SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
Commission Only (as Permitted
by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SVB Financial Services, Inc.
(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
<PAGE>
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
SVB FINANCIAL SERVICES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, APRIL 24, 1997
5:30 P.M.
Notice is hereby given that the Annual Meeting of Shareholders of SVB
Financial Services, Inc. will be held at the Raritan Valley Country Club, Route
28, Somerville, New Jersey 08876, on Thursday, April 24, 1997 at 5:30 P.M., for
the following purposes:
1. Election of fifteen (15) Directors for the terms as set forth in
the accompanying Proxy Statement.
2. Approval of the SVB Financial Services, Inc. 1997 Restated
Incentive Stock Option Plan as more fully described as Exhibit
"A" of the Proxy Statement.
3. Approval of the SVB Financial Services, Inc. 1997 Directors Stock
Option Plan as more fully described as Exhibit "B" of the Proxy
Statement.
4. Transaction of such other business as may properly come before
the meeting or any adjournment thereof.
Only those shareholders of record of SVB Financial Services, Inc. at
the close of business on March 21, 1997, shall be entitled to
notice of, and to vote at, the meeting. Each share of stock is
entitled to one vote.
By order of the Board of Directors
Marguerite Eppler
Secretary
Somerville, New Jersey
March 27, 1997
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON
WE ASK THAT YOU RETURN YOUR COMPLETED PROXY AS SOON AS POSSIBLE USING THE
ENVELOPE PROVIDED AND IN ANY CASE NO LATER THAN 3:00 P.M. ON APRIL 23, 1997.
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF- ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
<PAGE>
SVB FINANCIAL SERVICES, INC.
103 West End Avenue
P.O. Box 931
Somerville, New Jersey 08876
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS - APRIL 24, 1997
This Proxy Statement is furnished to shareholders of SVB Financial
Services, Inc. (the "Company") in connection with the solicitation of proxies by
the Board of Directors of the Company for the Annual Meeting of Shareholders to
be held at 5:30 P.M. on Thursday, April 24, 1997 and all adjournments thereof.
This Proxy Statement and accompanying materials are being mailed to shareholders
on or about March 27, 1997.
The close of business March 21, 1997, has been fixed as the record date
for the determination of shareholders entitled to notice of, and to vote at, the
meeting. As of the record date there were issued and outstanding 1,369,655
shares of Common Stock, with a par value of $4.17 per share (the "Common
Stock").
The Company owns 100% of Somerset Valley Bank (the "Bank"). At this
time the Company's investment in the Bank accounts for virtually all of its
assets and source of income. Accordingly, to avoid misleading or incomplete
information, portions of the following material discuss the Bank.
Holders of a majority of the outstanding shares of Common Stock present
in person or by proxy will constitute a quorum for the purpose of transacting
business at the annual meeting. ALL SHAREHOLDERS ARE URGED TO VOTE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY TO THE TRANSFER AGENT IN THE ENCLOSED
RETURN ENVELOPE.
When properly executed, a proxy will be voted in the manner directed by
the shareholder. However, if no contrary specification is made, it will be voted
FOR all of the Directors and the proposals listed in this Proxy Statement.
A proxy may be revoked at any time before it is exercised by written
notice to the Secretary of the Company, 103 West End Avenue, Somerville, New
Jersey 08876, bearing a date later than the proxy. The presence at the meeting
of any shareholder who submitted a proxy shall not revoke such proxy unless such
shareholder shall file written notice of revocation with the Secretary of the
Company prior to the voting of the Proxy. All properly executed proxies which
are received by the Secretary and are not revoked will be voted. Where no
instructions are indicated, properly executed proxies will be voted "FOR" the
Directors and the proposals set forth below.
THIS SOLICITATION IS MADE BY THE MANAGEMENT OF THE COMPANY and the cost
thereof shall be borne by the Company. Proxies may be solicited by mail, in
person or by telephone or facsimile by directors, officers or employees of the
Company and its subsidiary, Somerset Valley Bank. Such persons will receive no
additional compensation for their solicitation activities and will be reimbursed
only for their actual expenses in connection therewith. The Company will, upon
request, reimburse custodians, nominees, and fiduciaries for reasonable expenses
in forwarding materials to the proper shareholders.
<PAGE>
Voting Rights
Each share of Common Stock is entitled to one vote (non cumulative) on
all matters presented for shareholder vote. Abstentions and broker non-votes are
counted for the purposes of determining the presence or absence of a quorum for
the transaction of business. Abstentions are counted separately and are not
considered as either a vote "FOR" or "AGAINST" in tabulations of votes cast on
proposals by the shareholders. Broker non-votes are not counted at all for
purposes of determining whether a proposal has been approved.
Under New Jersey law and the Company's By-Laws a majority of the votes
cast at a meeting at which a quorum to transact business is present shall decide
the election of Directors and the proposals relating to Stock Option Plans set
forth in this Proxy Statement.
Directors/Principal Shareholders/Executive Officers
In accordance with the By-Laws of the Company, its Board of Directors
shall, from time to time, fix the exact number of directors, up to 25. The
number is presently fixed at 15. All named below, except as noted, are presently
members of the Board and have served since the Company's incorporation except
Dr. Gold who was appointed in July, 1996. They have all been members of the
Board of the Bank since 1990 with the exception of Mr. Bernstein, who has been a
member since 1991 and Dr. Gold who was one of the original Board Members and
Incorporators of the Bank and was reappointed to the Board in August, 1996.
The Company's Certificate of Incorporation provides that the Board of
Directors be classified and divided into three classes, as nearly equal in
number as possible. The 1997 Annual Meeting of Shareholders is the first such
meeting since the Company was incorporated. In the election of Directors at this
First Annual Meeting, the term of office of the first class shall expire at the
next Annual Meeting of Shareholders, the term of office of the second class
shall expire at the 1999 Annual Meeting of Shareholders and the term of the
third class shall expire at the 2000 Annual Meeting of Shareholders. After 1997,
at each Annual Meeting of Shareholders, Directors (equal in number to the class
whose term expires at the time of such meeting) shall be elected to hold office
until the third succeeding Annual Meeting of Shareholders.
Each Director no matter when elected will hold office until his/her
successor is elected and qualified, or until their earlier resignation or
removal.
The following table presents the name, age and address of each nominee
for Director and the Executive Officers, the class to which each nominee for
Director is assigned, the number of shares and the percentage of the outstanding
shares of common stock of the Bank beneficially owned, directly or indirectly,
by each of them as of March 21, 1997. There is no one other than the persons
listed below who owns beneficially 5% or more of the outstanding common stock.
<PAGE>
<TABLE>
<CAPTION>
Shares % of
Name & Address Beneficially Total
Title Age Principal Occupation Owned Outstanding
- ----- --- -------------------- ----- -----------
<S> <C> <C> <C> <C>
Directors Nominated to Serve
Until the 1998 Annual Meeting:
Bernard Bernstein 59 President & CEO, 50,662 3.70
Director Mid-State Lumber Corp.,
200 Industrial Parkway a wholesale lumber
Branchburg, NJ 08876 distributor
Robert P. Corcoran 56 President & CEO 6,000(1) .44
President, CEO & Director Somerset Valley Bank
12 Harvest Court SVB Financial Services, Inc.
Flemington, NJ 08822
Mark S. Gold, MD 47 Author & Professor 81,886(2) 5.98
Director University of Florida
2002 San Marco Blvd.
Suite 300
Jacksonville, FL 32207
Raymond L. Hughes 65 President of N.J. Risk 31,090(3) 2.27
Director Managers & Consultants
20 West End Avenue
Somerville, NJ 08876
S. Tucker S. Johnson 31 Farmer 19,860 1.45
Director
P.O. Box 675
Oldwick, NJ 08858
Directors Nominated to Serve
Until the 1999 Annual Meeting:
Willem Kooyker 54 Chairman of Tricon Holding 129,218(4) 9.43
Director LTD, an international
2 Worlds Drive commodities firm
Somerset, NJ 08875
Frank Orlando 63 Retired 57,960(5) 4.23
Director
786 Princeton Avenue
Brick, NJ 08724
Gilbert E. Pittenger 72 Retired 33,092(6) 2.42
Director
RD #1, Box 91
New Ringgold, PA 17960
Frederick D. Quick 65 President of Hesco 88,800(7) 6.48
Director Electric Supply Co., Inc.,
924 River Road a lighting and electrical
Neshanic Station, NJ 08853 supply firm
<PAGE>
Donald Sciaretta 41 President of Claremont 30,300 2.21
Director Construction Group, Inc.
P.O. Box 808
Far Hills, NJ 07931
Directors nominated to serve
until the 2000 Annual Meeting:
John K. Kitchen 53 President of Title Central 25,339(8) 1.85
Chairman of Board & Director Agency, a title insurance
P.O. Box 421 firm
Somerville, NJ 08876
Anthony J. Santye, Jr. 46 Managing Partner of A.J. 18,480(9)(10) 1.35
Director Santye and Co., an
36 East Main Street accounting and consulting
Somerville, NJ 08876 firm
G. Robert Santye 43 Director of Real Estate and 11,520(9)(11) .84
Vice Chairman & Director Business Valuation Services
36 East Main Street for A.J. Santye and Co.
Somerville, NJ 08876
Herman C. Simonse 65 Executive Vice President of 17,600 1.28
Director Belle Mead Development
93 Douglass Avenue Corporation
Bernardsville, NJ 07924
Donald R. Tourville 60 Chairman and CEO of Zeus 66,176 4.83
Director Scientific, Inc., a manu-
P.O. Box 38 facturer of diagnostic
Raritan, NJ 08869 test kits
Executive Officers:
Keith B. McCarthy 39 Chief Operating 3,600(12) .26
Executive Vice President & Officer of the Bank
Treasurer Executive Vice President &
501 Red School Lane Treasurer of the Company
Phillipsburg, NJ 08865
Arthur E. Brattlof 53 Executive Vice President & 1,497(13) .11
9 Steeple Chase Court Chief Lending Officer
Bedminster, NJ 07921 of the Bank
Total Directors and Executive Officers as a Group 49.13
1) Includes 720 shares in the name of his son, a minor. He also has options
to purchase 10,800 shares at $8.33 which expire in August 1999 and 4,800
shares at $8.33 which expire in April 2001.
2) Includes 2,880 shares owned by his wife as custodian for his children.
3) Includes 2,400 shares owned by Hughes-Plumer Pension Fund and 13,440 by
Hughes-Plumer Profit Sharing Plan.
4) Includes 48,000 shares held in trusts for his three children.
<PAGE>
5) Includes 32,400 shares held by Eight Mountain Trail, Inc. Employees
Profit Sharing Plan.
6) Includes 1,920 shares owned by Effective Controls, Inc. and 6,452 shares
held in Trusts for the benefit of his grandchildren.
7) Includes 15,000 shares owned by Hesco Electric Supply Company, Inc.
8) Includes 1,680 shares held by his wife as custodian for his children and
259 shares held by his daughter, a minor.
9) Anthony J. Santye, Jr. and G. Robert Santye are brothers.
