-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RMNQl0p2OYBp220uOOeIPr04J9tj71Ei0KCFdCs64cnsIa9IRwnArckJtPEWJzLz o6uqIHDRRB+uOLIeFug4Ig== 0000351238-99-000002.txt : 19990503 0000351238-99-000002.hdr.sgml : 19990503 ACCESSION NUMBER: 0000351238-99-000002 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990519 FILED AS OF DATE: 19990430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAN FRANCISCO CO CENTRAL INDEX KEY: 0000351238 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 943071255 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-10198 FILM NUMBER: 99605344 BUSINESS ADDRESS: STREET 1: 550 MONTGOMERY ST CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4157817810 MAIL ADDRESS: STREET 1: PO BOX 2887 CITY: SAN FRANCISCO STATE: CA ZIP: 94126 FORMER COMPANY: FORMER CONFORMED NAME: BANK OF SAN FRANCISCO CO HOLDING CO DATE OF NAME CHANGE: 19920703 DEF 14A 1 THE SAN FRANCISCO COMPANY 550 Montgomery Street, 10th Floor San Francisco, California 94111 April 30, 1999 Dear Stockholder: You are cordially invited to attend the 1999 Annual Meeting of Stockholders (the "Annual Meeting") of The San Francisco Company (the "Company"), to be held on May 19, 1999, at 10:00 a.m. local time, in the Board room of the Company at 550 Montgomery Street, 11th Floor, San Francisco, California, 94111. Enclosed are the Notice of the Annual Meeting, a Proxy Statement describing the business to be transacted at the Annual Meeting, and proxy cards for use in voting at the Annual Meeting. Separate proxy cards are provided for the holders of the Company's Class A Common Stock, $0.01 par value (the "Common Stock"), and of the Company's 8% Series B Convertible Preferred Stock, $0.01 par value (the "Series B Preferred Stock"). A copy of the Company's Annual Report on Form 10-K for the twelve months ended December 31, 1998 (the "1998 Annual Report") accompany the Proxy Statement. At the Annual Meeting, stockholders will be asked: (i) to elect nine (9) of the nine (9) authorized directors of the Company, three (3) to serve for one-year terms, three (3) to serve for two-year terms, and three (3) to serve for three-year terms; (ii) to ratify the Board of Directors' selection of KPMG LLP, independent public accountants, as the independent accounting firm for the Company during the fiscal years ending December 31, 1998 and 1999; and We hope that you will be able to attend the Annual Meeting. In any event, please complete, date, sign, and promptly return the appropriate enclosed proxy for the Common Stock and/or the Series B Preferred Stock. Sincerely yours, JAMES E. GILLERAN Chairman of the Board and, Chief Executive Officer You are urged to complete, date, sign, and promptly return your proxy card(s) in the enclosed envelope whether or not you plan to attend the Annual Meeting. PAGE THE SAN FRANCISCO COMPANY 550 Montgomery Street, 10th Floor San Francisco, California 94111 NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS To Be Held On May 19, 1999 To the holders of the Class A Common Stock, par value $.01 per share (the "Common Stock"), and the 8% Series B Convertible Preferred Stock, par value $.01 per share (the "Series B Preferred Stock"), of the San Francisco Company (the "Company"): The 1999 annual meeting of the stockholders of the Company will be held on May 19, 1999 at 10:00 a.m. local time, in the Board room of the Company, 550 Montgomery Street, 11th Floor, San Francisco, California 94111 (the "Annual Meeting") for the following purposes: 1. To elect nine (9) of the nine (9) authorized directors of the Company, three (3) to serve for one-year terms, three (3) to serve for two-year terms, and three (3) to serve for three-year terms; 2. To ratify the Board of Directors' selection of KPMG LLP, independent public accountants, as the independent accounting firm for the Company during the fiscal years ending December 31, 1998 and 1999; and These matters are more fully discussed in the enclosed Proxy Statement. If the Company's principal stockholder of record votes all of his shares of the Common Stock in favor of any or all of these proposals, then approval of such proposals would be assured. While the principal stockholder has not entered into any agreements as to the manner in which he will vote his shares, he has expressed his intent to vote in favor of all of the above proposals. Holders of the Common Stock and Series B Preferred Stock of the Company of record at the close of business on March 31, 1999 are entitled to vote at the Annual Meeting to the extent and in the manner set forth in the Proxy Statement. The Board of Directors has nominated: (1) Mr. Gordon Swanson, Mr. James E. Gilleran and Mr. Peter Foo to serve as Class I directors for terms until the Company's 2001 Annual Meeting of Stockholders or until their successors are elected, (2) Mr. Kent D. Price, Mr. John McGrath and Mr. Nicholas Unkovic to serve as Class II directors for terms until the Company's 2002 Annual Meeting of Stockholders or until their successors are elected, and (3) Mr. Willard D. Sharpe, Mr. Gary Williams and Mr. Paul Erickson to serve as Class III directors for terms until the Company's 2000 Annual Meeting of Stockholders or until their successors are elected. Any stockholder entitled to vote for directors may nominate candidates for election as directors of the Company; provided, however, that nominations for director of the Company by any person other than the Board of Directors may be made only by a record stockholder who has delivered a written notice to the Secretary of the Company no later than the close of business sixty (60) days in advance of the Annual Meeting or ten (10) days after the date on which notice of the Annual Meeting is first given to stockholders, whichever is later. Such stockholder's notice shall set forth (a) as to each person, if any, whom the stockholder proposes to nominate for election or re-election as a director: (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the Company which are beneficially owned by such person, and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including without limitation such person's written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected); and (b) as to the stockholder giving the notice: (i) the name and address of such stockholder, as they appear on the Company's books, and (ii) the class and number of shares of the Company which are beneficially owned by such stockholder. PAGE 1 At the request of the Board of Directors, any person nominated by the Board for election as a director shall furnish to the Assistant Secretary of the Company that information required to be set forth in the stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the Company unless nominated in accordance with the procedures set forth herein. The Chairman of the Annual Meeting, if the facts warrant, shall determine and declare at the Annual Meeting that a nomination was not made in accordance with the procedures prescribed herein, and if he should so determine, he shall so declare at the Annual Meeting and the defective nomination shall be disregarded. Any person giving a proxy has the power to revoke or suspend it before its exercise. A proxy is revocable before the Annual Meeting by sending written notice or a duly executed proxy bearing a later date to Keary L. Colwell, Chief Financial Officer of the Company, at the principal executive offices of the Company. In addition, a stockholder giving a proxy may revoke it by attending the Annual Meeting and electing to vote in person, before any vote is taken. Unless otherwise instructed, each valid proxy returned that is not revoked will be voted FOR the election as directors of the person or persons specified on such proxy card; FOR each of the proposals listed above; and at the proxy holder's discretion, on such other matters, if any, as may come before the Annual Meeting (including any proposal to adjourn the Annual Meeting). Please sign and date the appropriate enclosed proxy card or cards and return them promptly in the envelope provided whether or not you plan to attend the Annual Meeting. The Board of Directors unanimously recommends a vote FOR the election as directors of the persons named on the proxy card enclosed herein, and FOR the other proposal. The directors of the Company intend to vote all