<PAGE>
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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
SILICON VALLEY BANCSHARES
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
REGISTRANT
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
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[INSERT LOGO HERE]
PRELIMINARY COPY
SILICON VALLEY BANCSHARES
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 18, 1996
4:00 P.M.
TO THE SHAREHOLDERS:
I am pleased to invite you to attend the 1996 Annual Meeting of Shareholders
of Silicon Valley Bancshares, which will be held at the Renaissance Meeting
Center at Techmart, Silicon Valley Room, 5201 Great America Parkway, Santa
Clara, California 95054, on Thursday, April 18, 1996, 4:00 p.m., local time. The
purposes of the meeting are to:
1. Elect Directors to serve for the ensuing year and until their successors
are elected.
2. Approve an amendment to the Silicon Valley Bancshares 1989 Stock Option
Plan.
3. Approve an amendment to the Company's Bylaws to change the authorized
range of Directors.
4. Ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors.
5. Transact such other business as may properly come before the meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. TO ASSURE YOUR REPRESENTATION AT THE
MEETING, YOU ARE ENCOURAGED TO MARK YOUR VOTES, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. Any shareholder attending the meeting may vote in person even if such
shareholder has previously returned a proxy card.
Only shareholders of record on February 19, 1996 will be entitled to vote at
the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Daniel J. Kelleher
CHAIRMAN OF THE BOARD
Santa Clara, California
March 1, 1996
ALTHOUGH YOU MAY PRESENTLY PLAN TO ATTEND THE MEETING, PLEASE INDICATE ON THE
ENCLOSED PROXY CARD YOUR VOTE ON THE MATTERS PRESENTED AND SIGN, DATE AND RETURN
THE PROXY CARD. IF YOU DO ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOU MAY
WITHDRAW YOUR PROXY AT THAT TIME. WE ENCOURAGE YOU TO VOTE FOR THE ELECTION OF
ALL TEN (10) NOMINEES FOR DIRECTORS, FOR APPROVAL OF THE AMENDMENT TO THE
SILICON VALLEY BANCSHARES 1989 STOCK OPTION PLAN, FOR APPROVAL OF THE AMENDMENT
TO THE COMPANY'S BYLAWS, AND FOR RATIFICATION OF THE SELECTION OF KPMG PEAT
MARWICK LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
<PAGE>
PROXY STATEMENT -- TABLE OF CONTENTS
<TABLE>
<CAPTION>
MATTER PAGE
- ----------------------------------------------------------------------------------------------------------- -----
<S> <C>
Information Concerning the Proxy Solicitation.............................................................. 1
Proposal No. 1 -- Election of Directors*................................................................... 3
Security Ownership of Directors and Executive Officers..................................................... 5
Information on Executive Officers.......................................................................... 6
Report of the Personnel and Compensation Committee of the Board on Executive Compensation.................. 7
Return to Shareholders Performance Graph................................................................... 11
Table 1 -- Summary Compensation............................................................................ 12
Table 2 -- Option Grants in Fiscal Year 1995............................................................... 13
Table 3 -- Aggregated Option Exercises in Fiscal Year 1995 and Fiscal Year-End Option Values............... 14
Termination Arrangements................................................................................... 14
Board Committees and Meeting Attendance.................................................................... 18
Director Compensation...................................................................................... 19
Security Ownership of Certain Beneficial Holders........................................................... 20
Compliance with Section 16(a) of the Exchange Act.......................................................... 21
Certain Relationships and Related Transactions............................................................. 21
Proposal No. 2 -- Approval of Amendment to the 1989 Stock Option Plan*..................................... 22
Table 4 -- Amended Plan Benefits Table..................................................................... 23
Proposal No. 3 -- Approval of Amendment to Bylaws*......................................................... 29
Proposal No. 4 -- Ratification of Appointment of Independent Auditors*..................................... 30
Shareholder Proposals -- 1997 Annual Meeting............................................................... 30
1995 Annual Report......................................................................................... 30
Other Matters.............................................................................................. 31
</TABLE>
- ------------------------
*Denotes Items to be Voted on at the Meeting
i
<PAGE>
Mailed to shareholders on or about March 11, 1996
------------------------
PROXY STATEMENT
OF
SILICON VALLEY BANCSHARES
3003 TASMAN DRIVE
SANTA CLARA, CALIFORNIA 95054
------------------------
INFORMATION CONCERNING THE PROXY SOLICITATION
GENERAL
This Proxy Statement is furnished in connection with the solicitation of the
enclosed Proxy by, and on behalf of, the Board of Directors of Silicon Valley
Bancshares, a California corporation and bank holding company (the "Company")
for Silicon Valley Bank (the "Bank"), for use at the 1996 Annual Meeting of
Shareholders of the Company to be held in the Silicon Valley Room at the
Renaissance Meeting Center at Techmart, 5201 Great America Parkway, Santa Clara,
California 95054, ON THURSDAY, APRIL 18, 1996 AT 4:00 P.M., local time and at
all postponements or adjournments thereof (the "Meeting"). Only shareholders of
record on February 19, 1996 (the "Record Date") will be entitled to vote at the
Meeting and any postponements or adjournments thereof. At the close of business
on the Record Date, the Company had 9,119,205 outstanding shares of its no par
value Common Stock (the "Common Stock") held by 687 shareholders of record.
The Company's principal executive offices are located at 3003 Tasman Drive,
Santa Clara, CA 95054 and its telephone number at that location is (408)
654-7400.
VOTING
Shareholders of the Company's Common Stock are entitled to one vote for each
share held, except that for the election of directors, each shareholder has
cumulative voting rights entitling the shareholder to as many votes as shall
equal the number of shares held by such shareholder multiplied by the number of
directors to be elected. A shareholder may cast all his or her votes for a
single candidate or distribute such votes among as many of the candidates he or
she chooses (up to a maximum of the number of directors to be elected). 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) for a candidate unless such candidate's or candidates' names
have been placed in nomination prior to the voting in accordance with Section
2.11 of the Bylaws of the Company and the shareholder (or any other shareholder)
has given notice at the meeting prior to the voting of the shareholder's
intention to cumulate votes. If any shareholder has given such notice, all
shareholders may cumulate their votes for candidates properly placed in
nomination. The Proxy Holders are given discretionary authority under the terms
of the Proxy to cumulate votes represented by shares for which they are named
Proxy Holders.
Section 2.11 of the Bylaws of the Company governs nominations for election
of members of the Board of Directors, as follows: nominations for election of
members of the Company's 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 shall be made in writing and shall be delivered or mailed
to the Secretary of the Company not less than twenty-one (21) days nor more than
sixty (60) days prior to any meeting of shareholders called for the election of
directors; provided, however, that if less than twenty-one (21) days notice of
the meeting is given to shareholders, such notice of intention to nominate shall
be mailed or delivered to the Secretary of the Company not later than the close
of business on the tenth day following the day on which the notice of the
meeting was mailed; provided further, that if notice of
1
<PAGE>
such meeting is sent by third-class mail as permitted by the Bylaws, no notice
of intention to make nominations shall be required. 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
principal occupation of each proposed nominee; (c) the number of shares of
Common Stock of the Company owned by each proposed nominee; (d) the name and
residence address of the notifying shareholder; and (e) the number of shares of
Common Stock of the Company owned by the notifying shareholder. Nominations not
made in accordance herewith may, at the discretion of the Chairman of the
meeting, be disregarded and upon the Chairman's instructions, the Inspector of
Election can disregard all votes cast for each such nominee.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting is
a majority of the shares of Common Stock issued and outstanding on the Record
Date. Shares that are voted "FOR", "AGAINST" or "WITHHELD FROM" a matter are
treated as being present at the meeting for purposes of establishing a quorum
and are also treated as shares "represented and voting" at the Annual Meeting
(the "Votes Cast") with respect to such matter.
While there is no definitive statutory or case law authority in California
as to the proper treatment of abstentions, the Company believes that abstentions
should be counted for purposes of determining both (i) the presence or absence
of a quorum for the transaction of business and (ii) the total number of Votes
Cast with respect to a proposal (other than the election of directors). In the
absence of controlling precedent to the contrary, the Company intends to treat
abstentions in this matter. Accordingly, abstentions will have the same effect
as a vote against the proposal.
Broker non-votes will be counted for purposes of determining the presence or
absence of a quorum for the transaction of business, but will not be counted for
purposes of determining the number of Votes Cast with respect to the proposal on
which the broker has expressly not voted. Thus, a broker non-vote will not
affect the outcome of the voting on a proposal that requires a majority of the
Votes Cast (such as the amendment of the 1989 Stock Option Plan). However, with
respect to a proposal that requires a majority of the outstanding shares (such
as the amendment to the Bylaws), a broker non-vote has the same effect as a vote
against the proposal.
REVOCABILITY OF PROXIES
Any person giving a Proxy in the form accompanying this Proxy Statement has
the power to revoke the Proxy at any time prior to its exercise. A Proxy is
revocable prior to the Meeting by delivering either a written instrument
revoking it or a duly executed Proxy bearing a later date to the Secretary of
the Company. Such Proxy is also revoked if the shareholder is present at the
Meeting and votes in person.
SOLICITATION
This solicitation of proxies is made by, and on behalf of, the Board of
Directors of the Company. The Company 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 Company's Common Stock. In addition to the solicitation of Proxies
by use of the mail, some of the officers, directors and regular employees of the
Company and the Bank may (without additional compensation) solicit Proxies by
telephone or personal interview, the costs of which the Company will bear.
Unless otherwise instructed, each valid returned Proxy that is not revoked
will be voted in the election of directors "FOR" the nominees to the Board of
Directors, "FOR" the proposed amendment to the Company's 1989 Stock Option Plan,
"FOR" approval of the amendment to the Company's Bylaws, "FOR" ratification of
the appointment of KPMG Peat Marwick LLP as the Company's independent auditors,
and at the Proxy Holders' discretion on such other matters, if any, as may
properly come before the Meeting or any postponement or adjournment thereof
(including any proposal to adjourn the Meeting).
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES
The Company's Bylaws currently provide for a range of from ten (10) to
nineteen (19) directors and permit the exact number to be fixed by the Board.
Effective as of April 18, 1996, the Board has fixed the exact number of
directors at ten (10).
NOMINEES FOR DIRECTOR
All Proxies will be voted "FOR" the election of the following ten (10)
nominees recommended by the Board of Directors, all of whom are incumbent
directors, unless authority to vote for the election of directors is withheld.
All of the nominees have served as directors of the Company since the last
Annual Meeting of Shareholders, except David M. deWilde. Mr. deWilde recently
was appointed to the Board of Directors by the Board to fill a vacancy. All
incumbent directors are nominees for re-election to the Board. If any of the
nominees should unexpectedly decline or be unable to act as a director, the
Proxies may be voted for a substitute nominee designated by the Board of
Directors. The Board of Directors has no reason to believe that any nominee will
become unavailable and has no present intention to nominate persons in addition
to or in lieu of those listed below. Directors of the Company serve until the
next annual meeting of shareholders or until their successors are elected and
qualified.
The names and certain information about each of the Company's nominees for
director as of the Record Date are set forth below.
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION OR EMPLOYMENT DIRECTOR
NAME OF DIRECTOR AGE (2) OTHER BUSINESS AFFILIATIONS AND PUBLIC COMPANY DIRECTORSHIPS SINCE
- --------------------------------- --- ------------------------------------------------------------------- -----------
<S> <C> <C> <C> <C>
Gary K. Barr 51 (1) President and Chief Executive Officer, Pacific Coast 1982
Capital (a real estate investment and management
company), Carbondale, Colorado since August 1992.
(2) President and Chief Executive Officer, Landsing Pacific
Fund (a California real estate investment and
management company) from 1984 to August 1992. Interim
Acting Chief Executive Officer of the Company and the
Bank from January 1993 to May 1993.
James F. Burns, Jr. 58 (1) Executive Vice President and Chief Financial Officer, 1994
CBR Information Group (a credit and mortgage reporting
company), Houston, Texas since September 1988.
(2) Executive Vice President and Chief Financial Officer,
Integratec, Inc. (a company providing credit
origination, servicing, and collection services and the
parent company of CBR Information Group prior to
spin-off of CBR in 1993) from 1988 to 1993.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
(1) PRINCIPAL OCCUPATION OR EMPLOYMENT DIRECTOR
NAME OF DIRECTOR AGE (2) OTHER BUSINESS AFFILIATIONS AND PUBLIC COMPANY DIRECTORSHIPS SINCE
- --------------------------------- --- ------------------------------------------------------------------- -----------
<S> <C> <C> <C> <C>
John C. Dean 48 (1) President and Chief Executive Officer of the Company and 1993
the Bank since May 1993. Also, see "Information on
Executive Officers" below.
(2) Advisory Member of Board of Directors, American Central
Gas Companies, Inc., Tulsa, Oklahoma since August 1994.
David M. deWilde 55 (1) Founder and Managing Director, Chartwell Partners 1995
International, Inc. (an executive search firm) since
1989.
(2) Director, Berkshire Realty Company, Inc., Boston,
Massachusetts since 1993.
Clarence J. Ferrari, Jr., Esq. 61 (1) Founder and Principal, Ferrari, Alvarez, Olsen and 1983
Ottoboni (Attorneys-at-Law), San Jose, California since
1981.
Henry M. Gay 71 (1) Retired. 1982
(2) Founder and Director, Triad Systems Corporation (a
computer software company), Livermore, California since
1971.
Daniel J. Kelleher (1) 53 (1) Private Investor, Los Altos Hills, California. 1986
James R. Porter 60 (1) President, Chief Executive Officer, and Director, Triad 1994
Systems Corporation (a computer software company),
Livermore, California since September 1985.
(2) Member of Board of Directors, Brock Control Systems (a
sales automation company), Atlanta, Georgia since April
1993.
Michael Roster, Esq. (2) 50 (1) General Counsel, Stanford University, Stanford, 1994
California since August 1993.
(2) From 1987 to 1993, partner in the national law firm of
Morrison & Foerster.
Ann R. Wells 52 (1) Chief Executive Officer, Ann Wells Personnel Services, 1986
Inc. (a personnel agency), Sunnyvale, California since
January 1980.
</TABLE>
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(1) Chair of the Company Board and the Bank Board.
(2) Vice-Chair of the Company Board and the Bank Board.
VOTE REQUIRED
The ten (10) nominees for directors receiving the highest number of
affirmative votes of the shares entitled to be voted for them shall be elected
as directors. Votes withheld from any director are counted for purposes of
determining the presence or absence of a quorum, but have no other legal effect
under California law.
4
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding beneficial ownership as
of the Record Date of the Company's Common Stock by each of the Company's
directors, by each of the executive officers named in the Summary Compensation
Table and by all current directors and executive officers as a group. Unless
otherwise noted, the respective nominees have sole voting and investment power
with respect to the shares shown in the table as beneficially owned.
<TABLE>
<CAPTION>
AGGREGATE NUMBER OF SHARES PERCENT OF
NAME BENEFICIALLY OWNED OUTSTANDING SHARES
- ------------------------------------------------------------------ -------------------------- ---------------------
<S> <C> <C>
DIRECTORS
Gary K. Barr...................................................... 53,725 .59%
James F. Burns, Jr................................................ 5,000 .06%
John C. Dean *.................................................... 175,850(a)(j) 1.98%
David M. deWilde.................................................. 2,283 .03%
Clarence J. Ferrari, Jr., Esq..................................... 75,712(b) .83%
Henry M. Gay...................................................... 21,051 .23%
Daniel J. Kelleher................................................ 90,381(c) .99%
James R. Porter................................................... 4,375 .05%
Michael Roster, Esq............................................... 7,000 .08%
Ann R. Wells...................................................... 88,930(d) .98%
EXECUTIVE OFFICERS
Glen Blackmon..................................................... 36,932(e),(k) .40%
A. John Busch..................................................... 31,681(f),(l) .35%
John C. Dean...................................................... (See listing above under "Directors")
James F. Forrester................................................ 56,044(g),(m) .62%
Richard H. Harding................................................ 33,069(h),(n) .36%
Glen G. Simmons................................................... 26,924(i),(o) .30%
All current directors and executive officers as a group (15
persons)......................................................... 708,957** 7.77%
</TABLE>
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Includes (1) the following number of shares subject to options where the options
are exercisable within 60 days after the Record Date and (2) the following
number of shares under the Company's Employee Stock Ownership Plan:
<TABLE>
<S> <C> <C>
(1) (1) (Continued) (2)
(a) 50,000 shares (f) 26,405 shares (j) 48,159 shares
(b) 6,893 shares (g) 33,410 shares (k) 2,598 shares
(c) 9,193 shares (h) 26,405 shares (l) 2,978 shares
(d) 9,193 shares (i) 24,060 shares (m) 10,387 shares
(e) 24,060 shares (n) 2,804 shares
(o) 2,597 shares
</TABLE>
* Share ownership shown does not include 10,000 shares in the aggregate held
in two trusts for which Mr. Dean's brother serves as trustee for the benefit
of Mr. Dean's two daughters, as to which shares Mr. Dean disclaims
beneficial ownership.
** Includes 209,619 shares subject to options where the options are exercisable
within 60 days after the Record Date.
5
<PAGE>
INFORMATION ON EXECUTIVE OFFICERS
The positions and ages as of the Record Date of the executive officers of
the Company are as set forth below. There are no family relationships among
directors or executive officers of the Company.
<TABLE>
<CAPTION>
EMPLOYEE
NAME AND POSITION AGE BUSINESS EXPERIENCE SINCE
- ------------------------------------ --- ---------------------------------------------------------- -----------
<S> <C> <C> <C>
John C. Dean 48 Prior to joining the Company and the Bank in May 1993, Mr. 1993
President, Chief Executive Officer Dean served as President and Chief Executive Officer of
and Director of the Company and Pacific First Bank, a $6.5 billion federal savings bank
the Bank headquartered in Seattle, Washington from December 1991
until April 1993. From 1990 to 1991, Mr. Dean served as
Chairman and Chief Executive Officer of First Interstate
Bank of Washington and from 1986 to 1990, Chairman and
Chief Executive Officer of First Interstate Bank of
Oklahoma.
Glen Blackmon 40 Mr. Blackmon joined the Bank in August 1993 as Executive 1993
Executive Vice President, Chief Vice President and Chief Information Officer. He assumed
Financial Officer and Chief the role of Chief Financial Officer of the Company and
Information Officer of the Company the Bank in September 1995. Prior to joining the Bank,
and the Bank Mr. Blackmon served as President and Chief Information
Officer of Boatmen's Information Systems of Iowa,
formerly known as First Interstate Information Systems of
Iowa, Inc., from March 1990 to April 1993.
A. John Busch 41 Mr. Busch served as Executive Vice President and Chief 1993
Executive Vice President, Chief Lending and Credit Officer at First National Bank in San
Credit Officer and General Counsel Diego, California from January 1992 until joining the
of the Company and the Bank Bank in August 1993. From 1982 until January 1992, Mr.
Busch held increasingly responsible positions with Union
Bank in Los Angeles, California in the merchant banking
and legal departments.
James F. Forrester 52 Mr. Forrester joined the Bank in 1987 as Senior Vice 1987
Executive Vice President and President of Operations and Administration. In 1990, Mr.
Manager of the Bank's Strategic Forrester founded the Bank's Southern California office
Financial Services Group and managed that office until August 1993. Prior to
becoming manager of the Bank's Strategic Financial
Services Group in January 1996, Mr. Forrester managed the
Bank's Special Industries Group and Northern California
Technology Group from August 1993 to December 1995.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
EMPLOYEE
NAME AND POSITION AGE BUSINESS EXPERIENCE SINCE
- ------------------------------------ --- ---------------------------------------------------------- -----------
<S> <C> <C> <C>
Richard H. Harding 51 Since joining the Bank in April 1993, Mr. Harding has held 1993
Executive Vice President of the various positions in the Bank, including Manager of the
Bank Bank's Strategic Financial Services Group from April 1993
to December 1995. In January 1996, Mr. Harding assumed
the position of Executive Vice President of Special
Projects. Prior to joining the Bank, Mr. Harding served
as a Partner in the Private and Business Banking Division
of Pacific First Bank (a federal savings bank) from
January 1992 until April 1993. From August 1973 until
January 1992, Mr. Harding held increasingly responsible
positions in First Interstate Bank of Washington's
Corporate Banking Division.