10) Includes 9,552 shares held by A.J. Santye Co., PA, Profit Sharing Plan,
1,680 shares held by his wife and 2,160 shares held by his wife for the
benefit of his children.
11) Includes 3,120 shares held by his wife.
12) In addition, Mr. McCarthy has options to purchase 12,000 shares at $8.33
which expire August 1999 and 4,800 shares at $8.33 which expire April
2001.
13) In addition, Mr. Brattlof has options to purchase 6,240 shares at $8.33
which expire April 2001.
</TABLE>
Director Committees
All of the Board of Directors of the Company also serve on the Board of
Directors of the Bank. The Company has only had business activities since
September 3, 1996 and its Board has not yet established any committees.
There are six committees of the Board of Directors of the Bank.
The Executive Committee is composed of Messrs. Corcoran, Kitchen,
Kooyker, Pittenger, Quick, G.R. Santye and Tourville. The Committee reviews and
approves the Bank's budget and establishes the Bank's long range and strategic
plans.
The Loan Committee, composed of Messrs. Bernstein, Hughes, A.J. Santye,
Jr., Sciaretta, Simonse, Tourville, Kitchen and Corcoran, reviews and approves
loans within certain predetermined parameters, monitors the quality of the
portfolio and insures that credit/rate risks and the mix of loans are consistent
with the Bank's loan and asset/liability management policies.
The Real Estate Committee, composed of Messrs. Hughes, Sciaretta,
Simonse, and G.R. Santye, reviews appraisals for real estate mortgages and
construction loans and advises the Loan Committee and the Board with respect to
real estate lending.
The Audit Committee, composed of Messrs. Hughes, Johnson, Quick, A.J.
Santye, Jr. and Simonse, formulates the Bank's audit policy, chooses the
Company's accounting firm and reviews audits conducted by the Company's internal
and external auditors.
<PAGE>
The Investment Committee, composed of Messrs. Bernstein, Kooyker,
Johnson, Orlando and Pittenger, periodically reviews the Bank's investment
portfolio for adherence to bank policy and approves its investment strategy.
The Compensation Committee is composed of Messrs. Bernstein, Johnson,
Kitchen, Kooyker, Quick, Orlando and A.J. Santye, Jr. The Committee approves
compensation and bonuses for the Bank's Officers.
Messrs. Corcoran and Kitchen are ex-officio members of all the Bank's
committees. Mr. McCarthy, is a non-director, non-voting member of the Executive
and Investment Committees. Mr. Brattlof, Senior Vice President, is a
non-director voting member of the Loan Committee.
During 1996, the Board of Directors held 12 meetings, the Executive
Committee 2 meetings, the Loan Committee 13 meetings, the Audit Committee 2
meetings, the Investment Committee 3 meetings, the Compensation Committee 2
meetings, and the Real Estate Committee 9 meetings. In addition, there is
significant communication between the Board of Directors and the Company which
occurs apart from the regularly scheduled Board and Committee meetings and as a
result, the Bank does not regard attendance at meetings to be the primary
criterion to evaluate the contribution made by a Director. During 1996, all
Directors attended at least 75% of the total Board and Committee meetings with
the exception of Messrs. Hughes and Kooyker. Attendance percentages for the Loan
Committee are not included in these percentages. Because of the frequency of
Loan Committee meetings, only three Director Loan Committee members are required
to conduct committee meetings as set forth in the Bank's policy.
Executive Compensation
The following table summarizes all compensation earned in the past
three complete fiscal years for services performed in all capacities for the
Company and the Bank with respect to the Executive Officers. The compensation
noted in the table has been paid by the Bank. No compensation has been paid by
the Company:
<TABLE>
<CAPTION>
All
Name and Year Annual Compensation Other
Position Salary Bonus Compensation
<S> <C> <C> <C> <C>
Robert P. Corcoran 1996 $130,000 $20,573(1) $8,468(3)
President & CEO of 1995 125,000 31,250 9,089(3)
the Company and the Bank 1994 115,000 5,750 2,415(2)
Keith B. McCarthy 1996 97,650 12,202(1) 2,592(2)
Treasurer of the Company 1995 93,000 13,350 2,672(2)
Chief Operating Officer of 1994 85,000 4,250 1,784(2)
the Bank
Arthur E. Brattlof 1996 82,000 10,246(1) 2,176(2)
Executive Vice President 1995 78,000 11,700 2,271(2)
of the Bank 1994 73,000 3,660 1,537(2)
<PAGE>
1) The Bonus for 1996 is based 75% on a comparison of the Company's
results for 1996 in comparison with certain predetermined financial
goals, this portion is the amount stated in the table. The remaining
25% is based on a comparison of the Bank's results with a group of 10
similar banks as chosen by the Compensation Committee of the Board.
Since the results of the peer group are not available at this time this
amount has neither been determined nor paid.
2) Represents matching amounts contributed by the Bank to the 401(k) Plan.
3) Includes matching contributions to the 401(k) Plan of $3,450 in 1996
and $3,706 in 1995, Director fees of $3,000 in 1996 and $1,800 in 1995
and term life insurance premiums paid by the Company of $2,017 in 1996
and $3,538 in 1995.
</TABLE>
The Bank also maintains various medical, life and disability benefit
plans covering all its full-time employees. The Bank also provides automobiles
to the three executive officers mentioned in the table above and one other
officer of the Bank. Such officers have some personal use of those vehicles such
as commuting to and from the Bank.
Bonus Plan
During 1996, the Compensation Committee of the Board of Directors has
approved a bonus plan for the three executive officers listed in the table
above. Under the terms of the plan, cash bonuses will be paid to the executive
officers based upon a formula that includes the Company achieving certain
predetermined financial goals, the officers achieving certain predetermined
personal objectives and the performance of the Bank in comparison to the results
of a group of 10 similar banks as chosen by the Committee.
Bonuses were paid to other employees of the Company, who were employed
by the Company for the entire year based on the achievement of certain
predetermined financial goals.
1994 Stock Option Plan
During 1994, the Shareholders of the Bank approved the 1994 Somerset
Valley Bank Stock Option Plan (the "Plan"). The Plan was intended to enable the
Bank to attract and retain capable officers and key employees and to provide
them with incentives to promote the best interest of the Bank by enabling and
encouraging them through the grant of incentive stock options and nonqualified
stock options (collectively, the "Options") to acquire Bank stock.
The Plan was administered by a Committee of the Board of Directors of
the Bank which was composed of at least three (3) members of the Board. No
member of the Committee was eligible to participate in the Plan for a period of
at least one (1) year prior to his or her election to serve on the Committee.
The persons eligible to participate in the Plan were officers and key
employees of the Bank and its subsidiaries who were designated by the Board of
Directors upon recommendation by the Committee.
Note: The share amounts and prices in the following have been adjusted
for the six for five exchange of the shares of the Company for those of the
Bank.
<PAGE>
During 1996 the Bank was acquired by the Company.
There were 51,409 shares of common stock available for the granting of
options under the Plan. During 1994, Messrs. Corcoran and McCarthy were granted
options to purchase 12,000 shares each at a price of $8.33 per share for a five
year period expiring August 1999. No options were granted during 1995. Mr.
Corcoran exercised 1,200 of these options during 1996.
During 1996, 26,400 options were granted under the plan to 12 officers
including the three executive officers named in the table above who received
15,840 or 61% of the options granted. The executive officers received the
following amounts: Mr. Corcoran 4,800 options, Mr. McCarthy 4,800 options and
Mr. Brattlof 6,240 options. All options were granted at $8.33 per share and
expire April 30, 2001.
On October 31, 1996, the Board of Directors of the Company agreed to
transfer and assume the stock option plan of the Bank.
<PAGE>
PROPOSAL TO APPROVE THE 1997 RESTATED INCENTIVE STOCK OPTION PLAN
In order to update the 1994 Stock Option Plan after its transfer to and
assumption by the Company, the 1997 Restated Incentive Stock Option Plan was
prepared and adopted, subject to Shareholder Approval, by the Board of Directors
on January 31, 1997. The purpose of the 1997 Restated Incentive Stock Option
Plan is to provide a means by which selected Employees of the Company and its
Affiliates may be given an opportunity to purchase stock of the Company. The
Company, by means of the Plan, seeks to retain the services of persons who are
now Employees of the Company or of its Affiliates, to secure and retain the
services of new Employees of the Company and of its Affiliates, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.
The following is a summary of the proposed features of the 1997
Restated Incentive Stock Option Plan, which is qualified in its entirety by
reference to the 1997 Restated Incentive Stock Option Plan which is annexed
hereto as Exhibit A. As indicated in the text of the 1997 Restated Incentive
Stock Option Plan, any provision of the 1997 Restated Stock Option Plan which is
determined to be inconsistent with the applicable laws and regulations will be
deemed void.
Administration
The 1997 Restated Incentive Stock Option Plan may be administered by a
Committee appointed by the Board of Directors composed of not fewer than two (2)
members of the Board to serve in its place with respect to the Plan. All members
of such committee shall be Disinterested Persons, if required. Under the terms
of the 1997 Restated Incentive Stock Option Plan, the Committee has the
authority to (i) determine the employees who shall receive the grant of
Incentive Stock Options, the time or times at which, options shall be granted,
the number of shares of stock subject to each option and the vesting schedule of
such options (ii) determine the fair market value of the common stock of the
Company or of its Affiliates, (iii) determine the exercise price per share at
which options may be exercised, (iv) determine the terms and provisions of each
option granted and the forms of each option agreement, and subject to the
consent of the optionee, to modify and amend any outstanding option agreement,
(v) accelerate or defer (with the consent of the optionee) the date of any
outstanding option, to authorize any person to execute on behalf of the Company
any instrument required to effectuate the grant of an option previously granted
by the Committee, (vi) amend the 1997 Restated Stock Option Plan if required by
the Internal Revenue Code of 1986, as amended or by Rule 16b-3 of the Exchange
Act (vii) construe or interpret the 1997 Restated Stock Option plan, (viii)
authorize the sale of shares of Common Stock in connection with exercise of the
options, (ix) to effect, with the consent of the optionee, the cancellation of
any outstanding options and to grant in substitution thereof new options
relating to the same or different numbers of shares, (x) make all other
determinations deemed necessary or advisable for the administration of the plan.
Shares Reserved
Subject to adjustments for certain changes in the number of shares of
Common Stock, a total of 82,404 shares of the Company's Common Stock shall be
available for issuance under the 1997 Restated Stock Option Plan, of which
50,400 have previously been issued to employees pursuant to the 1994 Stock
Option Plan. Stock subject to the plan may be unissued shares or reacquired
<PAGE>
shares, bought on the market or otherwise. Incentive Stock Options may be
granted to eligible persons in such number and at such times as the Committee
may determine. However, to the extent that the aggregate Fair Market Value
(determined at the time of the grant) of stock with respect to which Incentive
Stock Options are exercisable for the first time by any optionee during any
calendar year under all plans of the Company and its affiliates exceed One
Hundred Thousand ($100,000) Dollars, the options or portions thereof that exceed
such limit shall be treated as Nonstatutory Options.
