SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A - No. 1(Mark One)
X AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 2-77519-LA
SARATOGA BANCORP
(Exact name of registrant as specified in its charter)
California 94-2817587
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) Identification No.)
12000 Saratoga-Sunnyvale Road
Saratoga, California 95070
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408)973-1111
Securities registered pursuant to Section 12 (b) of the Act:
Name of each exchange
Title of each class on which registered
NONE
Securities registered pursuant to Section 12 (g) of the Act:
NONE
(Title of class)
Saratoga Bancorp (1) has filed all reports required to be
filed by section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No .
Indicate by checkmark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
Saratoga Bancorp on March 1, 1996 was $6,661,376.
As of March 1, 1996, Saratoga Bancorp had 1,030,972 shares of common stock
outstanding.
Portions of the Registrant's Definitive Proxy Statement dated April 26, 1996
are incorporated into Part III, Items 10 through 13.
Exhibit Index is on page 4.
Page 1 of 43 pages
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Saratoga Bancorp
Amendment to Items 10 through 13
of Form 10-K filed on March 28, 1996
The Registrant hereby amends Items 10, 11,12 and 13 of the
Registrant's Form 10-K filed with the Securities and Exchange
commission on March 28, 1996 by attaching certain portions of its
Definitive Proxy Statement dated April 26, 1996 (the "Definitive
Proxy Statement"); and amends Item 14 to delete Item 10.6 and
substitute a new exhibit 10.6 and add exhibit 10.7.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information required by this item is set forth on pages 4
through 6 of the Definitive Proxy Statement, copies of which pages
are attached hereto and incorporated herein by reference.
Item 11. Executive Compensation
The information required by this item is set forth on pages 7
through 8 of the Definitive Proxy Statement, copies of which pages
are attached hereto and incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information required by this Item is set forth on pages 2
through 3 of the Definitive Proxy Statement, copies of which pages
are attached hereto and incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is set forth on page 10
of the Definitive Proxy Statement, a copy of which page is attached
hereto and incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
(a) *(10.6) Richard L. Mount Employment Agreement dated
August 30, 1995.
*(10.7) Richard L. Mount Chief Executive Officer
Incentive Compensation Plan dated July 8, 1995 and
amended and retstatedRichard L. Mount Chief Executive
Officer Incentive Compensation Plan amended February
22, 1996.
* Denotes management contracts, compensatory plans or
arrangements.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SARATOGA BANCORP
Date: April 29, 1996
Richard L. Mount, President
(Principal Executive Officer)
Date: April 29, 1996
Mary Page Rourke, Treasurer
(Principal Financial and
Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
Sequentially
Number Exhibits Numbered Page
10.6 Richard L. Mount/Employment Agreement
dated August 30, 1995. 5 - 16
10.7 Richard L. Mount/Chief Executive Officer
Incentive Compensation Plan dated July 8,
1995 and Richard L. Mount/Chief Executive
Officer Incentive Compensation Plan as
amended and restated February 22, 1996. 17 - 24
99.1 The Registrant's Definitive proxy
Statement dated April 26, 1996, which
is furnished for the information of
the Securities and Exchange Commission
and, except for those portions which
are expressly incorporated by reference
in this filing, is not to be deemed "filed"
as part of this filing. 25 - 36
EMPLOYMENT AGREEMENT
THIS AGREEMENT is entered into this ___ day of August, 1995 by and between
SARATOGA NATIONAL BANK, a National Banking Association (the Employer) and
RICHARD L. MOUNT (the Employee) and is effective as of January 1, 1995.
WHEREAS, Employer and Employee desire to enter into an agreement to engage
the services of Employee by reason of his experience, training, and ability
in the commercial banking industry;
NOW, THEREFORE, it is mutually agreed as follows:
1. Employment and Duties. Employer hereby employs Employee and Employee
hereby accepts employment with Employer as President and Chief Executive
Officer of Employer. He shall perform such duties as are customary to the
office, and such as may from time to time be reasonably requested of him by
the Board of Directors of Employer.
2. Extent of Services. Employee shall devote his full time, attention and
energies to the business of Employer and shall not during the term of this
Agreement be engaged in any other business activities, except passive personal
investments, without the prior written consent of Employer.
3. Term. The term of this Agreement shall be one (1) year from the effective
date hereof, subject to the termination provisions set forth herein.
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4. Base Salary. In consideration for services rendered under this Agreement,
Employer shall pay to Employee a base salary of One Hundred Thirty-Five
Thousand Dollars ($135,000.00), payable in equal installments of
Five Thousand Six Hundred Twenty-Five Dollars ($5,625.00) on the first and
fifteenth of each month during the term of this Agreement, prorated for any
partial employment period.
5. Incentive Compensation. In addition to Employees base salary as
described in paragraph 4, Employee shall be entitled to receive incentive
compensation in such amounts and at such times during the term of this
Agreement as is set forth in the Chief Executive Officer Incentive
Compensation Plan, which is marked Exhibit A and incorporated herein by
reference. Notwithstanding the provisions of said Plan, Employee shall
not be entitled to receive as incentive compensation (cash award and
deferred award combined) an amount which exceeds the amount of his base
salary.
6. Director Fees. Employee shall be entitled to receive Director Fees for
his service on the Board of Directors of Employer, in the same amount as
that paid to other Directors. Said Director Fees shall not be considered
part of Employees base salary.
7. Expenses. Employer shall pay, or Employee shall be reimbursed for all
ordinary and necessary expenses incurred by Employee in connection with his
employment. Employer shall also pay, or Employee shall be reimbursed for
expenses incurred in activities associated with promoting the business of
Employer that are authorized from time to time by the Board of Directors
of Employer,
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including expenses of club membership, entertainment, travel,
attendance at seminars and conventions and similar items.
8. Automobile. Employer shall provide Employee with an automobile for
Employees personal and business use during the term of this Agreement, or
until this Agreement is terminated as provided herein. Said automobile
shall be selected mutually by Employer and Employee. Employer also agrees
to procure and maintain automobile liability insurance on such automobile.
All automobile expenses incurred by Employee in performing his duties
hereunder are to be paid by Employer or reimbursed to Employee.
9. Vacation. Employee shall be entitled to five (5) weeks annual vacation
leave at full pay. The timing of such vacation leave shall be at the
discretion of the Employee, so long as it does not jeopardize his
responsibilities to Employer. Any unused vacation leave shall expire at
the end of the calendar year.
10. Sabbatical Leave. Employee is entitled to six weeks of sabbatical
leave, to be taken in accordance with the terms of the resolution adopted
on August 9, 1988 by Employers Board of Directors.
11. Disability. If Employee becomes disabled during the term of this
Agreement because of physical or mental disability such that he is unable
to perform his duties hereunder, Employer agrees to continue Employees
salary until the earlier of (i) six (6) months from the first working day
missed due to such physical or mental disability, or (ii) Employees return
to work.
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12. Insurance. At all times during the term of this Agreement, Employer
agrees to provide Employee and his dependents, at its sole cost and expense,
such group insurance as it provides its other employees, including health
(medical, dental, and hospitalization), accident, and disability insurance.
In addition Employer shall pay the premium cost for a term life insurance
policy in the face amount of Five Hundred Thousand Dollars ($500,000.00),
insuring Employees life. Employee shall be entitled to designate the
beneficiary of said policy.
13. Printed Material. All written or printed materials used by Employee
in performing duties for Employer, other than Employees personal notes
and diaries, are and shall remain the property of Employer. Upon
termination of employment, Employee shall return such written or printed
materials to Employer.
14. Disclosure of Information. Employee shall not, either before or after
termination of this Agreement, disclose to anyone any information relating
to Employer or any financial information, trade secrets, customer lists,
computer software or other information not otherwise publicly available
concerning the business and operations of Employer. Employee recognizes
and acknowledges that any financial information concerning any of Employers
customers, as it may exist from time to time, is strictly confidential and
is a valuable, special and unique asset of Employers business. Employee
shall not, either before or after termination of this Agreement, disclose
to anyone said
<PAGE>
financial information or any part thereof, for any reason
or purpose whatsover.
15. Noncompetition by Employee. During the term of this Agreement, Employee
shall not, directly or indirectly, either as an employee, employer,
consultant, agent, principal, stockholder, corporate officer, director, or
in any other individual or representative capacity, engage or participate
in any competitive banking business.
