SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6
(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ? 240.14a-12
NORTH BAY 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)
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statement number, or the Form or Schedule and the date of its filing
1) Amount Previously Paid:
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NOTICE OF SECOND ANNUAL MEETING
OF SHAREHOLDERS OF
NORTH BAY BANCORP
TO THE SHAREHOLDERS OF NORTH BAY BANCORP:
NOTICE IS HEREBY GIVEN that the Second Annual Meeting of the
Shareholders of North Bay Bancorp will be held at the Chardonnay Golf Club, 2555
Jamieson Canyon Road, Napa, California, on Tuesday, April 24, 2001, at 7:00 p.m.
to consider and act on:
(1) Election of Directors. The Board of Directors intends at this time to
present the following nominees
for election:
Thomas N. Gavin David B. Gaw
Fred J. Hearn Conrad W. Hewitt
Harlan R. Kurtz Richard S. Long
Thomas H. Lowenstein Thomas F. Malloy
Terry L. Robinson James E. Tidgewell
Nominations for election of members of the Board of Directors may be made by the
Board of Directors or any shareholder of the Company entitled to vote for the
election of Directors. Notice of intention to make any nominations (other than
for persons named above) must be made in writing and must be delivered or mailed
to the President of the Company not more than ten (10) days after delivery or
mailing of this Notice. Such notification must contain the following
information, to the extent known to the notifying shareholder: (a) the name and
address of each proposed nominee; (b) the principal occupation of each proposed
nominee; (c) the number of shares of the capital stock of the Company
beneficially owned by each proposed nominee; (d) the name and residence address
of the notifying shareholder; (e) the number of shares of capital stock of the
Company beneficially owned by the notifying shareholder. The notification must
be signed by the nominating shareholder and by the nominee. Nominations not made
in accordance herewith will be disregarded by the chairman of the meeting, and
upon his instructions, the inspector of the election will disregard all votes
cast for each such nominee. The time limitations set forth in this paragraph do
not apply to the nomination of a person to replace a proposed nominee who has
died or otherwise become incapacitated to serve as director between the last day
for giving notice hereunder and the date of election of directors if the
procedure called for in this paragraph was followed with respect to the
nomination of the proposed nominee.
(2) Ratification of the Selection of Arthur Andersen LLP. The shareholders will
be asked to ratify the Company's selection of Arthur Andersen LLP, independent
certified public accountants, as the independent auditors of North Bay Bancorp
for the year ending December 31, 2001.
Other Business. The shareholders will consider and act on such other
business as may properly be brought before the meeting.
Shareholders of record at the close of business on March 1, 2001 are entitled to
notice of, and to vote at, the Annual Meeting. Every shareholder is invited to
attend the Annual Meeting in person or by proxy. If you do not expect to be
present at the Meeting, you are requested to complete and return the
accompanying proxy form in the envelope provided. Any shareholder present at the
Annual Meeting may vote personally on all matters brought before the Meeting,
and in that event your proxy will not be used.
Dated: March 28, 2001
Wyman G. Smith, III
Corporate Secretary
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
PROXY STATEMENT
FOR THE
SECOND ANNUAL MEETING OF SHAREHOLDERS
OF
NORTH BAY BANCORP
1500 SOSCOL AVENUE
NAPA, CALIFORNIA 94559
(707) 257-8585
To Be Held April 24, 2001 at 7:00 p.m.
at the Chardonnay Golf Club, 2555 Jamieson Canyon Road, Napa, CA
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TABLE OF CONTENTS
GENERAL INFORMATION FOR SHAREHOLDERS...........................................1
PRINCIPAL SHAREHOLDERS.........................................................2
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING.................................3
1. ELECTION OF DIRECTORS.................................................3
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS.....................8
REPORT OF AUDIT COMMITTEE........................................8
REPORT OF COMPENSATION COMMITTEE.................................9
SECURITIES OWNERSHIP OF MANAGEMENT...................................12
EXECUTIVE COMPENSATION...............................................16
Summary Executive Compensation Table............................16
Option Grants and Exercises.....................................17
Termination of Employment and Change of Control Arrangements....19
Compensation of Directors.......................................19
OTHER INFORMATION REGARDING MANAGEMENT...............................23
Management Indebtedness.........................................23
Certain Business Relationships..................................23
Reports of Changes in Beneficial Ownership......................23
2. RATIFICATION OF INDEPENDENT AUDITORS.................................24
Availability of Form 10-KSB...................................................25
Shareholder Proposals.........................................................25
Other Matters.................................................................25
APPENDIX A. - North Bay Bancorp Audit Committee Charter
GENERAL INFORMATION FOR SHAREHOLDERS
The following information is furnished in connection with the solicitation of
the accompanying proxy by and on behalf of the Board of Directors of North Bay
Bancorp ("the Company" or "North Bay") for use at the Second Annual Meeting of
Shareholders to be held at the Chardonnay Golf Club, 2555 Jamieson Canyon Road,
Napa, California on Tuesday, April 24, 2001, at 7:00 p.m. Only shareholders of
record at the close of business on March 1, 2001, (the "Record Date") will be
entitled to notice of and to vote at the Annual Meeting. On the Record Date, the
Company had outstanding 1,856,899 shares of its Common Stock, all of which will
be entitled to vote at the Annual Meeting and any adjournments thereof. This
proxy statement will be first mailed to shareholders on or about March 28, 2001.
As many of the Company's shareholders are not expected to personally attend the
Annual Meeting, the Company solicits proxies so that each shareholder is given
an opportunity to vote. Shares represented by a duly executed proxy in the
accompanying form, received by the Board of Directors prior to the Annual
Meeting, will be voted at the Annual Meeting. A shareholder executing and
delivering the enclosed proxy may revoke the proxy at any time prior to exercise
of the authority granted by the proxy by (i) filing with the secretary of the
Company an instrument revoking it or a duly executed proxy bearing a later date;
or (ii) attending the meeting and voting in person. A proxy is also revoked when
written notice of the death or incapacity of the maker of the proxy is received
by the Company before the vote is counted. If a shareholder specifies a choice
with respect to any matter on the accompanying form of proxy, the shares will be
voted accordingly. If no specification is made, the shares represented by this
proxy will be voted in favor of election of the nominees specified and in favor
of the specified proposals.
Each shareholder of record is entitled to one vote for each share held on all
matters to come before the Annual Meeting, except that shareholders may have
cumulative voting rights with respect to the election of directors. If
cumulative voting is utilized, each shareholder may give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which the shareholder's shares are entitled, or may distribute the
same number of votes among as many candidates as the shareholder desires.
Pursuant to California law and the Company's bylaws, no shareholder may cumulate
votes unless the name of any candidate for which such votes would be cast has
been placed in nomination prior to the voting in accordance with the Company's
bylaws and, also prior to the voting at the Annual Meeting, any shareholder has
given notice of that shareholder's intention to cumulate that shareholder's
votes at such meeting. If any shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination. The Board of
Directors does not, at this time, intend to give such notice nor to cumulate the
votes it may hold pursuant to the proxies solicited herein unless the required
notice by a shareholder is given in proper form at the Annual Meeting, in which
instance the Board of Directors intends to cumulatively vote all the proxies
held by it in favor of the nominees for office as set forth herein. Therefore,
discretionary authority to cumulate votes in such event is solicited in this
Proxy Statement.
The proxy committee is composed of two officers of the Company, Terry L.
Robinson and Wyman G. Smith, III, who will vote all shares of Common Stock
represented by the proxies. However, the proxy committee cannot vote the shares
of the shareholder unless the shareholder
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signs and returns a proxy card. Proxy cards also confer upon the proxy committee
discretionary authority to vote the shares represented thereby on any matter
that was not known at the time this Proxy Statement was mailed, which may
properly be presented for action at the Annual Meeting including a motion to
adjourn, and with respect to procedural matters pertaining to the conduct of the
Annual Meeting. The total expense of soliciting the proxies in the accompanying
form will be borne by the Company. While proxies are normally solicited by mail,
proxies may also be directly solicited by officers, directors and employees of
the Company. Such officers, directors and employees will not be compensated for
this service beyond normal compensation to them.
The voting of proxies will be tabulated by a representative of Registrar and
Transfer Company, which has been appointed as the Company's independent
inspector of election. The inspector of election will be present at the meeting
in order to tabulate the voting of any proxies returned and ballots cast at that
time. Except as required by law, the vote indicated on each individual proxy
card and ballot will be held confidential.
