<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
CENTRAL COAST BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BRONSON, BRONSON & McKINNON LLP -- GLENN T. DODD, ESQ.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
<PAGE> 2
CENTRAL COAST BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MONDAY, SEPTEMBER 23, 1996
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Central Coast Bancorp will be
held at 301 Main Street, Salinas, California, on Monday, August 23, 1996 at 5:30
p.m. for the following purposes:
1. To elect directors.
2. To approve the Amended and Restated 1994 Stock Option Plan.
3. To approve Indemnification Agreements.
4. To approve the appointment of Deloitte & Touche LLP as
independent public accountants for the 1996 fiscal year.
5. To transact such other business as may properly come before
the Meeting.
The names of the Board of Directors' nominees to be directors of
Central Coast Bancorp are set forth in the accompanying Proxy Statement and
incorporated herein by reference.
Article III, Section 16 of the Bylaws of Central Coast Bancorp provides
for the nomination of directors in the following manner:
Nomination for election of members of the Board of Directors may be
made by the Board of Directors or by any shareholder of any outstanding class of
capital stock of the corporation entitled to vote for the election of directors.
Notice of intention to make any nominations shall be made in writing and shall
be delivered or mailed to the President of the corporation not less than 21 days
nor more than 60 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 shareholders, such notice of intention to nominate shall be
mailed or delivered to the President of the corporation not later than the close
of business on the tenth day following the day on which the notice of meeting
was mailed; provided further that if notice of such meeting is sent by
third-class mail as permitted by Section 6 of these By-Laws, no notice of
intention to make nominations shall be required. Such notification shall contain
the following information to the extent known to the notifying shareholder:
(a) the name and address of each proposed nominee;
(b) the principal occupation of each proposed nominee;
(c) the number of shares of capital stock of the corporation owned
by each proposed nominee;
(d) the name and residence address of the notifying shareholder;
and
(e) the number of shares of capital stock of the corporation owned
by the notifying shareholder.
Nominations not made in accordance herewith may, in the discretion of the
Chairman of the meeting, be disregarded and upon the Chairman's instructions,
the inspectors of election can disregard all votes cast for each such nominee. A
copy of this paragraph shall be set forth in a notice to shareholders of any
meeting at which Directors are to be elected.
<PAGE> 3
Only shareholders of record at the close of business on August 23, 1996
are entitled to notice of and to vote at this Meeting and at any postponements
or adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
THOMAS A. SA, SECRETARY
Salinas, California
August 30, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE> 4
Mailed to Shareholders
on or about August 30, 1996
CENTRAL COAST BANCORP
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is being furnished to the shareholders of Central
Coast Bancorp, a California corporation (the "Corporation"), in connection with
the solicitation of proxies by the Board of Directors for use at the Annual
Meeting of Shareholders to be held at 301 Main Street, Salinas, California on
September 23, 1996 at 5:30 p.m. (the "Meeting"). Only shareholders of record on
August 23, 1996 (the "Record Date") will be entitled to notice of the Meeting
and to vote at the Meeting. At the close of business on the Record Date, the
Corporation had outstanding and entitled to be voted 2,830,923 shares of its no
par value Common Stock (the "Common Stock").
Shareholders are entitled to one vote for each share held, except that
for the election of directors each shareholder has cumulative voting rights and
is entitled to as many votes as shall equal the number of shares held by such
shareholder multiplied by the number of directors to be elected. Each
shareholder may cast all his or her votes for a single candidate or distribute
such votes among any or all of the candidates as he or she chooses. However, no
shareholder shall be entitled to cumulate votes (in other words, cast for any
candidate a number of votes greater than the number of shares of stock held by
such shareholder) unless such candidate's name has been placed in nomination
prior to the voting and the shareholder has given notice at the Meeting prior to
the voting of the shareholder's intention to cumulate his or her votes. If any
shareholder has given such notice, all shareholders may cumulate their votes for
candidates in nomination. Prior to voting, an opportunity will be given for
shareholders or their proxies at the Meeting to announce their intention to
cumulate their votes. The proxy holders are given, under the terms of the proxy,
discretionary authority to cumulate votes on shares for which they hold a proxy.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke that proxy prior to its exercise. The proxy may be
revoked prior to the Meeting by delivering to the Secretary of the Corporation
either a written instrument revoking the proxy or a duly executed proxy bearing
a later date. The proxy may also be revoked by the shareholder by attending and
voting at the Meeting.
Votes cast by proxy or in person at the Meeting will be counted by the
Inspectors of Election for the Meeting. The Inspectors will treat abstentions
and "broker non-votes" (shares held by brokers or nominees as to which
instructions have not been received from the beneficial owners or persons
entitled to vote and the broker or nominee does not have discretionary voting
power under applicable rules of the stock exchange or other self regulatory
organization of which the broker or nominee is a member) as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. Abstentions and "broker non-votes" will not be counted as shares voted
for purposes of determining the outcome of any matter as may properly come
before the Meeting.
Unless otherwise instructed, each valid proxy returned which is not
revoked will be voted in the election of directors "FOR" the nominees of the
Board of Directors and "FOR" proposals No. 2, 3 and 4 as described in this Proxy
Statement, and, at the proxy holders' discretion, on such other matters, if any,
which may come before the Meeting (including any proposal to postpone or adjourn
the Meeting).
The Corporation will bear the entire cost of preparing, assembling,
printing and mailing proxy materials furnished
<PAGE> 5
by the Board of Directors to shareholders. Copies of proxy materials will be
furnished to brokerage houses, fiduciaries and custodians to be forwarded to the
beneficial owners of the Common Stock. In addition to the solicitation of
proxies by use of the mail, some of the officers, directors and regular
employees of the Corporation and its subsidiaries, Bank of Salinas and Cypress
Coast Bank (the "Subsidiaries"), may (without additional compensation) solicit
proxies by telephone or personal interview, the costs of which will be borne by
the Corporation.
The information contained in this Proxy Statement includes information
regarding Cypress Coast Bank, its President, and certain Cypress Coast Bank
directors who were appointed to the Corporation's Board of Directors as a result
of the merger transaction whereby Cypress Coast Bank became a wholly-owned
subsidiary of the Corporation effective May 31, 1996.
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of the Record Date August 23, 1996, no individual known to the Corporation
owned more than five percent (5%) of the outstanding shares of its Common Stock
except as described below.
<TABLE>
<CAPTION>
==========================================================================================================================
Percentage
Name and Address Amount and Nature of Class
Title of of Beneficial of Beneficial Beneficially
Class Owner(1) Ownership Owned
==========================================================================================================================
<S> <C> <C> <C>
Common Stock, Estate of Adele O'Grady(2) 169,864 5.59%
No Par Value
- --------------------------------------------------------------------------------------------------------------------------
Common Stock, Robert L. Meyer(3) 206,487 6.80%
No Par Value
==========================================================================================================================
</TABLE>
(1) The address for all persons listed is c/o Central Coast Bancorp, 301
Main Street, Salinas, California, 93901.
(2) Director O'Grady resigned from the board on November 21, 1995, and
subsequently died on December 19, 1995.
(3) All shares are held by Mr. Meyer and his spouse as trustees of the
Robert L. Meyer and Patricia J. Meyer Trust dated July 28, 1977.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of August 23, 1996,
concerning the equity ownership of the Corporation's directors and the executive
officers named in the Summary Compensation Table, and directors and executive
officers as a group. Unless otherwise indicated in the notes to the table, each
director and executive officer listed below possesses sole voting power and sole
investment power for the shares of the Corporation's Common Stock listed below.
All of the shares shown in the following table are owned both of record and
beneficially except as indicated in the notes to the table. The Corporation has
only one class of shares outstanding, Common Stock.
<TABLE>
<CAPTION>
Name and Address(1) of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class(2)
- -------------- ---------------------- -------------------- ----------
<S> <C> <C> <C>
Common Stock,
No Par Value Andrew E. Ausonio 76,033 (3) 2.50%
Common Stock,
No Par Value C. Edward Boutonnet 86,578 (4) 2.85%
Common Stock,
No Par Value Bradford G. Crandall 58,583 (5) 1.93%
Common Stock,
No Par Value Roger G. Emanuel 58,583 (6) 1.93%
Common Stock,
No Par Value Alfred _P. Glover 10,597 --
Common Stock,
No Par Value Richard C. Green 85,128 (7) 2.78%
Common Stock,
No Par Value Duncan L. McCarter 44,420 (8) 1.45%
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
Name and Address(1) of Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class(2)
- -------------- ---------------------- -------------------- ----------
<S> <C> <C> <C>
Common Stock,
No Par Value John F. McCarthy 22,214 (9) --
Common Stock,
No Par Value Robert M.
Mraule, D.D.S., M.D. 53,780 (10) 1.76%
Common Stock,
No Par Value Esther Kiefer-Miyamoto -- --
Common Stock,
No Par Value C. Frederick Rowden 11,835 (11) --
Common Stock,
No Par Value Thomas A. Sa 1,100 (12) --
Common Stock,
No Par Value Louis A. Souza 8,044 --
Common Stock,
No Par Value Nick Ventimiglia 22,217 (13) --
Common Stock,
No Par Value Glenn R. Woerz -- --
All directors 539,112 (14) 17.74%
and executive officers
of the Corporation
as a group (15 persons)
</TABLE>
(1) The address for all persons listed is c/o Central Coast Bancorp, 301
Main Street, Salinas, California, 93901.
(2) Includes shares of Common Stock subject to stock options exercisable
immediately. Unless otherwise indicated, beneficial ownership
represents less than one percent of the total class of shares
outstanding.
(3) Includes 36,722 shares of Common Stock held by Mr. Ausonio and his
spouse as trustees of the Ausonio Family Trust dated October 4, 1982,
14,817 shares of Common Stock held by Mr. Ausonio and his spouse as
trustees of the Barsotti Grandchildren Trust dated December 20, 1976
and 24,494 shares of Common Stock subject to stock options exercisable
immediately.
(4) Includes 31,925 shares of Common Stock owned jointly with Patricia
Boutonnet, 3,009 shares as custodian, 4,038 shares of Common Stock held
by Mr. Boutonnet as trustee of Boutonnet Farms Money Purchase Trust
dated October 26, 1982, 1,247 shares held by Mr. Boutonnet as trustee
of Boutonnet Farms Money Purchase Pension Plan and Trust dated November
1, 1980, 12,692 shares of Common Stock held by Mr. Boutonnet as trustee
of Boutonnet Farms, Inc. Money Purchase Pension Trust dated November 1,
1976 and 24,494 shares of Common Stock subject to stock options
exercisable immediately.
(5) Includes 34,089 shares of Common Stock held by Mr. Crandall and his
spouse as trustees of the Bradford G. Crandall and Lynne O. Crandall
Trust dated August 8, 1983 and 24,494 shares of Common Stock subject to
stock options exercisable immediately.
(6) Includes 34,089 shares of Common Stock held by Mr. Emanuel and his
spouse as trustees of the Roger G. Emanuel and Mable A. Emanuel Trust
dated January 29, 1982 and 24,494 shares of Common Stock subject to
stock options exercisable immediately.
(7) Includes 394 shares of Common Stock owned by Mr. Green's spouse, 1,916
shares of Common Stock held by Mr. Green as custodian for his son and
24,494 shares of Common Stock subject to stock options exercisable
immediately.
(8) Includes 19,964 shares of Common Stock held by Mr. McCarter and his
spouse as trustees of the Duncan L. McCarter and Leslie P. McCarter
Trust dated January 25, 1990, and 24,494 shares of Common Stock subject
to stock options exercisable immediately.
(9) Includes 1,386 shares of Common Stock owned jointly with Mr. McCarthy's
spouse and 20,828 shares of Common Stock subject to stock options
exercisable immediately.
(10) Includes 24,494 shares of Common Stock subject to stock options
exercisable immediately.
(11) Includes 11,404 shares of Common Stock subject to stock options
exercisable immediately.
(12) Includes 1,100 shares of Common Stock subject to stock options
exercisable immediately.
(13) Includes 2,420 shares of Common Stock subject to stock options
exercisable immediately.
(14) Includes 207,210 shares of Common Stock subject to stock options
exercisable immediately.
<PAGE> 8
PROPOSAL NO. 1
ELECTION OF DIRECTORS OF THE CORPORATION
The number of directors authorized for election at this meeting is ten
(10). Management has nominated the ten (10) incumbent directors to serve as the
Corporation's directors. Each director will hold office until the next Annual
Meeting of Shareholders and until his successor is elected and qualified.
All proxies will be voted for the election of the ten (10) nominees
listed below (all of whom are incumbent directors) recommended by the Board of
Directors unless authority to vote for the election of any directors is
withheld. The nominees receiving the highest number of affirmative votes of the
shares entitled to be voted for them shall be elected as directors. Abstentions
and votes cast against nominees have no effect on the election of directors. If
any of the nominees should unexpectedly decline or be unable to act as a
director, their proxies may be voted for a substitute nominee to be designated
by the Board of Directors. The Board of Directors has no reason to believe that
any nominee will be become unavailable and has no present intention to nominate
persons in addition to or in lieu of those named below.
The following table sets forth certain information as of the Record
Date, August 23, 1996, with respect to those persons nominated by the Board of
Directors for election as directors, as well as all executive officers. The
Corporation knows of no arrangements, including any pledge by any person of
securities of the Corporation, the operation of which may, at a subsequent date,
result in a change in control of the Corporation. There are no arrangements or
understandings by which any of the executive officers or directors of either the
Corporation or the Subsidiaries were selected. There is no family relationship
between any of the directors or executive officers.