of their shares FOR the approval of the proposals described above. By Order of the Board of Directors, Keary L. Colwell, Chief Financial Officer April 30, 1999 (approximate mailing date of proxy material) PAGE 2 THE SAN FRANCISCO COMPANY 550 Montgomery Street, 10th Floor San Francisco, California 94111 (415) 781-7810 PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS This Proxy Statement is furnished in connection with the solicitation of the enclosed proxy by, and on behalf of, the Board of Directors of The San Francisco Company (the "the Company"), a Delaware corporation and bank holding company for Bank of San Francisco (the "Bank"). The enclosed proxy is for use at the 1999 Annual Meeting of Stockholders of the Company to be held on May 19, 1999, at 10:00 a.m. local time, in the Board room of the Company, 550 Montgomery Street, 11th Floor, San Francisco, California, 94111 and at all postponements or adjournments thereof (the "Annual Meeting"). Purpose of the Annual Meeting At the Annual Meeting, holders of the Company's Class A Common Stock, par value $.01 per share (the "Common Stock") and 8% Series B Convertible Preferred Stock, par value $.01 per share (the "Series B Preferred Stock") will be asked to act on the following proposals: 1. To elect nine (9) of the nine (9) authorized directors of the Company, three (3) to serve for one-year terms, three (3) to serve for two-year terms, and three (3) to serve for three-year terms; 2. To ratify the Board of Directors' selection of KPMG LLP independent public accountants, as the independent accounting firm for the Company during the fiscal years ending December 31, 1998 and 1999; and If the Company's principal stockholder of record votes all of his shares of the Common Stock in favor of any or all of these proposals, then approval of such proposals would be assured. While the principal stockholder has not entered into any agreements as to the manner in which he will vote his shares, he has expressed his intent to vote in favor of all of the above proposals. Voting Securities Only stockholders of record on March 31, 1999 (the "Record Date") are entitled to notice of and to vote at the Annual Meeting. At the close of business on that Record Date, the Company had outstanding thirty-one million, seven hundred and twenty-eight thousand, seven hundred and eighty-two (31,728,782) shares of its Common Stock, and fifteen thousand, eight hundred and sixty-nine (15,869) shares of its Series B Preferred Stock. Each holder of the Common Stock and the Series B Preferred Stock is entitled, with respect to each matter as to which such holder is entitled to vote, to one (1) vote, in person or by proxy, for each share of the Common Stock or Series B Preferred Stock outstanding in his or her name on the transfer books of the Company as of the Record Date. Revocability of Proxies Any person giving a proxy has the power to revoke or suspend it before its exercise. A proxy is revocable before the Annual Meeting by sending written notice or a duly executed proxy bearing a later date to Keary L. Colwell, Chief Financial Officer of the Company, at the principal executive offices of the Company. In addition, a stockholder giving a proxy in any of the forms accompanying this Proxy Statement may revoke it by attending the Annual Meeting and electing to vote in person, before any vote is taken. PAGE 1 Votes Required Holders of the Common Stock and Series B Preferred Stock are entitled to vote on each of the proposals to be presented at the Annual Meeting. The following paragraphs explain, for each proposal, the vote required for adoption. In each case, a quorum must be present for the vote to be valid. PROPOSAL ONE: ELECTION OF DIRECTORS, as to the Class I directors, the validly-nominated nominees for election as directors, who rank first, second and third in number of votes received from holders of the Common Stock and the Series B Preferred Stock represented and voting together as a single class will be elected as directors; as to the Class II directors, the validly-nominated nominees for election as directors, who rank first, second and third in number of votes received from holders of the Common Stock and the Series B Preferred Stock voting together as a single class, will be elected as directors; and as to the Class III directors, the validly-nominated nominees for election as directors, who rank first, second, and third in number of votes received from holders of the Common Stock and the Series B Preferred Stock represented and voting together as a single class, will be elected as directors, in each case even if some or all of such nominees receive less than a majority of the total votes. PROPOSAL TWO: RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTING FIRM FOR 1998 AND 1999 requires an affirmative vote of the holders of a majority of the shares of the Common Stock and the Series B Preferred Stock represented and voting together as a single class. Such other matters, if any, as may properly come before the Annual Meeting will generally require the affirmative vote of the holders of a majority of the shares of the Common Stock and the Series B Preferred Stock represented and voting together as a single class. With regard to the election of directors, votes may be cast in favor or withheld; votes that are withheld will be excluded from the vote and will have no effect. Abstentions may be specified on all proposals (other than the election of directors) and will be counted as shares that are present or represented at the Annual Meeting for purposes of determining a quorum on the proposal on which the abstention is specified. However, because such shares will be counted as represented at the Annual Meeting, and because the success of the proposals (other than the election of directors) is measured based on the number of affirmative votes out of the number of shares represented at the Annual Meeting, abstentions will have the effect of a negative vote. Under applicable Delaware law, broker non-votes are counted for the purpose of determining the presence or absence of a quorum for the transaction of business but are not otherwise counted. Therefore, broker non-votes will have no effect on the outcome of the election of directors but will have the same effect as a vote against the other proposals. Unless otherwise instructed, each valid proxy returned which is not revoked will be voted FOR the election as directors of the persons specified on such proxy card, FOR each of the other proposals, and at the proxy holders' discretion, on such other matters, if any, that may come before the Annual Meeting (including any proposal to adjourn the Annual Meeting). Solicitation of Proxies The Company will bear the entire cost of preparing, assembling, printing and mailing proxy materials furnished by the Board of Directors to stockholders. Copies of proxy materials also will be furnished to brokerage houses, fiduciaries and custodians to be forwarded to the beneficial owners of the Common Stock and the Series B Preferred Stock. In addition to the solicitation of proxies by use of the mail, some of the officers, directors and regular employees of the Company and the Bank may (without additional compensation) solicit proxies by telephone or personal interview, the costs of which the Company will bear. In the event that any of the nominees for election as director become unavailable, which the Company does not expect, it is intended that, pursuant to the accompanying proxy, votes will be cast for such substitute nominee or nominees as may be designated by the Board of Directors, unless the Board of Directors reduces the number of directors. PAGE 2 Annual Report A copy of the Company's Annual Report on Form 10-K for the twelve months ended December 31, 1998 (the "1998 Annual Report") accompanies this Proxy Statement. Additional copies of the 1998 Annual Report, and Quarterly Reports on Form 10-Q are available without cost upon request by writing to Keary L. Colwell, Chief Financial Officer, The San Francisco Company, 550 Montgomery Street, 10th Floor, San Francisco, California 94111. Security Ownership of Certain Beneficial Owners and Management Common Stock On December 4, 1998, the Federal Reserve Board announced that on November 30, 1998, Mr. Putra Masagung and PT