SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NORTHBAY FINANCIAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
NORTHBAY FINANCIAL CORPORATION
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a- 6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0- 11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
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:
Notes:
September 19, 1995
Dear Stockholder:
We invite you to attend the Annual Meeting of Stockholders of Northbay
Financial Corporation to be held at the Petaluma Plaza North Office of
Northbay Savings Bank, 311 North McDowell Boulevard, Petaluma, California on
Wednesday, October 18, 1995 at 2:00 p.m., local time.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the meeting. During the meeting, we will
also report on the operations of the Corporation. Directors and officers of
the Corporation as well as representatives of KPMG Peat Marwick LLP, the
Corporation's independent auditors, will be present to respond to any
questions the stockholders may have.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE EVEN IF YOU CURRENTLY PLAN
TO ATTEND THE ANNUAL MEETING. Your vote is important, regardless of the
number of shares you own. This will not prevent you from voting in person but
will assure that your vote is counted if you are unable to attend the meeting.
Sincerely,
/s/ Herold Mahoney
Herold Mahoney
Chairman of the Board
and President
NORTHBAY FINANCIAL CORPORATION
1360 Redwood Way
Petaluma, California 94954
(707) 792-7400
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on October 18, 1995
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Meeting")
of Northbay Financial Corporation (the "Corporation"), will be held at the
Petaluma Plaza North Office of Northbay Savings Bank, 311 North McDowell
Boulevard, Petaluma, California at 2:00 p.m. on Wednesday, October 18, 1995.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Corporation;
2. The ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors for the Corporation for the fiscal year
ending June 30, 1996; and
3. The transaction of such other matters as may properly come
before the Meeting or any adjournments thereof.
The Board of Directors is not aware of any other business to come before
the Meeting.
Any action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Stockholders
of record at the close of business on August 23, 1995, are the stockholders
entitled to vote at the Meeting and any adjournments thereof. A complete
list of stockholders entitled to vote at the Meeting will be available for
stockholders at the offices of the Company during the ten days prior to the
Meeting, as well as at the Meeting.
You are requested to fill in and sign the enclosed form of Proxy which is
solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Meeting in
person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Donald P. Ramatici
DONALD P. RAMATICI
SECRETARY
Petaluma, California
September 19, 1995
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE CORPORATION THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
PROXY STATEMENT
OF
NORTHBAY FINANCIAL CORPORATION
1360 REDWOOD WAY
PETALUMA, CALIFORNIA 94954
ANNUAL MEETING OF STOCKHOLDERS
October 18, 1995
General
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Northbay Financial Corporation (the
"Corporation"), the holding company for Northbay Savings Bank, F.S.B. (the
"Bank"), to be used at the Annual Meeting of Stockholders of the Corporation
(the "Meeting") which will be held at the Petaluma Plaza North Office of
Northbay Savings Bank, 311 North McDowell Boulevard, Petaluma, California on
Wednesday, October 18, 1995, at 2:00 p.m., local time. The accompanying
notice of meeting and this Proxy Statement are being first mailed to
stockholders on or about September 19, 1995.
Voting and Revocability of Proxies
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted
at the Meeting and all adjournments thereof. Proxies may be revoked by
written notice to Donald P. Ramatici, Secretary of the Corporation, at the
address shown above, by filing of a later dated proxy prior to a vote being
taken on a particular proposal at the Meeting or by attending the Meeting and
voting in person. Proxies solicited by the Board of Directors of the
Corporation will be voted in accordance with the directions given therein.
Where no instructions are indicated, proxies will be voted for the nominees
for directors set forth below and in favor of each of the other proposals set
forth in this Proxy Statement for consideration at the Meeting. The proxy
confers discretionary authority on the persons named therein to vote with
respect to the election of any person as a director where the nominee is
unable to serve or for good cause will not serve, and matters incident to the
conduct of the Meeting.
Directors shall be elected by a plurality of the votes present in person
or represented by proxy at the Meeting and entitled to vote on the election of
directors. In all matters other than the election of directors, the
affirmative vote of the majority of shares present in person or represented by
proxy at the Meeting and entitled to vote on the matter shall be the act of
the stockholders. Proxies marked to abstain with respect to a proposal have
the same effect as votes against the proposal. Broker non-votes have no
effect on the vote.
Voting Securities and Security Ownership
Stockholders of record as of the close of business on August 23, 1995,
are entitled to one vote for each share then held. As of August 23, 1995, the
Corporation had 2,750,522 shares of Common Stock issued and outstanding. The
presence, in person or by proxy, of at least a majority of the total number of
shares of Common Stock outstanding will be necessary to constitute a quorum at
the Meeting. Abstentions and proxies received as broker non-votes are counted
for purposes of determining a quorum.