Name Age Position
- ---- --- --------
Andrew E. Ausonio 65 Director of the Corporation and of Bank
of Salinas since 1994, and 1982,
respectively. Director of Cypress Coast
Bank since 1996.
C. Edward Boutonnet 56 Director of the Corporation and of Bank
of Salinas since 1994, and 1982,
respectively.
Bradford G. Crandall 61 Director of the Corporation and of Bank
of Salinas since 1994, and 1982,
respectively. Director of Cypress Coast
Bank since 1996.
Roger G. Emanuel 76 Director of the Corporation and of Bank
of Salinas since 1994, and 1982,
respectively.
Alfred P. Glover 65 Director of the Corporation and of Bank
of Salinas since 1996. Director of
Cypress Coast Bank since 1988.
Richard C. Green 57 Director of the Corporation and of Bank
of Salinas since 1994, and 1982,
respectively.
Duncan L. McCarter 49 Director of the Corporation and of Bank
of Salinas since 1994, and 1982,
respectively.
<PAGE> 9
Name Age Position
- ---- --- --------
John F. McCarthy 53 Executive Vice President and Chief
Operating Officer of the Corporation and
of Bank of Salinas since December 1994,
and 1988, respectively.
Robert M. Mraule, M.D. 46 Director of the Corporation and of Bank
of Salinas since 1994, and 1982,
respectively.
C. Frederick Rowden 51 Director and President of Cypress Coast
Bank since 1992.
Thomas A. Sa 35 Senior Vice President, Chief Financial
Officer and Secretary of the Corporation
and Bank of Salinas since 1995 and
Cypress Coast Bank since 1996.
Louis A. Souza 68 Director of the Corporation and Bank of
Salinas since 1996. Director of Cypress
Coast Bank since 1988.
Nick Ventimiglia 54 Chairman, President and Chief Executive
Officer of the Corporation since December
1994. Chairman of Bank of Salinas since
1994. President and Chief Executive
Officer of Bank of Salinas since 1982.
The following is a brief account of the business experience for a minimum of
five years of each director and executive officer listed above in addition to
positions indicated.
Andrew E. Ausonio Organizer and Former Chairman of the Board of
Directors, Bank of Salinas; President, Ausonio
Construction, Inc., general contractor; Owner,
Ausonio Rentals and Aladin Properties, rental
property companies.
C. Edward Boutonnet Organizer, Bank of Salinas; Partner and General
Manager, California Artichoke and Vegetable Growers
Corporation, Sea Mist Farms, and Boutonnet Farms,
Inc.
Bradford G. Crandall President, E.B. Stone & Son, Inc., wholesale
nursery supply firm.
Roger G. Emanuel President and principal owner, Russell-Roger, Inc.,
operator of McDonald's restaurant franchises.
Alfred P. Glover Owner, Glover Enterprises, a real estate
development firm.
Richard C. Green Retired businessman and former President, Green's
Camera Shop, Inc.
Duncan L. McCarter Pharmacist and President, Care Pharmacies, Inc.;
President, Care Home Medical Services, Inc.
John F. McCarthy Vice President and Regional Manager, Hibernia Bank,
Salinas from 1986 to 1988; Vice President and
Regional Manager, Crocker National Bank from 1980
to 1986.
C. Frederick Rowden Director and President of Cypress Coast Bank since
1992. Director and President of Monterey County
Bank prior to 1992.
Robert M. Physician, Dentist, Oral and Maxillofacial Surgeon.
Mraule, D.D.S., M.D.
Thomas A. Sa Senior Vice President and Chief Financial Officer,
South Valley Bancorporation and South Valley
National Bank from 1994 to 1995. Vice President and
Chief Financial Officer, South Valley
Bancorporation and South Valley National Bank from
1992 to 1994. Assistant Vice President and
Comptroller, South Valley
<PAGE> 10
Bancorporation and South Valley National Bank from
1989 to 1992.
Louis A. Souza Owner, Louis A. Souza Construction, a general
contractor.
Nick Ventimiglia Organizer, Director, President and Chief Executive
Officer, Bank of Salinas from 1982 to 1994.
None of the Directors of the Corporation or the Subsidiaries is a
director of any other company with a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended, or subject to the
requirements of Section 15(d) of such Act or any company registered as an
investment company under the Investment Company Act of 1940, whose common stock
is registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit and Finance Committees, whose common members include Andrew
E. Ausonio, C. Edward Boutonnet (Chairman), Alfred P. Glover, Duncan L. McCarter
and Robert M. Mraule (Vice Chairman), oversees the Corporation's and
Subsidiaries' independent public accountants, analyzes the results of internal
and regulatory examinations and monitors the financial and accounting
organization and reporting. The Audit Committee met two (2) times and the
Finance Committee met thirteen (13) times in 1995.
The Board of Directors has not established a nominating committee. The
full Board of Directors performs the functions of a nominating committee with
responsibility for considering appropriate candidates for election as directors.
The Premises, Compensation and Performance Committee, whose members
include Andrew E. Ausonio (Chairman), C. Edward Boutonnet (Vice Chairman),
Duncan L. McCarter and Robert M. Mraule, oversees physical premises used in
daily operations and reviews and establishes the compensation paid to officers
and employees and employee benefits. The Premises, Compensation and Performance
Committee met four (14) times in 1995.
The Investment/CRA/Shareholder Relations Committee, whose members
include Andrew E. Ausonio, Roger G. Emanuel, Richard C. Green (Vice Chairman),
and Robert M. Mraule (Chairman), has responsibility for reviewing and
administering the Corporation's investment portfolio, maintenance of shareholder
relations, and administering the Corporation's Community Reinvestment Act
objectives and goals. The Investment/CRA/Shareholder Relations Committee met
four (4) times in 1995.
The Loan Committee, whose members include Andrew E. Ausonio, C. Edward
Boutonnet (Vice Chairman), Bradford G. Crandall (Chairman), Roger G. Emanuel,
Alfred P. Glover, Richard C. Green and Louis A. Souza, has responsibility for
establishing loan policy and approving loans which exceed certain dollar limits.
The Loan Committee met twenty-four (24) times in 1995.
The Marketing Committee, whose members include Andrew E. Ausonio, Roger
G. Emanuel (Vice Chairman), Richard C. Green, Duncan L. McCarter (Chairman) and
Louis A. Souza, has responsibility for administering the Corporation's marketing
policies and marketing programs. The Marketing Committee met twelve (12) times
in 1995.
During 1995, the Corporation's Board of Directors held fourteen (14)
meetings. All Directors attended at least seventy-five percent (75%) of the
aggregate of the total number of meetings of the Board of Directors and the
number of meetings of the committees on which they served.
COMPENSATION OF DIRECTORS
The fees paid to directors during 1995 were based on a range which
resulted in the Chairman of the Board receiving $1,500 per month, the
Loan Committee Chairman receiving $1,400 per month, the Chairmen of the Audit,
Investment/CRA/ Shareholder Relations, Marketing, and the Premises, Compensation
and Performance Committees each receiving $1,300 per month, and all other
Directors receiving $1,200 per month. In addition, members of the Loan Committee
received $200 per month and all other Directors received $100 per month for
attendance at committee meetings. The total amount of fees paid to all Directors
as a group for attendance at Board and committee meetings was $160,700 in 1995.
<PAGE> 11
EXECUTIVE COMPENSATION
Set forth below is the summary compensation paid or accrued during the
three years ended December 31, 1995 to Nick Ventimiglia, John F. McCarthy,
Thomas A. Sa, C. Frederick Rowden, Esther Kiefer-Miyamoto and Glenn Woerz, as
executive officers of the Corporation and the Subsidiaries.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
=============================================================================================================
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Year Salary Bonus Other Restricted Securities LTIP All Other
Principal Position ($)(1) ($)(2) Annual Stock Under- Payouts Compensation
Compen- Award(s) lying ($) ($)(5)
ation ($) Options/
($) SARs (#)
(4)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nick Ventimiglia, 1995 $175,000 $96,969 -- -- 11,000 -- $1,848
Chairman, President 1994 175,000 80,804 -- -- -- -- 1,438
and Chief Executive 1993 170,000 60,000 -- -- -- -- 1,798
Officer
- -------------------------------------------------------------------------------------------------------------
John F. McCarthy, 1995 118,079 64,638 -- -- -- -- $1,847
Executive Vice 1994 116,050 53,868 -- -- -- -- 1,412
President and Chief 1993 107,333 40,000 -- -- -- -- 1,610
Operating Officer
- -------------------------------------------------------------------------------------------------------------
Thomas A. Sa, 1995 40,193 21,200 -- -- 5,000 -- --
Senior Vice 1994 -- -- -- -- -- -- --
President, Chief 1993 -- -- -- -- -- -- --
Financial Officer and
Corporate Secretary
- -------------------------------------------------------------------------------------------------------------
C. Frederick 1995 93,031 -- -- -- -- -- --
Rowden, President, 1994 87,364 -- -- -- 11,404 -- --
Cypress Coast Bank 1993 90,522 -- -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------
Esther Kiefer- 1995 80,506 23,028 -- -- -- -- 1,686
Miyamoto, Senior 1994 86,333 25,151 -- -- -- -- 1,457
Vice President, 1993 81,213 17,445 -- -- -- -- 1,799
Cashier/Controller
- -------------------------------------------------------------------------------------------------------------
Glenn R. Woerz 1995 76,097 27,473 -- -- -- -- 1,620
Senior Vice 1994 74,833 22,893 -- -- -- -- 1,024
President, Deposit 1993 69,598 20,812 -- -- -- -- 591
Administrator
=============================================================================================================
</TABLE>
(1) Amounts shown include cash and non-cash compensation earned and received by
executive officers as well as amounts earned but deferred at the election of
those officers under the 401(k) Plan. The salary paid to Thomas A. Sa in
1995, was the amount earned in the period from the date of initial
employment, August 7, 1995 through December 31, 1995.
(2) Amounts indicated as bonus payments were earned for performance during 1995,
1994 and 1993.
(3) No executive officer received perquisites or other personal benefits in
excess of the lesser of $50,000 or 10% of each such officer's total annual
salary and bonus during 1995, 1994 or 1993.
(4) The Corporation has a 1994 Stock Option Plan (the "1994 Plan") pursuant to
which options may be granted to directors, and key, full-time salaried
officers and employees of the Corporation and the Subsidiaries. Options
granted under the 1994 Plan are either incentive options or non-statutory
options. Options granted under the 1994 Plan become exercisable in
accordance with a vesting schedule established at the time of grant. Vesting
may not extend beyond ten years from the date of grant. Options granted
under the 1994 Plan are adjusted to protect against dilution in the event of
certain changes in the Corporation's capitalization, including stock splits
and stock dividends. All options granted to the named executive officers
were incentive stock options and have an exercise price equal to the fair
market value of the Corporation's Common Stock on the date of grant.
(5) Amounts shown for each named executive officer are 401(k) matching
contributions for the year indicated.
<PAGE> 12
The following table sets forth certain information concerning the grant
of stock options under the Corporation's 1994 Option Plan to the named executive
officers during the fiscal year ended December 31, 1995.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
=====================================================================================================================
Individual Grants
- ---------------------------------------------------------------------------------------------------------------------
Percent of
Total
Options/
Number of SARs
Securities Granted
underlying to
option/SARs Employees Exercise of
Granted in Fiscal Base Price Expiration
(#) Year ($/Sh) Date
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nick Ventimiglia
President and 11,000 51% $14 4/11/05
Chief Executive Officer
- ---------------------------------------------------------------------------------------------------------------------
John F. McCarthy
Executive Vice President and - - - -
Chief Operating Officer
- ---------------------------------------------------------------------------------------------------------------------
Thomas A. Sa
Senior Vice President, 5,000 23% $16 8/21/05
Chief Financial Officer and
Corporate Secretary
- ---------------------------------------------------------------------------------------------------------------------
C. Frederick Rowden
President, Cypress Coast Bank -0- -0- -0- -0-
- ---------------------------------------------------------------------------------------------------------------------
Esther Kiefer-Miyamoto
Senior Vice President, -0- -0- -0- N/A
Cashier/Controller
- ---------------------------------------------------------------------------------------------------------------------
Glenn R. Woerz
Senior Vice President -0- -0- -0- N/A
and Deposit Administrator
- ---------------------------------------------------------------------------------------------------------------------
=====================================================================================================================
</TABLE>
The following table sets forth the number of shares of Common Stock
acquired by each of the named executive officers upon the exercise of stock
options during fiscal 1995, the net value realized upon exercise, the number of
shares of Common Stock represented by outstanding stock options held by each of
the named executive officers as of August 23, 1996 and the value of such options
based on the closing price of the Corporation's Common Stock and certain
information concerning unexercised options under the Plan.
