EXHIBIT 10.15
OPTION NO._____________________
________________________________________________________________________________
THIS OPTION AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF AND ANY
INTEREST OR PARTICIPATION HEREIN OR THEREIN ARE NOT REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), THE CALIFORNIA
CORPORATE SECURITIES LAW OF 1968, AS AMENDED, OR THE SECURITIES LAWS OF ANY
JURISDICTION, BY REASON OF SPECIFIC EXEMPTIONS THEREIN RELATING TO THE LIMITED
AVAILABILITY OF THE OFFERING AND MAY ONLY BE SOLD OR OFFERED FOR SALE BY AN
INVESTOR IF SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT AND THE CALIFORNIA
CORPORATE SECURITIES LAW OR OTHER APPLICABLE STATE SECURITIES LAWS OR IF
REGISTRATION OR QUALIFICATION UNDER SUCH ACTS IS NOT REQUIRED.
THE HOLDER OF THIS OPTION AND THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF ARE SUBJECT TO THE RESTRICTIONS HEREIN SET FORTH.
VOID AFTER 5:00 PM, SAN FRANCISCO TIME, ON DECEMBER 31, 2005.
________________________________________________________________________________
FORM OF CONTINGENT OPTION
to
SUBSCRIBE FOR AND PURCHASE
COMMON STOCK
of
FIRST REPUBLIC BANCORP INC.
________________________
FIRST REPUBLIC BANCORP INC.,
a Delaware corporation (the "Company")
HEREBY GRANTS,
subject to the provisions and upon the terms and conditions herein set forth
including without limitation the vesting and other contingencies set forth in
Section 1 hereof, to
Name
---------------------
(the "Optionholder") the right to subscribe for the purchase from the Company,
at the price of
$13.125 PER SHARE,
-------
as such price may be adjusted from time to time as provided herein (the
"Exercise Price"), from and after 9:00 AM San Francisco time on December 31,
1995 and to and including the earlier of (i) 5:00 PM San Francisco, California
time on December 31, 2005 or (ii) the occurrence of any of the events set forth
in Section 8 hereof (the "Expiration Time"), up to
Number of Shares SHARES
----------------
of the Company's Common Stock, par value $0.01 per share (the "Common Stock"),
as such number of shares may be adjusted from time to time (the "Option
Shares").
1. Exercise Right Contingent Upon Vesting of Options and Limit on Aggregate
------------------------------------------------------------------------
Issuances.
---------
(a) The Optionholder's right to subscribe for the purchase of the Option
Shares from the Company at any particular time shall be limited to the number of
Option Shares as to which the Optionholder's Option has vested in accordance
with the provisions of this Section 1 at that time. The Optionholder shall have
no right to subscribe for the purchase from the Company of any of the Option
Shares as to which the Optionholder's Option has not yet been vested in
accordance with the provisions of this Section 1 unless and until such time as
the Optionholder's Option as to such Option Shares shall have vested.
The Optionholder's Option shall vest as to a number of the Option
Shares calculated in accordance with the following formula:
(i) Upon the date of grant of this Option -- this Option shall vest as to
20.0% of the total number of Option Shares set forth on the cover page
of this Option;
(ii) If the tangible book value of the Company at December 31, 1996 is less
than $16.384 per share, no additional Option Shares shall vest except
as provided in Section 1(a)(iii) and (iv) and Section 1(b) below. On
February 15, 1997, if the tangible book value of the Company at
December 31, 1996 was equal to or more than $16.384 per share -- this
Option shall vest as to a percentage of the total number of Option
Shares set forth on the cover page of this Option obtained as follows:
2
. subtract $14.760 from the Company's tangible book value per share
at December 31, 1996;
. divide the remainder by $5.426 to achieve the "1996 percentage";
. multiply the result by 0.8.
(iii) If the tangible book value of the Company at December 31, 1997 is less
than $18.186 per share, no additional Option Shares shall vest except
as provided in Section 1(a)(iv) and Section 1(b) below. On February
15, 1998, if the tangible book value of the Company at December 31,
1997 was equal to or more than $18.186 per share -- this Option shall
vest as to a percentage of the total number of Option Shares set forth
on the cover page of this Option obtained as follows:
. subtract $14.760 from the Company's tangible book value per share
at December 31, 1997;
. divide the remainder by $5.426 to achieve the "1997 percentage";
. subtract from the resulting percentage the "1996 percentage" used
to calculate the number of Option Shares, if any, previously
vested pursuant to clause (ii) above.
