<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
MOUNTAIN BANK HOLDING COMPANY
- --------------------------------------------------------------------------------
(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>
March 30, 1999
Dear Shareholders:
You are cordially invited to attend the annual meeting of
shareholders of Mountain Bank Holding Company on Tuesday, April 13, 1999, at
7:00 p.m. at the VFW Hall, 44426 244th Avenue S.E., Enumclaw, Washington.
At this meeting you will be asked to elect three directors for a
term of three years, to approve a director stock option plan and an employee
stock option plan, and to ratify the appointment of accountants for the year
1999.
A proxy is enclosed with the Notice of Meeting and Proxy Statement.
Please indicate your voting instructions and sign, date, and return the proxy
promptly in the postage prepaid envelope provided. Whether or not you plan to
attend the annual meeting in person, it is important that you return the
enclosed proxy so that your shares are voted. A proxy that is returned signed
and dated but with no voting instructions will be voted in favor of the
matters and, in appropriate circumstances, will enable the Company's
management to adjourn the meeting to continue to solicit votes to approve
these matters. The proxy may be revoked in writing by the person giving it at
any time before it is exercised by notice of such revocation to the Secretary
of the Company, or by submitting a proxy having a later date, or by such
person appearing at the meeting and electing to vote in person.
During the meeting, 1998 activities will be reviewed and the
Company's plan for 1999 will be discussed.
Sincerely,
Roy T. Brooks
Chairman of the Board of Directors
<PAGE>
MOUNTAIN BANK HOLDING COMPANY
501 ROOSEVELT AVENUE
ENUMCLAW, WASHINGTON 98022
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 13, 1999
To the Shareholders of Mountain Bank Holding Company:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Mountain Bank Holding Company (the "Company") will be held at the VFW Hall,
44426 - 244th Avenue S.E., Enumclaw, Washington, on Tuesday, April 13, 1999, at
7:00 p.m. local time for the purpose of considering and voting upon the
following matters:
1. ELECTION OF DIRECTORS. To elect three (3) Directors to serve for a
term of three years or until their successors have been elected and
qualified.
2. APPROVAL OF 1999 DIRECTOR STOCK OPTION PLAN. To approve a new stock
option plan for the Company's directors.
3. APPROVAL OF 1999 EMPLOYEE STOCK OPTION PLAN. To approve a new stock
option plan for key employees of the Company.
4. RATIFICATION OF ACCOUNTANTS. To ratify the appointment of Knight,
Vale & Gregory, Inc., P.S., as the Company's independent auditors
for the year ending December 31, 1999.
5. WHATEVER OTHER BUSINESS may properly come before the Annual Meeting
or any adjournments thereof.
Only those shareholders of record at the close of business on March 1,
1999, shall be entitled to notice of, and to vote at, the Annual Meeting or any
adjournments thereof.
Further information regarding voting rights and the business to be
transacted at the Annual Meeting is given in the accompanying Proxy Statement.
Your continued interest as a shareholder in the affairs of the Company, its
growth and development, is genuinely appreciated by the directors, officers and
personnel who serve you.
March 30, 1999 BY ORDER OF THE BOARD OF DIRECTORS
Roy T. Brooks, Chairman of the Board
===============================================================================
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND DATE YOUR
PROXY CARD AND RETURN IT IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. RETENTION OF
THE PROXY IS NOT NECESSARY FOR ADMISSION TO THE ANNUAL MEETING.
===============================================================================
<PAGE>
MOUNTAIN BANK HOLDING COMPANY
501 ROOSEVELT AVENUE
ENUMCLAW, WASHINGTON 98022
(360) 825-0100
PROXY STATEMENT
This Proxy Statement and the accompanying Proxy are being sent to
shareholders on or about March 30, 1999, for use in connection with the Annual
Meeting of Shareholders ("Annual Meeting") of Mountain Bank Holding Company (the
"Company") to be held on Tuesday, April 13, 1999. Only those shareholders of
record at the close of business on March 1, 1999, shall be entitled to vote. The
number of shares of the Company's common stock, par value $1.00 per share (the
"Common Stock"), outstanding and entitled to vote at the Annual Shareholders
Meeting is 907,482.
SOLICITATION OF PROXIES. The enclosed Proxy is solicited by and on
behalf of the Board of Directors of the Company, with the cost of solicitation
borne by the Company. Solicitation may be made by directors and officers of the
Company and its bank subsidiary, Mt. Rainier National Bank (the "Bank").
Solicitation may be made by use of the mails, by telephone, facsimile and
personal interview. The Company does not expect to pay any compensation for the
solicitation of proxies, except to brokers, nominees and similar record holders
for reasonable expenses in mailing proxy materials to beneficial owners.
QUORUM. The presence, in person or by proxy, of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum at the Annual Meeting. Abstentions will be
counted as shares present and entitled to vote at the Annual Meeting for
purposes of determining the presence of a quorum. Broker non-votes will not be
considered shares present and will not be included in determining whether a
quorum is present.
VOTING RIGHTS
VOTING ON MATTERS PRESENTED. The three nominees for election as
Directors at the Annual Meeting who receive the highest number of affirmative
votes will be elected. Shareholders are not permitted to cumulate their votes
for the election of directors. Votes may be cast FOR or WITHHELD from each
nominee. Votes that are withheld and broker non-votes will have no effect on the
outcome of the election because directors will be elected by a plurality of
votes cast. With respect to the proposals to approve the new employee and
director stock option plans, and the ratification of accountants, stockholders
may vote FOR the proposal, AGAINST the proposal or may ABSTAIN from voting. The
affirmative vote of a majority of the total votes present, in person or by
proxy, at the Annual Meeting is required for the approval to adopt the new stock
option plans, and to ratify the appointment of the Company's independent
auditors. Holders of record of the Common Stock will be entitled to one vote per
share on any matter that may properly come before the Annual Meeting.
1
<PAGE>
VOTING OF PROXIES. If the enclosed Proxy is duly executed and received
in time for the meeting, it is the intention of the persons named in the Proxy
to vote the shares represented in accordance with the instructions indicated on
the Proxy. If no instructions are indicated, such proxies will be voted (i) FOR
the three nominees listed in this Proxy Statement, (ii) FOR the adoption of the
1999 Director Stock Option Plan; (iii) FOR the adoption of the 1999 Employee
Stock Option Plan; and FOR the ratification of the appointment of Knight, Vale &
Gregory, Inc., PS, as the Company's independent auditors for the year ending
December 31, 1999; and in the discretion of the proxy holder, as to any other
matter which may properly come before the Annual Meeting. Any proxy given by a
shareholder may be revoked before its exercise by notice to the Company in
writing, by a subsequently dated proxy, or at the Meeting prior to the taking of
the shareholder vote.
BUSINESS OF THE MEETING
There are four matters being presented for consideration by the
shareholders at the Annual Meeting.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
GENERAL
The Company's Restated Articles of Incorporation ("Articles") and
Bylaws provide that the number of directors must fall within a range of 5 and
25, the exact number to be determined by an affirmative vote of a majority of
the directors or by resolution of the shareholders. The Bylaws also provide that
the Board of Directors may fill vacancies created on the Board, within certain
limits, provided that the number of directors shall at no time exceed 25.
Directors are elected for a term of three years and until their
successors have been elected and qualified. The Company's Articles require that
the terms of the directors be staggered such that approximately one-third of the
directors are elected each year.
In accordance with the above, the Board of Directors has nominated
Messrs. Gallagher, Jones and Zurcher for election as directors for three-year
terms to expire in the year 2002. Mr. Zurcher, whose term would have expired in
the year 2001, has been nominated for election at the 1999 Annual Meeting, to
replace director Terry Garrison, who would otherwise have been up for reelection
this year. If any of Messrs. Gallagher, Jones or Zurcher should refuse or be
unable to serve, your Proxy will be voted for such person as shall be designated
by the Board of Directors to replace any such nominee. The Board of Directors
presently has no knowledge that any of the nominees will refuse or be unable to
serve.
In accordance with the Company's Bylaws, other nominations, if any, may
be made only in accordance with the prior notice provisions contained in the
Company's Bylaws. Such notice provisions require that a shareholder provide the
Company with written notice (containing the information required by the Bylaws)
at least 14 days but not more than 50 days prior to the Annual Meeting (or, if
the Company provides less than 21 days' public notice of such meeting, no later
than seven days after the date of the Company's notice).
