EXHIBIT 99.14
CAPITOLBANK SACRAMENTO
300 Capitol Mall
Sacramento, CA 95814
(916) 449-8300
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 25, 1994
TO THE SHAREHOLDERS OF CAPITOLBANK SACRAMENTO:
NOTICE IS HEREBY GIVEN that pursuant to its Bylaws and the call of its
Board of Directors, the Annual Meeting of Shareholders ("Meeting") of
CAPITOLBANK SACRAMENTO ("Bank") will be held at the offices of the Bank, 300
Capitol Mall, Sacramento, California, on Wednesday, May 25, 1994, at 5:00 p.m.,
for the purpose of considering and voting upon the following matters:
1. Election of Directors. The Board of Directors has nominated the
following nine persons for election to the Board of Directors to serve until the
next Annual Meeting of Shareholders and until their successors are elected and
qualified:
RALPH ANDERSEN LOUIS G. FIFER
THOMAS J. HAMMER ROBERT T. JENKINS
WILLIAM J. MARTIN THAYER T. PRENTICE
CAROLYN G. REID J. AL WICKLAND
JOHN A. WICKLAND, III
2. Amendment to Stock Option Plan. To approve an amendment to the Bank's
1992 Stock Option Plan to increase the number of shares available thereunder
from 306,023 to 500,000.
3. Ratification of Independent Public Accountants. To ratify the
appointment of KPMG Peat Marwick as independent public accountants for the Bank
for the current year.
4. To transact such other business as may properly come before the Meeting
and at any adjournment or postponement thereof.
Section 16(b) of Article III of the Bylaws of the Bank provides for
nomination of directors in the following manner:
"Nomination for election of members of the Board of Directors may be made
by the Board of Directors or by any stockholder of any outstanding class of
capital stock of the
corporation entitled to vote for the election of directors. Notice of intention
to make any nominations, (other than nominations by the Board of Directors)
shall be made in writing and shall be delivered or mailed to the President of
the corporation not less than 21 days nor more than 60 days prior to any meeting
of stockholders called for the election of directors; provided, however, that if
less than 21 days notice of the meeting is given to shareholders, such notice of
intention to nominate shall be mailed or delivered to the President of the
corporation not later than the close of business on the tenth day following the
day on which the notice of meeting was mailed; provided further that if notice
of such meeting is sent by third-class mail as permitted by Section 6 of these
Bylaws, no notice of intention to make nominations shall be required. Such
notification shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the number of shares of
capital stock of the corporation owned by each proposed nominee; (d) the name
and residence address of the notifying shareholder; and (e) the number of shares
of capital stock of the corporation owned by the notifying shareholder.
Nominations not made in accordance herewith may, in the discretion of the
Chairman of the meeting, be disregarded, and upon the Chairman's instructions,
the inspectors of election can disregard all votes cast for each such nominee.
A copy of this paragraph shall be set forth in a notice to shareholders of any
meeting at which Directors are to be elected."
Only those shareholders of record at the close of business on April 15,
1994 will be entitled to notice of and to vote at the Meeting, and at any
adjournment or postponement thereof.
By Order of the Board of Directors
/s/ Thayer T. Prentice
Thayer T. Prentice
Vice Chairman &
Chief Executive Officer
DATED: May 4, 1994
YOUR VOTE IS IMPORTANT. WE URGE YOU TO SIGN AND RETURN THE ACCOMPANYING
PROXY CARD WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. IF YOU DO ATTEND THE
MEETING, YOU MAY VOTE BY BALLOT AT THE MEETING, THEREBY REVOKING ANY PROXY
PREVIOUSLY GIVEN.
CAPITOLBANK SACRAMENTO
300 Capitol Mall
Sacramento, California 95814
(916) 449-8300
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 1994
INTRODUCTION
The 1994 Annual Meeting of Shareholders of the Bank will be held on
Wednesday, May 25, 1994, at 5:00 p.m. at the offices of the Bank, 300 Capitol
Mall, Sacramento, California, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. This proxy statement is furnished in
connection with the solicitation by the Board of Directors of proxies to be used
at the Meeting and at any adjournment or postponement thereof. This proxy
statement and the accompanying proxy are first being sent to shareholders on or
about May 4, 1994.