. multiply the result by 0.8.
(iv) If the tangible book value of the Company at December 31, 1998 is less
than $20.186 per share, no additional Option Shares shall vest except
as provided in Section 1(b) below. On February 15, 1999, if the
tangible book value
3
of the Company at December 31, 1998 was equal to or more than $20.186
per share -- this Option shall vest as to a percentage of the total
number of Option Shares set forth on the cover page of this Option
obtained as follows:
. subtract $14.76 from the Company's tangible book value per share
at December 31, 1998;
. divide the remainder by $5.426 to achieve the "1998 percentage";
. subtract from the resulting percentage the sum of "1996 and/or
1997 percentage" used to calculate the number of Option Shares,
if any, previously vested pursuant to clauses (ii) and (iii)
above.
. multiply the result by 0.8.
For purposes of illustration, examples of the foregoing calculations are
set forth on Annex A hereto. The maximum number of Option Shares that may vest
hereunder shall not exceed the number set forth on the cover page of this
Option.
Notwithstanding the foregoing, no Option Shares shall vest on a
February 15 vesting date or thereafter if the Optionholder's employment with the
Company terminated during the immediately preceding calendar year (A) due to
death or disability (as defined in Section 8(b)), unless the Optionholder was an
employee of the Company for at least six months of such calendar year in which
case Option Shares shall vest in accordance with the foregoing provisions of
this Section 1 or (B) due to termination for cause (as defined in Section 8(c))
or voluntary resignation.
4
For purposes of this Option, tangible book value per share shall be
equal to the Company's Total Stockholders' Equity as set forth on the Company's
audited financial statements at December 31 minus goodwill as defined in
-----
accordance with generally accepted accounting principles divided by the sum of
----------
the number of the Company's shares of common stock outstanding at December 31.
In the event that at any December 31 for which a calculation of tangible book
value per share is being made the Company has issued and outstanding shares of
any equity security having a liquidation preference that is senior to the
Company's common stock, then in making such calculation the aggregate
liquidation preference amount of all shares of such equity securities
outstanding at that December 31 date shall be deducted from the Company's Total
Stockholders' Equity.
At December 31, 1995, the date of grant for the Option Shares, the
Company has issued and outstanding $34,500,000 of convertible subordinated
debentures (the "Convertible Issue"). The Convertible Issue pays interest at
7.25%, carries a conversion price of approximately $13.67 and is convertible
into 2,524,210 shares of common stock. The conversion of the Convertible Issue
will dilute, or reduce the Company's tangible book value per share. If the
Convertible Issue is converted prior to December 31, 1998, then the annual
minimum objective or target amounts for tangible book value per share related to
the Option Shares will be adjusted to eliminate the effect of such conversion.
At December 31, 1995, the proforma dilutive effect of the Convertible
Issue on tangible book value per share is approximately
5
$0.46, resulting in an adjusted, proforma tangible book value per share of
$14.30 as if the Convertible Issue were converted. In this example, the annual
targeted amounts for the Option Shares, reflecting an 11% growth rate, would be
$15.873 at December 31, 1996, $17.619 at December 31, 1997 and $19.557 at
December 31, 1998.
(b) Notwithstanding the provisions of Section 1(a) hereof, at any time
during the term of this Option all of the remaining unvested Option Shares set
forth on the cover page of this Option shall automatically vest upon the
happening of any of the following events:
(i) the earlier of the date that the Board of Directors of the
Company approves a plan or agreement of merger or consolidation
providing for the merger of the Company with or into any other
corporation or the date that the Company enters into a binding
agreement of merger or consolidation with any other corporation;
(ii) the earlier of the date that the Board of Directors of the
Company approves, or the date that the Company enters into a
binding agreement providing for, the sale, lease, exchange,
pledge, or other disposition of all or substantially all of the
assets of the Company;
(iii) the date that the Board of Directors of the Company adopts any
plan or proposal for the liquidation or dissolution of the
Company; or
6
(iv) the earlier of the date on which any person or group acquires 25%
or more of the Company's issued and outstanding common stock or
the date upon which any person or group commences, or announces
an intention to commence, an offer for 25% or more of the
Company's issued and outstanding common stock.