Abstentions and broker non-votes are each included in the determination of the
number of shares present and voting for the purpose of determining whether a
quorum is present, and each is tabulated separately. In determining whether a
proposal has been approved, abstentions are counted in tabulations of the votes
cast on proposals presented to shareholders and broker non-votes are not counted
as votes for or against a proposal or as votes present and voting on the
proposal.
A copy of the Annual Report of the Company for the fiscal year ended December
31, 2000, accompanies this Proxy Statement. Additional copies of the Annual
Report are available upon request to Pansy F. Smith, Assistant Corporate
Secretary of the Company.
PRINCIPAL SHAREHOLDERS
As of March 1, 2001, the following persons were known by the Company to
beneficially own more than five percent (5%) of the outstanding Common Stock:
Relationship Number of Shares Percent of Class (1)
Name and Address with Company Beneficially Owned Beneficially Owned
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Houghton Gifford, M.D. Director Emeritus 113,192 (2) 6.12%
3219 Vichy Avenue of The Vintage Bank
Napa, CA 94558
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<FN>
(1) In computing the percentage of outstanding Common Stock owned beneficially
the number of shares beneficially owned has been divided by the number of
outstanding shares on the Record Date after (i) giving effect to stock dividends
paid through March 20, 2001 and (ii) assuming options exercisable by the named
person within 60 days have been exercised.
(2) Included in the total for Dr. Gifford are 644 shares held as custodian for a
minor under the California Uniform Transfers to Minors Act and 112,548 shares
held in the name of the Gifford Family Trust dated April 8, 1985, of which Dr.
Gifford is trustee.
</FN>
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MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
1. ELECTION OF DIRECTORS
It is intended to elect ten (10) Directors of the Company, pursuant to a
resolution of the Board of Directors fixing the authorized number of Directors
at ten (10). The Directors so elected will hold office for a term continuing
until the next Annual Meeting and until their successors are duly elected and
qualified. All of the nominees are at present members of the Board of Directors
of the Company. If any nominee should refuse or be unable to serve, the proxies
will be voted for such person as the Board of Directors may designate to replace
that nominee. The Board presently has no knowledge that any of the nominees will
refuse or be unable to serve. The nominees (up to the number of directors to be
elected) receiving the highest number of votes are elected. Votes against a
director and votes withheld have no legal effect.
Information is provided below regarding the individual nominees, as well as
regarding the executive officers of the Company, each of whom serves on an
annual basis and must be selected by the Board of Directors annually pursuant to
the bylaws of the Company.(3) The ages stated are as of March 1, 2001.
Dale Brain, age 53, is Executive Vice President and Chief Operating Officer of
North Bay and has been employed by North Bay since October 2000. Prior to
joining North Bay, Mr. Brain served as the COO for Tactive, a B2B Internet start
up company headquartered in Columbus, Ohio. Prior to Tactive Mr. Brain ran
information services and operations for Napa National Bank. Before coming to
Napa National, Mr. Brain spent 5 years at Kaiser Permanente where he ran Client
Services and Remote Delivery For the Northern California HMO. Mr. Brain began
his career at Bank of America where during his 20-year tenure, he moved from
branch operations to administration and finally to heading up out of state
acquisitions of RTC held savings and loan organizations. Mr. Brain attended the
University of Michigan and holds a graduate degree in Business from USF.
Lee-Ann Cimino, age 37, is Senior Vice President and Chief Financial Officer of
North Bay, Solano Bank and The Vintage Bank. Ms. Cimino joined The Vintage Bank
in 1987. Prior to becoming employed by The Vintage Bank, Ms. Cimino served as
Operations Manager for Lamorinda National Bank. Ms. Cimino is past treasurer of
the Napa Valley D.A.R.E. Foundation and a member of the board of directors of
the Banker Executive Council of Northern California and of the Napa Valley Safe
School Foundation.
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(3) As used throughout the Proxy Statement, the term "Executive Officer" means
the President, Executive Vice President/Credit Administrator, Executive Vice
President/Chief Operating Officer, Senior Vice President/Chief Financial
Officer, Senior Vice President/Marketing and Investment, and President and Chief
Executive Officer of Solano Bank.
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Thomas N. Gavin, age 48, is a Director of North Bay and a director and Chairman
of the Board of Solano Bank, since 2000. Mr. Gavin is the owner of Gavin &
Schreiner, a benefit planning company started in 1985. He is also an insurance
agent for New York Life, where he has been affiliated for over twenty five
years. Mr. Gavin earned his Associate of Arts degree from Solano Community
College and a B.A. in sociology from the University of California at Davis. He
completed his insurance agent education and was awarded his CLU from American
College. Mr. Gavin has been active in professional and local civic and social
organizations, including the Benicia Rotary Club (President 1994-1995), the
Benicia Chamber of Commerce (President 1987); St. Patrick -St. Vincent High
School Board of Regents (President 1996); and the Benicia Mainstreet Program
Board of Directors (President 1988). He is also a member of the Sutter-Solano
Hospital Foundation Board and the Board of Directors for St. Dominic's Church in
Benicia, where he has also coached basketball and softball for PAL.
David B. Gaw, age 55, has served as a director of The Vintage Bank since 1984
and served as Chairman of the Board of Directors from 1992 to 1994. He is also a
Director of North Bay and Solano Bank. Mr. Gaw has been engaged in the practice
of law in Napa and Solano Counties for more than twenty-nine years and is one of
the founding members of Gaw, Van Male, Smith, Myers & Miroglio, a professional
law corporation with offices in Napa, Fairfield, Vacaville and Redlands. Mr. Gaw
is certified by the California State Board of Legal Specialization in Probate,
Estate Planning, and Trust Law, and a Certified Elder Law Attorney by the
National Elder Law Foundation. Mr. Gaw has served as President of the Napa
County Bar Association. He is a member of The Queen of the Valley Hospital
Foundation Board of Trustees, and is a member of Boards of Directors of North
Bay Hospital Foundation, the Solano Community Foundation, and the North Bay
Health Care Group. North Bay, Solano Bank, and The Vintage Bank have retained
the legal services of Mr. Gaw's law firm since their organization and expect to
retain the firm's services in 2001.
Fred J. Hearn, Jr., age 47, has served as a Director of North Bay and Solano
Bank since 2000. Mr. Hearn is President of Hearn Pacific Construction, a real
estate general contracting company headquartered in Vacaville for more than
twenty-five years. He is also a member in Pacific Valley Development Company and
President of Pacific Concrete Construction Company Inc. Mr. Hearn is an active
member of both the Fairfield and Vacaville Chambers of Commerce, the Solano
Commercial Brokers and the Solano Economic Development Corporation. He has also
served on the Notre Dame Parochial School Board as secretary and vice president
for two terms and is a member of the Green Valley Country Club where he served
on the Building and Grounds Committee. Mr. Hearn helped organize the Vacaville
Homeless Shelter and presently serves on the Vacaville Chamber of Commerce
Economic Development Committee.
Conrad W. Hewitt, age 64, joined the Board of North Bay in November, 1999 and is
a consultant. He is a member of the Board of Directors of Global Intermodal
Systems, Inc., where he serves as Chairman of the Audit Committee and as a
member of the Compensation Committee. Also, he is a member of the Board of
Directors of ADPAC, Inc., Click Books.com, Inc., and Point West Capital
Corporation. Mr. Hewitt serves as Chairman of the Point West Capital Corporation
Board of Directors' Audit Committee and is a member of Point West's Compensation
and Executive Committees. He is also an advisory director for Clark/Bardes
Consulting and Private Capital Corporation. Mr. Hewitt served as Superintendent
of Banks and
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Commissioner, Department of Financial Institutions, State of California from
1995 to 1998. Prior to 1995, Mr. Hewitt was the Managing Partner, North Bay
Area, Ernst & Young and was employed by Ernst & Young for thirty-three years
until his retirement. Mr. Hewitt is a Certified Public Accountant. Mr. Hewitt
received a B.S. in Finance and Economics from the University of Illinois and did
post-graduate work at the University of Southern California.
Harlan Kurtz, age 70, is a Director of North Bay and has served as a Director of
The Vintage Bank since 1988 and has devoted a substantial amount of his time
serving as Chairperson of the Bank's Site Committee. Mr. Kurtz will retire from
The Vintage Bank as of April 24, 2001. He is a general contractor and President
of K-H Development Corporation. Mr. Kurtz also serves as general partner of a
number of real estate limited partnerships.