16. Surety Bond. Employee agrees to furnish all information and take any
other steps necessary from time to time to enable Employer to obtain or
maintain a fidelity bond, conditioned on the rendering of a true account
by Employee of all moneys, goods, or other property which may come into the
custody, charge, or possession of Employee during the term of this
Agreement. The surety company issuing the bond and the amount of the bond
must be acceptable to Employer. If Employee cannot qualify for a surety bond
at any time during the term of this Agreement, Employer shall have the option
to terminate this Agreement immediately.
17. Moral Conduct. Employee agrees to conduct himself at all times with
due regard to public conventions and morals. He further agrees not to do
or commit any act that will reasonably tend to shock or offend the
community, or to prejudice Employers reputation in general.
18. Termination of Agreement.
a. Automatic Termination. This Agreement shall terminate immediately
upon the occurrence of any of the following
<PAGE>
events, subject to either partys
right, without obligation, to waive an event reasonably susceptible of
waiver, and subject to the obligation of Employer to pay the amounts which
would otherwise be payable to Employee under this Agreement through the end
of the month in which the event occurs, except that in the event of
termination based upon subparagraphs (4), (5), (6), (7), (8), (9), or (12)
below, Employee shall have no rights to payments and Employer shall have no
obligation to make payments to or on behalf of Employee pursuant to this
Agreement:
(1) The death of Employee;
(2) The loss by Employee of legal capacity;
(3) The permanent disability of Employee;
(4) The habitual neglect by Employee of his obligations under this
Agreement;
(5) The wilful breach of duty by Employee in the course of his employment;
(6) The Employees deliberate disregard of any State of California or
federal banking laws, or the Bylaws, rules, policies or resolutions
of the Employer, or the laws, rules or regulations of the Federal
Deposit Insurance Corporation or the Office of the Comptroller of
the Currency, or other regulatory agency having jurisdiction over
Employer;
(7) The determination by a federal banking agency having jurisdiction
over Employer that Employee is not suitable to act in the capacity
for which he is employed by Employer;
<PAGE>
(8) Employees conviction of any felony or a crime involving moral
turpitude, or Employees commission of a fraudulent or dishonest act;
(9) Employees disclosure without authority of any secret or confidential
information concerning Employer, or Employees taking any action which
Employers Board of Directors determines, in its sole discretion,
constitutes unfair competition with Employer;
(10) The loss by Employer of legal capacity to contract;
(11) The occurrence of circumstances that make it impossible or
impractical for Employer to conduct or continue its business;
(12) The breach by either party of the terms of this Agreement; or
(13) The occurrence of a change in control of Employer, as defined in
paragraph 1 of the Management Continuity Agreement, a copy of which
is marked Exhibit B.
b. Termination by Employer. Employer may, at its option, terminate this
Agreement for any reason not specified in paragraph 18.a., or for no
reason, by giving not less than thirty (30) days prior written notice
of termination to Employee, without prejudice to any other remedy to
which Employer may be entitled either at law, in equity, or under this
Agreement. Upon such termination, Employee shall be entitled to
receive any employment
<PAGE>
benefits which shall have accrued prior to such termination, including
without limitation, incentive compensation in accordance with
paragraph 5 hereof, and the severance compensation specified in
paragraph 18.d. below.
c. Termination by Employee. This Agreement may be terminated by Employee
for any reason not specified in paragraph 18.a., or no reason, by giving
not less than thirty (30) days prior written notice of termination to
Employer. Upon such termination, all rights and obligations accruing to
Employee under this Agreement shall cease, except that such termination
shall not prejudice Employees rights regarding employment benefits which
shall have accrued prior to such termination, including, without limitation
incentice compensation in accordance with paragraph 5 hereof, and any other
remedy which Employee may have at law, in equity or under this agreement,
which remedy accrued prior to such termination.
d. Severance Pay Upon Termination Without Change in Control. In the event
of termination by Employer at any time pursuant to paragraph 18.b. of this
Agreement, Employee shall be entitled to severance pay at Employees rate of
pay immediately preceding such termination equal to six (6) months salary,
payable in a lump sum or monthly installments at the election of Employee;
and he shall also be paid any incentive compensation for the year in which
termination occurs, prorated to the date of termination. Such severance
pay is in lieu of all damages, payments and liabilities due to Employee on
account of the early termination of this agreement.
<PAGE>
e. Severance Pay Upon Termination Following Change in Control. Employer
and Employee acknowledge and agree that on July 9, 1990 they entered into
a Management Continuity Agreement, a copy of which is marked Exhibit B,
which agreement is still in full force and effect. Said agreement provides
Employee a severance benefit in the event of his termination following a
change in control of Employer, as defined therein.
19. Notices. Any notices to be given hereunder by either party to the
other may be effected either by personal delivery in writing or by U.S.
mail, registered or certified, prepaid with return receipt requested.
Mailed notice to Employer shall be given to Saratoga National Bank, 12000
Saratoga-Sunnyvale Road, Saratoga, CA 95070, Attention: William D. Kron,
Chairman of the Board. Mailed notice to Employee shall be given to Richard
L. Mount, 20564 Verde Court, Saratoga, CA 95070.
20. Entire Agreement. Except as set forth in this paragraph 19, this
Agreement supersedes any and all other agreements, either oral or written,
between the parties hereto with respect to the employment of Employee by
Employer, and it, together with Exhibits A and B hereto, contains all of
the covenants and agreements between the parties with respect to such
employment. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, have been made by
any party, or by anyone acting on behalf of any party, which are not embodied
herein, and that no other agreement, statement, or promise not contained
<PAGE>
in this Agreement shall be valid and binding. Any modification of this
Agreement shall be effective only if it is in writing and signed by the
party to be charged.
21. Partial Invalidity. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without
being impaired or invalidated in any way.
22. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, and venue for any
action or proceeding to enforce or interpret any provision of this Agreement
shall be in Santa Clara County, California.
23. Waiver. The parties hereto shall not be deemed to have waived any of
their respective rights under this Agreement, unless the waiver is in
writing and signed by such waiving party. No delay in exercising any right
shall be a waiver of the right, nor shall a waiver on one occasion operate
as a waiver of such right on a future occasion.
24. Payment of Money Due Deceased Employee. If Employee dies prior to the
expiration of the term of this Agreement, any money that may be due Employee
from Employer under this Agreement as of the date of Employees death shall
be paid to Employees personal representative, successor or assigns.
25. Attorneys Fees. Should either party hereto institute legal proceedings
to enforce or interpret any provision hereof, the prevailing party shall be
entitled to recover from the other party reasonable attorneys fees and
costs of suit.
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed in duplicate originals at
Saratoga, California, as of the date first above written.
EMPLOYER: SARATOGA NATIONAL BANK
By: _______________________
WILLIAM D. KRON
Chairman of the Board
By: _______________________
NEAL A. CABRINHA
Secretary
EMPLOYEE: ___________________________
RICHARD L. MOUNT
10
Saratoga National Bank
CHIEF EXECUTIVE OFFICER
INCENTIVE COMPENSATION PLAN
July 8, 1995
1. AGREEMENT
1.1 This Chief Executive Officer Incentive Compensation Plan (the Plan)
states the understanding between Richard L. Mount (Mount) and
Saratoga National Bank regarding incentive compensation of Mount
as Chief Executive Officer of Saratoga
National Bank ("SNB"). This Plan supersedes the prior Chief Executive
Officer Compensation Plan. Any employment agreement, management
continuity agreement, or other agreement that may exist between
Mount and SNB is separate from and shall not affect or be affected
by this Plan.
2. SALARY
2.1 SNB will pay Mount a base salary at a rate approved by resolution
of the Board of Directors (the Board). That base salary amount
earned during the year will be used in
calculating awards under this Plan. This Plan does not establish a
salary in addition to
any salary established by any other agreement between SNB and Mount.
2.2 Any Director fees or other amounts that SNB may pay Mount that are
not base salary will not be included as part of salary for the
purpose of this Plan.
3. INCENTIVE AWARDS
3.1 Mount will be eligible each year for a cash award and a deferred
award. The cash award will combine a growth award and a ROA award.
4. GROWTH AWARD
4.1 The Growth Award will equal one and one-half times the percentage
point difference (positive or negative) of SNB's percentage change
in assets for the year, minus the
median percentage change in assets among other Bay Area banks in
the same asset group (currently Group B: $50-$100 million).
