SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
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|_| Preliminary Proxy Statement
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(as permitted by Rule 14a-6(e)(2))
X Definitive Proxy Statement
Definitive Additional Materials
|_| Soliciting Material Pursuant to 240.14a-12
NORTH BAY BANCORP
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(Name of Registrant as Specified In Its Charter)
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<PAGE>
NOTICE OF FIRST ANNUAL MEETING
OF SHAREHOLDERS OF
NORTH BAY BANCORP
TO THE SHAREHOLDERS OF NORTH BAY BANCORP:
NOTICE IS HEREBY GIVEN that the First Annual Meeting of the
Shareholders of North Bay Bancorp will be held at the Napa Valley Marriott, 3425
Solano Avenue, Napa, California, on Tuesday, May 9, 2000, at 7:00 p.m. to
consider and act on:
(1) Election of Directors. The Board of Directors intends at this
time to present the following nominees for election:
David B. Gaw Conrad W. Hewitt
Harlan R. Kurtz Richard S. Long
Thomas H. Lowenstein Thomas F. Malloy
Terry L. Robinson James E. Tidgewell
Nominations for election of members of the Board of Directors may be made by the
Board of Directors or any shareholder of the Company entitled to vote for the
election of Directors. Notice of intention to make any nominations (other than
for persons named above) must be made in writing and must be delivered or mailed
to the President of the Company not more than ten (10) days after delivery or
mailing of this Notice. Such notification must contain the following
information, to the extent known to the notifying shareholder: (a) the name and
address of each proposed nominee; (b) the principal occupation of each proposed
nominee; (c) the number of shares of the capital stock of the Company
beneficially owned by each proposed nominee; (d) the name and residence address
of the notifying shareholder; (e) the number of shares of capital stock of the
Company beneficially owned by the notifying shareholder; (f) with the written
consent of the proposed nominee, a copy of which shall be furnished with the
notification, whether the proposed nominee has ever been convicted of or pleaded
nolo contendere to any criminal offense involving dishonesty or breach of trust,
filed a petition in bankruptcy, or been adjudged bankrupt or been an officer,
director, or general partner of a business entity which filed a petition in
bankruptcy or been adjudged bankrupt. The notification must be signed by the
nominating shareholder and by the nominee. Nominations not made in accordance
herewith will be disregarded by the chairman of the meeting, and upon his
instructions, the inspector of the election will disregard all votes cast for
each such nominee. The time limitations set forth in this paragraph do not apply
to the nomination of a person to replace a proposed nominee who has died or
otherwise become incapacitated to serve as director between the last day for
giving notice hereunder and the date of election of directors if the procedure
called for in this paragraph was followed with respect to the nomination of the
proposed nominee.
<PAGE>
(2) Ratification of the Selection of Arthur Andersen LLP. The
shareholders will be asked to ratify the Company's selection of Arthur Andersen
LLP, independent certified public accountants, as the independent auditors of
North Bay Bancorp for the year ending December 31, 2000
(3) Amendment to North Bay Bancorp Stock Option Plan. The
shareholders will be asked to amend the North Bay Bancorp Stock Option Plan to
increase the number of shares available for grant by 150,000 to 370,274 shares
Other Business. The shareholders will consider and act on such other
business as may properly be brought before the meeting.
Shareholders of record at the close of business on March 15, 2000, are entitled
to notice of, and to vote at, the Annual Meeting. Every shareholder is invited
to attend the Annual Meeting in person or by proxy. If you do not expect to be
present at the Meeting, you are requested to complete and return the
accompanying proxy form in the envelope provided. Any shareholder present at the
Annual Meeting may vote personally on all matters brought before the Meeting,
and in that event your proxy will not be used.
Dated: April 7, 2000
------------------------------
Wyman G. Smith, III
Corporate Secretary
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE
IN THE ENCLOSED POSTAGE PAID ENVELOPE
<PAGE>
PROXY STATEMENT
FOR THE
FIRST ANNUAL MEETING OF SHAREHOLDERS
OF
NORTH BAY BANCORP
1500 SOSCOL AVENUE
NAPA, CALIFORNIA 94559
(707) 257-8585
To Be Held May 9, 2000 at 7:00 p.m.
at the Napa Valley Marriott, 3425 Solano Avenue, 94558
-----------------------------------
TABLE OF CONTENTS
GENERAL INFORMATION FOR SHAREHOLDERS.......................................... 1
PRINCIPAL SHAREHOLDERS........................................................ 2
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING................................ 4
1. ELECTION OF DIRECTORS................................................ 4
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS.................... 7
SECURITY OWNERSHIP OF MANAGEMENT..................................... 7
EXECUTIVE COMPENSATION...............................................10
Summary Executive Compensation Table........................10
Option Grants in Last Fiscal Year...........................12
Aggregate Option Exercises in Last Fiscal Year and
Year-End Option Values..................................13
Long Term Incentive Plans - Awards in Last Fiscal Year......13
Termination of Employment and Change of
Control Arrangements....................................13
Compensation of Directors...................................14
OTHER INFORMATION REGARDING MANAGEMENT..............................17
Management Indebtedness.....................................17
Certain Business Relationships..............................17
Reports of Changes in Beneficial Ownership..................18
2. RATIFICATION OF INDEPENDENT AUDITORS.................................18
Required Vote and Recommendation............................18
3. APPROVAL OF AMENDMENT OF STOCK OPTION PLAN...........................18
Required Vote and Recommendation............................25
OTHER INFORMATION.............................................................25
AVAILABILITY OF FORM 10-KSB...................................................25
SHAREHOLDER PROPOSALS.........................................................25
OTHER MATTERS.................................................................26
<PAGE>
GENERAL INFORMATION FOR SHAREHOLDERS
The following information is furnished in connection with the solicitation of
the accompanying proxy by and on behalf of the Board of Directors of North Bay
Bancorp ("the Company") for use at the First Annual Meeting of Shareholders to
be held at the Napa Valley Marriott, 3425 Solano Avenue, Napa, California on
Tuesday, May 9, 2000, at 7:00 p.m. Only shareholders of record at the close of
business on March 15, 2000, (the "Record Date") will be entitled to notice of
and to vote at the Annual Meeting. On the Record Date, the Company had
outstanding 1,613,089 shares of its Common Stock, all of which will be entitled
to vote at the Annual Meeting and any adjournments thereof. This proxy statement
will be first mailed to shareholders on or about April 7, 2000.
As many of the Company's shareholders are not expected to personally attend the
Annual Meeting, the Company solicits proxies so that each shareholder is given
an opportunity to vote. Shares represented by a duly executed proxy in the
accompanying form, received by the Board of Directors prior to the Annual
Meeting, will be voted at the Annual Meeting. A shareholder executing and
delivering the enclosed proxy may revoke the proxy at any time prior to exercise
of the authority granted by the proxy by (i) filing with the secretary of the
Company an instrument revoking it or a duly executed proxy bearing a later date;
or (ii) attending the meeting and voting in person. A proxy is also revoked when
written notice of the death or incapacity of the maker of the proxy is received
by the Company before the vote is counted. If a shareholder specifies a choice
with respect to any matter on the accompanying form of proxy, the shares will be
voted accordingly. If no specification is made, the shares represented by this
proxy will be voted in favor of election of the nominees specified and in favor
of the specified proposals.
Each shareholder of record is entitled to one vote for each share held on all
matters to come before the Annual Meeting, except that shareholders may have
cumulative voting rights with respect to the election of directors. If
cumulative voting is utilized, each shareholder may give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which the shareholder's shares are entitled, or may distribute the
same number of votes among as many candidates as the shareholder desires.
Pursuant to California law and the Company's bylaws, no shareholder may cumulate
votes unless the name of any candidate for which such votes would be cast has
been placed in nomination prior to the voting in accordance with the Company's
bylaws and, also prior to the voting at the Annual Meeting, any shareholder has
given notice of that shareholder's intention to cumulate that shareholder's
votes at such meeting. If any shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination. The Board of
Directors does not, at this time, intend to give such notice nor to cumulate the
votes it may hold pursuant to the proxies solicited herein unless the required
notice by a shareholder is given in proper form at the Annual Meeting, in which
instance the Board of Directors intends to cumulatively vote all the proxies
held by it in favor of the nominees for office as set forth herein. Therefore,
discretionary authority to cumulate votes in such event is solicited in this
Proxy Statement.
The proxy committee is composed of two officers of the Company, Terry L.
Robinson and Wyman G. Smith, III, who will vote all shares of Common Stock
represented by the proxies. However, the proxy committee cannot vote the shares
of the shareholder unless the shareholder
1
<PAGE>
signs and returns a proxy card. Proxy cards also confer upon the proxy committee
discretionary authority to vote the shares represented thereby on any matter
that was not known at the time this Proxy Statement was mailed, which may
properly be presented for action at the Annual Meeting including a motion to
adjourn, and with respect to procedural matters pertaining to the conduct of the
Annual Meeting. The total expense of soliciting the proxies in the accompanying
form will be borne by the Company. While proxies are normally solicited by mail,
proxies may also be directly solicited by officers, directors and employees of
the Company. Such officers, directors and employees will not be compensated for
this service beyond normal compensation to them.
The voting of proxies will be tabulated by a representative of Chase Mellon
Shareholder Services, which has been appointed as the Company's independent
inspector of election. The inspector of election will be present at the meeting
in order to tabulate the voting of any proxies returned and ballots cast at that
time. Except as required by law, the vote indicated on each individual proxy
card and ballot will be held confidential.
Abstentions and broker non-votes are each included in the determination of the
number of shares present and voting for the purpose of determining whether a
quorum is present, and each is tabulated separately. In determining whether a
proposal has been approved, abstentions are counted in tabulations of the votes
cast on proposals presented to shareholders and broker non-votes are not counted
as votes for or against a proposal or as votes present and voting on the
proposal.
A copy of the Annual Report of the Company for the fiscal year ended December
31, 1999, accompanies this Proxy Statement. Additional copies of the Annual
Report are available upon request to Pansy F. Smith, Assistant Corporate
Secretary of the Company.
PRINCIPAL SHAREHOLDERS
<TABLE>
As of March 15, 2000, the following persons were known by the Company to
beneficially own more than five percent (5%) of the outstanding Common Stock:
2
<PAGE>
<CAPTION>
Relationship Number of Shares Percent of Class(1)
Name and Address with Company Beneficially Owned Beneficially Owned
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Houghton Gifford, M.D Director 115,970(2) 7.17%
3219 Vichy Avenue of The Vintage Bank
Napa, CA 94558
Terry L. Robinson Director and CEO 90,715(3) 5.62%
1500 Soscol Avenue
Napa, CA 94559
<FN>
- ----------
(1) In computing the percentage of outstanding Common Stock owned
beneficially the number of shares beneficially owned has been divided by the
number of outstanding shares on the Record Date after (i) giving effect to stock
dividends paid through March 15, 2000 and (ii) assuming options exercisable by
the named person within 60 days have been exercised.
(2) Included in the total for Dr. Gifford are 644 shares held as custodian
for a minor under the California Uniform Transfers to Minors Act; 112,548 shares
held in the name of the Gifford Family Trust dated April 8, 1985, of which Dr.