(c) Notwithstanding any provisions of this Option to the contrary, the
rights represented by this Option may not be exercised, and the Company shall
not be obligated to issue shares hereunder, if (and to the extent that) the
aggregate number of shares of common stock issued by the Company during that
calendar year pursuant to the exercise of stock options granted to officers,
directors or key employees of the Company under plans or arrangements adopted
without stockholders' approval, when added to the number of shares that the
Optionholder has requested be issued hereunder, would represent 5% or more of
the Company's then issued and outstanding common stock (including the shares
that the Optionholder has requested be issued pursuant to exercise of this
Option); provided, however, that nothing in this Section 1(c) shall prohibit the
-------- -------
exercise of this Option subsequently in the same calendar year or in subsequent
calendar years if at the time of exercise the 5% limit would not be exceeded;
and provided, further, that nothing in this Section 1(c) shall prohibit the
-------- -------
exercise of this Option if the foregoing provision ceases to be necessary in
order to comply with the rules and regulations of the national securities
exchange on which the Company's common stock is then listed and traded.
7
2. Duration and Exercise of Option; Issuance of Option Shares.
----------------------------------------------------------
The rights represented by this Option may be exercised by the
Optionholder of record, in whole, or from time to time in part, during normal
business hours on any day, other than a Saturday or Sunday, on which national
banks are authorized to do business in the City of San Francisco but not later
than the Expiration Time by (i) presentation of this Option, (ii) delivery of an
exercise form substantially in the form annexed hereto (the "Exercise Form")
duly executed by the Optionholder of record and specifying the number of Option
Shares to be purchased, to the Company at the principal office of the Company
(or such other office or agency of the Company as it may designate by notice to
the Optionholder at the address of such Optionholder appearing on the books of
the Company); or (iii) delivery of payment to the Company in cash or by
certified or official bank check, of the Exercise Price for the number of Option
Shares specified in the Exercise Form. Such Option Shares shall be deemed by the
Company to be issued to the Optionholder as the record holder of such Option
Shares as of the close of business on the date on which this Option shall have
been surrendered and payment made for the Option Shares as aforesaid.
All Option Shares which are issued upon the exercise of the rights
represented by this Option shall, upon issuance, be validly issued, fully paid
and nonassessable and free from all taxes, liens, security interests, charges
and other encumbrances with respect to the issue thereof other than taxes in
respect of any transfer occurring contemporaneously with such issue.
8
Certificates for the Option Shares specified in the Exercise Form
shall be delivered to the Optionholder as promptly as practicable, and in any
event within 10 business days, thereafter. The Company shall deliver to the
Optionholder one stock certificate representing the number of Option Shares
specified in the Exercise Form or such other number of stock certificates as may
reasonably be specified by the Optionholder and shall be issued in the name of
the Optionholder.
No adjustments or payments shall be made on or in respect of Option
Shares issuable on the exercise of this Option for any cash dividends paid or
payable to holders of record of Common Stock prior to the date as of which the
Optionholder shall be deemed to be the record holder of such Option Shares. If
this Option is not exercised prior to the Expiration Time, this Option shall
cease to be exercisable and shall become void without the need for any notice or
action on the part of the Company or any other person.
3. Payment of Taxes.
----------------
(a) The issuance of certificates for Option Shares shall be made without
charge to the Optionholder for any stock transfer or other issuance tax in
respect thereto; provided, however, that the Optionholder shall be required to
-------- -------
pay any and all taxes which may be payable in respect to any transfer involved
in the issuance and delivery of any certificates for Option Shares in a name
other than that of the then Optionholder as reflected upon the books of the
Company.
(b) Following any exercise of the Option granted hereunder, the Company
shall pay to the Optionholder an amount equal to the
9
tax benefit available to the Company as a result of the tax deduction allowed to
the Company pursuant to Section 83(h) or 162 of the Internal Revenue Code of
1986, as amended, (the "Code"). The Company shall make such payment if and when
the Company becomes entitled to such tax deduction. For purposes of this Section
3, the tax benefit available to the Company shall be computed using the highest
marginal tax rate under the Code and under the applicable State tax law then in
effect for general business corporations, regardless of the actual tax rate then
in effect for the Company. The Company may withhold from the amount due to the
Optionholder an appropriate amount of Federal, State and local taxes.