Gunung Agung, the beneficial owners of a majority of the Company's Common Stock entered into a Voting Trust Agreement (the "Agreement") which was filed with the Securities and Exchange Commission (the "SEC") on Form 8-K in December 1998. Mr. Masagung and PT Gunung Agung retained their individual beneficial interest but transferred voting control of all of their shares of Common Stock, which as of March 31, 1999 represented 97.8% of the Company's Common Stock, to a Trustee, Mr. Robb Evans, under the terms of the Agreement, effective January 4, 1999. The beneficiaries of the voting trust are Mr. Putra Masagung and PT Gunung Agung. The following sets forth information regarding the beneficial ownership of the holders of five percent (5%) or more of the Common Stock as of March 31, 1999. The address of PT Gunung Agung is 55 MH Thamrin, Jakarta, Indonesia, and Mr. Masagung's address for the purpose of his beneficial ownership is the principal executive office of the Company. Other than as set forth below based upon filings made with the SEC, the Company is not aware of any person who is the beneficial owner of five percent (5%) or more of the Common Stock as of March 31, 1999. Number of Shares of Common Stock Beneficially Percent Name of Beneficial Owner Owned of Class Pt Gunung Agung 16,600,845 52.3% Mr. Putra Masagung 14,426,457 45.5 PAGE 3 The following table shows the beneficial ownership of directors, Named Executive Officers, and directors and Named Executive Officers as a group as of March 31, 1999: Right to Acquire Number of shares Number of Shares of Common Stock Percent of Common Stock Percent Name of Beneficial Beneficially Owned of Class Within Sixty Days of Class Owner James E. Gilleran- Director of the Company and the Bank (1) 1,586,439 4.6% 1,586,439 4.6% John McGrath- Director of the Company and the Bank (1)(2) 350,464 1.0% 350,464 1.0% Kent D. Price- Director of the Company (1) 360,422 1.1% 360,422 1.1% Peter Foo- Director of the Company and Bank (3)(4) 19,829 0.1% 19,829 0.1% Nicholas Unkovic- Director of the Company and Bank (3)(4) 25,112 0.1% 25,112 0.1% Willard D. Sharpe- Director of the Company and Bank (3)(4) 30,438 0.1% 30,188 0.1% Gordon B. Swanson- Director of the Company (3)(4) 32,876 0.1% 30,188 0.1% Paul Erickson- Director of the Company and Bank (4)(5) 13,220 0.1% 13,220 0.1% Gary G. Williams- Director of the Company and Bank (3)(4) 19,829 0.1% 19,829 0.1% Keary Colwell- Chief Financial Officer of the Company and the Bank (6) 90,000 0.3% 90,000 0.3% Joanne Haakinson- Chief Administrative Officer of the Bank and Secretary of the Company (7) 67,500 0.2% 67,500 0.2% Directors and Named Executive Officers as a Group (eleven persons) 2,596,128 7.6% 2,593,190 7.6% _____________________ (1) The stock options have anti-dilution provisions. (2) Mr. McGrath was granted options to acquire 59,653 shares of the Common Stock at a price of $0.45 effective November 18, 1998. These options vest ratably over three years, with one-third vesting on each anniversary of the grant. None of these were vested as of March 31, 1999. (3) Each outside director not covered by an existing contract was granted options to acquire 26,438 shares of the Common Stock at a price of $0.34 effective October 1, 1996. These options will vest over three years based on seniority with Messrs. Swanson, Sharpe, and Unkovic being fully vested, and Messrs. Foo and Williams 75% vested. (4) Each outside director not covered by an existing contract was granted options to acquire 30,000 shares of the Common Stock at a price of $0.45 effective November 18, 1998. These options vest ratably over three years, with one-third vesting on each anniversary of the grant. None of these were vested as of December 31, 1998. (5) Mr. Erickson has been granted options to acquire 26,438 of the Common Stock at a price of $0.45 effective November 21, 1997. The options vest rateably over three years with 25% vested immediately. As of December 31, 1998, 50% were vested. (6) Ms. Colwell has been granted options to acquire 90,000 of the Common Stock at a price of $0.34 effective October 1, 1996 which are fully vested, and 29,000 of the Common Stock with a price of $0.45 effective November 18, 1998 with one-third vest on each anniversary of the grant. (7) Ms. Haakinson has been granted options to acquire 90,000 of the Common Stock at a price of $0.34 effective October 1, 1996 of which 67,500 have vested and 22,500 will vest on October 1, 1999, and 29,000 of the Common Stock which a price of $0.45 effective November 18, 1998 with one-third vesting on the anniversary of the grant. PAGE 4 Series B Preferred Stock The following sets forth information regarding the beneficial ownership of the Series B Preferred Stock as of March 31, 1999. Number of Shares Beneficially Percent Name of Beneficial Owner Owned of Class Gordon Swanson 7,200 45.4% All directors and Named Executive Officers as a group 7,200 45.4 The address of Mr. Swanson for the purpose of his ownership of the Series B Preferred Stock is the principal executive office of the Company. No other directors or officers have beneficial interest in the Series B Preferred Stock. Committees of the Boards of Directors The Company's Board of Directors held ten (10) meetings during 1998. All members of the Board attended at least 75% of all board meetings and meetings of the committees on which they served in 1998. The Company's Board of Directors presently does not have a standing nominating committee. The Board of Directors is responsible for considering the qualifications of individuals to serve as directors and recommending a slate of directors for election at the annual meeting. The Company's Personnel/Compensation Committee presently includes directors Messrs Unkovic, Erickson, Williams, Sharpe, Gilleran and McGrath. This Committee has responsibility for all personnel and compensation policy matters pertaining to Bank employees, officers and directors. It also monitors the Company's compliance with laws and regulations applicable uniquely to the protection of employees and officers. The Named Executive members are non-voting with regard to compensation for the Named Executives. This Committee met seven (7) times in the 1998 fiscal year. The Bank's Personnel Committee presently includes directors Messrs Erickson, Unkovic, Sharpe, McGrath, Williams, Gilleran and McGrath. This Committee is responsible for the oversight of the management and administration of the benefit plans, monitoring employment practices of the Bank's employees and officers, and senior officer, including Named Executives, compensation review and approval. The Named Executive members are non-voting with regard to compensation for the Named Executives. This Committee met twenty-one (21) times in the 1998 fiscal year. The Company's Audit Committee presently includes outside directors Messrs Sharpe, Foo, Erickson and Unkovic. Mr. Gilleran serves as an advisor to the Committee. This Committee evaluates Company performance, regulatory examination reports from the Federal Reserve Bank and appoints the Company's outside auditors. It also initiates suitable audit examinations of the Company's internal controls to preserve the Company's assets, and reviews periodic reports from outside auditors. This Committee met seven (7) times in the 1998 fiscal year. The Bank's Regulatory Committee presently includes outside directors Messrs Foo, Sharpe, Unkovic, and Erickson. This Committee is responsible for monitoring compliance with regulations, and monitoring the Bank's relationship with its primary regulators, the FDIC and Department of Financial Institutions. This Committee met ten (10) times in the 1998 fiscal year. The Bank's Loan, Investment and Special Assets Committee presently includes directors Messrs Gilleran, McGrath, Unkovic, Sharpe, and Foo, with directors Messrs Erickson and Williams as alternate Committee members. The Committee examines and approves loans above a specified size and monitors regular reviews of the entire loan portfolio. This Committee is responsible for lending, credit, investment and asset/liability management policies and monitors compliance with such policies. This Committee met thirty-three (33) times in the 1998 fiscal year. PAGE 5 Board of Directors' Compensation The Company and the Bank pay director