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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement [ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
ORANGE NATIONAL BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] Fee not required.
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LOGO
1201 EAST KATELLA AVENUE
ORANGE, CALIFORNIA 92667
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 18, 1998
TO THE SHAREHOLDERS OF ORANGE NATIONAL BANCORP:
NOTICE IS HEREBY GIVEN that, pursuant to the call of its board of directors, the
Annual Meeting of Shareholders (the "Meeting") of Orange National Bancorp (the
"Bancorp") will be held at the Bancorp's main office located at 1201 East
Katella Avenue, Orange, California, on Monday, May 18, 1998 at 7:30 a.m. for the
purpose of considering and voting upon the following matters:
1. Election of Directors. To elect nine (9) persons to the board of
directors to serve until the 1999 Annual Meeting of Shareholders and until
their successors are elected and have been qualified. The persons nominated
by management to serve as directors are:
Michael W. Abdalla, M.D. Gerald R. Holte
Michael J. Christianson James E. Mahoney
Kenneth J. Cosgrove Wayne F. Miller
Robert W. Creighton San E. Vaccaro
Charles R. Foulger
2. Ratification of Appointment of Accountants. To ratify the
appointment of McGladrey & Pullen, LLP as the Bancorp's independent
certified public accountants for the year 1998.
3. Transaction of Other Business. To transact such other business as
may properly come before the Meeting or any adjournment thereof.
The board of directors has fixed the close of business on April 3, 1998 as
the record date for determination of shareholders entitled to notice of, and to
vote at, the Meeting or any adjournment thereof.
The Bylaws of the Bancorp set forth the following procedures for
nominations to the board of directors:
Nominations for election of members of the Board of Directors may be made
by the Board of Directors or by any holder of any outstanding class of
capital stock of the Company entitled to vote for the election of
Directors. Notice of Intention to make any nominations (other than for
persons named in the Notice of any meeting called for the election of
Directors) are required to be made in writing and to be delivered or mailed
to the President of the Company by the later of: (i) the close of business
21 days prior to any meeting of stockholders called for the election of
Directors or (ii) 10 days after the date of mailing of notice of the
meeting to stockholders. Such notification must contain the following
information to the extent known to the notifying stockholder: (a) the name
and address of each proposed nominee; (b) the principal occupation of each
proposed nominee; (c) the number of shares of capital stock of the Company
owned by each proposed nominee; (d) the name and residence address of the
notifying stockholder; (e) the number of shares of capital stock of the
Company owned by the notifying stockholder; (f) the number of shares of
capital stock of any bank, bank holding company, savings and loan
association or other depository institution owned beneficially by the
nominee or by the notifying stockholder and the identities and locations of
any such institutions; and, (g) whether the proposed nominee has ever been
convicted of or pleaded nolo contendere to any criminal offense involving
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dishonesty or breach of trust, filed a petition in bankruptcy or been
adjudged bankrupt. The notification shall be signed by the nominating
stockholder and by each nominee, and shall be accompanied by a written
consent to be named as a nominee for election as a Director from each
proposed nominee. Nominations not made in accordance with these procedures
shall be disregarded by the chairman of the meeting, and upon his
instructions, the inspectors of election shall disregard all votes cast for
each such nominee. The foregoing requirements do not apply to the
nomination of a person to replace a proposed nominee who has become unable
to serve as a Director between the last day for giving notice in accordance
with this paragraph and the date of election of Directors if the procedure
called for in this paragraph was followed with respect to the nomination of
the proposed nominee.
BY ORDER OF THE BOARD OF DIRECTORS
Robert W. Creighton, Secretary
April 20, 1998
YOU ARE URGED TO VOTE IN FAVOR OF MANAGEMENT'S PROPOSALS BY SIGNING AND
RETURNING THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING IN PERSON. THE ENCLOSED PROXY IS SOLICITED BY THE BANCORP'S
BOARD OF DIRECTORS. ANY SHAREHOLDER GIVING A PROXY MAY REVOKE IT PRIOR TO THE
TIME IT IS VOTED BY NOTIFYING THE SECRETARY OF THE BANCORP IN WRITING OF
REVOCATION OF THE PROXY, BY FILING A DULY EXECUTED PROXY BEARING A LATER DATE,
OR BY ATTENDING THE MEETING AND VOTING IN PERSON. PLEASE INDICATE ON THE PROXY
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING SO THAT WE CAN ARRANGE FOR
ADEQUATE ACCOMMODATIONS.
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LOGO
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 18, 1998
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
Proxies for use at the 1998 Annual Meeting of Shareholders (the "Meeting") of
Orange National Bancorp (the "Bancorp") to be held at the Bancorp's main office
located at 1201 East Katella Avenue, Orange, California, on Monday, May 18, 1998
at 7:30 a.m., and at any and all adjournments thereof.
It is anticipated that this Proxy Statement and the accompanying Notice and
form of Proxy will be mailed on or about April 20, 1998 to shareholders eligible
to receive notice of, and to vote at, the Meeting.
REVOCABILITY OF PROXIES
A form of Proxy for voting your shares at the Meeting is enclosed. Any
shareholder who executes and delivers such Proxy has the right to and may revoke
it at any time before it is exercised by filing with the Secretary of the
Bancorp an instrument revoking it or a duly executed Proxy bearing a later date.