Growth Award = 1.5 x (SNB Assets Change% - Group Median Assets Change%)
<PAGE>
4.2 Growth Award example (illustrative data, not actual):
SNB Assets 12/31/94 $ 80,000,000
SNB Assets 12/31/95 $ 91,200,000
SNB Assets Change 14.00%
Bay Area Group B Median Change 8.00%
Assets Change Difference 6.00%
Growth Award (1.5 x Assets Chng Diff) 9.00%
4.3 The percentage change in assets will be calculated from the end
of the prior year to the end of the incentive period.
5. ROA AWARD
5.1 The ROA Award will equal 50 times the percentage point difference
(positive or negative) of SNB's ROA percentage for the year, minus
the median ROA percentage among other Bay Area banks in the same
asset group.
ROA Award = 50 x (SNB ROA% - Group Median ROA%)
5.2 ROA Award example (illustrative data, not actual):
SNB ROA 1995 1.20%
Bay Area Group B Median 0.80%
ROA Difference 0.40%
ROA Award (50 x ROA Diff) 20.00%
5.3 ROA will be calculated as net income for the period, divided by
average assets from the beginning of the first month through the
beginning of the final month.
6. CASH AWARD
6.1 The Cash Award will equal Mount's base salary for the year
multiplied by the Growth Award percentage (positive or negative)
added to the ROA Award percentage (positive or negative).
The payment will be made as soon as practicable after SNB's
accounting is completed for the year.
Cash Award = (Growth Award% + ROA Award%) x Salary
6.2 Cash Award example (illustrative data from examples above)
Growth Award 9.00%
ROA Award 20.00%
Cash Award 29.00%
29.00% x $135,000 = $39,150
6.3 If the sum of Growth Award and ROA Award percentages is a
negative value, the
<PAGE>
cash award for that year will be zero. There will be no negative
balance carried forward.
7. DEFERRED AWARD
7.1 Award: SNB will provide for Mount a deferred award each year in
the form of Participating Units equal to Mount's cash award for
the year.
7.2 Vesting: Mount's rights to the Units will vest beginning at the
end of the year for which
the award is earned and continuing during the next five years
of Mount's employment.
7.2.1 Vesting will be on a daily basis during the five-year period
(1,826 days). Each day of employment after the award year end
will vest 1/1,826, or 0.05476 percent of the Units vested for
that year. (For example, if Mount's employment
terminated 183 days after an award year end, he would be vested
in 183/1,826, or about 10 percent, of the Units granted for
that award year.)
7.3 Termination: If Mount's employment with SNB terminates for any
reason (voluntary or involuntary) other than retirement after
the year 1999, death or disability, vesting will cease at
termination date. Mount will forfeit any Units not vested as
of the termination date.
7.4 Retirement, etc.: If Mount's employment with SNB terminates
due to Mount's retirement after the year 1999, death or
disability, vesting will continue as though
Mount were employed. SNB will then pay the vested Units at
the regular times and according to the regular formula explained
in this Plan. If Mount is not living, SNB
will pay the beneficiary last designated in writing by Mount for
this purpose or, lacking such a beneficiary, SNB will pay Mount's
estate.
7.5 Termination Cause: In case of Mount's termination, the Board will
determine the cause. The Board may revise its determination at
any time.
7.6 Payment: SNB will pay vested Units to Mount under one of three
options to be selected by the Board in its sole discretion:
7.6.1 A lump sum, paid in cash at the end of the termination year
but not sooner than the end of 1999.
7.6.2 A 10-year annuity, to be purchased by SNB at the lump-sum value
at the end of the termination year but not sooner than the end
of 1999.
<PAGE>
7.6.3 Ten annual installments beginning at the end of the termination
year but not sooner than the end of 1999. Under this option,
the Units will continue to change in value according to the regular
Unit value formula until the Units are paid.
7.7 Value: The Unit value will be one dollar at time of grant.
The value will be increased or reduced by a factor equal to 10
times SNB's return on assets (ROA) rate each year,
compounded, until the Units are paid.
7.8 Payout Limit: If scheduled Units payments would exceed 50
percent of SNB's net earnings for the year the Board may
reduce the number of Units payable for that year
and defer the balance of vested Units for one year. The Board
may continue such deferrals in successive years to comply with
each year's payment limit. The Units will continue to gain or
lose value until paid.
7.9 Early Out: SNB may accelerate vesting and/or payment of Units
if Mount's Unit account balance is valued at less than $500 OR
if Mount faces severe financial hardship, as determined by the
Board.
7.10 Accelerated Vesting: Mount's rights to Units previously awarded
will become fully vested and immediately payable if, within any
12-month period, both of these events occur: (1) SNB ownership
changes more than 51 percent, AND (2)
Mount's employment terminates.
7.10.1 "Ownership changes" here means the sale, pledge or assignment
of SNB common stock to a party or parties other than the
current owners or members of their immediate families.
Current owners and the calculation of percent
change will be determined in reference to SNB ownership as
of January 15, 1990.
7.10.2 "Employment terminates" here means voluntary or involuntary
termination except for: (1) retirement after 1999, (2) death,
(3) disability or (4) discharge for cause, such as
dishonesty, neglect of duty or otherwise bringing harm or
discredit to SNB.
7.10.3 Units payable under this accelerated vesting provision will
be valued as of the time of accelerated vesting. The 1999
date limitations will not apply to this
accelerated vesting provision.
8. DRAW
8.1 If Mount's total pay (salary + Growth Award + ROA Award) for
a year equals less than 80 percent of Mount's prior two-year
average total pay, Mount may draw the difference as an advance
against his future earnings from SNB.
8.1.1 Advances paid to Mount or repaid to SNB will not be included in
<PAGE>
calculations of total pay for purposes of this section.
8.1.2 SNB may deduct the amount of any outstanding advances from Mount's
earnings in excess of 80 percent of his prior two-year average
total pay. "Earnings" here includes salary, Growth Awards, ROA
Awards and Deferred Awards.
8.2 Mount may not draw an advance under the terms of this section
upon or in anticipation of the termination of his employment for
any reason (voluntary or involuntary).
9. CALCULATION NOTES
9.1 Data for other Bay Area banks is available in the Grant Thornton
Bankers' Index. The Index shows change in assets percentages
and ROA percentages for each Bay Area bank in the same asset
group. SNB will array each of those percentages from high to
low for all banks in the group, excluding SNB. The median
percentage (the middle value) will be used for comparison. Note
that the median and not the average is to be used for comparison.
(The median is more reliable than the average, which can be
distorted by extreme values in the array.)
9.2 When calculating incentive awards, SNB will compare its year-end
data to the year-end data for other banks in the same size
category.
9.3 SNB assets and net income for the award year will be calculated
before allowance for awards being calculated under this Plan for
the award year. (This is to avoid circular calculations.)
9.4 At the discretion of the Board of Directors, SNB may calculate
separate awards, on a pro rata basis, before and after a major
change in SNB's condition. A major change
might include acquisition of another bank, a large infusion of
capital, sale of branches,
sale or abandonment of a large part of SNB's business, or other
such change that the Board regards as major. SNB's asset growth
and ROA would then be calculated and compared to other banks
for the separate periods before and after the change. Any such
pro rata calculation of award values will not accelerate award
payment to before year end.
9.5 With adoption of this Plan, the Board of Directors also terminates
the prior CEO Compensation Plan. All deferred Units granted under
the prior plan will be valued under the prior plan up to the
effective date of this Plan. After that date, the old Units
will convert to the new Unit value formula of this Plan
<PAGE>
10. LIMITATIONS AND RIGHTS
10.1 Nothing in this Plan may be construed to: (1) give any person any
right to be issued any award or payment other than under terms of
this Plan, (2) limit in any way the right of SNB to terminate
Mount's employment at any time or (3) be evidence of any
agreement or understanding, express or implied, that SNB
will employ Mount in any particular position or at any
particular rate of compensation or for any particular time,
except as specifically set forth in the Plan.
10.2 SNB may amend, alter, modify or terminate this Plan at any time
upon written notice to Mount.
10.2.1 Any such action shall not affect the rights of Mount with
respect to any award properly credited under this Plan
prior to the effective date of such action.
10.2.2 If this Plan is changed or terminated, SNB will prorate
cash and deferred awards for the portion of the year
worked before the change or termination.
10.3 This Plan will be in effect from January 1, 1995 until changed
or terminated.
* * * * *
Plan approved by the Board of Directors by resolution dated ________________
For the Board_______________________________________ Date____________________
Saratoga National Bank
12000 S. Saratoga-Sunnyvale Road, Saratoga, California 95070
Plan received and read by Richard L. Mount, Chief Executive Officer:
Signature__________________________________________ Date___________________
Address_____________________________________________________________________
<PAGE>
Saratoga National Bank
CHIEF EXECUTIVE OFFICER
INCENTIVE COMPENSATION PLAN
July 8, 1995
1. AGREEMENT
1.1 This Chief Executive Officer Incentive Compensation Plan (the Plan)
states the understanding between Richard L. Mount (Mount) and Saratoga
National Bank regarding incentive compensation of Mount as Chief
Executive Officer of Saratoga National Bank ("SNB"). This Plan
supersedes the prior Chief Executive Officer Compensation Plan.
Any employment agreement, management continuity agreement,
or other agreement that may exist between Mount and SNB is separate
from and shall not affect or be affected by this Plan.
2. SALARY
2.1 SNB will pay Mount a base salary at a rate approved by resolution of
the Board of Directors (the Board). That base salary amount earned
during the year will be used in calculating awards under this Plan.
This Plan does not establish a salary in addition to
any salary established by any other agreement between SNB and Mount.
2.2 Any Director fees or other amounts that SNB may pay Mount that are
not base salary will not be included as part of salary for the
purpose of this Plan.
3. INCENTIVE AWARDS
3.1 Mount will be eligible each year for a cash award and a deferred
award. The cash award will combine a growth award and a ROA award.
4. GROWTH AWARD
4.1 The Growth Award will equal one and one-half times the percentage
point difference (positive or negative) of SNB's percentage change
in assets for the year, minus the median percentage change in assets
among California banks located in a metropolitan
service area in the same asset group (currently $75-$150 million.)
Growth Award = 1.5 x (SNB Assets Change% - Group Median Assets Change%)
<PAGE>
4.2 Growth Award example (illustrative data, not actual):
SNB Assets 12/31/94 $ 80,000,000
SNB Assets 12/31/95 $ 91,200,000
SNB Assets Change 14.00%
Comparison Group Median Change 8.00%
Assets Change Difference 6.00%
Growth Award (1.5 x Assets Chng Diff) 9.00%
4.3 The percentage change in assets will be calculated from
the end of the prior year to the end of the incentive period.
5. ROA AWARD
5.1 The ROA Award will equal 50 times the percentage point difference
(positive or negative) of SNB's ROA percentage for the year,
minus the median ROA percentage among California banks located in
a metropolitan service area in the same asset group
(currently $75 - $150 million.)
ROA Award = 50 x (SNB ROA% - Group Median ROA%)
5.2 ROA Award example (illustrative data, not actual):
SNB ROA 1995 1.20%
Comparison Group Median 0.80%
ROA Difference 0.40%
ROA Award (50 x ROA Diff) 20.00%
5.3 ROA will be calculated as net income for the year, divided by
average assets for the year.
6. CASH AWARD
6.1 The Cash Award will equal Mount's base salary for the year
multiplied by the Growth Award percentage (positive or negative)
added to the ROA Award percentage (positive or negative). The
payment will be made as soon as practicable after SNB's accounting
is completed for the year.
Cash Award = (Growth Award% + ROA Award%) x Salary
6.2 Cash Award example (illustrative data from examples above)
Growth Award 9.00%
ROA Award 20.00%
Cash Award 29.00%
29.00% x $135,000 = $39,150
6.3 If the sum of Growth Award and ROA Award percentages is a negative
value, the
<PAGE>
cash award for that year will be zero. There will be no negative
balance carried forward.
7. DEFERRED AWARD
7.1 Award: SNB will provide for Mount a deferred award each year in
the form of Participating Units equal to Mount's cash award for
the year.
7.2 Vesting: Mount's rights to the Units will vest beginning at the
end of the year for which the award is earned and continuing
during the next five years of Mount's employment.
7.2.1 Vesting will be on a daily basis during the five-year period
(1,826 days). Each day of employment after the award year end
will vest 1/1,826, or 0.05476 percent of the Units vested for
that year. (For example, if Mount's employment
terminated 183 days after an award year end, he would be
vested in 183/1,826, or about 10 percent, of the Units granted
for that award year.)
7.3 Termination: If Mount's employment with SNB terminates for any
reason (voluntary or involuntary) other than retirement after
the year 1999, death or disability, vesting
will cease at termination date. Mount will forfeit any Units
not vested as of the termination date.
7.4 Retirement, etc.: If Mount's employment with SNB terminates due
to Mount's retirement after the year 1999, death or disability,
vesting will continue as though
Mount were employed. SNB will then pay the vested Units at the
regular times and
according to the regular formula explained in this Plan. If Mount
is not living, SNB
will pay the beneficiary last designated in writing by Mount for
this purpose or, lacking
such a beneficiary, SNB will pay Mount's estate.
7.5 Termination Cause: In case of Mount's termination, the Board will
determine the cause.
The Board may revise its determination at any time.
7.6 Payment: SNB will pay vested Units to Mount under one of three
options to be selected
by the Board in its sole discretion:
7.6.1 A lump sum, paid in cash at the end of the termination year but
not sooner than the end of 1999.
7.6.2 A 10-year annuity, to be purchased by SNB at the lump-sum value
at the end of the termination year but not sooner than the end
of 1999.
<PAGE>
7.6.3 Ten annual installments beginning at the end of the termination
year but not
sooner than the end of 1999. Under this option, the Units will
continue to
change in value according to the regular Unit value formula until
the Units are paid.
7.7 Value: The Unit value will be one dollar at time of grant. The
value will be increased
or reduced by a factor equal to 10 times SNB's return on assets
(ROA) rate each year, compounded, until the Units are paid.
7.8 Payout Limit: If scheduled Units payments would exceed 50 percent
of SNB's net
earnings for the year the Board may reduce the number of Units
payable for that year
and defer the balance of vested Units for one year. The Board may
continue such
deferrals in successive years to comply with each year's payment
limit. The Units will
continue to gain or lose value until paid.
7.9 Early Out: SNB may accelerate vesting and/or payment of Units if
Mount's Unit
account balance is valued at less than $500 OR if Mount faces
severe financial
hardship, as determined by the Board.
7.10 Accelerated Vesting: Mount's rights to Units previously awarded
will become
fully vested and immediately payable if, within any 12-month
period, both of
these events occur: (1) SNB ownership changes more than 51
percent, AND (2)
Mount's employment terminates.
7.10.1 "Ownership changes" here means the sale, pledge or assignment
of SNB
common stock to a party or parties other than the current
owners or members
of their immediate families. Current owners and the calculation
of percent
change will be determined in reference to SNB ownership as of
January 1, 1995.
7.10.2 "Employment terminates" here means voluntary or involuntary
termination
except for: (1) retirement after 1999, (2) death,
(3) disability or (4) discharge
for cause, such as dishonesty, neglect of duty or otherwise
bringing harm or discredit to SNB.
7.10.3 Units payable under this accelerated vesting provision will
be valued as of the
time of accelerated vesting. The 1999 date limitations will not
apply to this accelerated vesting provision.
8. DRAW
8.1 If Mount's total pay (salary + Growth Award + ROA Award) for a year
equals less than 80 percent of Mount's prior two-year average total
pay, Mount may draw the difference as an advance against his future
earnings from SNB.
8.1.1 Advances paid to Mount or repaid to SNB will not be included in
<PAGE>
calculations of total pay for purposes of this section.
8.1.2 SNB may deduct the amount of any outstanding advances from Mount's
earnings in excess of 80 percent of his prior two-year average
total pay.
"Earnings" here includes salary, Growth Awards, ROA Awards and
Deferred Awards.
8.2 Mount may not draw an advance under the terms of this section upon
or in anticipation of the termination of his employment for any
reason (voluntary or involuntary).
9. CALCULATION NOTES
9.1 For purposes of determining the Growth Award and the ROA Award,
SNB will array
each of the percentages from high to low for all banks in the
comparison group,
excluding SNB. The median percentage (the middle value) will be
used for comparison.