fees to each non- employee Director for attendance at Board meetings and Committee meetings which are held monthly. The combined fee for attendance at a Board meeting of the Company and the Bank is $750 per meeting. At December 31, 1998, the Chairman of each committee receives $400 and each member receives $300 for each committee meeting attended. The Company's committees are the Personnel and Compensation Committee, and the Audit Committee. The Bank's committees are the Loan, Investment, and Special Assets Committee, the Audit and Regulatory Committee, and the Personnel and Compensation Committee. The Company awarded a bonus to certain directors payable in 1999 as recognition of their contribution over the past four years to the improved financial condition of the Company. The total bonus award of $150,000 was paid to Messrs Foo, Erickson, Sharpe, Swanson, Unkovic and Williams in amounts ranging from $15,000 to $35,000 as determined, among other things, by giving weight to each directors' tenure on the board. Executive Officers and Other Significant Officers (the "Named Executives") Each executive officer is selected annually by the Board of Directors pursuant to provisions of the bylaws of the Company and the Bank. In addition, the Company and the Bank periodically enter into employment agreements with certain executive officers. See "Employment Agreements" below. The following are all of the executive officers of the Company and/or the Bank (the "Named Executives"), their occupations for the previous five years, ages and the lengths of service as an officer. JAMES E. GILLERAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (See position description of Mr. Gilleran's position with the Company and the Bank, and his background under the heading "Directors"). JOHN McGRATH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (See position description of Mr. McGrath's position with the Company and the Bank, and his background under the heading "Directors"). JOANNE HAAKINSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ms. Haakinson has served as Executive Vice President and Chief Administrative Officer of the Bank, and Secretary of the Bank and the Company since March 1996. She served as Executive Vice President and Chief Financial Officer of Sacramento First National Bank from 1982 to 1995. At December 31, 1998, Ms. Haakinson was 57 years of age. KEARY COLWELL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ms. Colwell has served as Executive Vice President and Chief Financial Officer of the Bank since April 1996 and of the Company since January 1997. Ms. Colwell had held other senior positions with the Company and the Bank since 1992. Prior to joining the Company and the Bank, she served as Vice President at First Nationwide Bank from 1988 to 1992. At December 31, 1998, Ms. Colwell was 39 years of age. Executive Compensation Decisions on the compensation of the Company's and the Bank's executives are generally made by the Bank's Personnel Committee and/or the Company's Personnel Compensation Committee. The voting members with regard to named executive compensation are outside directors of the Board of Directors of the Company and the Bank. All decisions by these Committees relating to the compensation of the Company's and the Bank's executive officers are reviewed by the Company's and the Bank's full Boards of Directors. Set forth below is a report of the Personnel/Compensation Committee addressing the Company's compensation policies for 1998 as they affected the Named Executives of the Company and the Bank serving at the end of 1998, whose compensation in 1998 is shown in the "Executive Compensation Tables" below. PAGE 6 Compensation Committee Interlocks and Insider Participation The voting members of the Company's Personnel/Compensation Committee, which during 1998 consisted of Mr. Erickson, Mr. Unkovic, Mr. Williams, and Mr. Sharpe, make decisions with respect to the compensation of the Named Executives. There are no director interlocks. Directors Messrs Gilleran and McGrath are on the Company's Personnel Compensation Committee and the Bank's Personnel Committee, but do not participate in voting on compensation matters related to Named Executives. Personnel and Compensation Committee's Report on Executive Compensation The Company's compensation philosophy is to pay for performance as an important way to encourage the actions necessary to achieve the Company's strategic objectives of increasing profitability and maximizing shareholder value. The Company's compensation philosophy is implemented through its compensation program which is structured to: . promote the Company's annual operating objectives, . promote the Company's long-term strategic plans, . ensure continuity of management, . recognize the level of management expertise, . be competitive within the industry and community, and . provide internal equity. The Company's compensation program includes base salary, annual bonus, a stock option plan, a severance and retention plan, and other benefits. The Company and the Bank have entered into contracts with the Named Executives on the terms described below. Base Salary Generally, the Company targets base salary at median to high competitive levels. The competitive levels are based on comparable positions in other banks. In addition, the Company takes other factors into consideration including an individual's specialized expertise, level of experience, broad range of expertise allowing the executive to assume multiple responsibilities, historical performance and salary requirements, leadership in the Company and the community, and contract terms. Annual Bonus The purpose of the annual bonus is to provide incentive for achieving defined target performance levels based on the Company's annual business and profit plan. The annual goals typically include objectives regarding earnings, loan and deposit growth, asset quality, operating efficiency, and regulatory examinations. The CEO and President are eligible to earn up to 100% of annual base salary. The other Named Executives are eligible to earn up to 50% of annual base salary. Annual bonus awards are determined based on the Company's performance and the performance of the individual executive. Based on the Company's extraordinary performance in 1998 and 1997, annual bonuses totaling $531,000 and $360,000 were awarded to the Named Executives. The 1998 annual bonus averaged 75% of base salary and ranged between 45% and 90% of annual base salary. The 1997 annual bonus awards averaged 51% of annual base salary and ranged between 33% and 67% of annual base salary. PAGE 7 Stock Option Plan The purpose of the stock option plan is to serve as a long- term incentive program by directly tying rewards to the long-term success of the Company and increases in stockholder value. Many of the options granted to the executive officers were granted as an inducement to attract and retain executives with the required talent and experience to manage the Company through its prior financial difficulties. All stock option grants are approved by the full board of directors. Severance and Retention Plan The purpose of the severance and retention plan is to promote continuity of management and provide for a retention incentive with regard to a potential change-in-control. Each executive is eligible for severance equal to one year of annual base salary and a retention payment equal to a maximum of one year annual base salary. The retention provision provides for the payment upon a change-in-control or the expiration of the employment agreements on April 22, 2001, which ever occurs first. Other Benefits The executive officers are entitled to participate in all employee benefit plans including the Company's vacation, 401K, and welfare and benefit plans. Each executive is entitled to four weeks of annual vacation. The welfare and benefits plans include workers' compensation benefits, medical and dental, life insurance, and long-term disability. The life insurance plans for the CEO and President provide for coverage of four (4) times the executives salary. In addition, Mr. McGrath has been granted reimbursement of certain living expenses. The Personnel/Compensation Committee believes that the base compensation of the Named Executives is competitive with