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 30, 1998
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 30, 1998 at 5:30 P.M., for
the following purposes:
1. Election of five (5) Directors for the terms as set forth in the
accompanying Proxy Statement.
2. 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 23, 1998, 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 31, 1998
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 29, 1998.
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 30, 1998
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 30, 1998 and all adjournments thereof.
This Proxy Statement and accompanying materials are being mailed to shareholders
on or about March 31, 1998.
The close of business March 23, 1998, 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 1,377,830
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.
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 five (5) Directors listed below have been nominated to serve until
the 2001 Annual Meeting or until his/her successor is elected and qualified, or
until their earlier resignation or removal.
The following table presents the name, title, address, age and
principal occupation of each nominee for Director followed by the remaining
Directors and the Executive Officers, the number of shares and the percentage of
the outstanding shares of common stock of the Company beneficially owned,
directly or indirectly, by each of them as of March 23, 1998. There is no one
other than the persons listed below who owns beneficially 5% or more of the
outstanding common stock. In addition to the shares listed in the table, each
Director with the exception of Mr. Corcoran owns 3,900 options to purchase 3,900
shares at a price of $13.00 per share.
<PAGE>
<TABLE>
<CAPTION>
Shares
Beneficially % of Total
Name, Title, and Address Age Principal Occupation Owned Outstanding
- ------------------------------ --- -------------------- ----- -----------
Directors Nominated to Serve
Until the 2001 Annual Meeting:
<S> <C> <C> <C> <C>
Bernard Bernstein 60 President and CEO, 50,662 3.68
Director Mid-State Lumber Corp.,
200 Industrial Parkway a wholesale lumber
Branchburg, NJ 08876 distributor
Robert P. Corcoran 57 President and CEO 5,000(1) .36
President, CEO and Director Somerset Valley Bank
12 Harvest Court SVB Financial Services, Inc.
Flemington, NJ 08822
Mark S. Gold, MD 48 Author and Professor 81,886(2) 5.94
Director University of Florida
2002 San Marco Boulevard
Jacksonville, FL 32207
Raymond L. Hughes 66 President of N.J. Risk 31,090(3) 2.26
Director Managers & Consultants
20 West End Avenue
Somerville, NJ 08876
S. Tucker S. Johnson 32 Farmer 19,860 1.44
Director
P.O. Box 675
Oldwick, NJ 08858
<CAPTION>
Shares
Beneficially % of Total
Name, Title, and Address Age Principal Occupation Owned Outstanding
- ------------------------------------- --- -------------------- ----- -----------
Directors Whose Terms Expire in 1999.
<S> <C> <C> <C> <C>
Willem Kooyker 55 Chairman and CEO of Blenheim 129,218(4) 9.38
Director Investments, Inc., an international
2 Worlds Drive fund management firm.
Somerset, NJ 08875
Frank Orlando 64 Retired 57,860(5) 4.20
Director
786 Princeton Avenue
Brick, NJ 08724
Gilbert E. Pittenger 73 Retired 33,524(6) 2.43
Director
RD #1, Box 91
New Ringgold, PA 17960
Frederick D. Quick 66 President of Hesco 88,800(7) 6.44
Director Electric Supply Co., Inc.,
924 River Road a lighting and electrical
Neshanic Station, NJ 08853 supply firm
Donald Sciaretta 42 President of Claremont 30,655 2.22
Director Construction Group, Inc.
P.O. Box 808
Far Hills, NJ 07931
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Directors Whose Terms Expire in 2000.