Note that the median and not the average is to be used for
comparison. (The median is
more reliable than the average, which can be distorted by extreme
values in the array.)
9.2 When calculating incentive awards, SNB will compare its year-end
data to the year-end
data for other banks in the same size category.
9.3 SNB assets and net income for the award year will be calculated
before allowance for
awards being calculated under this Plan for the award year. (This
is to avoid circular
calculations.)
9.4 At the discretion of the Board of Directors, SNB may calculate
separate awards, on a
pro rata basis, before and after a major change in SNB's condition.
A major change
might include acquisition of another bank, a large infusion of
capital, sale of branches,
sale or abandonment of a large part of SNB's business, or other
such change that the
Board regards as major. SNB's asset growth and ROA would then be
calculated and
compared to other banks for the separate periods before and after
the change. Any such
pro rata calculation of award values will not accelerate award
payment to before year
end.
9.5 With adoption of this Plan, the Board of Directors also terminates
the prior CEO
Compensation Plan. All deferred Units granted under the prior plan
will be valued
under the prior plan up to the effective date of this Plan. After
that date, the old Units
will convert to the new Unit value formula of this Plan
<PAGE>
<PAGE>
10. LIMITATIONS AND RIGHTS
10.1 Nothing in this Plan may be construed to: (1) give any person any
right to be
issued any award or payment other than under terms of this Plan,
(2) limit in
any way the right of SNB to terminate Mount's employment at any
time or (3)
be evidence of any agreement or understanding, express or implied,
that SNB
will employ Mount in any particular position or at any particular
rate of
compensation or for any particular time, except as specifically
set forth in the
Plan.
10.2 SNB may amend, alter, modify or terminate this Plan at any time
upon written
notice to Mount.
10.2.1 Any such action shall not affect the rights of Mount with
respect to any award
properly credited under this Plan prior to the effective date]
of such action.
10.2.2 If this Plan is changed or terminated, SNB will prorate cash
and deferred
awards for the portion of the year worked before the change or
termination.
10.3 This Plan will be in effect from January 1, 1995 until changed or
terminated.
* * * * *
Plan approved by the Board of Directors by resolution dated __________________
For the Board_______________________________________ Date____________________
Saratoga National Bank
12000 S. Saratoga-Sunnyvale Road, Saratoga, California 95070
Plan received and read by Richard L. Mount, Chief Executive Officer:
Signature__________________________________________ Date_____________________
Address______________________________________________________________________
Mailed to Shareholders
on or about April 26, 1996
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is being furnished to the shareholders of Saratoga
Bancorp, a California corporation (the "Corporation"), in connection with the
solicitation of proxies by the Board of Directors for use at the Annual
Meeting of Shareholders to be held at 12000 Saratoga-Sunnyvale Rd., Saratoga, CA
on May 23, 1996 (the "Meeting"). Only shareholders of record on April 12, 1996
(the "Record Date") will be entitled to notice of the Meeting and to vote at
the Meeting. At the close of business on the Record Date, the Corporation had
outstanding and entitled to be voted 1,030,972 shares of its no par value
Common Stock (the "Common Stock").
Shareholders are entitled to one vote for each share held, except that
for the election of directors each shareholder has cumulative voting rights
and is entitled to as many votes as shall equal the number of shares held by
such shareholder multiplied by the number of directors to be elected. Each
shareholder may cast all his or her votes for a single candidate or
distribute such votes among any or all of the candidates as he or she
chooses. However, no shareholder shall be entitled to cumulate votes
(in other words, cast for any candidate a number of votes greater than
the number of shares of stock held by such shareholder) unless such
candidate's name has been placed in nomination prior to the voting and the
shareholder has given notice at the Meeting prior to the voting of the
shareholder's intention to cumulate his or her votes. If any shareholder
has given such notice, all shareholders may cumulate their votes for
candidates in nomination. Prior to voting, an opportunity will be given for
shareholders or their proxies at the Meeting to announce their intention to
cumulate their votes. The proxy holders are given, under the terms of the
proxy, discretionary authority to cumulate votes on shares for which they
hold a proxy.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke that proxy prior to its exercise. The proxy may be
revoked prior to the Meeting by delivering to the Secretary of the
Corporation either a written instrument revoking the proxy or a duly executed
proxy bearing a later date. The proxy may also be revoked by the shareholder
by attending and voting at the Meeting.
Votes cast by proxy or in person at the Meeting will be counted by the
Inspectors of Election for the Meeting.
The Inspectors will treat abstentions and "broker non-votes" (shares held by
brokers or nominees as to which instructions have not been received from the
beneficial owners or persons entitled to vote and the broker or nominee
does not have discretionary voting power under applicable rules of the stock
exchange or other self regulatory organization of which the broker or
nominee is a member) as shares that are present and entitled to vote for
purposes of determining the presence of a quorum. Abstentions and "broker
non-votes" will not be counted as shares voted for purposes of determining
the outcome of any matter as may properly come before the Meeting.
Unless otherwise instructed, each valid proxy returned which is not
revoked will be voted in the election of directors "FOR" the nominees of
the Board of Directors and "FOR" Proposal No. 2, as described in this Proxy
Statement, and, at the proxy holders' discretion, on such other matters, if
any, which may come before the Meeting (including any proposal to postpone
or adjourn the Meeting).
The Corporation will bear the entire cost of preparing, assembling,
printing and mailing proxy materials furnished by the Board of Directors to
shareholders. Copies of proxy materials will be furnished to brokerage houses,
fiduciaries and custodians to be forwarded to the beneficial owners of the
Common Stock. In addition to the solicitation of proxies by use of the mail,
some of the officers, directors and regular employees of the Corporation
and the Corporation's subsidiary, Saratoga National Bank (the "Bank") may
(without additional compensation) solicit proxies by telephone or personal
interview, the costs of which will be borne by the Corporation.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
As of April 12, 1996, no individual known to the Corporation owned more
than five percent (5%) of the outstanding shares of its Common Stock except
as described below.
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class(1)
Common Stock, Richard L. Mount (2) 110,690 (3) 9.99%
No Par Value
Common Stock, V. Ronald Mancuso (4) 70,448 (5) 6.73%
No Par Value
(1) Including stock options exercisable within 60 days of the Record Date.
(2) The address for Mr. Mount, who is Chairman of the Board, President and
Chief Executive Officer of the Corporation, is the address of the
Corporation, 12000 Saratoga-Sunnyvale Road, Saratoga, CA 95070.
(3) Includes 275 shares of Common Stock owned by Branda Mount, a minor
daughter, under the Uniform Transfer to Minors Act (UTMA), Richard
L. Mount, custodian and 76,593 stock options exercisable within 60
days of the Record Date.
(4) The address for Dr. Mancuso, a member of the Corporation's Board of
Directors, is the address of the Corporation, 12000 Saratoga-
Sunnyvale Road, Saratoga, CA 95070.
(5) Includes 38,128 shares of Common Stock owned by the V. Ronald
Mancuso Professional Corporation Profit Sharing Plan; 1,377 shares
of Common Stock owned by Laura Mancuso, his daughter, under the
UTMA, V. Ronald or Rosanne Mancuso, Custodians; 1,377 shares of
Common Stock owned by Jerome D. Mancuso, his son, under the UTMA,
V. Ronald or Rosanne Mancuso, Custodians; 1,377 shares of Common
Stock owned by Victor R. Mancuso, Jr., his son, under the
UTMA, V. Ronald or Rosanne Mancuso, Custodians and 15,250 stock
options exercisable within 60 days of the Record Date.