Gifford is trustee; and 2,778 shares as to which Dr. Gifford holds an option
exercisable on May 1, 2000.
(3) See the footnote references set forth below under Security Ownership of
Management for information regarding the nature of Mr. Robinson's beneficial
ownership.
</FN>
</TABLE>
3
<PAGE>
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
1. ELECTION OF DIRECTORS
It is intended to elect eight Directors of the Company, pursuant to a resolution
of the Board of Directors fixing the authorized number of Directors at eight
(8). The Directors so elected will hold office for a term continuing until the
next Annual Meeting and until their successors are duly elected and qualified.
All of the nominees are at present members of the Board of Directors of the
Company. If any nominee should refuse or be unable to serve, the proxies will be
voted for such person as the Board of Directors may designate to replace that
nominee. The Board presently has no knowledge that any of the nominees will
refuse or be unable to serve. The nominees (up to the number of directors to be
elected) receiving the highest number of votes are elected. Votes against a
director and votes withheld have no legal effect.
Information is provided below regarding the individual nominees, as well as
regarding the executive officers of the Company, each of whom serves on an
annual basis and must be selected by the Board of Directors annually pursuant to
the bylaws of the Company.(4) The ages stated are as of March 15, 2000.
Lee-Ann Almeida, age 36, is Vice President and Chief Financial Officer of North
Bay and The Vintage Bank and has been employed by the Bank since 1987. Prior to
becoming employed by the Bank, Ms. Almeida served as Operations Manager for
Lamorinda National Bank. Ms. Almeida is past treasurer of the Napa Valley
D.A.R.E. Foundation and a member of the board of directors of the Banker
Executive Council of Northern California and of the Napa Valley Safe School
Foundation.
David B. Gaw, age 54, has served as a director of The Vintage Bank since 1984
and served as Chairman of the Board of Directors from 1992 to 1994. He is also a
Director of North Bay. Mr. Gaw has been engaged in the practice of law in Napa
and Solano Counties for more than twenty-seven years and is one of the founding
members of Gaw, Van Male, Smith, Myers & Miroglio, a professional law
corporation with offices in Napa, Fairfield, Vacaville and Redlands. Mr. Gaw is
certified by the California State Board of Legal Specialization in Probate,
Estate Planning, and Trust Law, and a Certified Elder Law Attorney by the
National Elder Law Foundation. Mr. Gaw has served as President of the Napa
County Bar Association. He is a member of The Queen of the Valley Hospital
Foundation Board of Trustees, and is a member of both North Bay Hospital
Foundation and the Solano Community Foundation's Board of Directors. The Vintage
Bank has retained the legal services of Mr. Gaw's law firm since the Bank's
organization and expects to retain the firm's services in 2000.
- ----------
(4) As used throughout the Proxy Statement, the term "Executive Officer"
means the President, Executive Vice President/Credit Administrator, Vice
President/Chief Financial Officer and the proposed President and Chief Executive
Officer of Solano Bank (Proposed).
4
<PAGE>
Conrad W. Hewitt, age 63, is a consultant and joined the Board of North Bay in
November, 1999. He is a member of the Board of Directors of Global Intermodal
Systems, Inc., Chairman of the Audit Committee; and member of the Compensation
Committee, ADPC, Inc., Renaissance Inc., Chairman of the Audit Committee; Crazy
Shirts, Inc., Chairman of the Audit Committee and member of the Compensation
Committee; Golden Gate University, Chairman of the Finance and Operations
Committee and a member of the Executive Committee and the San Francisco Council,
Boy Scouts of America, Chairman of the Audit Committee and a member of the
Executive Committee. Also, he is an advisory director for Compensation Resource
Group, Inc. and Private Capital Corporation. Mr. Hewitt served as Superintendent
of Banks and Commissioner, Department of Financial Institutions, State of
California from 1995 to 1998. Prior to 1995, Mr. Hewitt was the Managing
Partner, North Bay Area, Ernst & Young and was employed by Ernst & Young for
thirty-three years until his retirement. Mr. Hewitt is a Certified Public
Accountant. Mr. Hewitt received a B.S. in Finance and Economics from the
University of Illinois and did post-graduate work at the University of Southern
California.
Harlan Kurtz, age 69, is a Director of North Bay and has served as a Director of
The Vintage Bank since 1988 and has devoted a substantial amount of his time
serving as Chairperson of the Bank's Site Committee. He is a general contractor
and President of K-H Development Corporation.
Richard S. Long, age 55 is a director of North Bay and presently serves as
President and Chief Executive Officer of Regulus. Mr. Long has over twenty five
years of entrepreneurial and executive management experience. Regulus is a
remittance processor for major banks and corporations with over twenty locations
in the United States and Canada. In 1998 Mr. Long sold his company, Quantum
Information Corporation, to Regulus. Quantum, which has now been merged into
Regulus, is an information distribution management company that outsources the
processing, printing and distribution of time critical financial documents.
Prior to Quantum, Mr. Long spent seventeen years in the industrial gas and
equipment business. Starting in sales and moving through management to CEO and
owner of Bayox, Inc., he sold this business to Union Carbide Corporation in
1983. Mr. Long then bought out the investment group that started Boboli and
subsequently sold the United States and Canadian segments of this business to
General Foods in 1995. The international segment of this business was sold in
1998.
Thomas H. Lowenstein, age 57, is Vice-Chairman of the Board of Directors of
North Bay and The Vintage Bank and has served as a Director of the Bank since
1988. He is President of North Bay Plywood, a company engaged in the manufacture
and sale of building materials. Mr. Lowenstein has been active in the affairs of
St. Apollinaris School, Product Services Incorporated (PSI) and the Justin High
Foundation, having served on the boards of St. Apollinaris School and PSI and as
a Past President of St. Apollinaris School Board.
Thomas F. Malloy, age 57, is Chairman of the Board of Directors of North Bay and
The Vintage Bank and has served as a Director of the Bank since 1984. He is an
insurance broker and a Member in Malloy Imrie & Vasconi Insurance Services LLC
with offices in Napa and St. Helena. Mr. Malloy is a member and Past President
of the Napa County Independent Insurance Agents Association and Past President
of the Napa Active 20-30 Club.
5
<PAGE>
Joen M. McDaniel, age 40, is Vice President of Operations of North Bay and Vice
President of Retail Operations of The Vintage Bank and has been employed by The
Vintage Bank since 1988. She is currently Board President of the Boys and Girls
Club and a member of the Santa Rosa Diocesan Education Board. Prior to her
employment by The Vintage Bank, Ms. McDaniel was Assistant Vice President and
Branch Manager of Independent Savings and Loan.
Kathi Metro, age 45, is the Executive Vice President and Credit Administrator of
North Bay and Executive Vice President and Senior Loan Officer of The Vintage
Bank and has been employed by the Bank since 1985. Prior to becoming employed by
the Bank, Ms. Metro was an Assistant Vice President and Branch Manager of Napa
Valley Bank. She is an alumnus of Leadership Napa Valley and is a former member
of the Leadership Napa Valley Foundation Committee. In addition, Ms. Metro is a
former Director of C.O.P.E. and former member of the Napa County Commission on
the Status of Women and the Professional Business Services Committee of the Napa
Chamber of Commerce. She is currently a member of the North Napa Rotary Club and
the Board of Directors of the Napa Valley College Foundation and former member
of the Board of Directors of Napa Valley Economic Development Corporation.
Terry L. Robinson, age 52, is President and Chief Executive Officer of North Bay
and The Vintage Bank, as well as a Director, and has been employed by the Bank
since 1988. Mr. Robinson recently concluded his term as president of the Western
Independent Bankers. Prior to joining the Bank, Mr. Robinson served as Executive
Vice President and a member of the Board of Directors of American Bank of
Commerce in Boise, Idaho. Mr. Robinson is a Past President of the Napa Valley
Symphony Association, a Trustee of the Queen of the Valley Hospital Foundation,
a member of the board of directors of the Community Foundation of the Napa
Valley, is a member of the Napa Rotary Club and currently serves as co-chair of
the Napa Boys and Girls Club capital campaign. Mr. Robinson holds a B.S. of
Business in Accounting from the University of Idaho and a M.B.A. in finance from
U.C. Berkeley.
Glen C. Terry, age 48, is the proposed President and Chief Executive Officer of
Solano Bank (Proposed) and currently serves as the Senior Vice President and
Solano Region Manager of The Vintage Bank and has been employed by The Vintage
Bank since 1999. Prior to being employed by the Bank, Mr. Terry was President of
the Solano Region of Sierra West Bank, President & CEO of Napa Valley Bank, and
previously held other positions at WestAmerica Bank. Mr. Terry has also worked
with First Interstate Bank and Zions First National Bank. Mr. Terry is an
alumnus of Leadership Santa Rosa, has served on the Santa Rosa Design Review
Board, the Santa Rosa Chamber of Commerce, the Napa Chamber of Commerce, Clinic
Ole, and is a member of the Vacaville Noon Rotary Club. Mr. Terry received a
B.S. in Political Science from Utah State University and an M.B.A. from the
University of Utah.
James E. Tidgewell, age 54, a Director of North Bay and The Vintage Bank, has
served as a Director of the Bank since 1988. He is a certified public accountant
and partner in the accounting firm of G & J Seiberlich & Co LLP, with which he
has been associated since 1975. Mr. Tidgewell received a B.S. degree in
accounting from the University of Notre Dame in 1968 and thereafter spent
approximately five years as an accountant with Price Waterhouse & Co. Mr.
Tidgewell is a member of the American Institute of Certified Public Accountants
and the
6
<PAGE>
California Society of Certified Public Accountants. He is a Past President of
the Napa Active 20-30 Club, a member of the Napa Rotary Club and a member and
president of The Queen of the Valley Hospital Foundation Board of Trustees.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company has standing Audit and Personnel Committees. The Audit Committee,
which consisted of Conrad W. Hewitt as chairman, Harlan R. Kurtz, Thomas H.
Lowenstein and James E. Tidgewell, did not meet during the fiscal year ended
December 31, 1999. The principal function of the Audit Committee is to initiate
suitable examinations of the Company's internal controls and safeguards to
preserve the Company's assets. The Compensation Committee consisted of Carolyn
Sherwood, a director of the Company's subsidiary The Vintage Bank, as chair,
Conrad W. Hewitt, Thomas H. Lowenstein, and Thomas F. Malloy did not meet during
the fiscal year ended December 31, 1999. The principal functions of the
Personnel Committee are, subject to approval of the Board of Directors, to
establish personnel policies, set compensation for senior officers, establish
employee benefit programs and review the performance of senior officers. The
Company does not currently have a nominating committee; the Board of Directors
in its entirety acts upon nominations.
During 1999, the Company's Board of Directors met three (3) times. All of the
Directors of the Company standing for reelection attended more than 75% of the
aggregate of (1) the total number of meetings of the Board and (2) the total
number of meetings held by all committees of the Board on which she or he
served.
No director of the Company holds a directorship in any other company with a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended, or subject to the requirements of Section 15(d) of that
Act or any company registered as an investment company under the Investment
Company Act of 1940. No director or executive officer of the Company has any
family relations with any other director or executive officer of the Company.