Richard S. Long, age 56, is a director of North Bay since 1999 and presently
serves as Chief Executive Officer of Regulus Integrated Solutions, LLC. He
became a director of North Bay in November, 1999. Mr. Long has over twenty-five
years of entrepreneurial and executive management experience. Regulus is a
remittance processor for major banks and corporations with over twenty locations
in the United States and Canada. In 1998 Mr. Long sold his company, Quantum
Information Corporation, to Regulus. Quantum, which has now been merged into
Regulus, is an information distribution management company that outsources the
processing, printing and distribution of time critical financial documents.
Prior to Quantum, Mr. Long spent seventeen years in the industrial gas and
equipment business. Starting in sales and moving through management to CEO and
owner of Bayox, Inc., he sold this business to Union Carbide Corporation in
1983. Mr. Long then bought out the investment group that started Boboli and
subsequently sold the United States and Canadian segments of this business to
General Foods in 1988. The international segment of this business was sold in
1995.
Thomas H. Lowenstein, age 58, is a director of North Bay and Chairman of the
Board of The Vintage Bank and has served as a Director of The Vintage Bank since
1988. He is President of North Bay Plywood, a company engaged in the manufacture
and sale of building materials. Mr. Lowenstein has been active in the affairs of
St. Apollinaris School, Product Services Incorporated (PSI) and the Justin High
Foundation, having served on the boards of St. Apollinaris School and PSI and as
a Past President of St. Apollinaris School Board.
Thomas F. Malloy, age 58, is Chairman of the Board of Directors of North Bay and
has served as a Director of The Vintage Bank since 1984. He is an insurance
broker and a Member in Malloy Imrie & Vasconi Insurance Services LLC with
offices in Napa and St. Helena. Mr. Malloy is a member and Past President of the
Napa County Independent Insurance Agents Association and Past President of the
Napa Active 20-30 Club.
Kathi Metro, age 46, is the Executive Vice President and Credit Administrator of
North Bay and Executive Vice President and Chief Lending Officer of The Vintage
Bank and has been employed by The Vintage Bank since 1985. Prior to becoming
employed by The Vintage Bank, Ms. Metro was an Assistant Vice President and
Branch Manager of Napa Valley Bank. She is an alumnus of Leadership Napa Valley
and is a former member of the Leadership Napa Valley Foundation Committee. In
addition, Ms. Metro is a former Director of C.O.P.E. and former member of the
Napa County Commission on the Status of Women and the Professional Business
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Services Committee of the Napa Chamber of Commerce. She is currently a member of
the North Napa Rotary Club and the Board of Directors of the Napa Valley College
Foundation and a member of the California Bankers Association Real Estate
Legislation Committee.
Mark Richmond, age 37, is Senior Vice President for Marketing and Investments
for North Bay. He has been employed by The Vintage Bank since January 17, 1995.
From December of 1992 until becoming employed by The Vintage Bank, Mr. Richmond
served as a managing partner for Protective Financial Insurance Services, Inc.
His experience in the banking industry comes from sales and management
responsibilities with both community banks and statewide financial institutions.
Mr. Richmond has worked with Union Federal Savings, Santa Barbara Savings,
American Savings Bank and WestAmerica Bank.
Terry L. Robinson, age 53, is President and Chief Executive Officer of North Bay
and The Vintage Bank, as well as a Director. He is also a Director of Solano
Bank and has been employed by The Vintage Bank since 1988. Mr. Robinson recently
concluded his term as president of the Western Independent Bankers. Prior to
joining the Bank, Mr. Robinson served as Executive Vice President and a member
of the Board of Directors of American Bank of Commerce in Boise, Idaho. Mr.
Robinson is a Past President of the Napa Valley Symphony Association, a past
founding director the Community Foundation of Napa Valley and was Co-Chair of
the Napa Boys and Girls Club capital campaign. He currently serves as a member
of the Queen of the Valley Hospital Foundation Board of Trustees, and is a
member of the Napa Rotary Club. Mr. Robinson holds a B.S. of Business in
Accounting from the University of Idaho and a M.B.A. in finance from U.C.
Berkeley.
Glen C. Terry, age 49, is the President, Chief Executive Officer, Chief Lending
Officer, and a Director of Solano Bank. Prior to the opening of Solano Bank, he
served as the Senior Vice President and Solano Region Manager of The Vintage
Bank since 1999. Prior to being employed by The Vintage Bank, Mr. Terry was
President of the Solano Region of Sierra West Bank, President & CEO of Napa
Valley Bank, and previously held other positions at WestAmerica Bank. Mr. Terry
has also worked with First Interstate Bank and Zions First National Bank. Mr.
Terry is an alumnus of Leadership Santa Rosa, has served on the Santa Rosa
Design Review Board, the Santa Rosa Chamber of Commerce, the Napa Chamber of
Commerce, Clinic Ole' and is a member of the Vacaville Noon Rotary Club. Mr.
Terry received a B.S. in Political Science from Utah State University and an
M.B.A. from the University of Utah.
James E. Tidgewell, age 55, is a Director of North Bay and Vice Chairman of the
Board of The Vintage Bank, and has served as a Director of The Vintage Bank
since 1988. He is a certified public accountant and partner in the accounting
firm of G & J Seiberlich & Co LLP, with which he has been associated since 1975.
Mr. Tidgewell received a B.S. degree in accounting from the University of Notre
Dame in 1968 and thereafter spent approximately five years as an accountant with
Price Waterhouse & Co. Mr. Tidgewell is a member of the American Institute of
Certified Public Accountants and the California Society of Certified Public
Accountants. He is a Past President of the Napa Active 20-30 Club, a member of
the Napa Rotary Club and a member and president of The Queen of the Valley
Hospital Foundation Board of Trustees.
-6-
During 2000, the Company's Board of Directors met fourteen (14) times. All of
the Directors of the Company standing for reelection attended more than 75% of
the aggregate of (1) the total number of meetings of the Board and (2) the total
number of meetings held by all committees of the Board on which she or he
served.
No director of the Company holds a directorship in any other company with a
class of securities registered pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended, or subject to the requirements of Section 15(d) of that
Act or any company registered as an investment company under the Investment
Company Act of 1940. No director or executive officer of the Company has any
family relations with any other director or executive officer of the Company.
-7-
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company has standing Audit and Compensation Committees The Company does not
currently have a nominating committee; the Board of Directors in its entirety
acts upon nominations.
Audit Committee
The Audit Committee, which consisted of Conrad W. Hewitt as chairman, Thomas N.
Gavin, Harlan R. Kurtz, Thomas H. Lowenstein and James E. Tidgewell, met five
(5) times during the fiscal year ended December 31, 2000. The functions of the
Audit Committee are to recommend the appointment of and to oversee a firm of
independent public accountants who audit the books and records of the Company
for the fiscal year for which they are appointed, to approve each professional
service rendered by such accountants and to evaluate the possible effect of each
such service on the independence of the Company's accountants. The Audit
Committee also reviews internal controls and reporting procedures of the Bank's
branch offices and periodically consults with the independent auditors with
regard to the adequacy of internal controls.
REPORT OF AUDIT COMMITTEE
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934,
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE SHALL NOT BE INCORPORATED BY
REFERENCE INTO ANY SUCH FILINGS AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER
SUCH ACTS.
North Bay Bancorp (March 13, 2001)
The Audit Committee of the North Bay Bancorp Board of Directors (the "Audit
Committee") is composed of five independent directors and operates under a
written charter adopted by the Board of Directors (Exhibit A). The members of
the Audit Committee are Conrad W. Hewitt (Chairman), Thomas N. Gavin, Harlan R.
Kurtz, Thomas H. Lowenstein and James E. Tidgewell. The Audit Committee
recommends to the Board of Directors, subject to shareholder ratification, the
selection of the Company's independent accountants.
Management is responsible for the Company's internal controls and the financial
reporting process. The independent accountants are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Audit Committee's responsibility is to monitor and oversee these
processes.
In this context, the Audit Committee has met and held discussions with
management and Arthur Andersen LLP. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles, and the Audit
Committee has reviewed and discussed the consolidated
-8-
financial statements with management and Arthur Andersen LLP. The Audit
Committee discussed with Arthur Andersen LLP matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
Arthur Andersen LLP also provided to the Audit Committee the written disclosures
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and the Audit Committee discussed with
Arthur Andersen LLP that firm's independence.
Based on the Audit Committee's discussion with management and Arthur Andersen
LLP and the Audit Committee's review of the representation of management and the
report of Arthur Andersen LLP to the Audit Committee, the Audit Committee
recommended that the Board of Directors include the audited consolidated
financial statements in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 2000 filed with the Securities and Exchange Commission.