Persons and groups owning in excess of 5% of the Corporation's Common
Stock are required to file certain reports regarding such ownership pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Based upon such reports, management knows of no persons who were beneficial
owners of more than 5% of the outstanding shares of Common Stock at August 23,
1995. At that date, a total of 37,911 shares, or 1.37%, of the Common Stock
were beneficially owned by Granville I. Stark, Senior Vice President of the
Corporation, and a total of 655,208 shares, or 22.34%, of the Common Stock
were beneficially owned by all executive officers and directors of the
Corporation as a group (10 persons). The amount owned by Mr. Stark includes
1,999 shares owned directly, 2,878 shares owned through an IRA, 2,752 shares
owned through his wife's IRA, 535 shares owned through the Corporation's
Employee Stock Purchase Plan, 3,575 shares owned by the Bank's Employee Stock
Ownership Plan ("ESOP") which have been allocated to him and 26,171 shares
which he has a right to purchase pursuant to the exercise of stock options
under the Corporation's Stock Option and Incentive Plan (the "Stock Option
Plan"), and the amount owned by all executive officers and directors as a
group includes 182,082 shares which executive officers and directors as a
group have a right to purchase pursuant to the exercise of stock options under
the Corporation's Stock Option Plan and 15,203 shares owned by the Bank's ESOP
which have been allocated to executive officers, but excludes 123,214 shares
owned by the ESOP over which certain directors exercise partial voting and
dispositive power as members of the ESOP Committee and 6,985 shares owned by
the Bank's Profit Sharing Plan over which certain directors exercise shared
voting and dispositive power as trustees of such plan.
PROPOSAL I -- ELECTION OF DIRECTORS
The Corporation's Board of Directors is currently composed of seven
members due to the unfortunate departure of Director Henry E. Tomasini, who
passed away on December 5, 1995. Mr. Tomasini had been a member of the Board
of Directors of the Corporation since its inception and served as Chief
Executive Officer of the Bank from 1965 to 1984. The Boards of Directors of
the Corporation and the Bank mourn the loss of Mr. Tomasini and appreciate his
dedicated service over the years. The Corporation's Certificate of
Incorporation requires that directors be divided into three classes, as nearly
equal in number as possible, each class to serve for a three year period, with
approximately one-third of the directors elected each year. The Board of
Directors has nominated to serve as directors Victor L. DeCarli and Eugene W.
Traverso, each of whom is currently a member of the Board, to serve for a
three-year period.
If any nominee is unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute as the Board of
Directors may recommend or the size of the Board may be reduced to eliminate
the vacancy. At this time, the Board knows of no reason why any nominee might
be unavailable to serve.
Unless otherwise specified on the proxy, it is intended that the persons
named in the proxies solicited by the Board will be voted for the election of
the named nominees. Directors shall be elected by a plurality of the votes
cast at the Meeting, excluding any abstentions or broker non-votes.
The following table sets forth the names of the Board of Directors'
nominees for election as directors and of those directors who will continue to
serve as such after the Meeting. Also set forth is certain other information
with respect to each person's age, the expiration of his term as a director,
and the number and percentage of shares of Common Stock beneficially owned.
All such persons were initially appointed as directors in 1988 in connection
with the incorporation and organization of the Corporation, with the exception
of Eugene W. Traverso, who was appointed by the Board in December, 1991 in
connection with the Board's decision to expand the Board. Each director of
the Corporation is also a member of the Board of Directors of the Bank.
Shares of
Common Stock
Beneficially
Age at Owned at
June 30, Current Term August 23, Percent
Name 1995 to Expire 1995(1)(2) of Class
Board Nominees for Terms
to Expire in 1997:
Victor L. DeCarli 77 1995 90,582 3.28%
Eugene W. Traverso 56 1995 11,483 .42
Directors Continuing
in Office:
Alfred A. Alys 58 1996 115,606(3) 4.10
Raymond Nizibian, D.D.S. 65 1996 88,910 3.22
Donald P. Ramatici 67 1996 91,020 3.30
Herold Mahoney 81 1997 90,582 3.28
Martin A. Stinar 79 1997 57,616 2.09
[FN]
(1) Includes certain shares owned by businesses in which the director is an
officer or major stockholder or by spouses, by immediate family members,
or as a custodian or trustee for minor children, over which shares the
named individual effectively exercises sole or shared voting and
investment power, unless otherwise indicated. Also includes shares
which directors have a right to purchase pursuant to stock options under
the Stock Option Plan. Does not include 123,214 shares owned by the
ESOP, over which shares the ESOP Committee, consisting of certain
directors, exercises partial voting and investment power. In addition,
does not include 6,985 shares owned by the Bank's Profit Sharing Plan,
over which shares certain directors exercise voting and dispositive
powers.
(2) Includes 70,501, 8,494, 8,494, 8,494, 8,494, 8,494 and 8,494 shares
which may be purchased upon the exercise of options by Messrs. Alys,
Nizibian, Ramatici, Mahoney, Stinar, DeCarli and Traverso, respectively.
(3) Includes 6,388 shares held by the Corporation's ESOP which have been
allocated to Mr. Alys.
The principal occupation of each director of the Corporation for the
last five years is set forth below.
Victor L. DeCarli serves as Treasurer of the Corporation. He is the
sole owner of Petaluma Butane Distributors, Inc., Petaluma, California, a
company which distributes, installs, sells and services propane gas and
propane gas appliances.