4. Adjustment of Exercise Price and Number of Option Shares.
--------------------------------------------------------
Adjustments may be made in the number and kind of Option Shares
issuable upon the exercise of this Option, in the "target amounts" for tangible
book value for the Company per share set forth herein and in the Exercise Price
of this Option in the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights offering or
any other change in the corporate structure or shares of the Company and, in the
event of any such change, the aggregate number and kind of Option Shares shall
be appropriately adjusted. Adjustments under this Section 4 shall be made by the
Board of Directors of the Company, whose determination as to the adjustments to
be made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued pursuant to this Option on
account of any such adjustment. The
10
Company shall, from time to time, take all such action as may be required to
assure that the par value per share of the Option Shares is at all times equal
to or less than the then effective Exercise Price.
If an adjustment in the number of Option Shares creates fractional
shares, upon any exercise hereof, the Company shall pay to the Optionholder an
amount in cash equal to such fraction multiplied by the Current Market Price for
a day that includes the day upon which the exercise is made. For the purposes of
this section, "Current Market Price" shall mean (i) the closing market price of
Common Stock on the last preceding day, if such Common Stock is listed on a
national securities exchange; (ii) the average of the bid and asked prices on
the last preceding day, if such Common Stock is traded over-the-counter; or
(iii) if not so listed or traded, such per share price as the Board of Directors
shall determine, but in no event less than the book value per share of the
Company on the last preceding month end.
5. Transfer Restriction and Legend.
-------------------------------
This Option, (i) shall not be assignable or subject to any
encumbrance, pledge or charge of any nature, whether by operation of law or
otherwise, (ii) shall not be subject to execution, attachment or similar process
and (iii) shall not be transferable, other than by will or the laws of descent
and distribution, and this Option and all rights under this Option shall be
exercisable during the Optionholder's lifetime only by him/her or by his/her
guardian or legal representative.
11
Neither this Option nor securities issued upon the exercise thereof
may be in any manner transferred or disposed of, in whole or in part, except in
compliance with applicable United States federal and state securities laws.
This Option and any interest or participation therein are granted
solely for the account of the Optionholder for investment and may not be held
with a view to or for sale or distribution of the Option or any interest or
participation therein on any portion thereof and not with any intention of
selling, offering to sell, or otherwise disposing of or distributing this Option
or any interest or participation therein or any portion thereof.
6. Reservation and Listing of Shares, Etc.
--------------------------------------
During the period within which this Option may be exercised, the
Company shall at all times have authorized and reserved, and keep available free
from preemptive rights, a sufficient number of shares of Common Stock to provide
for the exercise of this Option, and shall at its expense use its best efforts
to procure such listing thereof (subject to official notice of issuance) as then
may be required on all stock exchanges on which the Common Stock is then listed.
7. Ownership of Option; Maintenance of Record of Exercise; Loss or Destruction
---------------------------------------------------------------------------
of Option.
---------
(a) The Company may deem and treat the person in whose name this
Option is registered on the books of the Company designated for such registry as
the holder and owner hereof (notwithstanding any notations of ownership or
writing hereon) for
12
all purposes and shall not be affected by any notice to the contrary.
(b) The Company shall maintain a record of all prior exercises, the
number of shares acquired upon all prior exercises, the number of shares vested
in the Optionholder pursuant to the provisions hereof and a balance of the
number of Option Shares covered by this Option. The Optionholder shall have the
right, during normal business hours of the Company and upon delivery of at least
five (5) days' prior notice to the Company, to review such record.
(c) Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Option, and, in the case of loss,
theft or destruction, of such bond or indemnification as the Company may
reasonably require, and, in case of such mutilation, upon surrender and
cancellation of this Option, the Company will execute and deliver a new Option
of like tenor.
8. Termination of Option.
---------------------
This Option shall terminate on the earlier of 5:00 PM San Francisco,
California time on December 31, 2005 or
(a) If the Optionholder shall die while an employee of the Company,
or within six (6) months after termination of such service, this Option may be
exercised by his/her executor or administrator or the person or persons to whom
his/her rights under the Option are transferred by will or by the laws of
descent and distribution within, but only within, the period of twelve months
next succeeding the date of his/her death and then only as and to
13
the extent that the Optionholder was entitled to exercise the Option on the day
next succeeding the day he/she died, or
(b) If an Optionholder's service as an employee to the Company
terminates by reason of Disability, the Optionholder may exercise this Option
on, or any time within the twelve months next succeeding, the date of such
termination by Disability and then only as and to the extent that the
Optionholder was entitled to exercise the Option on the day he/she terminated
his/her service as an employee of the Company by reason of Disability.