companies of similar size and with comparable operating history in the commercial banking industry. CEO's Compensation The base salary of the Company's CEO was determined primarily on the terms of his employment agreement as more fully discussed below. The agreement set Mr. Gilleran's base salary at $300,000 and provides for a discretionary annual bonus up to a maximum of 100% of base salary based upon many factors including asset quality, loan and deposit growth, pre-tax earnings, and oversight of the management of the Company and the Bank. In addition, pursuant to his contract in place at that time, a one-time incentive payment of $150,000 was paid in 1997 to the CEO in accordance with his contract based on a determination by the Board of Directors that the condition of the Company and the Bank were satisfactory. Based on the foregoing, in 1998 Mr. Gilleran received a base salary of $300,000, a one-time incentive payment of $150,000, as described above, and was awarded a bonus of $270,000 based on specific objectives for 1998 which was paid in 1999. Dated: April 21, 1999 Outside Director Committee Members Gary Williams, Chairman Paul Erickson Willard Sharpe Nicholas Unkovic PAGE 8 Executive Compensation Tables Summary of 1996-1998 Compensation. The following table sets forth the annual compensation, long-term compensation and other compensation paid to each of the Named Executives. Compensation is listed as of December 31, 1998, 1997 and 1996. SUMMARY COMPENSATION TABLE Annual compensation Long-term compensation(3) Awards Other All annual Restricted Securities other compen- stock underlying compen- Name and Salary Bonus sation award(s) Options/ sation principal Year ($) ($) ($)(1) ($) SARs(#)(2) ($)(4) position (a) (b) (c) (d) (e) (f) (g) (i) Chairman/ 1998 300,000 420,000 0 0 32,289 19,330 CEO-James 1997 279,170 200,000 0 0 179,185 0 E. Gilleran 1996 235,425 40,000 0 0 1,276,637 0 President/ 1998 170,000 153,000 0 0 66,110 25,858 COO/CCO-Bank 1997 170,000 80,000 0 0 35,837 0 John McGrath 1996 169,209 30,000 14,756 0 318,055 0 EVP/CAO 1998 120,000 54,000 0 0 39,000 1,710 Joanne 1997 120,000 40,000 0 0 90,000 0 Haakinson 1996 90,000 20,000 29,078 0 0 0 EVP/CFO 1998 120,000 54,000 0 0 39,000 251 Keary 1997 120,000 40,000 0 0 90,000 0 Colwell 1996 115,000 20,000 0 0 0 0 (1) "Other annual compensation" consists solely of consulting fees paid for consulting services prior to formal appointment into designated positions. (2) Generally, these options were granted pursuant to the employment agreements described below. The options have an exercise price range of between $0.34 and $5.68, the fair market value of the underlying stock at the time of grant. (3) The Company has no long-term incentive plan. (4) All other compensation includes premiums paid by the Bank for life insurance. Mr. McGrath's other compensation also includes reimbursement for living expenses. Employment Agreements Employment Agreement of Mr. Gilleran. The Company and the Bank entered into an employment agreement with Mr. Gilleran dated April 22, 1998 replacing the previous employment agreement. The 1998 employment agreement provides, among other things, for Mr. Gilleran to receive an annual salary of at least $300,000 per year, payable in accordance with the Bank's usual payment practices. In addition, the employment agreement provides for an annual cash performance bonus of between 0% and 100% of base salary. The term of the employment contract is three (3) years. PAGE 9 The contract has a severance provision that provides for a payment equal to one year's annual base salary upon termination. The contract also has a retention provision that provides for a payment equal to one year's annual base salary upon a change-in-control or at the end of three years from the date of the contract which ever occurs first. The agreement provides that the Board of Directors shall grant Mr. Gilleran options under the Amended and Restated 1993 Stock Option Plan (formerly the 1993 Executive Stock Option Plan) to acquire shares of the Company's Class A Common Stock (the "Common Stock") equal to 5% of the fully-diluted shares of the Common Stock, with additional anti- dilution options to be granted in the future as necessary to maintain the 5% interest until after the next public offering of the Company's Common Stock. The exercise price of subsequent anti-dilution options is at the then-current fair market value per share of the Common Stock or the price per share for the Common Stock issued to others in a public offering of the Company's Common Stock. As of December 31, 1998, Mr. Gilleran holds options to purchase 313,639 shares of the Common Stock with an exercise price of $5.68 per share, options to purchase 184 shares of the Common Stock with an exercise price of $4.50 per share, options to purchase 32,289 shares of the Common Stock with an exercise price of $0.45, and options to purchase 1,455,638 shares of the Common Stock with an exercise price of $0.34 per share. Except for certain anti-dilution options, the options granted to Mr. Gilleran, are fully vested. Under a separate indemnification agreement, Mr. Gilleran is indemnified by the Company and the Bank from any liability or expense arising as a result of actions taken by the Company or the Bank, or events relating to the business of the Company or the Bank, occurring prior to the execution of the employment agreement. Subject to certain limitations, Mr. Gilleran is also indemnified by the Company and the Bank from any liability or expense arising as a result of actions taken by the Company or the Bank, or events relating to the business of the Company or the Bank, occurring after the execution of the employment agreement, unless such liability or expense is due to his bad faith or gross negligence. Employment Agreement of Mr. McGrath. The Bank entered into an employment agreement with Mr. McGrath dated April 22, 1998 replacing the previous employment agreement. The 1998 employment agreement provides, among other things, for Mr. McGrath to receive an annual salary of at least $170,000 per year, payable in accordance with the Bank's usual payment practices. In addition, the employment agreement provides for an annual cash performance bonus of between 0% and 100% of base salary. The term of the employment contract is three years. The contract has a severance provision that provides for a payment equal to one year's annual base salary upon termination. The contract also as a retention provision that provides for a payment equal to one year's annual base salary upon a change-in-control or at the end of three years from the date of the contract which ever occurs first. The agreement provides that the Board of Directors shall grant Mr. McGrath options under the Amended and Restated 1993 Stock Option Plan (formerly the 1993 Executive Stock Option Plan) to acquire shares of the Company's Common Stock equal to 1% of the fully-diluted shares of the Common Stock, with additional anti-dilution options to be granted in the future as necessary to maintain the 1% interest until after the next public offering of the Company's Common Stock. The exercise price of subsequent anti-dilution options would be at then-current fair market value per share of the Common Stock or the price per share of the Common Stock issued to others in a public offering of the Company's Common Stock. As of December 31, 1998, Mr. McGrath holds options to purchase 63,683 shares of the Common Stock with an exercise price of $0.45 per share, and options to purchase 353,892 shares of the Common Stock with an exercise price of $0.34 per share. Except for certain anti-dilution options, the options granted to Mr. McGrath, are fully vested. Under a separate indemnification agreement, Mr. McGrath is indemnified by the Bank from any liability or expense arising as a result of actions taken by the Bank or the Company, or events relating to the business of the Bank or the Company, occurring prior to the execution of the employment agreement. Subject to certain limitations, Mr. McGrath is also indemnified by the Bank from any liability or expense arising as a result of actions taken by the Bank or the Company, or events relating to the business of the Bank or the Company, occurring after the execution of the employment agreement, unless such