<PAGE> 13
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION/SAR VALUE
===========================================================================================================================
(a) (b) (c) (d) (e)
- ---------------------------------------------------------------------------------------------------------------------------
Number of
Securities
Underlying Value of
Unexercised Unexercised In-
Options/SARs at the-Money
FY-End (#) Options/SARs at
FY-End ($)
- ---------------------------------------------------------------------------------------------------------------------------
Shares Value
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (3) ($) (1) Unexercisable Unexercisable (1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nick Ventimiglia 0 0 2,420/9,680 $4,400/17,600
- ---------------------------------------------------------------------------------------------------------------------------
John F. McCarthy 0 0 20,828/8,932 203,173/87,127
- ---------------------------------------------------------------------------------------------------------------------------
Thomas A. Sa 0 0 0/5,500 0/0
- ---------------------------------------------------------------------------------------------------------------------------
C. Frederick Rowden 0 0 11,404/0 129,093/0
- ---------------------------------------------------------------------------------------------------------------------------
Esther Kiefer-Miyamoto 12,337 $170,127 0/0 0/0
- ---------------------------------------------------------------------------------------------------------------------------
Glenn R. Woerz 6,546 $90,269 0/0 0/0
===========================================================================================================================
</TABLE>
(1) The aggregate value has been determined based upon the average of the bid
and asked prices for the Corporation's Common Stock at exercise or year-end,
minus the exercise price.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
There are no employment contracts or change in control arrangements
with any of the executive officers of the Corporation named in the Summary
Compensation Table, except C. Frederick Rowden who entered into an employment
agreement with Cypress Coast Bank ("Cypress") dated December 22, 1994, amended
on September 19, 1995, with a term commencing January 1, 1995 through June 30,
1998, pursuant to which Mr. Rowden received (i) annual salary of $90,000,
subject to increases equal to five-percent of his then base salary on October 1,
1995 and a minimum of five-percent of his then base salary on June 30, 1996 and
June 30, 1997; (ii) bonus entitlement for the six month period ending June 20,
1996 in an amount equal to 12-1/2% of the excess of the Bank's net income after
taxes in excess of a ten percent return on beginning equity for specified
periods; (iii) an automobile for business and personal use; (iv) grant of
options to acquire 20,000 shares of Cypress common stock; (v) group life, health
and disability insurance coverage; and (vi) vacation and other standard employee
benefits. In the event of termination upon a change in control (as defined in
the Agreement), Mr. Rowden would receive the remaining compensation he would
otherwise be entitled to receive absent the change in control.
CHANGES IN CONTROL
The corporation knows of no arrangements, including any pledge by any
person of securities of the Corporation, the operation of which may, at a
subsequent date, result in a change of control of the Corporation.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, executive officers and ten percent or more shareholders
of the Corporation's equity securities, to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes of ownership of
the Corporation's equity securities. Officers, directors and ten percent or more
shareholders are required by SEC regulation to furnish the Corporation with
copies of all Section 16(a) forms they file. To the Corporation's knowledge,
based solely on review of the copies of such reports furnished to the
Corporation and written representations that no other reports were required,
during the fiscal year ended December 31, 1995, all Section 16(a) filing
requirements applicable to its executive officers, directors and beneficial
owners of ten percent or
<PAGE> 14
more of the Corporation's equity securities appear to have been met.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
There have been no transactions, or series of similar transactions,
during 1995, or any currently proposed transaction, or series of similar
transactions, to which the Corporation or the Subsidiaries was or is to be a
party, in which the amount involved exceeded or will exceed $60,000 and in which
any director of the Corporation or the Subsidiaries, executive officer of the
Corporation or the Subsidiaries, any shareholder owning of record or
beneficially 5% or more of the Corporation's Common Stock, or any member of the
immediate family of any of the foregoing persons, had, or will have, a direct or
indirect material interest.
CERTAIN BUSINESS RELATIONSHIPS
There were no business relationships during 1995 of the type requiring
disclosure under Item 404(b) of Regulation S-K.
INDEBTEDNESS OF MANAGEMENT
The Corporation, through the Subsidiaries, has had, and expects in the
future to have banking transactions in the ordinary course of its business with
many of the Corporation's directors and officers and their associates, including
transactions with corporations of which such persons are directors, officers or
controlling shareholders, on substantially the same terms (including interest
rates and collateral) as those prevailing for comparable transactions with
others. Management believes that in 1995 such transactions comprising loans did
not involve more than the normal risk of collectibility or present other
unfavorable features. Loans to executive officers of the Corporation and the
Subsidiaries are subject to limitations as to amount and purposes prescribed in
part by the Federal Reserve Act, as amended, and the regulations of the Federal
Deposit Insurance Corporation.
PROPOSAL NO. 2
AMENDMENT OF 1994 STOCK OPTION PLAN
Shareholders are being asked to approve the Amended and Restated Central Coast
Bancorp 1994 Stock Option Plan (the "Plan"). On August _, 1996, the Board of
Directors amended the Plan (i) to increase the number of shares reserved for
issuance under the Plan from 203,123 to ________ shares of Central Coast Bancorp
common stock, (ii) to delete the provision of the Plan requiring that the Plan
be administered by a committee composed solely of two or more "disinterested
directors" (as such term was defined by former Securities and Exchange
Commission Rule 16b-3 ("Old Rule 16b-3")) with respect to officers who are
subject to Section 16 of the Exchange Act, (iii) to delete the provisions of the
Plan providing for the automatic nondiscretionary grant of options to
non-employee directors of the Corporation, (iv) to amend the Plan to permit
non-employee directors to be granted options in the discretion of either the
full Board of Directors or a committee composed solely of "non-employee
directors" (as such term is defined by new Securities and Exchange Commission
Rule 16b-3 ("New Rule 16b-3")), and (v) to make certain other revisions to the
Plan to reflect New Rule 16b-3. Assuming the Plan is approved by the
shareholders, the grant of options under the Plan and the issuance of shares
pursuant to the exercise of options is subject to obtaining an amendment to the
permit previously issued by the California Department of Corporations to reflect
the amended terms of the Plan. A copy of the Plan, as amended, is attached
hereto as Exhibit A. The summary of the Plan below is qualified in its entirety
by reference to Exhibit A.
PURPOSES
The purposes of the Plan are to attract and retain qualified
individuals to serve as employees of the Corporation and its affiliates and to
serve as non-employee directors of the Corporation, and to provide additional
incentive to such persons by encouraging them to acquire a proprietary interest
in the Corporation, and in general, to promote the success of the Corporation's
business.
SHARES SUBJECT TO THE PLAN
The Plan has been amended, subject to shareholder approval, to increase
the aggregate number of shares available
<PAGE> 15
for issuance pursuant to the exercise of options granted under the Plan from
203,123 shares to __________ shares of the Corporation's common stock. Should
any option granted under the Plan expire or become unexercisable for any reason
without having been exercised in full, the shares subject to the portion of the
option not so exercised will become available for subsequent option grants. The
Plan permits shares which have been delivered by the optionee upon exercise of
an option to pay the option exercise price or applicable withholding taxes, or
which have been withheld from the shares otherwise due upon exercise of an
option to pay applicable withholding taxes, to become available under the Plan
for future grants of options to eligible persons under the Plan. Prior to the
Plan amendment such shares could only become available for the grant of options
to eligible persons who were not subject to Section 16 of the Exchange Act.
ADMINISTRATION
The Plan permits the full Board to administer the Plan, except that the
Board may delegate its administration of the Plan to one or more committees of
the Board (the "Administrator"). Prior to the Plan amendment, the Plan required
that it be administered by a committee appointed by the Board composed of
directors who were considered "disinterested persons" as such term was defined
in Old Rule 16b-3, with respect to officers of the Corporation. As amended, the
Plan permits, but does not require administration by a committee composed solely
of at least two "non-employee directors" as defined by New Rule 16b-3 with
respect to officers and directors who are subject to Section 16 of the Exchange
Act. Before its amendment, the Plan provided for the automatic grant of options
to non-employee directors, the receipt of which did not disqualify directors
from being considered "disinterested persons" under Old Rule 16b-3. New Rule
16b-3 does not require such disinterested directors to administer the Plan with
respect to persons who are subject to Section 16. The amended Plan now permits
instead the discretionary grant of options to non-employee directors, subject to
the directors' fiduciary duties to refrain from self-dealing. It is expected
that the Stock Option Committee of the Board will administer the Plan with
respect to officers and non-employee directors who are subject to Section 16 of
the Exchange Act. The Premises, Compensation and Performance Committee currently
functions as the Stock Option Committee and it is currently composed of four
non-employee directors. They are Andrew E. Ausonio (Chairman), C. Edward
Boutonnet (Vice Chairman), Duncan L. McCarter and Robert M. Mraule.
The Administrator of the Plan has full authority, subject to the
provisions of the Plan, to determine the eligible individuals who are to receive
options under the Plan, the number of shares to be covered by each granted
option, the date or dates upon which the option is to become exercisable and the
maximum term for which the option is to remain outstanding. The Administrator
also has the authority to determine whether the granted option is to be a
nonstatutory option ("NSO") or incentive stock option ("ISO") under the federal
tax laws and to establish the rules and regulations for proper plan
administration. The Administrator also has the authority to amend outstanding
options granted under the Plan with the consent of the optionee.
ELIGIBILITY
Employees of the Corporation and its affiliates, persons who become
employees of the Corporation or its affiliates within thirty days after an
option is granted, and non-employee directors of the Corporation are eligible
for the grant of discretionary options under the amended Plan. As of August
__1996, there were approximately ___ employees of the Corporation and its
affiliates and ______ non-employee directors of the Corporation who were
eligible under the Plan. No participant under the Plan may receive options
during the term of the Plan to purchase an aggregate of more than ______ shares.
Before its amendment, the Plan provided that no participant under the Plan could
receive options during the term of the Plan to purchase an aggregate of more
than 50,780 shares.
The former automatic grant provisions of the Plan provided that each
non-employee director who was elected at the 1994 annual meeting of shareholders
at which the Plan was approved and thereafter each new non-employee director who
is first elected or appointed to the Board of Directors shall receive a NSO
option to purchase 10,000 shares of the Corporation's common stock with a ten
year term, cumulatively exercisable to the extent of 33 and 1/3% of the shares
subject to the option on the first, second and third anniversaries of the date
of grant, becoming 100% exercisable on the third anniversary of the date of
grant. The amended Plan now permits options to be granted to any non-employee
director for a number of shares and containing such terms, subject to the terms
of the Plan, as the Administrator may determine.
Since all options to be granted under the amended Plan are subject to
the discretion of the Administrator, it is not possible to determine the amount
of options that will be granted in the future to eligible persons. The following
table sets forth the options that were granted under the Plan during the last
fiscal year to (i) the executive officers named in the Summary Compensation
Table appearing elsewhere in this Proxy Statement, (ii) all current executive
officers of the Corporation as a group, and (iii) all non-employee directors of
the Corporation as a group, and (iv) all employees including officers who are
not executive officers.
<PAGE> 16
<TABLE>
<CAPTION>
1994 STOCK OPTION PLAN
- ----------------------------------------------------------------------------------------------------------------------
Name and Position
- ----------------------------------------------------------------------------------------------------------------------
Exercise Price Number of Shares
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nick Ventimiglia $14.00 11,000
Chairman, President and Chief
Executive Officer
- ----------------------------------------------------------------------------------------------------------------------
Thomas A. Sa $16.00 5,000
Senior Vice President Chief
Financial Officer and Corporate
Secretary
- ----------------------------------------------------------------------------------------------------------------------
Executive Officer $14.00 to $16.00 16,000
Group
- ----------------------------------------------------------------------------------------------------------------------
Non-employee Director Group -- --
- ----------------------------------------------------------------------------------------------------------------------
Employee Group (including non- $14.00 to $16.00 21,000
executive officers)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
EXERCISE PRICE AND EXERCISABILITY
The Administrator has the authority to determine the term of each
option granted under the Plan; provided, however, that the maximum period during
which any option may remain exercisable may not exceed ten years. However, an
option granted to an eligible person who owns stock possessing more than 10% of
the voting power of the Corporation's common stock, may not have a term longer
than five years from the date of grant. Options issued under the Plan may either
be immediately exercisable for the full number of shares purchasable thereunder
or may become exercisable in cumulative increments over a period of months or
years as determined by the Administrator; provided, however, that no option may
vest at a rate of less than 20% of the shares subject to the option during the
five year period from the date of grant.
The exercise price of all options granted under the Plan may not be
less than 100% of the fair market value of the Corporation's common stock on the
date of grant; provided, however, that the exercise price of an option granted
to an eligible person who owns stock possessing more than 10% of the voting
power of the Corporation's common stock may not be less than 110% of the fair
market value of the stock on the date of grant. The exercise price may be paid
in cash or in shares of common stock valued at fair market value on the exercise
date. Options may also be exercised through a same-day sale program, pursuant to
which a designated brokerage firm would effect an immediate sale of the shares
purchased under the option and pay over to the Corporation, out of the sales
proceeds available on the settlement date, sufficient funds to cover the
exercise price for the purchased shares plus applicable withholding taxes. For
purposes of establishing the exercise price and for all other valuation purposes
under the Plan, the fair market value per share of common stock on any relevant
date will mean, where there is a public market for the Corporation's common
stock, the mean of the bid and asked prices (or the closing price if listed on a
stock exchange or the National Association of Securities Dealers Automated
Quotation ("NASDAQ") National Market System) of the Corporation's common stock
for the date of grant, as reported in the Wall Street Journal (or, if not so
reported, as otherwise reported by NASDAQ or the National Quotation Bureau). If
such information is not available for the date of grant, then such information
for the last preceding date for which such information is available will be
considered as the fair market value. On August ____, 1996, the mean of the bid
and asked prices for the Corporation's common stock quoted by the National
Association of Securities Dealers Automated Quotation ("NASDAQ") OTC Bulletin
Board was $______ per share.
In order to satisfy applicable withholding taxes that arise upon
exercise of an option, optionees may elect to deliver to the Corporation, or
have the Corporation withhold from the shares otherwise due, a sufficient number
of shares having an aggregate fair market value equal to the tax due, in
compliance with rules and procedures established by the Administrator.