Glen G. Simmons 54 Mr. Simmons joined the Bank in July 1993 as Executive Vice 1993
Executive Vice President of Human President of Human Resources and Administration. Prior to
Resources and Administration of joining the Bank, Mr. Simmons served as Senior Vice
the Bank President and Director of Human Resources for First
Interstate Bank of Washington from November 1991 to June
1993. From February 1985 to November 1991, Mr. Simmons
held increasingly responsible positions in the Human
Resources Division of First Interstate Bank of
Washington.
</TABLE>
REPORT OF THE PERSONNEL AND COMPENSATION COMMITTEE OF
THE BOARD ON EXECUTIVE COMPENSATION
THE REPORT OF THE PERSONNEL AND COMPENSATION COMMITTEE SHALL NOT BE DEEMED
INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE
THIS PROXY STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933 OR UNDER
THE SECURITIES EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT"), EXCEPT TO THE EXTENT
THAT THE COMPANY SPECIFICALLY INCORPORATES THE INFORMATION CONTAINED IN THE
REPORT BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
Decisions regarding compensation of the Company's executive officers,
including those related to stock and stock options, are considered by the full
Board of Directors, based upon the recommendations and analysis performed by the
Personnel and Compensation Committee (the "Committee"), currently comprised of
Ms. Wells, Chair, and Messrs. Barr, deWilde, Gay, and Roster. However, the Stock
Committee makes grants of stock options to executive officers.
KEY PRINCIPLES
The Committee has adopted the following principles to use for guidance in
setting compensation:
- PAY COMPETITIVELY
-The Committee maintains a philosophy that executive compensation levels
should be competitive with that provided to others in other financial
institutions of comparable size. In that way, the Company can attract
and retain highly-qualified executives critical to the Company's
long-term success.
7
<PAGE>
-Consistent with this philosophy, the Committee regularly obtains
information regarding executive salary levels in the financial
institutions industry through various sources, including compensation
surveys conducted by banking industry associations and independent
compensation consultants.
-The Committee attempts to set (a) base compensation at the midpoint of
the range and (b) total compensation (including incentive compensation)
in the 75th to 90th percentile range (subject to the Company's financial
performance in the top quartile of the Company's competitive group).
- TIE INCENTIVE COMPENSATION TO COMPANY FINANCIAL PERFORMANCE.
-The Company's incentive compensation program is generally based on
measured financial performance of the Company and of the division
managed by the executive officer, if applicable. Incentive payouts
primarily depend on results, not efforts. Payouts are calculated as
percentages of base salaries, with threshold, target, and stretch payout
percentages being set at the beginning of each calendar year. Actual
payouts, i.e. whether threshold, target, or stretch amounts, depend on
achievement of specifically-defined goals, including corporate,
division, and individual goals.
-In 1995, incentive compensation goals for executive officers were tied
to the Company's profitability, and if applicable, the financial results
of the division managed by the executive officer.
1995 MARKET SURVEY
- EXECUTIVE OFFICERS
-A review of the Company's executive compensation was completed by an
independent compensation consultant in April 1995. In reviewing the 1995
executive compensation programs, the compensation consultant reviewed
market data (based on surveys published in 1994) for the Bank's
competitive group. The market data was updated to February 1995,
assuming a 4% annualized increase. The Bank's competitive group included
banks with $800 million to $6 billion in assets, with specific Bank
officers having been "matched" as closely as possible with competitive
group members with similar functional responsibilities. The compensation
consultant concluded that the Bank's base salaries were within the
competitive range but ranked between the 25th and 50th percentile
levels. Further, the total compensation paid to the executive officers
(including base salary and bonus) ranked in the 50th percentile. In that
a key principle of the Committee is total compensation should be in the
75th to 90th percentile range, the Committee will continue to review
executive compensation programs to ensure the Bank moves in the
direction of this range. The Committee believes this is critical to
retaining highly-qualified executives.
- CHIEF EXECUTIVE OFFICER
-The April 1995 review completed by the independent compensation
consultant (described immediately above) reflected that John Dean's 1995
base salary was below the 25th percentile level of base salaries paid to
chief executive officers in the Bank's competitive group. Further, John
Dean's aggregated 1995 base salary and bonus (based on Mr. Dean's 1995
bonus tied to 1994 performance) ranked below the 50th percentile level
of aggregated base salaries and bonuses in the competitive group.
-In January 1996, the Committee approved a grant of 5,000 shares of
restricted stock to Mr. Dean, with none of such shares vesting until
January 2000 (at which time 100% of the shares will vest). In approving
the stock grant to Mr. Dean, the Committee noted that the grant was
being made in recognition of Mr. Dean's success in 1995 (and prior
years) in increasing Company shareholder value. The stock grant is
subject to approval by the Federal Reserve Bank of San Francisco.
8
<PAGE>
INCENTIVE COMPENSATION PAID BASED ON 1995 COMPANY PERFORMANCE
- ACTUAL INCENTIVE COMPENSATION PAYMENTS.
-CHIEF EXECUTIVE OFFICER. 100% of John Dean's 1995 incentive compensation
payment depended on total Company profitability. Under the 1995
Incentive Compensation Program, the threshold, target, and stretch
payout amounts (represented as percentages of base salary) for John Dean
were 10%, 30%, and 65%, respectively. The Company's 1995 net income
reached the stretch goal. Accordingly, John Dean's incentive
compensation payment of $152,321 represented approximately 60% of his
base salary on December 31, 1995 ($254,200). A portion of Mr. Dean's
bonus ($30,464) was deferred.
-OTHER EXECUTIVE OFFICERS. In addition to the Company's profitability,
the Personnel and Compensation Committee set other goals for the other
executive officers' threshold, target, and stretch payment goals, namely
division and individual performances. For those executive officers in
profit-generating units, including James Forrester and Richard Harding,
division goals (and actual payments) were tied to financial performance
of the respective division, increase in the division's deposits, and
client calls made by the division. For those executive officers in
support divisions, including Glen Blackmon, John Busch and Glen Simmons,
1995 incentive compensation goals (and actual payments) were tied to
management of credit and operational risk, client service, and special
projects (including projects involving conversion of the Company's core
system and involving relocation to the Company's new headquarters).
- EMPLOYEE STOCK OWNERSHIP PLAN
-Also, see discussion in "Employee Stock Ownership Plan" below regarding
payments to executives under the Company's qualified defined
contribution plan.
TAX CONSEQUENCES
To the extent readily determinable and as one of the factors in its
consideration of compensation matters, the Committee considers the anticipated
tax treatment to the Company and to the executives of various payments and
benefits. The Committee will consider various alternatives to preserving the
deductibility of compensation payments (in particular, pursuant to Section
162(m) of the Internal Revenue Code) to the extent reasonably practicable and to
the extent consistent with its other compensation objectives. No executive
officer received cash compensation in excess of $1 million during 1995, and the
Committee does not expect that any executive officer will receive cash
compensation in excess of $1 million during 1996. The Committee adopted
limitations on the number of shares that may be subject to awards granted under
the 1989 Stock Option Plan during any one calendar year to an individual so that
compensation derived from stock options granted under such plan would qualify as
"performance-based" compensation within the meaning of Section 162(m) and would
therefore be deductible by the Company.
PERSONNEL AND COMPENSATION COMMITTEE
ANN R. WELLS, CHAIR
GARY K. BARR
DAVID M. DEWILDE (SINCE AUGUST 1995)
HENRY M. GAY
DANIEL J. KELLEHER (UNTIL JANUARY 1995)
MICHAEL ROSTER
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, the Personnel and Compensation Committee performed all
compensation functions of the Board of Directors. With regard to stock-based
compensation (including under the Company's employee benefit plans), the
Personnel and Compensation Committee worked with the Stock Committee, which has
primary responsibility for reviewing and approving the Company's stock-based
compensation plans. (See discussion below under "Board Committees and Meeting
Attendance" for additional information on the Personnel and Compensation
Committee and the Stock Committee). The Personnel and Compensation Committee and
the Stock Committee are currently chaired by Ms. Ann Wells, with Messrs. Barr,
deWilde, Gay and Roster serving as members. Mr. Kelleher served on the Personnel
and Compensation Committee until January 1995. With the exception of Mr. Barr,
who served as Interim Acting Chief Executive Officer of the Bank during the
period January 1993 through May 1993, none of the aforementioned persons has
ever been an officer or employee of the Company or the Bank.
Ann R. Wells, Chief Executive Officer of Ann Wells Personnel Services, Inc.,
provided temporary employment and recruiting services to the Bank in 1995 and is
expected to perform such services in 1996. The fees paid to Ann Wells Personnel
Services by the Bank did not exceed five (5) percent of that firm's gross
revenues for its last full fiscal year and are comparable to those charged by
unrelated parties for similar services.
Freedom Travel (of which Daniel J. Kelleher was a principal owner until
March 1995) provided travel agency services to the Bank in 1995. The fees paid
to Freedom Travel by the Bank did not exceed five (5) percent of that agency's
gross revenues for its last full fiscal year and are comparable to those charged
by unrelated parties for similar services.
As a state-chartered bank that is a member of the Federal Reserve System,
the Bank is subject to regular examinations by the California State Banking
Department ("Department") and the Federal Reserve Bank of San Francisco. In a
concurrent Department/Federal Reserve Bank of San Francisco examination
concluded in the fourth quarter of 1993, the regulators identified two loans to
Mr. Barr, a director, totaling $529,000 at December 31, 1993, which, in the
regulators' opinion, involved more than a normal risk of default. Only one of
the loans was outstanding as of December 31, 1995 (with such loan having been
upgraded in the prior year to reflect no more than a normal risk of default). As
of December 31, 1995, the outstanding balance on this loan was $266,670.
10
<PAGE>
RETURN TO SHAREHOLDERS PERFORMANCE GRAPH
The following graph compares, for the period from December 31, 1990 through
December 31, 1995, the cumulative total shareholder return on the Common Stock
of the Company with (i) the cumulative total return of the S&P 500 market index,
(ii) the cumulative total return of the NASDAQ stock market index, (iii) the
cumulative total return of the NASDAQ Banks Index and (iv) Montgomery
Securities' WESTERN BANK MONITOR California Independent Bank Proxy market index.
The graph assumes an initial investment of $100 and reinvestment of dividends.
The graph is not necessarily indicative of future stock price performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL
RETURN AMONG SILICON VALLEY BANCSHARES, S&P 500, NASDAQ,
NASDAQ BANKS AND THE CALIFORNIA INDEPENDENT BANK PROXY MARKET ISSUES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SILICON VALLEY
BANCSHARES S&P 500 NASDAQ STOCK MARKET -US NASDAQ BANKS
<S> <C> <C> <C> <C>
1990 100 100 100 100
1991 136.54 130.47 160.56 164.09
1992 86.24 140.41 186.87 238.85
1993 105.84 154.56 214.51 272.39
1994 141.12 156.6 209.69 271.41
1995 250.88 215.46 296.3 404.35
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------
1990 1991 1992 1993 1994 1995
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Silicon Valley Bancshares.......................... 100.00 136.54 86.24 105.84 141.12 250.88
S&P 500............................................ 100.00 130.47 140.41 154.56 156.60 215.46
NASDAQ Stock Market -- US.......................... 100.00 160.56 186.87 214.51 209.69 296.30
NASDAQ Banks (1)................................... 100.00 164.09 238.85 272.39 271.41 404.35
California Independent Bank Proxy (1).............. -- -- -- -- -- --
</TABLE>
- ------------------------
(1) Montgomery Securities' WESTERN BANK MONITOR California Independent Bank
Proxy market index information was not available to the Company as of the
date of filing of this Preliminary Proxy Statement. Such market index
information will be inserted in the Definitive Proxy Statement. Another bank
market index (the NASDAQ Banks Index) is being provided in this Preliminary
Proxy Statement and also will be included in the Definitive Proxy Statement.
11
<PAGE>
TABLE 1 -- SUMMARY COMPENSATION TABLE
The following table sets forth certain information for each of the last
three (3) fiscal years concerning the compensation of the Chief Executive
Officer and the five other most highly compensated executive officers of the
Company and of the Bank ("Named Officers") (based on salary plus bonus for
1995):
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
AWARDS
------------------------
ANNUAL COMPENSATION SECURITIES
--------------------------------------------- RESTRICTED UNDERLYING PAYOUTS
OTHER ANNUAL STOCK OPTIONS/ -------------
SALARY (1) BONUS COMPENSATION (2) AWARDS (3) SARS (4) LTIP PAYOUTS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- --------------------------------- --------- ---------- -------------- ----------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
John C. Dean (6) 1995 $ 254,200 $ 152,321(7) -- -- -- --
President and Chief 1994 $ 250,525 $ 123,681(8) -- -- -- --
Executive Officer 1993 $ 175,346 $ 75,000 $ 87,741 $ 475,000 100,000 --
Glen Blackmon (9) 1995 $ 135,000 $ 82,781(7) -- -- 21,500 --
Executive Vice President 1994 $ 124,692 $ 62,915 -- -- 5,000 --
Chief Financial Officer 1993 $ 50,000 $ 25,000 $ 15,064 -- 20,000 --
and Chief Information
Officer
A. John Busch (10) 1995 $ 160,000 $ 60,704(7) -- -- 21,500 --
Executive Vice President, 1994 $ 155,525 $ 77,523(8) -- -- 3,500 --
Chief Credit Officer and 1993 $ 59,104 $ 25,000 $ 91,620 -- 25,000 --
General Counsel
James F. Forrester 1995 $ 160,000 $ 75,703(7) -- -- 21,500 --
Executive Vice President 1994 $ 145,675 $ 73,238 -- -- 15,000 --
1993 $ 142,083 $ 60,000 $ 118,125 -- 15,000 --
Richard H. Harding (11) 1995 $ 145,000 $ 73,450(12) -- -- 21,500 --
Executive Vice President 1994 $ 135,525 $ 67,784 -- -- 3,500 --
1993 $ 92,596 $ 30,000 $ 35,283 -- 25,000 --
Glen G. Simmons (13) 1995 $ 135,000 $ 82,781(12) -- -- 21,500 --
Executive Vice President of 1994 $ 128,367 $ 62,915 $ 45,327 -- 5,000 --
Human Resources and 1993 $ 56,846 $ 25,000 $ 39,518 -- 20,000 --
Administration
<CAPTION>
ALL OTHER
COMPENSATION (5)
NAME AND PRINCIPAL POSITION ($)
- --------------------------------- -----------------
<S> <C>
John C. Dean (6) $ 23,500
President and Chief $ 19,998
Executive Officer $ 1,000
Glen Blackmon (9) $ 21,250
Executive Vice President $ 17,272
Chief Financial Officer $ 1,000
and Chief Information
Officer
A. John Busch (10) $ 23,500
Executive Vice President, $ 19,998
Chief Credit Officer and --
General Counsel
James F. Forrester $ 23,500
Executive Vice President $ 19,998
$ 18,369
Richard H. Harding (11) $ 22,750
Executive Vice President $ 18,630
$ 1,000
Glen G. Simmons (13) $ 21,250
Executive Vice President of $ 17,258
Human Resources and $ 1,000
Administration
</TABLE>
- ------------------------------
(1) Includes amounts deferred at the election of the executive officer.
(2) Amounts in this column represent relocation costs incurred by the employee
and reimbursed by the Bank. Amounts for the years shown are not reflected
if the total value of perquisites paid to the executive officer during a
fiscal year did not exceed, in the aggregate, the lesser of $50,000 or 10%
of the individual's salary plus bonus in the subject year.
(3) As of December 31, 1995, Mr. Dean held 50,000 restricted shares of the
Company's Common Stock, with a market value of $1,200,000. Market values
were based on the $24.00 closing market price of the Company's Common Stock
on the National Association of Securities Dealers Automated
Quotation/National Market System on December 29, 1995, the last trading day
of 1995. Holders of restricted stock have rights equivalent to those of
other shareholders, including voting rights and rights to dividends. Since
the date of grant, Mr. Dean's restricted stock grant was amended to change
the vesting, which originally provided for a three-year vesting period
beginning in 1994, to provide for 100% cliff-vesting in 1996 (with vesting
contingent upon continued employment). Accordingly, all of Mr. Dean's
shares will vest on March 31, 1996.
(4) The numbers in this column reflect shares of common stock underlying
options. No Stock Appreciation Rights ("SARs") were awarded during the
years 1993 through 1995.
(5) Amounts in this column represent employer contributions to the Company's
combined 401(k) and Employee Stock Ownership Plan.
(6) Mr. Dean joined the Company and the Bank in May 1993.
(7) Bonus grant is subject to approval by the Federal Reserve Bank of San
Francisco. Also, 20% of the executive's bonus was deferred.
12
<PAGE>
(8) These bonuses were payable in stock, with the number of shares tied to the
closing market price of the Company's stock ($13.625) on the date of Board
approval of the bonuses (January 24, 1995). With regard to such stock
grants, the Board offered the executive officers their choice of the
following: (1) 100% of the bonus amount would be paid in stock, with the
officer being responsible to pay out-of-pocket the taxes related to such
stock grant or (2) the bonus amount would be paid in part stock and part
cash, with the cash portion of such bonus amount being equal to the amount
of taxes payable on the total bonus amount. (Such cash portion was withheld
by the Company to pay the taxes, and accordingly, no cash was payable to the
executive). Mr. Dean selected the former alternative, and Mr. Busch selected
the latter alternative.
(9) Mr. Blackmon joined the Company and the Bank in August 1993.
(10) Mr. Busch joined the Company and the Bank in August 1993.
(11) Mr. Harding joined the Bank in April 1993.
(12) 20% of the executive's bonus was deferred.
(13) Mr. Simmons joined the Bank in July 1993.
STOCK OPTIONS
The following table sets forth information concerning the grant of options
to purchase the Company's Common Stock to the Named Officers during 1995:
TABLE 2 -- OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS IN 1995 (1)
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF VALUE AT ASSUMED
SECURITIES PERCENT OF TOTAL ANNUAL RATE OF STOCK
UNDERLYING OPTIONS/ PRICE APPRECIATION FOR
OPTIONS/ SARS GRANTED TO EXERCISE OR OPTION TERM (3)
SARS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED (#) FISCAL YEAR (2) ($/SHARE) DATE 5% ($) 10% ($)
- ---------------------------------- ----------- ----------------- ----------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
John C. Dean...................... -- -- -- -- -- --
Glen Blackmon..................... 21,500 5.84% $ 13.63 01/24/2000 $ 80,963 $ 178,907
A. John Busch..................... 21,500 5.84% $ 13.63 01/24/2000 $ 80,963 $ 178,907
James F. Forrester................ 21,500 5.84% $ 13.63 01/24/2000 $ 80,963 $ 178,907
Richard H. Harding................ 21,500 5.84% $ 13.63 01/24/2000 $ 80,963 $ 178,907
Glen G. Simmons................... 21,500 5.84% $ 13.63 01/24/2000 $ 80,963 $ 178,907
</TABLE>
- ------------------------
(1) Consists entirely of options granted pursuant to the Company's 1989 Stock
Option Plan (the "Plan"). The Plan provides for administration of the Plan
by the Board of Directors of the Company, or by the Stock Committee (to
which Committee the Board has delegated authority to administer the Plan)
(the "Administrator"). As Administrator, the Stock Committee designates the
persons to be granted options, the type of option, the number of underlying
shares, the exercise price, the date of grant and the date options are
exercisable. The Administrator also has broad discretion to amend
outstanding options or to effect repricings. These options were granted at
100% of the fair market value of the Company's Common Stock on the date of
grant. The option grants vest ratably over three years and expire five years
from the date of grant. Upon a "Change in Control" of the Company or the
Bank, the options will become fully exercisable.
