<PAGE>
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
GREATER BAY BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
GREATER BAY BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 18, 1997
TO THE SHAREHOLDERS OF GREATER BAY BANCORP:
NOTICE IS HEREBY GIVEN that, pursuant to its Bylaws and the call of
its Board of Directors, the Annual Meeting of Shareholders (the "Meeting") of
Greater Bay Bancorp (the "Company") will be held at the principal executive
offices of the Company, 2860 West Bayshore Road, Palo Alto, California 94303 on
Wednesday, June 18, 1997, at 5:00 p.m., for the following purposes, all as set
forth in the attached Proxy Statement:
1. ELECTION OF DIRECTORS. To elect (i) three persons to serve on the
Board of Directors as Class I Directors for an initial term of one year expiring
at the 1998 Annual Meeting of Shareholders; (ii) three persons to serve on the
Board of Directors as Class II Directors for an initial term of two years
expiring at the 1999 Annual Meeting of Shareholders; and (iii) four persons to
serve on the Board of Directors as Class III Directors for an initial term of
three years expiring at the 2000 Annual Meeting of Shareholders; each to serve
until his successor is elected and has qualified. The following three persons
are the Board of Directors' nominees to serve as Class I Directors for an
initial term of one year:
James E. Jackson
Duncan L. Matteson
Edwin E. van Bronkhorst
The following persons are the Board of Directors' nominees to serve as
Class II Directors for an initial term of two years:
John M. Gatto
Dick J. Randall
Donald H. Seiler
The following four persons are the Board of Directors' nominees to
serve as Class III Directors for an initial term of three years:
David L. Kalkbrenner
Rex D. Lindsay
Glen McLaughlin
Warren R. Thoits
2. AMENDMENT OF EMPLOYEE STOCK PURCHASE PLAN. To consider and vote
upon a proposal to amend the Greater Bay Bancorp Employee Stock Purchase Plan to
increase the number of shares of the Company's common stock reserved for
issuance thereunder by 100,000 shares.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS.
To ratify the appointment of Coopers & Lybrand L.L.P. as the Company's
independent public accountants for the year ending December 31, 1997.
4. OTHER BUSINESS. To transact such other business as may properly
come before the Meeting and at any and all adjournments thereof.
Article IV, Section 2 of the Bylaws of the Company provides for the
nomination of directors in the following manner:
<PAGE>
"Nomination for election of directors may be made by the Board of
Directors or by any holder 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 shall be made in writing and shall be delivered or
mailed to the President of the corporation 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 President of the corporation not
later than the close of business on the tenth (10th) day following the day on
which the notice of meeting was mailed; provided further, that if notice of such
meeting is sent by third class mail (if permitted by law), 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 capital stock of the corporation owned by
each proposed nominee;
(d) the name and residence address of the notifying shareholder; and
(e) the number of shares of capital stock of the corporation owned by
the notifying shareholder.
Nominations not made in accordance herewith may, in the discretion of the
Chairman of the meeting, be disregarded and upon the Chairman's instructions the
inspectors of election can disregard all votes cast for each such nominee. A
copy of this paragraph shall be set forth in a notice to shareholders of any
meeting at which directors are to be elected."
Only those shareholders of record at the close of business on May 5,
1997 shall be entitled to notice of and to vote at the Meeting.
IT IS IMPORTANT THAT ALL SHAREHOLDERS VOTE. WE URGE YOU TO SIGN AND RETURN THE
ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, REGARDLESS OF WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY THEN
WITHDRAW YOUR PROXY AND VOTE IN PERSON. IN ORDER TO FACILITATE THE PROVIDING OF
ADEQUATE ACCOMMODATIONS, PLEASE INDICATE ON THE PROXY WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Warren R. Thoits
WARREN R. THOITS
CORPORATE SECRETARY
Palo Alto, California
Dated: May 13, 1997
<PAGE>
GREATER BAY BANCORP
2860 WEST BAYSHORE ROAD
PALO ALTO, CALIFORNIA 94303
(415) 813-8200
____________________________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JUNE 18, 1997
____________________________________
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Greater Bay Bancorp (the "Company") for
use at its Annual Meeting of Shareholders (the "Meeting") to be held at the
principal executive offices of the Company, 2860 West Bayshore Road, Palo Alto,
California 94303 on Wednesday, June 18, 1997, at 5:00 p.m., and at any and all
adjournments thereof. It is expected that this Proxy Statement and enclosed form
of proxy will be mailed to shareholders on or about May 13, 1997.
MATTERS TO BE CONSIDERED
The matters to be considered and voted upon at the Meeting are:
1. ELECTION OF DIRECTORS. To elect (i) three persons to serve on the
Board of Directors as Class I Directors for an initial term of
one year expiring at the 1998 Annual Meeting of Shareholders;
(ii) three persons to serve on the Board of Directors as Class II
Directors for an initial term of two years expiring at the 1999
Annual Meeting of Shareholders; and (iii) four persons to serve
on the Board of Directors as Class III Directors for an initial
term of three years expiring at the 2000 Annual Meeting of
Shareholders; each to serve until his successor is elected and
has qualified.
2. AMENDMENT OF EMPLOYEE STOCK PURCHASE PLAN. To consider and vote
upon a proposal to amend the Greater Bay Bancorp Employee Stock
Purchase Plan to increase the number of shares of the Company's
common stock reserved for issuance thereunder by 100,000 shares.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS.
To ratify the appointment of Coopers & Lybrand L.L.P. as the
Company's independent public accountants for the year ending
December 31, 1997.
4. OTHER BUSINESS. To transact such other business as may properly
come before the Meeting and at any and all adjournments thereof.
COSTS OF SOLICITATION OF PROXIES
The Company will bear the costs of this solicitation, including the
expense of preparing, assembling, printing and mailing this Proxy Statement and
the material used in this solicitation of proxies. It is contemplated that
proxies will be solicited principally through the mails, but directors, officers
and regular employees of the Company may solicit proxies personally or by
telephone. The Company has engaged Shareholder Communications Corporation to
solicit proxies from brokers, nominees, fiduciaries and other custodians. The
cost of this service is approximately
1
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$6,500 plus out-of-pocket expenses in an anticipated maximum additional amount
of $3,500. Although there is no formal agreement to do so, the Company may
reimburse banks, brokerage houses and other custodians, nominees and fiduciaries
for their reasonable expense in forwarding these proxy materials to their
principals. In addition, the Company may pay for and utilize the services of
individuals or companies not regularly employed by the Company in connection
with the solicitation of proxies if the Board of Directors of the Company
determines that this is advisable.
OUTSTANDING SECURITIES, VOTING RIGHTS AND REVOCABILITY OF PROXIES
There were issued and outstanding 3,327,144 shares of the Company's
common stock, no par value per share ("Common Stock"), on May 5, 1997, which has
been set as the record date (the "Record Date") with respect to this
solicitation for the purpose of determining the shareholders entitled to notice
of and to vote at the Meeting. The Company's Articles of Incorporation also
authorize the issuance of up to 4,000,000 shares of preferred stock, no par
value per share, of which no shares are presently issued and outstanding.
A majority of the outstanding shares of Common Stock entitled to vote
at the Meeting must be present in person or represented by proxy at the Meeting
in order to constitute a quorum for the transaction of business. Abstentions and
broker non-votes will be treated as shares present and entitled to vote for
purposes of determining the presence of a quorum. Each holder of Common Stock
will be entitled to one vote, in person or by proxy, for each share of Common
Stock standing in his or her name on the books of the Company as of the Record
Date for the Meeting on any matter submitted to the vote of the shareholders.
The Company's Articles of Incorporation do not provide for cumulative
voting. In the election of Class I Directors and Class II Directors, each of
the three candidates receiving the highest number of votes will be elected. In
the election of Class III Directors, the four candidates receiving the highest
number of votes will be elected. The proposals to amend the Greater Bay Bancorp
Employee Stock Purchase Plan (the "ESPP") to increase the number of shares of
Common Stock reserved for issuance thereunder by 100,000 shares and ratify the
appointment of Coopers & Lybrand L.L.P. as the Company's independent public
accountants for the year ending December 31, 1997 each require the affirmative
vote of the majority of the shares of Common Stock present at the Meeting in
person or by proxy and entitled to vote.
A proxy for use at the Meeting is enclosed. The proxy must be signed
by you or your authorized agent. Any shareholder who executes and delivers such
proxy has the right to revoke it at any time before it is exercised by filing
with the Secretary of the Company an instrument revoking it or a duly executed
proxy bearing a later date. It may also be revoked by attendance at the Meeting
and election to vote thereat. Subject to such revocation, all shares represented
by a properly executed proxy received in time for the Meeting will be voted by
the proxy holders in accordance with the instructions on the proxy. If no
instruction is specified in respect to a matter to be acted upon, the shares
represented by the proxy will be voted "FOR" the election of the nominees for
director set forth herein, "FOR" amendment of the ESPP, and "FOR" ratification
of the appointment of Coopers & Lybrand L.L.P. as the Company's independent
public accountants for the year ending December 31, 1997. It is not anticipated
that any matters will be presented at the Meeting other than as set forth in the
accompanying Notice of the Meeting. If, however, any other matters are properly
presented at the Meeting, the proxy will be voted in accordance with the best
judgment and in the discretion of the proxy holders. Abstentions from voting on
any matter other than the election of directors will have the effect of a vote
"AGAINST" the proposal.
If you hold your shares of Common Stock in "street name" and you fail
to instruct your broker or nominee as to how to vote such shares of Common
Stock, your broker or nominee may, in its discretion, vote your shares of Common
Stock "FOR" the election of the nominees for director set forth herein, "FOR"
amendment of the ESPP and "FOR" ratification of the appointment of Coopers &
Lybrand L.L.P. as the Company's independent public accountants for the year
ending December 31, 1997.
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BENEFICIAL OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth information as of February 28, 1997
concerning the beneficial ownership of Common Stock for the directors and the
executive officers named in the Summary Compensation Table and as a group.
Unless otherwise indicated, each director and executive officer listed below
possesses sole voting power and sole investment power. All of the shares shown
in the following table are owned both of record and beneficially except as
indicated in the notes to the table. As of February 28, 1997, no person known
to the Company owned more than five percent (5%) of the outstanding shares.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(2)
----------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) NUMBER OF PERCENTAGE OF
- --------------------------------------- SHARES CLASS(3)
----------------------------------
<S> <C> <C>
C. Donald Allen(4)....................................................... 55,482 1.70
Murray B. Dey(5)......................................................... 21,575 0.67
John M. Gatto(6)......................................................... 29,354 0.90
David R. Hood(7)......................................................... 21,272 0.65
James E. Jackson(8)...................................................... 49,104 1.51
David L. Kalkbrenner(9).................................................. 38,946 1.19
Rex D. Lindsay(10)....................................................... 51,141 1.57
Duncan L. Matteson(11)................................................... 41,750 1.28
Glen McLaughlin(12)...................................................... 45,365 1.39
Hall Palmer (13)......................................................... 22,179 0.68
Dick J. Randall(14)...................................................... 107,194 3.30
Donald H. Seiler(15)..................................................... 32,880 1.01
Steven C. Smith(16)...................................................... 30,886 0.95
Warren R. Thoits(17)..................................................... 29,065 0.90
Edwin E. van Bronkhorst(18).............................................. 25,330 0.78
All directors and executive officers as a group (15 persons)(19)......... 596,841 17.56
</TABLE>
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(1) The address for each of the beneficial owners is care of the Company, 2860
West Bayshore Road, Palo Alto, California 94303.
(2) Includes shares issuable upon the exercise of stock options exercisable
within 60 days of February 28, 1997.
(3) Shares of Common Stock issuable upon exercise of stock options exercisable
within 60 days of February 28, 1997 are deemed outstanding for computing
the percentage of the person holding such securities but are not deemed
outstanding for computing the percentage of any other person.