2
<PAGE>
INFORMATION WITH RESPECT TO NOMINEES AND
DIRECTORS WHOSE TERMS CONTINUE
The following tables set forth certain information with respect to the
nominees for director and for directors whose terms continue. The table below
includes their ages, their principal occupations during the past five years, and
the year first elected or appointed a director of the Company. The table also
indicates the number of shares of Common Stock beneficially owned by each
individual on January 15, 1999, and the percentage of Common Stock outstanding
on that date that the individual's holdings represented. However, where
beneficial ownership was less than one percent of all outstanding shares, the
percentage is not reflected in the table.
<TABLE>
<CAPTION>
SHARES AND
PERCENTAGE OF
COMMON STOCK
PRINCIPAL OCCUPATION BENEFICIALLY
NAME, AGE AND OF DIRECTOR DURING OWNED AS OF
TENURE AS DIRECTOR LAST FIVE YEARS JANUARY 15, 1999
- ------------------ --------------- ----------------
(1)(2)
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2002
<S> <C> <C>
Brian W. Gallagher, 49 President and Principal Owner, 29,973(3)
Since 1993 Northern Transport, Inc. 3.28%
Michael K. Jones, Sr., 56 Certified Public Accountant, 28,599(5)
Since 1993 Principal Owner, Jones & 3.13%
Associates, Inc., P.S.
Hans R. Zurcher, 62 Partner, Zurcher Dairy 25,414
Since 1993 2.78%
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEES TO BE
ELECTED AS DIRECTORS.
(1) Shares held directly with sole voting and sole investment power, unless
otherwise indicated.
(2) Share amounts include stock options which are exercisable within 60 days as
follows: Mr. Brooks 4,000 shares; Ms. Bowen-Hahto 6,000 shares; Mr.
Gallagher 6,000 shares; Mr. Jones 6,000 shares; Mr. Kombol 6,000 shares;
Mr. Moergeli 7,000 shares; Mr. Raeder 6,000 shares; Mr. Van Beek 6,000
shares; and Mr. Zurcher 6,000 shares.
(3) Includes 3,857 shares held in trust for the benefit of Mr. Gallagher's
children; 1,062 held by Mr. Gallagher's spouse; and 3,298 held by Mr.
Gallagher's children.
(4) Includes 5,000 shares held by Mr. Jones' spouse; 2,260 shares held in
trusts for the benefit of Mr. Jones' children, and 341 held by Mr. Jones'
children.
3
<PAGE>
DIRECTORS WITH TERM EXPIRING IN 2000
<TABLE>
<S> <C> <C>
Roy T. Brooks, 58 Chairman and President of the 29,695(5)
Since 1993 Company; Chairman of the Bank; CEO, 3.26%
Chairman and part owner of Westmark
Electronics
Susan K. Bowen-Hahto, 50 Former owner of The Travel Line 15,000(6)
Since 1993 1.64%
Steve W. Moergeli, 45 President and CEO of the Bank; 12,145
Since 1997 Vice-President and Credit 1.33%
Administrator of the Bank
</TABLE>
DIRECTORS WITH TERM EXPIRING 2001
<TABLE>
<S> <C> <C>
Barry C. Kombol, 48 Attorney in private practice 13,500
Since 1993 1.48%
John W. Raeder, 62 Chairman, Universal Refrigeration, 19,736
Since 1993 Inc. 2.16%
Garrett S. Van Beek, 63 Owner, Van Beek & Sons Dairy 22,028(7)
Since 1993 2.41%
</TABLE>
(5) Includes 3,816 shares held jointly with spouse.
(6) Includes 1,000 shares held jointly with spouse and 1,200 shares held in
trusts for the benefit of Ms. Bowen-Hahto's children.
(7) Includes 2,743 shares held by Mr. Van Beek's spouse and 5,285 held jointly
with his spouse.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The following sets forth information concerning the Board of Directors
and Committees of the Company during the fiscal year 1998.
BOARD OF DIRECTORS
The Company held ten (10) Board meetings in 1998. Each director
attended at least 75 percent of the aggregate of (i) the total number of
meetings of the Board of Directors, except for Mr. Garrison who attended 70% of
the meetings, and (ii) the total number of meetings held by all committees on
which he or she served.
4
<PAGE>
CERTAIN COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company have established an Executive and
an Audit Committee. When the need arose the full Board served as the Nominating
Committee and the Compensation Committee.
AUDIT COMMITTEE. The main function of the Audit Committee includes
reviewing the plan, scope, and audit results of the independent auditors, as
well as reviewing and approving the services of the independent auditors. The
Audit Committee reviews or causes to be reviewed the reports of bank regulatory
authorities and reports its conclusions to the Board of Directors. The Audit
Committee also reviews procedures with respect to the Company's records and its
business practices, and reviews the adequacy and implementation of the internal
auditing, accounting and financial controls. The Committee held eight (8)
meetings during the year. For fiscal year 1998, members of the Audit Committee
consisted of Messrs. Kombol (Chairperson), Brooks, and Raeder.
EXECUTIVE COMMITTEE. The main function of the Executive Committee is to
establish the agenda for the Company's Board of Directors meeting, to receive
reports from the Executive Officers regarding their activities and the
implementation of the Company's business plan, and to ensure the Company's
strategic planning process is being followed. The Committee held no meetings
during the year. For the fiscal year 1998, members of the Executive Committee
consisted of Messrs. Brooks (Chairman), Gallagher, Garrison, Kombol, Moergeli,
and Van Beek.
COMPENSATION OF DIRECTORS
The Company and the Bank have established a program by which
non-employee directors receive compensation as follows:
COMPANY. The Directors receive no retainers, nor fees for meetings
attended.
BANK. The Chairman of the Board receives no separate compensation for
serving as Chairman. During 1998, each nonemployee Director (other than the
Chairman) received an annual retainer of $7,200; and each committee member
received a fee of $75.00 for each meeting attended.
5
<PAGE>
1990 DIRECTOR STOCK OPTION PLAN
At the first Annual Meeting of Shareholders of the Bank, the
shareholders approved the 1990 Director Stock Option Plan (the "1990 Director
Plan"). The 1990 Director Plan has been assumed and adopted by the Company.
Under the terms of the 1990 Director Plan, an outside director is granted an
option to purchase 6,000 shares of Common Stock upon his or her initial election
to the Board of Directors at an exercise price equal to the fair market value of
such shares on the date of grant. The options are exercisable on a cumulative
basis in annual installments of one third each on the third, fourth and fifth
anniversary of the date of grant. The service as a director must be continuous
for such vesting to occur.
A total of 60,000 shares of the Company's Common Stock may be issued
under the 1990 Director Plan. Options to purchase 54,000 shares at $5.00 per
share were issued on June 13, 1990, and expire on June 13, 2005. All options are
presently exercised or exercisable. No option can be exercised after the
expiration of 15 years from the date of grant. At the Annual Meeting, the
shareholders will be asked to approve a new director stock option plan. See
"Proposal No. 2 - 1999 Director Stock Option Plan."
EXECUTIVE COMPENSATION
The following table sets forth a summary of certain information
concerning compensation awarded to or paid by the Company for services rendered
in all capacities, during the last three fiscal years to the Chief Executive
Officer. No executive officer earned $100,000 or more during fiscal year 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
=======================================================================================================
Annual Compensation Long Term Compensation
------------------------------------- ----------------------
Awards Payouts
------------ ---------
Other Annual Securities
Name and Compensation Underlying LTIP All Other
Principal Position Year Salary (1) Bonus (2) (3) Options Payouts Compensation
- --------------------- ------ ---------- ---------- --------------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Roy T. Brooks 1998 $48,000 $ 0 $ 0 0 0 $ 0
Chairman, CEO 1997 46,700 0 0 5,000 (4) 0 0
& President 1996 0 0 0 0 0 0
=======================================================================================================
</TABLE>
(1) Represents annual compensation paid to Mr. Brooks for his duties as a
consultant to the Company and the Bank.
(2) Includes bonuses paid or to be paid during the subsequent year but
attributable to the year indicated.
(3) Does not include amounts attributable to miscellaneous benefits received by
executive officers, including the use of company-owned automobiles and the
payment of certain club dues. In the opinion of management, the costs to
the Company of providing such benefits to any individual executive officer
during the year ended
6
<PAGE>
December 31, 1998, did not exceed the lesser of $50,000 or 10% of the total
of annual salary and bonus reported for the individual.
(4) Mr. Brooks was granted options for 5,000 shares in recognition of his role
as President of Mt. Rainier National Bank from the time of the former
President's resignation in December 1996 until the Bank's new President was
appointed in March 1997.
STOCK OPTIONS
OPTION GRANTS. No options were granted to the named executive officer
during the year ended December 31, 1998.