Eligibility
Options under the 1997 Restated Incentive Stock Option Plan may be
granted only to Employees of the Company or of its Affiliates. A Director shall
only be eligible for the benefits of the plan if he or she is also an Employee,
provided, however, a Director shall in no event be eligible for the benefits of
the plan unless at the time discretion is exercised in the selection of the
Director as a person to whom Options may be granted, or in the selection of the
Director as a person to whom Options may be granted, or in the determination of
the number of optioned shares which may be covered by options granted to the
Director: (i) the Committee consists only of Non-Employee Directors; or (ii) the
plan otherwise complies with the requirements of Section 16b-3 of the Exchange
Act. This provision does not apply prior to the date of the first registration
of an equity security of the Company under Section 12 of the Exchange Act.
No person shall be eligible for the grant of an Incentive Stock Option,
if, at the time of the grant, such person owns or is deemed to own pursuant to
Section 424 (d) of the Internal Revenue Code of 1986, as amended, stock
possessing more than ten (10%) of the total combined voting power of all classes
of stock of the Company or of any of its Affiliates, unless the exercise price
of the option is at least one hundred and ten percent (110%) of the Fair Market
Value (as defined in the 1997 Restated Incentive Stock Option Plan) of such
stock at the date of the grant and the Incentive stock option is not exercisable
after the expiration of five (5) years from the date of the grant.
Terms of Options
The exercise price shall not be less than one hundred percent (100%) of
the Fair Market Value (as defined in the 1997 Restated Incentive Stock Option
Plan) of the stock subject to the Option on the date the Option is granted
(except as noted under Eligibility with respect to owners of ten (10%) percent
of the total combined voting stock of the Company or of any of its affiliates.)
No Option shall be exercisable after the expiration of five (5) years from the
date it was granted and the term of the Option shall be stated in the Option
Agreement.
Generally, an Option shall be deemed exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option Agreement by the person entitled to exercise the Option and full payment
has been received by the Company. The purchase price of the stock acquired
pursuant to the Option shall be paid, at the time the Option is exercised, to
the extent permitted by the statutes and regulations at the time that the Option
is exercised, either in cash or check.
<PAGE>
In the event that an Optionee's Continuous Status as an Employee (as
defined in the 1997 Restated Incentive Stock Option Plan) terminates (other than
by death or disability), the Optionee may exercise his or her option but only
prior to (i) the expiration of three (3) months after the date of such
termination and (ii) expiration of the term of the Option as set forth in the
Option Agreement, and only to the extent that the Optionee was entitled to
exercise it as of the date of such termination.
In the event that an Optionee's Continuous Status as an Employee
terminates as a result of the Optionee's Disability, the Optionee or his or her
personal representative may exercise his or her Option, but only within twelve
(12) months from the date of such termination, and only within twelve (12)
months from the date of such termination, and only to the extent that such
Optionee was entitled to exercise it on the date of such termination (but in no
event later than the expiration of the term of the Option as set forth in the
Option Agreement).
In the event of the death of the Optionee, the Option may be exercised,
at any time within twelve (12) months of the death of the Optionee (or such
longer or shorter time as may be specified in the Option Agreement) but in no
event later than the expiration date of the Option as set forth in the Option
Agreement.
Nontransferability
An Incentive Stock Option shall not be transferrable except by will or
by the laws of descent and distribution and shall be exercisable during the
lifetime of the Optionee only by such person.
Amendment
The Committee at any time may amend the Plan, provided however, that if
required by Section 16b-3, no amendment shall be made more than once every six
(6) months, other than to comport with the changes in the Code, ERISA, or other
rules and regulation promulgated thereunder. It is contemplated that the
Committee may amend the Plan in any respect the Committee deems necessary or
advisable to bring the Plan and the Options granted thereunder into compliance
with the Code and Rule 16b-3.
The Company will obtain shareholder approval of any Plan amendment to
the extent necessary or desirable to comply with Rule 16b-3 or with the Code or
any successor rule or statute or other rule or regulation, including the
requirements of any exchange or quotation system on which the Common Stock is
listed or quoted). The rights and obligations under the Options granted before
the amendment of the Plan shall not be altered or impaired by the amendment of
the Plan unless consented to in writing by the Optionee.
Termination
The Committee may suspend or terminate the Plan at any time, however,
the rights and obligations under any obligation granted while the Plan is in
effect shall not be altered or impaired by the suspension or termination of the
Plan except with the consent of the Optionee. Unless sooner terminated, the Plan
shall terminate within ten (10) years of the date the Plan was adopted by the
Board of Directors or approved by the Shareholders whichever date is earlier.
<PAGE>
Adjustments upon Changes in Capitalization or Merger
Subject to any required action by the shareholders of the Company, the
number of shares of Common stock subject to the Plan and the number of shares of
Common Stock that have been authorized for issuance under the Plan but as to
which no Option has yet been granted or have been returned to the Plan upon
cancellation or expiration, as well as the price per share of Common Stock shall
be proportionally adjusted for any increase or decrease in the number of issued
shares of the Common Stock, resulting from a stock split, stock dividend,
combination or reclassification of shares of Common Stock effected without
consideration by the Company. Such adjustment shall be made by the Committee,
whose determination shall be final, binding and conclusive.
In the event of dissolution or liquidation of the Company, each
outstanding Option will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Committee. The Committee may,
in its sole discretion, declare that any Option shall terminate as of a date
fixed by the Committee and give each Optionee the right to exercise his or her
Option as to all or any part of the Optioned Shares, including the Shares as to
which the Option would not otherwise be exercisable.
In the event of a proposed sale of substantially all of the assets of
the Company, or the merger, restructure, reorganization or consolidation of the
Company with or into another entity or entities in which the shareholders of the
Company receive cash or securities of another issuer, or any combination
thereof, in exchange for their shares of Common Stock, each outstanding Option
shall be assumed or an equivalent option shall be substituted by such successor
entity or an Affiliate of such successor entity, unless the Committee
determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, that the Optionee shall have the right to exercise
the Option as to all Optioned Shares, including Shares as to which the Option
would not otherwise be vested. Notwithstanding anything to the contrary in the
Plan, the Committee may grant options which provide for acceleration of the
vesting of shares subject to an Option upon Change of Control as defined in the
Plan.
Certain Federal Income Tax Consequences
The following summary generally describes the principal Federal (and
not state and local) income tax consequences of options granted under the 1997
Restated Incentive Stock Option Plan. It is general in nature and is not
intended to cover all tax consequences that may apply to a particular
participant in the 1997 Restated Incentive Stock Option Plan to the Company. The
provisions of the Code and regulations thereunder relating to these matters are
complicated and their impact in any one case may depend upon the particular
circumstances. This discussion is based on the Code as currently in effect.
If an Incentive Stock Option is awarded to a participant in accordance
with the terms of the 1997 Restated Incentive Stock Option Plan, no income will
be recognized by such participant at the time of the grant.
Generally, on exercise of an Incentive Stock Option, the participant
will not recognize any income and the Company will not be entitled to a
deduction for tax purposes. However, the difference between the purchase price
and the Fair Market Value of the shares of Common Stock received on the date of
exercise will be treated as a positive adjustment in determining alternative
minimum taxable income, which may subject the participant to the alternative
minimum tax. Upon the disposition of shares acquired upon exercise of an
<PAGE>
Incentive Stock Option under the 1997 Incentive Stock Option Plan, the
participant will ordinarily recognize long-term or short term capital gain or
loss (depending on the applicable holding period). Generally, however, if the
participant disposes of shares of Common Stock acquired upon exercise of an
Incentive Stock Option within two years after the date of grant or within one
year after the date of exercise (a "disqualifying disposition"), the optionee
will recognize ordinary income, and the Company will be entitled to a deduction
for tax purposes, the amount of the excess of the Fair Market Value of the
shares on the date of exercise over the purchase price (or the gain on sale, if
less). Any excess of the amount realized by the optionee on the disqualifying
disposition over the Fair Market Value of the shares on the date of exercise of
the Incentive Stock Option will ordinarily constitute capital gain. In the case
of an optionee subject to the restrictions of Section 16(b), the relevant date
in measuring the optionee's ordinary income and the Company's tax deduction in
connection with any such disqualifying disposition will normally be the later of
(i) the date the six-month period after the date grant lapses and (ii) the date
of exercise of the Incentive Stock Option.
Shareholder Approval Required
Approval of the 1997 Incentive Stock Option Plan by the Shareholders is
required in order for Incentive Stock Options to qualify as "performance-based"
compensation under Section 162(m) of the Code, for Incentive Stock Options to
meet the requirements of Section 422 of the Code.
New Plan Benefits Table
The Company has not included a benefits table because the number of
Incentive Stock Options that will be awarded to Employees in the future pursuant
to the 1997 Restated Incentive Stock Option Plan cannot be
determined at this time. In addition, because no Incentive Stock Option will
have an exercise price of less than the Fair Market Value of the Common Stock at
the date of Shareholder Approval, these Incentive Stock Options have no value at
the present time.
The Board of Directors believes that the adoption of the 1997 Restated
Incentive Stock Option Plan is in the best interests of the shareholders. Among
other things, the 1997 Restated Incentive Stock Option Plan will tend to
encourage the retention of equity ownership in the Company by Employees, which
will tend to align the interest of such employees with the interests of
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL OF THE 1997 INCENTIVE STOCK OPTION PLAN.
PROPOSAL TO APPROVE THE 1997 DIRECTORS STOCK OPTION PLAN
The 1997 Directors Stock Option Plan was adopted, subject to
Shareholder Approval, by the Board of Directors on January 31, 1997. The 1997
Directors Stock Option Plan is intended to promote the Company's interests by
establishing a mechanism to reward Directors based upon future increases in the
value of the Company's stock. This will help retain the services of persons who
are now Directors and provide incentives for them to exert maximum efforts for
the success of the Company and its affiliates.
<PAGE>
The following is a summary of the proposed features of the 1997
Directors Stock Option Plan, which is qualified in its entirety by reference to
the 1997 Directors Stock Option Plan which is annexed hereto as Exhibit B. As
indicated in the text of the 1997 Directors Stock Option Plan, any provision of
the 1997 Directors Stock Option Plan which is determined to be inconsistent with
the applicable laws and regulations will be deemed void.
Administration
The 1997 Directors Stock Option Plan may be administered by a Committee
appointed by the Board of Directors composed of not fewer than two (2) members
of the Board to serve in its place with respect to the Plan. No member of the
Committee may be an Employee or Officer of the Company or any Affiliate. Under
the terms of the 1997 Directors Stock Option Plan, the Committee has the
authority to (i) determine the fair market value of the common stock of the
Company or of its Affiliates, (ii) determine the terms and provisions of each
option granted and the forms of each option agreement, and subject to the
consent of the optionee, to modify and amend any outstanding option agreement,
(iii) accelerate or defer (with the consent of the optionee) the date of any
outstanding option, (iv) the Internal Revenue Code of 1986, as amended or (v)
construe or interpret the 1997 Directors Stock Option plan, (vi) authorize the
sale of shares of Common Stock in connection with exercise of the options, (vii)
to effect, with the consent of the optionee, the cancellation of any outstanding
options and to grant in substitution thereof new options relating to the same or
different numbers of shares, (viii) make all other determinations deemed
necessary or advisable for the administration of the plan.