(4) Includes 414 shares held by Mr. Allen's spouse, 3,579 shares held in an IRA
for Mr. Allen, 598 shares held in a 401(k) plan for Mr. Allen and 22,292
shares issuable upon the exercise of stock options exercisable within 60
days of February 28, 1997.
(5) Includes 14,563 shares held jointly with Mr. Dey's spouse as trustees of
the Murray B. Dey and Wendy H. Dey Trust dated April 23, 1982 and 8,401
shares issuable upon the exercise of stock options exercisable within 60
days of February 28, 1997.
(6) Includes 12,662 shares issuable upon the exercise of options exercisable
within 60 days of February 28, 1997.
(7) Includes 5,526 shares held in an IRA for Mr. Hood, 276 shares held jointly
by Mr. Hood and his spouse, 387 shares in a 401(k) plan for Mr. Hood and
15,083 shares issuable upon the exercise of options exercisable within 60
days of February 28, 1997.
(8) Includes 32,109 shares held jointly by James E. Jackson and his spouse,
1,466 shares held in an IRA for the benefit of Mr. Jackson's spouse, 7,015
shares held in an IRA for Mr. Jackson, 1,385 shares held in a 401(k) plan
for Mr. Jackson, and 7,131 shares issuable upon the exercise of options
exercisable within 60 days of February 28, 1997.
(9) Includes 9,047 shares held in an IRA for Mr. Kalkbrenner and 19,936 shares
issuable upon the exercise of stock options exercisable within 60 days of
February 28, 1997.
(10) Includes 36,927 shares held by the Rex D. and Leanor L. Lindsay Family
Trust, 1,906 shares held by Mr. Lindsay as custodian for his minor
grandchildren and 12,123 shares issuable upon the exercise of options
exercisable within 60 days of February 28, 1997.
(11) Includes 30,000 shares held jointly with Mr. Matteson's spouse as trustees
of the Matteson Family Trust, 9,000 shares held by the Matteson Realty
Services, Inc. Defined Benefit Employees' Retirement Trust and 2,750 shares
issuable upon the exercise of stock options exercisable within 60 days of
February 28, 1997.
(12) Includes 4,861 shares held in a Keogh account for Mr. McLaughlin and 16,418
shares issuable upon the exercise of stock options exercisable within 60
days of February 28, 1997.
(13) Includes 1,548 shares held in an IRA for Mr. Palmer and 15,083 shares
issuable upon the exercise of stock options exercisable within 60 days of
February 28, 1997.
(14) Includes 98,334 shares held in by the Dick J. and Carolyn L. Randall Trust
and 8,675 shares issuable upon the exercise of stock options exercisable
within 60 days of February 28, 1997.
(15) Includes 24,580 shares held jointly with Mr. Seiler's spouse as trustees of
the Seiler Family Trust and 2,000 shares issuable upon the exercise of
stock options exercisable within 60 days of February 28, 1997.
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(16) Includes 2,121 shares held in a 401(k) Plan for Mr. Smith, 8,743 shares
held jointly by Mr. Smith and his spouse and 20,022 shares issuable upon
the exercise of stock options exercisable within 60 days of February 28,
1997.
(17) Includes 9,832 shares held by Mr. Thoits as trustee of the Warren R. Thoits
Trust dated December 30, 1983, 5,836 shares held by Thoits Brothers, Inc.,
10,647 shares for which Mr. Thoits is the record holding trustee and 2,750
shares issuable upon the exercise of stock options exercisable within 60
days of February 28, 1997.
(18) Includes 22,580 shares held jointly with Mr. van Bronkhorst's spouse as
trustees of the E. E. van Bronkhorst Trust dated July 12, 1997 and 2,750
shares issuable upon the exercise of stock options exercisable within 60
days of February 28, 1997.
(19) Includes 168,075 shares issuable upon the exercise of stock options
exercisable within 60 days of February 28, 1997.
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DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors shall
be no less than seven (7) nor more than thirteen (13), until changed by an
amendment of Article IV, Section 1 of the Company's Bylaws, duly adopted by the
vote or written consent of a majority of the outstanding shares entitled to
vote. The Bylaws further provide that the exact number of directors shall be
fixed from time to time, within the foregoing range, by an amendment of Article
IV, Section 1(b) of the Bylaws, duly adopted by the Company's Board of
Directors. Article IV, Section 1(b) of the Bylaws currently provides that the
number of directors shall be ten (10).
The Bylaws also provide for classification of the Board of Directors
into three classes, designated as Class I, Class II and Class III, with each
class consisting of a number of directors equal as nearly as practicable to one-
third the total number of directors for so long as the Board of Directors
consists of nine or more authorized directors. In addition, the Bylaws provide
that the initial term of office of the Class I Directors will expire at the
Annual Meeting of Shareholders to be held during 1998; the initial term of
office of the Class II Directors will expire at the Annual Meeting of
Shareholders to be held during 1999; and the initial term of office of the Class
III Directors will expire at the Annual Meeting of Shareholders to be held
during 2000.
The persons named below, all of whom are present members of the Board
of Directors of the Company, will be nominated for election to serve for an
initial term of one, two or three years (as described above), and until their
successors are elected and have qualified. Votes will be cast pursuant to the
enclosed proxy in such a way as to effect the election of the Board of
Directors' ten nominees, or as many thereof as possible. In the event that any
of the nominees should be unable or unwilling to accept nomination for election
as a director, it is intended that the proxy holders will vote for the election
of such substitute nominees, if any, as shall be designated by the Board of
Directors. The Board of Directors has no reason to believe that any nominee
will be unable or unwilling to serve if elected to office.
THE BOARD OF DIRECTORS HAS APPROVED THE ELECTION OF THE NOMINEES NAMED
BELOW AND RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH NOMINEE AS A DIRECTOR OF
THE COMPANY.
The following table sets forth certain information, as of the Record
Date, with respect to those persons nominated by the Board of Directors for
election as directors, as well as all executive officers.
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<TABLE>
<CAPTION>
NAME POSITION(S) AGE
- -------------------------- ---------------------------------------------------------------- ---
DIRECTORS
CLASS I NOMINEES:
- --------------------------
<S> <C> <C>
Duncan L. Matteson Co-Chairman of the Board of the Company; Chairman of the 62
Board of Mid-Peninsula Bank
Edwin E. van Bronkhorst Vice-Chairman of the Board 73
James E. Jackson Director 62
CLASS II NOMINEES:
- --------------------------
John M. Gatto Co-Chairman of the Board 59
Dick J. Randall Director 65
Donald H. Seiler Director 68
CLASS III NOMINEES:
- --------------------------
Rex D. Lindsay Vice-Chairman of the Board 71
David L. Kalkbrenner Director; Chief Executive Officer and President of the Company 57
and Mid-Peninsula Bank
Glen McLaughlin Director 62
Warren R. Thoits Director 74
EXECUTIVE OFFICERS
C. Donald Allen Chairman of the Board and Chief Executive Officer of Cupertino 62
National Bank & Trust
Murray B. Dey Executive Vice President and Chief Credit Officer of Mid- 54
Peninsula Bank
David R. Hood Executive Vice President and Chief Lending Officer of the 52
Company and Cupertino National Bank & Trust
Hall Palmer Executive Vice President and Senior Trust Officer of the 56
Greater Bay Trust Company and Cupertino National Bank & Trust
Steven C. Smith Executive Vice President, Chief Operating Officer and Chief 45
Financial Officer of the Company; Executive Vice President
and Chief Operating Officer of Cupertino National Bank & Trust
</TABLE>
DUNCAN L. MATTESON, Co-Chairman of the Board of Directors of the
Company since November 1996. He served as Chairman of the Board of the Company
(formerly Mid-Peninsula Bancorp ("Mid-Peninsula")) from 1994 until the date of
the November 1996 merger (the "Merger") of Cupertino National Bancorp
("Cupertino") and Mid-Peninsula, and has served as Chairman of the Board of Mid-
Peninsula Bank ("MPB") since 1987. He is President of the Matteson Companies, a
diversified group of real estate investment and property management corporations
located in Menlo Park. He has been actively involved in the real estate
investment and securities industries in the Palo
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Alto/Menlo Park Area since 1959. He is a member of the Executive Committee of
the Stanford Heart Council, and serves as a trustee of the Palo Alto Medical
Foundation. As an appointee of the Governor, Mr. Matteson is Vice President of
the board of directors of the Cow Palace. He is the Immediate Past-Chairman of
the National Multi-Housing Council, a group of the leading apartment owners and
managers throughout the United States.
EDWIN E. VAN BRONKHORST, Vice-Chairman of the Board of Directors of
the Company (formerly Mid-Peninsula) since 1994 and a director of MPB since
1987. Mr. van Bronkhorst retired from the Hewlett-Packard Company in 1984 and
was, prior to his retirement, Senior Vice President, Chief Financial Officer and
Treasurer of that company and served on its board of directors from 1962 to
1984. He currently serves as a member of the board of directors of the
California Water Service Company and Nellcor Puritan Bennett, a manufacturer of
medical equipment, and is a Trustee and Treasurer of the David & Lucile Packard
Foundation.
JAMES E. JACKSON, director of the Company since November 1996. He
served as a director of Cupertino from 1984 to the date of the Merger and has
served as a director of Cupertino National Bank & Trust ("CNB") since 1984. Mr.
Jackson has been an attorney-at-law at the law firm Jackson & Abdalah, a
Professional Corporation, since 1976.
JOHN M. GATTO, Co-Chairman of the Company since November 1996. He was
a director of Cupertino from 1984 to the date of the Merger and has served as a
director of CNB since 1984. Mr. Gatto has been the sole proprietor of Maria
Enterprises, a development consultant company, since December 1993. From 1984 to
1993, Mr. Gatto was an architect for Cypress Properties, a real estate
development company.
DICK J. RANDALL, director of the Company since November 1996. He
served as a director of Cupertino from 1984 to the date of the Merger and has
served as a director of CNB since 1984. Mr. Randall has been a private investor
and rancher since 1993. From 1962 until his retirement in 1993, Mr. Randall
served as the president of The William Lyon Co., a real estate development and
construction company.
DONALD H. SEILER, director of the Company (formerly Mid-Peninsula)
since 1994 and of MPB since 1987. He is the founder and managing partner of
Seiler & Company, Certified Public Accountants, in Redwood City and San
Francisco. He has been a certified public accountant in San Francisco and the
Peninsula area since 1952. He is presently a director of Ross Stores, Inc.,
serves on the audit committee of Stanford Health Services, is a past-president
of the Jewish Community Federation of San Francisco, the Peninsula and Marin and
Sonoma Counties. He is on the board of directors of the Peninsula Community
Foundation.
REX D. LINDSAY, Vice-Chairman of the Board of Directors of the Company
since November 1996. He served as a director of Cupertino from 1984 to the date
of the Merger and has served as a director of CNB since 1984. For approximately
the past five years, Mr. Lindsay has been a rancher and a private investor.
DAVID L. KALKBRENNER, President, Chief Executive Officer and a
director of the Company and MPB. He has held such positions with the Company
(formerly Mid-Peninsula) since 1994 and with MPB since 1987. He was employed by
Crocker National Bank from 1963 to 1986. From 1981 to 1986, he served as First
Vice President and Regional Manager of the Mid-Peninsula region, with
administrative offices located in Palo Alto. He was responsible for the
administration of 14 full-service branches from San Carlos to Sunnyvale, a
business banking center in Palo Alto and the private banking office, also
located in Palo Alto. From 1977 to 1981, he was Vice President and Manager of
the main office of Crocker National Bank in Palo Alto. He is a member of the
board of directors of the College of Notre Dame and is a former director of the
Palo Alto Chamber of Commerce and the Community Association for the Retarded.