<PAGE> 17
SHAREHOLDER RIGHTS AND TRANSFERABILITY OF OPTIONS
No optionee is to have any shareholder rights with respect to his or
her option shares until such optionee has exercised the option, paid the
exercise price and been issued a stock certificate for the purchased shares.
Options are not assignable or transferable other than by will or by the laws of
inheritance, and may be exercised, during the optionee's lifetime, only by the
optionee.
TERMINATION OF EMPLOYMENT OR DIRECTOR STATUS
If an optionee ceases to be employed by the Corporation or any of its
affiliates (or if a non-employee director ceases to be a director of the
Corporation) for any reason other than disability or death, the option will
terminate upon the earlier of (i) the date which is three months after the date
of termination (or such longer period of time as the Administrator may
determine) or (ii) the original expiration date of the option. If an optionee's
employment is terminated by the Corporation for cause as defined in the Plan,
the option will terminate upon the earlier of (i) the date which is thirty days
after termination, or (ii) the original expiration date of the option. In any
event, the optionee may only exercise the option within the relevant time period
after termination to the extent the optionee was entitled to exercise the option
on the date of termination.
If an optionee ceases to be employed by the Corporation or any of its
affiliates (or if a non-employee director ceases to be a director of the
Corporation) due to the optionee's disability or death, the option will
terminate upon the earlier of (i) the date which is twelve months after the date
of termination (or such longer period of time as the Administrator may
determine) or (ii) the original expiration date of the option. The optionee or
the optionee's estate, as applicable, may, within such time period, exercise the
option to the extent the option was exercisable at the date of termination.
ADJUSTMENT UPON CHANGES IN CAPITALIZATION OR OTHER CORPORATE EVENT
Subject to any required action by the shareholders of the Corporation,
the number of shares of common stock covered by each outstanding option, and the
number of shares of common stock which have been authorized for issuance under
the Plan but as to which no options have yet been granted, as well as the price
per share of common stock covered by each such outstanding option, will be
proportionately adjusted for any increase or decrease in the number of issued
shares of common stock resulting from a stock split, reverse stock split, stock
dividend, recapitalization, combination or reclassification of the common stock,
or any other increase or decrease in the number of issued shares of common stock
effected without receipt of consideration by the Corporation; provided, however,
that conversion of any convertible securities of the Corporation will not be
deemed to have been "effected without receipt of consideration." Such adjustment
will be made by the Board of Directors, whose determination in that respect will
be final, binding and conclusive. Upon the dissolution or liquidation of the
Corporation, options then outstanding under the Plan shall terminate. Upon the
sale of the Corporation, or a merger or consolidation in which the Corporation
is not the surviving entity, outstanding options will terminate shortly before
consummation of the transaction, unless the successor has agreed to assume
outstanding options or to substitute equivalent options to purchase its shares
of stock.
AMENDMENT AND TERMINATION OF THE PLAN
The Plan became effective upon its adoption by the Board of Directors
and will continue in effect until March 21, 2004 unless sooner terminated by the
Board of Directors. The Board of Directors may amend or terminate the Plan from
time to time as the Board deems advisable, subject to shareholder approval to
the extent required by Internal Revenue Code Section 422 or other applicable
law, rule or regulation. The Plan has been amended to delete the requirement
that shareholder approval of certain amendments be obtained to comply with Old
Rule 16b-3 as New Rule 16b-3 no longer requires shareholder approval of such
plan amendments. No such amendment or termination will affect outstanding
options without the consent of the affected optionees.
FEDERAL TAX CONSEQUENCES
Options granted under the Plan may be either ISOs which satisfy the
requirements of Section 422 of the Internal Revenue Code or NSOs which do not
meet such requirements. The federal income tax treatment for the two types of
options differs as follows:
ISOs. No taxable income is recognized by an optionee at the time of the
option grant, and no taxable income is generally recognized at the time the
option is exercised. However, the excess of the fair market value of the common
stock received upon the exercise of an ISO over the exercise price is includable
in the employee's alternative minimum taxable income ("AMTI") and may be subject
to the alternative minimum tax ("AMT"). For AMT purposes only, the basis of the
common stock received upon exercise of an ISO is increased by the amount of such
excess.
An optionee will recognize taxable income in the year in which the
purchased shares acquired upon exercise of
<PAGE> 18
an ISO are sold or otherwise disposed. For federal tax purposes, dispositions
are divided into two categories: (i) qualifying and (ii) disqualifying. An
optionee will make a qualifying disposition of the purchased shares if the sale
or disposition is made more than two years after the grant date of the option
and more than one year after the exercise date. If an optionee fails to satisfy
either of these two holding periods prior to sale or disposition, then a
disqualifying disposition of the purchased shares will result.
Upon a qualifying disposition, an optionee will recognize long-term
capital gain or loss in an amount equal to the difference between the amount
realized upon the sale or other disposition of the purchased shares and the
exercise price paid for the shares except that for AMT purposes, the gain or
loss would be the difference between the amount realized upon the sale or other
disposition of the purchased shares and the employee's basis increased as
described above. If there is a disqualifying disposition of the shares, then the
optionee will generally recognize ordinary income to the extent of the lesser of
the difference between the exercise price and (i) the fair market value of the
common stock on the date of exercise, or (ii) the amount realized on such
disqualifying disposition. Any additional gain recognized upon the disposition
will be capital gain. If the amount realized is less than the exercise price,
the optionee will, in general, recognize a capital loss. If the optionee makes a
disqualifying disposition of the purchased shares, then the Corporation will be
entitled to an income tax deduction, for the taxable year in which such
disposition occurs, to the extent the optionee recognizes ordinary income. In no
other instance will the Corporation be allowed a deduction with respect to the
optionee's disposition of the purchased shares.
NSOs. No taxable income is recognized by an optionee upon the grant of
a NSO. The optionee will in general recognize ordinary income, in the year in
which the option is exercised, equal to the excess of the fair market value of
purchased shares on the date of exercise over the exercise price paid for such
shares, and the optionee will be required to satisfy the tax withholding
requirements applicable to such income. Upon a subsequent sale of the purchased
shares, the optionee will generally recognize either a capital gain or a capital
loss depending on whether the amount realized is more or less than the exercise
price.
The Corporation will be entitled to a business expense deduction equal
to the amount of ordinary income recognized by the optionee with respect to an
exercised NSO. The deduction will in general be allowed for the taxable year of
the Corporation in which ordinary income is recognized by the optionee in
connection with the acquisition of the option shares.
VOTE REQUIRED
The amendments to the Plan are subject to approval by the Corporation's
shareholders. The affirmative vote of the holders of a majority of the shares of
the Corporation's common stock present in person or represented by proxy and
entitled to vote at the Annual Meeting is required to approve the adoption of
the amended Plan provided that the number of affirmative votes equals at least a
majority of the shares constituting the required quorum. Abstentions will be
counted for purposes of determining the number of shares entitled to vote on the
proposal and will have the effect of a vote against the proposal. Although
broker non-votes with respect to Proposal No. 2 will be counted to determine the
presence or absence of a quorum, broker non-votes with respect to this proposal,
if any, will not be counted in determining the number of shares entitled to vote
on this proposal.
The Board of Directors has approved the amendmends to the Plan as
described above and recommends that shareholders vote FOR approval of the
amendments to the 1994 Stock Option Plan.
<PAGE> 19
PROPOSAL NO. 3
APPROVAL OF INDEMNIFICATION AGREEMENTS
CALIFORNIA LAW
The California General Corporation Law permits a California
corporation to adopt a provision in its articles of incorporation reducing or
eliminating the liability of a director to the corporation or its shareholders
for monetary damages for breach of the fiduciary duty of care, provided that
such liability does not arise from certain proscribed conduct (including
intentional misconduct and breach of the duty of loyalty). The Law in this
regard relates only to actions brought by shareholders on behalf of the
corporation (i.e., "derivative actions") and does not apply to claims brought by
outside parties. The Law also permits a corporation to include a provision in
its articles of incorporation allowing the corporation to include in its bylaws,
and in agreements between the corporation and its directors, officers and other
agents, provisions expanding the scope of indemnification beyond that
specifically provided under California law.
ARTICLE AND BYLAW PROVISIONS
The Corporation's Articles of Incorporation and Bylaws
implement the limitation upon personal liability of directors for monetary
damages for a breach of such directors' fiduciary duty of care and allow the
Corporation to expand the scope of its indemnification of directors, officers
and other agents to the fullest extent permitted by California law. Attached
hereto as Exhibits B and C are copies of Articles V and VI of the Corporation's
Articles of Incorporation and Section 48 of the Corporation's Bylaws, which
implement the limitation upon director liability and permit expanded
indemnification.
In order to provide full protection, the Corporation's Board
of Directors has determined that it is advisable to implement Indemnification
Agreements for the Corporation's directors, officers and other agents and has
approved the use of Indemnification Agreements. The Corporation's Board of
Directors believes that the Indemnification Agreements will serve the best
interests of the Corporation and its shareholders by increasing the scope of
protection provided and by strengthening the Corporation's ability to attract
and retain the services of knowledgeable and experienced persons to serve as
directors, officers and other agents of the Corporation.
The Corporation's shareholders are requested to approve and
ratify the proposed Indemnification Agreements between the Corporation and its
current and future directors, and such current and future officers and other
agents as the directors may designate, in substantially the form attached hereto
as Exhibit D.
OTHER PROTECTION
INDEMNIFICATION UNDER STATE STATUTES AND BYLAWS. The Corporation is
subject to the California General Corporation Law, which provides a detailed
statutory framework covering indemnification of any officer, director or other
agent of a corporation who is made or threatened to be made a party to any legal
proceeding by reason of his or her service on behalf of the Corporation. Such
law provides that indemnification against expenses actually and reasonably
incurred in connection with any such proceeding shall be made to any such person
who has been successful "on the merits" in the defense of any such proceeding,
but does not require indemnification in any other circumstance. The Law provides
that a corporation may indemnify any agent of the corporation, including
officers and directors, against expenses, judgments, fines, settlements and
other amounts actually and reasonably incurred in a third party proceeding
against such person by reason of his or her services on behalf of the
corporation, provided the person acted in good faith and in a manner he or she
reasonably believed to be in the best interests of the corporation. The Law
further provides that in derivative suits the corporation may indemnify such a
person against expenses incurred in such a proceeding, provided such person
acted in good faith and in a manner he or she reasonably believed to be in the
best interests of the corporation and its shareholders. Indemnification is not
available in derivative actions (i) for amounts paid or expenses incurred in
connection with a matter that is settled or otherwise disposed of without court
approval or (ii) with respect to matters for which the agent shall have been
adjudged to be liable to the corporation unless the court shall determine that
such person is entitled to indemnification.
The Law permits the advancing of expenses incurred in
defending any proceeding against a corporate agent by reason of his or her
service on behalf of the corporation upon the giving of a promise to repay any
such sums in the event it is later determined that such person is not entitled
to be indemnified. Finally, the California General Corporation Law provides that
the indemnification provided by the statute is not exclusive of other rights to
which those seeking indemnification may be entitled, by bylaw, agreement or
otherwise, to the extent additional rights are authorized in a corporation's
articles of incorporation. The Law further permits a corporation to procure
insurance on behalf of its directors, officers and agents against any liability
incurred by any such individual, even if a corporation would not otherwise have
the power under applicable law to indemnify the director, officer or agent for
such expenses. The Articles and Bylaws of the
<PAGE> 20
Corporation implement the applicable statutory framework and provide for
indemnification of directors, officers and other agents to the fullest extent
under the Law.
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. The Corporation presently
maintains a policy of directors' and officers' liability insurance. However,
there is no assurance that such coverage will continue to be available with such
breadth of coverage as the Corporation deems advisable and at reasonable
expense. Accordingly, the Board of Directors believes that it serves the
Corporation's interest to supplement any coverage which the Corporation may
maintain in the future by agreeing by contract to indemnify directors and
officers to the fullest extent permitted under applicable Law.
INDEMNIFICATION AGREEMENTS
The proposed Indemnification Agreements attempt to provide to
the Corporation's current and future directors, and such current and future
officers and other agents of the Corporation as the directors may designate, the
maximum indemnification allowed under applicable law and under the Corporation's
Articles of Incorporation and Bylaws. The Indemnification Agreements provide
indemnification which expands the scope of indemnification provided by Section
317 of the California General Corporation Law (the "Statute"). It has not yet
been determined, however, to what extent the indemnification expressly permitted
by Statute may be expanded, and therefore the validity and scope of
indemnification provided by the Indemnification Agreements may be subject to
future judicial interpretation.
Any award of indemnification to a director, officer or other
agent would come directly from the assets of the Corporation, thereby affecting
a shareholder's investment. It should be noted that if the Indemnification
Agreements are approved by the shareholders, they will by their terms apply to
conduct of the Corporation's directors, officers and other agents occurring
prior to the effective date of such Agreements.
The Indemnification Agreements set forth a number of
procedural and substantive matters which are not addressed or are addressed in
less detail in the Statute, including the following:
1. The Indemnification Agreements establish a standard of conduct
that the person to be indemnified must have acted "in a manner
such person did not believe to be contrary to the best
interests of the Corporation." This standard is an expansion
of the standard under the Statute that the person must have
acted "in a manner such person reasonably believed to be in
the best interests of the Corporation."
2. The Indemnification Agreements establish the presumption that
the indemnified party has met the applicable standard of
conduct required for indemnification. In addition, an
arbitrator may make the determination that indemnification is
proper in any arbitration proceeding in which such
determination is pending. The Statute requires a finding in
each specific case by the board of directors, independent
legal counsel or the shareholders that the applicable standard
of conduct has been met.
