<PAGE>
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Napa National Bancorp
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
NAPA NATIONAL BANCORP
901 MAIN STREET
NAPA, CA 94559
May 26, 1998
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Napa National Bancorp, a California corporation (the "Company"), which will be
held at the Company's principal executive office, located at 901 Main Street,
Napa, California 94559 on Tuesday, June 16, 1998, at 8:00 a.m.
You will be asked to elect as directors the ten individuals nominated by
the Board of Directors, adopt the Company's 1998 Amended and Restated Stock
Option Plan and ratify the appointment of Ernst & Young LLP as the Company's
independent public accountants. The attached Proxy Statement contains more
detailed information about the nominees, the stock option plan and other matters
regarding the meeting.
Whether or not you plan to attend, please sign and return the accompanying
proxy card in the postage-paid envelope provided as soon as possible so that
your shares will be represented at the meeting. The Board of Directors
recommends that you vote "FOR" each of the proposals listed on the proxy card.
If you attend the meeting and ask to vote in person, you may withdraw your proxy
at that time. It is important that your shares be represented.
W. Clarke Swanson, Jr.
Chairman of the Board
<PAGE>
NAPA NATIONAL BANCORP
901 MAIN STREET
NAPA, CALIFORNIA 94559
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, JUNE 16, 1998
To Our Shareholders:
The Annual Meeting of Shareholders of Napa National Bancorp (the
"Company"), a California corporation and bank holding company for Napa National
Bank (the "Bank"), will be held at the Company's principal executive office,
located at 901 Main Street, Napa, California 94559 on Tuesday, June 16, 1998, at
8:00 a.m. for the following purposes:
1. To elect the following ten directors of the Company to serve until the
next Annual Meeting of Shareholders and until their respective successors shall
be elected and qualified:
William A. Bacigalupi C. Richard Lemon
Dennis D. Groth Joseph G. Peatman
E. James Hedemark A. Jean Phillips
Michael D. Irwin George M. Schofield
Brian J. Kelly W. Clarke Swanson, Jr.
2. To adopt the Company's 1998 Amended and Restated Stock Option Plan.
3. To ratify the appointment of Ernst & Young LLP, as the Company's
independent public accountants for the 1998 fiscal year.
4. To consider and transact such other business as may properly come
before the meeting of any adjournment or postponement thereof.
Only shareholders of record at the close of business on April 21, 1998 are
entitled to notice of and to vote at this meeting and any adjournment(s)
thereof.
Provisions of the By-laws of the Company govern nominations for election of
members of the Board of Directors, as follows:
Nominations for election of members of the board of directors may be made
by the board of directors or by any shareholder of any outstanding class of
capital stock of the Company entitled to vote for the election of
directors. Notice of intention to make any nominations (other than for
persons named in the notice of the meeting at which such nomination is to
be made) shall be made in writing and shall be delivered or mailed to the
President of the Company by the later of the close of business twenty-one
(21) days prior to any meeting of shareholders called for the election of
directors or ten (10) days after the date of mailing of notice of the
meeting to
<PAGE>
shareholder. Such notification shall contain the following information to
the extent known to the notifying shareholder: (a) the name and address
of each proposed nominee; (b) the number of shares of capital stock of
the Company owned by each proposed nominee; (c) the name and residence
address of the notifying shareholder; (d) the number of shares of capital
stock of the Company owned by the notifying shareholder; (e) 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 a pleaded nolo contendere to any criminal offense
involving dishonesty or breach of trust, filed a petition in bankruptcy
or been adjudged bankrupt. The notice shall be signed by the nominating
shareholder and by the nominee. Nominations not made in accordance
herewith shall be disregarded by the chairperson of the meeting, and upon
his or her instruction, the inspectors of election shall disregard all
votes cast for each such nominee. The restrictions set forth in this
paragraph shall not apply to nomination of a person to replace a proposed
nominee who has died or otherwise become incapacitated to serve as a
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. A copy
of this paragraph shall be set forth in a notice to shareholders of any
meeting at which directors are to be elected.
All shareholders are cordially invited to attend the meeting in person. To
ensure your representation at the meeting you are requested to date, execute and
return the enclosed proxy card, without delay, in the enclosed postage-paid
envelope whether or not you plan to attend. Any shareholder present at the
meeting may vote personally on all matters brought before the meeting, in which
event such shareholder's proxy will not be used.
BY ORDER OF THE BOARD OF DIRECTORS
C. RICHARD LEMON
Secretary
Napa, California
May 26, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
<PAGE>
PROXY STATEMENT
INFORMATION CONCERNING PROXY
This statement is furnished in connection with the solicitation of proxies
to be used by the Board of Directors of Napa National Bancorp (the "Company") at
the Annual Meeting of Shareholders of the Company to be held at the Company's
principal executive office, located at 901 Main Street, Napa, California 94559,
on June 16, 1998 at 8:00 a.m., and at any adjournments or postponements thereof
(the "Meeting").
This Proxy Statement and the accompanying proxy are first being mailed to
shareholders on or about May 26, 1998.
A form of proxy for voting your shares at the Meeting is enclosed. Any
shareholder who executes and delivers a proxy has the right to revoke it at any
time before it is voted by filing with the Secretary of the Company an
instrument revoking it or a duly executed proxy bearing a later date. In
addition, the powers of the proxy holders will be revoked if the person
executing the proxy is present at the Meeting and advises the Chairman of his
election to vote in person. Where a signed proxy that does not contain voting
instructions is submitted to the Company, the proxy holders will vote the shares
represented by such proxy in favor of election of the nominees specified and in
favor of any specified proposals unless such proxy is later revoked.
The proxy also confers 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 Meeting,
including but not limited to: approval of minutes of the prior annual meeting
which will not constitute ratification of the actions taken at such meeting;
action with respect to procedural matters pertaining to the conduct of the
Meeting; and election of any person to any office for which a bona fide nominee
is named herein if such nominee is unable to serve or for good cause will not
serve.
The enclosed proxy is being solicited by the Company's Board of Directors.
The principal method of proxy solicitation for the Meeting will be by mail,
although additional solicitation may be made by telephone, telegraph or personal
visits by directors, officers and employees of the Company and its subsidiary,
Napa National Bank (the "Bank"). The Company may, at its discretion, engage the
services of a proxy solicitation firm to assist in the solicitation of proxies
but has not done so as of May 26, 1998. The total expense of the Board of
Directors' proxy solicitation for the Meeting will be borne by the Company and
will include reimbursement paid to brokerage firms and others for their expenses
in forwarding soliciting material and such expenses as may be paid to any proxy
solicitation firm engaged by the Company.
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<PAGE>
VOTING SECURITIES
Shareholders of record as of the close of business on April 21, 1998 (the
"Record Date") will be entitled to notice of and to vote at the Meeting. As of
such date, the Company had 783,500 shares of Common Stock outstanding.
Each shareholder of record is entitled to one vote, in person or by proxy,
for each share held on all matters to come before the Meeting, except that
shareholders may have cumulative voting rights with respect to the election of
directors. Cumulative voting allows a shareholder to cast a number of votes
equal to the number of directors to be elected (ten) multiplied by the number of
votes held in his or her name on the Record Date. This total number of votes
may be cast for one nominee or may be distributed among as many candidates as
the shareholder desires.
Pursuant to California law, no shareholder can cumulate votes unless prior
to the voting at the Meeting, a shareholder has given notice of the
shareholder's intention to cumulate the shareholder's votes at such Meeting and
the nominee for which the shareholder intends to cumulate votes has properly
been nominated. 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 or to cumulate the votes it may
hold pursuant to the proxies solicited herein unless the required notice by a
shareholder is given, in which event votes represented by proxies delivered
pursuant to this Proxy Statement may be cumulated in the discretion of the proxy
holders, in accordance with the recommendation of the Board of Directors.
Therefore, discretionary authority to cumulate votes in such event is solicited
in this Proxy Statement.
The ten candidates for election of directors receiving the highest number
of votes will be elected, whether or not votes are cumulated. The adoption of
the Company's 1998 Amended and Restated Stock Option Plan and the ratification
of the appointment of Ernst & Young LLP as the Company's independent public
accountants for the 1998 fiscal year requires the approval of a majority of the
shares of Common Stock present or represented by proxy and voting at the
meeting.
Shares which abstain from voting and "broker non-votes" (shares as to which
brokerage firms have not received voting instructions from their clients and
therefore do not have the authority to vote at the Meeting) will be counted for
purposes of determining a quorum. Abstentions or broker non-votes will not
count as votes in favor of the election of directors, the ratification of the
appointment of the Company's independent public accountant, or any other
proposal.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of the Record Date pertaining
to beneficial ownership of the Company's Common Stock by each of the persons
known to the Company to own 5% or more of the Company's Common Stock, current
directors of the Company (all of whom are nominees to be elected to the Board of
Directors), each of the named executive officers, /1/ and all of the directors
of the Company and the named executive officers as a group. The information
contained herein has been obtained from the Company's records, from information
furnished directly by the individual or entity to the Company, or from various
filings made by the named individuals with the Securities and Exchange
Commission (the "SEC").