Eugene W. Traverso is currently president of Traverso Gourmet Food and
Liquors, Inc., a retail food company located in Santa Rosa, California. From
1982 until 1991, Mr. Traverso was President of the Sonoma County Division and
First Vice President and Northern Regional Manager for Savings and Lending of
Great America Bank.
Alfred A. Alys is Executive Vice President and Chief Executive Officer
of the Corporation. Mr. Alys joined the Bank in 1970 and served as Executive
Vice President and Chief Executive Officer from July 1984 to October 1988.
Since October 1988 he has served as President, Chief Executive Officer and
Director of the Bank. Mr. Alys is Vice Chairman and Chairman of the
Investment Committee of the Sonoma County Employee Retirement Association. He
is a Director of the Sonoma County Open Space Authority and is active in
various other charitable and civic organizations.
Raymond Nizibian, D.D.S. is the owner of a general dental practice in
Petaluma.
Donald P. Ramatici serves as Vice President and Secretary of the
Corporation. Mr. Ramatici is Chairman of the Board of Don Ramatici Insurance,
Inc., an insurance brokerage located in Petaluma.
Herold Mahoney is Chairman of the Board and President of the
Corporation. Mr. Mahoney is the President and 50% owner of Royal Petroleum
Co., Petaluma, California, an independent petroleum products company.
Martin A. Stinar was a real estate broker until his retirement in 1981.
Section 16(a) of the Exchange Act requires the Corporation's officers
and directors, and persons owning more than 10% of the Corporation's Common
Stock, to file periodic reports of ownership and changes in ownership with the
Securities and Exchange Commission and to provide the Corporation with copies
of such reports. Based solely on its review of the copies of such reports
received by it, or written representations from certain reporting persons that
no Form 5 is required for those persons, the Corporation believes that all
filing requirements applicable to its officers, directors and 10% beneficial
owners were complied with during fiscal 1995.
Meetings and Committees of the Board of Directors
The Board of Directors of the Corporation conducts its business through
meetings of the Board. During the fiscal year ended June 30, 1995, the Board
of Directors held 52 meetings. No director of the Corporation attended fewer
than 75% of the total meetings of the Board of Directors and committee
meetings on which such Board member served during this period.
The Corporation's full Board of Directors acts as a nominating committee
for the annual selection of its nominees for election as directors. While the
Board of Directors will consider nominees recommended by stockholders, it has
not actively solicited recommendations from the Corporation's stockholders for
nominees nor, subject to the procedural requirements set forth in the Corpora-
tion's Certificate of Incorporation and Bylaws, established any procedures for
this purpose. The Board of Directors held one meeting during fiscal 1995 in
its capacity as the nominating committee.
The Corporation has standing Stock Option and ESOP committees, but has
not established standing audit and compensation committees. Presently the
functions of such audit and compensation committees are carried out by similar
committees of the Bank's Board of Directors.
The Bank's Audit Committee consists of Directors Nizibian (Chairman),
Stinar and Traverso. This committee recommends an audit firm to the Board of
Directors and meets with the outside auditors to discuss the results of the
annual audit and any related matter. The Audit Committee also receives and
reviews all the reports and findings prepared by the Bank's internal auditor
regarding financial reporting policies and practices. The Audit Committee
held five meetings during the fiscal year ended June 30, 1995.
The Bank's Personnel Committee, composed of Directors Mahoney
(Chairman), DeCarli and Stinar, meets periodically to review the performance
of all of the Bank's officers and to determine compensation programs and
adjustments. The Personnel Committee held one meeting during the fiscal year
ended June 30, 1995.
The Bank's Loan Committee, composed of Directors Ramatici (Chairman),
Stinar and Traverso, meets weekly to review loans granted for the previous
week and acts on loans requiring specific committee approval. The Loan
Committee met 52 times during the fiscal year ended June 30, 1995.
Directors' Compensation
Directors of the Corporation receive a monthly fee of $300. Members of
the Board of Directors of the Bank receive a monthly fee of $1,500. Each
director, except for Director Alys,
is also paid a fee of $200 per month for service on committees of the Bank's
Board irrespective of the number of committees on which he serves or the
frequency of attendance at such committee meetings.
Executive Compensation
Report of the Personnel Committee
General. The function of administering the Corporation's executive
compensation policies is performed by the Personnel Committee of the Board of
Directors of the Bank. The Personnel Committee consists of three outside
directors of the Corporation. The Personnel Committee is responsible for
reviewing the performance of the Chief Executive Officer and other officers
and developing and making recommendations to the Board concerning compensation
programs and awards. The Personnel Committee makes its recommendations on the
basis of its annual review and evaluation of the performance of the officers
and the consolidated financial condition and results of operations of the
Corporation, as well as available information regarding the compensation of
officers of comparable companies.
Executive Compensation Program. The overall executive compensation
program was developed with the objective of attracting and retaining qualified
and motivated executives by recognizing and rewarding successful performance.
