<PAGE>
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 / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
HERTIGAGE OAKS BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
HERITAGE OAKS BANCORP
545 12TH STREET
PASO ROBLES, CALIFORNIA 93446
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 27, 1999
7:00 P.M.
TO THE SHAREHOLDERS OF HERITAGE OAKS BANCORP:
NOTICE IS HEREBY GIVEN that pursuant to its Bylaws and the call of its
Board of Directors, the 1999 Annual Meeting of Shareholders (the "Meeting")
of Heritage Oaks Bancorp ("Corporation") will be held at the Corporation's
office at 545 12th Street, Paso Robles, California 93446 on Thursday, May 27,
1999 at 7:00 p.m. local time for the purpose of considering and voting on
the following matters:
1. ELECTION OF DIRECTORS. To elect nine (9) persons to the Board of
Directors of the Corporation to serve until the 2000 Annual Meeting
of Shareholders and until their successors are elected and have
qualified. The following persons have been nominated by the
Corporation for election:
Dr. B.R. Bryant Donald H. Campbell
Kenneth L. Dewar Dolores T. Lacey
Merle F. Miller John Palla
Ole K. Viborg Lawrence P. Ward
David Weyrich
2. AMENDMENT OF STOCK OPTION PLAN. To amend the 1997 Heritage Oaks
Bancorp Stock Option Plan to increase the number of shares authorized
thereunder by 99,254.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. To
ratify the appointment of Vavrinek, Trine, Day & Co. as the
Corporation's independent accountants for the 1998 fiscal year.
4. OTHER BUSINESS. To transact such other business as may properly come
before the Meeting and any adjournment or adjournments thereof.
Only those shareholders of record at the close of business on April 1,
1998 will be entitled to notice of and to vote at the Meeting.
<PAGE>
In connection with nominations for directors, Section 1.10 of the
Corporation's Bylaws provides:
"Nominations 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 provided that a notice of intention to make
nominations is made in the form and manner specified in this paragraph.
Notice of intention to make any nominations other than by the Board of
Directors shall be made in writing and shall be delivered or mailed to the
President of the Corporation not later than the close of business on the
day which is at least ten (10) days before the date of any meeting of
Shareholders called for the election of Directors. Said notification shall
contain the following information to the extent known to the person
making the nomination: (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 address of the person making the nominations;
and (e) the number of shares of capital stock of the Corporation owned by
the said person. Nominations not made in accordance herewith may in the
discretion of the Chairman of the meeting be disregarded and upon the
Chairman's instruction, the inspector of elections can disregard all
votes cast for each such nominee. Notwithstanding anything in this
paragraph to the contrary, a written notice of intention to make a
nomination as provided herein shall not be required unless the notice to
Shareholders of any meeting at which Directors are to be elected is mailed
at least ten (10) days prior to the date last available to the
Shareholder for delivery or mailing to the President of the Corporation of
the notice required herein. A copy of this paragraph shall be set forth
in a notice to Shareholders of any meeting at which Directors are to be
elected."
IT IS VERY IMPORTANT THAT EVERY SHAREHOLDER VOTE. WE URGE YOU TO SIGN AND
RETURN THE ENCLOSED PROXY AS SOON AS POSSIBLE WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY THEN
WITHDRAW YOUR PROXY. IF YOU DO NOT ATTEND THE MEETING, YOU MAY REVOKE THE
PROXY PRIOR TO THE TIME IT IS VOTED BY NOTIFYING THE CORPORATE SECRETARY IN
WRITING TO THAT EFFECT OR BY FILING A LATER DATED PROXY.
IN ORDER TO FACILITATE THE PROVISION OF ADEQUATE ACCOMMODATIONS, PLEASE
INDICATE ON THE PROXY WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING.
Dated: April 27, 1999 BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gwen R. Pelfrey
Gwen R. Pelfrey
Secretary
<PAGE>
Mailed to Shareholders
on or about April 27, 1999
HERITAGE OAKS BANCORP
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is being furnished to the shareholders of
Heritage Oaks 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 545 12th Street, Paso
Robles, California on May 27, 1999 at 7:00 p.m. local time (the "Meeting").
Only shareholders of record on April 1, 1999 (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 1,115,942 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.
1
<PAGE>
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" proposal No. 2 as described in this Proxy
Statement, and, at the proxy holders' discretion, on such other matters, if
any, which may properly 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 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 subsidiary, Heritage Oaks Bank (the "Bank"), may (without
additional compensation) solicit proxies by telephone or personal interview,
the costs of which will be borne by the Corporation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of the Record Date, April 1, 1999, 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>
Name and Address/1/of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership/2/ of Class/3/
- --------------------- ----------------------- -----------
<S> <C> <C>
Dr. B.R. Bryant 88,165 7.90%
Merle F. Miller 79,062 7.08%
John Palla 56,000 5.02%
Ole K. Viborg 92,318 8.27%
</TABLE>
/1/ Except as otherwise indicated, the address for all persons listed is
c/o Heritage Oaks Bancorp, 545 12th Street, Paso Robles, California,
93446.
/2/ For information concerning the amount and nature of beneficial
ownership, see "Security Ownership of Management".
/3/ Including shares of Common Stock subject to stock options exercisable
within 60 days of the Record Date.