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
The following table sets forth information as of March 15, 2000, pertaining to
beneficial ownership of the Company's Common Stock by those persons nominated
for election as directors and the executive officers listed in the Summary
Executive Compensation Table set forth hereinafter, as well as with respect to
all directors and executive officers as a group. The information contained
herein has been obtained from the Company's records or from information
furnished directly by the individuals to the Company. The numbers in the column
entitled "Number of Shares Beneficially Owned" reflect stock dividends paid
through March 15, 2000.(5) The table should be read with the understanding that
more than one person may be the
- ----------
(5) Upon the payment of a stock dividend, all unexercised stock options are
automatically adjusted so that the aggregate purchase price and the fractional
proportion of outstanding stock represented by the options remain unchanged.
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<PAGE>
beneficial owner of, or possess certain attributes of beneficial ownership with
respect to, the same shares.
<CAPTION>
Number of Shares
Name Nature of Position Beneficially Owned Ownership Percent(6)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
David B. Gaw Director of North Bay 17,865 (7) 1.11%
and The Vintage Bank
Conrad W. Hewitt Director of North Bay 210 (8),(10) 0.01%
Harlan R. Kurtz Director of North Bay 35,201 (8),(9) 2.18%
and The Vintage Bank
Richard S. Long Director of North Bay -0- (10) N/A
<FN>
- ----------
(6) In computing the percentage of outstanding Common Stock owned
beneficially by each director, the number of shares beneficially owned has been
divided by the number of outstanding shares on the Record Date after (i) giving
effect to stock dividends paid through March 20, 2000, and (ii) assuming options
exercisable by the director within 60 days have been exercised.
(7) Included in the total for Mr. Gaw are 14,705 shares held in the name of
the Gaw Family Trust dated September 22, 1999, of which Mr. Gaw is trustee; 151
shares as custodian for minors under the California Uniform Transfers to Minors
Act; and 1,389 shares as to which Mr. Gaw holds an option exercisable on May 1,
2000.
(8) Pursuant to California law, personal property held in the name of a
married person may be community property as to which either spouse has the power
and ability to manage and control in its entirety,
(9) Included in the total for Mr. Kurtz are 29,775 shares held in the name
of the Kurtz Family Trust dated February 25, 1992, of which Mr. Kurtz is
trustee; 2,648 shares are held as custodian for minors under the California
Uniform Transfers to Minors Act; and 2,778 shares as to which Mr. Kurtz holds an
option exercisable on May 1, 2000.
(10) Messrs. Hewitt and Long intend to purchase at least 2000 shares each in
the Company's current public offering.
</FN>
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Name Nature of Position Beneficially Owned Ownership Percent(6)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Thomas H. Lowenstein Director of North Bay 25,409 (8),(11) 1.57%
and The Vintage Bank
Thomas F. Malloy Chairman of the Board of 50,628 (8),(12) 3.14%
North Bay and The
Vintage Bank
Kathi Metro Executive V.P. of North 12,893 (8),(13) 0.80%
Bay and The Vintage Bank
Terry L. Robinson Director, CEO of North 90,715 (8),(14) 5.62%
Bay and The Vintage Bank
James E. Tidgewell Director of North Bay 11,698 (8),(15) 0.72%
and The Vintage Bank
<FN>
(11) Included in the total for Mr. Lowenstein are 19,386 shares held in the
name of the Lowenstein Family Trust dated October 8, 1992, of which he is a
trustee and as to which he has shared voting power; 3,245 shares held in the
name of North Bay Plywood Profit Sharing Trust, of which he is a trustee and as
to which he has shared voting power; and 2,778 shares as to which Mr. Lowenstein
holds an option exercisable on May 1, 2000.
(12) Included in the total for Mr. Malloy are 34,553 shares held in the name
of the Malloy Family Trust dated August 31, 1990; 13,066 shares held in the name
of the Malloy Imrie & Vasconi Insurances Services LLC 401(k) Profit Sharing Plan
of which he is not a trustee but as to which he may indirectly have shared
voting power; and 1,389 shares as to which Mr. Malloy holds an option
exercisable on May 1, 2000.
(13) Included in the total for Ms. Metro are 2,315 shares as to which Ms.
Metro holds an option exercisable on March 15, 2000.
(14) Included in the total for Mr. Robinson are 48,651 shares held in the
name of the Robinson Family Trust dated January 24, 1994, of which he is a
trustee and as to which he has shared voting power; 3,256 shares held in the
name of Snake River Honey Co., Inc., of which he is a director and to which he
has shared voting power; and 2,100 shares as to which Mr. Robinson holds an
option exercisable on March 15, 2000.
</FN>
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Name Nature of Position Beneficially Owned Ownership Percent(6)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
All Current Executive 249,830 (16) 15.32%
Officers and
Directors as a group
(total of 12)
</TABLE>
EXECUTIVE COMPENSATION
Summary Executive Compensation Table
The following table sets forth a summary of the compensation paid during each of
the Company's last three completed fiscal years for services rendered in all
capacities to Terry Robinson, the President and Chief Executive Officer of the
Company and to Kathi Metro, the only other executive officer of the Company
whose annual compensation exceeded $100,000 during 1999.
- ----------
(15) Included in the total for Mr. Tidgewell are 1,389 shares as to which
Mr. Tidgewell holds an option exercisable on May 1, 2000.
(16) In computing the percentage of outstanding Common Stock owned
beneficially by all Current Executive Officers and Directors as a group, it is
assumed that those options granted to any member of the group which are
exercisable within 60 days have been exercised and that therefore, the total
number of outstanding shares of the class has been increased by 17,842, the
number of shares subject to such exercisable options by all members of the
group.
10
<PAGE>
<TABLE>
Summary Executive Compensation Table
<CAPTION>
Long Term
Annual Compensation Compensation
----------------------------------------------------------------
Other Awards:
Annual Securities
Name and principal Compensation Underlying All Other
position Year Salary($) Bonus($) ($) Options (#) Compensation
- ------------------------- -------- -------------- ------------ ---------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Terry Robinson, 1999 173,250 63,415 -0- -0- 368,211
President and CEO 1998 164,333 47,000 -0- -0- 363,396
1997 156,292 39,569 -0- -0- 346,644
Kathi Metro, 1999 93,500 30,710 -0- -0- 8,421
Executive Vice 1998 86,989 24,760 -0- -0- 6,307
President 1997 83,500 19,622 -0- 5,250 6,054
</TABLE>
The value of perquisites and other personal benefits are disclosed in other
annual compensation if they exceed, in the aggregate, the lesser of $50,000 or
10% of salary and bonus. No amounts are reported in this column for Mr. Robinson
or Ms. Metro since the value of perquisites and other personal benefits did not
exceed the reporting threshold.
All Other Compensation for each year includes contributions to The Vintage
Bank's Profit Sharing and Salary Deferral 401(k) Plan. Contributions to the
Bank's 401(k) Plan for Mr. Robinson were $12,561 in 1999, $11,914 in 1998, and
$11,332 in 1997. Contributions to the Bank's 401(k) Plan for Ms. Metro were
$6,779 in 1999, $6,307 in 1998, and $6,054 in 1997.
All Other Compensation for each year also includes the full amount of The
Vintage Bank's share of life insurance premiums paid pursuant to a split dollar
life insurance plan and agreement with Mr. Robinson. By the terms of the Split
Dollar Agreement dated November 21, 1994, The Vintage Bank has agreed to pay
$23,312 of the policy's total annual premium of $24,922 for a period of ten
years. On the tenth anniversary of the Split Dollar Agreement, or sooner on the
occurrence of certain other events, Mr. Robinson is required to repay the total
amount of premiums paid by the bank pursuant to the Agreement. In order to
secure repayment of the total amount of premiums paid by The Vintage Bank, the
policy has been collaterally assigned to the bank.
11
<PAGE>
All Other Compensation for each year also includes amounts that would be payable
on account of corporate changes specified in Mr. Robinson's employment agreement
as described in the section of this proxy statement entitled "Termination of
Employment and Change of Control Arrangements." The amount payable to Mr.
Robinson ranges from:
o one year's base salary or the remainder of his base salary under his
Employment Agreement if less than one year remains in the case of a
corporate change approved by a majority of those directors who are
unaffiliated with the person initiating the corporate change, to
o two year's base salary in the case of a multistep corporate change not
approved by a majority of those directors unaffiliated with the person
initiating the corporate change.
The maximum amount payable under Mr. Robinson's current employment agreement in
connection with any corporate change is two years' base salary which for the
years 1997, 1998 and 1999 was $312,000, $328,000, and $346,500 respectively.
Director fees for 1997, 1998, and 1999 of $5,400, $5,800, and $6,000,
respectively, were deferred by Mr. Robinson pursuant to the Deferred Fee Plan
described in the section of this proxy statement entitled "Compensation of
Directors" and are not included in All Other Compensation for the years 1997,
1998, and 1999. All Other Compensation for 1998 and 1999 includes $170 and
$2,648, respectively, which is the taxable benefit of Mr. Robinson's benefits
under the Director Supplemental Retirement Program described in the section of
proxy statement entitled "Compensation of Directors."
Option Grants in Last Fiscal Year
Effective March 1, 1999, contemporaneous with Mr. Robinson's new five (5) year
Employment Agreement described below under "Termination of Employment and Change
of Control Arrangements," Mr. Robinson was granted an option to purchase 10,500
shares of the Company's common stock at an initial exercise price of $20.95 per
share, as adjusted for the 5% stock dividend paid March 20, 2000. This option
vests and becomes exercisable in five (5) equal annual installments at the
first, second, third, fourth, and fifth anniversaries of the date of grant.
Accordingly, the first installment will become exercisable March 1, 2000. This
grant equaled 41.67% of options granted to employees during 1999.
No options were granted to Executive Vice President Kathi Metro during 1999.
12
<PAGE>
<TABLE>
Aggregate Option Exercises in Last Fiscal Year and Year-End Option Values
<CAPTION>
- ------------------------------ ------------ ----------- ------------------------------ ------------------------------
Shares
Acquired Number of Securities Value of Unexercised
on Value Underlying Unexercised In-the-Money Options
Exercise Realized Options At Fiscal Year-End at Fiscal Year-End
(#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ------------------------------ ------------ ----------- ------------------------------ ------------------------------
- ------------------------------ ------------ ----------- ------------------------------ ------------------------------
<S> <C> <C> <C> <C>
Terry Robinson, Exercisable for 2,100 Exercisable - $6,006
President and CEO -0- N/A Unexercisable for 8,400 Unexercisable - $24,024
- ------------------------------ ------------ ----------- ------------------------------ ------------------------------
Kathi Metro, Exercisable for 2,315 Exercisable - $23,636
Executive Vice President -0- N/A Unexercisable for 3,473 Unexercisable - $35,459
- ------------------------------ ------------ ----------- ------------------------------ ------------------------------
</TABLE>
For purposes of calculating the value of unexercised stock options as of
December 31, 1999, it is assumed that the fair market value of the shares as of
December 31, 1999, was $23.81 per share, as adjusted for the 5% stock dividend
paid March 20, 2000. While the Board of Directors believes this to be a fair
value, it is not necessarily indicative of the price at which shares may be
bought or sold, since there is no established public trading market for the
shares.
Long Term Incentive Plans - Awards in Last Fiscal Year
There were no transactions in 1999 which require disclosure in a table for
long-term incentive plan awards.
Termination of Employment and Change of Control Arrangements
Effective March 1, 1999, The Vintage Bank entered into a new five (5) year
Employment Agreement with Mr. Robinson as President and Chief Executive Officer
of the bank. The Agreement provides that in the event of a termination by the
bank without cause, Mr. Robinson must be paid severance pay equal to six months'
base salary. In the event of certain specified corporate changes, including a
merger, sale, transfer of The Vintage Bank's assets or an effective change in
control of the bank, the bank may assign the Agreement to any successor entity,
continue the Agreement or terminate the Agreement, provided that if the bank
assigns or continues the Agreement, Mr. Robinson may either consent to such
assignment or continuance or may elect to terminate the Agreement. If the
Agreement is terminated by either party in connection with a corporate change
meeting certain requirements, including approval by a majority of those
directors who are unaffiliated with the person initiating the corporate change,
Mr. Robinson must be paid severance pay equal to one year's base salary or equal
to the remainder of his base salary under the Agreement if less than one year
remains. If the Agreement is terminated in connection with any other corporate
change, Mr. Robinson must be paid severance pay equal to two years' base salary.
Upon certain changes in control of The Vintage Bank fees deferred pursuant to
the Deferred Fee Plan described in the section of this proxy statement entitled
"Compensation of Directors," including accrued interest, are paid to the
participating directors in a lump sum.
13
<PAGE>
Compensation of Directors
The Board of Directors of North Bay has adopted a plan for the payment of fees
to directors for attendance at meetings of the Board, meetings of the Board of
Directors of The Vintage Bank or Solano Bank of which they are members, and
committees of which they are members. In accordance with that plan, directors of
North Bay are eligible to be paid a monthly fee of $800 for attendance at
regular Board meetings and meetings of the committees on which they sit;
provided, however, that Directors of North Bay also serving as directors of The
Vintage Bank are eligible to be paid an aggregate monthly fee of $1,200 for
attendance at regular Board meetings and meetings of the committees on which
they sit. However, under the North Bay Plan, Terry L. Robinson, President and
Chief Executive Officer of North Bay and The Vintage Bank, receives a monthly
payment of $500 per month. Directors serving only on the Board of Directors of
The Vintage Bank are eligible to be paid a monthly fee of $1,100 for attendance
at regular monthly Board meetings and meetings of committees on which they sit.
Persons who will be serving only on the Board of Directors of Solano Bank will
initially not be eligible to paid a monthly fee for attendance at regular Board
meetings or meetings of committees on which they sit. In all instances, the
payment of fees to directors is subject to reduction for failure to attend the
minimum number of meetings of the board and committees as specified in the North
Bay Plan.
Director Stock Options
It is intended that each non-employee serving on the Board of Directors of
Solano Bank, with the exception of persons also serving on either the North Bay
or The Vintage Bank Board of Directors, will be granted options to purchase
6,000 shares of North Bay's common stock pursuant to the North Bay Stock Option
Plan (formerly The Vintage Bank Amended and Restated 1993 Stock Option Plan). In
January 2000, Messrs. Long and Hewitt, newly elected non-employee directors of
North Bay were granted options to purchase 6,300 shares of North Bay's common
stock pursuant to the North Bay Stock Option Plan at a price of $23.81 per
share, as adjusted for the 5% stock dividend paid March 20, 2000. These options
become vested and exercisable in five equal installments at the first, second,
third, fourth and fifth anniversaries of the date of the grant. The first
installment will become exercisable on February 1, 2001.
In 1997, each non-employee director of The Vintage Bank (which includes all of
the directors except for Mr. Robinson) was granted an option to purchase an
additional 3,000 shares of the Bank's common stock pursuant to the Amended and
Restated 1993 Stock Option Plan approved at the 1998 Annual Shareholders Meeting
on April 29, 1998. These options become vested and exercisable in five equal
installments at the second, third, fourth, fifth and sixth anniversaries of the
date of grant. Accordingly, the first installment became exercisable on May 1,
1999.
The number of shares subject to purchase pursuant to each non-employee
director's option is subject to adjustment upon the occurrence of any changes in
capitalization of North Bay including stock splits and stock dividends. After
giving effect to the stock split effective October 1, 1997, and stock dividends
paid through March 20, 2000, the aggregate number of shares subject to each such
director's option is 6,615, and the effective price per share is $14.059.
14
<PAGE>
Directors' Deferred Fee Plan
In August 1995, The Vintage Bank established a Deferred Fee Plan for the
directors of The Vintage Bank including Mr. Robinson. The deferral program,
provides for deferral, at the election of each director, of up to $15,000 of
annual director fees from The Vintage Bank. The deferral program commences at
the time the director elects to participate and continues for a period which
continues until the director completes ten years of service and attains
retirement age. At the end of the deferral program or earlier in the event of
disability, the deferred compensation, including accrued interest, is paid to
the director in a lump sum or periodic payments over a specified period of time
as selected by the director upon enrollment in the Deferred Fee Plan. If the
director terminates his or her relationship with The Vintage Bank during the
Deferred Fee Plan period for reasons other than death or disability, all amounts
deferred, including accrued interest, will be paid in the manner selected by the
director but accrued interest on the deferred compensation shall be calculated
at an interest rate that is two-hundred basis points lower than the rate
established by The Vintage Bank's Board of Directors in accordance with the
Deferred Fee Plan.
In the event of death while a member of the Board of Directors, the director's
beneficiary will receive the amount that would have been paid to the director
had he or she remained in the program and attained his or her specified
retirement age.
In 1995 The Vintage Bank paid an aggregate single premium of $1,040,000 to
purchase life insurance policies on each director participating in the Deferred
Fee Plan to fund the death benefit. The Vintage Bank owns and is the beneficiary
of the policies and earns a rate of return on the invested premiums which is
reflected by an increase in the cash value of the policies. The directors
participating in the deferred program have no rights in the policies.
Management of The Vintage Bank believes that the premium investment, after
consideration of the non-taxable nature of earnings on certain insurance
investments, produces a higher return than other taxable investments made in the
normal course of business. Therefore, the net cost of this deferred compensation
program to The Vintage Bank is believed to be nominal.
Director Supplemental Retirement Program
Effective January 1, 1999, The Vintage Bank established a Director Supplemental
Retirement Program for the directors of The Vintage Bank including Mr. Robinson
and The Vintage Bank's corporate secretary, Wyman G. Smith. Under the program
and a retirement policy adopted by The Vintage Bank's Board of Directors,
non-employee directors attaining age sixty-five are no longer eligible for
re-election to the Board of Directors. Upon attaining retirement age and
provided the participant has served on The Vintage Bank's Board of Directors or
as an officer of The Vintage Bank for not less than ten years, participants are
entitled to receive the balance in a pre-retirement liability reserve account
established by The Vintage Bank under the program in annual installments
commencing thirty days following their retirement.
In order to fund its liability under the program and minimize the impact of the
program on The Vintage Bank's earnings, in 1998 The Vintage Bank paid an
aggregate single premium of
15
<PAGE>
$2,462,000 to purchase life insurance policies to fund the retirement and death
benefits. The Vintage Bank owns and is the beneficiary of the policies and earns
a rate of return on the invested premiums which is reflected by an increase to
the cash value of the policies. The directors participating in the program have
no rights in the policies other than an endorsement for a portion of the death
benefit.
Amounts credited to and the balance in a participant's pre-retirement account
are based on the excess of the earnings on the life insurance policy over the
opportunity costs on the premiums paid by the bank. Opportunity cost consists of
the lost earnings, after tax, which would have been earned by The Vintage Bank
had it invested the funds used to pay premiums for the life insurance policies.
The program returns this cost to The Vintage Bank before any amount is credited
to a participant's pre-retirement account or post retirement benefit.
In addition, after retirement, participants are entitled, until the
participant's death, to receive the annual earnings on the life insurance policy
in excess of the opportunity costs.
In some instances life insurance policies have not been purchased on
participants. These participants are provided a defined retirement benefit of
$8,500 per year which is substantially equivalent to the expected benefit for
participants whose pre-retirement account balance is tied to a life insurance
policy. Amounts credited to a participant's pre-retirement account in these
cases is determined in accordance with generally accepted accounting principles.
Participants with less than five (5) years of service on the Board of Directors
or to The Vintage Bank are not eligible to participate in the program.
Participants who served for more than five years, but less than ten years, are
entitled to receive a percentage of post retirement benefits determined by
multiplying twenty percent (20%) times years of service in excess of five years.
The program also provides that a deceased participant's named beneficiaries
shall receive a death benefit equal to the then unpaid balance of his or her
pre-retirement account, as well as that portion of the death benefit on his or
her life insurance policy in excess of the cash value of the policy. On the
death of a participant, The Vintage Bank receives a tax-free death benefit
sufficient to fully recover all premiums paid on the deceased participant's
specific life insurance policy.
Management believes that the premium investment, after consideration of the
non-taxable nature of earnings on certain insurance investments, produces a
higher return than other taxable investments made in the normal course of
business. Therefore, the net cost of the program to The Vintage Bank is believed
to be nominal.
OTHER INFORMATION REGARDING MANAGEMENT
Management Indebtedness
Certain provisions of the California Financial Code and Federal Regulations
enable state chartered banks to make loans to officers, directors and employees
up to certain specified limits.
16
<PAGE>
From time to time The Vintage Bank has made loans to such persons in the
ordinary course of business. These loans were made on substantially the same
terms, including interest rates and collateral requirements, as those prevailing
for comparable transactions with other nonaffiliated persons at the time each
loan was made, subject to the limitations and other provisions in California and
Federal law. These loans do not involve more than the normal risk of
collectibility or present other unfavorable features.
Certain Business Relationships
Mr. Gaw, a Director of the Company and of The Vintage Bank and nominee for
election to the Board of Directors, is a member and shareholder of the law firm
of Gaw, Van Male, Smith, Myers & Miroglio, a professional law corporation which
the Company has retained since its organization in 1985 and proposes to retain
for specific matters during 2000.
17
<PAGE>
REPORTS OF CHANGES IN BENEFICIAL OWNERSHIP
Based upon a review of Forms 3 and 4 and amendments thereto furnished to the
Company during the fiscal year ending December 31, 1999, Form 5 and amendments
thereto furnished to the Company with respect to the fiscal year ending December
31, 1999, and written representations from all reporting persons, all statements
required by rules promulgated by the Securities and Exchange Commission under
Section 16 of the Securities and Exchange Act of 1934 were timely filed, except
for Director Harlan Kurtz who filed a Form 4 due May 10, 1999 on May 18, 1999.
2. RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors of the Company has selected and appointed Arthur Andersen
LLP, independent certified public accountants, to examine the financial
statements of the Company for the year ending December 31, 2000. In recognition
of the important role of the independent auditor, the Board of Directors has
determined that its selection of the independent auditor should be submitted to
the shareholders for review and ratification on an annual basis. The Board of
Directors expects that a representative of Arthur Andersen LLP, will be in
attendance at the Annual Meeting and will be provided the opportunity to make a
statement if he or she so desires and will be available to respond to
appropriate questions of shareholders.
During the fiscal year ended December 31, 1999, Arthur Andersen LLP provided
professional services in connection with the audit of the financial statements
of The Vintage Bank for the year ending December 31, 1998, gave The Vintage
Bank's Board of Directors a post-audit briefing, prepared and completed The
Vintage Bank's 1998 federal income and California franchise tax returns,
provided assistance in completing The Vintage Bank's 1998 Annual Report to
Shareholders and documents filed with the Board of Governors of the Federal
Reserve System, and consulted with the Company's management regarding year end
tax planning.
Required Vote and Recommendation
The affirmative vote of a majority of the shares voting at the meeting, assuming
a quorum is present, is required to ratify the appointment of Arthur Andersen
LLP to audit the financial statements of the Company for the fiscal year ending
December 31, 2000. An abstention or failure to vote shares represented and
entitled to vote at the meeting will be treated as a negative vote. The Board of
Directors recommends that shareholders vote FOR this proposal.
3. APPROVAL OF AMENDMENT TO NORTH BAY BANCORP 1999 STOCK OPTION PLAN.
On November 1, 1999, the Company became the bank holding company of The Vintage
Bank through a corporate reorganization. In the reorganization, The Vintage Bank
became the wholly-owned subsidiary of the Company. Under the terms of the
reorganization the Amended and Restated 1993 Stock Option Plan of The Vintage
Bank became the North Bay Bancorp Stock
18
<PAGE>
Option Plan. The Bank Stock Option Plan was originally approved by the Board of
Directors of the Bank on March 4, 1993, approved by the shareholders of the Bank
on April 27, 1993, and approved by the California Superintendent of Banks on
March 25, 1993. The Bank Plan was subsequently amended and restated by the Board
of Directors of The Vintage Bank on March 17, 1997, and approved by the
shareholders of The Vintage Bank on April 29, 1997, and again amended by the
Board of Directors of The Vintage Bank on July 21, 1997, and approved by the
shareholders of The Vintage Bank on April 28, 1998. North Bay Plan was formally
adopted as the North Bay Bancorp Stock Option Plan by the Board of Directors of
the Company on November 15, 1999 and all 157,978 options outstanding under the
Bank Plan became options to purchase North Bay Bancorp Common Stock under the
North Bay Plan.
The purpose of the North Bay Plan is to provide a means whereby non-employee
directors, non-employee officers, and full-time, salaried officers and employees
of the Company and its wholly-owned bank subsidiaries may be granted incentive
stock options and/or nonqualified stock options to purchase North Bay common
stock, in order to attract and retain the services of such directors,
non-employee officers, and full-time, salaried officers and employees, and to
provide added incentive to them by encouraging stock ownership in North Bay.
The Board of Directors has determined that the North Bay Plan should be amended
and restated so that the number of shares is increased by 150,000 shares to an
aggregate of 370,274.
The North Bay Plan provides for the grant of both incentive stock options which
are intended to qualify as incentive stock options under Section 422(b) of the
Internal Revenue Code of 1986, as amended and non-qualified stock options which
are not intended to satisfy the requirements of Section 422(b).
As of March 15, 2000, approximately seventy-four (74) directors, employees or
officers of North Bay and its subsidiaries were eligible to receive options
under the North Bay Plan. As of March 15, 2000 options to purchase 219,123
shares of Common Stock were outstanding under the North Bay Plan, leaving only
1,151 shares available for future grants. The North Bay Plan is not qualified
under Section 401(a) of the Code or subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
19
<PAGE>
SUMMARY OF CERTAIN FEATURES OF THE NORTH BAY PLAN
Shares Subject to the North Bay Plan. The stock subject to the North Bay Plan
consists of North Bay's presently authorized but unissued common stock. Subject
to adjustments as provided in the North Bay Plan, the aggregate amount of Common
Stock to be delivered upon the exercise of all options granted under the North
Bay Plan shall not exceed 220,274 shares. As a result of this Proposal, this
amount would be increased to 370,274 shares. If any option granted under the
North Bay Plan shall expire, be surrendered, exchanged for another option,
canceled or terminated for any reason without having been exercised in full, the
unpurchased shares subject to that option shall again be available for purposes
of the North Bay Plan, including for replacement options which may be granted in
exchange for surrendered, canceled or terminated options.
Administration. The North Bay Plan is administered by a Stock Option Plan
Administration Committee appointed by the Board of Directors of North Bay.
Except for the terms and conditions explicitly contained in the North Bay Plan,
the Committee has the authority, in its discretion, to determine all matters
relating to the options to be granted under the North Bay Plan.
Number of Shares and Exercise Price. The maximum number of shares that may be
purchased in connection with the exercise of each option and the price per share
at which an option is exercisable shall be as established by the Committee,
subject to the following limitations:
(a) the exercise price of any option shall be not less than the fair
market value per share of the Common Stock at the time the option is granted,
The fair market value of a share of Common Stock shall be determined by the
Committee in accordance with any reasonable valuation method, including the
valuation methods described in Treasury Regulation Section 20.2031-2;
(b) with respect to incentive stock options granted to greater then 10%
stockholders, the term of the incentive stock options shall not exceed five
years and the exercise price shall be not less than 110% of the fair market
value of the Common Stock at the time the incentive stock option is granted;
(c) the number of shares subject to outstanding stock options held by
any single option holder shall not exceed 10% of the total outstanding shares of
Common Stock.
Medium and Time of Payment of Exercise Price. Payment of the option exercise
price shall be made in full at the time the notice of exercise of the option is
delivered to North Bay and shall be in cash, bank certified or cashier's check
or personal check (unless at the time of exercise the Committee in a particular
case determines not to accept a personal check) for the Common Stock being
purchased.
20
<PAGE>
Terms and Exercise of Options.
Non-Employee Directors
(a) In 1993, each director of The Vintage Bank who was not also a full-time,
salaried officer or employee was granted an option to purchase 6,000 shares, as
adjusted for a 2-for-1 stock split effected in 1997. The exercise price of the
options granted to the non-employee directors was the fair market value per
share of the Bank's common stock at the time of the grant. The term with respect
to the options granted to the non-employee directors was 5 years and 30 days
exercisable pursuant to a vesting schedule entitling non-employee directors to
exercise 20% of the total option following the completion of each year of
service from the date the options were granted.
(b) Additionally, every non-employee director of the North Bay or any of its
wholly-owned subsidiaries shall be eligible to be granted an option to purchase
6,000 shares on the date he or she becomes a director. The exercise price of any
option granted to a non-employee director shall be the fair market value per
share of the Common Stock at the time of such grant. No options may be granted
to a non-employee director except as provided in this paragraph.
Term and Maturity
The term of each incentive stock option shall be as established by the Committee
and, if not so established, shall be 10 years from the date it is granted, but
in no event shall the term of any incentive stock option exceed 10 years. The
term of each nonqualified stock option shall be as established by the Committee
and, if not so established, shall be 10 years. To ensure that North Bay will
achieve the purpose and receive the benefits contemplated in this Plan, any
option granted to any option holder shall vest 20% per year, beginning at the
end of the first year from the date of grant.
However, in the event an option holder is unable to exercise any non-qualified
stock option on account of the Company's Insider Trading Policy, the exercise
period shall be extended until the next succeeding trading window (determined in
accordance with the Insider Trading Policy) closes.
Termination of Employment or Office. If the option holder's relationship with
the Company or any wholly-owned subsidiary ceases for any reason other than
termination for cause, death or total disability, and unless by its terms the
option terminates or expires on a earlier date, then the option holder may
exercise, for a period of 90 days following termination of the relationship,
that portion of the option holder's option which is exercisable at the time the
relationship ceases. Any options not exercisable on the date the relationship
ceases shall expire as of that date. If, in the case of an incentive stock
option, an option holder's relationship with the Company or any wholly-owned
subsidiary changes (for example, from employee to non-employee, such as a
consultant), the change shall constitute a termination of the option holder's
employment, and the option holder's incentive stock option shall terminate as
discussed in this paragraph.
21
<PAGE>
Termination for Cause
If the option holder is terminated for cause, any option granted under the North
Bay Plan shall automatically terminate as of the first discovery by the Company
or wholly-owned subsidiary of any reason for termination for cause, and as of
the date of termination for cause, the option holder will no longer have the
right to purchase any shares under the option. "Termination for cause" shall
mean dismissal for dishonesty, conviction or confession of a crime punishable by
law (except minor violations), fraud, serious misconduct, material regulatory
violation or disclosure of confidential information, and shall include
termination of any relationship pursuant to the order or request of any
governmental regulatory agency. If an option holder's relationship with the
Company or any wholly-owned subsidiary is suspended pending an investigation of
whether or not the option holder shall be terminated for cause, all the option
holder's rights under any option granted under the North Bay Plan shall be
suspended during the period of investigation.
Termination Because of Total Disability
If an option holder's relationship with the Company or any wholly-owned
subsidiary ceases because of a total disability, the option holder's option
shall terminate at the end of a 12-month period following such cessation (unless
by its terms it terminates and expires on an earlier date).
Death of Option Holder
If an option holder dies while he or she has a relationship with the Company or
any wholly-owned subsidiary, any option held by the option holder, to the extent
that the option holder would have been entitled to exercise the option at the
time of death, may be exercised within one year after his or her death by the
personal representative of his or her estate or by the person or persons to whom
the option holder's rights under the option shall pass by will or by the
applicable laws of descent and distribution.
Transferability. Unless otherwise permitted by the Internal Revenue Code or the
Exchange Act, options may be transferred only by will and the laws of descent
and distribution and may be exercised during an option holder's life only by the
option holder.
Effect of Recapitalization, and other Corporate Transactions. The North Bay Plan
contains a provision for adjustment to the number and type of shares subject to
stock options in the event of a stock dividend, stock split, reverse stock split
or an exchange of shares as a result of a reorganization, recapitalization or
otherwise. The price of any stock option then outstanding also will be adjusted
so that there will be no change in the total purchase price payable upon
exercise the stock option.
Rights as an Option Holder, Shareholder. No person acquires any rights under the
North Bay Plan until a written option agreement has been executed on behalf of
the Company and by the option holder. An option holder has no rights as a
shareholder with respect to any shares covered by an option until a stock
certificate is issued to the option holder for such shares or, if no stock
certificate is issued, until the option holder becomes the holder of record of
such shares.
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Amendment and Termination. The North Bay Plan shall remain in effect until
March, 2003, unless earlier terminated by the Company's Board of Directors.