In addition, the powers of the proxyholders will be suspended if the person
executing the Proxy is present at the Meeting and elects to vote in person by
advising the chairman of the Meeting of his or her election to vote in person,
and votes in person at the Meeting. Subject to such revocation or suspension,
all shares represented by a properly executed Proxy received in time for the
Meeting will be voted by the proxyholders in accordance with the instructions
specified on the Proxy. UNLESS OTHERWISE DIRECTED IN THE ACCOMPANYING PROXY, THE
SHARES REPRESENTED BY YOUR EXECUTED PROXY WILL BE VOTED "FOR" THE NOMINEES FOR
ELECTION OF DIRECTORS NAMED HEREIN AND "FOR" RATIFICATION OF THE APPOINTMENT OF
MCGLADREY & PULLEN, LLP AS THE BANCORP'S INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS FOR 1998. IF ANY OTHER BUSINESS IS PROPERLY PRESENTED AT THE
MEETING, THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
MANAGEMENT.
PERSONS MAKING THE SOLICITATION
This solicitation of Proxies is being made by the board of directors (the
"Board") of the Bancorp. The expense of preparing, assembling, printing and
mailing this Proxy Statement and the materials used in the solicitation of
Proxies for the Meeting will be borne by the Bancorp. It is contemplated that
Proxies will be solicited principally through the use of the mail, but
directors, officers and employees of the Bancorp and its subsidiary, Orange
National Bank (the "Bank") may solicit Proxies personally or by telephone,
without receiving special compensation therefore. Although there is no formal
agreement to do so, the Bancorp may reimburse banks, brokerage houses and other
custodians, nominees and fiduciaries for their reasonable expenses in forwarding
these Proxy materials to shareholders whose stock in the Bancorp is held of
record by such entities. In addition, the Bancorp may use the services of
individuals or companies it does not regularly employ in connection with this
solicitation of Proxies, if management determines it to be advisable.
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VOTING SECURITIES
There were issued and outstanding 1,987,996 shares of the Bancorp's common
stock ("Common Stock") on April 3, 1998, which has been fixed as the record date
for the purpose of determining shareholders entitled to notice of, and to vote
at, the Meeting (the "Record Date"). On any matter submitted to the vote of the
shareholders, each holder of Common Stock will be entitled to one vote, in
person or by Proxy, for each share of Common Stock he or she held of record on
the books of the Bancorp as of the Record Date. In connection with the election
of directors, shares may be voted cumulatively if a shareholder present at the
Meeting gives notice at the Meeting, prior to the voting for election of
directors, of his or her intention to vote cumulatively. If any shareholder of
the Bancorp gives such notice, then all shareholders eligible to vote will be
entitled to cumulate their shares in voting for election of directors.
Cumulative voting allows a shareholder to cast a number of votes equal to the
number of shares held in his or her name as of the Record Date, multiplied by
the number of directors to be elected. These votes may be cast for any one
nominee, or may be distributed among as many nominees as the shareholder sees
fit. If cumulative voting is declared at the Meeting, votes represented by
Proxies delivered pursuant to this Proxy Statement may be cumulated in the
discretion of the proxyholders, in accordance with management's recommendation.
The effect of broker nonvotes is that such votes are not counted as being voted;
however such votes are counted for purposes of determining a quorum. The effect
of a vote of abstention on any matter is that such vote is not counted as a vote
for or against the matter, but is counted as an abstention.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Management of the Bancorp knows of no person who owns, beneficially or of
record, either individually or together with associates, 5 percent or more of
the outstanding shares of Common Stock, except as set forth in the table below.
The following table sets forth, as of February 15, 1998, the number and
percentage of shares of the Bancorp's outstanding Common Stock beneficially
owned, directly or indirectly, by each of the Bancorp's directors and named
executive officers and by the directors and executive officers of the Bancorp as
a group. The shares "beneficially owned" are determined under Securities and
Exchange Commission rules, and do not necessarily indicate ownership for any
other purpose. In general, beneficial ownership includes shares over which a
director or named executive officer has sole or shared voting or investment
power and shares which such person has the right to acquire within 60 days of
February 15, 1998. Unless otherwise indicated, the persons listed below have
sole voting and investment powers. Management is not aware of any arrangements
which may, at a subsequent date, result in a change of control of the Bancorp.
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS(1)
- -------------------------------------------------- -------------------- -----------
DIRECTORS AND NAMED EXECUTIVE OFFICERS:
Michael W. Abdalla, M.D........................... 98,791(2) 4.9%
Michael J. Christianson........................... 68,987(3) 3.4%
Kenneth J. Cosgrove............................... 75,911(4) 3.8%
Robert W. Creighton............................... 36,419(5) 1.8%
Charles R. Foulger................................ 85,835(6) 4.3%
Gerald R. Holte................................... 44,107(7) 2.2%
James E. Mahoney.................................. 108,381(8) 5.4%
Wayne F. Miller................................... 70,409(9) 3.5%
San E. Vaccaro.................................... 60,586(10) 3.0%
Frank A. Del Giorgio.............................. 17,193(11) *
Larry A. Sallinger................................ 4,200(12) *
All Directors and Executive Officers
as a Group (numbering 11)....................... 670,819 31.0%
(footnotes on following page)
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- ---------------
* Less than one percent.
(1) Includes shares subject to options held by the directors and named
executive officers that are exercisable within 60 days of February 15,
1998. These are treated as issued and outstanding for the purpose of
computing the percentages of each director, named executive officer and the
directors and executive officers as a group, but not for the purpose of
computing the percentage of class of any other person.
(2) Dr. Abdalla has 20,000 shares acquirable by exercise of stock options.