<PAGE>
Security Ownership of Management
The following table sets forth information as of April 12, 1996
concerning the equity ownership of directors, nominees, executive officers
named in the Summary Compensation Table and directors and executive officers
of the Corporation and the Bank as a group. Unless otherwise indicated, each
director and executive officer listed below possesses sole voting power and
sole investment power. All of the shares shown in the following table are
owned both of record and beneficially except as indicated in the notes to the
table. The Corporation has only one class of shares outstanding, Common
Stock. The address for beneficial owners, all of whom are incumbent
directors and officers of the Corporation and the Bank, is the address of the
Corporation, 12000 Saratoga-Sunnyvale Road, Saratoga, CA 95070. There are no
current arrangements known to the Corporation, that may result in a change in
control of the Corporation.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class(1)
Common Stock,
No Par Value Victor E. Aboukhater 42,203 (2) 4.03%
Common Stock,
No Par Value Neal A. Cabrinha 40,607 (3) 3.88%
Common Stock,
No Par Value Robert G. Egan 31,698 (4) 3.03%
Common Stock,
No Par Value William D. Kron 28,057 (5) 2.68%
Common Stock,
No Par Value Earl L. Lanna 18,243 (6) 1.74%
Common Stock,
No Par Value John F. Lynch, III 29,473 (7) 2.82%
Common Stock,
No Par Value V. Ronald Mancuso 70,448 (8) 6.73%
Common Stock,
No Par Value Richard L. Mount 110,690 (9) 9.99%
Common Stock,
No Par Value Mary Page Rourke 18,243 (10) 1.74%
All directors and executive
officers of the Corporation
as a group (9 persons) 389,662 (11) 31.54%
</TABLE>
(1) Includes stock options exercisable within 60 days of the Record Date.
(2) Includes 15,250 stock options exercisable within 60 days of the Record
Date.
(3) Includes 13,781 shares of Common Stock owned by an HR-10 Plan,
administered by California Pension Administrators and Consultants,
Inc. and 15,250 stock options exercisable within 60 days of the
Record Date.
(4) Includes 15,250 stock options exercisable within 60 days of the
Record Date.
(5) Includes 15,250 stock options exercisable within 60 days of the
Record Date and 1,377 shares of Common Stock owned by Judi Ann
Kron, his wife.
(6) Includes 18,243 stock options exercisable within 60 days of the
Record Date.
(7) Includes 551 shares of Common Stock owned by Joan Lynch, his wife,
and 15,250 stock options exercisable within 60 days of the Record
Date.
(8) Includes 38,128 shares of Common Stock owned by the V. Ronald Mancuso
Professional Corporation Profit Sharing Plan; 1,377 shares of
Common Stock owned by Laura Mancuso, his daughter, under the UTMA,
V. Ronald or Rosanne Mancuso, Custodians; 1,377 shares of Common
Stock owned by Jerome D. Mancuso, his son, under the UTMA, V.
Ronald or Rosanne Mancuso, Custodians; 1,377 shares of Common Stock
owned by Victor R. Mancuso, Jr., his son, under the UTMA, V. Ronald
or Rosanne Mancuso, Custodians and 15,250 stock options exercisable
within 60 days of the Record Date.
(9) Includes 275 shares of Common Stock owned by Branda Mount, a minor
daughter, under the UTMA, Richard L. Mount, Custodian and 76,593
stock options exercisable within 60 days of the Record Date.
(10) Includes 18,243 stock options exercisable within 60 days of the
Record Date.
(11) Includes 204,579 stock options exercisable within 60 days of the
Record Date.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS OF THE CORPORATION
The number of directors authorized for election at this meeting is seven
(7). Management has nominated the seven (7) incumbent directors to serve as
the Corporation's directors. Each director will hold office until the next
Annual Meeting of Shareholders and until his successor is elected and qualified.
All proxies will be voted for the election of the seven (7) nominees listed
below (all of whom are incumbent directors) recommended by the Board of
Directors unless authority to vote for the election of any directors is
withheld. The nominees receiving the highest number of affirmative votes of
the shares entitled to be voted for them shall be elected as directors.
Abstentions and votes cast against nominees have no effect on the election of
directors. If any of the nominees should unexpectedly decline or be unable
to act as a director, their proxies may be voted for a substitute nominee to
be designated by the Board of Directors. The Board of Directors has no reason
to believe that any nominee will be become unavailable and has no present
intention to nominate persons in addition to or in lieu of those named below.
The following table sets forth certain information as of the Record Date,
April 12, 1996, with respect to those persons nominated by the Board of
Directors for election as directors, as well as all executive officers. The
Corporation knows of no arrangements, including any pledge by any person of
securities of the Corporation, the operation of which may, at a subsequent
date, result in a change in control of the Corporation. There are no
arrangements or understandings by which any of the executive officers or
directors of either the Corporation or the Bank were selected. There is no
family relationship between any of the directors or executive officers.
<TABLE>
<S> <C> <C> <C>
Name Age Position Since
Victor E. Aboukhater 53 Director 1981
Neal A. Cabrinha 54 Director and Secretary 1981
Robert G. Egan 55 Director 1981
William D. Kron 52 Director 1981
Earl L. Lanna 44 Sr. Vice President and
Sr. Credit Officer 1987
(Bank only)
John F. Lynch, III 54 Director 1981
V. Ronald Mancuso 57 Director 1982
Richard L. Mount 51 Chairman of the Board
and President 1982
Mary Page Rourke 39 Treasurer; Sr. Vice
President/Chief
Financial Officer
(Bank only) 1987
</TABLE>
The following is a brief account of the business experience during the past
five years of each director/nominee and each executive officer listed above.
Victor E. Aboukhater from 1978 to 1986 was President of Victor Investment
Company, Saratoga, California. Since 1986, he has devoted all of his time to
the management of his personal investment portfolio of real estate and
securities. From 1965 to 1973, Mr. Aboukhater was employed by the Government
of Ras Al Khaima, United Arab Emirates. Mr. Aboukhater and his family moved to
Saratoga from London, England (where he owned his own export company), in
October 1978. Mr. Aboukhater is an American Citizen and a member of the
Knights of Malta, and in 1970 was awarded the Medal of Chivalry by the President
of Lebanon.
Neal A. Cabrinha has been a member of the law firm of Mallen & Cabrinha in
Saratoga, California, since 1976. He was admitted to practice law in
California in 1967. He has served as President of Eastfield Children's
Center, President of the Saratoga Rotary Club, and Chairman of the St.
Francis High School Foundation. He has served on the Board of Directors of
St. Francis High School, the Board of Trustees of Montalvo Association and
the Board of Directors of Amigos de los Americas, and he currently serves on
the Board of Directors of Our Lady of Fatima Villa. Mr. Cabrinha has been a
resident of Saratoga since 1969. He is a graduate of the University of San
Francisco, and the University of San Francisco Law School.
<PAGE>
Robert G. Egan is Managing Broker with Coldwell Banker Real Estate. Until
1985, Mr. Egan owned retail clothing stores. He is the 1984 Citizen of the
Year for the City of Saratoga, current Fire Commissioner, President
of Saratoga Rotary and is active in many other community organizations and
affairs. Mr. Egan has been a resident of Saratoga for over 24 years and is a
past President of the Saratoga Chamber of Commerce. Mr. Egan is a graduate
of the University of San Francisco, has completed his educational
requirements for a Master's Degree in Education and holds a Community College
Supervisor and Instructor credential.
William D. Kron is the founder and Chairman of Saratoga National Bank. He
is a principal at Apprise Software, Inc., an international developer and
implementer of financial software. He was formerly with IBM Sales &
Marketing. A fourth generation Californian, Mr. Kron is a member of the San
Jose Rotary Club and a graduate of the University of California at Berkeley.
Earl L. Lanna is Senior Vice President and Senior Credit Officer of
Saratoga National Bank. Prior to joining the Bank, he was employed by Bank
of the West in San Jose, CA as Assistant Vice President from June 1979 to
April 1987. Mr. Lanna is President of the West San Jose Kiwanis. He holds a
Bachelor of Science degree in Business Administration from the University of
Phoenix.
John F. Lynch, III (Jack) is Vice President-Operations of Impact Systems,
Inc., a manufacturer of industrial computer control systems.
Prior to December, 1982 he was Vice President for Measurex Systems Inc. He
has been a resident of Saratoga for 20 years. Mr. Lynch has a degree in Chemical
Engineering from the University of Mississippi and an MBA from the Harvard
Business School.
Dr. V. Ronald Mancuso has been in private dental practice in Saratoga since
August 1967 and a resident since October 1966. He attended St. Johns
University in New York and received his DDS degree from Seton Hall
College of Medicine and Dentistry in 1963. Past President of the Saratoga
Kiwanis Club, he also served as Director of the Saratoga Chamber of Commerce,
the Santa Clara County Dental Society and the Academy of General
Dentistry. He is presently a member of the American Dental Association, the
Academy of General Dentistry, the California Dental Association, Santa Clara
County Dental Society, and the Western Society of Periodontology.