(2) Based on options to purchase an aggregate of 368,250 shares of Common Stock
granted to all employees during 1995.
(3) Represents the potential net realizable dollar value of the option grants,
i.e., the market price of the underlying shares (adjusted for the assumed
annual stock appreciation rates of 5% and 10%, respectively, with the
assumed rates compounded annually over the five-year term of the options),
minus the aggregate exercise price of the options. The stock price
appreciation rates are mandated by SEC rules and do not represent the
Company's estimate of future stock prices.
The following table sets forth information concerning the exercise of
options during 1995 and the options held at 1995 fiscal year-end by Named
Officers.
13
<PAGE>
TABLE 3 -- AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES (1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISABLED
SHARES OPTIONS/SARS AT FISCAL IN- THE-MONEY OPTIONS/SARS
ACQUIRED ON VALUE YEAR-END AT FISCAL YEAR-END (3)
EXERCISE REALIZED (2) -------------------------- --------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John C. Dean......................... -- -- 50,000 50,000 $ 753,000 $ 753,000
Glen Blackmon........................ -- -- 15,100 31,400 $ 198,204 $ 355,351
A. John Busch........................ -- -- 17,940 32,060 $ 244,938 $ 367,937
James F. Forrester................... 15,819 $ 159,445 21,150 36,350 $ 274,469 $ 427,737
Richard H. Harding................... -- -- 17,940 32,060 $ 278,438 $ 384,437
Glen G. Simmons...................... -- -- 15,100 31,400 $ 226,612 $ 369,343
</TABLE>
- ------------------------
(1) Consists entirely of stock options. No stock appreciation rights ("SARs")
have been awarded to date.
(2) Represents the market price of the underlying securities on the date of the
option exercise, minus the exercise price.
(3) Represents the market value of the underlying securities at 1995 fiscal
year-end, based on the $24.00 closing market price of the Company's Common
Stock on the National Association of Securities Dealers Automated
Quotation/National Market System on December 29, 1995, less the exercise
price.
EMPLOYEE STOCK OWNERSHIP PLAN
The Company makes annual contributions to the now combined 401(k) and
Employee Stock Ownership Plan. (In 1995, the Company Employee Stock Ownership
Plan [a qualified stock bonus plan under the Internal Revenue Code] merged into
the Bank 401(k) Plan [a qualified profit sharing plan under the Internal Revenue
Code].) Hereinafter, "ESOP" shall refer to the portion of the combined plan that
includes amounts contributed by the Company on a compensation-based formula. The
assets of the ESOP (primarily Company stock) are held in trust for the exclusive
benefit of the employee-participants. Annual contribution amounts to the ESOP
are tied to the Company's profitability. Under the 1995 program, the guaranteed
contribution was 5% of each employee's eligible base compensation, with,
however, an additional potential 10% (of eligible base compensation) to be paid,
depending on attaining Company profitability goals (subject to certain
limitations on contributions under the Internal Revenue Code and other
limitations, including vesting provisions, under the ESOP). The Company's
profitability in 1995 (reaching stretch goals) resulted in contributions to each
employee of 15% of annual eligible base compensation.
TERMINATION ARRANGEMENTS
The Bank has entered into Termination Agreements ("Termination Agreements")
with Messrs. Dean, Blackmon, Busch, Forrester, Harding, Simmons and other
executive officers. The Termination Agreements provide for severance pay and
continuation of certain benefits if (1) the executive's employment is terminated
following a "Change in Control" (defined below) or (2) the executive is
terminated without cause, other than in connection with a Change in Control. The
Termination Agreements were approved by disinterested members of the Boards of
Directors of the Company and the Bank during 1994.
TERMINATION FOLLOWING A CHANGE IN CONTROL. In order for an executive to
receive benefits under the Termination Agreements following a Change in Control,
the executive must (i) be terminated involuntarily without cause or
constructively terminated within 12 months following the Change in
14
<PAGE>
Control or (ii) voluntarily terminate his employment within 180 days following a
Change in Control (in which case he retains the right to limited severance
benefits, including one-half of the termination payments otherwise provided for
following a Change in Control).
Under the Termination Agreements, a "Change in Control" will be deemed to
have occurred in any of the following circumstances:
(1) the acquisition of 50% or more of the outstanding voting stock of
the Company or the Bank by any person or entity, with certain exceptions for
employee benefit plans of the Company or the Bank;
(2) the acquisition of 25% or more of the outstanding voting stock of
the Company or the Bank by any person or entity and a change in the
composition of the Board during the following 12 months such that those
persons serving as directors immediately prior to the share acquisition, and
those new directors elected by a vote of at least two-thirds of the
directors of the Company or the Bank, cease to make up at least 60% of the
directors of the Company or the Bank;
(3) a merger or consolidation of the Company or the Bank with any other
corporation, other than a merger or consolidation in which the shareholders
of the Company or the Bank immediately prior thereto continue to own at
least 75% of the outstanding voting stock of the surviving entity; or
(4) the complete liquidation of the Company or the Bank, or disposition
of all or substantially all of the Company's or the Bank's assets.
A constructive termination is deemed to have occurred if the executive
resigns in writing following a reduction in the executive's then annual base
salary, a material reduction in the executive's responsibilities, incentive
compensation or benefits, or a relocation by more than 50 miles of the principal
place at which the executive works.
Under the Termination Agreements, the amount of severance benefits payable
to an executive whose employment is terminated during the 12 months following a
Change in Control is dependent upon the "transaction price multiple" of the then
book value of the Company or the Bank. As the transaction price multiple of book
value increases above 1.0, the severance benefit (represented as a multiple of
the executive's base salary) increases. For the percentage of consideration
received in excess of book value, the executive is entitled to receive twice
that percentage multiplied by his then annual base salary. Also, the executive
is entitled to a pro rata portion of earned bonus compensation. Finally, upon
such a termination, all outstanding options (representing interests in the
Company's Common Stock) will become immediately and fully vested (and may be
exercised within three months following termination) and all restrictions upon
any restricted Company stock will lapse immediately and all such shares will
become fully vested.
In linking the amount of termination payments within 12 months following a
Change in Control to the transaction price multiple of book value, the Boards of
Directors of the Company and the Bank underscored their view that management
should be rewarded correspondingly for increased shareholder value. Therefore,
the amount of severance payments to executives under the Termination Agreements
increases in direct proportion to increases in value realized through a Change
in Control of the Company or the Bank. Conversely, sale of the Company or the
Bank for less than book value, would result in no cash payout to executives
under the Termination Agreements, although they would still be entitled to
acceleration of vesting and continuation of benefits.
The severance program approved by the Boards of the Company and the Bank
includes non-executive Bank officers above a specified grade level in the Bank.
The amount of severance benefits payable to officers below the executive level
is likewise dependent upon the "transaction price multiple" described above.
Under the program for non-executive officers, as the grade level of the officer
in the Bank increases, the multiple of the officer's base salary used in
determining the severance benefit increases.
15
<PAGE>
In reviewing the proposed Termination Agreements, the Boards of the Company
and the Bank researched Change in Control protections afforded to employees in
other banking institutions of similar size. Based on this review, it is the
Board's view that the program approved by the Boards is less generous to
employees than programs typically afforded to other institutions' employees,
particularly, in light of the required premium benefits to shareholders as a
condition to any cash severance payments being made.
TERMINATION WITHOUT CAUSE. Under the Termination Agreements, executives are
entitled to different severance benefits if they are terminated without cause
either prior to a Change in Control or more than 12 months after a Change in
Control. The severance benefit is equal to 50% of the executive's then annual
base salary, plus a pro rata portion of earned bonus compensation. The payment
may be made in a lump sum or, at the executive's election, in equal monthly
installments for a period not to exceed six months from the date of termination.
During the period, the executive is entitled to receive reasonable outplacement
services and continuation of insurance and other health related benefits
provided by the Bank. Also, all outstanding options (representing interests in
the Company's Common Stock) on the date of termination will become immediately
and fully vested (and may be exercised within three months following
termination) and all restrictions upon any restricted Company stock will lapse
immediately and all such shares will become fully vested.
LIMITATION ON SEVERANCE PAYMENTS. To the extent that the severance payments
otherwise called for by the Termination Agreements would trigger "golden
parachute" tax treatment pursuant to Section 280G and/or Section 4999 of the
Internal Revenue Code, the payments will be reduced so that such adverse tax
consequences to the Company are not triggered.
DEAN EMPLOYMENT AGREEMENT
Mr. Dean entered into an employment agreement with the Company and the Bank,
effective April 12, 1993. The agreement provided for a one-year term of
employment, renewable annually thereafter by mutual agreement. Pursuant to his
employment agreement, Mr. Dean received a grant of 50,000 shares of restricted
stock in 1993, of which 25% were originally scheduled to vest on each of March
31, 1993, 1994, 1995 and 1996. Such shares were originally subject to a
restriction on resale for two years following vesting. This stock grant was
amended in the last quarter of 1993 to provide that no shares would vest until
March 31, 1996, at which time 100% of the shares would vest. The agreement was
further amended in 1995 to delete the two-year resale restriction. (The resale
restriction was deleted to provide Mr. Dean with sufficient liquidity to pay the
income taxes on the 50,000 shares vesting in 1996.) Additionally, under Mr.
Dean's employment agreement, the Company granted Mr. Dean options to purchase
50,000 shares of the Company's Common Stock pursuant to the Company's 1989 Stock
Option Plan (with the agreement providing for options to purchase an additional
50,000 shares under the terms of the agreement). The options vest as to 25% each
year, beginning in 1994. With the adoption of the above-described Termination
Agreements and with the exception of the above-described terms in Mr. Dean's
employment agreement, most key provisions of Mr. Dean's employment agreement
have been superseded.
SMITH EMPLOYMENT AGREEMENT
Roger V. Smith resigned as a member of the Company Board, effective October
24, 1995. Pursuant to an Employment Agreement, Mr. Smith will remain employed by
the Bank through October 31, 1997. Thereafter, Mr. Smith's employment term may
be renewed for three successive one-year periods (commencing on November 1,
1997, November 1, 1998, and November 1, 1999, respectively) under certain
conditions and circumstances. During the employment term, Mr. Smith shall
receive a monthly salary of $8,333. Also, during the employment term, all
options held by Mr. Smith will continue to be outstanding and vest in accordance
with their respective terms.
WOODWARD CONSULTING AGREEMENT
Allyn C. Woodward resigned as Senior Executive Vice President and Chief
Operating Officer of the Bank, effective April 1, 1995. The Bank and Mr.
Woodward have entered into a consulting agreement, effective April 1, 1995,
pursuant to which Mr. Woodward will continue to serve as a
16
<PAGE>
consultant to the Bank until October 1996. Under the consulting agreement, the
Bank will pay Mr. Woodward $214,200 over the 19-month period from April 1995 to
October 1996, for Mr. Woodward's services as a consultant. Until October 1996,
all stock options held by Mr. Woodward will continue to be outstanding and vest
in accordance with their respective terms. Additionally, the Company and the
Bank granted Mr. Woodward 25,000 shares of the Company's Common Stock, which
vested as to 1/3 of such number of shares on January 5, 1996 (on account of Mr.
Woodward's non-competition with the Bank through and including such date), and
which will vest as to 1/3 of such number of shares on each of January 5, 1997
and 1998, contingent upon Mr. Woodward's continued non-competition with the Bank
through and including the respective vesting dates.(1)
UYEMURA AGREEMENTS
The Company and the Bank entered into an agreement with Dennis G. Uyemura
pursuant to which Mr. Uyemura resigned as Chief Financial Officer of the Company
and the Bank, effective September 15, 1995. In accordance with the "termination
without cause" provisions of the Termination Agreement previously entered into
between the Bank and Mr. Uyemura, as described above, Mr. Uyemura received a
severance benefit equal to 50% of his then annual base salary on the date of
termination, plus a pro rata portion of earned bonus compensation. Also, Mr.
Uyemura's outstanding options on September 15, 1995 became immediately and fully
vested. Additionally, the Company, the Bank, and Mr. Uyemura have entered into a
Consulting Agreement, pursuant to which Mr. Uyemura has been engaged as a
consultant to work on the Company's transition to a new financial management
system. During the consulting term (September 15, 1995 through March 15, 1996),
Mr. Uyemura will be paid $6,667 per month.
- ------------------------
(1) As reported in the Company's 1995 Proxy Statement, Mr. Woodward's 25,000
restricted shares of the Company's Common Stock held at December 31, 1994
were forfeited to the Company. The grant described in this paragraph
constituted a new grant to Mr. Woodward.
17
<PAGE>
BOARD COMMITTEES AND MEETING ATTENDANCE
The Company and the Bank have Audit, Directors' Loan, Executive, Finance,
Personnel and Compensation/Stock Committees of their respective Boards of
Directors. Members as of the Record Date were as follows:
<TABLE>
<CAPTION>
AUDIT DIRECTORS' LOAN EXECUTIVE
- ------------------------------------ ------------------------------------ ------------------------------------
<S> <C> <C>
Clarence J. Ferrari, Jr., Chair Gary K. Barr, Chair Daniel J. Kelleher, Chair
James F. Burns, Jr. John C. Dean James F. Burns, Jr.
Henry M. Gay David M. deWilde John C. Dean
James R. Porter Daniel J. Kelleher Michael Roster
Ann R. Wells
<CAPTION>
PERSONNEL AND
FINANCE COMPENSATION/STOCK
- ------------------------------------ ------------------------------------
<S> <C> <C>
James F. Burns, Jr., Chair Ann R. Wells, Chair
John C. Dean Gary K. Barr
Clarence J. Ferrari, Jr. David M. deWilde
James R. Porter Henry M. Gay
Michael Roster
</TABLE>
AUDIT COMMITTEE (JOINT COMPANY/BANK COMMITTEE) 13 meetings in fiscal year 1995
- Approves the selection and termination of the Company's independent
auditors;
- Reviews the scope and results of the audit plans of the independent
auditors;
- Reviews the adequacy of the Company's internal accounting controls;
- Reviews with management, and with the independent auditors, reports filed
with banking regulatory agencies and the Securities and Exchange
Commission;
- Evaluates the activities and utilization of the Company's internal
auditing personnel; and
- Oversees management's efforts in ensuring that the Company is complying
with accounting standards and with federal and state banking laws.
DIRECTORS' LOAN COMMITTEE (BANK COMMITTEE) 62 meetings in fiscal year 1995
- Works with management in seeking to ensure that the Bank maintains and
enforces the Bank's credit policy and credit procedures;
- Works with management in ensuring compliance with lending limit
restrictions and with established portfolio constraints and limitations;
- Works with management in ensuring problem credits are identified on a
timely basis;
- Establishes lending authority levels for Bank committees and respective
officer levels in the Bank; and
- Reviews the Bank's community delineation's to ensure that they meet the
purposes of the Community Reinvestment Act.
EXECUTIVE COMMITTEE (SEPARATE COMPANY/BANK COMMITTEES) 8 meetings (Company
Executive
Committee) in fiscal year
1995
5 meetings (Bank Executive
Committee) in fiscal year
1995
- Works with management in developing long-term strategic plans;
- Has the authority of the Board between Board meetings, except as otherwise
provided by California law; and
18
<PAGE>
- Serves as the nominating committee for directors as well as Board and
Board committee chairs. (The Executive Committee will consider nominees
for director who are recommended by shareholders. Shareholders that wish
to submit names of prospective director-nominees for consideration by the
Executive Committee should do so in writing to the Secretary of Silicon
Valley Bancshares, 3003 Tasman Drive, Santa Clara, CA 95054.)
FINANCE COMMITTEE (BANK COMMITTEE) 11 meetings in fiscal year 1995
- Oversees the Bank's investment and funds management policies, which are
comprised of the following four policies: investment policy, liquidity
management policy, asset/liability management policy, and capital
management policy; and
- Reviews and approves the Company's and the Bank's insurance policies.
PERSONNEL AND COMPENSATION COMMITTEE (BANK COMMITTEE) 9 meetings in fiscal year
1995
- Works with management in ensuring that the Bank's long-term and short-term
compensation programs are competitive and effective in attracting,
retaining, and motivating highly-skilled personnel;
- Reviews and approves the Chief Executive Officer's (and the Bank's
Managing Committee members') compensation;
- Ensures that an appropriate mix of long-term and short-term compensation
programs are in place to provide performance-oriented incentives to the
Bank's employees; and
- Reviews and approves compensation and employee benefit plans. (With regard
to stock-based plans, the Personnel and Compensation Committee coordinates
its efforts with those of the Company's Stock Committee.)
STOCK COMMITTEE (COMPANY COMMITTEE) 4 meetings in fiscal year 1995
- Reviews and approves all stock-based compensation plans, including
employee stock option plans and employee stock ownership plans;
- Makes option grants to executive officers; and
- Works with the Bank's Personnel and Compensation Committee in ensuring
that stock-based compensation plans for the Company and the Bank are
effective in incentivizing employees to excel in performance.
Actions taken by the above-described Board Committees are reported to the
Company or Bank Board, as appropriate, following the Committee meetings.
During fiscal year 1995 (ended December 31, 1995), the Company Board of
Directors met 10 times: 4 regular meetings and 6 special meetings. During fiscal
year 1995 (ended December 31, 1995), the Bank Board of Directors met 12 times:
12 regular meetings and zero special meetings. All directors attended at least
75% of the aggregate of all Board meetings and meetings held by Committees of
which they were members.
DIRECTOR COMPENSATION
Outside directors receive an annual automatic stock grant of 2,500 shares of
the Company's Common Stock, together with reimbursement for travel expenses. The
annual grants of 2,500 shares are issued under the Company's 1989 Stock Option
Plan. Subject to re-election to the Board, each director will be granted an
award of 2,500 shares on April 19, 1996 in recognition of 1996-1997 service
19
<PAGE>
on the Board. During 1995, Directors Barr, Burns, Ferrari, Gay, Kelleher,
Porter, Roster and Wells each received a 2,500-share grant and Director deWilde
received a 2,083-share grant upon joining the Board in July 1995.
The Chair of the Board receives an additional annual fee of $5,000. The
Chairs of the respective Board Committees, as well as the Vice-Chair of the
Board, each receive an annual fee of $1,500. Finally, outside directors on the
Directors' Loan Committee (including the Chair of this Committee) receive $150
for every Committee meeting attended after the first two in any calendar month.
The Committee has five scheduled meetings each calendar month.
The compensation program for outside directors currently is under review by
the Personnel and Compensation Committee and is subject to change.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS
PRINCIPAL SHAREHOLDERS
Information concerning the owners of more than 5% of the outstanding Common
Stock of the Company (as of the Record Date) follows. The Company knows of no
persons other than those entities described below who beneficially own more than
5% of the outstanding Common Stock of the Company.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
--------------------------
NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNER SHARES TOTAL
- ----------------------------------- ------------ ------------
<S> <C> <C>
Entities affiliated with 704,015(1) 7.7%
Brinson Partners, Inc.
209 South La Salle
Chicago, Illinois 60604
Entities affiliated with 615,945(2) 6.7%
GeoCapital Corporation
767 Fifth Avenue
New York, New York 10153
H.A. Schupf & Co., Inc. 597,990(3) 6.6%
101 East 52nd Street
New York, New York 10022
T. Rowe Price Associates, Inc. 519,000(4) 5.7%
100 E. Pratt Street
Baltimore, Maryland 21202
</TABLE>
- ------------------------
(1) The number of shares, together with information in this footnote, have been
derived from Amendment No. 2 to Schedule 13G dated as of February 9, 1996 by
Brinson Partners, Inc. ("BPI"), an investment adviser, as filed with the
Securities and Exchange Commission ("SEC"). BPI is a wholly owned subsidiary
of Brinson Holdings, Inc. ("BHI"), a parent holding company; and Brinson
Trust Company ("BTC"), a bank, is a wholly-owned subsidiary of BPI. BHI is a
wholly-owned subsidiary of SBC Holding (USA), Inc. ("SBCUSA"). SBCUSA is a
wholly-owned subsidiary of Swiss Bank Corporation ("SBC"). SBC, SBCUSA, BHI
and BPI may be deemed to beneficially own and have the power to dispose and
vote or direct the disposition of voting of the Common Stock held by BTC and
BPI. BTC has shared voting and dispositive power with respect to 188,215
shares and BPI has shared voting and dispositive power with respect to
704,015 shares.