The table should be read with the understanding that more than one person
may be the beneficial owner or possess certain attributes of beneficial
ownership with respect to the same securities. Therefore, careful attention
should be given to the footnote references set forth in the column "Amount and
Nature of Beneficial Ownership." In addition, shares issuable pursuant to
options which may be exercised within 60 days of the Record Date are deemed to
be issued and outstanding and have been treated as outstanding in calculating
the percentage ownership of those individuals possessing such interest, but not
for any other individuals. Thus, the total number of shares considered to be
outstanding for the purposes of this table may vary depending upon the
individual's particular circumstances. For additional information, see the
section entitled "INFORMATION PERTAINING TO ELECTION OF DIRECTORS."
- ------------------------------
/1/ As used throughout this Proxy Statement, the term "named executive
officers" refer to the Company's Chief Executive Officer, the Company's
President and Chief Operating Officer and the Bank's Chief Information
Officer.
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<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER/1/ OWNERSHIP/2/ CLASS
<S> <C> <C>
William A. Bacigalupi 10,200/3/ 1.3%
Dale A. Brain 1,000/4/ *
Dennis D. Groth 5,100/5/ *
E. James Hedemark 7,600/6/ 1.0%
Michael D. Irwin 12,000/3/ 1.5%
Brian J. Kelly 12,725/7/ 1.6%
C. Richard Lemon 75,931/8/ 9.6%
Joseph G. Peatman 10,125/3/ 1.3%
A. Jean Phillips 7,600/6/ 1.0%
George M. Schofield 74,831/9/ 9.5%
W. Clarke Swanson, Jr. 526,727/10/ 66.4%
Napa National Bancorp Stock Participation Plan 64,631/11/ 8.3%
(the "Stock Plan")
All directors, nominees and named executive officers 679,208/12/ 77.8%
as a Group (11 persons)
</TABLE>
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* Indicates that the percentage of outstanding shares beneficially owned is
less than one percent (1%).
/1/ The address for all persons is: c/o Napa National Bancorp, 901 Main Street,
Napa, CA 94559. The Stock Plan's address is: Napa National Bancorp Stock
participation Plan, Mr. C. Richard Lemon, Co-Trustee, 901 Main Street, Napa, CA
94559.
/2/ Includes shares beneficially owned, directly and indirectly, together with
associates. Subject to applicable community property laws and shared voting or
investment power with a spouse, the persons listed have sole voting and
investment power with respect to such shares unless otherwise noted.
/3/ Includes 10,000 shares which may be acquired upon the exercise of stock
options.
/4/ Includes 1,000 shares which may be acquired upon the exercise of stock
options.
/5/ Includes 5,000 shares which may be acquired upon the exercise of stock
options.
/6/ Includes 7,500 shares which may be acquired upon the exercise of stock
options.
/7/ Includes 12,500 shares which may be acquired upon the exercise of stock
options.
/8/ Includes 10,000 shares which may be acquired upon the exercise of stock
options. Includes 800 shares held in an individual retirement account.
Includes 64,631 shares held in the Stock Plan of which Mr. Lemon is a co-trustee
and with regard to which shares Mr. Lemon has shared voting and investment
power. Mr. Lemon disclaims beneficial ownership as to the Stock Plan shares.
/9/ Includes 6,000 shares which may be acquired upon the exercise of stock
options. Includes 4,000 shares held in an individual retirement account.
Includes 64,631 shares held in the Stock Plan of which Mr. Schofield is co-
trustee and with regard to which shares Mr. Schofield has shared voting and
investment power. Mr. Schofield disclaims beneficial ownership as to the Stock
Plan shares.
/10/ Includes 10,000 shares which may be acquired upon the exercise of stock
options. Includes 9,271 shares held of record by minor relatives living with
Mr. Swanson. Mr. Swanson may be deemed to be a "control person" of the Company
within the meaning of the rules and regulations of the SEC by virtue of his
ownership interest in the Company.
/11/ Voting and investment power over the shares beneficially owned by the Stock
Plan is shared among its two co-trustees, Mr. Lemon and Mr. Schofield, both of
whom disclaim beneficial ownership of all of said shares.
/12/ Includes 89,500 shares which may be acquired within 60 days of the Record
Date upon the exercise of stock options.
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<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
The By-laws of the Company provide that the number of directors of the
Company may be no less than eight and no more than fifteen, with the exact
number within such range to be fixed by amendment of the By-laws or by a
resolution duly adopted by the shareholders or by the Board of Directors. The
number of directors is presently fixed at ten.
The persons named below, all of whom are currently serving one-year
terms as members of the Company's Board of Directors, have been nominated for
election as directors to serve until the next Annual Meeting and until their
successors are duly elected and qualified. Proxies will be voted in such a way
as to effect the election of all nominees or as many as possible. If any
nominee should become unable or unwilling to serve as a director, proxies will
be voted for such substitute nominees as shall be designated by the Board of
Directors. The Board of Directors presently has no knowledge that any of the
nominees will be unable or unwilling to serve. The ten nominees receiving the
highest number of votes at the Meeting shall be elected.
The following table sets forth certain information with respect to
those persons nominated by the Board of Directors for election as directors,
which information is based on data furnished by each such nominee.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, BUSINESS
DIRECTOR EXPERIENCE DURING PAST FIVE
Nominee AGE SINCE YEARS AND OTHER INFORMATION
- ----------------------------------------------------- ------------ ---------- --------------------------------
<S> <C> <C> <C>
William A. Bacigalupi 60 1990 President of Napa Garbage Services, Inc.,
Napa Valley Disposal Services, Inc. and
American Canyon Disposal, Inc.
Dennis D. Groth 55 1996 President of Groth Vineyards & Winery
Michael D. Irwin 55 1987 Chief Financial Officer of the Company
since 1989; Executive Vice President and
Chief Financial Officer and Director of The
Compass Group since 1993; Chief Financial
Officer and Director of Wild Planet Toys,
Inc. since 1996. Chief Financial Officer of
Swanson Vineyards and Winery since 1988.
E. James Hedemark 49 1995 Financial consultant since 1994. Formerly,
Director of ITT Federal Bank from 1994 to
1995; President and Chief Executive Officer
of Napa Valley Bank from 1992 to 1993;
various positions at Bank of America from
1972 to 1992.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION, BUSINESS
DIRECTOR EXPERIENCE DURING PAST FIVE
Nominee AGE SINCE YEARS AND OTHER INFORMATION
- ----------------------------------------------------- ------------ ---------- --------------------------------
<S> <C> <C> <C>
Brian J. Kelly 48 1988 Director of the Company since 1988;
President and Chief Operating Officer of the
Company since 1992; President and Chief
Executive Officer of the Bank since
September 1989.
C. Richard Lemon 54 1981 Secretary of the Company and the Bank
since 1982; Director and Partner of
Dickenson, Peatman & Fogarty since 1979;
President of Exchange Holding Corp. since
1979; President of Temecula Vineyards, Inc.
since 1994; Partner of Silverado Partners
since 1995.
Joseph G. Peatman 64 1994 Founding Partner and Director of Dickenson,
Peatman & Fogarty since 1964.
A. Jean Phillips 53 1995 Owner of Screaming Eagle Vineyard and Winery
since 1986; Partner and owner of Phillips &
Harris Land Brokers since 1979.
George M. Schofield 59 1990 President of George M. Schofield Co.,
financial consultant since 1984; President
of Unique Wines, Inc. since 1984;
Chief Financial Officer and Director of
Folie A Deux Winery since 1995; Director
of Delicato Vine since 1996; Director of
Vintage Directions since 1997.
W. Clarke Swanson, Jr. 59 1987 Chairman of the Board of the Company since
1994; Chief Executive Officer of the Company
since 1988; President of Swanson Vineyards and
Winery since 1986.
</TABLE>
There is no family relationship among any of the Company's executive
officers or directors (all of whom are nominees to be elected as directors).
All of the members of the Company's Board of Directors also serve as
the directors of the Bank. Director Lemon also serves as the sole director of
the Company's inactive and wholly-owned leasing subsidiary, Napa National
Leasing Company.
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<PAGE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS INTENDS TO VOTE ALL PROXIES HELD BY IT IN FAVOR
OF THE ELECTION OF EACH OF THE NOMINEES. YOU ARE URGED TO VOTE FOR PROPOSAL 1:
TO ELECT THE TEN NOMINEES SET FORTH HEREIN TO SERVE UNTIL THE NEXT ANNUAL
MEETING OF SHAREHOLDERS AND UNTIL THEIR RESPECTIVE SUCCESSORS SHALL BE ELECTED
AND QUALIFIED.
PROPOSAL 2: ADOPTION OF THE COMPANY'S 1998 AMENDED
AND RESTATED STOCK OPTION PLAN
SUMMARY OF THE STOCK OPTION PLAN
This summary description of the 1998 Amended and Restated Stock Option
Plan, effective upon its adoption by the Company's shareholders at the Meeting
(the "Plan"), is qualified in its entirety by reference to the Plan, a copy of
which is set forth in Annex A to this Proxy Statement. Any capitalized terms
which are used but not defined in this summary description have the meanings
assigned to such terms in the Plan. Shareholders are urged to read the Plan in
its entirety.