OPTION EXERCISES. The following table sets forth certain information
concerning exercises of stock options pursuant to stock option plans by the
named executive officer during the year ended December 31, 1998, and stock
options held at year end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
=========================================================================================================
Shares Number of Value of
Acquired on Value Unexercised Unexercised Options at
Name Exercise Realized Options at Year End Year End (1)
-------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
- -------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roy T. Brooks 0 0 4,000 5,000 $50,000 $25,000
=========================================================================================================
</TABLE>
(1) On December 31, 1998, the closing price of Common Stock was $17.50. For
purposes of the foregoing table, stock options with an exercise price less
than that amount are considered to be "in-the-money" and are considered to
have a value equal to the difference between this amount and the exercise
price of the stock option multiplied by the number of shares covered by the
stock option.
7
<PAGE>
1999 OFFICER INCENTIVE COMPENSATION PLAN
On December 14, 1998, the Board of Directors approved the Officer
Incentive Compensation Plan (the "Incentive Plan"). The purpose of the Incentive
Plan is to reward individuals who make significant contributions to the Bank's
success and to provide performance-based competitive pay opportunities.
Participants will be selected by the President and confirmed by the Board of
Directors, and must be in a position to materially affect the Bank's
performance. Under the terms of the Incentive Plan, each participant will be
assigned a specific dollar incentive based on their job description, overall
responsibility and direct influence on overall operating results. The percentage
of such dollar amount that is actually paid to the participant will be based on
the Bank's return on average assets for that fiscal year, as well as the
individual goals set for each participant.
1990 EMPLOYEE STOCK OPTION PLAN
At the first Annual Meeting of Shareholders of the Bank, the
shareholders approved the 1990 Employee Stock Option Plan (the "1990 Employee
Plan"). The 1990 Employee Plan was assumed and adopted by the Company. Under the
terms of the 1990 Employee Plan, both incentive and non-qualified options may be
granted to key employees of the Bank. The exercise price of the options may not
be less than 100% of the fair market value of the shares of the Company on the
date in which the option is granted. In general, an incentive stock option may
be exercised during a period of not more than 10 years from the date of grant,
although a shorter period may be specified, and in such amounts as the Board may
determine. A non-qualified stock option may be exercised during the period
specified by the Board. The Board has the authority to thereafter accelerate the
period within which any option may be exercised.
A total of 60,000 shares may be issued under the 1990 Employee Plan. At
December 31, 1998, there were outstanding options to purchase 58,668 shares of
the Company's Common Stock and 1,332 shares remain available under the 1990
Employee Plan for future grant. At the 1999 Annual Meeting, the shareholders
will be asked to approve a new employee stock option plan. See "Proposal No. 3 -
1999 Employee Stock Option Plan."
DEFERRED COMPENSATION PLANS
In 1993, the Bank established a deferred compensation agreement with
Director Kombol under which the director may defer his director's fees. The Bank
has also purchased a whole-life insurance policy which may be used to fund
benefits under the deferred compensation agreement.
401(k) PLAN
The Company's 401(k) Plan allows for pre-tax employee contributions up
to IRS maximum limits with a Company match of 50% of the first 6% of employee
contribution. Employee elective contributions are 100% vested at all times.
Matching contributions have a two year vesting schedule, and beginning the third
year, are 100% vested.
8
<PAGE>
As a result of the tax qualification of the 401(k) Plan, employees are
not subject to federal or state income taxation on the employee elective
contributions, employer contributions or earnings thereon until those amounts
are distributed from the 401(k) Plan, although the Company continues to receive
a compensation expense deduction for compensation paid.
EMPLOYEE STOCK PURCHASE PLAN
In order to encourage and facilitate the purchase of Company Common
Stock by employees, the Board adopted and shareholders approved at the 1996
Annual Meeting, the 1995 Employee Stock Purchase Plan (the "Purchase Plan"). The
Purchase Plan makes available 20,000 shares of Company Common Stock for purchase
by eligible employees through a payroll deduction method. The purchase price is
the lower of the market price of the Company's Common Stock at the beginning or
end of the plan year. At December 31, 1998, 16,186 shares remained available for
issuance under the Purchase Plan.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table provides certain information with respect to
executive officers and directors as a group. The Company is not aware of any
person who at December 31, 1998, beneficially owned more than five percent of
its outstanding Common Stock.
OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
SHARES AND PERCENTAGE OF
NAME COMMON STOCK BENEFICIALLY OWNED
- ---- -------------------------------
<S> <C>
Executive officers and directors as a group 219,151 (2.25%)(1)
(12 individuals)
</TABLE>
(1) Includes 66,000 shares subject to options that could be exercised within
60 days.
MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth information with respect to executive
officers who are not directors or nominees for director of the Company, and are
not otherwise named in the compensation table.
<TABLE>
<CAPTION>
RELATIONSHIP WITH THE COMPANY AND
NAME AND AGE BUSINESS EXPERIENCE DURING THE LAST FIVE YEARS
- ------------ ----------------------------------------------
<S> <C>
Sheila M. Brumley, 44 Chief Financial Officer; Senior Vice President and
Cashier of the Bank
Sterlin E. Franks, 52 Vice President and Credit Administrator of the Bank; Bank
branch management and bank administration
</TABLE>
9
<PAGE>
TRANSACTIONS WITH MANAGEMENT
Various of the directors and officers of the Company, members of their
immediate families, and firms in which they had an interest were customers of
and had transactions with the Bank during 1998 in the ordinary course of
business. Similar transactions may be expected to take place in the ordinary
course of business in the future. All outstanding loans and commitments included
in such transactions were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons and did not, in the opinion of management,
involve more than the normal risk of collectibility nor present other
unfavorable features.
Mr. Brooks, Chairman of the Board and Chief Executive Officer and
President of the Company, serves as a consultant to the Company and the Bank,
for which he receives $4,000 a month in compensation.
Palmer Coking and Coal Company, in which Mr. Kombol, a director of the
Company, owns a partnership interest, sold real property in Black Diamond,
Washington, to the Company during fiscal year 1998. The property, which was used
for the Bank's Black Diamond branch, was purchased for $144,529.30. The Company
believes that such transaction was completed on terms no less favorable than
could have been obtained from an unrelated third party.
COMPLIANCE WITH SECTION 16(a) FILING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended,
("Section 16(a)") requires that all executive officers and directors of the
Company and all persons who beneficially own more than 10 percent of the
Company's Common Stock file reports with the Securities and Exchange Commission
with respect to beneficial ownership of the Company's Securities. The Company
has adopted procedures to assist its directors and executive officers in
complying with the Section 16(a) filings.
Based solely upon the Company's review of the copies of the filings
which it received with respect to the fiscal year ended December 31, 1998, or
written representations from certain reporting persons, the Company believes
that all reporting persons made all filings required by Section 16(a) in a
timely manner.
PROPOSAL NO. 2 - APPROVAL OF 1999 DIRECTOR STOCK OPTION PLAN
On February 18, 1999, the Board of Directors approved the Company's
1999 Director Stock Option Plan (the "1999 Director Plan"), subject to
shareholder approval. If approved, no new options will be granted under the 1999
Director Plan until all shares available under the existing 1990 Director Plan
have been granted. The purpose of the 1999 Director Plan is to aid in retaining
and attracting competent directors, and to provide an incentive to directors to
improve the performance of the Company. The material features of the 1999
Director Plan are summarized below.
10
<PAGE>
ADMINISTRATION OF THE PLAN. The 1999 Director Plan will be administered
by the Board of Directors (or a committee of the Board), which will grant, from
time to time, nonqualified stock options to directors of the Company.
GRANT OF OPTIONS. A maximum of 20,000 shares of Common Stock are
reserved for issuance under the 1999 Director Plan. The 1999 Director Plan
provides for the issuance of non-qualified stock options ("NQSOs"). It does not
provide for the issuance of incentive stock options ("ISOs") within the meaning
of the federal income tax laws. The 1999 Director Plan provides that the
exercise price of NQSOs granted thereunder may be no less than the greater of
the fair market value or net book value of the stock at the date the option is
granted.
TERM AND PRICE OF OPTIONS. The Board of Directors (or a committee of
the Board) will determine the terms and conditions of the options granted under
the 1999 Director Plan, including the price, the date on which the options
become exercisable and the termination date (subject to the terms of the plan).
FEDERAL TAX TREATMENT. While no taxable income is recognized upon the
grant of a nonqualified stock option, recipients will generally recognize
ordinary income equal to the fair market value of the shares on the date of
exercise over the exercise price. The amount of such income would be a
deductible compensation expense for the Company.