3. The Indemnification Agreements provide that litigation
expenses shall be advanced to an indemnified party at his
request provided that he undertakes to repay the amount
advanced if it is ultimately determined that he is not
entitled to indemnification for such expenses. The Statute
provides that such expenses may be advanced against such an
undertaking upon authorization by the board of directors.
4. The Indemnification Agreements explicitly provide that in a
derivative suit the indemnified party will be entitled to
indemnification against amounts paid in settlement, to the
fullest extent permitted by law, where the indemnified party
meets the applicable standard of conduct. As noted above,
indemnification of any such amount would be paid out of the
Corporation's funds. The Statute does not provide for such
indemnification without court approval. The enforceability of
the provisions in the Indemnification Agreements providing for
settlement payments in derivative suits has not been
judicially interpreted by the courts and may be subject to
public policy limitations. The Board of Directors has not
sought a legal opinion as to the enforceability of these
provisions because of the lack of judicial interpretation of
the Statute to date.
5. In the event the Corporation does not pay a requested
indemnification amount, the Indemnification Agreements allow
the indemnified party to contest this determination by
petitioning a court to make an independent determination of
whether such party is entitled to indemnification under the
Indemnification Agreements. In the event of such a contest,
the burden of proving that the indemnified party did not meet
the applicable standard of conduct will be on the Corporation.
If the Corporation fails to establish that the applicable
standard of conduct has not been met, the indemnified party
will be entitled to indemnification, which will include
reimbursement for expenses incurred by the indemnified party
in such contest in establishing the right to indemnification.
The Statute does not set forth any procedure for contesting a
corporation's determination of a party's right to
indemnification or establish which party bears
<PAGE> 21
the burden of proof with respect to a challenge to such a
determination.
6. The Indemnification Agreements explicitly provide for partial
indemnification of costs and expenses in the event that an
indemnified party is not entitled to full indemnification
under the terms of the Indemnification Agreements. The Statute
does not specifically address this issue. It does, however,
provide that to the extent that an indemnified party has been
successful on the merits, he shall be entitled to such
indemnification.
7. The Indemnification Agreements automatically incorporate
future changes in the laws which increase the protection
available to the indemnitee. Such changes will apply to the
Corporation without further shareholder approval and may
further impair shareholders' rights or subject the
Corporation's assets to risk of loss in the event of large
indemnification claims. Each Indemnification Agreement
constitutes a binding, legal obligation of the Corporation,
and may not be amended without the consent of the individual
who is protected by such Indemnification Agreement.
8. The Indemnification Agreements explicitly provide that actions
by an indemnified party serving at the request of the
Corporation as a director, officer or agent of any employee
benefit plan, corporation, partnership, joint venture or other
enterprise, owned or controlled by the Corporation, shall be
covered by the indemnification. The Statute provides that a
corporation may so indemnify such parties. It should be noted
that by agreeing by contract to indemnify such parties, the
Corporation may be exposed to liability for actions of an
entity over which it may not exercise control, which liability
could adversely affect the Corporation's financial position.
The proposed Indemnification Agreements, together with the
limitation on the directors' liability and the indemnification provided by the
Article and Bylaw provisions, reduce significantly the number of instances in
which directors might be held liable to the Corporation for monetary damages for
breach of their fiduciary duties. Therefore, it should be noted that the current
directors of the Corporation have a direct personal interest in the approval of
the Indemnification Agreements.
THE FOREGOING DISCUSSION OF THE INDEMNIFICATION AGREEMENTS IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FORM OF INDEMNIFICATION AGREEMENT ATTACHED TO THIS
PROXY STATEMENT AS EXHIBIT D, WHICH YOU ARE URGED TO READ AND CONSIDER
CAREFULLY.
CERTAIN PROCEEDINGS. The Corporation is not aware of any material
pending or threatened legal proceedings against any of its directors or officers
which may result in a claim for indemnification.
INDEMNIFICATION FOR LIABILITIES UNDER THE SECURITIES ACT OF 1933
The Securities and Exchange Commission has expressed its
opinion that indemnification of directors, officers and controlling persons of a
corporation against liabilities arising under the Securities Act of 1933, as
amended (the "Act"), is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Corporation of expenses incurred
or paid by a director, officer or controlling person of the Corporation in the
successful defense of any such action, suit or proceeding) is asserted by a
director, officer or controlling person in connection with securities which have
been registered, the Corporation will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
VOTE REQUIRED TO APPROVE THE INDEMNIFICATION AGREEMENTS
Section 310 of the California General Corporation Law provides
that no contract between a corporation and one or more of its directors is
either void or voidable because such director or directors are parties to such
contract if the material facts as to the transaction and as to such directors'
interests are disclosed or known to the shareholders and such contract is
approved by the affirmative vote of a majority of the shares voting at the
meeting, with the shares owned by the interested directors not entitled to vote
thereon, or the contract has been approved by a disinterested majority of the
Board of Directors. If the contract has not been so approved, the contract is
not void or voidable if the person asserting the validity of the contract
sustains the burden of proving that the contract was just and reasonable to the
corporation at the time it was authorized.
Although the Corporation believes that the form of
Indemnification Agreement is just and reasonable to
<PAGE> 22
the Corporation, and that shareholder approval may not therefore be required
to validate the Indemnification Agreements, the Corporation believes that it is
appropriate to submit the Indemnification Agreements to the shareholders for
their consideration. If the Indemnification Agreements are approved by the
shareholders, they will not be void or voidable and the Corporation's
shareholders may not later assert a claim that the Indemnification Agreements
are invalid due to improper authorization; however, the shareholders may
challenge the validity of the Indemnification Agreements on other grounds. If
the Indemnification Agreements are not approved by the shareholders, the
Corporation may reconsider the implementation of such agreements. Whether or not
the shareholders approve the Indemnification Agreements, the Board of Directors
may in the future approve other forms of Indemnification Agreements which may or
may not be submitted to shareholders for approval. If such agreements were
implemented in the absence of shareholder approval, the invalidity of such
agreements could thereafter be asserted by any shareholder. In such an instance,
the person asserting the validity of the contracts bears the burden of proving
that they were just and reasonable to the Corporation at the time they were
authorized.
Approval of the Indemnification Agreements will require the
affirmative vote of a majority of the shares of the Corporation's Common Stock
voting in person and by proxy at the Meeting, provided, that the number of
affirmative votes equals at least a majority of the shares constituting the
required quorum. Abstentions will be counted for purposes of determining the
number of shares entitled to vote on the proposal and will have the effect of a
vote against the proposal. Although broker non-votes with respect to this
proposal will be counted to determine the presence or absence of a quorum,
broker non-votes with respect to this proposal, if any, will not be counted in
determining the number of shares entitled to vote on this proposal.
The Board of Directors has approved the Indemnification
Agreements and recommends that shareholders vote FOR the approval of the
Indemnification Agreements.
PROPOSAL NO. 4
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP served the Corporation and the Bank
as independent public accountants for the 1995 fiscal year. Deloitte & Touche
LLP has no interest, financial or otherwise, in the Corporation or the Bank. The
services rendered by Deloitte & Touche LLP during the 1995 fiscal year were
audit services, consultation in connection with various accounting matters and
preparation of corporation income tax returns. The Boards of Directors of the
Corporation approved each professional service rendered by Deloitte & Touche LLP
during the 1995 fiscal year, and the possible effect of each such service on the
independence of that firm was considered by the Boards of Directors before such
service was rendered.
Representatives of Deloitte & Touche LLP are expected to be present at
the Meeting and will have an opportunity to make a statement if they so desire
and to answer appropriate questions.
The Board of Directors of the Corporation has selected Deloitte &
Touche LLP to serve as the independent public accountants for the 1996 fiscal
year and recommend that the shareholders vote FOR approval to ratify the
selection of Deloitte & Touche LLP as the Corporation's independent public
accountants for the 1996 fiscal year.
ANNUAL REPORT
The Annual Report of the Corporation containing audited financial
statements for the fiscal year ended December 31, 1995 is included in this
mailing to shareholders.
FORM 10-K
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, IS AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO
THOMAS A. SA, SECRETARY, CENTRAL COAST BANCORP, 301 MAIN STREET, SALINAS,
CALIFORNIA, 93901.
<PAGE> 23
SHAREHOLDERS' PROPOSALS
Next year's Annual Meeting of Shareholders will be held on May 23,
1997. The deadline for shareholders to submit proposals for inclusion in the
Proxy Statement and form of Proxy for the 1997 Annual Meeting of Shareholders is
________, 1997. All proposals should be submitted by Certified Mail - Return
Receipt Requested, to Thomas A. Sa, Secretary, Central Coast Bancorp, 301 Main
Street, Salinas, California, 93901.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the Meeting, but if such matters are properly presented to the Meeting,
proxies solicited hereby will be voted in accordance with the judgment of the
persons holding such proxies. All shares represented by duly executed proxies
will be voted at the Meeting in accordance with the terms of such proxies.
CENTRAL COAST BANCORP
Salinas, California
August 30, 1996 By:_______________________
Thomas A. Sa
Secretary
<PAGE> 24
EXHIBIT A
AMENDED AND RESTATED CENTRAL COAST BANCORP
1994 STOCK OPTION PLAN
TABLE OF CONTENTS
Page
1. PURPOSE 1
2. ADMINISTRATION 1
3. ELIGIBILITY 2
4. THE SHARES 2
5. EXERCISE PRICE, DURATION, EXERCISABILITY
AND TERMINATION OF OPTIONS 3
6. ADDITIONAL TERMS AND CONDITIONS OF OPTIONS 5
7. ADJUSTMENT OF, AND CHANGES IN, THE SHARES 7
8. AMENDMENT AND TERMINATION OF THE PLAN 7
9. EFFECTIVENESS OF THE PLAN 8
10. INFORMATION TO OPTIONEES 8
11. PRIVILEGES OF STOCK OWNERSHIP, SECURITIES LAW
COMPLIANCE 8
12. NOTICE OF SALE 8
13. INDEMNIFICATION 8
<PAGE> 25
AMENDED AND RESTATED CENTRAL COAST BANCORP
1994 STOCK OPTION PLAN
1. PURPOSE
The purpose of this Central Coast Bancorp 1994 Stock Option Plan (the
"Plan") is to provide a method whereby those key employees and nonemployee
directors of Central Coast Bancorp and its affiliates (hereinafter collectively
referred to as the "Corporation"), who are primarily responsible for the
management and growth of the Corporation's business and who are presently making
and are expected to make substantial contributions to the Corporation's future
management and growth, may be offered incentives in addition to those presently
available, and may be stimulated by increased personal involvement in the
fortunes and success of the Corporation to continue in its service, thereby
advancing the interests of the Corporation and its shareholders.
The word "affiliate," as used in the Plan, means any bank or
corporation in any unbroken chain of banks or corporations beginning or ending
with the Corporation, if at the time of the granting of an option, each such
bank or corporation other than the last in that chain owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other banks or corporations in the chain.
2. ADMINISTRATION
The following provisions shall govern the administration of the Plan:
(a) Subject to paragraph (b) below, the Plan shall be administered by the
Board of Directors or by one or more duly appointed committees of the Board. The
Board of Directors may from time to time remove members from or add members to
the committee. Vacancies on the committee, however caused, shall be filled by
the Board of Directors. The Board of Directors may designate a Chairman and
Vice-Chairman of the committee from among the committee members. Acts of the
committee (i) at a meeting, held at a time and place and in accordance with
rules adopted by the committee, at which a quorum of the committee is present
and acting, or (ii) reduced to and approved in writing by all members of the
committee, shall be the valid acts of the committee.
(b) Discretionary grants of options to officers and directors of the
Corporation, including directors who are not also employees of the Corporation,
may be made by and all discretion with respect to the material terms of such
options may be exercised by either (i) the Board of Directors, or (ii) a duly
appointed committee of the Board composed solely of two or more Non-Employee
Directors having full authority to act in the matter. The term "Non-Employee
Directors" shall have the meaning set forth in Rule 16b-3 as promulgated by the
Securities and Exchange Commission ("SEC") under Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as such rule may be
amended from time to time, and as interpreted by the SEC ("Rule 16b-3").
(c) The Board and any such committee(s) referred to in Section 2(a) or 2(b)
is referred to hereinafter as the "Committee," except where otherwise expressly
provided or where the context requires otherwise.
(e) The Committee shall effect the grant of options under the Plan by
execution of instruments in writing in a form approved by the Committee. Subject
to the express terms and conditions of the Plan, the Committee shall have full
power to construe the Plan and the terms of any option granted under the Plan,
to prescribe, amend and rescind rules and regulations relating to the Plan or
such options and to make all other determinations necessary or advisable for the
Plan's administration, including, without limitation, the power to (i) determine
which persons meet the requirements of Section 3 hereof for selection as
participants in the Plan; (ii) determine to whom of the eligible persons, if
any, options shall be granted under the Plan; (iii) establish the terms and
conditions required or permitted to be included in every option agreement or any
amendments thereto, including whether options to be granted thereunder shall be
"incentive stock options," as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") or nonstatutory stock options not
described in Sections 422(b) or 423(a) of the Code; (iv) specify the number of
shares to be covered by each option; (v) determine the fair market value of
shares of the Corporation's common stock for any purpose under this Plan; (vi)
take appropriate action to amend any option hereunder, provided that no such
action may be taken without the written consent of the affected optionee; and
(vii) make all other determinations deemed necessary or advisable for
administering the Plan. The Committee's determination on the foregoing matters
shall be conclusive.