(3) Mr. Christianson has shared voting and investment powers as to 34,923 of
these shares and has 20,000 shares acquirable by exercise of stock options.
(4) Mr. Cosgrove has shared voting and investment powers as to 2,017 of these
shares, has shared voting and no investment powers as to 735 of these
shares and has 7,208 shares acquirable by exercise of stock options.
(5) Mr. Creighton has 7,000 shares acquirable by exercise of stock options.
(6) Mr. Foulger has shared voting and investment powers as to 65,835 of these
shares and has 20,000 shares acquirable by exercise of stock options.
(7) Mr. Holte has shared voting and investment powers as to 15,253 of these
shares and has 20,000 shares acquirable by exercise of stock options.
(8) Mr. Mahoney has shared voting and investment powers as to 88,381 shares and
has 20,000 shares acquirable by exercise of stock options. Mr. Mahoney's
address is c/o Orange National Bancorp, 1201 East Katella Avenue, Orange,
California 92667.
(9) Mr. Miller has shared voting and investment powers as to 50,279 of these
shares and has shared voting and no investment powers as to 82 of these
shares. Mr. Miller has 20,000 shares acquirable by exercise of stock
options.
(10) Mr. Vaccaro has shared voting and investment powers as to 393 of these
shares. Mr. Vaccaro has 30,000 shares acquirable by exercise of stock
options.
(11) Mr. Del Giorgio has 6,916 shares acquirable by exercise of stock options.
(12) Mr. Sallinger has 4,200 shares acquirable by exercise of stock options.
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Bancorp's
directors and certain executive officers and persons who own more than ten
percent of a registered class of the Bancorp's equity securities (collectively,
the "Reporting Persons"), to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. The Reporting Persons are required
by Securities and Exchange Commission regulation to furnish the Bancorp with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from the Reporting Persons that no Forms 5 were required
for those persons, the Bancorp believes that, during 1997 the Reporting Persons
complied with all filing requirements applicable to them.
PROPOSAL 1:
ELECTION OF DIRECTORS
NOMINEES
The Bancorp's Bylaws presently provide that the number of directors of the
Bancorp shall not be less than nine (9) nor more than seventeen (17) until
changed by an amendment to the Bylaws adopted by the Bancorp's shareholders. The
Bylaws further provide that the exact number of directors shall be nine (9)
until changed by a Bylaw amendment duly adopted by the Bancorp's shareholders or
the Board.
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The persons named below, all of whom are currently members of the Board,
have been nominated for election as directors to serve until the 1999 Annual
Meeting of Shareholders and until their successors are elected and have
qualified. Unless otherwise instructed, the proxyholders will vote the Proxies
received by them for the election of the nominees named below. Votes of the
proxyholders will be cast in such a manner as to effect, if possible, the
election of all nine (9) nominees, as appropriate, (or as many thereof as
possible under the rules of cumulative voting). The nine nominees for directors
receiving the most votes will be elected directors. In the event that any of the
nominees should be unable to serve as a director, it is intended that the Proxy
will be voted for the election of such substitute nominee, if any, as shall be
designated by the Board. The Board has no reason to believe that any of the
nominees named below will be unable to serve if elected. Additional nominations
for directors may only be made by complying with the nomination procedures which
are included in the Notice of Annual Meeting of Shareholders accompanying this
Proxy Statement.
The following table sets forth as of February 15, 1998, the names of, and
certain information concerning, the persons nominated by the Board for election
as directors of the Bancorp.
YEAR FIRST
NAME AND TITLE APPOINTED
OTHER THAN DIRECTOR AGE DIRECTOR PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
- ------------------------- --- ---------- -------------------------------------------------
Michael W. Abdalla, 64 1986 Orthopedic Surgeon and Vice President of Orange
M.D.................... Orthopedic Medical Group, Inc.
Michael J. 56 1986 Attorney in the law firm of Michael J.
Christianson........... Christianson, Inc.; Consultant with Christianson
International, Inc.; and associated with
Adventure Travel Group and Adventure Travel and
Mountain Climbing
Kenneth J. Cosgrove...... 50 1986 President and Chief Executive Officer of the
President, Chief Bancorp and the Bank. Former Executive Vice
Executive Officer President of the Bank.
Robert W. Creighton...... 59 1986 Chief Financial Officer of the Bancorp and
Secretary, Chief Executive Vice President and Chief Financial
Financial Officer Officer of the Bank.
Charles R. Foulger....... 64 1986 President and Owner of Foulger's Villa Honda,
Mazda and Volkswagen.
Gerald R. Holte.......... 60 1986 Partner in G.R. Holte & Associate, floor covering
dealer/contractor.
James E. Mahoney......... 69 1986 President of Mahoney Enterprises, Inc., business
development corporation.
Wayne F. Miller.......... 64 1986 Principal -- WFM Business Enterprises, Inc. and
Consultant to the Bank. Former President and
Chief Executive Officer of the Bancorp and the
Bank.
San E. Vaccaro........... 64 1986 Sole proprietor of the Law Offices of San E.
Chairman of the Vaccaro. Former Partner in the law firm of Curtis
Board of Directors & Vaccaro.
All of the nominees named above have served as members of the Bancorp's
Board since its inception. All nominees will continue to serve if elected at the
Meeting until the 1999 Annual Meeting of Shareholders and until their successors
are elected and have qualified. None of the directors were selected pursuant to
any arrangement or understanding other than with the directors and executive
officers of the Bancorp acting within their capacities as such. There are no
family relationships among any of the directors and executive officers of the
Bancorp. No director or executive officer of the Bancorp serves as a director of
any company which has a class of securities registered under, or which is
subject to the periodic reporting requirements of, the Securities Exchange Act
of 1934, or of any company registered as an investment company under the
Investment Company Act of 1940.