2
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of the Record Date,
April 1, 1999, concerning the equity ownership of the Corporation's
directors/nominees and the executive officer named in the Summary
Compensation Table, and directors and executive1/ officers as a group. Unless
otherwise indicated in the notes to the table below, 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. There are
no current arrangements known to the Corporation that may result in a change
in control of the Corporation.
<TABLE>
<CAPTION>
Name and Address/2/ of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership of Class/3/
- ---------------------- -------------------- -----------
<S> <C> <C>
Dr. B.R. Bryant 88,165 /4/ 7.90%
Donald H. Campbell 21,338 /5/ 2.09%
Kenneth L. Dewar 1,248 /6/ *
Dolores T. Lacey 2,467 /7/ *
Merle F. Miller 79,062 /8/ 7.08%
John Palla 56,000 /9/ 5.02%
Ole K. Viborg 92,318 /10/ 8.27%
Lawrence P. Ward 49,693 /11/ 4.45%
David Weyrich 34,915 /12/ 3.13%
All directors, nominees,
and executive officers
of the Corporation
as a group (12 persons) 454,661 /13/ 40.74%
- -------------
</TABLE>
* Less than 1%.
/1/ As used throughout this Proxy Statement, the term "executive officer"
means the President and Chief Executive Officer, the Executive Vice
President, and Chief Administrative Officer, Executive Vice President
and Chief Lending Officer and the Executive Vice President and Chief
Financial Officer. The Chairman of the Board, the Vice Chairman of the
Board, the Corporate Secretary and the Company's other officers are not
treated as executive officers of the Company.
/2/ The address for all persons listed is c/o Heritage Oaks Bancorp, 545
12th Street, Paso Robles, California, 93446.
/3/ Includes shares of Common Stock subject to stock options exercisable
within 60 days of the Record Date.
/4/ Includes shares of Common Stock held by Dr. Bryant and his spouse as
trustees of a family trust, and shares of Common Stock subject to
stock options exercisable within 60 days of the Record Date.
/5/ Includes shares of Common Stock owned jointly with Mr. Campbell's
spouse, and shares of Common Stock subject to stock options
exercisable within 60 days of the Record Date.
/6/ Includes shares of Common Stock owned jointly with Mr. Dewar's spouse
and shares of Common Stock subject to stock option exercisable within
60 days of Record Date.
/7/ Includes shares of Common Stock owned jointly with Mrs. Lacey's
spouse.
/8/ Includes shares of Common Stock held by Mr. Miller and his spouse as
trustees of a family trust, shares held in a rollover IRA account and
shares of Common Stock subject to stock options exercisable within 60
days of the Record Date.
/9/ Includes shares of Common Stock held by Mr. Palla and his spouse as
trustees of a family trust and shares of common stock subject to stock
options exercisable within 60 days of the Record Date.
/10/ Includes shares of Common Stock held by Mr. Viborg and his spouse as
trustees of a family trust, shares of Common Stock held by Mr. Viborg
in Ole Viborg, Inc., and shares of Common Stock subject to stock
options exercisable within 60 days of the Record Date.
/11/ Includes shares of Common Stock held jointly with Mr. Ward's spouse,
shares of Common Stock owned solely by Mr. Ward, and shares of Common
Stock subject to stock options exercisable within 60 days of the Record
Date.
/12/ Includes shares of common Stock jointly owned with Mr. Weyrich's spouse
and shares held in a rollover IRA account.
/13/ Includes shares of Common Stock subject to stock options exercisable
within 60 days of the Record Date.
PROPOSAL NO. I
ELECTION OF DIRECTORS OF THE CORPORATION
The number of directors authorized for election at the Meeting is
nine (9). Management has nominated the nine (9) incumbent directors14/ 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 nine (9) nominees
listed below 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 become unavailable and has no present intention to nominate persons in
addition to or in lieu of those named below.
- --------------
/14/ Elizabeth A. Cousins a director of the Bank since 1982 and of the
Company since 1994 retired as a director of both as of December 31,
1998. Ms. Cousins became a Director Emeritas of the Company. See
"DIRECTORS- Compensation of Directors" below. J. Russell Roy, a
director of the Board and the Company since February 1995, resigned
from both positions on February 9, 1999 for personal reasons.
4
<PAGE>
The following table sets forth certain information as of the Record
Date, April 1, 1999, with respect to those persons nominated by the Board of
Directors for election as directors. 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 directors of either the Corporation or the
Bank were selected. There is no family relationship between any of the
directors or executive officers.
<TABLE>
<CAPTION>
Name Age Position/Background
- ---- --- -------------------
<S> <C> <C>
Dr. B.R. Bryant 66 Chairman of the Board of Directors of the
Corporation and of the Bank since November 15,
1994, and 1982, respectively. Veterinarian;
General Contractor dba B.R. Bryant Construction
Donald H. Campbell 58 Vice Chairman of the Board of Directors of the
Corporation and of the Bank since November 15,
1994, and 1982, respectively. Real estate broker,
Coldwell Banker Western Properties and owner El
Pomar Vineyard Service.
Kenneth L. Dewar 40 President, J.B. Dewar, Inc (wholesale petroleum
distribution). Director of the Corporation and of
the Bank since August 27, 1998.