The Napa National Bancorp 1982 Stock Option Plan, as amended and restated
on July 15, 1988 (the "1982 Plan"), was ratified and approved by the
shareholders of the Company at the Company's 1988 Annual Meeting of
Shareholders. The 1982 Plan provides for awards in the form of options (which
may constitute incentive stock options ("ISOs") or non-statutory stock options
("NSOs")) to directors of the Company and also to officers and key full-time
employees of the Bank. The purpose of the 1982 Plan is to provide an incentive
to such persons, to attract qualified and able directors, officers and
employees, to provide an opportunity for such persons to acquire a proprietary
interest in the Company, to encourage employees to remain in the employ of the
Bank, and to encourage directors to serve or continue to serve on the Board of
Directors. The Plan is an amendment and restatement of the 1982 Plan and, for
purposes of the rules governing ISOs, is treated as a new plan. All NSOs
granted under the 1982 Plan are assumed under the Plan, and are subject to the
provisions set forth therein. Further, all Shares remaining available for grant
under the 1982 Plan as of the date of the Meeting will be available for grant
under the Plan. As of May 14, 1998, 139,700 options have been granted (of which
98,500 options are NSOs) and are still outstanding under the 1982 Plan, and
83,300 shares are reserved for awards. The fair market value of the Company's
Common Stock (the "Shares") subject to such awards on May 14, 1998 was $15.75
per Share.
The Plan will be administered by the Stock Option Committee of the Board of
Directors (the "Committee"), and shall consist of at least three directors
appointed by the Board. If a committee is not appointed, the Board of Directors
shall act as the Committee. The Committee shall have membership composition
which enables the Plan to qualify under Rule 16b-3 with regard to the grant of
Options or
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<PAGE>
other rights under the Plan to persons who are subject to Section 16 of the
Securities Exchange Act of 1934, as amended.
Under the 1982 Plan and this Plan, all nonemployee members of the Board of
Directors receive an automatic one-time grant of an NSO to purchase 10,000
Shares. The Plan provides that such options be granted at an Option Price equal
to the fair market value of the Shares at the time the options are granted.
These options vest 25% at the time of grant, and 25% per year thereafter. In
addition, officers and full-time key employees of the Bank and directors
(including nonemployee directors and directors of the Company who are also
salaried employees of the Bank) (collectively, "Participants") selected by the
Committee are eligible to receive options under the Plan. The terms of such
options are described below.
The Plan provides for the grant to Participants of stock options, which may
consist of NSOs and ISOs; however, eligibility for the grant of ISOs is limited
to Participants who are common-law employees. The Option Price of ISOs to
common-law employees who own 10% or more of the total combined voting power of
all classes of outstanding stock of the Company, its parent or any subsidiary of
the Company must equal at least 110% of the fair market value of the Shares on
the date of grant and the term of such an ISO may not be greater than five
years.
Options granted pursuant to the Plan need not have identical terms with
respect to each Optionee. Except as set forth above with respect to the
automatic grant of options to nonemployee directors, the Option Price under each
option shall be established by the Committee; however, the Option Price of any
ISO shall not be less than 100% of the fair market value of the Shares on the
date of grant. Further, any ISO granted to a 10% owner shall comply with the
rules set forth above. The Plan provides that "fair market value" of the Shares
shall be determined by the Committee in accordance with any reasonable valuation
method adopted by the Committee.
To the extent that the right to exercise Shares has vested, options may be
exercised by, at the discretion of the Committee, the optionee's delivery of (a)
cash, certified check, official bank check or the equivalent thereof equal to
the Option Price of the options; (b) Shares of Napa National Bancorp stock with
a fair market value as of the date of exercise equal to the Option Price; or (c)
a combination of (a) and (b).
The Board of Directors retains the right to terminate the Plan; however,
even if the Plan is not terminated, ISOs may not be issued under the Plan ten
years after the earlier of (a) the date of its adoption by the Board of
Directors or (b) the date it is approved by the shareholders. The Plan permits
the Committee to extend the exercise period for NSOs which have been previously
issued under the 1982 Plan. Upon adoption of the Plan, the Board of Directors
has the authority to extend for up to ten (10) years the exercise periods for
NSOs previously granted under the 1982 Plan. The options of the following
individuals could be affected in 1998: Mr. Irwin (10,000 Shares), Mr. Kelly
(2,500 Shares), Mr. Lemon (10,000 Shares) and Mr. Swanson (10,000 Shares).
Based on a current market value of Company's Common Stock of $15.75, the
extension of the exercise periods for these NSOs could result in the Company
taking a charge against 1998 earnings up to the approximate amount of
$154,000. This amount will be offset, however, by an increase in the Company's
shareholders equity of up to approximately $98,000 due to a future tax benefit
of up to approximately $56,000 the Company will be able to utilize. Thus, a
vote "FOR" Proposal 2 is, in addition to a vote in favor of the Plan, a vote
in favor of granting the Board of Directors the authority to extend the
exercise periods for these NSOs in the manner and with the financial and
accounting consequences described above.
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<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the federal income tax consequences of the Plan
is intended to be a summary of applicable federal law. State and local tax
consequences may differ. Because the federal income tax rules governing options
and related payments are complex and subject to frequent change, optionees are
advised to consult their tax advisors prior to exercise of options or
dispositions of stock acquired pursuant to option exercise.
ISOs and NSOs are treated differently for federal income tax purposes.
ISOs are intended to comply with the requirements of Section 422 of the Internal
Revenue Code. NSOs do not comply with such requirements.
An employee is not taxed on the grant or exercise of an ISO. The
difference between the exercise price and the fair market value of the shares on
the exercise date will, however, be a preference item for purposes of the
alternative minimum tax. If an optionee holds the shares acquired upon exercise
of an ISO for at least two years following grant and at least one year following
exercise, the optionee's gain, if any, upon a subsequent disposition of such
shares is long-term capital gain. The measure of the gain is the difference
between the proceeds received on disposition and the optionee's basis in the
shares (which generally equals the exercise price). If an optionee disposes of
stock acquired pursuant to exercise of an ISO before satisfying the one- and
two-year holding periods described above, the optionee will recognize both
ordinary income and capital gain in the year of disposition. The amount of the
ordinary income will be the lesser of (i) the amount realized on disposition
less the optionee's adjusted basis in the stock (usually the option price) or
(ii) the difference between the fair market value of the stock on the exercise
date and the option price. The balance of the consideration received on such a
disposition will be long-term capital gain if the stock had been held for at
least one year following exercise of the ISO. The Company is not entitled to an
income tax deduction on the grant or exercise of an ISO or on the optionee's
disposition of the shares after satisfying the holding period requirement
described above. If the holding periods are not satisfied, the Company will be
entitled to a deduction in the year the optionee disposes of the shares, in an
amount equal to the ordinary income recognized by the optionee.
An employee is not taxed on the grant of an NSO. On exercise, however, the
optionee recognizes ordinary income equal to the difference between the option
price and the fair market value of the shares on the date of exercise. The
Company is entitled to an income tax deduction in the year of exercise in the
amount recognized by the optionee as ordinary income. Any gain on subsequent
disposition of the shares is long-term capital gain if the shares are held for
at least one year following exercise. The Company does not receive a deduction
for this gain.
-11-
<PAGE>
PLAN BENEFITS
The Committee has full discretion to determine the number and amount of
options to be granted to Participants under the Plan. Therefore, except as
described above, the benefits and amounts that will be received by each of the
executive officers named in the Summary Compensation Table, the executive
officers as a group and all other key management employees under the Plan are
not presently determinable. Details on stock options granted during the last
two years to the executive officers named in the Summary Compensation Table are
presented herein in the table entitled "Summary Compensation Table."
REQUIRED APPROVAL
Approval of the proposed Plan requires that holders of a majority of the
outstanding shares of common stock represented and voting at a duly held meeting
at which a quorum is present approve the adoption of the Plan. Unless marked to
the contrary, proxies received will be voted "FOR" approval of the Plan.
Director Swanson, who beneficially owned 526,727 shares of Common Stock as
of April 21, 1998, has indicated to management that he intends to vote all
shares of Common Stock beneficially owned by him "FOR" approval of the Plan.
Accordingly, it is expected that the Plan will be adopted at the Meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS INTENDS TO VOTE ALL PROXIES HELD BY IT IN FAVOR OF
THE ADOPTION OF THE STOCK PLAN. YOU ARE URGED TO VOTE FOR PROPOSAL 2: TO ADOPT
THE COMPANY'S 1998 AMENDED AND RESTATED STOCK OPTION PLAN.
PROPOSAL 3: RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Ernst & Young LLP, which served the Company as independent
public accountants since September 19, 1996, has been selected by the Audit
Committee of the Board of Directors of the Company as the Company's independent
public accountants for the 1998 fiscal year. Ernst & Young LLP has no interest,
financial or otherwise, in the Company. The Company's prior auditing firm was
Deloitte & Touche LLP. Deloitte & Touche LLP had audited the Company's
financial statements for the years ended December 31, 1988 through December 31,
1995. Deloitte & Touche LLP was dismissed on September 19, 1996. The decision
to change auditors was recommended by the Company's Audit Committee and approved
by the full Board of Directors.
Ernst & Young LLP's report on the financial statements for the past two
years did not contain an adverse opinion or a disclaimer of opinion, nor was it
qualified or modified as to uncertainty, audit scope, or accounting principles.
-12-
<PAGE>
During the Company's two most recent fiscal years and any subsequent
interim period preceding the dismissal of Deloitte & Touche LLP there was no
disagreement(s) with Deloitte & Touche LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope of
procedure, which disagreement(s), if not resolved to the satisfaction of
Deloitte & Touche LLP, would have caused it to make reference to the subject
matter of the disagreement(s) in connection with its report on the Company's
financial statements.