GLEN MCLAUGHLIN, director of the Company since November 1996. He
served as a director of Cupertino from 1984 to the date of the Merger and has
served as a director of CNB since 1984. Mr. McLaughlin has also served as the
Chairman of Venture Leasing Associates, an equipment leasing company, since
December 1986.
WARREN R. THOITS, director of the Company (formerly Mid-Peninsula)
since 1994 and of MPB since 1987. He is a partner with the Palo Alto law firm
of Thoits, Love, Hershberger & McLean. He is a native of Palo Alto
7
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and a graduate of Stanford University and its School of Law. Mr. Thoits has been
very active in community and charitable organizations, having served as
President of the Palo Alto Chamber of Commerce, the Palo Alto Rotary Club and as
Chairman of the Palo Alto Area Chapter of the American Red Cross. He was
formerly a member of the board of directors of Northern California Savings and
Loan Association (now Great Western Bank).
C. DONALD ALLEN, Chairman of the Board and Chief Executive Officer of
CNB since 1990. He served as President and Chief Executive Officer and as a
director of Cupertino from 1984 to the date of the Merger. Mr. Allen was a
founding director and President of CNB.
MURRAY B. DEY, Executive Vice President and Chief Credit Officer of
MPB since 1987. From 1964 to 1986 he worked for Crocker National Bank. From
1975 to 1982, he was the Vice President and Assistant Manager of the main office
of Crocker National Bank in Palo Alto. He became the Manager of that office in
1982 and held that position until 1984. From 1984 to 1986 he was the Area
Market Manager in the Palo Alto/Menlo Park area. He currently serves as
President and Treasurer of the Home Equity Loan Program for Seniors, Inc., and
is a member of the Community Cabinet of the Lucille Packard Children's Hospital
at Stanford.
DAVID R. HOOD, Executive Vice President and Chief Lending Officer of
the Company since November 1996. Since April 1995, he has served as Executive
Vice President and Chief Lending Officer of CNB. From April 1985 to March
1995, he held positions of Vice President, Senior Vice President and Senior Loan
Officer, Executive Vice President and Senior Lending Officer, and President of
University Bank & Trust. From 1967 to 1985 Mr. Hood held various positions, the
most recent of which was Vice President and Manager of the San Mateo Business
Loan Center for Wells Fargo Bank, N.A.
HALL PALMER, Executive Vice President and Senior Trust Officer of the
Greater Bay Trust Company since November 1996. Mr. Palmer joined CNB in May
1995 as Executive Vice President and Senior Trust Officer. Prior to that time,
from May 1987 to May 1995, Mr. Palmer served as Executive Vice President and
Senior Trust Officer for University Bank & Trust. From 1984 to 1987, Mr. Palmer
was Senior Vice President and Executive Trust Officer for Key Bank of Oregon.
From 1968 to 1984, Mr. Palmer was Manager and Trust Officer for Wells Fargo
Bank, N.A.
STEVEN C. SMITH, Executive Vice President, Chief Operating Officer and
Chief Financial Officer of the Company since November 1996 and Executive Vice
President and Chief Operating Officer of CNB since 1995. He is a certified
public accountant who joined Cupertino and CNB in December 1993 as Senior Vice
President and Chief Financial Officer, and in 1995 was named Executive Vice
President and Chief Operating Officer of Cupertino and CNB. From July 1993 to
December 1993, Mr. Smith served as Executive Vice President and Chief Financial
Officer of Commercial Pacific Bank. From 1992 to July 1993, Mr. Smith served as
Executive Vice President and Chief Financial Officer of First Charter Bank.
From 1984 to 1991, Mr. Smith served as Senior Vice President of Finance and
Treasurer of Fidelity Federal Bank, a federal savings bank.
THE BOARD OF DIRECTORS AND COMMITTEES
The Company has five standing committees including an Audit Committee,
an Executive Committee, a Loan Committee, a Trust Oversight Committee and an
Investment/ALCO Committee.
The Audit Committee of the Company, which held three meetings in 1996,
is chaired by Mr. Seiler, and Messrs. McLaughlin, Randall and Thoits are
members. The purpose of the Audit Committee, among other things, is to direct
the activities of the external auditors of the Company in order to fulfill the
legal and technical requirements necessary to adequately protect the directors,
shareholders and employees of the Company. It is also the responsibility of
this committee to recommend to the Board of Directors the appointment of
independent accountants and to make certain that the external auditors have the
necessary freedom and independence to freely examine all the Company records.
The Executive Committee of the Company, which also acts as the
Executive Compensation Committee and the Nominating Committee, held nine
meetings during 1996 and is chaired by Mr. Matteson, and Messrs. Gatto,
8
<PAGE>
Kalkbrenner, Lindsay and van Bronkhorst are members. The purpose of the
Executive Compensation Committee is to determine the salary and bonus structure
for the Company's executive officers and supervise the compensation scheme for
the Company's other officers. In addition, the Executive Compensation Committee
determines appropriate awards under the Company's 1996 Stock Option Plan (the
"1996 Option Plan") and administers the Company's retirement plan. In performing
its duties as the Nominating Committee, the Executive Committee selects
management's nominees for election as directors and considers recommendations
for nominees submitted by shareholders, if such recommendations are made in
writing and in accordance with the procedures for shareholder nominations
described in the Company's Bylaws and in the Notice of Annual Meeting of
Shareholders.
During the year ended December 31, 1996, the Board of Directors of the
Company held a total of eight meetings. All of the persons who were directors
of the Company during 1996 attended at least 75% of the aggregate of (i) the
total number of such Company Board meetings and (ii) the total number of
meetings held by all committees of the Board of Directors of the Company on
which he served during such year.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Summary of Cash and Certain Other Compensation
The following table sets forth certain summary information concerning
compensation paid or accrued by the Company to or on behalf of the Company's
Chief Executive Officer and each of the five most highly compensated executive
officers of the Company (determined as of the end of the last fiscal year) whose
total annual salary and bonus exceeded $100,000 for the fiscal year ended
December 31, 1996. In all cases, payment was for services in all capacities to
the Company (and its predecessors, Mid-Peninsula Bancorp and Cupertino), and its
subsidiaries, MPB and CNB during the years ended December 31, 1996, 1995 and
1994.
9
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG
TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
SALARY(1) BONUS(2) COMPENSATION(3) OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) SARS(4) (#) (5) ($)
- -------------------------------------------------- ----------- ---------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
David L. Kalkbrenner 1996 182,083 124,000 8,400 20,000 71,054
President and CEO of the Company and 1995 150,000 97,000 8,400 15,000 45,033
MPB 1994 142,110 74,000 8,400 1,062 13,142
C. Donald Allen 1996 185,858 7,500 -- 3,816 69,123
Chairman and CEO of CNB 1995 161,177 7,500 -- -- 14,580
1994 150,000 -- -- -- 11,153
Steven C. Smith 1996 139,020 70,860 6,000 9,131 28,501
Executive Vice President, COO and 1995 127,250 48,000 6,000 8,968 7,033
CFO of the Company; EVP and 1994 103,416 30,000 6,000 8,968 830
COO of CNB
David R. Hood 1996 124,120 62,490 6,000 7,131 31,354
Executive Vice President and 1995 85,462 48,000 4,250 13,453 2,153
Chief Lending Officer of the 1994 -- -- -- -- --
Company and CNB
Murray B. Dey 1996 124,425 80,000 6,000 6,000 37,054
Executive Vice President and 1995 120,000 67,000 6,000 -- 23,891
Chief Credit Officer of MPB 1994 115,870 42,000 6,000 1,062 10,089
Hall Palmer 1996 122,600 62,490 6,000 4,631 33,343
Executive Vice President and Senior 1995 80,000 48,000 4,000 13,453 2,580
Trust Officer of Greater Bay Trust 1994 -- -- -- -- --
Company and CNB
</TABLE>
___________________
(1) Annual salary includes cash compensation earned and received by executive
officers as well as amounts earned but deferred at the election of those
officers under the Company's 401(k) Plan.
(2) Amounts indicated as bonus payments were earned for performance during 1996,
1995, and 1994 but paid in the first quarters of 1997, 1996, and 1995,
respectively.
(3) No executive officer received perquisites or other personal benefits in
excess of the lesser of $50,000 or 10% of each such officer's total annual
salary and bonus during 1996, 1995, or 1994. Amounts shown are for
automobile allowances.
(4) Under the 1996 Option Plan, options may be granted to directors and key,
full-time salaried officers and employees of the Company, MPB and CNB.
Options granted under the 1996 Option Plan are either incentive options or
non-statutory options. Options granted under the 1996 Option Plan become
exercisable in accordance with a vesting schedule established at the time of
grant. Vesting may not extend beyond ten years from the date of grant.
Options granted under the 1996 Option Plan are adjusted to protect against
dilution in the event of certain changes in the Company's capitalization,
including stock splits and stock dividends. All options granted to the named
executive officers were incentive stock options and have an exercise price
equal to the fair market value of the Common Stock on the date of grant. For
David L. Kalkbrenner and Murray B. Dey, the amounts shown have been adjusted
to give effect to a five percent stock dividend in December 1993, and the
conversion ratio pertaining to the merger transaction whereby WestCal
National Bank merged with and into MPB and MPB became a wholly owned
subsidiary of the Company, which transaction was consummated on October 7,
1994. For C. Donald Allen, Steven C. Smith, David R. Hood and Hall Palmer,
the amounts shown give effect to the conversion ratio pertaining to the
Merger between the Company and Cupertino which became effective on November
27, 1996.
(5) Amounts shown for David L. Kalkbrenner include $2,600 in directors' fees,
$3,612 in term life insurance premiums and $6,930 in 401(k) plan matching
contributions in 1994; $2,400 in directors' fees, $3,903 in term life
insurance premiums, $31,800 accrued under his Executive Salary Continuation
Agreement and $6,930 in 401(k) plan matching contributions in 1995; and
$2,400 in directors' fees, $11,000 in term life insurance premiums, $50,529
accrued under his Executive Salary Continuation Agreement and $7,125 in
401(k) plan matching contributions in 1996.
Amounts shown for C. Donald Allen include $8,400 in directors' fees and
$2,753 in 401(k) plan matching contributions in 1994; $8,150 in directors'
fees, $4,500 in 401(k) plan matching contributions and $1,930 to fund
retirement benefits in 1995; and $9,734 in directors' fees, $4,750 in 401(k)
plan matching contributions and $54,639 to fund retirement benefits in 1996.
10
<PAGE>
Amounts shown for Steven C. Smith include $830 in 401(k) plan matching
contributions in 1994; $4,500 in 401(k) plan matching contributions and
$2,513 to fund retirement benefits in 1995; and $4,750 in 401(k) plan
matching contributions and $23,751 to fund retirement benefits in 1996.
Amounts shown for David R. Hood, who joined the Company in April 1995,
include $2,153 in payments to fund his retirement benefits in 1995; $4,750
in 401(k) plan matching contributions and $26,604 to fund his retirement
benefits in 1996.
Amounts shown for Murray B. Dey include $3,159 in term life insurance
premiums and $6,930 in 401(k) plan matching contributions in 1994; $2,060 in
term life insurance premiums, $14,901 accrued under his Salary Continuation
Agreement and $6,930 in 401(k) plan matching contributions in 1995; and
$6,250 in term life insurance premiums, $23,679 accrued under his Salary
Continuation Agreement and $7,125 in 401(k) plan matching contributions in
1996.