Dolores T. Lacey 56 Director of the Corporation and of the Bank since
January 23, 1997. Rancher and businesswoman.
Merle F. Miller 62 Director of the Corporation and of the Bank since
November 15, 1994, and 1985, respectively.
Rancher; Owner, Golden Hill Corporation (land
sales and development).
John Palla 70 Director of the Corporation and of the Bank since
November 15, 1994, and 1985, respectively. Retired
(formerly owner of Palla Equipment, a farm
equipment dealership).
Ole K. Viborg 67 Director of the Corporation and of the Bank since
November 15, 1994, and 1983, respectively. Owner,
Ole Viborg, Inc. (paving contractor).
Lawrence P. Ward 47 Director, President and Chief Executive Officer of
the Corporation and of the Bank since November 15,
1994, and January 11, 1993, respectively.
President, Chief Executive Officer and Director of
Bank of Evergreen, Evergreen, Colorado, 1991-92,
and Mountain Valley National Bank, Conifer,
Colorado, 1986-92.
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
David Weyrich 44 Director of the Corporation and of the Bank since
January 1, 1999. Owner, Martin-Weyrich Winery
</TABLE>
None of the Corporation's or the Bank's Directors 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.
The following is a brief account of the business experience for a
minimum of five years of each non-director executive officer in addition to
their current positions .
<TABLE>
<CAPTION>
Name Position/Background
---- -------------------
<S> <C>
Gwen R. Pelfrey Age: 47. Secretary of the Corporation and
Secretary, Executive Vice President and Chief
Administrative Officer of the Bank since November
15, 1994, and October 1987, respectively. Vice
President/Loan Administrator of Intrawest Bank of
Boulder, Boulder, CO, and various other officer
positions from 1971 to 1987.
Paul Tognazzini Age: 49. Senior Vice President/Chief Lending
Officer 1990 to 1997. Executive Vice
President/Chief Lending Officer 1997 to present.
President of Loan Office, Sanwa Bank California
from 1988 to 1990. Vice President, Loan Office and
various other positions Security Pacific National
Bank, 1974 to 1998.
Margaret Torres Age: 48. Executive Vice President and Chief
Financial Officer of the Company and the Bank
since February, 1999. Executive Vice President and
Chief Financial Officer of Antalope Valley Bank,
1991-January 1999.
</TABLE>
DIRECTORS
COMMITTEES OF THE BOARD OF DIRECTORS
During 1998, the Corporation's Board of Directors held eight(8)
meetings and the Bank's Board of Directors held sixteen (16) meetings.
The Board of Directors has not established a nominating committee.
The functions of the nominating committee are performed by the full Board of
Directors.
6
<PAGE>
The Bank has an Audit Committee, whose members include Messrs.
Weyrich (Chairman), Bryant, Campbell, Palla and Viborg which oversees Bank's
independent public accountants, analyzes the results of internal and
regulatory examinations and monitors the financial and accounting
organization and reporting. The Bank's Audit Committee met fourteen (14)
times in 1998.
The Bank has a Loan Committee, whose members include Messrs. Miller
(Chairman), Bryant, Palla, Ward, Viborg and Campbell (alternate) which has
responsibility for receiving loans made by management, establishes loan
policy and approves certain size and types of loans as specified in the
Bank's loan policy. The Loan Committee met fifty-two (52) times in 1998.
The Bank has a Personnel Committee, whose members include Ms. Lacey
(Chairperson) and Messrs. Bryant, Miller and Ward which has responsibility for
reviewing and establishing compensation and benefits for all officers and
employees. The Personnel Committee met six (6) times in 1998.
The Bank has an Investment/Asset-Liability Committee whose members
include Messrs. Viborg (Chairman), Palla, Bryant, Campbell, Weyrich, Ward and
Dewar and non-directors, Pelfrey and Torres, which committee has the
responsibility for reviewing asset/liability information per quarter,
administers and reviews the Bank's strategies for asset/liability management.
The committee met twelve (12) times in 1998.
The Bank has an EFT Committee whose members include Messrs. Campbell
(Chairman), Bryant, Miller, Viborg and Ward and Ms. Lacey, which is responsible
for reviewing the bank's electronic funds, ATM, and technology policies. The
committee met twelve (12) times in 1998.
The Bank has a CRA/Compliance Committee which is shared by Ms. Lacey
and whose other members are Messrs. Bryant, Campbell, Palla, Ward and
non-director Pelfrey. The committee reviews the Bank's CRA materials and the
Bank's CRA investments, loans an community involvement. The committee discusses
community needs and develops and oversees the implementation of programs that
address those needs. The committee met four (4) times in 1998.
During 1998 all directors attended at least seventy-five percent (75%)
of the aggregate of the total number of meetings of the Corporation's Board of
Directors and the number of meetings of the Bank's committees on which they
served.
COMPENSATION OF DIRECTORS
Directors receive no compensation from the Corporation.
Directors' fees are paid by the Bank. The Chairman of the Board of
Directors was paid a retainer of $1,350 per month and all other non-employee
directors received a retainer of $1,250 per month during 1998. The chairman of
each committee received $125 for each committee meeting attended during 1998.