Shares Reserved
Subject to adjustments for certain changes in the number of shares of
Common Stock, a total of 54,600 shares of the Company's Common Stock shall be
available for issuance under the 1997 Directors Stock Option Plan. Stock subject
to the Plan may be unissued shares or reacquired shares, bought on the market or
otherwise.
Eligibility and Grant of Options
Upon approval of the 1997 Directors Stock Option Plan each Non-Employee
member of the Company's Board of Directors as of December 31, 1996 will be
granted an option to purchase 3,900 shares of the Common Stock at 100% of the
Fair Market Value as of the date of Shareholder Approval. As of March 27, 1997,
the Fair Market Value of the Common Stock is $13.00 per share. A Director is not
eligible to participate if he/she is also an Officer or Employee. The only
person who is both a Director and an Officer is Mr. Robert Corcoran, the
President and Chief Executive Officer of the Company. Accordingly, as a group
all Directors who are not officers or employees will receive options to purchase
all 54,600 shares available under the 1997 Directors Stock Option Plan upon
approval by the Shareholders.
As there are 14 Directors eligible to participate under the 1997
Directors Stock Option Plan, upon Shareholder Approval all of the shares of
Common Stock available under the Plan will be subject to option.
Terms of Options
The exercise price shall not be less than one hundred percent (100%) of
the Fair Market Value (as defined in the 1997 Directors Stock Option Plan) of
the stock subject to the Option on the date the Option is granted. No Option
shall be exercisable after the expiration of five (5) years from the date it was
granted and the term of the Option shall be stated in the Option Agreement.
<PAGE>
Generally, an Option shall be deemed exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option Agreement by the person entitled to exercise the Option and full payment
has been received by the Company. The purchase price of the stock acquired
pursuant to the Option shall be paid, at the time the Option is exercised, to
the extent permitted by the statutes and regulations at the time that the Option
is exercised, either in cash or check.
In the event that an Optionee's Continuous Status as a Director (as
defined in the 1997 Directors Stock Option Plan) terminates (other than by death
or disability), the Optionee may exercise his or her option but only prior to
(i) the expiration of three (3) months after the date of such termination and
(ii) expiration of the term of the Option as set forth in the Option Agreement,
and only to the extent that the Optionee was entitled to exercise it as of the
date of such termination.
In the event that an Optionee's Continuous Status as a Director
terminates as a result of the Optionee's Disability, the Optionee or his or her
personal representative may exercise his or her Option, but only within twelve
(12) months from the date of such termination, and only to the extent that such
Optionee was entitled to exercise it on the date of such termination (but in no
event later than the expiration of the term of the Option as set forth in the
Option Agreement).
In the event of the death of the Optionee, the Option may be exercised,
at any time within twelve (12) months of the death of the Optionee (or such
longer or shorter time as may be specified in the Option Agreement) but in no
event later than the expiration date of the Option as set forth in the Option
Agreement.
Shareholder Approval
While Shareholder Approval of the 1997 Directors Stock Option Plan is
no longer required by Rule 16(b) under the Securities and Exchange Act of 1934
or by New Jersey law, such approval is required by the explicit terms of the
Plan. Should Shareholder Approval not be obtained the Plan will not take effect.
New Plan Benefit Table
The Company has not included a benefits table because no Director
Options are now outstanding and, since they will have exercise prices equal to
the Fair Market Value of the Common Stock as of the date of Shareholder
Approval, these options have no value at the present time.
Transferability
A Directors Stock Option shall not be transferrable except: (i) by will
or by laws of descent and distribution or pursuant to a qualified domestic
relations order, as defined by the Code or Title I of the Employee Retirement
Income Act, as amended ("ERISA"), or the rules thereunder (a "QDRO") and shall
be exercisable during the lifetime of the Optionee only by such person or any
transferee pursuant to a QDRO; or (ii) without payment of consideration, to
immediate family members (i.e. spouses, children and grandchildren) of the
Optionee or to a trust for the benefit of such family members, or partnership
whose only partners are such family members.
<PAGE>
Certain Federal Income Tax Consequences
The following summary generally describes the principal federal (and
not state and local) income tax consequences of options granted under the 1997
Directors Stock Option Plan. It is general in nature and is not intended to
cover all tax consequences that may apply to a particular participant in the
1997 Directors Stock Option Plan or to the Company. The provisions of the Code
and the regulations thereunder relating to these matters are complicated and
their impact in any one case may depend upon the particular circumstances. This
discussion is based on the Code as currently in effect.
If a Grant is awarded to a participant in accordance with the terms of
the 1997 Directors Stock Option Plan, no income will be recognized by such
participant at the time the Grant is awarded.
Generally, on exercise of a Nonqualified Stock Option, the amount by
which the Fair Market Value of the Common Stock on the date of exercise exceeds
the purchase price of such shares will be taxable to the participant as ordinary
income, and will be deductible for tax purposes by the Company, in the year in
which the participant recognizes the ordinary income. The disposition of shares
acquired upon exercise of a Nonqualified Stock Option ordinarily will result in
long-term or short-term capital gain or loss (depending on the applicable
holding period) in an amount equal to the difference between (i) the amount
realized on such disposition and (ii) the sum of (x) the purchase price and (y)
the amount of ordinary income recognized in connection with the exercise of the
Nonqualified Stock Option.
Section 16(b) of the Securities Exchange Act of 1934, as amended
("Section 16(b)"), generally requires officers, directors and ten percent
shareholders of the Company to disgorge profits from buying and selling the
Common Stock within a six month period. Generally, unless the participants in
the 1997 Directors Stock Option Plan elect otherwise, the relevant date for
measuring the amount of ordinary income to be recognized upon the exercise of a
Nonqualified Stock Option will be the later of (x) the date the six month period
following the date of the Grant lapses and (y) the date of exercise of the
Nonqualified Stock Option.
If a Nonqualified Stock Option is exercised through the use of Common
Stock previously owned by the participant, such exercise generally will not be
considered a taxable disposition of the previously owned shares and, thus, no
gain or loss will be recognized with respect to the shares used to exercise the
option.
The Company may be required to withhold tax on the amount of income
recognized by an optionee upon exercise of a Nonqualified Stock Option.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL OF THE 1997 DIRECTORS STOCK OPTION PLAN.
Certain Agreements
The Company has entered into employment agreements with Messrs.
Corcoran, McCarthy and Brattlof. The agreements provide for the payment of
bonuses as determined by the Compensation Committee of the Board of Directors,
see "Bonus Plan". The agreements provide for severance payments in the event the
officers are terminated without cause or resign with good reason. Such benefits
are equivalent to two times the base salary for Mr. Corcoran payable over 24
<PAGE>
months and one times the base salary for Messrs. McCarthy and Brattlof payable
over 12 months. In the event of a change of control all three officers would
receive a severance payment equal to two times base salary payable over 24
months plus an annual payment for two years equivalent to the average bonus paid
during the last three years of employment.
Director Compensation
No compensation was paid for Board of Directors meetings of the
Company.
During 1996, Directors of the Bank received compensation for service on
the Board of Directors of $250 per Board of Directors meeting attended and $100
for each committee meeting. John K. Kitchen as Chairman of the Board received
compensation of $6,000 in addition to his other per meeting fees.
During 1997, Directors of the Bank will receive $450 for Board of
Directors meetings attended and $100 for Committee meetings attended. Mr.
Kitchen with receive $24,000 as Chairman in addition to his other per meeting
fees.
Benefit Plans
The Bank maintains a 401(k) plan covering substantially all employees.
Under the terms of the plan, the Bank will match 50% of an employee's
contribution, up to 6% of the employee's salary. Employees become fully vested
in the Bank's contribution after five years of service. The Bank contributed
$25,495 to the plan in 1996.
Transactions with Related Persons
It is currently the policy of the Company and Bank not to extend credit
or make loans to any of its Directors or their affiliates.
A partnership made up of, among others, all but one of the Bank's
Directors owns and leases the premises to the Bank at 103 West End Avenue as
well as additional office space in the adjacent 117 West End Avenue. The lease
for 103 West End Avenue, which is the principal banking facility, was reviewed
by both the FDIC and the Department of Banking prior to the Bank's opening to
determine that the terms of the lease are comparable to those the Bank would
have received in an arms length transaction with an unaffiliated third party.
Neither the FDIC nor the Department of Banking objected to the terms of the
lease. The office space at 117 West End Avenue is also leased at such comparable
terms.
Independent Public Accountants
The Board of Directors has selected Grant Thornton to be the
independent public accountants for the Company for the fiscal year ending
December 31, 1997. A member of that firm will be present at the Annual Meeting
and available to respond to appropriate questions from the shareholders, and
make a statement if desired to do so.
Arthur Andersen LLP was the Company's and its subsidiary Bank's
independent public accountant from its inception in 1991 through the year ended
December 31, 1996. They will also have a member of their firm present and
available to respond to appropriate questions from the shareholders, and make a
statement if desired to do so.
<PAGE>
The report of Arthur Andersen LLP on the consolidated financial
statements of the Company as of and for the year ended December 31, 1996 did not
contain an adverse opinion or a disclaimer of opinion, nor was it qualified or
modified as to uncertainty, audit scope, or accounting principles.
The decision to change accountants was recommended by the Audit
Committee of the Board of Directors and approved by the Board of Directors.
There were no disagreements with Arthur Andersen LLP on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure.
Financial and Other Information Incorporated by Reference
A copy of the Company's annual report is being sent to each shareholder
along with this proxy statement and is incorporated herein by reference. This
information should be read by shareholders in conjunction with this proxy
statement.
Proposals by Security Holders
Proposals by security holders intended to be presented at the 1998
Annual Meeting of Shareholders (which the Company currently intends to hold in
April of 1998) must be received by the Secretary of the Company by November 28,
1997 for inclusion in its Proxy Statement and form of Proxy relating to that
meeting. If the date of the next annual meeting is changed by more than 30
calendar days from such anticipated time fame, the Company shall, in a timely
manner, inform its stockholders of the change and the date by which proposals of
stockholders must be received. All such proposals should be directed to the
attention of the Secretary, SVB Financial Services, Inc., 103 West End Avenue,
Somerville, New Jersey 08876.
Other Matters Which May Properly Come Before the Meeting
The Board of Directors knows of no other business that will be
presented for consideration at the Annual Meeting other than that stated in the
Notice. Should any other matter properly come before the meeting and any
adjournment thereof, it is intended that proxies in the enclosed form will be
voted in respect thereof in accordance with the judgment of the person or
persons voting the proxies.
<PAGE>
EXHIBIT A
SVB FINANCIAL SERVICES, INC.