Amounts shown for Hall Palmer, who joined the Company in May 1995, include
$2,580 to fund his retirement benefits in 1995; $4,750 in 401(k) plan
matching contributions and $28,593 to fund his retirement benefits in 1996.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
Effective March 3, 1992, the Company entered into a two-year
employment agreement with David L. Kalkbrenner which provides for automatic one-
year extensions until the agreement is terminated as described below. The
agreement, as amended, provides for, among other things: (a) a base salary of
$135,000 per year, as adjusted at the discretion of the Board of Directors; (b)
a discretionary annual bonus based upon the pre-tax net profits of the Company,
(c) payment to Mr. Kalkbrenner of his base salary (reduced by the amount
received by him from state disability insurance or workers' compensation or
other similar insurance through policies provided by the Company) for a period
of six months if he becomes disabled so that he is unable to perform his duties;
(d) four weeks annual vacation leave; (e) a $500,000 life insurance policy; (f)
an automobile allowance; and (g) reimbursement for ordinary and necessary
expenses incurred by Mr. Kalkbrenner in connection with his employment. The
agreement may be terminated with or without cause, but if the agreement is
terminated due to the occurrence of circumstances that make it impossible or
impractical for the Company to conduct or continue its business, the loss by the
Company of its legal capacity to contract, the Company's breach of the terms of
the agreement, or in the Company's discretion by giving not less than 30 days'
prior written notice of termination, Mr. Kalkbrenner will be entitled to receive
severance compensation equal to 24 months of Mr. Kalkbrenner's then existing
base salary. The agreement further provides that in the event of a "change in
control" as defined therein and within a period of two years following
consummation of such change in control: (a) Mr. Kalkbrenner's employment is
terminated; (b) any adverse change occurs in the nature and scope of Mr.
Kalkbrenner's position, responsibilities, duties, salary, benefits or location
of employment; or (c) any event occurs which reasonably constitutes a demotion,
significant diminution or constructive termination of Mr. Kalkbrenner's
employment, Mr. Kalkbrenner will be entitled to receive severance compensation
in an amount equal to two and one-half times his average annual compensation for
the five years immediately preceding the change in control (or for such shorter
time as Mr. Kalkbrenner was employed by the Company).
The Company has entered into an Executive Salary Continuation
Agreement with C. Donald Allen effective as of August 1, 1993. The agreement
provides for an annual benefit of up to $100,000 to be paid to Mr. Allen or his
designated beneficiary over a period of one hundred and eighty (180) months.
The benefit is effective upon: (i) Mr. Allen's attainment of sixty-five (65)
years of age or his death or disability prior to such time if he were actively
employed by the Company at the time; (ii) termination of his employment by the
Company without "cause" (as defined in the agreement); (iii) termination or
constructive termination of his employment by the Company, after the occurrence
of a "change of control" in the Company or CNB as defined in the agreement.
Although this agreement is intended to provide Mr. Allen with an additional
incentive to remain in the employ of the Company, the agreement states it shall
not be deemed to constitute a contract of employment between Mr. Allen and CNB
nor shall any provision of this agreement restrict the right of Mr. Allen to
terminate his employment. The agreement shall have no impact or effect upon any
separate written employment agreement which Mr. Allen may have with the Company.
The Company has entered into Employment, Severance and Retirement
Benefits Agreements with Steven C. Smith effective as of September 1, 1994,
David R. Hood, effective as of April 14, 1994 and Hall Palmer effective as of
May 1, 1995. Each employment agreement sets the officer's beginning annual
salary, subject to annual cost of living adjustments, with the initial salary
payable to Mr. Smith being set at $135,000 and the initial salary payable to Mr.
Hood and Mr. Palmer being set at $120,000. Each of these employment agreements
entitles the officer
11
<PAGE>
to severance benefits equal to 12 months' salary in the event that such
officer's employment is terminated for any reason other than death, disability,
retirement or certain acts of misconduct, or in the event that such officer
resigns within one year after a change in control of the Company upon a
reduction in responsibilities or compensation or certain other events deemed to
be unfavorable to the officer. In addition, the agreements entitle each officer
to certain retirement benefits. See "Retirement Benefits" herein.
1996 Stock Option Plan
The Company's Board of Directors has adopted the 1996 Option Plan for
the purpose of offering selected employees, directors and consultants an
opportunity to acquire a proprietary interest in the success of the Company, or
to increase such interest, by purchasing shares of Common Stock. The 1996
Option Plan provides both for the grant of nonstatutory options as well as
incentive stock options intended to qualify under Section 422 of the Code.
Options granted under the 1996 Option Plan contain provisions pursuant
to which, in the event of a Change in Control (as defined below) of the Company,
all unexercised options will become exercisable in full prior to such event,
unless the surviving corporation substitutes a substantially equivalent option.
The 1996 Option Plan provides that a "Change of Control" will occur in the event
of (i) a change in the composition of the Board of Directors, as a result of
which fewer than half of the incumbent directors are directors who either (a)
had been directors of the Company (including prior service as a director of
either CNB or MPB) 24 months prior to such change or (b) were elected, or
nominated for election, to the Board of Directors with the affirmative votes of
at least a majority of the directors who had been directors of the Company at
the effective time of the Merger or 24 months prior to such change (whichever
is later) and who were still in office at the time of the election or nomination
or (ii) any "person" (as such term is defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) who is or became the beneficial
owner, directly or indirectly, of securities of the Company representing 50% or
more of the combined voting power of the Company's then outstanding securities.
Retirement Benefits
Pursuant to the employment agreements between the Company and Messrs.
Smith, Hood and Palmer, each such officer or his spouse (should she survive him)
is entitled to retirement benefits based upon the proceeds of a split-dollar
life insurance policy maintained by the Company for each officer's benefit.
Each officer may begin receiving benefits upon reaching "retirement age" (as
defined in each agreement) or upon termination of employment, whichever occurs
later. Benefits are payable in the form of draws against the annual increase in
the cash surrender value of the officer's insurance policy from the time
benefits commence, up to a maximum annual draw of $55,000 for Mr. Hood, $44,000
for Mr. Palmer and $60,000 for Mr. Smith (or such lesser amount as shall have
vested, as described below) with the increase in value in excess of such amount
becoming the property of the Company. The right to make such draws continues
during the lifetime of the officer and his surviving spouse, but in no case
longer than 40 years. The right to this retirement benefit vests at 1/84 of such
amount monthly following the effective date of such employment agreement,
provided that vesting is subject to acceleration upon the occurrence of certain
events following a Change in Control, as such term is defined in each employment
agreement. See "Employment Contracts and Termination of Employment and Change
in Control Arrangements" herein.
12
<PAGE>
Stock Options
The following table provides the specified information concerning
grants of options to purchase Common Stock made during the year ended December
31, 1996 to the persons named in the Summary Compensation Table:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS IN FISCAL 1996
- -------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
% OF TOTAL PRICE APPRECIATION
NUMBER OF OPTIONS FOR OPTION TERM (1)
SECURITIES GRANTED TO EXERCISE ---------------------
UNDERLYING EMPLOYEES OR BASE
OPTIONS IN FISCAL PRICE(3) EXPIRATION 5% 10%
NAME GRANTED(2) YEAR ($/SH) DATE ($) ($)
- --------------------------- ---------- ---------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
David L. Kalkbrenner....... 10,000 16.75 01/17/06 105,340 266,952
10,000 21.75 12/17/06 136,785 346,639
----------
20,000 16.12
C. Donald Allen............ 816 15.94 05/16/02 4,424 10,036
3,000 21.75 12/17/06 41,035 103,992
----------
3,816 3.08
Steven C. Smith............ 1,631 15.94 05/16/02 8,842 20,059
7,500 21.75 12/17/06 102,588 259,979
----------
9,131 7.36
David R. Hood.............. 1,631 15.94 05/16/02 8,842 20,059
5,500 21.75 12/17/06 75,232 190,651
----------
7,131 5.75
Murray B. Dey.............. 3,000 16.75 01/17/06 31,602 80,086
3,000 21.75 12/17/06 41,035 103,992
----------
6,000 4.84
Hall Palmer................ 1,631 15.94 05/16/02 8,842 20,059
3,000 21.75 12/17/06 41,036 103,992
----------
4,631 3.74
</TABLE>
- --------------------
(1) Potential gains are net of exercise price, but before taxes associated with
exercise. These amounts represent certain assumed rates of appreciation
only, based on Securities and Exchange Commission rules. Actual gains, if
any, on stock option exercises are dependent on the future performance of
the Common Stock, overall market conditions and the optionholders' continued
employment through the vesting period. The amounts reflected in this table
may not necessarily be achieved. One share of stock purchased in 1996 at
$15.94 would yield profits of $10.02 per share at 5% appreciation over ten
years, or $25.40 per share at 10% appreciation over the same period. One
share of stock purchased in 1996 at $21.75 would yield profits of $13.68 per
share at 5% appreciation over ten years, or $34.66 per share at 10%
appreciation over the same period. One share of stock purchased in 1996 at
$16.75 would yield profits of $10.53 per share at 5% appreciation over ten
years, or $26.70 per share at 10% appreciation over the same period.
(2) Generally, options granted under the 1996 Option Plan vest at the rate of
25% of the options granted for each full year of the optionee's continuous
employment with the Company and are exercisable to the extent vested. See
also "Employment Contracts and Termination of Employment and Change in
Control Arrangements" herein.
(3) All options listed were granted at the estimated fair market value on the
date of grant.
Option Exercises and Holdings
The following table provides the specified information concerning
exercises of options to purchase Common Stock in the fiscal year ended December
31, 1996, and unexercised options held as of December 31, 1996, by the persons
named in the Summary Compensation Table:
13
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES VALUE OPTIONS AT 12/31/96(#) 12/31/96($)(1)
ACQUIRED ON REALIZED ---------------------------- ----------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- -------------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David L. Kalkbrenner 4,917 27,068 12,307 32,894 161,550 255,302
C. Donald Allen -- -- 22,291 3,000 375,135 7,875
Steven C. Smith -- -- 20,022 10,489 274,109 61,728
David R. Hood -- -- 15,083 5,500 210,358 14,438
Murray B. Dey 1,203 6,623 6,550 7,366 89,916 47,554
Hall Palmer -- -- 15,083 3,000 210,358 7,875
</TABLE>
- ------------------
(1) Based on the closing price of Common Stock on December 31, 1996, the last
trading day in 1996, which was $24.375.
Executive Committee's Report on Executive Compensation
Set forth below is a report of the Executive Committee addressing the
Company's compensation policies for 1996 applicable to the Company's executives.
The Report of the Executive Committee of the Board of Directors 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, 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.
The Executive Committee of the Board of Directors acts as the
Executive Compensation Committee of the Company. The Executive Committee
establishes the overall compensation and employee benefits of the Company and
approves specific compensation levels for executive officers. It is a goal of
the Executive Committee to implement executive officer compensation programs
that further the business objectives of the Company and that attract, retain and
motivate the best qualified executive officers. Currently, the members of the
Executive Committee are John M. Gatto, Duncan L. Matteson, David L. Kalkbrenner,
Rex D. Lindsay and Edwin E. van Bronkhorst. Each member of the Executive
Committee is a non-employee director of the Company, except for Mr. Kalkbrenner.
The Company's executive compensation policies and specific executive
compensation programs are adopted and administered in accordance with the
principal goal of maximizing return on shareholders' equity. The Executive
Committee believes that this performance goal, and the long-term interests of
the Company's shareholders generally, are best achieved by attracting and
retaining management of high quality, and that such management will require
commensurate compensation. The Executive Committee believes that the Company's
executive officer compensation policies are consistent with this policy.
In addition, the Executive Committee believes that while the Company's
compensation programs should reflect the philosophy that executive compensation
levels be linked to Company performance, such compensation programs should also
be competitive and consistent with those provided to others holding positions of
similar responsibility in the banking and financial services industry. The
Company's compensation plans are designed to assist the Company in attracting
and retaining qualified employees critical to the Company's long-term success,
while enhancing employees' incentives to perform to their fullest abilities to
increase profitability and maximize shareholder value.