All other non-employee directors received $100 for each committee meeting
attended during 1998. The total amount of fees paid to directors as retainers
and for attendance at Board and committee meetings
7
<PAGE>
during 1998 was $158,100. Further, the Directors do participate in the
Corporation's Stock Option Plan. During 1998 Director Dewar was granted an
option for 5,000 shares pursuant to the 1997 stock option plan at an exercise
price of $16.50.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Set forth below is the summary compensation paid or accrued during
1998-1996 to Lawrence P. Ward, the only executive officers of the Corporation
or the Bank to receive total annual salary and bonus of more than $100,000
during 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------- ---------------------- --------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Year Salary Bonus Other Restricted Securities LTIP All Other
Principal Position ($) (1) ($) (2) Annual Stock Underlying Payouts Compensation
Compen- Award(s) Options/ ($) ($) (5)
sation $ ($) SARs (#)
(3) (4)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence P. Ward 1998 $131,875 $44,130 $7,200 $30,433
President 1997 $125,000 $22,833 $7,200 $26,471
1996 $105,000 $57,399 $7,200 - - - $23,876
</TABLE>
- --------------
(1) Amounts shown include cash and non-cash compensation earned and
received as well as amounts earned but deferred at the election of
those officers under the 401(k) Plan.
(2) Amount shown as bonus payments were earned in the year indicated but
not paid until the first quarter of the next fiscal year.
(3) Represents auto allowance for Mr. Ward.
(4) The Corporation has a 1990 Stock Option Plan (the "1990 Plan") and a
1997 Stock Option Plan (the "1997 Plan") pursuant to which options are
granted to directors and to key, full-time salaried officers and
employees of the Corporation and its subsidiary. Options granted under
either the 1990 Plan or the 1997 Plan are either incentive options or
non-qualified stock options. Options granted under either the 1990
Plan or the 1997 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 become fully
exercisable upon the sale, merger or consolidation of the Corporation
in which the Corporation is not a survivor notwithstanding the vesting
provisions under either the 1990 Plan or the 1997 Plan. Options granted
under the Plans 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 in the years indicated
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. As of December 31, 1998, there were
565 shares remaining in the 1990 Plan and 803 shares remaining under
the 1997 Plan.
8
<PAGE>
(5) Amounts shown for Lawrence P. Ward in 1998 represent $20,221 in term
life insurance premiums, $6,249 in excess medical insurance premiums
and $2,499 in 401(k) matching contributions; 1997 represent $20,135 in
term life insurance premiums, $3,249 in excess medical insurance
premiums and $3,087 in 401(k) matching contributions; in 1996, $18,704
in term life insurance premiums, $2,588 in excess medical insurance
premiums and $2,584 in 401 (k) matching contributions.
OPTION/SAR GRANTS, EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth certain information concerning stock
option grants and unexercised options held by Mr. Ward under the 1990 Plan and
the 1997 Plan.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION/SAR VALUE
(a) (b) (c) (d) (e)
Number of Securities
Underlying
Unexercised Value of Unexercised
Options/SARs at In-the-Money Options/SARs at
FY-End(#) FY-End ($)
Value --------------------- ----------------------------
Shares Acquired or Realized Exercisable/ Exercisable/
Name Exercise(#) ($) (1) Unexercisable Unexercisable /1/
-------- ----------------------- -------------- ----------------- --------------------
<S> <C> <C> <C> <C>
Lawrence P. Ward 2,500 $32,300 33,500/24,000 $416,070/$133,920
</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 between the Corporation or the
Bank and their executive officers except that the Bank has an employment
agreement with Lawrence P. Ward, its President and Chief Executive Officer.
In general, such agreement has a three year term expiring on January 31,
2002, and renews annually unless a party gives written notice to the other
within certain time periods. The agreement establishes a base salary in 1999
of $140,000, provides for continuation of participation in the Bank's bonus
compensation, 401-K, and executive salary continuation plans. The agreement
also provides for payment of life insurance policy premiums and an auto
allowance. If the agreement is terminated without cause, Mr. Ward would
receive severance pay equal to one year's annual base salary in effect at the
date of termination plus one year of insurance payments and auto allowance.
In the event of termination during or after a merger or change of control,
Mr. Ward would be entitled to severance pay equal to two year's base salary
plus one year of insurance payments and auto allowance. In the event of a
change of control where Mr. Ward is offered subsequent employment, Mr. Ward
would be entitled to severance pay equal to two (2) years annual base salary
if he is terminated or resigns for good reason. Events that are considered
good reason include, but are not limited to, reduction in title,
compensation, demotion, or expanded travel.
9
<PAGE>
Recognizing the importance of building and retaining a competent
management team, the Board of Directors purchased life insurance policies on
the lives of four key employees, Lawrence Ward, Gwen Pelfrey, Paul Tognazzini
and Margaret Torres for the purpose of providing certain death, disability
and post-employment/retirement benefits. The Bank is the sole owner and
beneficiary of each policy. In order to define the specific death, disability
and post-employment/retirement benefits to be provided, the Bank's Board of
Directors reviewed and adopted an integrated conditional non-qualified
deferred compensation plan provided to the Bank by Bank Compensation
Strategies Group. The form of the plan provided has been endorsed by the
California Bankers Association, the American Bankers Association, as well as
numerous other state banking associations. Under the terms of the plan,
differing death, disability and post-employment/retirement benefits are
provided to each covered employee. Pursuant to the plan, agreements were
entered into between the Bank and each of the four key employees. By defining
and increasing, over each employee's term of employment, the amounts each
employee will receive upon the occurrence of certain specified events,
including formal retirement on or after a specified age, each employee has
been given what the Board believes to be a reasonable incentive to remain
with the Bank until retirement. While several provisions have been included
which will serve to reduce the overall amounts payable, the agreements are
expected to provide a maximum annual benefit payment of Sixty Thousand
Dollars ($60,000) to Mr. Ward, and Thirty Thousand Dollars ($30,000) to Ms.