We have also considered whether the provision of services by Arthur Andersen LLP
not related to the audit of the financial statements referred to above and to
the reviews of interim financial statements included in the Company's 10-QSB for
the quarters ended March 31, June 30 and September 30, 2000, is compatible with
maintaining Arthur Andersen LLP's independence.
Respectfully submitted by the Audit Committee,
Conrad W. Hewitt, (Chair), Thomas N. Gavin, Thomas H. Lowenstein, Harlan R.
Kurtz, James E. Tidgewell
Compensation Committee
The Compensation Committee consisted of Richard S. Long, as chair, Fred W.
Hearn, Conrad W. Hewitt, Thomas H. Lowenstein, and Thomas F. Malloy met eight
(8) times during the fiscal year ended December 31, 2000. The principal
functions of the Compensation Committee are, subject to approval of the Board of
Directors, to establish personnel policies, set compensation for senior
officers, establish employee benefit programs and review the performance of
senior officers.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes and administers
the Company's executive compensation programs. The goals of the Company's
executive compensation programs are to:
1. Align executive compensation with shareholder interests;
2. Attract, retain, and motivate a highly competent executive team;
3. Link compensation to Company, Bank and individual performance; and
4. Achieve a balance between incentives for short-term and long-term
performance.
-9-
The Compensation Committee reviews and approves the recommendations of the
Company's President for all elements of executive compensation. No officer of
the Company is present during discussion or deliberations of his or her own
compensation. In addition to periodically reviewing executive compensation in
light of Company and individual performance, the Compensation Committee
periodically compares all elements of compensation of Company executive officers
with compensation for comparable positions within the community banking
industry.
Approximately 25% to 40% of executive officer cash compensation is contingent
upon Company performance and adjusted as appropriate for individual performance.
Grants under the Company's stock option plans are designed to further strengthen
the linkage between shareholder return and executive compensation. The Board of
Directors annually determines targets for Company revenues, earnings, return on
assets and return on equity to be used as the measurement points for decisions
regarding executive compensation. Executive officer salary adjustments are
determined by a subjective evaluation of performance by comparisons to peers
within the community banking industry. Bonuses are awarded in amounts determined
by the Board of Directors in accordance with an incentive plan adopted annually
by the Board, which relates the amount of bonuses paid to the performance of the
Company.
The Board of Directors determined the CEO's compensation for 2000 based in part
on the incentive compensation plan mentioned above. This plan allows the
Directors to determine bonus compensation as it relates to Company performance.
The CEO's salary is determined by comparisons with CEO salaries of peer groups
within the banking industry. Thirty-six percent (36%) of the CEO's compensation
for 2000 was a result of bonus awarded in accordance with the Bank's
performance.
Respectfully submitted by the Compensation Committee,
Richard S. Long as Chair, Fred W. Hearn, Conrad W. Hewitt, Thomas H. Lowenstein,
and Thomas F. Malloy.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
There were no interlocking relationships where (a) an executive officer of North
Bay or the Banks served as a member of the compensation committee of another
entity, one of whose executive officers served on the Compensation Committee of
North Bay or the Banks; (b) an executive officer served as a director of another
entity, one of whose executive officers served on the Compensation Committee of
North Bay or the Banks; or (c) an executive officer of North Bay or the Banks
served as a member of the compensation committee of another entity, one of whose
executive officers served as a director of North Bay or the Banks.
Shareholder Return on Performance Graph
The following graph compares changes in the value of $100 invested at year end
1999 in the Company's Common Stock, in the Standard & Poors 500 Composite Stock
Price Index (the "S&P 500"), and in an industry index, assuming that all
dividends were reinvested. The Company's industry index is the NASDAQ BANK Index
(the "NASDAQ BANK"), which is a composite of all NASDAQ companies with a SIC
code of #6022.
-10-
[The following descriptive data is supplied in accordance with Rule 304(d) of
Regulation S-T]
NORTH BAY BANCORP NAPA CA
Cumulative Total Return
---------------------------
11/4/1999 11/00 12/00
NORTH BAY BANCORP 100.00 80.80 72.92
S & P 500 100.00 108.04 98.20
NASDAQ BANK 100.00 94.96 108.44
-11-
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of March 1, 2001, pertaining to
beneficial ownership of the Company's Common Stock by those persons nominated
for election as directors and the executive officers listed in the Summary
Executive Compensation Table set forth hereinafter, as well as with respect to
all directors and executive officers as a group. The information contained
herein has been obtained from the Company's records or from information
furnished directly by the individuals to the Company. The numbers in the column
entitled "Number of Shares Beneficially Owned" reflect stock dividends paid
through March 1, 2001. (4) The table should be read with the understanding that
more than one person may be the beneficial owner of, or possess certain
attributes of beneficial ownership with respect to, the same shares.
- -----------------------------
(4) Upon the payment of a stock dividend, all unexercised stock options are
automatically adjusted so that the aggregate purchase price and the fractional
proportion of outstanding stock represented by the options remain unchanged.
-12-
Number of
Shares
Beneficially
Name Nature of Position Owned Ownership Percent(5)
- ---- ------------------ ----- --------- ----------
Thomas N. Gavin Director of North Bay 2,384 6, 7 0.12%
and Chairman of the
Board and Director of
Solano Bank
David B. Gaw Director of North Bay, 17,463 8 0.90%
Solano Bank and The
Vintage Bank
Fred J. Hearn Director of North Bay 4,772 6, 9 0.24%
and Solano Bank
Conrad W. Hewitt Director of North Bay 3,929 10 0.20%
Harlan R. Kurtz Director of North Bay 36,960 6, 11 1.90%
and The Vintage Bank
Richard S. Long Director of North Bay 11,823 6, 12 0.61%
Thomas H. Lowenstein Director of North Bay 26,364 6, 13 1.35%
and Chairman of the
Board of The Vintage Bank
Thomas F. Malloy Chairman of the Board of 54,498 6, 14 2.80%
North Bay and Director
of The Vintage Bank
<FN>
- --------------------------
5 In computing the percentage of outstanding Common Stock owned beneficially by
each director, the number of shares beneficially owned has been divided by the
number of outstanding shares on the Record Date after (i) giving effect to stock
dividends paid through March 20, 2001, and (ii) assuming options exercisable by
the director within 60 days have been exercised.
</FN>
-13-
Number of
Shares
Beneficially
Name Nature of Position Owned Ownership Percent(5)
- ---- ------------------ ----- --------- ----------
Kathi Metro Executive V.P. of Credit 15,304 6, 15 0.79%
Administration of North
Bay, Executive V.P.
and
Chief Lending Officer of
The Vintage Bank
Terry L. Robinson Director, CEO of North 70,208 16 3.60%
Bay and The Vintage Bank
and Director of Solano
Bank
Glen C. Terry Director, President, CEO 4,591 6, 17 0.24%
and Chief Lending
Officer of Solano Bank
James E. Tidgewell Director of North Bay 12,583 6, 18 0.63%
and The Vintage Bank
All Current Executive 260,579 19 13.38%
Officers and Directors as a
group (total of 15)
<FN>
6 Pursuant to California law, personal property held in the name of a married
person may be community property as to which either spouse has the power and
ability to manage and control in its entirety.
7 Included is the total for Mr. Gavin is 715 shares held by Edward Jones & Co.
as custodian FBO Patrice M. Gavin.
8 Included in the total for Mr. Gaw are 15,400 shares held in the name of the
Gaw Family Trust dated September 22, 2000, of which he is the trustee; 158
shares as custodian for minors under the California Uniform Transfers to Minors
Act; and 1,459 shares as to which Mr. Gaw holds an option exercisable on April
30, 2001.
-14-
9 Included in the total for Mr. Hearn are 4,772 shares held in the name of the
Hearn Family Trust dated December 31, 1996 of which Mr. Hearn is a trustee and
to which he has shared voting power.
10 Included in the total for Mr. Hewitt are 1,323 shares as to which Mr. Hewitt
holds an option exercisable as of April 20, 2001.
11 Included in the total for Mr. Kurtz are 30,003 shares held in the name of the
Kurtz Family Trust dated February 25, 1992, of which Mr. Kurtz is trustee and as
to which he has shared voting power; 4,040 are held as custodian for minors
under the California Uniform Transfers to Minors Act; and 2,917 shares as to
which Mr. Kurtz holds an option exercisable on April 30, 2001.