Subject to the requirements of the Internal Revenue Code with respect to
incentive stock options and to the terms, conditions and limitations of the
North Bay Plan, the Committee may modify or amend outstanding options granted
under this Plan. The modification or amendment of an outstanding option shall
not, without the consent of the option holder, impair or diminish any of his or
her rights or any of the obligations of North Bay under the option. Except as
otherwise provided in the North Bay Plan, no outstanding option shall be
terminated without the consent of the option holder. Unless the option holder
agrees otherwise, any changes or adjustments made to outstanding incentive stock
options granted under the North Bay Plan shall be made in such a manner so as
not to constitute a "modification," as defined in Code Section 424(h), and so as
not to cause any incentive stock option issued hereunder to fail to continue to
qualify as an incentive stock option as defined in Code Section 422(b).
FEDERAL INCOME TAX CONSEQUENCES
The following tax discussion is a brief summary of current federal income tax
law. The discussion is intended solely for general information and does not make
specific representations to any participant. A taxpayer's particular situation
may be such that some variation of the basic rules is applicable to him or her.
In addition, the federal income tax laws and regulations frequently have been
revised and may be changed again at any time in the future. Therefore, each
participant is urged to consult a tax adviser before exercising any option or
before disposing of any shares of stock acquired under the North Bay Plan both
with respect to federal income tax consequences as well as any foreign, state or
local tax consequences.
A. Incentive Stock Options
An employee realizes no income upon the grant of an incentive stock option and
consequently is not subject to any federal income tax consequences at that time.
The employee also realizes no income by exercising the incentive option with a
cash payment, provided the option holder remained an employee of the Company (or
of any of its wholly-owned subsidiaries) at all times during the period
beginning with the date of grant of the option and ending three (3) months
before the date of exercise. The excess, if any, of the fair market value of the
stock on the date of exercise over the exercise price, however, is an adjustment
in computing alternative minimum taxable income which could subject the employee
to federal tax liability under the alternative minimum tax.
In order to obtain the most favorable tax consequences, the employee must not
sell the stock acquired pursuant to an incentive option until two years after
the option was granted and one year after the option was exercised. If the sale
occurs after both holding periods have lapsed, the employee will be taxed at
capital gain rates on gain equal to the amount the option holder receives for
the stock less the amount he or she paid to exercise the option.
The tax consequences may differ from those described above if the employee sells
the stock acquired by exercising an incentive stock option before both the two
year and one year holding period requirements have been satisfied (a
"disqualifying disposition"). In that case, the
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employee will realize ordinary compensation income subject to federal income tax
in the year the stock is sold equal to the lesser of (i) the fair market value
of the stock on the exercise date less the exercise price, or (ii) the amount
realized on the sale of the stock less the exercise price. Any excess of sale
proceeds over the fair market value of the stock on the exercise date will be
capital gain (taxed at the various rates depending on the employee's holding
period for the stock).
A disqualifying disposition of the stock acquired upon exercise of an incentive
stock option also has alternative minimum tax consequences. If an employee
acquires stock by exercising an incentive stock option and disposes of that
stock in the same tax year, the regular tax and alternative minimum tax
treatments are the same. If that stock is disposed of in a disqualifying
disposition in a later tax year, the "spread" between the option price and the
fair market value of the stock is included in alternative minimum taxable income
in the exercise year and in regular taxable income in the disposition year.
Generally, the Company is not entitled to a deduction resulting from the grant
or exercise of an incentive stock option. In the case of a disqualifying
disposition, however, the Company may deduct an amount equal to the amount that
the employee recognizes as compensation income.
An employee may exercise incentive stock options granted under the North Bay
Plan that first become exercisable in a calendar year, provided that the
aggregate initial fair market value of the stock so acquired (as determined at
the times the options are granted) does not exceed $100,000. In addition, an
employee may exercise any option, without regard to the $100,000 limitation, at
any time after the calendar year in which it becomes first exercisable. To the
extent that the aggregate fair market value of stock with respect to which
incentive stock options are exercisable for the first time during any calendar
year (under all plans of the Company or any subsidiary corporations) exceeds
$100,000, such options shall be treated as nonstatutory stock options.
Special rules apply to persons involved in insolvency or bankruptcy proceedings
and to the exercise of incentive stock options by estates, heirs and legatees.
B. Nonstatutory Stock Options
An option holder who is granted a nonstatutory option in connection with the
performance of services generally realizes no ordinary income at that time. In
most cases, the option holder will realize compensation income and consequently
will be subject to federal income tax at the time the option holder exercises
the option with a cash payment. The option holder must include as ordinary
income the excess, if any, of the fair market value of the stock received over
the exercise price. Because the option holder recognizes compensation income if
the option holder is an employee, North Bay is required to withhold income and
employment taxes at the time the option holder includes the amount in income.
The basis for determining gain or loss on the sale of stock received through the
exercise of a nonstatutory option is the amount paid for the stock plus that
amount included in income on the exercise of the option.
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Withholding Taxes
The Company shall have the right to retain and withhold from any payment under
the North Bay Plan the amount of taxes required by any government to be withheld
or otherwise deducted and paid with respect to such payment. At its discretion,
the Company may require an option holder receiving shares of common stock to
reimburse the Company for any taxes required to be withheld by the Company and
withhold any distribution in whole or in part until the Company is so
reimbursed. Alternatively, the Company shall have the right to withhold from any
other cash amounts due or to become due from the Company to the option holder an
amount equal to such taxes or retain and withhold that number of shares having a
fair market value not less than the amount of such taxes required to be withheld
by the Company to reimburse the Company for any such taxes and cancel (in whole
or in part) any such shares so withheld. If required by Section 16(b) of the
Exchange Act, the election to pay withholding taxes by delivery of shares held
by any person who at the time of exercise is subject to Section 16(b) of the
Exchange Act shall be made within six months prior to the date the option
exercise becomes taxable.
Required Vote and Recommendation
The affirmative vote of a majority of the shares voting at the meeting and a
majority of the disinterested shares voting at the meeting, assuming a quorum is
present, is required to approve amendment of the North Bay Plan. An abstention
or failure to vote any shares will be treated as a negative vote. The Board of
Directors recommends that shareholders vote FOR this proposal.
OTHER INFORMATION
AVAILABILITY OF FORM 10-KSB
A copy of the Company's 1999 Annual Report on Form 10-KSB, including financial
statements and the financial statement schedules, required to be filed with the
Securities Exchange Commission pursuant to Section 13 of the Securities Exchange
Act of 1934, will be furnished without charge to any shareholder upon written
request. A copy may be requested by writing Pansy F. Smith, Assistant Corporate
Secretary, The Vintage Bank, P.O. Box 2200, Napa, California 94558.
SHAREHOLDER PROPOSALS
The 2001 Annual Meeting of Shareholders will be held on April 24, 2001, December
7, 2000, is the date by which shareholder proposals intended to be presented at
the 2001 Annual Meeting must be received by management of the Company at its
principal executive office for inclusion in the Company's 2001 proxy statement
and form of proxy relating to that meeting. Additionally, with respect to any
proposal by shareholders not submitted for inclusion in the Bank's Proxy
Statement, if notice of such proposal is not received by February 22, 2001, such
notice will be considered untimely, and the Bank's proxy holders shall have
discretionary authority to vote on such proposal.
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OTHER MATTERS
The Board of Directors is not aware of any other matters to come before the
Annual Meeting. If any other matter not mentioned in this Proxy Statement is
brought before the Annual Meeting, the persons named in the enclosed form of
proxy will have discretionary authority to vote all proxies with respect thereto
and in accordance with their judgment.
Dated: April 7, 2000. For the Board of Directors
Napa, California
--------------------------------
Wyman G. Smith, III
Corporate Secretary
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APPENDIX TO EDGARIZED FILING
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NORTH BAY BANCORP STOCK OPTION PLAN
SECTION 1 PURPOSE AND RECITALS
On November 1, 1999, North Bay Bancorp (the "Company") became the bank
holding company of The Vintage Bank (the "Bank") through a corporate
reorganization (the "Reorganization"). In the Reorganization, the Bank became
the wholly-owned subsidiary of the Company. Pursuant to the terms of the
reorganization the Amended and Restated 1993 Stock Option Plan of the Bank
became the North Bay Stock Option Plan. The Bank Stock Option Plan (the "1993
Plan") was originally approved by the Board of Directors of the Bank on March 4,
1993, approved by the stockholders of the Bank on April 27, 1993, and approved
by the California Superintendent of Banks on March 25, 1993, and thereafter
amended and restated by the Board of Directors of the Bank on March 17, 1997,
and approved the stockholders of the Bank on April 29, 1997, and amended by the
Board of Directors of the Bank on July 21, 1997, and approved by the
stockholders of the Bank on April 28, 1998. This document memorializes all
amendments to the 1993 Plan as well as an amendment approved by the Board of
Directors of the Company on November 15, 1999, which amendment did not require
the approval of the stockholders of the Bank; conforming revisions consistent
with the effect of the Reorganization; an amendment approved the the Board of
Directors of the Company on January 18, 2000, which amendment did not require
stockholder approval; and an amendment approved the the Board of Directors of
the Company on March 20, 2000, and approved by stockholders of the Bank on
May__, 2000. The purpose of the North Bay Bancorp Stock Option Plan (the "Plan")
is to provide a means whereby non-employee directors (subject to the
restrictions contained in Sections 2 and 4), full-time, salaried officers,
non-employee officers and employees of the Company and its wholly-owned bank
subsidiaries may be granted incentive stock options and/or nonqualified stock
options to purchase the Common Stock (as defined in Section 3) of the Company,
in order to attract and retain the services of such directors, full-time,
salaried officers, non-employee officers and employees, and to provide added
incentive to them by encouraging stock ownership in the Company.
SECTION 2 ADMINISTRATION
2.1 Plan Administration
This Plan shall be administered by a Stock Option Plan Administration
Committee (the "Committee") appointed by the Board of Directors of the Company
(the "Board"). The number of members of the Committee shall be not less than
three. The Committee shall be composed of the Personnel Committee of the Board
excluding, however, any full-time, salaried officer or employee of the Company
or any of its wholly-owned subsidiaries and provided that all of the members of
the Committee shall be "disinterested persons" as defined in the rules and
regulations promulgated under Section 16(b) of the Securities and Exchange Act
of 1934 (the "Exchange Act"), as amended from time to time.
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2.2 Procedures
The Committee may hold meetings at such times and places as it shall
determine. The acts of a majority of the members of the Committee present at
meetings at which a quorum exists, or acts reduced to or approved in writing by
all Committee members, shall be valid acts of the Committee.
2.3 Responsibilities
Except for the terms and conditions explicitly set forth in this Plan,
the Committee shall have the authority, in its discretion, to determine all
matters relating to the options to be granted under this Plan, including
selection of the individuals to be granted options, the number of shares to be
subject to each option, the exercise price, all other terms and conditions of
the options. Grants under the Plan need not be identical in any respect, even
when made simultaneously. The interpretation and construction by the Committee
of any terms or provisions of this Plan or any option issued hereunder, or of
any rule or regulation promulgated in connection herewith, shall be conclusive
and binding on all interested parties, so long a such interpretation and
construction, with respect to incentive stock options, corresponds to the
requirements of Section 422 of the Internal Revenue Code of 1986 (the "Code"),
the regulations thereunder, and any amendments thereto.