It is the Personnel Committee's goal to align management compensation with the
goals of the Corporation by implementing direct incentives to manage the
business successfully from both a financial and operating perspective to
enhance stockholder value. The program principally consists of (i) salaries,
(ii) an incentive compensation plan, (iii) a stock option and incentive plan,
(iv) an employee stock ownership plan and (v) a profit sharing plan. Total
executive compensation is determined on the basis of the Personnel Committee's
review and evaluation of the respective executive officers' performance and
the Corporation's consolidated financial condition and results of operations,
as well as available information regarding the compensation of comparable
officers of comparable companies. It has been the Personnel Committee's
policy to set base salaries at levels that are slightly below the average for
the peer group, with incentive compensation designed to serve as a supplement.
Annual awards under the incentive compensation plan are based upon the
attainment of targeted levels of performance by the Bank, and individual
awards are based on a percentage of eligible officers' salaries. While
periodic awards under the stock option and incentive plan may be based on
recognition of officers' past or future performance or other considerations,
options generally are awarded as an incentive to maximize long-term
stockholder value, typically with exercise prices equal to the market price of
the Corporation's stock at the award date, and gains on options therefore
generally dependent upon future appreciation in the stock's price. Under the
profit sharing plan, which holds stock of the Corporation among its assets,
the Bank's contributions are made for each employee participant in an amount
up to $500 according to a percentage of his or her individual contributions.
Compensation of the Chief Executive Officer. The Chief Executive
Officer's base salary is determined on the basis of the Personnel Committee's
review and evaluation of his
performance and the Corporation's consolidated financial condition and results
of operations, as well as available information regarding the compensation of
chief executive officers of comparable companies. It has been the Personnel
Committee's policy to set the base salary at a level that is slightly below
the average for the peer group, with incentive compensation designed to serve
as a supplement. Mr. Alys received non-incentive based stock options in lieu
of a salary increase in fiscal 1993. See "Compensation Summary." In fiscal
1994 and 1995, Mr. Alys received a salary increase in accordance with past
practices and to reflect changes in the peer group salary structure and the
Corporation's performance. The Chief Executive Officer's award under the
incentive compensation plan for fiscal 1994 was in proportion to his salary.
Mr. Alys did not receive an award under the incentive compensation plan for
fiscal 1995 in view of the Corporation's performance for the year.
Personnel Committee
Herold Mahoney, Chairman
Martin A. Stinar
Victor L. DeCarli
Compensation Summary
The following table sets forth the cash and noncash compensation for
each of the last three fiscal years awarded to or earned by the Chief
Executive Officer and the other executive officer of the Corporation whose
salary and bonus for fiscal 1995 exceeded $100,000 for services rendered in
all capacities to the Corporation and its subsidiaries.
Annual Compensation Long Term Compensation
-------------------------------------------------------------
Awards Payouts
----------------- --------
Other
Annual Restricted All
Compen- Stock Options/ LTIP Other
Year Salary Bonus sation(1) Awards($) SARs(#) Payouts Compensation
--------------------------------------------------------------------------------
Alfred A. Alys 1995 $210,000 $ --- $21,600(2) $ --- --- $ --- $48,196(4)
Chief Executive 1994 $200,000 $14,944 $18,600(2) $ --- --- $ --- $43,666(4)
Officer and 1993 $155,000 $27,249 $15,600(2) $ --- 9,138(3) $ --- $39,574(4)
Executive
Vice President
Granville I. Stark 1995 $105,000 $ --- $ --- $ --- --- $ --- $ 500(6)
Senior Vice 1994 $100,000 $ 5,597 $ --- $ --- --- $ --- $ 500(6)
President 1993 $ 93,494 $11,203 $ --- $ --- 2,379(5) $ --- $ 500(6)
_________________
[FN]
(1) Does not include personal benefits which in the aggregate do not exceed
the lesser of $50,000 or 10% of the total annual salary and bonus of the
named executive officers.
(2) Consists of director's fees of $1,500 per month paid by the Bank and
director's fees of $300 per month paid by the Corporation since January
1, 1994. For the first six months of fiscal 1994, and for fiscal 1993,
directors of the Bank were paid a fee of $1,300 per month and directors
of the Corporation were not paid any fee for service on the Board.
(3) Consists of options granted on July 17, 1992 to purchase 3,004 shares
for $3.99 per share (the fair market value of the Common Stock on that
date was $10.25 per share, as adjusted for subsequent stock dividends)
and options granted on June 30, 1993 to purchase 6,134 shares for $11.55
per share (the fair market value of the Common Stock on that date). For
these purposes, the fair market value per share of Common Stock is
assumed to be equal to the closing price on the respective dates as
reported on the American Stock Exchange. All options were immediately
vested and exercisable and have ten year terms.
(4) Consists of matching contributions under the Corporation's 401(k) Plan
of $500, $500 and $500 for fiscal 1995, 1994 and 1993, respectively, and
contributions under the Corporation's Deferred Compensation Plan of
$47,696, $43,166 and $39,074 for fiscal 1995, 1994 and 1993,
respectively.
(5) Consists of options granted on June 30, 1993 to purchase 2,379 shares
for $11.55 per share (the market value of the Common Stock on that date,
as adjusted for subsequent stock dividends). For this purpose, the fair
market value per share of Common Stock is assumed to be equal to the
closing price on that date as reported on the American Stock Exchange.