12 Included in the total for Mr. Long are 10,500 shares held in the Richard S.
Long and Cynthia A. Long Trust dated September 15, 1993, of which Mr. Long is a
trustee and as to which he has shared voting power; and 1,323 shares as to which
Mr. Long holds an option exercisable as of April 30, 2001.
13 Included in the total for Mr. Lowenstein are 20,040 shares held in the name
of the Lowenstein Family Trust dated October 8, 1992, of which he is a trustee
and as to which he has shared voting power; 3,407 shares held in the name of
North Bay Plywood Profit Sharing Trust, of which he is a trustee and as to which
he has shared voting power; and 2,917 shares as to which Mr. Lowenstein holds an
option exercisable as of April 30, 2001.
14 Included in the total for Mr. Malloy are 37,739 shares held in the name of
the Malloy Family Trust dated August 31, 1990, of which he is a trustee and as
to which he has shared voting power; and 15,058 shares held in the name of the
Malloy Imrie & Vasconi Insurance Services LLC 401(k) Profit Sharing Plan of
which he is not a trustee but as to which he may indirectly have shared voting
power.
15 Included in the total for Ms. Metro are 4,198 shares as to which Ms. Metro
holds an option exercisable as of April 30, 2001.
16 Included in the total for Mr. Robinson are 34,197 shares held in the name of
Snake River Honey Co., Inc., of which he is a director and as to which he has
shared voting power; and 4,410 shares as to which Mr. Robinson holds an option
exercisable as of April 30, 2001.
17 Included in the total for Mr. Terry are 2,205 shares as to which Mr. Terry
holds an option exercisable as of April 30, 2001.
18 Included in the total for Mr. Tidgewell are 1,459 shares as to which Mr.
Tidgewell holds an option exercisable as of April 30, 2001.
19 In computing the percentage of outstanding Common Stock owned beneficially by
all Current Executive Officers and Directors as a group, it is assumed that
those options granted to any member of the group which are exercisable within 60
days have been exercised and that therefore, the total number of outstanding
shares of the class has been increased by 28,266 the number of shares subject to
such exercisable options by all members of the group.
</FN>
-15-
EXECUTIVE COMPENSATION
Summary Executive Compensation Table
The following table sets forth a summary of the compensation paid during each of
the Company's last three completed fiscal years for services rendered in all
capacities to Terry Robinson, the President and Chief Executive Officer of the
Company and to Kathi Metro and Glen Terry, the only other executive officers of
the Company whose annual compensation exceeded $100,000 during 2000. (Mr.
Robinson, Ms. Metro, and Mr. Terry are sometimes collectively referred to as the
"Named Executive Officers").
Summary Executive Compensation Table
Long Term
Compensation
Annual Compensation Awards
- -------------------------- ---------- ------------------------------------------- ----------------- -----------------
Securities All Other
Name and Principal Other Annual Underlying Compensation
Position Year Salary ($) Bonus ($) Compensation Options (#) ($)
- -------------------------- ---------- ------------ ------------ ----------------- ----------------- -----------------
Terry L. Robinson, 2000 183,917 68,850 -0- -0- 25,488
President and Chief
Executive Officer
1999 173,250 63,415 -0- 11,576 21,711
1998 164,333 47,000 -0- -0- 35,396
Kathy Metro, Executive 2000 99,000 31,250 -0- 2,756 13,613
Vice President
1999 93,500 30,710 -0- -0- 8,421
1998 86,989 24,760 -0- -0- 6,307
Glen C. Terry*, 2000 109,167 39,480 -0- 11,025 8,124
President & CEO, Solano
Bank
1999 41,667 5,000 -0- -0- 2,510
1998 N/A N/A N/A N/A N/A
<FN>
* Mr. Terry's employment with the Company began in August 1999.
</FN>
The value of perquisites and other personal benefits are disclosed in other
annual compensation if they exceed, in the aggregate, the lesser of $50,000 or
10% of salary and bonus. No amounts are reported in this column for Mr.
Robinson, Ms. Metro, or Mr. Terry since the value of perquisites and other
personal benefits did not exceed the reporting threshold.
All Other Compensation for each year includes contributions to The Vintage
Bank's Profit Sharing and Salary Deferral 401(k) Plan. Contributions to the
Bank's 401(k) Plan for Mr. Robinson were $13,334 in 2000, $12,561 in 1999, and
$11,914 in 1998. Contributions to the Bank's 401(k) Plan for Ms. Metro were
$7,431 in 2000, $6,779 in 1999, and $6,307 in 1998. Contributions to the Bank's
401(k) Plan for Mr. Terry were $1,800 in 2000 and $-0- in 1999.
-16-
All Other Compensation for each year also includes the full amount of The
Vintage Bank's share of life insurance premiums paid pursuant to a split dollar
life insurance plan and agreement with Mr. Robinson. By the terms of the Split
Dollar Agreement dated November 21, 1994, The Vintage Bank has agreed to pay
$23,312 of the policy's total annual premium of $24,922 for a period of ten
years. On the tenth anniversary of the Split Dollar Agreement, or sooner on the
occurrence of certain other events, Mr. Robinson is required to repay the total
amount of premiums paid by the bank pursuant to the Agreement. In order to
secure repayment of the total amount of premiums paid by The Vintage Bank, the
policy has been collaterally assigned to the bank.
All Other Compensation for each year also includes amounts that would be payable
on account of corporate changes specified in Mr. Robinson's employment agreement
as described in the section of this proxy statement entitled "Termination of
Employment and Change of Control Arrangements." The amount payable to Mr.
Robinson ranges from:
o one year's base salary or the remainder of his base salary under his
Employment Agreement if less than one year remains in the case of a
corporate change approved by a majority of those directors who are
unaffiliated with the person initiating the corporate change, to
o two year's base salary in the case of a multistep corporate change not
approved by a majority of those directors unaffiliated with the person
initiating the corporate change.
Director fees for 1998, 1999, and 2000 of $5,800, $6,000, and $2,500
respectively, were deferred by Mr. Robinson pursuant to the Deferred Fee Plan
described in the section of this proxy statement entitled "Compensation of
Directors" and are not included in All Other Compensation for the years 1998,
1999, and 2000. All Other Compensation for 1999 and 2000 includes $2,648 and
$654, respectively, which is the taxable benefit of Mr. Robinson's benefits
under the Director Supplemental Retirement Program described in the section of
this proxy statement entitled "Compensation of Directors."
Option Grants and Exercises
The following table sets forth information concerning individual grants of stock
options during fiscal year 2000 to each of the Named Executive Officers, as
adjusted to for the 5% stock dividends paid through March 20, 2001:
-17-
Option Grants in Last Fiscal Year
Number of Securities
Underlying Options % of Total Options Granted Exercise or Expiration
Name Granted (#) to Employees in Fiscal Year Base Price ($/Sh) Date
- ---- ----------- --------------------------- ----------------- ----
Terry L. Robinson,
President and Chief -0- -- -- --
Executive Officer
Kathi Metro, Executive
Vice President 2,756 (1) 5% $22.11 2/01/2010
Glen C. Terry, President
and Chief Executive 11,025 (1) 22% $22.11 2/01/2010
Officer, Solano Bank and
Chief Financial Officer
<FN>
(1) Options were granted on February 1, 2000 and are exercisable with respect to
20% thereof within 60 days of the Record Date.
</FN>
The following table shows exercises of stock options during fiscal year 2000 by
the Named Executive Officers and the value at December 31, 2000 of unexercised
options on an aggregated basis held by each such persons:
Aggregate Option Exercises in Last Fiscal Year and Year-End Option Values
Number of Securities Value of Unexercised
Value Underlying Unexercised In-the-Money Options
Shares Acquired Realized Options At Fiscal Year-End at Fiscal Year-End
on Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
--------------------------------------- ------------- --------------------------------- -----------------------------
Terry Robinson, -0- -0- Exercisable for 2,315 Exercisable - $ 4,620
President and CEO Unexercisable for 9,261 Unexercisable - $18,481
Kathi Metro, -0- -0- Exercisable for 3,647 Exercisable - $29,327
Executive Vice Unexercisable for 5,187 Unexercisable - $ -0-
President.
Glen C. Terry, -0- -0- Exercisable for -0- Exercisable - $ -0-
President, CEO of Unexercisable for 11,025 Unexercisable $ -0-
Solano Bank
-18-
For purposes of calculating the value of unexercised stock options as of
December 31, 2000, it is assumed that the fair market value of the shares as of
December 31, 2000, was $21.00 per share, as adjusted for the 5% stock dividend
paid March 20, 2001. While the Board of Directors believes this to be a fair
value, it is not necessarily indicative of the price at which shares may be
bought or sold, since there is no established public trading market for the
shares.