(2) The number of shares in this table, together with information in this
footnote, have been derived from the Schedule 13G dated as of February 15,
1996 by GeoCapital Corporation ("GCC"), as
20
<PAGE>
filed with the SEC. GCC is deemed to be the beneficial owner of 517,745
shares since it has the sole power to dispose or to direct the disposition
of such shares; however, GCC does not have any voting power with respect to
such shares. Irwin Lieber and Barry K. Fingerhut, principal stockholders of
GCC, own directly 42,650 and 51,350 shares, respectively. Jeanne E.
Flaherty, an employee of GCC, owns 500 shares; Seth Lieber, an employee of
GCC, owns 1,500 shares; Jonathan Lieber, an employee of GCC, owns 2,000
shares; and Wilma Engel, an individual, owns 200 shares. In addition, by
reason of their ownership interests in GCC, Messrs. Lieber and Fingerhut may
also be deemed to be indirect beneficial owners of the 517,745 shares that
GCC is deemed to own beneficially.
(3) The number of shares in this table, together with information in this
footnote, have been derived from Amendment No. 3 to Schedule 13G dated as of
January 26, 1996 by H. A. Schupf & Co., Inc., an investment adviser, as
filed with the SEC. H. A. Schupf & Co., Inc., has sole voting power with
respect to 50,000 shares and sole dispositive power with respect to all
597,990 shares. Its clients are the actual owners of 547,990 of the shares
and have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, such securities. No
individual client has an interest that relates to more than five (5) percent
of the class.
(4) The number of shares, together with information in this footnote, have been
derived from the Schedule 13G dated as of February 14, 1996 by T. Rowe Price
Associates, Inc. ("TRP Associates"), an investment adviser and T. Rowe Price
Small Cap Value Fund, Inc. ("TRP Fund"), as filed with the Securities and
Exchange Commission ("SEC"). TRP Associates has sole voting power with
respect to 35,000 shares and sole dispositive power with respect to 519,000
shares. TRP Fund has sole voting power with respect to 480,500 shares (which
number of shares is included in the number of shares reported by TRP
Associates) and sole dispositive power as to no shares. The ultimate power
to receive dividends and the power to direct the receipt of dividends are
vested in the individual and institutional clients to which TRP Associates
serves as investment adviser. No client has an interest that relates to more
than five (5) percent of the class. With respect to securities owned by the
TRP Fund, only State Street Bank and Trust Company, as custodian for the TRP
Fund, has the right to receive dividends paid with respect to, and proceeds
from the sale of, such securities. The shareholders of the TRP Fund
participate proportionately in any dividends and distributions so paid.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Company believes that during fiscal year 1995, with the exception of the
following items, its officers (as defined in the rules under Section 16 of the
Exchange Act) and directors have complied with all Section 16(a) filing
requirements, except that (i) James Forrester and Harry Kellogg each made one
late filing with regard to one sale in 1995 and (ii) Catherine Ngo made one late
filing with regard to one purchase in 1995.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain directors of the Company and Bank and the entities with which they
are affiliated are customers of the Bank and have had banking transactions with
the Bank in the ordinary course of business. The Board of Directors of the Bank
adopted a policy during 1992 to prohibit new loans or the renewal of existing
loans to insiders after December 31, 1993. Term loans existing at December 31,
1992 were permitted to remain outstanding until scheduled maturity. The Company
believes that all extensions of credit included in such transactions were made
in compliance with applicable laws and on substantially the same terms,
including interest rates, collateral and repayment terms, as those prevailing at
the time for comparable transactions with other persons of similar
creditworthiness and, in the opinion of the Board of Directors of the Bank, did
not involve more than a normal risk of collectibility or default or present any
other unfavorable features.
See, however, "Compensation Committee Interlocks and Insider Participation."
21
<PAGE>
PROPOSAL NO. 2
APPROVAL OF AMENDMENTS TO
THE SILICON VALLEY BANCSHARES 1989 STOCK OPTION PLAN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE OPTION PLAN
PROPOSED AMENDMENT
The 1989 Silicon Valley Bancshares Stock Option Plan (the "Option Plan") was
amended by the Board of Directors in February 1996, subject to approval by the
Company's shareholders, to reserve an additional 150,000 shares for issuance
thereunder, bringing the total number of shares under the Option Plan to
1,626,532 shares. A principal reason for the proposed increase in number of
shares under the Option Plan is to provide for the grant of options to purchase
100,000 shares to a consulting firm that has been assisting the Company in
development and implementation of a new financial management system. The new
financial management system is intended to assist in maximizing shareholder
value through enhanced employee performance, by more closely aligning employee
interests with that of the Company's shareholders. The option grant to the
consulting firm will be made on the date of the Annual Meeting of Shareholders
(April 18, 1996) at an exercise price equal to the greater of (a) $20.00 per
share or (b) the closing market price of the underlying Common Stock on April
18, 1996, subject to shareholder approval of the increase in number of shares
under the Option Plan. If such proposed increase in the number of shares is not
approved, the subject consulting contract provides for a cash payment in lieu of
the option grant.
PARTICIPATION IN THE OPTION PLAN
The grant of options, stock purchase rights and stock bonuses under the
Option Plan to employees, including the executive officers named in the Summary
Compensation Table (the "Named Officers"), is subject to the discretion of the
Company's Board of Directors or of the Stock Committee (to which Committee the
Board has delegated authority to administer the Option Plan) (the
"Administrator"). As of the date of this proxy statement, the only awards that
have been granted under the Option Plan are options and stock bonuses. There has
been no determination made by the Administrator with respect to future
discretionary awards to employees or consultants under the Option Plan.
Accordingly, future awards to employees are not determinable. Non-employee
directors are only eligible to participate in the automatic grant program under
the Option Plan. The automatic grant of shares to non-employee directors under
the plan is non-discretionary but is subject to the continued
22
<PAGE>
service as a director on the automatic grant date. Accordingly, future awards to
non-employee directors are not determinable. The following table sets forth
information with respect to the grant of options/stock bonuses during the last
fiscal year:
TABLE 4 -- AMENDED PLAN BENEFITS TABLE
1989 STOCK OPTION PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE NUMBER OF SHARES
OF SUBJECT TO
OPTIONS/STOCK OPTIONS/STOCK
NAME OR IDENTITY OF GROUP POSITION BONUSES (1) BONUSES GRANTED
- --------------------------------------- --------------------------------------- -------------- ----------------
<S> <C> <C> <C>
John C. Dean President and Chief Executive Officer $ 217,872 9,078(2)
Glen Blackmon Executive Vice President, Chief $ 516,000 21,500(3)
Financial Officer and Chief
Information Officer
A. John Busch Executive Vice President, Chief Credit $ 571,968 23,832(4)
Officer and General Counsel
James F. Forrester Executive Vice President $ 516,000 21,500(3)
Richard H. Harding Executive Vice President $ 516,000 21,500(3)
Glen G. Simmons Executive Vice President $ 516,000 21,500(3)
All Current Executive Officers as a $ 2,853,840 118,910(5)
Group
All Other Employees as a Group $ 6,475,920 269,830(6)
All Outside Directors as a Group $ 1,114,992 46,458(2)
</TABLE>
- ------------------------
(1) In the case of options, dollar value does not represent potential realizable
value to the optionee, but was computed by multiplying the number of shares
by the closing market price of the Company's Common Stock of $24.00 on
December 29, 1995 as quoted in the National Association of Securities
Dealers Automated Quotation/National Market System. In the case of stock
bonuses, dollar value was computed by multiplying the number of shares by
the closing market price of the Company's Common Stock of $24.00 on December
29, 1995 as quoted in the National Association of Securities Dealers
Automated Quotation/National Market System.
(2) Includes shares under stock bonuses only.
(3) Includes shares subject to options only.
(4) Includes 21,500 shares subject to options and 2,332 shares under stock
bonuses.
(5) Includes 107,500 shares subject to options and 11,410 shares under stock
bonuses.
(6) Includes 260,750 shares subject to options and 9,080 shares under stock
bonuses.
The essential features of the Option Plan are outlined below.
GENERAL
The Board of Directors believes that the ability to grant equity-based
awards is an important factor in attracting and retaining skilled employees,
directors and consultants. The Board believes that such equity-based awards help
to align the interests of employees, directors and consultants with the
interests of the Company and shareholders of the Company.
23
<PAGE>
ESSENTIAL FEATURES
The Option Plan provides for the grant of stock options, stock bonuses and
stock purchase rights to eligible participants. As of December 31, 1995, options
to purchase 451,632 shares had been exercised, options to purchase 951,959
shares were outstanding and 72,941 shares were available for future grant. If
the shareholders approve the proposed amendment, there will be 222,941 shares
available for future grant (of which options to purchase 100,000 shares will be
granted to the consulting firm described above.)
PURPOSE
The purposes of the Option Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to employees, directors and consultants of the Company and to promote
the success of the Company's business.
ADMINISTRATION
With respect to discretionary grants of options, stock bonus awards or stock
purchase rights to employees who are also officers or directors of the Company
subject to Section 16(b) of the Exchange Act, the Option Plan will be
administered in such a manner as to satisfy the disinterested administration
requirements of Rule 16b-3 promulgated under the Exchange Act or any successor
rule thereto ("Rule 16b-3"). The Option Plan is currently being administered by
the Stock Committee, in conjunction with the Personnel and Compensation
Committee (collectively, the "Committee"). With respect to the annual automatic
stock awards to members of the Board of Directors, as described below, such
grants shall be automatic and not subject to the discretion of any person.
ELIGIBILITY
The Option Plan provides that discretionary awards may be granted to
employees, directors and consultants of the Company or any parent or
majority-owned subsidiary. Incentive stock options may be granted only to
employees. Except with respect to annual automatic stock bonus awards to members
of the Board of Directors, the Board or the Committee selects the recipients and
determines the number of shares to be subject to each award. In making such
determination, the duties and responsibilities of the recipient, the value of
his or her services, his or her present and potential contribution to the
success of the Company, the anticipated number of years of future service and
other relevant factors are taken into account. As of December 31, 1995, there
are approximately 348 employees, nine directors and one consultant eligible to
participate in the Option Plan.
AUTOMATIC STOCK AWARDS TO DIRECTORS
The Option Plan, as amended, provides that members of the Board of
Directors, who are not also employees of the Company (or affiliates thereof) and
who have not been employees of the Company (or affiliates thereof) for the
period commencing three years prior to the date of any grants under this
paragraph ("Outside Directors"), shall be automatically awarded 2,500 shares of
the Company's Common Stock on the day after the Annual Meeting. Pursuant to this
provision, Directors Barr, Burns, deWilde, Ferrari, Gay, Kelleher, Porter,
Roster and Wells will receive 2,500 shares if they are re-elected to the Board
at the Annual Meeting. Moreover, Outside Directors who are appointed or elected
to the Board subsequent to the grant date shall automatically be awarded a
number of shares of the Company's Common Stock, on the date of such appointment
or election, determined by multiplying 2,500 by a fraction, the numerator of
which shall be the number of months until the next May 1 (counting any partial
month as a full month) and the denominator of which shall be 12, which number
shall be rounded down to the nearest whole integer.
Director stock awards granted under the Option Plan, as amended, are not
subject to vesting or contractual transfer restrictions.
LIMITATIONS ON AWARDS
The Option Plan limits the discretion allowed to the Committee in granting
awards. The limitation provides that no employee may be granted in any one
fiscal year awards to receive more than
24
<PAGE>
250,000 shares of Common Stock of the Company. This limitation is intended to
preserve the Company's ability to deduct for federal income tax purposes the
compensation expense relating to awards granted to certain executive officers
under the Option Plan. Without this provision in the Option Plan, Section 162(m)
of the Code might limit the Company's ability to deduct such compensation
expense.
TERMS OF OPTIONS
The terms of options granted under the Option Plan are determined by the
Board or the Committee. Each option granted under the Option Plan is evidenced
by a written stock option agreement between the Company and the optionee and is
subject to the following additional terms and conditions:
(a) EXERCISE OF THE OPTION. Under forms of Option Agreements used with
the Option Plan, options typically vest as to one-quarter to one-third of
the shares after the first year of grant and at the rate of one-quarter to
one-third of the shares per year thereafter, as determined by the Board of
Directors or the Committee, although different vesting schedules may be
used. An option granted under the Option Plan is exercised by giving written
notice of exercise to the Company, specifying the number of full shares of
Common Stock to be purchased and tendering payment of the purchase price to
the Company. Payment for shares issued upon exercise of an option may
consist of cash, check, promissory note, other shares of the Company's
Common Stock that have been held by the optionee for at least six months,
cashless exercise or any combination of such methods of payment, or such
other consideration and method of payment as is permitted under applicable
laws.
(b) EXERCISE PRICE. The per share exercise price of options granted
under the Option Plan is determined by the Board or the Committee and, in
the case of incentive stock options, may not be less than 100% of the fair
market value on the date of grant. However, in the case of options granted
to an optionee who owns more than 10% of the voting power or value of all
classes of stock of the Company, the per share exercise price must not be
less than 110% of the fair market value on the date of grant. The closing
price of the Company's Common Stock on the National Association of
Securities Dealers Automated Quotation/National Market System on December
29, 1995, was $24.00 per share.
(c) TERMINATION OF STATUS AS AN EMPLOYEE, CONSULTANT OR DIRECTOR. If
the optionee's employment or consulting relationship with the Company or
status as a Director is terminated for any reason (other than death or
disability), options are exercisable for three months (or such other period
of time not exceeding six months as is determined by the Board or the
Committee) after such termination as to all or part of the shares as to
which the optionee was entitled to exercise at the date of such termination.
(d) DEATH OR DISABILITY OF OPTIONEE. Options are exercisable for no
more than 12 months (or such shorter time as is determined by the Board, or
the Committee, with such determination in the case of an incentive stock
option being made at the time of grant of the option) following termination
because of a permanent and total disability or within 12 months by the
employee's estate after his or her death.
(e) TERM AND TERMINATION OF OPTIONS. Options granted under the Option
Plan shall be for a term not to exceed 10 years, as determined by the Board
or the Committee on the date of grant. No option may be exercised by any
person after the expiration of its term. In the case of an option granted to
an optionee who, immediately before the grant of such option, owns more than
10% of the voting power of all classes of stock of the Company, the term of
the option may not be more than five years.
(f) OTHER PROVISIONS. The option agreement may contain such other
terms, provisions and conditions not inconsistent with the Option Plan as
may be determined by the Board or the Committee.
25
<PAGE>
TERMS OF STOCK PURCHASE RIGHTS
The Option Plan permits the Company to grant stock purchase rights to
purchase Common Stock of the Company ("Stock Purchase Rights") either alone, in
addition to, or in tandem with other awards under the Option Plan and/or cash
awards made outside the Option Plan. Upon the granting of a Stock Purchase
Right, the offeree shall be advised in writing of the terms, conditions and
restrictions related to the offer, including the number of shares of Common
Stock that the offeree shall be entitled to purchase, the price to be paid and
the time within which the offeree must accept such offer (which shall in no
event exceed 60 days from the date upon which the Administrator made the
determination to grant the Stock Purchase Right). The offer shall be accepted by
execution of a restricted stock purchase agreement between the Company and the
offeree.
Unless the Administrator determines otherwise, the restricted stock purchase
agreement shall grant the Company a repurchase option exercisable upon the
voluntary or involuntary termination of the purchaser's employment or consulting
relationship with the Company for any reason (including death or permanent and
total disability). The purchase price for shares repurchased pursuant to the
restricted stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the
Administrator may determine.
TERMS OF STOCK BONUS AWARDS
The Option Plan also permits the granting of stock bonuses ("Stock Bonus
Awards"). Such awards shall be based on such performance or employment-related
factors as the Administrator, in its discretion, shall determine. Stock Bonus
Awards may vary from participant to participant and group to group. Such awards
shall be granted for no cash consideration.
Stock Bonus Awards will be payable in Common Stock of the Company and may be
subject to forfeiture provisions (i.e., may be in the form of restricted stock
with vesting provisions).
NONTRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS
An option or Stock Purchase Right is not transferable by the recipient,
other than by will or the laws of descent and distribution, and is exercisable
during the recipient's lifetime only by the recipient. In the event of the
recipient's death, options or Stock Purchase Rights may be exercised by a person
who acquires the right to exercise the option or right by bequest or
inheritance.
CHANGES IN CAPITALIZATION
In the event a change, such as a stock split or stock dividend payable in
Common Stock, is made in the Company's capitalization that results in an
exchange of Common Stock for a greater or lesser number of shares without
receipt of consideration by the Company, appropriate adjustment shall be made in
the price and number of shares subject to outstanding awards. Appropriate
adjustment will also be made in the number of shares of Common Stock that have
been authorized for issuance under the Option Plan but as to which no awards
have yet been granted or that have been returned to the Option Plan upon
cancellation of an award. Such adjustments shall be made by the Board of
Directors, whose determination shall be final, binding and conclusive, subject
to any required action by the shareholders of the Company.
In the event of a "Change in Control" (defined below) recipients of
outstanding options and rights shall have the right to exercise, and shall be
vested as to, all outstanding options and rights as to all of the stock covered
thereby, including shares as to which the option or right would not otherwise be
exercisable or vested. If outstanding options and rights become fully vested in
the event of a Change in Control, the Board shall notify all participants that
their outstanding options and rights shall be fully exercisable for a period of
three months (or such other period of time not exceeding six months as is
determined by the Board or Committee at the time of grant) from the date of such
notice, and any unexercised options or rights shall terminate upon the
expiration of such period.
26
<PAGE>
"Change in Control" means:
(1) the acquisition of 50% or more of the outstanding voting stock of
the Company or the Bank by any person or entity, with certain exceptions for
employee benefit plans of the Company or the Bank;
(2) the acquisition of 25% or more of the outstanding voting stock of
the Company or the Bank by any person or entity and a change in the
composition of the Board during the following 12 months such that those
persons serving as directors immediately prior to the share acquisition, and
those new directors elected by a vote of at least two-thirds of the
directors of the Company or the Bank, cease to make up at least 60% of the
directors of the Company or the Bank;
(3) a merger or consolidation of the Company or the Bank with any other
corporation, other than a merger or consolidation in which the shareholders
of the Company or the Bank immediately prior thereto continue to own at
least 75% of the outstanding voting stock of the Company or the Bank; or
(4) the complete liquidation of the Company or the Bank, or disposition
of all or substantially all of the Company's or the Bank's assets.
AMENDMENT AND TERMINATION OF THE PLAN
The Board may amend or terminate the Option Plan from time to time in such
respects as the Board may deem advisable; provided that, to the extent necessary
to comply with Rule 16b-3 promulgated under Section 16 of the Exchange Act or
with Section 422 of the Internal Revenue Code (the "Code") (or any other
successor or applicable law or regulation), the Company shall obtain shareholder
approval of any Option Plan amendment in such a manner and to such a degree as
is required by the applicable law, rule or regulation. Any amendment or
termination of the Option Plan shall not affect awards already granted and such
awards shall remain in full force and effect as if the Option Plan had not
adversely been amended or terminated, unless mutually agreed otherwise between
the recipient and the Company, which agreement must be in writing and signed by
the recipient and the Company.
In any event, the Option Plan shall terminate in 1999. Any awards
outstanding under the Option Plan at the time of its termination shall remain
outstanding until they expire by their terms.
TAX INFORMATION
STOCK OPTIONS. Options granted under the Option Plan may be either
"incentive stock options," as defined in Section 422 of the Code, or
nonstatutory options.