During the Company's two most recent fiscal years, and any subsequent
interim period prior to engaging Ernst & Young LLP, neither the Company nor
someone on its behalf consulted Ernst & Young LLP regarding (i) either: the
application of accounting principles to a specified transaction, either
completed or proposed; or the type of audit opinion that might be rendered on
the Company's financial statements and no written report was provided to the
Company nor was any oral advice provided that the new accountant concluded was
an important factor considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issue; or (ii) any matter that was
either the subject of a "disagreement" (as described in paragraph 304 of the
Securities and Exchange Commission's Regulation S-B and the related instructions
to that paragraph) or "event" (as described in paragraph 304 of the Securities
and Exchange Commission's Regulation S-B).
A representative of Ernst & Young LLP is expected to attend the Meeting
with the opportunity to make a statement if he or she desires to do so and
respond to appropriate questions from shareholders present at the Meeting.
All Proxies will be voted for ratification of the appointment of Ernst &
Young LLP, unless authority to vote for the ratification of such selection is
withheld or an abstention is noted. If Ernst & Young LLP should for any reason
decline or be unable to act as independent public accountants, the Proxies will
be voted for a substitute independent public accounting firm to be designated by
the Audit Committee of the Board of Directors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS INTENDS TO VOTE ALL PROXIES HELD BY IT IN FAVOR OF
THE RATIFICATION OF ERNST & YOUNG LLP YOU ARE URGED TO VOTE FOR PROPOSAL 3:
TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS FOR THE 1998 FISCAL YEAR.
-13-
<PAGE>
INFORMATION PERTAINING TO ELECTION OF DIRECTORS
COMMITTEES OF THE BOARD OF DIRECTORS; DIRECTOR ATTENDANCE
The Board of Directors of the Bank maintains an Audit Committee which
consists of the following individuals: Directors Hedemark, Irwin, Kelly,
Peatman, Phillips and Swanson. The functions of the Audit Committee are to
recommend the appointment of and oversee a firm of independent public
accountants who audit the books and records of the Company for the fiscal year
for which they are appointed, to approve each professional service rendered by
such accountants, and to evaluate the possible effect of each such service on
the independence of the Company's accountants. The Audit Committee met eleven
times during 1997.
During January 1996, the Company established a Compensation Committee which
consists of Directors Peatman, Bacigalupi, Kelly, and Swanson. Mr. Peatman was
appointed as the Chairman of the Committee. The function of the Compensation
Committee is to review Director and Executive compensation of the Company and
recommend to the Board of Directors both Director and Executive Officer
Compensation packages. The Compensation Committee did not meet during 1997.
Accordingly, the Board of Directors performed the functions of the Compensation
Committee during 1997 and let the compensation for the Chairman, President and
Chief Operating Officer and Directors stand as per the January 1996 meeting. No
bonuses were awarded.
During 1997, the Company did not have a standing Nominating Committee. The
Executive Committee of the Board of Directors of the Company performs the
functions of this committee and consists of the following individuals: Directors
Kelly and Swanson. The Executive Committee did not meet during 1997.
Nominations by shareholders will be considered by the Executive Committee
provided such nominations comply with the Company's By-laws and the notice
provisions included in the Notice of Meeting which accompanies this Proxy
Statement. This By-law provision is designed to give the Board of Directors
advance notice of third-party nominations, if any, and the qualifications of
nominees, and may have the effect of precluding third-party nominations if not
followed.
The Board of Directors of the Company held 10 regular meetings and one
annual and one special meeting during 1997. Each director of the Company
attended at least 75% of the following meetings with the exception of A. Jean
Phillips who attended 67% of the following meetings: (i) the total number of
meetings of the Board of Directors and (ii) the total number of meetings of
committees of the Board on which he or she served (during the period for which
he or she served).
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act"), requires the Company's directors and executive officers and
persons who beneficially own more than ten percent of a registered class of the
Company's equity securities to file with the SEC initial reports of ownership
and reports of changes in ownership of common stock and other equity securities
of the Company. Officers, directors and greater than ten percent shareholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
-14-
<PAGE>
To the Company's knowledge, based solely on a review of such reports
furnished to the Company and written representations furnished to the Company by
such officers, Directors and ten percent shareholders, during the fiscal year
ended December 31, 1997, all Section 16(a) filing requirements applicable to its
officers, Directors and ten percent shareholders were complied with other than
Mr. Kelly's inadvertent failure to file one Form 4 relating to Mr. Kelly's
exercise of options for 7,500 shares of Common Stock at an exercise price of
$8.00 per share and subsequent sale of such shares of Common Stock at a price of
$15.50 per share during November 1997. Director Kelly corrected said failure by
filing a Form 5 with the SEC on February 11, 1998.
EXECUTIVE OFFICERS
In addition to Directors Irwin, Kelly and Swanson, discussed above,
executive officers of the Company and Bank during 1997 included Dale A. Brain
(age 50), Frederick C. Hoey (age 55) and Rodney M. Wiessner (age 36). All
executive officers of the Company and the Bank serve at the pleasure of the
Board of Directors.
Mr. Brain became the Bank's Senior Vice President and Chief Information
Officer in November 1996. Prior to that time, Mr. Brain was Manager, Planning &
Control at Kaiser Permanente Medical from 1992 to 1996. Mr. Brain had
previously been in a variety of management positions with Bank of America from
1969 to 1992.
In March 1997, the Bank expanded its senior management by hiring Frederick
C. Hoey. Mr. Hoey became the Bank's Senior Vice President and Chief Credit
Officer. Prior to joining the Bank, Mr. Hoey was with American Investors
Company as a regional representative since 1996, with Westamerica Bank as a Vice
President from 1992 to 1996, and in a variety of management positions with
various financial institutions prior to 1992.
In July 1997, the Bank hired Rodney M. Wiessner as the Bank's Senior Vice
President, Chief Financial Officer, Treasurer and Cashier. He is also the
Treasurer/ Cashier and Assistant Secretary of the Company. Prior to joining the
Bank, Mr. Wiessner had been Chief Financial Officer of Mid Valley Bank since
1995. Prior to joining Mid Valley Bank, Mr. Wiessner was an Audit Manager with
Perry-Smith and Company from 1990 to 1995.
-15-
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth for service in all
capacities to the Company and the Bank for the periods indicated the
compensation with respect to the Company's Chief Executive Officer and those
executive officers of the Company and the Bank whose salary and bonus exceeded
$100,000 in 1997.
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation/1/ Compensation
- ------------------------------- ---- ----------- ------- ------------- ------------
<S> <C> <C> <C> <C> <C>
W. Clarke Swanson, Jr., 1997 $ 124,800/2/ $ 0 $2,425 $ 0
CEO 1996 125,300/2/ 0 2,700 0
1995 46,600/2/ 0 441 0
Brian J. Kelly, President 1997 $ 135,000/3/ 0 9,600 8,489/5//6/
and COO 1996 135,000/3/ 20,500 8,834 12,788/5//6/
1995 115,000/3/ 27,682 8,530 6,900/6/
Dale A. Brain, SVP, Chief 1997 105,667/3/ 8,500/4/ 3,000 3,203/5//6/
Information Officer, of the
Bank
</TABLE>
- ---------------
/1/ For the year ended December 31, 1997, consists of country club membership
for Mr. Swanson in the amount of $2,425; country club membership and auto
allowance for Mr. Kelly in the amount of $3,000 and $6,600 respectively; auto
allowance for Mr. Brain in the amount of $3,000.
/2/ Includes payments for attending meetings of the Board of Directors and all
committees thereof.
/3/ Includes amounts contributed by Mr. Kelly and Mr. Brain to the Stock Plan.
/4/ Includes moving bonus.
/5/ Consists of contributions by the Company to the Stock Plan for the benefit
of Mr. Kelly and Mr. Brain.
/6/ Includes unpaid vacation for Mr. Kelly and Mr. Brain.
-16-
<PAGE>
The following table sets forth the options exercised in 1997 and the
December 31, 1997 unexercised value of both vested and unvested options for the
Company's Chief Executive Officer and those executive officers of the Company
whose salary and bonus exceeded $100,000 in 1997.
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Shares of Common Value of Unexercised
Stock Underlying Unexercised In-The-Money Options
Options at December 31, 1997 at December 31, 1997/1/
Shares Acquired Value ---------------------------- ---------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W. Clarke
Swanson, Jr., CEO 0 0 10,000 0 $77,500 0
Brian J. Kelly,
President and COO 7,500 56,250/2/ 12,500 0 95,975 0
Dale A. Brain,
SVP, Chief
Information Officer, 0 0 1,000 4,000 400 1,600
of the Bank
</TABLE>
- ------------------------------
/1/ Fair market value of the Company's Common Stock share on December 31, 1997
was $15.75.
/2/ In November 1997, Mr. Kelly acquired 7,500 shares of Common Stock upon the
exercise of options at an exercise price of $8.00 per share. The fair
market value per share of Common Stock on the exercise date was $15.50 per
share.