Disability shall mean inability of an individual to perform the services
normally rendered by such individual due to any physical or mental impairment
that can be expected either to persist for a continuous period of twelve months
or more or to result in death, as determined by the Board of Directors of the
Company on the basis of appropriate medical advice, or
(c) If an Optionholder is terminated as an employee for cause, this
Option shall automatically expire on the date 20 business days following the
date of termination for cause. For this purpose, an Optionholder shall be
considered terminated upon receipt of written notice of termination. If an
Optionholder is not available for service of notice, then an Optionholder shall
be considered terminated upon posting by registered mail of such notice. For
purposes of this Option, termination for cause shall be determined by the Board
of Directors of the Company in its sole discretion and shall include termination
for malfeasance or gross malfeasance in the performance of duties or conviction
for illegal activity in connection therewith or any conduct significantly
14
detrimental to the interests of the Company, and in any event, a determination
of the Board of Directors of the Company with respect thereto shall be final,
binding and conclusive, or
(d) If the Optionholder voluntarily resigns as an employee of the
Company, this Option shall automatically expire six months after the date of
such termination. For this purpose, the date of termination shall be considered
the date written notice of resignation is given by the Optionholder to the
Company.
9. Survival of Option.
------------------
This Option shall survive the death of the Optionholder only to the
extent provided in Section 8(a) herein. During the time this Option is held by
the Optionholder's estate, the Option may be registered in the name of such
estate or of the executor of such estate for the benefit of the estate.
10. Binding Effects; Benefits.
-------------------------
So long as this Option is outstanding and exercisable, this Option
shall inure to the benefit of and shall be binding upon the Company, its
successors and assigns. Nothing in this Option, expressed or implied, is
intended to or shall confer on any person other than the Company, any rights,
obligations or liabilities under or by reason of this Option. The Optionholder
shall have no rights with respect to this Option or the Option Shares except as
expressly set forth in this Option. These rights can be enforced by the
Optionholders and holders of Option Shares, or their respective heirs or legal
representatives. The Optionholder shall not, solely by virtue of this Option, be
entitled to any rights of a stockholder of the Company, either at law or in
equity.
15
11. Amendments and Waivers.
----------------------
This Option may be modified or amended by the Board of Directors of
the Company; provided that, no modification or amendment shall adversely affect
the rights of the Optionholder. The waiver of any nonperformance or
noncompliance with this Option shall only apply to the particular nonperformance
or noncompliance and shall constitute a modification of this Option.
12. Section and Other Headings.
--------------------------
The section and other headings contained in this Option are for
reference purposes only and shall not be deemed to be a part of this Option or
to affect the meaning or interpretation of this Option.
13. Notices.
-------
All demands, requests, notices and other communications required or
permitted to be given under this Option shall be in writing and shall be deemed
to have been duly given, except as provided in Section 1, if delivered
personally or three days after having been mailed by United States certified or
registered first class mail, postage prepaid, to the parties hereto at the
following addresses or at such other address as any party hereto shall hereafter
specify by notice to the other party hereto:
(a) if to the Company, addressed to:
President
First Republic Bancorp Inc.
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
(b) if to any Optionholder, at that person's address as
it appears on the books of the Company.
16
14. Governing Law.
-------------
This Option shall be governed by and construed in accordance with the
laws of the State of California applicable to instruments made and obligations
to be performed in such state.
IN WITNESS WHEREOF, the Company has caused this Option to be signed by
its duly authorized officer.
FIRST REPUBLIC BANCORP INC.
By: __________________________________
President
Date: ________________________________
17
EXERCISE FORM
(To be executed upon exercise of this Option)
The undersigned, the record holder of this Option, hereby irrevocably
elects to exercise the right, represented by this Option, to purchase _________
____________ of the Option Shares and herewith tenders payment for such Option
Shares to the order of FIRST REPUBLIC BANCORP INC. in the amount of $ __________
in accordance with the terms of this Option. The undersigned represents and
warrants that, if the Option Shares have not been registered under the
Securities Act of 1933, as amended, the Option Shares are being purchased solely
for the undersigned's own account for investment and not with a view to or for
sale or distribution of the Option Shares or any portion thereof and not with
any present intention of selling, offering to sell or otherwise disposing of or
distributing the Option Shares or any portion thereof. The undersigned also
represents and warrants that, if the Option Shares have not been registered
under the Securities Act of 1933, as amended, the entire legal and beneficial
interest of the Option Shares purchased hereby are being purchased for and will
be held for the account of the undersigned and neither in whole or in part for
any other person.