1997 RESTATED INCENTIVE STOCK OPTION PLAN
1. PURPOSES.
(a) Restated Plan. This 1997 Incentive Stock Option Plan
modifies and restates the 1994 Stock Option Plan adopted by the Board of
Directors of Somerset Valley Bank on March 31, 1994 and which was ratified by
the shareholders of the Bank on April 26, 1994. The 1994 Stock Option Plan was
assigned by Somerset Valley Bank to SVB Financial Services, Inc. by resolution
of the Boards of Directors of both corporations at meetings of the respective
Boards of Directors held on October 31, 1996. The Restated Incentive Stock
Option Plan restates the provisions of the 1994 Stock Option Plan as to
Incentive Stock Options only.
(b) Opportunity to Purchase Stock. The purpose of the Plan is
to provide a means by which selected Employees of the Company and its Affiliates
may be given an opportunity to purchase stock of the Company. The Company, by
means of the Plan, seeks to retain the services of persons who are now Employees
of the Company and its Affiliates, to secure and retain the services of new
Employees of the Company and its Affiliates, and to provide incentives for such
persons to exert maximum efforts for the success of the Company and its
Affiliates.
(c) Incentive Stock Options. The Company intends that the
Options issued under the Plan shall be Incentive Stock Options.
2. DEFINITIONS.
(a) "Affiliate" means any parent corporation or subsidiary corporation
of the Company, as those terms are defined in Sections 424(e) and (f)
respectively of the Code, whether such corporations are now or are hereafter
existing.
(b) "Board" means the Board of Directors of the Company.
(c) "Change of Control" means the occurrence, at any time after
December 31, 1996, of (i) a merger or consolidation of the Company with or into
another Person or the merger of another Person into the Company or the transfer
ownership of nay voting stock of the Company to any Person or "group" (as such
term is defined in Section 13 (d)(3) of the Securities and Exchange Act of 1934,
as amended (the "Exchange Act")), of Persons as a consequence of which those
Persons who held the voting stock of the Company immediately prior to such
merger, consolidation or transfer do not hold either directly or indirectly a
majority of the voting stock of the Company(or, if applicable, the surviving
company of such merger or consolidation) after the consummation of such merger,
consolidation or transfer; (ii) the sale of all or substantially all of the
assets of the Company to any Person or "group" of Persons (other than to an
entity which owns a majority or more of the Common Stock of the Company, a
subsidiary of the Company, or an entity whose equity interests are owned
directly or indirectly by the Company or by an entity which owns directly or
indirectly a majority or more of the Common Stock of the Company); or (iii) any
<PAGE>
event or series of events (which event or series of events must include a proxy
fight or proxy solicitation with respect to the election of directors of the
Company made in opposition to the nominees recommended by the Continuing
Directors) during any period of 12 consecutive months all or any portion of
which is after (i) the date set forth above, and (ii) the date the Company first
has securities registered under Section 12 of the Exchange Act, as a result of
which a majority of the Board of Directors of the Company consists of
individuals other than Continuing Directors.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Board of Directors of the Company unless a
separate Committee has been appointed by the Board in accordance with Section
3(c) of the Plan.
(f) "Common Stock" means the common stock of SVB Financial Services,
Inc., a New Jersey corporation.
(g) "Company" means SVB Financial Services, Inc., a New Jersey
corporation.
(h) "Continuing Directors of the Company" means with respect to any
period of 12 consecutive months (i) any members of the Board of Directors of the
Company on the first day of such period, (ii) any member of the Board of
Directors of the Company elected after the first day of such period at any
annual meeting of the shareholders who were nominated by the Board of Directors
or a committee thereof, if a majority of the members of the Board of Directors
or such Committee were Continuing Directors at the time of such nomination , and
(iii) any members of the Board of Directors of the Company elected to succeed
Continuing Directors of the Board of Directors or a committee thereof, if a
majority of the members of the Board of Directors or such committee were
Continuing Directors at the time of such election.
(i) "Continuous Status as an Employee" means the employment or
relationship as an employee is not interrupted or terminated with the Company or
any Affiliate. Continuous Status as an Employee shall not be considered
interrupted in the case of : (1) any sick leave, military leave, or any leave of
absence approved by the Committee; provided, however, that for purposes of the
Incentive Stock Options, any such leave is for a period of not more than ninety
(90) days or reemployment upon the expiration of such leave is guaranteed by
contract or statute; or (2) transfers between locations of the Company or
between the Company and its Affiliates or between the Company or its Affiliates
on the one hand and their successors, on the other hand.
(j) "Director" means a member of the Board.
(k) "Disability" means permanent and total disability as defined in
Section 22 (e) (3) of the Code.
(l) "Non-Employee Director" means a Director who is considered to be a
"non-employee director" in accordance with Section (b) (3) (i) of Rule 16b-3,
and any other applicable rules, regulations and interpretations of the
Securities and Exchange Commission.
(m) "Employee" means any person, including officers and Directors,
employed by the Company or any Affiliate. Neither service as a Director nor
payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
<PAGE>
(n) "Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
(o) "Fair Market Value" means, as of the any date, the value of the
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation (NASDAQ) System, the Fair Market Value of a share of Common Stock
shall be the Closing sales price for such stock on the date of determination
(or, if no such price is reported on such date, such price as reported on the
nearest preceding day) as quoted on such system or exchange (or exchange with
the greatest volume of trading in the Common Stock), as reported in The Wall
Street Journal or such other source as the Committee deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a share of Common Stock shall be the mean of the closing bid and
the asked prices for the Common Stock on the date of determination (or, if such
prices are not reported for such date, such prices as reported on the nearest
preceding date), as reported in the Wall Street Journal or such other source as
the Committee deems reliable;
(iii) If the Fair Market Value is not determined pursuant to
(i) or (ii) above, then the Fair Market Value shall be determined in good faith
by the Committee.
(p) "Incentive Stock Option" means an Option qualifying as an incentive
stock option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.
(q) "Nonstatutory Stock Option" means an Option not qualifying as an
Incentive Stock Option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(r) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the Plan.
(t) "Option Agreement" means a written agreement between the Company
and the Optionee evidencing the conditions of an individual Option grant. The
Option Agreement shall be subject to the terms and conditions of the Plan.
(u) "Optioned Shares" means with respect to any Option the Shares of
the Common Stock subject to the Option.
(v) "Optionee" means an Employee or Consultant who holds an outstanding
Option.
(w) "Person" means an individual or an entity.
(x) "Plan" the SVB Financial Services, Inc. 1997 Restated Incentive
Stock Option Plan.
(y) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3.
<PAGE>
(z) "Shares" shall mean a share of Common Stock, as adjusted in
accordance with Section 10.
3. ADMINISTRATION.
(a) Committee. The Plan shall be administered by the Committee.
(b) Powers. The Committee shall have the power, subject to, and within
the limitations of, the express provisions of the Plan to:
(i) grant Options;
(ii) determine, in accordance with Section 6 of the Plan, the
Fair Market Value per Share of the Common Stock;
(iii) determine, in accordance with Section 6, the exercise
price per Share at which Options may be exercised;
(iv) determine the Employees to whom, and the time or times at
which, Options shall be granted, the number of shares of Optioned Stock subject
to each Option and the vesting schedule of such Options;
(v) determine the terms and provisions of each Option granted
(which need not be identical) and the forms of Option Agreements and, with the
consent of the Optionee, and subject to Section 11, to modify or amend any
outstanding Option;
(vi) accelerate or defer (with the consent of the Optionee)
the date of any outstanding Option;
(vii) authorize any person to execute on behalf of the Company
any instrument required to effectuate the grant of an Option previously granted
by the Committee;
(viii) amend the Plan as provided in Section 11;
(ix) construe and interpret the Plan and Options granted under
it, and to establish, amend and revoke rules and regulations for the
administration of the Plan, subject to Section 11; including correcting any
defect, omission or inconsistency in the Plan or in any Option Agreement, in any
manner and to the extent it shall deem necessary or expedient to make the Plan
Fully effective;
(x) authorize the sale of shares of the Company's Common Stock
in connection with the exercise of the Options;
(xi) effect, at any time and from time to time, with the
consent of the affected Optionee, the cancellation of any or all outstanding
Options and grant in substitution thereof new Options relating to the same or
different numbers of Shares, but having an exercise price per share consistent
with Section 6(b) at the date of the new Option grant; and
(xii) make all other determination deemed necessary or
advisable for the administration of the Plan.
<PAGE>
(c) Committee. The Board may appoint a committee composed of not fewer
than two (2) members of the Board to serve in its place with respect to the
Plan. All of the members of such Committee shall be Disinterested Persons, if
required under Section 3 (d). From time to time, the Board may increase the size
of the Committee and appoint such additional members, remove members (with or
without cause) and substitute new members of the committee, fill vacancies,
(however caused) and remove members of the committee and thereafter directly
administer the Plan, all to the extent permitted by the rules governing plans
intended to qualify as a discretionary plan under Rule 16b-3.
(d) Exchange Act Registration. Any requirement that an administrator of
the Plan be a Disinterested Person shall not apply (i) prior to the date of the
first registration of an equity security of the Company under Section 12 of the
Exchange Act or (ii) if the Board or the Committee expressly declares that such
requirement shall not apply. Any Disinterested Person shall otherwise comply
with the requirements of Rule 16b-3.
4. SHARES SUBJECT TO PLAN.
(a) Number of Shares. Subject to the provisions of Section 10 relating
to adjustments upon changes in stock, the stock that may be sold pursuant to
Options is 82,404 shares of the Company's Common Stock, of which Options have
previously been issued to Employees for 50,400 shares of the Company's Common
Stock pursuant to the 1994 Stock Option Plan. If any Option shall for any reason
expire or otherwise terminate without having been exercised in full, the
Optioned Shares not purchased under such Option shall revert to and again become
available for issuance under the Plan unless the Plan shall have terminated;
provided, however, that Shares that have actually been issued under the Plan
shall not be returned to the Plan and shall not become available for future
issuance under the Plan.
(b) Stock Subject to Plan. The stock subject to the Plan may be
unissued shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Employees. Incentive Stock Options may be granted to Employees
only.
(b) 10% Holders. No person shall be eligible for the grant of an
Incentive Stock Option, if, at the time of the grant, such person owns (or is
deemed to own pursuant to Section 424(d) of the Code) stock possessing more than
ten (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates unless the exercise price of the Option is
at least one hundred ten percent (110%) of the Fair Market Value of such stock
at the date of the grant and the Incentive Stock Option is not exercisable after
the expiration of five (5) years from the date of the grant.
(c) Directors. A Director shall only be eligible for the benefits of
this Plan if he or she is also an Employee, provided, however, a Director shall
in no event be eligible for the benefits of the Plan unless at the time
discretion is exercised in the selection of the Director as a person to whom
Options may be granted, or in the selection of the Director as a person to whom
Options may be granted, or in the determination of the number of Optioned Shares
<PAGE>
which may be covered by Options granted to the Director: (i) the Committee
consists only of Non-Employee Directors; or, (ii) the Plan otherwise complies
with the requirements of Section 16b-3. This Section 5 (c) shall not apply prior
to the date of the first registration of an equity security of the Company under
Section 12 of the Exchange Act.