<S> <C> <C> <C> <C>
John K. Kitchen 54 President of Title Central 25,339(8) 1.84
Chairman of Board and Director Agency, a title insurance
P.O. Box 421 firm
Somerville, NJ 08876
Anthony J. Santye, Jr. 47 Managing Partner of A.J. 18,480(9)(10) 1.34
Director Santye and Co., an
36 East Main Street accounting and consulting
Somerville, NJ 08876 firm
G. Robert Santye Director of Real Estate and 11,520(9)(11) .84
Vice Chairman and Director Business Valuation Services
36 East Main Street for A.J. Santye and Co.
Somerville, NJ 08876
Herman C. Simonse 66 President of HCS Consultants, Inc. 17,600 1.28
Director
93 Douglass Avenue
Bernardsville, NJ 07924
Donald R. Tourville 61 Chairman and CEO of Zeus 66,176 4.80
Director Scientific, Inc., a manu-
P.O. Box 38 facturer of diagnostic
Raritan, NJ 08869 test kits
Executive Officers:
Keith B. McCarthy 40 Chief Operating 3,600(12) .26
Executive Vice President and Officer of the Bank
Treasurer Executive Vice President and
501 Red School Lane Treasurer of the Company
Phillipsburg, NJ 08865
Arthur E. Brattlof 54 Executive Vice President and 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 672,767 48.82%
</TABLE>
(1) Includes 720 shares in the name of his son, a minor. He also has options to
purchase 7,800 shares at $8.33 per share which expire in August 1999, 4,800
shares at $8.33 per share which expire in April 2001 and 5,000 shares at
$13.00 per share which expire November 2002.
(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.
(5) Includes 32,400 shares held by Eight Mountain Trail, Inc. Employees Profit
Sharing Plan.
<PAGE>
(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 Quick Family Investments LP.
(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, he has options to purchase 8,400 shares at $8.33 per share
which expire August 1999, 4,800 shares at $8.33 per share which expire
April 2001 and 5,000 shares at $13.00 per share which expire November 2002.
(13) In addition, he has options to purchase 6,240 shares at $8.33 per share
which expire April 2001 and 5,000 shares at $13.00 per share which expire
November 2002.
Director Committees
All members 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.
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.
<PAGE>
The Compensation Committee, composed of Messrs. Bernstein, Johnson,
Kitchen, Kooyker, Quick, Orlando and A.J. Santye, Jr., 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, Executive Vice President, is a
non-director voting member of the Loan Committee.
During 1997, the Board of Directors held 12 meetings, the Executive
Committee 4 meetings, the Loan Committee 11 meetings, the Audit Committee 5
meetings, the Investment Committee 4 meetings, the Compensation Committee 1
meeting, and the Real Estate Committee 6 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 1997, all
Directors attended at least 75% of the total Board and Committee meetings with
the exception of Messrs. Hughes, Johnson, Kooyker and Sciaretta. 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>
Annual
Compensation All Other
Name and Position Year Salary Bonus Compensation
- ----------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Robert P. Corcoran 1997 $136,500 $18,632(1) $16,410(3)
President and CEO of 1996 130,000 29,023 8,467(3)
the Company and the Bank 1995 125,000 31,250 9,044(3)
Keith B. McCarthy 1997 102,500 11,325(1) 4,703(4)
Treasurer of the Company 1996 97,650 16,011 2,592(2)
Chief Operating Officer of 1995 93,000 13,350 2,672(2)
the Bank
Arthur E. Brattlof 1997 88,500 9,708(1) 3,467(2)
Executive Vice President 1996 82,000 13,444 2,176(2)
of the Bank 1995 78,000 11,700 2,271(2)
</TABLE>
<PAGE>
(1) The Bonus for 1997 is based 75% on a comparison of the Company's
results for 1997 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 $5,308 in 1997,
$3,450 in 1996 and $3,706 in 1995, Director fees of $4,950 in 1997,
$3,000 in 1996 and $1,800 in 1995 and term life insurance premiums paid
by the Bank of $6,152 in 1997, $2,017 in 1996 and $3,538 in 1995.
(4) Includes matching contributions to the 401(k) Plan of $4,028 and life
insurance premiums paid by the Bank of $675.
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 1997, the Compensation Committee of the Board of Directors has
approved a bonus plan for the three executive officers listed in the previous
table. 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.
1997 Restated Incentive Stock Option Plan
On April 24, 1997, the shareholders approved the 1997 Restated
Incentive Stock Option Plan, which provides for officers and employees of the
Company to purchase up to 82,404 shares of Common Stock. The purpose of the Plan
is to (i) replace and expand certain existing stock options of the Bank (ii)
assist the Company and the Bank in attracting and retaining qualified persons as
their employees and (iii) to help insure that employees of the Company and the
Bank have shared economic interests with the shareholders of the Company.