If a proxy in the accompanying form is duly executed and returned in
time for the meeting, the shares represented thereby will be voted by the
proxyholders in accordance with the instructions on the proxy. If no
instruction is specified, the shares will be voted for the nominees identified
in this proxy statement, for the amendment to the Stock Option Plan, for the
ratification of the appointment of KPMG Peat Marwick as independent public
accountants for the Bank for the current year, and in accordance with the
recommendations of the Board of Directors on such other matters as may properly
be presented at the Meeting. The proxy may, nevertheless, be revoked prior to
its exercise by delivering written notice of revocation to the Assistant
Secretary of the Bank, by executing a later dated proxy or by attending the
Meeting and voting in person.
The expense of preparing, assembling, printing and mailing this proxy
statement and the material used in this solicitation of proxies will be borne by
the Bank. It is contemplated that proxies will be solicited through the mail,
but officers and regular employees of the Bank may solicit proxies personally.
The annual report of the Bank to its shareholders, including financial
statements for the fiscal year ended December 31, 1993 (which also serves as the
Bank's Annual Disclosure Statement under applicable FDIC regulations), is being
provided to shareholders with this proxy statement. Additional copies of the
annual report may be obtained upon request of the Corporate Secretary,
CapitolBank Sacramento, P.O. Box 2311, Sacramento, California 95812-2311 (916)
449-8300.
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VOTING SECURITIES
The Board of Directors set April 15, 1994 as the record date for the
purpose of determining the shareholders entitled to notice of and to vote at the
Meeting. On April 15, 1994, there were 4,080,302 shares of the Bank's common
stock outstanding. Each share of common stock is entitled to one vote on each
matter that comes before the Meeting (except as noted below under the discussion
of cumulative voting).
In connection with the election of directors, shares are entitled to
be voted cumulatively if a shareholder present at the Meeting has given notice
of his or her intention to vote his or her shares cumulatively. If a
shareholder has given such notice, all shareholders may cumulate their votes for
candidates in nomination. If a proxy is marked for the election of directors
without any exception indicated, it may, at the discretion of the proxyholders,
be voted cumulatively in the election of directors. Cumulative voting entitles
a shareholder to give one nominee as many votes as is equal to the number of
shares owned by such shareholder multiplied by the number of directors to be
elected, or to distribute his or her votes on the same principle between two or
more nominees as he or she sees fit.
REGULATORY AGREEMENT
On February 24, 1993, the Bank entered into a Memorandum of
Understanding (the "Memorandum") with the Federal Deposit Insurance Corporation
(the "FDIC") and the California State Banking Department (the "State") as a
result of a joint examination of the Bank by the FDIC and the State. The FDIC
performed a subsequent examination of the Bank as of November 15, 1993. Based
upon the results of that examination, on February 7, 1994, the FDIC, along with
the State, terminated the existing Memorandum.
PROPOSAL ONE: ELECTION OF DIRECTORS
The Bylaws of the Bank provide that the authorized number of directors
of the Bank shall be not less than seven nor more than thirteen, the exact
number of directors within said range to be fixed by a duly adopted resolution
of the Board of Directors. Pursuant to such a resolution, the Board has fixed
the number of directors at nine. The nine persons named below, all of whom are
presently members of the Board of Directors of the Bank, have been nominated for
election to serve until the next Annual Meeting of Shareholders and until their
successors are elected and qualified, or until such director's earlier death,
resignation or removal. All persons named below have consented to being named
as nominees in this proxy statement and to serve if elected. If any of the
nominees should unexpectedly decline or be unable to act or serve as a director,
the proxies
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may be voted for a substitute nominee to be designated by the Board of
Directors. Shares represented by executed proxies shall be voted, if authority
to do so is not withheld, for the nine nominees named below, subject to the
proxyholders' discretionary power to cumulate votes. The nine nominees
receiving the highest number of affirmative votes of the shares entitled to be
voted for them shall be elected as directors.
Certain information with respect to the persons nominated by the Board
of Directors for election as directors, and all nominees for election, and
principal officers of the Bank as a group, is set forth below:
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Common Stock
First Year Beneficially
Elected or Owned on
Appointed a April 15, 1994 (1)
Age Director No. %
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Ralph Andersen 54 1994 0 0%
Louis G. Fifer 45 1991 500 .01%
Thomas J. Hammer, Jr. 61 1991 1,500 .03%
Robert T. Jenkins 50 1991 1,000 .02%
William J. Martin (2) 47 1994 26,042 .64%
Thayer T. Prentice (3) 57 1994 31,250 .77%
Carolyn G. Reid 55 1991 3,000 .07%
J. Al Wickland, Jr. 73 1986 839,254 20.60%
John A. Wickland, III 49 1989 180,705 4.40%
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Directors and Principal
Officers (14 persons) (4) (5) 1,109,507 26.60%
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(1) Unless otherwise indicated and subject to community property laws, each of
the above Directors holds sole voting and investment power as to all shares
owned.
(2) Includes 26,042 shares which may be acquired under stock options
exercisable within 60 days of April 15, 1994.
(3) Includes 31,250 shares which may be acquired under stock options
exercisable within 60 days of April 15, 1994.
(4) As used in this proxy statement, the term "officer" or "principal officer"
means a Chairman of the Board of Directors, Vice Chairman of the Board,
President, Executive Vice Presidents, Senior Vice Presidents, Corporate
Secretary, Vice President, and any other person who participates in major
policy-making functions of the Bank.
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(5) Includes 82,592 shares which may be acquired under stock options
exercisable within 60 days of April 15, 1994.
Principal Shareholders
The following table sets forth certain information regarding all
shareholders who beneficially own more than 5% of the outstanding shares of
Common Stock of the Bank (the only class outstanding) as of April 15, 1994, the
record date for determining shareholders entitled to vote.
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Number of Shares Percent of
Name and Address of Directly or Outstanding
Beneficial Owner Beneficially Owned Shares
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J. Al Wickland, Jr.
3640 American River Drive
Sacramento, California
95853 839,254 (1) 20.6%
(1) Mr. Wickland, a Director of the Bank, holds sole voting and investment
power to all of his shares.
Business Experience of Nominees
Ralph Andersen: Mr. Andersen, 54, was appointed as a Director on March 30,
1994. Since his retirement in 1987, Mr. Andersen has served as a member of the
Board of Directors of The Junior Statesmen Foundation, University of California
Berkeley Foundation, Sutter Community Hospitals, Salvation Army, and the ICMA
Retirement Corporation. From 1972 to 1987, Mr. Andersen owned and operated
Ralph Andersen & Associates, a management consulting firm, with offices in
Sacramento and Newport Beach, California and Dallas, Texas. Mr. Andersen also
engaged in real estate development and investment in Sacramento, California, and
served on the Board of Directors of Point West Bank (from 1982 to 1988) until
Point West Bank was sold to First Interstate Bank. From 1964 to 1971, Mr.
Andersen served as Principal Assistant to the Director of the League of
California Cities.
Louis G. Fifer: Mr. Fifer has served as a director since May 1991.
Currently, Mr. Fifer also serves as the Vice President of Operations with Hotel
Information Systems, a manufacturer and provider of hospitality information
systems. Prior to that time, he served in various managerial and ownership
capacities with Systems Integrators, Inc., a company engaged in the development
and sales of computerized publishing systems. Mr. Fifer terminated his
employment with Systems Integrators, Inc. on October 31, 1992. Systems
Integrators,
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Inc. filed a petition under Chapter 11 of the U.S. Bankruptcy Code on
September 22, 1993.
Thomas J. Hammer, Jr.: Mr. Hammer has served as a director since November
1991. For more than five years, Mr. Hammer has served as the President of
Shasta Linen Supply, Inc., a Sacramento based linen service provider.
Robert T. Jenkins: Mr. Jenkins has served as a director since September
1991. For more than five years, he has served in various capacities with Intel
Corporation, a worldwide developer and manufacturer of advanced computer chips.
Most recently, Mr. Jenkins has served as Vice President and Director of
Corporate Licensing of Intel Corporation.
William J. Martin: Mr. Martin, 47, was appointed as President and Chief
Operating Officer on April 2, 1994. Mr. Martin became a Director effective
April 15, 1994. From December 1993 to April 1, 1994, Mr. Martin served as
Executive Vice President of American River Bank. From October 1990 to December
1993, Mr. Martin served as Executive Vice President and Commercial Lending
Manager of the Sacramento Regional Office of Bank of San Francisco. For more
than 20 years prior to that time, Mr. Martin served in various capacities in the
banking industry, including as Senior Vice President and Manager of First
Interstate Bank's Sacramento Business Banking Center (from January 1989 to
October 1990), Executive Vice President of Point West Bank, Sacramento,
California (from October 1986 to January 1989) and with Crocker National Bank
(from 1971 to 1986).