-17-
<PAGE>
COMPENSATION OF DIRECTORS
Members of the Board of Directors did not receive any compensation
during 1997 for attendance at meetings of the Board of Directors and the
committees thereof. The 1997 director compensation package for directors of the
Bank included paying each director $200 for every board or committee meeting he
or she attends. Mr. Kelly, as a full-time employee of the Company and the Bank,
does not receive compensation as a director of the Bank. Chairpersons for the
committees of the board of directors of the Bank receive $300 for each meeting
they chair. This fee structure is intended to compensate the Chairpersons for
their additional time and effort required in fulfilling this role. The
foregoing fee schedule was effective for all of 1997. During 1997, the members
of the board of directors of the Bank, as a group, received a total of $81,000
for attendance at all meetings of the board of directors of the Bank and the
committees thereof.
In January 1998, the boards of directors of both the Company and the
Bank decided to leave the 1998 director compensation package the same as the
1997 director compensation package.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PURCHASE RIGHT
In 1987, Mr. Swanson acquired 300,701 shares of the Company's common
stock ("Common Stock") through a tender offer at $11.00 per share (the "Tender
Offer"), net to the sellers in cash. The Tender Offer was made pursuant to the
terms of an agreement with the Company, dated as of February 5, 1987 (the
"Purchase Agreement").
As disclosed to shareholders in materials related to the Tender Offer,
the Purchase Agreement provides, among other things, certain protections against
dilution of Mr. Swanson's stock ownership by requiring that if the Company
should desire to issue any Equity Securities (as defined below), it shall give
Mr. Swanson first right to purchase (the "Purchase Right") a portion of such
Equity Securities up to an amount which will enable Mr. Swanson to maintain the
same percentage of ownership of the outstanding Common Stock as held by Mr.
Swanson on the date immediately following his purchases in the Tender Offer
(i.e., 60.14%). In the event that the number of shares of Common Stock owned by
Mr. Swanson should decline due to Mr. Swanson's failure to purchase shares
pursuant to such right or sales of shares of Common Stock by Mr. Swanson, the
Purchase Agreement provides that the Purchase Right entitles Mr. Swanson to
purchase a new portion of new issuances of Equity Securities up to an amount
which will enable Mr. Swanson to maintain his percentage ownership of the
outstanding Common Stock as computed immediately prior to each issuance of such
Equity Securities.
-18-
<PAGE>
The Purchase Right also applies to issuances of Equity Securities to
employees, officers and directors under stock option plans approved by the Board
of Directors of the Company, provided, however, that Common Stock shall be
deemed to have been issued only upon the exercise of an employee stock option.
The Purchase Agreement further states that if Mr. Swanson has a right to
purchase Common Stock due to the exercise of a stock option by an employee,
officer or director of the Company, the purchase price of such Common Stock
purchasable by Mr. Swanson shall be equal to the exercise price of such option.
The term "Equity Securities" is defined in the Purchase Agreement to
mean Common Stock, rights, options (except stock options issued pursuant to
stock option plans), warrants to purchase Common Stock, any security other than
Common Stock having voting rights in the election of the Board of Directors
which are not contingent upon a failure to pay dividends, any security
convertible into or exchangeable for any of the foregoing, and any agreement or
commitment to issue any of the foregoing.
The Purchase Right terminates when Mr. Swanson ceases to own in excess
of 10% of the then outstanding shares of Common Stock.
INSIDER PARTICIPATION
Directors Lemon and Peatman are directors of the Bank and of the
Company. Both are shareholders in Dickenson, Peatman & Fogarty, a Professional
Law Corporation, which provided legal services to the Company and the Bank
during 1996 and 1997 and which expects to provide legal services during 1998.
Mr. Peatman serves on the Compensation Committee of the Company and performs
equivalent functions for Directors, Peatman & Fogarty. Mr. Lemon is a co-
trustee of the Stock Plan.
INDEBTEDNESS OF MANAGEMENT
Some of the Company's directors and executive officers, as well as
their immediate family and associates, are customers of, and have had banking
transactions with, the Bank in the ordinary course of the Bank's business, and
the Bank expects to have such ordinary banking transactions with these persons
in the future. In the opinion of management of the Company, all loans and
commitments to lend included in such transactions were made in the ordinary
course of business on substantially the same terms, including interest rates and
collateral, as those prevailing for comparable transactions with other persons
of similar creditworthiness, and did not involve more than a normal risk of
collectibility or present other unfavorable features. Although the Bank does
not have any limits on the aggregate amount it would be willing to lend to
directors and officers as a group, loans to individual directors and officers
must comply with the Bank's respective lending policies and statutory lending
limits, and prior approval of the Bank's board of directors is required for
these types of loans.
-19-
<PAGE>
SHAREHOLDER PROPOSALS
Any shareholder desiring to submit a proposal for action at the 1999
Annual Meeting of Shareholders that the shareholder desires to be presented in
the Company's Proxy Statement with respect to such meeting, should submit such
proposal to the Company at its principal place of business no later than
December 31, 1998.
FORM 10-KSB
If any shareholder would like a copy of the Company's Annual Report to
the SEC on Form 10-KSB, for the fiscal year ended December 31, 1997, including
financial statements and financial statement schedules, it may be obtained
without charge. Exhibits to the Form 10-KSB will be furnished upon payment of
reasonable charges. Written requests should be directed to Napa National
Bancorp, 901 Main Street, Napa, CA 94559.
OTHER MATTERS
Management is not aware of any other matters to come before the
Meeting. If any other matter not mentioned in this Proxy Statement is brought
before the Meeting, the persons named in the enclosed form of proxy will have
discretionary authority to vote all proxies with respect thereto in accordance
with their judgment.
By Order of the Board of Directors
C. Richard Lemon, Secretary
Dated: May 26, 1998
Napa, California
-20-
<PAGE>
ANNEX A
NAPA NATIONAL BANCORP
1998 AMENDED AND RESTATED STOCK OPTION PLAN
<PAGE>
NAPA NATIONAL BANCORP
1998 AMENDED AND RESTATED STOCK OPTION PLAN
INDEX
ARTICLE COMMENCING
NO. DESCRIPTION ON PAGE
1. PURPOSE 1
2. ADMINISTRATION 1
3. PARTICIPANTS 2
4. THE SHARES 2
5. GRANT, TERMS AND CONDITIONS OF OPTIONS 3
6. ADJUSTMENTS OF AND CHANGES IN THE SHARES 7
7. LISTING OR QUALIFICATION OF SHARES 8
8. BINDING EFFECT OF CONDITIONS 8
9. AMENDMENT AND TERMINATION OF THE PLAN 9
10. PRIVILEGES OF STOCK OWNERSHIP; SECURITIES LAW 9
COMPLIANCE; NOTICE OF SALE
11. INDEMNIFICATION 10
-i-
<PAGE>
NAPA NATIONAL BANCORP
1998 AMENDED AND RESTATED STOCK OPTION PLAN
1. PURPOSE
The purpose of this Napa National Bancorp ("Napa National Bancorp" or
the "Company") 1998 Amended and Restated Stock Option Plan (the "Plan") is to
secure for the Company, its wholly-owned subsidiary, Napa National Bank (the
"Bank"), and the shareholders of the Company the benefits of the incentives
inherent in the ownership of Common Stock of Napa National Bancorp by the
Company's nonemployee directors and by those full-time employees and officers of
the Bank who will share responsibility with management of the Bank for its
future growth and success (collectively all such individual shall be
"Participants"). Further, it is intended that the Plan attract qualified and
able directors, officers and employees, to provide an opportunity for such
persons to acquire a proprietary interest in the Company, to encourage employees
to remain in the employ of the Bank, and to encourage directors to serve or
continue to serve on the Board of Directors. It is intended that certain
options granted pursuant to the Plan shall constitute incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code") ("incentive stock options"), and that other options granted
pursuant to the Plan shall not constitute incentive stock options ("nonstatutory
stock options"). Any nonstatutory stock option issued under the 1982 Stock
Option Plan as Amended and Restated (the "Prior Plan") which is outstanding as
of the Amendment Date shall be assumed under this Plan and, shall be subject to
the terms set forth herein.
The word "Affiliate," as used in this Plan, means any bank or
corporation in an unbroken chain of banks or corporations beginning or ending
with the Company, if at the time in question, each such bank or corporation
other than the last in that chain owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other banks or corporations in the chain. As used in this Plan, the term "Board
of Directors" means the Board of Directors of Napa National Bancorp, the term
"nonemployee director" means a member of the Board of Directors who is not also
an officer or employee of the Bank, and the term "Amendment Date" shall mean the
date on which this Plan is adopted by the requisite vote of the shareholders of
the Company.
2. ADMINISTRATION
The following provisions shall govern the administration of the Plan:
(a) The Plan shall be administered by a committee of the Board of
Directors appointed for this purpose by the Board of Directors (the "Committee")
composed of not less than three (3) directors. The Board of Directors may from
time to time remove members from or add members to the Committee. If the Board
does not appoint a Committee, the entire Board shall act as the Committee. The
Committee shall satisfy the requirements of Rule 16b-3 (or its successor) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") with
respect to the grant of options to persons who are officers or directors of the
Company subject to Section 16 of the Exchange Act. Vacancies on the Committee,
howsoever caused, shall be filled by the Board of Directors. The Board of
Directors
-1-
<PAGE>
shall designate a Chairman and Vice-Chairman of the Committee from among the
Committee members. Acts of the Committee (i) at a meeting, held at a time and
place and in accordance with rules adopted by the Committee, at which a quorum
of the Committee is present and acting, or (ii) reduced to and approved in
writing by a majority of the members of the Committee, shall be the valid acts
of the Committee.