(d) Other Limits on Incentive Stock Options. To the extent that the
aggregate Fair Market Value (determined at the time of the grant) of stock with
respect to which Incentive Stock Options are exercisable for the first time by
any Optionee during any calendar year under all plans of the Company and its
Affiliates exceeds One Hundred Thousand ($100,000) Dollars, the Options or
portions thereof that exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
6. OPTION PROVISIONS.
Each Option Agreement shall be in such form and contain such terms and
conditions as the Committee shall deem appropriate. In the event that any
provision of the Option Agreement and the Plan conflict, the provisions of the
Plan shall control. The provisions of separate Options need not be identical,
but each Option Agreement shall include (through incorporation of provisions
hereof by reference in the Option Agreement or otherwise) the substance of each
of the following provisions:
(a) Term. No Option shall be exercisable after the expiration of five
(5) years from the date it was granted and the term of each Option shall be
stated in the Option Agreement.
(b) Price. Subject to Section 5, the exercise price shall be not less
than one hundred percent (100%) of the Fair Market Value of the stock subject to
the Option on the date the Option is granted. The exercise price of each Stock
Option shall not be less than the par value of the Optioned Shares on the date
the Option was exercised.
(c) Consideration. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations at the time the Option is exercised, either in cash or check.
(d) Exercise. Subject to 9(f), an Option shall be deemed exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Option Agreement by the person entitled to exercise the Option
and full payment for the Shares with respect to which the Option is exercised
has been received by the Company by cash or check. Each Optionee who exercises
an Option shall, upon notification of the amount due (if any) and prior to or
concurrent with delivery of the certificate representing the Shares, pay to the
Company by cash or check, amounts necessary to satisfy applicable federal, state
or local tax withholding requirements.
(e) Non-Transferability. An Incentive Stock Option shall not be
transferrable except by will or by laws of descent and distribution and shall be
exercisable during the lifetime of the Optionee only by such person.
(f) Vesting. The total number of shares of stock subject to an Option
may, but need not, be allocated in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time during
each of the installment periods, the option may become exercisable ("Vest") with
respect to some of all of the Shares allotted to that period and may be
exercised with respect to some or all of the Shares allotted to such period
<PAGE>
and/or any prior period as to which the Option became vested but has not been
fully exercised. During the remainder of the term of the Option, (if its term
extends beyond the end of the installment period), the Option may be exercised
from time to time with respect to any Shares then remaining subject to the
Option. The provisions of the this subsection are subject to any Option
provisions governing minimum number of Shares as to which an Option may be
exercised. Options may not be exercised in fractional shares.
(g) Securities Compliance. The Company may require any Optionee, or any
person to whom an Option is transferred under Section 6 (f), as a condition of
exercising such Option, (i) to give written assurances satisfactory to the
Company as to the Optionee's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters, and that he or she is capable of evaluating, alone, or together with
the purchaser representative, the merits and risks of exercising the Option;
(ii) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the Option for such person's own
account and not with the present intention of selling or otherwise distributing
the stock; and (iii) to deliver such other documentation as may be necessary to
comply with federal and state securities laws. These requirements and any
assurances given pursuant to such requirements, shall be inoperative if (i) the
issuance of the Shares upon the exercise of the Option has been registered under
a then effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), and all applicable state securities laws, or
(ii) as to any such requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
applicable securities laws. The Company may, upon advice of Counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary and appropriate in order to comply with applicable
securities laws, including but not limited to, legends restricting the transfer
of the stock, and may enter stop-transfer orders against the transfer of the
Shares of Common Stock issued upon the exercise of an Option. The Company has no
obligation to undertake registration of Options or the Shares of Common Stock
issued upon the exercise of an Option.
(h) Termination of Employment. In the event an Optionee's Continuous
Status an Employee terminates (other than by the Optionee's death or
disability), the Optionee may exercise his or her Option but only prior to the
(i) expiration of three (3) months after the date of such termination and (ii)
expiration of the term of the Option as set forth in the Option Agreement, and
only to the extent that the Optionee was entitled to exercise it at the date of
such termination. If, at the date of such termination, the Optionee is not
entitled to exercise his or her entire Option, the Shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If after termination, the Optionee does not fully
exercise his or her Option within the time specified in the Option Agreement,
the Option shall terminate and the Shares covered by the unexercised portion of
the such Plan shall revert to and again become available under the Plan.
(i) Disability of Optionee. In the event that an Optionee's Continuous
Status as an Employee terminates as a result of the Optionee's Disability, the
Optionee or his or her personal representative may exercise his or her Option,
but only within twelve (12) months from the date of such termination, and only
to the extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of the term of the Option
<PAGE>
as set forth in the Option Agreement). If, at the date of such termination, the
Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to and again be
available under the Plan. If, after such termination, the Optionee does not
fully exercise his or her Option within the time period specified herein, the
Option shall terminate and the Shares covered by the unexercised portion of the
Option shall revert to and again become available under the Plan.
(j) Death of Optionee. In the event of the death of an Optionee, the
Option may be exercised , at any time within twelve (12) months following the
date of death (or such longer or shorter time as may be specified in the Option
Agreement) but in no event later than the expiration date of the Option as set
forth in the Option agreement, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that the Optionee was entitled to exercise the Option as of the date
of his or her death. If at the time of death, the Optionee was not entitled to
exercise his or her entire Option, then the Shares covered by the unexercisable
portion of the Option shall revert to and again become available under the Plan.
If, after death, the Optionee's estate or a person who acquired the right to
exercise the Option, does not fully exercise the Option within the time period
specified herein, then the Shares covered by the unexercised portion of the
Option shall revert to and again become available under the Plan.
7. COVENANTS OF THE COMPANY.
(a) Reserves. During the term of the Options, the Company shall keep
available at all times and shall reserve the number of shares required to
satisfy such Options upon exercise.
(b) Regulatory Approvals. The Company shall seek and obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to issue and sell Shares upon exercise of the Options;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan or any Option or any Shares
issued or issuable pursuant to such Options. If, after reasonable efforts, the
Company is unable to obtain from such regulatory commission or agency the
authority that counsel for the Company deems necessary for the lawful issuance
and sale of the Shares under the Plan, the Company shall be relieved from any
liability for failure to issue or sell Shares upon exercise of such Options
unless and until authority is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of the stock pursuant to Options shall
constitute general funds of the Company.
9. MISCELLANEOUS.
(a) Acceleration of Vesting. The committee shall have the power to
accelerate the time at which an Option may first be exercised or the time during
which an Option or any part thereof will Vest pursuant to Section 6 (g),
notwithstanding the provisions in the Option Agreement stating the time at which
it may first be exercised or the time during which it will Vest.
<PAGE>
(b) No Rights as Shareholder. Neither an Optionee nor any person to
whom an Option is transferred under Section 6(f) shall be deemed to be the
holder of or to have any of the rights of a holder with respect to, any Shares
subject to such Option including, but not limited to, rights to vote or to
receive dividends unless and until such person has satisfied all requirements
for the exercise of the Option according to its terms, the certificates
evidencing such Shares have been issued and such person has become the record
owner of such Shares.
(c) No Right To Continue as Employee. Nothing in the Plan or any
instrument executed or Option granted pursuant thereto shall confer upon any
Employee, or Optionee any right to continue in the employ of the Company, or any
Affiliate or shall affect the right of the Company or any Affiliate to terminate
the employment or the relationship of any Employee or Optionee with or without
cause.
(d) Date of Grant. Once shareholder approval of the Plan has been
obtained, the date of grant of an Option shall, for all purposes, be the date on
which the Committee makes the determination granting such Option. Notice of the
determination shall be given to each Optionee within a reasonable time after the
date of such grant. The Code may cause the grant date to be recognized as the
date of the grant even though shareholder approval has not been obtained.
(e) Rule 16b-3. With respect to persons subject to Section 16 of the
Exchange Act, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 and with respect to such persons all
transactions shall be subject to such conditions regardless of whether they are
expressly set forth in the Plan or the Option Agreement. To the extent any
provision of the Plan or action by the Committee fails to comply, it shall not
apply to such persons or their transactions and shall be deemed null and void,
to the extent permitted by law and deemed advisable by the Committee.
(f) Conditions Upon Exercise of Options. Notwithstanding any other
provisions, Shares shall not be issued and Options shall not be exercised unless
the exercise of such Option and the Issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including
without limitation, the Securities Act of 1933, as amended, applicable state
securities laws, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange (including NASDAQ) upon
which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
(g) Grants Exceeding Allotted Shares. If the Optioned Shares exceed, as
of the date of the grant, the number of shares that may be issued under the Plan
without additional shareholder approval, such Option shall be void with respect
to such excess Shares, unless shareholder approval of an amendment to the Plan
sufficiently increasing the number of Shares subject to the Plan is timely
obtained in accordance with Section 11 of the Plan.
(h) Notice. Any written notice to the Company required by any of the
provisions of the Plan shall be addressed to the Secretary of the Company and
shall be effective when it is received. Any written notice to Optionee required
by the Plan shall be addressed to the Optionee at the address on file for the
Optionee with the Company and shall become effective 3 days after it is mailed
by certified mail, postage prepaid to such address or at the time of delivery if
delivered sooner by messenger or overnight delivery service.
<PAGE>
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the maximum number of Shares of Common Stock
subject to the Plan, the number of shares of Common Stock covered by each
outstanding Option and the number of shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Option has yet been
granted or have been returned to the plan upon cancellation or expiration of an
option, as well as the price per share of Common Stock shall be proportionally
adjusted for any increase or decrease in the number of issued shares of the
Common Stock, resulting from a stock split, stock dividend, combination or
reclassification of shares of Common Stock effected without consideration by the
Company; provided, however that the conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or exercise price of Optioned Shares.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, each outstanding Option will
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Committee. The Committee may, in the exercise of its
sole discretion in such instances, declare that any Option shall terminate as of
a date fixed by the Committee and give each Optionee the right to exercise his
or her Option as to all or any part of the Optioned Shares, including Shares as
to which the Option would not otherwise be exercisable.
(c) Merger or Asset Sale. Subject to Section 10 (b), in the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger, restructure, reorganization or consolidation of the Company with or into
another entity or entities in which the shareholders of the Company receive cash
or securities of another issuer, or any combination thereof, in exchange for
their shares of Common Stock, each outstanding Option shall be assumed or an
equivalent option shall be substituted by such successor entity or an Affiliate
of such successor entity, unless the Committee determines, in the exercise of
its sole discretion and in lieu of such assumption or substitution, that the
Optionee shall have the right to exercise the Option as to all Optioned Shares,
including Shares as to which the Option would not otherwise be vested. If the
Committee makes an Option fully exercisable in lieu of assumption or
substitution in the event of a merger, restructure, reorganization,
consolidation or sale of assets, the Committee shall notify the Optionee that
the Option shall be fully exercisable for a period of thirty (30) days from the
notice, and the Option will terminate upon the expiration of such period. For
the purposes of this Section, the Option shall be considered to be assumed if
following the merger, restructure, reorganization, consolidation or sale of
assets, the Option confers the right to purchase, for each Optioned Share
immediately prior to the merger, restructure, reorganization, consolidation or
sale of assets, the consideration (whether in stock, cash,or other securities or
property) received in the merger or sale of asset by holders of Common Stock for
each share of Common Stock for each share of Common Stock held on the effective
date of the consummation of the transaction (and if holders were offered a
choice of consideration, the type of consideration, the type of Common Stock);
provided, however, that if such consideration received in the solely common
equity of the successor entity or its Affiliates, the Committee may, with the
<PAGE>
consent of the successor entity the Optionee, provide for the consideration to
be received upon the exercise of the Option, for each Optioned Share, to be
solely Common Stock of the successor entity or its Affiliates equal Common Stock
in the merger, restructure, reorganization, consolidation or sale of assets.