Thayer T. Prentice: Mr. Prentice, 56, was appointed as a Director on March
30, 1994. Prior to that time, Mr. Prentice served in various capacities at Bank
of San Francisco, including Chairman, President and Chief Executive Officer
(from November 1, 1991 through August 4, 1993) and Vice Chairman (from 1990
through November 1, 1991). From 1988 to 1990, Mr. Prentice served as Executive
Vice President and Division Manager of First Interstate Bank, and from 1979 to
1988, Mr. Prentice served as President and Chief Executive Officer of Point West
Bank. Mr. Prentice also has served on the Board of Directors of the Dean's
Advisory Council of the Graduate School of Management of the University of
California at Davis since 1990 and on the Salvation Army Advisory Board in
Sacramento, California, since 1980 (serving as Chairman in 1984).
Carolyn G. Reid: Ms. Reid has served as a director since May 1991. For
more than five years, she has been Vice President and Co-Owner of Reid and
Associates, a building materials marketing and sales company in Sacramento.
J. Al Wickland, Jr.: Mr. Wickland has served as a director since March
1986, and as Chairman of the Board from January 1987 to August 1990. Mr.
Wickland was reelected Chairman of the Board in August 1991, and currently
serves in this capacity.
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For more than five years, he has served as Chairman of the Board of Wickland Oil
Co., a Sacramento based petroleum distribution and marketing company.
John A. Wickland, III: Mr. Wickland has served as a director since January
1989. Since 1989, he has also been President of Wickland Corporation and
Wickland Properties. He also holds executive positions with Wickland Oil
Company. From 1975 through 1989, he was President of Regal Stations, Inc., the
predecessor corporation of Wickland Properties.
There is no family relationship between any of the directors listed above,
except that John A. Wickland, III is the son of J. Al Wickland, Jr.
The Board of Directors and Committees
The Board of Directors is responsible for the overall affairs of the Bank.
To assist it in carrying out this responsibility, the Board has delegated
certain authority to several standing committees. These include a Compensation
Committee, Loan Committee, Audit Committee, Investment Committee and Trust
Committee. The membership and duties of these committees are as follows:
The Compensation Committee is chaired by Mr. John A. Wickland, III, and
Messrs. Robert T. Jenkins and Louis G. Fifer serve as members. The Compensation
Committee held one meeting during 1993. The primary purpose of the Compensation
Committee is to review and make recommendations regarding the policy of the Bank
with respect to the compensation of the Bank's management. The Compensation
Committee also serves as the Stock Option Committee for the Bank.
The Loan Committee is chaired by Mr. John A. Wickland, III, and Messrs.
Louis G. Fifer and William J. Martin serve as permanent members and Mr. Thayer
T. Prentice serves as an ex-officio member. Messrs. Thomas J. Hammer, Jr.,
Robert T. Jenkins, J. Al Wickland, Jr. and Ms. Carolyn G. Reid are rotating
members. During 1993, the Loan Committee held a total of 41 meetings. The
purpose of the Loan Committee is to monitor adherence to the Bank's loan
policies and to approve loan requests over the limits assigned to management.
The Loan Committee also reviews loans approved by management for compliance with
the Bank's lending policy and to determine credit worthiness of the borrower.
The Audit Committee is chaired by Ms. Carolyn Reid, and Messrs. J. Al
Wickland, Jr. and Robert T. Jenkins are members. During 1993, the Audit
Committee held a total of four meetings. The purpose of the Audit Committee is
to establish and maintain an internal audit system, review and modify internal
Bank procedures, monitor reports by regulatory agencies, meet quarterly
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with independent auditors, and to recommend independent accountants for
appointment by the Board of Directors.
The Investment Committee is chaired by Mr. Robert T. Jenkins and Messrs.
John A. Wickland, III and William J. Martin are members and Mr. Thayer T.
Prentice is an ex-officio member. During 1993, the Investment Committee held a
total of three meetings. The purpose of the Investment Committee is to monitor
adherence to the Bank's Investment Policy and to review investment activity.
The Trust Committee is chaired by Mr. Thomas J. Hammer, Jr., and Messrs. J.
Al Wickland, Jr. and William J. Martin and Ms. Carolyn G. Reid are members and
Mr. Thayer T. Prentice is an ex-officio member. During 1993, the Trust
Committee held a total of eleven meetings. The purpose of the Trust Committee
is to approve trust applications and terminations, and to review all trust
investments and implement audits of all trust accounts.
The Board of Directors does not currently have a standing Nominating
Committee. The Board as a whole identifies potential nominees for election to
the Board of Directors and will consider shareholder nominations in accordance
with established procedures as outlined in the Bylaws of the Bank and stated in
the Notice of Annual Meeting of Shareholders accompanying this proxy statement.
The Board held 13 meetings in 1993; the committees held 55 meetings. Each
of the persons who was a director of the Bank during 1993 attended at least 75%
of the aggregate of the total number of meetings of the Board and the total
number of committee meetings of which he or she was a member, with the exception
of John A. Wickland, III, who attended 73% of said meetings.
Directors' Compensation
Each outside member of the Board of Directors receives $400 per board
meeting and $200 per committee meeting attended. A total of $54,500 was paid
during 1993 to all outside directors. Employee directors receive no
compensation for attending meetings of the Board of Directors or committees of
the Board.
Remuneration
Cash Compensation
The following table sets forth the aggregate remuneration for services in
all capacities paid or accrued for the fiscal year ended December 31, 1993: (a)
to each of the five most highly compensated principal officers of the Bank whose
aggregate cash and cash equivalent forms of remuneration exceeded $60,000; and
(b) to all principal officers of the Bank as a group:
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CASH COMPENSATION TABLE
Identification and Capacities in Which Salaries, Fees and
Remuneration is Received Bonuses (1)
- - --------------------------------------------------------------------------------
Thomas E. King (2)
President & Chief Executive Officer $170,680
Susan J. Drack
Senior Vice President and
Commercial Banking Manager $101,160
Bernard Rao
Senior Vice President and
Chief Administrative Officer $95,640
Dennis F. Ceklovsky (3)
Senior Vice President and
Chief Credit Officer $90,340
Florence A. Bellacosa
Vice President and
Trust Department Manager $77,760
All Principal Officers
as a Group (4)
(10 persons) $714,782
(1) Includes deferrals of salary pursuant to the 401(k) plan as described under
the heading COMPENSATION PLANS below. No other compensation was paid or
distributed during the last fiscal year to the: (i) individuals named in
the cash compensation table above which in the aggregate equals or exceeds
the lesser of $25,000 or 10 percent of the compensation set forth in the
cash compensation table for such individual or (ii) group named in the cash
compensation table above which in the aggregate equals or exceeds the
lesser of $25,000 times the number of persons in the group or 10 percent of
the aggregate compensation set forth in the cash compensation table for
such group.
(2) Mr. King ceased being the President and Chief Executive Officer and a
Director of the Bank effective April 15, 1994. For information regarding
Mr. King's cessation of employment with the Bank, see "Severance Agreement
with Thomas E. King."
(3) Mr. Ceklovsky ceased being an officer of the Bank effective April 2, 1994.
It is expected that Mr. Ceklovsky will cease providing services to the Bank
effective May 15, 1994. The Bank is currently negotiating a severance
arrangement with Mr. Ceklovsky, which is expected to provide that Mr.
Ceklovsky will, among other things,
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release the Bank and its affiliates from certain liabilities and
obligations including those that arose out of his employment by the Bank
and termination of that employment. The Bank, in turn, among other things,
is expected to agree to pay to Mr. Ceklovsky the equivalent of six months'
salary ($41,000) and if at the conclusion of six months from the effective
date of the agreement Mr. Ceklovsky has not obtained subsequent employment
or is not self-employed, the Bank will pay to Mr. Ceklovsky a continuation
salary of $6,833 per month for up to three months or until Mr. Ceklovsky
obtains such subsequent employment, whichever occurs first. It is also
expected that the Bank will pay up to a maximum of $12,000 for Mr.