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THE BOARD OF DIRECTORS AND COMMITTEES
The Bancorp's Board held twelve (12) meetings during 1997. None of the
directors attended less than 75 percent of all Board meetings and committee
meetings (of which they were a member) that were held in 1997.
There were no standing committees of the Bancorp's Board in 1997. However,
in 1997, the Bank had a standing Audit Committee and a standing Directors Review
Committee.
The Bank's Audit Committee, which consisted of Mr. Christianson and Dr.
Abdalla met six (6) times in 1997. The Audit Committee's functions include
making recommendations to the Board on the selection of the Bancorp's and the
Bank's independent certified public accountants, reviewing the arrangements for
the independent certified public accountants' examination, reviewing the
internal accounting controls and reporting, and any other duties assigned by the
Board.
The Bank's Directors Review Committee, which consisted of Messrs.
Christianson, Holte, Mahoney and Vaccaro met six (6) times in 1997. The
Directors Review Committee's function is to evaluate and recommend to the Board
policies regarding the Bank's officers' compensation, employee benefits,
retirement and other internal administrative matters.
COMPENSATION OF DIRECTORS
The directors of the Bancorp who are not employees of the Bank received a
fee of $300 per meeting for attendance at the Bancorp's Board meetings and $235
per meeting for up to two meetings if such director did not attend the meeting.
The Chairman of the Bancorp's Board received a fee of $450 per meeting for
attendance at the Bancorp's Board meetings. In addition, the directors of the
Bancorp who are not employees of the Bank received a fee of $900 per meeting for
attendance at the Bank's board of directors meetings and $700 per meeting for up
to two meetings if such director did not attend the meeting. The Chairman of the
Bank's board of directors received a fee of $1,350 per meeting for attendance at
the Bank's board of directors meetings and an automobile allowance of $300 per
month. Directors of the Bancorp who are employees of the Bank received a fee of
$500 per month for attendance at the Bank's board of directors meetings. In
addition, directors who were members of the Bank's Directors Review Committee
and Audit Committee received a fee of $300 per meeting for each meeting they
attended. The Chairmen of the Bank's Directors Review Committee and Audit
Committee received a fee of $500 per meeting for each meeting they attended. In
1998, the directors will receive the same compensation as that received during
1997.
Directors of the Bancorp and the Bank also have the option of participating
in the Bank's Deferred Fee Program. Pursuant to the Deferred Fee Program,
directors make an initial deferral election by filing with the Bank a signed
Election Form which sets forth the amount of the director's fees to be deferred.
The Bank then establishes a Deferral Account on its books for the director and
credits to the Deferral Account the fees deferred by the director and interest
on the account balance at an annual rate determined prospectively by the Bank's
board of directors in December of each year. The Deferral Account is not a trust
fund of any kind and the director is a general unsecured creditor of the Bank
for the payment of the benefits. Benefits under the Deferred Fee Program are
payable upon the director's termination of service. If termination of service
occurs after the director attains the age of 65, the amount of benefit payable
is the Deferral Account balance at the date of termination of service. This
amount may be paid by the Bank in either one lump sum within 60 days of
termination of service or in 120 monthly installments commencing on the first
day of the month following the director's termination of service. If termination
of service occurs before the director attains the age of 65, the amount of
benefit payable is also the Deferral Account balance at the date of termination
of service. This amount may be paid by the Bank in either one lump sum within 60
days of termination of service or in 120 monthly installments commencing on the
first day of the month following the director's termination of service. If
termination of service occurs due to disability before the director attains the
age of 65 or due to a change in control of the Bank, the amount of benefit
payable is also the Deferral Account balance at the date of termination of
service. This amount shall be paid by the Bank in one lump sum within 60 days of
termination of service. Finally, if termination of service occurs due to the
death of the director, the amount of benefit payable is the greater of the
Deferral Account balance at the date of termination of service or the
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amount set forth in the individual Deferral Fee Agreement. This amount shall
also be paid by the Bank in one lump sum within 60 days of termination of
service.
Messrs. Cosgrove, Creighton, Foulger, Holte, Mahoney and Vaccaro have all
entered into Deferred Fee Agreements with the Bank. Mr. Cosgrove's agreement
provides for a minimum death benefit of $227,315; Mr. Creighton's agreement
provides for a minimum death benefit of $68,411; Mr. Foulger's agreement
provides for a minimum death benefit of $191,901; Mr. Holte's agreement provides
for a minimum death benefit of $224,035; Mr. Mahoney's agreement provides for a
minimum death benefit of $56,442; and Mr. Vaccaro's agreement provides for a
minimum death benefit of $774,146.
In June, 1997, each outside director of the Bancorp, other than Mr.
Vaccaro, received a stock option under the Bancorp's 1997 Stock Option Plan to
acquire 20,000 shares of Common Stock and Mr. Vaccaro received a stock option to
acquire 30,000 shares of Common Stock. The exercise price for these shares was
$17.72 per share. The options are for a term of five years expiring in June,
2002. The vesting of the director options was 100% of the total option amount
immediately.