TERMINATION AND AMENDMENT OF PLAN. The Board of Directors may terminate
the 1999 Director Plan at any time without shareholder approval. The Board of
Directors may amend the 1999 Director Plan at any time; PROVIDED, HOWEVER, that
shareholder approval is required to increase the number of shares of Common
Stock authorized for issuance thereunder.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE BY STOCKHOLDERS
FOR APPROVAL OF THE 1999 DIRECTOR STOCK OPTION PLAN. THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK PRESENT IN PERSON OR BY
PROXY AT THE ANNUAL MEETING IS REQUIRED TO APPROVE THIS PROPOSAL.
PROPOSAL NO. 3 - APPROVAL OF 1999 EMPLOYEE STOCK OPTION PLAN
On February 18, 1999, the Board of Directors approved the Company's
1999 Employee Stock Option Plan (the "1999 Employee Plan"), subject to
shareholder approval. If approved, no new options will be granted under the 1999
Employee Plan, until all shares available under the 1990 Employee Plan have been
granted. The purpose of the 1999 Employee Plan is to aid in retaining and
attracting competent employees, and to provide an incentive to employees to
improve the performance of the Company. The material features of the 1999
Employee Plan are summarized below.
PARTICIPANTS. The 1999 Employee Plan provides for the issuance of NQSOs
and ISOs, from time to time, to employees of the Company.
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ADMINISTRATION OF THE PLAN. A maximum of 60,000 shares of Common Stock
are reserved for issuance under the 1999 Employee Plan, which will be
administered by the Board of Directors (or a committee of the Board).
GRANT AND PRICE OF OPTIONS. The Board of Directors (or a committee of
the Board) will determine the terms and conditions of the options granted under
the 1999 Employee Plan, including the price, the date or conditions on which the
options become exercisable and the termination date (subject to the terms of the
plan).
The 1999 Employee Plan provides that the exercise price of any option
granted under the Plan may be no less than the greater of the fair market value
or net book value of the stock at the date the option is granted. The exercise
price of an ISO may not be less than the fair market value of the Common Stock
at the date the option is granted, and in some cases must be at least 110% of
such fair market value. No option may in any event be exercisable more than ten
years from the date of the grant of such option, and under certain circumstances
ISOs may not be exercisable more than five years from the date of grant.
FEDERAL TAX TREATMENT. The 1999 Employee Plan provides for the issuance
of options which qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, and nonqualified stock
options. Holders of ISOs incur no tax (and the Company is not entitled to a
deduction) on the grant or exercise of such options. When stock received upon
exercise of an ISO is sold, the holder incurs tax at capital gain rates. In
order to qualify under Section 422, ISOs are subject to a number of
restrictions, including the following: (i) the option price may not be less than
the fair market value of the stock at the time the option is granted, and (ii)
the market value of the stock for which an employee's incentive stock options
become exercisable in any year may not exceed $100,000.
TERMINATION AND AMENDMENT OF PLAN. The Board of Directors may terminate
the 1999 Employee Plan at any time without shareholder approval. The Board of
Directors may amend the 1999 Employee Plan at any time; PROVIDED, HOWEVER, that
shareholder approval is required to increase the number of shares of Common
Stock authorized for issuance thereunder.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE BY STOCKHOLDERS
FOR APPROVAL OF THE 1999 EMPLOYEE STOCK OPTION PLAN. THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK PRESENT IN PERSON OR BY
PROXY AT THE ANNUAL MEETING IS REQUIRED TO APPROVE THIS PROPOSAL.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
At the Annual Meeting, stockholders of the Company will be asked to
ratify the appointment of Knight, Vale & Gregory, Inc., P.S., as the Company's
independent auditors for the year ending December 31, 1999. This appointment was
recommended by the Audit Committee of the Bank and approved by the Board of
Directors of the Company and the Bank. If the stockholders of the Company do not
ratify the appointment of Knight, Vale & Gregory, Inc., P.S., the appointment
will be reconsidered by the Board of Directors of the Company.
Knight, Vale & Gregory, Inc., P.S. has audited the Company since its
formation and the Bank for many years. Audit services performed by Knight, Vale
& Gregory, Inc., P.S. include examinations of the financial statements of the
Company, limited reviews of interim financial information, services related to
filings with regulatory authorities and consultations on matters related to
accounting and financial reporting.
A representative of Knight, Vale & Gregory, Inc., P.S. will be present
at the Annual Meeting and available to respond to appropriate questions and will
be given an opportunity to make a statement if the representative chooses to do
so.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE BY STOCKHOLDERS
FOR RATIFICATION OF KNIGHT, VALE & GREGORY, INC., P.S. AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 1999. THE AFFIRMATIVE VOTE
OF THE HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK PRESENT IN PERSON OR
BY PROXY AT THE ANNUAL MEETING IS REQUIRED TO APPROVE THIS PROPOSAL.
OTHER BUSINESS
The Board of Directors knows of no other matters to be brought before
the shareholders at the Annual Meeting. In the event other matters are presented
for a vote at the Meeting, the proxy holders will vote shares represented by
properly executed proxies in their discretion in accordance with their judgment
on such matters.
At the Meeting, management will report on the Company's business and
shareholders will have the opportunity to ask questions.
INFORMATION CONCERNING SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2000 annual
shareholder's meeting must be received by the Secretary of the Company before
November 20, 1999, for inclusion in the 2000 Proxy Statement and form of proxy.
In addition, if the Company receives notice of a shareholder proposal after
February 13, 2000, the persons named as proxies in such proxy statement and form
of proxy will have discretionary authority to vote on such shareholder proposal.
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ANNUAL REPORT TO SHAREHOLDERS
ANY SHAREHOLDER MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-KSB FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES EXCHANGE ACT OF 1934 FOR THE YEAR ENDED DECEMBER 31, 1998,
INCLUDING FINANCIAL STATEMENTS. Written requests for the Form 10-KSB should be
addressed to Sheila Brumley, CFO, Mountain Bank Holding Company, 501 Roosevelt
Avenue, Enumclaw, Washington 98022.
March 30, 1999 BY ORDER OF THE BOARD OF DIRECTORS
Roy T. Brooks, Chairman of the Board
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MOUNTAIN BANK HOLDING COMPANY
PROXY
PLEASE SIGN AND RETURN IMMEDIATELY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Garrett S. Van Beek and Hans R. Zurcher
and each of them (with full power to act alone) as Proxies, with full power of
substitution, and hereby authorizes them to represent and to vote, as designated
below, all the shares of common stock of Mountain Bank Holding Company held of
record by the undersigned on March 1, 1999, at the annual meeting of
shareholders to be held on April 13, 1999, or any adjournment of such Meeting.
1. ELECTION OF DIRECTORS
A. I vote FOR all nominees listed below (except as marked to the
contrary below) /_/
B. I WITHHOLD AUTHORITY to vote for any individual nominee whose
name I have struck a line through in the list below /_/
Brian W. Gallagher -SOLID DIAMOND- Michael K. Jones -SOLID DIAMOND-
Hans R. Zurcher
2. APPROVAL OF 1999 DIRECTOR STOCK OPTION PLAN. Approval of the Company's
new 1999 Director Stock Option Plan.
FOR /_/ AGAINST /_/ ABSTAIN /_/
3. APPROVAL OF 1999 EMPLOYEE STOCK OPTION PLAN. Approval of the Company's
new 1999 Employee Stock Option Plan.
FOR /_/ AGAINST /_/ ABSTAIN /_/
4. RATIFICATION OF INDEPENDENT AUDITORS. Ratification of the appointment
of Knight, Vale & Gregory, Inc., P.S., as the Company's independent
auditors for the year ending December 31, 1999.
FOR /_/ AGAINST /_/ ABSTAIN /_/
5. WHATEVER OTHER BUSINESS may properly be brought before the meeting or
any adjournment thereof.
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" AND WILL BE VOTED "FOR" THE
PROPOSITIONS LISTED UNLESS AUTHORITY IS WITHHELD OR A VOTE AGAINST OR
AN ABSTENTION IS SPECIFIED, IN WHICH CASE THIS PROXY WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATION SO MADE.
Management knows of no other matters that may properly be, or which are
likely to be, brought before the Meeting. However, if any other matters are
properly presented at the Meeting, this Proxy will be voted in accordance with
the recommendations of management.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSITIONS.
_______________________________, 1999
-------------------------------------
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WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE. IF MORE
THAN ONE TRUSTEE, ALL SHOULD SIGN.