Ceklovsky's out-placement assistance and will release Mr. Ceklovsky from
certain liabilities and obligations including those that arose out of his
employment by the Bank and termination of that employment. Ms. Kathleen M.
Thomas was appointed to the office of Senior Vice President and Chief
Credit Officer of the Bank effective April 2, 1994.
(4) Includes all principal officers who served during 1993.
Employment Agreement with Thomas E. King
On April 3, 1992, the Bank entered into an employment agreement with Thomas
E. King, President and Chief Executive Officer, which provided for a base salary
of $150,000 per year. In addition, the agreement provided that Mr. King was
entitled to participate in the Bank's stock option plan and was eligible to
receive up to 50% of his annual base salary in the form of an incentive bonus
based upon the achievement of certain performance goals. Under the agreement,
Mr. King was also entitled to severance compensation equal to twelve months base
salary if the Board of Directors terminated Mr. King's employment during the
first year of employment for reasons other than serious misbehavior or
malfeasance. The severance compensation was to decrease each year after the
first year of his employment until it reached zero after five years of
employment.
On August 26, 1993, the severance compensation portion of the agreement
with Mr. King was amended. The amendment, among other things, provided that if
Mr. King was terminated for reasons other than serious misbehavior or
malfeasance, the Bank would pay to Mr. King as severance compensation the
difference, if any, between $150,000 and the before-tax gain realized by Mr.
King upon the sale of shares of the Bank's common stock that Mr. King had
acquired, or had a right to acquire, pursuant to the Bank's Stock Option Plan.
Severance Agreement with Thomas E. King
Pursuant to the terms of a severance agreement dated April 7, 1994 (the
"Severance Agreement"), between the Bank and Mr. King, Mr. King ceased being the
President and Chief
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Executive Officer and a Director of the Bank effective April 15, 1994. In
connection with the termination of Mr. King's employment, Mr. King, among other
things, agreed to provide consulting services to the Bank through August 15,
1994, relinquish rights he had to compensation that accrued and had not been
paid prior to the time of his termination, relinquish rights he had to options
to purchase shares of the Bank's Common Stock, and release the Bank and its
affiliates from certain liabilities and obligations including those that arose
out of his employment by the Bank, termination of that employment, and related
matters. The Bank, in turn, among other things, agreed to pay to Mr. King a
one-time severance payment of $150,000 on April 15, 1994, his out-placement
assistance until he secures a full-time position, his costs of health insurance
until the earlier of August 15, 1994, or the date he becomes eligible for health
insurance benefits offered by a future employer, and, provided that he provides
the consulting services described in the Severance Agreement for the time period
described therein, to continue to pay to him his regular base salary of $12,500
per month through August 15, 1994. The Bank also agreed to release Mr. King
from certain liabilities and obligations including those that arose out of his
employment by the Bank, termination of that employment, and related matters.
Employment Agreement with Thayer T. Prentice
Effective March 30, 1994, the Bank entered into a five-year employment
agreement with Thayer T. Prentice, Vice Chairman and Chief Executive Officer,
which provides for a base salary of $150,000 per year. In addition, the
agreement provides that Mr. Prentice is entitled to participate in the Bank's
stock option plan and other employee benefit plans, is eligible to receive up to
40% of his annual base salary in the form of an incentive bonus based upon the
achievement of certain performance goals and is to receive a $500,000 term life
insurance policy and an automobile allowance of $500 per month. The agreement
also provides that Mr. Prentice is entitled to severance compensation equal to
$150,000 if he is terminated (a) without cause, or (b) in the event of certain
reorganizations, including the sale of all or substantially all of the assets of
the Bank, the merger, consolidation or reorganization of the Bank in which the
Bank is not the survivor, or a tender offer involving fifty percent (50%) or
more of the issued and outstanding voting securities of the Bank. Pursuant to
the agreement, on March 30, 1994, Mr. Prentice was granted options to purchase
125,000 shares of the Bank's common stock at a price of $1.50 per share. Mr.
Prentice's options have a term of ten years from the date of grant and become
exercisable as to 25% of the shares underlying the options immediately and as to
the remaining 75% of the shares, in equal installments on March 30, 1995, 1996,
1997 and 1998, subject to earlier vesting in connection with certain
reorganizations described above.