Richard L. Mount is Chairman of the Board, President and Chief Executive
Officer of the Corporation as well as President, Chief Executive Officer and
Director of Saratoga National Bank. Previously, Mr. Mount was Chairman of the
Board and President of Foothills National Bank in Fort Collins, Colorado, from
October 1980 to February 1982. From January to May 1980, Mr. Mount was
Executive Vice President of Central Trust Company of Newark, Ohio. He
currently serves on the Board of Directors of the Federal Reserve Bank of San
Francisco and as Chairman of the Independent Bankers Association of America.
He has previously served as President of the Saratoga Chamber of Commerce and
as Chairman of the Saratoga Rotary Art Show and Celebrate! Saratoga. Mr. Mount
received his Bachelor of Science degree from Ohio State University in 1967. He
is a graduate of the Ohio School of Banking (1971) and the Graduate School of
Banking at the University of Wisconsin (1974).
Mary Page Rourke is Treasurer of the Corporation, and Senior Vice President
and Chief Financial Officer of Saratoga National Bank. Before joining the
Bank, Ms. Rourke was Vice President and Cashier of Bank of Los Gatos, N.A.
from May 1984 to July 1987. Ms. Rourke received her Bachelor of Science degree
in Development and Resource Economics from the University of California, Davis
in 1980. She is a member of the Legislative Task Force of the California
Thoroughbred Breeder's Association.
None of the Corporation's or Bank's Directors is a director of any other
company with a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, or subject to the requirements
of Section 15(d) of such Act or any company registered as an investment company
under the Investment Company Act of 1940, whose common stock is registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.
<PAGE>
DIRECTORS
Committees of the Board of Directors
The Audit Committee, with the guidance of Deloitte & Touche, conducts the
Annual Directors audit. Robert G. Egan, Neal A. Cabrinha, William D. Kron and
John F. Lynch, III serve on this committee, which met four times in 1995. The
purpose of this committee is to review the internal controls and financial
reporting for the Corporation and the Bank, to examine the findings and reports
of the outside auditors and bank examiners and to monitor the Bank's overall
compliance with the various laws and regulations which govern the banking
industry.
The Compensation Committee, which sets and reviews the compensation of the
Bank's Chief Executive Officer and reviews the overall compensation of the
Bank's employees, is composed of three non-employee directors.
Victor Aboukhater, Neal A. Cabrinha and V. Ronald Mancuso serve on this
committee. During 1995, the committee met four times.
The Strategic Planning Committee evaluates various opportunities for
corporate growth and share appreciation. The members of this committee are
Victor E. Aboukhater, William D. Kron, V. Ronald Mancuso and Richard L.
Mount. During 1995, the Committee met twice.
The Board of Directors has not established a nominating committee. The
entire Board of Directors performs the functions of the nominating committee
with responsibility for considering appropriate candidates for election as
directors of the Corporation.
During the last full fiscal year all directors attended at least seventy-
five percent (75%) of the aggregate of the total number of meetings of the
Board of Directors and the number of meetings of the committees on which they
served.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
Set forth below is the summary compensation paid or accrued during the
fiscal years ended December 31, 1993, 1994 and 1995 to Richard L. Mount,
Earl L. Lanna and Mary Page Rourke, the only executive officers of the
Corporation and the Bank.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-Term Compensation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AWARDS PAYOUTS
Other Securities
Name and Annual Restricted Underlying All other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary($) Bonus($) sation($) Award(s) SARS (#) Payouts($)sation($)
1/ 2/ 3/ ($) 4/ 5/
Richard L.1995 $150,437 $24,307 - - - - $25,978
Mount 1994 $143,962 $ 4,144 - - $10,000 - $15,116
President 1993 $135,818 $ 5,000 - - - - $15,343
& CEO
Earl L. 1995 $72,887 $11,000 - - - - $500
Lanna 1994 $72,524 $ 7,250 - - 4,000 - $500
Sr. Vice 1993 $67,222 $ 3,000 - - - - -
President
& Sr.
Credit
Officer
Mary Page 1995 $59,471 $11,000 - - - - $500
Rourke 1994 $56,116 $7,250 - - 4,000 - $500
Sr. Vice 1993 $55,444 $3,000 - - - - -
President
& Chief
Financial
Officer
</TABLE>
1/ Amounts shown include cash and non-cash compensation earned and received by
executive officers as well as amounts earned but deferred at the election of
those officers under the 401(k) Plan. Amounts deferred during 1993 under the
401(k) Plan were $5,940 for Richard L. Mount, $0.00 for Earl L. Lanna and
$1,998 for Mary Page Rourke. Amounts deferred during 1994 under the 401(k)
Plan were $7,828 for Richard L. Mount, $3,170 for Earl L. Lanna and $3,079
for Mary Page Rourke. Amounts deferred during 1995 under the 401(k) Plan
were $9,240 for Richard L. Mount, $4,923 for Earl L. Lanna and $3,520 for
Mary Page Rourke. The Plan did not permit the Corporation to make matching
contributions prior to April 1, 1994.
2/ Amounts indicated as bonus payments were earned for performance during
1993, 1994 and 1995, but paid in the first quarters of 1994, 1995 and 1996,
respectively.
3/ No executive officer received perquisites or other personal benefits in
excess of the lesser of $50,000 or 10% of each such officer's total annual
salary and bonus during 1993, 1994 or 1995.
4/ The Corporation's 1982 Amended Stock Option Plan (the "1982 Plan") expired
by its terms on October 26, 1992. Therefore, no options were granted by the
Corporation during 1993, 1994 or 1995 under the 1982 Plan. Prior to
expiration of the 1982 Plan, options were granted to key, full-time salaried
officers and employees of the Corporation and its subsidiary. Options granted
under the 1982 Plan were either incentive options or non-statutory options.
Options granted under the 1982 Plan become exercisable in accordance with a
vesting schedule established at the time of grant. Vesting may not extend
beyond ten years from the date of grant. Upon a change in control of the
Corporation, all outstanding options under the 1982 Plan will become fully
vested and exercisable. Options granted under the 1982 Plan are adjusted to
protect against dilution in the event of certain changes in the Corporation's
capitalization, including stock splits and stock dividends. The
Corporation's 1994 Stock Option Plan (the "1994 Plan") is substantially
similar to the 1982 Plan regarding provisions related to option grants,
vesting and dilution. Upon a change in control, options do not become fully
vested and exercisable, but may be assumed or equivalent options may be
substituted by a successor corporation. All options granted in 1994 under
the 1994 Plan to the named executive officers were incentive stock options
and have an exercise price equal to the fair market value of the
Corporation's Common Stock on the date of grant. There were no options
granted in 1995 to any of the named executive officers.
5/ Amounts shown for Richard L. Mount include $10,800 in director fees and
$4,543 in term life insurance premiums in 1993, $12,000 in director
fees, $2,616 in term life insurance premiums and $500 in 401(k) matching
contributions in 1994 and $12,000 in director fees, $13,478 in term
life insurance premiums and $500 in 401(k) matching contributions in 1995.
Amounts shown in 1994 and 1995 for all other executive officers
are 401(k) matching contributions.
<PAGE>
Option/SAR Exercises and Year-End Value Table
The following table sets forth certain information concerning unexercised
options under the Plan as of April 26, 1996.
Aggregated Option/SAR Exercises in Last Fiscal Year, and Fiscal Year-End
Option/SAR Values
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised
Options/SARS Options/SARS
at Fiscal at Fiscal
Year-End (#) Year-End ($)
<TABLE>
<S> <C> <C> <C> <C>
Shares Acquired on Exercisable/ Exercisable/
Name Exercise Value Realized($) Unexercisable Unexercisable 1/
Richard L. Mount - - 76,593/0 $181,527/$0
Earl L. Lanna - - 18,243/4,640 $21,541/$4,062
Mary Page Rourke - - 18,243/4,640 $22,644/$4,062
</TABLE>
1/ At December 31, 1995, the high and low bid prices of the Corporation's
common stock were $7.375 and $7.125, respectively. The aggregate value has
been determined based upon the bid price of $7.375, minus the exercise price
or base price.
Set forth below are the Long-Term Incentive Plan Awards accrued during
the fiscal year ended December 31, 1995 to Richard L. Mount, the only
executive officer of the Corporation and the Bank who received awards under
a Long-Term Incentive Plan.