2.4 Section 16(b) Compliance and Bifurcation of This Plan
It is the intention of the Company that this Plan comply in all
respects with Rule 16b-3 under the Exchange Act and, if any Plan provision is
later found not to be in compliance with such Rule, the provisions shall be
deemed null and void, and in all events this Plan shall be construed in favor of
its meeting the requirements of Rule 16b-3. Notwithstanding anything in this
Plan to the contrary, the Board, in its absolute discretion, may bifurcate this
Plan so as to restrict, limit or condition the use of any provision of this Plan
to participants who are officers and directors subject to Section 16(b) of the
Exchange Act without so restricting, limiting or conditioning this Plan with
respect to other participants. No options shall be granted under this Plan to
any person if the granting of such option would not meet the requirements of
Rule 16b-3 for exemption under Section 16(b) of the Exchange Act.
2.5 Information to Optionees
The Company shall provide Optionees (defined in Section 4) with
consolidated Financial Statements of the Company and its subsidiaries not less
frequently than annually in accordance with Regulation 260.140.46 of the Rules
of the California Corporations Commissioner.
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SECTION 3 STOCK SUBJECT TO THIS PLAN
The stock subject to this Plan shall be the Company's Common Stock (the
"Common Stock"), presently authorized but unissued or now held or subsequently
acquired by the Company. Subject to adjustments as provided in Section 7, the
aggregate amount of Common Stock to be delivered upon the exercise of all
options granted under this Plan shall not exceed 370,274 shares, as such Common
Stock was constituted on the effective date of the Reorganization.(15) If any
option granted under this Plan shall expire, be surrendered, exchanged for
another option, canceled or terminated for any reason without having been
exercised in full, the unpurchased shares subject thereto shall thereupon again
be available for purposes of this Plan, including for replacement options which
may be granted in exchange for such surrendered, canceled or terminated options.
SECTION 4 ELIGIBILITY
An incentive stock option may be granted only to an individual who, at
the time the option is granted, is a full-time salaried officer or employee of
the Company or any of its wholly-owned subsidiaries. A nonqualified stock option
may be granted to any director, full-time, salaried officer, non-employee
officer or employee of the Company or any of its wholly-owned subsidiaries. Any
party to whom an option is granted under this Plan shall be referred to
hereinafter as an "Optionee."
SECTION 5 TERMS AND CONDITIONS OF OPTIONS
Options granted under this Plan shall be evidenced by written
agreements which shall contain such terms, conditions, limitations and
restrictions as the Committee shall deem advisable and which are not
inconsistent with this Plan. Notwithstanding the foregoing, options shall
include or incorporate by reference the following terms and conditions:
5.1 Number of Shares and Price
The maximum number of shares that may be purchased pursuant to the
exercise of each option and the price per share at which such option is
exercisable (the "exercise price") shall be as established by the Committee,
subject to the following limitations:
(a) the exercise price of any option shall be not less than
the fair market value per share of the Common Stock at the time the option is
granted, which shall be determined by the Committee in accordance with any
reasonable valuation method, including the valuation methods described in
Treasury Regulation Section 20.2031-2;
- ----------
(15) By the terms of the 1993 Plan, the aggregate amount of Common
Stock reserved for issuance upon the exercise of all options granted was
140,000. After giving effect to the split of the Bank"s stock in 1997 and stock
dividends since the 1993 Plan was adopted, the adjusted number of shares
available for issuance under the 1993 Plan as of November 1, 1999, the effective
date of the Reorganization, was 337,211.
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(b) with respect to incentive stock options granted to greater
then 10% stockholders, the 0exercise price shall be as required by Section 6;
(c) the number of shares subject to outstanding stock options
held by any single optionee shall not exceed 10% of the total outstanding shares
of Common Stock.
5.2 Non-Employee Directors
(a) In accordance with subsection 5.2 of the 1993 Plan, every
director of the Bank who was not also a full-time, salaried officer or employee
(a "non-employee director") was granted an option to purchase 3,000 shares
effective upon the latest of the following dates: (1) the date on which the
Optionee had been a director for six months; (2) the date on which the 1993 Plan
was approved by the Bank's stockholders; or (3) the date on which the 1993 Plan
was approved by the California Superintendent of Banks. The exercise price of
the options granted to the non-employee directors was the fair market value per
share of the Common Stock at the time of the grant. The term with respect to the
options granted to the non-employee directors was 5 years and 30 days
exercisable pursuant to a vesting schedule entitling non-employee directors to
exercise 20% of the total option following the completion of each year of
service from the date the options were granted.
(b) Notwithstanding any provision herein to the contrary, but
subject to all limitations not inconsistent herewith, every non-employee
director of the Company or any of its wholly-owned subsidiaries shall be
eligible to be granted an option to purchase 6,000 shares.(16) The time of any
such grant shall be on the latest of the following dates: (1) the date on which
this Plan is approved by the Bank's stockholders; or (2) the date on which the
Optionee becomes a director. The exercise price of any option granted to a
non-employee director shall be the fair market value per share of the Common
Stock at the time of such grant. No options may be granted to a non-employee
director except as provided in this paragraph.
5.3 Term and Maturity
Subject to the restrictions contained in Section 6 with respect to
granting incentive stock options to greater than 10% stockholders, the term of
each incentive stock option shall be as established by the Committee and, if not
so established, shall be 10 years from the date it is granted, but in no event
shall the term of any incentive stock option exceed 10 years. The term of each
nonqualified stock option shall be as established by the Committee and, if not
so established, shall be 10 years; provided, however, that (i) the term with
respect to any option previously granted to a non-employee director under
subsection 5.2(a) or 5.2(b) shall remain 5 years and 30 days. To ensure that the
Company will achieve the purpose and receive the benefits contemplated in this
Plan, any option granted to any Optionee shall (unless, with respect to
employees who are not subject to Section 16 of the Exchange Act, the condition
of this sentence
- ----------
(16) By the terms of the 1993 Plan, the number of shares was 3,000. The
number of shares has been increased to reflect the effect of the 1997 stock
split.
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is waived or modified in the agreement evidencing the option or
by resolution adopted by the Committee) be exercisable according to the
following schedule:
Period of Optionee's Continuous
Relationship With the Company From Portion of Total Option
the Date the Option Is Granted Which is Exercisable
---------------------------------- ----------------------
after 1 year 20%
after 2 years 40%
after 3 years 60%
after 4 years 80%
after 5 years 100%
Notwithstanding the foregoing, any option granted to a non-employee
director under subsection 5.2(b) shall be exercisable only according to the
following schedule:
Period of Optionee's Continuous
Relationship With the Company From Portion of Total Option
the Date the Option Is Granted Which is Exercisable
---------------------------------- ----------------------
after 1 year 20%
after 2 years 40%
after 3 years 60%
after 4 years 80%
after 5 years 100%
Notwithstanding the foregoing, in the event an Optionee is unable to
exercise any non-qualified stock option on account of the Company"s Insider
Trading Policy, the exercise period shall be extended until the next succeeding
trading window (determined in accordance with the Insider Trading Policy)
closes.
5.4 Exercise
Subject to the vesting schedules described in subsection 5.3 and to any
additional holding period required by applicable law, each option may be
exercised in whole or in part; provided, however, that no fewer than 20% of the
total shares subject to the option (or the remaining shares then purchasable
under the option, if less than 20%) may be purchased upon any exercise of option
rights hereunder and that only whole shares will be issued pursuant to the
exercise of any option. During an Optionee's lifetime, any stock options granted
under this Plan are personal to him or her and are exercisable solely by such
Optionee. Options shall be exercised by delivery to the Company of notice of the
number of shares with respect to which the option is exercised, together with
payment of the exercise price.
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5.5 Payment of Exercise Price
Payment of the option exercise price shall be made in full at the time
the notice of exercise of the option is delivered to the Company and shall be in
cash, bank certified or cashier's check or personal check (unless at the time of
exercise the Committee in a particular case determines not to accept a personal
check) for the Common Stock being purchased.
5.6 Withholding Tax Requirement
The Company shall have the right to retain and withhold from any
payment of cash or Common Stock under this Plan the amount of taxes required by
any government to be withheld or otherwise deducted and paid with respect to
such payment. At its discretion, the Company may require an Optionee receiving
shares of Common Stock to reimburse the Company for any such taxes required to
be withheld by the Company and withhold any distribution in whole or in part
until the Company is so reimbursed. In lieu thereof, the Company shall have the
right to withhold from any other cash amounts due or to become due from the
Company to the Optionee an amount equal to such taxes or retain and withhold
that number of shares having a fair market value not less than the amount of
such taxes required to be withheld by the Company to reimburse the Company for
any such taxes and cancel (in whole or in part) any such shares so withheld. If
required by Section 16(b) of the Exchange Act, the election to pay withholding
taxes by delivery of shares held by any person who at the time of exercise is
subject to Section 16(b) of the Exchange Act shall be made within six months
prior to the date the option exercise becomes taxable.
5.7 Nontransferability of Option
Options granted under this Plan and the rights and privileges conferred
hereby may not be transferred, assigned, pledged or hypothecated in any manner
(whether by operation of law or otherwise) other than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code or Title I of the Employment Retirement
Income Security Act, or the rules thereunder, and shall not be subject to
execution, attachment or similar process. Any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of any option under the Plan or of any
right or privilege conferred hereby contrary to the Code or to the provisions of
this Plan, or the sale or levy of any attachment or similar process upon the
rights and privileges conferred hereby shall be null and void. Notwithstanding
the foregoing, an Optionee may, during the Optionee's lifetime, designate a
person who may exercise the option after the Optionee's death by giving written
notice of such designation to the Committee. Such designation may be changed
from time to time by the Optionee by giving written notice to the Committee
revoking any earlier designation and making a new designation.
5.8 Termination of Relationship
If the Optionee's relationship with the Company or any wholly-owned subsidiary
ceases for any reason other than termination for cause, death or total
disability, and unless by its terms the option sooner terminates or expires,
then the Optionee may exercise, for a period of 90 days following termination of
the relationship, that portion of the Optionee's option which is exercisable at
the time of such cessation, but the Optionee's option shall terminate at the end
of such period following such cessation as to all shares for which it has not
theretofore been
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exercised. If, in the case of an incentive stock option, an Optionee's
relationship with the Company or any wholly-owned subsidiary changes (i.e., from
employee to nonemployee, such as a consultant), such change shall constitute a
termination of the Optionee's employment with the Company or wholly-owned
subsidiary, and the Optionee's incentive stock option shall terminate in
accordance with this subsection.
If the relationship of an Optionee is terminated for cause, any option
granted hereunder shall automatically terminate as of the first discovery by the
Company or wholly-owned subsidiary of any reason for termination for cause, and
such Optionee shall thereupon have no right to purchase any shares pursuant to
such option. "Termination for cause" shall mean dismissal for dishonesty,
conviction or confession of a crime punishable by law (except minor violations),
fraud, serious misconduct, material regulatory violation or disclosure of
confidential information, and shall include termination of any relationship
pursuant to the order or request of any governmental regulatory agency. If an
Optionee's relationship with the Company or any wholly-owned subsidiary is
suspended pending an investigation of whether or not the Optionee shall be
terminated for cause, all the Optionee's rights under any option granted
hereunder likewise shall be suspended during the period of investigation.