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Employment Agreement with William J. Martin
Effective April 2, 1994, the Bank entered into a five-year employment
agreement with William Martin, President and Chief Operating Officer, which
provides for a base salary of $125,000 per year. In addition, the agreement
provides that Mr. Martin is entitled to participate in the Bank's stock option
plan and other employee benefit plans, is eligible to receive up to 40% of his
annual base salary in the form of an incentive bonus based upon the achievement
of certain performance goals and is to receive a $500,000 term life insurance
policy, a $20,000 one-time bonus upon execution of the agreement (which has been
paid to Mr. Martin) and an automobile allowance of $500 per month. The
agreement also provides that Mr. Martin is entitled to severance compensation
equal to $125,000 if he is terminated (a) without cause, or (b) in the event of
certain reorganizations, including the sale of all or substantially all of the
assets of the Bank, the merger, consolidation or reorganization of the Bank in
which the Bank is not the survivor, or a tender offer involving fifty percent
(50%) or more of the issued and outstanding voting securities of the Bank.
Pursuant to the agreement, on April 4, 1994, Mr. Martin was granted options to
purchase 104,167 shares of the Bank's common stock at a price of $1.50 per
share. Mr. Martin's options have a term of ten years from the date of grant and
become exercisable as to 25% of the shares underlying the options immediately
and as to the remaining 75% of the shares, in equal installments on April 4,
1995, 1996, 1997 and 1998, subject to earlier vesting in connection with certain
reorganizations described above.
Other New Principal Officers
In addition to Messrs. Prentice and Martin, the Bank appointed Mr. Lawrence
McGovern to the office of Senior Vice President and Chief Financial Officer and
Ms. Kathleen Thomas to the office of Senior Vice President and Chief Credit
Officer of the Bank, effective April 2, 1994. Prior to joining the Bank, from
December 1993 to April 1, 1994, Mr. McGovern served as Senior Vice President,
Lending of American River Bank. From January 1991 to December 1993, Mr.
McGovern served as Senior Vice President, Lending of the Bank of San Francisco
and from December 1988 to January 1991, he served as Division Finance Manager of
First Interstate Bank of California. From December 1983 to December 1988, Mr.
McGovern served as Vice President and Chief Financial Officer of Point West
Bank.
Prior to joining the Bank, from December 1993 to April 1, 1994, Ms. Thomas
served as Senior Vice President and Chief Credit Officer of American River Bank.
From December 1990 to December 1993, Ms. Thomas served as Senior Vice President
and Team Leader of the Sacramento Regional Office of the Bank of San Francisco.
For ten years prior to that time, Ms. Thomas served in various capacities in the
banking industry, including Vice President and Credit Administration Support
Manager of First
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Interstate Bank of California, a Vice President of Wells Fargo Bank and
Assistant Vice President Team Leader with Crocker National Bank.
Compensation Plans
401(k) Plan
The Bank established a 401(k) investment plan (the "Plan") for all eligible
employees in 1988. The Plan permits each eligible employee to defer up to 15%
of compensation on a pre-tax basis up to a specified maximum which for calendar
year 1993 was $8,994. The Bank makes a matching contribution of $1.00 for every
$1.00 of compensation deferred by the employee with a maximum matching
contribution of 3% of the employee's annual compensation. The Bank incurred
expenses on behalf of the Plan of $54,031, $54,419 and $56,900 for the years
ended December 31, 1993, 1992 and 1991, respectively. During fiscal years 1993,
1992 and 1991, the Bank made matching contributions for the principal officers
named in the Cash Compensation Table and groups as follows:
1993 1992 1991
---- ---- ----
Thomas E. King $ 4,680 $ 3,000 $ (1)
Susan J. Drack 2,655 1,632 -0-
Bernard Rao 2,640 2,560 2,441
Dennis F. Ceklovsky 2,340 -0- (1)
Florence A. Bellacosa 2,008 1,565 617
All Principal Officers
as a Group (2) 14,848 9,753 7,666
All Officers (other than
Principal Officers) as
a Group (3) 20,977 23,424 28,379
All Employees as a Group
(other than Officers and
Principal Officers) (4) 18,206 21,242 20,855
- - ------------------------
(1) Such person was not an employee of the Bank during the period indicated.
(2) Includes 6 persons in 1993, 4 in 1992 and 4 in 1991.