INCENTIVE STOCK OPTIONS. An optionee who is granted an incentive stock
option will not recognize taxable income either at the time the option is
granted or upon its exercise, although the exercise may subject the optionee to
the alternative minimum tax. Upon the sale or exchange of the shares more than
two years after grant of the option and one year after exercising the option,
any gain or loss will be treated as long-term capital gain or loss. If these
holding periods are not satisfied, the optionee will recognize ordinary income
at the time of sale or exchange equal to the difference between the exercise
price and the lower of (i) the fair market value of the shares at the date of
the option exercise or (ii) the sale price of the shares. A different rule for
measuring ordinary income upon such a premature disposition may apply if the
optionee is also an officer, director, or 10% shareholder of the Company. The
Company will be entitled to a deduction in the same amount as the ordinary
income recognized by the optionee. Any gain or loss recognized on such a
premature disposition of the shares in excess of the amount treated as ordinary
income will be characterized as long-term or short-term capital gain or loss,
depending on the holding period.
NONSTATUTORY STOCK OPTIONS. All other options that do not qualify as
incentive stock options are referred to as nonstatutory options. An optionee
will not recognize any taxable income at the time he or she is granted a
nonstatutory option. However, upon its exercise, the optionee will recognize
taxable income generally measured as the excess of the then fair market value of
the shares purchased over
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the purchase price. Any taxable income recognized in connection with an option
exercise by an optionee who is also an employee of the Company will be subject
to tax withholding by the Company. Upon resale of such shares by the optionee,
any difference between the sales price and the optionee's purchase price, to the
extent not recognized as taxable income as described above, will be treated as
long-term or short-term capital gain or loss, depending on the holding period.
The Company will be entitled to a tax deduction in the same amount as the
ordinary income recognized by the Optionee with respect to shares acquired upon
exercise of a nonstatutory option.
STOCK PURCHASE RIGHTS. Stock Purchase Rights will generally be taxed in the
same manner as nonstatutory options. However, restricted stock is usually
purchased upon exercise of a Stock Purchase Right. At the time of purchase,
restricted stock is subject to a "substantial risk of forfeiture" within the
meaning of Section 83 of the Code. As a result, the purchaser will not recognize
ordinary income at the time of purchase. Instead, the purchaser will recognize
ordinary income on the dates when the stock ceases to be subject to substantial
risk of forfeiture. The stock will generally cease to be subject to a
substantial risk of forfeiture when it is no longer subject to the Company's
right to repurchase the stock upon the purchaser's termination of employment
with the Company (i.e., as it "vests"). At such times, the purchaser will
recognize the ordinary income measured as the difference between the purchase
price and the fair market value of the stock on the date the stock is no longer
subject to a substantial risk of forfeiture. However, a purchaser may accelerate
to the date of purchase his or her recognition of ordinary income, if any, and
the beginning of any capital gain holding period by timely filing an election
pursuant to Section 83(b) of the Code. In such event, the ordinary income
recognized, if any, would be equal to the difference between the purchase price
and the fair market value of the stock on the date of purchase, and the capital
gain holding period would commence on the purchase date. The ordinary income
recognized by a purchaser who is an employee will be treated as wages and will
be subject to tax withholding by the Company out of the current compensation of
the purchaser. If such current compensation is insufficient to pay the
withholding tax, the purchaser will be required to make direct payment to the
Company for the tax liability. Generally, the Company will be entitled to a tax
deduction in the amount and at the time the purchaser recognizes ordinary
income.
Different rules may apply in the case of purchasers who are subject to
Section 16 of the Securities Exchange Act of 1934, as amended.
STOCK BONUS AWARDS. A recipient who receives restricted stock pursuant to a
Stock Bonus Award will recognize ordinary income equal to the fair market value
of the stock at the time or times the restrictions lapse (unless a Code Section
83(b) election is timely filed at the time of grant). Different rules may apply
if the recipient is subject to Section 16(b) of the Exchange Act. Generally, the
Company will be entitled to a tax deduction in the amount and at the time the
recipient recognizes ordinary income.
The foregoing is only a summary of the effect of federal income taxation
upon the grantee and the Company with respect to the grant and exercise of
options, and with respect to the grant of Stock Purchase Rights and Stock Bonus
Awards, under the Option Plan. It does not purport to be complete, and does not
discuss the tax consequences of the optionee's death or the income tax laws of
any municipality, state or foreign country in which an optionee may reside.
VOTE REQUIRED
Approval of the amendments to the 1989 Stock Option Plan requires the
affirmative vote of a majority of the Votes Cast.
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PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO THE COMPANY'S BYLAWS
TO PROVIDE FOR A BOARD OF DIRECTORS
CONSISTING OF EIGHT TO FIFTEEN DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE BYLAWS
PROPOSED AMENDMENT
Section 3.2 of the Bylaws of the company currently provides that the number
of members of the Board of Directors of the Company shall not be less than 10
nor more than 19. Effective January 1996, the Board of Directors, subject to
shareholder approval, authorized an amendment to the Bylaws to provide that the
number of directors of the Company shall be not less than eight nor more than 15
directors, with the exact number of directors initially set at 10. The exact
number of directors may be changed within such authorized range by a further
amendment to Section 3.2 adopted by either the Board of Directors (acting
without further shareholder approval) or by the shareholders. Accordingly, it is
proposed that Section 3.2 of the Bylaws be amended to read in its entirety
substantially as follows:
"Section 3.2 -- Number and Qualification of Directors.
The authorized number of directors of the Corporation shall not be
less than eight (8) nor more than fifteen (15) until changed by amendment
of the Articles of Incorporation or by a bylaw amending this Section 3.2
duly adopted by the vote or written consent of holders of a majority of
the outstanding shares entitled to vote, provided that a proposal to
reduce the authorized minimum number of directors below five cannot be
adopted. The exact number of directors shall be fixed from time to time,
within the limits specified in this Section 3.2: (i) by a resolution duly
adopted by the Board; (ii) by a Bylaw or amendment thereof duly adopted
by the vote of a majority of the outstanding shares entitled to vote; or
(iii) by approval of the shareholders (as defined in Section 153 of the
California General Corporation Law). No amendment may change the stated
maximum number of authorized directors to a number greater than two times
the stated minimum number of directors minus one.
Subject to the foregoing provisions for changing the number of
directors, the number of directors of this Corporation has been fixed at
ten (10)."
The Board determined to amend the Bylaws as set forth above in order that
the authorized range of directors for the Company matches the authorized range
for the Bank (which range has been from eight to 15 since the original Bylaws of
the Bank were adopted in 1983). The proposed change in the authorized range of
directors provides the Board of Directors of the Company the flexibility to
decrease the authorized number of directors to eight or nine, without
shareholder approval, in the event the Board of Directors deems it advisable
that the Board of Directors be comprised of less than 10 members in the future.
The Board of Directors is not permitted to decrease the number of authorized
directors if such decrease would have the effect of removing a director from
office prior to the expiration of his or her term.
VOTE REQUIRED
Approval of the proposed amendment to the Bylaws requires the affirmative
vote of the holders of a majority of the Company's Common Stock issued and
outstanding and entitled to vote. Accordingly, abstentions and broker non-votes
will have the same effect as a vote against the Bylaw amendment. In the event
the shareholders do not approve the amendment to the Bylaws, the authorized
range of directors shall remain at not less than 10 nor more than 19 members.
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PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The firm of KPMG Peat Marwick LLP has been approved by the Audit Committee
and the Board of Directors of the Company to be its independent auditors for the
1996 fiscal year. KPMG Peat Marwick LLP has audited the Company's financial
statements since November 1994. KPMG Peat Marwick LLP has no interest, financial
or otherwise, in the Company or the Bank.
Representatives from the firm of KPMG Peat Marwick LLP will be present at
the Annual Meeting of Shareholders and afforded the opportunity to make a
statement if they desire to do so, and will be available to respond to
shareholders' questions.
The Company's financial statements for fiscal year 1993 were audited by
Deloitte & Touche LLP. On November 1, 1994, the Audit Committee of the Board of
Directors of the Company (i) dismissed the firm of Deloitte & Touche LLP as
independent auditors for the Company and its subsidiaries and (ii) retained the
firm of KPMG Peat Marwick LLP as independent auditors for the Company and its
subsidiaries for the fiscal year ending December 31, 1994. None of the reports
by Deloitte & Touche LLP on the financial statements of the Company for the
years in the two-year period ended December 31, 1993, and the subsequent interim
period, contain any adverse opinions or disclaimers of opinion nor are they
qualified or modified as to uncertainty, audit scope or accounting principles.
In connection with the audits of the Company's financial statements for each of
the years in the two-year period ended December 31, 1993, and in the subsequent
interim period, there were no disagreements with Deloitte & Touche LLP on any
matters of accounting principles or practices, financial statement disclosure or
auditing scope and procedures, which, if not resolved to the satisfaction of
Deloitte & Touche LLP, would have caused Deloitte & Touche LLP to make reference
to the matter in their reports. At the Company's request, Deloitte & Touche LLP
provided a letter addressed to the Securities and Exchange Commission stating
that it agreed with the above statements.
SHAREHOLDER PROPOSALS -- 1997 ANNUAL MEETING
Shareholders are entitled to present proposals for action at a forthcoming
Annual Meeting of Shareholders if they comply with the requirements of
California corporate law, the proxy rules and the Company's Bylaws. Any
shareholder proposal intended to be presented at the 1997 Annual Meeting of
Shareholders of the Company must be received at the Company's Santa Clara office
on or before November 11, 1996 in order to be considered for possible inclusion
in the Company's Proxy Statement and form of proxy relating to such annual
meeting.
1995 ANNUAL REPORT
Enclosed is a copy of the Company's 1995 Annual Report to Shareholders,
including financial statements for the year ended December 31, 1995.
Shareholders who wish to obtain, without charge, a copy of the Company's Annual
Report on Form 10-K (without exhibits) for the year ended December 31, 1995 as
filed with the Securities and Exchange Commission should address a written
request to Shareholder Relations, Silicon Valley Bancshares, 3003 Tasman Drive,
Santa Clara, California 95054.
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OTHER MATTERS
As of the date of this Proxy Statement, there are no other matters that
Management intends to present or has reason to believe others will present at
the Annual Meeting. If other matters properly come before the Annual Meeting,
those who act as Proxy Holders will vote in accordance with their best judgment.
THE BOARD OF DIRECTORS
A. Catherine Ngo
CORPORATE SECRETARY
Santa Clara, California
March 1, 1996
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APPENDICES INDEX
ATTACHED TO SILICON VALLEY BANCSHARES
PRELIMINARY PROXY STATEMENT
<TABLE>
<S> <C>
APPENDIX A Proposed Amended Silicon Valley Bancshares' 1989 Stock Option
Plan
APPENDIX B Proposed Amended Silicon Valley Bancshares' Bylaws
</TABLE>
THE FOREGOING APPENDICES ARE BEING SUBMITTED TO THE COMMISSION FOR REVIEW
PURPOSES ONLY AND WILL NOT BE INCLUDED IN THE PROXY SOLICITATION MATERIALS
DISTRIBUTED TO THE SHAREHOLDERS.
<PAGE>
APPENDIX A
SILICON VALLEY BANCSHARES
1989 STOCK OPTION PLAN
AMENDMENT AND RESTATEMENT EFFECTIVE AS OF THE DATE
OF OBTAINING SHAREHOLDER APPROVAL IN 1996.
1. PURPOSE
The purpose of this Silicon Valley Bancshares Stock Option Plan (the "Plan")
is to provide a method whereby those key employees, directors and consultants of
Silicon Valley Bancshares (the "Company") and its affiliates, who are primarily
responsible for the management and growth of the Company's business and who are
presently making and are expected to make substantial contributions to the
Company's future management and growth, may be offered incentives in addition to
those presently available, and may be stimulated by increased personal
involvement in the success of the Company to continue in its service, thereby
advancing the interests of the Company and its shareholders.
The word "affiliate," as used in the Plan, means any bank or corporation in
any unbroken chain of banks or corporations beginning or ending with the
Company, if at the time of the granting of an option, right or stock bonus
award, 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.
2. ADMINISTRATION
(i) Multiple Administrative Bodies. If permitted by Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended ("Rule 16b-3;" the
"Exchange Act"), the Plan may be administered by different bodies with respect
to directors, officers who are not directors, and employees who are neither
directors nor officers.
(ii) Administration With Respect to Directors and Officers Subject to
Section 16(b). Except for the automatic grants to directors provided for in
Sections 6 and 9, which shall be automatic and not subject to any discretion,
with respect to option, stock purchase right or stock bonus award grants made to
employees who are also officers or directors subject to Section 16(b) of the
Exchange Act, the Plan shall be administered by (A) the Board, if the Board may
administer the Plan in compliance with the rules governing a plan intended to
qualify as a discretionary plan under Rule 16b-3, or (B) the Stock Committee of
the Board, which committee shall be constituted to comply with the rules
governing a plan intended to qualify as a discretionary plan under Rule 16b-3
(the Board or its committee shall be referred to herein as the "Committee").
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by the rules governing
a plan intended to qualify as a discretionary plan under Rule 16b-3.
(iii) Administration With Respect to Other Persons. With respect to option,
stock purchase right or stock bonus award grants made to employees or
consultants who are neither directors nor officers of the Company, the Plan
shall be administered by (A) the Board or (B) a committee designated by the
Board, which committee shall be constituted to satisfy applicable laws (the
Board or its committee shall be referred to herein as the "Committee"). Once
appointed, such Committee shall serve in its designated capacity until otherwise
directed by the Board. The Board may increase the size of the Committee and
appoint additional members, remove members (with or without cause) and
substitute new members, fill vacancies (however caused), and remove all members
of the Committee and thereafter directly administer the Plan, all to the extent
permitted by applicable laws.
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(iv) The Company shall effect the grant of options, rights and stock bonus
awards 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, the
Committee shall have full power to construe the Plan and the terms of any
option, right or stock bonus award granted under the Plan, to prescribe, amend
and rescind rules and regulations relating to the Plan or such options, rights
or stock bonus awards and to make all other determinations necessary or
advisable for the Plan's administration, including, without limitation, the
power to (i) determine which persons meet the requirements of Section 3 hereof
for selection as participants in the Plan; (ii) determine to whom of the
eligible persons, if any, options, right or stock bonus award shall be granted
under the Plan; (iii) establish the terms and conditions required or permitted
to be included in every option, right or stock bonus award agreement or any
amendments thereto, including whether options to be granted thereunder shall be
"incentive stock options," as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (hereinafter the "Code") or nonstatutory stock options
not described in Section 422 of the Code; (iv) specify the number of shares to
be covered by each option, right or stock bonus award; (v) determine the fair
market value of shares of the Company's common stock used by a participant to
exercise options or rights; (vi) grant options or rights in exchange for
cancellation of options or rights granted earlier at different exercise prices;
(vii) take appropriate action to amend any option, right or stock bonus award
hereunder, provided that no such action may be taken without the written consent
of the affected participant; and (viii) make all other determinations deemed
necessary or advisable for administering the Plan. The Committee's determination
on the foregoing matters shall be conclusive.
3. ELIGIBILITY
The persons who shall be eligible to receive options, rights or stock bonus
awards under this Plan shall be the key employees and officers of the Company
and its affiliates, persons who became employees of the Company or its
affiliates within thirty days of the date of grant of an option, right or stock
bonus award, directors of the Company or its affiliates, and consultants of the
Company or its affiliates.
4. THE SHARES
The shares of stock subject to options, rights or stock bonus awards
authorized to be granted under the Plan shall consist of one million six hundred
twenty six thousand five hundred thirty two (1,626,532) shares of the Company's
no par value Common Stock (hereinafter the "Shares"), 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 Section 11 hereof. Upon
the expiration or termination for any reason of an outstanding option or right
under the Plan which has not been exercised in full, all unissued Shares
thereunder shall again become available for the grant of options, rights or
stock bonus awards under the Plan.
5. LIMITATION ON PLAN AWARDS
The following limitations shall apply to grants of options, stock purchase
rights and stock bonus awards to Employees:
(i) No Employee shall be granted, in any fiscal year of the Company,
options, stock purchase rights or stock bonus awards to purchase more than two
hundred and fifty thousand (250,000) Shares.
(ii) The foregoing limitation shall be adjusted proportionately in
connection with any change in the Company's capitalization as described in
Section 11.
(iii) If an option, stock purchase right or stock bonus award is cancelled
(other than in connection with a transaction described in Section 11), the
cancelled option, stock purchase right or stock bonus award will be counted
against the limit set forth in Section 5. For this purpose, if the exercise
price of an option or stock purchase right is reduced, the transaction will be
treated as a cancellation of the option or stock purchase right and the grant of
a new option or stock purchase right.
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6. GRANT, TERMS AND CONDITIONS OF OPTIONS
A. AUTOMATIC GRANTS TO OUTSIDE DIRECTORS
Members of the Board of Directors of the Company who are not employees of
the Company ("Outside Directors") shall, in January, 1991 on the date of the
regularly scheduled meeting of the Board of Directors of the Company and on the
January meeting of the Board of Directors in 1992 and 1993, each be granted an
option to purchase 2,000 Shares under the Plan; provided, however, that if there
are insufficient Shares available under the Plan for each Outside Director to
receive an option to purchase 2,000 Shares (as adjusted) in any year, the number
of Shares subject to each option shall equal the total number of available
Shares remaining under the Plan divided by the number of Outside Directors on
such date, as rounded down to avoid fractional Shares. All options granted to
Outside Directors shall be subject to the following terms and conditions:
(i) Nonstatutory Options. All stock options granted to Outside Directors
pursuant to the Plan shall be nonstatutory stock options.
(ii) Option Price. The purchase price under each option granted to an
Outside Director shall be one hundred percent 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 shall be
determined in accordance with any reasonable valuation method, including the
valuation methods described in Treasury Regulation Section 20.2031-2.
(iii) Duration and Vesting of Options. Each option shall be for a three-year
term and shall be immediately vested for exercise in full on the date of grant.
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.
(iv) Termination of Tenure on the Board. Unless the Committee determines
otherwise, upon the termination of an optionee's status as a member of the
Board, his or her rights to exercise an option then held shall be only as
follows:
DEATH OR DISABILITY: If an optionee's tenure on the Board is terminated by
death or disability, such optionee or such optionee's qualified representative
(in the event of the optionee's mental disability) or the optionee's estate (in
the event of optionee's death) shall have the right for a period of twelve
months following the date of such death or disability to exercise the option to
the extent the optionee was entitled to exercise such option on the date of the
optionee's death or disability; provided the actual date of exercise is in no
event after the expiration of the term of the option. An optionee's "estate"
shall mean the optionee's legal representative or any person who acquires the
right to exercise an option by reason of the optionee's death.
OTHER REASONS: If an optionee's tenure on the Board is terminated for any
reason other than those mentioned above under "Death or Disability," the
optionee may, within three months (or such longer period not exceeding six
months as the Board may determine) following such termination, exercise the
option to the extent such option was exercisable by the optionee on the date of
such termination, provided the date of exercise is in no event after the
expiration of the term of the option.
(v) The automatic grants to Outside Directors pursuant to this Section 5.A
shall not be subject to the discretion of any person. The provisions of this
Section 5.A shall not be amended more than once every six months, other than to
comport with changes in the Code or the rules thereunder. Any amendment to this
Section 5.A shall, to the extent required by applicable rules of the Securities
and Exchange Commission, be approved by the shareholders of the Company.
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<PAGE>
B. GRANTS TO EMPLOYEES AND CONSULTANTS
Options, at the discretion of the Committee, may be granted at any time
prior to the termination of the Plan to persons who are employees or consultants
of the Company, including employees who are also directors of the Company.
Options granted by the Committee to employees and consultants pursuant to the
Plan shall be subject to the following terms and conditions:
(i) Grant of Options. Stock options granted pursuant to the Plan may be
either incentive stock options or nonstatutory stock options. If the aggregate
fair market value of the Shares which are exercisable for the first time during
any one calendar year under all incentive stock options held by an optionee
exceeds $100,000 (determined at the time of the grant of the options), such
options shall be treated as nonstatutory stock options to the extent of such
excess.