If an Optionee's relationship with the Company or any wholly-owned
subsidiary ceases because of a total disability, the Optionee's option shall
terminate at the end of a 12-month period following such cessation (unless by
its terms it sooner terminates and expires). As used in this Plan, the term
"total disability" refers to a mental or physical impairment of the Optionee
which is expected to result in death or which has lasted or is expected to last
for a continuous period of 12 months or more and which causes the Optionee to be
unable, in the opinion of the Company and two independent physicians, to perform
his or her duties for the Company or wholly-owned subsidiary and to be engaged
in any substantial gainful activity. Total disability shall be deemed to have
occurred on the first day after the Company and the two independent physicians
have furnished their opinion of total disability to the Committee.
For purposes of this subsection 5.7, with respect to incentive stock
options, employment shall be deemed to continue while the Optionee is on
military leave, sick leave or other bona fide leave of absence (as determined by
the Committee). The foregoing notwithstanding, employment shall not be deemed to
continue beyond the first 90 days of such leave, unless the Optionee's
reemployment rights are guaranteed by statute or by contract.
5.9 Death of Optionee
If an Optionee dies while he or she has a relationship with the Company
or any wholly-owned subsidiary, any option held by such Optionee, to the extent
that the Optionee would have been entitled to exercise such option, may be
exercised within one year after his or her death by the personal representative
of his or her estate or by the person or persons to whom the Optionee's rights
under the option shall pass by will or by the applicable laws of descent and
distribution.
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5.10 Status of Stockholders
Neither the Optionee nor any party to which the Optionee's rights and
privileges under the option may pass shall be, or have any of the rights or
privileges of, a stockholder of the Company with respect to any of the shares
issuable upon the exercise of any option granted under this Plan unless and
until such option has been exercised.
5.11 Continuation of Relationship
Nothing in this Plan or in any option granted pursuant to this Plan
shall confer upon any Optionee any right to continue in the employ of the
Company or wholly-owned subsidiary or to interfere in any way with the right of
the Company or wholly-owned subsidiary to terminate his or her employment or
other relationship with the Company or wholly-owned subsidiary at any time.
5.12 Modification and Amendment of Option
Subject to the requirements of Code Section 422 with respect to
incentive stock options and to the terms and conditions and within the
limitations of this Plan, the Committee may modify or amend outstanding options
granted under this Plan. The modification or amendment of an outstanding option
shall not, without the consent of the Optionee, impair or diminish any of his or
her rights or any of the obligations of the Company under such option. Except as
otherwise provided in this Plan, no outstanding option shall be terminated
without the consent of the Optionee. Unless the Optionee agrees otherwise, any
changes or adjustments made to outstanding incentive stock options granted under
this Plan shall be made in such a manner so as not to constitute a
"modification," as defined in Code Section 424(h), and so as not to cause any
incentive stock option issued hereunder to fail to continue to qualify as an
incentive stock option as defined in Code Section 422(b).
5.13 Limitation on Value for Incentive Stock Options
As to all incentive stock options granted under the terms of this Plan,
to the extent that the aggregate fair market value (determined at the time the
incentive stock option is granted) of the stock with respect to which incentive
stock options are exercisable for the first time by the Optionee during any
calendar year (under this Plan and all other incentive stock option plans of the
Company) exceeds $100,000, such options shall be treated as nonqualified stock
options. The previous sentence shall not apply if the Internal Revenue Service
publicly rules, issues a private ruling to the Company, any Optionee, or any
legatee, personal representative or distributee of an Optionee or issues
regulations changing or eliminating such annual limit.
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SECTION 6 GREATER THAN 10% STOCKHOLDERS
6.1 Exercise Price and Term of Incentive Stock Options
If incentive stock options are granted under this Plan to employees who
own more than 10% of the total combined voting power of all classes of stock of
the Company, the term of such incentive stock options shall not exceed five
years and the exercise price shall be not less than 110% of the fair market
value of the Common Stock at the time the incentive stock option is granted.
This provision shall control notwithstanding any contrary terms contained in an
option agreement or any other document.
6.2 Attribution Rule
For purposes of subsection 6.1, in determining stock ownership, an
employee shall be deemed to own the stock owned, directly or indirectly, by or
for his or her brothers, sisters, spouse, ancestors and lineal descendants.
Stock owned, directly or indirectly, by or for a corporation, partnership,
estate or trust shall be deemed to be owned proportionately by or for its
stockholders, partners or beneficiaries. If an employee or a person related to
the employee owns an unexercised option or warrant to purchase stock of the
Company, the stock subject to that portion of the option or warrant which is
unexercised shall not be counted in determining stock ownership. For purposes of
this Section 6, stock owned by an employee shall include all stock actually
issued and outstanding immediately before the grant of the incentive stock
option to the employee.
SECTION 7 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
The aggregate number and class of shares for which options may be
granted under this Plan, the number and class of shares covered by each
outstanding option and the exercise price per share thereof (but not the total
price), and each such option, shall all be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock of the
Company resulting from a split-up or consolidation of shares or any like capital
adjustment, or the payment of any stock dividend.
7.1 Effect of Liquidation, Reorganization or Change in Control
7.1.1 Conversion of Options on Stock-for-Stock Exchange
If the stockholders of the Company receive capital stock of
another corporation ("Exchange Stock") in exchange for their shares of Common
Stock in any transaction involving a merger, consolidation, acquisition of
property or stock, separation or reorganization, all options granted hereunder
shall be converted into options to purchase shares of Exchange Stock unless the
Company and the corporation issuing the Exchange Stock, in their sole
discretion, determine that any or all such options granted hereunder shall not
be converted into options to purchase shares of Exchange Stock but instead shall
terminate. The amount and price of converted options shall be determined by
adjusting the amount and price of the options granted hereunder in the same
proportion as used for determining the number of shares of Exchange Stock the
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holders of Common Stock receive in such merger, consolidation, acquisition of
property or stock, separation or reorganization. The vesting schedule set forth
in the option agreement shall continue to apply to the options granted for the
Exchange Stock.
7.2 Fractional Shares
In the event of any adjustment in the number of shares covered by any
option, any fractional shares resulting from such adjustment shall be
disregarded and each such option shall cover only the number of full shares
resulting from such adjustment.
7.3 Determination of Committee to Be Final
All Section 7 adjustments shall be made by the Committee, and its
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive. Unless an Optionee agrees otherwise, any
change or adjustment to an incentive stock option shall be made in such a manner
so as not to constitute a "modification," as defined in Code Section 424(h), and
so as not to cause his or her incentive stock option issued hereunder to fail to
continue to qualify as an incentive stock option as defined in Code Section
422(b).
SECTION 8 SECURITIES REGULATION
Shares of Common Stock shall not be issued with respect to an option
granted under this Plan 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, any applicable state
securities laws, the Securities Act of 1933, as amended, the Exchange Act, the
rules and regulations promulgated thereunder, any applicable banking rules and
regulations, and the requirements of any stock exchange upon which the shares
may then be listed, and shall be further subject to the approval of counsel for
the Bank with respect to such compliance, including the availability of an
exemption from registration for the issuance and sale of any shares hereunder.
Inability of the Company to obtain from any regulatory body having jurisdiction
the authority deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any shares hereunder or the unavailability of an exemption
from registration for the issuance and sale of any shares hereunder shall
relieve the Company of any liability in respect of the nonissuance or sale of
such shares as to which such requisite authority shall not have been obtained.
As a condition to the exercise of an option, the Company may require
the Optionee to represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any present intention
to sell or distribute such shares if, in the opinion of the counsel for the
Company, such a representation is required by any relevant provision of the
aforementioned laws. At the option of the Company, a stop-transfer order against
any shares of stock may be placed on the official stock books and records of the
Company, and a legend indicating that the stock may not be pledged, sold or
otherwise transferred unless an opinion of counsel is provided (concurred in by
counsel for the Company) stating that such transfer is not in violation of any
applicable law or regulation may be stamped on stock certificates in order to
assure exemption from registration. The Committee may also require such other
action or
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agreement by the Optionee as may from time to time be necessary to comply with
the federal and state securities laws.
Should any of the Company"s capital stock of the same class as the
Common Stock subject to options granted hereunder be listed on a national
securities exchange, all shares of Common Stock issued hereunder if not
previously listed on such exchange shall be authorized by that exchange for
listing thereon prior to the issuance thereof.
SECTION 9 AMENDMENT AND TERMINATION
9.1 Action of Board of Directors
The Board of Directors of the Company may at any time suspend, amend or
terminate this Plan, provided that except as set forth in Section 7, the
approval of the Company's stockholders shall have been obtained within 12 months
before or after the adoption by the Board of any amendment which will:
(a) increase the number of shares which are to be reserved for
the issuance of options under this Plan;
(b) permit the granting of stock options to a class of persons
other than those presently permitted to receive stock options under
this Plan;
(c) reduce the minimum exercise price of options to be granted
under this Plan;
(d) increase the maximum term of options to be granted under
this Plan; or
(e) require stockholders' approval under applicable law,
including Section 16(b) of the Exchange Act.
Any amendment made to this Plan which would constitute a "modification"
to incentive stock options outstanding on the date of such amendment shall not
be applicable to such outstanding incentive stock options, but shall have
prospective effect only, unless the Optionee agrees otherwise.
Notwithstanding the foregoing, no amendment to this Plan which changes
the amount, price or timing of options which may be granted to non-employee
directors shall be made more than once every six months, other than to comport
with changes in the Internal Revenue Code, the Employee Retirement Income
Security Act, or the rules thereunder.
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9.2 Automatic Termination
Unless sooner terminated by the Board, this Plan shall terminate 10
years from the date on which this Plan is adopted by the Board. No option may be
granted after such termination or during any suspension of this Plan. The
amendment or termination of this Plan shall not, without the consent of the
Optionee, alter or impair any rights or obligations under any option theretofore
granted under this Plan.
SECTION 10 EFFECTIVENESS OF THIS PLAN
This Plan became effective upon adoption by the Board and approval by
the stockholders of the Bank. This plan was approved by the stockholders of the
Bank on April 27, 1993 and by the California Superintendent of Banks of March
25, 1993.
Adopted and amended by the Board of Directors of the Bank on March 17,
1997, approved by the stockholders of the Bank on April 29, 1997.
An amendment made to include non-employee officers was adopted by the
Board of Directors of the Bank on July 21, 1997 and approved by the stockholders
of the Bank on April 28, 1998.
Adopted and amended by the Board of Directors of the Company on
November 15, 1999.
An amendment made to delete former 7.1.1 which authorized the
acceleration of unvested options; to modify prior Section 7.1.2 (now Section
7.1.1) to delete references to the former acceleration provision; and to add a
new Section 2.5 "Information to Optionees," all as required as condition to
issuance of a permit by the California Department of Corporations, was adopted
by the Board of Directors of the Company on January 18, 2000, and did not
require stockholder approval.
An amendment increasing the number of shares subject to grant was
adopted by the Board of Directors of the Company on March 20, 2000 and approved
by the stockholders on May __, 2000.