Pelfrey Mr. Tognazzini and Ms. Torres. Although the annual benefit amount
will typically be paid in equal monthly installments over a fifteen (15) year
period, a lesser and defined lump sum payment may be required in the event
the employee's employment with the Bank is terminated without cause. In the
event of the executive's death, the Bank is obligated to pay any remaining
amounts due under the agreement to the executive's spouse or designated
beneficiary over the remaining payout period (or in a lump sum, as the case
may be). Other events which may also alter when payment of the annual benefit
is to begin, and the amount to be paid, include: (i) disability, as defined
in the agreement, in which case the employee will begin to receive the
defined benefit at the earlier of the defined retirement age or when he is no
longer entitled to receive disability benefits under his principal disability
insurance policy; and (ii) constructive termination following a "change of
control," in which case the executive is entitled to all or a portion of the
annual benefit depending upon length of service prior to termination. If,
however, the executive's employment is terminated for cause, the Bank is
released from all payment obligations to the Employee.
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, 1998,
all Section 16(a) filing requirements applicable to its executive officers,
directors and beneficial owners of ten percent or more of the Corporation's
equity securities appear to have been met.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
There have been no transactions, or series of similar transactions,
during 1998, or any currently proposed transaction, or series of similar
transactions, to which the Corporation or the Bank was or is to be a party,
in which the amount involved exceeded or will exceed $60,000 and in which any
director (or nominee for director) of the Corporation or the Bank, executive
officer of the Corporation or the Bank, 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.
INDEBTEDNESS OF MANAGEMENT
The Corporation, through the Bank, 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 1998 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 Bank are subject to limitations as to amount and purposes
prescribed in part by the Federal Reserve Act, as amended, the regulations of
the Federal Deposit Insurance Corporation and the California Financial Code.
PROPOSAL NO. 2
AMENDMENT OF STOCK OPTION PLAN
INTRODUCTION
The Corporation's 1997 Stock Option Plan (the "1997 Plan") presently
provides for the issuance of up to 161,049 shares of Common Stock upon the
exercise of options granted under the 1997 Plan. At April 1, 1999, the
Corporation had options outstanding pursuant to the 1997 Plan to purchase a
total of 160,246 shares and only 803 shares available for future grants.
While options to purchase an aggregate of 73,914 shares and only options for
565 shares may be granted pursuant thereto of Common Stock remain outstanding
pursuant to the 1990 Stock Option Plan,. A description of options granted to
and exercised by the Corporation's executive officers and directors during
1997 is included herein in "ELECTION OF DIRECTORS OF THE CORPORATION."
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Shareholders are being asked to approve an amendment to the 1997
Plan to increase the maximum number of shares of the Corporation's Common
Stock which are reserved under the 1997 Plan, in the aggregate, from 161,049
shares to 260,303 shares. In an effort to continue to attract and maintain
high quality persons to serve as directors, officers and key employees of the
Corporation, the Board of Directors adopted the amendment to the 1997 Plan on
April 22, 1999 Meeting, subject to shareholder approval.
The Corporation's Board of Directors believes it is advisable for
the shareholders to approve the proposed amendment to the 1997 Plan in order
to have options available to encourage directors, officers and key employees
to remain with the Corporation and to attract new, qualified officers, key
employees and directors in today's competitive market. If the proposed
amendment to the 1997 Plan is approved, the total shares available pursuant
to the 1990 and 1997 Plans would be approximately 30% of the total shares
outstanding at April 1, 1999. The 1997 Plan has not been amended in any other
respect, and remains in full force and effect.
SUMMARY OF 1997 PLAN
The following is a summary of the 1997 Plan. This summary does not
purport to be complete and is qualified in its entirety by reference to the
complete text of the 1997 Plan which is available for inspection at the
Administrative office of the Corporation.
ADOPTION OF THE 1997 PLAN AND PURPOSE
On January 23, 1997, the Board of Directors adopted and approved,
subject to shareholder approval, the 1997 Plan to provide that employees and
officers ("Employees"), employee directors ("Employee Directors") and
non-employee directors ("Non-Employee Directors") will be eligible to receive
options to purchase shares of the Common Stock of the Corporation. The 1997
Plan did not supersede the Corporation's 1990 Stock Option Plan nor effect
any of the stock options granted under such Plan. The shareholders of the
Corporation approved the 1997 Plan on May 28, 1997.
PURPOSE
The purpose of the 1997 Plan is to strengthen the Corporation by
providing to participating Employees, Employee Directors and Non-Employee
Directors added incentive for high performance and to encourage stock
ownership in the Corporation. The 1997 Plan seeks to accomplish these goals
by a means whereby such Employees, Employee Directors and Non-Employee
Directors of the Corporation may be given an opportunity to purchase, by way
of option, Common Stock of the Corporation. The 1997 Plan is also intended to
enable the Corporation to compete effectively for and retain the services of
such persons and to provide incentives for such persons to exert maximum
efforts for the success of the Corporation
The Corporation intends that the options issued under the 1997 Plan
shall, in the discretion of the committee which administers the 1997 Plan, be
either incentive stock options ("Incentive Stock Options") as that term is
used in Section 422A of the Internal Revenue Code of 1986, as amended (the
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"Code"), or any successor thereto, or options which do not qualify as
incentive stock options ("Non-Qualified Stock Options").
ADMINISTRATION
A committee of directors, appointed by the Board of Directors and
composed of not less than three "Non-Employee Directors," administers the
1997 Plan (the "Committee"). The Committee shall have full power and
authority in its discretion to take any and all action required or permitted
to be taken under the 1997 Plan, including the selection of participants to
whom stock options may be granted, the determination of the number of shares
which may be covered by stock options, the purchase price, and other terms
and conditions thereof. Regardless of whether a Committee is selected, the
Board of Directors of the Corporation may act as the Committee and any action
taken by said Board as such shall be deemed to be taken by the Committee.
SHARES RESERVED
There are currently 161,049 shares of Common Stock remaining
reserved for issuance upon exercise of options granted under the 1997 Plan.
The proposed amendment to the 1997 Plan would increase the number of shares
reserved under the 1997 Plan to 260,303 shares. If any option granted under
the 1997 Plan shall for any reason expire, be canceled or otherwise terminate
without having been exercised in full, the shares not purchased under such
option shall again become available for the 1997 Plan.
ELIGIBILITY
All Employees, Employee Directors and Non-Employee Directors are
eligible to participate in the 1997 Plan and Employees and Employee Directors
are eligible to receive Incentive and Non-Qualified Stock Options.
Non-Employee Directors are only eligible to receive Non-Qualified Stock
Options. The Corporation may issue Incentive Stock Options provided that the
aggregate fair market value (determined at the time the Incentive Stock
Option is granted) of the stock with respect to which Incentive Stock Options
are exercisable for the first time by the optionee during any calendar year
shall not exceed $100,000. Should it be determined that any Incentive Stock
Option granted pursuant to the 1997 Plan exceeds such maximum, such Incentive
Stock Option shall be considered to be a Non-Qualified Stock Option and not
qualify for treatment as an Incentive Stock Option under Section 422A of the
Code to the extent, but only to the extent, of such excess.
OPTION PRICE
The exercise price of each option shall be determined by the
Committee and shall not be less than the fair market value of the stock
subject to the option on the date the option is granted; provided, however,
that the purchase price of the stock subject to an Incentive Stock Option may
not be less than 110% of such fair market value where the optionee owns (or
is deemed to own pursuant to the Code) shares of stock representing more than
10% of total combined voting power of all classes of stock of the
Corporation. The purchase price of Common Stock acquired pursuant to an
option shall be paid in cash at the time the option is exercised.
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ADJUSTMENTS UPON CHANGES IN STOCK
If the outstanding shares of the Common Stock of the Corporation are
increased, decreased, or changed into, or exchanged for a different number or
kind of shares or securities of the Corporation without receipt of
consideration by the Corporation, through reorganization, merger,
recapitalization, reclassification, stock split, stock dividend, stock
consolidation, or otherwise, an appropriate and proportionate adjustment
shall be made in the number and kind of shares as to which options may be
granted. A corresponding adjustment changing the number or kind of shares and
the exercise price per share allocated to unexercised options, or portions
thereof, which shall have been granted prior to any such change shall
likewise be made. Any such adjustment, however, in an outstanding option
shall be made without change in the total price applicable to the unexercised
portion of the option but with a corresponding adjustment in the price for
each share subject to the option adjustments being made by the Committee
whose determination as to what adjustments shall be made, and the extent
thereof, shall be final and conclusive. No fractional shares of stock shall
be issued under the 1997 Plan on account of any such adjustment.
EXPIRATION, TERMINATION AND TRANSFER OF OPTIONS
No option under the 1997 Plan may extend more than ten (10) years
from the date of grant. Notwithstanding the foregoing, any Incentive Stock
Option granted to an optionee who owns (or is deemed to own pursuant to the
Code) shares of stock representing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation or any of
its affiliates shall expire not later than five (5) years from the date of
grant.
Except in the event of termination of employment due to death,
disability or termination for cause, options will terminate 30 days after an
Employee or Employee Director optionee ceases to be employed by the
Corporation or its subsidiaries or a Non-Employee Director optionee ceases to
serve as a director of the Corporation or its subsidiaries unless the options
by their terms were scheduled to terminate earlier. During that 30 day period
after the Employee or Employee Director optionee ceases to be employed by the
Corporation or its subsidiaries, or a Non-Employee Director optionee ceases
to serve as a director of the Corporation or its subsidiaries, such options
shall be exercisable only as to those shares with respect to which
installments, if any, had accrued as of the date on which the optionee ceased
to be employed by the Corporation or its subsidiaries or ceased to serve as
director of the Corporation or its subsidiaries. If such termination was due
to such optionee's disability (as defined in the 1997 Plan), or such
optionee's death, the option, by its terms, may be exercisable for one year
after such termination of employment or cessation of directorship unless the
option by its terms was scheduled to terminate earlier. In the event of
disability or death, such options shall be exercisable only as to those
shares with respect to which installments, if any, had accrued as of the date
of death or disability. If an optionee's employment is terminated for "cause"
(as defined in the 1997 Plan), the option terminates immediately subject to
reinstatement by the Committee in its sole discretion. An option by its terms
may only be transferred by will or by laws of descent and distribution upon
the death of the optionee, and shall be exercisable during the lifetime of
the person to whom the option is granted only by such person.
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TERMINATION AND AMENDMENT OF THE 1997 PLAN
The 1997 Plan and the options granted thereunder will terminate upon
the occurrence of a terminating event, including, but not limited to,
liquidation, reorganization, merger or consolidation of the Corporation with
another bank in which the Corporation is not the surviving entity, or a sale
of substantially all the assets of the Corporation to another person (a
"Terminating Event") unless provision is made in connection with such
transaction for assumption of options theretofore granted, or substitution
for such options with new options covering stock of a successor employer,
solely in the discretion of such successor, with appropriate adjustment as to
the number and kind of shares and prices. The Committee shall notify each
optionee of the pendency of a Terminating Event. Upon the delivery of such
notice, any option outstanding shall, notwithstanding any vesting schedule
contained in an option agreement, become fully exercisable within the time
period established by the Committee. The Board of Directors may also suspend
or terminate the 1997 Plan at any time. Unless sooner terminated, the 1997
Plan shall terminate ten (10) years from the effective date of the 1997 Plan
or January 23, 2007. No options may be granted under the 1997 Plan while it
is suspended or after it is terminated. Rights and obligations under any
option granted pursuant to the 1997 Plan while it is in effect shall not be
altered or impaired by suspension or termination of the 1997 Plan, other than
pursuant to the terms thereof, except with the consent of the person to whom
the stock option was granted.
The 1997 Plan may be amended by the Board of Directors at any time,
and from time to time. However, except as otherwise provided in the 1997 Plan
relating to adjustments upon changes in stock (e.g., stock splits or stock
dividends), no amendment shall be effective unless approved by the
affirmative vote of a majority of the outstanding shares of the Corporation
present and voting, if the amendment will, among other things,: (a)
materially increase the number of shares reserved for options under the 1997
Plan; (b) materially modify the requirements as to eligibility for
participation in the 1997 Plan; (c) increase or decrease the exercise price
of any option granted under the 1997 Plan; or (d) increase the maximum term
of options provided for in the Plan.
FEDERAL INCOME TAX CONSEQUENCES
Generally under present law, when an option qualifies as an
Incentive Stock Option under Section 422A of the Code: (a) an Employee will
not realize taxable income either upon the grant or the exercise of the
option, (b) any gain or loss upon a qualifying disposition of the shares
acquired by the exercise of the option will be treated as capital gain or
loss, and (c) no deduction will be allowed to the Corporation for federal
income tax purposes in connection with the grant or exercise of an Incentive
Stock Option or a qualifying disposition of the shares. A disposition by an
Employee of stock acquired upon exercise of an Incentive Stock Option will
constitute a qualifying disposition if it occurs more than two years after
the grant of the option, and one year after the transfer of the shares to the
Employee. If such stock is disposed of by the Employee before the expiration
of those time limits, the transfer would be a "disqualifying disposition" and
the Employee, in general, will recognize ordinary income equal to the lesser
of (a) the aggregate fair market value of the shares
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as of the date of exercise less the option price, or (b) the amount realized
on the disqualifying disposition less the option price. Ordinary income from
a disqualifying disposition will constitute compensation to the Employee.
Upon the exercise of an Incentive Stock Option, the difference
between the fair market value of stock on the date of exercise and the option
price generally is treated as a "tax preference" item in that taxable year
for alternative minimum tax purposes, as are a number of other items
specified by the Code. Such tax preference items (with adjustments) form the
basis for the alternative minimum tax, which may apply depending on the
amount of the computed "regular tax" of the employee for that year. Under
certain circumstances the amount of alternative minimum tax is allowed as a
carry forward credit against regular tax liability in subsequent years.
In the case of stock options which do not qualify as an Incentive
Stock Option (Non-Qualified Stock Options), no income generally is recognized
by the optionee at the time of the grant of the option. Under present law the
optionee generally will recognize ordinary income at the time the
Non-Qualified Stock Option is exercised equal to the aggregate fair market
value of the shares acquired less the option price. Notwithstanding the
foregoing, if the shares received upon exercising a Non-Qualified Stock
Option are subject to certain restrictions, the taxable event is postponed
until the restrictions lapse.
Shares acquired upon exercise of Non-Qualified Stock Option will
have a tax basis equal to their market value on the exercise date or other
relevant date on which ordinary income is recognized and the holding period
for the shares generally will begin on the date of exercise or such other
relevant date. Upon subsequent disposition of the shares, the optionee
generally will recognize capital gain or loss provided the shares are held by
the optionee for more than one year prior to disposition.
The Corporation generally will be entitled to a deduction equal to
the ordinary income recognized by the optionee in the case of a disqualifying
disposition of an Incentive Stock Option or in connection with the exercise
of a Non-Qualified Stock Option.
APPROVAL OF THE AMENDMENT TO THE 1997 PLAN REQUIRES THE APPROVAL OF
THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF THE CORPORATION'S
COMMON STOCK.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS A VOTE OF "FOR"
THIS PROPOSAL.
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PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Vavrinek, Trine, Day & Co. served the Corporation as
independent public accountants for the 1998 fiscal year. Vavrinek, Trine, Day
& Co. has no interest, financial or otherwise, in the Corporation. The
services rendered by Vavrinek, Trine, Day & Co. during the 1998 fiscal year
were audit services, consultation in connection with various accounting
matters and preparation of corporation income tax returns. The Board of
Directors of the Corporation approved each professional service rendered by
Vavrinek, Trine, Day & Co. during the 1998 fiscal year, and the possible
effect of each such service on the independence of that firm was considered
by the Board of Directors before such service was rendered. Representatives
of Vavrinek, Trine, Day & Co. are expected to be present at the Meeting and
will have an opportunity to make a statement if they so desire and respond to
appropriate questions.
The Board of Directors of the Corporation has selected Vavrinek,
Trine, Day & Co. to serve as the independent public accountants for the 1999
fiscal year and recommend that the shareholders vote "FOR" approval to ratify
the selection of Vavrinek, Trine, Day & Co. as the Corporation's independent
public accountants for the 1999 fiscal year.
ANNUAL REPORT
The Annual Report of the Corporation containing audited financial
statements for the fiscal year ended December 31, 1998 is included in this
mailing to shareholders.
FORM 10-KSB
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-KSB FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, IS AVAILABLE TO SHAREHOLDER WITHOUT CHARGE UPON WRITTEN
REQUEST TO GWEN R. PELFREY, SECRETARY, HERITAGE OAKS BANCORP, 545 12TH
STREET, PASO ROBLES, CALIFORNIA, 93446.
SHAREHOLDER'S PROPOSALS
Next year's Annual Meeting of Shareholders will be held on May 25,
2000. The deadline for shareholders to submit proposals for inclusion in the
Proxy Statement and form of Proxy for the 1999 Annual Meeting of Shareholders
is December 17, 1999. All proposals should be submitted by Certified
Mail-Return Receipt Requested, to Gwen R. Pelfrey, Secretary, Heritage Oaks
Bancorp, 545 12th Street, Paso Robles, California, 93446.
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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
discretion 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.
HERITAGE OAKS BANCORP
Paso Robles, California
April 27,1999
By: Gwen R. Pelfrey
Secretary
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REVOCABLE PROXY - HERITAGE OAKS BANCORP
ANNUAL MEETING OF SHAREHOLDERS - MAY 27, 1999
The undersigned shareholder(s) of Heritage Oaks Bancorp (the
"Corporation") hereby appoints, constitutes and nominates Donald H. Campbell,
David Weyrich and Merle F. Miller, and each of them, the attorney, agent and
proxy of the undersigned, with full power of substitution, to vote all shares
of the Corporation which the undersigned is entitled to vote at the Annual
Meeting of Shareholders to be held at 545 12th Street , Paso Robles,
California on Thursday, May 27, 1999 at 7:00 p.m. local time, and any and all
adjournments thereof, as fully and with the same force and effect as the
undersigned might or could do if personally present thereat, as follows:
1. ELECTION OF DIRECTORS. To elect the following nine (9) persons to the
Board of Directors of the Corporation to serve until the 2000 Annual
Meeting of Shareholders and until their successors are elected and have
qualified:
Dr. B.R. Bryant Donald H. Campbell
Kenneth L. Dewar Dolores T. Lacey
Merle F. Miller John Palla
Ole K. Viborg Lawrence P. Ward
David Weyrich
/ / FOR ALL NOMINEES LISTED ABOVE / / WITHHOLD AUTHORITY TO VOTE
(EXCEPT AS MARKED TO THE FOR ALL NOMINEES LISTED ABOVE
CONTRARY)
A SHAREHOLDER MAY WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE BY
LINING THROUGH OR OTHERWISE STRIKING OUT THE NAME OF SUCH NOMINEE.
2. AMENDMENT OF STOCK OPTION PLAN. To amend the 1997 Heritage Oaks
Bancorp Stock Option Plan to increase the number of shares authorized
thereunder by 99,254.
/ / FOR / / AGAINST / / ABSTAIN
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. To
ratify the appointment of Vavrinek, Trine, Day & Co. as the
Corporation's independent accountants for the 1998 fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
4. OTHER BUSINESS. To transact such other business as may properly come
before the Meeting and any adjournment or adjournments thereof.
(continued on next page)
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The Board of Directors recommends a vote FOR each of the foregoing
proposals. If any other business is presented at the Annual Meeting, this
Proxy shall be voted in accordance with the discretion of the proxy holders.
This Proxy also vests discretionary authority to cumulate votes. This Proxy
is solicited on behalf of the Board of Directors and may be revoked prior to
its use.
Signature(s) Date:
---------------------------------- -------------------
---------------------------------- -------------------
Number of shares
--------------
I (We) will / / will not / / attend the Annual Meeting in person.
NOTE: Please sign your full name. Joint owners should each sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title as such.