(ii) Option Price. The purchase price under each option shall be determined
by the Committee; provided, however, that (i) the purchase price of a
nonstatutory stock option shall not be less than one hundred percent of the fair
market value of the Shares subject thereto on the date the option is granted,
(ii) the purchase price of an incentive stock option granted to an individual
who does not own stock possessing more than ten percent of the total combined
voting power of all classes of stock of the Company shall not be less than one
hundred percent of the fair market value of the Shares subject thereto on the
date the option is granted, and (iii) the purchase price of an incentive stock
option granted to an individual who owns stock possessing more than ten percent
of the total combined voting power of all classes of stock of the Company shall
not be less than one hundred ten percent of the fair market value of the Shares
subject thereto on the date the option is granted. The fair market value of such
stock shall be determined in accordance with any reasonable valuation method,
including the valuation methods described in Treasury Regulation Section
20.2031-2.
(iii) Duration of Options. Each option shall be for a term determined by the
Committee; provided, however, that the term of any option may not exceed ten
years and, provided further, that the term of any option granted to an
individual who owns stock possessing more than ten percent of the total combined
voting power of all classes of stock of the Company shall not exceed five years.
Each option shall vest in such manner and at such time as the Committee shall
determine and the Committee may accelerate the time of exercise of any option,
provided, however, that if compliance with the terms of Rule 16b-3, as
promulgated under the Securities Exchange Act of 1934, as amended (hereinafter
the "Exchange Act") so requires, no option may vest prior to six months after
the date of grant. 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.
(iv) Termination of Employment or Consultant Status. Unless the Committee
determines otherwise, upon the termination of an optionee's status as an
employee or officer of the Company, his or her rights to exercise an option then
held shall be only as follows;
DEATH OR DISABILITY: If an optionee's employment or status as a consultant
is terminated by death or disability, such optionee or such optionee's qualified
representative (in the event of the optionee's mental disability) or the
optionee's estate (in the event of optionee's death) shall have the right for a
period of twelve (12) months following the date of such death or disability to
exercise the option to the extent the optionee was entitled to exercise such
option on the date of the optionee's death or disability; provided the actual
date of exercise is in no event after the expiration of the term of the option.
An optionee's "estate" shall mean the optionee's legal representative or any
person who acquires the right to exercise an option by reason of the optionee's
death.
CAUSE: If an optionee's employment or status as a consultant is terminated
because such optionee is determined by the Board 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
4
<PAGE>
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 any bank regulatory agency, neither
the optionee nor the optionee's estate shall be entitled to exercise any option
with respect to any Shares whatsoever. In making such determination, the Board
shall act fairly and shall give the optionee an opportunity to appear and be
heard at a hearing before the full Board and present evidence on the optionee's
behalf. For the purpose of this paragraph, termination of employment or
consultant status shall be deemed to occur when the Company dispatches notice or
advice to the optionee that the optionee's employment or status as a consultant
is terminated, and not at the time of optionee's receipt thereof.
OTHER REASONS: If an optionee's employment or status as a consultant is
terminated for any reason other than those mentioned above under "Death or
Disability" and "Cause," the optionee may, within three months (or within such
other period not exceeding six months as may be determined by the Committee)
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 status as a consultant; provided the date of exercise is in no
event after the expiration of the term of the option and provided further that
any option which is exercisable more than three months following termination
shall be treated as a nonstatutory option whether or not it was designated as
such at the time it was granted.
C. TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS
The following terms and conditions shall apply to all options granted
pursuant to the Plan:
(i) Exercise of Options. To the extent the right to purchase Shares has
vested under an optionee's stock option agreement, options may be exercised from
time to time by delivering payment therefor in cash, certified check, official
bank check, or the equivalent thereof acceptable to the Company, 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. An optionee may also exercise an option by electing to deliver
shares of Company Common Stock that have been held by the optionee for at least
six months. The Committee may, in its discretion, permit optionees who are
employees of the Company to pay the exercise price of options by delivering to
the Company a full recourse promissory Note. Such an election is subject to
approval or disapproval by the Committee, and if the optionee is subject to
short-swing profit liability under Section 16 of the Exchange Act, the timing of
the election must satisfy the requirements of Rule 16b-3, as promulgated under
the Exchange Act. 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.
(ii) Use of Proceeds from Stock. Proceeds from the sale of Shares pursuant
to the exercise of options granted under the Plan shall constitute general funds
of the Company.
(iii) Rights as 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 11 hereof.
(iv) Withholding. The Company shall have the right to condition the issuance
of shares upon exercise of a nonstatutory stock option upon payment by the
optionee of any income taxes required to be withheld under federal, state or
local tax laws or regulations in connection with such exercise.
(v) Limitations on Grants to Directors. No Director of the Company shall be
granted options in any one calendar year which would entitle him or her to
acquire more than ten percent of the Shares,
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<PAGE>
as adjusted pursuant to Section 11. The aggregate amount of Shares subject to
options granted to all Directors of the Company as a group shall not exceed
thirty-three percent of the Shares, as adjusted pursuant to Section 11.
(vi) 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 a director or consultant of the Company, nor limit in any
way the right of the Company to terminate an optionee's employment or status as
a consultant at any time.
7. STOCK BONUS AWARDS
Stock bonus awards may be either granted alone or in addition to options and
other rights granted under the Plan. Such awards shall be granted for no cash
consideration. The Committee shall determine, in its sole discretion, the terms,
conditions and restrictions for each stock bonus award, and shall determine any
performance or employment related factors to be considered in the granting of
stock bonus awards and the extent to which such stock bonus awards have been
earned. Stock bonus awards may vary from participant to participant and between
groups of participants. Each stock bonus award shall be confirmed by, and be
subject to the terms of, a stock bonus award agreement.
8. STOCK PURCHASE RIGHTS
(i) Rights to Purchase. Stock purchase rights may be issued either alone,
in addition to, or in tandem with other awards granted under the Plan and/or
cash awards made outside of the Plan. After the Committee determines that it
will offer stock purchase rights under the Plan, it shall advise the offeree in
writing, of the terms, conditions and restrictions related to the offer,
including the number of Shares that the offeree shall be entitled to purchase,
the price to be paid, and the time within which the offeree must accept such
offer, which shall in no event exceed sixty (60) days from the date upon which
the Committee made the determination to grant the stock purchase right. The
offer shall be accepted by execution of a restricted stock purchase agreement in
the form determined by the Committee.
(ii) Repurchase Option. Unless the Committee determines otherwise, the
restricted stock purchase agreement shall grant the Company a repurchase option
exercisable upon the voluntary or involuntary termination of the purchaser's
employment with the Company for any reason (including death or disability). The
purchase price for Shares repurchased pursuant to the restricted stock purchase
agreement shall be the original price paid by the purchaser and may be paid by
cancellation of any indebtedness of the purchaser to the Company. The repurchase
option shall lapse at a rate determined by the Committee.
(iii) Rule 16b-3. Stock purchase rights granted to individual subject to
Section 16 of the Exchange Act, and Shares purchased by such individuals in
connection with stock purchase rights, shall be subject to any restrictions
applicable thereto in compliance with Rule 16b-3. An Insider may only purchase
Shares pursuant to the grant of a stock purchase right, and may only sell Shares
purchased pursuant to the grant of a stock purchase right, during such time or
times as are permitted by Rule 16b-3.
(iv) Other Provisions. The restricted stock purchase agreement shall contain
such other terms, provisions and conditions not inconsistent with the Plan as
may be determined by the Committee in its sole discretion. In addition, the
provisions of restricted stock purchase agreements need not be the same with
respect to each purchaser.
(v) Rights as a Shareholder. Once the stock purchase right is exercised,
the purchaser shall have the rights equivalent to those of a shareholder, and
shall be a shareholder when his or her purchase is entered upon the records of
the duly authorized transfer agent of the Company. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the
stock purchase right is exercised, except as provided in Section 11 of the Plan.
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9. AUTOMATIC OUTSIDE DIRECTOR STOCK AWARDS
Members of the Board of Directors of the Company who are not also employees
of the Company or its affiliates and who have not been employees of the Company
or its affiliates for the period commencing three years prior to the date of any
grants under this Section 9, shall be automatically awarded 2,500 shares of
Company common stock on (i) the day after shareholder approval of the amendment
to this Section 9 of the Option Plan (approved by the Board of Directors in
October 1994) is obtained (1994 Grant), (ii) the day after shareholder approval
of the amendment to this Section 9 of the Option Plan (to be approved by the
Board of Directors in April 1995) is obtained (1995 Grant) and (iii) the day
after the 1996 Annual Meeting of Shareholders (1996 Grant). Moreover, members of
the Board of Directors who are appointed or elected to the Board subsequent to
any of the above grant dates shall automatically be awarded a number of shares
of Company common stock, on the date of such appointment or election, determined
by multiplying 2,500 by a fraction, the numerator of which shall be the number
of months until the next May 1 (counting any partial month as a full month) and
the denominator of which shall be 12, which number shall be rounded down to the
nearest whole integer.
The automatic grants to certain Outside Directors pursuant to this Section 9
shall not be subject to the discretion of any person. The provisions of this
Section 9 shall not be amended more than once every six months, other than to
comport with changes in the Code or the rules thereunder. Any amendment to this
Section 9 shall, to the extent required by applicable rules of the Securities
and Exchange Commission, be approved by the shareholders of the Company.
10. NON-TRANSFERABILITY
Each option and right shall be transferable only by will or the laws of
descent and distribution and shall be exercisable during the participant's
lifetime only by the participant, or in the event of disability, the
participant's qualified representative. In addition, in order for Shares
acquired under incentive stock options to receive the tax treatment afforded
such shares, the Shares may not be disposed of within two years from the date of
the option grant nor within one year after the date of transfer of such Shares
to the optionee.
11. ADJUSTMENT OF, AND CHANGES IN, THE SHARES
In the event the shares of Common Stock of the Company, as presently
constituted, shall be changed into or exchanged for a different number or kind
of shares of stock or other securities of the Company or of another corporation
(whether by reason of reorganization, merger, consolidation, recapitalization,
reclassification, split-up, combination of shares, or otherwise), or if the
number of Shares of Common Stock of the Company shall be increased through the
payment of a stock dividend, there shall be substituted for or added to each
Share of Common Stock of the Company theretofore appropriated or thereafter
subject or which may become subject to an option, right or stock bonus award
under the Plan, the number and kind of shares of stock or other securities into
which each outstanding share of Common Stock of the Company 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, appropriate adjustment shall be made
in the number and kind of Shares as to the outstanding options, rights or stock
bonus awards or portions thereof, then unexercised, so that any participant's
proportionate interest in the Company by reason of his or her rights under
unexercised portions of such options, rights or stock bonus awards shall be
maintained as before the occurrence of such event. Such adjustment in
outstanding options or rights shall be made without change in the total price to
the unexercised portion of the option or right, and with a corresponding
adjustment in the option or right price per share.
In the event of a proposed dissolution or liquidation of the Company,
options, rights and shares outstanding under the Plan shall become accelerated
so as to become 100% vested immediately prior to the consummation of such
proposed action.
In the event of a "change in control" (as defined in the immediately
succeeding paragraph), all outstanding options, rights and shares under the
Plan, shall become 100% vested. If outstanding options and rights become fully
vested in the event of a change in control, the Board shall notify all
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participants that their outstanding options and rights shall be fully
exercisable for a period of 3 months (or such other period of time not exceeding
six months as is determined by the Board at the time of grant) from the date of
such notice, and any unexercised options or rights shall terminate upon the
expiration of such period.
"Change in control" means the occurrence of any of the following events:
(i) Any "person" (as such term is used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), other than
a trustee or other fiduciary holding securities under an employee benefit
plan of the Company or a corporation owned directly or indirectly by the
shareholders of the Company or of the Company's wholly-owned bank subsidiary
(the "Bank") in substantially the same proportions as their ownership of
stock in the Company or the Bank (as the case may be), becomes after the
date hereof the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of the securities of the Company or
the Bank representing fifty percent (50%) or more of the total voting power
represented by the Company's or the Bank's then outstanding securities that
vote generally in the election of directors ("Voting Securities");
(ii) Any "person" (as such term is used in Section 13(d) and 14(d) of
the Exchange Act), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation
owned directly or indirectly by the shareholders of the Company or the Bank
in substantially the same proportions as their ownership of stock in the
Company or the Bank (as the case may be), becomes after the date hereof the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of twenty-five percent (25%) or more of the Voting
Securities of the Company or the Bank, and within a period of twelve (12)
months of such acquisition of beneficial ownership, individuals who at the
beginning of such period constitute the Board of Directors of the Company or
the Bank, or any new director whose election or nomination was approved by a
vote of at least two-thirds of the directors of the Company or the Bank (as
the case may be), then still in office who were directors at the beginning
of such period, or whose election or nomination was previously so approved,
cease for any reason to constitute at least sixty percent (60%) of the
directors of the Company or the Bank;
(iii) The merger or consolidation of the Company or the Bank with any
other corporation, other than a merger or consolidation in which the
shareholders of the Company or the Bank (as the case may be) immediately
prior thereto continue to own, directly or indirectly, Voting Securities
representing at least seventy-five percent (75%) of the total voting power
of the entity surviving such merger or consolidation; or
(iv) The complete liquidation of the Company or the Bank or sale or
disposition by the Company or the Bank (in one transaction or a series of
transactions) of all or substantially all of the Company's or the Bank's
assets.
No right to purchase fractional shares shall result from any adjustment in
options or rights pursuant to this Section 11. In case of any such adjustment,
the shares subject to the option or right 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 or right 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 the
Company, 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 11, a participant shall have no
rights by reason of any of the following events: (1) subdivision or
consolidation of shares of stock of any class issued by the Company; (2) payment
by the Company 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 or acquisition of assets or stock of another
corporation by the Company. Any issue by the Company of
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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, right or stock bonus award, and no adjustment by reason thereof
shall be made.
The grant of an option, right or stock bonus award 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.
12. LISTING OR QUALIFICATION OF SHARES
All options and rights granted under the Plan are subject to the requirement
that if at any time 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 the Shares under the option or right, the option
or right 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 Committee.
13. BINDING EFFECT OF CONDITIONS
The conditions and stipulations herein contained, or in any option, right or
stock bonus award granted pursuant to the Plan shall be, and constitute, a
covenant running with all of the Shares acquired by the participant pursuant to
this Plan, directly or indirectly, whether the same have been issued or not, and
those Shares owned by the participant shall not be sold, assigned or transferred
by any person save and except in accordance with the terms and conditions herein
provided. In addition, the participant shall agree to use the participant's best
efforts to cause the officers of the Company to refuse to record on the books of
the Company any 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.
14. AMENDMENT AND TERMINATION OF THE PLAN
The Board shall have complete power and authority to terminate or amend the
Plan; provided, however, that the Board shall not, without the approval of the
shareholders of the Company, amend the Plan in a manner that requires
shareholder approval for continued compliance with the terms of Rule 16b-3, as
promulgated under the Exchange Act, Section 422 of the Code, any successor
rules, or other regulatory authority. Except as provided in Section 11, no
termination, modification or amendment of the Plan may, without the consent of
any employee or officer to whom such option, right or stock bonus award was
previously granted under the Plan, adversely affect the rights of such employee
or officer under such option, right or stock bonus award.
The Plan, unless sooner terminated, shall terminate ten years from the date
the Plan is adopted by the Board. An option, right or stock bonus award may not
be granted under the Plan after the Plan is terminated.
15. EFFECTIVENESS OF THE PLAN
The Plan shall become effective only upon adoption by the Board. The
effectiveness of the Plan shall be conditioned upon the approval of the Plan by
the shareholders of the Company within twelve (12) months of the adoption of the
Plan by the Board. Options, rights or stock bonus awards may be granted from
time to time, as the Committee may determine; provided, however, that the
exercise of any option or right under the Plan shall be conditioned upon the
registration of the Shares with the Securities and Exchange Commission and
qualification of the options, rights and underlying Shares under the California
securities laws unless in the opinion of counsel to the Company such
registration or qualification is not necessary.
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16. PRIVILEGES OF STOCK OWNERSHIP, SECURITIES LAW COMPLIANCE AND NOTICE OF SALE
No participant shall be entitled to the privileges of stock ownership as to
any Shares not actually issued and delivered to the participant. No Shares shall
be purchased upon the exercise of any option unless and until all of the then
applicable requirements of any (i) regulatory agencies having jurisdiction and
(ii) any exchanges upon which the Common Stock of the Company may be listed
shall have been fully complied with. The Company shall diligently endeavor to
comply with all applicable securities laws before any options, rights or stock
bonus awards are granted under the Plan and before any Shares are issued
pursuant to the exercise of such options, rights or stock bonus awards. The
participant shall give the Company notice of any sale or other disposition of
any such Shares not more than five days after such sale or disposition.
17. INDEMNIFICATION
To the extent permitted by applicable law in effect from time to time, no
member of the Board or the Committee shall be liable for any action or omission
of any other member of the Board 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. The Company 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 liability or a 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 he 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 the
Company by a shareholder or holder of a voting trust certificate representing
shares of the Company. 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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APPENDIX B
AMENDMENT AND RESTATEMENT EFFECTIVE AS OF THE DATE
OF OBTAINING SHAREHOLDER APPROVAL IN 1996.
BYLAWS
OF
SILICON VALLEY BANCSHARES
ARTICLE I
OFFICES
Section 1.1. PRINCIPAL EXECUTIVE OFFICE. The principal executive office of
this corporation (the "Corporation") is hereby fixed and located at 3000
Lakeside Drive, Santa Clara, California. The Board of Directors (the "Board") is
hereby granted full power and authority to change the principal executive office
from one location to another. Any such change shall be noted in the Bylaws by
the Secretary, opposite this Section, or this Section may be amended to state
the new location.
Section 1.2. OTHER OFFICES. Other branch offices or places of business may
at any time be established by the Board at any place or places deemed
appropriate.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.1. PLACE OF MEETINGS. All annual or other meetings of
shareholders shall be held at the principal executive office of the Corporation,
or at any other place which may be designated either by the Board or by the
written consent of all persons entitled to vote thereat given either before or
after the meeting and filed with the Secretary of the Corporation.
Section 2.2. ANNUAL MEETINGS.
(a) TIME. The Annual Meeting of shareholders shall be held each year
on a date and at a time designated by the Board. The date so designated
shall be within fifteen months after the last Annual Meeting.
(b) BUSINESS TO BE TRANSACTED. At each Annual Meeting, directors shall
be elected, reports of the affairs of the Corporation shall be considered
and any other business may be transacted which is within the powers of the
shareholders.
(c) NOTICE. Written notice of each Annual Meeting shall be given to
each shareholder entitled to vote, either personally or by first class mail
or other means of written communication, charges prepaid, addressed to such
shareholder at such shareholder's address appearing on the books of the
Corporation, or given by the shareholder to the Corporation for the purpose
of notice, or if no such address appears or is given, at the place where the
principal executive office of the Corporation is located or by publication
at least once in a newspaper of general circulation in the county in which
the principal executive office is located. If any notice or report addressed
to the shareholder at the address of such shareholder appearing on the books
of the Corporation is returned to the Corporation by the United States
Postal Service marked to indicate that the United States Postal Service is
unable to deliver the notice or report to the shareholder at such address,
all future notices or reports shall be deemed to have been duly given
without further mailing if the same shall be available for the shareholder
upon written demand of the shareholder at the principal executive office of
the Corporation for a period of one year from the date of the giving of the
notice or report to all other shareholders. If a shareholder gives no
address, notice shall be deemed to have been given to the shareholder if
sent by mail or other means of written
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communication addressed to the place where the principal executive office of
the Corporation is located, or if published at least once in some newspaper
of general circulation in the county in which the principal executive office
is located.