DIRECTOR EMERITUS PLAN
During 1995, the Bancorp and the Bank each established a Directors Emeritus
Plan. Those outside directors who have satisfactorily served ten or more
consecutive years as an outside director and any outside directors who have
satisfactorily served five or more consecutive years as an outside director and
immediately prior thereto served five or more consecutive years as an inside
director, qualify and are entitled to participate under the Directors Emeritus
Plans. In 1997, four of the then-outside directors, Messrs. Barrera, Durante and
Frantz and Dr. Smith, elected to participate in the Directors Emeritus Plans.
The Directors Emeritus Plans terminated on January 1, 1998. Director Emeritus
status shall be for a period of five years from the date of retirement as an
outside director of the Bancorp and/or the Bank, subject to reduction for the
period of time a director serves beyond the mandatory retirement age of 72,
provided the director meets all of the requirements under the Directors Emeritus
Plans.
The Directors Emeritus receive a monthly sum equal to a percent of the base
director fee such director was receiving for attending a Board meeting of the
Bancorp and/or a board meeting of the Bank at the time such director became a
Director Emeritus. The percentage received shall be on a sliding scale as
follows: 1st year, 80%; 2nd year, 75%; 3rd year, 70%; 4th year, 65%; and 5th
year, 60%. In addition, the Directors Emeritus can participate in existing
medical plans of the Bank subject to eligibility and each Director Emeritus
paying all of his respective premiums for such coverage. In order to qualify for
remuneration under the Directors Emeritus Plans, a Director Emeritus must comply
with the provisions of the Director Emeritus Plans.
Director Emeritus status can terminate upon any of the following events:
(i) death of the Director Emeritus; (ii) inability of the Director Emeritus to
provide service to the Bancorp or the Bank; (iii) upon the fifth year
anniversary of the date of retirement as an outside director; (iv) resignation
as Director Emeritus; (v) determination by the Bancorp's Board and/or the Bank's
board of directors that the Director Emeritus has not fulfilled his or her
service requirements; (vi) reelection or appointment of the Director Emeritus as
a director of the Bancorp and/or the Bank; or (vii) the failure of the Director
Emeritus to maintain a minimum ownership of 5,000 shares of Common Stock.
In the event of any Acquisition of the Bank, as defined in the Directors
Emeritus Plans, the terms of the Directors Emeritus Plans shall continue and be
in full force and effect unless the resulting corporation terminates the
Directors Emeritus Plans, in which case the resulting corporation shall pay the
Director Emeritus a lump sum amount in cash equal to 75% of the remaining
benefits due such Director Emeritus under the Directors Emeritus Plans.
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EXECUTIVE OFFICERS
The following table sets forth information, as of February 15, 1998,
concerning executive officers of the Bancorp and certain executive officers of
the Bank:
NAME AGE POSITION AND PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS
- --------------------- --- ------------------------------------------------------------
Kenneth J. Cosgrove.. 50 President and Chief Executive Officer of the Bancorp and the
Bank. Former Executive Vice President of the Bank.
Robert W. Creighton.. 59 Chief Financial Officer of the Bancorp and Executive Vice
President and Chief Financial Officer of the Bank.
Frank A. Del Giorgio. 53 Senior Vice President and Loan Administrator of the Bank.
Larry A. Sallinger... 55 Senior Vice President and Branch Administrator of the Bank.
Former Executive Vice President -- Interim President/Chief
Executive Officer of Frontier Bank, N.A. from 1993 through
1994. Prior to that time, Senior Vice President/Loan
Administrator of Frontier Bank, N.A.
EXECUTIVE COMPENSATION
During 1997, the Bancorp did not pay any cash compensation to its executive
officers and no such cash compensation is expected to be paid during 1998.
However, the persons serving as the executive officers of the Bancorp received
during 1996, and are expected to receive in 1997, cash compensation in their
capacities as executive officers of the Bank.
The following Summary Compensation Table indicates the compensation of the
Bancorp's executive officers, and certain of the Bank's executive officers.
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
- ------------------------------------------------------------------ --------------------- -------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
- ----------------------------- ---- ------- ------ ------------ ---------- -------- ------- ------------
OTHER RESTRICTED
ANNUAL STOCK LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) OPTIONS/ PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) SARS ($) ($)(1)
- ----------------------------- ---- ------- ------ ------------ ---------- -------- ------- ------------
Kenneth J. Cosgrove.......... 1997 151,500 83,146 1,173 0 10,000 0 1,800
President and Chief 1996 142,834 52,399 1,281 0 0 0 1,800
Executive Officer of the 1995 140,050 62,041 0 0 15,750 0 1,800
Bancorp and the Bank
Robert W. Creighton.......... 1997 119,500 48,733 123 0 3,000 0 1,800
Chief Financial Officer 1996 115,917 31,131 58 0 5,000 0 1,800
of the Bancorp; Executive 1995 118,000 38,217 0 0 0 0 1,800
Vice President and
CFO of the Bank
Frank A. Del Giorgio......... 1997 95,100 35,721 0 0 2,500 0 1,800
Senior Vice President 1996 96,300 25,639 0 0 0 0 1,800
of the Bank 1995 92,100 35,033 0 0 0 0 1,800
Larry A. Sallinger........... 1997 98,666 15,000 0 0 0 0 1,800
Senior Vice President 1996 94,583 12,000 0 0 0 0 1,800
of the Bank 1995 90,000 15,000 0 0 5,250 0 1,800
- ---------------
(1) The Bank's contribution to its 401(k) plan for employees of 3% of salary to
a maximum of $1,800.