ALL JOINT OWNERS MUST SIGN.
<PAGE>
MOUNTAIN BANK HOLDING COMPAYN
EMPLOYEE STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. The purpose of this Employee Stock Option Plan
("Plan") is to secure for MOUNTAIN BANK HOLDING COMPANY ("Holding
Company") and its shareholders the benefits which flow from providing
key employees of Holding Company with incentive inherent in common
stock ownership. It is generally recognized that stock options plans
aid in retaining competent employees, furnish a device to attract
employees of exceptional ability, and provide incentive to employees to
make the Holding Company successful. Holding Company intends that
Options issued pursuant to this Plan shall constitute either Incentive
Stock Options within the meaning of Section 422 of the Code or
Nonqualified Stock Options
2. DEFINITIONS. As used in this Plan, the following definitions apply:
a. "Board" means the Board of Directors of Holding Company.
b. "Code" means the Internal Revenue Code of 1986, as amended.
c. "Common Stock" means Holding Company's common stock, currently
with a par value of $1.00 per share.
d. "Committee" has the meaning set forth in subparagraph 4(a) of
this Plan.
e. "Continuous Status as Employee" means the absence of any
interruption or termination of service as an Employee.
Continuous Status as an Employee shall not be considered
interrupted in the case of sick leave, military leave or any
other approved leave of absence.
f. "Date of Grant" of an Option means the date on which the
Committee makes the determination granting such Option, or
such later date as the Committee may designate. The Date of
Grant shall be specified in the Option agreement.
g. "Employee" means any person employed by Holding Company, or a
Subsidiary of Holding Company which is currently in existence
or is hereafter organized or is acquired by Holding Company.
h. "Exercise Price" has the meaning set forth in subparagraph
4(b)(2) of this Plan.
i. "Holding Company" has the meaning set forth in paragraph 1 of
this Plan.
j. "Option" means a stock option granted under this Plan. Options
shall include both Incentive Stock Options as defined under
Section 422 of the Code and Nonqualified Stock Options, which
refer to all stock options other than Incentive Stock Options.
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k. "Optionee" means an Employee who receives an Option.
l. "Plan" has the meaning set forth in paragraph 1 of this Plan.
m. "Parent" means any corporation owning at least eighty percent
(80%) of the total voting power of the issued and outstanding
stock of Holding Company, and eighty percent (80%) of the
total value of the issued and outstanding stock of Holding
Company.
n. "Shareholder-Employee" means an Employee who owns stock
representing more than ten percent (10%) of the total combined
voting power of all classes of stock of Holding Company or of
any Subsidiary or parent company. For this purpose, the
attribution of stock ownership rules provided in Section
424(d) of the Code shall apply.
o. "Subsidiary" means any corporation of which not less than
fifty percent (50%) of the voting shares are held by Holding
Company or a Subsidiary, whether or not such corporation now
exists or is hereafter organized or acquired by Holding
Company or a Subsidiary.
3. STOCK SUBJECT TO OPTIONS.
a. NUMBER OF SHARES RESERVED. The maximum number of shares which
may be optioned and sold under this Plan is 40,000 shares of
the Common Stock of Holding Company (subject to adjustment as
provided in subparagraph 6(j) of this Plan). During the term
of this Plan, Holding Company will at all times reserve and
keep available a sufficient number of shares of its Common
Stock to satisfy the requirements of this Plan.
b. EXPIRED OPTIONS. If any outstanding Option expires or becomes
unexercisable for any reason without having been exercised in
full, the shares of Common Stock allocable to the unexercised
portion of such Option will again become available for other
Options.
4. ADMINISTRATION OF THE PLAN.
a. THE COMMITTEE. The Board will administer this Plan directly,
acting as a Committee of the whole, or if the Board elects, by
a separate Committee appointed by the Board for that purpose
and consisting of at least two non-employee Board members. All
references in the Plan to the "Committee" refers to this
separate Committee, if any is established, or if none is then
in existence, refers to the Board as a whole. Once appointed,
any Committee will continue to serve until otherwise directed
by the Board. From time to time, the Board may increase the
size of the Committee and appoint additional members, remove
members (with or without cause), appoint new members in
substitution, and fill vacancies however caused. The Committee
will select one of its members as
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<PAGE>
chairman, and will hold meetings at such times and places as
the chairman or a majority of the Committee may determine. At
all times, the Board will have the power to remove all members
of the Committee and thereafter to directly administer this
Plan as a Committee of the whole.
(1) Members of the Committee who are eligible for Options
or who have been granted Options will be counted for
all purposes in determining the existence of a quorum
at any meeting of the Committee and will be eligible
to vote on all matters before the Committee
respecting the granting of Options or administration
of this Plan.
(2) At least annually, the Committee must present a
written report to the Board indicating the persons to
whom Options have been granted since the date of the
last such report, and in each case the Date of Grant,
the number of shares optioned, and the per-share
Exercise Price.
B. POWERS OF THE COMMITTEE. All actions of the Committee must be
either (i) by a majority vote of the members of the full
Committee at a meeting of the Committee, or (ii) by unanimous
written consent of all members of the full Committee without a
meeting. All decisions, determinations and interpretations of
the Committee will be final and binding on all persons,
including all Optionees and any other holders or persons
interested in any Options, unless otherwise expressly
determined by a vote of the majority of the entire Board. No
member of the Committee or of the Board will be liable for any
action or determination made in good faith with respect to the
Plan or any Option. Subject to all provisions and limitations
of the Plan, the Committee will have the authority and
discretion:
(1) to determine the persons to whom Options are to be
granted, the Dates of Grant, and the number of shares
to be represented by each Option;
(2) to determine the price at which shares of Common
Stock are to be issued under an Option, subject to
subparagraph 6(b) of this Plan ("Exercise Price");
(3) to determine all other terms and conditions of each
Option granted under this Plan (including
specification of the dates upon which Options become
exercisable, and whether conditioned on performance
standards, periods of service or otherwise), which
terms and conditions can vary between Options;
(4) to modify or amend the terms of any Option previously
granted, or to grant substitute Options, subject to
subparagraphs 6(l) and 6(m) of this Plan;
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<PAGE>
(5) to authorize any person or persons to execute and
deliver Option agreements or to take any other
actions deemed by the Committee to be necessary or
appropriate to effect the grant of Options by the
Committee;
(6) to interpret this Plan and to make all other
determinations and take all other actions which the
Committee deems necessary or appropriate to
administer this Plan in accordance with its terms and
conditions.
5. ELIGIBILITY. Options may be granted only to Employees. Granting of
Options under this Plan will be entirely discretionary with the
Committee. Adoption of this Plan will not confer on any Employee any
right to receive any Option or Options under this Plan unless and until
said Options are granted by the Committee in its sole discretion.
Neither the adoption of this Plan nor the granting of any Options under
this Plan will confer upon any Employee or Optionee any right with
respect to continuation of employment, nor will the same interfere in
any way with his or her right or with the right of the shareholders of
Holding Company or any Subsidiary to terminate his or her employment at
any time.
6. TERMS AND CONDITIONS OF OPTIONS. All Options granted under this Plan
must be authorized by the Committee, and must be documented in written
Option agreements in such form as the Committee will approve from time
to time, which agreements must comply with and be subject to all of the
following terms and conditions:
a. NUMBER OF SHARES; ANNUAL LIMITATION. Each Option agreement
must state whether the Option is intended to be an Incentive
Stock Option or a Nonqualified Stock Option and the number of
shares subject to Option. Any number of Options may be granted
to an Employee at any time; except that, in the case of
Incentive Stock Options, the aggregate fair market value
(determined as of each Date of Grant) of all shares of Common
Stock with respect to which Incentive Stock Options become
exercisable for the first time by such Employee during any one
calendar year (under all incentive stock option plans of the
Company and all of its Subsidiaries taken together) shall not
exceed $100,000. Any portion of an Option in excess of the
$100,000 limitation shall be treated as a Nonqualified Stock
Option
b. EXERCISE PRICE AND CONSIDERATION. The Exercise Price shall be
the price determined by the Committee, subject to
subparagraphs (1) and (2) below.
(1) In the case of Incentive Stock Options, the Exercise
Price shall in no event be less than the fair market
value of the Common Stock on the Date of Grant. In
the case of an Incentive Stock Option granted to a
Employee who, immediately before the grant of such
Incentive Stock Option, is a Shareholder-Employee,
the Exercise Price shall be at least 110% of the fair
market value of the Common Stock on the Date of
Grant.