All options were immediately vested and exercisable and have ten year
terms.
(6) Consists of matching contributions under the Corporation's 401(k) Plan
of $500, $500 and $500 for fiscal 1995, 1994 and 1993, respectively.
Option Grants, Exercises and Fiscal Year-End Value Table
No stock options were granted by the Corporation during fiscal 1995.
The following table sets forth information concerning exercises of stock
options by the Chief Executive Officer and the other executive officer named
in the Compensation Summary table above during the last fiscal year, as well
as the value of the stock options held by such persons at the end of the
fiscal year.
Value of
Number of Unexercised
Unexercised In-the-Money
Shares Options Options
Acquired ------------------ -------------------
on Value At FY-End(#) At FY-End($)
Exercise Realized Exerciseable/ Exerciseable/
Name # $ Unexerciseable Unexerciseable(1)
---------------------------------------------------------------------
Alfred A. Alys --- $ --- 70,501/--- $676,967/---
Granville I. Stark --- $ --- 26,171/--- $250,529/---
_____________________
[FN]
(1) Based on the aggregate fair market value of the shares of Common Stock
underlying the options at June 30, 1995 less the aggregate exercise
price. For purposes of this calculation, the fair market value per
share of Common Stock at fiscal year-end is assumed to be equal to the
closing price on that date as reported on the American Stock Exchange.
Salary Continuation Agreement
In June 1986, the Bank entered into an executive salary continuation
agreement with its Chief Executive Officer, Alfred A. Alys. Under the
agreement, Mr. Alys will receive $75,000 annually for a period of ten years,
payable monthly beginning on the first day of the month following his
retirement at age 62 or such later date as may be agreed upon. During such
ten-year period, Mr. Alys must be available to serve in a consulting capacity.
If Mr. Alys dies before the ten year period terminates (including his death
before payments commence), his beneficiaries shall receive the then unpaid
annual payments as they become payable. Mr. Alys is fully vested in the right
to receive the annual payments provided by the agreement, if his employment is
terminated in accordance with the terms thereof. The agreement also provides
for a lump sum payment to be made to Mr. Alys, pursuant to a schedule
contained in the
agreement, should he become disabled prior to his retirement. Such lump sum
payment would have been $21,498 after the first year of service under the
agreement, and will increase to $472,945 after the twelfth year of service.
This agreement has been funded by purchase of a key man universal life
insurance policy, naming the Bank as the beneficiary, which had a current
value of $718,240 and a cash net surrender value of approximately $702,240 at
June 30, 1995.
Employment Agreements
The Corporation and Bank have entered into separate employment
agreements (the "Employment Agreements") with Alfred A. Alys, Executive Vice
President and Chief Executive Officer of the Corporation and President and
Chief Executive Officer of the Bank.
The Employment Agreements became effective on December 15, 1993, and
have terms of three years. On each anniversary date from the date of
commencement of the Employment Agreements, the term of employment may be
extended for an additional one-year period beyond the then effective
expiration date, upon a determination by the Board of Directors that the
performance of Mr. Alys has met the required standards and that such
Employment Agreement should be extended. The Employment Agreements provide
for inclusion of Mr. Alys in any discretionary bonus plans, retirement and
medical plans, customary fringe benefits and vacation and sick leave. The
Bank's Employment Agreement provides for payment of an annual base salary to
Mr. Alys in the amount of $200,000, and provides Mr. Alys with a salary review
by the Board of Directors not less often than annually. Rather than providing
a base salary, the Corporation's Employment Agreement guarantees the
performance of the Bank's obligations under its Employment Agreement.
Each Employment Agreement will terminate upon Mr. Alys' death or
disability, and is terminable by the Corporation or Bank with or without "just
cause" (as defined in the Employment Agreement). If Mr. Alys is terminated
without "just cause," he shall be entitled to salary and benefits up to the
date of the termination of the term of the Employment Agreement (plus any
renewal term) plus salary for an additional 12-month period, not to exceed
three years. In the event of termination for "just cause," Mr. Alys will not
be entitled to any salary or benefits for any period after such termination.
If an Employment Agreement is terminated due to Mr. Alys' "disability" (as
defined in the Employment Agreements), Mr. Alys will be entitled to a
continuation of his compensation and benefits through the date on which such
disability is established and the Employment Agreement is terminated. Mr.
Alys is able to voluntarily terminate his Employment Agreement by providing 60
days' written notice to the Board of Directors of the Bank or the Corporation,
in which case Mr. Alys is entitled to receive only his compensation and
benefits up to the date of the termination.