7
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OPTION/SAR GRANTS TABLE
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E)
- ---------------------------------- -------------- ------------ ----------- ---------------
% OF TOTAL
OPTIONS/SARS
OPTIONS/SARS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SHARE) DATE
- ---------------------------------- -------------- ------------ ----------- ---------------
Kenneth J. Cosgrove............... 10,000 Options 38% $18.62 July 16, 2002
Robert W. Creighton............... 5,000 Options 19% $13.75 April 1, 2002
Frank A. Del Giorgio.............. 2,500 Options 9% $13.75 April 1, 2002
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION/SAR
VALUE
(A) (B) (C) (D) (E)
- ---------------------------- ------------------ -------------- --------------- ---------------
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
YEAR-END (#) YEAR-END($)
SHARES ACQUIRED ON VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
- ---------------------------- ------------------ -------------- --------------- ---------------
Kenneth J. Cosgrove......... 3,000 $21,240 Options Only Options Only
11,083/6,667 $148,257/$31,702
Robert W. Creighton......... 0 N/A Options Only Options Only
4,333/3,667 $54,471/$41,679
Frank A. Del Giorgio........ 0 N/A Options Only Options Only
6,083/1,667 $100,339/$16,045
Larry A. Sallinger.......... 0 N/A Options Only Options Only
3,150/2,100 $55,393/$36,928
- ---------------
N/A -- means not applicable.
EMPLOYMENT CONTRACTS
The executive officers of the Bank have, or had during 1997, employment
contracts with the Bank as described below.
Kenneth J. Cosgrove has a three year employment contract with the Bank
beginning July 1, 1997 and expiring June 30, 2000. In addition, unless the
employment contract is otherwise terminated, the term of the employment contract
shall automatically extend in annual increments of one year so as to always
remain a three year employment contract. Mr. Cosgrove's annual salary is
currently fixed at $160,000 and shall be renegotiated in each subsequent year.
Mr. Cosgrove also agreed to an $8,000 per year salary deduction for a period of
eight (8) years beginning March 1, 1996, in consideration of Mr. Cosgrove's
salary continuation agreement which is described below. Under the terms of the
employment contract, Mr. Cosgrove is entitled to a two-part bonus: Part 1 is 8%
to 20% of his annual salary calculated on the Bancorp's Return on Equity as
described below; and Part 2 is 1% of the Bancorp's pre-tax earnings, subject to
a minimum earnings of $500,000. Mr. Cosgrove's employment contract provides that
in the event he becomes disabled, he shall be entitled to 100% of his salary for
ninety days and after such ninety day period, he shall be entitled to 100% of
his salary, less any disability benefits received under any income
continuation/disability plans sponsored by the Bank, for a period not to exceed
730 days, but in no event beyond the term of the employment contract. In
addition, if the Bank or Bancorp is merged, sold or acquired and the merging,
purchasing or acquiring entity elects not to employ Mr. Cosgrove under the terms
of an agreement acceptable to Mr. Cosgrove, he shall have
8
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the right to continue to receive his base salary plus certain other employee
benefits for a period of two years following the merger, sale or acquisition.
In addition Mr. Cosgrove has a salary continuation agreement with the Bank
which provides that the Bank will pay him $154,056 per year for 15 years
following his retirement from the Bank at age 65 or later. In the event of
earlier retirement before age 60, Mr. Cosgrove will receive salary continuation
payments beginning at age 65 with the amount of the salary continuation payment
being based on years of service and up to a maximum of $8,556 per month for 180
months. In the event of earlier retirement after age 60 and before age 65, Mr.
Cosgrove will receive salary continuation payments beginning at the time of such
early retirement with the amount of the salary continuation payment based on
years of service up to a maximum of $12,838 per month for 180 months. In the
event of disability of Mr. Cosgrove prior to February 21, 2001, Mr. Cosgrove
would receive a one time lump sum disability benefit based on years of service
and up to a maximum of $133,125. In the event of disability of Mr. Cosgrove
after February 21, 2001, Mr. Cosgrove would receive salary continuation benefits
based on years of service up to a maximum of $12,838 per month for 180 months or
until the time Mr. Cosgrove recovered and returned to active service. In the
event Mr. Cosgrove dies while in active service of the Bank, his beneficiary
will receive from the Bank a benefit amount of $154,056 per year for 15 years
beginning one month after his death. In the event of termination with cause, Mr.
Cosgrove will forfeit any benefits from the salary continuation agreement. In
the event of a change of control of the Bank whereby Mr. Cosgrove's employment
is terminated or adversely affected, Mr. Cosgrove will receive salary
continuation benefits up to a maximum of $12,838 per month for 180 months
beginning after the change of control. The benefits under the salary
continuation agreement for Mr. Cosgrove will also be reduced in the event such
payments are not deductible under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code").