Long Term Incentive Plans - Awards in Last Fiscal Year
There were no transactions in 2000 which require disclosure in a table for
long-term incentive plan awards.
Termination of Employment and Change of Control Arrangements
Effective March 1, 1999, The Vintage Bank entered into a new five (5) year
Employment Agreement with Mr. Robinson as President and Chief Executive Officer
of the bank. The Agreement provides that in the event of a termination by the
bank without cause, Mr. Robinson must be paid severance pay equal to six months'
base salary. In the event of certain specified corporate changes, including a
merger, sale, transfer of The Vintage Bank's assets or an effective change in
control of the bank, the bank may assign the Agreement to any successor entity,
continue the Agreement or terminate the Agreement, provided that if the bank
assigns or continues the Agreement, Mr. Robinson may either consent to such
assignment or continuance or may elect to terminate the Agreement. If the
Agreement is terminated by either party in connection with a corporate change
meeting certain requirements, including approval by a majority of those
directors who are unaffiliated with the person initiating the corporate change,
Mr. Robinson must be paid severance pay equal to one year's base salary or equal
to the remainder of his base salary under the Agreement if less than one year
remains. If the Agreement is terminated in connection with any other corporate
change, Mr. Robinson must be paid severance pay equal to two years' base salary.
The maximum amount payable under Mr. Robinson's current employment agreement in
connection with any corporate change is two years' base salary which for the
years 1998, 1999 and 2000 was $328,000, $346,500, and $367,834, respectively.
Upon certain changes in control of The Vintage Bank fees deferred pursuant to
the Deferred Fee Plan described in the section of this proxy statement entitled
"Compensation of Directors," including accrued interest, are paid to the
participating directors in a lump sum.
Compensation of Directors
The Board of Directors of North Bay has adopted a plan for the payment of fees
to directors for attendance at meetings of the Board, meetings of the Board of
Directors of The Vintage Bank or Solano Bank of which they are members, and
committees of which they are members. In accordance with that plan, directors of
North Bay are eligible to be paid a monthly fee of $1,000 for attendance at
regular Board meetings and meetings of the committees on which they sit;
provided, however, that Directors of North Bay also serving as directors of The
Vintage Bank are eligible to be paid an aggregate monthly fee of $1,250 for
attendance at regular Board meetings and meetings of committees on which they
sit. Also, the Chairman of the Board of North Bay is eligible to be paid an
additional $200 per month. Directors serving only on the
-19-
Board of Directors of The Vintage Bank are eligible to be paid a monthly fee of
$750 for attendance at regular bi-monthly Board meetings and meetings of
committees on which they sit. Also, the Chairman of the Board of The Vintage
Bank is eligible to be paid an additional $100 per month. Persons who serve only
on the Board of Directors of Solano Bank are not currently eligible to be paid a
monthly fee for attendance at regular Board meetings or meetings of committees
on which they sit. In all instances, the payment of fees to directors is subject
to reduction for failure to attend the minimum number of meetings of the board
and committees as specified in the North Bay Plan. Terry L. Robinson, President
and Chief Executive Officer of North Bay and The Vintage Bank and a director of
North Bay, The Vintage Bank and Solano Bank is not eligible to be paid any fees
for attendance at regular Board meetings and committees on which he sits.
Director Stock Options
In February 2000, Messrs. Long and Hewitt, newly elected non-employee directors
of North Bay and Mr. Nicks, a newly appointed non-employee director of The
Vintage Bank were granted options to purchase 6,300 shares of North Bay's common
stock pursuant to the North Bay Stock Option Plan at a price of $22.11 per
share, as adjusted for the 5% stock dividend paid March 20, 2001. These options
become vested and exercisable in five equal installments at the first, second,
third, fourth and fifth anniversaries of the date of the grant. The first
installment will become exercisable on February 1, 2001.
In March 2000, Mr. Beckstoffer a newly appointed non-employee director of The
Vintage Bank was granted options to purchase 6,300 shares of North Bay's common
stock pursuant to the North Bay Stock Option Plan at a price of $22.68 per
share, as adjusted for the 5% stock dividend paid March 20, 2001. These options
become vested and exercisable in five equal installments at the first, second,
third, fourth and fifth anniversaries of the date of the grant. The first
installment will become exercisable on March 1, 2001.
On July 1, 2000, an option to purchase 6,300 shares of North Bay Common Stock at
a price of $20.95 per share, adjusted for the 5% stock dividend paid on March
20, 2001, was granted to each director of Solano Bank, other than Directors
Robinson, Gaw and Terry. This option vests and becomes exercisable in five (5)
equal annual installments at the first, second, third, fourth, and fifth
anniversaries of the date of grant. Accordingly, the first installment will
become exercisable July 1, 2001.
The number of shares subject to purchase pursuant to each non-employee
director's option is subject to adjustment upon the occurrence of any changes in
capitalization of North Bay including stock splits and stock dividends. After
giving effect to the stock split effective October 1, 1997, and stock dividends
paid through March 20, 2001, the aggregate number of shares subject to each such
director's option is 135,670, and the effective price per share is $18.03.
-20-
Directors' Deferred Fee Plan
In August 1995, The Vintage Bank established a Deferred Fee Plan for the
directors of North Bay, Solano Bank and The Vintage Bank including Mr. Robinson.
The Deferred Fee Plan has been adopted by North Bay, and is now available to
directors of North Bay, Solano Bank, and The Vintage Bank. The deferral program,
provides for deferral, at the election of each director, of up to $15,000 of
annual director fees. The deferral program commences at the time the director
elects to participate and continues for a period which continues until the
director completes ten years of service and attains retirement age. At the end
of the deferral program or earlier in the event of disability, the deferred
compensation, including accrued interest, is paid to the director in a lump sum
or periodic payments over a specified period of time as selected by the director
upon enrollment in the Deferred Fee Plan. If the director terminates his or her
relationship with North Bay, Solano Bank and/or The Vintage Bank during the
Deferred Fee Plan period for reasons other than death or disability, all amounts
deferred, including accrued interest, will be paid in the manner selected by the
director but accrued interest on the deferred compensation shall be calculated
at an interest rate that is two-hundred basis points lower than the rate
established by North Bay's Board of Directors in accordance with the Deferred
Fee Plan.
In the event of death while a member of the Board of Directors, the director's
beneficiary will receive the amount that would have been paid to the director
had he or she remained in the program and attained his or her specified
retirement age.
In 1995 The Vintage Bank paid an aggregate single premium of $1,040,000 to
purchase life insurance policies on each director participating in the Deferred
Fee Plan to fund its liability for the death benefit. The Vintage Bank owns and
is the beneficiary of the policies and earns a rate of return on the invested
premiums which is reflected by an increase in the cash value of the policies.
The directors participating in the deferred program have no rights in the
policies.
Management of North Bay believes that the premium investment, after
consideration of the non-taxable nature of earnings on certain insurance
investments, produces a higher return than other taxable investments made in the
normal course of business. Therefore, the net cost of this deferred compensation
program to North Bay is believed to be nominal.
Director Supplemental Retirement Program
Effective January 1, 1999, The Vintage Bank established a Director Supplemental
Retirement Program for the directors of The Vintage Bank including Mr. Robinson
and The Vintage Bank's corporate secretary, Wyman G. Smith. Under the program
and a retirement policy adopted by The Vintage Bank's Board of Directors,
non-employee directors attaining age sixty-five are no longer eligible for
re-election to the Board of Directors. Upon attaining retirement age and
provided the participant has served on The Vintage Bank's Board of Directors or
as an officer of The Vintage Bank for not less than ten years, participants are
entitled to receive a defined benefit of $8,500 per year under the program in
annual installments commencing thirty days following their retirement. The
benefit is subject to an annual 2% cost of living increase commencing January 1,
2001.
-21-
In order to fund its liability under the program and minimize the impact of the
program on The Vintage Bank's earnings, in 1998 The Vintage Bank paid an
aggregate single premium of $2,462,000 to purchase life insurance policies to
fund the retirement and death benefits. The Vintage Bank owns and is the
beneficiary of the policies and earns a rate of return on the invested premiums
which is reflected by an increase to the cash value of the policies. The
directors participating in the program have no rights in the policies other than
an endorsement for a portion of the death benefit.