Each Employment Agreement contains provisions stating that in the event
of Mr. Alys' involuntary termination of employment in connection with, or
within one year after, any change in control of the Bank or the Corporation,
other than for "just cause," Mr. Alys will be paid within ten days of such
termination an amount equal to 2.99 times his "base amount," as defined in
Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the
"Code"). In no event, however, may Mr. Alys' parachute payment exceed the
difference between 2.99 times his "base amount," as defined in Section
280G(b)(3) of the Code and the sum of any other parachute payments, as defined
under Section 280G(b)(2) of the Code, that Mr. Alys receives
on account of the change in control. "Control" generally refers to the
acquisition, by any person or entity, of the ownership or power to vote more
than 25% of the Bank's or Corporation's voting stock, the control of the
election of a majority of the Bank's or the Corporation's directors or the
exercise of a controlling influence over the management or policies of the
Bank or the Corporation. In addition, under the Employment Agreements, a
change in control occurs when, during any consecutive two-year period,
directors of the Corporation or the Bank at the beginning of such period cease
to constitute two-thirds of the Board of Directors of the Corporation or the
Bank, unless the election of replacement directors was approved by a two-
thirds vote of the directors then in office or when the Corporation or Bank
enter into a merger or consolidation without another company, sell all or
substantially all of their assets or liquidate or dissolve. Each Employment
Agreement also provides for a similar lump sum payment to be made in the event
of Mr. Alys' voluntary termination of employment within one year following a
change in control, upon the occurrence, or within 90 days thereafter, of
certain specified events following the change in control, which have not been
consented to in writing by Mr. Alys, including (i) requiring Mr. Alys to move
his personal residence or perform his principal executive functions more than
35 miles from the Bank's current primary office, (ii) materially reducing Mr.
Alys' base compensation as then in effect, (iii) failing to maintain existing
employee benefit plans, including material vacation, fringe benefits, stock
option and retirement plans, (iv) assigning duties and responsibilities to Mr.
Alys which are materially different than those normally associated with his
position with the Corporation or the Bank and (v) materially diminishing Mr.
Alys' authority and responsibility. The aggregate payments that would be made
to Mr. Alys assuming his termination of employment under the foregoing
circumstances at June 30, 1995 would have been approximately $627,900. These
provisions may have an anti-takeover effect by making it more expensive for a
potential acquiror to obtain control of the Corporation.
Change in Control Agreement
The Bank has entered into a change in control agreement (the "Change in
Control Agreement") with Granville I. Stark, Senior Vice President. Under the
terms of the Change in Control Agreement, if Mr. Stark's employment with the
Bank is terminated without "just cause" (as defined in the Change in Control
Agreement) in connection with or within 24 months following a change in
control of the Corporation or the Bank, he will be entitled to a lump sum
payment equal to 2.50 times his "base amount" as defined in Section 280G(b)(3)
of the Code, plus the cost of obtaining like health benefits; provided,
however, that in no event may such payment exceed 2.99 times Mr. Stark's base
amount.
"Control" generally refers to the acquisition, by any person or entity,
of the ownership or power to vote more than 25% of the Bank's or Corporation's
voting stock, the control of the election of a majority of the Bank's or the
Corporation's directors or the exercise of a controlling influence over the
management or policies of the Bank or the Corporation. In addition, under the
Change in Control Agreement, a change in control occurs when, during any
consecutive two-year period, directors of the Corporation or the Bank at the
beginning of such period cease to constitute two-thirds of the Board of
Directors of the Corporation or the Bank, unless the election of replacement
directors was approved by a two-thirds vote of the directors then in office.
The Change in Control Agreement also provides for a similar lump sum payment
to be made in the event of Mr. Stark's voluntary termination of employment
within 24 months following a change in control, upon the occurrence, or within
90 days thereafter, of certain
specified events following the change in control, which have not been
consented to in writing by Mr. Stark, including (i) requiring Mr. Stark to
move his personal residence or perform his principal executive functions more
than 35 miles from his primary office, (ii) materially reducing Mr. Stark's
base compensation, perquisites or benefits as then in effect, (iii) assigning
duties and responsibilities to Mr. Stark which are materially different than
those normally associated with his position with the Corporation or the Bank
and (iv) materially diminishing Mr. Stark's authority or responsibility. The
aggregate payments that would be made to Mr. Stark assuming his termination of
employment under the foregoing circumstances at June 30, 1995 would have been
approximately $313,950. These provisions may have an anti-takeover effect by
making it more expensive for a potential acquiror to obtain control of the
Corporation.
Comparative Stock Performance Graph
The following graph shows the cumulative total return on the Common
Stock of the Corporation since June 30, 1990, compared with the cumulative
total return of the American Stock Exchange Market Value Index and an industry
peer group index (see the explanation following the table) over the same
period. Cumulative total return on the Common Stock and each index equals the
total increase in value since that date assuming reinvestment of all dividends
paid. The graph was prepared assuming that $100 was invested on June 30, 1990
in the Common Stock or in each index. The stockholder return shown on the
graph below is not necessarily indicative of future performance.
FIVE-YEAR CUMULATIVE TOTAL RETURN
NORTHBAY FINANCIAL CORPORATION, AMEX MARKET
VALUE INDEX AND PEER GROUP(1)
The stock performance graph displays a line graph for each of the
Corporation, the AMEX Market Value Index and the Corporation's peer group,
with cumulative total returns plotted as follows on the dates indicated:
AMEX Index Peer Group Northbay
June 30, 1990 $100 $100 $100
June 30, 1991 99 79 162
June 30, 1992 105 122 195
June 30, 1993 120 177 204
June 30, 1994 117 242 288
June 30, 1995 138 259 267
____________
[FN]
(1) Consists of publicly traded federal savings associations (Standard
Industrial Classification No. 6035) with capitalization between $20
million and $70 million.