Long-Term Incentive Plans - Awards in Last Fiscal Year
Estimated Future Payouts
under Non-Stock Price-Based Plans
Performance or
Number of Shares, Other Period Until
Units or Other Maturation or
Name Rights Payout Threshold Target Maximum
Richard L. Mount 24,307 Vesting - 5 1/ $0.00 2/
Years
1/ Threshold payout amounts are not readily determinable due to the yearly
adjustment to reflect Return on Assets (ROA) on the Plan awards prior
to the payout beginning in 2000, but could result in no payouts.
2/ Maximum payout amounts are not specifically limited or readily
determinable due to the yearly adjustment to reflect Return on Assets (ROA)
on the Plan awards prior to the payout beginning in 2000.
<PAGE>
Compensation of Directors
Each member of the Board of Directors was paid a monthly retainer fee
of $1,000.00 in 1995. Mr. Neal Cabrinha, Secretary of the Corporation,
received an additional $500.00 per month for his services as Secretary. In
1996, each member will receive a monthly retainer fee of $1,500.00.
Mr. Cabrinha will continue to receive an additional $500.00 per month for his
services as Secretary.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
The Bank and Richard L. Mount, President and Chief Executive Officer of
the Bank, entered into an Employment Agreement dated August 30, 1995,
effective as of January 1, 1995, which was subsequently amended and restated
as of February 22, 1996, for a term of one year from the effective date,
subject to annual renewal in the discretion of the Board if Directors,
pursuant to which Mr. Mount received during 1995 and will receive during the
term of the agreement (i) base salary in the amount of $135,000, subject to
annual increase in the discretion of the Board of Directors; (ii) incentive
compensation based upon factors including the increase in the Bank's average
assets in excess of the median percentage change in assets among certain
other California banks of comparable asset size and return on average assets
("ROA") less the median ROA among the same California bank peer group, with
payment divided into current incentive award payments following an annual audit
of the Bank's financial results and a deferred payment award component;
(iii) reimbursement for all ordinary and necessary expenses incurred in
connection with Bank business, including club memberships, entertainment,
travel and attendance at seminars and conventions; (iv) an automobile for
personal and Bank business use and related insurance coverages during the term
of the Agreement; (v) a term life insurance policy in the face amount of
$500,000 and group insurance coverages for health (including medical, dental
and hospitalization), accident and disability; (vi) customary vacation and
disability benefits; (vii) severance equal to six months base salary in the
event of termination without cause by the Bank; and (viii) severance payments
upon a change in control of the Corporation or the Bank pursuant to a
Management Continuity Agreement as described below.
The Bank and Mr. Mount also entered into a Management Continuity
Agreement dated July 9, 1990 with an initial term of three years subject to
renewal in the discretion of the Board of Directors of the Bank, which provided
for severance benefits to be paid to Mr. Mount in the event of a change in
control of the Corporation or the Bank which shall be deemed to have occurred
in the event of a change in control of a nature required to be reported in
response to Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or in response to any other form or
report to the Securities and Exchange Commission or any stock exchange in
which the Corporation shares are listed which requires the reporting of a change
in control; or in the event any "person" (as such term is used in the
Exchange Act) is or becomes the beneficial owner, directly or indirectly, of
securities of the Corporation or the Bank representing 25% or more of the
combined voting power of the Corporation's or the Bank's then outstanding
securities; or in any one year, individuals who at the beginning of such
period constitute the Board of Directors of the Corporation cease for any reason
to constitute a majority of the Board of Directors of the Corporation,
unless the election, or the nomination for election by the Corporation's
shareholders of each new director is approved by a vote of at least three-
quarters of the directors then still in office who were directors at the
beginning of the period; or a majority of the members of the Board of Directors
in office prior to the happening of any event determines in its sole
discretion that as a result of such event there has been a change in
control. Severance benefits pursuant to the Agreement are payable in the event
of actual or constructive termination of Mr. Mount other than for cause
within a period of one and one-half years following a change in control of the
Corporation or the Bank calculated at the rate of 1.5 times Mr. Mount's
average annual compensation based upon aggregate compensation paid by the
Bank to Mr. Mount includable in gross income for Federal income tax purposes
for the five tax years ending immediately prior to any change in control.
Such severance payments are subject to reduction for each month and portion
of a month of Mr. Mount's continued employment with the Bank or any
successor entity following a change in control up to the expiration of one and
one-half years thereafter. In the event Mr. Mount's employment with the Bank or
any successor entity continues for the entire one and one-half year period
following a change in control, no severance benefit shall be payable pursuant
to the Agreement. Mr. Mount may elect to have the severance benefit paid in
annual installments over a period not exceeding five years following the
date of termination. All severance benefits under the Agreement are in
addition to any other accrued or vested benefits Mr. Mount may be entitled
to under his employment agreement with the Bank.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
There have been no transactions, or series of similar transactions,
during 1995, or any currently proposed transaction, or series of similar
transactions, to which the Corporation or the Bank was or is to be a party,
in which the amount involved exceeded or will exceed $60,000 and in which any
director (or nominee for director) of the Corporation or the Bank, executive
officer of the Corporation or the Bank, any shareholder owning of record or
beneficially 5% or more of the Corporation's Common Stock, or any member of
the immediate family of any of the foregoing persons, had, or will have, a
direct or indirect material interest.
Certain Business Relationships
Director Neal A. Cabrinha is a member of the law firm of Mallen &
Cabrinha, which has performed legal services in the past and although such
firm did not perform legal services for the Corporation in 1995, it may perform
legal services for the Corporation in 1996.
Indebtedness of Management
The Corporation, through the Bank, has had, and expects in the future
to have banking transactions in the ordinary course of its business with many
of the Corporation's directors and officers and their associates, including
transactions with corporations of which such persons are directors, officers or
controlling shareholders, on substantially the same terms (including interest
rates and collateral) as those prevailing for comparable transactions
with others. Management believes that in 1995 such transactions comprising
loans did not involve more than the normal risk of collectibility or present
other unfavorable features. Loans to executive officers of the Corporation and
the Bank are subject to limitations as to amount and purposes prescribed in
part by the Federal Reserve Act, as amended, and the regulations of the
Comptroller of the Currency.
PROPOSAL NO. 2
RATIFICATION AND APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP served the Corporation as independent
public accountants for the 1995 fiscal year. Deloitte & Touche LLP has no
interest, financial or otherwise, in the Corporation. The services rendered
by Deloitte & Touche LLP during the 1995 fiscal year were audit services,
consultation in connection with various accounting matters and preparation
of corporation income tax returns. The Board of Directors of the Corporation
approved each professional service rendered by Deloitte & Touche LLP during the
1995 fiscal year, and the possible effect of each such service on the
independence of that firm was considered by the Board of Directors before such
service was rendered.
Representatives of Deloitte & Touche LLP are expected to be present at the
Meeting and will have an opportunity to make a statement if they so desire.
The Board of Directors of the Corporation has selected Deloitte & Touche
LLP to serve as the independent public accountants for the 1996 fiscal year
and recommend that the shareholders vote "FOR" approval to ratify the
selection of Deloitte & Touche LLP as the Corporation's independent public
accountants for the 1996 fiscal year.
ANNUAL REPORT
The Annual Report of the Corporation containing audited financial
statements for the fiscal year ended December 31, 1995 is included in this
mailing to shareholders.
<PAGE>
FORM 10-K
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED, IS AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST
TO NEAL A. CABRINHA, SECRETARY, SARATOGA BANCORP, 12000 SARATOGA-SUNNYVALE
ROAD, SARATOGA, CALIFORNIA 95070.
SHAREHOLDER'S PROPOSALS
Next year's Annual Meeting of Shareholders will be held on May 22, 1997.
The deadline for shareholders to submit proposals for inclusion in the Proxy
Statement and form of Proxy for the 1997 Annual Meeting of Shareholders is
December 28, 1996. All proposals should be submitted by Certified Mail -
Return Receipt Requested, to Neal A. Cabrinha, Secretary, Saratoga Bancorp,
12000 Saratoga-Sunnyvale Road, Saratoga, California 95070.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the Meeting, but if such matters are properly presented to the
Meeting, proxies solicited hereby will be voted in accordance with the
judgment of the persons holding such proxies. All shares represented by
duly executed proxies will be voted at the Meeting in accordance with the
terms of such proxies.
SARATOGA BANCORP
Saratoga, California
April 26, 1996 By: Neal A. Cabrinha, Secretary