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
<PAGE>
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 Section 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
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 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.
<PAGE>
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.
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 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 Section 16b-3.
<PAGE>
The Company will obtain shareholder approval of any Plan amendment to
the extent necessary or desirable to comply with Section 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.
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.
<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
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
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.
<TABLE>
<CAPTION>
OPTIONS GRANTS IN LAST FISCAL YEAR
(Individual Grants)
Number of Percent of Total
Securities Options Granted
Underlying Options to Employees in
Name Granted Fiscal Year Exercise Price Expiration Date
---- ------- ----------- -------------- ---------------
<S> <C> <C> <C> <C>
Robert P. Corcoran 5,000 16.6% $13.00 November 20, 2002
Keith B. McCarthy 5,000 16.6% $13.00 November 20, 2002
Arthur E. Brattlof 5,000 16.6% $13.00 November 20, 2002
</TABLE>
<PAGE>
1997 Directors Stock Option Plan
On April 24, 1997, the shareholders of the Company approved the 1997
Directors Stock Option Plan. The Plan is intended to promote the Company's
interest by establishing a mechanism to reward Directors based on 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.
On June 26, 1997, each non-employee member of the Company's Board of
Directors was granted an option to purchase 3,900 shares of the Common Stock of
the Company at $13.00 per share, which was the fair market value of the Common
Stock as of that date.
As there were 14 Directors eligible to participate under the 1997
Directors Stock Option Plan all of the shares available under the Plan are
subject to option.
Administration
The 1997 Directors Stock Option Plan will 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 will 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.
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.
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 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.
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 Qualified Domestic
Relations Order (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.
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 non-qualified 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 non-qualified stock option ordinarily will result in
<PAGE>
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
non-qualified 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
non-qualified 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 non-qualified stock option.
If a non-qualified 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 non-qualified stock option.
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.
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 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 1997, Directors of the Bank received compensation for service on
the Board of Directors of $450 per Board of Directors meeting attended and $100
for each committee meeting. Mr. John Kitchen as Chairman of the Board received
compensation of $24,000 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 67% 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
$44,316 to the Plan in 1997.
<PAGE>
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 in
1991 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, 1998. 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.
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 1999
Annual Meeting of Shareholders (which the Company currently intends to hold in
April of 1999) must be received by the Secretary of the Company by November 28,
1998 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 shareholders of the change and the date by which proposals of
shareholders 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>
REVOCABLE PROXY
SVB FINANCIAL SERVICES, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
APRIL 30, 1998
The undersigned shareholder hereby constitutes and appoints each of ARTHUR E.
BRATTLOF, MARGUERITE EPPLER and KEITH B. McCARTHY, with full power of
substitution, to act as proxy for and to vote all shares of Common Stock which
the undersigned is entitled to vote at the Annual Meeting of Shareholders to be
held on April 30, 1998, at 5:30 p.m. prevailing local time at the Raritan Valley
Country Club, Route 28, Somerville, New Jersey, or at any adjournment(s)
thereof, on all matters coming before the meeting, including (but not limited
to) the election of any person to the directorship for which a nominee named
hereon is unable to serve.
The undersigned instructs said proxies to vote:
I. Election of Directors
For a term to continue to the 2001 Annual Meeting:
[ ] FOR [ ] WITHHOLD [ ] EXCEPT
Bernard Bernstein, Robert P. Corcoran, Mark S. Gold, M.D., Raymond L.
Hughes, S. Tucker S. Johnson.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
THE PROXIES SHALL VOTE AS SPECIFIED ABOVE, OR IF A CHOICE IS NOT SPECIFIED
FOR ANY OF THE ABOVE NOMINEES, THE PROXIES WILL VOTE "FOR" THE ELECTION OF THE
BOARD OF DIRECTORS NOMINEES.
Please be sure to sign and date
this Proxy in the box below.
_________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
<PAGE>
Detach above card, sign, date and mail in postage paid envelope provided.
SVB FINANCIAL SERVICES, INC.
Please mark, sign, date and return this Proxy promptly using the envelope
provided. Please sign exactly as your name(s) appear hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