(b) The Company shall effect the grant of options under the Plan by
execution of instruments in writing in a form approved by the Committee.
Subject to the express terms and conditions of the Plan and the terms of any
option outstanding under the Plan, the Committee shall have full power to
interpret and construe the Plan and the terms of any option granted under the
Plan, to prescribe, amend and rescind rules and regulations relating to the Plan
or such options, and to make all other determinations necessary or advisable for
the Plan's administration, including, without limitation, the power to (i) to
determine which persons meet the requirements of Section 3 hereof for selection
as Participants in the Plan and which persons are considered to be "employees"
for purposes of the Code and therefore eligible to receive incentive stock
options under the Plan; (ii) determine to whom of the eligible Participants, if
any, options shall be granted under the Plan; (iii) establish the terms and
conditions required or permitted to be included in every option agreement or any
amendments thereto relating to options including whether options to be granted
thereunder shall be incentive stock options or nonstatutory stock options; (iv)
specify the number of shares to be covered by each option; (v) in the event a
particular option is to be an incentive stock option, determine and incorporate
such terms and provisions, as well as amendments thereto, as shall be required
in the judgment of the Committee, so as to provide for or conform such option to
any change in any law, regulation, ruling or interpretation applicable thereto;
(vi) determine the fair market value of Napa National Bancorp stock used by an
optionee to exercise options or to satisfy tax withholding requirements pursuant
to Sections 5(c)(2) and 5(c)(9) hereof; (vii) determine whether payment of the
exercise price of any such option shall be in cash, shares of Common Stock of
the Company, or any combination thereof; (viii) subject to Section 9, amend any
existing stock option agreement to extend the period of exercisability of the
options granted thereunder; and (ix) to make all other determinations deemed
necessary or advisable for administering the Plan. The Committee's
determination on the foregoing matters shall be conclusive.
3. PARTICIPANTS
The persons who shall be eligible to receive options under the Plan
shall be: (a) nonemployee directors in accordance with Section 5(a) and (b)
with respect to Section 5(b), all key full-time salaried employees, officers and
directors of the Bank (including nonemployee directors and directors who are
also salaried employees); provided, however, that only key full-time salaried
employees of the Bank shall be eligible to receive incentive stock options. The
terms "officers and key full-time salaried employees" as used herein shall mean
such officers and key employees as may be determined by the Committee in its
sole discretion.
4. THE SHARES
The shares of stock which may be issued upon the exercise of options
authorized to be granted under the Plan shall consist of the number of shares of
Common Stock, no par value (the "Shares"), of Napa National Bancorp, or the
number and kind of shares of stock or other securities which shall be
substituted for such Shares or to which such Shares shall be adjusted as
provided in
-2-
<PAGE>
Section 6, which remain available for grant under the Prior Plan as of July 14,
1998, as well as the number of Shares subject to existing nonstatutory stock
option agreements under the Prior Plan. The Shares subject to the Plan may be
set aside out of the authorized but unissued shares of Common Stock of Napa
National Bancorp not reserved for any other purpose or out of shares of Common
Stock subject to an option which, for any reason, terminates unexercised as to
the Shares. If any option granted hereunder terminates for any reason or expires
before such option is exercised in full, the Shares which might otherwise have
been issued upon the exercise of such option shall again become available for
the purposes of the Plan.
5. GRANT, TERMS AND CONDITIONS OF OPTIONS
(a) Each nonemployee director who has not been an employee of the
Company or any of its Affiliates for all or any part of the preceding fiscal
year shall be granted, subject to the Committee's approval, nonstatutory options
to purchase 10,000 Shares, subject to adjustment as provided in Section 6 below,
on the following date: (i) in the case of nonemployee directors first elected
to the Board of Directors at the first Annual Meeting of Shareholders of the
Company to be held after the Amendment Date, at the time of such meeting; and
(ii) in the case of persons first becoming nonemployee directors after such
Annual Meeting, at the earlier of the time when they first are appointed by the
Board of Directors or elected by the shareholders of the Company. Each option
granted to nonemployee directors pursuant to this paragraph shall be exercisable
for a period of twenty (20) years. Such options shall be 25% vested and
exercisable at the time of grant and the remainder of such options shall vest at
an annual rate of 25% per year on each anniversary of the date of grant.
(b) Options may be granted to any other Participant who, in the
judgment of the Committee, contribute to the successful conduct of the Bank's
operation through their judgment, interest, ability and special efforts;
provided, however, that: (i) an eligible officer or employee shall not
participate in the granting of his or her own option, and (ii) in connection
with incentive stock options, the aggregate fair market value of the Shares
(determined as of the date the related option is granted) with respect to which
such incentive stock options are exercisable for the first time by any optionee
during any calendar year (under all stock option plans of the Company) shall not
exceed $100,000.
(c) In addition, all options granted pursuant to the Plan shall be
subject to the following terms and conditions:
(1) Option Price. The purchase price of a Share (the "Option Price")
------------
under each incentive stock option shall be not less than one hundred percent
(100%) of the fair market value of the Shares subject thereto on the date the
option is granted, as such value is determined by the Committee. The fair
market value of such stock for the purpose of establishing an Option Price or
attributing a value for the purpose of Section 5(c)(9) shall be determined in
accordance with any reasonable valuation method, including the valuation methods
described in Treasury Regulation Section 20.2031-2. If, however, an employee
owns stock of the Company, determined in accordance with Section 425(d) of the
Code, possessing more then ten percent (10%) of the total combined voting power
of all classes of stock of the Company, then the Option Price of an incentive
stock option granted to such person shall be not less than one hundred ten
percent (110%) of such fair market value at the time such option is granted.
The Option Price under a nonstatutory stock option shall, except for options
granted
-3-
<PAGE>
pursuant to Section 5(a), be established by the Committee in its discretion.
Options granted pursuant to Section 5(a) shall have an Option Price equal to the
fair market value of the Shares on the date of grant.
(2) Duration and Exercise of Options. Each incentive stock option
--------------------------------
shall vest and shall be exercisable in such manner and at such time up to but
not exceeding ten (10) years from the date such option is granted, and, except
as set forth in Section 5(a), each nonstatutory stock option shall vest and
shall be exercisable in such manner and at such time up to but not exceeding
twenty (20) years and one month from the date the option is granted, as the
Committee shall determine in its sole discretion; provided also, however, that
the Committee may, in its sole discretion; accelerate the time of vesting of any
option; provided further, that if an incentive stock option is granted to an
employee owning stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company, determined in
accordance with Section 425(d) of the Code, such option shall not be exercisable
after the expiration of five (5) years from the date such option is granted.
The termination of the Plan shall not alter the maximum duration, the vesting
provisions, or any other term or condition of any option granted prior to the
termination of the Plan.
To the extent that the right to purchase Shares has vested under an
optionee's stock option agreement, options may be exercised from time to time by
delivering, at the discretion of the Committee, (a) cash, certified check,
official bank check or the equivalent thereof acceptable to the Company; (b)
shares of Napa National Bancorp stock with a fair market value as of the date of
exercise equal to the Option Price; or (c) shares of Napa National Bancorp stock
with a fair market value as of the date of exercise less than the full amount of
the Option Price plus cash, certified check, official bank check or the
equivalent thereof acceptable to the Company equal to the remaining amount of
the Option Price; together with written notice to the Secretary of the Company
identifying the option or part thereof being exercised and specifying the number
of Shares for which payment is being tendered. The Company shall deliver to the
optionee, which delivery shall be not less than fifteen (15) days and not more
than thirty (30) days after the giving of such notice, without transfer or issue
tax to the optionee (or other person entitled to exercise the option) at the
principal office of the Company, or such other place as shall be mutually
acceptable, a certificate or certificates for such Shares dated the date the
options were validly exercised; provided, however, that the time of such
delivery may be postponed by the Company for such period as may be required for
it with reasonable diligence to comply with any requirements of law. If an
option covers incentive and nonstatutory stock options, separate stock
certificates shall be issued; one or more for stock acquired upon exercise of
the incentive stock options and one or more for the stock acquired upon exercise
of the nonstatutory stock options. If the Option Price is satisfied in whole or
in part by delivery of Napa National Bancorp stock, separate stock certificates
shall be issued, one or more for the number of shares of stock received equal to
the number of shares of Napa National Bancorp stock delivered and one or more
for the remainder of the shares received upon the exercise.
(3) Termination of Employment or Officer or Director Status. Upon the
-------------------------------------------------------
termination of an optionee's status as a nonemployee director or as an officer
or employee of the Bank, his or her rights to exercise an option then held shall
be only as follows:
DEATH: If such status is terminated by death, the executors or
administrators of the optionee's estate, or any person or persons who shall have
acquired the option directly from the optionee by such optionee's will or the
applicable laws of descent and distribution, shall have the right for a
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period of twelve (12) months following the date of such death to exercise such
option, provided the actual date of exercise is in no event after the expiration
of the term of the option.
DISABILITY: If such status is terminated by reason of the optionee
becoming permanently and totally disabled within the meaning of Section 22(e)(3)
of the Code (as determined by the Committee), such optionee or such optionee's
qualified representative (in the event of the optionee's mental disability)
shall have the right for a period of twelve (12) months following the date of
such disability to exercise such option, provided the actual date of exercise is
in no event after the expiration of the term of the option.