Participants with less than five (5) years of service on the Board of Directors
or to The Vintage Bank are not eligible to participate in the program.
Participants who served for more than five years, but less than ten years, are
entitled to receive a percentage of post retirement benefits determined by
multiplying twenty percent (20%) times years of service in excess of five years.
The program also provides that a deceased participant's named beneficiaries
shall receive a death benefit. On the death of a participant, The Vintage Bank
receives a tax-free death benefit sufficient to fully recover all premiums paid
on the deceased participant's specific life insurance policy.
Management believes that the premium investment, after consideration of the
non-taxable nature of earnings on certain insurance investments, produces a
higher return than other taxable investments made in the normal course of
business. Therefore, the net cost of the program to The Vintage Bank is believed
to be nominal.
-22-
OTHER INFORMATION REGARDING MANAGEMENT
Management Indebtedness
Certain provisions of the California Financial Code and Federal Regulations
enable state chartered banks to make loans to officers, directors and employees
up to certain specified limits. From time to time Solano Bank and The Vintage
Bank have made loans to such persons in the ordinary course of business. These
loans were made on substantially the same terms, including interest rates and
collateral requirements, as those prevailing for comparable transactions with
other nonaffiliated persons at the time each loan was made, subject to the
limitations and other provisions in California and Federal law. These loans do
not involve more than the normal risk of collectibility or present other
unfavorable features.
Certain Business Relationships
Mr. Gaw, a Director of the Company, Solano Bank, and of The Vintage Bank and
nominee for election to the Board of Directors, is a member and shareholder of
the law firm of Gaw, Van Male, Smith, Myers & Miroglio, a professional law
corporation which North Bay, Solano Bank and The Vintage Bank have retained
since their organization and propose to retain for specific matters during 2001.
During 2000, fees received by Mr. Gaw's firm for these services totaled $85,559,
of which $55,704 were billed to North Bay, $18,002 to Solano Bank, and $12,483
to The Vintage Bank.
Reports of Changes in Beneficial Ownership
Based upon a review of Forms 3 and 4 and amendments thereto furnished to the
Company during the fiscal year ending December 31, 2000, Form 5 and amendments
thereto furnished to the Company with respect to the fiscal year ending December
31, 2000, and written representations from all reporting persons, all statements
required by rules promulgated by the Securities and Exchange Commission under
Section 16 of the Securities Exchange Act of 1934 were timely filed, except for
Director Thomas Lowenstein who filed a Form 4 due May 10, 2000 on February 13,
2001, and Director Terry L. Robinson who filed a Form 4 due September 10, 2000
on February 13, 2001.
-23-
2. RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors of the Company has selected and appointed Arthur Andersen
LLP, independent certified public accountants, to examine the financial
statements of the Company for the year ending December 31, 2001. In recognition
of the important role of the independent auditor, the Board of Directors has
determined that its selection of the independent auditor should be submitted to
the shareholders for review and ratification on an annual basis. The Board of
Directors expects that a representative of Arthur Andersen LLP, will be in
attendance at the Annual Meeting and will be provided the opportunity to make a
statement if he or she so desires and will be available to respond to
appropriate questions of shareholders.
During the fiscal year ended December 31, 2000, Arthur Andersen LLP provided
professional services in connection with the audit of the financial statements
of North Bay for the year ending December 31, 1999, gave North Bay's Board of
Directors a post-audit briefing, prepared and completed North Bay's 1999 federal
income and California franchise tax returns, provided assistance in completing
North Bay's 1999 Annual Report to Shareholders and documents filed with the
Securities and Exchange Commission, and consulted with North Bay's management
regarding year end tax planning.
Audit Fees
The aggregate fees billed by Arthur Andersen LLP for professional services
rendered for the audit of the Company's annual financial statements for fiscal
year 2000 and the reviews of the financial statements included in the Company's
Forms 10-QSB for such fiscal year were $58,000.
Financial Information Systems Design And Implementation Fees
There were no fees billed by Arthur Andersen LLP for professional services
rendered for information technology services relating to financial information
systems design and implementation for fiscal year 2000.
All Other Fees
The aggregate fees billed by Arthur Andersen LLP for services rendered to the
Company other than the services described above under the captions "Audit Fees"
and "Financial Information Systems Design and Implementation Fees", were
$40,950.
Required Vote and Recommendation
The affirmative vote of a majority of the shares voting at the meeting, assuming
a quorum is present, is required to ratify the appointment of Arthur Andersen
LLP to audit the financial statements of North Bay for the fiscal year ending
December 31, 2001. An abstention or failure to vote shares represented and
entitled to vote at the meeting will be treated as a negative vote. The Board of
Directors recommends that shareholders vote FOR this proposal.
-24-
Availability of Form 10-KSB
A copy of the Company's 2000 Annual Report on Form 10-KSB, including financial
statements and financial statement schedules required to be filed with the
Securities Exchange Commission pursuant to Section 13 of the Securities Exchange
Act of 1934, will be furnished without charge to any shareholder upon written
request. A copy may be requested by writing Pansy F. Smith, Assistant Corporate
Secretary, North Bay Bancorp, P.O. Box 2200, Napa, California 94558.
Shareholder Proposals
The 2002 Annual Meeting of Shareholders will be held on April 23, 2002. November
28, 2001, is the date by which shareholder proposals intended to be presented at
the 2002 Annual Meeting must be received by management of the Company at its
principal executive office for inclusion in the Company's 2002 proxy statement
and form of proxy relating to that meeting. Additionally, with respect to any
proposal by shareholders not submitted for inclusion in the Bank's Proxy
Statement, if notice of such proposal is not received by February 11, 2002, such
notice will be considered untimely, and the Company's proxy holders shall have
discretionary authority to vote on such proposal.
OTHER MATTERS
The Board of Directors is not aware of any other matters to come before the
Annual Meeting. If any other matter not mentioned in this Proxy Statement is
brought before the Annual Meeting, the persons named in the enclosed form of
proxy will have discretionary authority to vote all proxies with respect thereto
and in accordance with their judgment.
Dated: March 28, 2001. For the Board of Directors
Napa, California
--------------------------
Wyman G. Smith, III
Corporate Secretary
-25-
APPENDIX A.
[OMIT GRAPHIC]
AUDIT COMMITTEE CHARTER
ORGANIZATION
The Audit Committee of the Board of Directors shall be comprised of at
least three Directors who are independent of Management and the Company.
Members of the Audit Committee shall be considered independent if they have no
relationship to the Company that may interfere with the exercise of their
independence from Management and the Company. All Audit Committee members will
be financially literate, and at least one member will have accounting or related
financial management expertise.
STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Directors in
fulfilling their responsibility to the shareholders, potential shareholders,
regulators and investment community relating to corporate accounting, reporting
practices of the company and the quality and integrity of financial reports of
the Company. In so doing, it is the responsibility of the Audit Committee to
maintain free and open communication among the Directors, the independent
auditors, the regulators, the internal auditors and the financial management of
the Company.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible. Flexibility is needed to best
react to changing conditions and to ensure to the Directors, shareholders and
regulators that the corporate accounting and reporting practices of the Company
are in accordance with all requirements and are of the highest quality.
In carrying out these responsibilities, the Audit Committee will:
>> Obtain the full Board of Directors' approval of this Charter and review and
reassess this Charter as conditions dictate (at least annually).
-i-
>> Review and recommend to the Directors the independent auditors to be
selected to audit the financial statements of the Company and its
subsidiaries.
>> Have a clear understanding with the independent auditors that they are
ultimately accountable to the Board of Directors and the Audit Committee as
the shareholders' representatives, who have the ultimate authority in
deciding to engage, evaluate and, if appropriate, terminate their services.
>> Review and concur with Management's appointment, termination or replacement
of the internal audit, compliance review, credit administration and credit
review outsourcing firms. The Audit Committee has the authorized
responsibility to appoint, terminate or replace these firms and personnel.
>> Meet with the independent auditors and financial management of the Company
to review the scope of the proposed audit and timely quarterly reviews for
the current year along with the procedures to be utilized and the adequacy
of the independent auditors' compensation. At the conclusion of each review
or audit, the Committee review the report, including any comments or
recommendations of the independent auditors.
>> Review with the independent auditors the Company's internal auditor or
outsourcing representative and financial and accounting personnel, the
adequacy and effectiveness of the accounting and financial controls of the
Company, and elicit any recommendations for the improvement of such
internal controls or particular areas where new or more detailed controls
or procedures are desirable. Particular emphasis should be given to the
adequacy of internal controls to expose any payments, transactions or
procedures that might be deemed illegal or otherwise improper. Further, the
Committee periodically should review Company policy statements to determine
their adherence to the Code of Conduct.