(d) Change of Control. Notwithstanding anything to the contrary, the
Committee may grant options which provide for the acceleration of the vesting of
shares subject to an Option upon a Change of Control. Such provisions shall be
set forth in the Option Agreement.
11. AMENDMENT OF THE PLAN.
(a) Amendments by the Committee. The Committee at any time, from time
to time, may amend the Plan, provided, however, that if required by Rule 16b-3,
no amendment shall be made more than once every six months, other than to
comport with the changes in the Code, ERISA or the rules and regulations
promulgated thereunder.
(b) Compliance with the Code and Rule 16b-3. It is expressly
contemplated that the Committee may amend the Plan in any respect the Committee
deems necessary or advisable to bring the Plan and the Options granted hereunder
into compliance with the Code and Rule 16b-3.
(c) Shareholder Approval. Notwithstanding anything to the contrary, the
Company shall obtain shareholder approval of any Plan amendment to the extent
necessary or desirable to comply with Rule 16b-3 or with the Code (or any
successor rule or statute or other applicable law, rule or regulation, including
the requirements o any exchange or quotation system on which the Common Stock is
listed or quoted). Such shareholder approval, f required shall be obtained in
such manner and to such degree as is required by the applicable law, rule or
regulation.
(d) Rights and Obligations Granted Prior to Amendments. Rights and
obligations under any Option granted before amendment of the Plan shall not be
altered or impaired by any amendment of the Plan unless (i) the Company requests
the consent of the Optionee or his or her successor and (ii) such person
consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) Termination Date. The Committee may suspend or terminate the Plan
at any time. Unless sooner terminated, the Plan shall terminate within ten (10)
years of the date the Plan is adopted by, the Board of Directors or approved by
shareholders of the Company which ever date is earlier. No Options may be
granted under the Plan while it is suspended or after it is terminated.
(b) Alteration of Existing Rights. Rights and obligations under any
Option granted while the Plan is in effect shall not be altered or impaired by
the suspension or termination of the Plan except with the consent of the
Optionee or his or her successor.
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Options granted under the Plan shall be exercised unless and until the Plan has
been approved by the shareholders of the Company. Continuance of the Plan shall
be subject to the approval of the shareholders within 12 month from the date of
the Plan or the Board.
<PAGE>
EXHIBIT B
SVB FINANCIAL SERVICES, INC.
1997 DIRECTORS STOCK OPTION PLAN
1. PURPOSES.
(a) Opportunity to Purchase Stock. The purpose of the Plan is
to provide a means by which Directors of the Company and its Affiliates may be
given an opportunity to purchase stock of the Company. The Company, by means of
the Plan, seeks to retain the services of persons who are now Non-Employee
Directors of the Company and its Affiliates, and to provide incentives for such
persons to exert maximum efforts for the success of the Company and its
Affiliates.
(b) Nonstatutory Stock Options. The Company intends that the
Options issued under the Plan shall be Nonstatutory Stock Options.
2. DEFINITIONS.
(a) "Affiliate" means any parent corporation or subsidiary corporation
of the Company, as those terms are defined in Sections 424(e) and (f)
respectively of the Code, whether such corporations are now or are hereafter
existing.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Board of Directors of the Company unless a
separate Committee has been appointed by the Board in accordance with Section
3(c) of the Plan.
(e) "Common Stock" means the common stock of SVB Financial Services,
Inc., a New Jersey corporation.
(f) "Company" means SVB Financial Services, Inc., a corporation of the
State of New Jersey.
(g) "Continuous Status as a Director" means the relationship as member
of the Board of Directors is not interrupted or terminated with the Company or
any Affiliate. Continuous Status as a Director shall not be considered
interrupted in the case of : (1) any sick leave, military leave, or any leave of
absence approved by the Committee.
(h) "Director" means a member of the Board and includes Directors who
are officers and Employees of the Company or its Affiliates and Directors that
are neither Employees or Officers of the Company or any of its Affiliates.
(i) "Disability" means permanent and total disability as defined in
Section 22 (e) (3) of the Code.
(j) "Non-Employee Director" means a Director who is considered to be a
"non-employee director" in accordance with Section (b) (3) (i) of Rule 16b-3,
and any other applicable rules, regulations and interpretations of the
Securities and Exchange Commission.
<PAGE>
(k) "Employee" means any person, including officers and Directors,
employed by the Company or any Affiliate. Neither service as a Director nor
payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
(l) "Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of the any date, the value of the
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation (NASDAQ) System, the Fair Market Value of a Share of Common Stock
shall be the Closing sales price for such stock on the date of determination
(or, if no such price is reported on such date, such price as reported on the
nearest preceding day) as quoted on such system or exchange (or exchange with
the greatest volume of trading in the Common Stock), as reported in The Wall
Street Journal or such other source as the Committee deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean of the closing bid and
the asked prices for the Common Stock on the date of determination (or, if such
prices are not reported for such date, such prices as reported on the nearest
preceding date), as reported in the Wall Street Journal or such other source as
the Committee deems reliable;
(iii) If the Fair Market Value is not determined pursuant to
(i) or (ii) above, then the Fair Market Value shall be determined in good faith
by the Committee.
(n) "Non-Statutory Stock Option" means an Option not qualifying as an
Incentive Stock Option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(p) "Option" means a stock option granted pursuant to the Plan.
(q) "Option Agreement" means a written agreement between the Company
and the Optionee evidencing the conditions of an individual Option grant. The
Option Agreement shall be subject to the terms and conditions of the Plan.
(r) "Optioned Shares" means with respect to any Option the Shares of
the Common Stock subject to the Option.
(s) "Optionee" means a Director who holds an outstanding Option.
(t) "Person" means an individual or an entity.
(u) "Plan" the SVB Financial Services, Inc. 1997 Directors Stock Option
Plan.
<PAGE>
(v) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3.
(w) "Shares" shall mean a Share of Common Stock, as adjusted in
accordance with Section 10.
3. ADMINISTRATION.
(a) Committee. The Plan shall be administered by the Committee.
(b) Powers. The Committee shall have the power, subject to, and within
the limitations of, the express provisions of the Plan to:
(i) determine, in accordance with Section 6 of the Plan, the
Fair Market Value per Share of the Common Stock;
(ii) determine the terms, provisions, and the forms of Option
Agreements and, with the consent of the Optionee, and subject to Section 11, to
modify or amend any outstanding Option;
(iii) accelerate or defer (with the consent of the Optionee)
the date of any outstanding Option;
(iv) authorize any person to execute on behalf of the Company
any instrument required to effectuate the grant of an Option;
(v) construe and interpret the Plan and Options granted under
it, and to establish, amend and revoke rules and regulations for the
administration of the Plan, subject to Section 11; including correcting any
defect, omission or inconsistency in the Plan or in any Option Agreement, in any
manner and to the extent it shall deem necessary or expedient to make the Plan
Fully effective;
(vi) effect, at any time and from time to time, with the
consent of the affected Optionee, the cancellation of any or all outstanding
Options and grant in substitution thereof new Options relating to the same
numbers of Shares, but having an exercise price per Share consistent with
Section 6(b) at the date of the new Option grant; and
(vii) make all other determination deemed necessary or
advisable for the administration of the Plan.
(c) Committee. The Board may appoint a committee composed of not fewer
than two (2) members of the Board to serve in its place with respect to the
Plan. All of the members of such Committee shall be Non- Employee Directors, if
required under Section 3(d). From time to time, the Board may increase the size
of the Committee and appoint such additional members, remove members (with or
without cause) and substitute new members of the committee, fill vacancies,
(however caused) and remove members of the committee and thereafter directly
administer the Plan, all to the extent permitted by the rules governing plans
intended to qualify as a discretionary plan under Rule 16b-3.
(d) Exchange Act Registration. Any requirement that an administrator of
the Plan be a Non-Employee Director shall not apply (i) prior to the date of the
first registration of an equity security of the Company under Section 12 of the
Exchange Act or (ii) if the Board or the Committee expressly declares that such
requirement shall not apply. Any Non-Employee Director shall otherwise comply
with the requirements of Rule 16b-3.
<PAGE>
4. GRANT OF OPTIONS AND SHARES SUBJECT TO PLAN.
(a) Upon the Effective Date of the Plan as set forth in Section 13
hereof, each Non-Employee Director as of December 31, 1996 shall be granted an
Option to purchase 3,900 Shares of the Common Stock at Fair Market Value on said
Effective Date.
(b) Number of Shares. Subject to the provisions of Section 10 relating
to adjustments upon changes in stock, the stock that may be sold pursuant to
Options is 54,600 Shares of the Company's Common Stock. If any Option shall for
any reason expire or otherwise terminate without having been exercised in full,
the Optioned Shares not purchased under such Option shall not become available
for future issuance under the Plan.
(c) Stock Subject to Plan. The stock subject to the Plan may be
unissued shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Directors Eligible. Nonstatutory Stock Options shall be granted to
each of the Non-Employee Directors upon the Effective Date of the Plan as set
forth in Section 13 hereof immediately following adoption of the Plan by the
Board and approval thereof by the stockholders as provided in Section 13
hereafter.
(b) Directors. A Director shall be eligible for the benefits of the
Plan only if he/she is a Non-Employee Director.
6. OPTION PROVISIONS.
Each Option Agreement shall be in such form and contain such terms and
conditions as the Committee shall deem appropriate. In the event that any
provision of the Option Agreement and the Plan conflict, the provisions of the
Plan shall control. The provisions of separate Options need not be identical,
but each Option Agreement shall include (through incorporation of provisions
hereof by reference in the Option Agreement or otherwise) the substance of each
of the following provisions:
(a) Term. No Option shall be exercisable after the expiration of five
(5) years from the date it was granted and the term of each Option shall be
stated in the Option Agreement.
(b) Price. The exercise price shall be not less than one hundred
percent (100%) of the Fair Market Value of the stock subject to the Option on
the date the Option is granted. The exercise price of each Stock Option shall
not be less than the par value of the Optioned Shares on the date the Option was
exercised.
(c) Consideration. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations at the time the Option is exercised, either in cash or check.
(d) Exercise. Subject to 9(f), an Option shall be deemed exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Option Agreement by the person entitled to exercise the Option
and full payment for the Shares with respect to which the Option is exercised
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has been received by the Company by cash or check. Each Optionee who exercises
an Option shall, upon notification of the amount due (if any) and prior to or
concurrent with delivery of the certificate representing the Shares, pay to the
Company by cash or check, amounts necessary to satisfy applicable federal, state
or local tax withholding requirements.
