<PAGE>
================================================================================
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SGV BANCORP, INC.
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(5) Total fee paid:
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[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
SGV BANCORP, INC.
225 NORTH BARRANCA STREET
WEST COVINA, CALIFORNIA 91791
(818) 859-4200
October 15, 1997
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders (the
"Annual Meeting") of SGV Bancorp, Inc. (the "Company"), the holding company for
First Federal Savings and Loan Association of San Gabriel Valley (the
"Association"), which will be held on November 20, 1997, at 2:00 p.m., Pacific
Time, at the South Hills Country Club, 2655 S. Citrus Street, West Covina,
California.
The attached Notice of the Annual Meeting and the Proxy Statement describe
the formal business to be transacted at the Annual Meeting. Directors and
officers of the Company, as well as a representative of Deloitte & Touche LLP,
the Company's independent auditors, will be present at the annual meeting to
respond to any questions that stockholders may have regarding the business to be
transacted.
The Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interests of the Company and
its stockholders. For the reasons set forth in the Proxy Statement, the Board
of Directors unanimously recommends that you vote "FOR" each matter to be
considered.
YOUR COOPERATION IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST
BE REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE
CONDUCT OF BUSINESS. WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED SO
THAT YOUR SHARES WILL BE REPRESENTED.
On behalf of the Board of Directors and all of the employees of the Company
and the Association, I thank you for your continued interest and support.
Sincerely yours,
/s/ Barrett G. Andersen
Barrett G. Andersen
President and Chief Executive Officer
<PAGE>
SGV BANCORP, INC.
225 NORTH BARRANCA STREET
WEST COVINA, CALIFORNIA 91791
(818) 859-4200
__________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 20, 1997
__________________________________
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the "Annual
Meeting") of SGV Bancorp, Inc. (the "Company") will be held on November 20,
1997, at 2:00 p.m., Pacific Time, at South Hills Country Club, 2655 S. Citrus
Street, West Covina, California.
The purpose of the Annual Meeting is to consider and vote upon the
following matters:
1. The election of two directors to a three-year term of office;
2. The approval of the SGV Bancorp, Inc. 1997 Stock-Based Incentive Plan;
3. The ratification of the appointment of Deloitte & Touche LLP as
independent auditors of the Company for the fiscal year ending June
30, 1998; and
4. Such other matters as may properly come before the Annual Meeting and
at any adjournments thereof, including whether or not to adjourn the
meeting.
The Board of Directors has established September 30, 1997, as the record
date for the determination of stockholders entitled to receive notice of and to
vote at the Annual Meeting and at any adjournments thereof. Only record holders
of the common stock of the Company as of the close of business on that date will
be entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof. In the event there are not sufficient votes for a quorum or to approve
or ratify any of the foregoing proposals at the time of the Annual Meeting, the
Annual Meeting may be adjourned in order to permit further solicitation of
proxies by the Company. A list of stockholders entitled to vote at the Annual
Meeting will be available at SGV Bancorp, Inc., 225 N. Barranca Street, West
Covina, California 91791, for a period of ten days prior to the Annual Meeting
and will also be available at the meeting itself.
By Order of the Board of Directors
/s/ Edie J. Beachboard
Edie J. Beachboard
Corporate Secretary
West Covina, California
October 15, 1997
<PAGE>
SGV BANCORP, INC.
_______________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 20, 1997
_______________________
SOLICITATION AND VOTING OF PROXIES
This proxy statement is being furnished to stockholders of SGV Bancorp,
Inc. (the "Company") in connection with the solicitation by the Board of
Directors ("Board of Directors" or "Board") of proxies to be used at the Annual
Meeting of stockholders (the "Annual Meeting"), to be held on November 20, 1997,
at 2:00 p.m., Pacific Time, at South Hills Country Club, 2655 S. Citrus Street,
West Covina, California and at any adjournments thereof. The 1997 Annual Report
to Stockholders, including consolidated financial statements for the fiscal year
ended June 30, 1997, and a proxy card, accompanies this proxy statement, which
is first being mailed to record holders on or about October 15, 1997.
The Company was formed and became a savings and loan holding company as
part of the mutual to stock conversion (the "Conversion") of First Federal
Savings and Loan Association of San Gabriel Valley (the "Association"), which
was completed on June 28, 1995.
Regardless of the number of shares of common stock owned, it is important
that record holders of a majority of the outstanding shares of common stock be
represented by proxy or in person at the Annual Meeting. Stockholders are
requested to vote by completing the enclosed proxy card and returning it signed
and dated in the enclosed postage-paid envelope. Stockholders are urged to
indicate their vote in the spaces provided on the proxy card. PROXIES SOLICITED
BY THE BOARD OF DIRECTORS OF THE COMPANY WILL BE VOTED IN ACCORDANCE WITH THE
DIRECTIONS GIVEN THEREIN. WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED PROXY
CARDS WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED IN
THIS PROXY STATEMENT, "FOR" THE APPROVAL OF THE SGV BANCORP, INC. 1997 STOCK-
BASED INCENTIVE PLAN AND "FOR" THE RATIFICATION OF DELOITTE & TOUCHE LLP AS
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING JUNE 30, 1998.
Other than the matters set forth on the attached Notice of Annual Meeting
of Stockholders, the Board of Directors knows of no additional matters that will
be presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxy holders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting and at any adjournments
thereof, including whether or not to adjourn the Annual Meeting.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Corporate Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person.
3
<PAGE>
HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN
NAME, YOU WILL NEED APPROPRIATE DOCUMENTATION FROM YOUR RECORD HOLDER TO VOTE
PERSONALLY AT THE ANNUAL MEETING.
The cost of solicitation of proxies on behalf of the Board of Directors
will be borne by the Company. In addition to the solicitation of proxies by
mail, Kissel-Blake, Inc. will assist the Company in soliciting proxies for the
Annual Meeting and will be paid a fee of $4,000 plus out-of-pocket expenses.
Proxies may also be solicited personally or by mail or telephone by directors,
officers and other employees of the Company and the Association without
additional compensation therefor. The Company will also request persons, firms
and corporations holding shares in their names, or in the name of their
nominees, which are beneficially owned by others, to send proxy material to and
obtain proxies from such beneficial owners, and will reimburse such holders for
their reasonable expenses in doing so.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of shares
of common stock of the Company ("Common Stock"), with each share entitling its
owner to one vote on all matters to be voted on at the Annual Meeting, except as
described below. There is no cumulative voting for the election of directors.
The close of business on September 30, 1997, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 2,342,176 shares.
In accordance with the provisions of the Company's Certificate of
Incorporation, record holders of Common Stock who beneficially own in excess of
10% of the outstanding shares of Common Stock (the "Limit") are not entitled to
any vote with respect to the shares held in excess of the Limit. A person or
entity is deemed to beneficially own shares owned by an affiliate of, as well as
by persons acting in concert with, such person or entity. The Company's
Certificate of Incorporation authorizes the Board of Directors (i) to make all
determinations necessary to implement and apply the Limit, including determining
whether persons or entities are acting in concert, and (ii) to demand that any
person who is reasonably believed to beneficially own stock in excess of the
Limit supply information to the Company to enable the Board of Directors to
implement and apply the Limit.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote (after giving
effect to the Limit described above, if applicable) is necessary to constitute a
quorum at the Annual Meeting. In the event that there are not sufficient votes
for a quorum, or to approve or ratify any matter being presented at the time of
the Annual Meeting, the Annual Meeting may be adjourned in order to permit the
further solicitation of proxies.
4
<PAGE>
As to the election of directors, the proxy card being provided by the Board
of Directors enables a stockholder to vote "FOR" the election of the nominees
proposed by the Board of Directors, or to "WITHHOLD AUTHORITY" to vote for one
or more of the nominees being proposed. Under Delaware law and the Company's
bylaws, directors are elected by a plurality of votes cast, without regard to
either broker non-votes, or proxies as to which authority to vote for one or
more of the nominees being proposed is withheld.
As to the approval of the SGV Bancorp, Inc. 1997 Stock-Based Incentive
Plan, by checking the appropriate box, a stockholder may: (i) vote "FOR" the
item; (ii) vote "AGAINST" the item; or (iii) "ABSTAIN" from voting on the item.
Under the Company's bylaws, unless otherwise required by law, all such matters
shall be determined by a majority of the votes cast, without regard to either
broker non-votes, or proxies marked "ABSTAIN" as to that matter.
As to the approval of Deloitte & Touche LLP as independent auditors of the
Company and all other matters that may properly come before the Annual Meeting,
by checking the appropriate box, a stockholder may: (i) vote "FOR" the item;
(ii) vote "AGAINST" the item; or (iii) "ABSTAIN" from voting on the item. Under
the Company's bylaws, unless otherwise required by law, all such matters shall
be determined by a majority of the votes cast, without regard to either broker
non-votes, or proxies marked "ABSTAIN" as to that matter.
Proxies solicited hereby will be returned to the Company's transfer agent,
and will be tabulated by inspectors of election designated by the Board of
Directors, who will not be employed by, or a director of, the Company or any of
its affiliates. After the final adjournment of the Annual Meeting, the proxies
will be returned to the Company for safekeeping.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to those persons believed by
the Company to be beneficial owners of more than 5% of the Company's outstanding
shares of Common Stock on the Record Date as disclosed in certain reports
regarding such ownership filed by such persons with the Company and with the
Securities and Exchange Commission ("SEC"), in accordance with Sections 13(d)
and 13(g) of the Securities Exchange Act of 1934, as amended ("Exchange Act").
Other than those persons listed below, the Company is not aware of any person,
as such term is defined in the Exchange Act, that owns more than 5% of the
Company's Common Stock as of the Record Date.
5
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address Beneficial Percent of
Title of Class of Beneficial Owner Ownership Class
- -------------------- ---------------------------------- ------------- ----------------
<S> <C> <C> <C>
Common Stock First Federal Savings and Loan 190,936(1) 8.2%
Association of San Gabriel Valley
Employee Stock Ownership Plan and
Trust ("ESOP")
225 North Barranca Street
West Covina, California 91791
Common Stock Jeffrey L. Gendell 159,500 6.8%
Tontine Partners, L.P.
200 Park Avenue, Suite 3900
New York, New York 10166
Common Stock Grace & White 317,150 12.2%
515 Madison Avenue, Suite 1700
New York, New York 10022
Common Stock FMR Corp. 140,000 5.4%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
(1) Shares of Common Stock were acquired by the ESOP in the Conversion. The
ESOP Committee of the Board of Directors administers the ESOP. The ESOP
Trustee must vote all allocated shares held in the ESOP in accordance with
the instructions of the participants. As of the record date, 40,914 shares
have been allocated to participant's accounts. Under the ESOP, unallocated
shares will be voted by the ESOP Trustee in a manner calculated to most
accurately reflect the instructions received from participants regarding
the allocated stock so long as such vote is in accordance with the
provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Officers, as
defined in regulations promulgated by the SEC thereunder, and directors, and
persons who own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership with the SEC. Officers,
directors and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. Based on a review of copies of such reports of ownership furnished to the
Company, or written representations that no forms were necessary, the Company
believes that during the past fiscal year all filing requirements applicable to
its officers, directors and greater than ten percent beneficial owners were
complied with.
6
<PAGE>
PROPOSALS TO BE VOTED ON AT THE MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of six (6)
directors and is divided into three classes. Each of the six members of the
Board of Directors of the Company also presently serves as a director of the
Association. Directors are elected for staggered terms of three years each,
with the term of office of only one of the three classes of directors expiring
each year. Directors serve until their successors are elected and qualified.
The two nominees proposed for election at this Annual Meeting are Barrett
G. Andersen and Royce A. Stuzman. No person being nominated as a director is
being proposed for election pursuant to any agreement or understanding between
any person and the Company.
In the event that any such nominee is unable to serve or declines to serve
for any reason, it is intended that the proxies will be voted for the election
of such other person as may be designated by the present Board of Directors.