Transactions with Management
Sale/Leaseback of Office Buildings
In December 1985, the Bank sold three of its office buildings to
directors of the Bank at pre-tax gains. The Bank sold its main office
building to Director DeCarli and members of his immediate family for
$1,487,500, the Healdsburg branch office building to Director Mahoney and his
wife for $608,800, and the Rohnert Park branch office building to Director
Ramatici and his wife for $959,500. Concurrently therewith, the Bank entered
into long-term agreements to lease back these premises. The sale/leaseback of
the office buildings was approved by the Bank's Board of Directors with each
of the involved directors abstaining from voting. The Bank did not provide
financing to the directors for the transaction. In the opinion of management,
the terms of each of the sales and the leases were at least as favorable to
the Bank as those available from unrelated third parties. In addition, each
of the transactions was approved in advance by the Federal Home Loan Bank of
San Francisco.
The lease with Director DeCarli and immediate family members on the main
office building had an original term of one year expiring on December 23, 1986
and contained an option to extend the original term for a period of 25 years
and two additional consecutive terms
of five years each. The lease has been extended for the 25 year term. The
initial monthly rental under this lease was $11,466 and is to be increased
based on the Consumer Price Index for the San Francisco-Oakland area at a
maximum of 6% per year. The lease also provides that the Bank shall pay all
costs and expenses of owning and operating the premises, including real estate
taxes, maintenance costs and public liability insurance. The aggregate amount
paid under the lease during fiscal 1995 was $188,124.
The lease with Director Mahoney on the Healdsburg branch office building
has an original term of 25 years expiring on December 23, 2010 and contains an
option to extend the original term for two additional consecutive terms of
five years each. The initial monthly rental under this lease was $4,693 and
is to be increased based on the Consumer Price Index for the San Francisco-
Oakland area at a maximum of 6% per year. The lease also provides that the
Bank shall pay all costs and expenses of owning and operating the premises,
including real estate taxes, maintenance costs and public liability insurance.
The aggregate amount paid under the lease during fiscal 1995 was $76,995.
The lease with Director Ramatici on the Rohnert Park branch office
building has an original term of 25 years expiring on December 23, 2010 and
contains an option to extend the original term for two additional consecutive
terms of five years each. The initial monthly rental under this lease was
$7,399 and is to be increased based on the Consumer Price Index for the San
Francisco-Oakland area at a maximum of 6% per year. The lease also provides
that the Bank shall pay all costs and expenses of owning and operating the
premises, including real estate taxes, maintenance costs and public liability
insurance. The aggregate amount paid under the lease during fiscal 1995 was
$121,399.
Don Ramatici Insurance, Inc.
The Bank has obtained all of its insurance coverage (i.e., directors'
and officers' liability coverage, fidelity bonds, hazard and auto coverage)
from Don Ramatici Insurance Inc., which was previously owned by Director
Ramatici and is currently owned by two of his sons. Furthermore, in April
1986, Northbay Service Corporation ("NSC"), a wholly-owned subsidiary of the
Bank, entered into an agreement with this company to jointly administer NSC's
insurance solicitation business. Upon NSC's dissolution, this agreement was
transferred to Sonoma Service Company, a wholly-owned subsidiary of the Bank.
During fiscal 1989, this agreement was terminated because of the difficulty in
obtaining underwriting of insurance in the State of California. During the
fiscal year ended June 30, 1995, the Bank paid total insurance premiums of
$113,064 to this company. In the opinion of management, the terms of these
transactions were at least as favorable to the Bank as those available from
unrelated third parties.
Loans to Officers, Directors and Employees
In the past, the Bank maintained a policy of offering interest rate and
fee concessions on real estate, consumer and commercial loans to its officers,
directors and employees. As a result of the passage in August 1989 of the
Financial Institutions Reform, Recovery and Enforcement Act of 1989, however,
the Bank is no longer permitted to offer preferential terms on loans to
executive officers and directors. The Bank therefore offers interest rate and
fee concessions only to its non-executive employees. All loans to directors
and executive officers are currently made
in the ordinary course of business on substantially the same terms as those of
comparable transactions prevailing at the time and do not involve more than
the normal risk of collectibility or contain other unfavorable features.
Set forth below is certain information relating to loans made to
executive officers and directors of the Corporation whose terms include
interest rate or fee concessions and whose total aggregate loan balances
exceeded $60,000 at any time during the fiscal year ended June 30, 1995.