(e) Non-Transferability. A Directors Stock Option shall not be
transferrable except: (i) by will or by laws of descent and distribution or
pursuant to a qualified domestic relations order, as defined by the Code or
Title I of the Employee Retirement Income Act, as amended ("ERISA), or the rules
thereunder (a "QDRO") and shall be exercisable during the lifetime of the
Optionee only by such person or any transferee pursuant to a QDRO; or (ii)
without payment of consideration, to immediate family members (i.e. spouses,
children and grandchildren) of the Optionee or to a trust for the benefit of
such family members, or partnership whose only partners are such family members.
(f) Securities Compliance. The Company may require any Optionee, or any
person to whom an Option is transferred under Section 6 (f), as a condition of
exercising such Option, (i) to give written assurances satisfactory to the
Compnay as to the Optionee's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters, and that he or she is capable of evaluating, alone, or together with
the purchaser representative, the merits and risks of exercising the Option;
(ii) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the Option for such person's own
account and not with the present intention of selling or otherwise distributing
the stock; and (iii) to deliver such other documentation as may be necessary to
comply with federal and state securities laws. These requirements and any
assurances given pursuant to such requirements, shall be inoperative if (i) the
issuance of the Shares upon the exercise of the Option has been registered under
a then effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), and all applicable state securities laws, or
(ii) as to any such requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
applicable securities laws. The Company may, upon advice of Counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary and appropriate in order to comply with applicable
securities laws, including but not limited to, legends restricting the transfer
of the stock, and may enter stop-transfer orders against the transfer of the
Shares of Common Stock issued upon the exercise of an Option. The Company has no
obligation to undertake registration of Options or the Shares of Common Stock
issued upon the exercise of an Option.
(g) Termination of Service. In the event an Optionee's Continuous
Status a Director terminates (other than by the Optionee's death or disability),
the Optionee may exercise his or her Option but only prior to the (i) expiration
of three (3) months after the date of such termination and (ii) expiration of
the term of the Option as set forth in the Option Agreement, and only to the
extent that the Optionee was entitled to exercise it at the date of such
termination. If after termination, the Optionee does not fully exercise his or
her Option within the time specified in the Option Agreement, the Option shall
terminate.
(h) Disability of Optionee. In the event that an Optionee's Continuous
Status as a Director terminates as a result of the Optionee's Disability, the
Optionee or his or her personal representative may exercise his or her Option,
but only within twelve (12) months from the date of such termination, and only
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to the extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). If, after such termination, the Optionee
does not fully exercise his or her Option within the time period specified
herein, then the Option shall terminate.
(i) Death of Optionee. In the event of the death of an Optionee, the
Option may be exercised , at any time within twelve (12) months following the
date of death (or such longer or shorter time as may be specified in the Option
Agreement) but in no event later than the expiration date of the Option as set
forth in the Option agreement, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent that the Optionee was entitled to exercise the Option as of the date
of his or her death. If, after death, the Optionee's estate or a person who
acquired the right to exercise the Option, does not fully exercise the Option
within the time period specified herein, then the Option shall terminate.
7. COVENANTS OF THE COMPANY.
(a) Reserves. During the term of the Options, the Company shall keep
available at all times and shall reserve the number of Shares required to
satisfy such Options upon exercise.
(b) Regulatory Approvals. The Company shall seek and obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to issue and sell Shares upon exercise of the Options;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan or any Option or any Shares
issued or issuable pursuant to such Options. If, after reasonable efforts, the
Company is unable to obtain from such regulatory commission or agency the
authority that counsel for the Company deems necessary for the lawful issuance
and sale of the Shares under the Plan, the Company shall be relieved from any
liability for failure to issue or sell Shares upon exercise of such Options
unless and until authority is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of the stock pursuant to Options shall
constitute general funds of the Company.
9. MISCELLANEOUS.
(a) No Rights as Shareholder. Neither an Optionee nor any person to
whom an Option is transferred under Section 6(f) shall be deemed to be the
holder of or to have any of the rights of a holder with respect to, any Shares
subject to such Option including, but not limited to, rights to vote or to
receive dividends unless and until such person has satisfied all requirements
for the exercise of the Option according to its terms, the certificates
evidencing such Shares have been issued and such person has become the record
owner of such Shares.
(b) No Right To Continue as Director. Nothing in the Plan or any
instrument executed or Option granted pursuant thereto shall confer upon any
Director or Optionee any right to continue in the employ of the Company, or any
Affiliate, or to continue to serve as a member of the Board of Directors of the
Company or any Affiliate or shall affect the right of the Company or any
Affiliate to terminate the employment or the relationship of any Director,
Employee, Officer or Optionee with or without cause.
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(c) Date of Grant. Once Shareholder approval of the Plan has been
obtained, the date of grant of an Option shall, for all purposes, be the date on
which the Shareholder approval of the Plan was obtained. Notice shall be given
to each Optionee within a reasonable time after the date of such grant.
(d) Rule 16b-3. With respect to persons subject to Section 16 of the
Exchange Act, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 and with respect to such persons all
transactions shall be subject to such conditions regardless of whether they are
expressly set forth in the Plan or the Option Agreement. To the extent any
provision of the Plan or action by the Committee fails to comply, it shall not
apply to such persons or their transactions and shall be deemed null and void,
to the extent permitted by law and deemed advisable by the Committee.
(e) Conditions Upon Exercise of Options. Notwithstanding any other
provisions, Shares shall not be issued and Options shall not be exercised unless
the exercise of such Option and the Issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including
without limitation, the Securities Act of 1933, as amended, applicable state
securities laws, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange (including NASDAQ) upon
which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
(f) Notice. Any written notice to the Company required by any of the
provisions of the Plan shall be addressed to the Secretary of the Company and
shall be effective when it is received. Any written notice to Optionee required
by the Plan shall be addressed to the Optionee at the address on file for the
Optionee with the Company and shall become effective 3 days after it is mailed
by certified mail, postage prepaid to such address or at the time of delivery if
delivered sooner by messenger or overnight delivery service.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) Changes in Capitalization. Subject to any required action by the
Shareholders of the Company, the maximum number of Shares of Common Stock
subject to the Plan, the number of Shares of Common Stock covered by each
outstanding Option and the number of Shares of Common Stock that have been
authorized for issuance under the Plan but have been returned to the plan upon
cancellation or expiration of an option, as well as the price per Share of
Common Stock shall be proportionally adjusted for any increase or decrease in
the number of issued Shares of the Common Stock, resulting from a stock split,
stock dividend, combination or reclassification of Shares of Common Stock
effected without consideration by the Compnay; provided, however that the
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Committee, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of Shares of stock of any class, or securities convertible into Shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or exercise price of Optioned Shares.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, each outstanding Option will
terminate immediately prior to the consummation of such proposed action, unless
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otherwise provided by the Committee. The Committee may, in the exercise of its
sole discretion in such instances, declare that any Option shall terminate as of
a date fixed by the Committee and give each Optionee the right to exercise his
or her Option as to all or any part of the Optioned Shares, including Shares as
to which the Option would not otherwise be exercisable.
(c) Merger or Asset Sale. Subject to Section 10 (b), in the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger, restructure, reorganization or consolidation of the Company with or into
another entity or entities in which the Shareholders of the Company receive cash
or securities of another issuer, or any combination thereof, in exchange for
their Shares of Common Stock, each outstanding Option shall be assumed or an
equivalent option shall be substituted by such successor entity or an Affiliate
of such successor entity, unless the Committee determines, in the exercise of
its sole discretion and in lieu of such assumption or substitution, that the
Optionee shall have the right to exercise the Option as to all Optioned Shares,
including Shares as to which the Option would not otherwise be vested. If the
Committee makes an Option fully exercisable in lieu of assumption or
substitution in the event of a merger, restructure, reorganization,
consolidation or sale of assets, the Committee shall notify the Optionee that
the Option shall be fully exercisable for a period of thirty (30) days from the
notice, and the Option will terminate upon the expiration of such period. For
the purposes of this Section, the Option shall be considered to be assumed if
following the merger, restructure, reorganization, consolidation or sale of
assets, the Option confers the right to purchase, for each Optioned Share
immediately prior to the merger, restructure, reorganization, consolidation or
sale of assets, the consideration (whether in stock, cash,or other securities or
property) received in the merger or sale of asset by holders of Common Stock for
each Share of Common Stock for each Share of Common Stock held on the effective
date of the consummation of the transaction (and if holders were offered a
choice of consideration, the type of consideration, the type of Common Stock);
provided, however, that if such consideration received in the solely common
equity of the successor entity or its Affiliates, the Committee may, with the
consent of the successor entity the Optionee, provide for the consideration to
be received upon the exercise of the Option, for each Optioned Share, to be
solely Common Stock of the successor entity or its Affiliates equal Common Stock
in the merger, restructure, reorganization, consolidation or sale of assets.
11. AMENDMENT OF THE PLAN.
(a) Amendments by the Committee. The Committee at any time, from time
to time, may amend the Plan, provided, however, that if required by Rule 16b-3,
no amendment shall be made more than once every six months, other than to
comport with the changes in the Code, ERISA or the rules and regulations
promulgated thereunder.
(b) Compliance with the Code and Rule 16b-3. It is expressly
contemplated that the Committee may amend the Plan in any respect the Committee
deems necessary or advisable to bring the Plan and the Options granted hereunder
into compliance with the Code and Rule 16b-3.
(c) Shareholder Approval. Notwithstanding anything to the contrary, the
Company shall obtain Shareholder approval of any Plan amendment to the extent
necessary or desirable to comply with Rule 16b-3 or with the Code (or any
successor rule or statute or other applicable law, rule or regulation, including
the requirements o any exchange or quotation system on which the Common Stock
may be listed or quoted). Such Shareholder approval, if required, shall be
obtained in such manner and to such degree as is required by the applicable law,
rule or regulation.
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(d) Rights and Obligations Granted Prior to Amendments. Rights and
obligations under any Option granted before amendment of the Plan shall not be
altered or impaired by any amendment of the Plan unless (i) the Company requests
the consent of the Optionee or his or her successor and (ii) such person
consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) Termination Date. The Committee may suspend or terminate the Plan
at any time. Unless sooner terminated, the Plan shall terminate within ten (10)
years of the date the Plan is adopted by, the Board of Directors or approved by
Shareholders of the Company which ever date is earlier. No Options may be
granted under the Plan while it is suspended or after it is terminated.
(b) Alteration of Existing Rights. Rights and obligations under any
Option granted while the Plan is in effect shall not be altered or impaired by
the suspension or termination of the Plan except with the consent of the
Optionee or his or her successor.
13. EFFECTIVE DATE OF PLAN AND GRANT OF OPTIONS.
The Plan and the Options granted hereunder shall become effective as of
the date of approval of the Plan by the affirmative votes of the holders of a
majority of the Common Stock present, or represented, and entitled to vote at
the 1997 Annual meeting of the Shareholders duly held in accordance with the
applicable laws of the State of New Jersey.