14
<PAGE>
Certain of the Company's executive officers, including the Chief
Executive Officer, have written employment agreements with the Company which
were entered into prior to the Merger (see "DIRECTORS AND EXECUTIVE OFFICERS --
Compensation of Executive Officers and Directors -- Employment Contracts and
Termination of Employment and Change-in-Control Arrangements"). The base
salaries and bonuses paid to these executive officers for 1996 were originally
established and approved by the respective compensation committees of Mid-
Peninsula and Cupertino. The Executive Committee, on which two former members
of each of the Mid-Peninsula and Cupertino compensation committees serve,
subsequently approved and ratified the determinations by the Mid-Peninsula and
Cupertino compensation committees regarding 1996 compensation under the
employment agreements. In addition, the level of compensation granted to other
executive officers from time to time, is determined by the Executive Committee
based on factors that the Executive Committee deems appropriate.
Annual compensation levels for executive officers and compensation
levels to be implemented from time to time in written employment agreements with
executive officers are determined by the Executive Committee based primarily on
its review and analysis of the following factors: (i) the responsibilities of
the position, (ii) the performance of the individual and his or her general
experience and qualifications, (iii) the overall financial performance
(including return on equity, levels of general and administrative expense and
budget variances) of the Company for the previous year and the contributions to
such performance measures by the individual or his or her department, (iv) the
officer's total compensation during the previous year, (v) compensation levels
paid by comparable companies in similar industries, (vi) the officer's length of
service with the Company, and (vii) the officer's effectiveness in dealing with
external and internal audiences. The Executive Committee believes that the
base compensation of the executive officers is competitive with companies of
similar size and with comparable operating results in similar industries.
The base salary of the Company's Chief Executive Officer was
determined primarily on the terms of his employment agreement effective as of
March 3, 1992 (the "Agreement"). The Agreement set Mr. Kalkbrenner's base
salary at $135,000 for the calendar year ended December 31, 1992, and provides
for annual adjustments by the Board of Directors and for a discretionary annual
bonus based upon the pre-tax net profits of the Company. In addition, the Chief
Executive Officer's compensation for 1996 was based in part on his progress in
achieving certain additional criteria. These criteria included completing the
Merger, results in meeting the Company's strategic business plan, and leadership
abilities. Based on the foregoing, in 1996 Mr. Kalkbrenner received a base
salary of $182,083 and a bonus of $124,000.
While the Executive Committee establishes salary and bonus levels
based on the above described criteria, the Executive Committee also believes
that encouraging equity ownership by executive officers further aligns the
interests of the officers with the performance objectives of the Company's
shareholders and enhances the Company's ability to attract and retain highly
qualified personnel on a basis competitive with industry practices. Stock
options granted by the Company pursuant to the Company's 1996 Option Plan help
achieve this objective, and provide additional compensation to the officers to
the extent that the price of the Common Stock increases over fair market value
on the date of grant. Stock options have been granted to each of the executive
officers and to other officers or key employees of the Company. Through the
1996 Option Plan, there will be an additional direct relationship between the
Company's performance and benefits to executive officer Plan participants.
Dated: May 13, 1997 EXECUTIVE COMMITTEE
Duncan L. Matteson, Chairman
John M. Gatto
David L. Kalkbrenner
Rex D. Lindsay
Edwin E. van Bronkhorst
15
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Executive Committee acts as the Executive Compensation Committee
of the Company. The members of the Executive Committee are Messrs. Gatto,
Matteson, Kalkbrenner, Lindsay and van Bronkhorst. None of these persons serves
or has served as an officer or employee of the Company, MPB or CNB, except for
Mr. Kalkbrenner, who serves as the Chief Executive Officer and President of the
Company and MPB. Mr. Matteson has an interest in a building leased by MPB. See
"Certain Relationships and Related Transactions" herein.
During 1996, the Executive Committee of Mid-Peninsula served as the
Compensation Committee for Mid-Peninsula Bancorp and MPB. The members of the
Executive Committee were Messrs. Kalkbrenner, Matteson, Seiler, Thoits and van
Bronkhorst. No person who served as a member of the Executive Committee of Mid-
Peninsula during 1996 has ever been an officer or employee of Mid-Peninsula
Bancorp or MPB, except Mr. Kalkbrenner.
During 1996, the Executive Committee of Cupertino served as the
Compensation Committee of Cupertino and CNB. The members of the Executive
Committee were Messrs. Gatto, Lindsay, McLaughlin and Randall. No person who
served as a member of the Executive Committee of Cupertino during 1996 has ever
been an officer or employee of Cupertino or CNB.
Performance Graph
The following graph compares, for the period from December 31, 1991
through December 31, 1996, the yearly percentage change in the Company's
cumulative total shareholder return on Common Stock with (i) the cumulative
total return of the Nasdaq Total Return Index and (ii) the cumulative total
return of an index comprised of independent banks and bank holding companies
with less than $1 billion in assets. The graph assumes an initial investment of
$100 and reinvestment of dividends. The graph is not necessarily indicative of
future price performance.
16
<PAGE>
The graph 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, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such acts.
[PERFORMANCE GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
PERIOD ENDING
---------------------------------------------------------------
INDEX 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
GREATER BAY BANCORP 100.00 71.79 74.12 139.13 188.93 280.87
NASDAQ TOTAL RETURN INDEX 100.00 116.38 133.59 130.59 184.67 227.16
LESS THAN $1 BILLION INDEPENDENT
BANK PROXY 100.00 104.57 134.41 127.26 176.18 260.15
</TABLE>
- ---------------------------
Source: SNL Securities L.C.
Director Compensation
Directors of MPB received $200 for each board meeting attended during
1996. Non-employee directors of MPB received $150 for each committee meeting
attended in 1996. Non-employee directors of MPB's Loan Committee received a
$500 per month retainer as well as $150 for each meeting attended during 1996.
Total compensation for MPB directors in 1996 was $63,590.
For 1996, the Chairman and Vice Chairman of the Board of CNB received
annual retainers of $15,000 and $12,500, respectively. All other directors
received an annual retainer of $10,000. In addition, the Chairman and Vice
Chairman of the Directors' Loan Committee received annual retainers of $4,500,
and other members received annual retainers of $4,000. The Chairman of the
Audit Committee received an annual retainer of $2,000, and Audit Committee
members each received an annual retainer of $1,500. The Trust Committee
Chairman received an annual retainer of $2,000 and Trust Committee members each
received $1,500. The Compensation Committee members each received an annual
retainer of $1,000. Total compensation for CNB directors in 1996 was $158,374.
17
<PAGE>
For 1997, the Co-Chairmen of the Board of the Company will receive
annual retainers of $14,000. All other non-officer directors will receive annual
retainers of $9,000. Loan Committee members will receive retainers of $6,000,
Trust Oversight Committee members will receive retainers of $3,000, and Audit
Committee and Investment/ALCO Committee members will receive retainers of
$1,000. Members of the Boards of Directors of CNB and MPB will receive
retainers of $1,800 each. The estimated total compensation for the Board of
Directors in 1997 is $189,500.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company, through MPB and CNB, has had, and expects in the future
to have, banking transactions in the ordinary course of its business with the
Company's directors and officers and their associates, including transactions
with corporations of which such persons are directors, officers or controlling
shareholders, on substantially the same terms (including interest rates and
collateral) as those prevailing for comparable transactions with others.
Management believes that such transactions comprising loans did not involve more
than the normal risk of collectibility or present other unfavorable features.
Loans to executive officers of the Company are subject to limitations as to
amount and purposes prescribed in part by the Federal Reserve Act, as amended.
MPB leases its offices at 420 Cowper Street, Palo Alto, California
94301 from MPB Associates, a tenant-in-common arrangement in which three
directors of the Company, Messrs. Matteson, Seiler and Thoits, and four other
directors of MPB hold an approximate 51% interest. The acquisition of MPB's
leased premises by MPB Associates in 1990 did not result in a change in the
terms of MPB's lease.
The lease, which originally expired in May 1993, has been extended
through January 2000. MPB pays an annual rental of $560,000 for the entire
leased space. Additionally, MPB pays real property taxes, utilities, and
building insurance, to the extent they exceed, on an annual basis, $1.40 per
rentable square foot, $1.60 per rentable square foot, and $0.17 per rentable
square foot, respectively. The rent will be adjusted every twelve months
beginning June 1, 1997 in accordance with the change in the immediately
preceding year over 1992 in the Consumer Price Index for All Urban Consumers,
San Francisco/Oakland Metropolitan Area, All-Items (1967 = 100) as published by
the U.S. Department of Labor, Bureau of Labor Statistics. The lease also
contains a provision granting MPB a right of first refusal to purchase the
building during the term of the lease upon the same terms and conditions that
the landlord is willing to accept from a third party.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Executive officers, directors and greater than ten-percent
shareholders are required by Securities and Exchange Commission regulations to
furnish to the Company copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, or written representation that no Form 5 was required, the Company
believes that during the fiscal year ended December 31, 1996 all executive
officers, directors and greater than ten-percent beneficial owners complied with
all Section 16(a) filing requirements applicable to them, except as follows:
Following the consummation of the Merger, a Form 4 reporting the change in
ownership as a result of the consummation of the Merger was filed late for each
of the former directors of Cupertino and executive officers of Cupertino who
became directors and executive officers of the Company after the Merger. These
individuals included Messrs. Allen, Gatto, Hood, Jackson, Lindsay, McLaughlin,
Palmer, Randall and Smith.
18
<PAGE>
AMENDMENT OF EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors of the Company adopted the ESPP and the
shareholders of the Company approved the ESPP in connection with Merger, which
was consummated on November 27, 1996. The ESPP provides for the purchase of
Common Stock by employees of the Company and any subsidiaries designated by the
Board of Directors. Management believes that the ESPP is an important factor in
attracting and retaining qualified employees essential to the success of the
Company. The Board of Directors has approved an amendment to the ESPP, subject
to shareholder approval, increasing the number of shares reserved for issuance
under the ESPP by 100,000 shares. The amendment will enable eligible employees
of the Company to continue to purchase shares under the terms and conditions of
the ESPP. As of the Record Date, a total of 76,434 shares of Common Stock were
available for issuance under the ESPP, as previously approved by the
shareholders.
SUMMARY OF THE PROVISIONS OF THE ESPP, AS AMENDED
The following summary of the ESPP is qualified in its entirety by the
specific language of the ESPP, a copy of which is available to any shareholder
upon request.
General. The ESPP is intended to qualify as an "employee stock
purchase plan" under section 423 of the Internal Revenue Code (the "Code"). The
ESPP gives each participant the right at the beginning of each offering period
under the plan to purchase shares of Common Stock (a "Purchase Right"), which
Purchase Right will be exercised on each purchase date under the ESPP unless the
participant has withdrawn from participation in the offering or in the plan
prior to such purchase date. As previously approved by the shareholders, a
maximum of 82,318 of the authorized but unissued shares of Common Stock may be
issued under the ESPP. As of the Record Date, 76,434 shares were available for
future issuance under the ESPP. The Board of Directors has adopted a resolution
to amend the ESPP, subject to shareholder approval, to increase by 100,000
shares the aggregate maximum number of shares that may be issued under the plan.
Accordingly, in the event the proposal is approved, 176,434 shares of Common
Stock will be available for issuance under the ESPP. In the event of any stock
dividend, stock split, combination or reclassification of the Common Stock or
any other increase or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company, or, at the Board's discretion
in the event of any reorganization, recapitalization, rights offering,
consolidation or merger of the Company, proportional adjustments will be made to
the number of shares subject to the ESPP and outstanding Purchase Rights and to
the purchase price. If any Purchase Right expires or terminates, the shares of
Common Stock subject to such Purchase Right are returned to the ESPP and may
again be subjected to a Purchase Right.
Administration. The Purchase Price is administered by the Board of
Directors or by a duly appointed committee thereof.