<PAGE> 26
3. ELIGIBILITY
The persons who shall be eligible to receive the discretionary grant of
options under this Plan shall be those key employees, officers and directors of
the Corporation (including directors of the Corporation who are not also
employees of the Corporation) and persons who became employees of the
Corporation within thirty days of the date of grant of an option ("Eligible
Persons"). Notwithstanding any other provision of this Plan, no Eligible Person
shall be granted options to purchase more than an aggregate of _____________
shares of the Corporation's common stock under this Plan, as adjusted pursuant
to Section 7.
4. THE SHARES
The shares of stock subject to options authorized to be granted under
the Plan shall consist of __________________________ (____________) shares of
the Corporation's no par value common stock (the "Shares"), or the number and
kind of shares of stock or other securities which shall be substituted for such
Shares or to which such Shares shall be adjusted as provided in Section 7
hereof. Upon the expiration or termination for any reason of an outstanding
option under the Plan which has not been exercised in full, all unissued Shares
thereunder shall again become available for the grant of options under the Plan.
Shares of the Corporation's common stock which are (i) delivered by an optionee
in payment of the exercise price of an option pursuant to Section 6(a), or (ii)
delivered by an optionee, or withheld by the Corporation from the shares
otherwise due upon exercise of a nonstatutory stock option, in satisfaction of
applicable withholding taxes as permitted by Section 6(c) shall again become
available for the grant of options under the Plan.
5. EXERCISE PRICE, DURATION, EXERCISABILITY AND TERMINATION OF OPTIONS
Options, in the discretion of the Committee, may be granted at any time
prior to the termination of the Plan to Eligible Persons. Options granted by the
Committee pursuant to the Plan shall be subject to the following terms and
conditions:
(a) Grant of Options. Options granted pursuant to the Plan may be either
incentive stock options or nonstatutory stock options; provided, however, that
Eligible Persons must be employees of the Corporation or its affiliates to be
granted an incentive stock option. If the aggregate fair market value of the
shares issuable upon exercise of incentive stock options which are exercisable
for the first time during any one calendar year under all incentive stock
options held by an optionee exceeds $100,000 (determined at the time of the
grant of the options), such options shall be treated as nonstatutory stock
options to the extent of such excess.
(b) Exercise Price. The purchase price under each option shall not be less
than one hundred percent of the fair market value of the Shares subject thereto
on the date the option is granted; provided, however, that the purchase price of
an option granted to an individual who owns stock possessing more than ten
percent of the total combined voting power of all classes of stock of the
Corporation shall not be less than one hundred ten percent of the fair market
value of the Shares subject thereto on the date the option is granted. For any
purposes under this Plan, fair market value per share shall mean, where there is
a public market for the Corporation's common stock, the mean of the bid and
asked prices (or the closing price if listed on a stock exchange or The Nasdaq
National Market of the Corporation's common stock for the date of grant, as
reported in the Wall Street Journal (or, if not so reported, as otherwise
reported by The Nasdaq Stock Market or the National Quotation Bureau). If such
information is not available for the date of grant, then such information for
the last preceding date for which such information is available shall be
considered as the fair market value.
(c) Duration of Options. Each option shall be for a term determined by the
Committee; provided, however, that the term of any option may not exceed ten
years and, provided further, that the term of any incentive stock option granted
to an individual who owns stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Corporation shall not
exceed five years. Each option shall vest in such manner and at such time as the
Committee shall determine and the Committee may accelerate the time of exercise
of any option; provided, however, that no option shall vest for exercise at a
rate of less than twenty percent per year during the five year period following
the date of grant of an option.
(d) Termination of Employment or Director Status. Upon the termination of
an optionee's status as an employee or director of the Corporation, his or her
rights to exercise an option then held shall be only as follows:
<PAGE> 27
DEATH OR DISABILITY: If an optionee's employment or service as
a director is terminated by death or disability, such optionee or such
optionee's qualified representative (in the event of the optionee's mental
disability) or the optionee's estate (in the event of optionee's death) shall
have the right for a period of twelve (12) months (or such longer period as the
Committee may determine at the date of grant or during the term of the option)
following the date of such termination to exercise the option to the extent the
optionee was entitled to exercise such option on the date of such termination;
provided the actual date of exercise is in no event after the expiration of the
term of the option. To the extent the option is not exercised within such period
the option will terminate. An optionee's "estate" shall mean the optionee's
legal representative or any person who acquires the right to exercise an option
by reason of the optionee's death.
CAUSE: If an optionee's employment is terminated because such
optionee is determined by the Board to have committed an act of embezzlement,
fraud, dishonesty, breach of fiduciary duty to the Corporation, or to have
deliberately disregarded the rules of the Corporation which resulted in loss,
damage or injury to the Corporation, or if an optionee makes any unauthorized
disclosure of any of the secrets or confidential information of the Corporation,
induces any client or customer of the Corporation to break any contract with the
Corporation or induces any principal for whom the Corporation acts as agent to
terminate such agency relations, or engages in any conduct which constitutes
unfair competition with the Corporation, or if an optionee is removed from any
office of the Corporation by any bank regulatory agency, the optionee shall have
the right for a period of thirty days to exercise the option to the extent the
option was exercisable on the date of termination; provided that the date of
exercise is in no event after the expiration of the term of the option. To the
extent the option is not exercised within such period the option will terminate.
For the purpose of this paragraph, termination of employment shall be deemed to
occur when the Corporation dispatches notice or advice to the optionee that the
optionee's employment is terminated, and not at the time of optionee's receipt
thereof.
OTHER REASONS: If an optionee's employment or service as a
director is terminated for any reason other than those mentioned above under
"Death or Disability" and "Cause," the optionee may, within three months (or
such longer period as the Committee may determine at the date of grant or during
the term of the option) following such termination, exercise the option to the
extent such option was exercisable on the date of termination, provided the date
of exercise is in no event after the expiration of the term of the option and
provided further that any option which is exercised more than three months
following termination shall be treated as a nonstatutory option whether or not
it was designated as such at the time it was granted. To the extent the option
is not exercised within such period the option will terminate.
6. ADDITIONAL TERMS AND CONDITIONS OF OPTIONS
The following terms and conditions shall apply to all options granted
pursuant to the Plan:
(a) Exercise of Options. To the extent the right to purchase Shares has
vested under an optionee's stock option agreement, options may be exercised from
time to time by delivering payment therefor in cash, certified check, official
bank check, or the equivalent thereof acceptable to the Corporation, together
with written notice to the Secretary of the Corporation, identifying the option
or part thereof being exercised and specifying the number of Shares for which
payment is being tendered. To the extent permitted by an optionee's stock option
agreement, an optionee may also exercise an option by the delivery and surrender
of shares of Corporation common stock which (a) have been owned by the optionee
for at least six months or such other period as the Committee may require; and
(b) have an aggregate fair market value on the date of surrender equal to the
exercise price. In addition, an option may be exercised by delivering to the
Corporation (i) an exercise notice instructing the Corporation to deliver the
certificates for the Shares purchased to a designated brokerage firm and (ii) a
copy of irrevocable instructions delivered to the brokerage firm to sell the
Shares acquired upon exercise of the option and to deliver to the Corporation
from the sale proceeds sufficient cash to pay the exercise price and applicable
withholding taxes arising as a result of the exercise.
The Corporation shall deliver to the optionee, without transfer or
issue tax to the optionee (or other person entitled to exercise the option), at
the principal office of the Corporation, or such other place as shall be
mutually acceptable, a certificate or certificates for such Shares dated the
date the options were validly exercised; provided, however, that the time of
such delivery may be postponed by the Corporation for such period as may be
required for it with reasonable diligence to comply with any requirements of
law.
(b) Transferability of Option and Shares. Each option shall be transferable
only by will or the laws of descent
<PAGE> 28
and distribution and shall be exercisable during the optionee's lifetime only by
the optionee, or in the event of disability, the optionee's qualified
representative. In addition, in order for Shares acquired upon exercise of
incentive stock options to receive the tax treatment afforded such Shares, the
Shares may not be disposed of within two years from the date of the option grant
nor within one year after the date of transfer of such Shares to the optionee.
(c) Withholding. The Corporation shall have the right to condition the
issuance of Shares upon exercise of an option upon payment by the optionee of
any applicable taxes required to be withheld under federal, state or local tax
laws or regulations in connection with such exercise. To the extent permitted in
an optionee's stock option agreement, an optionee may elect to pay such tax by
(i) requesting the Corporation to withhold a sufficient number of Shares from
the total number of Shares issuable upon exercise of the option or (ii)
delivering a sufficient number of shares of Corporation common stock which have
been held by the optionee for at least six months (or such other period as the
Committee may require) to the Corporation. The value of shares withheld or
delivered shall be the fair market value of such shares on the date the exercise
becomes taxable as determined by the Committee. Such an election is subject to
approval or disapproval by the Committee.
(d) Other Terms and Conditions. Options may also contain such other
provisions, which shall not be inconsistent with any of the foregoing terms, as
the Committee shall deem appropriate. No option, however, nor anything contained
in the Plan, shall confer upon any optionee any right to continue in the employ
or in the status as a director of the Corporation, nor limit in any way the
right of the Corporation to terminate an optionee's employment at any time.
7. ADJUSTMENT OF, AND CHANGES IN, THE SHARES
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Corporation, the number of shares of common stock covered by
each outstanding option, and the number of shares of common stock which have
been authorized for issuance under the Plan but as to which no options have yet
been granted, as well as the price per share of common stock covered by each
such outstanding option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of common stock resulting from a stock
split, reverse stock split, stock dividend, recapitalization, combination or
reclassification of the common stock, or any other increase or decrease in the
number of issued shares of common stock effected without receipt of
consideration by the Corporation; provided, however, that conversion of any
convertible securities of the Corporation shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board of Directors, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Corporation of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of common stock
subject to an option.
(b) Dissolution, Liquidation, Sale or Merger. In the event of a proposed
dissolution or liquidation of the Corporation, options outstanding under the
Plan shall terminate immediately before the consummation of such proposed
action. The Board will, in such circumstances, provide written notice to the
optionees of the expected dates of termination of outstanding options and
consummation of the proposed dissolution or liquidation.
In the event of a proposed sale of all or substantially all of the
assets of the Corporation, or the merger of the Corporation with or into another
corporation in a transaction in which the Corporation is not the surviving
corporation, outstanding options may be assumed or equivalent options may be
substituted by the successor corporation (or a parent or subsidiary of the
successor corporation), unless the successor corporation does not agree to
assume the options or to substitute equivalent options. If outstanding options
are not assumed or substituted by equivalent options, all outstanding options
shall terminate immediately before the consummation of such sale or merger
(subject to the actual consummation of the sale or merger) and the Corporation
shall provide written notice to the optionees of the expected dates of
termination of the options and consummation of such transaction. If the
transaction is not consummated, unexercised options shall continue in accordance
with their original terms.
(c) Notice of Adjustments, Fractional Shares. To the extent the foregoing
adjustments relate to stock or securities of the Corporation, such adjustments
shall be made by the Committee, whose determination in that respect shall be
final, binding and conclusive. No right to purchase fractional shares shall
result from any adjustment in options pursuant to this Section 7. In case of any
such adjustment, the shares subject to the option shall be rounded down to the
nearest whole share. Notice of any adjustment shall be given by the Corporation
to
<PAGE> 29
each holder of an option which was in fact so adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of the Plan.
No adjustment shall be made for dividends or other rights for which the
record date is prior to the date of such issuance, except as provided in Section
7 hereof.
Any issue by the Corporation of shares of stock of any class, or
securities convertible into shares of any class, shall not affect the number or
price of shares of common stock subject to the option, and no adjustment by
reason thereof shall be made. The grant of an option pursuant to the Plan shall
not affect in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
8. AMENDMENT AND TERMINATION OF THE PLAN
The Board shall have complete power and authority to terminate or amend
the Plan; provided, however, that the Board shall not, without the approval of
the shareholders of the Corporation, amend the Plan in a manner that requires
shareholder approval for continued compliance with Section 422 of the Code, any
successor rules, or other regulatory authority. Except as provided in Section 7,
no termination, modification or amendment of the Plan may, without the consent
of the optionee to whom such option was previously granted under the Plan,
adversely effect the rights of such optionee. Any consent required by the
preceding sentence may be obtained in any manner deemed appropriate by the
Committee.
The Plan, unless sooner terminated, shall terminate on March 21, 2004,
ten years from the date the Plan was originally adopted by the Board. An option
may not be granted under the Plan after the Plan is terminated.
9. EFFECTIVENESS OF THE PLAN
The Plan became effective upon adoption by the Board of Directors on
March 21, 1994 and was approved by the shareholders of the Corporation at the
1994 annual meeting of shareholders.
10. INFORMATION TO OPTIONEES
The Corporation shall provide to each optionee during the period for
which he or she has one or more outstanding options, copies of all annual
reports and all other information which is provided to shareholders of the
Corporation. The Corporation shall not be required to provide such information
to key employees whose duties in connection with the Corporation assure their
access to equivalent information.
11. PRIVILEGES OF STOCK OWNERSHIP, SECURITIES LAW COMPLIANCE
No optionee shall be entitled to the privileges of stock ownership as
to any Shares not actually issued and delivered to the optionee. The exercise of
any option under the Plan shall be conditioned upon the registration of the
Shares with the SEC and qualification of the options and underlying Shares under
the California securities laws, unless in the opinion of counsel to the
Corporation such registration or qualification is not necessary. The Corporation
shall diligently endeavor to comply with all applicable securities laws before
any options are granted under the Plan and before any Shares are issued pursuant
to the exercise of such options.