Robert W. Creighton has an employment contract with the Bank which began
April 1, 1996 and was extended to expire March 31, 1999. Mr. Creighton's annual
salary is fixed at $117,000. Mr. Creighton also agreed to an $8,000 per year
salary deduction for a period of eight (8) years beginning March 1, 1996, in
consideration of Mr. Creighton's salary continuation agreement which is
described below. However, in March 1998, the Bank and Mr. Creighton agreed to
discontinue the $8,000 per year salary deduction and Mr. Creighton's annual
salary is again fixed at $117,000. Under the employment contract, Mr. Creighton
is entitled to a two-part bonus: Part 1 is 8% to 20% of his annual salary
calculated on the Bancorp's Return on Equity as described below; and Part 2 is
one-half of 1% of the Bancorp's pre-tax earnings, subject to a minimum earnings
of $750,000 for the years ended December 31, 1996 and 1997 and $2,000,000 for
the year ended December 31, 1998. Mr. Creighton's employment contract provides
that in the event he becomes disabled, he will be entitled to 100% of his salary
for ninety days and after such ninety day period, he will be entitled to 100% of
his salary, less any disability benefits received under any income
continuation/disability plans sponsored by the Bank, for a period not to exceed
275 days, but in no event beyond the term of the employment contract. In
addition, if the Bancorp is merged, sold or acquired and the merging, purchasing
or acquiring entity elects not to employ Mr. Creighton under the terms of an
agreement acceptable to Mr. Creighton, he will be entitled to receive his base
salary plus certain other employee benefits for the remaining period of the
employment contract, less any payments received from the salary continuation
agreement between Mr. Creighton and the Bank.
In addition Mr. Creighton has a salary continuation agreement with the Bank
which provides that the Bank will pay him $60,000 per year for 15 years
following his retirement from the Bank at age 65 or later. In the event of
earlier retirement before age 60, Mr. Creighton will receive salary continuation
payments beginning at age 65 with the amount of the salary continuation payment
being based on years of service and up to a maximum of $2,304 per month for 180
months. In the event of earlier retirement after age 60 and before age 65, Mr.
Creighton will receive salary continuation payments beginning at the time of
such early retirement with the amount of the salary continuation payment based
on years of service up to a maximum of $5,000 per month for 180 months. In the
event of disability of Mr. Creighton prior to February 21, 2001, Mr. Creighton
would receive a one time lump sum disability benefit based on years of service
and up to a maximum of $492,967. In the event of disability of Mr. Creighton
after February 21, 2001, Mr. Creighton would receive salary continuation
benefits based on years of service up to a maximum of $5,000 per month for 180
months or
9
13
until the time Mr. Creighton recovered and returned to active service. In the
event Mr. Creighton dies while in active service of the Bank, his beneficiary
will receive from the Bank a benefit amount of $60,000 per year for 15 years
beginning after his death. In the event of termination with cause, Mr. Creighton
will forfeit any benefits from the salary continuation agreement. In the event
of a change of control of the Bank whereby Mr. Creighton's employment is
terminated or adversely affected, Mr. Creighton will receive salary continuation
benefits up to a maximum of $5,000 per month for 180 months beginning after the
change of control. The benefits under the salary continuation agreement for Mr.
Creighton will also be reduced in the event such payments are not deductible
under Section 280G of the Code.
Frank A. Del Giorgio has an employment contract with the Bank which began
April 1, 1996 and was extended to expire March 31, 1999. Mr. Del Giorgio's
annual salary was fixed at $92,100 for the April 1, 1996 through March 31, 1997
period, was increased to $96,100 for the April 1, 1997 through March 31, 1998
period, and was increased to $100,600 for the April 1, 1998 through March 31,
1999 period. Under the employment contract, Mr. Del Giorgio is entitled to a
two-part bonus: Part 1 is 8% to 20% of his annual salary calculated on the
Bancorp's Return on Equity as described below; and Part 2 is 0.35% of the
Bancorp's pre-tax earnings, subject to a minimum earnings of $750,000 for the
years ended December 31, 1996 and 1997 and $2,000,000 for the year ended
December 31, 1998. Mr. Del Giorgio's contract provides that in the event he
becomes disabled, he will be entitled to 100% of his salary for ninety days and
after such ninety day period, he will be entitled to 100% of his salary, less
any disability benefits received under any income continuation/disability plans
sponsored by the Bank, for a period not to exceed 275 days, but in no event
beyond the term of the employment contract. In addition, if the Bancorp is
merged, sold or acquired and the merging, purchasing or acquiring entity elects
not to employ Mr. Del Giorgio under the terms of an agreement acceptable to Mr.
Del Giorgio, he will be entitled to receive his base salary plus certain other
employee benefits for the remaining period of the employment contract.
The earnings bonus is the officer's specified percentage of the amount of
the Bancorp's pre-tax earnings after allowances for the Bank's loan loss
reserves. No bonus is paid unless the applicable pre-tax earnings amount is more
than $500,000 for Mr. Cosgrove and $750,000 for Messrs. Creighton and Del
Giorgio.
The Return on Equity bonus is paid only if the Bancorp realizes at least
10% Return on Equity. Return on Equity is the Bancorp's net income divided by
shareholders' equity at the end of the prior fiscal year. The bonus amount is a
scaled percentage of the officer's salary from 8% to 20%, varying with the
amount of Return on Equity, as follows:
PERCENT BONUS PERCENT BONUS
RETURN PERCENT RETURN PERCENT
ON EQUITY OF SALARY ON EQUITY OF SALARY
--------- --------- --------- ---------
10 8 16.1 14
11.1 9 17.1 15
12.1 10 18.1 16
13.1 11 19.1 18
14.1 12 20.1 20
15.1 13
Each executive officer is entitled to employee benefits made available by
the Bank to all its employees plus, use of an automobile supplied by the Bank,
life, health and disability insurance fully paid by the Bank, and participation
in the Bank's deferred compensation plan. Each executive officer is also
entitled to participate in the Bancorp's 1997 Stock Option Plan and the
Bancorp's 1993 Incentive Stock Option Plan.