Eligibility. Any employee of the Company or of any subsidiary
corporation of the Company designated by the Board of Directors is eligible to
participate in the ESPP so long as the employee is customarily employed for at
least 20 hours per week and at least five months in a calendar year and has
completed three months of continuous employment. However, no employee who owns
or holds options to purchase, or as a result of participation in the ESPP would
own or hold options to purchase, 5% or more of the total combined voting power
or value of all classes of stock of the Company is entitled to participate in
the ESPP. As of the Record Date, 182 employees were eligible to participate in
the ESPP.
Offerings. Generally, each offering of shares under the ESPP (an
"Offering") is for a period of three months, commencing on the first day of each
calendar quarter. However, the Board of Directors may establish a different
term for one or more Offerings or different commencement or ending dates.
Participation and Purchase of Shares. Participation in the ESPP is
limited to eligible employees who authorize payroll deductions, which may not
exceed 15% of compensation for each pay period during an Offering or such other
rate as the Board determines. If an Offering is shorter than 13 weeks, the
maximum withholding percentage will equal 15%, or such other rate determined by
the Board, multiplied by 13 and divided by the number of weeks in
19
<PAGE>
the Offering. Once an employee becomes a participant in the ESPP, the employee
will automatically participate in each successive Offering until such time as
the employee ceases to be an eligible employee, withdraws from the ESPP, or
terminates employment.
Subject to certain limitations, each participant in an Offering has a
Purchase Right equal to 15% of the participant's base compensation for the
Offering (determined at the rate of base compensation in effect on the first day
of the Offering) divided by 85% of the fair market value of a share of Common
Stock on the first day of the Offering. Participants may not purchase shares of
Common Stock having a fair market value exceeding $25,000 for each calendar year
in which the participant participates in the ESPP (measured by the fair market
value of the Common Stock on the first day of the Offering in which the shares
are purchased).
At the end of each Offering, a participant acquires the number of
shares of Common Stock determined by dividing the total amount of payroll
deductions from the participant's compensation during the Offering by the
purchase price, limited in any case by the number of shares subject to the
participant's Purchase Right for the Offering. The purchase price per share at
which the shares are sold under the ESPP generally equals 85% of the lesser of
the fair market value of a share of Common Stock on the first day of the
Offering or on the last day of the Offering. The fair market value of the
Common Stock on any relevant date generally will be the average of the high and
low sales prices per share of the Common Stock on such date as reported on the
Nasdaq National Market. As of the Record Date, the fair market value of Common
Stock was $27.75 per share. Any payroll deductions under the ESPP not applied
to the purchase of shares is returned to the participant, except for an amount
insufficient to purchase another whole share, which amount may be applied to the
next Offering.
A participant may withdraw from an Offering at any time without
affecting his or her eligibility to participate in future Offerings. However,
once a participant withdraws from an Offering, that participant may not again
participate in the same Offering.
Merger or Sale. In the event of a merger of the Company or a sale of
all or substantially all of its assets, the Board of Directors may accelerate
the last day of the current Offering to a date on or before the effective date
of the transaction unless the successor corporation or a parent or subsidiary
corporation thereof assumes or substitutes substantially equivalent purchase
rights for those outstanding under the ESPP. Unless otherwise provided by the
Board of Directors, the current Offering will terminate immediately prior to a
dissolution or liquidation of the Company.
Termination or Amendment. The ESPP will continue until terminated by
the Board of Directors or until all of the shares reserved for issuance under
the ESPP have been issued. The Board of Directors may amend or terminate the
ESPP at any time, except that the approval of the Company's shareholders is
required within twelve months of the adoption of any amendment increasing the
number of shares authorized for issuance under the ESPP, changing the
designation of employees eligible to participate in the ESPP, or materially
increasing the benefits which may accrue to participants under the ESPP.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE ESPP
The following summary is intended only as a general guide as to the
United States federal income tax consequences under current law of participation
in the ESPP as a stock purchase plan that meets the requirements of section 423
of the Code and does not attempt to describe all potential tax consequences.
Furthermore, the tax consequences are complex and subject to change, and a
taxpayer's particular situation may be such that some variation of the described
rules is applicable.
A participant recognizes no taxable income either as a result of
commencing to participate in the ESPP or purchasing shares of Common Stock under
the terms of the ESPP. If a participant disposes of shares purchased under the
ESPP within two years from the first day of the applicable Offering or within
one year from the purchase date (a "disqualifying disposition"), the participant
will realize ordinary income in the year of such disposition equal to the amount
by which the fair market value of the shares on the date the shares were
purchased exceeds the purchase price. The amount of the ordinary income will be
added to the participant's basis in the shares, and any additional gain or
20
<PAGE>
resulting loss recognized on the disposition of the shares will be a capital
gain or loss. A capital gain or loss will be long-term if the participant's
holding period is more than twelve months, otherwise it will be short-term.
If the participant disposes of shares purchased under the ESPP at
least two years after the first day of the applicable Offering and at least one
year after the date of purchase, the participant will realize ordinary income in
the year of disposition equal to the lesser of (i) the excess of the fair market
value of the shares on the date of disposition over the purchase price or (ii)
15% of the fair market value of the shares on the first day of the applicable
Offering. The amount of any ordinary income will be added to the participant's
basis in the shares, and any additional gain recognized upon the disposition
after such basis adjustment will be a long-term capital gain. If the fair
market value of the shares on the date of disposition is less than the purchase
price, there will be no ordinary income and any loss recognized will be a long-
term capital loss.
If the participant still owns the shares at the time of death,
ordinary income will be recognized in the year of death equal to the lesser of
(i) the excess of the fair market value of the shares on the date of death over
the purchase price or (ii) 15% of the fair market value of the shares on the
first day of the Offering in which the shares were purchased.
The Company should be entitled to a tax deduction in the year of a
disqualifying disposition equal to the amount of ordinary income recognized by
the participant as a result of the disposition, except to the extent such
deduction is limited by section 162(m) of the Code, which imposes a $1 million
cap on the amount of compensation paid to a corporation's five most highly-
compensated executive officers that the corporation may deduct in any year for
federal income tax purposes, subject to the exclusion of certain forms of
incentive-based compensation. In all other cases, no deduction is allowed to
the Company.
VOTE REQUIRED AND BOARD OF DIRECTORS' RECOMMENDATION
The affirmative vote of a majority of the shares of Common Stock
present or represented by proxy and entitled to vote at the Meeting, at which a
quorum representing a majority of all outstanding shares of Common Stock of the
Company is present, either in person or by proxy, is required for approval of
this proposal. Abstentions will be counted as present for purposes of
determining the presence of a quorum, but will have the same effect as a
negative vote for purposes of approving the proposal to amend the ESPP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" APPROVAL OF THE AMENDMENT OF THE ESPP
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Coopers & Lybrand L.L.P.
("Coopers & Lybrand") as its independent public accountants for the year ending
December 31, 1997, and shareholders are being asked to ratify the appointment.
The appointment was recommended by the Audit Committee. Coopers & Lybrand, the
Company's accountants for the year ended December 31, 1996, performed audit
services for 1996 which included the examination of the consolidated financial
statements and services related to filings with the Securities and Exchange
Commission. All professional services rendered by Coopers & Lybrand during 1996
were furnished at customary rates and terms. Representatives of Coopers &
Lybrand will be present at the Meeting and will be available to respond to
appropriate questions from shareholders.
Prior to the Merger, Cupertino's independent accountants were Coopers
& Lybrand and Mid-Peninsula's independent accountants were KPMG Peat Marwick,
LLP ("Peat Marwick"). On consummation of the Merger, Mid-Peninsula changed its
name to Greater Bay Bancorp and on December 17, 1996, Greater Bay Bancorp
changed its independent accountants by terminating its engagement of Peat
Marwick and selecting Coopers & Lybrand as its independent accountants to audit
its financial statements for the year ended December 31, 1996. The decision to
terminate the Company's engagement of Peat Marwick and select Coopers & Lybrand
was unanimously recommended
21
<PAGE>
by the Company's Audit Committee and approved by the Company's Board of
Directors. During the two most recent fiscal years of the Company and any
subsequent interim period preceding the aforesaid change, there were no
disagreements between the Company and Peat Marwick on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure which if not resolved to the satisfaction of Peat Marwick would have
caused them to make reference to the subject matter of the disagreement in their
report.
Peat Marwick's report on the financial statements for 1994 and 1995
contained no adverse opinion or disclaimer of opinion nor was it qualified or
modified as to uncertainty, audit scope, or accounting principles, except their
report dated January 22, 1996, relating to the consolidated balance sheets of
Mid-Peninsula and subsidiary as of December 31, 1995 and 1994, and the related
consolidated statements of operations, changes in shareholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1995,
referenced other auditors. On October 7, 1994, the Company acquired San Mateo
County Bancorp on a pooling-of-interests basis. Peat Marwick did not audit the
consolidated financial statements of San Mateo County Bancorp as of and for the
year ended December 31, 1993. These statements, which were included in the
1993 restated consolidated financial statements, were audited by other auditors,
whose report contained an explanatory paragraph regarding the adoption Statement
of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
Taxes," and SFAS No. 115, "Accounting for Certain Investments, Debt and Equity
Securities." Peat Marwick's report, insofar as it relates to the amounts
included for San Mateo County Bancorp, is based solely on the report of other
auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS.
ANNUAL REPORT
Together with this Proxy Statement, the Company has distributed to
each of its shareholders an annual report for the year ended December 31, 1996.
The annual report contains consolidated financial statements of the Company and
its subsidiaries and the report thereon of Coopers & Lybrand, the Company's
independent public accountants.
UPON WRITTEN REQUEST OF ANY PERSON ENTITLED TO VOTE AT THE MEETING,
ADDRESSED TO WARREN R. THOITS, SECRETARY OF THE COMPANY, AT 2860 WEST BAYSHORE
ROAD, PALO ALTO, CALIFORNIA 94303, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A
COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR 1996, INCLUDING THE FINANCIAL
STATEMENTS AND THE SCHEDULES THERETO, FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934.
PROPOSALS OF SHAREHOLDERS
Under certain circumstances, shareholders are entitled to present
proposals at shareholder meetings. Any such proposal to be included in the Proxy
Statement for the Company's 1998 Annual Meeting of Shareholders must be
submitted by a shareholder prior to January 13, 1998, in a form that complies
with applicable regulations.
22
<PAGE>
OTHER BUSINESS
The Board of Directors knows of no other business which will be
presented for consideration at the Meeting other than as stated in the Notice of
Meeting. If, however, other matters are properly brought before the Meeting, it
is the intention of the persons named in the accompanying form of Proxy to vote
the shares represented thereby in accordance with their best judgment and in
their discretion, and authority to do so is included in the proxy.
Dated: May 13, 1997 GREATER BAY BANCORP
/s/ David L. Kalkbrenner
-------------------------------------
DAVID L. KALKBRENNER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
23
<PAGE>
Dated: March 27, 1997
[LOGO OF GREATER BAY BANCORP]
GREATER BAY
BANCORP
EMPLOYEE STOCK PURCHASE PLAN
A. PURPOSE, HISTORY AND DESCRIPTION
--------------------------------
The Employee Stock Purchase Plan (the "Purchase Plan") of Greater Bay
Bancorp (the "Company") provides eligible employees of the Company and its
Designated Subsidiaries with an opportunity to purchase shares of the Company's
Common Stock through payroll deductions.
The Purchase Plan, under which 82,318/1/ shares of the Company's Common
Stock are reserved for issuance to all employees of the Company and its
Designated Subsidiaries who meet certain minimum employment criteria, was
adopted by the Board of Directors and shareholders of Greater Bay Bancorp and
assumed by the Company in connection with the merger of Cupertino National
Bancorp with and into the Company, which was consummated on November 27, 1996.
The Plan was subsequently amended by the Board of Directors on March 27, 1997.
The following terms shall have the meanings defined below:
(a) "Code" means the Internal Revenue Code of 1986, as amended.
"Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of a leave of absence
agreed to in writing by the Company, provided that such leave is for a period of
not more than 90 days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.
- ------------------
/1/ The number of shares is adjusted for stock dividends subsequent to
the date of the original approval of the Purchase Plan.
1
<PAGE>
(b) "Designated Subsidiaries" means the Subsidiaries which have been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Purchase Plan.
(c) "Employee" means any person, including an officer, who is
customarily employed for at least twenty (20) hours per week and more than five
(5) months in a calendar year by the Company or one of its Designated
Subsidiaries.
(d) "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if at the time of the
granting of the option, each of the corporations other than the Company owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
(e) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
granting of the option, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing at least 50 percent or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
B. SHARE RESERVE
-------------
The maximum number of shares which may be issued under the Purchase Plan is
82,318/2/ shares of the Company's authorized but unissued Common Stock (the
"Shares") subject to adjustment upon changes in capitalization of the Company as
provided in paragraph N below. In the event that any option granted under the
Purchase Plan (a "Plan Option") for any reason expires or is terminated, the
Shares allocable to the unexercised portion of such Plan Option may again be
made subject to a Plan Option. The Shares to be sold to participants in the
Purchase Plan may be, at the election of the Company, either treasury shares or
shares authorized but unissued. If the total number of Shares which would
otherwise be subject to Plan Options granted pursuant to paragraph G hereof on
the Offering Date of an Offering Period exceeds the number of Shares then
available under the Purchase Plan (after deduction of all Shares for which
options have been exercised or are then outstanding), the Company shall make a
pro rata allocation of the Shares remaining available for option grant in as
uniform and equitable a manner as is practicable. In such event, the Company
shall give written notice of such reduction of the number of Shares subject to a
Plan Option to each Participant affected thereby and shall return any excess
funds accumulated in each Participant's account as soon as practicable after the
termination of such Offering Period.
- --------------------------
/2/ The number of shares is adjusted for stock dividends subsequent to the date
of the original approval of the Purchase Plan.
2
<PAGE>
C. ADMINISTRATION
--------------
The Purchase Plan may be administered by the Board or by a duly appointed
committee of the Board. Any subsequent references to the Board shall also mean
the committee if it has been appointed. All questions of interpretation of the
Purchase Plan or of any Plan Options shall be determined by the Board, and such
determinations shall be final, binding and conclusive upon all persons having an
interest in the Purchase Plan and/or any Plan Option. Subject to the provisions
of the Purchase Plan, the Board shall determine all of the relevant terms and
conditions of Plan Options granted pursuant to the Purchase Plan; provided,
however, that all Participants granted Plan Options pursuant to the Purchase
Plan shall have the same rights and privileges within the meaning of section
423(b)(5) of the Code. All expenses incurred in connection with the
administration of the Purchase Plan shall be paid by the Company.
D. ELIGIBILITY
-----------
Any Employee is eligible to participate in the Purchase Plan and any
Offering under the Purchase Plan except the following:
(i) an Employee who has not completed three months of continuous
employment with the Company or Designated Subsidiary as of the commencement of
the Offering Period (as hereinafter defined); and
(ii) an Employee who (a) owns or (b) holds options to purchase, or who, as
a result of participation in the Purchase Plan, would (a) own or (b) hold
options to purchase, stock of the Company possessing five percent or more of the
total combined voting power or value of all classes of the Company within the
meaning of section 423(b)(3) of the Code.
E. OFFERING DATES
--------------
(i) OFFERING PERIODS. The Purchase Plan shall be implemented by four
-----------------
annual offering periods of three months' duration (each of which referred to
herein as an "Offering Period"), commencing on the first day of each calendar
quarter (January 1, April 1, July 1, and October 1) and ending on the last day
of each calendar quarter (March 31, June 30, September 30, and December 31). The
first Offering Period shall commence on July 1, 1991. The Board may, however,
establish a different term for one or more future Offerings and/or different
commencing and/or ending dates for such Offerings without Shareholder approval,
if such change is announced at least fifteen (15) days prior to the scheduled
beginning of the first Offering Period to be affected. An employee who becomes
eligible to participate in the Purchase Plan after an Offering Period has
commenced shall not be eligible to participate during such Offering Period. The
first day of an Offering Period shall be the "Offering Date" for such Offering
Period.
(ii) GOVERNMENT APPROVAL; SHAREHOLDER APPROVAL. Notwithstanding any other
------------------------------------------
provisions of the Purchase Plan to the contrary, any Plan Option granted
pursuant to the Purchase
3
<PAGE>
Plan shall be subject to (a) obtaining all necessary governmental approvals
and/or qualifications of the sale and/or issuance of the Plan Options and/or the
Shares, and (b) in the case of Plan Options with an Offering date after an
amendment to the Purchase Plan, obtaining any necessary approval of the
shareholders of the Company required by paragraph R below.
F. PARTICIPATION IN THE PURCHASE PLAN
----------------------------------
(i) INITIAL PARTICIPATION. An eligible Employee may elect to become a
---------------------
Participant effective on the first Offering Date after satisfying the
eligibility requirements set forth in paragraph D above by delivering a
subscription agreement authorizing payroll deductions (a "Subscription
Agreement") to the Company's payroll office at such time at least seven (7) days
prior to an Offering Date as may be established by the Company (the "Enrollment
Date"). An eligible Employee who does not deliver a Subscription Agreement to
the Company's payroll office prior to the Enrollment Date for the first Offering
Date after becoming eligible to participate in the Purchase Plan shall not
participate in the Purchase Plan for that Offering Period or for any subsequent
Offering Period unless such Employee subsequently enrolls in the Purchase Plan
by filing a Subscription Agreement with the Company prior to the applicable
Enrollment Date for such subsequent Offering Date.
(ii) AUTOMATIC PARTICIPATION IN SUBSEQUENT OFFERINGS. A participant shall
------------------------------------------------
automatically participate in each succeeding Offering Period until such time as
such Participant withdraws from the Purchase Plan pursuant to paragraph K below
or terminates employment with the Company. A Participant is not required to
file an additional Subscription Agreement for such Offering Periods in order to
automatically participate therein.
G. RIGHT TO PURCHASE SHARES
------------------------
Subject to the limitations set forth in paragraphs B, I(iii), I(v), and
J(ii), on each Offering Date, each Participant shall be granted a Plan Option to
purchase (at the purchase price determined under paragraph H) a number of whole
Shares arrived at by dividing (a) an amount equal to 15% of the Participant's
Compensation for the Offering Period beginning on such Offering Date
determined at the rate of such Participant's Compensation in effect as of
such Offering Date by (b) 85% of the fair market value of a share of the
Company's Common Stock on the Offering Date. "Compensation" includes all amounts
paid in cash and includable as "wages" subject to tax under section 3101(a) of
the Code without applying the dollar limitation of section 3121(a) of the Code.
Accordingly, "Compensation" includes salaries, commissions, bonuses and
contributions made at the direction of the Participant pursuant to certain
qualified cash or deferred arrangements. "Compensation" does not include
reimbursements of expenses, allowances, or any amount deemed received by a
Participant without the actual transfer of cash or any amounts directly paid
pursuant to the Purchase Plan or any other stock purchase or stock option plan.
The fair market value of a share of the Company's Common Stock shall be
determined in accordance with paragraph H.
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H. PURCHASE PRICE
--------------
The purchase price at which Shares may be acquired in any Offering under
the Purchase Plan shall be set by the Board. Unless otherwise provided by the
Board before the commencement of an Offering Period, the purchase price for the
Offering Period shall be 85% of the lesser of (i) the fair market value of the
Company's Common Stock, as determined by the Board, on the Offering Date of such
Offering Period or (ii) the fair market value of the Company's Common Stock, as
determined by the Board, on the last day of the Offering Period. In no event may
the purchase price be lower than the price specified in the previous sentence.
The fair market value of the Company's Common Stock at any point in time has
been determined to be the average of the high and low sales prices of the
Company's Common Stock on such date as reported on the National Association of
Securities Dealers Automated Quotation ("NASDAQ") National Market System.
I. PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS
---------------------------------------------
(i) ACCUMULATION OF PAYROLL DEDUCTIONS. The purchase price of Shares to
-----------------------------------
be acquired in an Offering Period shall be accumulated by payroll deductions
over the Offering Period. Except as set forth below, the amount of Compensation
to be withheld from a Participant's Compensation during each pay period shall be
determined by the Participant's subscription agreement.
(ii) DECREASE OF PAYROLL DEDUCTIONS. During an Offering Period, a
-------------------------------
Participant may elect to decrease the rate of payroll deductions from his or her
Compensation by filing an amended Subscription Agreement with the Company on or
before the "Change Notice Date". The "Change Notice Date" shall initially be
the seventh day prior to the end of the first pay period for which such election
is to be effective; however, the Company may change such Change Notice Date from
time to time.
(iii) MAXIMUM DEDUCTIONS. The amount of payroll deductions with respect to
-------------------
the Purchase Plan for any Participant during any pay period shall not exceed
15%, or such other rate as may be determined from time to time by the Board, of
the Participant's Compensation (as hereinabove defined) for such pay period;
provided, however, that in the event the Offering Period is shorter than 13
weeks, the maximum withholding percentage shall be adjusted to equal 15%, or
such other rate as may be determined from time to time by the Board, multiplied
by 13 and divided by the number of weeks in the Offering Period.
(iv) COMMENCEMENT OF PAYROLL DEDUCTIONS. Payroll deductions shall
----------------------------------
commence on the first payday following the Offering Date of an Offering Period
and shall continue to the end of such Offering Period unless sooner altered or
terminated as provided in the Purchase Plan.
(v) CERTAIN RULES TO BE ESTABLISHED BY COMPANY. The Company may, from
-------------------------------------------
time to time, establish (i) a minimum required amount of payroll deductions for
participation in any Offering, (ii) limitations on the frequency and/or number
of changes in the amount of payroll deductions during
5
<PAGE>
an Offering, (iii) such other limitations or procedures as deemed advisable by
the Company in the Company's sole discretion which are consistent with the
Purchase Plan.
(vi) NO INTEREST ON PAYROLL DEDUCTION. Interest shall not be accrued or
---------------------------------
paid on payroll deductions from a Participant's Compensation.
(vii) PARTICIPANT ACCOUNTS. Individual accounts shall be maintained for
---------------------
each Participant. All payroll deductions from a Participant's compensation shall
be credited to the Participant's account under the Purchase Plan and shall be
deposited with the general funds of the Company. All payroll deductions
received or held by the Company may be used by the Company for any corporate
purpose.
J. PURCHASE OF SHARES
------------------
(i) PURCHASE. On the last day of an Offering Period, each Participant
---------
who has not withdrawn from the Offering or whose employment has not terminated
on or before such last day shall automatically purchase that number of whole
Shares arrived at by dividing the total amount credited to Participant's account
pursuant to paragraph I(vii) above by the Purchase Price established pursuant to
paragraph H above (subject to the limitation in paragraph J(ii) below). All
additional cash remaining in the Participant's account for such completed
Offering shall be refunded to the Participant as soon as practicable after the
last day of the Offering Period. In the event the cash to be returned to a
Participant pursuant to the preceding sentence is an amount less than the amount
necessary to purchase a whole Share, the Company shall maintain such cash in the
Participant's account to be applied toward the purchase of Shares in the next
subsequent Offering.
(ii) FAIR MARKET VALUE LIMITATION. No participant shall be granted a Plan
-----------------------------
Option which would permit the Participant to purchase Shares under the Purchase
Plan (and all similar plans of the Company and any Subsidiary) at a rate which
exceeds $25,000 of the fair market value of such Shares (determined at the time
of grant) for each calendar year in which such Plan Option is outstanding.
(iii) RIGHTS AS A SHAREHOLDER AND EMPLOYEE. A Participant shall have no
-------------------------------------
rights as a shareholder by virtue of the Participant's participation in the
Purchase Plan until the date of issuance of a certificate or certificates for
the Shares being purchased pursuant to the exercise of the Participant's Plan
Option. No adjustment shall be made for dividends or distributions or other
rights for which the record date is prior to the date such certificate or
certificates is issued. Nothing in the Purchase Plan shall confer upon a
Participant any right to continue in the employ of the Company or interfere in
any way with any right of the Company to terminate the Participant's employment
at any time.
(iv) WITHHOLDING TAX. At the time the Shares are purchased for a
----------------
Participant, the Company shall withhold from the Participant's Compensation the
amount necessary to make adequate provision for federal and state withholding
obligations of the Company, if any, which arise upon such purchase.
6
<PAGE>
K. WITHDRAWAL
----------
(i) NOTICE OF WITHDRAWAL. A participant may withdraw all, but not less
---------------------
than all, of the payroll deductions credited to his account under the Purchase
Plan by signing and delivering to the Company's payroll office a written notice
of withdrawal on a form provided by the Company for such purpose. Such
withdrawal may be elected at any time prior to the end of the Offering Period.
Unless otherwise indicated, withdrawal from an Offering does not result in a
withdrawal from the Purchase Plan or any succeeding Offering pursuant to the
Purchase Plan. A Participant is prohibited from again participating in the
current Offering upon withdrawal from such Offering at any time.
(ii) RETURN OF PAYROLL DEDUCTIONS. Upon withdrawal from an Offering the
-----------------------------
Participant's interest in that Offering shall terminate, and, as soon as
practical after the withdrawal, the withdrawn Participant's accumulated payroll
deductions shall be returned to the Participant.
(iii) WITHDRAWAL FROM THE PURCHASE PLAN; SUBSEQUENT PARTICIPATION. A
-----------------------------------------------------------
Participant may withdraw from the Purchase Plan by signing and delivering to the
Company's payroll office a written notice of withdrawal on a form provided by
the Company for such purpose. In the event a Participant voluntarily elects to
withdraw from the Purchase Plan, the Participant may not resume participation in
the Purchase Plan during the same Offering Period, but may participate in any
succeeding Offering under the Purchase Plan by filing a new authorization for
payroll deductions in the same manner as set forth above for initial
participation in the Purchase Plan.
L. TERMINATION OF EMPLOYMENT
-------------------------
Termination of a Participant's Continuous Status as an Employee for any
reason, including retirement or death, or the failure of a Participant to remain
an Employee eligible to participate in the Purchase Plan, shall terminate the
Participant's participation in the Purchase Plan immediately. Upon such
termination, the payroll deductions credited to the Participant's account shall
be returned to the Participant (or in the case of the Participant's death, to
the Participant's legal representative) and all rights under the Purchase Plan
shall terminate. A Participant whose participation has been so terminated may
again become eligible to participate in the Purchase Plan by again satisfying
the requirements of paragraph D above.
M. DESIGNATION OF BENEFICIARY
--------------------------
A Participant may file a written designation of a beneficiary who is to
receive Shares and/or cash, if any, from such Participant's account under the
Purchase Plan in the event of such Participant's death at a time when cash or
Shares are held for his account. Such designation of beneficiary may be changed
by the Participant at any time by written notice. In the event of the death of a
Participant in the absence of a valid designation of a beneficiary who is living
at the time of such Participant's death, the Company shall deliver such Shares
and/or cash to the executor or administrator of the estate of the Participant;
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such Shares and/or
cash to
7
<PAGE>
the spouse or to any one or more dependents or relatives of the Participant; or
if no spouse, dependent or relative is known to the Company, the to such other
person as the Company may reasonably designate.
N. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
------------------------------------------
Subject to any required action by the shareholders of the Company, the
number of Shares covered by each Plan Option under the Purchase Plan which has
not been exercised and the number of shares of Common Stock which have been
authorized for issuance under the Purchase Plan but have not yet been placed
under option (collectively, the "Reserves"), as well as the price per share of
Common Stock covered by each Plan Option under the Purchase Plan which has not
yet been exercised, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, stock dividend, combination or reclassification of the Common Stock or
any other increase or decrease in the number of shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to a Plan
Option.
In the event of a proposed dissolution or liquidation of the Company, the
Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, each outstanding Plan
Option under the Purchase Plan shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation (the "Acquiring Corporation"). If the Acquiring
Corporation elects not to assume or substitute for the outstanding Plan Options,
the Board may, in its sole discretion and notwithstanding any other provision
herein to the contrary, adjust the ending date of the then current Offering
Period to a date on or before the effective date of such proposed transaction.
If the Board makes such an adjustment to the ending date of the Offering Period,
the Board shall notify the Participants of such new ending at least ten days in
advance thereof.
The board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserves, as well as the price per share
of Common Stock covered by each outstanding Plan Option, in the event that the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or merged into any other
corporation.
8
<PAGE>
O. TRANSFERABILITY
---------------
Neither payroll deductions credited to a Participant's account nor any
rights with regard to the exercise of a Plan Option or to receive Shares under
the Purchase Plan may be assigned, transferred, pledged or otherwise disposed of
in any way (other than by will, the laws of descent and distribution, or as
provided in paragraph M hereof) by the Participant. Any such attempt at
assignment, transfer, pledge or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds in
accordance with paragraph K.
P. REPORTS
-------
Each Participant who purchases Shares in an Offering period shall receive
as soon as practical after the last day of each Offering Period a report of such
Participant's account setting forth the total payroll deductions accumulated,
the number of Shares purchased and the remaining cash balance to be refunded or
retained in the Participant's account pursuant to paragraph J(i) above, if any.
Q. TERM OF THE PURCHASE PLAN
-------------------------
The Purchase Plan shall become effective upon the earlier to occur of its
adoption by the Board or its approval by the shareholders of the Company. The
Purchase Plan shall continue until terminated by the Board or until all of the
Shares reserved for issuance under the Purchase Plan have been issued, whichever
shall come first.
R. AMENDMENT OR TERMINATION OF THE PURCHASE PLAN
---------------------------------------------
The Board may at any time amend or terminate the Purchase Plan, except that
such termination cannot affect Plan Options previously granted under the
Purchase Plan, nor may any amendment make any change in a Plan Option previously
granted under the Purchase Plan which would adversely affect the right of any
Participant (except as may be necessary to qualify the Purchase Plan pursuant to
section 423 of the Code), nor may any amendment be made without obtaining the
approval of the shareholders of the Company within 12 months of the adoption of
such amendment if such amendment would authorize the sale of more shares than
are authorized for issuance under the Purchase Plan, or change the designation
of the employees (or class of employees) eligible for participation in the
Purchase Plan.
S. NOTICES
-------
All notices or other communications by a Participant to the Company in
connection with the Purchase Plan shall be deemed to have been duly given when
received in the form specified by the Company at the location, or by the person,
designated by the Company for the receipt thereof.
9
<PAGE>
T. SHAREHOLDER APPROVAL
--------------------
The Purchase Plan and any increase in the number of Shares reserved under
the Purchase Plan must be approved by a majority of the votes cast at a duly
held shareholders' meeting at which a quorum representing a majority of all
outstanding voting stock of the Company is, either in person or by proxy,
present and voting on the Purchase Plan, within twelve months before or after
the date the Purchase Plan has been adopted or the increase in the number of
Shares reserved under the Purchase Plan has been approved by the Board.
U. CONDITIONS UPON ISSUANCE OF SHARES
----------------------------------
Shares shall not be issued with respect to a Plan Option unless the
exercise of such Plan Option and the issuance and delivery of such Shares
pursuant thereto shall comply with all applicable provisions of law, domestic or
foreign, including, without limitation, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of a Plan Option and if required by
applicable securities laws, the Company may require the Participant for whose
account the Plan Option is being exercised to represent and warrant at the time
of such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
V. ERISA AND INTERNAL REVENUE CODE SECTION 401
-------------------------------------------
The Purchase Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended and is not qualified under
section 401(a) of the Code.
10
<PAGE>
GREATER BAY BANCORP
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 18, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder(s) hereby nominate(s), constitute(s) and
appoint(s) David L. Kalkbrenner, Steven C. Smith and Warren R. Thoits,
and each of them, the attorneys, agents and proxies of the undersigned,
with full powers of substitution to each, to attend and act as proxy or
proxies of the undersigned at the Annual Meeting of Shareholders (the
"Meeting") of GREATER BAY BANCORP (the "Company") to be held at the
principal executive offices of the Company, 2860 West Bayshore Road,
Palo Alto, California 94303, on Wednesday, June 18, 1997, at 5:00 p.m.,
and at any and all adjournments thereof, and to vote as specified herein
the number of shares which the undersigned, if personally present, would
be entitled to vote.
1. ELECTION OF DIRECTORS.
[_] FOR ALL CLASS I, CLASS II AND CLASS III DIRECTOR NOMINEES LISTED
BELOW (except as indicated to the contrary below).
[_] WITHHOLD AUTHORITY to vote for all Class I, Class II and Class III
Director nominees listed below.
Class I Director nominees: James E. Jackson, Duncan L. Matteson and
Edwin E. van Bronkhorst
Class II Director nominees: John M. Gatto, Dick J. Randall and Donald H.
Seiler
Class III Director nominees: David L. Kalkbrenner, Rex D. Lindsay, Glen
McLaughlin and Warren R. Thoits
INSTRUCTION: TO WITHHOLD AUTHORITY to vote for any individual nominee(s)
write that nominee's(s') name in the space below.
----------------------------------------------------------------
2. AMENDMENT OF EMPLOYEE STOCK PURCHASE PLAN ("ESPP") to increase the
number of shares of the Company's common stock reserved for issuance
thereunder by 100,000 shares.
[_] FOR [_] AGAINST [_] ABSTAIN
3. RATIFICATION OF APPOINTMENT OF COOPERS & LYBRAND L.L.P. as
independent public accountants of the Company for the year ending
December 31, 1997.
[_] FOR [_] AGAINST [_] ABSTAIN
4. OTHER BUSINESS. In their discretion, the Proxies are authorized to
vote upon such other business as may properly come before the Meeting
and at any and all adjournments thereof. The Board of Directors at
present knows of no other business to be presented by or on behalf of
the Company or the Board of Directors at the Meeting.
PLEASE SIGN AND DATE ON REVERSE SIDE
PLEASE SIGN AND DATE BELOW
The undersigned hereby ratifies and confirms all that said attorneys
and proxies, or any of them, or their substitutes, shall lawfully do or
cause to be done by virtue hereof, and hereby revokes any and all
proxies heretofore given by the undersigned to vote at said Meeting. The
undersigned acknowledges receipt of the notice of said Annual Meeting
and the Proxy Statement accompanying said notice.
Please date this Proxy and sign exactly as your name(s) appear(s) on
this card. Joint owners should each sign personally. Corporate proxies
should be signed by an authorized officer. Executors, administrators,
trustees, etc., should give their full titles.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS, "FOR" AMENDMENT OF THE
ESPP AND "FOR" RATIFICATION OF APPOINTMENT OF COOPERS & LYBRAND L.L.P.
THE PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS MADE, IT WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS
NOMINATED BY THE BOARD OF DIRECTORS, "FOR" AMENDMENT OF THE ESPP AND
"FOR" RATIFICATION OF APPOINTMENT OF COOPERS & LYBRAND L.L.P.
Dated:__________, 1997
Signed:_______________
Signed:_______________
I(WE) WILL ___ WILL NOT ___ ATTEND THE MEETING IN PERSON.