CAUSE: If that optionee is determined by the Board of Directors to
have committed an act of embezzlement, fraud, dishonesty, breach of fiduciary
duty to the Company, or to have deliberately disregarded the rules of the
Company which resulted in loss, damage or injury to the Company, or if an
optionee makes any unauthorized disclosure of any of the secrets or confidential
information of the Company, induces any client or customer of the Company to
break any contract with the Company or induces any principal for whom the
Company acts as agent to terminate such agency relations, or engages in any
conduct which constitutes unfair competition with the Company, or if an optionee
is removed from any office of the Company by the Federal Deposit Insurance
Corporation or any other bank regulatory agency, neither the optionee nor the
optionee's estate shall be entitled to exercise any option with respect to any
Shares whatsoever after termination of employment, officer or director status.
In making such determination, the Board of Directors shall act fairly and shall
give the optionee an opportunity to appear and be heard at a hearing before the
full Board of Directors and present evidence on the optionee's behalf. For the
purpose of this paragraph, termination of employment or officer or director
status shall be deemed to occur when the Company dispatches notice or advice to
the optionee that the optionee's employment or retention or status as an officer
or director is terminated and not at the time of optionee's receipt thereof.
OTHER REASONS: If an optionee's employment or retention or status as
an officer or director is terminated for any reason other than those mentioned
above under "Death", "Disability" and "Cause", the optionee may, within three
(3) months following such termination, exercise the option to the extent such
option was exercisable by the optionee on the date of termination of the
optionee's employment or retention or status as an officer or director, provided
the date of exercise is in no event after the expiration of the term of the
option.
Notwithstanding the foregoing provisions of this Section 5(c)(3), if
the status of an optionee as a nonemployee director is terminated because it is
determined that the optionee is, or in the view of a Federal bank regulatory
agency would be, precluded from continuing service as a member of the Board of
Directors by virtue of a concurrent relationship of the optionee with an
organization primarily engaged in the issue, underwriting or distribution of
securities and if that optionee shall, as an independent advisor or consultant,
provide without other remuneration advice, services or other assistance to the
Company or the Bank of at least the same quality or quantity as the optionee
rendered as a director, then the options held by that optionee shall remain in
full force until the earlier of (i) expiration according to the terms of such
options, (ii) termination because of death, disability or cause as described
above and in accordance with those paragraphs applicable to such reasons for
termination, or (iii) a determination made by the Board of Directors in its sole
discretion that the optionee's assistance to the Company or Bank has ceased to
be of at least the same quality or quantity as
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<PAGE>
the optionee rendered while a director. In the event that such an option is
terminated pursuant to such a Board of Directors determination, the optionee may
within three (3) months of that determination exercise the option to the extent
the option was exercisable by the optionee on the date of such determination.
(4) Transferability of Option. Except as may be provided in a stock
-------------------------
option agreement, each option shall be transferable only by will or the laws of
descent and distribution and shall be exercisable during the optionee's lifetime
only by the optionee.
(5) Cancellation of and Substitution for Options. The Company shall
--------------------------------------------
have the right, subject to optionee consent, to cancel any option granted to
persons other than nonemployee directors at any time before it otherwise would
expire by its terms, and it may grant to the same optionee in substitution
therefor a new option upon terms otherwise consistent with the requirements of
the Plan, including an option stating an Option Price which is lower (but not
higher) than that for the option which was canceled and which, in any case,
shall be no less than the fair market value of the Shares subject thereto on the
date the new option is granted.
(6) Other Terms and Conditions. Options may also contain such other
--------------------------
provisions, which shall not be inconsistent with any of the foregoing terms, as
the Committee shall deem appropriate. No option, however, nor anything
contained in the Plan, shall confer upon any optionee any right to continue in
the employ or in the status as an officer or director of the Company, nor limit
in any way the right of the Company to terminate a optionee's employment or
status as an officer or director at any time.
(7) Use of Proceeds from Stock. Proceeds from the sale of Shares
--------------------------
issued pursuant to the exercise of options granted under the Plan shall
constitute general funds of Napa National Bancorp.
(8) Rights of a Shareholder. The optionee shall have no rights as a
-----------------------
shareholder with respect to any Shares until the date of issuance of a stock
certificate for such Shares. No adjustment shall be made for dividends or other
rights for which the record date is prior to the date of such issuance, except
as provided in Section 6 hereof.
(9) Satisfaction of Tax Withholding Requirements. Whenever Shares are
--------------------------------------------
to be issued pursuant to an option under the Plan, the Company shall have the
right to require the optionee to remit to the Company an amount sufficient to
satisfy federal and state withholding tax requirements prior to delivery of any
certificate or certificates for such Shares. Whenever an optionee is required
to pay to the Company an amount required to be withheld under applicable federal
and state income tax laws in connection with receipt of Shares upon exercise of
any option, the Committee may, in its absolute discretion, permit the optionee
to satisfy such obligation, in whole or in part, by electing to have the Company
withhold shares of the Company's Common Stock having a value equal to the amount
required to be withheld or by delivering to the Company already-owned shares to
satisfy the withholding requirement. The amount of the withholding requirement
shall include any amount agreed to be withheld at the time the election is made,
not in excess of the maximum federal and state income tax rates applicable to
the optionee on the date that the amount of tax to be withheld is to be
determined (the "Tax Date"). The value of the shares to be withheld or
delivered will be based on their fair market
-6-
<PAGE>
value on the Tax Date. Such elections will be subject to the following
restrictions; (1) the election must be made on or before the Tax Date; (2) the
election will be irrevocable; and (3) the election will be subject to the
disapproval of the Committee. Each election by an optionee whose transactions in
shares of Common Stock are subject to Section 16(b) of the Exchange Act will be
subject to the following additional restrictions: (1) the election may not be
made within six months of the grant of the option (except that this limitation
will not apply in the event death or disability of the optionee occurs prior to
the expiration of the six-month period), and (2) the election must be made
either at least six months before the Tax Date or within a ten day period
beginning on the third day following the release of the Company's quarterly or
annual summary statement of earnings.
6. ADJUSTMENT OF AND CHANGES IN THE SHARES
The number of Shares covered by the Plan, and the number of shares and
price per share of each outstanding option, shall be proportionately adjusted
for any increase or decrease in the number of issued and outstanding shares of
Common Stock resulting from a subdivision or consolidation of shares or the
patent of a stock dividend, or any other increase or decrease in the number of
issued and outstanding shares of Common Stock effected without receipt of
consideration by the Company. In the event the shares of Common Stock of Napa
National Bancorp, as presently constituted, shall be changed into or exchanged
for a different number or kind of shares of stock or other securities of Napa
National Bancorp or of another corporation (whether by reason of reorganization,
merger, consolidation, recapitalization, reclassification, split-up, combination
of shares, or otherwise), the Committee shall substitute for each share of
Common Stock of Napa National Bancorp theretofore subject to outstanding options
granted under the Plan or thereafter subject or which may become subject to an
option under the Plan the number and kind of shares of stock or other securities
into which each outstanding share of Common Stock of Napa National Bancorp shall
be so changed or for which each share shall be exchanged, or to which each such
share shall be entitled, as the case may be. In addition, the Committee shall
make appropriate adjustment in the number and kind of shares as to which
outstanding options, or portions thereof then unexercised, shall be exercisable,
so that any optionee's proportionate interest in securities of Napa National
Bancorp by reason of his rights under unexercised portions of such options shall
be maintained as before the occurrence of such event. Such adjustment in
outstanding options shall be made without change in the total price to the
unexercised portion of the option and with a corresponding adjustment in the
Option Price.
In the event of sale, dissolution or liquidation of Napa National
Bancorp or a merger or consolidation in which the Company is not the surviving
or resulting corporation (unless the Company's obligations hereunder are assumed
by the surviving or resulting corporation), the Committee shall have the power
to cause the termination of every option outstanding hereunder; provided,
--------
however, that the optionee shall have the right immediately prior to such sale,
- -------
dissolution, liquidation, or merger or consolidation in which Napa National
Bancorp is not the surviving or resulting corporation to notification thereof as
soon as practicable and, thereafter, to exercise the optionee's option to
purchase Shares subject thereto to the extent of any unexercised portion of the
option, regardless of the vesting provision of Section 5(c)(2) hereof. This
right of exercise shall be conditioned upon the execution of a final plan of
dissolution of liquidation or a definitive agreement of merger or consolidation.
In the event of an offer by any person or entity to all shareholders
of Napa National Bancorp to purchase any or all shares of Common Stock of Napa
National Bancorp (or shares of stock
-7-
<PAGE>
or other securities which shall be substituted for such shares or to which such
shares shall be adjusted as provided in Section 6 hereof), any optionee under
this Plan shall have the right upon the commencement of such offer to exercise
the option and purchase shares subject thereto to the extent of any unexercised
or unvested portion of such option.
No right to purchase fractional shares shall result from any
adjustment in options pursuant to this Section 6. In case of any such
adjustment, the shares subject to the option shall be rounded down to the
nearest whole share. Notice of any adjustment shall be given by the Company to
each holder of an option which was in fact so adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of the Plan.