All notices shall be given to each shareholder entitled thereto not less
than ten (10) days nor more than sixty (60) days before each Annual Meeting. Any
such notice shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by other means of written
communication. An affidavit of mailing of any such notice in accordance with the
foregoing provisions, executed by the Secretary, Assistant Secretary or any
transfer agent of the Corporation shall be prima facie evidence of the giving of
the notice. Such notices shall specify:
(i) the place, the date and the hour of each meeting;
(ii) those matters which the Board, at the time of the mailing of the
notice, intends to present for action by the shareholders;
(iii) if directors are to be elected, the names of nominees intended at
the time of the notice to be presented by the Board for election;
(iv) the general nature of a proposal, if any, to take action with
respect to approval of: (a) a contract or other transaction with an
interested director, (b) amendment of the Articles of Incorporation, (c) a
reorganization of the Corporation as defined in Section 181 of the
California General Corporation Law, (d) a voluntary dissolution of the
Corporation, or (e) a distribution in dissolution other than in accordance
with the rights of outstanding preferred shares, if any; and
(v) such other matters, if any, as may be required by law.
Section 2.3. SPECIAL MEETINGS. Special meetings of the shareholders, for
the purpose of taking any action permitted by the shareholders under the
California General Corporation Law and the Articles of Incorporation of the
Corporation, may be called at any time by the Chairman of the Board or the
President, or by the Board, or by one or more shareholders holding not less than
ten percent (10%) of the votes entitled to be cast at the meeting. Upon request
in writing that a special meeting of shareholders be called for any purpose,
directed to the Chairman of the Board, President, Vice President or Secretary by
any person (other than the Board) entitled to call a special meeting of
shareholders, the officer forthwith shall cause notice to be given to
shareholders entitled to vote that a meeting will be held at a time requested by
the person or persons calling the meeting, not less than thirty-five (35) nor
more than sixty (60) days after receipt of the request. Except in special cases
where other express provision is made by statute, notice of special meetings
shall be given in the same manner as for annual meetings of shareholders. In
addition to the matters required by items (i), and if applicable, (ii) and (iii)
of the preceding Section, notice of any special meeting shall specify the
general nature of the business to be transacted, and no other business may be
transacted at such meeting.
Section 2.4. QUORUM. The presence in person or by proxy of the persons
entitled to vote a majority of the voting shares at any meeting shall constitute
a quorum for the transaction of business. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
Section 2.5. ADJOURNED MEETINGS AND NOTICE THEREOF. Any shareholders'
meeting, annual or special, whether or not a quorum is present, may be adjourned
from time to time by the vote of a majority of the shares, the holders of which
are either present in person or represented by proxy thereat, but in the absence
of a quorum no other business may be transacted at such meeting, except as
provided in Section 2.4 above.
When any shareholders' meeting, either annual or special, is adjourned for
forty-five (45) days or more, or if after adjournment a new record date is fixed
for the adjourned meeting, notice of the adjourned meeting shall be given as in
the case of an original meeting. Except as provided above, it
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shall not be necessary to give any notice of the time and place of the adjourned
meeting or of the business to be transacted thereat, other than by announcement
of the time and place thereof at the meeting at which such adjournment is taken.
Section 2.6. VOTING. Unless a record date for voting purposes be fixed as
provided in Section 5.1 of these Bylaws, then, subject to the provisions of
Sections 702 through 704 of the California Corporations Code (relating to voting
of shares held by a fiduciary, in the name of a corporation or in joint
ownership), only persons in whose names shares entitled to vote stand on the
stock records of the Corporation at the close of business on the business day
next preceding the day on which notice of the meeting is given or if such notice
is waived, at the close of business on the business day next preceding the day
on which the meeting of shareholders is held, shall be entitled to vote at such
meeting, and such day shall be the record date for such meeting. Such vote may
be oral or by ballot; provided, however, that all elections for directors must
be by ballot upon demand made by a shareholder at any election and before the
voting begins. If a quorum is present, except with respect to election of
directors, the affirmative vote of the majority of the shares represented at the
meeting and entitled to vote on any matter (which shares voting affirmatively
also constitute at least a majority of the required quorum) shall be the act of
the shareholders, unless the vote of a greater number or voting by classes is
required by the California General Corporation Law or the Articles of
Incorporation. Subject to the requirements of the next sentence, every
shareholder entitled to vote at any election for directors shall have the right
to cumulate such shareholder's votes and give one candidate a number of votes
equal to the number of directors to be elected, multiplied by the number of
votes to which such shareholder's shares are entitled, or to distribute his or
her votes on the same principal among as many candidates as the shareholder
shall think fit. No shareholder shall be entitled to cumulate votes unless the
name of the candidate or candidates for whom the votes would be cast has been
placed in nomination prior to the voting and at least one shareholder has given
notice at the meeting, prior to the voting, of the shareholder's intention to
cumulate his or her votes. The candidates receiving the highest number of
affirmative votes of shares entitled to be voted for them, up to the number of
directors to be elected, shall be elected. Votes against the directors and votes
withheld shall have no legal effect.
Section 2.7. VALIDATION OF DEFECTIVELY CALLED OR NOTICED MEETINGS. The
transactions of any meeting of shareholders, either annual or special, however
called and noticed, and wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice, if a quorum be present either
in person or by proxy, and if, either before or after the meeting, each of the
persons entitled to vote, not present in person or by proxy signs a waiver of
notice or a consent to the holding of the meeting, or an approval of the minutes
thereof. The waiver of notice or consent need not specify either the business to
be transacted or the purpose of any annual or special meeting of shareholders,
except that if action is taken or proposed to be taken for approval of any of
those matters specified in Section 2.2(c)(iv) of these Bylaws, the waiver of
notice or consent shall state the general nature of the proposal. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of notice
of that meeting, except when the person objects, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened, and except that attendance at a meeting is not a waiver of
any right to object to the consideration of matters not included in the notice
of the meeting if that objection is expressly made at the meeting.
Section 2.8. ACTION WITHOUT MEETING.
(a) ELECTION OF DIRECTORS. Directors may be elected without a meeting
by a consent in writing, setting forth the action so taken, signed by all of
the persons who would be entitled to vote for the election of directors,
provided that, without notice, except as hereinafter set forth, a
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director may be elected at any time to fill a vacancy (other than one
created by removal) not filled by the directors, by the written consent of
persons holding a majority of the outstanding shares entitled to vote for
the election of directors.
(b) OTHER ACTION. Any other action which, under any provision of the
California General Corporation Law, may be taken at a meeting of the
shareholders, may be taken without a meeting, and without prior notice
except as hereinafter set forth, if a consent in writing, setting forth the
action so taken, is signed by the holders of outstanding shares having not
less than minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Unless the consents of all shareholders entitled to
vote have been solicited in writing:
(i) Notice of any proposed shareholder approval of (a) a contract or
other transaction with an interested director, (b) indemnification of an
agent of the Corporation as authorized by Section 3.17 of these Bylaws,
(c) a reorganization of the Corporation as defined in Section 181 of the
California General Corporation Law, or (d) a distribution in dissolution
other than in accordance with the rights of outstanding preferred shares,
if any, without a meeting by less than unanimous written consent, shall
be given at least ten (10) days before the consummation of the action
authorized by such approval; and
(ii) Prompt notice shall be given at the taking of any other
corporate action approved by shareholders without a meeting by less than
unanimous written consent, to those shareholders entitled to vote who
have not consented in writing. Such notices shall be given as provided in
Section 2.2(c) of these Bylaws.
Unless, as provided in Section 5.1 of these Bylaws, the Board has fixed a
record date for the determination of shareholders entitled to notice of and to
give such written consent, the record date for such determination shall be the
day on which the first written consent is given. All such written consents shall
be filed with the Secretary of the Corporation.
Any shareholder giving a written consent, or the shareholder's proxyholders,
or a transferee of the shares, or a personal representative of the shareholder,
or their respective proxyholders, may revoke the consent by a writing received
by the Corporation prior to the time that written consents by the number of
shares required to authorize the proposed action have been filed with the
Secretary of the Corporation, but may not do so thereafter. Such revocation is
effective upon its receipt by the Secretary of the Corporation.
Section 2.9. PROXIES. Every person entitled to vote or execute consents
shall have the right to do so either in person or by one or more agents
authorized by a written proxy. A proxy may be in the form of a written
authorization signed or an electronic transmission authorized by a shareholder
or the shareholder's agent. A proxy may be transmitted by an oral telephonic
transmission if it is submitted with information from which it may be determined
that the proxy was authorized by the shareholder or the shareholder's agent. Any
proxy duly executed is not revoked and continues in full force and effect until
(i) an instrument revoking it or a duly executed proxy bearing a later date is
filed with the Secretary of the Corporation prior to the vote pursuant thereto,
(ii) the person executing the proxy attends the meeting and votes in person, or
(iii) written notice of the death or incapacity of the maker of such proxy is
received by the Corporation before the vote pursuant thereto is counted;
provided, that no such proxy shall be valid after the expiration of eleven (11)
months from the date of its execution, unless the person executing it specifies
therein the length of time for which said proxy is to continue in force.
Section 2.10. INSPECTORS OF ELECTION. In advance of any meeting of
shareholders the Board may appoint inspectors of election to act at the meeting
and any adjournment thereof. If inspectors of election are not so appointed, or
if any persons so appointed fail to appear or refuse to act, the Chairman of any
meeting of shareholders may, and on the request of any shareholder or a
shareholder's proxy shall, appoint inspectors of election (or persons to replace
those who so fail or refuse) at
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the meeting. The number of inspectors shall be either one or three. If appointed
at a meeting on the request of one or more shareholders or proxies, the majority
of shares represented in person or by proxy shall determine whether one or three
inspectors are to be appointed.
The duties of the inspectors shall be as prescribed in Section 707 of the
California General Corporation Law and shall include: (i) determining the number
of shares outstanding and the voting power of each, the shares represented at
the meeting, the existence of a quorum, the authenticity, validity and effect of
proxies; (ii) receiving votes, ballots or consents; (iii) hearing and
determining all challenges and questions in any way arising in connection with
the right to vote; (iv) counting and tabulating all votes or consents; (v)
determining when the polls shall close; (vi) determining the result; and (vii)
such other acts as may be proper to conduct the election or vote with fairness
to all shareholders. In the determination of the validity and effect of proxies,
the dates contained on the forms of proxy shall presumptively determine the
order of execution on the proxies, regardless of postmark dates on the envelopes
in which they are mailed.
The inspectors of election shall perform their duties impartially, in good
faith, to the best of their ability and as expeditiously as is practical. If
there are three inspectors of election, the decision, act or certificate of a
majority is effective in all respects as the decision, act or certificate of
all. Any report or certificate made by the inspectors of election is prima facie
evidence of the facts stated therein.
Section 2.11. NOMINATION OF DIRECTORS. Nominations for election of members
of the Board may be made by the Board or by any shareholder of any outstanding
class of capital stock of the Corporation 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 Secretary of the
Corporation by the later of: the close of business twenty-one (21) days prior to
any meeting of shareholders called for election of directors, or ten (10) days
after the date of mailing notice of the meeting to shareholders. Such
notification shall contain the following information to the extent known to the
notifying shareholder: (i) the name and address of each proposed nominee; (ii)
the principal occupation of each proposed nominee; (iii) the number of shares of
capital stock of the Corporation owned by each proposed nominee; (iv) the name
and residence address of the notifying shareholder; (v) the number of shares of
capital stock of the Corporation owned by the notifying shareholder; and (vi)
with the written consent of the proposed nominee, a copy of which shall be
furnished with the notification, whether the proposed nominee has ever been
convicted of or pleaded nolo contendere to any criminal offense involving
dishonesty or breach of trust, filed a petition in bankruptcy or been adjudged
bankrupt. The notice shall be signed by the nominating shareholder and by the
nominee. Nominations not made in accordance herewith shall be disregarded by the
Chairman of the meeting, and upon the Chairman's instructions, 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 the preceding paragraph shall be set forth in the notice to
shareholders of any meeting at which directors are to be elected.
ARTICLE III
DIRECTORS
Section 3.1. POWERS. Subject to limitation of the Articles of
Incorporation and of the California General Corporation Law as to action to be
authorized or approved by the shareholders, and subject to the duties of
directors as prescribed by the Bylaws, and subject to the rules and regulations
as may be promulgated from time to time by applicable regulatory authorities,
all corporate powers shall be exercised by or under the authority of, and the
business and affairs of the Corporation shall be controlled by, the Board.
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Section 3.2 NUMBER AND QUALIFICATION OF DIRECTORS. The authorized number
of directors of the Corporation shall not be less than eight (8) nor more than
fifteen (15) until changed by amendment of the Articles of Incorporation or by a
bylaw amending this Section 3.2 duly adopted by the vote or written consent of
holders of a majority of the outstanding shares entitled to vote, provided that
a proposal to reduce the authorized minimum number of directors below five
cannot be adopted. The exact number of directors shall be fixed from time to
time, within the limits specified in this Section 3.2: (i) by a resolution duly
adopted by the Board; (ii) by a Bylaw or amendment thereof duly adopted by the
vote of a majority of the outstanding shares entitled to vote; or (iii) by
approval of the shareholders (as defined in Section 153 of the California
General Corporation Law). No amendment may change the stated maximum number of
authorized directors to a number greater than two times the stated minimum
number of directors minus one.
Subject to the foregoing provisions for changing the number of directors,
the number of directors of this Corporation has been fixed at ten (10).
Section 3.3. ELECTION AND TERM OF OFFICE. The directors shall be elected
at each annual meeting of shareholders, but if any such annual meeting is not
held or the directors are not elected thereat, the directors may be elected at
any special meeting of shareholders held for that purpose or by written consent
in accordance with Section 2.8 of these Bylaws. All directors shall hold office
until their respective successors are elected, subject to the California General
Corporation Law and the provisions of these Bylaws with respect to vacancies on
the Board.
Section 3.4 [RESERVED].
Section 3.5. REMOVAL OF DIRECTORS. The entire Board or any individual
director may be removed from office by a vote of shareholders holding a majority
of the outstanding shares entitled to vote at an election of directors. A
material breach of the Corporation's Code of Ethics or a director's failure to
attend at least seventy-five percent (75%) of the Board meetings held during the
director's term of office may constitute grounds for removal. However, unless
the entire Board is removed, no individual director may be removed when the
votes cast against removal, or not consenting in writing to such removal, would
be sufficient to elect such director if voted cumulatively at an election at
which the same total number of votes were cast (or, if such action is taken by
written consent, all shares entitled to vote were voted) and the entire number
of directors authorized at the time of the director's most recent election were
then being elected.
Section 3.6. VACANCIES. A vacancy in the Board shall be deemed to exist
(i) in case of the death, resignation or removal of any director, (ii) if a
director has been declared of unsound mind by order of court or convicted of a
felony, (iii) if the authorized number of directors be increased, or (iv) if the
shareholders fail, at any annual or special meeting of shareholders at which any
director or directors are elected, to elect the full authorized number of
directors to be voted for at that meeting.
Vacancies in the Board, except for a vacancy created by the removal of a
director, may be filled by a majority of the remaining directors, though less
than a quorum or by a sole remaining director, and each director so elected
shall hold office until his or her successor is elected at an annual or a
special meting of the shareholders. A vacancy in the Board created by the
removal of a director may only be filled by the vote of a majority of the shares
entitled to vote represented at a duly held meeting at which a quorum is
present, or by the written consent of the holders of all of the outstanding
shares.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors. Any such election by written
consent (except to fill a vacancy created by removal) shall require the consent
of holders of a majority of the outstanding shares entitled to vote.
Any director may resign effective upon giving written notice to the Chairman
of the Board, the President, the Secretary or the Board of the Corporation,
unless the notice specifies a later time for
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the effectiveness of such resignation. If the Board accepts the resignation of a
director tendered to take effect at a future time, the Board or the shareholders
shall have the power to elect a successor to take office when the resignation is
to become effective.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of his or her term of office.
Section 3.7. FREQUENCY AND PLACE OF MEETING. The Board shall hold a
meeting at least once each calendar quarter. Regular meetings of the Board shall
be held at any place and time which has been designated from time to time by
resolution of the Board or by written consent of all members of the Board. In
the absence of such designation, regular meetings shall be held at the principal
executive office of the Corporation. Special meetings of the Board may be held
either at a place so designated or at the principal executive office.
Section 3.8. ORGANIZATIONAL MEETING. Immediately following each annual
meeting of shareholders, the Board shall hold a regular meeting at the place of
the annual meeting or at such other place as shall be fixed by the Board, for
the purpose of organization, election of officers and the transaction of other
business. Call and notice of such meetings are hereby dispensed with.
Section 3.9. OTHER REGULAR MEETINGS. Other regular meetings of the Board
shall be held at any place and time which has been designated from time to time
by resolution of the Board or by written consent of all members of the Board.
Notice of all such regular meetings of the Board is hereby dispensed with.
Section 3.10. SPECIAL MEETINGS. Special meetings of the Board for any
purpose or purposes may be called at any time by the Chairman of the Board, the
President or by any two directors.
Special meetings shall be held upon four days' notice by mail or other form
of written communication, or 24 hours notice received personally, by telephone
or by facsimile or comparable means of communication. Written notice of the time
and place of special meetings shall be addressed to the director at the
director's address as it is shown upon the records of the Corporation or, if it
is not so shown on such records or is not readily ascertainable, at the place at
which the meetings of the directors are regularly held.
Any notice shall state the date, place and hour of the meeting and may state
the general nature of the business to be transacted and that other business may
be transacted at the meeting.
Section 3.11. ACTION WITHOUT MEETING. Any action by the Board may be taken
without a meeting if all members of the Board shall individually or collectively
consent in writing to the action. The written consent or consents shall be filed
with the minutes of the proceedings of the Board and shall have the same force
and effect as a unanimous vote of the directors.
Section 3.12. ACTION AT A MEETING, QUORUM AND REQUIRED VOTE. Presence of a
majority of the authorized number of directors at a meeting of the Board
constitutes a quorum for the transaction of business, except as hereinafter
provided. Members of the Board may participate in a meeting through use of
conference telephone or similar communications equipment, so long as all members
participating in such meeting can hear one another. (Participation in a meeting
as permitted in the preceding sentence constitutes presence in person at the
meeting.) Every act or decision done or made by a majority of the directors
present at a meeting duly held at which a quorum is present shall be regarded as
the act of the Board, unless a greater number, or the same number after
disqualifying one or more directors from voting, is required by law, by the
Articles of Incorporation or by these Bylaws. A meeting at which a quorum is
initially present may continue to transact business notwithstanding the
withdrawal of a director or directors, provided that any action taken is
approved by at least a majority of the required quorum for the meeting.
Section 3.13. VALIDATION OF DEFECTIVELY CALLED OR NOTICED MEETINGS. The
transactions of any meeting of the Board, however called and noticed or wherever
held, shall be as valid as though had at a meeting duly held after regular call
and notice, if a quorum is present and if, either before or after the
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meeting, each of the directors not present or who, though present, has prior to
the meeting or at its commencement, protested the lack of proper notice: (i)
signs a written waiver of notice or a consent to holding such meeting or an
approval of the minutes thereof; or (ii) waives notice and withdraws his or her
objection. All such waivers, consents or approvals shall be filed with the
corporate records or made a part of the minutes of the meeting.
Section 3.14. ADJOURNMENT. A majority of the directors present at any
directors' meeting, either regular or special, may adjourn to another time and
place.
Section 3.15. NOTICE OF ADJOURNMENT. If the meeting is adjourned for more
than 24 hours, notice of any adjournment to another time or place shall be given
prior to the time of the adjourned meeting to the directors who were not present
at the time of adjournment. Otherwise notice of the time and place of holding an
adjourned meeting need not be given to absent directors if the time and place be
fixed at the meeting adjourned.
Section 3.16. FEES AND COMPENSATION. Directors and members of committees
may receive such compensation, if any, for their services, and such
reimbursement for expenses, as may be fixed or determined by resolution of the
Board.
Section 3.17. INDEMNIFICATION OF AGENTS OF THE CORPORATION; PURCHASE OF
LIABILITY INSURANCE.