The Board of Directors has no reason to believe that any of the persons named
will be unable or unwilling to serve. UNLESS AUTHORITY TO VOTE FOR THE NOMINEES
IS WITHHELD, IT IS INTENDED THAT THE SHARES REPRESENTED BY THE ENCLOSED PROXY
CARD, IF EXECUTED AND RETURNED, WILL BE VOTED "FOR" THE ELECTION OF ALL NOMINEES
PROPOSED BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF THE
NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO NOMINEES, CONTINUING DIRECTORS AND EXECUTIVE
OFFICERS
The following table sets forth, as of the Record Date, the names of the
nominees, continuing directors and "named executive officers" of the Company as
defined below, their ages, a brief description of their recent business
experience, including present occupations and employment, certain directorships
held by each, the year in which each became a director of the Association, and
the year in which their terms (or in the case of the nominees, proposed terms)
as director of the Company expire. The table also sets forth the amount of
Common Stock and the percent thereof beneficially owned by each director and
named executive officer and all directors and executive officers as a group as
of the Record Date.
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<PAGE>
<TABLE>
<CAPTION>
Shares of
Name and Principal Expiration Common Stock
Occupation at Present Director of Term as Beneficially Percent of
and for Past Five Years Age Since(1) Director Owned(2) Class
- ------------------------- --- ---------- ----------- --------------- ------------
NOMINEES
<S> <C> <C> <C> <C> <C>
Barrett G. Andersen 49 1983 2000 68,463(3)(4) 2.92%
President and Chief Executive
Officer of the Company and the
Association; Director, President
and Chief Executive Officer of
First Covina.
Royce A. Stutzman 59 1991 2000 11,456(3)(4) 0.49%
CPA and Managing Partner and
Chairman of Vicenti, Lloyd &
Stutzman, business consultants
and certified public accounts;
Chairman of the of Board of the
Association 1995-1996.
CONTINUING DIRECTORS
Thomas A. Patronite 59 1993 1999 18,956(3)(4) 0.81%
President and part owner of
Azusa Engineering, Inc.,
a manufacturing and parts
distribution firm.
John D. Randall 66 1991 1999 12,706(3)(4) 0.54%
Educational consultant;
Retired President of Mt. San
Antonio College.
Irven G. Reynolds 71 1976 1998 34,206(3)(4) 1.46%
Owner of Reynolds Buick/
GMC Trucks; Chairman of
the Board of the Association
1992-1995; Director of First
Covina.
Benjamin S. Wong 46 1991 1998 25,206(3)(4) 1.08%
President of Great Wall
Restaurant, Inc. and General
Manager of Great Wall Restaurant,
a family owned restaurant.
Chairman of the Board since
October 1996.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Shares of
Name and Principal Expiration Common Stock
Occupation at Present Director of Term as Beneficially Percent of
and for Past Five Years Age Since(1) Director Owned(2) Class
- ------------------------- --- ---------- ----------- --------------- ------------
NAMED EXECUTIVE OFFICERS
WHO ARE NOT DIRECTORS
<S> <C> <C> <C> <C> <C>
Ronald A. Ott 41 - - 30,941(3)(4) 1.32%
Executive Vice President,
Chief Financial Officer and
Treasurer of the Company;
Executive Vice President of
the Association since February
1996 and Senior Vice President
and Treasurer of the Association
since 1991.
Dale Schiering 50 - - 11,038 0.47%
Senior Vice President, Chief
Lending Officer
Stock Ownership of all - - - 271,069(5) 11.57%
Directors and Executive Officers
as a Group (13 persons)
</TABLE>
_____________________
(1) Includes years of service as a director of the Association.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting or dispositive power as to shares reported
herein (except as noted).
(3) Includes 3,023 shares awarded to each outside director, 18,002, 13,094 and
6,546 shares awarded to Messrs. Andersen, Ott and Schiering, respectively,
under the First Federal Savings and Loan Association of San Gabriel Valley
1995 Master Stock Compensation Plan ("Stock Compensation Plan"). Such
awards commenced vesting at a rate of 20% per year on January 17, 1997.
Each participant presently has voting power as to the shares awarded.
(4) Includes 2,182 options granted to each outside director and 10,911, 7,637
and 3,819 options granted to Messrs. Andersen, Ott and Schiering,
respectively, under the SGV Bancorp, Inc. 1995 Master Stock Option Plan
("Stock Option Plan") which became exercisable on January 17, 1997.
Excludes 8,728 options granted to each outside director, and 43,642, 30,550
and 15,275 options granted to Messrs. Andersen, Ott and Schiering,
respectively, which are not yet exercisable.
(5) Includes a total of 80,578 shares awarded under the Stock Compensation Plan
as to which voting may be directed. Excludes a total of 192,022 unvested
shares subject to options granted under the Stock Option Plan.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts its business through meetings of the Board
of Directors and through activities of its committees. The Board of Directors
meets monthly and may have additional meetings as needed. During fiscal 1997,
the Board of Directors of the Company held 17 meetings. All of the directors of
the Company attended at least 85% of the total number of the Company's Board
meetings held and committee meetings on which such directors served during
fiscal 1997.
The Boards of Directors of the Company and the Association maintain
committees, the nature and composition of which are described below:
9
<PAGE>
AUDIT COMMITTEE. The Audit Committee of the Company consists of Messrs.
Randall, Stutzman and Wong, all of whom are outside directors. This committee
meets on an quarterly basis. The primary purpose of this committee is to
provide reasonable assurance that financial disclosures made by management
accurately portray the financial condition and results of operation. The
committee also maintains a liaison with the outside auditors and reviews the
adequacy of internal controls. The Audit Committee of the Association met 6
times in fiscal 1997.
NOMINATING COMMITTEE. The Company's Nominating Committee consists of
Messrs. Wong, Reynolds, Randall and Patronite. The committee considers and
recommends the nominees for director to stand for election at the Company's
annual meeting of stockholders. The Company's Certificate of Incorporation and
Bylaws also provide for stockholder nominations of directors. These provisions
require such nominations to be made pursuant to timely notice in writing to the
Secretary of the Company. The stockholder's notice of nomination must contain
all information relating to the nominees which is required to be disclosed by
the Company's bylaws and by the Exchange Act. The Nominating Committee met on
July 21, 1997.
COMPENSATION/BENEFITS COMMITTEE. The Company's Compensation/Benefits
Committee consists of Messrs. Reynolds, Randall and Patronite. This committee
meets to establish compensation for the Chief Executive Officer, approves the
compensation of senior officers and various compensation and benefits to be paid
to employees and to review the incentive compensation programs when necessary.
The Compensation/Benefits Committee met 2 times in fiscal 1997. The Association
also has an Employee Compensation and Benefits Committee, consisting of Messrs.
Reynolds, Randall and Andersen and Ms. Beachboard, a non-voting member, which
met 8 times during fiscal 1997.
DIRECTORS' COMPENSATION
FEE ARRANGEMENTS. Currently, all nonemployee directors of the Association
receive a retainer of $1,600 per month and all nonemployee directors of the
Company receive a retainer of $375 per month. No committee meeting fees are
paid. Directors of First Covina do not receive a fee for service on its Board
of Directors.
STOCK OPTION PLAN. Under the Stock Option Plan, each outside director was
granted non-statutory options to purchase 10,910 shares of Common Stock at an
exercise price of $9.63 per share, which was the fair market value of the shares
on the date of grant (January 17, 1996). Options become exercisable in five (5)
equal annual installments of 20% commencing one year from the date of grant.
STOCK COMPENSATION PLAN. Under the Stock Compensation Plan each outside
director was awarded 3,023 shares of Common Stock. To the extent shares are
available for grants under the Stock Compensation Plan, each outside director
who is elected subsequent to January 17, 1996 will be granted an award equal to
625 shares of Common Stock. Awards to directors vest in five (5) equal annual
installments of 20% commencing one year from the date of grant.
1995 DIRECTORS' DEFERRED FEE STOCK UNIT PLAN. The Association and the
Company have implemented the 1995 Directors' Deferred Fee Stock Unit Plan
("Deferred Fee Plan") for its directors. Under the Deferred Fee Plan, directors
may elect to defer receipt of directors' fees earned by them until their service
with the Board of Directors terminates. The directors' deferred fees are
10
<PAGE>
credited to the account of participating directors under the terms of the
Deferred Fee Plan and are credited with earnings based on several investment
choices, including Company stock. If a participant chooses to have deferred
fees credited to a stock unit account with the Deferred Fee Plan, the
participant will receive a benefit based on the earnings from and appreciation
in the stock of the Company.
EXECUTIVE COMPENSATION
THE REPORT OF THE COMPENSATION COMMITTEE AND THE STOCK PERFORMANCE GRAPH
SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT
INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR THE EXCHANGE ACT, EXCEPT TO THE
EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE,
AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Under rules
established by the SEC, the Company is required to provide certain data and
information in regard to the compensation and benefits provided to the Company's
Chief Executive Officer and other executive officers of the Company. The
disclosure requirements for the Chief Executive Officer and such executive
officers include the use of tables and a report explaining the rationale and
considerations that led to fundamental compensation decisions affecting those
individuals. In fulfillment of this requirement, the Compensation/Benefits
Committee, at the direction of the Board of Directors, has prepared the
following report for inclusion in this Proxy Statement.
GENERAL. The Company is the parent company of the Association and does not
pay any cash compensation to the executive officers of the Company. The Board
of Directors of the Company has established a Compensation/Benefits Committee
consisting of Messrs. Reynolds, Randall and Patronite, all of whom are outside
directors.
A separate committee, the Employee Compensation and Benefits Committee of
the Association, was responsible for establishing the calendar 1997 compensation
and benefits for executive officers of the Association and for reviewing
recommendations of management for compensation and benefits for other officers
and employees of the Association. The Employee Compensation and Benefits
Committee of the Association consists of Directors Reynolds, Randall and Mr.
Andersen and Ms. Beachboard, who is a non-voting member. Mr. Andersen's
compensation and benefits were established by the Board of Directors, based upon
recommendations made by the Committee. Mr. Andersen did not participate in
establishing his compensation and benefits.
COMPENSATION POLICIES. The Employee Compensation and Benefits Committee
established the factors and criteria upon which the executive officers'
compensation was based and how such compensation relates to the Association's
performance, general compensation policies, competitive factors, and regulatory
requirements. The Committee's compensation policies are designed to reward and
provide incentive for executives based upon achievement of individual and
Association goals.
For purposes of determining the competitive market for the Association's
executives, the Committee reviewed the compensation paid to top executives of
thrifts and banks with total assets
11
<PAGE>
in a range of the Association's total asset size and performance results
comparable to those of the Association. This information was generally derived
from the following sources: (1) 1996 SNL Executive Compensation Review for
Thrift Institutions; (2) peer group data taken from the KPMG Peat Marwick
1995/1996 compensation survey which covers California financial institutions;
and (3) the California League of Savings Institutions 1996 Salary Survey.
Executive officers' compensation consisted of salary and long term
incentive compensation in the form of stock options and stock awards. Base
salary levels are within a range consistent with salaries paid by other
institutions that are similar in asset size and geographical markets to the
Association. Each executive's base salary was determined based upon an
evaluation of the individual's performance contribution. Although the
Committee's policy in regard to base salary is subjective and no specific
formula is used, the Committee considered the overall performance of the
Association.
LONG TERM INCENTIVE COMPENSATION. The Company and the Association maintain
the Stock Option Plan and the Stock Compensation Plan under which executive
officers have received grants and awards. See "Salary Compensation Table" and
"Option Grants in Last Fiscal Year." The Committee believes that stock
ownership is a significant incentive in building stockholders' wealth and
aligning the interests of employees and stockholders. Stock options and stock
awards under such plans were allocated by the Committee based upon regulatory
practices and policies, the practices of other recently converted financial
institutions as verified by external surveys and based upon the executive
officers' level of responsibility and contributions to the Company and the
Association.
Effective January 17, 1997, one third of the High Performance award that
was previously forfeited under the Stock Compensation Plan was regranted to the
same executive officers in the same amounts as originally granted. The
regranted shares are base grants and will vest at 25% annually beginning January
17, 1998. In regranting the forfeited shares to the same individuals, the
committee considered the awards as part of an overall compensation package
designed to provide long-term incentives to senior management.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. The CEO's base salary is
currently $172,500 per annum. This amount is near the median for financial
institutions of a similar size with similar characteristics. The CEO's base
salary was increased from $160,500 to $172,500 on January 1, 1997 based on his
performance in the previous 12-month period. The CEO did not receive a bonus.
No specific formula was used nor did the Committee set specified salary levels
based upon the achievement of particular quantifiable objectives or financial
goals. Rather, the Committee considered the overall profitability of the
Company and the contribution made to the Company by the CEO.
The CEO has entered into employment agreements with the Company and the
Association which specify his base salary and requires periodic review of such
salary. In addition, the CEO and other executive officers have the option to
participate in a Supplemental Executive Retirement Plan
12
<PAGE>
(SERP). The CEO and other executive officers also participate in other benefit
plans available to all employees including the Employee Stock Ownership Plan and
the 401(k) Plan. The CEO and other executive officers are also participants in
the Stock Option Plan and Stock Compensation Plan which are intended to align
the interests and performance of executive officers with the long term interests
of the Company's stockholders. The CEO was awarded 54,553 options under the
Stock Option Plan and 18,002 shares under the Stock Compensation Plan which
commenced vesting at a rate of 20% per year beginning on January 17, 1997,
subject to, in the case of two thirds of the awards under the Stock Compensation
Plan, the achievement of certain performance goals established by the Committee.
COMPENSATION/BENEFITS COMMITTEE
Irven G. Reynolds
John D. Randall
Thomas A. Patronite
13
<PAGE>
(This page has been left blank intentionally.)
14
<PAGE>
STOCK PERFORMANCE GRAPH. The following graph shows a comparison of
cumulative total shareholder return on the Company's Common Stock, based on the
market price of the Common Stock with the cumulative total return of companies
in the Nasdaq National Market and Nasdaq Bank Stocks for the period beginning on
June 29, 1995, the day the Company's Common Stock began trading, through June
30, 1997.
COMPARISON OF CUMULATIVE TOTAL RETURNS
SGV Bancorp, Inc.
June 29, 1995 - June 30, 1997
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Summary
<S> <C> <C> <C> <C> <C> <C> <C>
6/29/95 9/29/95 12/29/95 3/29/96 6/28/96 9/30/96 12/31/96
------- ------- -------- ------- ------- ------- --------
SGV Bancorp., Inc. 100.000 116.923 122.308 110.769 104.615 117.692 138.462
Nasdaq Stock Market 100.000 112.883 114.261 119.590 129.352 133.951 140.535
Nasdaq Bank Stocks 100.000 113.424 123.801 128.659 130.786 144.742 163.445
3/31/97 6/30/97
------- -------
SGV Bancorp, Inc. 156.923 171.923
Nasdaq Stock Market 132.919 157.280
Nasdaq Bank Stocks 175.683 204.456
</TABLE>
Notes:
A. The lines represent quarterly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the quarterly interval, based on the fiscal year-end is not a
trading day, the preceding trading day is used.
D. The index level for all series was set to 100,000 on 6/29/95.
15
<PAGE>
SUMMARY COMPENSATION TABLE. The following table shows, for the years ended
June 30, 1997, 1996 and 1995, the cash compensation paid by the Association, as
well as certain other compensation paid or accrued for those years, to the chief
executive officer and those executive officers of the Company and the
Association who received an amount in salary and bonuses in excess of $100,000
in fiscal 1997 ("Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation(1) Awards Payouts
Other Securities
Annual Restricted Underlying LTIP All Other
Name and Principal Compensation Stock Awards Options/SARS Payouts Compensation
Positions Year Salary($)(1) Bonus($) ($)(2) ($)(3) (#)(4) ($)(5) ($)(6)
------------------ ---- ----------- ------- ------------ ------------ ------------ ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Barrett G. Andersen 1997 $202,817 $ -- -- $ 13,800 -- -- $4,837
President and Chief 1996 163,736 -- -- 161,803 54,553 -- 4,912
Executive Officer 1995 146,446 -- -- -- -- -- 9,526
Ronald A. Ott 1997 $155,321 $ -- -- $ 10,040 -- -- $4,027
Executive Vice 1996 125,582 -- -- 117,678 38,187 -- 3,767
President, Chief 1995 112,447 -- -- -- -- -- 4,244
Financial Officer
and Treasurer
Dale Schiering 1997 $115,139 $ -- -- $ 5,014 -- -- $2,619
Senior Vice President
and Chief Lending
Officer
</TABLE>
- ---------------------------
(1) Under Annual Compensation, the column titled "Salary" includes amounts
deferred pursuant to the Association's 401(k) Plan pursuant to which
officers may defer up to 15% of their compensation up to the maximum limits
under the Internal Revenue Code.
(2) There were no (a) perquisites over the lesser of $50,000 or 10% of the
individual's total salary and bonus for the year; (b) payments of above-
market preferential earnings on deferred compensation; (c) payments of
earnings with respect to long-term incentive plans prior to settlement or
maturation; (d) tax payment reimbursements; or (e) preferential discounts
on stock.
(3) Effective January 17, 1997, Messrs. Andersen, Ott and Schiering were
granted 1,200, 873 and 436 shares of Common Stock pursuant to the Stock
Compensation Plan. These shares, together with the 16,802, 12,221 and
6,109 shares granted in 1996, to Messrs. Andersen, Ott and Schiering had a
market value at June 30, 1997, of $250,948, $178,602 and $91,251,
respectively. A committee of non-employee directors determines the date on
which plan share awards vest. Awards granted in 1996 generally vest at 20%
a year. The first vesting occurred on January 17, 1997. Awards granted
effective in 1997 vest at 25% per year commencing January 17, 1998. Two
thirds of the plan share awards to Messrs. Andersen, Ott and Schiering are
subject to the achievement of certain performance goals established by the
committee, in addition to the vesting requirement. See "Compensation
Committee Report on Executive Compensation."
(4) Includes 54,553 and 38,187 options granted to Messrs. Andersen and Ott in
1996, respectively, under the Stock Option Plan which became exercisable in
equal installments at an annual rate of 20% beginning January 17, 1997.
Excludes 19,094 options granted to Mr. Schiering under the Stock Option
Plan in 1996 which became exercisable in equal installments as an annual
rate of 20% beginning January 17, 1997.
(5) For 1997, 1996 and 1995, the Association had no long-term incentive plans,
accordingly, there were no payouts or awards under any long-term incentive
plan.
(6) Consists of amounts contributed by the Association on behalf of the named
individuals pursuant to the Association's 401(k) Plan.
16
<PAGE>
EMPLOYMENT AGREEMENTS. The Association and the Company entered into
employment agreements with Messrs. Andersen and Ott (individually, the
"Executive"). These employment agreements are intended to ensure that the
Association and the Company will be able to maintain a stable and competent
management base. The continued success of the Association and the Company
depends to a significant degree on the skills and competence of Messrs. Andersen
and Ott.
The employment agreements provide for a three-year term for both Messrs.
Andersen and Ott. The employment agreements provide that, commencing on the
first anniversary date and continuing each anniversary date thereafter, the
Board of Directors may extend the agreement for an additional year so that the
remaining term shall be three years, unless written notice of non-renewal is
given by the Board of Directors after conducting a performance evaluation of the
Executive. The agreements provide that the Executive's base salary will be
reviewed annually. The current base salaries for Mr. Andersen and Mr. Ott are
$172,500 and $130,680, respectively. In addition to the base salary, the
agreements provide for, among other things, participation in stock benefits
plans and other fringe benefits applicable to executive personnel. The
agreements provide for termination by the Association or the Company for cause
as defined in the agreements at any time. In the event the Association or the
Company chooses to terminate the Executive's employment for reasons other than
for cause or a change in control of the Association or the Company, or in the
event of the Executive's resignation from the Association and the Company upon:
(i) failure to re-elect the Executive to his current offices; (ii) a material
change in the Executive's functions, duties or responsibilities; (iii) a
relocation of the Executive's principal place of employment by more than 50
miles; (iv) liquidation or dissolution of the Association or the Company; or (v)
a breach of the agreement by the Association or the Company, the Executive or,
in the event of death, his beneficiary would be entitled to receive an amount
equal to the remaining base salary payments due to the Executive and the
contributions that would have been made on the Executive's behalf to any
employee benefit plans of the Association or the Company during the remaining
term of the agreement. The Association and the Company would also continue and
pay for the Executive's life, health and disability coverage for the remaining
term of the Agreement.
Under the agreements, if voluntary or involuntary termination follows a
change in control of the Association or the Company, the Executive or, in the
event of death, his beneficiary, would be entitled to a severance payment equal
to the greater of: (i) the payments due for the remaining terms of the
agreement; or (ii) three times the Executive's average annual compensation for
the five preceding taxable years. The Association and the Company would also
continue the Executive's life, health, and disability coverage for thirty-six
months. Notwithstanding that both agreements provide for a severance payment in
the event of a change in control, the Executive would only be entitled to
receive a severance payment under one agreement. Payments to the Executive
under the Association's agreement will be guaranteed by the Company in the event
that payments or benefits are not paid by the Association.
Payments and benefits under the employment agreements together with
payments from other benefit plans may constitute an excess parachute payment
under Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), resulting in the imposition of an excise tax on the recipient and
denial of the deduction for such excess amounts to the Company and the
Association.
17
<PAGE>
In the event of a change in control of the Association or Company, the total
amount of payments due under the Agreements, based solely on cash compensation
paid to Messrs. Andersen and Ott over the past five fiscal years and excluding
any benefits under any employee benefit plan which may be payable, would be
approximately $801,312.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Association established in
1995 a non-qualified Supplemental Executive Retirement Plan ("SERP") to provide
certain officers and highly compensated employees with additional retirement
benefits. The benefits provided under the SERP will make up the benefits lost
to the SERP participants due to application of limitations on compensation and
maximum benefits applicable to the Association's tax qualified 401(k) Plan and
the ESOP. Benefits will be provided under the SERP at the same time and in the
same form as the benefits will be provided under the 401(k) Plan and the ESOP.
The Association has established an irrevocable grantor's trust ("rabbi
trust") in connection with the SERP. This trust is being funded with
contributions from the Association for the purpose of providing the benefits
promised under the terms of the SERP. The SERP participants have only the
rights of unsecured creditors with respect to the trust's assets, and will not
recognize income with respect to benefits provided by the SERP until such
benefits are received by the participants. The assets of the rabbi trust are
considered part of the general assets of the Association and are subject to the
claims of the Association's creditors in the event of the Association's
insolvency. Earnings on the trust's assets are taxable to the Association. The
trustee of the trust may invest the trust's assets in the Company's stock.
STOCK OPTION PLAN. The Company maintains the Stock Option Plan which
provided discretionary awards to officers and key employees as determined by a
committee of non-employee directors. No options were granted under the Stock
Option Plan to the Named Executive Officers during fiscal 1997.
18
<PAGE>
The following table provides certain information with respect to the number
of shares of Common Stock represented by outstanding options held by the Named
Executive Officers as of June 30, 1997. Also reported are the values for "in-
the-money" options which represent the positive spread between the exercise
price of any such existing stock options and the year end price of the Common
Stock.
Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Value of
Number of Securities Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Option/SARs at
Fiscal Year End(#) Fiscal Year End($)
---------------------------- ---------------------------
Name Exercisable/Unexercisable(1) Exercisable/Unexercisable(2)
- ---- ---------------------------- ---------------------------
<S> <C> <C>
Barrett G. Andersen................. 10,910/43,643 $47,022/$188,101
Ronald A. Ott....................... 7,637/30,550 $32,915/$131,671
</TABLE>
___________________________
(1) The options in this table have an exercise price of $9.63 and became
exercisable at an annual rate of 20% beginning January 17, 1997. The
options will expire ten (10) years from the date of grant.
(2) Based on market value of the underlying stock at the fiscal year end, minus
the exercise price. The market price on June 30, 1997 was $13.94.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
It has been a long standing policy of the Association not to make any loans
to executive officers and directors. This policy was changed on June 16, 1997
by resolution of the Board of Directors. Since the policy change, there have
been no loans made to executive officers or directors. However, prior to the
enactment of the Financial Institutions Reform, Recovery and Enforcement Act of
1989 ("FIRREA"), the policy allowed loans to executive officers and directors on
their principal residences. Except as discussed below, the Association's pre-
FIRREA policy provided that all employee loans made by the Association, which
included loans to its executive officers and directors, be made in the ordinary
course of business and, except as noted below, on substantially the same terms,
including collateral, as those prevailing at the time for comparable
transactions with other persons and could not involve more than the normal risk
of collectibility or present other unfavorable features. The only exceptions
were that origination fees were waived and the interest rate margin was reduced
to 0.5% over the index while the borrower was in the employ of the Association.
As of June 30, 1997, there was one mortgage loan outstanding to a director or an
executive officer made prior to FIRREA with an outstanding balance of $204,961.
This loan was current at September 30, 1997. This loan was made by the
Association in the ordinary course of business, with no favorable terms other
than the waiver of origination fees and the interest rate margin of 0.5% over
the index while employed by the Association and did not involve more than the
normal risk of collectibility or present other unfavorable features.
19
<PAGE>
PROPOSAL 2. APPROVAL OF THE SGV BANCORP, INC.
1997 STOCK-BASED INCENTIVE PLAN
The Board of Directors of the Company is presenting for stockholder
approval the SGV Bancorp, Inc. 1997 Stock-Based Incentive Plan (the "Incentive
Plan" or "Plan"), in the form attached hereto as Appendix A. The purpose of the
Incentive Plan is to attract and retain qualified personnel in key positions,
provide officers, employees and non-employee Directors ("Outside Directors")
with a proprietary interest in the Company as an incentive to contribute to the
success of the Company, promote the attention of management to other
stockholders' concerns and reward employees for outstanding performance. The
following is a summary of the material terms of the Incentive Plan, which is
qualified in its entirety by the complete provisions of the Plan attached as
Appendix A.
GENERAL
The Incentive Plan authorizes the granting of options to purchase Common
Stock, option-related awards and awards of Common Stock (collectively,
"Awards"). Subject to certain adjustments to prevent dilution of Awards to
participants, for each calendar year from and including 1997 through the year
2006, Common Stock equal to an amount of up to one percent (1%) of the adjusted
average Common Stock outstanding used to calculate fully diluted earnings per
share as reported in the annual report to stockholders for the preceding year
shall become available for issuance under the Incentive Plan. Based on the
number of shares of Common Stock outstanding at September 30, 1997, and assuming
that such numbers of shares of Common Stock of the Company outstanding remained
static, the number of shares of Common Stock that could be awarded under the
Plan over the ten year period in the aggregate would be 230,000 shares. In
addition, shares of Commons Stock available for issuance under the Incentive
Plan in previous years but not actually issued, shall be added to the aggregate
number of shares of Common Stock available for issuance in that calendar year
under the Incentive Plan and any shares of Common Stock that are exchanged by a
participant as full or partial payment to the Company in connection with the
exercise of a stock option awarded under the Incentive Plan shall be added to
the aggregate number of shares of Common Stock available for issuance in the
following calendar year. However, for each calendar year from and including
1997 through the year 2006, in no event, except as subject to adjustment as
provided in the Incentive Plan, shall more than 230,000 shares of Common Stock
be cumulatively available for issuance pursuant to the exercise of Incentive
Stock Options awarded under the Incentive Plan. All officers, other employees,
Outside Directors, and consultants and advisors of the Company and its
affiliates, including the Association and its subsidiaries, are eligible to
receive Awards under the Incentive Plan. The Incentive Plan will be
administered by a committee of non-employee directors of the Company (the
"Committee"). Authorized but unissued shares, shares previously issued and
reacquired by the Company or shares purchased in the market may be used to
satisfy Awards under the Incentive Plan. If authorized but unissued shares are
utilized to fund the grant of stock awards or the exercise of options granted
under the Incentive Plan, it would result in an increase in the number of shares
then outstanding, and will have a dilutive effect on the holdings of existing
stockholders.
20
<PAGE>
TYPES OF AWARDS
GENERAL. The Incentive Plan authorizes the grant of Awards to officers,
employees, Outside Directors, and advisors and consultants in the form of: (i)
options to purchase the Company's Common Stock intended to qualify as incentive
stock options under Section 422 of the Code (options which afford tax benefits
to the recipients upon compliance with certain conditions and which do not
result in tax deductions to the Company), referred to as "Incentive Stock
Options"; (ii) options that do not so qualify (options which do not afford
income tax benefits to recipients, but which may provide tax deductions to the
Company), referred to as "Non-Statutory Stock Options"; (iii) limited rights
which are exercisable only upon a change in control of the Company or
Association (as defined in the Incentive Plan) ("Limited Rights"); and (iv)
Stock Awards. Each type of Award granted under the Plan may be subject to
vesting requirements or other conditions imposed by the Committee.
OPTIONS. The Incentive Plan provides for the granting of options to
purchase Common Stock of the Company ("Options") to employees, officers, Outside
Directors, and consultants and advisors. Pursuant to the Incentive Plan, the
Committee has the authority to determine the date, or dates, on which Options
shall become exercisable and any other conditions that must be met prior to
becoming exercisable. The exercise price of an Option may be paid in cash or in
Common Stock at the discretion of the Committee. See "Payout Alternatives" and
"Alternative Option Payments."
Options granted to employees will be qualified as Incentive Stock Options
to the extent permitted under Section 422 of the Code. Incentive Stock Options,
at the discretion of the Committee with the concurrence of the holder, may be
converted into Non-Statutory Stock Options. The exercise price of all Incentive
Stock Options must be 100% of the fair market value of the underlying Common
Stock at the time of grant, except as provided below. In order to qualify as
Incentive Stock Options under Section 422 of the Code, the option must be
granted to an employee, the exercise price must not be less than 100% of the
fair market value on the date of grant, the term of the option may not exceed
ten years from the date of grant, and no more than $100,000 of options may
become exercisable or vest in any fiscal year. Incentive Stock Options granted
to any person who is the beneficial owner of more than 10% of the outstanding
voting stock may be exercised only for a period of five years from the date of
grant and the exercise price must be at least equal to 110% of the fair market
value of the underlying Common Stock on the date of grant.
Each Outside Director, as well as consultants and advisors of the Company
or its affiliates will be eligible to receive Non-statutory Stock Options to
purchase shares of Common Stock. Additionally, officers and employees are
eligible to receive Non-Statutory Stock Options under the Plan to the extent
they are ineligible to receive Incentive Stock Options. The exercise price of
each Non-Statutory Stock option shall equal the fair market value of the Common
Stock on the date the option is granted.
Options granted under the Incentive Plan may be exercised at such times as
the Committee determines, but in no event shall an Option be exercisable more
than ten years from the date of grant (or five years from date of grant for a
10% owner). Unless otherwise determined by the Committee,
21
<PAGE>
upon termination of an optionee's services for any reason other than death,
disability, change in control, retirement or termination for cause, all then
exercisable Options shall remain exercisable for a period of three months
following termination and all unexercisable Options shall be cancelled. Unless
otherwise determined by the Committee, in the event of the death, disability, or
retirement of the optionee or a change in control of the Company or Association,
all unexercisable Options held by such optionee will become fully exercisable
and remain exercisable for up to one year thereafter. In the event of
termination for cause, unless otherwise determined by the Committee, all
exercisable and unexercisable options held by the optionee shall be cancelled.
In the event of the retirement of an optionee, the Committee shall have the
discretion to (1) determine that all unexercisable options shall become
exercisable and remain exercisable for one year, or (2) allow unexercisable
options to continue to vest in accordance with their original terms, provided
the optionee is engaged as a consultant, advisor or advisory director of the
Company or any of its affiliates.
LIMITED RIGHTS. The Incentive Plan also provides the Committee with the
ability to grant a Limited Right concurrently with any Option. Limited Rights
are related to specific Options granted and become exercisable only upon a
change in control of the Association or the Company. Upon exercise, the holder
will be entitled to receive in lieu of purchasing the stock underlying the
Option, a lump sum cash payment equal to the difference between the exercise
price of the related Option and the fair market value of the shares of Common
Stock subject to the Option on the date of exercise of the right less any
applicable tax withholding.
STOCK AWARDS. The Incentive Plan also authorizes the granting of Stock
Awards to officers, employees, Outside Directors, and advisors and consultants.
The Committee has the authority to determine the dates on which Stock Awards
granted will vest or any other conditions which must be satisfied prior to
vesting.
When stock awards are distributed in accordance with the Incentive Plan,
the recipients will also receive amounts equal to accumulated cash and stock
dividends (if any) with respect thereto plus earnings thereon minus any required
tax withholding amounts. Prior to vesting, recipients of Awards may direct the
voting of shares of Common Stock granted to them and held in a trust established
to hold shares of Common Stock which may be granted under the Incentive Plan.
Shares of Common Stock held by the Incentive Plan trust which have not been
allocated or for which voting has not been directed are voted by the trustee in
the same proportion as the awarded shares are voted in accordance with the
directions given by all recipients of Awards.
Unless otherwise determined by the Committee, upon termination of the
services of a holder of a Stock Award for any reason other than death,
disability, change in control, retirement or termination for cause, all such
holder's rights in unvested Stock Awards shall be cancelled. Unless otherwise
determined by the Committee, in the event of the death or disability of the
holder of the Stock Award or termination of the holder's service following a
change in control of the Company or Association, all unvested Stock Awards held
by such individual will immediately become fully vested. In the event of
termination for cause of a holder of a Stock Award, all unvested Stock Awards
held by such individual shall be cancelled. In the event of a Stock Award
holder's retirement, all unvested Stock Awards held by such individual shall be
cancelled, provided, however,
22
<PAGE>
that the Committee, in its discretion, may determine that all unvested Stock
Awards shall continue to vest in accordance with their original terms, provided
the holder is engaged as a consultant, advisor or advisory director of the
Company or any of its affiliates.
TAX TREATMENT
OPTIONS. An optionee will generally not be deemed to have recognized
taxable income upon grant or exercise of any Incentive Stock Option, provided
that shares transferred in connection with the exercise are not disposed of by
the optionee for at least one year after the date the shares are transferred in
connection with the exercise of the option and two years after the date of grant
of the option. If certain holding periods are satisfied, upon disposal of the
shares, the aggregate difference between the per share option exercise price and
the fair market value of the Common Stock is recognized as income taxable at
long term capital gains rates. No compensation deduction may be taken by the
Company as a result of the grant or exercise of Incentive Stock Options,
assuming these holding periods are met.
In the case of the exercise of a Non-statutory Stock Option, an optionee
will be deemed to have received ordinary income upon exercise of the stock
option in an amount equal to the aggregate amount by which the per share
exercise price is exceeded by the fair market value of the Common Stock. In the
event shares received through the exercise of an Incentive Stock Option are
disposed of prior to the satisfaction of the holding periods (a "disqualifying
disposition"), the exercise of the option will be treated as the exercise of a
Non-statutory Stock Option, except that the optionee will recognize the ordinary
income for the year in which the disqualifying disposition occurs. The amount
of any ordinary income deemed to have been received by an optionee upon the
exercise of a Non-statutory Stock Option or due to a disqualifying disposition
will be a deductible expense of the Company for tax purposes.
LIMITED RIGHTS. In the case of Limited Rights, the holder would have to
include the amount paid to him upon the exercise of the Limited Right in his
gross income for federal income tax purposes in the year in which the payment is
made and the Company would be entitled to a deduction for federal income tax
purposes of the amount paid.
STOCK AWARDS. When shares of Common Stock, as Stock Awards, are
distributed, the recipient is deemed to receive ordinary income equal to the
fair market value of such shares at the date of distribution plus any dividends
and earnings on such shares (provided such date is more than six months after
the date of grant) and the Company is permitted a commensurate compensation
expense deduction for income tax purposes.
PERFORMANCE AWARDS.
GENERAL. The Incentive Plan provides the Committee with the ability to
condition or restrict the vesting or exercise of any Award upon the achievement
of performance targets or goals as set forth under the Incentive Plan. Any
Award subject to such conditions or restrictions is considered to be a
"Performance Award." Subject to the express provisions of the Plan and as
discussed in this
23
<PAGE>
paragraph, the Committee has discretion to determine the terms of any
Performance Award, including the amount of the award, or a formula for
determining such, the performance criteria and level of achievement related to
these criteria which determine the amount of the award granted, issued,
retainable and/or vested, the period as to which performance shall be measured
for determining achievement of performance (a "performance period"), the timing
of delivery of any awards earned, forfeiture provisions, the effect of
termination of employment for various reasons, and such further terms and
conditions, in each case not inconsistent with the Plan, as may be determined
from time to time by the Committee. For purposes of satisfying the requirements
for "performance based compensation" under Code Section 162(m), the performance
criteria upon which Performance Awards are granted, issued, retained and/or
vested shall be a measure based on one or more Qualifying Performance Criteria
(as defined below). Notwithstanding satisfaction of any performance goals, the
number of shares granted, issued, retainable and/or vested under a Performance
Award may be adjusted by the Committee on the basis of such further
considerations as the Committee in its sole discretion shall determine.
However, the Committee may not increase the amount earned upon satisfaction of
any performance goal by any Participant who is a "covered employee" within the
meaning of Section 162(m) of the Code.
QUALIFYING PERFORMANCE CRITERIA AND SECTION 162(M) LIMITS. Subject to
stockholder approval of the Plan, the performance criteria for any Performance
Award that is intended to satisfy the requirements for "performance based
compensation" under the Code Section 162(m) shall be based upon any one or more
of the following performance criteria, either individually, alternatively or in
any combination, applied to either the Company as a whole or to a business unit
or subsidiary, either individually, alternatively or in any combination, and
measured either on an absolute basis or relative to a pre-established target, to
previous years' results or to a designated comparison group, in each case as
preestablished by the Committee under the terms of the Award: net income, as
adjusted for non-recurring items; cash earnings; earnings per share; cash
earnings per share; return on equity; return on assets; assets; stock price;
total shareholder return; capital; net interest income; market share; cost
control or efficiency ratio; and asset growth.
PAYOUT ALTERNATIVES
The Committee has the discretion to determine the form of payment it shall
use in distributing payments for all Awards. If the Committee requests any or
all participants to make an election as to form of payment, it shall not be
considered bound by the election. Any shares of Common Stock tendered in
payment of an obligation arising under the Incentive Plan or applied to tax
withholding amounts shall be valued at the fair market value of the Common
Stock.
ALTERNATE OPTION PAYMENTS
Subject to the terms of the Incentive Plan, the Committee also has
discretion to determine the form of payment for the exercise of an Option. The
Committee may indicate acceptable forms in the Award Agreement covering such
Options or may reserve its decision to the time of exercise. No Option is to be
considered exercised until payment in full is accepted by the Committee. The
Committee may permit the following forms of payment for Options: (a) in cash or
by certified or
24
<PAGE>
cashiers check, or (b) by tendering previously acquired shares of Common Stock.
Any shares of Common Stock tendered in payment of the exercise price of an
Option shall be valued at the Fair Market Value of the Common Stock on the date
prior to the date of exercise.
AMENDMENT
The Board of Directors may amend the Incentive Plan in any respect, at any
time, provided that no amendment may affect the rights of the holder of an Award
without his or her permission.
ADJUSTMENTS
In the event of any change in the outstanding shares of Common Stock of the
Company by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, or other increase or decrease in such shares
without receipt or payment of consideration by the Company, or in the event an
extraordinary capital distribution is made, including the payment of an
extraordinary dividend, the Committee may make such adjustments to previously
granted Awards, to prevent dilution, diminution or enlargement of the rights of
the holder. All Awards under this Incentive Plan shall be binding upon any
successors or assigns of the Company.
NONTRANSFERABILITY
Unless determined otherwise by the Committee, awards under the Incentive
Plan shall not be transferable by the recipient other than by will or the laws
of intestate succession or pursuant to a domestic relations order. With the
consent of the Committee, a participant may designate a person or his or her
estate as beneficiary of any award to which the recipient would then be
entitled, in the event of the death of the participant.
STOCKHOLDER APPROVAL AND EFFECTIVE DATE OF PLAN
The Incentive Plan became effective on July 21, 1997 (the "Effective
Date"), the date it was approved by the Board of Directors. The Incentive Plan
shall be presented to shareholders for ratification in order to: (a) obtain
preferential tax treatment for Incentive Stock Options and (b) maintain listing
on The Nasdaq National Market. The failure to obtain shareholder ratification
for such purposes will not effect the validity of the Incentive Plan and any
Awards made under the Plan; provided, however, that if the Incentive Plan is not
ratified by stockholders in accordance with IRS regulations, the Plan shall
remain in full force and effect, and any Incentive Stock Options granted under
the Plan shall be deemed to be Non-Statutory Stock Options and any Award
intended to comply with Section 162(m) of the Code shall not comply with Section
162(m) of the Code.
TERMINATION
The right to grant Awards under the Incentive Plan will terminate upon the
earlier of: (i) ten (10) years after the Effective Date; or (ii) the issuance of
a number of shares of Common Stock
25
<PAGE>
pursuant to the exercise of Options or the distribution of Stock Awards which
together with the exercise of Limited Rights is equivalent to the maximum number
of shares reserved under the Plan. The Board of Directors has the right to
suspend or terminate the Incentive Plan at any time, provided that no such
action will, without the consent of a participant, adversely affect a
participant's vested rights under a previously granted Award.
NEW PLAN BENEFITS
As of the date of this Proxy Statement, 8,183 options have been granted to
Senior Vice President Michael Quigley. The options are intended to be Incentive
Stock Options upon approval of this Plan by shareholders. If the 1997 Stock-
Based Incentive Plan is not approved, the 8,183 options will be considered non-
statutory.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED PROXY
CARD, IF EXECUTED AND RETURNED, WILL BE VOTED "FOR" THE APPROVAL OF THE SGV
BANCORP, INC. 1997 STOCK-BASED INCENTIVE PLAN.
26
<PAGE>
PROPOSAL 3. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended June 30, 1997
were Deloitte & Touche LLP. The Company's Board of Directors has reappointed
Deloitte & Touche LLP to continue as independent auditors for the Association
and the Company for the year ending June 30, 1998, subject to ratification of
such appointment by the stockholders.
Representatives of Deloitte & Touche LLP will be present at the Annual
Meeting. They will be given an opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions from
stockholders present at the Annual Meeting.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED PROXY
CARD WILL BE VOTED "FOR" RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE
LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
ADDITIONAL INFORMATION
STOCKHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement and form of
proxy relating to the 1998 Annual Meeting of Stockholders, a stockholder
proposal must be received by the Secretary of the Company at the address set
forth on the first page of this Proxy Statement not later than June 17, 1998.
Any such proposal will be subject to 17 C.F.R. (S) 240.14a-8 of the Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING
The bylaws of the Company provide an advance notice procedure for a
stockholder to properly bring business before an Annual Meeting. The
stockholder must give written advance notice to the Secretary of the Company not
less than ninety (90) days before the date originally fixed for such meeting,
provided, however, that in the event that less than one hundred (100) days
notice or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the tenth day following the date on which the
Company's notice to stockholders of the annual meeting date was mailed or such
public disclosure was made. The advance notice by stockholders must include the
stockholder's name and address, as they appear on the Company's record of
stockholders, a brief description of the proposed business, the reason for
conducting such business at the Annual Meeting, the class and number of shares
of the Company's capital stock that are beneficially owned by such stockholder
and any material interest of such stockholder in the proposed business. In the
case of
27
<PAGE>
nominations to the Board of Directors, certain information regarding the
nominees must be provided. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement or the proxy relating to an annual
meeting any stockholder proposal which does not meet all of the requirements for
inclusion established by the SEC in effect at the time such proposal is
received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are then present at the Annual
Meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the Annual Meeting.
By Order of the Board of Directors
/s/ Edie J. Beachboard
Edie J. Beachboard
Corporate Secretary
West Covina, California
October 15, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE
REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
28
<PAGE>
APPENDIX A
FORM OF
SGV BANCORP, INC.
1997 STOCK-BASED INCENTIVE PLAN
1. DEFINITIONS.
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(a) "Affiliate" means any "subsidiary corporation" of the Holding
Company, as such term is defined in Section 424(f) of the Code.
(b) "Association" means First Federal Savings and Loan Association of San
Gabriel Valley.
(c) "Award" means, individually or collectively, a grant under the Plan
of Non-Statutory Stock Options, Incentive Stock Options, Limited Rights and
Stock Awards.
(d) "Award Agreement" means an agreement evidencing and setting forth the
terms of an Award granted under the Plan.
(e) "Board of Directors" means the board of directors of the Holding
Company.
(f) "Change in Control" means a change in control of the Association or
Holding Company of a nature that (i) would be required to be reported in
response to Item 1 of the current report on Form 8-K, as in effect on the date
hereof, pursuant to Sections 13 or 15(d) of the Exchange Act; (ii) results in a
"change of control" or "acquisition of control" within the meaning of the
regulations promulgated by the Office of Thrift Supervision ("OTS") (or its
predecessor agency) found at 12 C.F.R. Part 574, as in effect on the date
hereof; provided, however, that in applying the definition of change in control
as set forth under such regulations the Board of Directors shall substitute its
judgment for that of the OTS; or (iii) without limitation Change in Control
shall be deemed to have occurred at such time as (A) any "person" (as the term
is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Association or the Holding Company
representing 20% or more of the Association's or the Holding Company's
outstanding securities except for any securities of the Association purchased by
the Holding Company and any securities purchased by any tax-qualified employee
benefit plan of the Association; or (B) individuals who constitute the Board of
Directors on the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved by a vote of
at least three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Holding Company's stockholders was approved
by a nominating committee serving under the Incumbent Board, shall be, for
purposes of this clause (B), considered as though he were a member of the
Incumbent Board; or (C) a plan of reorganization, merger, consolidation, sale of
all or substantially all the assets of the Association or the Holding Company or
similar transaction occurs in which the Association or Holding Company is not
the resulting entity; or (D) a solicitation of shareholders of the Holding
Company, by someone other than the current management of the Holding Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Holding Company or Association or similar
<PAGE>
transaction with one or more corporations, as a result of which the outstanding
shares of the class of securities then subject to the plan are exchanged for or
converted into cash or property or securities not issued by the Association or
the Holding Company; or (E) a tender offer is made for 20% or more of the voting
securities of the Association or the Holding Company.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the committee designated by the Board of Directors
pursuant to Section 2 to administer the Plan.
(i) "Common Stock" means the Common Stock of the Holding Company, par
value, $.01 per share.
(j) "Date of Grant" means the effective date of an Award.
(k) "Disability" means any mental or physical condition with respect to
which the Participant qualifies for and receives benefits for under a long-term
disability plan of the Holding Company or an Affiliate, or in the absence of
such a long-term disability plan or coverage under such a plan, "disability"
shall mean a physical or mental condition which, in the sole discretion of the
Committee, is reasonably expected to be of indefinite duration and to
substantially prevent the Participant from fulfilling his duties or
responsibilities to the Holding Company or an Affiliate.
(l) "Effective Date" means July 21, 1997.
(m) "Employee" means any person employed by the Holding Company or an
Affiliate. Directors who are employed by the Holding Company or an Affiliate
shall be considered Employees under the Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(o) "Exercise Price" means the price at which a Participant may purchase
a share of Common Stock pursuant to an Option.
(p) "Extraordinary Dividend" means a distribution to stockholders by the
Holding Company of earnings or stockholders' equity which: (i) exceeds net
earnings for the period for which the distribution is paid or (ii) will be
treated by the stockholders receiving such distribution as a return of capital
for federal income tax purposes.