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<PAGE>
(2) In all cases, the Exercise Price shall be no less
than the greater of (i) the fair market value of the
Common Stock or (ii) the net book value of the Common
Stock at the time of grant, as is determined by the
Committee.
(3) In all cases, the Exercise Price shall be payable
either (i) in United States dollars upon exercise of
the Option, or (ii) if approved by the Board, other
consideration including without limitation Common
Stock of Holding Company, services, debt instruments
or other property.
c. TERM OF OPTION. No Option shall in any event be exercisable
after the expiration of ten (10) years from the Date of Grant.
Further, no Incentive Stock Option granted to a Employee who,
immediately before such Incentive Stock Option is granted, is
a Shareholder-Employee shall be exercisable after the
expiration of five (5) years from the Date of Grant. Subject
to the foregoing and other applicable provisions of the Plan
including but not limited to subparagraphs 6(g), 6(h) and
6(i), the term of each Option will be determined by the
Committee in its discretion.
d. NON-TRANSFERABILITY OF OPTIONS. No Option may be sold,
pledged, assigned, hypothecated, transferred, or disposed of
in any manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
e. MANNER OF EXERCISE. An Option will be deemed to be exercised
when written notice of exercise has been given to Holding
Company in accordance with the terms of the Option by the
person entitled to exercise the Option, together with full
payment for the shares of Common Stock subject to said notice.
f. RIGHTS AS SHAREHOLDER. An Optionee shall have none of the
rights of a shareholder with respect to any shares covered by
his or her Option unless and until the Optionee has exercised
such Option and submitted full payment for the shares.
g. DEATH OF OPTIONEE. An Option shall be exercisable at any time
prior to termination under subparagraphs (1) or (2), below, by
the Optionee's estate or by such person or persons who have
acquired the right to exercise the Option by bequest or by
inheritance or by reason of the death of the Optionee. In the
event of the death of an Holder,
(1) an Incentive Stock Option shall terminate no later
than the earliest of (i) one year after the date of
death of the Optionee if the Optionee had been in
Continuous Status as an Employee since the Date of
Grant of the Option, or (ii) the date specified under
subparagraph 6(i) of this Plan if the Optionee's
status as an Employee was terminated prior to his or
her death, or (iii) the expiration date otherwise
provided in the applicable Option agreement; and
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<PAGE>
(2) a Nonqualified Stock Option shall terminate no later
than the earlier of (i) one year after the date of
death of the Optionee, or (ii) the expiration date
otherwise provided in the Option agreement, except
that if the expiration date of a Nonqualified Stock
Option should occur during the 180-day period
immediately following the Optionee's death, such
Option shall terminate at the end of such 180-day
period.
h. DISABILITY OF OPTIONEE. If an Optionee's status as an Employee
is terminated at any time during the Option period by reason
of a disability (within the meaning of Section 22(e)(3) of the
Code) and if said Optionee had been in Continuous Status as an
Employee at all times between the date of grant of the Option
and the termination of his or her status as an Employee, his
or her Option shall terminate no later than the earlier of (i)
one year after the date of termination of his or her status as
an Employee, or (ii) the expiration date otherwise provided in
his or her Option agreement.
i. TERMINATION OF STATUS AS AN EMPLOYEE.
(1) If an Optionee's status as an Employee is terminated
at any time after the grant of an Option to such
Employee for any reason other than death or
disability (as described in subparagraphs 6(g) and
6(h) above) and not for cause, as provided in
subparagraph (2) below, then such Option shall
terminate no later than the earlier of (i) the same
day of the third month after the date of termination
of his or her status as an Employee, or (ii) the
expiration date otherwise provided in his or her
Option agreement.
(2) If an Optionee's status as an Employee is terminated
for cause at any time after the grant of an Option to
such Employee, then such Option shall terminate at
the end of the day on the date of termination of his
or her status as an Employee. For this purpose,
"cause" includes fraud or willful misconduct or any
other conduct which the Board reasonably believes
will cause or has caused Holding Company substantial
injury as a result of gross negligence or dishonesty.
j. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any
required action by the shareholders of Holding Company, the
number of shares of Common Stock covered by each outstanding
Option, the number of shares of Common Stock available for
grant of additional Options, and the per-share Exercise Price
in each outstanding Option, will be proportionately adjusted
for any increase or decrease in the number of issued shares of
Common Stock resulting from any stock split or other
subdivision or consolidation of shares, the payment of any
stock dividend (but only on the Common Stock) or any other
increase or decrease in the number of such shares of Common
Stock effected without receipt of consideration by Holding
Company; PROVIDED, however, that conversion of any convertible
securities of Holding Company will not be deemed to have been
"effected without
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<PAGE>
receipt of consideration." Such adjustment will be made by the
Committee, whose determination in that respect will be final,
binding and conclusive.
(1) Except as otherwise expressly provided in this
subparagraph 6(j), no Optionee will have any rights
by reason of any stock split or the payment of any
stock dividend or any other increase or decrease in
the number of shares of Common Stock, and no issuance
by Holding Company of shares of stock of any class,
or securities convertible into shares of stock of any
class, will affect the number of shares or Exercise
Price subject to any Options, and no adjustments in
Options will be made by reason thereof. The grant of
an Option under this Plan will not affect in any way
the right or power of Holding Company to make
adjustments, reclassifications, reorganizations or
changes of its capital or business structure.
k. CONDITIONS UPON ISSUANCE OF SHARES. Shares of Common Stock
will not be issued with respect to an Option granted under
this Plan unless the exercise of such Option and the issuance
and delivery of such shares pursuant thereto will comply with
all applicable provisions of law, including applicable federal
and state securities laws. As a condition to the exercise of
an Option, Holding Company may require the person exercising
such Option to represent and warrant at the time of exercise
that the shares of Common Stock are being purchased only for
investment and without any present intention to sell or
distribute such Common Stock if, in the opinion of counsel for
Holding Company, such a representation is required by any of
the aforementioned relevant provisions of law.
l. CORPORATE SALE TRANSACTIONS. In the event of the merger or
reorganization of Holding Company with or into any other
corporation, the sale of substantially all of the assets of
Holding Company, or a dissolution or liquidation of Holding
Company (collectively, "Sale Transaction"), (1) all
outstanding Options that are not then fully exercisable will
become exercisable upon the date of closing of any sale
transaction or such earlier date as the Committee may fix; and
(2) the Committee may, in the exercise of its sole discretion,
terminate all outstanding Options as of a date fixed by the
Committee. In such event, however, the Committee must notify
each Optionee of such action in writing not less than sixty
(60) days prior to the termination date fixed by the
Committee, and each Optionee must have the right to exercise
his or her Option prior to said termination date.
m. SUBSTITUTE STOCK OPTIONS. In connection with an internal
reorganization of Holding Company, the Committee is
authorized, in its discretion, to substitute for any
unexercised Option, a new option for shares of the resulting
entity's stock.
n. TAX COMPLIANCE. Holding Company, in its sole discretion, may
take actions reasonably believed by it to be required to
comply with any local, state, or federal tax laws relating to
the reporting or withholding of taxes attributable to the
grant or exercise of any Option or the disposition of any
shares of Common Stock
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issued upon exercise of an Option, including, but not limited
to (i) withholding from any Optionee exercising an Option a
number of shares of Common Stock having a fair market value
equal to the amount required to be withheld by Holding Company
under applicable tax laws, and (ii) withholding from any form
of compensation or other amount due an Optionee, or holder, of
shares of Common Stock issued upon exercise of an Option any
amount required to be withheld by Holding Company under
applicable tax laws. Withholding or reporting will be
considered required for purposes of this subparagraph if the
Committee, in its sole discretion, so determines.
o. HOLDING PERIOD FOR INCENTIVE STOCK OPTIONS. With regard to
shares of Common Stock issued pursuant to an Incentive Stock
Option granted under the Plan, if the Optionee (or such other
person who may exercise the Option pursuant to subparagraph
6(g) of this Plan) makes a disposition of such shares within
two years from the Date of Grant of such Option, or within one
year from the date of issuance of such shares to the Optionee
upon the exercise of such Option, then the Optionee must
notify the Company in writing of such disposition and must
cooperate with the Company in any tax compliance relating to
such disposition.
p. OTHER PROVISIONS. Option agreements executed under this Plan
may contain such other provisions as the Committee will deem
advisable.
