UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A
(RULE
14a-101)
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment No.
)
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by the Registrant
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Preliminary
Proxy Statement
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for Use of the Commission Only (as permitted by Rule
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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WEST
COAST BANCORP
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(Name
of Registrant as Specified In Its Charter)
_________________________________________________________
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Preliminary Copy
March 16,
2010
Dear
Shareholder:
You are
cordially invited to attend the 2010 Annual Meeting of Shareholders of West
Coast Bancorp to be held in The Oaks-Meadows Conference Center, located at
5300 Meadows Rd., Lake Oswego, Oregon, on Tuesday, April 27, 2010, at
2:00 p.m. local time.
At the
annual meeting, you will be asked to consider and vote on the election of
directors, Bancorp's Tax Benefit Preservation Plan designed to help protect the
Company's tax attributes, amendments to our 2002 Stock Incentive Plan to
increase the number of shares available for awards, ratification of our
appointment of our independent registered public accounting firm, and such other
business as may properly come before the annual meeting.
Your vote
is very important to us. Regardless of whether or not you plan to attend
the meeting in person, please vote by voting via the Internet, by telephone, or
by returning a proxy card. Instructions on how to vote through the
Internet or by telephone are included in the enclosed proxy
statement.
We value
you as a West Coast Bancorp shareholder and look forward to seeing you at the
meeting.
Sincerely,
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Robert
D. Sznewajs
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President
and CEO
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WEST
COAST BANCORP
5335
Meadows Road, Suite 201
Lake
Oswego, Oregon 97035
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
Be Held April 27, 2010
2:00 p.m.,
Pacific Time
To the
Shareholders of West Coast Bancorp:
The 2010
Annual Meeting of Shareholders of West Coast Bancorp will be held in The
Oaks-Meadows Conference Center, located at 5300 Meadows Rd., Lake Oswego,
Oregon, on Tuesday, April 27, 2010, at 2:00 p.m. local time. At
the meeting, shareholders will be asked to consider and vote on the following
matters:
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1.
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Electing
eight directors to serve for one-year
terms;
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2.
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Approving
our Tax Benefit Preservation Plan as described in the accompanying proxy
statement to help protect the Company's tax
attributes;
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3.
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Amending
our 2002 Stock Incentive Plan (the "Plan") as described in the
accompanying proxy statement to increase the number of shares available
for awards;
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4.
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Ratifying
the appointment of Deloitte & Touche LLP as our independent
registered public accounting firm for 2010;
and
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5.
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Such
other business as may properly come before the meeting or an adjournment
thereof.
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Only
shareholders of record on March 1, 2010, may vote on proposals at the
annual meeting in person or by proxy. We encourage you to promptly
complete and return the proxy card, or to vote electronically by telephone or
Internet, in order to ensure that your shares will be represented and voted at
the meeting in accordance with your instructions. If you attend the
meeting in person, you may withdraw your proxy and vote your shares if you want
to change your vote.
Further
information regarding voting rights and the business to be transacted at the
meeting is included in the accompanying proxy statement. We appreciate
your continued interest as a shareholder in the affairs of our company and in
its growth and development.
March
16, 2010
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BY
ORDER OF THE BOARD OF DIRECTORS
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Richard
R. Rasmussen
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Executive
Vice President
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General
Counsel and Secretary
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YOUR VOTE IS IMPORTANT
Whether
or not you plan to attend the annual meeting, please sign and date your
proxy card and return it in the enclosed postage prepaid envelope, or vote
electronically via the Internet or by telephone. See "Voting Via the
Internet or by Telephone" on the last page of the accompanying proxy
statement for further details. You do not need to keep your proxy
for admission to the annual
meeting.
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TABLE OF CONTENTS
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Page
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VOTING
IN CONNECTION WITH THE ANNUAL MEETING
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1
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PROPOSAL
1—ELECTION OF DIRECTORS
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2
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BOARD
OF DIRECTORS
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4
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General
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4
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Leadership
Structure
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5
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Risk
Oversight
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5
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Board
Committees
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6
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Shareholder
Communications with the Board
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8
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Non-Employee
Director Compensation for 2008
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9
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PROPOSAL
2—APPROVAL OF TAX BENEFIT PRESERVATION PLAN
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11
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PROPOSAL
3—APPROVAL OF AMENDMENT TO OUR 2002 STOCK INCENTIVE PLAN
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15
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PROPOSAL
4—RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS
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19
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MATTERS
RELATED TO OUR AUDITORS
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20
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Auditors
for Fiscal Year Ended December 31, 2009
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20
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Fees
Paid to Independent Registered Public Accounting Firm
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20
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Report
of Audit Committee
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21
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OTHER
BUSINESS
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21
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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22
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Stock
Ownership Table
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22
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Section
16(a) Beneficial Ownership Reporting Compliance
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24
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MANAGEMENT
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25
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EXECUTIVE
COMPENSATION
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26
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Discussion
and Analysis of Executive Compensation Programs
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26
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Summary
Compensation Table
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33
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Grants
of Plan-Based Awards for 2009
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34
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Outstanding
Equity Awards at Fiscal Year-End 2009
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35
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Option
Exercises and Stock Vesting for 2009
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36
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Pension
Benefits for 2009
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37
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Nonqualified
Deferred Compensation for 2009
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38
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Equity
Compensation Plan Information
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40
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Potential
Payments Upon Termination or Change in Control
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40
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Report
of the Compensation Committee
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50
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TRANSACTIONS
WITH RELATED PERSONS
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52
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COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
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52
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INFORMATION
CONCERNING DIRECTOR NOMINATIONS
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53
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INFORMATION
CONCERNING SHAREHOLDER PROPOSALS
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54
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HOUSEHOLDING
MATTERS
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54
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ANNUAL
REPORT TO SHAREHOLDERS
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55
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VOTING
VIA THE INTERNET OR BY TELEPHONE
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55
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APPENDIX
A
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A-1
– A-40
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APPENDIX
B
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B-1
– B-15
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WEST
COAST BANCORP
5335
Meadows Road, Suite 201
Lake
Oswego, Oregon 97035
(503)
684-0884
PROXY
STATEMENT
VOTING
IN CONNECTION WITH THE ANNUAL MEETING
General.
This proxy statement and the accompanying proxy are being furnished to you as a
shareholder in connection with the solicitation of proxies by our Board of
Directors for use at the West Coast Bancorp Annual Meeting of Shareholders to be
held Tuesday, April 27, 2010, and at any adjournment of the meeting (the
"Annual Meeting"). These proxy materials are first being made available to
shareholders on or about March 16, 2010. When we refer to our company
in this proxy statement below we frequently use "we," "us," or "our," but we
also sometimes refer to our company as "Bancorp" or the "Company."
March 1,
2010 has been established as the record date for the Annual Meeting.
Holders of record of Bancorp common stock as of that date are entitled to notice
of and to vote at the meeting. On the record date, there were 87,082,304
common shares outstanding and each share is entitled to one vote.
A majority of the outstanding common shares will constitute a quorum for
the conduct of business at the meeting. We also have outstanding 121,328
shares of mandatorily convertible cumulative participating preferred stock,
Series B. These preferred shares are not entitled to be voted at the
Annual Meeting.
Voting by
Proxy.
To vote by proxy, please sign and date the enclosed proxy
card and return it to us as soon as possible. Properly executed proxies
that are received in time and not subsequently revoked will be voted as
instructed on the proxies. If you return a signed proxy without
instructions, your shares will be voted in accordance with the recommendation of
our Board of Directors—
FOR
all nominees for
election as directors,
FOR
ratification of
our Tax Benefit Preservation Plan,
FOR
proposed
amendments to our 2002 Stock Incentive Plan, and
FOR
ratification of
the appointment of Deloitte & Touche LLP as our independent registered
pubic accountants. If you vote over the Internet or by telephone as
described below, you do not need to also mail a proxy to us.
Voting by
Internet or Telephone.
We encourage you to vote electronically or
by telephone. Shareholders may vote via the Internet at
www.proxyvote.com
or
by telephone by calling the telephone number referenced on their voting
form. Please see "Voting Via the Internet or by Telephone" near the end of
this proxy statement for additional information regarding these methods of
voting.
Voting at the
Meeting.
You may vote in person at the Annual Meeting. Even
if you plan to attend the meeting, we encourage you to submit a proxy or vote by
Internet or telephone to ensure that your vote is received and
counted.
Changing or
Revoking Your Vote.
After voting, you may change your vote by
completing a new proxy and returning it to us, by voting again via the Internet
or by telephone as described above, or by voting in person at the Annual
Meeting. Only the last vote timely received by us will be counted.
If you are a registered shareholder, you may request a new proxy card from
Bancorp's Secretary. If your shares are held by a broker or other nominee,
you may request a new proxy card from the broker or nominee. You may
revoke a proxy that has been filed with us by filing written notice of
revocation with Bancorp's Secretary before the meeting.
Solicitation of
Proxies.
Proxies will be solicited primarily through the mail, but
may also be solicited by directors and officers of the Company and its primary
operating subsidiaries, West Coast Bank (the "Bank") and West Coast Trust
Company, Inc. ("West Coast Trust"), personally or by other means such as
telephone or e-mail. We may also engage an outside proxy solicitation firm
and pay a fee for such services. All costs of solicitation of proxies will
be borne by us.
Proposal 1—Election of
Directors
General
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Under our Articles of
Incorporation, the Board of Directors may establish the total number of
positions on our Board within a range of eight to 20. Our Board is
currently comprised of eight positions, except that, subject to and effective
upon receipt of required regulatory approvals, two new positions have been
created on our Board and Simon Glick and John T. Pietrzak have been elected to
fill those positions. Each Board member is elected annually.
Our Board
has nominated eight individuals to stand for election to our board of directors
as follows: Lloyd D. Ankeny, Simon Glick, Duane C. McDougall,
Steven J. Oliva, John T. Pietrzak, Steven N. Spence,
Robert D. Sznewajs (our President and CEO), and Nancy A.
Wilgenbusch. Messrs. Glick and Pietrzak are being nominated at the
request of certain investors in our October 2009 private capital
raise. These investors have the contractual right to designate two
individuals for nomination to our Board. Our Board elected to waive a
provision of our bylaws that otherwise requires that directors that have reached
the age of 72 not stand for re-election so that Mr. Ankeny could once
again be nominated. Two directors, Michael Bragg and David Truitt, have decided
not to stand for re-election. The number of positions on our Board will be
reduced to eight, if necessary, at our annual Board meeting held on the day of
the Annual Meeting.
Each
nominee has consented to serve if elected. If any nominee becomes unable
to serve prior to the meeting, our Board may designate a replacement nominee and
in such case your duly executed proxy will be voted for such
replacement.
The Board
of Directors has determined that each of the current directors standing for
election, other than Mr. Sznewajs, is an "independent director" under
Rule 5605(a)(2) of Nasdaq listing standards applicable to the
Company. All members of the Board's compensation, nominating and audit
committees are "independent directors" under this standard.
In the
course of determining that each director is an "independent director" under the
Nasdaq listing standards, the Board considered various loan transactions and
deposit relationships between the Bank and certain directors (or their family
members or business interests). These transactions and relationships were
entered into on the same terms prevailing at the time for comparable
transactions or relationships with other persons, as described further under the
heading "Transactions With Related Persons" below. The Board also
considered the possible effects of a bank branch lease with a business entity
partially owned by a
director and determined
that the transaction does not affect the director's independence.
Reasons For
Nominations.
Nominees for election at the 2010 annual meeting of
shareholders are all currently directors of the Company. All nominees
possess the skills and qualifications described under "Information Concerning
Director Nominations—Director Qualifications" below and continuing directors
have demonstrated the ability to work together with one another in a collegial
manner. The nominees have a wide variety of professional backgrounds and
complementary skills. There is also increasing geographic diversity among
the nominees. In addition, the background and qualifications that led the
Company to nominate each person are included below.
Information With
Respect to Nominees
.
Nominees for election
as directors are listed below, together with certain biographical
information. All current directors of Bancorp also serve as directors of
the Bank.
Lloyd D. Ankeny,
72
Director
since 1995
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Mr. Ankeny
is Chair of our Board of Directors. He has been a private real
estate investor for more than five years. Mr. Ankeny was
selected for his leadership skills, prior management experience,
familiarity with the Company and the banking business, and knowledge of
real estate.
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Simon Glick,
63
Director
since 2010
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Mr.
Glick has been serving as a Vice President of Louis Glick & Company,
Vice President of Federal Diamond Corporation, and General Partner of
Siget NY Partners, LP for more than five years. Mr. Glick was
selected at the recommendation of GF Financial LLC. Mr. Glick
has an extensive background in investments and real
estate.
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Duane C. McDougall,
58
Director
since 2003
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Mr. McDougall
has been a director of Boise Cascade, LLC since 2005 and Board Chair since
December, 2008. He also served as President & CEO of Boise
Cascade, LLC from December, 2008 to August, 2009. He was previously
President and Chief Executive Officer of Willamette Industries, Inc., an
international manufacturer of paper and other forest products, from
December 1998 through 2002. Prior to becoming President and
CEO, he served as Chief Accounting Officer, Executive Vice President and
in other positions at Willamette Industries for 22 years.
Mr. McDougall has served as a director of Cascade Corporation and
Greenbrier Companies for more than five years and as a director of
StanCorp Financial Group, Inc. since December, 2009. He previously
served as a director of InFocus Corporation from 2003 to 2007.
Mr. McDougall was selected for his leadership skills, accounting and
financial background, prior management experience, familiarity with the
Company and the banking business, stature within the community, and his
knowledge of the forest products industry.
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Steven J. Oliva,
69
Director
since 2003
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Mr. Oliva
has served as President and Chief Executive Officer of Hi-School Pharmacy,
Inc., for more than five years. He is a board member of the National
Association of Chain Drug Stores, and Oregon State University Advisory
Board—School of Pharmacy, Emeritus. He is also a real estate
investor. Mr. Oliva was selected for his familiarity with the
Company and his knowledge of the pharmaceutical industry and real estate
markets. He is also well-regarded and active within our
community.
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John T. Pietrzak,
37
Director
since 2010
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Mr. Pietrzak
has been a Principal of Castle Creek Capital LLC, a merchant banking
organization that specializes in bank investments and operations, since
2008 and a Director from 2005 to 2008. Prior to joining Castle
Creek, he was a Director of Demand Planning for Levi Strauss &
Co. Mr. Pietrzak was selected at the recommendation of Castle
Creek Partners IV, LP, an investor in our October 2009 private
capital raise. Mr. Pietrzak has a background in investments,
retail planning, and a current focus on investments in community
banks.
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Steven N. Spence,
62
Director
since 2001
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Mr. Spence
has been a Senior Vice President of RBC Wealth Management, Inc. since
2009. Previously, he was Senior Vice President of UBS Financial
Services Inc., a securities brokerage firm, and its predecessors in
Portland, Oregon, for more than five years. Mr. Spence was
selected for his leadership skills, his familiarity with the Company and
the banking business, and his background and high profile within the
investment management community.
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Robert D. Sznewajs,
63
Director
since 2000
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Mr. Sznewajs
has been President and Chief Executive Officer of Bancorp and the Bank for
more than five years. Mr. Sznewajs has also been a director of
Coinstar Inc. for more than five years. Mr. Sznewajs was
selected for his leadership skills, his position as President & CEO of
the Company, and his knowledge of the Company and the banking
business.
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Dr. Nancy A.
Wilgenbusch,
61
Director
since 2003
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Dr. Wilgenbusch
has been President Emerita of and advisor to Marylhurst University since
2008. Previously she was President of Marylhurst University for more
than five years. Dr. Wilgenbusch has also served as a director
of Cascade Corporation and as a trustee of Tax-Free Trust of Oregon for
more than five years. She previously served as a director of
Scottish Power from 2004 to 2007. Dr. Wilgenbusch was selected
for her knowledge of the Company, her background in education and
auditing, and high profile within our community. As the only woman
on our Board, she also provides a diversity of gender
perspectives.
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Messrs.
Glick and Pietrzak were elected by the Board on January 13, 2010, to fill
positions created in connection with their elections, subject to receipt of
required regulatory approvals. Neither Mr. Glick nor Mr. Pietrzak will
take office until their respective election has been approved by our
regulators.
The eight
directors receiving the highest total number of votes will be elected, provided
there is a quorum present. If regulatory approvals to the election of Mr.
Glick and/or Mr. Pietrzak to our Board have not been received as of the date of
the Annual Meeting, the elections of Messrs. Glick and Pietrzak will in each
case be conditioned on receipt of all required regulatory approvals.
Shares that are not represented at the meeting, votes that are withheld, and
shares not voted for the election of directors by brokers or nominees due to a
failure of the shareholder to provide instructions ("broker non-votes") will not
be counted in determining the number of votes for each nominee and will have no
effect on the election of directors. Beginning this year, banks and
brokers acting as nominees for beneficial owners are not
permitted to vote proxies with regard to the election of directors on behalf of
beneficial owners who have not provided voting instructions to the nominee,
making it especially important that you send your broker your voting
instructions.
BOARD
OF DIRECTORS
General
The Board
has determined that each member of the Board except Mr. Sznewajs is an
"independent director" under Nasdaq Rule 5605(a)(2).
During
2009, our Board met 23 times. Each director attended at least 75% of
the total meetings of the Board of Directors and all committees of the Board on
which he or she served during 2009. The Board holds executive sessions of
non-management directors not less than once per calendar quarter.
Executive sessions are scheduled by our Board Chair and any director may request
that additional executive sessions be scheduled.
Bancorp
policy requires that directors and director nominees attend our annual meeting
of shareholders, except under circumstances beyond the reasonable control of
such person. In 2009, all directors except Mr. Ouderkirk attended the
annual meeting of shareholders.
Leadership
Structure
The
positions of Board Chair and President and Chief Executive Officer are filled by
different persons. Mr. Ankeny, an independent director, serves as
Board Chair, while Mr. Sznewajs serves as President and Chief Executive
Officer. The Board believes that separating the roles of Chairman and
Chief Executive Officer is preferable and in the best interests of shareholders
because it gives our independent directors a significant role in board direction
and agenda setting and enhances the Board's ability to fulfill its oversight
responsibilities, including of senior management. Separating the positions
also provides an independent viewpoint and focus at board meetings, and improves
communication between management and the Board by giving our CEO a single
initial source for board-level communication and input on significant
decisions.
Risk
Oversight
Risk
management is the responsibility of management and risk oversight is the
responsibility of the Board. The Board administers its risk oversight
function principally through its division of responsibility within its committee
structure, with each board committee being responsible for overseeing risk
within its area of responsibility. For example, our Loan, Investment, and
Asset/Liability Committee (the "Loan Committee") plays an important role in
overseeing our loan functions and monitoring related risks.
Responsibilities of our various committees are discussed below.
Significant risk oversight matters considered by the committees are reported to
and considered by the Board. Some significant risk oversight matters are
reported directly to the Board, including matters not falling within the area of
the responsibility of any committee. Types of risks with the potential to
adversely affect the Company include credit, interest rate, liquidity, and
compliance risks, and risks relating to our operations and
reputation.
Management
regularly provides the Board and its various committees with a significant
amount of information regarding a wide variety of matters affecting the
Company. Matters presented to the Board and board committees generally
include information with respect to risk. The Board and board committees
consider the risk aspects of such information and often request additional
information with respect to issues that involve risks to the Company. The
Board and board committees also raise risk issues on their own
initiative.
To assist
the Company with respect to risk management, and to assist the Board and board
committees with respect to risk oversight, the Company employs a Senior Vice
President & Corporate Risk Manager, who works to identify and assess risks
in all parts of the Company. The Corporate Risk Manager reports to the
Audit and Compliance Committee (the "Audit Committee"), attends meetings of the
Audit Committee on a regular basis and attends Board and other committee
meetings as needed. The Company also employs a Senior Vice President and
Manager of Credit Review who also makes direct reports to the Audit Committee
and the Loan Committee.
The
Company does not believe the Board's risk oversight function has had a
significant effect on the Board's leadership structure, although a change in
leadership structure could result in changes in the implementation of the risk
oversight function.
Board
Committees
The Board
of Directors has established certain standing committees of the Board, including
an Audit & Compliance Committee, a Compensation & Personnel
Committee, a Governance & Nominating Committee, and a Loan, Investment
and Asset/Liability Committee.
Audit &
Compliance Committee.
The Audit Committee operates under a formal
written charter adopted by the Board. A copy of the Audit Committee
charter is available at our website at
www.wcb.com
under the
"About Us—Investor Information" tab and "Corporate Governance" subheading.
The Audit Committee held nine meetings during 2009.
During
2009, the Audit Committee was comprised of Mr. McDougall (Chair),
Mr. Bragg, and Dr. Wilgenbusch. Each member of the Audit
Committee is financially literate and meets the independence standards for
members of public company audit committees set forth in Nasdaq listing standards
and applicable Securities and Exchange Commission ("SEC") rules adopted under
the Sarbanes-Oxley Act of 2002. Further, the Board of Directors has
determined that Mr. McDougall meets the standards of an audit committee
financial expert set forth in SEC regulations and is financially sophisticated
as described in Nasdaq listing standards.
The Audit
Committee has sole authority to appoint or replace Bancorp's independent
registered public accounting firm (sometimes referred to below as our "auditor")
and is directly responsible for compensating and overseeing its work, including
the annual audit. Our auditor reports directly to the Audit Committee,
which evaluates its independence and performance at least annually. The
Audit Committee must pre-approve all audit services and legally permitted
non-audit services to be performed by our auditor. In addition, the Audit
Committee is required to meet with our auditor and internal audit staff in
executive sessions and to resolve any disagreements that arise between
management and the auditors.
The Audit
Committee oversees the Company's internal audit function and is responsible for
reviewing significant reports prepared by the internal audit department.
The Audit Committee also assists the Board in overseeing the quality and
integrity of Bancorp's accounting and reporting practices and has adopted
procedures for the receipt and treatment of complaints regarding accounting
matters. Finally, the Audit Committee oversees compliance with respect to
certain regulatory matters, including SEC and bank regulatory
issues.
While the
Audit Committee has the responsibilities and authority described above and in
its charter, it is not the duty of the Audit Committee to plan or conduct audits
or determine whether financial statements and other disclosures are complete,
accurate, and in accordance with generally accepted accounting principles.
These remain the responsibilities of our management and independent
auditor.
Compensation &
Personnel Committee.
The Compensation & Personnel
Committee (the "Compensation Committee") operates under a formal written charter
adopted by the Board. A copy of the Compensation Committee charter is
available at our website at
www.wcb.com
under the
"About Us—Investor Information" tab and "Corporate Governance" subheading.
The Compensation Committee held seven meetings during 2009.
During
2009, the Committee was comprised of Mr. Truitt (Chair), Mr. Ankeny,
Mr. Bragg, Mr. McDougall, and Mr. Oliva. Each member of the
Compensation Committee is a "non-employee director" under SEC Rule 16b-3
and an "outside director" under Section 162(m) of the Internal Revenue Code
of 1986, as amended.
The
Compensation Committee is charged with, among other things, approving the base
salary, incentive compensation, stock option grants, restricted stock awards,
employment agreements, change in control agreements, supplemental executive
retirement plans, and other compensation of, and establishing performance goals
and incentive opportunity levels for, our executive officers. In addition,
the Compensation Committee reviews the base salary and incentive compensation of
other senior officers and the Company's most highly compensated employees.
It also reviews and recommends to the Board restricted stock awards, stock
option grants and change-in-control agreements for other employees. It is
also responsible for periodically reviewing and making recommendations to the
Board with respect to the adoption of employee benefit plans.
Under its
charter, the Compensation Committee has the authority to retain the services of
outside compensation consultants to assist in the evaluation and determination
of compensation levels and to approve the fees and other terms of their
engagement. The Compensation Committee may also delegate its authority and
responsibilities to its chair or subcommittees of one or more committee members
as and when appropriate and permitted by law, but does not normally do so and
has no standing delegation of authority on any matters. For additional
information regarding the processes and procedures for the consideration and
determination of our executive compensation, including the role of executive
officers and consultants in that process, see "Executive Compensation—Discussion
and Analysis of Executive Compensation Programs" below.
In
addition to its responsibilities relating to compensation matters, the
Compensation Committee is required to review and assess on a periodic basis the
Company's guidelines regarding director and employee stock ownership. The
Compensation Committee is responsible for an annual review of our management
succession plan and periodic reviews and recommendations with respect to human
resource policies.
The
Compensation Committee also makes recommendations to the Board regarding all
elements of compensation paid to our outside directors, including annual
retainers, meeting fees, restricted stock awards, and stock option grants,
although all elements of Board compensation are ultimately the responsibility of
the full Board. See "Board of Directors—Director Compensation for 2009"
below.
Governance &
Nominating Committee.
The Governance & Nominating
Committee (the "Governance Committee") operates under a formal written charter
adopted by the Board. The charter is available at our website at
www.wcb.com
under the
"About Us—Investor Information" tab and "Corporate Governance" subheading.
The Governance Committee held two meetings in 2009. During 2009, the
Committee was comprised of Dr. Wilgenbusch (Chair), Mr. Ankeny,
Mr. McDougall, and Mr. Spence.
The
Governance Committee is charged with promoting sound principles and practices of
corporate governance, identifying and recommending to the Board qualified
individuals to serve as board members, including with respect to vacancies that
occur on the Board from time to time, and evaluating the performance of the
Board and committees of the Board (including itself). The Governance
Committee also must review from time to time the qualifications and independence
of members of the Board and each of its committees. The Governance
Committee is also required to periodically review and recommend to the Board one
or more codes of ethics applicable to directors, officers and employees
consistent with sound business practices and applicable laws and regulations and
to monitor compliance with these codes and certain other
initiatives.
Other
specific duties and responsibilities of the Governance Committee include:
regular monitoring and review of the appropriateness of the Company's corporate
governance principles and practices; recommending to the Board specific criteria
for determining independence of outside directors consistent with Nasdaq listing
standards; recommending to the Board such changes to the Board's committee
structures and committee functions as it deems advisable; confirming that each
standing committee charter is reviewed at least annually by each committee;
reviewing and assessing the quality and clarity of information provided to the
Board and making such recommendations to management as it deems appropriate;
evaluating the effectiveness of the Board's oversight of management; assessing
the Board's performance and meeting annually with Board members to discuss its
performance review; reviewing shareholder proposals and recommending appropriate
action to the Board; and reviewing any proposed amendments to the Company's
charter documents.
Our Board
has adopted a policy that provides for consideration of director candidates
recommended by security holders. For a discussion of the Governance
Committee's policies and procedures regarding recommendations for director
nominees, see "Information Concerning Director Nominations" below.
Loan, Investment,
& Asset/Liability Committee.
The Loan, Investment, and
Asset/Liability Committee (the "Loan Committee") operates under a formal written
charter adopted by the Board. A copy of the Loan Committee charter is
available at our website at
www.wcb.com
under the
"About Us—Investor Information" tab and "Corporate Governance" subheading.
The Committee held 12 meetings during 2009. During 2009, the Loan
Committee was comprised of Mr. Spence (Chair), Mr. Ankeny,
Mr. Oliva, Mr. Sznewajs, and Mr. Truitt.
The Loan
Committee is responsible for initial review of loans in excess of management's
authorized approval limits and loans involving insiders subject to
Regulation O of applicable banking regulations. The Loan Committee is
assigned the function of monitoring all lending policies, portfolio quality,
delinquencies, collection and charge-off procedures, loan loss reserves, loan
quality review guidelines, the credit review function, and approval and
collateral evaluations. The Loan Committee also monitors loan
concentrations, delinquency trends, composition of loans, exceptions to lending
policy, and credit risk of off balance sheet items such as letters of credit and
commitments to buy and sell loans or securities.
Our Chief
Credit Officer provides monthly reports to the Loan Committee. In
addition, the Loan Committee receives monthly reports from the Chief Financial
Officer or Asset/Liability Manager on net interest revenues, spreads, margins,
liquidity, investment activities, prognosis of the market, strategies for
investment and broker activities, and other relevant investment and other
issues.
In
addition to the formal board committees, certain members of the Board attend
meetings with Company management, and/or the Company's independent auditors on a
quarterly basis to review and discuss the Company's quarterly earnings,
Form 10-Ks and 10-Qs, and related matters prior to release to the
public.
Shareholder
Communications with the Board
Shareholders
may communicate with our Board of Directors directly. Bancorp will
promptly forward all letters or other written communications addressed to the
Board, a specific committee of the Board, or to an individual director.
Such communications may be sent to the Company at its corporate offices.
Communications will not be pre-screened.
Shareholders
and others wishing to submit a report to members of the Audit Committee on an
anonymous and confidential basis regarding accounting, internal control, or
auditing matters, potential securities law violations, or violations of the
Company's Code of Conduct and Ethical Standards or Code of Ethics for Senior
Financial Officers may do so by going to
www.ethicspoint.com
and following the prompts or by calling 1-866-297-0224.
Non-Employee
Director Compensation for 2009
The
following table summarizes compensation paid to non-employee directors for
services during the year ended December 31, 2009.
Name
|
|
Fees
Earned or
Paid in
Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
(1)(2)
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings (3)
|
|
|
All
Other
Compen-
sation (4)
($)
|
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
Lloyd
D. Ankeny
|
|
$
|
79,600
|
|
|
$
|
0
|
|
|
$
|
6,274
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
28
|
|
|
$
|
85,902
|
|
Michael
J. Bragg
|
|
$
|
46,600
|
|
|
$
|
0
|
|
|
$
|
6,274
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
28
|
|
|
$
|
52,902
|
|
Duane
C. McDougall
|
|
$
|
59,300
|
|
|
$
|
0
|
|
|
$
|
6,274
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
28
|
|
|
$
|
65,602
|
|
Steven
J. Oliva
|
|
$
|
45,800
|
|
|
$
|
0
|
|
|
$
|
6,274
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
28
|
|
|
$
|
52,102
|
|
J.F.
Ouderkirk
(5)
|
|
$
|
13,967
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
28
|
|
|
$
|
13,995
|
|
Steven
N. Spence
|
|
$
|
53,200
|
|
|
$
|
0
|
|
|
$
|
6,274
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
28
|
|
|
$
|
59,502
|
|
David
J. Truitt
|
|
$
|
54,400
|
|
|
$
|
0
|
|
|
$
|
6,274
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
28
|
|
|
$
|
60,702
|
|
Dr.
Nancy A. Wilgenbusch
|
|
$
|
47,300
|
|
|
$
|
0
|
|
|
$
|
6,274
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
28
|
|
|
$
|
53,602
|
|
|
1.
|
Reflects
the grant date fair value of the option to purchase 9,600 shares granted
to each director estimated on the date of grant using the Black-Sholes
option-pricing model in accordance with FASB ASC
Topic 718.
|
|
2.
|
The
following table shows the total number of stock options outstanding as of
December 31, 2009, for each non-employee
director:
|
|
No. of Stock
Options
|
Mr. Ankeny
|
23,450
|
Mr. Bragg
|
15,400
|
Mr. McDougall
|
20,450
|
Mr. Oliva
|
20,450
|
Mr. Spence
|
13,050
|
Mr. Truitt
|
17,450
|
Dr.
Wilgenbusch
|
20,450
|
|
3.
|
Non-employee
directors are entitled to participate in Bancorp's Directors' Deferred
Compensation Plan (the "Directors' DCP"), under which directors may elect
to defer payment of some or all of their directors fees. Earnings on
contributions by each participant are dependent on the return on
investments that the director selects from a list of publicly available
mutual funds or Bancorp stock. See "Executive
Compensation—Nonqualified Deferred Compensation for 2009" for a list of
available investment options, which are the same as those available to our
executives under the executives' plan. We do not make additional
contributions or provide above-market or preferential earnings on fees
deferred by directors under the Directors'
DCP.
|
|
4.
|
The
dollar amounts in column (g) reflect dividends that were paid on
restricted stock in 2009 that were not factored into the grant date fair
value of the award.
|
|
5.
|
Mr.
Ouderkirk served as a director until April 2009, when he did not
stand for re-election at the 2010 Annual Meeting of
Shareholders.
|
In
establishing non-employee director compensation, the Compensation Committee and
the Board of Directors considered information regarding the compensation paid to
directors of the peer group companies listed under the heading "Executive
Compensation—Discussion and Analysis of Executive Compensation Programs" below
that was provided by Clark Consulting, a compensation consultant engaged by the
Compensation Committee, along with director compensation information derived
from other sources. Non-employee directors serving on the Board are paid
an annual retainer and additional fees for attendance at certain Board and Board
committee meetings.
During
2009, the Board chair received an annual retainer of $64,000, while the Audit
Committee and the Compensation Committee chairs received $44,000, and each other
committee chair received an annual retainer of $38,000. All other
directors received annual retainers of $32,000. Directors also received
$300 for each board meeting attended. In addition, directors received $600
for each Board committee meeting attended (whether as a member of a committee or
at the request of a committee) from January through April. From May
through December each Board committee member was paid $600 only for Board
committee meeting attended (whether as a member of a committee or at the request
of a committee) on the same day as a regular Board meeting. From January
through June, members of the Audit Committee (other than the Chair) received
$600 for attending meetings with the Company's independent registered public
accountants to analyze, review, and discuss the Company's quarterly earnings
releases and Forms 10-Q, Form 10-K, and related matters. From
July through December, such fee was paid to all directors who attended such
meetings. Bancorp directors who also serve on the board of West Coast
Trust received $600 for each meeting of the West Coast Trust board that they
attended from January through April and $300 for each regular meeting attended
from May through December. The West Coast Trust board chair received an
additional $1,000 for the year.
Recent
practice has been to grant restricted stock awards and/or stock options to
non-employee directors on an annual basis. In 2009, the directors were
granted stock options at the board meeting held in conjunction with our annual
meeting of shareholders as reflected in the preceding table. Stock options
are not subject to vesting requirements.
Proposal 2-Approval of Tax
Benefit Preservation Plan
On
October 23, 2009, the Company's Board of Directors unanimously adopted a Tax
Benefit Preservation Plan (the "Benefit Preservation Plan") with Wells Fargo
Bank, National Association, as Rights Agent, designed to preserve the Company's
net operating losses, tax credits and other tax assets (the "Tax
Attributes"). The Benefit Preservation Plan is currently in effect and, if
our shareholders do not approve the Benefit Preservation Plan by
October 25, 2010, the Benefit Preservation Plan will automatically expire
on that date.
Background
and Reasons for the Proposal
The
Benefit Preservation Plan is intended to protect shareholder value by attempting
to diminish the risk of a limitation on the Company's ability to use the Tax
Attributes under the Internal Revenue Code of 1986, as amended (the "Code"), and
rules promulgated by the Internal Revenue Service.
To the
extent that the Tax Attributes do not otherwise become limited, the Company
believes that it will be able to use a significant amount of the Tax Attributes
to reduce its tax liability, and therefore these Tax Attributes are an important
asset to the Company. If, however, the Company experiences an "ownership
change," as defined in Section 382 of the Code, the Company's ability to
use the Tax Attributes will be substantially limited, and the timing of the
usage of the Tax Attributes could be substantially delayed, which could
therefore significantly impair the value of the Tax Attributes. In
general, an ownership change would occur if the Company's "5-percent
shareholders," as defined under Section 382 of the Code, collectively
increase their ownership in the Company by more than 50 percentage points
over a rolling three-year period. Five-percent shareholders do not
generally include certain institutional holders, such as mutual fund companies,
that hold Company stock on behalf of several individual mutual funds where no
single fund owns 5% or more of Company stock.
As
further described below, the Benefit Preservation Plan is intended to reduce the
likelihood of such an "ownership change" occurring by deterring any person or
group from becoming the "Beneficial Owner" (as such term is defined in the
Benefit Preservation Plan ) of 4.9% or more of the Company's outstanding Common
Stock, without the approval of our Board of Directors.