10
14
PROPOSAL 2:
RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The firm of McGladrey & Pullen, LLP, Anaheim, California, served as
independent certified public accountants for the Bancorp and the Bank through
the year 1997. The Bancorp has selected McGladrey & Pullen, LLP to serve as the
Bancorp's independent certified public accountants for the year 1998. All
services rendered by McGladrey & Pullen, LLP were approved by the Board, which
has determined the firm of McGladrey & Pullen, LLP to be independent. It is
expected that one or more representatives of McGladrey & Pullen, LLP will be
present at the Meeting and will be given the opportunity to make a statement, if
desired, and to respond to appropriate questions.
In the event shareholders do not ratify the appointment of McGladrey &
Pullen, LLP as the Bancorp's independent certified public accountants for the
forthcoming fiscal year, such appointment will be reconsidered by the Bank's
Audit Committee and the Board.
Ratification of the appointment of McGladrey & Pullen, LLP as the Bancorp's
independent certified public accountants for fiscal year 1998 requires the
affirmative vote of a majority of the outstanding shares of Common Stock
represented and voting at the meeting.
Management recommends that the shareholders vote "FOR" ratification of the
appointment of McGladrey & Pullen, LLP as the Bancorp's independent certified
public accountants for 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Some of the Bancorp's directors and executive officers and their immediate
families as well as the companies with which they are associated are customers
of, or have had banking transactions with, the Bank in the ordinary course of
the Bank's business, and the Bank expects to have banking transactions with such
persons in the future. In management's opinion, all loans and commitments to
lend included in such transactions were made in compliance with applicable laws
on substantially the same terms, including interest rates and collateral, as
those prevailing for comparable transactions with other persons of similar
creditworthiness and, in the opinion of management, did not involve more than a
normal risk of collectibility or present other unfavorable features.
SHAREHOLDER PROPOSALS
The deadline for shareholders to submit proposals to be considered for
inclusion in the Proxy Statement for the Bancorp's 1999 Annual Meeting of
Shareholders is December 31, 1998.
11
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OTHER MATTERS
Management does not know of any matters to be presented at the Meeting
other than those set forth above. However, if other matters come before the
Meeting, it is the intention of the persons named in the accompanying Proxy as
proxyholders to vote the shares represented by the Proxy in accordance with the
recommendations of management on such matters, and discretionary authority to do
so is included in the Proxy.
ORANGE NATIONAL BANCORP
Robert W. Creighton
Secretary
Dated: April 20, 1998
The Annual Report to Shareholders for the fiscal year ended December 31,
1997 has been previously mailed to the Bancorp's shareholders.
A COPY OF THE BANCORP'S 1997 ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K WILL BE PROVIDED TO THE BANCORP'S SHAREHOLDERS WITHOUT
CHARGE UPON WRITTEN REQUEST TO THE SECRETARY, ORANGE NATIONAL BANCORP, 1201 EAST
KATELLA AVENUE, ORANGE, CALIFORNIA 92667.
12
16
PROXY
ORANGE NATIONAL BANCORP
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Messrs. Gerald R. Holte and Wayne F.
Miller as proxyholders, with full power of substitution, to represent, vote and
act with respect to all shares of common stock of Orange National Bancorp (the
"Bancorp") which the undersigned would be entitled to vote at the meeting of
shareholders to be held on May 18, 1998 at 7:30 a.m. at the Bancorp's main
office located at 1201 East Katella Avenue, Orange, California or any
adjournments thereof, with all the powers the undersigned would possess if
personally present as follows:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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FOLD AND DETACH HERE
17
Please mark
your votes as
indicated in [X]
this example.
1. Election of nine (9) persons to be directors.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space below.)
FOR
all nominees listed
(except as marked to WITHHOLD
the contrary below) AUTHORITY
[ ] [ ]
-------------------------------------------------------------------
Michael W. Abdalla, M.D. Robert W. Creighton James E. Mahoney
Michael J. Christianson Charles R. Foulger Wayne F. Miller
Kenneth J. Cosgrove Gerald R. Holte San E. Vaccaro
2. Ratification of the appointment of McGladrey & Pullen, LLP as the Bancorp's
independent certified public accountants for 1998.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Transaction of such other business as may properly come before the meeting
and any adjournment or adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE MATTERS LISTED. The
Proxy confers authority to vote and shall be voted in accordance with such
recommendation unless a contrary instruction is indicated, in which case, the
shares represented by the Proxy will be voted in accordance with such
instruction. IF NO INSTRUCTION IS SPECIFIED WITH RESPECT TO A MATTER TO BE
ACTED UPON, THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED IN ACCORDANCE
WITH THE RECOMMENDATIONS OF MANAGEMENT. IF ANY OTHER BUSINESS IS PRESENTED AT
THE MEETING, THIS PROXY CONFERS AUTHORITY TO AND SHALL BE VOTED IN ACCORDANCE
WITH THE RECOMMENDATIONS OF MANAGEMENT.
I DO DO NOT EXPECT TO ATTEND THE MEETING.
[ ] [ ]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED
PRIOR TO ITS EXERCISE BY NOTIFYING THE SECRETARY OF THE BANCORP IN WRITING OF
REVOCATION OF THE PROXY, BY FILING A DULY EXECUTED PROXY BEARING A LATER DATE
OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
Signature(s) Date
------------------------------------------ ------------------
(Please date this Proxy and sign your name exactly as it appears on your stock
certificates. Executors, administrators, trustees, etc., should give their
full title. If a corporation, please sign in full corporate name by the
president or other authorized officer. If a partnership, please sign in
partnership name by an authorized person. All joint owners should sign.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE