PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement [ ] Confidential for Use of the
Commission Only (as permitted
by Rule 14a-6(e) (2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under 240.14a-12
CENTRAL COAST BANCORP
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X] No fee required.
[ ] $125 per Exchange Act Rules 0-11 (c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22 (a) (2) of Schedule 14A.
[ ] Fee computed on table below per exchange Act Rules 14a-6 (i) 4 and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously by written preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11 (a) (2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid :
(2) Form, Schedule or Registration Statement No. :
(3) Filing Party :
(4) Date Filed :
PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
CENTRAL COAST BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MONDAY, JUNE 11, 2001
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Central Coast Bancorp will be held
at 301 Main Street, Salinas, California, on Monday, June 11, 2001 at 5:30 p.m.
for the following purposes:
1. To amend the articles of incorporation and bylaws to provide for the
classification of the board of directors.
2. To amend the articles of incorporation and bylaws to eliminate
cumulative voting in the election of directors.
3. To elect directors.
4. To approve the appointment of Deloitte & Touche LLP as independent public
accountants for the 2001 fiscal year.
5. To transact such other business as may properly come before the Meeting.
The names of the Board of Directors' nominees to be directors of Central
Coast Bancorp are set forth in the accompanying Proxy Statement and
incorporated here by reference.
Article III, Section 16 of the Bylaws of Central Coast Bancorp provides
for the nomination of directors in the following manner:
"Nomination for election of members of the Board of Directors may be made
by the Board of Directors or by any shareholder of any outstanding class of
capital stock of the 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 21 days nor more than 60 days prior to any meeting of
shareholders called for the election of directors; provided however, that if
less than 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 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 as permitted by Section 6
of these by-laws, no notice of intention to make nominations shall be
required. Such notification shallcontain 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 shareholders of record at the close of business on April 13, 2001
are entitled to notice of and to vote at this Meeting and at any postponements
or adjournments thereof.
By Order of the Board of Directors
/s/ JOHN F. MCCARTHY
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John F. McCarthy, Secretary
Salinas, California
April 26, 2001
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE SIGN AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
Mailed to Shareholders
on or about April 26, 2001
CENTRAL COAST BANCORP
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is being furnished to the shareholders of Central
Coast Bancorp, a California corporation (the "Corporation"), in connection
with the solicitation of proxies by the Board of Directors for use at the
Annual Meeting of Shareholders to be held at 301 Main Street, Salinas,
California on June 11, 2001 at 5:30 p.m. (the "Meeting"). Only shareholders
of record on April 13, 2001 (the "Record Date") will be entitled to notice of
the Meeting and to vote at the Meeting. At the close of business on the
Record Date, the Corporation had outstanding and entitled to be voted
6,721,998 shares of its no par value Common Stock (the "Common Stock").
Shareholders are entitled to one vote for each share held, except that
for the election of directors each shareholder has cumulative voting rights
and is entitled to as many votes as shall equal the number of shares held by
such shareholder multiplied by the number of directors to be elected. Each
shareholder may cast all his or her votes for a single candidate or
distribute such votes among any or all of the candidates as he or she
chooses. However, no shareholder shall be entitled to cumulate votes (in
other words, cast for any candidate a number of votes greater than the number
of shares of stock held by such shareholder) unless such candidate's name has
been placed in nomination prior to the voting and the shareholder has given
notice at the Meeting prior to the voting of the shareholder's intention to
cumulate his or her votes. If any shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination. Prior to
voting, an opportunity will be given for shareholders or their proxies at the
Meeting to announce their intention to cumulate their votes. The proxy
holders are given, under the terms of the proxy, discretionary authority to
cumulate votes on shares for which they hold a proxy.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke that proxy prior to its exercise. The proxy may be
revoked prior to the Meeting by delivering to the Secretary of the
Corporation either a written instrument revoking the proxy or a duly executed
proxy bearing a later date. The proxy may also be revoked by the shareholder
by attending and voting at the Meeting.
Votes cast by proxy or in person at the Meeting will be counted by the
Inspectors of Election for the Meeting. The Inspectors will treat abstentions
and "broker non-votes" (shares held by brokers or nominees as to which
instructions have not been received from the beneficial owners or persons
entitled to vote and the broker or nominee does not have discretionary voting
power under applicable rules of the stock exchange or other self-regulatory
organization of which the broker or nominee is a member) as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. Abstentions and "broker non-votes" will not be counted as shares voted
for purposes of determining the outcome of any matter as may properly come
before the Meeting.
Unless otherwise instructed, each valid proxy returned which is not
revoked will be voted "FOR" proposals 1, 2, 3 and 4 as described in this Proxy
Statement, and, at the proxyholders' discretion, on such other matters, if any,
which may come before the Meeting (including any proposal to postpone or
adjourn the Meeting).
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PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
The Corporation will bear the entire cost of preparing, assembling,
printing and mailing proxy materials furnished by the Board of Directors to
shareholders. Copies of proxy materials will be furnished to brokerage
houses, fiduciaries and custodians to be forwarded to the beneficial owners
of the Common Stock. In addition to the solicitation of proxies by use of the
mail, some of the officers, directors and regular employees of the
Corporation and its subsidiary, Community Bank of Central California (the
"Bank"), may (without additional compensation) solicit proxies by telephone
or personal interview, the costs of which will be borne by the Corporation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
As of the Record Date, April 13, 2001, no individual known to the
Corporation owned more than five percent (5%) of the outstanding shares of
its Common Stock except as described below.
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Name and Amount and Percentage
Address of Nature of of Class
Title of Beneficial Beneficial Beneficially
Class Owner Ownership Owned
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Common Stock, Robert L.Meyer (1) 543,851 7.46%
No Par Value
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(1) The address for the person listed is P. O. Box 606, King City,
California, 93930-0606. 516,820 shares are held by Mr. Meyer and his
spouse as trustees of the Robert L. Meyer and Patricia J. Meyer Trust
dated July 28, 1977 and 27,031 shares are held as trustee of the Craig
Meyer Trust.
Security Ownership of Management
The following table sets forth information as of April 13, 2001,
concerning the equity ownership of the Corporation's directors and the
executive officers named in the Summary Compensation Table, and directors and
executive officers as a group. Unless otherwise indicated in the notes to
the table, each director and executive officer listed below possesses sole
voting power and sole investment power for the shares of the Corporation's
Common Stock listed below. All of the shares shown in the following table
are owned both of record and beneficially except as indicated in the notes to
the table. The Corporation has only one class of shares outstanding, Common
Stock.
Name and Address (1) Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class (2)
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Common Stock, No Par Value Robert C. Blatter 25,771 (3) 0.35%
Common Stock, No Par Value C. Edward Boutonnet 277,331 (4) 3.77%
Common Stock, No Par Value Bradford G. Crandall 247,035 (5) 3.36%
Common Stock, No Par Value Alfred P. Glover 73,347 (6) 1.00%
Common Stock, No Par Value Michael T. Lapsys 119,888 (7) 1.64%
Common Stock, No Par Value Duncan L. McCarter, R.Ph. 172,426 (8) 2.34%
Common Stock, No Par Value John F. McCarthy 101,945 (9) 1.39%
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PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
Name and Address (1) Amount and Nature of Percent of
Title of Class Beneficial Owner Beneficial Ownership Class (2)
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Common Stock, No Par Value Robert M. Mraule, D.D.S.,MD 185,321 (10) 2.52%
Common Stock, No Par Value Louis A. Souza 66,005 (11) 0.90%
Common Stock, No Par Value Robert M. Stanberry 18,012 (12) 0.25%
Common Stock, No Par Value Mose E. Thomas, Jr. 77,016 (13) 1.05%
Common Stock, No Par Value Nick Ventimiglia 113,101 (14) 1.54%
All directors and executive officers
of the Corporation as a group (12 persons) 1,474,198 (15) 18.34%
( 1) The address for all persons listed is c/o Central Coast Bancorp,
301 Main Street, Salinas, California, 93901.
( 2) Includes shares of Common Stock subject to stock options exercisable
immediately.
( 3) Includes 4,489 shares held jointly with his spouse and 23,229 shares
of Common Stock subject to stock options exercisable immediately.
( 4) Includes 79,669 shares of Common Stock held in a partnership, 4,431
shares as custodian for his grandchildren, 27,010 shares of Common Stock
held by Mr. Boutonnet as trustee of the Charles E. Boutonnet Trust,
33,377 shares held by Mr. Boutonnet as trustee of Boutonnet Farms, Inc.
Profit Sharing Plan, 63,889 shares held in the Central Coast Bancorp
Nonqualified Deferred Compensation Plan Trust as to which Mr. Boutonnet
has shared investment power and 68,515 shares of Common Stock subject to
stock options exercisable immediately.
( 5) Includes 85,070 shares of Common Stock held jointly with his
spouse as trustees of the Bradford G. Crandall and Lynne O. Crandall
Trust, 29,950 shares held by Mr. Crandall and his sister as trustees of
the Irella F. Crandall Trust, 63,500 shares held in the Central Coast
Bancorp Nonqualified Deferred Compensation Plan Trust as to which Mr.
Crandall has shared investment power and 68,515 shares of Common Stock
subject to stock options exercisable immediately.
( 6) Includes 10,305 shares of Common Stock held jointly with his spouse,
707 shares held by his spouse and 43,558 shares of Common Stock subject
to stock options exercisable immediately.
( 7) Includes 18 shares of Common Stock held jointly with his spouse, and
498 shares held as custodian, 93,055 shares held in the Kathy O.
Lapsys and Michael T. Lapsys Trust and 26,317 shares of Common Stock
subject to stock options exercisable immediately.
( 8) Includes 40,830 shares of Common Stock held jointly with his spouse as
trustees of the Duncan L. McCarter and Leslie P. McCarter Trust,
63,081 shares held in the Central Coast Bancorp Nonqualified Deferred
Compensation Plan Trust as to which Mr. McCarter has shared investment
power and 68,515 shares of Common Stock subject to stock options
exercisable immediately.
( 9) Includes 74,267 shares of Common Stock held jointly with his spouse
as trustees of the John F. McCarthy and Mary Ann McCarthy Trust and
27,678 shares of Common Stock subject to stock options exercisable
immediately.
(10) Includes 73,085 shares of Common Stock held by Dr. Mraule as trustee
of Robert M. Mraule D.D.S., M.D., Inc. Money Purchase P ension Plan,
43,721 shares held in the Central Coast Bancorp Nonqualified Deferred
Compensation Plan Trust as to which Mr. Mraule has shared investment
power and 68,515 shares subject to stock options exercisable
immediately.
(11) Includes 14,752 shares of Common Stock held jointly with his spouse,
15,125 shares held in the Central Coast Bancorp Nonqualified Deferred
Compensation Plan Trust as to which Mr. Souza has shared investment
power and 28,433 shares of Common Stock subject to stock options
exercisable immediately.
(12) Includes 16,652 shares of Common Stock subject to stock options
exercisable immediately.
(13) Includes 11,237 shares of Common Stock owned jointly with his spouse,
and 35,564 shares of Common Stock subject to stock options exercisable
immediately.
(14) Includes 71,260 shares of Common Stock subject to stock options
exercisable immediately.
(15) Includes 552,251 shares of Common Stock subject to stock options
exercisable immediately and 249,316 shares held by the Central Coast
Bancorp Board of Directors Deferred Stock Option Plan Trust.
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PROPOSAL NO. 1
APPROVAL OF AMENDMENTS TO THE CENTRAL COAST BANCORP
ARTICLES OF INCORPORATION AND BYLAWS TO PROVIDE FOR
THE CLASSIFICATION OF THE BOARD OF DIRECTORS
Introduction
On March 26, 2001, the board of directors adopted amendments to the
Central Coast Bancorp articles of incorporation and bylaws which provide that
the board of directors be divided into three classes of directors, each
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 consists of
at least nine authorized directors and, in the event that the total number of
authorized directors on the board is at least six but less than nine, for
classification of the board of directors into two classes, each consisting of
a number of directors equal as nearly as practicable to one-half the total
number of directors. After initial implementation at the 2001 annual meeting
of shareholders, each class of directors would be subject to election every
third year and would serve for a three-year term for so long as the board
remained classified into three classes, or would be subject to election every
second year and would serve for a two-year term in the event the board were
classified into two classes. Currently, all of Central Coast Bancorp's
directors are elected each year to serve a one-year term.
If the proposal is approved by the shareholders, the board of directors
will, for purposes of initial implementation, designate three classes of
directors for election at the 2001 annual meeting. Class I will be elected
initially for a one-year term expiring at the 2002 annual meeting of
shareholders; Class II will be elected initially for a two-year term expiring
at the 2003 annual meeting of shareholders; and Class III will be elected for
a three-year term expiring at the annual meeting of shareholders to be held
in the year 2004; and, in each case, until their successors are duly elected
and qualified. At each annual meeting after the 2001 annual meeting, only
directors of the class whose term is expiring would be voted upon, and upon
election each director would serve a three-year term. Commencing with the
annual meeting of shareholders scheduled to occur in 2002, directors elected
to Class I would serve for a three-year term and until their successors are
duly elected and qualified, subject to any decrease in the total number of
authorized directors. Subsequently, in the years 2003 and 2004, directors
elected to Class II and Class III, respectively, would also be elected for a
three-year term and until their successors are duly elected and qualified.
Classification of the board of directors is permitted by Section 301.5
of the California Corporations Code. Under Section 301.5, a qualifying
California corporation, may divide its board of directors into two or three
classes, with one-half or one-third of the directors, respectively, elected
at each annual meeting (or as near to one-half or one-third as practicable).
The authorized number of directors must be not less than six in the case of a
two-class board and not less than nine in the case of a three-class board.
Classified boards of directors are permitted under the corporate law of a
majority of states, and Central Coast Bancorp believes that well over
one-half of Fortune 500 companies provide for classified boards.
The text of the proposed amendment to the articles of incorporation is
set forth in Appendix B attached to this proxy statement. If this proposal
is adopted by the Central Coast Bancorp shareholders, in order to make the
bylaws consistent with the amendment to the articles of incorporation
described in this proposal, upon effectiveness of the filing of the amendment
to the articles of incorporation with the California Secretary of State,
Section 17 of Article III of the bylaws will be amended to read as set forth
in Appendix B, which is incorporated here by this reference. The proposed
amendments to the articles of incorporation and bylaws are subject to such
modification as may be required upon filing by the California Secretary of
State.
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PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
Effect of Classification of Board
If adopted, the classification of the board will apply to every
subsequent election of directors for so long as at least six directors are
authorized under the Central Coast Bancorp bylaws and the classification
provision is not amended. The Central Coast Bancorp bylaws provide that the
board of directors will consist of not less than seven (7) and not more than
thirteen (13) directors, with the exact number of directors currently set at
nine (9). So long as the board continues to consist of at least nine (9)
authorized directors, after initial implementation of the classified board,
directors will serve for a term of three years rather than one year, and
one-third of the directors (or as near to one-third as practicable) will be
elected each year.
In the event that the number of directors increases, the increase will
be apportioned by the board among the classes of directors to make each class
as nearly equal in number as possible. If the number of authorized directors
is decreased to at least six but less than nine, the directors will be
apportioned by the board among two classes, each consisting of one-half of
the directors or as close an approximation as possible, directors will serve
for a term of two years, and one-half the directors (or as near to one-half
as practicable) will be elected each year. In any event, a decrease in the
number of directors cannot shorten the term of any incumbent director.
Vacancies on the board created by any resignation, removal or other reason,
or by an increase in the size of the board, may be filled for the remainder
of the term by the vote of the majority of the directors remaining in office
or by the vote of holders of a majority of the outstanding shares of the
Central Coast Bancorp common stock.
Under California law, members of the board of directors may be removed
by the board of directors for cause (defined to be a felony conviction or
court declaration of unsound mind), by the shareholders without cause or by
court order for fraudulent or dishonest acts or gross abuse of authority or
discretion. In the case of a board of directors that is not classified, no
director may be removed by the shareholders if the votes cast against the
removal (or, if done by written consent, the votes eligible to be cast by the
non-consenting shareholders) would have been sufficient to elect the director
if voted cumulatively at an election at which the same total number of votes
were cast (or, if the action is taken by written consent, all shares entitled
to vote were voted) and the entire number of directors authorized at the time
of the director's most recent election were then being elected (the "relevant
number of directors"). In the case of classified boards, the relevant number
of directors is (i) the number of directors elected at the most recent annual
meeting of shareholders or, if greater, (ii) the number of directors sought
to be removed. It should be noted that this removal provision applies
equally to corporations that permit cumulative voting and to those that do
not.
Other Effects
The board of directors believes that the amendment of the articles of
incorporation and bylaws is in the best interests of Central Coast Bancorp
and its shareholders.
Public companies are potentially subject to attempts by various
individuals and entities to acquire significant minority positions in the
company with the intent either of obtaining actual control of the company by
electing their own slate of directors, or of achieving some other goal, such
as the repurchase of their shares by the company at a premium. Public
companies also are potentially subject to inadequately priced or coercive
bids for control through majority share ownership. These prospective
acquirors may be in a position to elect a company's entire board of directors
through a proxy contest or otherwise, even though they do not own a majority
of a company's outstanding shares at the time. If this proposal is approved,
a majority of Central Coast Bancorp's directors could not be removed by
those persons until two annual meetings of shareholders have occurred,
unless the removal was for cause and the requisite vote was obtained.
By providing this additional time to the board of directors and
eliminating the possibility of rapid removal of the board, the directors of
Central Coast Bancorp will have the necessary time to most effectively
satisfy their responsibility to the Central Coast Bancorp shareholders to
evaluate any proposal and to assess and develop alternatives without the
pressure created by the threat of imminent removal. In addition, this
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PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
proposal, by providing that directors will serve three-year terms rather than
one-year terms, will enhance continuity and stability in the composition of
Central Coast Bancorp's board of directors and in the policies formulated by
the board. The board believes that this, in turn, will permit it more
effectively to represent the interests of all shareholders, including
responding to demands or actions by any shareholder or group. Following
adoption of the classified board structure, at any given time at least
one-third of the members of the board of directors will generally have had
prior experience as directors of Central Coast Bancorp. The board believes
that this will facilitate long-range planning, strategy and policy and will
have a positive impact on customer and employee loyalty. Central Coast
Bancorp has not historically had problems with either the continuity or
stability of its board of directors. The classification of the board of
directors will have the effect of making it more difficult to replace
incumbent directors. So long as the board is classified into three classes,
a minimum of three annual meetings of shareholders would generally be
required to replace the entire board, absent intervening vacancies. While
the proposal is not intended as a takeover-resistive measure in response to a
specific threat, it may discourage the acquisition of large blocks of Central
Coast Bancorp's shares by causing it to take longer for a person or group of
persons who acquire a block of shares to effect a change in management.
If this proposal is approved and implemented, a shareholder or group of
shareholders seeking to replace a majority of the directors on the board will
generally need to influence the voting of at least a majority of the
outstanding shares at two consecutive annual meetings. In addition, Central
Coast Bancorp has other corporate attributes that may also have the effect of
helping Central Coast Bancorp to resist an unfriendly acquisition. These
include existing provisions in the Central Coast Bancorp articles of
incorporation and bylaws eliminating, subject to specified exceptions, the
liability of directors for monetary damages; provisions in the articles of
incorporation and bylaws providing for indemnification of directors and
officers; provisions in the bylaws requiring advance notice of nomination of
a candidate for election to the board of directors of Central Coast Bancorp
when the nomination is made by a person other than the nominating committee
of the board; and, if approved by the Central Coast Bancorp shareholders, the
elimination of cumulative voting in the election of directors as described in
Proposal No. 2 and Appendix C of this proxy statement.
This proposal is not in response to any attempt to acquire control of
Central Coast Bancorp. However, the board believes that adopting this
proposal is prudent, advantageous and in the best interests of shareholders
because it will give the board more time to fulfill its responsibilities to
shareholders, and it will provide greater assurance of continuity and
stability in the composition and policies of the board of directors. The
board also believes the advantages outweigh any disadvantage relating to
discouraging potential acquirors from attempting to obtain control of Central
Coast Bancorp.
Vote Required for Approval
Approval of the proposed amendments to the articles of incorporation and
the bylaws requires that holders of a majority of the outstanding shares of
common stock of Central Coast Bancorp vote "FOR" the proposal. If this
proposal is not approved, it is the intention of Central Coast Bancorp that
the directors elected at the 2001 annual meeting will serve without
classification as contemplated by this proposal.
Recommendation of Management
The board of directors believes that the advantages of the proposed
amendments to the articles of incorporation and bylaws classifying the board
of directors for purposes of the election of directors greatly outweigh the
possible disadvantages of the amendments. Accordingly, the board of
directors has unanimously approved the proposed amendments and unanimously
recommends that the Central Coast Bancorp shareholders vote "FOR" their
approval.
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PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
PROPOSAL NO. 2
APPROVAL OF AMENDMENTS TO THE CENTRAL COAST BANCORP ARTICLES OF INCORPORATION
AND BYLAWS TO ELIMINATE CUMULATIVE VOTING IN THE ELECTION OF DIRECTORS
Introduction
Effective on January 1, 1990, the California General Corporation Law was
amended to permit California corporations with widely traded securities to
provide, with the approval of their shareholders, for majority rule voting in
electing directors in lieu of cumulative voting. California law specifically
allows a corporation with its common stock quoted on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market to
eliminate cumulative voting by an amendment to its bylaws or articles of
incorporation. Central Coast Bancorp's common stock is listed for trading
and quoted under the symbol "CCBN" on the Nasdaq National Market. Prior to
such legislation, cumulative voting in electing directors was mandatory for
California corporations upon proper notice by any shareholder of the
corporation. By permitting shareholders of California corporations to
provide for majority rule voting in electing directors, the new law
substantially conforms California corporate law with the corporate laws of a
majority of other states (including Delaware, Illinois, Michigan, New Jersey,
New York, Ohio, Pennsylvania and Texas) which either provide that cumulative
voting is optional or make no provision for cumulative voting at all. Only a
small majority of states still require that shareholders be permitted to
invoke cumulative voting.
Cumulative Voting
Cumulative voting in the election of directors may currently be invoked
by any shareholder of Central Coast Bancorp who complies with statutory
notice requirements. Cumulative voting entitles shareholders to a number of
votes per share of common stock equal to the number of directors to be
elected, and all nominees are voted upon simultaneously. Holders of shares
may cast all of their votes for a single nominee or distribute them among two
to more nominees.
As a consequence of cumulative voting, a shareholder with a relatively
small number of voting shares may be able to elect one or more directors.
For example, if a shareholder were to give the appropriate notice and
properly nominate a nominee, and nine directors were to be elected at an
annual meeting, a shareholder holding 10% of the voting shares could elect
one director by cumulating and casting his or her votes for one candidate.
This is true even if shareholders holding 90% of the voting shares are
opposed to the election of that candidate and cast their votes to elect nine
other nominees.
Absent cumulative voting, a nominee cannot be elected without relatively
wide support, as shareholders are entitled to only one vote per share with
the nominee receiving the greatest number of votes being elected.
Consequently, the holder or holders of a majority of the shares entitled to
vote in an election of directors will be able to elect all directors of
Central Coast Bancorp, and holders of less than a majority of the shares may
not be able to elect any directors.
For reasons set forth below, the board believes that the articles of
incorporation should be amended to eliminate cumulative voting. The text of
the proposed amendment to the articles of incorporation is set forth in
Appendix C attached to this proxy statement and is incorporated here by
this reference. The proposed amendment to the articles of incorporation is
subject to such modification as may be required upon filing by the California
Secretary of State.
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PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
Reasons for the Amendment
The board believes that the elimination of cumulative voting is
advantageous to Central Coast Bancorp and its shareholders because each
director of a publicly held corporation has a duty to represent the interests
of all shareholders rather than any specific shareholder or group of
shareholders. The presence on the board of directors of one or more
directors representing the interests of a minority shareholder or group of
shareholders could disrupt the management of Central Coast Bancorp and
prevent it from operating in the most effective manner. Furthermore, the
election of directors who view themselves as representing a particular
minority constituency could introduce an element of discord on the board of
directors, impair the ability of the directors to work effectively and
discourage qualified independent individuals from serving as directors.
Providing for majority rule voting in the election of directors by
eliminating cumulative voting will help ensure that each director acts in the
best interests of all shareholders.
This proposal to eliminate cumulative voting is not being made in
response to any effort by a minority shareholder or group of shareholders to
attain representation on the board of directors or acquire greater influence
in the management of the Corporation's business, nor is Central Coast Bancorp
aware of any such effort. Furthermore, this proposal is not being made in
response to any attempt to acquire control of Central Coast Bancorp, nor is
Central Coast Bancorp aware of any such attempt.
Other Effects
Approval of the proposed amendment may render more difficult any attempt
by a holder or group of holders of a significant number of voting shares, but
less than a majority, to change or influence the management or policies of
Central Coast Bancorp. In addition, under certain circumstances, the
proposed amendment, along with other measures that may be viewed as having
anti-takeover effects (such as Proposal No. 1 to classify the Central Coast
Bancorp board of directors), may discourage an unfriendly acquisition or
business combination involving Central Coast Bancorp that a shareholder might
consider to be in such shareholder's best interest, including an unfriendly
acquisition or business combination that might result in payment of a premium
over the market price for the shares held by the shareholder. For example,
the proposed amendment may discourage the accumulation of large minority
shareholdings (as a prelude to an unfriendly acquisition or business
combination proposal or otherwise) by persons who would not make that
acquisition without being assured of representation on the board of directors.
Conforming Bylaw Amendment
If this Proposal No. 2 is adopted by the Central Coast Bancorp
shareholders, in order to make the bylaws consistent with the amendment to
the articles of incorporation set forth in this Proposal No. 2, upon
effectiveness of the filing of the amended articles of incorporation with the
California Secretary of State, Section 11 of Article II of the bylaws shall
be amended to read as set forth in Appendix C which is incorporated here by
this reference. The proposed amendment of the bylaws is subject to such
modification as may be required upon filing by the California Secretary of
State.
Vote Required for Approval
Approval of the proposed amendments to the articles of incorporation and
the bylaws requires that holders of a majority of the outstanding shares of
common stock of Central Coast Bancorp vote "FOR" the proposal.
Recommendation of Management
The board of directors believes that this proposal is in the best
interests of Central Coast Bancorp and its shareholders, and unanimously
recommends a vote "FOR" its approval.
8
PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
PROPOSAL NO. 3
ELECTION OF CENTRAL COAST BANCORP DIRECTORS
The number of directors authorized for election at this meeting is nine
(9). Management has nominated the nine (9) incumbent directors to serve as
the Central Coast Bancorp directors. Each director will hold office until
his or her successor is elected and qualified.
All proxies will be voted for the election of the nine (9) nominees
listed below (all of whom are incumbent directors) recommended by the board
of directors unless authority to vote for the election of any directors is
withheld. The nominees receiving the highest number of affirmative votes of
the shares entitled to be voted for them shall be elected as directors, and
will be elected (a) to the class designated opposite their names, provided
that Proposal No. 1 is approved, and (b) in the event Proposal No. 1 is not
approved, then as directors without classification. Abstentions and votes
cast against nominees have no effect on the election of directors. If any of
the nominees should unexpectedly decline or be unable to act as a director,
their proxies may be voted for a substitute nominee to be designated by the
board of directors. The board of directors has no reason to believe that any
nominee will be become unavailable and has no present intention to nominate
persons in addition to or in lieu of those named below.
Mose E. (Class 1) Louis A. (Class 1) Alfred P. (Class 1)
Thomas Souza Glover
Michael T. (Class 2) Duncan L. (Class 2) Nick (Class 2)
Lapsys McCarter Ventimiglia
C. Edward (Class 3) Bradford C. (Class 3) Robert M. (Class 3)
Boutonnet Crandall Mraule
See "Proposal No. 1, Approval of Amendments to the Central Coast Bancorp
Articles of Incorporation and Bylaws to Provide for the Classification of the
Board of Directors" on page 4, for information regarding the classification
of the board of directors.
The following table sets forth names and certain information as of April
13, 2001, concerning the persons named for election as directors of the
Corporation.
Director of Director of
Corporation Bank (1) Principal Occupation
Name Age Since Since During Last Five Years
- ---- --- ----- ----- ----------------------
C. Edward 61 1994 1982 Organizer, Bank of
Boutonnet Salinas; Owner and
General Manager, Sea Mist
Farms, Ocean Mist Farms
and Boutonnet Farms, Inc.
Bradford G. 66 1994 1982 President, E.B. Stone &
Crandall Son, Inc., wholesale
nursery supply firm.
Alfred P. 69 1996 1988 Organizer of Cypress
Glover Bank; Owner, Glover
Enterprises, a real
estate development firm.
Michael T. 52 1998 1998 Chairman, Device Dynamics
Lapsys Incorporated, a
semiconductor marking
company.
Duncan L. 54 1994 1982 President and Chief
McCarter,R.Ph. Executive Officer,
Healthcare Pathway
Management, Inc., d.b.a.
AdvantaCare Medical, and
d.b.a. AdvantaCare
InfusionCare, and Care
Pharmacies, Inc.
9
PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
Director of Director of
Corporation Bank (1) Principal Occupation
Name Age Since Since During Last Five Years
- ---- --- ----- ----- ----------------------
Robert M. 51 1994 1982 Physician, Dentist, Oral
Mraule, and Maxillofacial Surgeon.
D.D.S.,
M.D.
Louis A. Souza 72 1996 1988 Organizer of Cypress
Bank; Owner, Louis A.
Souza Construction, a
general contractor,
semi-retired.
Mose E. 60 1996 1989 Organizer of Cypress
Thomas, Bank; Owner and General
Jr. Manager, Chapel of
Seaside, Inc., and
Mission Mortuary, Inc.,
funeral chapels.
Nick 59 1994 1994 Organizer, Director,
Ventimiglia President and Chief
Executive Officer, Bank
of Salinas from 1982 to
1994.
(1) Represents year of first service as a director of either of the
predecessors, Bank of Salinas or Cypress Bank, prior to their
merger resulting in Community Bank of Central California.
None of the directors/nominees for director listed above or executive
officers listed on page 11, were selected pursuant to any arrangement or
understanding other than with the directors and executive officers of the
Corporation acting within their capacities as such. There are no family
relationships between any two or more of the directors/nominees for director or
executive officers. No director/nominee for director or executive officer
serves as a director of (i) any company which has a class of securities
registered under Section 12, or which is subject to the periodic reporting
requirements of Section 15(d), of the Securities Exchange Act of 1934, or (ii)
any company registered as an investment company under the Investment Company
Act of 1940.
Committees of the Board of Directors
The Audit Committee, chaired by Alfred P. Glover, and the Finance
Committee, chaired by C. Edward Boutonnet, whose common members include
Michael T. Lapsys, Duncan L. McCarter, Robert M. Mraule (Vice Chairman) and
Mose E. Thomas, Jr., oversee the Corporation's and Subsidiary's independent
public accountants, analyze the results of internal and regulatory
examinations and monitor the financial and accounting organization and
reporting. The Audit Committee met thirteen (13) times and the Finance
Committee met twelve (12) times in 2000. See the Audit Committee Reprot on
page 16 for additional information regarding the functions of the Audit
Committee.
The Board of Directors has not established a nominating committee. The
full Board of Directors performs the functions of a nominating committee with
responsibility for considering appropriate candidates for election as
directors.
The Premises, Compensation and Performance Committee, whose members
include C. Edward Boutonnet (Vice Chairman), Duncan L. McCarter, Robert M.
Mraule (Chairman), Louis A. Souza and Mose E. Thomas, Jr., oversees physical
premises used in daily operations and reviews and establishes employee
benefits and the compensation paid to executive officers and other
employees. The Premises, Compensation and Performance Committee met twelve
(12) times in 2000.
The Investment/CRA/ALCO Committee, whose members include Bradford G.
Crandall, Alfred P. Glover, Michael T. Lapsys (Chairman) and Louis A. Souza
(Vice Chairman), has responsibility for asset/liability management, review of
the Corporation's investment portfolio, maintenance of shareholder relations
and community reinvestment. The Investment Committee met nine (9) times in
2000.
The Loan Committee, whose members include C. Edward Boutonnet (Vice
Chairman), Bradford G. Crandall (Chairman), Alfred P. Glover, Michael T.
Lapsys and Louis A. Souza has responsibility for establishing loan policy and
approving loans which exceed certain dollar limits. The Loan Committee met
twenty-four (24) times in 2000.
10
PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
The Marketing and Shareholder Relations Committee, whose members include
Duncan L. McCarter (Chairman), Louis A. Souza and Mose E. Thomas (Vice
Chairman), has responsibility for administering the Corporation's marketing
policies and marketing programs. The Marketing Committee met eleven (11)
times in 2000.
During 2000, the Corporation's Board of Directors held twelve (12)
meetings. All Directors attended at least seventy-five percent (75%) of the
aggregate of the total number of meetings of the Board of Directors and the
number of meetings of the committees on which they served, except Directors
Crandall, McCarter and Thomas, who attended 67%, 67% and 53%, respectively.
Compensation of Directors
The fees paid to directors during 2000 included a base fee of $2,050 per
month for attendance at Board meetings of the Corporation and the
Subsidiary. In addition to the base fee, the Loan Committee Chairman
received $200 per month, the Chairmen of then Audit, Finance,
Investment/CRA/ALCO, Marketing and Shareholder Relations and the Premises,
Compensation and Performance Committees each received $100 per month. The
total amount of fees paid to all Directors as a group for attendance at Board
and committee meetings was $205,000 in 2000.
EXECUTIVE OFFICERS
The following table sets forth names and certain information as of April
13, 2001, concerning the executive officers of the Corporation.
Corporation Bank
Executive Executive Principal Occupation
Name Age Since Since During Last Five Years
---- --- ----- ----- ----------------------
Nick 59 1994 1982 Chairman, President and
Ventimiglia Chief Executive Officer of
the Corporation since
December 1994. President and
Chief Executive Officer of
Community Bank of Central
California or its
predecessors, since 1982.
Organizer, Director,
President and Chief
Executive Officer, Bank of
Salinas from 1982 to 1994.
John F. McCarthy 58 1994 1988 Executive Vice President
and Chief Operating Officer
of the Corporation, and of
Community Bank of Central
California or its
predecessors, since 1988
and 1994, respectively.
Secretary of the
Corporation, and of
Community Bank of Central
California or its
predecessors, since 1997.
Vice President and Regional
Manager, Hibernia Bank,
Salinas from 1986 to 1988;
Vice President and Regional
Manager, Crocker National
Bank from 1980 to 1986.
Robert M. 61 1998 1998 Senior Vice President and
Stanberry Chief Financial Officer of
the Corporation, and of
Community Bank of Central
California or its
predecessors, since 1998.
Vice President and Chief
Financial Officer, TriCo
Bancshares from 1993 to
1998.
11
PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
Corporation Bank
Executive Executive Principal Occupation
Name Age Since Since During Last Five Years
---- --- ----- ----- ----------------------
Robert C. Blatter 40 1996 1996 Senior Vice President and
Loan Administrator of the
Corporation, and of
Community Bank of Central
California or its
predecessors, since
1996. Commercial Banking
Officer, Bank of America
from 1986 to 1989.
EXECUTIVE COMPENSATION
Set forth below is the summary compensation paid or accrued during the
three years ended December 31, 2000 to Nick Ventimiglia, John McCarthy,
Robert M. Stanberry and Robert C. Blatter, the only executive officers of the
Corporation and/or the Subsidiary.
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------------------------------------------------------------
Long-Term Compensation
----------------------
Annual Compensation Awards Payouts
-------------------------- ------------ -------
(f) (g)
(e) Restricted Securities (h) (i)
(a) (c) (d) Other Annual Stock Underlying LTIP All Other
Name and (b) Salary Bonus Compensation Award(s) (Options/SARs Payouts Compensation
Principal Position Year ($)1/ ($)2/ ($)3/ ($) (#)4/ ($) ($) 5/
------------------ ---- ------ ----- ------------ -------- ------------ ------- ------------
Nick Ventimiglia, 2000 $255,000 $173,250 -- -- 11,000 -- $2,625
Chief Executive Officer; 1999 $240,000 $165,000 -- -- -- -- $2,111
President, Central Coast 1998 $240,000 $154,030 -- -- -- -- $2,000
Bancorp and Community
Bank
- ------------------------
John F. McCarthy, 2000 $165,500 $112,875 -- -- 8,250 -- $2,625
Executive Vice President, 1999 $157,500 $107,500 -- -- -- -- $2,111
Chief Operating Officer 1999 $150,000 $100,119 -- -- -- -- $2,000
and Corporate Secretary
- ------------------------
Robert M. Stanberry, 2000 $124,000 $ 63,000 -- -- 4,400 -- $2,453
Senior Vice President 1999 $117,875 $ 60,000 -- -- -- -- $2,457
and Chief Financial 1998 $ 14,626 -- -- -- 22,687 -- --
Officer
- ------------------------
Robert C. Blatter, 2000 $105,000 $ 63,000 -- -- 4,400 -- $2,625
Senior Vice President 1999 $ 90,000 $ 60,000 -- -- -- -- $2,111
and Loan Administrator 1998 $ 85,000 $ 60,000 -- -- -- -- $1,981
- ---------------------------------------------------------------------------------------------------------------------------------
1/ Amounts shown include cash and non-cash compensation earned and received
by executive officers as well as amounts earned but deferred at the
election of those officers under the 401(k) and Deferred Compensation Plans.
The salary paid to Mr. Stanberry in 1998 was the amount earned in the period
from the date of initial employment, November 16, 1998.
2/ Amounts indicated as bonus payments were earned for performance during
2000, 1999 and 1998.
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 2000, 1999, and 1998.
4/ Amounts shown represent the number of shares granted, adjusted for all
stock dividends and stock splits. The Corporation had a 1982 Stock Option
Plan (the "1982 Plan") pursuant to which options could be granted to
directors and key, full-time salaried, officers and employees of the
Corporation and the Subsidiary. The 1982 Plan expired by its terms in 1993.
Options granted under the 1982 Plan were either incentive options or non-
statutory options. Options granted under the 1982 Plan became exercisable
in accordance with a vesting schedule established at the time of grant.
Vesting could not extend beyond ten years from the date of grant. Upon a
change in control of the Corporation, all outstanding options under the
1982 Plan will become fully vested and exercisable. Options granted
under the 1982 Plan were adjusted to protect against dilution in the
event of certain changes in the Corporation's capitalization, including
stock splits and stock dividends. TheCorporation's 1994 Stock Option Plan,
as amended, (the "1994 Plan") is substantially similar to the 1982 Plan
regarding provisions related to option grants, vesting and dilution. Upon
a change in control, options donot become fully vested and exercisable, but
may be assumed or equivalent options may be substituted by a successor
corporation. All options granted to the named executive officers are
incentive stock options and have an exercise price equal to the fair market
value of the Corporation's Common Stock on the date of grant.
5/ Amounts shown for each named executive officer are 401(k) matching
contributions for the year indicated.
12
PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
The following table sets forth information concerning options granted
during 2000 to the executive officers named in the Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
----------------------------------------------------- -------------------------
(a) (b) (c) (d) (e) (f) (g)
- ----------------------------------------------------------------------------------------------------------
Number of Percentage
Securities of Total
Underlying Options/SARs
Option/SARs Granted to Exercise of
Granted Employees in Base Price Expiration
(#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ----------------------------------------------------------------------------------------------------------
Nick Ventimiglia 11,000 10% $14.55 3/26/10 $100,655 $255,078
- ----------------------------------------------------------------------------------------------------------
John F. McCarthy 8,250 8% $14.55 3/26/10 $ 75,491 $191,309
- ----------------------------------------------------------------------------------------------------------
Robert M. Stanberry 4,400 4% $14.55 3/26/10 $ 40,262 $102,031
- ----------------------------------------------------------------------------------------------------------
Robert C. Blatter 4,400 4% $14.55 3/26/10 $ 40,262 $102,031
- ----------------------------------------------------------------------------------------------------------
The following table sets forth the number of shares of Common Stock
acquired by each of the named executive officers upon the exercise of stock
options during fiscal 2000, the net value realized upon exercise, the number
of shares of Common Stock represented by outstanding stock options held by
each of the named executive officers as of December 31, 2000 and the value of
such options based on the closing price of the Corporation's Common Stock and
certain information concerning unexercised options under the 1994 Stock
Option Plan.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
- -----------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised in-the-Money
Options/SARs at Options/SARs at
Fiscal Year-End Fiscal Year-End
Shares Value (#) ($)
Acquired on Realized Exercisable/ Exercisable/
Name Exercise (#) ($) Unexercisable Unexercisable (1)
- -----------------------------------------------------------------------------------------------------
Nick Ventimiglia - - 67,631 / 11,000 $641,717 / $178,800
- -----------------------------------------------------------------------------------------------------
John F. McCarthy - - 24,956 / 8,250 $203,255 / $134,100
- -----------------------------------------------------------------------------------------------------
Robert M. Stanberry - - 15,125 / 11,963 $ 53,309 / $ 98,176
- -----------------------------------------------------------------------------------------------------
Robert C. Blatter - - 21,779 / 4,400 $216,537 / $ 71,520
- -----------------------------------------------------------------------------------------------------
(1) The aggregate value has been determined based upon the closing price for
the Corporation's Common Stock at year-end, minus the exercise price.
13
PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
Employment Contracts and Termination of Employment and Change in Control
Arrangements
The Corporation has entered into employment agreements with Messrs.
Ventimiglia, President and Chief Executive Officer; McCarthy, Executive Vice
President and Chief Operating Officer; Stanberry, Senior Vice President and
Chief Financial Officer; and Blatter, Senior Vice President and Loan
Administrator. The agreements provide for an original term of three years
with automatic one-year extensions until the agreements are terminated as
described below. The agreements provide for a base salary, which is
disclosed for 2000 in the Summary Compensation Table. The base salaries
under each agreement are reviewed annually and are subject to adjustment at
the discretion of the Board of Directors. Additionally, the agreements
provide for, among other things: (a) a discretionary annual bonus based upon
the Corporation's achievement of certain profitability, growth and asset
quality standards as established by the Board of Directors; (b) payment of
base salary, reduced by the amounts received from state disability insurance
or workers' compensation or other similar insurance benefits through policies
provided by the Bank; (c) stock option grants under the Corporation's stock
option plan, at the sole discretion of the Board of Directors; (d) four
weeks annual vacation leave; (e) use of an automobile; and (f) reimbursement
for ordinary and necessary expenses incurred in connection with employment.
The agreements may be terminated with or without cause, but if the
agreements are terminated without cause due to the occurrence of
circumstances that make it impossible or impractical for the Employer to
conduct or continue its business, the loss by the Employer of its legal
capacity to contract or the Employer's breach of the terms of the agreement,
the employee is entitled to receive severance compensation equal to six
months of the existing base salary (twelve months in the case of Mr.
Ventimiglia). The agreements further provide that in the event of a "change
in control" as defined therein and within a period of one and a half years
(two years in the case of Mr. Ventimiglia) following consummation of such
change in control: (a) the employee's employment is terminated; or (b) any
adverse change occurs in the nature and scope of the employee'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 employment, then the employee will
be entitled to receive severance compensation in an amount equal to a
multiple of the employee's average annual compensation for the five years
immediately preceding the change in control as follows: (a) two times for Mr.
Ventimiglia; (b) one and one-half times for Messrs. McCarthy and Stanberry;
and (c) one times for Mr. Blatter.
Recognizing the importance of building and retaining a competent
management team, additional agreements were entered into to provide post-
retirement benefits to Messers Ventimiglia, McCarthy and Blatter. The terms of
the agreements include the amounts each employee will receive upon the
occurrence of certain specified events, including formal retirement on or after
a specified age. The agreements generally provide for annual retirement
benefit payments of Ninety Thousand Dollars ($90,000) to Mr. Ventimiglia,
Seventy Thousand Dollars ($70,000) to Mr. McCarthy and Forty-five Thousand
Dollars ($45,000) to Mr. Blatter. The annual retirement benefit amount is
payable in equal monthly installments over a fifteen (15) year period. In
the event of an employee's death, all remaining amounts due are anticipated
to be paid to the employee's designated beneficiary over the remaining payout
period. Other events which may alter when payment of the annual retirement
benefit is to begin, or the amount which is to be paid, include: (a)
disability prior to retirement in which case the employee shall be entitled
to a lesser benefit payment amount based upon the length of employment; and
(b) either termination of employment without cause or constructive
termination following a "change of control," in which case the employee is
entitled to receive the full annual benefit payment in equal monthly
installments for fifteen (15) years beginning in the month following the
termination or "change of control." Generally, in those situations where the
employee is terminated for cause, or where the employee voluntarily
terminates his employment prior to retirement or other event triggering a
right to payments under the agreement, the employee is not entitled to the
payment of any benefits.
14
PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The compensation of the executive officers of the Corporation and the
Bank is reviewed and approved annually by the Board of Directors on
recommendation by the Premises, Compensation and Performance Committee (the
"Committee"). During 2000, Messrs. Boutonnet, McCarter, Mraule, Souza and
Thomas were members of the Committee. Messrs. Ventimiglia, McCarthy,
Stanberry and Blatter, served as executive officers of the Corporation and/or
the Bank during 2000.
The Committee's philosophy is that compensation should be designed to
reflect the value created for shareholders while supporting the Corporation's
strategic goals. The Committee reviews annually the compensation of the
executive officers to insure that the Corporation's compensation programs are
related to financial performance and consistent generally with employers of
comparable size in the industry. Annual compensation for the Corporation's
executive officers includes the following components:
1) Base salary is related to the individual officer's level of
responsibility and comparison with comparable employers in the industry.
2) Annual cash bonuses are based on individual and Corporation
performance. Factors evaluated include the achievement of certain
profitability, growth and asset quality standards as established by the Board
of Directors. The bonus compensation is funded from the Corporation's
pre-tax income. While many of the factors considered in determining whether
to award a bonus are objective, the Committee recommendation may also include
certain subjective factors as part of the bonus analysis. During 2000,
bonuses were recommended by the Committee and approved by the Board of
Directors for the named executive officers as reflected in the Summary
Compensation Table.
3) Stock option grants are intended to increase the executive
officers' interest in the Corporation's long-term success and to link the
interests of the executive officers with those of the shareholders as
measured by the Corporation's share price. Stock options are granted at the
prevailing market value of the Corporation's Common Stock and will only have
value if the Corporation's stock price increases. See the Summary Compensation
Table, Option Grant Table and Option/SAR Exercise Table, and notes thereto
for further description of stock options.
4) The Corporation matches salary deferred by employees participating
in its 401(k) Plan at a rate determined annually by the Board of Directors
(25% of salary deferred for 2000). Executive officers are eligible to
participate in the 401(k) plan. See the Summary Compensation Table for further
401(k) plan information.
Submitted by:
/s/ ROBERT M. MRAULE /s/ C. EDWARD BOUTONNET /s/ DUNCAN L. MCCARTER
- ------------------------- ----------------------- ----------------------
Robert M. Mraule, DDS, MD C. Edward Boutonnet Duncan L. McCarter, R.Ph.
/s/ LOUIS A. SOUZA /s/ MOSE E. THOMAS
- ------------------------- -----------------------
Louis A. Souza Mose E. Thomas, Jr.
15
PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
AUDIT COMMITTEE REPORT
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
CORPORATION'S PREVIOUS OR FUTURE FILINGS UNDER THE SECURITIES ACT OF 1933 OR
THE SECURITIES EXCHANGE ACT OF 1934 THAT MIGHT INCORPORATE THIS PROXY STATEMENT
OR FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, IN WHOLE OR IN
PART, THE FOLLOWING REPORT SHALL NOT BE DEEMED TO BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILING.
The Audit Committee consists of the following members of the Corporation's
Board of Directors: Alfred P. Glover, Michael T. Lapsys, Duncan L. McCarter,
Robert M. Mraule, and Mose E. Thomas, Jr. . Each of the members of the
Committee is independent as defined under the National Association of
Securities Dealers' listing standards. The Committee operates under a
written charter adopted by the Board of Directors which is included in this
proxy statement as Appendix A.
The Committee's responsibilities include providing advice with respect
to the Corporation's financial matters and assisting the Board of Directors in
discharging its responsibilities regarding accounting, tax and legal
compliance. The Committee's primary responsibilities are to: (1) serve as
an independent and objective party to monitor the Corporation's financial
reporting process and internal control system; (2) review and evaluate the
audit efforts of the Corporation's independent accountants and internal
auditors (BancAudit Associates LLC); (3) evaluate the Corporation's quarterly
financial performance as well as its compliance with laws and regulations; (4)
oversee management's establishment and enforcement of financial policies and
business practices; and (5) facilitate communication among the independent
accountants, financial and senior management, the internal auditors and the
Board of Directors.
The Committee has reviewed and discussed the audited financial
statements of the Corporation for the fiscal year ended December 31, 2000 with
the Corporation's management. The Committee has discussed with Deloitte &
Touche LLP, the Corporation's independent public accountants, the matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees). The Committee has also received the
written disclosures and the letter from Deloitte & Touche LLP required by
Independence Standards Board Standard No. 1 (Independence Discussion with
Audit Committees) and the Committee has discussed the independence of
Deloitte & Touche LLP with that firm.
Based on the Committee's review and discussions noted above, the
Committee recommended to the Board of Directors that the Corporation's audited
financial statements be included in the Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 2000 for filing with the Securities
and Exchange Commission.
Submitted by:
/s/ ALFRED P. GLOVER /s/ ROBERT M. MRAULE /s/ MICHAEL T. LAPSYS
- ---------------------- ------------------------ ---------------------
Alfred P. Glover Robert M.Mraule, DDS, MD Michael T. Lapsys
/s/ DUNCAN L. MCCARTER /s/ MOSE E. THOMAS
- ---------------------- -----------------------
Duncan L. McCarter, R.Ph Mose E. Thomas, Jr.
16
PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
COMPARISON OF CENTRAL COAST BANCORP SHAREHOLDER RETURN
Set forth below is a line graph comparing the annual percentage change in
the cumulative total return on the Corporation's Common Stock with the
cumulative total return of the S&P 500 and the Nasdaq Bank Index as of the
end of each of the Corporation's last five fiscal years.
The following table assumes that $100.00 was invested on December 31, 1995 in
Central Coast Bancorp Common Stock and each index, and that all dividends
were reinvested. Returns have been adjusted for stock dividends and stock
splits declared by Central Coast Bancorp. Shareholder returns over the
indicated period should not be considered indicative of future shareholder
returns.
[GRAPHIC OMITTED]
Index 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
- ----- -------- -------- -------- -------- -------- --------
Central Coast Bancorp 100.00 138.96 210.97 226.44 232.07 276.55
S&P 500 100.00 123.18 164.36 212.07 256.84 233.95
Nasdaq Bank Stocks 100.00 132.04 221.06 219.64 211.14 241.08
Changes in Control
The Corporation knows of no arrangements, including any pledge by any
person of securities of the Corporation, the operation of which may, at a
subsequent date, result in a change of control of the Corporation.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, executive officers and ten percent or more
shareholders of the Corporation's equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports
of changes of ownership of the Corporation's equity securities. Officers,
directors and ten percent or more shareholders are required by SEC regulation
to furnish the Corporation with copies of all Section 16(a) forms they file.
To the Corporation's knowledge, based solely on review of the copies of such
reports furnished to the Corporation and written representations that no
other reports were required, during the fiscal year ended December 31, 2000,
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PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
except for Messrs. Blatter, Crandall and Mraule, who filed one late report on
a Form 4, all Section 16(a) filing requirements applicable to its executive
officers, directors and beneficial owners of ten percent or more of the
Corporation's equity securities appear to have been met.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
There have been no transactions, or series of similar transactions,
during 2000, or any currently proposed transaction, or series of similar
transactions, to which the Corporation or the Bank was or is to be a party,
in which the amount involved exceeded or will exceed $60,000 and in which
any director of the Corporation or the Bank, executive officer of the
Corporation or the Bank, any shareholder owning of record or beneficially
5% or more of the Corporation's Common Stock, or any member of the immediate
family of any of the foregoing persons, had, or will have, a direct or indirect
material interest.
Certain Business Relationships
There were no business relationships during 2000 of the type requiring
disclosure under Item 404(b) of Regulation S-K.
Indebtedness of Management
The Corporation, through the Bank, has had, and expects in the future
to have banking transactions in the ordinary course of its business with
many of the Corporation's directors and officers and their associates,
including transactions with corporations of which such persons are directors,
officers or controlling shareholders, on substantially the same terms
(including interest rates and collateral) as those prevailing for comparable
transactions with others. Management believes that in 2000 such transactions
comprising loans did not involve more than the normal risk of collectibility
or present other unfavorable features. Loans to executive officers of the
Corporation and the Bank are subject to limitations as to amount and purposes
prescribed in part by the Federal Reserve Act, as amended, and the regulations
of the Federal Deposit Insurance Corporation.
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PROPOSAL NO. 4
RATIFICATION AND APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Deloitte & Touche LLP, certified public
accountants, served the Corporation as its independent public accountants and
auditors for the 2000 fiscal year at the direction of the Board of Directors
of the Corporation. Deloitte & Touche LLP has no interests, financial or
otherwise, in the Corporation. The services rendered by Deloitte & Touche LLP
during the 2000 fiscal year were audit services, consultation in connection
with various accounting matters, and preparation of the Corporation's income
tax returns. The fees paid to Deloitte & Touche LLP for professional services
during the 2000 fiscal year were as follows:
Audit Fees
The Corporation paid Deloitte & Touche LLP $200,000 during the 2000
fiscal year for the audit of the Corporation's annual financial statements for
the most recent fiscal year and for reviews of the Corporation's financial
statements included in the Corporation's Form 10-Q filings for the 2000 fiscal
year.
Financial Information Systems Design and Implementation Fees
No services were provided and no payments made for financial information
systems design and implementation.
All Other Fees
The Corporation paid Deloitte & Touche LLP $27,000 during the 2000 fiscal
year for all other services rendered by Deloitte & Touche LLP to the
Corporation.
The Board of Directors of the Corporation approved each professional
service rendered by Deloitte & Touche LLP during the 2000 fiscal year and
considered whether the provision of such services is compatible with Deloitte
& Touche LLP maintaining its independence. It is anticipated that one of the
representatives of that firm will be present at the Meeting and will be able
to make a statement if they so desire and answer appropriate questions.
The Board of Directors has selected Deloitte & Touche LLP to serve as
the Corporation's independent public accountants for the year 2001 and
recommends that shareholders vote "FOR" the ratification of the appointment of
Deloitte & Touche LLP.
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ANNUAL REPORT
The Annual Report of the Corporation containing audited financial
statements for the fiscal year ended December 31, 2000 is included in this
mailing to shareholders.
FORM 10-K
A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED, IS AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST
TO JOHN F. McCARTHY, SECRETARY, CENTRAL COAST BANCORP, 301 MAIN STREET,
SALINAS, CALIFORNIA, 93901.
SHAREHOLDERS' PROPOSALS
Next year's Annual Meeting of Shareholders will be held on May 16,
2002. The deadline for shareholders to submit proposals for inclusion in the
Proxy Statement and form of Proxy for the 2001 Annual Meeting of Shareholders
is December 21, 2001. Management of the Corporation will have discretionary
authority to vote proxies obtained by it in connection with any shareholder
proposal not submitted on or before the December 21, 2001 deadline. All
proposals should be submitted by Certified Mail - Return Receipt Requested,
to John F. McCarthy, Secretary, Central Coast Bancorp, 301 Main Street,
Salinas, California, 93901.
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the Meeting, but if such matters are properly presented to the
Meeting, proxies solicited hereby will be voted in accordance with the
judgment of the persons holding such proxies. All shares represented by duly
executed proxies will be voted at the Meeting in accordance with the terms of
such proxies.
CENTRAL COAST BANCORP
Salinas, California
April 26, 2001 By: /s/ JOHN F. MCCARTHY
---------------------
John F. McCarthy
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APPENDIX A
Audit Charter
ARTICLE 1
PURPOSE
- -------
The Audit Committee shall oversee the integrity of the financial
reporting process and internal controls of the Company/Bank (the Terms
Company and Bank refer to each entity jointly). The Audit Committee is
responsible for the selection, evaluation and replacement of independent and
internal auditors. The Committee shall confirm and assure the independence
of the independent auditor and the objectivity of the internal auditor. The
Audit Committee shall monitor the control environment of the Company/Bank and
shall review the adequacy of internal control systems, including internal
audit activities, to ensure the accuracy of financial reporting. The Audit
Committee, working with management, shall help ensure that the involvement of
the Company's/Bank's internal auditor in the audit of the Company's/Bank's
entire financial reporting process is appropriate and properly coordinated
with the independent Auditor. Finally, the Audit Committee shall foster a
strong ethical climate within the Company/Bank and maintain open channels of
communication.
The Audit Committee shall report regularly to the Board of Directors of
the Company/Bank ("Board"). The Board and management shall ensure that the
Audit Committee has adequate resources and authority to discharge its
responsibilities and to act as informed, vigilant and effective overseers of
the Company's/Bank's financial reporting process and internal controls.
ARTICLE 2
DEFINITIONS
- -----------
2.1 Affiliate: An "Affiliate" of the Company/Bank or of any other entity,
herein after acquired, shall mean entity that directly or indirectly
controls, or is controlled by, or is under common control with, the
Company/Bank or the other entity, as the case maybe.
2.2 Audit Services: "Audit Services" is any work required to be performed
by an Independent Auditor or Internal Auditor.
2.3 Call Report: A "Call Report" for any period is the consolidated Report
of Condition and Income for the Company/Bank.
2.4 Financial Reporting: The "Financial Reporting" of the Company/Bank is
the recording, processing, summarizing and presenting of financial data
in annual Financial Statements, interim Financial Statements and
regulatory reports.
2.5 Financial Statements: The "Financial Statements" of the Company/Bank
are the statements and accompanying footnotes that are intended to show
the financial position of the Company/Bank at a point in time, the
results of operation and the cash flows of the Company/Bank, over a
period of time.
2.6 Governmental Entity: A "Governmental Entity" shall mean (1) any
national government, or political subdivision thereof or local
jurisdiction therein; or (2) any board, commission, department,
division, organ, instrumentality, court or agency of any entity
described in (1) above, however constituted.
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2.7 Independent Auditor: An "Independent Auditor" is any individual,
including an auditor, who performs or participates in providing Audit
Services and any accounting firm, including a corporation,
proprietorship, partnership or other business comprised of Independent
Auditors providing Audit Services.
2.8 Independent Director: An " Independent Director" of the Company/Bank is
a director of the Company/Bank who (1) is not and has not been an
officer or employee of the Company/Bank or any of its Affiliates within
the preceding 3 years, (2) the Board has determined is independent of
management of the Company/Bank after considering whether (a) the
director serves or has served as a consultant, advisor, promoter,
underwriter, legal counsel, or trustee to the Company/Bank or any of its
Affiliates; (b) the director is a relative of an officer or other
employee of the Company/Bank or any of its Affiliates currently or in
the past three years; (c) the director has received compensation in
excess of $60,000, except for board services, retirement benefits or
non-discretionary compensation; (d) a company affiliated with the
director has received or has made payments to / from the Company/Bank in
excess of 5% of gross revenues or $200k, whichever is more in the past 3
years, and (e) the director is employed as executive of another entity
where any executive of the Company / Bank serves on that entity's
compensation committee.
ARTICLE 3
ORGANIZATION
- ------------
3.1 Membership: The Audit Committee shall consist of not less than three (3)
independent directors who must be able to read and understand financial
statements. In addition, at least one member must have financial
sophistication. The Audit Committee may have one non independent
director on the committee with Board approval and proxy disclosure if
the board, under exceptional and limited circumstances, determines that
membership on the committee by the individual is required by the best
interests of the corporation and its shareholders; however, current
employee, officer or immediate family is not permitted for any reason.
3.2 Appointment and Term: The Board of Directors shall appoint the members
of the Audit Committee at its annual meeting for a term of one year.
3.3 Chairperson: The Chairperson of the Audit Committee shall be appointed
by the Board of Directors of the Company/Bank from among the members of
the Audit Committee. The Chairperson of the Audit Committee shall
preside at all meetings of the Audit Committee and shall perform such
other duties as may be assigned by the Board of Directors from time to
time.
3.4 Removal: Except as provided in this paragraph, a member of the Audit
Committee may be removed from the Audit Committee upon the vote of a
majority of the Board. Any member of the Audit Committee, effective as
of the date such member ceases to be a member of the Board, shall also
cease to be a member of the Audit Committee. The Board shall remove
from the Audit Committee:
(a) Any member who the Board determines has breached such member's
obligations under the Company's/Bank's Code of Ethics and
Statement of Responsibilities;
(b) Any member who fails to attend a minimum of seventy-five percent
(75%) of all general and pecial meetings of the Audit Committee,
such determination to be made on an annual basis at the
Organizational meetings of the Company/Bank;
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(c) Any member who has been convicted of a felony or who has engaged
in any dishonest or fraudulent activity, as determined by a Court
of competent jurisdiction;
(d) Any member who has grossly abused such member's authority as an
Audit Committee member and/or Board member of the Company/Bank,
as determined by the Board; or
(e) Any member who has been declared of unsound mind.
3.5 Resignation: Any member of the Audit Committee may resign effective
upon giving written notice to the Chairperson of the Board of Directors
unless the notice specifies a later time for the effectiveness of such
resignation. If the resignation is effective at a later time, a
successor may be appointed to fill the vacancy on the Audit Committee
when the resignation becomes effective.
3.6 Vacancies: All vacancies on the Audit Committee, however created, may
be filled by a majority vote of the Board of Directors, and each member
of the Audit Committee so appointed shall hold office until the
expiration of the term for which appointed and until a successor is
appointed and qualified.
3.7 Regular Meetings: Regular meetings of the Audit Committee shall be held
at least quarterly during each fiscal year of the Company/Bank at such
time and place as the Audit Committee by resolution shall determine.
The Audit Committee shall meet prior to the commencement of the annual
audit by the Company's/Bank's Independent Auditor to review the scope
and approach of the annual audit and at the conclusion thereof review
such audit, including any comments or recommendations of the independent
auditors. The Audit Committee may provide for other regular meetings
of the Audit Committee by resolution. Regular meetings of the Audit
Committee may be held without notice.
3.8 Special Meetings: Special meetings of the Audit Committee may be
called at any time by the Chairperson of the Audit Committee, any two
members thereof, the Chairperson of the Board of Directors or a majority
of the Board of Directors. Special meetings may be held upon four (4)
days' notice by mail or twenty-four (24) hours' notice delivered
personally or by telephone, facsimile or telegraph.
3.9 Voting: A majority of the Audit Committee members shall constitute a
quorum for the transaction of business. Every action consented by a
majority of the Audit Committee members present at a meeting (at which a
quorum is present) shall be regarded as an act of the Audit Committee.
3.10 Minutes: The Audit Committee shall maintain minutes and other relevant
records of its meetings and activities. Such minutes shall be made
available for review by the Board of Directors, and by bank regulatory
agencies.
3.11 Telephone Conference Meetings: Members of the Audit Committee may
participate in a meeting through the use of conference telephone or
similar communication equipment, so long as all members participating in
such meetings can hear one another. Participation in a meeting pursuant
to this Section will be recorded in the minutes and will constitute
present in person at such meeting.
3.12 Access to Counsel: The Audit Committee may retain its own outside
counsel, to be paid at the expense of the Company/Bank, at its
discretion and without the prior permission or approval of the Board of
Directors or the management of the Company/Bank.
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3.13 Authority to meet with Auditors: The Audit Committee shall have the
authority without obtaining the permission of the Board of Directors of
the Company/Bank to meet at any time with the Company's/Bank's
Independent Auditor or any of the Company's/Bank's internal audit
personnel without including any of the other members or representatives
of the management of the Company/Bank in such meeting.
3.14 Internal Auditor:
(a) Audit Committee Appointment of an Internal Auditor. The Audit
Committee shall appoint the Company's/Bank's Internal Auditor,
who shall serve at the pleasure of the Audit Committee, and who
shall report on all matters directly to the Chairperson of the Audit
Committee. The Audit Committee shall be responsible for overseeing
and maintaining the independence of the Internal Auditor. The
Company's/Bank's Internal Auditor shall meet with the Audit
Committee on a regular basis, attend meetings of the Audit
Committee and report regularly on the activities of the
Company's/Bank's internal auditing personnel. The internal auditor
shall be accountable to the Audit Committee and the Board of
Directors.
(b) Internal Auditor Relationship with Company/Bank Management. The
Internal Auditor shall be available to the Chief Executive Officer
and other officers of the Company/Bank for opinions and advice
concerning the Company's/Bank's internal controls. In particular,
the Internal Auditor shall advise the Chief Executive Officer and
other officers of the Company/Bank as to whether the
Company's/Bank's accounting systems, internal controls, and
policies and procedures are adequate, efficient, effective, and
followed by Company/Bank personnel. The Internal Auditor's
performance under this paragraph with respect to the
Company's/Bank's management periodically shall be reviewed by the
Chief Executive Officer and shall be part of the Internal Auditor's
annual performance review.
3.15 Amendments:
(a) General. This charter of the Audit Committee may be amended only by
a resolution adopted by a majority of the Outside Directors (whether
or not constituting a quorum of the entire Board of Directors).
(b) Compliance with Rules issued by Regulatory Agencies. It is the
intent of the Board of Directors that this Audit Committee Charter
complies with applicable legal rules, including rules and
guidelines of the Federal Deposit Insurance Corporation, The
Federal Reserve Bank, The Securities & Exchange Commission and the
NASDAQ Stock Exchange. It is also the intent of the Board of
Directors to amend this Charter, from time to time, to comply with
changes in applicable law including changes in the final rules
and guidelines of the organizations listed above.
ARTICLE 4
DUTIES AND RESPONSIBILITIES
4.1 Duties and Responsibilities: The duties and responsibilities of the
Audit Committee shall include the following:
a) Review of Reports. The Audit Committee shall review with management
and the Independent Auditor, quarterly interim financial
information. The Committee shall review and discuss the audited
annual financial statements with management and the independent
auditors and recommend to the board of directors inclusion of such
statements in the annual report on Form10-K. The Audit Committee
shall inquire as to the independent auditors qualitative judgments
about the appropriateness, not just the acceptability of the
accounting principles and the clarity of the financial disclosure
practices used or proposed to be adopted by the Company / Bank.
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PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
b) Approval Selection and Termination of Independent Auditor. The Audit
Committee shall approve the selection and termination of the
Company's/Bank's Independent Auditor. The Audit Committee shall
arrange for pre-filing independent accountant's review of quarterly
interim financial statements and for an audit of the annual
financial statements. Prior to the commencement of any proposed
audit of the Company's/Bank's financial records or Financial
Reporting by the Independent Auditor, the Audit Committee shall
review and approve the scope and approach of the proposed audit.
The Audit Committee shall confirm and assure the independence of
the independent auditor.
c) Review of Adjustments, Suggestions, and Disagreements. The Audit
Committee shall review all significant adjustments to the
Company's/Bank's Financial Statements suggested by the
Company's/Bank's Independent Auditor and address all significant
disagreements between the Independent Auditor and the management of
the Company/Bank. The management of the Company/Bank shall advise
the Audit Committee of any significant accounting issue on which it
seeks to obtain an opinion from any auditor other than the
Company's/Bank's Independent Auditor or by any Governmental Entity
for improvements to the Company's/Bank's internal financial
controls or Financial Reporting practices and procedures.
d) Oversight of Internal Accounting Controls. The Audit Committee shall
review the adequacy of the Company's/Bank's systems and procedures
of internal accounting controls over Financial Reporting. The
Audit Committee shall review the handling by the Company's/Bank's
management of any material inadequacies or reportable conditions
identified by the Company's/Bank's internal auditing personnel or
Independent Auditor in the systems and procedures of internal
accounting records.
e) Evaluation of Internal Audit Function. The Audit Committee shall
from time to time, and at least quarterly, evaluat the activities,
organizational structure, qualifications, utilization and
effectiveness of the Company's/Bank's internal auditing personnel.
The Audit Committee shall review with management and the Internal
Auditor their assessments of the adequacy of internal controls,
including identified material weakness in internal controls. The
Audit Committee shall review with management and with the Internal
Auditor measures for detection and prevention of management
override or compromise of the internal control system. Finally,
the Audit Committee shall work with management and the Internal
Auditor to assure comprehensive coverage of the Company's/Bank's
operations by audits.
f) Oversight of Internal Credit Review Process. The Audit Committee
shall review the adequacy of the Company's/Bank's internal credit
review process. The Audit Committee may at it discretion obtain
assistance in conducting such review from one or more outside
consultants selected by the Audit Committee whose fees, if any,
shall be paid by the Company/Bank with, however, the prior
permission of the Board.
g) Duties Provided for Under Applicable Law. The Audit Committee shall
have all such other duties and responsibilities specifically
provided for as audit committee responsibilities under applicable
law.
h) Compliance with Banking Regulations and Accounting Standards. The
Audit Committee shall nsure the Company's/Bank's compliance with
all applicable banking regulations nd accounting rules, as such
regulations and rules relate to any of the duties and
responsibilities.
i) Annual Reporting to Shareholders. The Audit committee shall report
annually in the proxy statement the following:
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PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
- the Audit committee's review and discussion of the financial
statements with management
- the Audit committee's discussion with the independent
auditors of the written independence disclosures required
by Independence Standards Board Statement No. 1
- the audit Committee's recommendation to the Board of
Directors that the audited financial statements be included
in the Company's annual report on Form 10K
4.2 Access to Corporate Resources: The Audit Committee shall at all times
have access to resources of the Company/Bank, including personnel and
electronic computing or data processing support (subject to the
constraints of the annual operating budget approved by the Board), which
the Audit Committee may deem necessary to enable the Audit Committee to
perform its duties and responsibilities as set forth in this Article 4.
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PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
APPENDIX B
Text of Proposed Amendments to the Central Coast Bancorp Articles of
Incorporation and Bylaws to Provide for the Classification of the Board of
Directors
The articles of incorporation of Central Coast Bancorp shall be amended by
adding thereto a new Article VII which shall read as set forth below:
VII
(a) The number of directors which shall constitute the whole board
of directors of this corporation shall be specified in the
bylaws of the corporation.
(b) In the event that the authorized number of directors shall be
fixed at nine (9) or more, the board of directors shall be
divided into three classes: Class I, Class II and Class III,
each consisting of a number of directors equal as nearly as
practicable to one-third the total number of directors.