(a) For the purposes of this Section: "agent" means any person who is or
was a director, officer, employee or other agent of this Corporation, or is
or was serving at the request of this Corporation as a director, officer,
employee or agent of another foreign or domestic corporation, partnership,
joint venture, trust or other enterprise or was a director, officer,
employee or agent of a foreign or domestic Corporation which was a
predecessor corporation of this Corporation or of another enterprise at the
request of such predecessor Corporation; "proceeding" means any threatened,
pending or completed action or proceeding, whether civil, criminal,
administrative or investigative; and "expenses" includes, without
limitation, attorneys' fees and any expenses of establishing a right to
indemnification under subdivision (d) or subdivision (e)(4) of this Section.
(b) This Corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, to any proceeding (other than an action
by or in the right of this Corporation) by reason of the fact that such
person is or was an agent of this Corporation, against expenses, judgments,
fines, settlements and other amounts actually and reasonably incurred in
connection with the proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in the best interests of this
Corporation and, in the case of a criminal proceeding, had no reasonable
cause to believe the conduct of the person was unlawful. The termination of
any proceeding by judgment, order, settlement, conviction or upon a plea of
nolo contendere or its equivalent shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which the person
reasonably believed to be in the best interests of this Corporation or that
the person had reasonable cause to believe that the person's conduct was
unlawful.
(c) This Corporation shall indemnify any person who was or is a party,
or is threatened to be made a party, to any threatened, pending or completed
action by or in the right of this Corporation to procure a judgment in its
favor by reason of the fact that the person is or was an agent of this
Corporation, against expenses actually and reasonably incurred by the person
in connection with the defense or settlement of the action if the person
acted in good faith, in a manner the person believed to be in the best
interests of this Corporation and its shareholders. No indemnification shall
be made under this subdivision (c):
(1) In respect to any claim, issue or matter as to which the person
shall have been adjudged to be liable to this Corporation and its
shareholders, in the performance of the person's duty to this
Corporation, unless and only to the extent that the court in which the
proceeding is or was pending shall determine upon application that, in
view of all the circumstances of this case, the person is fairly and
reasonably entitled to indemnity for the expenses which the court shall
determine.
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(2) Of amounts paid in settling or otherwise disposing of a pending
action, without court approval.
(3) Of expenses incurred in defending a pending action which is
settled or otherwise disposed of without court approval.
(d) To the extent that an agent of this Corporation has been successful
on the merits in defense of any proceedings referred to in subdivision (b)
or (c) or in defense of any claim, issue or matter therein, the agent shall
be indemnified against expenses actually and reasonably incurred by the
agent in connection therewith.
(e) Except as provided in subdivision (d), any indemnification under
this Section shall be made by this Corporation only if authorized in the
specific case, upon a determination that indemnification of that agent is
proper in the circumstances because the agent has met the applicable
standard of conduct set forth in subdivision (b) or (c), by any of the
following:
(1) A majority vote of a quorum consisting of directors who are not
parties to such proceeding.
(2) If such a quorum of directors is not obtainable, by independent
legal counsel in a written opinion.
(3) Approval of the shareholders, with the shares owned by the person
to be indemnified not being entitled to vote thereon.
(4) The court in which the proceeding is or was pending upon
application made by the Corporation or the agent or the attorney or other
person rendering services in connection with the defense, whether or not
the application by the agent, attorney or other person is opposed by the
Corporation.
(f) Expenses incurred in defending any proceeding may be advanced by
this Corporation prior to the final disposition of the proceeding upon
receipt of a written undertaking by or on behalf of the agent to repay such
amount if it shall be determined ultimately that the agent is not entitled
to be indemnified as authorized in this Section.
(g) The indemnification provided by this Section shall not be deemed
exclusive of any additional rights to indemnification that are authorized in
the Articles of Incorporation. Nothing in this Section shall affect any
right to indemnification to which persons other than the directors and
officers may be entitled by contract or otherwise.
(h) No indemnification or advance shall be made under this Section,
except as provided in subdivision (d) or subdivision (e)(4) of this Section,
in any circumstance where it appears:
(1) That it would be inconsistent with a provision of the Articles of
Incorporation, the Bylaws, a resolution of the shareholders or an
agreement in effect at the time of the accrual of the alleged cause of
action asserted in the proceeding in which the expenses were incurred or
other amounts were paid, which prohibits or otherwise limits
indemnification.
(2) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
(i) Upon a determination by the Board, this Corporation may purchase and
maintain insurance on behalf of any agent of the Corporation against any
liability asserted against or incurred by the agent in such capacity or
arising out of the agent's status as such whether or not this Corporation
would have the power to indemnify the agent against such liability under the
provisions of this Section.
(j) This Section does not apply to any proceeding against any trustee,
investment manager or other fiduciary of an employee benefit plan in that
person's capacity as such, even though the person may also be an agent, as
defined in subdivision (a) of this Section, of the Corporation. The
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Corporation shall have power to indemnify such a trustee, investment manager
or other fiduciary to the extent permitted by subdivision (f) of Section 207
of the California General Corporation Law.
Section 3.18. COMMITTEES. The Board may, by resolution or committee
charter adopted by a majority of the authorized number of directors, designate
one or more committees, each committee consisting of two or more directors, to
serve at the pleasure of the Board. These committees may include, without
limitation, an Executive Committee, an Audit Committee, a Stock Committee and
any such other committees as the Board may deem appropriate. Any such committee,
to the extent provided in the resolution of the Board or committee charter, may
exercise those powers and responsibilities so designated, except that no
committee shall be authorized to take action with respect to:
(i) The approval of any action for which shareholder approval or
approval of the outstanding shares is required.
(ii) The filling of vacancies on the Board or in any committee.
(iii) The amendment or repeal of Bylaws or the adoption of new Bylaws.
(iv) The amendment or repeal of any resolution of the Board which by its
express terms is not so amendable or repealable.
(v) The appointment of other committees of the Board or the members
thereof.
(vi) A distribution, except at a rate, in a periodic amount or within a
price range set forth in the Articles of Incorporation or as determined by
the Board.
ARTICLE IV
OFFICERS
Section 4.1. OFFICERS. The Officers of the Corporation shall be a Chief
Executive Officer, President, Secretary, Chief Financial Officer and, at the
discretion of the Board, such other officers as may be deemed necessary
("Officers"). Any two or more Officer positions, except those of the President
and Secretary, may be held by the same person. In appropriate circumstances, an
Officer of the Corporation may be excluded by resolution of the Board or by a
provision of the Bylaws from participation, other than in the capacity of a
director if applicable, in major policymaking functions of the Corporation.
Section 4.2. ELECTION. Except as otherwise provided in these Bylaws, the
Officers of the Corporation shall be chosen by the Board, and each Officer shall
be employed at will, unless employed for a determinate period of time pursuant
to a written employment agreement approved by the Board, and shall have such
authority and perform such duties as are provided in the Bylaws or as the Board
may, from time to time, determine.
Section 4.3. SUBORDINATE OFFICERS. The Corporation may have such
subordinate officers as the business of the Corporation may require
("Subordinate Officers"), including one or more Vice Presidents, a Cashier, one
or more Assistant Cashiers, Operations Officers and Managers. Subordinate
Officers may be chosen by the Board, the Chief Executive Officer or the
President, and such Officers and Subordinate Officers upon whom authority is
conferred by the Board, the Chief Executive Officer or the President
("Authorized Officers"). Subordinate Officers shall be employed at will, unless
employed for a determinate period of time pursuant to a written employment
agreement approved by the Board, and shall have such authority and perform such
duties as are provided in the Bylaws or as the Board, Chief Executive Officers,
President or Authorized Officers may, from time to time, determine.
Section 4.4. REMOVAL AND RESIGNATION. Any Officer may be removed, either
with or without cause, by the Board, subject, in each case, to the rights, if
any, of an Officer under any contract or
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employment. Any Subordinate Officer may be removed, with or without cause, by
the Board, Chief Executive Officer, President or Authorized Officer, subject to
such rights, if any, of a Subordinate Officer under a written employment
agreement.
Any Officer or Subordinate Officer may resign at any time by giving written
notice to the Board or to the President, or to the Secretary of the Corporation.
Any such resignation shall take effect at the date of the receipt of such notice
or at any later time specified therein; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Section 4.5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in the
manner prescribed in the Bylaws for regular appointments to such office.
Section 4.6. CHAIRMAN OF THE BOARD; VICE-CHAIRMAN. The Executive Committee
of the Board shall nominate the Chairman of the Board, subject to approval by
the Board. The Chairman of the Board shall also serve as Chairman of the
Executive Committee and shall serve in such capacities for a maximum of three
consecutive one-year terms. The Chairman shall be an officer of the Board and
shall, if present, preside at all meetings of the Board. The Chairman may
exercise and perform such other powers and duties as may be from time to time be
assigned by the Board or prescribed by the Bylaws. The Chairman shall not,
however, be deemed an Officer of the Corporation.
The Executive Committee of the Board shall nominate a Vice-Chairman of the
Board, subject to approval by the Board. Any Vice-Chairman so approved may serve
a maximum of three consecutive one-year terms. The Vice-Chairman shall have such
powers and perform such duties as may be from time to time be assigned by the
Board or the Chairman of the Board and shall preside at any meeting of the Board
at which the Chairman is absent or otherwise unable to serve. The Vice-Chairman
shall not be deemed an Officer of the Corporation.
Section 4.7. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall,
subject to the control of the Board, have general supervision, direction and
control of the business and officers of the Corporation. The Chief Executive
Officer shall exercise and perform such other powers and duties as may be from
time to time assigned by the Board or prescribed by the Bylaws.
Section 4.8. PRESIDENT. Subject to such supervisory powers, if any, as may
be given by the Board to the Chairman of the Board, the President shall preside
at all meetings of the shareholders and at all meetings of the Board when the
Chairman of the Board and the Vice-Chairman of the Board are absent or otherwise
unable to serve. The President shall have the general powers and duties of
management usually vested in the office of the President of a bank and shall
have such other powers and duties as may be prescribed by law, the Board or the
Bylaws.
Section 4.9. VICE PRESIDENT. In the absence or disability of the
President, the Vice Presidents in order of their rank as fixed by the Board or,
if not ranked, the Vice President designated by the Board, shall perform all the
duties of the President, and when so acting shall have all the powers of, and be
subject to all the restrictions upon the President. The Vice Presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board or the Bylaws. No Vice President
shall preside over meetings of the shareholders or at meetings of the Board in
the absence or disability of the President and Chairman of the Board unless the
Vice President so serving is also a Director.
Section 4.10. SECRETARY. The Secretary shall record or cause to be
recorded, and shall keep or cause to be kept, at the principal executive office
and such other place or places as the Board may order, a book of minutes of
actions taken at all meetings of directors and shareholders, with the time and
place of holding, whether regular or special, and, if special, how authorized,
the notice thereof given, the names of those present at directors' meetings, the
number of shares present or represented at shareholders' meetings, and the
proceedings thereof. In the event of any meeting in Executive Session or
otherwise if the Secretary is not present, an Acting Secretary shall be
designated by the Chairman of the meeting for the purpose of recording the
minutes of actions taken at the meeting or Executive Session thereof.
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The Secretary shall keep, or cause to be kept, a copy of the Bylaws of the
Corporation at the principal executive office or business office in accordance
with Section 213 of the California General Corporation Law.
The Secretary shall keep, or cause to be kept, at the principal executive
office, or at the office of the Corporation's transfer agent, a share register,
or a duplicate share register, showing the names of the shareholders and their
addresses, the number and classes of shares held by each, the number and date of
certificates issued for the same, or the number and date of cancellation of
every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all the meetings
of the shareholders and of the Board required by the Bylaws or by law to be
given and shall have such other powers and perform such other duties as may be
prescribed by the Board or by the Bylaws.
Section 4.11. CHIEF FINANCIAL OFFICER. The Chief Financial Officer of the
Corporation shall keep and maintain, or cause to be kept and maintained,
adequate and correct accounts of the properties and business transactions of the
Corporation, and shall send or cause to be sent to the shareholders of the
Corporation such financial statements and reports as are required to be sent to
them by law or these Bylaws.
The Chief Financial Officer shall deposit all moneys and other valuables in
the name and to the credit of the Corporation with such depositories as may be
designated by the Board. The Chief Financial Officer shall disburse, or cause to
be disbursed, the funds of the Corporation as may be ordered by the Board, shall
render to the President and directors, whenever they request it, an account of
all transactions as Chief Financial Officer and of the financial condition of
the Corporation, and shall have such other powers and perform such other duties
as may be prescribed by the Board or the Bylaws.
ARTICLE V
MISCELLANEOUS
Section 5.1. RECORD DATE. The Board may fix a time in the future as a
record date for the determination of the shareholders entitled to notice of and
to vote at any meetings of shareholders or entitled to give consent to corporate
action in writing without a meeting, to receive any report, to receive any
dividend or distribution, or any allotment of rights or to exercise rights in
respect to any change, conversion or exchange of shares. The record date so
fixed shall be not more than sixty (60) days or less than ten (10) days prior to
the date of any meeting or other event for the purpose of which it is fixed.
When a record date is so fixed, only shareholders of record on that date are
entitled to notice of and to vote at any such meeting, to give consent without a
meeting, to receive any report, to receive a dividend, distribution or allotment
of rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the Corporation after the record date.
Section 5.2. INSPECTION OF CORPORATE RECORDS. Except as restricted or
limited by applicable law, including Sections 1600 through 1605 of the
California General Corporation Law, the accounting books and records, the record
of shareholders and minutes of proceedings of the shareholders and the Board and
committees of the Board of this Corporation and any subsidiary of this
Corporation shall be open to inspection upon the written demand on the
Corporation of any shareholder or holder of a voting trust certificate at any
reasonable time during usual business hours, for a purpose reasonably related to
such holder's interest as shareholder or as the holder of such voting trust
certificate. Such inspection by a shareholder or holder of a voting trust
certificate may be made in person or by agent or attorney, and the right of
inspection includes the right to copy and make extracts.
Section 5.3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
payment of money, notes or other evidence of indebtedness, shall be signed or
endorsed by such person or persons and in such manner as, from time to time,
shall be determined by resolution of the Board.
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Section 5.4. ANNUAL AND OTHER REPORTS. The Board of the Corporation shall
cause an annual report to be sent to the shareholders not later than 120 days
after the close of the fiscal or calendar year. Notwithstanding the foregoing
sentence, however, the requirement for such annual report is dispensed with so
long as this Corporation has less than 100 shareholders of record. If required
to be sent to shareholders, the annual report shall contain a balance sheet as
of the end of such fiscal year and an income statement and statement of changes
in financial position for such fiscal year, accompanied by any report thereon of
independent accountants or, if there is no such report, the certificate of an
authorized officer of the Corporation that such statements were prepared without
audit from the books and records of the Corporation.
Section 5.5. CONTRACTS, ETC., HOW EXECUTED. The Board, except as in the
Bylaws otherwise provided, may authorize any officer or officers, agent or
agents, to enter into any contract or execute any instrument in the name of and
on behalf of the Corporation, and such authority may be general or confined to
specific instances.
Section 5.6. CERTIFICATE OF SHARES. Every holder of shares in the
Corporation shall be entitled to have a certificate signed in the name of the
Corporation by the Chairman or Vice Chairman of the Board or the President or a
Vice President and by the Chief Financial Officer or an assistant treasurer or
the Secretary or any assistant secretary, certifying the number of shares and
the class or series of shares owned by the shareholder. Any of the signatures on
the certificate may be facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if such person were an officer, transfer agent or registrar at
the date of issue.
No new certificate for shares shall be issued in lieu of an old certificate
unless the latter is surrendered and cancelled at the same time. The Board may,
however, in case any certificate for shares is lost, stolen, mutilated or
destroyed, authorize the issuance of a new certificate in lieu thereof, upon
such terms and conditions, including reasonable indemnification of the
Corporation, as the Board shall determine.
Section 5.7. INSPECTION OF BYLAWS. The Corporation shall keep in its
principal executive office the original or a copy of the Bylaws as amended or
otherwise altered to date, certified by the Secretary, which shall be open to
inspection by the shareholders at all reasonable times during office hours.
Section 5.8. CONSTRUCTION AND DEFINITIONS. Unless the context otherwise
requires, the general provisions, rules of construction and definitions
contained in the California General Corporation Law shall govern the
construction of these Bylaws. Without limiting the generality of the foregoing,
the masculine gender includes the feminine and neuter, the singular, number
includes the plural and the plural number includes the singular, and the term
"person" includes a Corporation as well as a natural person.
ARTICLE VI
AMENDMENTS
Section 6.1. POWER OF SHAREHOLDERS. New Bylaws may be adopted or these
Bylaws may be amended or repealed by the affirmative vote of a majority of the
outstanding shares entitled to vote, or by written assent of shareholders
entitled to vote such shares, except as otherwise provided by law or by the
Articles of Incorporation.
Section 6.2. POWER OF DIRECTORS. Subject to the right of shareholders as
provided in Section 6.1 to adopt, amend or repeal Bylaws, Bylaws may be adopted,
amended or repealed by the Board provided, however, that the Board may adopt a
bylaw or amendment thereof changing the authorized number of directors only for
the purpose of fixing the exact number of directors within the limits specified
in Section 3.2 of these Bylaws.
13
<PAGE>
SILICON VALLEY BANCSHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 18, 1996
The undersigned appoints JOHN C. DEAN and A. CATHERINE NGO, or either of
them, with full power of substitution for himself or herself, as the Proxy
Holder of the undersigned to vote and otherwise represent all of the shares
registered in the name of the undersigned at the Annual Meeting of Shareholders
of Silicon Valley Bancshares to be held on Thursday, April 18, 1996, at 4:00
p.m. at the RENAISSANCE MEETING CENTER AT TECHMART, SILICON VALLEY ROOM, 5201
GREAT AMERICA PARKWAY, SANTA CLARA, CALIFORNIA 95054 and any postponements or
adjournments thereof, with the same effect as if the undersigned were present
and voting such shares, on the following matters and in the following manner.
1. To elect directors to serve for the ensuing year and until their successors
are elected.
/ / FOR all nominees listed below, with the discretionary authority to cumulate
votes, except votes withheld
/ / WITHHOLD AUTHORITY to vote for all nominees listed below
IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THAT NOMINEE'S NAME APPEARING IN THE LIST BELOW:
Gary K. Barr, James F. Burns, Jr., John C. Dean, David M. deWilde, Clarence J.
Ferrari, Jr., Henry M. Gay, Daniel J. Kelleher, James R. Porter, Michael Roster,
and Ann R. Wells
2. To ratify and approve an amendment to the
Silicon Valley Bancshares 1989 Stock Option Plan increasing the number of shares
reserved for issuance thereunder by 150,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify and approve an amendment to Silicon Valley Bancshares' Bylaws
changing the permitted range of the number of directors to a range of eight to
15.
/ / FOR / / AGAINST / / ABSTAIN
4. To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors.
/ / FOR / / AGAINST / / ABSTAIN
5. To vote or otherwise represent the shares on any other business that may
properly come before the meeting and any postponements or adjournments thereof,
according to the Proxy Holder's decision and in their discretion.
(CONTINUED ON OTHER SIDE)
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF NO SPECIFICATIONS ARE MADE, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED FOR EACH OF THE ABOVE NOMINEES AND PROPOSALS, AND WITH
RESPECT TO SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING AND ANY
POSTPONEMENTS OR ADJOURNMENTS THEREOF, AS THE SAID PROXY HOLDERS DEEM ADVISABLE.
__________________________________
(Shareholder Signature)
__________________________________
(Name typed or printed)
Date signed______________________________________________________________, 199
I plan to attend the meeting.
/ / YES / / NO
Sign exactly as your name(s) appear(s) on your stock certificate. A corporation
is requested to sign its name by its President or other duly authorized officer,
with the office held designated. Executors, administrators, trustees, etc., are
requested to so indicate when signing. If stock is registered in two names,
both should sign.
SHAREHOLDERS SHOULD MARK, SIGN AND DATE THIS PROXY PROMPTLY AND RETURN IT IN THE
ENCLOSED ENVELOPE.