The undersigned acknowledges that each certificate for Option Shares
initially issued upon exercise of this Option, unless at the time of exercise
such Option Shares are registered under the Securities Act of 1933, as amended
(the "Securities Act"), shall bear the following legend:
18
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
NOT REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), THE CALIFORNIA
CORPORATE SECURITIES LAW OF 1968, AS AMENDED, OR
THE SECURITIES LAWS OF ANY JURISDICTION, BY REASON
OF SPECIFIC EXEMPTIONS THEREIN RELATING TO THE
LIMITED AVAILABILITY OF THE OFFERING AND MAY ONLY
BE SOLD OR OFFERED FOR SALE BY AN INVESTOR IF
SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT
AND THE CALIFORNIA CORPORATE SECURITIES LAW OR
OTHER APPLICABLE STATE SECURITIES LAWS OR IF
REGISTRATION OR QUALIFICATION UNDER SUCH ACTS IS
NOT REQUIRED.
or such other legend as required by the Board of Directors.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the
Securities Act of the securities represented thereby) shall also bear the above
legend unless legal counsel as shall be reasonably approved by the Company
renders a written legal opinion to the Company that the securities represented
thereby need no longer be subject to such restrictions.
The undersigned also acknowledges that the Company may place a "stop
transfer" notification on the stock records of the Company.
The undersigned warrants that, upon the reasonable request of the
Company, the undersigned will deliver such certificates, instruments and
documents as may be required by the Company.
_____________________________________
Optionholder
19
Page 1 of 3
ANNEX A
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SAMPLE VESTING CALCULATIONS
AT TARGET AMOUNTS
---------------------------
The following sample vesting calculations are presented
for purposes of illustration, based upon the actual
December 31, 1995 tangible book value per share of $14.76
Aggregate
Increase in
Tangible Book Increase in Tangible
Value as a Book Value From Prior Number of
Aggregate Percentage of Year as a Percentage Option Shares
Increase in the Total Three- of the Total Three- Vested Per
Tangible Book Tangible Book Year Targeted Year Targeted Percentage of Option 1,000 Option
Value Per Share Value Increase Increase Shares Vested Shares Granted
--------------------------------------------------------------------------------------------------------------------------
Actual at 12/31/95 (Vested at date of
$14.76 grant) 20.0% 200
Target 12/31/96
$16.384 1.624 29.9% 29.9% 29.9% x 0.8 = 23.9% 239
Target 12/31/97
$18.186 1.802 63.1% 63.1 - 29.9 = 33.2% 33.2% x 0.8 = 26.6% 266
Target 12/31/98
$20.186 2.000 100.0% 100% - 63.1 = 36.9% 36.9% x 0.8 = 29.5% 295
----- ----- ---
Total $5.426 100% 100% 1,000
====== ==== ==== =====
-----------------
Percentages are rounded.
Page 2 of 3
ANNEX A
SAMPLE VESTING CALCULATIONS
TARGETS MISSED
---------------------------
Target Actual Percentage Number of Option
Tangible Tangible Book of Option Shares Vested
Book Value Value Per Shares Per 1,000 Option
Per Share Share Calculation Vested Shares Granted
-----------------------------------------------------------------------------------------------------------------
20.0%* 200
12/31/96 16.384 16.500 16.500 - 14.760 x 0.8 = 25.6% 25.6% 256
---------------
5.426
12/31/97 18.186 18.000 N/A 0% 0
12/31/98 20.186 20.000 N/A 0% 0
----- ---
Total 45.6% 456
===== ===
---------------------
* 20% vested at date of grant.
Page 3 of 3
ANNEX A
-------
SAMPLE VESTING CALCULATIONS
TARGETS EXCEEDED
---------------------------
Target Actual Number of Option
Tangible Tangible Book Percentage of Shares Vested
Book Value Value Per Option Shares Per 1,000 Option
Per Share Share Calculation Vested Shares Granted
----------------------------------------------------------------------------------------------------------------------------------
20.0%* 200
12/31/96 16.384 16.80 16.80 - 14.76 x 0.8 = 30.0% 30.0% 300
-------------
5.426
12/31/97 18.186 20.00 20.00 - 14.76 x 0.8 = 77.3%
-------------
5.426
77.3 - 30.0 = 47.3% 473
----- ---
Subtotal 97.3% 973
12/31/98 20.186 23.00 (All remaining shares) 2.7% 27
Total 100% 1,000
==== =====