Description
of the Plan
The
following description of the Benefit Preservation Plan is qualified in its
entirety by reference to the text of the Benefit Preservation Plan, which is
attached to this Proxy Statement as Appendix A.
We urge you to read carefully the
plan agreement in its entirety as the discussion below is only a
summary.
Under the
Benefit Preservation Plan, since the record date of November 2, 2009, each
share of the Company's common stock (the "Common Stock") carries with it one
preferred share purchase right (a "Right") and each share of the Company's
Mandatorily Convertible Cumulative Participating Preferred Stock, Series B
(the "Series B Preferred Stock") carries with it 50 Rights (subject to
adjustment), until the Distribution Date (as such term is defined below) or
earlier expiration of the Rights, as described below. Provisions similar
to those applicable to the Series B Preferred Stock also apply to the
Company's Mandatorily Convertible Cumulative Participating Preferred Stock,
Series A (the "Series A Preferred Stock"), shares of which have since
converted into Common Stock following receipt of the requisite shareholder
approvals at the Company's January 20, 2010 Special Meeting of
Shareholders.
In
general, the Rights will work to impose a significant penalty upon any person or
group which becomes the "Beneficial Owner" (as such term is defined in the
Benefit Preservation Plan) of 4.9% or more of the Company's outstanding Common
Stock, without the approval of our Board of Directors. A person or group
that holds Series A Preferred Stock or Series B Preferred Stock is
generally treated as the Beneficial Owner of the Common Stock into which such
preferred stock is convertible (notwithstanding any limitation or condition on
the conversion of such preferred stock). In addition, the calculation of
the number of shares of Common Stock "then outstanding" for purposes of
determining percentage thresholds of ownership includes the number of shares of
Common Stock into which outstanding shares of Series A Preferred Stock or
Series B Preferred Stock would be convertible, notwithstanding any
limitations or conditions on such conversion).
In
general, a shareholder who was a Beneficial Owner of 4.9% or more of the
outstanding Common Stock as of October 23, 2009, will not trigger the Rights so
long as such shareholder does not (i) become the Beneficial Owner of
additional shares of Common Stock representing 0.2% or more of the shares of
Common Stock then outstanding or (ii) become the Beneficial Owner of less
than 4.9% ownership of the outstanding Common Stock and then reacquire shares
that would result in such shareholder becoming the Beneficial Owner of 4.9% or
more of the outstanding Common Stock. Our Board of Directors may, in its
sole discretion, exempt any person or group for purposes of the Benefit
Preservation Plan if it determines the acquisition by such person or group will
not jeopardize the Tax Attributes or is otherwise in the Company's best
interests.
The Rights
. From the
record date of November 2, 2009, until the Distribution Date or earlier
expiration of the Rights, the Rights will trade with, and will be inseparable
from, the Common Stock and the Series B Preferred Stock, as
applicable. New Rights will also accompany any new shares of Common Stock,
Series A Preferred Stock or Series B Preferred Stock that are issued
after November 2, 2009, until the Distribution Date or earlier expiration
of the Rights.
Exercise Price
. Each
Right will allow its holder to purchase from the Company one one-hundredth of a
share of Series C Junior Participating Preferred Stock, no par value, of
the Company ("Series C Preferred Stock") for $30.00, subject to adjustment
(the "Exercise Price"), once the Rights become exercisable. This portion
of a share of Series C Preferred Stock will give the shareholder
approximately the same dividend, voting, and liquidation rights as would one
share of Common Stock (subject to certain exceptions described in the Benefit
Preservation Plan with respect to Rights that immediately prior to the
Distribution Date were evidenced by a certificate that also evidenced
Series B Preferred Stock). Prior to exercise, the Right does not give
its holder any dividend, voting, or liquidation rights.
Exercisability
. The
Rights will not be exercisable until 10 days after the public announcement
that a person or group has become an "Acquiring Person" by obtaining Beneficial
Ownership, from October 23, 2009 onwards, of 4.9% or more of the Company's
outstanding Common Stock (or, if already the "Beneficial Owner" (as such term is
defined in the Benefit Preservation Plan) of at least 4.9% of the Company's
outstanding Common Stock, by acquiring beneficial ownership of additional shares
of Common Stock representing 0.2% or more of the shares of Common Stock then
outstanding), unless exempted by our Board of Directors. The date on which
the Rights become exercisable is referred to as the "Distribution Date."
Until that date or earlier expiration of the Rights, the Common Stock
certificates, Series A Preferred Stock certificates and Series B
Preferred Stock certificates will also evidence the Rights, and any transfer of
shares of Common Stock or Series A Preferred Stock or Series B
Preferred Stock will constitute a transfer of Rights. After that date, the
Rights will separate from the Common Stock, Series A Preferred Stock and
Series B Preferred Stock, and be evidenced by book-entry credits or by
Rights certificates that the Company will mail to all eligible holders of Common
Stock, Series A Preferred Stock and Series B Preferred Stock.
Any Rights held by an Acquiring Person are void and may not be
exercised.
Consequences of a Person or Group
Becoming an Acquiring Person
. If a person or group becomes an
Acquiring Person, all holders of Rights except the Acquiring Person or an
affiliate or an associate of any Acquiring Person may, for payment of the
Exercise Price, purchase shares of Common Stock with a market value of twice the
Exercise Price, based on the market price of the Common Stock as of the
acquisition that resulted in such person or group becoming an Acquiring Person
(subject to certain exceptions described in the Benefit Preservation Plan with
respect to Rights that immediately prior to the Distribution Date were evidenced
by a certificate that also evidenced Series B Preferred
Stock).
Exchange
. After a
person or group becomes an Acquiring Person, our Board of Directors may
extinguish the Rights by exchanging one share of Common Stock or an equivalent
security for each Right, other than Rights held by the Acquiring Person or an
affiliate or an associate of any Acquiring Person (subject to certain exceptions
described in the Benefit Preservation Plan with respect to Rights that
immediately prior to the Distribution Date were evidenced by a certificate that
also evidenced Series B Preferred Stock).
Series C Preferred Stock
Provisions
. Each one one-hundredth of a share of Series C
Preferred Stock, if issued:
•
will not be redeemable;
•
will entitle holders to dividends equal to the dividends, if any,
paid on one share of Common Stock;
•
will entitle holders upon liquidation either to receive $1 per
share or an amount equal to the payment made on one share of Common Stock,
whichever is greater;
•
will have the same voting power as one share of Common Stock
(subject to certain exceptions described in the Benefit Preservation Plan with
respect to Rights that immediately prior to the Distribution Date were evidenced
by a certificate that also evidenced Series B Preferred Stock);
and
•
will entitle holders to a per share payment equal to the payment
made on one share of Common Stock, if shares of Common Stock are exchanged via
merger, consolidation or similar transaction.
The value
of one one-hundredth interest in a share of Series C Preferred Stock is
expected to approximate the value of one share of Common Stock.
Expiration
. The Rights
will expire on the earliest of (i) October 23, 2012, (ii) the
time at which the Rights are redeemed, (iii) the time at which the Rights
are exchanged, (iv) the repeal of Section 382 or any successor
statute, or any other change, if our Board of Directors determines that this
Benefit Preservation Plan is no longer necessary for the preservation of the Tax
Attributes, (v) October 25, 2010, if approval of the Benefit
Preservation Plan by the Company's shareholders has not been obtained prior to
such date, or (vi) a determination by our Board of Directors, prior to the
time any person or group becomes an Acquiring Person, that the Benefit
Preservation Plan and the Rights are no longer necessary for the preservation of
the Tax Attributes or are no longer in the best interests of the Company and its
shareholders.
Redemption
. Our Board
of Directors may redeem the Rights for $.001 per Right at any time before any
person or group becomes an Acquiring Person. If our Board of Directors
redeems any Rights, it must redeem all of the Rights. Once the Rights are
redeemed, the only right of the holders of Rights will be to receive the
redemption price of $.001 per Right. The redemption price will be adjusted
if the Company has a stock split or stock dividends of Common
Stock.
Anti-Dilution
Provisions
. Our Board of Directors may adjust the Exercise Price,
the number of shares of Series C Preferred Stock issuable and the number of
outstanding Rights to prevent dilution that may occur from a stock dividend, a
stock split, or a reclassification of the Series C Preferred Stock or
Common Stock.
Amendments
. The terms
of the Benefit Preservation Plan may be amended by our Board of Directors
without the consent of the holders of the Rights. After a person or group
becomes an Acquiring Person and does not become an exempt person prior to the
Distribution Date, our Board of Directors may not amend the Benefit Preservation
Plan in a way that adversely affects holders of the Rights (other than an
Acquiring Person or an affiliate or associate of an Acquiring
Person).
Certain
Considerations Relating to the Plan
Our Board
of Directors believes that attempting to protect the Tax Attributes through the
Benefit Preservation Plan is in the Company's and our shareholders' best
interests. Nonetheless, we cannot eliminate the possibility that an
"ownership change" will occur even if the Benefit Preservation Plan is
approved. You should consider the factors below when making your voting
decision.
Future Use and Amount of the Tax
Attributes is Uncertain.
Our use of the Tax Attributes depends on
our ability to generate taxable income in the future. We cannot assure you
whether we will have taxable income in any applicable period or, if we do,
whether such income or the Tax Attributes at such time will exceed any potential
Section 382 limitation.
Potential Challenge to the Tax
Attributes.
The amount of the Tax Attributes has not been audited
or otherwise validated by the Internal Revenue Service (the "IRS"). The
IRS could challenge the amount of the Tax Attributes, which could result in an
increase in our liability in the future for income taxes. In addition,
determining whether an "ownership change" has occurred is subject to
uncertainty, both because of the complexity and ambiguity of the
Section 382 provisions and because of limitations on the knowledge that any
publicly traded company can have about the ownership of, and transactions in,
its securities on a timely basis. Therefore, we cannot assure you that the
IRS or other taxing authority will not claim that we experienced an "ownership
change" and attempt to reduce the benefit of the Tax Attributes even if the
Benefit Preservation Plan is in place.
Continued Risk of Ownership
Change.
Although the Benefit Preservation Plan is intended to
diminish the likelihood of an "ownership change," we cannot assure you that it
will be effective. The amount by which our ownership may change in the
future could, for example, be affected by purchases and sales of stock by
5-percent shareholders and new issuances of stock by us, should we choose to do
so.
Potential Effects on
Liquidity.
The Benefit Preservation Plan is intended to deter
persons or groups of persons from acquiring Beneficial Ownership of shares of
our Common Stock in excess of the specified limitations. A shareholder's
ability to dispose of our stock may be limited if the Benefit Preservation Plan
reduces the number of persons willing to acquire our stock or the amount they
are willing to acquire. A shareholder's ownership of our stock may become
subject to the Benefit Preservation Plan upon actions taken by persons related
to, or affiliated with, them. Shareholders are advised to monitor their
Beneficial Ownership of our Common Stock carefully and to consult their own
legal advisors to determine whether their Beneficial Ownership of our Common
Stock approaches the proscribed level as defined in the Benefit Preservation
Plan.
Potential Impact on Value.
The Benefit Preservation Plan could negatively impact the value of our
stock by deterring persons or groups of persons from acquiring shares of our
stock, including in acquisitions for which some shareholders might receive a
premium above market value.
Potential Anti-Takeover
Effect
. Our Board of Directors adopted the Benefit Preservation
Plan to diminish the risk that our ability to use the Tax Attributes to reduce
potential federal income tax obligations becomes limited. Nonetheless, the
Benefit Preservation Plan may have an "anti-takeover effect" because it may
deter a person or group of persons from, without obtaining the approval of our
Board of Directors, acquiring Beneficial Ownership of 4.9% or more of our Common
Stock or, in the case of persons or persons that already beneficially own 4.9%
or more of our Common Stock, from acquiring Beneficial Ownership of any
additional shares of our Common Stock. As the Benefit Preservation Plan
will cause substantial dilution to any person or group who attempts to acquire
such an interest in the Company without advance approval from our Board of
Directors, one effect of the Benefit Preservation Plan may be to render more
difficult or discourage any attempt to acquire the Company or a substantial
interest in the Company without such approval.
Vote
Required
Per the
terms of the Benefit Preservation Plan, shareholder approval of the Benefit
Preservation Plan requires that the votes cast in favor of the Benefit
Preservation Plan exceed the votes cast against the Benefit Preservation Plan by
the holders of record of the outstanding shares of Common Stock on the record
date. Shares that are not represented at the meeting, votes that are
withheld, and shares not voted for the Benefit Preservation Plan by brokers or
nominees will have no effect on the outcome of the voting on this
proposal.
The
Board of Directors unanimously recommends that you vote
FOR
approving the Tax
Benefit Preservation Plan.
Proposal
3
—
Approval
of Amendment to our 2002 Stock Incentive Plan
On
February 23, 2010, our Board of Directors adopted, subject to shareholder
approval, an amendment to our 2002 Stock Incentive Plan (the "Stock Plan") to
increase by 2,000,000 to 4,140,000 the total number of common shares that may be
issued under the Stock Plan and to increase by 2,000,000 to 2,488,000 the number
of shares that may be issued as restricted stock or as other awards based on
common stock under Section 8 of the Stock Plan. Proposed amendments
to the Stock Plan are reflected in Amendment No. 5 to the Stock Plan
attached to this Proxy Statement as Appendix B, together with the Stock
Plan in full as proposed to be amended.
Background
and Reasons for the Proposal
The Stock
Plan was originally adopted by the Company in 2002. The Stock Plan
initially authorized the issuance of up to 1,700,000 common shares pursuant to
awards granted in accordance with the Stock Plan, but limited the number of
shares available for restricted stock awards to 113,322 shares. The
Stock Plan was amended in 2004 to increase the total number of shares that could
be issued as restricted stock to 288,000, without increasing the total number of
common shares available under the Stock Plan. The Stock Plan was twice
amended in 2006, (i) first, (a) to increase the total number of shares
that may be issued under the Stock Plan to 1,900,000 and (b) to increase
the number of shares available for restricted stock awards to 488,000 and to
expand the types of awards subject to the limitation to include both restricted
stock and other awards based on stock, and (ii) second, to make mandatory,
certain proportional adjustments to the number of shares that may be issued
under the Stock Plan, the number of shares that may be issued as restricted
stock or other stock awards under the Stock Plan, and the number and type of
shares, and exercise price for outstanding options, in the event of a stock
split, stock dividend or recapitalization affecting the Common Stock. The
Stock Plan was amended in 2009 to increase by 240,000 to 2,140,000 the total
number of common shares that may be issued under the Stock Plan.
As of
March 1, 2010, without giving effect to proposed amendments, 38,974 shares
were available for future grants under the Stock Plan, all of which are
available for restricted stock and other stock-based awards. The proposed
amendment increases the total number of shares that may be issued under the
Stock Plan to accommodate future awards. Such additional shares may be
issued as stock options, restricted stock, or as other awards based on common
stock under Section 8 of the Stock Plan.
Status
of Awards
The
following is a summary of awards granted under the Stock Plan since
inception:
|
|
Option Shares
Granted
|
|
|
Option Shares
Outstanding
|
|
|
Shares Issued on
Option Exercises
|
|
|
Restricted
Shares Issued
|
|
Named
Executive Officers
|
|
|
357,390
|
|
|
|
324,019
|
|
|
|
33,371
|
|
|
|
166,125
|
|
Other
Employees
|
|
|
1,291,560
|
|
|
|
925,841
|
|
|
|
233,980
|
|
|
|
250,610
|
|
Directors
|
|
|
177,350
|
|
|
|
130,700
|
|
|
|
32,800
|
|
|
|
56,082
|
|
TOTAL
|
|
|
1,826,300
|
|
|
|
1,380,560
|
|
|
|
300,151
|
|
|
|
472,817
|
|
As of
March 1, 2010, Bancorp and its subsidiaries employed approximately
777 employees eligible to participate in the Stock Plan. On
March 11, 2009, the closing price of our common stock was
$_______.
No new
Stock Plan benefits have been allocated to executive officers, directors, or any
specific individuals under the Stock Plan at this time. For information
regarding awards granted under the Stock Plan to executive officers named in
this proxy statement, please see "Executive Compensation" below.
Description
of the Plan as Proposed to Be Amended
The
complete text of the Stock Plan, as proposed to be amended, is included in
Appendix B immediately following Amendment No. 5 to the Stock
Plan. The following description of the Stock Plan summarizes its material
features as proposed to be amended and is qualified in its entirety by reference
to the Stock Plan included in Appendix B.
Purpose
. The
purpose of the Stock Plan is to give the Company a competitive advantage in
attracting, retaining and motivating officers, employees, directors and/or
consultants and to provide the Company and its subsidiaries and affiliates with
a stock plan providing incentives linked to the profitability of the Company's
businesses and increases in shareholder value.
Eligibility and
Administration
. Individuals eligible to participate include
directors, officers, employees, and consultants of the Company or any of its
subsidiaries or affiliates and prospective employees and consultants who have
accepted offers of employment or engagement.
The Stock
Plan is administered by the Board of Directors directly based generally on
recommendations of the Compensation Committee (such administrator is referred to
herein as the "Committee"). If the Board elects, it may delegate its
authority to the Compensation Committee or such other committee of the Board as
the Board may from time to time designate. All or any portion of
responsibilities and powers under the Stock Plan may, unless prohibited by
applicable law or Nasdaq rule, be further delegated to any one or more of the
members of a committee, or to any other person or persons.
Types of
Awards
. The Stock Plan provides for both incentive and nonqualified
stock options, restricted stock and other awards of common stock or awards that
are valued in whole or in part by reference to common stock. The following
is a brief description of the types of awards that may be granted under the
Stock Plan:
Options
.
The Stock Plan provides for stock options of two types: incentive stock
options qualified under Section 422 of the Internal Revenue Code (the
"Code") and nonqualified options. Each option will be evidenced by an
option agreement approved by the Committee, which form of agreement may
differ. With respect to each option grant, the Committee will have
authority to determine, among other things, (i) the individuals to whom
options may be granted, (ii) the number of shares of common stock subject
to an option, (iii) the terms and conditions of an option, including
exercise price, vesting conditions, any vesting acceleration, and the acceptable
methods of exercise and payment of the exercise price, and (iv) whether an
option will be an incentive or nonqualified option. Incentive stock
options may be exercisable for not more than 10 years from the date of
grant and must have an option price of not less than the fair market value of
the underlying common stock on the date of grant. Under the terms of the
Stock Plan, no individual may be granted options in any calendar year
representing the right to receive in excess of 300,000 shares. The
Stock Plan prohibits payment of dividends or dividend equivalents on stock
options.
Unless
otherwise determined by the Committee, if a recipient of an option terminates
services to the Company by reason of death, disability or retirement, any option
held at that time will immediately vest in full and may thereafter be exercised
until the expiration of the stated term of the option. Unless otherwise
determined by the Committee or as described with respect to termination events
following a Change in Control (as defined and described under the heading
"Change in Control Arrangements" below), options held by an option holder
terminated other than for Cause (as defined below) or by reason of death,
disability, or retirement may be exercised to the extent then exercisable for
three months from the date of termination or the balance of the stated term of
the option, whichever is shorter. Unless otherwise provided by the
Committee, options will terminate automatically if an option holder is
terminated for "cause," as defined in an agreement with the Company or, if no
agreement exists, conviction of a felony or willful and deliberate failure on
the part of the participant to perform his or her employment duties in any
material respect ("Cause"). If at any time an option is exercised after
the expiration of applicable periods specified under Section 422 of the
Code, the option will thereafter be treated as a nonqualified option for all
purposes.
Restricted
Stock
. Restricted stock awards are shares of common stock that may
be subject to forfeiture during a specified vesting period if conditions are not
satisfied, such as continued employment or attainment of individual or Company
performance goals. From the date of issuance of shares of restricted
stock, the recipient is entitled to the rights of a shareholder with respect to
such shares, including voting and dividend rights. The Committee may award
shares of restricted stock either alone or in addition to other awards, and
restricted stock awards will be subject to such terms, conditions, and
restrictions as the Committee determines.
The
Committee may, prior to or at the time of grant of restricted stock, designate
the grant as a performance-based award. In the case of performance-based
awards to covered employees under Section 162(m) of the Code, performance
goals must be based on the attainment of specified levels of one or more of the
following measures: stock price, earnings, earnings per share, return on
equity, return on assets, asset quality, net interest margin, loan portfolio
growth, efficiency ratio, deposit portfolio growth, and liquidity, and must be
set by the Committee within the time period prescribed by Section 162(m) of
the Code and related regulations. The Stock Plan is designed to provide
the Company with the flexibility to qualify compensation attributable to
performance-based awards for deduction in full under Section 162(m) of the
Code.
Unless
otherwise determined by the Committee, upon a participant's termination by
reason of death or disability, all restrictions, including any performance
goals, applicable to any restricted stock will lapse or be deemed earned in
full, as the case may be, and such restricted stock will become fully vested and
transferable to the full extent of the original grant. Other vesting
conditions are determined by the Committee and set forth in forms of award
agreements used by the Company from time to time.
Changes in
Control
. All awards held by a participant will vest in full and
become exercisable for the full term of an option if a participant's employment
is terminated by the Company or its successor other than for Cause during the
24-month period following a Change in Control (as defined in the Stock
Plan). The Stock Plan also contains look-back provisions providing for
full vesting and exercisability for the entire stated term of an option
agreement upon a Change in Control for individuals terminated other than for
Cause after the Company executes an agreement that provides for a Change in
Control but before closing of the transaction. Finally, the Committee may
provide in an award agreement or otherwise that, during the 60-day period from
and after a Change in Control, an optionee will have the right to the cash value
of all or any part of an option (whether or not fully vested) based on the
spread between a formula price approximating the price per share received in the
Change in Control and the exercise price.
Adjustments to
Shares
. In the event of a stock split (including a reverse stock
split), a dividend or distribution paid in common stock, or a recapitalization
of or affecting common stock, the aggregate number and kind of shares reserved
for issuance under the Stock Plan, the maximum limitation upon the number of
shares that may be issued as restricted stock or subject to stock options to be
granted to a single participant in any fiscal year under the Stock Plan, the
number, kind, and option price per share subject to each outstanding stock
option, and the number and kind of shares subject to other awards granted under
the Stock Plan, will be automatically adjusted proportionately, or substituted,
to reflect the effect of such stock split, distribution paid in common stock, or
recapitalization. Adjustments will be in the discretion of the Committee
in the event of any merger or consolidation, separation (including a spin off),
or other reorganization or change in capital structure.
If any
awards granted under the Stock Plan are forfeited or any option terminates,
expires, or lapses without being exercised, the shares subject to such awards
will again be available for issuance under the Stock Plan.
Federal Income Tax
Consequences
. Certain awards granted under the Stock Plan are
intended to qualify as incentive stock options for federal income tax
purposes. Under federal income tax law currently in effect, the recipient
of an option will recognize no income or gain (for regular income tax purposes)
upon either grant or exercise of an incentive stock option. However, upon
the exercise of an incentive stock option, the amount by which the market value
of the shares subject to the incentive stock option exceeds the exercise price
is included in the alternative minimum taxable income of the optionee and may,
under certain conditions, be taxed under the alternative minimum tax. If
an employee exercises an incentive stock option and does not dispose of any of
the option shares within either two years following the date of grant or one
year following the date of exercise, then any gain realized upon subsequent
disposition of the shares will be treated as capital gain. If an employee
disposes of shares acquired upon exercise of an incentive stock option before
the expiration of applicable holding periods, any amount realized will be
taxable as ordinary compensation income. The Company will not be allowed
any deduction for federal income tax purposes at either the time of the grant or
the time of exercise of an incentive stock option. Upon any disqualifying
disposition by an employee, the Company will generally be entitled to a
deduction to the extent the employee realized ordinary income.
Certain
awards under the Stock Plan will be treated as nonqualified options for federal
income tax purposes. Under federal income tax law presently in effect, the
recipient of a nonqualified option will recognize no income until the option is
exercised. At the time of exercise of a nonqualified option, the optionee
will realize ordinary income, and the Company will generally be entitled to a
deduction, in the amount by which the market value of the shares exceeds the
exercise price. The Company is required to withhold on the income
amount. Upon the sale of shares acquired upon exercise of a nonqualified
option, the excess of the amount realized from the sale over the market value of
the shares on the date of exercise is taxable to the recipient as capital gain,
and will not result in any further deduction for the Company.
The
Committee may permit recipients of options to pay all or a portion of the
exercise price for an option using previously acquired shares of common
stock. If an option is exercised and payment is made in previously held
shares, there is no taxable gain or loss to the recipient other than any gain
recognized as a result of exercise of the option, as described
above.
An
employee who receives restricted stock under the Stock Plan will generally
realize taxable income in each year in which a portion of the shares vest based
on the value of the shares at the time of vesting, unless a Section 83(b)
election is made. If a Section 83(b) election is made, the employee
will realize taxable income in the year of initial receipt based on the value of
the shares at that time. The Company generally will be entitled to a tax
deduction equal to the amount includable as income by the employee at the same
time or times as the employee recognizes income with respect to the
shares. The Company is required to withhold on the income
amount.
Section 162(m)
of the Code limits to $1,000,000 per person the amount that the Company may
deduct for compensation paid to any of its executive officers named in the
executive compensation section of the Company's proxy statement in any year
("named executive officers"). Under IRS regulations, compensation received
through the exercise of an option or through grant or vesting of restricted
stock will not be subject to the $1,000,000 limit if the option or grant and the
plan pursuant to which it is granted meet certain requirements. One
requirement is shareholder approval of a per-employee limit on the number of
shares as to which options or grants may be made. Another requirement
relates to the independence of the Board or committee of the Board considering
and approving grants of awards and, in the case of restricted stock, applicable
performance goals. Finally, the exercise price of an option may not be
less than the fair market value of the common stock on the date of grant.
The Stock Plan has been structured so that options and all restricted stock
awards that are subject to performance goals described in the Stock Plan will
meet the Section 162(m) requirements.
Vote
Required
Assuming
a quorum is present at the meeting, the amendment to our Stock Plan will be
approved if the votes cast in favor of the amendment exceed the votes cast
against it. Shares not represented at the meeting, abstentions from
voting, and broker non-votes will have no effect on the outcome of voting on the
amendment. If the proposed amendment is not approved by shareholders, the
Stock Plan will continue in effect as if no amendment had been
made.
The
Board of Directors recommends that you vote
FOR
amending our 2002
Stock Incentive Plan as described above.
Proposal 4—Ratification
of Selection of Independent Registered Public Accountants
The Audit
Committee has selected Deloitte & Touche LLP as the Company's
independent registered public accountants for the fiscal year ending
December 31, 2010. Although the selection of independent auditors is
not required to be submitted to a vote of the shareholders by the Company's
charter documents or applicable law, the Board has decided to ask the
shareholders to ratify the selection. If the shareholders do not approve
the selection of Deloitte & Touche LLP, the Board will ask the Audit
Committee to reconsider its recommendation.
Provided
that a quorum is present, the selection of Deloitte & Touche LLP as the
Company's independent auditors will be ratified if the votes cast in favor of
the proposal exceed the votes cast against it at the Annual Meeting.
Shares that are not represented at the meeting, shares that abstain from voting
on this proposal, and broker non-votes will have no effect on the outcome of the
rating on this proposal.
The
Board of Directors recommends that you vote
FOR
ratification of
the selection of Deloitte & Touche LLP as our independent registered
public accounting firm for 2010.
MATTERS
RELATED TO OUR AUDITORS
Auditors
for Fiscal Year Ended December 31, 2009
Deloitte &
Touche LLP, our independent registered public accountants, performed audits of
our consolidated financial statements for 2009 and our management's assessment
that the Company maintained effective internal control over financial reporting
as of December 31, 2009. A representative of Deloitte &
Touche LLP will be present at the Annual Meeting and available to respond to
appropriate questions. The representative will have the opportunity to
make a statement at the annual meeting if he or she so desires.
Fees
Paid to Independent Registered Public Accounting Firm
The
following table sets forth the aggregate fees paid to Deloitte & Touche
LLP, the member firms of Deloitte Touche Tohmatsu, and their respective
affiliates (collectively, "Deloitte & Touche"), for the years ended
December 31, 2009, and December 31, 2008:
|
|
Year Ended December 31, 2009
|
|
|
Year Ended December 31, 2008
|
|
Description
|
|
Amount Paid
|
|
|
Amount Paid
|
|
Audit
Fees (1)
|
|
$
|
848,850
|
|
|
$
|
678,620
|
|
Audit-Related
Fees (2)
|
|
|
18,500
|
|
|
|
18,000
|
|
Tax
Fees (3)
|
|
|
236,528
|
|
|
|
61,341
|
|
All
Other Fees
|
|
|
0
|
|
|
|
0
|
|
|
(1)
|
Fees
for audit services consist of:
|
|
·
|
Audit
of the Company's annual financial
statements;
|
|
·
|
Reviews
related to obligations under the Federal Deposit Insurance Corporation
Improvement Act;
|
|
·
|
Reviews
in connection with quarterly reports filed with the
SEC;
|
|
·
|
Includes
approximately $130,000 in 2009 and approximately $140,000 in 2008
for preparation of internal control reports and related attestation
services; and
|
|
·
|
Other
SEC-related work such as consents and other
services.
|
|
(2)
|
Fees
for audit-related services consist of benefit plan
audits.
|
|
(3)
|
Fees
for tax services consist of tax compliance services, including federal,
state, and local tax preparation services and advice, and tax
planning.
|
Total
fees paid to Deloitte & Touche LLP were $1.1 million of which $.24 million
related to our successful private offering of securities and registered rights
offering.
The Audit
Committee has adopted pre-approval policies and procedures for pre-approving
work to be performed by Deloitte & Touche. Under Bancorp's
pre-approval policy, the Audit Committee must pre-approve all audit and
permitted non-audit services to be performed by our independent auditors.
All services performed by Deloitte & Touche during 2009 were
pre-approved by the Audit Committee.
The Audit
Committee has pre-approved the use of Deloitte & Touche for certain
audit services and specific types of services characterized as audit-related and
tax services. These categories include with respect to audit services,
attestation services, services associated with SEC registration statements, and
consultations with management relating to accounting disclosure of transactions
or events. With respect to audit-related and tax services, these
categories include due diligence and audit services relating to potential
mergers and acquisitions, benefit plan audits, internal control reviews,
consultations relating to disclosure treatment of transactions, tax preparation
services, and tax planning and advice. For each category of services, the
Audit Committee has set dollar limits on the amount of services that may be
provided and has required that management or the auditors report back to the
committee from time to time to inform members of services actually provided and
costs therefor. The Audit Committee has delegated to the chair of the
Audit Committee the authority to consider and pre-approve any management or
other request for additional services to be performed by Deloitte &
Touche.
Report
of Audit Committee
In
discharging its responsibilities, the Audit Committee:
|
·
|
Reviewed
and held discussions with management and Deloitte & Touche
relating to the Company's financial statements, internal control, the
audit and financial reporting by Bancorp
generally;
|
|
·
|
Discussed
and reviewed with Deloitte & Touche all matters the firm was
required to communicate to and discuss with the Audit Committee under
applicable standards, including those described in Statement on Auditing
Standards No. 61, as amended;
and
|
|
·
|
Received
from Deloitte & Touche the written disclosures and letter
required by the Public Company Accounting Oversight Board regarding
communication with the Audit Committee concerning independence and
discussed with Deloitte & Touche its
independence.
|
Based on
the Audit Committee's review of the audited consolidated financial statements
and the various discussions with management and the independent accountants
described above, the Audit Committee recommended to the Board of Directors that
the audited consolidated financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31,
2009.
Audit
Committee Members
Duane C.
McDougall (Chair), Michael Bragg, and Dr. Nancy Wilgenbusch.
OTHER
BUSINESS
The Board
knows of no other matters to be brought before the shareholders at the Annual
Meeting. In the event other matters are presented for a vote at the Annual
Meeting, the proxy holders will vote shares represented by properly executed
proxies in their discretion in accordance with their judgment on such
matters.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Stock
Ownership Table
The
following table shows beneficial ownership as of February 1, 2010, of
(i) Bancorp common stock beneficially owned by our current directors and
nominees for director, the executive officers named in the summary compensation
table, shareholders known to us to beneficially own more than 5% of our common
stock, and all executive officers and directors of Bancorp as a group and
(ii) Bancorp Series B Preferred Stock beneficially owned by one of our
directors. No other officer or director beneficially owns any shares of
Series B Preferred Stock. Beneficial ownership includes shares
currently owned, shares that a person has a right to vote or transfer, and any
shares that a person has a right to acquire within 60 days. To our
knowledge, none of the listed shares have been pledged as collateral for loans
or other indebtedness. Except as noted below, each holder has sole voting
and investment power with respect to listed shares. At
February 1, 2010, Bancorp had 87,171,915 shares outstanding.
Name and Address
|
|
Number of Common
Shares Beneficially
Owned
(1)(2)(3)(4)
|
|
|
Percent of
Common
(5)
|
|
|
|
|
|
|
|
|
5%
or Greater Owners of Voting Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MFP
Partners, L.P.
25
th
Floor
667
Madison Avenue
New
York, NY 10065
|
|
|
8,535,000
|
(6)
|
|
|
9.80
|
%
|
|
|
|
|
|
|
|
|
|
GF
Financial, LLC
1271
Avenue of the Americas
New
York, NY 10020
|
|
|
7,285,000
|
(7)
|
|
|
8.36
|
%
|
|
|
|
|
|
|
|
|
|
Red
Mountain Capital Partners II, LP
Suite
925
10100
Santa Monica Blvd.
Los
Angeles, CA 90067
|
|
|
4,441,700
|
(8)
|
|
|
5.10
|
%
|
|
|
|
|
|
|
|
|
|
Basswood
Capital Management, LLC, et al
10
th
Floor
645
Madison Avenue
New
York, NY 10022
|
|
|
4,440,000
|
(9)
|
|
|
5.09
|
%
|
Name
|
|
Number of Common
Shares Beneficially
Owned
(1)(2)(3)(4)
|
|
|
Percent of
Common
(5)
|
|
|
|
|
|
|
|
|
Officers,
Directors, and Nominees for Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lloyd
D. Ankeny
|
|
|
151,649
|
|
|
|
*
|
|
Michael J.
Bragg
|
|
|
48,073
|
(11)
|
|
|
*
|
|
James D.
Bygland
|
|
|
63,927
|
(12)
|
|
|
*
|
|
Anders
Giltvedt
|
|
|
152,865
|
|
|
|
*
|
|
Simon
Glick (7) (10)
|
|
|
7,285,000
|
|
|
|
8.36
|
%
|
Duane C.
McDougall
|
|
|
36,724
|
|
|
|
*
|
|
Xandra
McKeown
|
|
|
39,048
|
|
|
|
*
|
|
Steven J.
Oliva
|
|
|
140,263
|
|
|
|
*
|
|
John
T. Pietrzak
|
|
|
0
|
|
|
|
*
|
|
Hadley
S. Robbins
|
|
|
20,937
|
|
|
|
*
|
|
Steven N.
Spence
|
|
|
32,806
|
(13)
|
|
|
*
|
|
Robert D.
Sznewajs
|
|
|
341,287
|
(14)
|
|
|
*
|
|
David J.
Truitt
|
|
|
54,330
|
|
|
|
*
|
|
Nancy
Wilgenbusch
|
|
|
30,266
|
|
|
|
*
|
|
All
directors and executive officers as a group
(12 persons)
|
|
|
—
|
|
|
|
—
|
%
|
Series B Preferred
Stock
Name
|
|
Number of Series B
Preferred Shares
Beneficially Owned
|
|
|
Percent of Series B
Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
Simon
Glick
|
|
|
63,782
|
(10)(15)
|
|
|
17.65
|
%
|
*Represents
less than 1% of our outstanding common stock.
|
1.
|
Share
amounts include shares subject to stock options exercisable within
60 days after February 1, 2010, as follows: Lloyd D.
Ankeny, 23,450 shares; Michael J. Bragg, 15,400 shares;
James D. Bygland, 31,701 shares; Anders Giltvedt,
99,765 shares; Duane C. McDougall, 20,450 shares; Xandra
McKeown, 17,376 shares; Steven J. Oliva, 20,450 shares;
Hadley Robbins, 5,451 shares; Steven N. Spence, 3,050 shares;
Robert D. Sznewajs, 171,313 shares; David J. Truitt,
17,450 shares; Nancy Wilgenbusch, 20,450 shares; and by all
directors and executive officers as a group,
456,306 shares.
|
|
2.
|
Share
amounts include shares held under deferred compensation plans as to which
participants have shared voting and dispositive power as follows:
Lloyd D. Ankeny, 1,724 shares; Michael J. Bragg, 3,185
shares; James D. Bygland, 643 shares; Duane C. McDougall,
2,515 shares; Xandra McKeown, 144 shares; Steven J. Oliva,
20,692 shares; Steven N. Spence, 1,375 shares;
David J. Truitt, 31,389 shares; and Nancy Wilgenbusch,
2,708 shares.
|
|
3.
|
Share
amounts include restricted shares which, although not fully vested,
possess full voting rights, as follows: James D. Bygland,
3,798 shares; Anders Giltvedt, 13,455 shares; Xandra McKeown,
8,528 shares; Hadley Robbins, 8,741 shares; and Robert D.
Sznewajs, 32,225 shares; and by all directors and executive officers
as a group, 66,747 shares.
|
|
4.
|
Share
amounts include the following shares held in accounts under Bancorp's
401(k) Plan: James D. Bygland, 12,428 shares; Anders
Giltvedt, 1 share; Xandra McKeown, 1,374 shares; Robert D.
Sznewajs, 1,483 shares; and by all directors and executive officers
as a group, 15,286 shares.
|
|
5.
|
Calculated
in accordance with Rule 13d-3(d)(1) of the Securities Exchange Act of
1934 (the "Exchange Act").
|
|
6.
|
Based
on information contained in the Schedule 13G jointly filed
February 4, 2010 by MFP Partners, L.P ("Partners"), MFP Investors
LLC, the general partner of Partners ("Investors"), and Michael Price,
managing partner of Partners ("Price"). The Schedule 13G
indicates Partners, Investors, and Price share voting and dispositive
power with respect to the listed shares. Partners also beneficially
owns (i) 8,732 shares of Series B Preferred Stock, which is
convertible into 439,100 shares of common stock following transfer to
third parties in a widely disputed offering and (ii) a Class C
Warrant, which is exercisable to purchase 75,000 shares of Series B
Preferred Stock, which are convertible into 3,750,000 shares of common
stock following transfer to third parties in a widely disputed
offering. Since Partners does not have the right to acquire these
shares of common stock and will not have voting or dispositive power of
such shares of common stock, the underlying shares of common stock are not
included in the amount reported.
|
|
7.
|
Based
on information contained in the Schedule 13D jointly filed
February 1, 2009, by GFF Financial, LLC ("GFF"), Diaco Investments,
L.P., 90% owner and manager member of GFF ("Diaco"), Signet, L.L.C.,
general partner of Diaco ("Signet"), and Simon Glick, managing member of
Signet. The Schedule 13D indicates that GFF may be deemed to be
the beneficial owner of the shares and that GFF, Diaco, Signet and
Mr. Glick may be deemed to share voting and dispositive power with
respect to the listed shares. GFF also directly owns:
(i) 8,782 shares of Series B Preferred Stock, which is
convertible into 439,100 shares of common stock following transfer to
unaffiliated third parties in a widely dispersed offering and (ii) a
Class C Warrant, which is exercisable for 55,000 shares of
Series B Preferred Stock that would be convertible into 2,750,000
shares of common stock following transfer to unaffiliated third parties in
a widely dispersed offering. Since GFF does not have the right to
acquire these shares of common stock and will have no voting or
dispositive power over such common stock, those underlying shares of
common stock are not included in the amount
reported.
|
|
8.
|
Based
on information contained in the Schedule 13D jointly filed
February 18, 2010 by Red Mountain Capital Partners LLC, Red Mountain
Capital Partners II, L.P. ("RMCP II"), RMCP GP LLC, Red Mountain Capital
Management, Inc., and Willem Mesdag. RMCP II reports that it has the
sole power to vote and dispose of the listed shares and that other
reporting persons are included because they may be deemed to control RMCP
II and therefore have beneficial ownership of the listed
shares.
|
|
9.
|
Based
on information contained in the Schedule 13G jointly filed
February 12, 2010 by Basswood Opportunity Partners, LP, Basswood
Opportunity Fund, Inc., Basswood Capital Management, L.L.C., Marcel
Lindenbaum, Matthew Lindenbaum, Bennett Lindenbaum, Nathan Jeremy
Lindenbaum, Abigail Lindenbaum Taylor, and Victoria Lindenbaum Feder which
indicates they may be deemed to be a group for purposes of
Rule 13d-5(b) of the Exchange Act, and each member of the group may
be deemed to beneficially own shares owned by other members of the
group.
|
|
10.
|
Mr. Glick
beneficially owns shares held by GFF as a result of his position and
ownership interest in GFF. See
Note 7.
|
|
11.
|
Share
amounts include 1,604 shares owned by Mr. Bragg's spouse.
Mr. Bragg disclaims any beneficial ownership of these
shares.
|
|
12.
|
Share
amounts include 60 shares owned by Mr. Bygland's stepson.
Mr. Bygland disclaims any beneficial ownership of these
shares.
|
|
13.
|
Share
amounts include 2,000 shares owned by Mr. Spence's spouse.
Mr. Spence disclaims any beneficial ownership of these
shares.
|
|
14.
|
Share
amounts include 268 shares owned by Mr. Sznewajs' spouse. Mr.
Sznewajs disclaims any beneficial of these
shares.
|
|
15.
|
Share
amounts include 55,000 shares of Series B Preferred Stock issuable
upon exercise of outstanding Class C Warrants that are exercisable
within 60 days of February 1,
2010.
|
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a)
of the Securities Exchange Act of 1934, as amended ("Section 16(a)"),
requires that all of our executive officers and directors and all persons who
beneficially own more than 10% of our common stock ("reporting persons") file
reports with the SEC with respect to beneficial ownership of Bancorp common
stock. We have adopted procedures to assist our directors and executive
officers in complying with the Section 16(a) filing
requirements.
We
believe that all executive officers and directors made all filings required by
Section 16(a) on a timely basis during 2009, based solely upon our review
of the copies of filings that we received with respect to the year ended
December 31, 2009, and written representations from reporting
persons.
MANAGEMENT
Information
with respect to our executive management team, other than Mr. Sznewajs,
appears below. Information relating to Mr. Sznewajs, who is also a
director, can be found under "Proposal 1—Election of Directors." Each
of the executive officers listed below serves in the position listed at both
Bancorp and the Bank.
James D.
Bygland, 48
|
Mr. Bygland
has served as Executive Vice President and Chief Information Officer for
more than five years.
|
|
|
Anders
Giltvedt, 50
|
Mr. Giltvedt
has served as Executive Vice President and Chief Financial Officer for
more than five years.
|
|
|
Kevin
McClung, 40
|
Mr. McClung
has served as Controller for more than five years and is presently a
Senior Vice President.
|
|
|
Xandra
McKeown, 52
|
Ms. McKeown
has served as Executive Vice President and Manager of the Commercial
Banking Group for more than five years.
|
|
|
Hadley
S. Robbins, 53
|
Mr. Robbins
has served as Executive Vice President and Chief Credit Officer since
April 2007. Mr. Robbins previously served as a regional
business banking manager and in other positions at Wells Fargo &
Company, from October 2003 until joining
Bancorp.
|
EXECUTIVE
COMPENSATION
Discussion
and Analysis of Executive Compensation Programs
As part
of our discussion of executive compensation in this proxy statement, we provide
summaries of and derive examples from various plans and agreements, such as
employment agreements, change in control agreements, equity incentive plans, and
supplemental executive retirement agreements, that are complicated legal
documents. For additional information regarding these legal
documents, we refer you to the complete documents as they have been incorporated
into our Annual Report on Form 10-K for the year ended December 31,
2009. Our annual report has been filed with the SEC and is available
on its website at
www.sec.gov
. The
Exhibit Index in our annual report directs you to where each of the exhibits
incorporated into our annual report, including all agreements with our named
executive officers, can be found. All of these documents can be
obtained on the SEC website. All summaries or examples derived from
these documents that are included in this proxy statement are qualified in their
entirety by reference to the actual legal documents.
Objectives and
Basis for Compensation
. The objectives of our compensation
program for named executive officers are to attract, retain, motivate and reward
highly qualified executives. As a general practice, the Compensation
Committee targets total compensation of each named executive at the 65
th
percentile of the total compensation of executives holding similar positions at
similarly situated bank holding companies, as modified upward or downward by the
following factors:
|
·
|
length
of time in the position,
|
|
·
|
scope
of job responsibilities,
|
|
·
|
current
and long term job performance and potential for
advancement,
|
|
·
|
competitive
market conditions for individuals holding similar positions,
and
|
|
·
|
the
annual and longer term performance of our
company.
|
Total
executive compensation may also be affected by decisions to pay higher levels of
compensation in order to attract superior executive talent in critical functions
or to provide additional compensation outside of the normal annual review cycle
to address retention issues.
To assist
the Compensation Committee in achieving the objectives of our compensation
programs for executive officers, the committee has on a periodic basis retained
the services of a consultant to conduct surveys and provide reports, updates and
related advice to the committee regarding compensation paid to executive
officers at similarly situated bank holding companies that hold positions
similar to those of our named executive officers. In 2006, the
committee retained the Compensation Group of Clark Consulting, Inc.
("Consultant"), to provide such services. The Consultant provided the
committee with a report regarding executive compensation based on information
derived from a banking and financial industry compensation survey and a
customized survey of a peer group composed of the bank holding companies listed
beginning on page 32 below ("the peer group").
The
Compensation Committee periodically compares the total annual compensation of
each named executive to the total annual compensation of executives holding
comparable positions at similarly situated bank holding
companies. For the purpose of such comparisons, the committee
considers base salary, annual bonus, and the value of stock options and
restricted stock grants. The committee focuses primarily on total
annual compensation rather than the various individual elements of compensation
because total annual compensation is generally most important to
executives. Further, focusing on total annual compensation allows us
more flexibility to provide forms of compensation that are tailored to meet our
goals and the particular executive's needs and wishes, either at the time of
hire or later in the employment relationship. The Compensation
Committee does not focus on supplemental executive retirement plans, life
insurance, change in control agreements, and other compensation elements in its
comparisons because it does not believe such comparisons are particularly
meaningful, it is difficult to assign a value to certain elements, and it is not
believed to be industry practice to do so.
According
to information provided by our Consultant, the total annual compensation of each
of our named executive officers compares to the 65
th
percentile of 2008 total annual compensation of similarly situated executives at
peer group companies as follows: Mr. Sznewajs: -26%;
Mr. Giltvedt: -27%; Ms. McKeown: -22;
Mr. Robbins: -26%; and
Mr. Bygland: -48%. To calculate these percentages and
the base salary percentages discussed below, our Consultant applied increase
factors to its 2006 market data of 4% for 2007 and 7% for 2008.
The
Compensation Committee determined that it was not necessary to obtain and
compare information from our Consultant regarding 2009 total annual compensation
information of similarly situated executives at peer group
companies. The decision was made in light of the Company's recent
financial performance and the Committee's decision not increase the base
salaries of or grant annual bonuses to named executive officers in
2009.
Based on
our review of the compensation arrangements discussed below, and our assessments
of individual and corporate performance, we believe our executive compensation
levels and the design of our executive compensation programs are
effective.
Goals
. The
compensation program and its various elements are designed to reward a
combination of individual, department and/or corporate
performance. How the various elements of the compensation program are
designed to reward such performance is explained more fully below.
Elements of
Compensation
. The primary elements of our compensation program
for named executive officers are base salary, annual bonus, stock options,
restricted stock, supplemental executive retirement plans, life insurance,
change in control agreements, deferred compensation plans, and an employment
contract with the President & CEO. In addition, named executive
officers are eligible to receive other benefits that are generally available to
all employees on a non-discriminatory basis, such as participation in and
matching contributions under our 401(k) plan, vacations, and medical, dental,
life, disability, and long term care insurance.
Base
Salaries
. Base salaries of named executive officers were last
adjusted effective January 1, 2007, to approximately the amounts shown
under the subheading "Summary Compensation Table" in this section below.
The Committee
normally adjusts base
salaries of named executive officers on the first day of each calendar
year. It did not do so in 2008, 2009 or 2010 due to the Company's
financial performance.
Except
for the absence of base salary adjustments in 2008, 2009 and 2010, it has been
the practice of the Compensation Committee to target the base salary of each
named executive officer at or slightly below the 65th percentile base salary of
executives holding similar positions in our Consultant's
report. According to information provided by our Consultant, the 2008
base salary of our named executive officers compares to the 65th percentile base
salary in 2008 of similarly situated executives at peer group companies as
follows: Mr. Sznewajs: -28%;
Mr. Giltvedt: -23%; Ms. McKeown: -7%;
Mr. Robbins: -8%; and
Mr. Bygland: -23%. No survey was obtained for
2009.
In
addition to information previously received from our Consultant, in January 2010
the Company received information from Moss Adams LLP regarding the base salaries
of named executive officers as part of a management study. Compared
to executive officers holding similar positions in institutions of similar asset
size in the geographic area, Moss Adams concluded that the base salaries of Mr.
Sznewajs, Ms. McKeown and Mr. Robbins are either at or slightly above the median
base salary, the base salary of Mr. Giltvedt seemed to be slightly higher than
the median, and the base salary of Mr. Bygland appeared to be on the low end of
median base salaries. Moss Adams conclusions were based on
information contained in its own survey as well as information contained in
surveys of SNL Financial and Independent Community Bankers of
America. Moss Adams was not acting as a compensation consultant in
providing this information.
As
described in greater detail below, an increase in the base salary of a named
executive officer also results in an increase in such officer's targeted annual
bonus and benefit levels under the supplemental executive retirement and change
in control agreements applicable to him or her and may also lead to increases in
the number of stock options and restricted shares granted to such
person.
Annual Bonuses
.
In light of lower than
expected corporate performance, annual bonuses have not been paid to
Mr. Sznewajs since early 2007 (for 2006 performance) and since early 2008
to other named executives (for 2007 performance). Although no annual
bonuses have been paid recently, this section describes the structure of
Bancorp's annual bonus program.
Annual
bonuses allow named executives to earn additional annual cash compensation if
performance goals and certain objective and subjective criteria are
satisfied. The bonus paid each named executive officer is a function
of the executive's bonus opportunity, the achievement of individual, department
and/or corporate performance goals, and the Compensation Committee's
discretion.
The bonus
opportunity of each named executive is a percentage of his or her base salary
and, except in the case of our CEO, is proposed by the President and CEO and
reviewed and approved annually by the Compensation Committee. For
example, an executive with a base salary of $200,000 and a bonus opportunity of
50% has an opportunity to earn a bonus of $100,000, subject to achievement of
individual, department and Company performance goals and to the discretion of
the Compensation Committee. The bonus paid may be more or less than
the amount of the bonus opportunity. This structure gives the
Compensation Committee latitude to weigh factors it considers important when
considering executive bonuses, including subjective factors.
The bonus
opportunity and the percentage of that opportunity that is allocated between
individual, department and corporate goals for each named executive is as
follows:
|
|
|
Percent of Bonus Opportunity
Allocated to Achievement of
|
|
|
|
Bonus
Opportunity*
|
|
|
Individual and
Department Goals
|
|
|
Corporate
Goals
|
|
Robert
Sznewajs
|
|
|
100
|
%
|
|
|
0
|
%
|
|
|
100
|
%
|
Anders
Giltvedt
|
|
|
60
|
%
|
|
|
25
|
%
|
|
|
75
|
%
|
Xandra
McKeown
|
|
|
50
|
%
|
|
|
50
|
%
|
|
|
50
|
%
|
Hadley
Robbins
|
|
|
50
|
%
|
|
|
50
|
%
|
|
|
50
|
%
|
James
Bygland
|
|
|
30
|
%
|
|
|
50
|
%
|
|
|
50
|
%
|
*As a
percentage of base salary.
Our
primary long-term corporate goals are to maintain a 10% or greater
year-over-year growth in earnings per share and a 15% or greater return on
average equity, tangible. The Company did not achieve its primary
long term corporate goals in 2009. Our year-over-year earnings per
diluted share declined to a loss of $3.13 in 2009, from a loss of $.38 in 2008,
and earnings of $1.05 in 2007. Our return on average equity, tangible
in 2009 was (46.47)%, down from (2.88)% in 2008, and 8.7% in 2007.
In
addition to our primary long-term corporate goals, other corporate goals
considered by management and the Compensation Committee in determining the
annual bonuses of each named executive included:
|
·
|
regulatory
compliance, corporate governance, and credit
quality,
|
|
·
|
strategic
planning and execution of the strategic
plan,
|
|
·
|
the
competitive environment, and
|
|
·
|
customer
and employee satisfaction survey results and community
image.
|
While the
Company did not achieve its growth in earnings per share and return on equity,
tangible goals, most corporate goals were achieved. Those goals that
were not achieved were primarily due to entry of regulatory orders against the
Bank and significant credit quality issues in certain parts of our loan
portfolio, including residential construction loans. As a result of
not achieving certain corporate goals, the Committee determined that each named
executive should receive 0% for both the corporate goals part and the
individual/ department part of his/her bonus opportunity.
The
individual and department performance goals of each named executive officer
differed. Mr. Sznewajs had no individual or department
goals. The individual and department performance goals of each of our
named executives were as follows:
Officer
|
|
Performance Goal Areas
|
|
|
|
Mr. Giltvedt
|
|
Financial
reporting, expansion strategies, capital management, and corporate
projects.
|
|
|
|
Ms.
McKeown
|
|
Origination
and sale of certain commercial loan, deposit and related products,
cross-sales, and customer satisfaction.
|
|
|
|
Mr. Robbins
|
|
Credit
quality, loan losses and quality of reporting to our Board and its Loan,
Investment & Asset/Liability Committee.
|
|
|
|
Mr. Bygland
|
|
Systems
maintenance (including operational accuracy) and systems development
(including new products and
services).
|
The
foregoing goals are general rather than specific. All named
executives also have department goals relating to employee
satisfaction.
In light
of the Committee's determination that no annual bonuses should be paid due to
Bancorp's lower than expected financial performance, achievement of individual
and department goals became irrelevant for purposes of determining annual
bonuses.
Restricted Stock and Stock
Options
. Restricted stock and stock options provide the
Compensation Committee with important tools to attract, retain, motivate and
reward named executive officers and to further align the interests of management
with those of our shareholders. Restricted stock and stock option
awards are designed to strengthen the mutuality of interests between Bancorp's
shareholders and named executive officers by providing a portion of annual
compensation in a form that gives the executive a proprietary interest in
pursuing the long-term growth, profitability, and financial success of
Bancorp. Stock option grants provide an additional incentive for
named executive officers to build shareholder value since recipients only
receive value from the grants if the price of our stock
appreciates.
In 2009,
stock options were granted to each named executive officer. Stock
options awarded in 2009 vest one-half annually over a two-year
period. The vesting period helps retain named executive officers and
is generally consistent with industry practice. Stock options expire
ten years from the date of grant. Stock options granted in 2009 and
earlier years were incentive stock options to the extent permitted by
law. We chose to grant incentive stock options primarily, rather than
non-qualified options, because of the additional incentive to hold the stock
after exercise and the potential tax benefits provided to employees by incentive
stock options.
The
number of stock options granted to each named executive was determined based on
individual performance, the executive's potential, and a formula that takes into
account the total number of option shares being granted to all employees being
granted stock options (as determined by total dollars available for all such
grants and our determination of the value of each option share using the
Black-Scholes method), the executive's salary, and a multiplier based on the
executive's job grade.
In 2009,
we increased the number of stock options granted to named executive officers and
others, and did not award restricted shares, prompted by our perception that
stock options will generally provide greater value to recipients than restricted
stock. The overall cost of such equity-based compensation for accounting
purposes dropped significantly in 2009 compared to 2008.
In 2009
(and for many years prior), our board generally granted restricted stock and/or
stock options to named executive officers at meetings held on the date of our
annual shareholders meeting, a date shortly after we release first quarter
earnings. The exercise price for options has been the closing
reported sales price of our stock on that date of grant. Our
practices in this regard have been consistent.
Supplemental Executive
Retirement Plans
. The Compensation Committee approved entry
into supplemental executive retirement agreements ("SERPs") with
Mr. Sznewajs, Mr. Giltvedt, Ms. McKeown, and Mr. Bygland in
2003 and with Mr. Robbins in 2007. The SERPs were implemented to
help retain key executives and remain competitive with others in our peer
group. In a report provided by our Consultant in 2003, it was
reported that 14 of the 19 bank holding companies in our peer group at
the time provided SERPs to one or more executive
officers. Information provided by our Consultant indicated that
benefits to be provided to named executives under the SERPs would, with respect
to percentage of base salary and payout periods, be in the mid-range of benefits
provided by companies in our peer group at the time.
The
SERPs, as amended in 2005, tie the benefit provided to a percentage of final
base salary. All named executives have elected to receive their SERP
benefits in a lump sum payment rather than in a fiscal payment over 15 years,
except that Mr. Giltvedt has elected a lump sum only in the event of benefits
triggered by death. Each SERP includes non-compete and
non-solicitation provisions. For more detailed discussion of the
SERPs, see the discussion in this section below under the subheading "Pension
Benefits for 2009."
Prior to
2009, the SERPs generally vested at a rate of 10% per year upon either
achievement of a return on equity, tangible of 10%, or in the discretion of the
Committee. In early 2009, based on advice from our Consultant that
vesting requirements are relatively uncommon in SERPs, the SERPs were amended to
eliminate the requirement of a 10% per year return on equity, tangible for
vesting to occur.
Life
Insurance
. In 2003, we purchased bank-owned life insurance for
Mr. Sznewajs, Mr. Giltvedt, Ms. McKeown, and Mr. Bygland and
others to help recover the costs of projected employee benefits, provide key
executives with another element of a comprehensive and competitive compensation
package, reward those persons for past and future services, and encourage them
to continue employment with us. In 2007, we purchased a term life
insurance policy for Mr. Robbins. Life insurance benefits under
the policies are $300,000 for Mr. Sznewajs and $200,000 for each other
named executive officer. Additional life insurance coverage is
provided under policies available to all employees.
Change In Control
Agreements
. The Compensation Committee approved entry into
change in control agreements ("CIC's") for Mr. Sznewajs,
Mr. Giltvedt, Ms. McKeown, and Mr. Bygland in 2003 and
Mr. Robbins in 2007. The CICs were implemented to help us retain
the executives (particularly after a change in control has been proposed) and
remain competitive with others in our peer group and in our market.
Benefits
under the CICs are payable to each named executive officer upon the occurrence
of events described in the CICs. Those events require both a change
in control (as defined in the CIC) and a termination of the employment of the
named executive officer (i.e., a double trigger). CICs provided by
some other companies provide executives with benefits solely upon the occurrence
of a change in control (i.e., a single trigger). We believe our
approach is more reasonable and reflective of our intent to compensate the
executive in the event of a termination of employment.
For a
more detailed discussion of the terms and conditions of the CICs, see the
discussion in this section below under the subheading "Potential Payments Upon
Termination or Change in Control."
Deferred Compensation
Plan
. We maintain an executive officers' deferred compensation
plan which permits each named executive officer and others to defer all or part
of his or her base salary, annual incentive bonuses, and commissions under the
plan on a tax-deferred basis. The plan provides us with an additional
opportunity to attract and retain senior officers by providing them with a
tax-advantaged investment vehicle at a very nominal cost to us. We do
not make contributions to the plan or pay or guarantee earnings to
participants.
An amount
equal to participant deferrals is placed in a "rabbi" trust that is subject to
the claims of our creditors. Plan participants have a number of
investment options, including Bancorp stock. The return on
contributions enjoyed by each participant depends on the return on the
investments which the participant selects. Participants are fully
vested in their plan benefits at all times. For more detailed
discussion of the deferred compensation plan, see the discussion in this section
below under the subheading "Nonqualified Deferred Compensation for
2009."
Employment Contract with the
CEO
. We entered into a new employment agreement with
Mr. Sznewajs that became effective on January 1, 2008 and continues
for a three-year term that ends December 31, 2010. This
agreement became effective immediately following the end of the term of our
previous three-year agreement with Mr. Sznewajs. The agreement
is consistent with the objectives of our compensation program to attract,
retain, motivate and reward highly qualified executives. For more
detailed discussion of the terms and conditions of the employment agreement, see
the tables and related discussion below under the subheadings "Summary
Compensation Table" and "Potential Payments Upon Termination or Change in
Control."
Role of Executive
Officers.
The base salaries, bonus payments, and number of
stock options and restricted shares granted to Mr. Giltvedt,
Ms. McKeown, Mr. Robbins, and Mr. Bygland were recommended to the
Compensation Committee by our CEO and Executive Vice President of Human
Resources and approved by the committee. The recommendations were
reviewed with the Compensation Committee chair in advance of deliberations and
action by the committee as a whole. Our CEO and Executive Vice
President of Human Resources were present during the Compensation Committee's
deliberations and approval process. The base salary, bonus payment,
and number of stock options and restricted shares granted to Mr. Sznewajs
were approved by the Compensation Committee in executive session.
Compensation
Recovery and Forfeiture Policies.
We maintain the following
provisions regarding the recovery, adjustment and forfeiture of compensation
paid or due to named executive officers:
Forfeiture of Equity
Awards
.
The
2002 Plan provides that, in the event the employment of any holder of an option
is terminated for cause, stock options of such holder, whether vested or
unvested, will terminate. Termination "for cause" is defined as
either conviction for committing a felony or willful and deliberate failure to
perform job duties. Restricted stock that has not yet vested will
also be forfeited upon any "for cause" termination. These provisions
serve to protect our intellectual and human capital and help ensure that our
executives act in the best interest of our company and its
stockholders.
Forfeiture and Recoupment
Benefits
. Each SERP applicable to our named executive officers
provides that the executive will forfeit any benefits upon any termination of
employment "for cause." An explanation of what constitutes "for
cause" may be found in the discussion in this section below under the subheading
"Potential Payments Upon Termination or Change in Control." Each
agreement also provides that, if the non-competition or non-solicitation
provisions of the agreement are violated, any payments made after the date of
breach must be repaid and any remaining unpaid benefits will be
forfeited.
Recoupment of Annual Bonuses
and Stock Gains
. The Sarbanes-Oxley Act of 2002 provides that
if a company is required to restate its financials due to material
non-compliance with reporting requirements, the chief executive officer and
chief financial officer must reimburse the company for (1) any bonus or
other incentive- or equity-based compensation received during the 12 months
following the first public release of later-restated financials, and
(2) any profits from the sale of securities during those
12 months.
Stock Ownership
Policy Guidelines.
We established the following policy and
recommended guidelines regarding minimum ownership of Bancorp stock by our named
executive officers:
Position:
|
|
Number of Shares:
|
|
|
|
|
|
Chief
Executive Officer
|
|
|
90,000
|
|
Chief
Financial Officer
|
|
|
38,500
|
|
Chief
Credit Officer
|
|
|
22,500
|
|
Business
Banking Manager
|
|
|
22,500
|
|
Chief
Information Officer
|
|
|
22,500
|
|
Named
executive officers are expected to achieve the indicated share ownership within
three to five years of becoming an executive. Shares subject to stock
options, whether vested or unvested, are considered owned for purposes of our
stock ownership policy. During 2009, all named officers were in
compliance with the policy.
Accounting and
Tax Treatments.
Provisions of the Internal Revenue Code limit
the deductibility of compensation in excess of $1 million, unless the
compensation is "performance-based compensation" or qualifies under certain
other exceptions. The Compensation Committee strives to qualify
executive compensation for deductibility to the extent consistent with the best
interests of our company, but deductibility is not the sole factor used by the
committee in ascertaining appropriate levels or modes of
compensation.
Bank Holding
Company Peer Group.
The Consultant's 2006 report provided
compensation-related information regarding the bank holding companies listed
below (the "peer group"):
2006 Peer
Group
CVB Financial Corp., CA
Umpqua Holdings Corporation,
OR
Central Pacific Financial Corp.,
HI
PFF Bancorp, Inc., CA
First Community Bancorp,
CA
Western Alliance Bancorp,
NV
Frontier Financial Corporation,
WA
Columbia Banking System, Inc.,
WA
Placer Sierra Bancshares,
CA
TriCo Bancshares, CA
Vineyard National Bancorp,
CA
Beverly Hills Bancorp, CA
Cascade Bancorp, OR
Heritage Commerce Corp.,
CA
AmericanWest Bancorp, WA
Columbia Bancorp, OR
The
Consultant's 2006 report included information regarding base salary, bonus,
value of awarded stock options, value of restricted stock awards, and certain
other compensation derived from various sources, including the proxy statements,
of members of the peer group. The peer group used in the Consultant's
2006 report was jointly selected by the Compensation Committee, management and
the Consultant.
Summary
Compensation Table
The
following table summarizes the various elements of compensation paid to or
earned by our chief executive officer, chief financial officer and other three
most highly compensated executive officers during 2007, 2008, and
2009.
Name and
Principal
Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
(1) ($)
|
|
|
Option
Awards (2)
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings (3)
($)
|
|
|
All Other
Compensation (4)
($)
|
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
Robert D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sznewajs,
|
|
2009
|
|
|
$
|
360,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
19,572
|
|
|
$
|
0
|
|
|
$
|
27,148
|
|
|
$
|
825
|
|
|
$
|
407,545
|
|
President and
|
|
2008
|
|
|
|
360,000
|
|
|
|
0
|
|
|
|
258,964
|
|
|
|
76,324
|
|
|
|
0
|
|
|
|
37,267
|
|
|
|
13,395
|
|
|
|
745,856
|
|
Chief
|
|
2007
|
|
|
|
360,000
|
|
|
|
0
|
|
|
|
428,652
|
|
|
|
0
|
|
|
|
0
|
|
|
|
87,896
|
|
|
|
21,908
|
|
|
|
898,456
|
|
Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Giltvedt,
|
|
2009
|
|
|
$
|
200,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
5,326
|
|
|
$
|
0
|
|
|
$
|
39,812
|
|
|
$
|
320
|
|
|
$
|
245,458
|
|
EVP/Chief
|
|
2008
|
|
|
|
200,000
|
|
|
|
0
|
|
|
|
131,529
|
|
|
|
20,595
|
|
|
|
0
|
|
|
|
38,836
|
|
|
|
4,254
|
|
|
|
395,189
|
|
Financial
|
|
2007
|
|
|
|
200,000
|
|
|
|
105,000
|
|
|
|
114,732
|
|
|
|
0
|
|
|
|
0
|
|
|
|
37,824
|
|
|
|
11,139
|
|
|
|
468,695
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xandra
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKeown,
|
|
2009
|
|
|
$
|
200,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,509
|
|
|
$
|
0
|
|
|
$
|
43,321
|
|
|
$
|
217
|
|
|
$
|
248,047
|
|
EVP/Business
|
|
2008
|
|
|
|
200,000
|
|
|
|
0
|
|
|
|
84,354
|
|
|
|
11,014
|
|
|
|
0
|
|
|
|
42,325
|
|
|
|
2,746
|
|
|
|
340,425
|
|
Banking
|
|
2007
|
|
|
|
200,000
|
|
|
|
90,000
|
|
|
|
78,082
|
|
|
|
0
|
|
|
|
0
|
|
|
|
41,271
|
|
|
|
9,383
|
|
|
|
418,736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hadley S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robbins,
|
|
2009
|
|
|
$
|
200,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
4,509
|
|
|
$
|
0
|
|
|
$
|
53,229
|
|
|
$
|
203
|
|
|
$
|
257,941
|
|
EVP/Chief
|
|
2008
|
|
|
|
200,000
|
|
|
|
0
|
|
|
|
84,354
|
|
|
|
11,014
|
|
|
|
0
|
|
|
|
51,796
|
|
|
|
2,157
|
|
|
|
349,307
|
|
Credit
|
|
2007
|
|
|
|
166,667
|
|
|
|
111,200
|
|
|
|
131,570
|
|
|
|
57,876
|
|
|
|
0
|
|
|
|
38,012
|
|
|
|
4,807
|
|
|
|
510,026
|
|
Officer
|
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bygland,
|
|
2009
|
|
|
$
|
150,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
3,692
|
|
|
$
|
0
|
|
|
$
|
26,060
|
|
|
$
|
96
|
|
|
$
|
179,848
|
|
EVP/Chief
|
|
2008
|
|
|
|
150,000
|
|
|
|
0
|
|
|
|
35,420
|
|
|
|
5,507
|
|
|
|
0
|
|
|
|
25,389
|
|
|
|
1,322
|
|
|
|
216,631
|
|
Information
|
|
2007
|
|
|
|
150,000
|
|
|
|
45,000
|
|
|
|
38,244
|
|
|
|
0
|
|
|
|
0
|
|
|
|
24,707
|
|
|
|
7,292
|
|
|
|
265,243
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
dollar amounts in column (e) reflect the grant date fair value using
the closing price of the stock on the grant date, with the exception that
the value of the two 2008 awards to each named executive officer subject
to a performance condition are based on probable outcome with respect to
satisfaction of the performance condition, consistent with the recognition
criteria in FASB ASC Topic 718 (excluding the effect of estimated
forfeiture). Those two 2008 awards are subject to the price of
Bancorp stock reaching $23.57 for a period of 20 consecutive business
days on or before April 22, 2010 and April 22, 2012 and have
been assigned a value of $8.16 per share. Additional
details regarding restricted stock awards under the 2002 Plan are
described in the tables below under the headings "Grants of Plan-Based
Awards for 2009" and "Outstanding Equity Awards at Fiscal Year-End
2009."
|
|
(2)
|
The
dollar amounts in column (f) reflect grant date fair value estimated
on the grant date using the Black-Sholes option pricing model in
accordance with FASB ASC Topic 718. Additional details
regarding stock options granted under the 2002 Plan are described in the
tables below under the headings "Grants of Plan-Based Awards for 2009" and
"Outstanding Equity Awards at Fiscal Year-End
2009."
|
|
(3)
|
The
dollar amounts in column (h) reflect increases in the actuarial
present value of each executive's SERP using assumptions consistent with
those used in our financial statements, as discussed in the table and
related discussion under the subheading "Pension Benefits for 2009"
below.
|
|
(4)
|
The
dollar amounts in column (i) reflect dividends on restricted stock
and 401(k) Plan matching contributions. No matching
contributions were made with respect to 2008 and 2009 contributions to the
401(k) Plan.
|
|
(5)
|
Bonus
amount includes $36,200 paid as a signing bonus when Mr. Robbins
joined the Company in
April 2007.
|
Under
Mr. Sznewajs's employment agreement, which expires December 31, 2010,
Mr. Sznewajs is entitled to receive an annual base salary of $360,000,
subject to upward adjustment only based on reviews to occur
annually. In addition to base salary, Mr. Sznewajs's annual cash
bonus opportunity is 100% of his annual base
salary. Mr. Sznewajs is also entitled to participate in our
stock incentive plan, all employee pension, welfare and insurance benefit plans
or programs, and such fringe benefits as are available to other senior
executives. We have agreed to consider annually whether to provide
Mr. Sznewajs retiree medical benefits.
Grants
of Plan-Based Awards for 2009
The
following table sets forth certain information concerning individual grants of
equity and non-equity awards to the named executive officers during the year
ended December 31, 2009. No previously issued stock options were
repriced or otherwise modified in 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Estimated Future Payouts
|
|
|
Number of
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Grant Date
|
|
|
|
|
|
Under Non-Equity
|
|
|
Under Equity Incentive Plan
|
|
|
Shares of
|
|
|
Securities
|
|
|
Base Price
|
|
|
Fair Value
|
|
|
|
|
|
Incentive Plan Awards
|
|
|
Awards
|
|
|
Stock or
|
|
|
Underlying
|
|
|
of Option
|
|
|
of Stock
|
|
|
|
Grant
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target (#)
|
|
|
Maximum
|
|
|
Units
|
|
|
Options (1)
|
|
|
Awards (2)
|
|
|
and Option
|
|
Name
|
|
Date
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Share)
|
|
|
Awards (3)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
(l)
|
|
Robert
D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sznewajs
|
|
4/28/2009
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
29,950
|
|
|
$
|
2.31
|
|
|
$
|
19,572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Giltvedt
|
|
4/28/2009
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,150
|
|
|
$
|
2.31
|
|
|
$
|
5,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xandra
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKeown
|
|
4/28/2009
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,900
|
|
|
$
|
2.31
|
|
|
$
|
4,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hadley
S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robbins
|
|
4/28/2009
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,900
|
|
|
$
|
2.31
|
|
|
$
|
4,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bygland
|
|
4/28/2009
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,650
|
|
|
$
|
2.31
|
|
|
$
|
3,692
|
|
(1) Reflects
stock option grants in 2009 under the 2002 Plan. Stock options are
subject to a two-year vesting schedule, with one-half of each grant vesting on
each of the first two anniversaries of the grant date, and expire 10 years
from the grant date. Options may generally be exercised for a period
of three months following termination of employment. Options vest
immediately and remain exercisable for their stated term in the event of
retirement, death, disability, or termination of employment within
24 months of a change in control affecting our company (extended to
36 months for Mr. Sznewajs under his change in control
agreement). Options held by employees terminated for cause terminate
immediately.
(2) The
exercise price is equal to the closing price of Bancorp stock on the grant
date. The option exercise price may be paid in cash, by surrendering
vested shares owned by the executive officer for cancellation, by canceling
sufficient option shares to pay the exercise price, in a cashless exercise
through a broker, or a combination of the foregoing.
(3) The
grant date fair value of stock options granted in 2009 was $0.6535 per
share, which amount was determined using the Black-Scholes option pricing model
based on the assumptions described in Note 14 to our audited financial
statements included in the 2009 10-K.
Outstanding
Equity Awards at Fiscal Year-End 2009
The
following table sets forth certain information concerning outstanding equity
awards held by named executive officers at December 31, 2009.
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (1)
(#)
Unexercisable
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date (1)
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested (2)
(#)
|
|
|
Market Value
of Shares or
Units of
Stock That
Have Not
Vested (3)
($)
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested (4)
(#)
|
|
|
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (3)
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101,860
|
|
|
|
|
|
|
$
|
12.27
|
|
1/01/2010
|
|
|
18,999
|
|
|
$
|
39,898
|
|
|
|
12,900
|
|
|
$
|
27,090
|
|
|
|
|
68,368
|
|
|
|
|
|
|
|
10.28
|
|
4/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,240
|
|
|
|
|
|
|
|
14.67
|
|
5/21/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
D.
|
|
|
5,079
|
|
|
|
|
|
|
|
16.24
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sznewajs
|
|
|
29,100
|
|
|
|
|
|
|
|
20.64
|
|
4/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,863
|
|
|
|
5,287
|
|
|
|
|
27.50
|
|
4/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,663
|
|
|
|
25,987
|
|
|
|
|
12.75
|
|
4/22/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,950
|
|
|
|
|
2.31
|
|
4/22/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,550
|
|
|
|
|
|
|
|
$
|
9.55
|
|
4/03/2010
|
|
|
7,662
|
|
|
$
|
16,090
|
|
|
|
5,650
|
|
|
$
|
11,865
|
|
|
|
|
19,752
|
|
|
|
|
|
|
|
|
10.28
|
|
4/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,600
|
|
|
|
|
|
|
|
|
14.67
|
|
5/21/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anders
|
|
|
10,100
|
|
|
|
|
|
|
|
|
16.24
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Giltvedt
|
|
|
8,800
|
|
|
|
|
|
|
|
|
21.32
|
|
4/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
|
|
|
|
|
20.64
|
|
4/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,625
|
|
|
|
875
|
|
|
|
|
27.50
|
|
4/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,338
|
|
|
|
7,012
|
|
|
|
|
12.75
|
|
4/22/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,150
|
|
|
|
|
2.31
|
|
4/28/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,500
|
|
|
|
|
|
|
|
$
|
16.24
|
|
4/22/2013
|
|
|
5,299
|
|
|
$
|
11,128
|
|
|
|
3,150
|
|
|
$
|
6,615
|
|
|
|
|
4,450
|
|
|
|
|
|
|
|
|
21.32
|
|
4/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xandra
|
|
|
5,000
|
|
|
|
|
|
|
|
|
20.64
|
|
4/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKeown
|
|
|
2,175
|
|
|
|
725
|
|
|
|
|
27.50
|
|
4/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,250
|
|
|
|
3,750
|
|
|
|
|
12.75
|
|
4/22/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,900
|
|
|
|
|
2.31
|
|
4/28/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,200
|
|
|
|
4,200
|
|
|
|
$
|
31.92
|
|
3/27/2017
|
|
|
5,512
|
|
|
$
|
11,575
|
|
|
|
3,150
|
|
|
$
|
6,615
|
|
Hadley S.
|
|
|
1,250
|
|
|
|
3,750
|
|
|
|
|
12.75
|
|
4/22/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robbins
|
|
|
|
|
|
|
6,900
|
|
|
|
|
2.31
|
|
4/28/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,272
|
|
|
|
|
|
|
|
$
|
9.20
|
|
4/27/2010
|
|
|
2,312
|
|
|
$
|
4,855
|
|
|
|
1,450
|
|
|
$
|
3,045
|
|
|
|
|
7,715
|
|
|
|
|
|
|
|
|
10.28
|
|
4/24/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
14.67
|
|
5/21/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
16.24
|
|
4/22/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
D.
|
|
|
2,350
|
|
|
|
|
|
|
|
|
21.32
|
|
4/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bygland
|
|
|
2,500
|
|
|
|
|
|
|
|
|
20.64
|
|
4/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,238
|
|
|
|
412
|
|
|
|
|
27.50
|
|
4/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
625
|
|
|
|
1,875
|
|
|
|
|
12.75
|
|
4/22/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,650
|
|
|
|
|
2.31
|
|
4/28/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
All
stock options expire 10 years after the grant
date. Options granted in 2006, 2007, and 2008 vest and become
exercisable in equal installments annually over a four-year
period. Options granted in 2009 vest and become exercisable in
equal installments annually over a two-year
period.
|
|
(2)
|
Unvested
awards of restricted stock vest as
follows:
|
The
following number of restricted shares from one 2008 grant vest if the price of
Bancorp stock reaches $23.57 for a period of 20 consecutive business days
on or before April 22, 2010: Mr. Sznewajs 2,600 shares;
Mr. Giltvedt: 1,150 shares; Ms. McKeown: 650
shares; Mr. Robbins: 650 shares; and
Mr. Bygland: 300 shares. The following number of
restricted shares from a second 2008 grant vest if the price of Bancorp stock
reaches such price for a period of 20 consecutive business days on or
before April 22, 2012: Mr. Sznewajs: 10,300
shares; Mr. Giltvedt: 4,500 shares;
Ms. McKeown: 2,500 shares; Mr. Robbins: 2,500 shares;
and Mr. Bygland: 1,150 shares. The remainder of the
restricted stock awards vest as follows:
Year of Vesting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2011
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Sznewajs
|
|
|
9,637
|
|
|
|
6,362
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Giltvedt
|
|
|
3,412
|
|
|
|
2,575
|
|
|
|
1,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ms. McKeown
|
|
|
2,387
|
|
|
|
1,762
|
|
|
|
1,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Robbins
|
|
|
2,181
|
|
|
|
2,181
|
|
|
|
1,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Bygland
|
|
|
1,088
|
|
|
|
762
|
|
|
|
462
|
|
|
(3)
|
Based
on the $2.10 closing price per share of our stock on December 31,
2009.
|
|
(4)
|
For
a description of vesting terms of incentive-based awards see footnote (1)
to the preceding "Grants of Plan-Based Awards for 2009"
table.
|
Option
Exercises and Stock Vesting for 2009
The
following table sets forth certain information concerning exercises of stock
options and vesting of restricted stock by the named executive officers during
the year ended December 31, 2009.
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired
on Exercise
(#)
|
|
|
Value Realized
on Exercise
($)
|
|
|
Number of
Shares
Acquired
on Vesting
(#)
|
|
|
Value Realized
on Vesting (1)
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
D. Sznewajs
|
|
|
—
|
|
|
$
|
—
|
|
|
|
12,750
|
|
|
$
|
30,945
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anders
Giltvedt
|
|
|
—
|
|
|
$
|
—
|
|
|
|
4,499
|
|
|
$
|
10,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xandra
McKeown
|
|
|
—
|
|
|
$
|
—
|
|
|
|
2,913
|
|
|
$
|
7,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hadley
S. Robbins
|
|
|
—
|
|
|
$
|
—
|
|
|
|
2,181
|
|
|
$
|
5,275
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James D.
Bygland
|
|
|
—
|
|
|
$
|
—
|
|
|
|
1,363
|
|
|
$
|
3,312
|
|
|
(1)
|
Based on the closing price per
share of our stock on the date of
vesting.
|
Pension
Benefits for 2009
The
following table sets forth certain information concerning Bancorp's supplemental
executive retirement agreements ("SERPs") with named executive officers as of
December 31, 2009.
Name
|
|
Plan Name
|
|
Number of Years
Credited Service
(#)
|
|
|
Present Value of
Accumulated
Benefit (1)
($)
|
|
|
Payments During
Last Fiscal Year
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
Robert
D. Sznewajs
|
|
SERP
for
Robert
Sznewajs
|
|
|
10
|
|
|
$
|
1,275,064
|
|
|
$
|
0
|
|
Anders
Giltvedt
|
|
SERP
for
Anders
Giltvedt
|
|
|
9
|
|
|
$
|
206,403
|
|
|
$
|
0
|
|
Xandra
McKeown
|
|
SERP
for
Xandra
McKeown
|
|
|
9
|
|
|
$
|
237,195
|
|
|
$
|
0
|
|
Hadley
S. Robbins
|
|
SERP
for
Hadley
Robbins
|
|
|
3
|
|
|
$
|
143,037
|
|
|
$
|
0
|
|
James D.
Bygland
|
|
SERP
for
James
Bygland
|
|
|
10
|
|
|
$
|
135,190
|
|
|
$
|
0
|
|
|
(1)
|
SERPs
are individual contracts with each of our named executive officers that
originally provided for specified benefit payments over a fixed 15-year
term. The SERPs were amended in late 2008 to provide each named
executive officer with an option to receive a lump sum payment at
retirement. Mr. Giltvedt elected to receive a lump sum
payment in the event of his death prior to normal retirement
age. The other executive officers each elected to receive lump
sum payments in all payment circumstances. The valuation method
used to determine the present value of accumulated benefit in
column (d) above and the increase in the present value of the benefit
disclosed in column (h) of the Summary Compensation Table is
consistent with Accounting Principles Board Opinion No. 12, as
amended, and based on the actual terms of each SERP and a discount rate of
six percent as specified in the SERPs. The same methods and
assumptions were used to derive amounts included in our financial
statements.
|
We
entered into a SERP with Mr. Robbins in April 2007. We entered
into SERPs with each of our other named executive officers in August 2003, which
SERPs were amended effective July 1, 2005. The SERPs were
further amended in late 2008 to comply with section 409A of the Internal Revenue
Code and to give each named executive officer a one-time opportunity, to be
exercised on or before December 31, 2008, to elect to receive some or all
SERP payments in a lump sum payment upon reaching retirement or normal
retirement age, as the case may be. Each SERP is a non-qualified,
unfunded plan that is designed to provide retirement benefits for the
participant. Each SERP is further intended to assist in assuring each
participant's continued service to our company.
Benefit
amounts payable under each SERP vary based on whether (1) a participant
retired at normal retirement age or terminated employment in connection with a
termination event under his or her change in control agreement, or
(2) terminated employment due to early voluntary termination, early
involuntary termination, or disability.
All SERP
benefits are equal to, or the lump sum payment is calculated based on the value
of, a 15-year stream of monthly payments equal to 35% of the participant's final
base salary, except that, in the event a participant terminates employment in
connection with a termination event under his or her change in control
agreement, monthly payments or lump sum amounts are based on 35% of projected
base salary as of the participant's normal retirement date. In the
event a participant terminates employment as a result of an early voluntary
termination, early involuntary termination, or disability, his or her monthly
payments or lump sum amounts will be based on annual benefit levels determined
in accordance with a formula set forth in each participant's SERP that results
in benefit amounts that increase over the participant's period of continued
service, but not above the normal retirement benefit. No benefits are
payable if a participant is terminated for cause (as defined in each
participant's change in control agreement).
Each SERP
also includes non-competition and non-solicitation provisions that provide for a
loss of future benefits and forfeiture of benefits received after a breach but
before discovery if an executive competes with us in the states of Oregon or
Washington or solicits our customers or employees (i) in the case of
Mr. Sznewajs, within 36 months of any termination which triggers
change in control benefits or 24 months of any other termination; and
(ii) in the case of other named executives, within 24 months of any
termination which triggers change in control benefits or 12 months of any
other termination.
Retirement,
change in control, involuntary termination, and disability benefits of each
participant are fully vested immediately. Voluntary termination
benefits are presently vested as follows: Mr. Sznewajs, 100%;
Mr. Giltvedt, 90%; Ms. McKeown, 90%; Mr. Robbins, 20%; and
Mr. Bygland, 100%. Benefits not currently vested will continue
to vest at a rate of 10% for each additional year of completed
service. Each SERP may be amended only by mutual agreement, except
that we may amend or terminate each SERP if laws or regulations change in a way
that would result in benefits being taxable to the executive before receipt or
in material financial penalties or other materially detrimental ramifications to
our company, provided in any case vested benefits would be
preserved.
Nonqualified
Deferred Compensation for 2009
The
following table sets forth certain information regarding the accounts of named
executive officers under Bancorp's executives' deferred compensation
plan.
Name
|
|
Executive
Contributions
in Last FY
($)
|
|
|
Bancorp
Contributions in
Last FY
($)
|
|
|
Aggregate
Earnings in Last
FY
($)
|
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
|
Aggregate
Balance
at Last FYE (1)
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
Robert
D. Sznewajs
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Anders
Giltvedt
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
30,193
|
|
|
$
|
0
|
|
|
$
|
166,480
|
|
Xandra
McKeown
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,185
|
|
|
$
|
0
|
|
|
$
|
10,898
|
|
Hadley
S. Robbins
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
39
|
|
|
$
|
48,129
|
|
|
$
|
0
|
|
James D.
Bygland
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
(2,819
|
)
|
|
$
|
0
|
|
|
$
|
1,453
|
|
|
(1)
|
Named
executive officers have deferred amounts previously reported as
compensation in the Summary Compensation Table into the executive's
deferred compensation plan as follows: Mr. Giltvedt -
$136,064; Ms. McKeown - $10,783; Mr. Robbins - $69,653; and
Mr. Bygland - $8,494.
|
Our
executive officers' deferred compensation plan permits each named executive
officer (and other senior executives) to defer all or part of his or her base
salary, annual incentive bonuses, and commissions on a tax-deferred
basis. We have not and do not make contributions to the plan or pay
preferential earnings or guaranty interest to participants in the
plan.
Under the
plan, an amount equal to deferrals under the plan is placed in a "rabbi" trust
that is subject to the claims of our creditors. Participants have a
number of investment options upon which to base earnings on deferred amounts,
including our stock. The return on contributions enjoyed by each
participant depends on the return on the investments that the participant
selects. The following table shows currently available investment
choices and annualized returns earned by those choices in 2009:
Plan Investment Choice
|
|
Performance
(annual return for 2009)
|
|
American
Century Strategic Allocation: Conservative
|
|
|
14.3
|
%
|
American
Century Strategic Allocation: Moderate
|
|
|
20.6
|
%
|
American
Funds EuroPacific Growth Fund
|
|
|
38.7
|
%
|
American
Funds Growth Fund of America
|
|
|
34.5
|
%
|
Baron
Growth Fund
|
|
|
34.2
|
%
|
Dodge
& Cox Balanced Fund
|
|
|
28.4
|
%
|
Federated
Government Obligations Fund
|
|
|
0.01
|
%
|
Federated
High-Income Bond Fund, Inc. A
|
|
|
51.1
|
%
|
Federated
MDT Small Cap Value (1)
|
|
|
7.1
|
%
|
Federated
Stock
|
|
|
18.9
|
%
|
Federated
Total Return Bond Instl
|
|
|
12.1
|
%
|
Manager's
AMG Systematic Value Fund
|
|
|
23.0
|
%
|
West
Coast Bancorp Stock
|
|
|
(67.6
|
)%
|
|
(1)
|
This
investment option was only available during the second though fourth
quarters of 2009 and returned 30.83% during such
period.
|
Contributions
and earnings may be withdrawn following termination of employment or upon the
occurrence of a financial hardship approved by the plan
administrator.
Equity
Compensation Plan Information
The
following table summarizes information regarding shares of Bancorp stock that
may be issued upon exercise of options, warrants and rights under Bancorp's
existing equity compensation plans and arrangements as of December 31,
2009. All of our plans or arrangements under which equity
compensation may be awarded have been approved by shareholders. The
information includes the number of shares covered by, and the weighted average
exercise price of, outstanding options, warrants, and other rights and the
number of shares remaining available for future grants, excluding the shares to
be issued upon exercise of outstanding options, warrants, and other
rights.
Plan Category
|
|
A. Number of
securities to be
issued upon
exercise of
outstanding
options, warrants,
and rights
|
|
|
B. Weighted-
average
exercise price
of outstanding
options,
warrants, and
rights
|
|
|
C. Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column A)
|
|
Equity
compensation plans approved by shareholders (1)
|
|
|
1,746,752
|
|
|
$
|
13.08
|
|
|
|
31,429
|
|
Equity
compensation plans not approved by shareholders
|
|
|
0
|
|
|
|
N/A
|
|
|
|
0
|
|
Total
|
|
|
1,746,752
|
|
|
$
|
13.08
|
|
|
|
31,429
|
|
|
16.
|
Future
grants may be made only under the 2002 Plan. The number of
shares shown in column C as available for future issuance includes
31,429 shares available for restricted stock
grants.
|
Potential
Payments Upon Termination or Change in Control
The
following five tables set forth certain information concerning payments and
other benefits that would have been payable to our named executive officers in
the event of a termination of employment on December 31, 2009, under
various circumstances described in the tables. The tables assume no
changes in benefits or vesting are made by our Board. None of our
officers other than Mr. Sznewajs is entitled to severance payments solely
as a result of a termination of employment. Mr. Sznewajs may be
entitled to severance under the terms of his employment
agreement. All of our named executive officers have entered into a
change in control agreement (a "CIC agreement") with us that provides severance
benefits if his or her employment is terminated by us without cause or by the
executive for good reason (which includes changes in job responsibilities)
within a certain period after a change in control of our company (referred to as
a "CIC" in the following tables). We have not entered into any
agreements or plans that provide benefits to our named executive officers solely
as a result of a change in control. Except as noted in the footnotes
to the tables, all amounts are payable by Bancorp.
Robert
D. Sznewajs, President and Chief Executive Officer
|
|
Voluntary Terminations
|
|
|
Involuntary Terminations
(Other Than Death and Disability)
|
|
|
|
|
|
|
|
|
|
For Good
Reason
Without CIC
|
|
|
For Good
Reason With
CIC
|
|
|
Any Other
Voluntary
Termination
|
|
|
Without
Cause and
Without CIC
|
|
|
Without
Cause and
With CIC
|
|
|
Any Other
Involuntary
Terminations
|
|
|
Death
|
|
|
Disability
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
Cash
Severance (1)
|
|
$
|
360,000
|
|
|
$
|
1,080,000
|
|
|
$
|
0
|
|
|
$
|
360,000
|
|
|
$
|
1,080,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Restricted
Stock
Vesting
(2)
|
|
|
66,992
|
|
|
|
66,992
|
|
|
|
66,992
|
|
|
|
66,992
|
|
|
|
66,992
|
|
|
|
0
|
|
|
|
66,992
|
|
|
|
66,992
|
|
Stock
Option Vesting (2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
SERP
Benefits (3)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Health
Benefits
(4)
|
|
|
12,265
|
|
|
|
18,398
|
|
|
|
0
|
|
|
|
12,265
|
|
|
|
18,398
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Life
Insurance Proceeds (5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
900,000
|
|
|
|
0
|
|
Outplacement
(6)
|
|
|
0
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
10,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Tax
Gross-
up
(Est.) (7)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total
|
|
$
|
439,253
|
|
|
$
|
1,175,386
|
|
|
$
|
66,988
|
|
|
$
|
439,253
|
|
|
$
|
1,175,386
|
|
|
$
|
0
|
|
|
$
|
966,988
|
|
|
|
66,988
|
|
|
(1)
|
Dollar
amounts in columns (a) and (d) are comprised of amounts that
would be due to Mr. Sznewajs under his employment agreement, under
which, in the event he terminates his employment with us for "good reason"
or we terminate his employment without "cause," each as described in his
employment agreement and summarized in the discussion that follows these
tables, he is entitled to receive a lump sum payment equal to the sum
of:
|
|
·
|
Base
salary for his remaining contract term (through December 31,
2010);
|
|
·
|
Annualized
bonus for the year termination occurs (in this case zero for
2009);
|
|
·
|
The
average of the annualized bonus for the year termination occurs (in this
case zero for 2009) and the actual bonus paid for the year before
termination occurs (in this case zero for 2008) times the number of years
remaining on the contract after termination occurs in this case, one);
and
|
|
·
|
His
deemed matching and profit sharing contributions under our 401(k) plan (in
this case zero).
|
All
payments must be made within six months of termination. Mr. Sznewajs has no
obligation to mitigate or offset amounts we pay him if he takes another position
following termination.
Dollar
amounts in columns (b) and (e) represent amounts that would be due to
Mr. Sznewajs under his CIC agreement, under which, if he terminates his
employment for "good reason," or if we or our successor terminate his employment
other than for "cause," "disability," or death within three years of a change in
control (or prior to a change of control but on or after the date a transaction
is announced or should have been announced under applicable law), he is entitled
to a lump sum payment equal to the sum of:
|
·
|
Three
times his adjusted salary and average bonus;
and
|
|
·
|
Three
times his deemed matching contribution under our 401(k)
plan.
|
Cash
payments due under Mr. Sznewajs's CIC agreement must be paid the first day
of the seventh month following the date of a termination event, unless
applicable regulations permit earlier payments, in which case payment must be
made within 30 days of the date of termination.
|
(2)
|
All
dollar amounts represent the value of the vesting in full of shares of
restricted stock that were not vested as of December 31, 2009,
calculated by multiplying the number of shares that would vest by the
closing price of our stock on December 31, 2009, $2.10 per share
(the "Year-End Price"). Mr. Sznewajs is entitled to vesting of all
restricted stock and options with respect to various termination events
described in the column headings as follows: (i) columns (a)
and (d), under the terms of his employment agreement,
(ii) columns (b) and (e), under the terms of his CIC agreement and
the 2002 Plan, (iii) columns (c) and (f), under the terms
of the 2002 Plan and related award agreements that provide for full
vesting upon retirement, unless terminated for cause, and
(iv) columns (g) and (h), under the terms of both the 2002 Plan
and his employment agreement. No increase in incremental value is shown
relating to the vesting of options because all of his unvested options
have an exercise price above the Year-End
Price.
|
|
(3)
|
Mr. Sznewajs
is fully vested in his SERP benefits; accordingly, he receives no
incremental benefits under his SERP upon the occurrence of any of the
described events, other than death or
disability.
|
|
(4)
|
Dollar
amounts in columns (a) and (d) represent total COBRA payments
for 12 months that we would be obligated to pay under
Mr. Sznewajs's employment agreement, provided that our obligation to
make these payments terminates if he qualifies for group health coverage
from a subsequent employer. Dollar amounts in columns (b)
and (e) represent total COBRA payments for 18 months that we
would be obligated to pay under Mr. Sznewajs's CIC agreement, except
that our obligation to make these payments will not exceed the maximum
period for which COBRA coverage is provided by
law.
|
|
(5)
|
The
dollar amount in column (h) represents amounts that would be due to
Mr. Sznewajs's heirs under our bank-owned life insurance program
($300,000) that provides a benefit to certain executives and our group
term life insurance program ($600,000) that provides a benefit for
employees generally equal to two times salary as of the date of death,
subject to a cap of $600,000. Such amounts would be paid by insurance
companies rather than by us. Figures do not include amounts payable under
an accidental death and dismemberment policy ($600,000) that reflect a
benefit available to employees generally equal to two times salary as of
the date of accidental death, but also subject to a cap of
$600,000.
|
|
(6)
|
Represents
amounts available for outplacement services under his CIC
agreement.
|
|
(7)
|
If
severance benefits due to Mr. Sznewajs under his CIC agreement
subject him to the federal excise tax imposed on benefits that constitute
excess parachute payments under the Internal Revenue Code (the "Code"), he
is entitled to be reimbursed for taxes on an after-tax basis.
Mr. Sznewajs's severance benefits as of December 31, 2009, would
not trigger an excise tax under the Code, so no gross-up payment is shown
in this illustration.
|
Anders
Giltvedt, Executive Vice President and Chief Financial Officer
|
|
Voluntary Terminations
|
|
|
Involuntary Terminations
(Other Than Death and Disability)
|
|
|
|
|
|
|
|
|
|
For Good
Reason Without
CIC
|
|
|
For Good
Reason With
CIC
|
|
|
Any Other
Voluntary
Termination
|
|
|
Without
Cause
and
Without
CIC
|
|
|
Without
Cause and
With CIC
|
|
|
Any Other
Involuntary
Terminations
|
|
|
Death
|
|
|
Disability
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
Cash
Severance (1)
|
|
$
|
0
|
|
|
$
|
400,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Restricted
Stock
Vesting
(2)
|
|
|
0
|
|
|
|
27,955
|
|
|
|
0
|
|
|
|
0
|
|
|
|
27,955
|
|
|
|
0
|
|
|
|
27,955
|
|
|
|
27,955
|
|
Stock
Option Vesting (2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
SERP
Benefits (3)
|
|
|
0
|
|
|
|
155,782
|
|
|
|
0
|
|
|
|
0
|
|
|
|
155,782
|
|
|
|
0
|
|
|
|
820,186
|
|
|
|
25,628
|
|
Health
Benefits (4)
|
|
|
0
|
|
|
|
24,925
|
|
|
|
0
|
|
|
|
0
|
|
|
|
24,925
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Life
Insurance Proceeds (5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
600,000
|
|
|
|
0
|
|
Outplacement
(6)
|
|
|
0
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Tax
Gross-
up
(Est.) (7)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total
|
|
$
|
0
|
|
|
$
|
613,662
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
613,662
|
|
|
$
|
0
|
|
|
$
|
783,737
|
|
|
$
|
183,737
|
|
|
(1)
|
Dollar
amounts in columns (b) and (e) represent amounts that would be due to
Mr. Giltvedt
under
his CIC agreement, under which, if he terminates his employment for "good
reason," or if we or our successor terminate his employment other than for
"cause," "disability," or death within two years of a change in control
(or prior to a change of control but on or after the date a transaction is
announced or should have been announced under applicable law), he is
entitled to a lump sum payment equal to the sum
of:
|
|
·
|
Two
times his adjusted salary and average bonus;
and
|
|
·
|
Two
times his deemed matching contribution under our 401(k)
plan.
|
For
purposes of calculating Mr. Giltvedt's severance payment under his CIC
agreement, we have used the average of bonuses paid to him in 2008 and 2009 for
services to our company in 2007 and 2008. Cash payments due under
Mr. Giltvedt 's CIC agreement must be paid within 30 days of the date
of a termination event.
|
(2)
|
All
dollar amounts represent the value of the vesting in full of restricted
stock that was not vested as of December 31, 2009, calculated by
multiplying the number of shares that would vest by the Year-End Price.
Mr. Giltvedt is entitled to vesting of all restricted stock and
options, (i) with respect to termination events described in columns
(b) and (e), under the terms of his CIC agreement and the 2002 Plan and
(ii) with respect to termination events described in columns (g)
and (h), under the terms of the 2002 Plan. No increase in incremental
value is shown relating to the vesting of options because all of his
unvested options have an exercise price above the Year-End
Price.
|
|
(3)
|
Represents
the incremental value of benefits that would become due to
Mr. Giltvedt under his SERP upon certain termination events described
in the table.
|
|
(4)
|
Dollar
amounts in columns (b) and (e) represent total COBRA payments for
18 months that would be due to Mr. Giltvedt under his CIC
agreement, except that our obligation to make these payments will end at
the maximum period for which COBRA coverage is provided by
law.
|
|
(5)
|
The
dollar amount in column (h) represents amounts due to Mr. Giltvedt's
heirs under our bank-owned life insurance program ($200,000) that provides
a benefit to certain executives and our group term life insurance program
($400,000) that provides a benefit for employees generally equal to two
times salary as of the date of death. Such amounts would be paid by
insurance companies rather than by us. Figures do not include amounts
payable under an accidental death and dismemberment policy ($400,000) that
reflect a benefit available to employees generally equal to two times
salary as of the date of accidental
death.
|
|
(6)
|
Represents
the amount available to cover outplacement services under his CIC
agreement.
|
|
(7)
|
If
severance benefits due to Mr. Giltvedt under his CIC agreement
subject him to the federal excise tax imposed on benefits that constitute
excess parachute payments under the Code, he is also entitled to be
reimbursed for taxes on an after-tax basis. Mr. Giltvedt's severance
benefits as of December 31, 2009, would not trigger an excise tax
under the Code, so no gross-up payment is shown in this
illustration.
|
Xandra
McKeown, Executive Vice President of Commercial Banking.
|
|
Voluntary Terminations
|
|
|
Involuntary Terminations
(Other Than Death and Disability)
|
|
|
|
|
|
|
|
|
|
For Good
Reason Without
CIC
|
|
|
For Good
Reason With
CIC
|
|
|
Any Other
Voluntary
Termination
|
|
|
Without
Cause
and
Without
CIC
|
|
|
Without
Cause and
With CIC
|
|
|
Any Other
Involuntary
Terminations
|
|
|
Death
|
|
|
Disability
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
Cash
Severance (1)
|
|
$
|
0
|
|
|
$
|
400,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Restricted
Stock
Vesting
(2)
|
|
|
0
|
|
|
|
17,743
|
|
|
|
0
|
|
|
|
0
|
|
|
|
17,743
|
|
|
|
0
|
|
|
|
17,743
|
|
|
|
17,743
|
|
Stock
Option Vesting (2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
SERP
Benefits (3)
|
|
|
0
|
|
|
|
150,024
|
|
|
|
0
|
|
|
|
0
|
|
|
|
150,024
|
|
|
|
0
|
|
|
|
748,105
|
|
|
|
26,9344
|
|
Health
Benefits (4)
|
|
|
0
|
|
|
|
15,518
|
|
|
|
0
|
|
|
|
0
|
|
|
|
15,518
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Life
Insurance Proceeds (5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
600,000
|
|
|
|
0
|
|
Outplacement
(6)
|
|
|
0
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Tax
Gross-
up
(Est.) (7)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total
|
|
$
|
0
|
|
|
$
|
588,285
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
588,285
|
|
|
$
|
0
|
|
|
$
|
767,767
|
|
|
$
|
167,767
|
|
|
(1)
|
Dollar
amounts in columns (b) and (e) represent amounts that would be due to
Ms. McKeown under her CIC agreement with us, under which, if she
terminates her employment with no for "good reason," or if we or our
successor terminate her employment other than for "cause," "disability,"
or death within two years of a change in control (or prior to a change of
control but on or after the date a transaction is announced or should have
been announced under applicable law), she is entitled to a lump sum
payment equal to the sum of:
|
|
·
|
Two
times her adjusted salary and average bonus;
and
|
|
·
|
Two
times her deemed matching contribution under our 401(k)
plan.
|
|
(2)
|
For
purposes of calculating Ms. McKeown's severance payment under her CIC
agreement, we have used the average of bonuses paid to her in 2008 and
2009 for services to our company in 2007 and 2008. Cash payments due under
Ms. McKeown's CIC agreement must be paid within 30 days of a
termination event.
|
|
(3)
|
All
dollar amounts represent the value of the vesting in full of restricted
stock and stock options that were not vested as of December 31, 2009,
calculated by multiplying the number of shares that would vest by the
Year-End Price. Ms. McKeown is entitled to vesting of all restricted
stock and options, (i) with respect to termination events described
in columns (b) and (e), under the terms of her CIC agreement and the
2002 Plan and (ii) with respect to termination events described in
columns (g) and (h), under the terms of the 2002 Plan. No increase in
incremental value is shown relating to the vesting of options because all
of her unvested options have an exercise price above the Year-End
Price.
|
|
(4)
|
Represents
the incremental value of benefits that would become due to Ms. McKeown
under her SERP upon certain termination events described in the
table.
|
|
(5)
|
Dollar
amounts in columns (b) and (e) represent total COBRA payments for
18 months that would be due to Ms. McKeown under her CIC agreement,
except that our obligation to make these payments will end at the maximum
period for which COBRA coverage is provided by
law.
|
|
(6)
|
The
dollar amount in column (h) represents amounts due to Ms. McKeown's heirs
under our bank-owned life insurance program ($200,000) that provides a
benefit to certain executives and our group term life insurance program
($400,000) that provides a benefit for employees generally equal to two
times salary as of the date of death. Such amounts would be paid by
insurance companies rather than by us. Figures do not include amounts
payable under an accidental death and dismemberment policy ($400,000) that
reflect a benefit available to employees generally equal to two times
salary as of the date of accidental
death.
|
|
(7)
|
Represents
the amount available to cover outplacement services under her CIC
agreement. If severance benefits due to Ms. McKeown under her CIC
agreement subject her to the federal excise tax imposed on benefits that
constitute excess parachute payments under the Code, she is also entitled
to be reimbursed for taxes on an after-tax basis. Ms. McKeown's
severance benefits as of December 31, 2009, would not trigger an
excise tax under the Code, so no gross-up payment is shown in this
illustration.
|
Hadley
S. Robbins, Executive Vice President and Chief Credit Officer
|
|
Voluntary Terminations
|
|
|
Involuntary Terminations
(Other Than Death and Disability)
|
|
|
|
|
|
|
|
|
|
For Good Reason
Without CIC
|
|
|
For Good
Reason
With CIC
|
|
|
Any Other
Voluntary
Termination
|
|
|
Without
Cause
and
Without
CIC
|
|
|
Without
Cause and
With CIC
|
|
|
Any other
Involuntary
Terminations
|
|
|
Death
|
|
|
Disability
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
Cash
Severance (1)
|
|
$
|
0
|
|
|
$
|
400,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
400,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Restricted
StockVesting (2)
|
|
|
0
|
|
|
|
18,190
|
|
|
|
0
|
|
|
|
0
|
|
|
|
18,190
|
|
|
|
0
|
|
|
|
18,190
|
|
|
|
18,190
|
|
Stock
Option Vesting (2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
SERP
Benefits (3)
|
|
|
0
|
|
|
|
379,990
|
|
|
|
0
|
|
|
|
0
|
|
|
|
379,990
|
|
|
|
0
|
|
|
|
379,531
|
|
|
|
128,531
|
|
Health
Benefits
(4)
|
|
|
0
|
|
|
|
8,940
|
|
|
|
0
|
|
|
|
0
|
|
|
|
8,940
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Life
Insurance Proceeds (5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
600,000
|
|
|
|
0
|
|
Outplacement
(6)
|
|
|
0
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Tax
Gross-
up
(Est.) (7)
|
|
|
0
|
|
|
|
356,805
|
|
|
|
0
|
|
|
|
0
|
|
|
|
356,805
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total
|
|
$
|
0
|
|
|
$
|
1,168,925
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
1,168,925
|
|
|
$
|
0
|
|
|
$
|
998,180
|
|
|
$
|
398,180
|
|
|
(1)
|
Dollar
amounts in columns (b) and (e) represent amounts that would be due to
Mr. Robbins under his CIC agreement with us, under which, if he
terminates his employment for "good reason," or if we or our successor
terminate his employment other than for "cause," "disability," or death
within two years of a change in control (or prior to a change of control
but on or after the date a transaction is announced or should have been
announced under applicable law), he is entitled to a lump sum payment
equal to the sum of:
|
|
·
|
Two
times his adjusted salary and average bonus;
and
|
|
·
|
Two
times his deemed matching contribution under our 401(k)
plan.
|
For
purposes of calculating Mr. Robbins's severance payment under his CIC
agreement, we have used the bonuses paid to him in 2008 and 2009 for services to
our company in 2007 and 2008. Cash payments due under Mr. Robbins's CIC
agreement must be paid within 30 days of a termination event.
|
(2)
|
All
dollar amounts represent the value of the vesting in full of restricted
stock that were not vested as of December 31, 2009, calculated by
multiplying the number of shares that would vest by the Year-End Price.
Mr. Robbins is entitled to vesting of all restricted stock and
options, (i) with respect to termination events described in
columns (b) and (e), under the terms of his CIC agreement and the
2002 Plan, and (ii) with respect to termination events described in
columns (g) and (h), under the terms of the 2002 Plan. No increase in
incremental value is shown relating to the vesting of options because all
of his unvested options have an exercise price above the Year-End
Price.
|
|
(3)
|
Represents
the incremental value of benefits that would become due to
Mr. Robbins under his SERP upon certain termination events described
in the table.
|
|
(4)
|
Dollar
amounts in columns (b) and (e) represent total COBRA payments for
18 months that would be due to Mr. Robbins under his CIC
agreement, except that our obligation to make these payments will end at
the maximum period for which COBRA coverage is provided by
law.
|
|
(5)
|
The
dollar amount in column (h) represents amounts due to Mr. Robbins's
heirs under our bank-owned life insurance program ($200,000) that provides
a benefit to certain executives and our group term life insurance program
($400,000) that provides a benefit for employees generally equal to two
times salary as of the date of death. Such amounts would be paid by
insurance companies rather than by us. Figures do not include amounts
payable under an accidental death and dismemberment policy ($400,000) that
reflect a benefit available to employees generally equal to two times
salary as of the date of accidental
death.
|
|
(6)
|
Represents
the amount available to cover outplacement services under his CIC
agreement.
|
|
(7)
|
If
severance benefits due to Mr. Robbins subject him to the federal
excise tax imposed on benefits that constitute excess parachute payments
under the Code, he is also entitled to be reimbursed for taxes on an
after-tax basis. Amount shown represents the estimated gross-up payment
that would be due to Mr. Robbins under the terms of his CIC agreement
to cover excise taxes arising out of severance benefits shown in the
table.
|
James
D. Bygland, Executive Vice President and Chief Information Officer
|
|
Voluntary Terminations
|
|
|
Involuntary Terminations
(Other Than Death and Disability)
|
|
|
|
|
|
|
|
|
|
For Good Reason
Without CIC
|
|
|
For Good
Reason
With CIC
|
|
|
Any Other
Voluntary
Termination
|
|
|
Without
Cause
and
Without
CIC
|
|
|
Without
Cause
and
With
CIC
|
|
|
Any Other
Involuntary
Terminations
|
|
|
Death
|
|
|
Disability
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
Cash
Severance (1)
|
|
$
|
0
|
|
|
$
|
300,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
300,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Restricted
StockVesting (2)
|
|
|
0
|
|
|
|
7,900
|
|
|
|
0
|
|
|
|
0
|
|
|
|
7,900
|
|
|
|
0
|
|
|
|
7,900
|
|
|
|
7,900
|
|
Stock
Option Vesting (2)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
SERP
Benefits (3)
|
|
|
0
|
|
|
|
76,015
|
|
|
|
0
|
|
|
|
0
|
|
|
|
76,015
|
|
|
|
0
|
|
|
|
700,128
|
|
|
|
0
|
|
Health
Benefits (4)
|
|
|
0
|
|
|
|
25,227
|
|
|
|
0
|
|
|
|
0
|
|
|
|
25,227
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Life
Insurance Proceeds (5)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
500,000
|
|
|
|
0
|
|
Outplacement
(6)
|
|
|
0
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
5,000
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Tax
Gross-
up
(Est.) (7))
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total
|
|
$
|
0
|
|
|
$
|
414,442
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
414,442
|
|
|
$
|
0
|
|
|
$
|
583,915
|
|
|
$
|
83,915
|
|
|
(1)
|
Dollar
amounts in columns (b) and (e) represent amounts that would be due to
Mr. Bygland under his CIC agreement with us, under which, if he
terminates his employment for "good reason," or if we or our successor
terminate his employment other than for "cause," "disability," or death
within two years of a change in control (or prior to a change of control
but on or after the date a transaction is announced or should have been
announced under applicable law), he is entitled to a lump sum payment
equal to the sum of:
|
|
·
|
Two
times his adjusted salary and average bonus;
and
|
|
·
|
Two
times his deemed matching contribution under our 401(k)
plan.
|
For
purposes of calculating Mr. Bygland's severance payment under his CIC
agreement, we have used the average of bonuses paid to him in 2008 and 2009 for
services to our company in 2007 and 2008. Cash payments due under
Mr. Bygland 's CIC agreement must be paid within 30 days of a termination
event.
|
(2)
|
All
dollar amounts represent the value of the vesting in full of restricted
stock that were not vested as of December 31, 2009, calculated by
multiplying the number of shares that would vest by the Year-End Price.
Mr. Bygland is entitled to vesting of all restricted stock and
options, (i) with respect to termination events described in columns
(b) and (e), under the terms of his CIC agreement and the 2002 Plan and
(ii) with respect to termination events described in columns (g)
and (h), under the terms of the 2002 Plan. No increase in incremental
value is shown relating to the vesting of options because all of his
unvested options have an exercise price above the Year-End
Price.
|
|
(3)
|
Mr. Bygland
is fully vested in his SERP benefits; accordingly, he receives no
incremental benefits under his SERP upon the occurrence of any of the
described events, other than death.
|
|
(4)
|
Dollar
amounts in columns (b) and (e) represent total COBRA payments for
18 months that would be due to Mr. Bygland under his CIC
agreement, except that our obligation to make these payments will end at
the maximum period for which COBRA coverage is provided by
law.
|
|
(5)
|
The
dollar amount in column (h) represents amounts due to Mr. Bygland's
heirs under our bank-owned life insurance program ($200,000) that provides
a benefit to certain executives and our group term life insurance program
($300,000) that provides a benefit for employees generally equal to two
times salary as of the date of death. Such amounts would be paid by
insurance companies rather than by us. Figures do not include amounts
payable under an accidental death and dismemberment policy ($300,000) that
reflect a benefit available to employees generally equal to two times
salary as of the date of accidental
death.
|
|
(6)
|
Represents
the amount available to cover outplacement services under his CIC
agreement.
|
|
(7)
|
If
severance benefits due to Mr. Bygland subject him to the federal
excise tax imposed on benefits that constitute excess parachute payments
under the Code, he is also entitled to be reimbursed for taxes on an
after-tax basis. Mr. Bygland's severance benefits as of
December 31, 2009, would not trigger an excise tax under the Code, so
no gross-up payment is shown in this
illustration.
|
The
discussion below should be read in conjunction with the preceding tables
illustrating payments that would be paid to our named executive officers in the
event of a hypothetical termination on December 31, 2009. Significant
provisions of our agreements with our named executive officers are discussed
below, including definitions relating to employment termination that determine
whether our executives will be entitled to severance benefits. Because our CIC
agreements with our named executive officers require termination of employment
in addition to a change in control, no executive will be entitled to severance
payments due to a change in control alone.
Agreement Terms
Affecting Payments Due Upon A Termination of Employment Following a Change in
Control.
We have entered into CIC agreements with each of our named
executive officers effective as of January 1, 2004, as amended, except in
the case of Mr. Robbins whose agreement was entered into effective
March 5, 2007. Each CIC agreement has a one-year term but provides for
automatic extension for an additional year on each anniversary of the agreement,
unless on or prior to September 30 of each year either we or the executive
gives written notice terminating the agreement. If a "change in control" occurs,
each agreement provides for an automatic extension of its term—to three years
for Mr. Sznewajs and two years for each other executive.
Each of
our executives is entitled to severance benefits if he or she terminates his or
her employment for "good reason," or if we terminate his or her employment other
than for "cause," "disability," or death within a given period following a
change in control – three years for Mr. Sznewajs and two years for all
other executives. Severance benefits will also be payable if an executive is
terminated other than for cause, disability or death prior to a change of
control and such termination occurs on or after the date a transaction is
announced or should have been announced under applicable securities or other
laws. "Good reason" and "cause" in each CIC agreement are defined in
substantially the same manner in which those terms are defined in
Mr. Sznewajs's employment agreement, as described under the subheading
"Agreement Terms Affecting Payments Due to Mr. Sznewajs Following
Employment Termination" below.
A "change
in control" will be deemed to occur if:
|
·
|
a
person acquires 30% or more of our outstanding common stock, other than
from us or in certain exempt
transactions;
|
|
·
|
directors
in office at the time of each CIC agreement, including individuals elected
as directors thereafter based on a nomination by our Board, cease for any
reason to constitute a majority of the
Board;
|
|
·
|
we
complete a merger, reorganization, or consolidation or sale of all or
substantially all of our assets, unless (A) our shareholders prior to
such transaction continue to own 50% or more of the common stock and 50%
or more of the voting power of outstanding securities of the resulting
entity, (B) no person has acquired 30% or more of our common stock or
the combined voting power of its outstanding securities, and (C) a
majority of our Board continues in office;
or
|
|
·
|
shareholders
approve a
liquidation.|Bullet9|ZZMPTAG|
|
In the
event an executive's severance benefits under his or her CIC agreement are
triggered, he or she will be entitled to severance benefits, including payments,
as illustrated in the preceding table for each of our executives.
If any
payments under a CIC agreement are determined to be subject to the federal
excise tax imposed on benefits that constitute excess parachute payments under
the Internal Revenue Code, the executive will be entitled to reimbursement for
such taxes on an after-tax basis, again as illustrated in the preceding tables.
Under certain circumstances, we may also be unable to deduct the resulting
compensation expense for federal income tax purposes.
Under
each CIC agreement, the executive has agreed that he or she will assist us in
evaluating any proposal for a change in control and not resign his or her
position until the contemplated transaction is completed or abandoned. In
addition, for a period after the change in control, if we want the executive to
continue employment in a position or under circumstances that qualify as "good
reason," the executive will be obligated to do so, provided such continued
employment is for not longer than 90 days, in a reasonably comparable
position, and occurs at the then current place of employment or at such other
location as is agreeable to the executive. The executive will be entitled to
severance benefits upon commencement of a continued employment
period.
Agreement Terms
Affecting Payments Due to Mr. Sznewajs Following Employment
Termination.
We have entered into an employment agreement with
Mr. Sznewajs that was effective beginning January 1, 2008, and
continues for a three-year term, expiring on December 31, 2010.
Mr. Sznewajs' employment agreement provides for severance benefits under
certain circumstances as described in footnotes one and two to his table of
benefits above. Whether or not Mr. Sznewajs receives benefits depends on
the nature of the termination of his employment agreement.
Mr. Sznewajs
will receive severance benefits unless he quits or is terminated for "cause." We
may terminate Mr. Sznewajs for cause only if (x) two-thirds of the
members of the Board determine that cause exists based on substantial evidence,
(y) Mr. Sznewajs is given reasonable notice of the board meeting
called to make that determination, and (z) Mr. Sznewajs and his legal
counsel are given an opportunity to address the board meeting. We may terminate
Mr. Sznewajs for "cause" if:
|
·
|
He
engages in dishonest or fraudulent conduct involving the
Company;
|
|
·
|
He
materially breaches the confidentiality provisions of his
agreement;
|
|
·
|
He
is convicted on any felony charge or on a misdemeanor reflecting upon
honesty;
|
|
·
|
His
acts or failures to act materially injure the Company's reputation,
business affairs, or financial condition if injury could have been
reasonably avoided by Mr. Sznewajs;
or
|
|
·
|
He
fails or refusals to substantially perform his duties and does not cure
such failure or refusal within a reasonable period following written
notice.
|
Mr. Sznewajs
will also be entitled to severance benefits if he terminates his employment for
what is called "good reason" under his agreement. He may terminate his
employment for "good reason" if:
|
·
|
His
salary is reduced or any compensation or benefit plan benefiting
Mr. Sznewajs is reduced or eliminated in a manner that does not apply
generally to all similarly situated
employees;
|
|
·
|
His
responsibilities or duties are
diminished;
|
|
·
|
He
is relocated to a location more than 35 miles from our Lake Oswego
office; or
|
|
·
|
We
materially breach Mr. Sznewajs's employment agreement and fail to
cure the breach within a reasonable period following written notice by
Mr. Sznewajs.
|
Report
of the Compensation Committee
The
Compensation & Personnel Committee ("Compensation Committee") discharges the
responsibilities assigned to it by the Board of Directors with respect to
compensation and personnel matters, including those relating to Bancorp's
executive officers.
In
discharging its responsibilities, the Compensation Committee:
|
·
|
Reviewed
and discussed with management the Compensation Discussion and Analysis
included in this proxy statement;
and
|
|
·
|
Based
on the review and discussions, the Compensation Committee recommended to
the Board of Directors that the Compensation Discussion and Analysis be
included in the proxy statement and furnished in the Company's annual
report on Form 10-K for the year ended December 31, 2009,
through its incorporation by reference from the proxy
statement.
|
Compensation
Committee Members
David
Truitt (Chair), Lloyd D. Ankeny, Michael J. Bragg, Duane McDougall,
Steven J. Oliva
TRANSACTIONS
WITH RELATED PERSONS
Many of
our directors and officers, members of their immediate families, and firms in
which they have or had an interest were customers of and had transactions with
the Bank or West Coast Trust during 2009 in the ordinary course of business.
Similar transactions may be expected to take place in the ordinary course of
business in the future. All outstanding loans and commitments were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and did
not, in the opinion of management, involve more than the normal risk of
collectability or present other unfavorable features.Bancorp has adopted written
policies and procedures for the review, approval and ratification of
transactions with related persons. Related persons include our directors and
named executive officers. The policies require that all transactions with
related persons that are required to be publicly disclosed under Item 404
of Regulation S-K of the Securities and Exchange Commission ("SEC") be
either approved or ratified by a designated Board committee.
The
policies require that all material facts of all transactions that require
approval be reviewed and either approved or disapproved:
|
·
|
Loan
Committee Approval
. With respect to loans and other extensions of
credit, by the Loan Committee, with any members of the committee who are
not independent abstaining from discussion and voting;
and
|
|
·
|
Governance
Committee Approval.
With respect to other transactions, by the
Governance Committee.
|
In
determining whether to approve or ratify a transaction, the appropriate Board
committee will take into account, among other factors determined to be
appropriate, whether the transaction is on terms no less favorable than terms
generally available to an unaffiliated third-person under the same or similar
circumstances and the extent of the related person's interest in the
transaction. If advance approval of a transaction is not feasible, the
transaction is considered and, if determined to be appropriate, ratified by the
committee as soon as practical after its occurrence.
No
director may participate in any discussion or approval of a transaction for
which he or she is involved, except that the director is required to provide all
material information concerning the transaction to the committee. If a
transaction will be ongoing, the appropriate committee responsible for approval
of the transaction may establish guidelines for our management to follow in its
ongoing dealings with the related person. The policy does not require
pre-approval or ratification of any transaction with another entity in which the
related person's only relationship is as an employee (other than an executive
officer) of the entity.
We will
provide a complete written copy of the policy upon written request addressed to
the Corporate Secretary at 5335 Meadows Road, Suite 201, Lake Oswego,
Oregon 97035.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs.
Truitt, Ankeny, Bragg, McDougall, and Oliva served on the Compensation Committee
during 2009. During 2009, none of our executive officers served on the Board of
Directors of any entities whose directors or officers serve on our Compensation
Committee.
INFORMATION
CONCERNING DIRECTOR NOMINATIONS
Director Qualifications.
Minimum director qualifications to serve as a director of our Company include
experience at a high level in business, government, or education, demonstrated
leadership abilities, generalized or specific knowledge or other skills or
qualities of particular value to the Board in fulfilling its responsibilities,
and outstanding personal attributes such as unquestioned integrity, sound
business judgment, and significant business, community or political contacts. In
addition, a board candidate must have time and willingness to commit to being a
productive and active member of the Board and committees of the Board on which
he or she will serve. Our bylaws provide that persons who have reached the age
of 72 may not stand for election, unless waived by the Board on a case-by-case
basis. Finally, persons nominated to stand for election as one of our directors
must be acceptable to our banking regulators.
Sources of Nominee
Recommendations
. We receive suggestions for potential director nominees
from a variety of sources including Board members, management representatives,
advisors, and shareholders. The Governance Committee is authorized by its
charter to retain a third-party search firm to assist it in identifying director
candidates, but it has not done so recently. Two investors in our recent capital
raise, GF Financial, LLC and Castle Creek Capital Partners, IV LP are each
contractually entitled to designate one Board member subject to satisfaction of
applicable legal and governance requirements. Those investors have designated
Simon Glick and John Pietrzak, respectively, who have both been nominated to
stand for election by the Governance Committee and the Board.
Shareholder Nominee Recommendations
to Governance Committee.
It is the policy of the Governance Committee to
consider shareholder recommendations concerning nominees for director.
Shareholders wishing to suggest a candidate for nomination as a director by the
Governance Committee should write to us at our corporate offices to the
attention of the Chair of the Governance & Nominating Committee, care
of the Corporate Secretary, and shall include:
|
·
|
A
statement that the writer is a shareholder and is proposing a candidate
for consideration as a director
nominee;
|
|
·
|
Name
and contact information for the
candidate;
|
|
·
|
A
statement of the candidate's experience in business, government, or
education and his educational
background;
|
|
·
|
Information
regarding the candidate's qualifications, relationships with our
customers, suppliers or competitors, and any relationship or understanding
between the proposing shareholder and the candidate;
and
|
|
·
|
A
statement that the candidate is willing to be considered and serve if
nominated and elected.
|
Shareholders
wishing to recommend a candidate for nomination should submit a recommendation
not later than 120 days prior to the first anniversary of the date our
proxy statement was released to shareholders in connection with the previous
year's annual meeting. Shareholder-recommended candidates will be evaluated
using the same criteria used to evaluate all potential candidates for director,
except that current directors whose performance as a director has been
satisfactory or better will normally be favored over new
candidates.
Governance Committee Evaluation
Process
. The Governance Committee evaluates potential nominees by
reviewing their qualifications, considering references as appropriate,
conducting interviews as needed, and considering such other information as may
be deemed relevant, including the needs of the Board at the time.
Diversity Considerations
. In
considering which persons to nominate as directors for election by shareholders,
the Governance Committee and Board consider many types of diversity. Bancorp's
long-standing Corporate Governance Policy provides that the Board shall take
into account its commitment to diversity among its membership. Qualified
candidates are considered without regard to race, color, religion, sex,
ancestry, national origin, disability, or any other factor that qualifies the
candidate as a member of a protected class under applicable law. The governance
policy also provides that the Board shall attempt to maintain geographic
diversity and diversity in professional backgrounds among its
members.
In
addition the provisions of our Corporate Governance Policy regarding diversity,
the Governance Committee, as a matter of practice, may seek or favor a candidate
with particular areas of expertise that complement our existing Board
composition or satisfy legal requirements. In general, we seek a board that
includes a diversity of perspectives and a broad range of experiences and
includes individuals that possess the background, skills, expertise, and
commitment necessary to make a significant contribution to our
Company.
Our
Corporate Governance Policy regarding diversity is implemented by actively
considering the various attributes of all suggested director nominees, and when
appropriate, actively recruiting additional potential nominees. The Governance
Committee and Board believe the process has been effective in developing and
maintaining significant Board diversity.
Direct Shareholder
Nominations
. In addition to our Governance Committee nominating process,
our bylaws permit shareholders to directly nominate directors for consideration
at an annual meeting of shareholders. In order to submit a nominee for
consideration at an annual meeting of shareholders, a shareholder must comply
with the notice provisions contained in our bylaws. Under our bylaws, a
shareholder entitled to vote for the election of directors may nominate at a
meeting persons for election as director only if written notice of such
shareholder's intent to make a nomination is given to our Secretary, either by
personal delivery or certified mail, not later than 60 days before the date
of the annual meeting (provided that, if the date of a meeting is not publicly
announced more than 90 days in advance, such notice must be given within
15 days after the first public disclosure of the annual meeting
date).
INFORMATION
CONCERNING SHAREHOLDER PROPOSALS
Shareholder
proposals intended to be presented at the 2011 Annual Meeting of Shareholders
must be received by our Secretary before November 17, 2010, for inclusion
in the 2011 Proxy Statement and form of proxy. In addition, if we receive notice
of a shareholder proposal after January 30, 2011, the persons named as
proxies in such proxy statement and form of proxy will have discretionary
authority to vote on such shareholder proposal.
Our
bylaws provide that no business may be brought before an annual meeting except
by or at the direction of the Board, as specified in our notice of the meeting,
or by any shareholder of record who delivers notice to our Secretary not less
than 60 days in advance of such meeting (unless the date of the meeting has
not been publicly announced by us more than 90 days prior to the meeting,
in which case the shareholder's notice must be given within 15 days after
we publicly announce the meeting date). To be effective, the shareholder's
notice must include certain information about the matter proposed to be
considered at the meeting and the shareholder providing the notice, as specified
further in the bylaws. If the chair of an annual meeting determines that these
advance notice procedures have not been complied with, he or she may declare
that the business was not properly brought before the meeting and will not be
considered.
HOUSEHOLDING
MATTERS
We are
delivering a single Notice of Internet Access, and if requested, a single copy
of our annual report and proxy statement to persons with the same last name
residing in a single household or whom we reasonably believe are members of the
same family, unless we have been notified that such persons prefer to receive
individual copies of those documents. This practice is referred to as
"householding."
If you
reside at an address that received only one copy of our Notice of Internet
Access or, if requested, our annual report and proxy statement as a result of
householding, we will deliver additional copies upon oral or written request to
West Coast Bancorp, 5335 Meadows Road, Suite 201, Lake Oswego, Oregon
97035, Attn: Corporate Secretary, or by phone at
(503) 684-0884.
If you
object to householding and wish to receive separate copies of documents in the
future, you may contact either:
1. Broadridge
("Broadridge") if your shares are held in an account at a brokerage firm or
bank, at 1-800-542-1061. Please have your proxy card in hand in order to access
your account and follow the automated instructions. You can also contact
Broadridge in writing by writing to Broadridge, Householding Department,
51 Mercedes Way, Edgewood, NY 11717.
2. Wells
Fargo Shareholder Services ("Wells"), our stock transfer agent, if your shares
are directly registered with them, at 1-877-602-7615. Please have your proxy
card in hand in order to access your account. The Company's code for use of
Wells' automated system is 210.
If you
received multiple copies of your Notice of Internet Access or other documents at
a single address and would like to request delivery of a single copy in the
future, please contact us or our transfer agent as described above.
ANNUAL
REPORT TO SHAREHOLDERS
Any shareholder may obtain without
charge a copy of our Annual Report on Form 10-K filed with the Securities
and Exchange Commission for the year ended December 31, 2009 including
financial statements.
Written requests for the Form 10-K should be
addressed to Richard R. Rasmussen, Corporate Secretary of West Coast
Bancorp, at 5335 Meadows Road, Suite 201, Lake Oswego, Oregon
97035.
VOTING
VIA THE INTERNET OR BY TELEPHONE
You may
vote via the Internet at
www.proxyvote.com
or
may vote telephonically by calling 1-800-690-6903. In either case, have either
your Notice of Internet Availability of Proxy Materials or your proxy card in
hand and follow the instructions. Votes submitted via the Internet or by
telephone must be received by 8:59 pm (PT) on April 26, 2010
(April 22, 2010 for participants in West Coast Bancorp's 401(k) Plan), to
be counted.
The
telephone and Internet voting procedures are designed to authenticate
shareholders' identities, to allow shareholders to give their voting
instructions and to confirm that shareholders' instructions have been recorded
properly. Shareholders voting via the Internet should understand that there may
be costs associated with electronic access, such as usage charges from Internet
access providers and telephone companies, that must be borne by the
shareholder.
March
16, 2010
|
BY
ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
Richard
R. Rasmussen
|
|
Executive
Vice President
|
|
General
Counsel and Secretary
|
Appendix
A
West
Coast Bancorp
and
Wells
Fargo Bank, National Association
Tax
Benefit Preservation Plan
Dated as
of October 23, 2009
TAX
BENEFIT PRESERVATION PLAN
Tax
Benefit Preservation Plan, dated as October 23, 2009 ("
Plan
") between West
Coast Bancorp, an Oregon corporation (the "
Company
") and Wells
Fargo Bank, National Association, as rights agent (the "
Rights
Agent
").
WITNESSETH
The Board
of Directors of the Company has authorized and declared a dividend of one
preferred share purchase right (a "
Right
") for each
Common Share (as hereinafter defined) of the Company outstanding on November 2,
2009 (the "
Record
Date
") and 50 Rights (subject to adjustment as provided herein) for each
share of Series A Preferred Stock and 50 Rights (subject to adjustment as
provided herein) for each share of Series B Preferred Stock outstanding on
the Record Date, each Right representing the right to purchase one one-hundredth
of a share of Series C Preferred Stock (as hereinafter defined), upon the
terms and subject to the conditions herein set forth, and has further authorized
and directed the issuance of one Right with respect to each Common Share, 50
Rights with respect to each share of Series A Preferred Stock, and 50
Rights with respect to each share of Series B Preferred Stock that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date, the Early Expiration Date and the Final Expiration
Date (as such terms are hereinafter defined).
Accordingly,
in consideration of the premises and the mutual agreements herein set forth, the
parties hereby agree as follows:
Section 1.
Definitions
. For
purposes of this Plan, the following terms have the meanings
indicated:
(a)
"
Acquiring
Person
" shall mean any Person (other than any Exempt Person) who or
which, together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 4.9% or more of the Common Stock of the Company then
outstanding, but shall not include the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any Subsidiary of the Company, any
entity holding Common Stock for or pursuant to the terms of any such plan, or
any Person becoming an Acquiring Person as a result of (A) the repurchase
of Common Stock, Series A Preferred Stock or Series B Preferred Stock
by the Company or (B) a stock dividend, stock split, reverse stock split or
similar transaction effected by the Company, in each case unless and until such
Person, after becoming aware that such Person has become an Acquiring Person,
becomes a Beneficial Owner of any additional Common Stock;
provided
,
however
, that,
(i) any Person who or which would otherwise be an Acquiring Person as of
the date of this Plan (such person, an "
Existing Holder
")
will not be deemed to be an Acquiring Person for any purpose of this Plan prior
to or after the date of this Plan unless and until such time as (A) such
Person or any Affiliate or Associate of such Person thereafter becomes,
individually or in the aggregate, the Beneficial Owner of additional Common
Stock representing two-tenths of a percent (0.2%) or more of the Common Stock
then outstanding, not including Common Shares obtained (1) pursuant to any
agreement or regular-way purchase order for Common Stock that is in effect on or
prior to the date of this Plan and consummated in accordance with its terms
after the date of this Plan, or (2) as a result of a stock dividend, rights
dividend, stock split or similar transaction effected by the Company in which
all holders of Common Stock are treated equally, (B) any other Person who
is the Beneficial Owner of Common Stock becomes an Affiliate or Associate of
such Person after the date of this Plan, or (C) such Person or any
Affiliate or Associate of such Person exercises rights, options or warrants
to acquire any Common Stock, Series A Preferred Stock or Series B
Preferred Stock;
provided
,
however
, that the
foregoing exclusion in this clause (i) shall cease to apply with respect to
any Person at such time as such Person, together with all Affiliates and
Associates of such Person, Beneficially Owns less than 4.9% of the
then-outstanding Common Stock, and (ii) a Person will not be deemed to have
become an Acquiring Person solely as a result of a reduction in the number of
shares of Common Stock outstanding unless and until such time as (A) such
Person or any Affiliate or Associate of such Person thereafter becomes the
Beneficial Owner of any additional Common Stock, other than as a result of a
stock dividend, stock split or similar transaction effected by the Company in
which all holders of Common Stock are treated equally, or (B) any other
Person who is the Beneficial Owner of Common Stock becomes an Affiliate or
Associate of such Person after the date of this Plan. Notwithstanding the
foregoing, if (1) the Board of Directors of the Company determines that a
Person who would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently,
and (2) such Person divests as promptly as practicable or agrees in writing
with the Company to divest a sufficient number of shares of Common Stock so that
such Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), then, if the Board of Directors
of the Company so chooses, such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Plan;
provided
,
however
, that the
requirement in this clause (2) shall apply only if the actions specified
therein are required by the Board of Directors of the Company.
(b) "
Affiliate
" shall have
the meaning ascribed to such term in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act, as in effect on the date of this Plan and,
to the extent not included within the foregoing, will also include, with respect
to any Person, any other Person (other than an Exempt Person) whose Common Stock
would be deemed owned constructively or indirectly by, or otherwise aggregated
with, such first Person pursuant to the provisions of Section 382;
provided
,
however
, that a
Person will not be deemed to be the Affiliate or Associate of another Person
solely because either or both Persons are or were Directors of the
Company.
(c) "
Associate
" shall have
the meaning ascribed to such term in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act as in effect on the date of this
Plan.
(d) A
Person shall be deemed the "
Beneficial Owner
" of
and shall be deemed to "
beneficially own
" any
securities:
(i)
which such Person or any of such Person's Affiliates or Associates beneficially
owns, directly or indirectly;
(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such right
is exercisable immediately or only after the pas
sage of time
or after the satisfaction of conditions) pursuant to any agreement, arrangement
or understanding (other than customary agreements with and between underwriters
and selling group members with respect to a
bona fide
public
offering of securities), or upon the exercise of conversion rights, exchange
rights, rights (other than these Rights), warrants or options, or otherwise
(whether such rights are exercisable immediately or only after the passage of
time or after the satisfaction of conditions);
provided
,
however
, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Person's Affiliates or Associates until such
tendered securities are accepted for purchase or exchange; or (B) the right
to vote pursuant to any agreement, arrangement or understanding;
provided
,
however
, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially own, any
security if the agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated under the
Exchange Act and (2) is not also then reportable on Schedule 13D under
the Exchange Act (or any comparable or successor report); for the avoidance of
doubt, (1) if a Person or any of such Person's Affiliates or Associates
holds Series A Preferred Stock or a warrant, right or option to acquire
Series A Preferred Stock, such Person shall be deemed to "beneficially own"
the Common Stock into which such Series A Preferred Stock is convertible
(notwithstanding any limitations or conditions on the conversion of the
Series A Preferred Stock) and (2) if a Person or any of such Person's
Affiliates or Associates holds Series B Preferred Stock or a warrant, right
or option to acquire Series B Preferred Stock, such Person shall be deemed
to "beneficially own" the Common Stock into which such Series B Preferred
Stock is convertible (notwithstanding any limitations or conditions on the
conversion of the Series B Preferred Stock); or
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities) for the
purpose of acquiring, holding, voting (except to the extent contemplated by the
proviso to Section 1(d)(ii)(B) hereof) or disposing of any securities of
the Company.
Notwithstanding
anything in this Plan to the contrary, to the extent not within the foregoing
provisions of this paragraph (d), a Person shall be deemed the "Beneficial
Owner" of, and shall be deemed to "beneficially own" or have "beneficial
ownership" of, any securities which such Person would be deemed to own (whether
constructively, indirectly or otherwise) pursuant to
Section 382.
Notwithstanding
anything in this definition of Beneficial Ownership to the contrary, the phrase
"then outstanding," (i) when used with reference to a Person's Beneficial
Ownership of securities (other than Series A Preferred Stock and
Series B Preferred Stock) of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder and (ii) shall include the number of Common
Shares into which the Series A Preferred Stock then issued and outstanding
is convertible (notwithstanding any limitations or conditions on the conversion
of the Series A Preferred Stock) and shall include the number of Common
Shares into which the Series B Preferred Stock then issued and outstanding
is convertible (notwithstanding any limitations or conditions on the conversion
of the Series B Preferred Stock).
(e)
"
Business Day
" shall
mean any day other than a Saturday, a Sunday, or a day on which banking
institutions in New York are authorized or obligated by law or executive order
to close.
(f) "
Close of Business
" on
any given date shall mean 5:00 P.M., New York City time, on such date;
provided
,
however
, that, if
such date is not a Business Day, it shall mean 5:00 P.M., New York City time, on
the next succeeding Business Day.
(g)
"
Common Stock
" or
"
Common Shares
"
when used with reference to the Company shall mean the shares of common stock,
no par value, of the Company. "Common Stock" or "Common Shares" when used with
reference to any Person other than the Company shall mean the capital stock (or
equity interest) with the greatest voting power of such other Person or, if such
other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(h)
"
Distribution Date
"
shall have the meaning set forth in Section 3(a) hereof.
(i)
"
Early Expiration
Date
" shall have the meaning set forth in Section 7(a)
hereof.
(j)
"
Exchange
Act
" shall mean the Securities Exchange Act of 1934, as
amended.
(k)
"
Exchange
Ratio
" shall have the meaning set forth in Section 24(a)
hereof.
(l)
"
Exempt Person
"
shall mean a Person whose Beneficial Ownership (together with all Affiliates and
Associates of such Person) of 4.9% or more of the then-outstanding Common Stock,
as determined after the date hereof by the Company's Board of Directors in its
sole discretion, (i) will not jeopardize or endanger the availability to the
Company of any income tax benefit or (ii) is otherwise in the best interests of
the Company;
provided
,
however
, that such a
Person will cease to be an Exempt Person if the Board makes a contrary
determination with respect to the effect of such Person's Beneficial Ownership
(together with all Affiliates and Associates of such Person) regardless of the
reason therefor.
(m) "
Final Expiration
Date
" shall have the meaning set forth in Section 7(a)
hereof.
(n) "
NASDAQ
" shall mean
the National Association of Securities Dealers, Inc. Automated Quotation
System.
(o) "
Person
" shall mean
any individual, firm, corporation, partnership, limited liability company,
limited liability partnership, trust, estate or other entity, or a group of
Persons making a "coordinated acquisition" of shares or otherwise treated as an
entity within the meaning of Section 1.382-3(a)(1) of the Treasury
Regulations, and shall include any successor (by merger or otherwise) of such
individual or entity, but shall not include a Public Group (as such term is
defined in Section 1.382-2T(f)(13) of the Treasury
Regulations).
(p) "
Purchase Price
" shall
have the meaning set forth in Section 7(b) hereof.
(q) "
Record Date
" shall
have the meaning set forth in the second paragraph hereof.
(r) "
Redemption Date
"
shall have the meaning set forth in Section 7(a) hereof.
(s) "
Redemption Price
"
shall have the meaning set forth in Section 23(a) hereof.
(t) "
Right
" shall have the
meaning set forth in the second paragraph hereof.
(u) "
Right Certificate
"
shall have the meaning set forth in Section 3(a) hereof.
(v) "
Section
382
" shall mean
Section 382 of the Internal Revenue Code of 1986, as amended, or any
successor provision or replacement provision.
(w) "
Series A
Preferred Stock
"
shall mean shares of Mandatorily Convertible Cumulative Participating Preferred
Stock, Series A, no par value, of the Company.
(x) "
Series B
Preferred Stock
"
shall mean shares of Mandatorily Convertible Cumulative Participating Preferred
Stock, Series B, no par value, of the Company.
(y) "
Series C
Preferred Stock
"
shall mean shares of Series C Junior Participating Preferred Stock, no par
value, of the Company having the rights and preferences set forth in the Form of
Articles of Amendment to Designate the Terms of Series C Junior
Participating Preferred Stock attached to this Plan as
Exhibit A.
(z) "
Shares Acquisition
Date
" shall mean the first date of public announcement by the Company or
an Acquiring Person, prior to the earliest of the Redemption Date, the Early
Expiration Date and the Final Expiration Date, that an Acquiring Person has
become such.
(aa) "
Stockholder Approval
"
shall mean the approval of this Plan where the votes cast in favor of the Plan
exceed the votes cast against it at the meeting of stockholders of the Company
duly held in accordance with the Company's Restated Articles of Incorporation
and Amended and Restated Bylaws and applicable law.
(bb) "
Subsidiary
" of any
Person shall mean any corporation or other entity of which a majority of the
voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by such Person.
(cc) "
Summary of Rights
"
shall have the meaning set forth in Section 3(b) hereof.
(dd) "
Trading Day
" shall
have the meaning set forth in Section 11(d) hereof.
(ee) "
Treasury Regulations
"
shall mean final, temporary and proposed income tax regulations promulgated
under the Internal Revenue Code of 1986, as amended, including any amendments
thereto.
Section 2.
Appointment of Rights
Agent
. The Company hereby appoints the Rights Agent to act as agent for
the Company in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Company may from time to time appoint
such co-Rights Agents as it may deem necessary or desirable.
Section 3.
Issue of Right
Certificates
. (a) Until the Close of Business on the tenth day after
the Shares Acquisition Date (including any such Shares Acquisition Date which is
after the date of this Plan and prior to the issuance of the Rights) (the "
Distribution Date
"),
(i) the Rights will be evidenced (subject to the provisions of
Section 3(b) hereof) by the certificates for Common Stock of the Company
registered in the names of the holders thereof and by the certificates for the
Series A Preferred Stock and the Series B Preferred Stock of the
Company registered in the names of the holders thereof (such certificates for
the Common Stock, the Series A Preferred Stock and the Series B
Preferred Stock shall also be deemed to be Right Certificates) and not by
separate Right Certificates, and (ii) the right to receive Right
Certificates will be transferable only in connection with the transfer of the
underlying shares of Common Stock, Series A Preferred Stock or
Series B Preferred Stock. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights Agent
will, if requested, send) by first-class, insured, postage-prepaid mail,
(x) to each record holder of Common Stock of the Company as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a "
Right Certificate
"),
evidencing one Right for each Common Share so held (other than with respect to
Rights that have become void pursuant to Section 11(a)(ii) hereof or that
have been exchanged pursuant to Section 24 hereof), (y) to each record
holder of Series A Preferred Stock of the Company as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate evidencing the number of Rights held
with respect to each share of Series A Preferred Stock (other than with
respect to Rights that have become void pursuant to Section 11(a)(ii)
hereof or that have been exchanged pursuant to Section 24 hereof) and
(z) to each record holder of Series B Preferred Stock of the Company
as of the Close of Business on the Distribution Date, at the address of such
holder shown on the records of the Company, a Right Certificate evidencing the
number of Rights held with respect to each share of Series B Preferred
Stock (other than with respect to Rights that have become void pursuant to
Section 11(a)(ii) hereof or that have been exchanged pursuant to
Section 24 hereof). Upon conversion or exchange of any share of
Series A Preferred Stock or Series B Preferred Stock into shares of
Common Stock, the Rights associated with such share of Series A Preferred
Stock or Series B Preferred Stock will automatically be extinguished, and a
Right will be issued in respect of each such share of Common
Stock. As of the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(b) On
the Record Date, or as soon as practicable thereafter, the Company will, at its
option, either send (by first-class, postage-prepaid mail at the address shown
on the records of the Company) or make otherwise available to each record holder
of Common Stock, to each record holder of Series A Preferred Stock, and to
each record holder of Series B Preferred Stock as of the Close of Business
on the Record Date, a copy of a Summary of Rights to Purchase Series C
Preferred Stock, in substantially the form of Exhibit C hereto (the "
Summary of Rights
").
With respect to certificates for Common Stock of the Company outstanding as of
the Record Date, certificates for Series A Preferred Stock outstanding as
of the Record Date, and certificates for Series B Preferred Stock
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders thereof
together with a copy of the Summary of Rights attached thereto. Until the
Distribution Date (or the earliest of the Redemption Date, the Early Expiration
Date or the Final Expiration Date), the surrender for transfer of any
certificate for Common Stock, Series A Preferred Stock or Series B
Preferred Stock of the Company outstanding on the Record Date, with or without a
copy of the Summary of Rights attached thereto, shall also constitute the
transfer of the Rights associated with the Common Stock, Series A Preferred
Stock or Series B Preferred Stock of the Company represented
thereby.
(c) Certificates
for such Common Stock, Series A Preferred Stock or Series B Preferred
Stock which become outstanding after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date, the Early Expiration Date or the
Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them a legend in substantially the following
form:
This
certificate also evidences and entitles the holder hereof to certain rights as
set forth in the Plan between West Coast Bancorp and Wells Fargo Bank, National
Association, dated as of October 23, 2009, as it may be amended from time to
time (the "
Plan
"), the terms of
which are hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of West Coast Bancorp. Under certain
circumstances, as set forth in the Plan, such Rights (as defined in the Plan)
will be evidenced by separate certificates and will no longer be evidenced by
this certificate. West Coast Bancorp will mail to the holder of this certificate
a copy of the Plan without charge after receipt of a written request therefor.
As set forth in the Plan, Rights beneficially owned by any Person (as defined in
the Plan) who becomes an Acquiring Person or an Affiliate or an Associate of any
Acquiring Person (each as defined in the Plan) become null and
void.
With
respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Stock, Series A
Preferred Stock or Series B Preferred Stock of the Company represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate (prior to the earliest of the
Distribution Date, the Redemption Date, the Early Expiration Date or the Final
Expiration Date) shall also constitute the transfer of the Rights associated
with the Common Stock, Series A Preferred Stock or Series B Preferred
Stock of the Company represented thereby. In the event that the Company
purchases or otherwise acquires any Common Stock, Series A Preferred Stock
or Series B Preferred Stock of the Company after the Record Date but prior
to the Distribution Date, any Rights associated with such Common Stock,
Series A Preferred Stock or Series B Preferred stock of the Company
shall be deemed cancelled and retired so that the Company shall not be entitled
to exercise any Rights associated with the Common Stock, Series A Preferred
Stock or Series B Preferred Stock of the Company which are no longer
outstanding.
Section 4.
Form of Right
Certificates
. (a) The Right Certificates (and the forms of election to
purchase Series C Preferred Stock and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit B hereto, and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Plan, or as may be required to comply
with any applicable law or with any applicable rule or regulation made pursuant
thereto or with any applicable rule or regulation of any stock exchange or the
Financial Industry Regulatory Authority, or to conform to usage. Subject to the
provisions of Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one one-hundredths of a share of
Series C Preferred Stock at the price per one one-hundredth of a share of
Series C Preferred Stock set forth herein in Section 7(b), but the
number of such one one-hundredths of a share of Series C Preferred Stock
and the Purchase Price shall be subject to adjustment as provided
herein.
Section 5.
Countersignature and
Registration
. The Right Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President and Chief Executive Officer,
its Chief Financial Officer, its General Counsel, any of its Vice Presidents or
its Treasurer (any of the foregoing, an "
Authorized Officer
"),
either manually or by facsimile signature, shall have affixed thereto the
Company's seal or a facsimile thereof, and shall be attested by the Secretary or
an Assistant Secretary of the Company, either manually or by facsimile
signature. The Right Certificates shall be manually or by facsimile
countersigned by the Rights Agent and shall not be valid for any purpose unless
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the individual who signed such Right Certificates had not ceased to be such
officer of the Company; and any Right Certificate may be signed on behalf of the
Company by any individual who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of the execution of this Plan any such
individual was not such an officer.
Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at its
principal office, books for registration and transfer of the Right Certificates
issued hereunder. Such books shall show the names and addresses of the
respective holders of the Right Certificates, the number of Rights evidenced on
its face by each of the Right Certificates and the date of each of the Right
Certificates.
Section 6.
Transfer, Split Up,
Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates
. Subject to the provisions of Section 14
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earliest of the Redemption Date, the
Early Expiration Date or the Final Expiration Date, any Right Certificate or
Right Certificates (other than Right Certificates representing Rights that have
become void pursuant to Section 11(a)(ii) hereof or that have been
exchanged pursuant to Section 24 hereof) may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates entitling the registered holder to purchase a like number of
one one-hundredths of a share of Series C Preferred Stock as the Right
Certificate or Right Certificates surrendered then entitled such holder to
purchase. Any registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right Certificate
or Right Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer of
any such surrendered Right Certificate until the registered holder shall have
completed and signed the certificate contained in the form of assignment on the
reverse side of such Right Certificate and shall have provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon or as promptly as practicable thereafter, the Rights Agent shall
countersign and deliver to the Person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Right Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and, at the Company's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.
Section 7.
Exercise of
Rights; Purchase Price; Expiration Date of Rights
. (a) The registered
holder of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein), in whole or in part, at any time after
the Distribution Date, upon
surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-hundredth of a
share of Series C Preferred Stock as to which the Rights are exercised, at
or prior to the earliest of (i) the Close of Business on October 23, 2012 (the
"
Final Expiration
Date
"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (the "
Redemption Date
"),
(iii) the time at which such Rights are exchanged as provided in Section 24
hereof, (iv) the repeal of Section 382 or any successor statute, or any
other change, if the Board, in its sole discretion, determines that this Plan is
no longer necessary for the preservation of tax benefits, (v) October 25, 2010
if Stockholder Approval has not been obtained prior to such date or (vi) a
determination by the Board, prior to the time any Person becomes an Acquiring
Person, that the Plan and the Rights are no longer necessary for the
preservation or existence of income tax benefits or are no longer in the best
interests of the Company and its stockholders (the earliest of the dates set
forth in clauses (iv), (v), and (vi), the "
Early Expiration
Date
").
(b)
The Purchase Price for each one one-hundredth of a share of Series C
Preferred Stock purchasable pursuant to the exercise of a Right shall initially
be $30.00 (the "
Purchase
Price
"), and shall be subject to adjustment from time to time
as provided in Section 11 hereof, and shall be payable in lawful money of
the United States of America in accordance with paragraph (c)
below.
(c)
Upon receipt of a Right Certificate representing exercisable Rights, with the
form of election to purchase duly executed, accompanied by payment of the
Purchase Price for the shares to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent
shall thereupon promptly (i) (A) requisition from any
transfer agent of the Series C Preferred Stock certificates for the number
of Series C Preferred Stock to be purchased and the Company hereby
irrevocably authorizes any such transfer agent to comply with all such requests,
or (B) requisition from the depositary agent depositary receipts representing
such number of one one-hundredths of a share of Series C Preferred Stock as
are to be purchased (in which case certificates for the Series C Preferred
Stock represented by such receipts shall be deposited by the transfer agent of
the Series C Preferred Stock with such depositary agent) and the Company
hereby directs such depositary agent to comply with such request; (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof;
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder; and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right
Certificate. The payment of the Purchase Price shall be made in cash
or by certified bank check or bank draft payable to the order of the Company.
The Company reserves the right to require prior to the occurrence of an event
described in Section 11(a)(ii) that, upon any exercise of Rights, a number
of Rights be exercised so that only whole shares of Series C Preferred
Stock would be issued.
(d)
In case the registered holder of any Right Certificate shall exercise less than
all the Rights evidenced thereby, a new Right Certificate evidencing Rights
equivalent to the Rights remaining unexercised shall be issued by the Rights
Agent to registered holder of such Right Certificate or to such holder's duly
authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company will be obligated to undertake any action with respect to any purported
transfer, split up, combination or exchange of any Right Certificate pursuant to
Section 6 or exercise of a Right Certificate as set forth in this
Section 7 unless the registered holder of such Right Certificate has
(i) completed and signed the certificate following the form of assignment
or the form of election to purchase, as applicable, set forth on the reverse
side of the Right Certificate surrendered for such transfer, split up,
combination, exchange or exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company may reasonably
request.
Section 8.
Cancellation and
Destruction of Right Certificates
. All Right Certificates surrendered for
the purpose of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in cancelled form, or, if surrendered to the Rights
Agent, shall be cancelled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by any of
the
provisions of this Plan. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. Subject to applicable law and regulation, the Rights
Agent shall maintain in a retrievable database electronic records of all
cancelled or destroyed stock certificates which have been canceled or destroyed
by the Rights Agent. The Rights Agent shall maintain such electronic records or
physical records for the time period required by applicable law and regulation.
Upon written request of the Company (and at the expense of the Company), the
Rights Agent shall provide to the Company or its designee copies of such
electronic records or physical records relating to rights certificates cancelled
or destroyed by the Rights Agent.
Section 9.
Availability of
Series C
Preferred Stock
. (a)
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Series C Preferred Stock or
any Series C Preferred Stock held in its treasury the number of shares of
Series C Preferred Stock that will be sufficient to permit the exercise in
full of all outstanding Rights in accordance with Section 7 hereof. The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all Series C Preferred Stock delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
Series C Preferred Stock (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and nonassessable
shares.
(b) The
Company further covenants and agrees that it will pay when due and payable any
and all federal and state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Right Certificates or of any
Series C Preferred Stock upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Right Certificates to a Person other
than, or the issu
ance or delivery of certificates or
depositary receipts for the Series C Preferred Stock in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any certificates or
depositary receipts for Series C Preferred Stock upon the exercise of any
Rights until any such tax shall have been paid (any such tax being payable by
the holder of such Right Certificate at the time of surrender) or until it has
been established to the Company's reasonable satisfaction that no such tax is
due.
(c) If
the Company determines that registration under the Securities Act is required,
then the Company shall use commercially reasonable efforts (i) to file, as soon
as practicable after the Distribution Date, on an appropriate form, a
registration statement under the Securities Act with respect to the securities
issuable upon exercise of the Rights, (ii) to cause such registration statement
to become effective as soon as practicable after such filing and (iii) to cause
such registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such securities and
(B) the earliest of the Redemption Date, the Early Expiration Date or the Final
Expiration Date. The Company shall also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the
Rights. The Company may temporarily suspend, for a period of time not
to exceed 90 calendar days after the date the Company determines that
registration is required, the exercisability of the Rights in order to prepare
and file such registration statement and to permit it to become effective or to
qualify the rights, the exercise thereof or the issuance of shares of
Series C Preferred Stock, Common Stock, or other securities upon the
exercise thereof under state securities or "blue sky" laws. Upon any
such suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in
effect. The Company shall notify the Rights Agent in writing whenever
it makes a public announcement pursuant to this Section 9 and give the
Rights Agent a copy of such announcement. In addition, if the Company
determines that a registration statement or other document should be filed under
the Securities Act or any state securities laws following the Distribution Date,
the Company may temporarily suspend the exercisability of the Rights, for a
period of time not to exceed 90 calendar days after the date the Company makes
such determination, in each relevant jurisdiction, until such time as a
registration statement has been declared effective or any such other document
filed and, if required, approved, and, upon any such suspension, the Company
shall issue a public announcement stating that the exercisability of the Rights
has been temporarily suspended, as well as a public announcement at such time as
the suspension is no longer in effect. Notwithstanding anything in
this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite registration or qualification in such jurisdiction
has not been effected or the exercise of the Rights is not permitted under
applicable law.
Section 10.
Series C
Preferred Stock Record
Date
. Each Person in whose name any certificate for Series C
Preferred Stock is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares of Series C
Preferred Stock represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made;
provided
,
however
, that, if the
date of such surrender and payment is a date upon which the Series C
Preferred Stock transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such shares on, and such certificate
shall be dated, the next succeeding Business Day on which the Series C
Preferred Stock transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Series C Preferred Stock for which
the Rights shall be exercisable, including, without limitation, the right to
vote, to receive dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.
Section 11.
Adjustment of
Purchase Price, Number of Shares or Number of Rights
. The Purchase
Price, the number of shares of Series C Preferred Stock covered by each
Right and the num
ber of Rights outstanding are subject to
adjustment from time to time as provided in this
Section 11.
(a)
(i) In the event the Company shall at any
time after the date of this Plan (A) declare a dividend on the Series C
Preferred Stock payable in Series C Preferred Stock, (B) subdivide the
outstanding shares of Series C Preferred Stock, (C) combine the outstanding
shares of Series C Preferred Stock into a smaller number of shares of
Series C Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Series C Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of
the record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date and at a time when the
Series C Preferred Stock transfer books of the Company were open, such
holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification;
provided
,
however
, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii)
Subject to Section 23 and Section 24 hereof, in the event any Person
becomes an Acquiring Person, each holder of a Right (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person) shall thereafter
have a right to receive, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-hundredths of a
share of Series C Preferred Stock for which a Right is
then exercisable, in accordance with the terms of this Plan and in lieu of
Series C Preferred Stock, such number of Common Stock as shall equal the
result obtained by (A) multiplying the then current Purchase Price by the
number of one one-hundredths of a share of Series C Preferred Stock for
which a Right is then exercisable and dividing that product by (B) 50% of
the then current per share market price of the Common Stock of the Company
(determined pursuant to Section 11(d) hereof) on the date of the occurrence
of such event; provided that, notwithstanding the foregoing, no Right that
immediately prior to the Distribution Date was evidenced by a certificate that
also evidenced Series B Preferred Stock may be exercised for Common Stock
pursuant to this Section 11(a)(ii) until such Right is transferred to a
third party in a Widely Dispersed Offering (as such term is defined in the
Articles of Amendment of the Series B Preferred Stock). In the event that
any Person shall become an Acquiring Person and does not become an Exempt Person
prior to the Distribution Date and the Rights shall then be outstanding, the
Company shall not take any action which would eliminate or diminish the benefits
intended to be afforded by the Rights.
Notwithstanding
anything in this Agreement to the contrary, however, from and after the first
occurrence of such event, any Rights that are beneficially owned by (A) any
Acquiring Person (or any Affiliate or Associate of any Acquiring Person),
(B) a transferee of any Acquiring Person (or any such Affiliate or
Associate) who becomes a transferee after the occurrence of such Person becoming
an Acquiring Person or (C) a transferee of any Acquiring Person (or any
such Affiliate or Associate) who became a transferee prior to or concurrently
with such Person becoming an Acquiring Person pursuant to either (1) a
transfer from the Acquiring Person (or any such Affiliate or Associate) to
holders of its equity securities or to any Person with whom the Acquiring Person
(or any such Affiliate or Associate) has any continuing agreement, arrangement
or understanding, written or otherwise, regarding the transferred Rights or
(2) a transfer that the Board has determined is part of a plan, arrangement
or understanding, written or otherwise, which has the purpose or effect of
avoiding the provisions of this paragraph, shall be null and void without any
further action and any holder of such Rights shall thereafter have no rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Company will use commercially reasonable
efforts to ensure that the provisions of this Section 11(a)(ii) are
complied with, but shall have no liability to any holder of Rights Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. From and after the occurrence of any Person becoming an
Acquiring Person, no Right Certificates shall be issued pursuant to
Section 3 or Section 6 hereof that represents Rights that are or have
become void pursuant to the provisions of this paragraph, and any Right
Certificates delivered to the Rights Agent that represents Rights that are or
have become void pursuant to the provisions of this paragraph shall be
cancelled.
(iii)
In the event that there shall not be sufficient Common Stock issued but not
outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with subparagraph (ii) above, the Company may suspend
temporarily such exercise and shall take all such action as may be necessary
to authorize additional Common Stock for issuance upon
exercise of the Rights. In the event the Company shall, after good faith effort,
be unable to take all such action as may be necessary to authorize such
additional Common Stock, the Company shall substitute, for each Common Share
that would otherwise be issuable upon exercise of a Right, a number of shares of
Series C Preferred Stock or fraction thereof such that the current per
share market price of one share of Series C Preferred Stock multiplied by
such number or fraction is equal to the current per share market price of one
Common Share as of the date of issuance of such shares of Series C
Preferred Stock or fraction thereof.
(b)
In case the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Series C Preferred Stock entitling
them (for a period expiring within 45 calendar days after such record date)
to subscribe for or purchase Series C Preferred Stock (or shares having the
same rights, privileges and preferences as the Series C Preferred Stock
("
equivalent preferred
shares
")) or securities convertible into Series C Preferred Stock or
equivalent preferred shares at a price per share of Series C Preferred
Stock or equivalent preferred share (or having a conversion price per share, if
a security convertible into Series C Preferred Stock or equivalent
preferred shares) less than the then current per share market price of the
Series C Preferred Stock (as defined in Section 11(d)) on such record
date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of shares
of Series C Preferred Stock outstanding on such record date plus the number
of shares of Series C Preferred Stock which the aggregate offering price of
the total number of shares of Series C Preferred Stock and/or equivalent
preferred shares so to be offered (and/or the aggregate initial conversion price
of the convertible securities so to be offered) would purchase at such current
market price and the denominator of which shall be the number of shares of
Series C Preferred Stock outstanding on such record date plus the number of
additional shares of Series C Preferred Stock and/or equivalent preferred
shares to be of
fered for subscription or purchase (or into
which the convertible securities so to be offered are initially convertible);
provided
,
however
, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price may be paid
in a consideration part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and holders
of the Rights. Shares of Series C Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and, in the event that such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been
fixed.
(c)
In case the Company shall fix a record date for the making of a
distribution to all holders of the Series C Preferred Stock (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Series C Preferred Stock) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the then-current per share market price of the
Series C Preferred Stock on such record date, less the fair market value
(as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and holders of the Rights) of the por
tion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one share
of Series C Preferred Stock and the denominator of which shall be such
then-current per share market price of the Series C Preferred Stock on such
record date;
provided
,
however
, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company to be
issued upon exercise of one Right. Such adjustments shall be made successively
whenever such a record date is fixed; and, in the event that such distribution
is not so made, the Purchase Price shall again be adjusted to be the Purchase
Price which would then be in effect if such record date had not been
fixed.
(d)
(i) For the purpose of any computation
hereunder, the "current per share market price" of any security (a "
Security
" for the
purpose of this Section 11(d)(i)) on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the 30
consecutive Trading Days immediately prior to such date;
provided
,
however
, that, in the
event that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such Security of (A)
a dividend or distribution on such Security payable in shares of such Security
or Securities convertible into such shares, or (B) any subdivision, combination
or reclassification of such Security and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, reported
at or prior to 4:00 P.M. Eastern time or, in case no such sale takes place on
such day, the average of the bid and asked prices, regular way, reported as of
4:00 P.M. Eastern time, in either case, as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the NASDAQ or, if the
Security is not listed or admitted to trading on the NASDAQ, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price reported at
or prior to 4:00 P.M. Eastern time or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported as of 4:00
P.M. Eastern time by NASDAQ or such other system then in use, or, if on any such
date the Security is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Security selected by the Board of Directors of the Company. The
term "
Trading
Day
" shall mean a day on which the principal national securities exchange
on which the Security is listed or admitted to trading is open for the
transaction of business, or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(ii)
For the purpose of any computation hereunder, the "current per share market
price" of the Series C Preferred Stock shall be determined in accordance
with the method set forth in Section 11(d)(i). If the Series C
Preferred Stock are not publicly traded, the "current per share market price" of
the Series C Preferred Stock shall be conclusively deemed to be the current
per share market price of the Common Stock as determined pursuant to
Section 11(d)(i) hereof (appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof),
multiplied by one hundred. If neither the Common Stock nor the Series C
Preferred Stock are publicly held or so listed or traded, "current per share
market price" shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent.
(e)
No adjustment in the Purchase Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the Purchase Price;
provided
,
however
, that any
adjustments which by reason of this Section 11(e) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one one-millionth of a share of Series C
Preferred Stock or one ten-thousandth of any other share or security as the case
may be. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f)
If, as a result of an adjustment made pursuant to Section 11(a) hereof, the
holder of any Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than Series C Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to the
Series C Preferred Stock contained in Section 11(a) through (c)
hereof, inclusive, and the provisions of Sections 7, 9 and 10 hereof with
respect to the Series C Preferred Stock shall apply on like terms to any
such other shares.
(g)
All Rights originally issued by the Company subsequent to any adjustment made to
the Purchase Price hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of one one-hundredths of a share of
Series C Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided
herein.
(h)
Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a share of Series C Preferred Stock (calculated to
the nearest one one-millionth of a share of Series C Preferred Stock)
obtained by (A) multiplying (x) the number of one one-hundredths of a share
covered by a Right immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(B) dividing the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(i)
The Company may elect, on or after the date of any adjustment of the
Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of one one-hundredths of a share of Series C
Preferred Stock purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for the number of one one-hundredths of a share of Series C Preferred Stock
for which a Right was exercisable immediately prior to such adjustment. Each
Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights, indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i),
the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which
such holders shall be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein,
and shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public
announcement.
(j)
Irrespective of any adjustment or change in the Purchase Price or in the
number of one one-hundredths of a share of Series C Preferred Stock
issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and the number of
one one-hundredths of a share of Series C Preferred Stock which were
expressed in the initial Right Certificates issued hereunder.
(k)
Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-hundredth of the then par value, if any, of the
Series C Preferred Stock issuable upon exercise of the Rights, the Company
shall take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable shares of Series C Preferred Stock at such adjusted Purchase
Price.
(l)
In any case in which this Section 11 shall require that an adjustment in
the Purchase Price be made effective as of a record date for a specified event,
the Company may
elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Series C Preferred Stock and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Series C
Preferred Stock and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment;
provided
,
however
, that the
Company shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(m)
Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that it, in its sole discretion, shall determine to be advisable
in order that any consolidation or subdivision of the Series C Preferred
Stock, issuance wholly for cash of any Series C Preferred Stock at less
than the current market price, issuance wholly for cash of Series C
Preferred Stock or securities which by their terms are convertible into or
exchangeable for Series C Preferred Stock, dividends on Series C
Preferred Stock payable in Series C Preferred Stock or issuance of rights,
options or warrants referred to in Section 11(b) hereof, hereafter made by
the Company to holders of the Series C Preferred Stock shall not be taxable
to such stockholders.
(n)
In the event that, at any time after the date of this Plan and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on the
Common Stock payable in Common Stock, or (ii) effect a subdivision, combination
or consolidation of the Common Stock (by reclassification or otherwise than by
payment of dividends in Common Stock) into a greater or lesser number of Common
Stock, then, in any such case, (A) the number of one one-hundredths of a share
of Series C Preferred Stock purchasable after such event upon proper
exercise of each Right shall be determined by multiplying the number of one
one-hundredths of a
share of Series C Preferred Stock
so purchasable immediately prior to such event by a fraction, the numerator of
which is the number of Common Stock outstanding immediately before such event
and the denominator of which is the number of Common Stock outstanding
immediately after such event, and (B) each Common Share, Series A Preferred
Share and Series B Preferred Share outstanding immediately after such event
shall have issued with respect to it that number of Rights which each Common
Share, Series A Preferred Share or Series B Preferred Share, as
applicable, outstanding immediately prior to such event had issued with respect
to it. The adjustments provided for in this Section 11(n) shall be made
successively whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
Section 12.
Certificate of
Adjusted Purchase Price or Number of Shares
. Whenever an adjustment is
made as provided in Section 11 hereof, the Company shall promptly (a)
prepare a certificate setting forth such adjustment and a brief statement of the
facts accounting for such adjustment, (b) file with the Rights Agent and with
each transfer agent for the Common Stock, Series A Preferred Stock,
Series B Preferred Stock and the Series C Preferred Stock and the
Securities and Exchange Commission a copy of such certificate and (c) if such
adjustment occurs at any time after the Distribution Date, mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25
hereof.
Section 13.
Reserved
.
Section 14.
Fractional Rights and
Fractional Shares
. (a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall be paid to the
registered holders of the Right Certificates with regard to which such
fractional Rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right shall be the
closing
price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case, as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the NASDAQ or, if the Rights are not listed or
admitted to trading on the NASDAQ, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.
(b)
The Company shall not be required to issue fractions of shares of Series C
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Series C Preferred Stock) upon exercise of the
Rights or to distribute certificates which evidence fractional shares of
Series C Preferred Stock (other than fractions which are integral multiples
of one one-hundredth of a share of Series C Preferred Stock). Fractions of
shares of Series C Preferred Stock in integral multiples of one
one-hundredth of a share of Series C Preferred Stock may, at the election
of the Company, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Company and a depositary selected by it;
provided
that such
agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Series C Preferred Stock represented
by such depositary receipts. In lieu of fractional shares of Series C
Preferred Stock that are not integral multiples of one one-hundredth of a share
of Series C Preferred Stock, the Company shall pay to the registered
holders of Right Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one share of Series C Preferred Stock. For the purposes of this
Section 14(b), the current market value of a share of Series C
Preferred Stock shall be the closing price of a share of Series C Preferred
Stock (as determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of such
exercise.
(c) Following
the occurrence of an event described in Section 11(a)(ii), the Company
shall not be required to issue fractions of Common Stock upon exercise of the
Rights or to distribute certificates which evidence fractional Common Shares. In
lieu of fractional Common Shares, the Company shall pay to the registered
holders of Rights Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of one Common Share. For purposes of this Section 14(c), the current
market value of one Common Share shall be the closing price of one Common Share
(as determined pursuant to Section 11(d)(i)) for the Trading Day
immediately prior to the date of such exercise.
(d) The
holder of a Right, by the acceptance of the Right, expressly waives such
holder's right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
(e) Whenever
a payment for fractional Rights or fractional shares is to be made by the Rights
Agent, the Company shall (i) promptly prepare and deliver to the Rights
Agent a certificate setting forth in reasonable detail the facts related to such
payment and the prices and/or formulas utilized in calculating such payments,
and (ii) provide sufficient monies to the Rights Agent in the form of fully
collected funds to make such payments.
Section 15.
Rights of
Action
. (a) All rights of action in respect of this Plan, excepting the
rights of action given to the Rights Agent under Section 18 hereof, are
vested in the respective registered holders of the Right Certificates (or, prior
to the Distribution Date, the registered holders of the Common Stock,
Series A Preferred Stock or Series B Preferred Stock); and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Stock, Series A Preferred Stock or Series B Preferred
Stock), without the consent of the Rights Agent or of the holder of any other
Right Certificate (or, prior to the Distribution Date, of the Common Stock,
Series A Preferred Stock or Series B Preferred Stock), may, in such
holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise the
Rights evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Plan. Without limiting the foregoing or any remedies
available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Plan, and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Plan.
(d) Notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other Person as a
result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree,
judgment or ruling issued by any court of competent jurisdiction or by any
governmental, regulatory or administrative agency or commission, or any statute,
rule, regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided
,
however
, that the
Company shall use commercially reasonable efforts to have any such order,
decree, judgment or ruling lifted or otherwise overturned as soon as
possible.
Section 16.
Plan of Right
Holders
. Every holder of a Right, by accepting the same, consents and
agrees with the Company and the Rights Agent and with every other holder of a
Right that:
(a)
prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Stock, Series A Preferred Stock
or Series B Preferred Stock;
(b)
after the Distribution Date, the Right Certificates are transferable only on the
registry books of the Rights Agent if surrendered at the principal office of the
Rights Agent, duly endorsed or accompanied by a proper instrument of transfer;
and
(c)
the Company and the Rights Agent may deem and treat the person in whose
name the Right Certificate (or, prior to the Distribution Date, the associated
Common Stock certificate, the associated Series A Preferred Stock
certificate or the associated Series B Preferred Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate,
the associated Common Stock certificate, the associated Series A Preferred
Stock certificate or the associated Series B Preferred Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary or be liable hereunder.
Section 17.
Right
Certificate Holder Not Deemed a Stockholder
. No holder, as such, of any
Right Certificate shall be entitled to vote, receive dividends or be deemed for
any
purpose the holder of the shares of Series C
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18.
Concerning the Rights
Agent
. The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder, and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Plan
and the exercise and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, or expense incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this Plan,
including the costs and expenses of defending against any claim of liability in
the premises.
The
Rights Agent shall be protected and shall incur no liability for, or in respect
of any action taken, suffered or omitted by it in connection with, its
administration of this Plan in reliance upon any Right Certificate or
certificate for the Series C Preferred Stock or Common Stock or
Series A Preferred Stock or Series B Preferred Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or
other paper or document believed
by it to be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper person or persons, or otherwise upon the advice of
counsel as set forth in Section 20 hereof.
In
no event shall the Rights Agent or its directors, officers, agents and employees
be liable for any special, indirect or consequential damages from any action
taken or omitted to be taken by it or them hereunder or in connection herewith
even if advised of the possibility of such damages. The
indemnification provisions contained in this Section 18 shall survive any
termination of services under this Plan, including resignation or removal of the
Rights Agent.
Section 19.
Merger or
Consolidation or Change of Name of Rights Agent
. Any corporation
into which the Rights Agent or any successor Rights Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a
party, or any corporation succeeding to the stock transfer or corporate trust
powers of the Rights Agent or any successor Rights Agent, shall be the successor
to the Rights Agent under this Plan without the execution or filing of any paper
or any further act on the part of any of the parties hereto;
provided
that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such
successor Rights Agent shall succeed to the agency created by this Plan, any of
the Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and, in case at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and, in all such cases, such Right Certificates shall have the full force
provided in the Right Certificates and in this Plan.
In
case at any time the name of the Rights Agent shall be changed and at such time
any of the Right Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been counter
signed, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and, in all such cases, such Right Certificates shall have the
full force provided in the Right Certificates and in this Plan.
Section 20.
Duties of Rights
Agent
. The Rights Agent undertakes the duties and obligations imposed by
this Plan upon the following terms and conditions, by all of which the Company
and the holders of Right Certificates, by their acceptance thereof, shall be
bound:
(a)
The Rights Agent may consult with legal counsel (who may be legal counsel for
the Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion.
(b)
Whenever in the performance of its duties under this Plan the Rights Agent shall
deem it necessary or desirable that any fact or matter (including, without
limitation, the identity of any Acquiring Person and the determination of
"current market price") be proved or established by the Company prior to taking
or suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any Authorized
Officer and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Plan in reliance upon such
certificate.
(c)
The Rights Agent shall be liable hereunder to the Company and any other Person
only for its own negligence, bad faith or willful misconduct.
(d)
The Rights Agent shall not be liable for or by reason of any of the statements
of fact or recitals contained in this Plan or in the Right Certificates (except
its countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the Company
only.
(e)
The Rights Agent shall not be under any responsibility in respect of the
validity of this Plan or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the validity or execution
of any Right Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Plan or in any Right Certificate; nor shall it be responsible for any
change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of the
Rights (including the manner, method or amount thereof) provided for in
Section 3, 11, 23 or 24 hereof, or the ascertaining of the existence of
facts that would require any such change or adjustment (except with respect to
the exercise of Rights evidenced by Right Certificates after actual notice that
such change or adjustment is required); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Series C Preferred Stock to be issued pursuant to this
Plan or any Right Certificate or as to whether any Series C Preferred Stock
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f)
The Company agrees that it will perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be required by the
Rights Agent for the carrying out or performing by the Rights Agent of the
provisions of this Plan.
(g)
The Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any Authorized Officer,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or for any delay
in acting while waiting for those instructions.
(h)
The Rights Agent and any stockholder, director, officer or employee of the
Rights Agent may buy, sell or deal in any of the Rights or other securities of
the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Plan. Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(i)
The Rights Agent may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either itself or by or through its
attorneys or agents, and the Rights Agent shall not be answerable or accountable
for any act, default, neglect or misconduct of any such attorneys or agents or
for any loss to the Company resulting from any such act, default, neglect or
misconduct, provided that reasonable care was exercised in the selection and
continued employment thereof.
(j) At
any time and from time to time after the Distribution Date, upon the request of
the Company, the Rights Agent shall deliver to the Company a list, as of the
most recent practicable date (or as of such earlier date as may be specified by
the Company), of the holders of record of the Rights.
Section 21.
Change of Rights
Agent
. The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Plan upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Stock,
Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock by registered or certified mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Stock, Series A Preferred
Stock, Series B Preferred Stock and Series C Preferred Stock by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (which holder
shall, with such notice, submit such holder's Right Certificate for inspection
by the Company), then the registered holder of any Right Certificate may apply
to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation or other entity organized and doing business under
the laws of the United States or of the State of New York (or of any other state
of the United States so long as such corporation or other entity is authorized
to do business as a banking institution in the State of New York), in good
standing, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the
time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock,
Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22.
Issuance of New Right
Certificates
. Notwithstanding any of the provisions of this Plan or of
the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by the Board of
Directors of the Company to reflect any adjustment or change in the Purchase
Price and the number or kind or class of shares or other securities or property
purchasable under the Right Certificates made in accordance with the provisions
of this Plan.
Section 23.
Redemption
. (a)
The Board of Directors of the Company may, at its option, at any time prior to
such time as any Person becomes an Acquiring Person, redeem all but not less
than all the then outstanding Rights at a redemption price of $.001 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "
Redemption Price
").
The redemption of the Rights by the Board of Directors of the Company may be
made effective at such time, on such basis and with such conditions as the Board
of Directors of the Company, in its sole discretion, may
establish. The Company may, at its option, pay the Redemption Price
in cash, shares of Common Stock (based on the current per share market price of
the Common Stock at the time of redemption as determined pursuant to
Section 11(d)(i) hereof) or any other form of consideration deemed
appropriate by the Board.
(b) Immediately
upon the action of the Board of Directors of the Company ordering the redemption
of the Rights pursuant to paragraph (a) of this Section 23, and without any
further action and without any notice, the right to exercise the Rights will
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. The Company shall promptly give public notice of
any such redemption;
provided
,
however
, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the Board of Directors
of the Company ordering the redemption of the Rights, the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common Stock, Series A Preferred Stock or Series B Preferred
Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24
hereof, and other than in connection with the purchase of Common Stock,
Series A Preferred Stock or Series B Preferred Stock prior to the
Distribution Date.
(c) In
the case of a redemption under Section 23(a) hereof, the Company may, at
its option, discharge all of its obligations with respect to the Rights by (i)
issuing a press release announcing the manner of redemption of the Rights and
(ii) mailing payment of the Redemption Price to the registered holders of the
Rights at their last addresses as they appear on the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent of the Common Stock, Series A Preferred Stock or
Series B Preferred Stock, and upon such action, all outstanding Right
Certificates shall be void without any further action by the
Company.
Section 24.
Exchange
. (a)
The Board of Directors of the Company may, at its option, at any time after any
Person becomes an Acquiring Person, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) hereof) for Common Stock at
an exchange ratio of one Common Share per Right, appropriately adjusted to
reflect any adjustment in the number
of Rights pursuant to
Section 11(i) (such exchange ratio being hereinafter referred to as the
"
Exchange
Ratio
"); provided that any Right that immediately prior to the
Distribution Date was evidenced by a certificate that also evidenced
Series B Preferred Stock may not be exchanged for Common Stock pursuant to
this Section 24 until such Right is transferred to a third party in a
Widely Dispersed Offering (as such term is defined in the Articles of Amendment
of the Series B Preferred Stock).
(b)
Immediately upon the action of the Board of Directors of the Company ordering
the exchange of any Rights pursuant to paragraph (a) of this Section 24 and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Common Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange;
provided
,
however
, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the exchange
of the Common Stock for Rights will be effected, and, in the event of any
partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected
pro
rata
based on the number of Rights (other than Rights which
have become void pursuant to the provisions of Section 11(a)(ii) hereof)
held by each holder of Rights.
(c)
In the event that there shall not be sufficient Common Stock issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated in accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional Common Stock for
issuance upon exchange of the Rights. In the event the Company shall, after good
faith effort, be unable to take all such action as may be necessary to authorize
such additional Common Stock, the Company shall substitute, for each Common
Share that would otherwise be issuable upon exchange of a
Right, a number of shares of Series C Preferred Stock or fraction thereof
such that the current per share market price of one share of Series C
Preferred Stock multiplied by such number or fraction is equal to the current
per share market price of one Common Share as of the date of issuance of such
shares of Series C Preferred Stock or fraction thereof.
(d)
The Company shall not be required to issue fractions of Common Stock or to
distribute certificates representing fractions of shares of Common
Stock. In lieu of such fractional Common Stock, the Company shall pay
to the registered holders of the Right Certificates with regard to which such
fractional Common Stock would otherwise be issuable an amount in cash equal to
the same fraction of the current market value of a whole Common Share. For the
purposes of this paragraph (d), the current market value of a whole Common Share
shall be the closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.
Section 25.
Notice of
Certain Events
. (a) In case the Company shall, at any time after the
Distribution Date, propose (i) to pay any dividend payable in stock of any class
to the holders of the Series C Preferred Stock or to make any other
distribution to the holders of the Series C Preferred Stock (other than a
regular quarterly cash dividend), (ii) to offer to the holders of the
Series C Preferred Stock rights or warrants to subscribe for or to purchase
any additional shares of Series C Preferred Stock or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of the Series C Preferred Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Series C Preferred Stock), (iv) to effect any consolidation or merger into
or with, or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to, any other
Person, (v) to effect the liquidation, dissolution or winding up of the Company,
or (vi) to declare or pay any dividend on the Common Stock payable in Common
Stock or to effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in Common
Stock), then, in each such case, the Company shall give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Stock, Series A Preferred Stock,
Series B Preferred Stock and/or Series C Preferred Stock, if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to the record date
for determining holders of the Series C Preferred Stock for purposes of
such action, and, in the case of any such other action, at least 10 days prior
to the date of the taking of such proposed action or the date of participation
therein by the holders of the Common Stock, Series A Preferred Stock,
Series B Preferred Stock and/or Series C Preferred Stock, whichever
shall be the earlier.
(b)
In case the event set forth in Section 11(a)(ii) hereof shall occur, then
the Company shall, as soon as practicable thereafter, give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice of the
occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii)
hereof.
Section 26.
Notices
.
Notices or demands authorized by this Plan to be given or made by the Rights
Agent or by the holder of any Right Certificate to or on the Com
pany shall be sufficiently given or made if sent by overnight
delivery service or first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Rights Agent) as follows:
|
5335
Meadows Road, Suite 201
Lake
Oswego, Oregon 97035
Attention:
General Counsel
|
Subject
to the provisions of Section 21 hereof, any notice or demand authorized by
this Plan to be given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by overnight delivery service or first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
|
Wells
Fargo Bank, National Association
Shareowner
Services
161
North Concord Exchange
South
St. Paul, MN 55075
Attn:
Account Manager
|
Notices
or demands authorized by this Plan to be given or made by the Company or the
Rights Agent to the holder of any Right Certificate shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed to such holder
at the address of such holder as shown on the registry books of the
Company.
Section 27.
Supplements and
Amendments
. The Company may from time to time supplement or
amend this Plan without the approval of any holders of Right Certificates in
order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
to shorten or lengthen any time period hereunder, or to amend or make any other
provisions with respect to the Rights which the Company may deem necessary or
desirable, any such supplement or amendment to be
evidenced
by a writing signed by the Company and the Rights Agent;
provided
,
however
, that, from
and after such time as any Person becomes an Acquiring Person and does not
become an Exempt Person prior to the Distribution Date, this Plan shall not be
amended in any manner which would adversely affect the interests of the holders
of Rights (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person).
Section 28.
Successors
. All
the covenants and provisions of this Plan by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section 29.
Benefits of this
Plan
. Nothing in this Plan shall be construed to give to any
Person other than the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Stock,
Series A Preferred Stock or Series B Preferred Stock) any legal or
equitable right, remedy or claim under this Plan; but this Plan shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Stock, Series A Preferred Stock or Series B Preferred
Stock).
Section 30.
Severability
. If
any term, provision, covenant or restriction of this Plan is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions of this Plan
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated.
Section 31.
Governing
Law
. This Plan and each Right Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware
and for all purposes shall be governed by and construed in accordance with the
laws of such state applicable to contracts to be made and performed entirely
within such state.
Section 32.
Counterparts
. This
Plan may be executed in any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument. A
signature to this Plan transmitted electronically shall have the same authority,
effect, and enforceability as an original signature.
Section 33.
Descriptive
Headings
. Descriptive headings of the several Sections of this
Plan are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
Section 34.
Determinations and Actions
by the Board
. For all purposes of this Plan, any calculation
of the number of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding Common
Stock of which any Person is the Beneficial Owner, will be made in accordance
with, as the Board of Directors deems to be applicable, the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange
Act or the provisions of Section 382. The Board of Directors of
the Company will have the exclusive power and authority to administer this Plan
and to exercise all rights and powers specifically granted to the Board of
Directors of the Company or to the Company, or as may be necessary or advisable
in the administration of this Plan, including without limitation the right and
power to (i) interpret the provisions of this Plan (including without
limitation Section 27, this Section 34 and other provisions hereof
relating to its powers or authority hereunder) and (ii) make all
determinations deemed necessary or advisable for the administration of this Plan
(including without limitation any determination contemplated by
Section 1(a) or any determination as to whether particular Rights shall
have become void). All such actions, calculations, interpretations
and determinations (including, for purposes of clause (y) below, any
omission with respect to any of the foregoing) which are done or made by the
Board of Directors of the Company in good faith will
(x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties and (y) not subject the Board
of Directors of the Company to any liability to any Person, including without
limitation the Rights Agent and the holders of the Rights.
Section
35.
Process to Seek
Exemption
. Any Person who desires to effect any acquisition of Common
Stock that would, if consummated, result in such Person (together with its
Affiliates and Associates) beneficially owning 4.9% or more of the
then-outstanding Common Stock (or, in the case of an Existing Holder, additional
shares of Common Stock representing 0.2% or more of the then-outstanding Common
Stock) (a "
Requesting
Person
") may, prior to the acquisition of the Common Stock and in
accordance with this Section 35, request that the Board grant an exemption with
respect to such acquisition under this Plan so that such acquisition would be
deemed to be an "Exempt Transaction" for purposes of this Plan (an "
Exemption Request
").
An Exemption Request shall be in proper form and shall be delivered by
registered mail, return receipt requested, to the Secretary of the Company at
the principal executive office of the Company. To be in proper form, an
Exemption Request shall set forth (i) the name and address of the Requesting
Person, (ii) the number and percentage of shares of Common Stock then
beneficially owned by the Requesting Person, together with all Affiliates and
Associates of the Requesting Person, and (iii) a reasonably detailed description
of the transaction or transactions by which the Requesting Person would propose
to acquire Beneficial Ownership of Common Stock aggregating 4.9% or more of the
then outstanding Common Stock (or, in the case of an Existing Holder, additional
shares of Common Stock representing 0.2% or more of the then-outstanding Common
Stock) and the maximum number and percentage of shares of Common Stock that the
Requesting Person proposes to acquire. The Board shall make a determination
whether to grant an exemption in response to an Exemption Request as promptly as
practicable (and, in any event, within ten Business Days) after receipt thereof;
provided, that the failure of the Board to make a determination within such
period shall be deemed to constitute the denial by the Board of the Exemption
Request. Any exemption granted hereunder may be granted in whole or in part, and
may be subject to limitations or conditions (including a requirement that the
Requesting Person agree that it will not acquire Beneficial Ownership of shares
of Common Stock in excess of the maximum number and percentage of shares
approved by the Board), in each case as and to the extent the Board shall
determine necessary or desirable.
Any
Exemption Request may be submitted on a confidential basis and, except to the
extent required by applicable law, the Company shall maintain the
confidentiality of such Exemption Request and the Board's determination with
respect thereto.
IN
WITNESS WHEREOF, the parties hereto have caused this Plan to be duly executed
and attested, all as of the day and year first above written.
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West
Coast Bancorp
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By
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Name:
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Title:
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COUNTERSIGNED
BY:
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Wells
Fargo Bank, National
Association
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Exhibit
A
FORM
OF
ARTICLES
OF AMENDMENT
TO
DESIGNATE THE TERMS OF
SERIES C
JUNIOR PARTICIPATING PREFERRED STOCK
OF
WEST
COAST BANCORP
Pursuant
to Section 60.131 of the Oregon Business Corporation Act
West
Coast Bancorp, a corporation organized and existing under laws of the State of
Oregon (the "Company"), in accordance with the provisions of Sections 60.004,
60.131, 60.134 and 60.301 of the Oregon Business Corporation Act, DOES HEREBY
CERTIFY:
The board
of directors of the Company (the "Board of Directors"), in accordance with the
Restated Articles of Incorporation and the Amended and Restated Bylaws of the
Company and applicable law, adopted the following resolution on October 22,
2009, creating a series of 2,500,000 shares of Preferred Stock of the Company
designated as "Series C Junior Participating Preferred Stock."
RESOLVED,
that pursuant to the provisions of the Restated Articles of Incorporation and
the Amended and Restated Bylaws of the Company and applicable law, a series of
Preferred Stock, no par value, of the Company be and hereby is created, and that
the designation and number of shares of such series, and the voting and other
powers, designations, preferences and relative, participating, optional or other
rights, and the qualifications, limitations and restrictions thereof, of the
shares of such series, are as follows:
Section 1.
Designation and
Amount
. The shares of such series shall be designated as "Series C
Junior Participating Preferred Stock" (the "Series C Preferred Stock") and
the number of shares constituting the Series C Preferred Stock shall be
2,500,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors;
provided
, that no
decrease shall reduce the number of shares of Series C Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Company convertible into Series C Preferred Stock.
Section 2.
Dividends and
Distributions
.
(A) Subject
to the rights of the holders of any shares of any series of Preferred Stock (or
any similar stock) ranking prior and superior to the Series C Preferred
Stock
with respect to dividends, the holders of shares of
Series C Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series C Preferred Stock, in an amount per share (rounded to the nearest
cent), subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions, declared on the Common Stock, no par value per share (the
"Common Stock"), of the Company since the immediately preceding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Series C Preferred Stock, other than, in each case, a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise). In the event the Company shall at any
time declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which holders of
shares of Series C Preferred Stock were entitled immediately prior to such
event under the preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(B) The
Company shall declare a dividend or distribution on the Series C Preferred
Stock as provided in paragraph (A) of this Section immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock).
(C) Dividends,
to the extent payable as provided in paragraphs (A) and (B) of this Section,
shall begin to accrue and be cumulative on outstanding shares of Series C
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date
of issue of such shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of
Series C Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series C Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such shares
shall be allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for the
determination of holders of shares of Series C Preferred Stock entitled
to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section 3.
Voting Rights
. The
holders of shares of Series C Preferred Stock shall have the following
voting rights:
(A) Subject
to the provision for adjustment hereinafter set forth, each share of
Series C Preferred Stock shall entitle the holder thereof to 100 votes on
all matters submitted to a vote of the stockholders of the Company. In the event
the Company shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series C Preferred
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except
as otherwise provided herein, in any other Articles of Amendment creating a
series of Preferred Stock or any similar stock, or by law, the holders of shares
of Series C Preferred Stock and the holders of shares of Common Stock and
any other capital stock of the Company having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of the
Company.
(C) Except
as set forth herein, or as otherwise provided by law, holders of Series C
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
(D) Reference
is made to that certain Tax Benefit Preservation Plan (the "Plan"), dated as of
October 23, 2009, between the Company and Wells Fargo Bank, National
Association, as rights agent. Notwithstanding anything in this
Section 3, each share of Series C Preferred Stock that was received by
the holder thereof as a result of the exercise of a Right (as defined in the
Plan) that immediately prior to the Distribution Date (as defined in the Plan)
was evidenced by a certificate that also evidenced the Company's Mandatorily
Convertible Cumulative Participating Preferred Stock, Series B (the
"Series B Preferred Stock") shall have no voting rights until transferred
to a third party in a Widely Dispersed Offering (as such term is defined in the
Articles of Amendment of the Series B Preferred Stock).
Section 4.
Certain
Restrictions
.
(A) Whenever
quarterly dividends or other dividends or distributions payable on the
Series C Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series C Preferred Stock outstanding shall
have been paid in full, the Company shall not:
(i) declare
or pay dividends, or make any other distributions, on any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series C Preferred Stock;
(ii)
declare or pay dividends, or make any other distributions, on any shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series C Preferred Stock, except
dividends paid ratably on the Series C Preferred Stock and all such parity
stock on which divi
dends are payable or in arrears in
proportion to the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem
or purchase or otherwise acquire for consideration shares of any stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series C Preferred Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such junior stock in
exchange for shares of any stock of the Company ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the Series C
Preferred Stock; or
(iv) redeem
or purchase or otherwise acquire for consideration any shares of Series C
Preferred Stock, or any shares of stock ranking on a parity with the
Series C Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The
Company shall not permit any subsidiary of the Company to purchase or otherwise
acquire for consideration any shares of stock of the Company unless the Company
could, under paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.
Section 5.
Reacquired Shares
.
Any shares of Series C Preferred Stock purchased or otherwise acquired by
the Company in any manner whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be reissued as
part of a new series of Preferred Stock subject to the conditions and
restrictions on issuance set forth herein, in the Restated Articles of
Incorporation, or in any other Articles of Amendment creating a series of
Preferred Stock or any similar stock or as otherwise required by
law.
Section 6.
Liquidation, Dissolution or
Winding Up
. Upon any liquidation, dissolution or winding up of the
Company, no distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series C Preferred Stock unless, prior thereto, the
holders of shares of Series C Preferred Stock shall have received $100 per
share, plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, provided that the
holders of shares of Series C Preferred Stock shall be entitled to receive
an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be distributed
per share to holders of shares of Common Stock, or (2) to the holders of shares
of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series C Preferred Stock, except
distributions made ratably on the Series C Preferred Stock and all such
parity stock in proportion to the total amounts to which the holders of all such
shares are entitled upon such liquidation, dissolution or winding up. In the
event the Company shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of
Series C Preferred Stock were entitled immediately prior to such event
under the proviso in clause (1) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7.
Consolidation, Merger,
etc.
In case the Company shall enter into any consolidation,
merger, combination, conversion, share exchange or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock, a
member's interest, a partnership interest, a beneficial interest in a trust or
other owner's interest, or securities, cash and/or any other property, then in
any such case each share of Series C Preferred Stock shall at the same time
be similarly exchanged or changed into an amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the aggregate
amount of stock, a member's interest, a partnership interest, a beneficial
interest in a trust or other owner's interest, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged. In the event the Company shall at
any time declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of
Series C Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 8.
No Redemption
. The
shares of Series C Preferred Stock shall not be redeemable.
Section 9.
Rank
. The
Series C Preferred Stock shall rank, with respect to the payment of
dividends and the distribution of assets, junior to all series of any other
class of the Company's Preferred Stock.
Section 10.
Amendment
. The
Restated Articles of Incorporation of the Company shall not be amended in any
manner which would materially alter or change the powers, preferences or special
rights of the Series C Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series C Preferred Stock, voting together as a single
class.
Exhibit
B
Form of
Right Certificate
Certificate
No. R-
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____
Rights
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NOT
EXERCISABLE AFTER OCTOBER 23, 2012 OR EARLIER
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IF
REDEMPTION OR EXCHANGE OCCURS OR AS OTHER-
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WISE
SPECIFIED IN THE AGREEMENT. THE RIGHTS ARE
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SUBJECT
TO REDEMPTION AT $.001 PER RIGHT AND TO EX-
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CHANGE
ON THE TERMS SET FORTH IN THE
AGREEMENT.
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Right
Certificate
WEST
COAST BANCORP
This certifies that ___________, or registered assigns, is the registered owner
of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Plan, dated as
of October 23, 2009 (the "Plan"), between West Coast Bancorp, an Oregon
corporation (the "Company"), and Wells Fargo Bank, National Association (the
"Rights Agent"), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Plan) and prior to 5:00 P.M., New York City
time, on October 25, 2012 (or earlier as specified in the Plan) at the principal
office of the Rights Agent, or at the office of its successor as Rights Agent,
one one-hundredth of a fully paid non-assessable share of Series C Junior
Participating Preferred Stock, par value $0.001 per share, of the Company (the
"Preferred Shares"), at a purchase price of $30.00 per one one-hundredth of a
Preferred Share (the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of one
one-hundredths of a Preferred Share which may be purchased upon exercise hereof)
set forth above, and the Purchase Price set forth above, are the number and
Purchase Price as of October 23, 2009, based on the Preferred Shares as
constituted at such date. As provided in the Plan, the Purchase Price and the
number of one one-hundredths of a Preferred Share which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
This Right Certificate is subject to all of the terms, provisions and conditions
of the Plan, which terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which Plan reference is hereby
made for a full description of the rights, limitations of rights, obligations,
duties and immunities hereunder of the Rights Agent, the Company and the holders
of the Right Certificates. Copies of the Plan are on file at the principal
executive offices of the Company and the offices of the Rights
Agent.
This Right Certificate, with or without other Right Certificates, upon surrender
at the principal office of the Rights Agent, may be exchanged for another Right
Certificate or Right
Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Plan, the Rights evidenced by this Right
Certificate (i) may be redeemed by the Company at a redemption price of $.001
per Right or (ii) may be exchanged in whole or in part for Preferred Shares or
shares of the Company's Common Stock, no par value per share.
No fractional Preferred Shares will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions which are integral multiples of
one one-hundredth of a Preferred Share, which may, at the election of the
Company, be evidenced by depositary receipts), but, in lieu thereof, a cash
payment will be made, as provided in the Plan.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Plan or herein be construed
to confer upon the holder hereof, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Plan), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Right Certificate shall have been exercised as provided in the
Plan.
This Right Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned manually or by facsimile by the Rights
Agent.
WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal. Dated as of ____, ___.
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WEST
COAST BANCORP
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By
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Name:
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Title:
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COUNTERSIGNED
BY:
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WELLS
FARGO BANK, NATIONAL ASSOCIATION
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By
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Name:
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Title:
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Form of Reverse Side of Right Certificate
FORM OF
ASSIGNMENT
(To be
executed by the registered holder if such
holder
desires to transfer the Right Certificate.)
FOR VALUE
RECEIVED
hereby sells, assigns and
transfers
unto
(Please
print name and address of transferee)
this
Right Certificate, together with all right, title and interest therein, and does
hereby
irrevocably
constitute and appoint
Attorney, to transfer the within
Right
Certificate on the books of the within-named Company, with full power of
substitution.
Dated:
___________________
Signature
Medallion Guaranteed:
All
Guarantees must be made by a financial institution (such as a bank or broker)
which is a participant in the Securities Transfer Agents Medallion Program
("STAMP"), the New York Stock Exchange, Inc. Medallion Signature Program
("MSP"), or the Stock Exchanges Medallion Program ("SEMP") and must not be
dated. Guarantees by a notary public are not acceptable.
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Plan).
Form of
Reverse Side of Right Certificate – continued
FORM
OF ELECTION TO PURCHASE
(To be
executed if holder desires to exercise
Rights
represented by the Right Certificate.)
To: WEST
COAST BANCORP
The undersigned hereby irrevocably elects to exercise
_________________ Rights represented by this Right Certificate to purchase
the Preferred Shares issuable upon the exercise of such Rights and requests that
certificates for such Preferred Shares be issued in the name of:
Please
insert social security
or
other identifying number
|
(Please
print name and address)
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If such
number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please
insert social security
or
other identifying number
|
(Please
print name and address)
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Dated:
Signature
Medallion Guaranteed:
All Guarantees must be made by a financial institution (such as a bank or
broker) which is a participant in the Securities Transfer Agents Medallion
Program ("STAMP"), the NASDAQ, Inc. Medallion Signature Program ("MSP"), or the
Stock Exchange
s Medallion Program ("SEMP") and must not be
dated. Guarantees by a notary public are not acceptable.
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Plan).
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase, as the
case may be, must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
In the event the certification set forth above in the Form of Assignment or the
Form of Election to Purchase, as the case may be, is not completed, the Company
and the Rights Agent will deem the beneficial owner of the Rights evidenced by
this Right Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Plan) and such Assignment or Election to Purchase
will not be honored.
Exhibit
C
SUMMARY
OF RIGHTS TO PURCHASE
SERIES C
PREFERRED STOCK
Introduction
Our
Company, West Coast Bancorp, an Oregon corporation, has entered into a Tax
Benefit Preservation Plan with Wells Fargo Bank, National Association, as Rights
Agent, dated as of October [●], 2009 (the "Plan"). Our Board of
Directors (the "Board") approved the Plan in an effort to deter acquisitions of
our common stock that would potentially limit our ability to use our built in
losses and any resulting net loss carryforwards to reduce potential future
federal income tax obligations.
Under the
Plan, from and after the record date of October [●], 2009, each share of
our common stock will carry with it one preferred share purchase right (a
"Right"), each share of the Company's Mandatorily Convertible Cumulative
Participating Preferred Stock, Series A ("Series A Preferred Stock"),
will carry with it 50 Rights (subject to adjustment) and each share of the
Company's Mandatorily Convertible Cumulative Participating Preferred Stock,
Series B ("Series B Preferred Stock"), will carry with it
50 Rights (subject to adjustment), until the Distribution Date or earlier
expiration of the Rights, as described below. In general terms, the
Rights will work to impose a significant penalty upon any person or group which
acquires 4.9% or more of our outstanding common stock after October [●],
2009, without the approval of our Board. Stockholders who own 4.9% or more of
the outstanding common stock as of the close of business on October [●],
2009, will not trigger the Rights so long as they do not (i) acquire
additional shares of common stock representing 0.2% or more of the shares of
common stock then outstanding or (ii) fall under 4.9% ownership of common
stock and then reacquire shares that in the aggregate equal 4.9% or more of the
common stock. The Board may, in its sole discretion, exempt any person or group
for purposes of the Plan if it determines the acquisition by such person or
group will not jeopardize tax benefits or is otherwise in the Company's best
interests.
For those
interested in the specific terms of the Plan, we provide the following summary
description. Please note, however, that this description is only a
summary, and is not complete, and should be read together with the entire Plan,
which has been filed with the Securities and Exchange Commission as an exhibit
to our Current Report on Form 8-K, dated October [●],
2009. A copy of the agreement is available free of charge from our
Company.
The Rights
. From
the record date of October [●], 2009, until the Distribution Date or
earlier expiration of the Rights, the Rights will trade with, and will be
inseparable from, the common stock, the Series A Preferred Stock and the
Series B Preferred Stock, as applicable. New Rights will also
accompany any new shares of Common Stock, Series A Preferred Stock or
Series B Preferred Stock that we issue after October [●], 2009, until
the Distribution Date or earlier expiration of the Rights.
Exercise
Price.
Each Right will allow its holder to purchase from our
Company one one-hundredth of a share of Series C Junior Participating
Preferred Stock, no par value, of the Company ("Series C Preferred Stock")
for $30.00, subject to adjustment (the "Exercise Price"), once the Rights become
exercisable. This portion of a share of Series C Preferred Stock
will give the stockholder approximately the same dividend, voting, and
liquidation rights as would one share of common stock (subject to certain
exceptions described in the Plan with respect to Rights that immediately prior
to the Distribution Date were evidenced by a certificate that also evidenced
Series B Preferred Stock). Prior to exercise, the Right does not
give its holder any dividend, voting, or liquidation rights.
Exercisability.
The
Rights will not be exercisable until 10 days after the public announcement
that a person or group has become an "Acquiring Person" by obtaining beneficial
ownership, after October [●], 2009, of 4.9% or more of our outstanding
common stock (or if already the beneficial owner of at least 4.9% of our
outstanding common stock, by acquiring additional shares of our common stock
representing 0.2% or more of the shares of common stock then outstanding),
unless exempted by the Board.
We refer
to the date when the Rights become exercisable as the "Distribution Date." Until
that date or earlier expiration of the Rights, the common stock certificates,
Series A Preferred Stock certificates and Series B Preferred Stock
certificates will also evidence the Rights, and any transfer of shares of common
stock or Series A Preferred Stock or Series B Preferred Stock will
constitute a transfer of Rights. After that date, the Rights will separate from
the common stock, Series A Preferred Stock and Series B Preferred
Stock, and be evidenced by book-entry credits or by Rights certificates that we
will mail to all eligible holders of common stock, Series A Preferred Stock
and Series B Preferred Stock. Any Rights held by an Acquiring Person are
void and may not be exercised.
Consequences of a Person or Group
Becoming an Acquiring Person.
If a person or group becomes an
Acquiring Person, all holders of Rights except the Acquiring Person may, for
payment of the Exercise Price, purchase shares of our common stock with a market
value of twice the Exercise Price, based on the market price of the common stock
as of the acquisition that resulted in such person or group becoming an
Acquiring Person (subject to certain exceptions described in the Plan with
respect to Rights that immediately prior to the Distribution Date were evidenced
by a certificate that also evidenced Series B Preferred
Stock).
Exchange.
After a
person or group becomes an Acquiring Person, our Board may extinguish the Rights
by exchanging one share of common stock or an equivalent security for each
Right, other than Rights held by the Acquiring Person or an Affiliate or an
Associate of any Acquiring Person (subject to certain exceptions described in
the Plan with respect to Rights that immediately prior to the Distribution Date
were evidenced by a certificate that also evidenced Series B Preferred
Stock).
Series C
Preferred Stock Provisions
Each one
one-hundredth of a share of Series C Preferred Stock, if
issued:
will not
be redeemable.
will
entitle holders to dividends equal to the dividends, if any, paid on one share
of common stock.
will
entitle holders upon liquidation either to receive $1 per share or an amount
equal to the payment made on one share of common stock, whichever is
greater.
will have
the same voting power as one share of common stock (subject to certain
exceptions described in the Plan with respect to Rights that immediately prior
to the Distribution Date were evidenced by a certificate that also evidenced
Series B Preferred Stock).
will
entitle holders to a per share payment equal to the payment made on one share of
common stock, if shares of our common stock are exchanged via merger,
consolidation, or a similar transaction.
The value
of one one-hundredth interest in a share of Series C Preferred
Stock is expected to approximate the value of one share of common
stock.
Expiration.
The
Rights will expire on the earliest of (i) October [●], 2012,
(ii) the time at which the Rights are redeemed, (iii) the time at
which the Rights are exchanged, (iv) the repeal of Section 382 or any
successor statute, or any other change, if the Board determines that this Plan
is no longer necessary for the preservation of tax benefits,
(v) October
[●], 2010 if approval of the Plan by
our stockholders has not been obtained prior to such date, or (vi) a
determination by the Board, prior to the time any person or group becomes an
Acquiring Person, that the Plan and the Rights are no longer necessary for the
preservation or existence of income tax benefits or are no longer in the best
interests of the Company and its stockholders.
Redemption.
Our
Board may redeem the Rights for $.001 per Right at any time before any person or
group becomes an Acquiring Person. If our Board redeems any Rights,
it must redeem all of the Rights. Once the Rights are redeemed, the
only right of the holders of Rights will be to receive the redemption price of
$.001 per Right. The redemption price will be adjusted if we have a
stock split or stock dividends of our common stock.
Anti-Dilution
Provisions.
Our Board may adjust the Exercise Price, the
number of shares of Series C Preferred Stock issuable and the number of
outstanding Rights to prevent dilution that may occur from a stock dividend, a
stock split, or a reclassification of the Series C Preferred Stock or
common stock.
Amendments.
The
terms of the Plan may be amended by our Board without the consent of the holders
of the Rights. After a person or group becomes an Acquiring Person
and does not become an exempt person prior to the Distribution Date, our Board
may not amend the agreement in a way that adversely affects holders of the
Rights (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person).
Appendix
B
AMENDMENT
NO. 5
TO
WEST COAST BANCORP
2002
STOCK INCENTIVE PLAN
This
AMENDMENT NO. 5 (the "Amendment") to the WEST COAST BANCORP 2002 STOCK
INCENTIVE PLAN (the "Plan") is adopted effective February 23, 2010, by the
Board of Directors of West Coast Bancorp, an Oregon corporation (the "Company"),
subject to approval by the Company's shareholders at the Company's 2010 annual
meeting of shareholders.
1. Pursuant
to the provisions of Section 10 of the Plan, Section 3 of the Plan is
amended by replacing its first two sentences with the following:
"The
maximum number of shares of Common Stock that may be delivered to participants
and their beneficiaries under the Plan shall be 4,140,000. No more
than 2,488,000 shares may be issued as Restricted Stock or be based upon the
Common Stock pursuant to Section 8 of the Plan.
2. Except
as amended hereby, all the terms and conditions of the Plan will remain in full
force and effect.
WEST
COAST BANCORP
2002
STOCK INCENTIVE PLAN
(As
adopted by the Board of Directors February 23, 2010,
subject
to shareholder approval)
SECTION
1. Purpose;
Definitions
The
purpose of the Plan is to give the Company a competitive advantage in
attracting, retaining and motivating officers, employees, directors and/or
consultants and to provide the Company and its Subsidiaries and Affiliates with
a stock plan providing incentives for future performance of services directly
linked to the profitability of the Company's businesses and increases in Company
shareholder value.
For
purposes of the Plan, the following terms are defined as set forth
below:
(a)
"Affiliate"
means a
corporation or other entity controlled by, controlling or under common control
with the Company.
(b)
"Award"
means a Stock Option,
Restricted Stock, or other stock-based award.
(c)
"Board"
means the Board of
Directors of the Company.
(d)
"Cause"
means, unless
otherwise provided by the Committee, (1) "Cause" as defined in any
Individual Agreement to which the participant is a party, or (2) if there
is no such Individual Agreement or if it does not define
Cause: (A) conviction of the participant for committing a felony
under federal law or the law of the state in which such action occurred,
(B) willful and deliberate failure on the part of the participant to
perform his or her employment duties in any material respect, or (C) prior
to a Change in Control, such other events as shall be determined by the
Committee.
(e)
"Change in Control"
and
"Change in Control Price"
have the meanings set forth in Sections 9(b) and (c),
respectively.
(f)
"Code"
means the Internal
Revenue Code of 1986, as amended from time to time, and any successor
thereto.
(g)
"Commission"
means the
Securities and Exchange Commission or any successor agency.
(h)
"Committee"
means the
Committee referred to in Section 2.
(i)
"Common Stock"
means common
stock, no par value per share, of the Company.
(j)
"Company"
means West Coast
Bancorp, an Oregon corporation.
(k)
"Covered Employee"
means a
participant designated prior to the grant of Restricted Stock by the Committee
who is or may be a "covered employee" within the meaning of
Section 162(m)(3) of the Code in the year in which the Company is expected
to be entitled to a federal income tax deduction with respect to the
Award.
(l)
"Disability"
means, unless
otherwise provided by the Committee, (1) "Disability" as defined in any
Individual Agreement to which the participant is a party, or (2) if there
is no such Individual Agreement or it does not define "Disability," permanent
and total disability as determined under the Company's Long-Term Disability Plan
applicable to the participant.
(m)
"Eligible Individuals"
mean
directors, officers, employees and consultants of the Company or any of its
Subsidiaries or Affiliates, and prospective employees and consultants who have
accepted offers of employment or consultancy from the Company or its
Subsidiaries or Affiliates, who are or will be responsible for or contribute to
the management, growth or profitability of the business of the Company, or its
Subsidiaries or Affiliates.
(n)
"Exchange Act"
means the
Securities Exchange Act of 1934, as amended from time to time, and any successor
thereto.
(o)
"Fair Market Value"
means,
except as otherwise provided by the Committee, as of any given date, the closing
reported sales price on such date (or, if there are no reported sales on such
date, on the last date prior to such date on which there were sales) of the
Common Stock on the New York Stock Exchange Composite Tape or, if not listed on
such exchange, on any other national securities exchange on which the Common
Stock is listed or on NASDAQ. If there is no regular public trading
market for such Common Stock, the Fair Market Value of the Common Stock shall be
determined by the Committee in good faith.
(p)
"Incentive Stock Option"
means any Stock Option designated as, and qualified as, an "incentive stock
option" within the meaning of Section 422 of the Code.
(q)
"Individual Agreement"
means
an employment, consulting or similar agreement between a participant and the
Company or one of its Subsidiaries or Affiliates, and, after a Change in
Control, a change in control or salary continuation agreement between a
participant and the Company or one of its Subsidiaries or
Affiliates. If a participant is party to both an employment agreement
and a change in control or salary continuation agreement, the employment
agreement shall be the relevant "Individual Agreement" prior to a Change in
Control, and, the change in control or salary continuation agreement shall be
the relevant "Individual Agreement" after a Change in Control.
(r)
"NonQualified Stock Option"
means any Stock Option that is not an Incentive Stock Option.
(s)
"Qualified Performance-Based
Award"
means an Award of Restricted Stock designated as such by the
Committee at the time of grant, based upon a determination that (i) the
recipient is or may be a "covered employee" within the meaning of
Section 162(m)(3) of the Code in the year in which the Company would expect
to be able to claim a tax deduction with respect to such Restricted Stock, and
(ii) the Committee wishes such Award to qualify for the Section 162(m)
Exemption.
(t)
"Performance Goals"
means the
performance goals established by the Committee in connection with the grant of
Restricted Stock. In the case of Qualified Performance-Based Awards,
(i) such goals shall be based on the attainment of specified levels of one
or more of the following measures: stock price, earnings, earnings
per share, return on equity, return on assets, asset quality, net interest
margin, loan portfolio growth, efficiency ratio, deposit portfolio growth, and
liquidity, and (ii) such Performance Goals shall be set by the Committee
within the time period prescribed by Section 162(m) of the Code and related
regulations.
(u)
"Plan"
means the West Coast
Bancorp 2002 Stock Incentive Plan, as set forth herein and as hereinafter
amended from time to time.
(v)
"Restricted Stock"
means an
Award granted under Section 6.
(w)
"Restricted Stock Agreement"
has the meaning set forth in Section 6(c)(vi) of the Plan.
(x)
"Retirement"
means, except as
otherwise provided by the Committee, retirement from active employment with the
Company, a Subsidiary or Affiliate at or after the attainment of age 55 and
with five years or more of employment service with the Company, a Subsidiary or
Affiliate.
(y)
"Rule 16b-3"
means
Rule 16b-3, as promulgated by the Commission under Section 16(b) of
the Exchange Act, as amended from time to time.
(z)
"Section 162(m)
Exemption"
means the exemption from the limitation on deductibility
imposed by Section 162(m) of the Code that is set forth in
Section 162(m)(4)(C) of the Code.
(aa)
"Stock Option"
means an Award
granted under Section 5.
(bb)
"Subsidiary"
means any
corporation, partnership, joint venture or other entity during any period in
which at least a 50% voting or profits interest is owned, directly or
indirectly, by the Company or any successor to the Company.
(cc)
"Termination of Employment"
means the termination of the participant's employment with, or performance of
services for, the Company and any of its Subsidiaries or
Affiliates. A participant employed by, or performing services for, a
Subsidiary or an Affiliate shall also be deemed to incur a Termination of
Employment if the Subsidiary or Affiliate ceases to be such a Subsidiary or an
Affiliate, as the case may be, and the participant does not immediately
thereafter become an employee of, or service-provider for, the Company or
another Subsidiary or Affiliate. Temporary absences from employment
because of illness, vacation or leave of absence and transfers among the Company
and its Subsidiaries and Affiliates shall not be considered Terminations of
Employment.
In
addition, certain other terms used herein have definitions given to them in the
first place in which they are used.
SECTION
2. Administration
The Plan
shall be administered by the Board directly, or if the Board elects, by the
Compensation and Personnel Committee or such other committee of the Board as the
Board may from time to time designate, which committee shall be composed of not
less than two directors, and shall be appointed by and serve at the pleasure of
the Board. Notwithstanding the foregoing or any other provision of
the Plan to the contrary, all Performance Goals will be established and
administered and all Qualified Performance-Board Awards will be granted to any
"covered employee" within the meaning of Section 162(m)(3) of the Code,
only by either (a) the Board as a whole in a proceeding in which all
members of the Board who are or may be "covered employees" recuse themselves
from consideration and approval of such goals or Awards, or (b) a duly
authorized committee consisting of two or more "outside directors" as that term
is defined in Section 162(m) of the Code. All references in the
Plan to the "Committee" refer to the Board as a whole, unless a separate
committee has been designated or authorized consistent with the
foregoing.
The
Committee shall have plenary authority to grant Awards pursuant to the terms of
the Plan to Eligible Individuals.
Among
other things, the Committee shall have the authority, subject to the terms of
the Plan:
(a) To
select the Eligible Individuals to whom Awards may from time to time be
granted;
(b) To
determine whether and to what extent Incentive Stock Options, NonQualified Stock
Options and Restricted Stock or any combination thereof are to be granted
hereunder;
(c) To
determine the number of shares of Common Stock to be covered by each Award
granted hereunder;
(d) To
determine the terms and conditions of any Award granted hereunder (including,
but not limited to, the option price (subject to Section 5(a)), any vesting
condition, restriction or limitation (which may be related to the performance of
the participant, the Company or any Subsidiary or Affiliate) and any vesting
acceleration or forfeiture waiver regarding any Award and the shares of Common
Stock relating thereto, based on such factors as the Committee shall
determine;
(e) To
modify, amend or adjust the terms and conditions of any Award (subject to
Sections 5(a) and 5(b)), at any time or from time to time, including but not
limited to Performance Goals; provided, however, that the Committee may not
adjust upwards the amount payable with respect to any Qualified
Performance-Based Award;
(f)
To determine to what extent and under what circumstances Common
Stock and other amounts payable with respect to an Award shall be deferred;
and
(g) To
determine under what circumstances an Award may be settled in cash or Common
Stock under Section 5(d).
The
Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any agreement relating thereto)
and to otherwise supervise the administration of the Plan.
The
Committee may act only by a majority of its members then in office, except that
the Committee may, except to the extent prohibited by applicable law or the
applicable rules of a stock exchange, allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers to any person or persons
selected by it. Any such allocation or delegation may be revoked by the
Committee at any time.
Any
determination made by the Committee or pursuant to delegated authority pursuant
to the provisions of the Plan with respect to any Award shall be made in the
sole discretion of the Committee or such delegate at the time of the grant of
the Award or, unless in contravention of any express term of the Plan, at any
time thereafter. All decisions made by the Committee or any
appropriately delegated officer pursuant to the provisions of the Plan shall be
final and binding on all persons, including the Company and Plan
participants.
Any
authority granted to the Committee may also be exercised by the full Board,
except to the extent that the grant or exercise of such authority would cause
any Award or transaction to become subject to (or lose an exemption under) the
short-swing profit recovery provisions of Section 16 of the Exchange Act or
cause an Award designated as a Qualified Performance-Based Award not to qualify
for, or to cease to qualify for, the Section 162(m)
Exemption. To the extent that any permitted action taken by the Board
conflicts with action taken by the Committee, the Board action shall
control.
Notwithstanding
the foregoing, except in connection with a corporate transaction involving the
Company (including, without limitation, any stock dividend, stock split,
extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, or exchange of shares), the
terms of outstanding Stock Options and stock appreciation rights may not be
amended to reduce the exercise price of the Stock Options or stock appreciation
rights and outstanding Stock Options or stock appreciation rights may not be
cancelled in exchange for cash, Stock Options, stock appreciation rights or
other Awards with an exercise price that is less than the exercise price of the
cancelled Stock Options or stock appreciation rights.
SECTION
3. Common Stock Subject to Plan
The
maximum number of shares of Common Stock that may be delivered to participants
and their beneficiaries under the Plan shall be 4,140,000. No more
than 2,488,000 shares may be issued as Restricted Stock or be based upon the
Common Stock pursuant to Section 8 of the Plan. The maximum
aggregate number of shares of Common Stock that may be issued pursuant to
Incentive Stock Options is 1,800,000. No participant may be granted
Stock Options covering in excess of 300,000 shares of Common Stock in any fiscal
year of the Company. Shares subject to an Award under the Plan may be
authorized and unissued shares. No further awards will be granted
under the Company's 1999 Stock Option Plan, 2000 Restricted Stock Plan and
Amended and Restated 1995 Director Stock Option Plan.
If any
Award is forfeited, or if any Stock Option terminates, expires or lapses without
being exercised, the shares of Common Stock subject to such Awards shall again
be available for distribution in connection with Awards under the
Plan.
In the
event of a stock split (including a reverse stock split), a dividend or
distribution paid in Common Stock, or a recapitalization of or affecting Common
Stock, the aggregate number and kind of shares reserved for issuance under the
Plan, the maximum limitation upon the number of shares that may be issued as
Restricted Stock or subject to Stock Options to be granted to a single
participant in any fiscal year under the Plan, the number, kind, and option
price per share subject to each outstanding Stock Option, and the number and
kind of shares subject to other Awards granted under the Plan, will
automatically be adjusted proportionately, or substituted, to reflect the effect
of such stock split, distribution paid in Common Stock, or
recapitalization.
In the
event of any merger or consolidation, separation (including a spin off), a
reorganization (whether or not such reorganization comes within the definition
of such term in Section 368 of the Code), any partial or complete
liquidation, or any other change in corporate capitalization not specifically
addressed above, the Committee or Board may make such adjustments or
substitution in the aggregate number and kind of shares reserved for issuance
under the Plan, the maximum limitation upon the number of shares that may be
issued as Restricted Stock or subject to Stock Options to be granted to a single
participant under the Plan, in the number, kind, and option price per share
subject to outstanding Stock Options, in the number and kind of shares subject
to other outstanding Awards under the Plan and/or such other equitable
adjustments or substitutions as it may determine to be appropriate in its sole
discretion.
Notwithstanding
the foregoing, the number of shares subject to any Award shall always be a whole
number which shall be obtained by rounding all calculations up to the nearest
whole share.
SECTION
4. Eligibility
Awards
may be granted under the Plan to Eligible Individuals.
SECTION
5. Stock Options
Stock
Options may be granted alone or in addition to other Awards granted under the
Plan and may be of two types: Incentive Stock Options and
NonQualified Stock Options. Any Stock Option granted under the Plan
shall be in such form as the Committee may from time to time
approve.
The
Committee shall have the authority to grant any optionee Incentive Stock
Options, NonQualified Stock Options or both types of Stock Options;
provided, however,
that
grants hereunder are subject to the aggregate limit on grants to individual
participants set forth in Section 3. Incentive Stock Options may
be granted only to employees of the Company and its subsidiaries or parent
corporation (within the meaning of Section 424(f) of the
Code). To the extent that any Stock Option is not designated as an
Incentive Stock Option or even if so designated does not qualify as an Incentive
Stock Option on or subsequent to its grant date, it shall constitute a
NonQualified Stock Option.
Stock
Options shall be evidenced by option agreements, the terms and provisions of
which may differ. An option agreement shall indicate on its face
whether it is intended to be an agreement for an Incentive Stock Option or a
NonQualified Stock Option. The grant of a Stock Option shall occur on
the date the Committee by resolution selects an Eligible Individual to receive a
grant of a Stock Option, determines the number of shares of Common Stock to be
subject to such Stock Option to be granted to such Eligible Individual and
specifies the terms and provisions of the Stock Option. The Company
shall notify an Eligible Individual of any grant of a Stock Option, and a
written option agreement or agreements shall be duly executed and delivered by
the Company to the participant. Such agreement or agreements shall
become effective upon execution by the Company and the participant.
Stock
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions as the
Committee shall deem desirable:
Option Price
. The
option price per share of Common Stock purchasable under a Stock Option shall be
determined by the Committee and set forth in the option agreement, and shall not
be less than the Fair Market Value of the Common Stock subject to the Stock
Option on the date of grant.
(b)
Option Term
. The
term of each Stock Option shall be fixed by the Committee, but no Stock Option
shall be exercisable more than 10 years after the date the Stock Option is
granted.
(c)
Exercisability
. Except
as otherwise provided herein, Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee. If the Committee provides that any Stock Option is
exercisable only in installments, the Committee may at any time waive such
installment exercise provisions, in whole or in part, based on such factors as
the Committee may determine. In addition, the Committee may at any
time accelerate the exercisability of any Stock Option.
(d)
Method of
Exercise
. Subject to the provisions of this Section 5,
Stock Options may be exercised, in whole or in part, at any time during the
option term by giving written notice of exercise to the Company specifying the
number of shares of Common Stock subject to the Stock Option to be
purchased.
Such
notice shall be accompanied by payment in full of the purchase price by
certified or bank check or such other instrument as the Company may
accept. If approved by the Committee, payment, in full or in part,
may also be made in the form of unrestricted Common Stock (by delivery of such
shares or by attestation) already owned by the optionee of the same class as the
Common Stock subject to the Stock Option (based on the Fair Market Value of the
Common Stock on the date the Stock Option is exercised);
provided, however,
that, in
the case of an Incentive Stock Option, the right to make a payment in the form
of already owned shares of Common Stock of the same class as the Common Stock
subject to the Stock Option may be authorized only at the time the Stock Option
is granted.
If
approved by the Committee, payment in full or in part may also be made by
delivering a properly executed exercise notice to the Company, together with a
copy of irrevocable instructions to a broker to deliver promptly to the Company
the amount of sale or loan proceeds necessary to pay the purchase price, and, if
requested, by the amount of any federal, state, local or foreign withholding
taxes. To facilitate the foregoing, the Company may enter into
agreements for coordinated procedures with one or more brokerage
firms.
In
addition, if approved by the Committee, payment in full or in part may also be
made by instructing the Company to withhold a number of such shares having a
Fair Market Value on the date of exercise equal to the aggregate exercise price
of such Stock Option. The Committee may also provide for Company
loans to be made for purposes of the exercise of Stock Options.
No shares
of Common Stock shall be issued until full payment therefor has been
made. Except as otherwise provided in Section 5(o) below, an
optionee shall have all of the rights of a shareholder of the Company holding
the class or series of Common Stock that is subject to such Stock Option
(including, if applicable, the right to vote the shares and the right to receive
dividends), when the optionee has given written notice of exercise, has paid in
full for such shares and, if requested, has given the representation described
in Section 12(a).
(e)
Nontransferability of Stock
Options
. No Stock Option shall be transferable by the optionee
other than (i) by will or by the laws of descent and distribution; or
(ii) in the case of a NonQualified Stock Option, as otherwise expressly
permitted by the Committee including, if so permitted, pursuant to a transfer to
such optionee's immediate family (as defined by the Committee), whether directly
or indirectly or by means of a trust or partnership or otherwise. All
Stock Options shall be exercisable, subject to the terms of this Plan, only by
the optionee, the guardian or legal representative of the optionee, or any
person to whom such option is transferred pursuant to this paragraph,
it being understood that the term "holder" and "optionee" include such guardian,
legal representative and other transferee.
(f)
Termination
by Reason of Death
. Unless otherwise determined by the
Committee, if an optionee incurs a Termination of Employment by reason of death,
any Stock Option held by such optionee shall immediately vest in full and may
thereafter be exercised until the expiration of the stated term of such Stock
Option. In the event of Termination of Employment by reason of death,
if an Incentive Stock Option is exercised after the expiration of the
post-termination exercise periods that apply for purposes of Section 422 of
the Code, such Stock Option will thereafter be treated as a NonQualified Stock
Option.
(g)
Termination by Reason of
Disability
. Unless otherwise determined by the Committee, if
an optionee incurs a Termination of Employment by reason of Disability, any
Stock Option held by such optionee shall immediately vest in full and may
thereafter be exercised until the expiration of the stated term of such Stock
Option. In the event of Termination of Employment by reason of
Disability, if an Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422 of the Code,
such Stock Option will thereafter be treated as a NonQualified Stock
Option.
(h)
Termination by Reason of
Retirement
. Unless otherwise determined by the Committee, if
an optionee incurs a Termination of Employment by reason of Retirement, any
Stock Option held by such optionee shall immediately vest in full and may
thereafter be exercised until the expiration of the stated term of such Stock
Option. In the event of Termination of Employment by reason of
Retirement, if an Incentive Stock Option is exercised after the expiration of
the post-termination exercise periods that apply for purposes of
Section 422 of the Code, such Stock Option will thereafter be treated as a
NonQualified Stock Option.
(i)
Termination by the Company for
Cause
. Unless otherwise determined by the Committee, if an
optionee incurs a Termination of Employment for Cause, all Stock Options held by
such optionee, whether vested or unvested, shall thereupon
terminate.
(j)
Other
Termination
. Unless otherwise determined by the Committee, if
an optionee incurs a Termination of Employment for any reason other than death,
Disability, or Retirement, or for Cause, and except as set forth in
Section 5(i) above, any Stock Option held by such optionee, to the extent
it was then exercisable at the time of termination, or on such accelerated basis
as the Committee may determine, may be exercised for the lesser of three months
from the date of such Termination of Employment or the balance of such Stock
Option's stated term;
provided, however,
that if
the optionee dies within such three-month period, any unexercised Stock Option
held by such optionee shall, notwithstanding the expiration of such three-month
period, continue to be exercisable to the extent to which it was exercisable at
the time of death for a period of 12 months from the date of such death or
until the expiration of the stated term of such Stock Option, whichever period
is the shorter. If an Incentive Stock Option is exercised after the
expiration of the post-termination exercise periods that apply for purposes of
Section 422 of the Code, such Stock Option will thereafter be treated as a
NonQualified Stock Option.
(k)
Additional Rules for Incentive Stock
Options.
Notwithstanding anything contained herein to the
contrary, no Stock Option which is intended to qualify as an Incentive Stock
Option may be granted to any Eligible Employee who at the time of such grant
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of any Subsidiary, unless at the time such
Stock Option is granted the option price is at least 110% of the Fair Market
Value of a share of Common Stock and such Stock Option by its terms is not
exercisable after the expiration of five years from the date such Stock Option
is granted. In addition, the aggregate Fair Market Value of the
Common Stock (determined at the time a Stock Option for the Common Stock is
granted) for which Incentive Stock Options are exercisable for the first time by
an optionee during any calendar year, under all of the incentive stock option
plans of the Company and of any Subsidiary, may not exceed
$100,000. To the extent a Stock Option that by its terms was intended
to be an Incentive Stock Option exceeds this $100,000 limit, the portion of the
Stock Option in excess of such limit shall be treated as a NonQualified Stock
Option.
(l)
Cashing Out of Stock
Option
. On receipt of written notice of exercise, the
Committee may elect to cash out all or part of the portion of the shares of
Common Stock for which a Stock Option is being exercised by paying the optionee
an amount, in cash or Common Stock, equal to the excess of the Fair Market Value
of the Common Stock over the option price times the number of shares of Common
Stock for which the Option is being exercised on the effective date of such
cash-out.
(m)
Certain Terminations Prior to a
Change in Control
. Unless otherwise determined by the
Committee, notwithstanding any other provision of this Plan to the contrary, in
the event an optionee incurs a Termination of Employment by the Company other
than for Cause at any time after the Company executes an agreement that provides
for a transaction that if consummated would constitute a Change in Control, but
before the actual occurrence of such Change in Control, and, thereafter, such
Change in Control actually occurs, then, upon such Change in Control, any Stock
Option held by such optionee prior to such Termination of Employment shall
immediately vest in full and may thereafter be exercised by the optionee until
expiration of the stated term of such Stock Option. If an Incentive
Stock Option is exercised after the expiration of the post-termination exercise
periods that apply for purposes of Section 422 of the Code, such Stock
Option will thereafter be treated as a NonQualified Stock Option.
(n)
Change in Control
Cash-Out.
If the Committee shall determine at the time of
grant of an Option or thereafter, then, notwithstanding any other provision of
the Plan, during the 60-day period from and after a Change in Control (the
"Exercise Period"), an optionee shall have the right, whether or not the Stock
Option is fully exercisable and in lieu of the payment of the option price for
the shares of Common Stock being purchased under the Stock Option and by giving
notice to the Company, to elect (within the Exercise Period) to surrender all or
part of the Stock Option to the Company and to receive cash, within 30 days
of such election, in an amount equal to the amount by which the Change in
Control Price per share of Common Stock on the date of such election shall
exceed the exercise price per share of Common Stock under the Stock Option (the
"Spread") multiplied by the number of shares of Common Stock granted under the
Stock Option as to which the right granted under this Section 5(n) shall
have been exercised.
(o)
Dividends and Dividend
Equivalents
. Dividends and dividend equivalents may not be
paid or accrued on Stock Options.
SECTION
6. Restricted Stock
(a)
Administration
. Shares
of Restricted Stock may be awarded either alone or in addition to other Awards
granted under the Plan. The Committee shall determine the Eligible
Individuals to whom and the time or times at which grants of Restricted Stock
will be awarded, the number of shares to be awarded to any Eligible Individual,
the conditions for vesting, the time or times within which such Awards may be
subject to forfeiture and any other terms and conditions of the Awards, in
addition to those contained in Section 6(c).
(b)
Awards and
Certificates
. Shares of Restricted Stock shall be evidenced in
such manner as the Committee may deem appropriate, including book-entry
registration or issuance of one or more stock certificates. Any
certificate issued in respect of shares of Restricted Stock shall be registered
in the name of such participant and shall bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Award,
substantially in the following form:
"The
transferability of this certificate and the shares of stock represented hereby
are subject to the terms and conditions (including forfeiture) of the West Coast
Bancorp 2002 Stock Incentive Plan and a Restricted Stock
Agreement. Copies of such Plan and Agreement are on file at the
offices of West Coast Bancorp, 5335 Meadows Road, Suite 201, Lake
Oswego, Oregon 97035."
The
Committee may require that the certificates evidencing such shares be held in
custody by the Company until the restrictions thereon shall have lapsed and
that, as a condition of any Award of Restricted Stock, the participant shall
have delivered a stock power, endorsed in blank, relating to the Common Stock
covered by such Award.
(c)
Terms and
Conditions
. Shares of Restricted Stock shall be subject to the
following terms and conditions:
(i) The
Committee may, prior to or at the time of grant, designate an Award of
Restricted Stock as a Qualified Performance-Based Award, in which event it shall
condition the grant or vesting, as applicable, of such Restricted Stock upon the
attainment of Performance Goals. If the Committee does not designate
an Award of Restricted Stock as a Qualified Performance-Based Award, it may also
condition the grant or vesting thereof upon the attainment of Performance
Goals. Regardless of whether an Award of Restricted Stock is a
Qualified Performance-Based Award, the Committee may also condition the grant or
vesting thereof upon the continued service of the participant. The
conditions for grant or vesting and the other provisions of Restricted Stock
Awards (including without limitation any applicable Performance Goals) need not
be the same with respect to each recipient. The Committee may at any
time, in its sole discretion, accelerate or waive, in whole or in part, any of
the foregoing restrictions (other than, in the case of Restricted Stock which is
a Qualified Performance-Based Award, satisfaction of the applicable Performance
Goals, unless the participant's employment is terminated by reason of death or
Disability).
No
more than 113,322 shares of Common Stock may be subject to Qualified
Performance-Based Awards granted to any participant during the term of the
Plan.
(ii) Subject
to the provisions of the Plan and the Restricted Stock Agreement referred to in
Section 6(c)(vi), during the period, if any, set by the Committee,
commencing with the date of such Award for which such participant's continued
service is required (the "Restriction Period"), and until the later of
(i) the expiration of the Restriction Period and (ii) the date the
applicable Performance Goals (if any) are satisfied, the participant shall not
be permitted to sell, assign, transfer, pledge or otherwise encumber shares of
Restricted Stock;
provided
that the foregoing
shall not prevent a participant from pledging Restricted Stock as security for a
loan, the sole purpose of which is to provide funds to pay the option price for
Stock Options.
(iii) Except
as provided in this paragraph (iii) and Sections 6(c)(i)
and 6(c)(ii) and the Restricted Stock Agreement, the participant shall
have, with respect to the shares of Restricted Stock, all of the rights of a
stockholder of the Company holding the class or series of Common Stock that is
the subject of the Restricted Stock, including, if applicable, the right to vote
the shares and the right to receive any dividends. If so determined
by the Committee in the applicable Restricted Stock Agreement and subject to
Section 12(e) of the Plan, (A) cash dividends on the class or series
of Common Stock that is the subject of the Restricted Stock Award shall be
automatically deferred and reinvested in additional Restricted Stock,
and shall, as determined by the Committee, either be (i) held subject to
the vesting of the underlying Restricted Stock, or held subject to meeting
Performance Goals applicable only to dividends, or (ii) distributed in full
or in part without regard to the vested status of the underlying Restricted
Stock and (B) dividends payable in Common Stock shall be paid in the form
of Restricted Stock of the same class as the Common Stock with which such
dividend was paid, and shall, as determined by the Committee, be either
(i) held subject to the vesting of the underlying Restricted Stock, or held
subject to meeting Performance Goals applicable only to dividends, or
(ii) distributed in full or in part without regard to the vested status of
the underlying Restricted Stock.
(iv) Except
to the extent otherwise provided in the applicable Restricted Stock Agreement or
Section 6(c)(i), 6(c)(ii), 6(c)(v), 6(d) or 9(a)(ii), upon a participant's
Termination of Employment for any reason during the Restriction Period or before
the applicable Performance Goals are satisfied, all shares still subject to
restriction shall be forfeited by the participant;
provided
,
however
, that the Committee
shall have the discretion to waive, in whole or in part, any or all remaining
restrictions (other than, in the case of Restricted Stock which is a Qualified
Performance-Based Award, satisfaction of the applicable Performance Goals,
unless the participant's employment is terminated by reason of death or
Disability) with respect to any or all of such participant's shares of
Restricted Stock.
(v) If
and when any applicable Performance Goals are satisfied and the Restriction
Period expires without a prior forfeiture of the Restricted Stock, unlegended
certificates for such shares shall be delivered to the participant upon
surrender of the legended certificates.
(vi) Each
Award shall be confirmed by, and be subject to, the terms of a Restricted Stock
Agreement.
(d)
Termination of Employment due to
Death or Disability
. Unless otherwise determined by the
Committee, upon a participant's Termination of Employment by reason of death or
Disability, the restrictions, including any Performance Goals, and deferral
limitations applicable to any Restricted Stock shall lapse (with respect to
Performance Goals, be deemed earned in full), and such Restricted Stock shall
become free of all restrictions and become fully vested and transferable to the
full extent of the original grant.
SECTION
7. [Intentionally Left Blank]
SECTION
8. Other Stock-Based Awards
Other
Awards of Common Stock and other Awards that are valued in whole or in part by
reference to, or are otherwise based upon, Common Stock, including (without
limitation) dividend equivalents and convertible debentures, may be granted
either alone or in conjunction with other Awards granted under the
Plan.
SECTION
9. Change in Control Provisions
Impact of
Event
. Notwithstanding any other provision of this Plan to the
contrary, in the event a recipient of an Award incurs a Termination of
Employment by the Company or a successor other than for Cause during the
24-month period following a Change in Control:
(i) Any
Stock Options held by an optionee which are not then exercisable and vested,
shall become fully exercisable and vested to the full extent of the original
grant, and all Stock Options shall be exercisable until expiration of the stated
term of such Stock Options.
(ii) The
restrictions, including any Performance Goals, and deferral limitations
applicable to any Restricted Stock shall lapse (with respect to Performance
Goals, be deemed earned in full), and such Restricted Stock shall become free of
all restrictions and become fully vested and transferable to the full extent of
the original grant.
(iii) The
Committee may also make additional adjustments and/or settlements of outstanding
Awards as it deems appropriate and consistent with the Plan's
purposes.
(b)
Definition of Change in
Control
. For purposes of the Plan, a "Change in Control" shall
mean the happening of any of the following events:
(i) The
acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 30% or more of either (1) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common Stock") or
(2) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for purposes
of this subsection (i), the following acquisitions shall not constitute a
Change of Control: (1) any acquisition directly from the
Company, (2) any acquisition by the Company, (3) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (4) any acquisition
by any corporation pursuant to a transaction which complies with
clauses (1), (2) and (3) of subsection (iii) of this
Section 9(b); or
(ii) Individuals
who, as of the effective date of the Plan, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
effective date of the Plan whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) Consummation
of a reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Company (a "Business Combination"), in
each case, unless, following such Business Combination, (1) all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (2) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 30% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination, and (3) at least
a majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) The
approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.
(c)
Change in Control
Price
. For purposes of the Plan, "Change in Control Price"
means the higher of (i) the highest reported sales price, regular way, of a
share of Common Stock in any transaction reported on the New York Stock Exchange
Composite Tape or other national exchange on which such shares are listed or on
NASDAQ during the 60-day period prior to and including the date of a Change in
Control or (ii) if the Change in Control is the result of a tender or
exchange offer or a Business Combination, the highest price per share of Common
Stock paid in such tender or exchange offer or Business Combination;
provided, however,
that in
the case of Incentive Stock Options, the Change in Control Price shall be in all
cases the Fair Market Value of the Common Stock on the date such Incentive Stock
Option is exercised. To the extent that the consideration paid in any
such transaction described above consists all or in part of securities or other
noncash consideration, the value of such securities or other noncash
consideration shall be determined in the sole discretion of the
Board.
SECTION
10. Term, Amendment and Termination
The Plan
will terminate on the tenth anniversary of the effective date of the
Plan. Under the Plan, Awards outstanding as of such date shall not be
affected or impaired by the termination of the Plan.
The Board
may amend, alter, or discontinue the Plan, but no amendment, alteration or
discontinuation shall be made which would materially and adversely impair the
rights of an optionee under a Stock Option or a recipient of a Restricted Stock
Award or other stock-based Award theretofore granted without the optionee's or
recipient's consent, except such an amendment made to comply with applicable
law, stock exchange rules or accounting rules. In addition, no such
amendment shall be made without the approval of the Company's stockholders to
the extent such approval is required by applicable law or stock exchange
rules.
The
Committee may amend the terms of any Stock Option or other Award theretofore
granted, prospectively or retroactively, but no such amendment shall materially
and adversely impair the rights of any holder without the holder's consent,
except such an amendment made to cause the Plan or Award to comply with
applicable law, stock exchange rules or accounting rules.
Subject
to the above provisions, the Board shall have authority to amend the Plan to
take into account changes in law and tax and accounting rules as well as other
developments, and to grant Awards which qualify for beneficial treatment under
such rules without stockholder approval.
SECTION
11. Unfunded Status of Plan
It is
presently intended that the Plan constitute an "unfunded" plan for incentive and
deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments;
provided, however,
that
unless the Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION
12. General Provisions
(a) The
Committee may require each person purchasing or receiving shares pursuant to an
Award to represent to and agree with the Company in writing that such person is
acquiring the shares without a view to the distribution thereof. The
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer.
Notwithstanding
any other provision of the Plan or agreements made pursuant thereto, the Company
shall not be required to issue or deliver any certificate or certificates for
shares of Common Stock under the Plan prior to fulfillment of all of the
following conditions:
(i) Listing
or approval for listing upon notice of issuance, of such shares on the New York
Stock Exchange, Inc., or such other securities exchange as may at the time be
the principal market for the Common Stock;
(ii) Any
registration or other qualification of such shares of the Company under any
state or federal law or regulation, or the maintaining in effect of any such
registration or other qualification which the Committee shall, in its absolute
discretion upon the advice of counsel, deem necessary or advisable;
and
(iii) Obtaining
any other consent, approval, or permit from any state or federal governmental
agency which the Committee shall, in its absolute discretion after receiving the
advice of counsel, determine to be necessary or advisable.
(b) Nothing
contained in the Plan shall prevent the Company or any Subsidiary or Affiliate
from adopting other or additional compensation arrangements for its
employees.
(c)
The Plan shall not constitute a contract of employment, and adoption of
the Plan shall not confer upon any employee any right to continued employment,
nor shall it interfere in any way with the right of the Company or any
Subsidiary or Affiliate to terminate the employment of any employee at any
time.
(d)
No later than the date as of which an amount first becomes includible in the
gross income of the participant for federal income tax purposes with respect to
any Award under the Plan, the participant shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any federal,
state, local or foreign taxes of any kind required by law to be withheld with
respect to such amount. Unless otherwise determined by the Company,
withholding obligations may be settled with Common Stock, including Common Stock
that is part of the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and its Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the participant. The Committee may
establish such procedures as it deems appropriate, including making irrevocable
elections, for the settlement of withholding obligations with Common
Stock.
(e)
Reinvestment of dividends in additional Restricted Stock at the time of
any dividend payment shall only be permissible if sufficient shares of Common
Stock are available under Section 3 for such reinvestment (taking into
account then outstanding Stock Options and other Awards).
(f)
The Committee shall establish such procedures as it deems appropriate for a
participant to designate a beneficiary to whom any amounts payable in the event
of the participant's death are to be paid or by whom any rights of the
participant, after the participant's death, may be exercised.
(g)
In the case of a grant of an Award to any employee of a Subsidiary of the
Company, the Company may, if the Committee so directs, issue or transfer the
shares of Common Stock, if any, covered by the Award to the Subsidiary, for such
lawful consideration as the Committee may specify, upon the condition or
understanding that the Subsidiary will transfer the shares of Common Stock to
the employee in accordance with the terms of the Award specified by the
Committee pursuant to the provisions of the Plan. All shares of
Common Stock underlying Awards that are forfeited or canceled should revert to
the Company.
(h)
The Plan and all Awards made and actions taken thereunder shall be governed by
and construed in accordance with the laws of the State of Oregon, without
reference to principles of conflict of laws.
(i)
Except as otherwise provided in Section 5(e) by the Committee, Awards under
the Plan are not transferable except by will or by laws of descent and
distribution.
SECTION
13. Effective Date of Plan
The Plan
shall be effective as of the date it is adopted by the Board, subject to
approval of the Plan by the affirmative vote of a majority of the votes cast
with respect to the plan at a meeting of stockholders.