7. TERM OF THE PLAN. This Plan will become effective and Options may be
granted upon the Plan's approval by the Board, subject to shareholder
approval. Unless sooner terminated as provided in subparagraph 7(a) of
this Plan, this Plan will terminate on the tenth (10th) anniversary of
its effective date. Options may be granted at any time after the
effective date and prior to the date of termination of this Plan.
a. AMENDMENT OR EARLY TERMINATION OF THE PLAN. The Board may
terminate this Plan at any time. The Board may amend this Plan
at any time and from time to time in such respects as the
Board may deem advisable, except that, without approval of the
shareholders, no revision or amendment will increase the
number of shares of Common Stock subject to this Plan other
than in connection with an adjustment under subparagraph 6(j)
of this Plan.
b. EFFECT OF AMENDMENT OR TERMINATION. No amendment or
termination of this Plan will affect Options granted prior to
such amendment or termination, and all such Options will
remain in full force and effect notwithstanding such amendment
or termination.
8. SHAREHOLDER APPROVAL. Adoption of this Plan will be subject to
ratification by affirmative vote of shareholders owning at least a
majority of the outstanding Common Stock of Holding Company at a duly
convened meeting. If such shareholder approval is not obtained within
twelve (12) months after the date of the Board's adoption of this Plan,
then this Plan shall terminate subject to subparagraph 7(b) of the Plan
except that
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any Incentive Stock Options previously granted under the Plan shall
become Nonqualified Stock Options, and no further Options shall be
granted under the Plan.
* * * * *
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CERTIFICATE OF ADOPTION
I certify that the foregoing Employee Stock Option Plan was approved by
the Board of Directors of Mountain Bank Holding Company on February 18, 1999.
I further certify that the foregoing Employee Stock Option Plan was
approved by the shareholders of Mountain Bank Holding Company on April 13, 1999.
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Sheila Marie Brumley, Secretary
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MOUNTAIN BANK HOLDING COMPANY
DIRECTOR STOCK OPTION PLAN
1. PURPOSE OF THE PLAN. The purpose of this Director Stock Option Plan
("Plan") is to secure for MOUNTAIN BANK HOLDING COMPANY ("Holding
Company") and its shareholders the benefits which flow from providing
Directors of the Holding Company with incentive inherent in common
stock ownership. It is generally recognized that stock options plans
aid in retaining competent directors, furnish a device to attract
directors of exceptional ability, and provide incentive to Directors to
make the Holding Company successful. Holding Company intends that
Options issued under this Plan will constitute nonqualified stock
options.
2. DEFINITIONS. As used in this Plan, the following definitions apply:
a. "Board" means the Board of Directors of Holding Company.
b. "Common Stock" means Holding Company's common stock, currently
with a par value of $1.00 per share.
c. "Committee" has the meaning set forth in subparagraph 4(a) of
this Plan.
d. "Continuous Status as a Director" means the absence of any
interruption or termination of service as a Director.
e. "Date of Grant" of an Option means the date on which the
Committee makes the determination granting such Option, or
such later date as the Committee may designate. The Date of
Grant shall be specified in the Option agreement.
f. "Director" means any person serving as a member of the Board
of Holding Company or a Subsidiary of Holding Company which is
currently in existence or is hereafter organized or is
acquired by Holding Company.
g. "Exercise Price" has the meaning set forth in subparagraph
4(b)(2) of this Plan.
h. "Holding Company" has the meaning set forth in paragraph 1 of
this Plan.
i. "Option" means a stock option granted under this Plan, which
constitutes a Nonqualified Stock Option.
j. "Optionee" means a Director who receives an Option.
k. "Plan" has the meaning set forth in paragraph 1 of this Plan.
l. "Parent" means any corporation owning at least eighty percent
(80%) of the total voting power of the issued and outstanding
stock of Holding Company, and
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eighty percent (80%) of the total value of the issued and
outstanding stock of Holding Company.
m. "Subsidiary" means any bank or other corporation of which not
less than fifty percent (50%) of the voting shares are held by
Holding Company or a Subsidiary, whether or not such
corporation now exists or is hereafter organized or acquired
by Holding Company or a Subsidiary.
3. STOCK SUBJECT TO OPTIONS.
a. NUMBER OF SHARES RESERVED. The maximum number of shares which
may be optioned and sold under this Plan is 20,000 shares of
the Common Stock of Holding Company (subject to adjustment as
provided in subparagraph 6(j) of this Plan). During the term
of this Plan, Holding Company will at all times reserve and
keep available a sufficient number of shares of its Common
Stock to satisfy the requirements of this Plan.
b. EXPIRED OPTIONS. If any outstanding Option expires or becomes
unexercisable for any reason without having been exercised in
full, the shares of Common Stock allocable to the unexercised
portion of such Option will again become available for other
Options.
4. ADMINISTRATION OF THE PLAN.
a. THE COMMITTEE. The Board will administer this Plan directly,
acting as a Committee of the whole, or if the Board elects, by
a separate Committee appointed by the Board for that purpose
and consisting of at least two non-employee Board members. All
references in the Plan to the "Committee" refers to this
separate Committee, if any is established, or if none is then
in existence, refers to the Board as a whole. Once appointed,
any Committee will continue to serve until otherwise directed
by the Board. From time to time, the Board may increase the
size of the Committee and appoint additional members, remove
members (with or without cause), appoint new members in
substitution, and fill vacancies however caused. The Committee
will select one of its members as chairman, and will hold
meetings at such times and places as the chairman or a
majority of the Committee may determine. At all times, the
Board will have the power to remove all members of the
Committee and thereafter to directly administer this Plan as a
Committee of the whole.
(1) Members of the Committee who are eligible for Options
or who have been granted Options will be counted for
all purposes in determining the existence of a quorum
at any meeting of the Committee and will be eligible
to vote on all matters before the Committee
respecting the granting of Options or administration
of this Plan.
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(2) At least annually, the Committee must present a
written report to the Board indicating the Directors
to whom Options have been granted since the date of
the last such report, and in each case the Date of
Grant, the number of shares optioned, and the
per-share Exercise Price.
b. POWERS OF THE COMMITTEE. All actions of the Committee must be
either (i) by a majority vote of the members of the full
Committee at a meeting of the Committee, or (ii) by unanimous
written consent of all members of the full Committee without a
meeting. All decisions, determinations and interpretations of
the Committee will be final and binding on all persons,
including all Optionees and any other holders or persons
interested in any Options, unless otherwise expressly
determined by a vote of the majority of the entire Board. No
member of the Committee or of the Board will be liable for any
action or determination made in good faith with respect to the
Plan or any Option. Subject to all provisions and limitations
of the Plan, the Committee will have the authority and
discretion:
(1) to determine the Directors to whom Options are to be
granted, the Dates of Grant, and the number of shares
to be represented by each Option;
(2) to determine the price at which shares of Common
Stock are to be issued under an Option, subject to
subparagraph 6(b) of this Plan ("Exercise Price");
(3) to determine all other terms and conditions of each
Option granted under this Plan (including
specification of the dates upon which Options become
exercisable, and whether conditioned on performance
standards, periods of service or otherwise), which
terms and conditions can vary between Options;
(4) to modify or amend the terms of any Option previously
granted, or to grant substitute Options, subject to
subparagraphs 6(l) and 6(m) of this Plan;
(5) to authorize any person or persons to execute and
deliver Option agreements or to take any other
actions deemed by the Committee to be necessary or
appropriate to effect the grant of Options by the
Committee;
(6) to interpret this Plan and to make all other
determinations and take all other actions which the
Committee deems necessary or appropriate to
administer this Plan in accordance with its terms and
conditions.
5. ELIGIBILITY. Options may be granted only to Directors. Granting of
Options under this Plan will be entirely discretionary with the
Committee. Adoption of this Plan will not confer on any Director any
right to receive any Option or Options under this Plan unless and until
said Options are granted by the Committee, in its sole discretion.
Neither the adoption of this Plan nor the granting of any Options under
this Plan will confer upon any
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Director or Optionee any right with respect to continuation of status
as a Director, nor will the same interfere in any way with his or her
right or with the right of the shareholders of Holding Company or any
Subsidiary to terminate his or her status as a Director at any time.