12. NOTICE OF SALE
The optionee shall give the Corporation notice of any sale or other
disposition of any Shares acquired upon exercise of an incentive stock option
not more than five days after such sale or disposition.
13. INDEMNIFICATION
To the extent permitted by applicable law in effect from time to time,
no member of the Board or the Committee shall be liable for any action or
omission of any other member of the Board or Committee nor for any act or
omission on the member's own part, excepting only the member's own willful
misconduct or gross negligence. The Corporation shall pay expenses incurred by,
and satisfy a judgment or fine rendered or levied against, a present or former
director or member of the Committee in any action against such person (whether
or
<PAGE> 30
not the Corporation is joined as a party defendant) to impose liability or a
penalty on such person for an act alleged to have been committed by such person
while a director or member of the Committee arising with respect to the Plan or
administration thereof or out of membership on the Committee or by the
Corporation, or all or any combination of the preceding; provided the director
or Committee member was acting in good faith, within what such director or
Committee member reasonably believed to have been within the scope of his or her
employment or authority and for a purpose which he or she reasonably believed to
be in the best interests of the Corporation or its shareholders. Payments
authorized hereunder include amounts paid and expenses incurred in settling any
such action or threatened action. This section does not apply to any action
instituted or maintained in the right of the Corporation by a shareholder or
holder of a voting trust certificate representing shares of the Corporation. The
provisions of this section shall apply to the estate, executor, administrator,
heirs, legatees or devisees of a director or Committee member, and the term
"person" as used in this section shall include the estate, executor,
administrator, heirs, legatees or devisees of such person.
<PAGE> 31
EXHIBIT B
ARTICLE V:
"The liability of the directors of this corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law."
ARTICLE VI:
"This corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California General Corporation Law) for breach of
duty to the corporation and its shareholders through bylaw provisions,
agreements with agents, or otherwise, in excess of the indemnification otherwise
permitted by Section 317 of the California General Corporation Law, subject to
the limits on such excess indemnification set forth in Section 204 of the
California General Corporation Law."
<PAGE> 32
EXHIBIT C
Section 48. Indemnification of Corporate Agents.
"The corporation shall have power to indemnify each of its agents to the
fullest extent permissible by the California General Corporation Law. Without
limiting the generality of the foregoing sentence, the corporation:
(a) is authorized to provide indemnification of agents in excess of that
expressly permitted by section 317 of the California General
Corporation Law for those agents of the corporation for breach of
duty to the corporation and its shareholders, provided, however, that
the corporation is not authorized to provide indemnification of any
agent for any acts or omissions or transactions from which a director
may not be relieved of liability as set forth in the exception to
section 204(a)(10) of the California General Corporation Law or as to
circumstances in which indemnity is expressly prohibited by section
317 of the California General Corporation Law; and
(b) shall have power to purchase and maintain insurance on behalf of any
agent of the corporation against any liability asserted against or
incurred by the agent in such capacity or arising out of the agent's
status as such, whether or not the corporation would have the power
to indemnify the agent against such liability under the provisions of
section 317 of the California General Corporation Law, and shall have
power to advance the expenses reasonably expected to be incurred by
such agent in defending any such proceeding upon receipt of the
undertaking required by subdivision (f) of such section. The term
"agent" used in this section 48 shall have the same meaning as such
term in section 317 of the California General Corporation Law."
<PAGE> 33
EXHIBIT D
INDEMNIFICATION AGREEMENT
Preamble
This Indemnification Agreement (this "Agreement") is made as of this ______
day of ____________, 199__, by and between Central Coast Bancorp, a California
corporation (the "Corporation"), and __________________________________________
("Indemnitee").
Recitals
A. The Corporation and Indemnitee recognize the substantial increase in
corporate litigation in general, subjecting directors, officers and agents to
expensive litigation risks at the same time as the availability and coverage of
liability insurance has been severely limited and may not be available with
acceptable coverage and at a reasonable cost to the Corporation in the future.
B. Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee and other directors,
officers and agents of the Corporation may not be willing to continue to serve
as directors, officers and agents without additional protection.
C. The Corporation desires to attract and retain the services of highly
qualified individuals, such as Indemnitee, to serve as directors, officers and
agents of the Corporation and to indemnify its directors, officers and agents so
as to provide them with the maximum protection permitted by law.
Agreement
Based upon the facts and premises contained in the above Recitals and in
consideration of the mutual promises below, the Corporation and Indemnitee
hereby agree as follows:
1. Indemnification and Expense Advancement.
(a) Action, Etc. Other than by Right of the Corporation. The
Corporation shall indemnify Indemnitee if Indemnitee was or is a party or is
threatened to be made a party to any proceeding (other than an action by or in
the right of the Corporation to procure a judgment in its favor) by reason of
the fact that Indemnitee is or was an Agent of the Corporation, against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in the best
interests of the Corporation and, in the case of a criminal proceeding, has no
reasonable cause to believe the conduct of Indemnitee was unlawful. The
termination of any proceeding by judgment, order, settlement, conviction or upon
a plea of nolo contendere or its equivalent shall not,
<PAGE> 34
of itself, create a presumption that Indemnitee did not act in good faith and in
a manner which Indemnitee reasonably believed to be in the best interests of the
Corporation or that Indemnitee had reasonable cause to believe that Indemnitee's
conduct was unlawful.
(b) Action, Etc., By or in the Right of the Corporation. The Corporation
shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to
be made a party to any threatened, pending or completed action by or in the
right of the Corporation to procure a judgment in its favor by reason of the
fact that Indemnitee is or was an Agent of the Corporation, against expenses
actually and reasonably incurred by Indemnitee in connection with the defense or
settlement of such action if Indemnitee acted in good faith, in a manner
Indemnitee believed to be in the best interests of the Corporation and its
shareholders; except that no indemnification shall be made under this
Subparagraph (b) for any of the following:
(i) In respect of any claim, issue or matter as to which Indemnitee shall
have been adjudged to be liable to the Corporation in the performance
of Indemnitee's duty to the Corporation and its shareholders, unless
and only to the extent that the court in which such proceeding is or
was pending shall determine upon application that, in view of all the
circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnity for the expenses which such court shall
determine;
(ii) Of amounts paid in settling or otherwise disposing of a pending
action without court approval; or
(iii) Of expenses incurred in defending a pending action which is settled
or otherwise disposed of without court approval.
(c) Determination of Right of Indemnification. Any indemnification under
Subparagraphs (a) and (b) shall be made by the Corporation only if authorized in
the specific case, upon a determination that indemnification of Indemnitee is
proper in the circumstances because Indemnitee has met the applicable standard
of conduct set forth above in Subparagraphs (a) and (b) by any of the following:
(i) A majority vote of a quorum consisting of directors who are not
parties to such proceeding;
(ii) If such a quorum of directors is not obtainable, by independent legal
counsel in a written opinion;
(iii) Approval of the shareholders by the affirmative vote of a majority of
the shares entitled to vote represented at a duly held meeting at
which a quorum is present or by the written consent of shareholders
as provided in the Bylaws, with the shares owned by the person to be
indemnified not being entitled to vote thereon; or
(iv) The court in which such proceeding is or was pending upon application
made by the Corporation or its Agent or attorney or other person
rendering services in connection with the defense, whether or not
such
<PAGE> 35
application by the Agent, attorney or other person is opposed by the
Corporation.
(d) Advances of Expenses. Expenses (including attorneys' fees), costs, and
charges incurred in defending any proceeding shall be advanced by the
Corporation prior to the final disposition of such proceeding upon receipt of an
undertaking by or on behalf of Indemnitee to repay such amount unless it shall
be determined ultimately that Indemnitee is entitled to be indemnified as
authorized in this Paragraph 1.
(e) Indemnification Against Expenses of Successful Party. Notwithstanding
the other provisions of this Paragraph 1, to the extent that Indemnitee has been
successful on the merits in a defense of any proceeding, claim, issue or matter
referred to in Subparagraphs (a) and (b), Indemnitee shall be indemnified
against all expenses actually and reasonably incurred by Indemnitee in
connection therewith.
(f) Right of Indemnitee to Indemnification Upon Application; Procedure Upon
Application. Any indemnification provided for in Subparagraphs (a), (b) or (e)
shall be made no later than ninety (90) days after the Corporation is given
notice of request by Indemnitee, provided that such request is made after final
adjudication, dismissal, or settlement unless an appeal is filed, in which case
the request is made after the appeal is resolved (hereafter referred to as
"Final Disposition"). Upon such notice, if a quorum of directors who were not
parties to the action, suit, or proceeding giving rise to indemnification is
obtainable, the Corporation shall within two (2) weeks call a Board of Directors
meeting to be held within four (4) weeks of such notice, to make a determination
as to whether Indemnitee has met the applicable standard of conduct. Otherwise,
if a quorum consisting of directors who were not parties in the relevant action,
suit, or proceeding is not obtainable, the Corporation shall retain (at the
Corporation's expense) independent legal counsel chosen either jointly by the
Corporation and Indemnitee or else by Corporation counsel within two (2) weeks
to make such determination. If (1) at such directors meeting such a quorum is
not obtained or, if obtained, refuses to make such determination or (2) if such
legal counsel is not so retained or, if retained, does not make such
determination within four (4) weeks, then the Board of Directors shall cause a
shareholders meeting to be held within four (4) weeks to make such a
determination.
If notice of a request for payment of a claim under any statute,
under this Agreement, or under the Corporation's Articles of Incorporation or
Bylaws providing for indemnification or advance of expenses has been given to
the Corporation by Indemnitee, and such claim is not paid in full by the
Corporation within ninety (90) days of the later occurring of the giving of such
notice and Final Disposition in case of indemnification and twenty (20) days of
the giving of such notice in case of advance of expenses, Indemnitee may, but
need not, at any time thereafter bring an action against the Corporation to
receive the unpaid amount of the claim or the expense advance and, if
successful, Indemnitee shall also be paid for the expenses (including attorneys'
fees) of bringing such action. It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in connection
with any action, suit, or proceeding in advance of its Final Disposition) that
Indemnitee has not met the standards of conduct which make it permissible under
applicable law for the Corporation to indemnify Indemnitee for the amount
claimed, and Indemnitee shall be entitled to receive interim payment of expenses
pursuant to
<PAGE> 36
Subparagraph (d) unless and until such defense may be finally adjudicated by
court order or judgment from which no further right of appeal exists. Neither
the failure of the Corporation (including its Board of Directors, independent
legal counsel, or its shareholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances because Indemnitee
has met the applicable standard of conduct required by applicable law, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its shareholders) that Indemnitee has not met such
applicable standard of conduct, shall create a presumption that Indemnitee has
or has not met the applicable standard of conduct.
(g) Other Rights and Remedies. The indemnification provided by this
Paragraph 1 shall not be deemed exclusive of, and shall not affect, any other
rights to which an Indemnitee may be entitled under any law, the Corporation's
Articles of Incorporation, Bylaws, agreement, vote of shareholders or
disinterested directors or otherwise, both as to action in his or her official
capacity and as to action in another capacity while holding such office, and
shall continue after Indemnitee has ceased holding such office or acting in such
official capacity and shall inure to the benefit of the heirs, executors, and
administrators of Indemnitee.
(h) Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was an Agent against any liability asserted
against such person and incurred by him or her in any such capacity, or arising
out of his or her status as such, whether or not the Corporation would have the
power to indemnify such person against such liability under the provisions of
this Paragraph 1.
(i) Optional Means of Assuring Payment. Upon request by an Indemnitee
certifying that Indemnitee has reasonable grounds to believe Indemnitee may be
made a party to a proceeding for which Indemnitee may be entitled to be
indemnified under this Paragraph 1, the Corporation may, but is not required to,
create a trust fund, grant a security interest or use other means (including,
without limitation, a letter of credit) to ensure the payment of such sums as
may become necessary to effect indemnification as provided herein.
(j) Savings Clause. If this Paragraph 1 or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify Indemnitee as to expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement with respect
to any action, suit, proceeding, or investigation, whether civil, criminal or
administrative, and whether internal or external, including a grand jury
proceeding and an action or suit brought by or in the right of the Corporation,
to the full extent permitted by any applicable portion of this Paragraph 1 that
shall not have been invalidated, or by any other applicable law.
(k) Definition of Agent. For the purposes of this Paragraph 1, "Agent"
means any person who is or was a director, officer, employee or other agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise, or was a director,
officer, employee or agent of a foreign or domestic corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation; "proceeding" means any threatened,
pending or completed action or proceeding, whether civil, criminal, administra-
<PAGE> 37
tive or investigative; and "expenses" includes without limitation
attorneys' fees and any expenses of establishing a right to indemnification.