Highest
Unpaid Unpaid
Balance Balance at
Date of Original in Fiscal June 30, Note Current
Borrower Type Loan Balance 1995 1995 Rate Rate
--------------------------------------------------------------------------------------------
Alfred A. Alys Home Loan 10-28-83 $140,000 $118,492 $114,708 9.92% 5.68%
Chief Executive
Officer
Granville Stark Home Loan 10-16-86 182,400 163,523 159,360 7.33 5.68
Senior Vice Home Loan 7-26-89 50,000 34,133 31,552 8.86 5.80
President
Greg Jahn Home Loan 6-13-88 110,000 101,349 99,261 7.57 5.63
Vice President
Raymond Nizibian Home Loan 8-02-89 300,000 226,006 221,283 8.34 5.80
Director
Compensation Committee Interlocks and Insider Participation
The Bank's Personnel Committee consists of Directors Mahoney, DeCarli and
Stinar. Former Director Henry E. Tomasini served as Chairman of the Personnel
Committee until December 5, 1994. The Committee meets periodically to evaluate
the compensation and fringe benefits of the directors, officers and employees
and to recommend changes and to monitor and evaluate employee performance. Mr.
Tomasini previously served as Chief Executive Officer of the Bank from May 1965
to June 1989.
PROPOSAL II - RATIFICATION OF APPOINTMENT OF AUDITORS
KPMG Peat Marwick LLP was the Corporation's and the Bank's independent
certified public accountant for the 1995 fiscal year. The Board of Directors
presently intends to renew the Corporation's arrangement with KPMG Peat Marwick
LLP to be its independent certified public accountant for the 1996 fiscal year,
subject to ratification by the Corporation's stockholders. A representative of
KPMG Peat Marwick LLP is expected to be present at the Meeting to respond to
appropriate questions and to make a statement, if so desired.
The appointment of the auditors must be ratified by a majority of the
votes cast by the stockholders of the Corporation at the Meeting. The Board of
Directors recommends that stockholders vote "FOR" the ratification of the
appointment of auditors.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting the proxies.
MISCELLANEOUS
The cost of soliciting proxies will be borne by the Corporation. The
Corporation will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by
mail, directors, officers and regular employees of the Corporation may solicit
proxies personally or by telegraph or telephone without additional
compensation.
The Corporation's Annual Report to Stockholders, including financial
statements, is being mailed to all stockholders of record as of the close of
business on August 23, 1995. Any stockholder who has not received a copy of
such Annual Report may obtain a copy by writing to the Secretary of the
Corporation. Such Annual Report is not to be treated as a part of the proxy
solicitation material or as having been incorporated herein by reference.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Corporation's proxy materials
for next year's Annual Meeting of Stockholders, any stockholder proposal to
take action at such meeting must be received at the Corporation's executive
office at 1360 Redwood Way, Petaluma, California 94954, no later than May 22,
1996. Any such proposals shall be subject to the requirements of the proxy
rules adopted under Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Donald P. Ramatici
DONALD P. RAMATICI
SECRETARY
Petaluma, California
September 19, 1995
FORM 10-K
A COPY OF THE CORPORATION'S FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 1995
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT
CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST TO THE
SECRETARY, NORTHBAY FINANCIAL CORPORATION, 1360 REDWOOD WAY, PETALUMA,
CALIFORNIA 94954.
REVOCABLE PROXY
NORTHBAY FINANCIAL CORPORATION
PETALUMA, CALIFORNIA
ANNUAL MEETING OF STOCKHOLDERS
October 18, 1995
The undersigned hereby appoints Alfred A. Alys, Herold Mahoney, Raymond
Nizibian, D.D.S., Donald P. Ramatici and Martin A. Stinar, with full powers of
substitution, to act as proxies for the undersigned, to vote all shares of
Common Stock of Northbay Financial Corporation which the undersigned is
entitled to vote at the Annual Meeting of Stockholders, to be held at the
Petaluma Plaza North Office of Northbay Savings Bank, 311 North McDowell
Boulevard, Petaluma, California, on Wednesday, October 18, 1995 at 2:00 p.m.,
local time, and at any and all adjournments thereof, as follows:
VOTE
FOR WITHHELD
1. The election as directors of all
nominees listed below (except as
marked to the contrary below). _____ _____
Victor L. DeCarli
Eugene W. Traverso
INSTRUCTION: To withhold your vote for any individual nominee,
insert that nominee's name on the line provided below.
FOR AGAINST ABSTAIN
2. The approval of the appointment
of KPMG Peat Marwick LLP as _____ _____ _____
auditors for the fiscal year
ending June 30, 1996.
The Board of Directors recommends a vote "FOR" each of the listed propositions.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER
BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. THIS
PROXY CONFERS DISCRETIONARY AUTHORITY ON THE HOLDERS THEREOF TO VOTE WITH
RESPECT TO THE ELECTION OF ANY PERSON AS DIRECTOR WHERE THE NOMINEE IS UNABLE
TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE AND MATTERS INCIDENT TO THE CONDUCT
OF THE 1995 ANNUAL MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or at any
adjournment thereof and after notification to the Secretary of the Corporation
at the Meeting of the stockholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated and of no
further force and effect.
The undersigned acknowledges receipt from the Corporation prior to the
execution of this proxy of notice of the Meeting, a proxy statement dated
September 19, 1995 and an annual report.
Dated: ________________, 1995
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in which this card
was mailed. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held jointly, each
holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.