6. TERMS AND CONDITIONS OF OPTIONS. All Options granted under this Plan
must be authorized by the Committee, and must be documented in written
Option agreements in such form as the Committee will approve from time
to time, which agreements must comply with and be subject to all of the
following terms and conditions:
a. NUMBER OF SHARES. Each Option agreement must state the number
of shares subject to Option. Any number of Options may be
granted to a single eligible Director at any time and from
time to time.
b. EXERCISE PRICE AND CONSIDERATION. Each option agreement must
state the Exercise Price for the shares of Common Stock to be
issued under the Option, which price must be not less than the
greater of (1) the fair market value of the Common Stock or
(2) the net book value of the Common Stock at the time of
grant, as is determined by the Committee. The Exercise Price
is payable either (i) in United States dollars upon exercise
of the Options, or (ii) if approved by the Board or Committee,
other consideration including without limitation Common Stock
of Holding Company, services, or other property.
c. TERM OF OPTION. Subject to other applicable provisions of this
Plan including but not limited to subparagraphs 6(g), 6(h) and
6(i), the term of each Option will be determined by the
Committee in its discretion.
d. NON-TRANSFERABILITY OF OPTIONS. No Option may be sold,
pledged, assigned, hypothecated, transferred, or disposed of
in any manner other than by will or by the laws of descent or
distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
e. MANNER OF EXERCISE. An Option will be deemed to be exercised
when written notice of exercise has been given to Holding
Company in accordance with the terms of the Option by the
person entitled to exercise the Option, together with full
payment for the shares of Common Stock subject to said notice.
f. RIGHTS AS SHAREHOLDER. An Optionee shall have none of the
rights of a shareholder with respect to any shares covered by
his or her Option unless and until the Optionee has exercised
such Option and submitted full payment for the shares.
g. DEATH OF OPTIONEE. In the event of the death of an Optionee
who at the time of his or her death was a Director and who had
been in Continuous Status as a Director since the Date of
Grant of the Option, the Option will terminate on the earlier
of (i) one year after the date of death of the Optionee, or
(ii) the expiration date otherwise provided in the Option
agreement, except that if the expiration date
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should occur during the 180-day period immediately following
the Optionee's death, such Option will terminate at the end of
such 180-day period. The Option will be exercisable at any
time prior to such termination by the Optionee's estate, or by
such person or persons who have acquired the right to exercise
the Option by bequest or by inheritance or by reason of the
death of the Optionee.
h. DISABILITY OF OPTIONEE. If an Optionee's status as a Director
is terminated at any time during the Option period by reason
of a disability (within the meaning of Section 22(e)(3) of the
Internal Revenue Code) and if said Optionee had been in
Continuous Status as a Director at all times between the Date
of Grant of the Option and the termination of his or her
status as a Director, his or her Option will terminate on the
earlier of (i) one year after the date of termination of his
or her status as a Director, or (ii) the expiration date
otherwise provided in his or her Option agreement.
i. TERMINATION OF STATUS AS A DIRECTOR.
(1) If an Optionee's status as a Director is terminated
at any time after the grant of an Option to such
Director for any reason other than death or
disability, as provided in subparagraphs 6(g) and
6(h) of this Plan, and excepting if the Director is
removed for cause, as provided in subparagraph (2)
below, such Option will terminate on the earlier of
(i) the same day of the sixth month after the date of
termination of his or her status as a Director, or
(ii) the expiration date otherwise provided in his or
her Option agreement.
(2) If an Optionee is removed as a Director for cause at
any time after the grant of an Option to such
Director, then such Option will terminate on the date
of termination of his or her status as a Director.
For this purpose, cause will be deemed to exist only
if the Board has reasonable grounds to believe that
Holding Company has suffered or will suffer
substantial injury as a result of the gross
negligence or dishonesty of the Director who is
removed.
j. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any
required action by the shareholders of Holding Company, the
number of shares of Common Stock covered by each outstanding
Option, the number of shares of Common Stock available for
grant of additional Options, and the per-share Exercise Price
in each outstanding Option, will be proportionately adjusted
for any increase or decrease in the number of issued shares of
Common Stock resulting from any stock split or other
subdivision or consolidation of shares, the payment of any
stock dividend (but only on the Common Stock) or any other
increase or decrease in the number of such shares of Common
Stock effected without receipt of consideration by Holding
Company; PROVIDED, however, that conversion of any convertible
securities of Holding Company will not be deemed to have been
"effected without
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receipt of consideration." Such adjustment will be made by the
Committee, whose determination in that respect will be final,
binding and conclusive.
(1) Except as otherwise expressly provided in this
subparagraph 6(j), no Optionee will have any rights
by reason of any stock split or the payment of any
stock dividend or any other increase or decrease in
the number of shares of Common Stock, and no issuance
by Holding Company of shares of stock of any class,
or securities convertible into shares of stock of any
class, will affect the number of shares or Exercise
Price subject to any Options, and no adjustments in
Options will be made by reason thereof. The grant of
an Option under this Plan will not affect in any way
the right or power of Holding Company to make
adjustments, reclassifications, reorganizations or
changes of its capital or business structure.
k. CONDITIONS UPON ISSUANCE OF SHARES. Shares of Common Stock
will not be issued with respect to an Option granted under
this Plan unless the exercise of such Option and the issuance
and delivery of such shares pursuant thereto will comply with
all applicable provisions of law, including applicable federal
and state securities laws. As a condition to the exercise of
an Option, Holding Company may require the person exercising
such Option to represent and warrant at the time of exercise
that the shares of Common Stock are being purchased only for
investment and without any present intention to sell or
distribute such Common Stock if, in the opinion of counsel for
Holding Company, such a representation is required by any of
the aforementioned relevant provisions of law.
l. CORPORATE SALE TRANSACTIONS. In the event of the merger or
reorganization of Holding Company with or into any other
corporation, the sale of substantially all of the assets of
Holding Company, or a dissolution or liquidation of Holding
Company (collectively, "Sale Transaction"), (1) all
outstanding Options that are not then fully exercisable will
become exercisable upon the date of closing of any sale
transaction or such earlier date as the Committee may fix; and
(2) the Committee may, in the exercise of its sole discretion,
terminate all outstanding Options as of a date fixed by the
Committee. In such event, however, the Committee must notify
each Optionee of such action in writing not less than sixty
(60) days prior to the termination date fixed by the
Committee, and each Optionee must have the right to exercise
his or her Option prior to said termination date.
m. SUBSTITUTE STOCK OPTIONS. In connection with an internal
reorganization of Holding Company (e.g., formation of a
holding company), the Committee is authorized, in its
discretion, to substitute for any unexercised Option, a new
option for shares of the resulting entity's stock.
n. TAX COMPLIANCE. Holding Company, in its sole discretion, may
take actions reasonably believed by it to be required to
comply with any local, state, or federal tax laws relating to
the reporting or withholding of taxes attributable to the
grant
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or exercise of any Option or the disposition of any shares of
Common Stock issued upon exercise of an Option, including, but
not limited to (i) withholding from any Optionee exercising an
Option a number of shares of Common Stock having a fair market
value equal to the amount required to be withheld by Holding
Company under applicable tax laws, and (ii) withholding from
any form of compensation or other amount due an Optionee, or
holder, of shares of Common Stock issued upon exercise of an
Option any amount required to be withheld by Holding Company
under applicable tax laws. Withholding or reporting will be
considered required for purposes of this subparagraph if the
Committee, in its sole discretion, so determines.
o. OTHER PROVISIONS. Option agreements executed under this Plan
may contain such other provisions as the Committee will deem
advisable.
7. TERM OF THE PLAN. This Plan will become effective and Options may be
granted upon the Plan's approval by the Board, subject to shareholder
approval. Unless sooner terminated as provided in subparagraph 7(a) of
this Plan, this Plan will terminate on the tenth (10th) anniversary of
its effective date. Options may be granted at any time after the
effective date and prior to the date of termination of this Plan.
a. AMENDMENT OR EARLY TERMINATION OF THE PLAN. The Board may
terminate this Plan at any time. The Board may amend this Plan
at any time and from time to time in such respects as the
Board may deem advisable, except that, without approval of the
shareholders, no revision or amendment will increase the
number of shares of Common Stock subject to this Plan other
than in connection with an adjustment under subparagraph 6(j)
of this Plan.
b. EFFECT OF AMENDMENT OR TERMINATION. No amendment or
termination of this Plan will affect Options granted prior to
such amendment or termination, and all such Options will
remain in full force and effect notwithstanding such amendment
or termination.
8. SHAREHOLDER APPROVAL. Adoption of this Plan will be subject to
ratification by affirmative vote of shareholders owning at least a
majority of the outstanding Common Stock of Holding Company at a duly
convened meeting.
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CERTIFICATE OF ADOPTION
I certify that the foregoing Director Stock Option Plan was approved by
the Board of Directors of Mountain Bank Holding Company on February 18, 1999.
I further certify that the foregoing Director Stock Option Plan was
approved by the shareholders of Mountain Bank Holding Company on April 13, 1999.
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Sheila Marie Brumley, Secretary
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