To the extent the foregoing adjustments relate to stock or securities
of Napa National Bancorp, such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive.
Except as expressly provided in this Section 6, an optionee shall have
no rights by reason of any of the following events: (1) subdivision or
consolidation of shares of stock of any class; (2) payment of any stock
dividend; (3) any other increase or decrease in the number of shares of stock of
any class; (4) any dissolution, liquidation, merger, consolidation, spin-off of
assets or stock of another corporation other than the Bank. Any issue by the
Company of shares of stock of any class, or securities convertible into shares
of any class, shall not affect the number or price of shares of Common Stock
subject to the option, and no adjustment by reason thereof shall be made.
The grant of an option pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
7. LISTING OR QUALIFICATION OF SHARES
All options granted under the Plan are subject to the requirement that
if at any time the Board of Directors or the Committee shall determine in its
discretion that the listing or qualification of the Shares subject thereto on
any securities exchange or under any applicable law, or the consent or approval
of any governmental regulatory body, is necessary or desirable as a condition of
or in connection with the issuance of Shares under the option, the option may
not be exercised in whole or in part unless such listing, qualification, consent
or approval shall have been effected or obtained free of any condition not
acceptable to the Board of Directors or the Committee.
8. BINDING EFFECT OF CONDITIONS
The conditions and stipulations herein contained, or in any option
granted pursuant to the Plan shall be, and constitute, a covenant running with
all of the Shares acquired by the optionee pursuant to this Plan, directly or
indirectly, whether the same have been issued or not, and those Shares owned by
the optionee shall not be sold, assigned or transferred by any person save and
except in accordance with the terms and conditions herein provided, and the
optionee shall agree to use the optionee's best efforts to cause the officers of
the Company to refuse to record on the books of Napa National Bancorp any
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<PAGE>
assignment or transfer made or attempted to be made except as provided in the
Plan and to cause said officers to refuse to cancel old certificates or to issue
or deliver new certificates therefor where the purchaser or assignee has
acquired certificates or the Shares represented thereby, except strictly in
accordance with the provisions of the Plan.
9. AMENDMENT AND TERMINATION OF THE PLAN
The Board of Directors shall have complete power and authority to
terminate or amend the Plan, subject to shareholder approval as required by
applicable law; except that no incentive stock options may be issued ten years
after the earlier of the date the Plan is adopted, or the date the Plan is
approved by the shareholders. Except as provided in Section 6, no termination,
modification or amendment of the Plan may, without the consent of an employee,
officer or director to whom such option shall theretofore have been granted,
adversely effect the rights of such employee, officer or director under such
option. For the purposes of incentive stock options, this amendment and
restatement shall be deemed a new plan.
10. PRIVILEGES OF STOCK OWNERSHIP; SECURITIES LAW COMPLIANCE; NOTICE OF SALE
(a) No optionee shall be entitled to the privileges of stock ownership
as to any Shares not actually issued and delivered to the optionee. No Shares
shall be purchased upon the exercise of any option unless and until any then
applicable requirements of any regulatory agencies having jurisdiction and of
any exchanges upon which the Common Stock of Napa National Bancorp may be listed
shall have been fully complied with. Napa National Bancorp shall diligently
endeavor to comply with all applicable securities laws before any options are
granted under the Plan and before any Shares are issued pursuant to the exercise
of such options. The optionee shall give Napa National Bancorp notice of any
sale or other disposition of any such Shares not more than five (5) days after
such sale or other disposition.
(b) The exercise of any options granted pursuant to the Plan shall be
conditioned upon the registration of the Plan with the Securities and Exchange
Commission and Qualification of the Plan with the Commissioner of Corporations
of the State of California unless in the opinion of counsel to the Company such
registration and qualification is not necessary. Further, unless the shares of
Common Stock to be issued upon exercise of an option have been effectively
registered under the Securities Act of 1933 and qualified under the California
Corporate Securities Law, as each is now in force or hereafter amended, the
Company shall be under no obligation to issue any shares of Common Stock covered
by an option unless the person who exercises such option, in whole or in part,
shall give a written representation and undertaking to the Company which is
satisfactory in form and scope to counsel to the Company and upon which, in the
opinion of such counsel, the Company may reasonably rely, that he or she is
acquiring the shares of Common Stock issued to him or her pursuant to such
exercise of the option for his or her own account as an investment and not with
a view to, or for sale in connection with, the distribution of any such shares
of Common Stock, and that he or she will make no transfer of the same except in
compliance with any rules and regulations in force at the time of such transfer
under the Securities Act of 1933, the California Corporate Securities Law of
1968, or any other applicable law, and that if shares of Common Stock are issued
without such registration or qualification, a legend to this effect shall be
endorsed upon the securities so issued.
-9-
<PAGE>
11. INDEMNIFICATION
To the extent permitted by applicable law in effect from time to time, no
member of the Board of Directors or the Committee shall be liable for any action
or omission of any other member of the Board of Directors or Committee nor for
any act or omission on the member's own part, excepting only the member's own
willful misconduct or gross negligence. Napa National Bancorp shall pay
expenses incurred by, and satisfy a judgment or fine rendered or levied against,
a present or former director or member of the Committee in any action against
such person (whether or not the Company is joined as a party defendant) to
impose a liability or penalty on such person for an act alleged to have been
committed by such person while a director or member of the Committee arising
with respect to the Plan or administration thereof or out of membership on the
Committee or by the Company, or all or any combination of the preceding;
provided, the director or Committee member was acting in good faith, within what
such director or Committee member reasonably believed to have been within the
scope of his or her employment or authority and for a purpose which he or she
reasonably believed to be in the best interests of the Company or its
shareholders. Payments authorized hereunder include amounts paid and expenses
incurred in settling any such action or threatened action. This section does
not apply to any action instituted or maintained in the right of Napa National
Bancorp by a shareholder or holder of a voting trust certificate representing
shares of Napa National Bancorp. The provisions of this section shall apply to
the estate, executor, administrator, heirs, legatees or devisees of a director
or Committee member, and the term "person" as used in this section shall include
the estate, executor, administrator, heirs, legatees, or devisees of such
person.
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<PAGE>
PROXY PROXY
NAPA NATIONAL BANCORP.
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
NAPA NATIONAL BANCORP FOR THE ANNUAL MEETING OF SHAREHOLDERS, JUNE 16, 1998
The undersigned holder of Common Stock acknowledges receipt of a copy of the
Notice of Annual Meeting of Shareholders of Napa National bancorp and the
accompanying Proxy Statement dated May 26, 1998, and revoking any proxy
heretofore given, hereby constitutes and appoints Michael D. Irwin, Brian J.
Kelly and C. Richard Lemon, and each of them, each with full power of
substitutions, as attorneys, agents and proxies to represent and vote, as
designated on the reverse side, all shares of Common Stock of Napa National
Bancorp (the "Company"), which the undersigned would be entitled to vote at the
Annual Meeting of Shareholders of the Company to be held at 901 Main Street,
Napa, California 94559 on Tuesday, June 16, 1998, at 8:00 A.M., or at any
postponement or adjournment thereof, upon the matters set forth in the Notice
of Annual Meeting of Shareholders and Proxy Statement and upon such other
business as may properly come before the meeting or any postponement or
adjournment thereof. All properly executed proxies will be voted as indicated.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
* *
* * FOLD AND DETACH HERE * *
<PAGE>
Please mark your votes as indicated in this sample [X]
THIS PROXY IS SOLICITED BY, AND ON BEHALF OF, THE BOARD OF DIRECTORS OF THE
COMPANY AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
1. To elect as Directors the nominees set forth below.
[ ] FOR ALL nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below. Any proxy
which does not withhold authority to vote for the election of any
nominee shall be deemed to grant such authority.
Nominees: William A. Bacigalupi C. Richard Lemon
Dennis Groth Joseph G. Peatman
E. James Hedemanrk A. Jean Phillips
Michael D. Irwin George M. Schofield
Brian J. Kelly W. Clarke Swanson, Jr.
2. To adopt the Company's 1998 Amended and Restated Stock Option Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To ratify the appointment of Ernst & Young LLP as independent public
accountants for the Company's 1998 fiscal year.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before this meeting, or at any
postponement or adjournment thereof.
I/We do [ ] or do not [ ] expect to attend this meeting.
-----------------------
Number of Common Shares
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS,
NOMINATED BY THE BOARD OF DIRECTORS, "FOR" THE ADOPTION OF THE COMPANY'S 1998
AMENDED AND RESTATED STOCK OPTION PLAN AND "FOR" RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR 1998.
WHEN THE PROXY IS PROPERLY EXECUTED, SHARES REPRESENTED BY THE PROXY WILL BE
VOTED AS DIRECTED. IF NO DIRECTION IS GIVEN IN THE PROXY, SHARES REPRESENTED BY
THE PROXY WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS, NOMINATED BY THE BOARD
OF DIRECTORS, "FOR" RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR 1998 AND, IN THE DISCRETION OF
THE PROXY HOLDERS, ON ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE
MEETING OR AT ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
SIGNATURE(S) DATE
------------------------------------------- -------------
Please mark, date and sign exactly as your name(s) appear(s) above. When signing
as attorney, executor, administrator, trustee or guardian, please give full
title. If there is more than one trustee all should sign. All joint owners must
sign WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND RETURN THIS
PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
* *
* * FOLD AND DETACH HERE * *