Directors in Class I shall initially serve for a term expiring
at the 2002 annual meeting of shareholders, directors in Class
II shall initially serve for a term expiring at the 2003
annual meeting of shareholders, and directors in Class III
shall initially serve for a term expiring at the 2004 annual
meeting of shareholders. Thereafter, each director shall
serve for a term ending at the third annual shareholders
meeting following the annual meeting at which such director
was elected. In the event that the authorized number of
directors shall be fixed with at least six (6) but less than
nine (9), the board of directors shall be divided into two
classes, designated Class I and Class II, each consisting of
one-half of the directors or as close an approximation as
possible. At each annual meeting, each of the successors to
the directors of the class whose term shall have expired at
such annual meeting shall be elected for a term running until
the second annual meeting next succeeding his or her election
and until his or her successor shall have been duly elected
and qualified. The foregoing notwithstanding, each director
shall serve until his or her successor shall have been duly
elected and qualified, unless he or she shall resign, die,
become disqualified or disabled, or shall otherwise be removed.
(c) At each annual election, the directors chosen to succeed
those whose terms then expire shall be identified as being
of the same class as the directors they succeed, unless, by
reason of any intervening changes in the authorized number of
directors, the board of directors shall designate one or more
directorships whose term then expires as directorships of
another class in order more nearly to achieve equality in
the number of directors among the classes. When the board of
directors fills a vacancy resulting from the resignation,
death, disqualification or removal of a director, the director
chosen to fill that vacancy shall be of the same class as the
director he or she succeeds, unless, by reason of any previous
changes in the authorized number of directors, the board of
directors shall designate the vacant directorship as a
directorship of another class in order more nearly to achieve
equality in the number of directors among the classes.
(d) Notwithstanding the rule that the classes shall be as nearly
equal in number of directors as possible, in the event of any
change in the authorized number of directors, each director
then continuing to serve as such will nevertheless continue as
a director of the class of which he or she is a member, until
the expiration of his current term or his or her earlier
resignation, death, disqualification or removal. If any newly
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PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
created directorship or vacancy on the board of directors,
consistent with the rule that the three classes shall be as
nearly equal in number of directors as possible, may be
allocated to one or two or more classes, the board of
directors shall allocate it to that of the available class
whose term of office is due to expire at the earliest date
following such allocation.
Section 17 of Article III of the Central Coast Bancorp bylaws
shall be amended in its entirety to read as follows:
Section 17. Election and Term of Office. The directors shall
be elected annually by the shareholders at the annual meeting of
the shareholders; provided, that if for any reason, the annual
meeting or an adjournment thereof is not held or the directors are
not elected thereat, then the directors may be elected at any
special meeting of the shareholders called and held for that
purpose. The term of office of the directors shall, except as
provided in Section 18, begin immediately after their election and
shall continue until their respective successors are elected and
qualified. In the event that the authorized number of directors
shall be fixed at nine (9) or more, the board of directors shall be
divided into three classes, designated Class I, Class II and Class
III. Each class shall consist of one-third of the directors or as
close an approximation as possible. The initial term of office of
the directors of Class I shall expire at the annual meeting to be
held during fiscal year 2002, the initial term of office of the
directors of Class II shall expire at the annual meeting to be held
during fiscal year 2003 and the initial term of office of the
directors of Class III shall expire at the annual meeting to be
held during fiscal year 2004. At each annual meeting, commencing
with the annual meeting to be held during fiscal year 2002, each of
the successors to the directors of the class whose term shall have
expired at such annual meeting shall be elected for a term running
until the third annual meeting next succeeding his or her election
and until his or her successor shall have been duly elected and
qualified. In the event that the authorized number of directors
shall be fixed with at least six (6) but less than nine (9), the
board of directors shall be divided into two classes, designated
Class I and Class II. Each class shall consist of one-half of the
directors or as close an approximation as possible. At each annual
meeting, each of the successors to the directors of the class whose
term shall have expired at such annual meeting shall be elected for
a term running until the second annual meeting next succeeding his
or her election and until his or her successor shall have been duly
elected and qualified. Notwithstanding the rule that the classes
shall be as nearly equal in number of directors as possible, in the
event of any change in the authorized number of directors, each
director then continuing to serve as such shall nevertheless
continue as a director of the class of which he or she is a member
until the expiration of his or her current term, or his or her
prior death, resignation or removal. At such annual election, the
directors chosen to succeed those whose terms then expire shall be
of the same class as the directors they succeed, unless, by reason
of any intervening changes in the authorized number of directors,
the board of directors shall designate one or more directorships
whose term then expires as directorships of another class in order
more nearly to achieve equality of number of directors among the
classes.
This Section 17 may be amended or repealed only by approval of
the board of directors and the outstanding shares (as defined in
Section 152 of the California General Corporation Law) voting as a
single class, notwithstanding Section 903 of the California General
Corporation Law.
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APPENDIX C
Text of Proposed Amendments to Central Coast Bancorp Articles of
Incorporation and Bylaws to Eliminate Cumulative Voting in the Election of
Directors
The articles of incorporation of Central Coast Bancorp shall be amended
by adding thereto a new Article VIII which shall read as set forth below:
VIII
No holder of any class of stock of the corporation shall be
entitled to cumulative voting in connection with any election of
directors of the corporation.
Section 11 of Article II of the Central Coast Bancorp bylaws shall be
amended in its entirety to read as follows:
Section 11. Voting Rights; No Cumulative Voting. Only
persons in whose names shares entitled to vote stand on the stock
records of the corporation at the close of business on the record
date fixed by the Board of Directors as provided in Section 41 of
these Bylaws for the determination of shareholders of record shall
be entitled to notice of and to vote at a meeting of shareholders.
If no record date is fixed, the record date for determining
shareholders entitled to notice of or to vote at a meeting of
shareholders shall be at the close of business or the business day
next preceding the day on which notice is given or, if notice is
waived, at the close of business on the business day next preceding
the day on which the meeting is held; the record date for
determining corporate action in writing without a meeting, when no
prior action by the Board of Directors has been taken, shall be the
day on which the first written consent is given; and the record
date for determining shareholders for any other purpose shall be at
the close of business on the day on which the Board of Directors
adopts the resolution relating thereto, or the 60th day prior to
the date of such other action, whichever is later.
No holder of any class of stock of the corporation shall be
entitled to cumulate votes in connection with any election of
directors of the corporation.
In any election of directors, the candidates receiving the
highest number of votes of the shares entitled to be voted for them
are elected.
Voting may be by voice or ballot, provided that any election
of directors must be by ballot upon the demand of any shareholder
made at the meeting and before the voting begins.
29
PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
CENTRAL COAST BANCORP
Solicited by the Board of Directors
for the Annual Meeting of Shareholders
on June 11, 2001
The undersigned holder of common stock acknowledges receipt of a copy of the
notice of annual meeting of shareholders of Central Coast Bancorp and the
accompanying proxy statement dated April 26, 2001, and revoking any proxy
heretofore given, hereby constitutes and appoints C. Edward Boutonnet, and
Nick Ventimiglia and each of them, with full power of substitution, as
attorneys and proxies to appear and vote all of the shares of common stock of
Central Coast Bancorp, a California corporation, outstanding in the name of
the undersigned which the undersigned could vote if personally present and
acting at the Annual Meeting of Shareholders of Central Coast Bancorp, to be
held at 301 Main Street, Salinas, California, on Monday, June 11, 2001, at
5:30 p.m. or at any postponements or adjournments thereof, upon the following
items as set forth in the notice of meeting and proxy statement and to vote
according to their discretion on all matters which may be properly presented
for action at the meeting or any postponements or adjournments thereof.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE FOLLOWING
ITEMS:
1. To approve amendments to the Central Coast Bancorp articles of
incorporation and bylaws to provide for the classification of the board
of directors.
|_| FOR |_| AGAINST |_| ABSTAIN
2. To approve amendments to the Central Coast Bancorp articles of
incorporation and bylaws to eliminate cumulative voting in the election
of directors.
|_| FOR |_| AGAINST |_| ABSTAIN
3. To elect as directors of Central Coast Bancorp management's nominees set
forth below who will be elected (a) to the class designated in the
accompanying proxy statement dated April 26, 2001 provided that Proposal
No. 1 above is approved and (b) in the event Proposal No. 1 is not
approved, as directors without classification:
|_| FOR all nominees listed |_| WITHHOLD AUTHORITY to
below (except as marked vote for all nominees
to the contrary below): listed below
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below:
- ---------------------------------------------------------------------------
C. Edward Boutonnet Michael T. Lapsys Louis A. Souza
- ---------------------------------------------------------------------------
Bradford G. Crandall Duncan L.McCarter, R.Ph. Mose E. Thomas
- ---------------------------------------------------------------------------
Alfred P. Glover Robert M. Mraule, D.D.S.,M.D. Nick Ventimiglia
- ---------------------------------------------------------------------------
4. To ratify the appointment of Deloitte & Touche, LLP as independent
accountants for the year 2001.
|_| FOR |_|AGAINST |_|ABSTAIN
5. In their discretion, to transact such other business as may properly
come before the annual meeting or any postponements or adjournments of
the annual meeting.
30
PRELIMINARY PROXY MATERIALS - SUBJECT TO CHANGE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, 3, AND 4 SET
FORTH ABOVE. THE PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED.
IF NO DIRECTION IS MADE, IT WILL BE VOTED "FOR" PROPOSALS 1, 2, 3, AND 4 SET
FORTH ABOVE.
SHAREHOLDER(S) No. of Common Shares
----------------
- ----------------------------
- ----------------------------
Date: , 2001 Please date and sign exactly as your
------------- name(s) appears. When signing as
attorney, executor, administrator,
trustee, or guardian, please give
full title. If more than one
trustee, all should sign. All joint
owners should sign. WHETHER OR NOT
YOU PLAN TO ATTEND THIS MEETING,
PLEASE DATE, SIGN AND RETURN THIS
PROXY AS PROMPTLY AS POSSIBLE IN
THE ENCLOSED POSTAGE-PAID ENVELOPE.
I/we do [ ] or do not [ ]
expect
to attend this meeting.
THIS PROXY IS SOLICITED BY, AND ON BEHALF OF, THE BOARD OF
DIRECTORS AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
31