>> Review reports received from regulators concerning legal and regulatory
matters that may have a material effect on the financial statement related
Company compliance policies.
>> Review with the Company's counsel any legal matters that could have a
significant impact on the Company's financial statements.
>> Review the internal audit, credit administration and credit review
functions of the Company, including the independence and authority of its
reporting obligations, the proposed audit plans for the coming year and the
coordination of such plans with the independent auditors. Additionally, all
credit review outsourcing reports will be reviewed by the Committee. The
internal audit, compliance review, credit administration and credit review
functions shall report directly to the Audit Committee. For operational
purposes, on a daily basis these functions shall report to the CEO or his
designated officer.
>> Review the policies and procedures in effect for considering officers'
expenses and perquisites.
-ii-
>> Inquire of Management, the internal audit and credit administration review
firms and the independent auditors about significant risks or exposures and
assess the steps Management has taken to minimize such risks to the
Company.
>> Receive prior to each meeting, a summary of findings from completed
internal audits and a progress report on the proposed internal audit plan,
with explanations for any deviations from the original plan.
>> Review the quarterly financial statements with financial management and the
independent auditors prior to the filing of the Form 10-Q (or prior to the
press release of results, if possible) to determine that the independent
auditors do not take exception to the disclosure and content of the
financial statements, and discuss any other matter required to be
communicated to the Committee by the auditors. The Chair of the Committee
may act on behalf of the Committee for the purpose of this review.
Following 2000 year-end, the Company's independent auditor will provide a
quarterly written opinion regarding the Company's financial condition.
>> Review the financial statements contained in the Annual Report to
Shareholders with Management and the independent auditors to determine that
the independent auditors are satisfied with the disclosure and content of
the financial statements to be presented to the shareholders. Review with
financial management and the independent auditors the results of their
timely analysis of significant financial reporting issues and practices,
including changes in or adoptions of accounting principles and disclosure
practices, and discuss any other matters required to be communicated to the
Committee by the auditors. Also review with financial management and the
independent auditors their judgments about the quality, not just
acceptability, of accounting principals and the clarity of the financial
disclosure practices used or proposed to be used and, particularity, the
degree of aggressiveness or conservatism of the Company's accounting
principles and underlying estimates, and other significant decisions made
in preparing the financial statements.
>> It is the responsibility of the Chairman of the Audit Committee to
communicate and interact with other Committees of the Board and the Board
itself on all matters of importance.
>> The Committee Chairperson will be authorized to meet with the independent
auditors and financial management of the Company to review their reports on
behalf of the Committee.
>> Provide sufficient opportunity for the independent auditors to meet with
the members of the Audit Committee without members of Management present.
Among the items to be discussed in these meetings are the independent
auditors' evaluation of the Company's financial, accounting and auditing
personnel and the cooperation that the independent auditors received during
the course of the audit.
>> Review accounting and financial human resources and succession planning
within the Company.
-iii-
>> Report the results of the annual audit to the Board of Directors. If
requested by the Board, invite the independent auditors to attend the full
Board of Directors meeting to assist in reporting the results of the annual
audit or to answer other director questions (alternatively, the other
Directors, particularly the other independent Directors shall be invited to
attend the Audit Committee meeting during which the results of the annual
audit are reviewed.)
>> Review the nature and scope of other professional services provided to the
Company by the independent auditors and consider the relationship to the
auditors' independence.
>> On an annual basis, obtain from the independent auditors a written
communication delineating all their relationships and professional services
as required by Independence Standards Board No. 1, Independence Discussions
with Audit Committees. In addition, review with the independent auditors
the nature and scope of any disclosed relationships or professional
services and take, or recommend that the Board of Directors take,
appropriate action to ensure the continuing independence of the auditors.
>> Determine that the external auditors had a peer review and the results of
such review.
>> Review the report of the Audit Committee in the Proxy Statement disclosing
whether or not the Committee has reviewed and discussed with Management and
the independent auditors, as well as discussed within the Committee
(without Management or the independent auditors present), the financial
statements and the quality of accounting principles and significant
judgments affecting the financial statements. In addition, disclose the
Committee's conclusion on the fairness of presentation of the financial
statements as to their conformity with GAAP based on those discussions. The
Audit Committee should recommend to the Board that the audited financial
statements be included in the Company's Annual Report on Form 10-K.
>> Submit the minutes of all meetings of the Audit Committee to, or discuss
the matters discussed at each Committee meeting with, the Board of
Directors.
>> Investigate any matter brought to its attention within the scope of its
duties, with the power to retain outside counsel for this purpose if, in
its judgment, that is appropriate. Also, when necessary, the Committee
should review and assess conflict of interests and related party
transactions.
>> Review the Company's disclosure in the Proxy Statement for its Annual
Meeting of Shareholders that states that the Committee has satisfied its
responsibilities under this Charter for the prior year. In addition,
include a copy of this Charter in the Annual Report to Shareholders or the
Proxy Statement at least triennially or the year after any significant
amendment to the Charter.
>> The Committee should conduct a self-assessment of its performances in the
interest of continuous improvement. This self-assessment should occur at
least every two years. An outside facilitator may be used to conduct this
self-evaluation.
-iv-
SUBSIDIARY BANKS
This Audit Charter shall be adopted, where applicable, by the
subsidiary Banks.
FREQUENCY OF MEETINGS
The Audit Committee should meet as a minimum quarterly.
COMMITTEE EDUCATION AND ORIENTATION
Whenever possible, members of the Committee are expected to attend
association conferences, meetings and classes for continuing education and
exposure to the banking business and environment in which the Company operates.
AUDIT COMMITTEE PLAN
The Committee should develop an annual Audit Committee Plan which is
responsive to the primary Audit Committee responsibilities for the review and
approval of the Plan by the full Board.
-v-
APPENDIX TO EDGARIZED FILING
NORTH BAY BANCORP PROXY CARD
-vi-
X PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE
This proxy is solicited on behalf of the Board of Directors and may be
revoked prior to the meeting.
NORTH BAY BANCORP
The undersigned hereby appoints Terry L. Robinson and Wyman G. Smith, III, as
Proxies, each with full power of substitution, and hereby authorizes them to
represent and to vote all the shares of common stock of North Bay Bancorp held
of record by the undersigned on March 1, 2001, at the annual meeting of
shareholders to be held on April 24, 2001, or any adjournment thereof. The
undersigned hereby further confers upon such Proxies, and each of them, or there
substitute or substitutes, discretionary authority to vote in respect to all
other matters which may properly come before the meeting or any adjournment
thereof, including discretionary authority to cumulate votes in the election of
directors.
The undersigned acknowledges receipt (a) the Notice of Annual Meeting and
accompanying Proxy Statement and (b) an Annual Report of the Company for the
fiscal year ended December 31, 2000, and hereby expressly revokes any and all
proxies heretofore given or executed by the undersigned with respect to the
shares of stock represented by this Proxy, and by filing this Proxy with the
Secretary of the Company, gives notice of such revocation.
Please be sure to sign and date Date _________
this Proxy in the box below.
______________________ _____________________________
Stockholder sign above Co-holder (if any) sign above
1. ELECTION OF DIRECTORS
NOMINEES:
Thomas N. Gavin; David B. Gaw; Fred J. Hearn; Conrad W. Hewitt; Harlan R. Kurtz;
Richard S. Long; Thomas H. Lowenstein; Thomas F. Malloy; Terry L. Robiinson;
James E. Tidgewell
For : ____ Withhold:___ For All Except ____
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below:
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT
PUBLIC ACCOUNTANTS OF THE COMPANY.
For ___ Against ___ Abstain ____
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this Proxy will be
voted for all of the nominees named on this Proxy Card and for Proposal 2.
- --------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
North Bay Bancorp
1500 Soscol Avenue
Napa, California 94559
Please sign exactly as your name appears hereon. If shares are held jointly by
two or more persons, whether as a community property, joint tenancy or
otherwise, both or all of suh persons should sign. If shares are held by a
corporation, this Proxy should be signed in full corporate name by the President
or other authorized officer. If shares are held by a partnership, this Proxy
should be signed in partnership name by an authorized person. Executor,
administrators or other fiduciaries who execute this Proxy for a shareholder of
record should give their full title.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
Has your address changed?
__________________________________
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