(q) "Fair Market Value" means the market price of Common Stock,
determined by the Committee as follows:
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<PAGE>
(i) If the Common Stock was traded on the date in question on The
Nasdaq Stock Market then the Fair Market Value shall be equal
to the last transaction price quoted for such date by The
Nasdaq Stock Market;
(ii) If the Common Stock was traded on a stock exchange on the date
in question, then the Fair Market Value shall be equal to the
closing price reported by the applicable composite transactions
report for such date; and
(iii) If neither of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good
faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported in The Wall Street Journal. The
-----------------------
Committee's determination of Fair Market Value shall be conclusive and binding
on all persons.
(r) "Holding Company" means SGV BANCORP, INC.
(s) "Incentive Stock Option" means a stock option granted to a
Participant pursuant to Section 7 of the Plan that is intended to meet the
requirements of Section 422 of the Code.
(t) "Limited Right" means an Award granted to a Participant pursuant to
Section 8 of the Plan.
(u) "Non-Statutory Stock Option" means a stock option granted to a
Participant pursuant to the terms of the Plan but which is not intended to be
and is not identified as an Incentive Stock Option or a stock option granted
under the Plan which is intended to be and is identified as an Incentive Stock
Option but which does not meet the requirements of Section 422 of the Code.
(v) "Option" means an Incentive Stock Option or Non-Statutory Stock
Option.
(w) "Outside Director" means a member of the Board of Directors of the
Holding Company or an Affiliate who is not also an Employee of the Holding
Company or an Affiliate.
(x) "Participant" means any person who holds an outstanding Award.
(y) "Performance Award" means an Award granted to a Participant pursuant
to Section 10 of the Plan.
(z) "Performance Goal" means an objective for the Holding Company or any
Affiliate or any unit thereof or any individual that may be established by the
Committee for a Performance Award to become vested, earned or exercisable.
Performance Goals applicable to Performance
3
<PAGE>
Awards are intended to constitute "performance-based" compensation within the
meaning of Section 162(m) of the Code and may be based on one or more of the
following criteria:
(i) net income, as adjusted for non-recurring items
(ii) cash earnings
(iii) earnings per share
(iv) cash earnings per share
(v) return on equity
(vi) return on assets
(vii) assets
(viii) stock price
(ix) total shareholder return
(x) capital
(xi) net interest income
(xii) market share
(xiii) cost control or efficiency ratio
(xiv) asset growth
(aa) "Plan" means the SGV BANCORP, INC. 1997 Stock-Based Incentive Plan.
(bb) "Retirement" means a termination of employment (i) from the Holding
Company or an Affiliate as defined in the First Federal Savings and Loan
Association of San Gabriel Valley Employees' Savings and Profit Sharing Plan if
the individual were a participant in such Defined Contribution Plan or (ii)
under circumstances designated as a Retirement by the Committee. "Retirement"
with respect to an Outside Director means the termination of service from the
Board of Directors of the Holding Company and any Affiliate following written
notice to the Board of Directors of such Outside Director's intention to retire.
(cc) "Stock Award" means an Award granted to a Participant pursuant to
Section 9 of the Plan.
(dd) "Termination for Cause" shall mean, in the case of an Outside
Director, removal from the Board of Directors or, in the case of an Employee,
termination of employment, because of a material loss to the Holding Company or
an Affiliate caused by the Participant's intentional failure to perform stated
duties, personal dishonesty, willful violation of any law, rule, regulation
(other than traffic violations or similar offenses) or final cease and desist
order, as determined by the Board of Directors. No act, or failure to act, on a
Participant's part shall be "willful" unless done, or omitted to be done, not in
good faith and without reasonable belief that the action or omission was in the
best interest of the Holding Company or an Affiliate.
(ee) "Trust" means a trust established by the Board of Directors in
connection with this Plan to hold Plan assets for the purposes set forth herein.
4
<PAGE>
(ff) "Trustee" means any person or entity approved by the Board of
Directors to hold legal title to any of the Trust assets for the purposes set
forth under the Plan.
2. ADMINISTRATION.
--------------
(a) The Committee shall administer the Plan. The Committee shall consist
of two or more disinterested directors of the Holding Company, who shall be
appointed by the Board of Directors. A member of the Board of Directors shall
be deemed to be "disinterested" only if he satisfies (i) such requirements as
the Securities and Exchange Commission may establish for non-employee directors
administering plans intended to qualify for exemption under Rule 16b-3 (or its
successor) under the Exchange Act and (ii) such requirements as the Internal
Revenue Service may establish for outside directors acting under plans intended
to qualify for exemption under Section 162(m)(4)(C) of the Code. The Board of
Directors may also appoint one or more separate committees of the Board of
Directors, each composed of one or more directors of the Holding Company or an
Affiliate who need not be disinterested and who may grant Awards and administer
the Plan with respect to Employees and Outside Directors who are not considered
officers or directors of the Holding Company under Section 16 of the Exchange
Act.
(b) The Committee shall (i) select the Employees and Outside Directors
who are to receive Awards under the Plan, (ii) determine the type, number,
vesting requirements and other features and conditions of such Awards, (iii)
interpret the Plan and (iv) make all other decisions relating to the operation
of the Plan. The Committee may adopt such rules or guidelines as it deems
appropriate to implement the Plan. The Committee's determinations under the Plan
shall be final and binding on all persons.
(c) Each Award shall be evidenced by a written agreement ("Award
Agreement") containing such provisions as may be approved by the Committee.
Each Award Agreement shall constitute a binding contract between the Holding
Company or an Affiliate and the Participant, and every Participant, upon
acceptance of the Award Agreement, shall be bound by the terms and restrictions
of the Plan and the Award Agreement. The terms of each Award Agreement shall be
in accordance with the Plan, but each Award Agreement may include such
additional provisions and restrictions determined by the Committee, in its
discretion, provided that such additional provisions and restrictions are not
inconsistent with the terms of the Plan. In particular, the Committee shall set
forth in each Award Agreement (i) the type of Award granted (ii) the Exercise
Price of an Option or Stock Appreciation Right, (iii) the number of shares
subject to the Award; (iv) the expiration date of the Award, (v) the manner,
time, and rate (cumulative or otherwise) of exercise or vesting of such Award,
and (vi) the restrictions, if any, placed upon such Award, or upon shares which
may be issued upon exercise of such Award. The Chairman of the Committee and
such other directors and officers as shall be designated by the Committee is
hereby authorized to execute Award Agreements on behalf of the Company or an
Affiliate and to cause them to be delivered to the recipients of Awards.
5
<PAGE>
(d) The Committee may delegate all authority for: (i) the determination
of forms of payment to be made by or received by the Plan and (ii) the execution
of any Award Agreement. The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management of the
Holding Company or an Affiliate for determinations to be made pursuant to the
Plan, including the attainment of Performance Goals. However, only the Committee
or a portion of the Committee may certify the attainment of a Performance Goal.
3. TYPES OF AWARDS AND RELATED RIGHTS.
-----------------------------------
The following Awards may be granted under the Plan:
(a) Non-Statutory Stock Options
(b) Incentive Stock Options
(c) Limited Rights
(d) Stock Awards
4. STOCK SUBJECT TO THE PLAN.
-------------------------
Subject to adjustment as provided in Section 15 hereof, for each calendar
year from and including 1997 through the year 2006, Common Stock equal to an
amount of up to one percent (1%) of the adjusted average common shares
outstanding of the Holding Company used to calculate fully diluted earnings per
share as reported in the annual report to shareholders for the preceding year,
shall become available for issuance under the Plan. In addition, (a) shares of
Common Stock available for issuance under the Plan in previous years but not
actually issued, shall be added to the aggregate number of shares of Common
Stock available for issuance in that calendar year under the Plan; and (b) any
shares of Common Stock which are exchanged by a Participant as full or partial
payment to the Holding Company in connection with the exercise of a stock option
awarded under the Plan shall be added to the aggregate number of shares of
Common Stock available for issuance in the following calendar year.
However, for each calendar year from and including 1997 through the year
2006, in no event, except as subject to adjustment as provided in Section 15,
shall more than 230,000 shares of Common Stock be cumulatively available for
issuance pursuant to the exercise of Incentive Stock Options awarded under the
Plan.
Any shares issued under the Plan may consist in whole or in part of
authorized and unissued shares or of treasury shares, and no fractional shares
may be issued under the Plan.
5. ELIGIBILITY.
-----------
The Committee, in its sole discretion, may grant Awards to any or all
Employees and Outside Directors, as well as to consultants and advisors of the
Holding Company or an Affiliate.
6
<PAGE>
6. NON-STATUTORY STOCK OPTIONS.
---------------------------
The Committee may, subject to the limitations of this Plan and the
availability of shares of Common Stock reserved but not previously awarded under
this Plan, grant Non-statutory Stock Options upon such terms and conditions as
it may determine.
(a) Exercise Price. The Committee shall determine the Exercise Price of
--------------
each Non-statutory Stock Option. However, the Exercise Price shall not be less
than 100% of the Fair Market Value of the Common Stock on the Date of Grant.
(b) Terms of Non-statutory Stock Options. The Committee shall determine
------------------------------------
the term during which a Participant may exercise a Non-statutory Stock Option,
but in no event may a Participant exercise a Non-statutory Stock Option, in
whole or in part, more than ten (10) years from the Date of Grant. The
Committee shall also determine the date on which each Non-statutory Stock
Option, or any part thereof, first becomes exercisable and any terms or
conditions a Participant must satisfy as prior to each Non-statutory Stock
Option becoming exercisable. The shares of Common Stock underlying each Non-
statutory Stock Option installment may be purchased in whole or in part by the
Participant at any time during the term of such Non-statutory Stock Option after
such installment becomes exercisable.
(c) Non-Transferability. Unless otherwise determined by the Committee in
-------------------
accordance with this Section 6(c), a Participant may not transfer, assign,
hypothecate, or dispose of in any manner, other than by will or the laws of
intestate succession, a Non-statutory Stock Option. The Committee may, however,
in its sole discretion, permit transferability or assignment of a Non-statutory
Stock Option if such transfer or assignment is, in its sole determination, for
valid estate planning purposes and such transfer or assignment is permitted
under the Code and Rule 16b-3 under the Exchange Act. For purposes of this
Section 6(c), a transfer for valid estate planning purposes includes, but is not
limited to: (a) a transfer to a revocable intervivos trust as to which the
Participant is both the settlor and trustee, (b) a transfer for no consideration
to: (i) any member of the Participant's Immediate Family, (ii) any trust solely
for the benefit of members of the Participant's Immediate Family, (iii) any
partnership whose only partners are members of the Participant's Immediate
Family, and (iv) any limited liability corporation or corporate entity whose
only members or equity owners are members of the Participant's Immediate Family.
For purposes of this Section 6(c), "Immediate Family" includes, but is not
necessarily limited to, a Participant's parents, grandparents, spouse, children,
grandchildren, siblings (including half bothers and sisters), and individuals
who are family members by adoption. Nothing contained in this Section 6(c)
shall be construed to require the Committee to give its approval to any transfer
or assignment of any Non-statutory Stock Option or portion thereof, and approval
to transfer or assign any Non-statutory Stock Option or portion thereof does not
mean that such approval will be given with respect to any other Non-statutory
Stock Option or portion thereof. The transferee or assignee of any Non-
statutory Stock Option shall be subject to all of the terms and conditions
applicable to such Non-statutory Stock Option immediately prior to the transfer
or assignment and shall be subject to any other conditions proscribed by the
Committee with respect to such Non-statutory Stock Option.
7
<PAGE>
(d) Termination of Employment or Service (General). Unless otherwise
----------------------------------------------
determined by the Committee, upon the termination of a Participant's employment
or service for any reason other than Disability, death, Retirement or
Termination for Cause, the Participant's Non-statutory Stock Options shall be
exercisable only as to those shares that were immediately exercisable by the
Participant at the date of termination and only for a period of three (3) months
following termination.
(e) Termination of Employment or Service (Retirement). In the event of a
-------------------------------------------------
Participant's Retirement, the Participant's Non-statutory Stock Options shall be
exercisable only as to those shares that were immediately exercisable by the
Participant at the date of Retirement and remain exercisable for a period of one
(1) year; provided however, that upon the Participant's Retirement, the
Committee, in its discretion, may determine that all unexercisable Non-statutory
Stock Options shall continue to become exercisable in accordance with the Award
Agreement if the Participant is immediately engaged by the Holding Company or an
Affiliate as a consultant or advisor or continues to serve the Holding Company
or an Affiliate as a director or advisory director.
(f) Termination of Employment or Service (Disability or death). Unless
----------------------------------------------------------
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or service due to Disability or death, all Non-
statutory Stock Options held by such Participant shall immediately become
exercisable and remain exercisable for a period one (1) year.
(g) Termination of Employment or Service (Change in Control). Unless
--------------------------------------------------------
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or service due to a Change in Control, all Non-
statutory Stock Options held by such Participant shall immediately become
exercisable and remain exercisable for a period one (1) year.
(h) Termination of Employment or Service (Cause). Unless otherwise
--------------------------------------------
determined by the Committee, in the event of a Participant's Termination for
Cause, all rights with respect to the Participant's Non-statutory Stock Options
shall expire immediately upon the effective date of such Termination for Cause.
(i) Payment. Payment due to a Participant upon the exercise of a Non-
-------
statutory Stock Option shall be made in the form of shares of Common Stock.
7. INCENTIVE STOCK OPTIONS.
-----------------------
The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Incentive Stock Options to an Employee. Incentive Stock Options granted
pursuant to the Plan shall be subject to the following terms and conditions:
(a) Exercise Price. The Committee shall determine the Exercise Price of
--------------
each Incentive Stock Option. However, the Exercise Price shall not be less
than 100% of the Fair Market Value
8
<PAGE>
of the Common Stock on the Date of Grant. However, if at the time an Incentive
Stock Option is granted, the Employee owns or is treated as owning, for purposes
of Section 422 of the Code, Common Stock representing more than 10% of the total
combined voting securities of the Holding Company ("10% Owner"), the Exercise
Price shall not be less than 110% of the Fair Market Value of the Common Stock
on the Date of Grant.
(b) Amounts of Incentive Stock Options. To the extent the aggregate Fair
----------------------------------
Market Value of shares of Common Stock with respect to which Incentive Stock
Options that are exercisable for the first time by an Employee during any
calendar year under the Plan and any other stock option plan of the Holding
Company or an Affiliate exceeds $100,000, or such higher value as may be
permitted under Section 422 of the Code, such Options in excess of such limit
shall be treated as Non-statutory Stock Options. Fair Market Value shall be
determined as of the Date of Grant with respect to each such Incentive Stock
Option.
(c) Terms of Incentive Stock Options. The Committee shall determine the
--------------------------------
term during which a Participant may exercise an Incentive Stock Option, but in
no event may a Participant exercise an Incentive Stock Option, in whole or in
part, more than ten (10) years from the Date of Grant. If at the time an
Incentive Stock Option is granted to an Employee who is a 10% Owner, the
Incentive Stock Option granted to such Employee shall not be exercisable after
the expiration of five (5) years from the Date of Grant. The Committee shall
also determine the date on which each Incentive Stock Option, or any part
thereof, first becomes exercisable and any terms or conditions a Participant
must satisfy prior to the Incentive Stock Option becoming exercisable. The
shares of Common Stock underlying each Incentive Stock Option may be purchased
in whole or in part at any time during the term of such Incentive Stock Option
after such Option becomes exercisable.
(d) Non-Transferability. No Incentive Stock Option shall be transferable
-------------------
except by will or the laws of descent and distribution and is exercisable,
during his lifetime, only by the Employee to whom the Committee grants the
Incentive Stock Option. The designation of a beneficiary does not constitute a
transfer.
(e) Termination of Employment (General). Unless otherwise determined by
-----------------------------------
the Committee, upon the termination of an Employee's employment for any reason
other than Disability, death, Retirement or Termination for Cause, the
Employee's Incentive Stock Options shall be exercisable only as to those
Incentive Stock Options that were immediately exercisable by the Employee at the
date of termination and only for a period of three (3) months following such
termination.
(f) Termination of Employment (Retirement). In the event of an Employee's
--------------------------------------
Retirement, the Employee's Incentive Stock Options shall be exercisable only as
to those shares that were immediately exercisable by the Employee at the date of
Retirement and remain exercisable for a period of one (1) year; provided
however, that upon the Employee's Retirement, the Committee, in its discretion,
may determine that all unexercisable Incentive Stock Options shall continue to
become exercisable in accordance with the Award Agreement if the Employee is
immediately engaged by
9
<PAGE>
the Holding Company or an Affiliate as a consultant or advisor or continues to
serve the Holding Company or an Affiliate as a director or advisory director.
(g) Termination of Employment (Disability or Death). Unless otherwise
-----------------------------------------------
determined by the Committee, in the event of the termination of an Employee's
service for Disability or death, all unvested Incentive Stock Options held by
such Employee shall immediately become exercisable and shall remain exercisable
for one (1) year after such termination.
(h) Termination of Employment (Change in Control). Unless otherwise
---------------------------------------------
determined by the Committee, in the event of the termination of an Employee's
service for Change in Control, all unvested Incentive Stock Options held by such
Employee shall immediately become exercisable and shall remain exercisable for
one (1) year after such termination.
(i) Termination of Employment (Cause). Unless otherwise determined by
---------------------------------
the Committee, in the event of an Employee's Termination for Cause, all rights
under such Employee's Incentive Stock Options shall expire immediately upon the
effective date of such Termination for Cause. Any Option which, by operation of
this provision, does not meet the requirements of Section 422 of the Code, shall
be considered a Non-Statutory Stock Option.
(j) Payment. Payment due to a Participant upon the exercise of an
-------
Incentive Stock Option shall be made in the form of shares of Common Stock.
(k) Disqualifying Dispositions. Each Award Agreement with respect to an
--------------------------
Incentive Stock Option shall require the Participant to notify the Committee of
any disposition of shares of Common Stock issued pursuant to the exercise of
such Option under the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions), within 10 days of such
disposition. As of the Effective Date of this Plan, a disqualifying disposition
means any disposition of the shares of Common Stock within two years from the
date of the grant of the Incentive Stock Option to which such shares relate or
within one year of the date such shares are transferred to the Participant
pursuant to his exercise of the Incentive Stock Option.
8. LIMITED RIGHTS.
--------------
Simultaneously with the grant of any Option, the Committee may grant a
Limited Right with respect to all or some of the shares of Common Stock covered
by such Option, subject to the following terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be exercisable in
---------------
whole or in part before the expiration of six (6) months from the Date of Grant
of the Limited Right. A Limited Right may be exercised only in the event of a
Change in Control. The Limited Right may be exercised only when the underlying
Option is eligible to be exercised, and only when the Fair Market Value of the
underlying shares on the day of exercise is greater than the Exercise Price of
the underlying Option. Upon exercise of a Limited Right, the underlying Option
shall cease to be
10
<PAGE>
exercisable and shall be terminated. Upon exercise or termination of an Option,
any related Limited Rights shall terminate. The Limited Right is transferable
only when the underlying Option is transferable and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall promptly
-------
receive from the Holding Company or an Affiliate an amount of cash equal to the
difference between the Exercise Price of the underlying Option and the Fair
Market Value of the Common Stock subject to such Option on the date the Limited
Right is exercised, multiplied by the number of shares with respect to which
such Limited Right is being exercised.
9. STOCK AWARDS.
------------
The Committee may, subject to the limitations of the Plan, make Stock
Awards which shall consist of the grant of some number of shares of Common Stock
to a Participant subject to the following terms and conditions:
(a) Grants of the Stock Awards. Stock Awards may only be made in whole
--------------------------
shares of Common Stock. Stock Awards may only be granted from shares reserved
under the Plan and available for award at the time the Stock Award is made to
the Participant.
(b) Terms of the Stock Awards. The Committee shall determine the dates
-------------------------
on which Stock Awards granted to a Participant shall vest and any terms or
conditions which must be satisfied prior to the vesting of any installment or
portion of the Stock Award. Any such terms or conditions shall be determined by
the Committee as of the Date of Grant.
(c) Termination of Employment or Service (General). Unless otherwise
----------------------------------------------
determined by the Committee, upon the termination of a Participant's employment
or service for any reason other than Disability, death, Retirement or
Termination for Cause, the Participant's unvested Stock Awards as of the date of
termination shall be forfeited and any rights the Participant had to such
unvested Stock Awards shall become null and void.
(d) Termination of Employment or Service (Retirement). In the event of a
-------------------------------------------------
Participant's Retirement, the Participant's unvested Stock Awards as of the date
of Retirement shall be forfeited and any rights the Participant had to such
unvested Stock Awards shall become null and void; provided however, that upon
the Participant's Retirement, the Committee, in its discretion, may determine
that all unvested Stock Awards shall continue to vest in accordance with the
Award Agreement if the Participant is immediately engaged by the Holding Company
or an Affiliate as a consultant or advisor or continues to serve the Holding
Company or an Affiliate as a director or advisory director.
(e) Termination of Employment or Service (Disability or death). Unless
----------------------------------------------------------
otherwise determined by the Committee, in the event of a termination of the
Participant's service due to Disability or death all unvested Stock Awards held
by such Participant shall immediately vest.
11
<PAGE>
(f) Termination of Employment or Service (Change in Control). Unless
--------------------------------------------------------
otherwise determined by the Committee, in the event of a termination of the
Participant's service due to a Change in Control all unvested Stock Awards held
by such Participant shall immediately vest.
(g) Termination of Employment or Service (Cause). Unless otherwise
--------------------------------------------
determined by the Committee, or in the event of the Participant's Termination
for Cause, all unvested Stock Awards held by such Participant as of the
effective date of such Termination for Cause shall be forfeited and any rights
such Participant had to such unvested Stock Awards shall become null and void.
(h) Issuance of Certificates. Unless otherwise held in Trust and
------------------------
registered in the name of the Trustee, (i) reasonably promptly after the Date
of Grant with respect to shares of Common Stock pursuant to a Stock Award, the
Holding Company shall cause to be issued a stock certificate, registered in the
name of the Participant to whom such Stock Award was granted, evidencing such
shares; provided, that the Holding Company shall not cause such a stock
certificate to be issued unless it has received a stock power duly endorsed in
blank with respect to such shares. Each such stock certificate shall bear the
following legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture provisions and restrictions against
transfer) contained in the SGV Bancorp, Inc. 1997 Stock-Based
Incentive Plan and Award Agreement entered into between the
registered owner of such shares and SGV Bancorp, Inc. or its
Affiliates. A copy of the Plan and Award Agreement is on file in the
office of the Corporate Secretary of SGV Bancorp, Inc., 225 North
Barranca Street, West Covina, California 91791-1080."
Such legend shall not be removed until such shares vest pursuant to the
terms hereof.
(ii) Each certificate issued pursuant to this Section 9(h), in connection
with a Stock Award, shall be held by the Holding Company or its Affiliates
unless the Committee determines otherwise.
(i) Non-Transferability. Except to the extent permitted by the Code, the
-------------------
rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules:
(i) The recipient of a Stock Award shall not sell, transfer,
assign, pledge, or otherwise encumber shares subject to the
Stock Award until full vesting of such shares has occurred. For
purposes of this section, the separation of beneficial
ownership and legal title through the use of any "swap"
transaction is deemed to be a prohibited encumbrance.
(ii) Unless determined otherwise by the Committee and except in the
event of the Participant's death or pursuant to a domestic
relations order, a Stock Award is not transferable and may be
earned in his lifetime only by the Participant
12
<PAGE>
to whom it is granted. Upon the death of a Participant, a Stock
Award is transferable by will or the laws of descent and
distribution. The designation of a beneficiary shall not
constitute a transfer.
(iii) If a recipient of a Stock Award is subject to the provisions of
Section 16 of the Exchange Act, shares of Common Stock subject
to such Stock Award may not, without the written consent of the
Committee (which consent may be given in the Award Agreement),
be sold or otherwise disposed of within six (6) months
following the date of grant of the Stock Award.
(j) Accrual of Dividends. Whenever shares of Common Stock underlying a
--------------------
Stock Award are distributed to a Participant or beneficiary thereof under the
Plan, such Participant or beneficiary shall also be entitled to receive, with
respect to each such share distributed, a payment equal to any cash dividends
and the number of shares of Common Stock equal to any stock dividends, declared
and paid with respect to a share of the Common Stock if the record date for
determining shareholders entitled to receive such dividends falls between the
date the relevant Stock Award was granted and the date the relevant Stock Award
or installment thereof is issued. There shall also be distributed an
appropriate amount of net earnings, if any, of the Trust with respect to any
dividends paid out on the shares related to the Stock Award.
(k) Voting of Stock Awards. After a Stock Award has been granted but for
----------------------
which the shares covered by such Stock Award have not yet been vested, earned
and distributed to the Participant pursuant to the Plan, the Participant shall
be entitled to vote or to direct the Trustee to vote, as the case may be, such
shares of Common Stock which the Stock Award covers subject to the rules and
procedures adopted by the Committee for this purpose and in a manner consistent
with the Trust agreement.
(l) Payment. Payment due to a Participant upon the redemption of a Stock
-------
Award shall be made in the form of shares of Common Stock.
10. PERFORMANCE AWARDS
------------------
(a) The Committee may determine to make any Award under the Plan
contingent upon the achievement of a Performance Goal or any combination of
Performance Goals. Each Performance Award shall be evidenced in the Award
Agreement, which shall set forth the Performance Goals applicable to the Award,
the maximum amounts payable and such other terms and conditions as are
applicable to the Performance Award. Each Performance Award shall be granted and
administered to comply with the requirements of Section 162(m) of the Code.
(b) Any Performance Award shall be made not later than 90 days after the
start of the period for which the Performance Award relates and shall be made
prior to the completion of 25% of such period. All determinations regarding the
achievement of any Performance Goals will be made by the Committee. The
Committee may not increase during a year the amount of a
13
<PAGE>
Performance Award that would otherwise be payable upon achievement of the
Performance Goals but may reduce or eliminate the payments as provided for in
the Award Agreement.
(c) Nothing contained in the Plan will be deemed in any way to limit or
restrict the Committee from making any Award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter in
effect.
(d) A Participant who receives a Performance Award payable in Common
Stock shall have no rights as a shareholder until the Company Stock is issued
pursuant to the terms of the Award Agreement. The Common Stock may be issued
without cash consideration.
(e) A Participant's interest in a Performance Award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.
(f) No Award or portion thereof that is subject to the attainment or
satisfaction of a condition or Performance Goal shall be distributed or
considered to be earned or vested until the Committee certifies in writing that
the conditions or Performance Goal to which the distribution, earning or vesting
of such Award is subject has been achieved.
11. DEFERRED PAYMENTS
-----------------
The Committee, in its discretion, may permit a Participant to elect to
defer receipt of all or any part of any cash or stock payment under the Plan, or
the Committee may determine to defer receipt by some or all Participants, of all
or part of any such payment. The Committee shall determine the terms and
conditions of any such deferral, including the period of deferral, the manner of
deferral, and the method for measuring appreciation on deferred amounts until
their payout.
12. METHOD OF EXERCISE OF OPTIONS
-----------------------------
Subject to any applicable Award Agreement, any Option may be exercised by
the Participant in whole or in part at such time or times, and the Participant
may make payment of the Exercise Price in such form or forms, including, without
limitation, payment by delivery of cash, Common Stock or other consideration
(including, where permitted by law and the Committee, Awards) having a Fair
Market Value on the exercise date equal to the total Exercise Price, or by any
combination of cash, shares of Common Stock and other consideration, including
exercise by means of a cashless exercise arrangement with a qualifying broker-
dealer, as the Committee may specify in the applicable Award Agreement.
13. RIGHTS OF PARTICIPANTS
----------------------
No Participant shall have any rights as a shareholder with respect to any
shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such Common Stock. Nothing contained herein or in any
Award Agreement confers on any person any right to continue
14
<PAGE>
in the employ or service of the Holding Company or an Affiliate or interferes in
any way with the right of the Holding Company or an Affiliate to terminate a
Participant's services.
14. DESIGNATION OF BENEFICIARY.
--------------------------
A Participant may, with the consent of the Committee, designate a person or
persons to receive, in the event of death, any Award to which the Participant
would then be entitled. Such designation will be made upon forms supplied by
and delivered to the Holding Company and may be revoked in writing. If a
Participant fails effectively to designate a beneficiary, then the Participant's
estate will be deemed to be the beneficiary.
15. DILUTION AND OTHER ADJUSTMENTS.
------------------------------
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Holding Company, or in the event an
extraordinary capital distribution (including an Extraordinary Dividend) is
made, the Committee may make such adjustments to previously granted Awards, to
prevent dilution, diminution, or enlargement of the rights of the Participant,
including any or all of the following:
(a) adjustments in the aggregate number or kind of shares of Common Stock
or other securities that may underlie future Awards under the Plan;
(b) adjustments in the aggregate number or kind of shares of Common Stock
or other securities underlying Awards already made under the Plan;
(c) adjustments in the Exercise Price of outstanding Incentive and/or
Non-statutory Stock Options, or any Limited Rights attached to such
Options.
No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award. All Awards under
this Plan shall be binding upon any successors or assigns of the Holding
Company.
16. TAX WITHHOLDING.
---------------
(a) Whenever under this Plan, cash or shares of Common Stock are to be
delivered upon exercise or payment of an Award or any other event with respect
to rights and benefits hereunder, the Committee shall be entitled to require as
a condition of delivery (i) that the Participant remit an amount sufficient to
satisfy all federal, state, and local withholding tax requirements related
thereto, (ii) that the withholding of such sums come from compensation otherwise
due to the Participant or from any shares of Common Stock due to the Participant
under this Plan or (iii) any combination of the foregoing provided, however,
that no amount shall be withheld from any cash payment or shares
15
<PAGE>
of Common Stock relating to an Award which was transferred by the Participant in
accordance with this Plan.
(b) If any disqualifying disposition described in Section 7(k) is made
with respect to shares of Common Stock acquired under an Incentive Stock Option
granted pursuant to this Plan, or any transfer described in Section 6(c) is
made, or any election described in Section 17 is made, then the person making
such disqualifying disposition, transfer, or election shall remit to the Holding
Company or its Affiliates an amount sufficient to satisfy all federal, state,
and local withholding taxes thereby incurred; provided that, in lieu of or in
addition to the foregoing, the Holding Company or its Affiliates shall have the
right to withhold such sums from compensation otherwise due to the Participant,
or, except in the case of any transfer pursuant to Section 6(c), from any shares
of Common Stock due to the Participant under this Plan.
17. NOTIFICATION UNDER SECTION 83(b)
--------------------------------
The Committee may, on the Date of Grant or any later date, prohibit a
Participant from making the election described below. If the Committee has not
prohibited such Participant from making such election, and the Participant
shall, in connection with the exercise of any Option, or the grant of any Stock
Award, make the election permitted under Section 83(b) of the Code (i.e., an
election to include in such Participant's gross income in the year of transfer
the amounts specified in Section 83(b) of the Code), such Participant shall
notify the Committee of such election within 10 days of filing notice of the
election with the Internal Revenue Service, in addition to any filing and
notification required pursuant to regulations issued under the authority of
Section 83(b) of the Code.
18. AMENDMENT OF THE PLAN AND AWARDS.
--------------------------------
(a) The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect, prospectively or retroactively; provided
however, that provisions governing grants of Incentive Stock Options shall be
submitted for shareholder approval to the extent required by such law,
regulation or interpretation.
Failure to ratify or approve amendments or modifications by shareholders
shall be effective only as to the specific amendment or modification requiring
such ratification. Other provisions of this Plan will remain in full force and
effect.
No such termination, modification or amendment may adversely affect the
rights of a Participant under an outstanding Award without the written
permission of such Participant.
(b) The Committee may amend any Award Agreement, prospectively or
retroactively; provided, however, that no such amendment shall adversely affect
the rights of any Participant under an outstanding Award without the written
consent of such Participant.
16
<PAGE>
19. EFFECTIVE DATE OF PLAN.
----------------------
The Plan became effective upon approval by the Board of Directors of SGV
Bancorp, Inc. on July 21, 1997. The Plan shall be presented to shareholders
for ratification in order to: (a) obtain preferential tax treatment for
Incentive Stock Options and (b) maintain listing on The Nasdaq National Market.
The failure to obtain shareholder ratification for such purposes will not effect
the validity of the Plan and any Awards made under the Plan; provided, however,
that if the Plan is not ratified by stockholders in accordance with IRS
regulations, the Plan shall remain in full force and effect, and any Incentive
Stock Options granted under the Plan shall be deemed to be Non-Statutory Stock
Options and any Award intended to comply with Section 162(m) of the Code shall
not comply with Section 162(m) of the Code.
20. TERMINATION OF THE PLAN.
-----------------------
The right to grant Awards under the Plan will terminate upon the earlier
of: (i) ten (10) years after the Effective Date; (ii) the issuance of a number
of shares of Common Stock pursuant to the exercise of Options or the
distribution of Stock Awards which together with the exercise of Limited Rights
is equivalent to the maximum number of shares reserved under the Plan as set
forth in Section 4 hereof. The Board of Directors has the right to suspend or
terminate the Plan at any time, provided that no such action will, without the
consent of a Participant, adversely affect a Participant's vested rights under a
previously granted Award.
21. APPLICABLE LAW.
--------------
The Plan will be administered in accordance with the laws of the state of
California and applicable federal law.
IN WITNESS WHEREOF, the Holding Company has established this Plan, as
adopted by the Board of Directors of SGV Bancorp, Inc. on July 21, 1997.
ADOPTED BY SGV BANCORP, INC.
THE BOARD OF DIRECTORS:
- ---------------------------- By: -------------------------------------
Date For the Entire Board of Directors
RATIFIED BY SHAREHOLDERS:
- ---------------------------- By: -------------------------------------
Date Corporate Secretary
17
<PAGE>
R THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF SGV BANCORP, INC.
E
V SGV BANCORP, INC.
O
C ANNUAL MEETING OF SHAREHOLDERS
A
B NOVEMBER 20, 1997
L
E 2:00 P.M. PACIFIC TIME
P The undersigned hereby appoints the Board of Directors of SGV Bancorp,
R Inc. (the "Company") to act as proxy for the undersigned, and to vote all
O shares of Common Stock of the Company which the undersigned is entitled to
X vote only at the Annual Meeting of Shareholders, to be held on November 20,
Y 1997, at 2:00 p.m. Pacific Time, at the South Hills Country Club, 2655 S.
Citrus Street, West Covina, California, and at any and all adjournments
thereof, as indicated on the reverse side of this proxy.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE
PROPOSALS LISTED. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING,
INCLUDING WHETHER OR NOT TO ADJOURN THE MEETING, THIS PROXY WILL BE VOTED BY
THE BOARD OF DIRECTORS IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE
BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL
MEETING.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE>
Please mark [X]
your votes as
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS PRESENTED.
VOTE
FOR WITHHELD
1. The election of all nominees listed [_] [_]
(except as marked to the contrary below).
Barrett Andersen and Royce A. Stutzman
INSTRUCTION: To withhold your vote for any individual nominee, write that
nominee's name on the line provided below:
- -----------------------------------------
FOR AGAINST ABSTAIN
2. The approval of the SGV Bancorp, Inc. [_] [_] [_]
1997 Stock-Based Incentive Plan
FOR AGAINST ABSTAIN
3. The ratification of the appointment of [_] [_] [_]
Deloitte & Touche LLP as independent
auditors of SGV Bancorp, Inc. for the
fiscal year ending June 30, 1998
The undersigned acknowledges receipt from the Company prior to the execution
of this proxy of a Notice of Annual Meeting of Shareholders and of a Proxy
Statement dated October 14, 1997 and of the Annual Report to Shareholders.
Signature(s) ___________________________ Date ______________________________
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS CARD. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL
TITLE. IF SHARES ARE HELD JOINTLY, EACH HOLDER MAY SIGN BUT ONLY ONE SIGNATURE
IS REQUIRED.