(l) Indemnification under Section 204(a)(11) of the California Corporations
Code. Subject to the provisions of California Corporations Code Section
204(a)(11) and any other applicable law, notwithstanding any other provisions of
this Paragraph 1, the following shall apply to the indemnification of
Indemnitee:
(i) The Corporation shall indemnify Indemnitee pursuant to this
Subparagraph (l) if the Corporation would be required to indemnify
Indemnitee pursuant to Subparagraphs (a) or (b) if in Subparagraphs
(a) or (b) the phrase "in a manner Indemnitee reasonably believed to
be in the best interests of the Corporation" is replaced with the
phrase "in a manner Indemnitee did not believe to be contrary to the
best interests of the Corporation". If pursuant to Subparagraphs (c)
and (f) the person making the Subparagraph (a) and/or (b) conduct
standard determination determines that such standard has not been
satisfied, such person shall also determine whether this Subparagraph
(l)(i) conduct standard has been satisfied;
(ii) There shall be a presumption that Indemnitee met the applicable
standard of conduct required to be met in Subparagraph (c) for
indemnification, rebuttable by clear and convincing evidence to the
contrary;
(iii) The Corporation shall have the burden of proving that Indemnitee did
not meet the applicable standard of conduct in Subparagraph (c);
(iv) In addition to the methods provided for in Subparagraph (c), a
determination that indemnification is proper in the circumstances
because the Indemnitee met the applicable standard of conduct may
also be made by the arbitrator in any arbitration proceeding in which
such matter is or was pending;
(v) Unless otherwise agreed to in writing between an Indemnitee and the
Corporation in any specific case, indemnification may be made under
Subparagraph (b) for amounts paid in settling or other wise disposing
of a pending action without court approval.
2. Changes.
In the event of any change, after the date of this Agreement, in any
applicable law, statute, or rule which expands the right of a California
corporation to indemnify a member of its board of directors or an officer, such
changes shall be automatically, without further action of the parties, within
the purview of Indemnitee's rights and Corporation's obligations, under this
Agreement. In the event of any change in any applicable law, statute or rule
which narrows the right to indemnify a member of its board of directors or an
officer, such changes, to the extent not otherwise required by such law, statute
or rule to be applied to this Agreement, shall have no effect on this
<PAGE> 38
Agreement or the parties' rights and obligations hereunder. In the event of an
amendment to the Corporation's Bylaws which expands the right to indemnify a
member of its board of directors or an officer, such change shall be
automatically, without further action of the parties, within Indemnitee's rights
and Corporation's obligations under this Agreement. In the event of any
amendment to the Corporation's Bylaws which narrows such right of a California
corporation to indemnify a member of its board of directors or an officer, such
change shall only apply to the indemnification of Indemnitee for acts committed,
or lack of action, by Indemnitee after such amendment. The Corporation agrees to
give Indemnitee prompt notice of amendments to the Corporation's Bylaws which
concern indemnification.
3. Nonexclusivity.
The indemnification provided by this Agreement shall not be deemed
exclusive of any rights to which Indemnitee may be entitled under the
Corporation's Articles of Incorporation, its Bylaws, any agreement, any vote of
shareholders or disinterested Directors, the California Corporations Code, or
other wise, both as to action in Indemnitee's official capacity and as to action
in any other capacity while holding such office (an "Indemnified Capacity"). The
indemnification provided under this Agreement shall continue as to Indemnitee
for any action taken or not taken while serving in an Indemnified Capacity even
though he may have ceased to serve in an Indemnified Capacity at the time of any
action, suit or other covered proceeding.
4. Partial Indemnification.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Corporation for some or a portion of the expenses,
judgment, fines or penalties actually or reasonably incurred by him in the
investigation, defense, appeal or settlement of any civil or criminal action,
suit or proceeding, but not, however, for the total amount thereof, the
Corporation shall nevertheless indemnify Indemnitee for the portion of such
expenses, judgments, fines or penalties to which Indemnitee is entitled.
5. Mutual Acknowledgement.
Both the Corporation and Indemnitee acknowledge that in certain
instances, California state and federal banking laws and regulations, federal
law or public policy may override applicable state law and prohibit the
Corporation from indemnifying its directors and officers under this Agreement or
otherwise. For example, the Corporation and Indemnitee acknowledge that the
federal regulators have taken the position that indemnification is not
permissible for liabilities arising under certain federal securities laws, and
federal legislation prohibits indemnification for certain ERISA violations.
Indemnitee understands and acknowledges that the Corporation has undertaken or
may be required in the future to undertake with federal regulators to submit
questions of indemnification to a court in certain circumstances for a
determination of the Corporation's right under public policy to indemnify
Indemnitee. Furthermore, Indemnitee and Corporation acknowledge that the extent
of (i) indem-
<PAGE> 39
nification permissible under Section 204(a)(11) of the California Corporations
Code has not been judicially determined; therefore, the enforceability of
Indemnitee's rights under Subparagraph (l) is uncertain; and (ii) advancement of
expenses and indemnification of Indemnitee in the event of a proceeding or
action described in Paragraph 7, Subparagraph (a) below, is also uncertain and
may not be permissible or may be subject to applicable regulatory restrictions.
6. Severability.
Nothing in this Agreement is intended to require or shall be
construed as requiring the Corporation to do or fail to do any act in violation
of applicable law. The Corporation's inability, pursuant to court order, to
perform its obligations under this Agreement shall not constitute a breach of
the Agreement. If the application of any provision or provisions of the
Agreement to any particular facts or circumstances shall be held to be invalid
or unenforceable by any court of competent jurisdiction, then (i) the validity
and enforceability of such provision or provisions as applied to any other
particular facts or circumstances and the validity of other provisions of this
Agreement shall not in any way be affected or impaired thereby and (ii) such
provision(s) shall be reformed without further action by the parties to make
such provision(s) valid and enforceable when applied to such facts and
circumstances with a view toward requiring the Corporation to indemnify
Indemnitee to the fullest extent permissible by law.
7. Exceptions.
Any other provision herein to the contrary notwithstanding, the
Corporation shall not be obligated pursuant to the terms of this Agreement:
(a) Regulatory Agency Proceedings. To indemnify Indemnitee for expenses,
penalties or other payments incurred in an administrative proceeding or action
instituted by a bank regulatory agency, which proceeding or action results in a
final order assessing civil money penalties or requiring affirmative action by
the Indemnitee in the form of payments to the Corporation; or
(b) Claims Initiated by Indemnitee. To indemnify or advance expenses to
Indemnitee with respect to proceedings or claims (except counter-claims or
cross-claims) initiated or brought voluntarily by Indemnitee and not by way of
defense, except with respect to proceedings brought to establish or enforce a
right to indemnification under this Agreement or any other statute or law or
otherwise as required by the California Corporations Code, but such
indemnification or advancement of expenses may be provided by the Corporation in
specific cases if the Board of Directors finds it to be appropriate; or
(c) Lack of Good Faith. To indemnify Indemnitee for any expenses incurred
by Indemnitee with respect to any proceeding instituted by Indemnitee to enforce
or interpret this Agreement, if a court of competent jurisdiction
<PAGE> 40
determines that each of the material assertions made by Indemnitee in such
proceeding was not made in good faith or was frivolous; or
(d) Insured Claims. To indemnify Indemnitee for expenses or liabilities of
any type whatsoever (including, but not limited to, judgments, fines, ERISA
excise taxes or penalties, and amounts paid in settlement) which have been paid
directly to Indemnitee by an insurance carrier under a policy of officers' and
directors' liability insurance maintained by the Corporation; or
(e) Claims under Section 16(b). To indemnify Indemnitee for expenses or the
payment of profits arising from the purchase and sale by Indemnitee of
securities in violation of Section 16(b) of the Securities Exchange Act of 1934,
as amended, or any similar successor statute.
8. Counterparts.
This Agreement may be executed in one or more counterparts, each of
which shall constitute an original.
9. Successors and Assigns.
This Agreement shall be binding upon the Corporation and its
successors and assigns, and shall inure to the benefit of Indemnitee and
Indemnitee's estate, heirs, and legal representatives and permitted assigns.
Indemnitee may not assign this Agreement without the prior written consent of
the Corporation.
10. Attorneys' Fees.
In the event that any action is instituted by Indemnitee under this
Agreement to enforce or interpret any of the terms hereof, Indemnitee shall be
entitled to be paid all court costs and expenses, including reasonable
attorneys' fees, incurred by Indemnitee with respect to such action, unless as a
part of such action, the court of competent jurisdiction determines that each of
the material assertions made by Indemnitee as a basis for such action were not
made in good faith or were frivolous. In the event of an action instituted by or
in the name of the Corporation under this Agreement or to enforce or interpret
any of the terms of this Agreement, Indemnitee shall be entitled to be paid all
court costs and expenses, including attorneys' fees, incurred by Indemnitee in
defense of such action (including with respect to Indemnitee's counterclaims and
cross-claims made in such action), unless as a part of such action the court
determines that each of Indemnitee's material defenses to such action were made
in bad faith or were frivolous.
<PAGE> 41
11. Notice.
All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed duly given (i) if delivered by
hand and receipted for by the party addressee, on the date of such receipt, or
(ii) if mailed by certified or registered mail with postage prepaid, on the
third business day after the date postmarked. Addresses for notice to either
party are as shown under Authorized Signatures at the end of this Agreement, or
as subsequently modified by written notice.
12. Paragraph Headings.
The Paragraph and Subparagraph headings in this Agreement are solely
for convenience and shall not be considered in its interpretation.
13. Waiver.
A waiver by either party of any term or condition of the Agreement or
any breach thereof, in any one instance, shall not be deemed or construed to be
a waiver of such term or condition or of any subsequent breach thereof.
14. Entire Agreement; Amendment.
This instrument contains the entire integrated Agreement between the
parties hereto and supersedes all prior negotiations, representations or
agreements, whether written or oral except for the Corporation's Articles of
Incorporation and Bylaws. It may be amended only by a written instrument signed
by a duly authorized officer of Corporation and by Indemnitee.
15. Choice of Law and Forum.
Except for that body of law governing choice of law, this Agreement
shall be governed by, and construed in accordance with, internal laws of the
State of California which govern transactions between California residents. The
parties agree that any suit or proceeding in connection with, arising out of or
relating to this Agreement shall be instituted only in a state court located in
Monterey County in the State of California to the fullest extent permissible or
in the United States District Court for the Northern District of California, and
the parties, for the purpose of any such suit or proceeding, irrevocably agree
and submit to the personal and subject matter jurisdiction and venue of any such
court in any such suit or proceeding and agree that service of process may be
effected in the same manner notice is given pursuant to Section 11 above.
<PAGE> 42
16. Consideration.
Part of the consideration the Corporation is receiving from
Indemnitee to enter into this Agreement is Indemnitee's agreement to serve or to
continue to serve, as applicable, for the present as an Agent of the
Corporation. Nothing in this Agreement shall preclude Indemnitee from resigning
as an Agent of the Corporation nor the Corporation, by action of its
shareholders, board of directors, or officers, as the case may be, from
terminating Indemnitee's services as an Agent, as the case may be, with or
without cause.
Authorized Signatures
- --------------------------
In order to bind the parties to this Indemnification Agreement, the parties
or their duly authorized representations have signed their names below on the
dates indicated.
Central Coast Bancorp INDEMNITEE:
By
------------ ------------
- -------------- ------------
Printed Name and Title Printed Name
- -------------- ------------
- -------------- ------------
(address) (address)
Date Executed: Date Executed:
------ ------
<PAGE> 43
PROXY PROXY
CENTRAL COAST BANCORP
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD SEPTEMBER 23, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of Common Stock acknowledges receipt of a copy of the
Notice of Annual Meeting of Shareholders of Central Coast Bancorp and the
accompanying Proxy Statement dated August 30, 1996, and revoking any Proxy
heretofore given, hereby constitutes and appoints Andrew F. Ausonio, C. Edward
Boutonnet, and Nick Ventimiglia and each of them, with full power of
substitution, as attorneys and proxies to appear and vote all of the shares of
Common Stock of Central Coast Bancorp, a California corporation, standing in the
name of the undersigned which the undersigned could vote if personally present
and acting at the Annual Meeting of Shareholders of Central Coast Bancorp, to be
held at 301 Main Street, Salinas, California on Monday, September 23, 1996, at
5:30 p.m. or at any postponements or adjournments thereof, upon the following
items as set forth in the Notice of Meeting and Proxy Statement and to vote
according to their discretion on all other matters which may be properly
presented for action at the Meeting or any postponements or adjournments
thereof. The above-named proxy holders are hereby granted discretionary
authority to cumulate votes represented by the shares covered by this Proxy in
the election of directors.
UNLESS OTHERWISE SPECIFIED THIS PROXY WILL BE VOTED "FOR" THE FOLLOWING ITEMS:
1. To elect as directors the nominees set forth below:
- WITHHOLD AUTHORITY
to vote for all nominees listed below.
- FOR all nominees listed below
(except as marked to the contrary below).
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below:
<TABLE>
<S> <C> <C>
Andrew E. Ausonio Roger G. Emanuel Robert M. Mraule, D.D.S., M.D.
C. Edward Boutonnet Alfred P. Glover Louis M. Souza
Bradford G. Crandall Richard C. Green Nick Ventimiglia
Duncan L. McCarter
</TABLE>
2. To approve the Amended and Restated 1994 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. To approve Indemnification Agreements.
/ / FOR / / AGAINST / / ABSTAIN
4. To approve the appointment of Deloitte & Touche LLP as independent
public accountants for the 1996 fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
5. To transact such other business as may properly come before the
meeting.
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS AND "FOR"
PROPOSALS NO. 2, 3 AND 4. THE PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS
DIRECTED. IF NO DIRECTION IS MADE, IT WILL BE VOTED "FOR" THE ELECTION OF
DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS AND "FOR" PROPOSALS NO. 2, 3 AND
4.
No. of Common Shares_______________________
I/We do / / or do not / / expect to attend this
Meeting.
Dated:_______________________________, 1996
SHAREHOLDER(S)
___________________________________________
___________________________________________
Please date and sign exactly as your name(s) appear(s). When signing as
attorney, executor, administrator, trustee, or guardian, please give full title.
If more than one trustee, all should sign. All joint owners should sign. WHETHER
OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND RETURN THIS PROXY AS
PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