liability or expense is due to the his bad faith or gross negligence. PAGE 10 Employment Agreements of Ms. Colwell and Ms. Haakinson. The Bank entered into employment agreements with Ms. Colwell and Ms. Haakinson dated April 22, 1998 which provide, among other things, for Ms. Colwell and Ms. Haakinson to receive an annual salary of at least $120,000 per year, payable in accordance with the Bank's usual payment practices. In addition, the employment agreement provides for an annual cash performance bonus of between 0% and 50% of base salary. The term of each employment contract is three years. The contracts have severance provisions that provide for a payment equal to one year's annual base salary upon termination. The contracts also have a retention provision that provides for payments equal to one year's annual base salary upon a change-in-control or at the end of three years from the date of the contract which ever occurs first. Under separate indemnification agreements, Ms. Colwell and Ms. Haakinson are indemnified by the Bank from any liability or expense arising as a result of actions taken by the Bank or the Company, or events relating to the business of the Bank or the Company, occurring prior to the execution of the employment agreement. Subject to certain limitations, they are also indemnified by the Bank from any liability or expense arising as a result of actions taken by the Bank or the Company, or events relating to the business of the Bank or the Company, occurring after the execution of the employment agreement, unless such liability or expense is due to the his bad faith or gross negligence. Other Employee Benefit Plans 401(k) Profit Sharing Plan. In 1986, the Company established a 401(k) Profit Sharing Plan (the "Plan") which is intended to qualify under Sections 401(a) and 401(k) of the Internal Revenue Code. The Plan permits each participating employee with six months of service to contribute to the Plan through payroll deductions (the "salary deferral contributions") of from 2% to 16% of the participant's eligible compensation from the Company and its subsidiaries, thereby deferring taxes on all or a portion of these amounts. Under the Plan, the Company currently will match a participant's tax deferred contributions by an amount equal to 100% of such contribution for each year subject to a limitation of 2% of the participant's eligible compensation for that year. The Company may also make additional contributions to the Plan in such amounts as may be determined by the Company's Board of Directors. Any such additional contributions are allocated among Plan participants based upon their compensation levels. The Company's contribution vests 100% after a participant has completed five years of participation in the Plan, with vesting of 20% per year for each of years one through five. In addition, the Company's contribution vests upon a participant's retirement at age 65 or upon a participant's death or permanent disability. Participants are entitled to receive their salary deferral contributions and vested benefits under the Plan upon termination of employment, retirement, death or disability. Participants have the right to allocate their salary deferral contributions among ten (10) different investment funds. Amended and Restated 1993 Stock Option Plan. Awards under the Amended and Restated 1993 Stock Option Plan are made to both directors and officers. The awards for officers are discretionary and based on the performance of the Company, the officer's job performance, the importance of his or her position, and his or her contribution to the organization's goals for the award period. In 1998, 1997 and 1996, grants totaling 645,771, 668,971 and 2,522,689 were made, respectively. As of December 31, 1998, the maximum number of options available for grant have been granted. Pension Plan and Long-term Incentive Plan. The Company does not have pension or long-term incentive plans. PAGE 11 The following table sets forth the options granted to the Named Executives during 1998: Options/SAR Grants in Last Fiscal Year Numbers of % of Total Securities Options/SARs Grant Underlying Granted to Exercise or Date Name and Prin- Options/SARs Employees in Base Price Expiration Present cipal position Granted(#) Fiscal Year ($/Share) Date Value($)(1) (a) (b) (c) (d) (e) (f) Chairman/CEO James E. Gilleran 32,289 5.0 0.45 11/17/2008 2,260 President/COO /CCO John McGrath 66,110 10.2 0.45 11/17/2008 4,628 EVP/CAO Joanne Haakinson 39,000 6.0 0.45 11/17/2008 2,730 EVP/CFO Keary Colwell 39,000 6.0 0.45 11/17/2008 2,730 (1) The Company used the Black-Scholes option pricing model assuming a risk free interest rate of 4.54%, an expected life of approximately thirty months (2.5 years), no expected dividend yield and a volatility factor of less than one. (2) Options totaling 6,457 granted to Mr. McGrath and all of the options granted to Mr. Gilleran in accordance with the anti-dilution provisions of their employment contracts. Accordingly, they are immediately vested but are not exercisable until the underlying options (which resulted in the issuance of the anti-dilution options) are exercised. (3) Options totaling 59,653 granted to Mr. McGrath and all of the options granted to Ms. Haakinson and Ms. Colwell vest equally on each anniversary over a three year period or in full upon a change in control. page 12 The following table sets forth the unexercised options held as of December 31, 1998 and options exercised during 1998 by the Named Executives: Aggregated Options/SAR Exercises in the Last Fiscal Year and Fiscal Year-end Options/SAR Values Number of Securities Value of Underlying Unexercised Unexercised In-the-Money Options/SARs at Options/SARs at Shares Fiscal Year end Fiscal Year end($) Name and Prin- Acquired on Value (Exercisable/Un- (Exercisable/Un- cipal position Exercise(#) Realized ($)exercisable)(#) exercisable)($)(1) (a) (b) (c) (d) (e) Chairman/CEO James E. -- -- 1,586,439/ $337,516/ Gilleran 215,673 45,847 President/COO /CCO -- -- 234,269/ $91,121/ John McGrath 183,306 10,819 EVP/CAO Joanne -- -- 67,500/ $17,550/ Haakinson 61,500 11,700 EVP/CFO -- -- 90,000/ $23,400/ Keary Colwell 39,000 5,850 (1) Fair market value is calculated based on a bid price of $0.60 per share less the underlying exercise price per share of in-the-money options. PAGE 13 Common Stock Performance Graph The following Common Stock Performance chart compares the annual percentage change, on a dividend reinvested basis, in the cumulative total stockholder return on the Common Stock with the cumulative total return of the Standards & Poor's 500 Stock Index (the "S&P") and for the five year period commencing January 1, 1993, and an index on the Company's peers selected in good faith. The peer group index selected is the Dow Jones Banks - Western U.S. The comparison assumes $100 was invested on December 31, 1993 in the Company's Common Stock in each of the foregoing indices and the reinvestment of dividends. The stock price performance depicted in the Performance Graph is not necessarily indicative of future price performance. [GRAPH NOT INCLUDED] Index 1993 1994 1995 1996 1997 1998 The San Francisco Company $100 $29 $1 $2 $3 $2 S&P 500 Total Return Index 100 101 139 171 229 294 Dow Jones Western Bank Index 100 106 183 241 350 416 In 1994, the Company's Common Stock was suspended from trading on the American Stock Exchange and in 1995 the Company's Common Stock was delisted. Since 1996, First Security Van Kasper has been making a market in the Company's Common Stock. The Company's Common Stock is thinly traded with less than 2.2% held by minority Stockholders. PAGE 14 Certain Relationships and Related Transactions The Bank has had and expects to continue to have banking transactions with many of the directors and executive officers of the Company and the Bank (and their associates). Loans by the Bank to any director or executive officer of the Company or any of its subsidiaries (or any associate of such persons) have been made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and were judged not to involve more than the normal risk of collection or present other unfavorable features. Loans by the Bank to any director, executive officer or principal stockholder of the Company or any of its subsidiaries (as such persons are defined by regulation) are subject to limitations under California and federal law. Among other things, a loan by the Bank to a director, executive officer, or principal stockholder of the Company or any of its subsidiaries must be on non-preferential terms and, if all loans to a given person exceed $25,000, such loans must be approved in advance by the Bank's Board of Directors. The Bank had no such loans outstanding as of December 31, 1998. The Company and the Bank entered into indemnification agreements with each of the Named Executive Officers and each Director dated March 18, 1998. The indemnification agreements provide for indemnification from and against any and all liabilities or expenses arising with respect to any action or inaction taken in the course of their duties as a Named Executive Officer or as a director of the Company and/or the Bank. The Company and the Bank have engaged the law firm of Graham & James LLP to perform the function of General Counsel. Mr. Unkovic, a director of the Company and the Bank, is a partner with Graham & James LLP. The Company entered into an indemnification agreement with Graham & James LLP dated December 16, 1994. The indemnification agreement provides that Graham & James LLP is indemnified against any and all liabilities and expenses against Graham & James LLP arising by reason of Mr. Unkovic serving as a director of the Company. The indemnification does not include legal services Mr. Unkovic or Graham & James LLP may render to the Company or its subsidiaries, affiliates, directors, officers or stockholders. PROPOSAL ONE: ELECTION OF DIRECTORS Directors and Nominees The bylaws of the Company provide a procedure for nomination for election of members of the Board of Directors, which procedure is printed in full in the Notice of Annual Meeting of Stockholders accompanying this Proxy Statement. If nomination is not made in accordance with the procedures set forth in the Notice of Annual Meeting of Stockholders, the Chairman of the Annual Meeting may, if the facts warrant, determine and declare at the Annual Meeting that a nomination was not made in accordance with the procedures set forth in the bylaws and direct that the defective nomination be disregarded. The bylaws of the Company presently provide that the number of directors of the Company is subject to adjustment by resolution of the Board of Directors, and the Board of Directors have adopted a resolution setting the number of directors at nine (9). Pursuant to the reincorporation of the Company in Delaware in 1988, the Board of Directors is divided into three classes (Class I, Class II, and Class III). The bylaws prescribe that the three classes shall be as nearly equal in number as possible. Accordingly, Classes I, II and III are each comprised of three (3) directors. Each director serves for a term ending on the date of the third annual meeting of the stockholders following the annual meeting at which the director was elected. The Class I, II and III directors are presently serving until the Annual Meeting. Notwithstanding the above, each director serves pursuant to the bylaws until his successor is duly elected and qualified or until his death, resignation or removal. Except as stated below, no director of the Company is a director of any company with a class of securities registered pursuant to section 12 of the Exchange Act, or subject to the requirements of section 15(d) of the Exchange Act or of any company registered as an investment company under the Investment the Company Act of 1940, as amended. Except for the Bank and Peninsula Holdings, none of the corporations or organizations discussed below is an affiliate of the Company. Mr. Masagung owns a controlling interest in Peninsula Holdings and Mr. Peter Foo is the President of Peninsula Holdings. No director, nominee for director or executive officer of the Company or the Bank has any family relationship with any other director or executive officer of the Company or director or executive officer of the Bank. PAGE 15 No vacancy on the Board of Directors will exist after the election of directors pursuant to this PROPOSAL ONE. Class I Directors. Three (3) Class I directors are to be elected at the Annual Meeting, each to hold office until the Company's 2001 annual meeting of stockholders and until his respective successor is duly elected and qualified, or until his death, resignation or removal. The nominees for election as a Class I Director are Messrs. James E.Gilleran, Gordon B. Swanson, and Peter Foo. Each is presently serving as a director. The following sets forth as to each nominee for election as a Class I director of the Company, such person's age, principal occupation during at least the last five years, and the period during which each person has served as a director of the Company. JAMES E. GILLERAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Gilleran has served as the Chairman and Chief Executive Officer of the Company and the Bank since October 1994. He served as Superintendent of Banks for the State of California from 1989 to 1994. At December 31, 1998, Mr. Gilleran was 65 years of age and he has served as a director of the Company and the Bank since 1994. GORDON B. SWANSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Swanson has been Chief Executive Officer of Cran Chile since October 1997. Cran Chile is a major grower and processor of cranberries located in southern Chile. Mr. Swanson served as Vice President of Global Real Estate with Levi Strauss & Co. from 1993 to 1997. At December 31, 1998, Mr. Swanson was 54 years of age and he has served as a director of the Company and the Bank since 1985. PETER FOO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Foo has been the President of Peninsula Holdings Inc. since 1993. He was the co-owner of Ampac Trading (USA) Co. from 1980 to 1993. At December 31, 1998, Mr. Foo was 51 years of age. He has served as a director of the Company and the Bank since 1996. Class II Directors. Three (3) Class II directors are to be elected at the Annual Meeting, each to hold office until the Company's 2002 annual meeting of stockholders and until his respective successor is duly elected and qualified, or until his death, resignation or removal. The nominees for election as a Class II Director are Messrs. John McGrath, Kent D. Price, and Nicholas Unkovic. Each is presently serving as a director. The following sets forth as to each nominee for election as a Class II director of the Company, such person's age, principal occupation during at least the last five years, and the period during which each person has served as a director of the Company. JOHN MCGRATH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. McGrath has served as President, Chief Operating Officer and Chief Credit Officer of the Bank since 1995 and as President of the Company since 1997. He served as President and Chief Executive Officer of Sacramento First National Bank from 1982 to 1995. At December 31, 1998, Mr. McGrath was 56 years of age and he has served as a director of the Bank since 1995 and as a director of the Company since 1997. KENT D. PRICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Price is the President of Robert Kent Company. In 1998, he retired from IBM where he served as General Manager from 1994 to 1998. Mr. Price was the Chairman and Chief Executive Officer of the Company and the Bank from September 1993 to August 1994. He served as Executive Vice President, Private Banking and Corporate Development of Bank of America from 1991 to 1993. At December 31, 1998, Mr. Price was 55 years of age and he has served as a director of the Company since 1993 and was a director of the Bank from 1993 to 1994. PAGE 16 NICHOLAS UNKOVIC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Unkovic is and has been a partner for the law firm of Graham & James LLP for more than five years. At December 31, 1998, Mr. Unkovic was 47 years of age and he has served as a director of the Company since 1994 and as director of the Bank since 1996. Class III Directors. Three (3) Class III directors are to be elected at the Annual Meeting, each to hold office until the Company's 2000 annual meeting of stockholders and until his respective successor is duly elected and qualified, or until his death, resignation or removal. The nominees for election as a Class III Director are Messrs. Paul Erickson, Willard D. Sharpe, and Gary Williams. Each is presently serving as a director. The following sets forth as to each nominee for election as a Class III director of the Company, such person's age, principal occupation during at least the last five years, and the period during which each person has served as a director of the Company. PAUL ERICKSON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Erickson has been the managing principal of Erickson Strategic Consulting Services since 1989. He advises owners and CEOs of medium size business on strategic financial, marketing and organizational issues. At December 31, 1998, Mr. Erickson was 63 years of age and he has served as a director of the Company and the Bank since 1997. WILLARD D. SHARPE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Sharpe is a retired economist who, at the time of his retirement in 1987, served as a Vice President of Chase Manhattan Bank and as the Bank's chief economist for Asia. In addition, since 1993, Mr. Sharpe has been a Vice President of two privately held companies involved in efforts to explore prospects for investment in Vietnam. At December 31, 1998, Mr. Sharpe was 76 years of age and he has served as a director of the Company and the Bank since 1993. GARY WILLIAMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mr. Williams has served as the Dean of the McLaren School of Business School at the University of San Francisco since 1986. At December 31, 1998, Mr. Williams was 66 years of age and he has served as a director of the Company and the Bank since 1996. If the Company's principal stockholder of record were to vote all of the shares of the Common Stock that are subject to the Agreement in favor of PROPOSAL ONE approval would be assured. PROPOSAL TWO: RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTING FIRM FOR 1998 AND 1999 The firm of KPMG LLP independent public accountants, was appointed in 1998 and 1999 to audit the books and records of the Company and the Bank for 1998 and 1999, respectively. The selection of an independent accounting firm to provide audit services for the Company has been approved annually by the Company's Board of Directors. The Board engaged KPMG LLP to perform auditing services for 1998 prior to ratification by the stockholders. The Board desires to have KPMG LLP continue as the independent accounting firm for the Company for the current fiscal year. Accordingly, stockholders are being asked to act upon a proposal to ratify the Board of Directors' selection of KPMG LLP for 1998 and 1999. KPMG LLP has advised the Company that one or more of its representatives will be present at the Annual Meeting to make a statement if they so desire and to respond to appropriate questions. If the Company's principal stockholder of record were to vote all of the shares of the Common Stock that are subject to the Agreement in favor of PROPOSAL TWO approval would be assured. PAGE 17 The Board of Directors recommends a vote FOR PROPOSAL TWO: RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTING FIRM FOR 1998 AND 1999 STOCKHOLDER PROPOSALS The deadline for stockholders to submit proposals to be considered for inclusion in the Company's proxy statement and form of proxy for the 2000 Annual Meeting of stockholders is March 15, 2000. OTHER PROPOSED ACTION The Board of Directors is not aware of other business which will come before the Annual Meeting, but if any such matters are properly presented, proxies solicited hereby will be voted, at the proxy holder's discretion, upon the direction of management. All shares represented by duly executed proxies will be voted at the Annual Meeting. The SAN FRANCISCO COMPANY KEARY L. COLWELL Chief Financial Officer San Francisco, California April 30, 1999 PAGE THE SAN FRANCISCO COMPANY Proxy Solicited by the Board of Directors Annual Meeting of Stockholders May 19, 1999 James E. Gilleran or Keary L. Colwell, or either of them, each with the power of substitution, is hereby authorized to represent and to vote the Class A Common Stock (the "Common Stock") of the undersigned at the Annual Meeting of Stockholders of THE SAN FRANCISCO COMPANY (the "Company"), to be held on May 19, 1999, at 10:00 a.m. local time, in the Boardroom of the Company at 550 Montgomery Street, 11th Floor, San Francisco, California 94111, or any adjournment thereof, as follows: 1. PROPOSAL ONE: to elect nine (9) of the nine (9) authorized directors of the Company, three (3) to serve for two-year terms (Class I), three (3) to serve for three-year terms (Class II), and three (3) to serve for one-year terms (Class III). FOR all nominees listed below (except as listed to the contrary) or WITHHOLD AUTHORITY to vote for all nominees listed below. Class I Directors: Gordon B. Swanson, James E. Gilleran, and Peter Foo. Class II Directors: Kent D. Price, John McGrath, and Nicholas Unkovic. Class III Directors: Paul Erickson, Willard D. Sharpe, and Gary Williams. FOR ALL___________ WITHHELD FOR ALL ___________ FOR ALL EXCEPT _____________ _____________ _____________ 2. PROPOSAL TWO: to ratify the Board of Directors' selection of KPMG LLP, independent public accountants, as the independent accounting firm for the Company during the fiscal years ending December 31, 1998 and 1999. FOR _________ AGAINST _________ ABSTAIN _________ This proxy will be voted as specified, or if no choice is specified, will be voted FOR Proposals One and Two. Dated:___________________________, 1999 _______________________________________ (Signature) _______________________________________ (Signature if held jointly) (Please sign EXACTLY as your name appears on your stock certificate and this proxy. Executors, administrators, trustees, guardians, attorneys etc. should give their full title. If signer is a corporation, please give full corporate name and signature by a duly authorized officer, stating the officer's title. If a partnership, please sign in partnership name by an authorized person.) PAGE THE SAN FRANCISCO COMPANY Proxy Solicited by the Board of Directors Annual Meeting of Stockholders May 19, 1999 James E. Gilleran or Keary L. Colwell, or either of them, each with the power of substitution, is hereby authorized to represent and to vote the 8% Series B Convertible Preferred Stock of the undersigned at the Annual Meeting of Stockholders of THE SAN FRANCISCO COMPANY (the "Company"), to be held on May 19, 1999, at 10:00 a.m. local time, in the Boardroom of the Company at 550 Montgomery Street, 11th Floor, San Francisco, California 94111, or any adjournment thereof, as follows: 1. PROPOSAL ONE: to elect nine (9) of the nine (9) authorized directors of the Company, three (3) to serve for one-year terms (Class III), three (3) to serve for two-yer terms (Class I), and three (3) to serve for three-year terms (Class II). FOR all nominees listed below (except as listed to the contrary) or WITHHOLD AUTHORITY to vote for all nominees listed below. Class I Directors: Gordon B. Swanson, James E. Gilleran, and Peter Foo. Class II Directors: Kent D. Price, John McGrath, and Nicholas Unkovic. Class III Directors: Paul Erickson, Willard D. Sharpe, and Gary Williams. FOR ALL __________ WITHHELD FOR ALL ___________ FOR ALL EXCEPT _____________ _____________ _____________ 2. PROPOSAL TWO: to ratify the Board of Directors' selection of KPMG LLP, independent public accountants, as the independent accounting firm for the Company during the fiscal years ending December 31, 1998, and 1999. FOR ___________ AGAINST ____________ ABSTAIN ____________ This proxy will be voted as specified, or if no choice is specified, will be voted FOR Proposals One and Two. Dated: ____________________________, 1999 _________________________________________ (Signature) _________________________________________ (Signature if held jointly) (Please sign EXACTLY as your name appears on your stock certificate and this proxy. Executors, administrators, trustees, guardians, attorneys etc, should give their full title. If signer is a corporation, please give full corporate name and signature by a duly authorized officer, stating the officer's title. If a partnership, please sign in partnership name by an authorized person.) -----END PRIVACY-ENHANCED MESSAGE-----