(3) Includes 19 persons in 1993, 19 in 1992 and 19 in 1991.
(4) Includes 36 persons in 1993, 37 in 1992 and 48 in 1991.
-12-
Stock Options
During June 1992, the Bank adopted the 1992 Stock Option Plan (the "Stock
Option Plan"), which was approved by the shareholders of the Bank at the Bank's
1993 Annual Meeting of Shareholders. The Stock Option Plan is administered by a
Committee of two or more Directors, who, during their service as an
administrator of the Stock Option Plan and during the one-year period prior to
such service, have not received or been awarded any of the Bank's common stock
pursuant to the Stock Option Plan or any other stock option or stock
appreciation rights plan of the Bank. The Committee is currently composed of
the same members who comprise the Compensation Committee of the Board.
Options may be granted to officers and employees (including directors who
are employees) of the Bank or a subsidiary of the Bank. Nonemployee directors
of the Bank are not eligible to receive options under the Stock Option Plan.
Options are granted at not less than the fair market value of the underlying
shares on the date of the grant. Under the Stock Option Plan, the Bank may
issue stock options with respect to an aggregate of 306,023 shares of common
stock. As of April 15, 1994, 275,367 shares of common stock were subject to
outstanding options granted under the Stock Option Plan (including the options
described above that were recently granted to Messrs. Prentice and Martin) and
30,656 shares remained available for subsequent option grants. Options may be
either incentive stock options or nonqualified stock options.
Options granted under the Stock Option Plan shall be granted to employees
and officers of the Bank who in the judgment of the Board of Directors or the
committee designated by the Board, contribute to the successful conduct of the
Bank's operations through their judgment, interest, ability and special efforts,
and shall vest in such manner as the Board or the committee designated by the
Board determines, but such vesting period shall not exceed ten years from the
date the option is granted.
If the optionee ceases to be an officer or employee of the Bank or any of
its subsidiaries due to death or disability, the Stock Option Plan provides that
the optionee's estate, or in the case of disability of the optionee, the
optionee, may exercise the options for a period of twelve months following the
date of such death or disability to the extent the option was exercisable on
such date, and provided that the date of exercise is in no event after the
expiration of the term of the option. If the optionee ceases to be an officer
or employee of the Bank or any of its subsidiaries because the optionee has been
terminated for cause, the optionee shall have no right to exercise such options.
In all other circumstances, the optionee may exercise any vested stock options
within three months after such optionee ceases to be an officer or employee of
the Bank or any of its
-13-
subsidiaries, provided that the date of exercise is in no event after the
expiration of the term of the option. Currently, the Bank has 7 principal
officers and 77 other full-time employees.
The following table shows, as to the persons named therein, certain
information with respect to stock options, including: (i) the title and
aggregate amount of shares subject to options granted since January 1, 1992, and
(ii) the average per share exercise price thereof.
Shares of Thomas E. Thayer T. William J. Bernard Dennis F. Susan J. Florence
Common Stock King(1) Prentice Martin Rao Ceklovsky(2) Drack Bellacosa
- - ------------ --------- --------- ---------- ------- ------------ -------- ---------
Granted from January 1,
1992 to April 15, 1994:
Number of Shares 102,008 125,000 104,167 16,600 16,600 10,000 3,000
Average per share $2.00 $1.50 $1.50 $1.70 $1.70 $1.50 $1.50
option price
Exercised from January 1, 1992
to April 15, 1994:
Number of Shares 0 0 0 0 0 0 0
Net value (market value of $0 $0 $0 $0 $0 $0 $0
shares on date options
exercised less exercise price)
Exercisable options at
April 15, 1994:
Number of Shares (1) 31,250 26,042 2,200 2,200 0 0
Average per share option price (1) $1.50 $1.50 $2.00 $2.00 $0 $0
- - --------------------------------
(1) Mr. King ceased being an officer and director of the Bank on April 15,
1994. As part of Mr. King's Severance Agreement described above, Mr. King
agreed that his stock options will have terminated effective April 4, 1994.
(2) Mr. Ceklovsky ceased being an officer of the Bank effective April 2, 1994.
It is expected that Mr. Ceklovsky will cease providing services to the Bank
effective May 15, 1994. The Bank is currently negotiating a severance
arrangement with Mr. Ceklovsky, the expected terms of which are described
above.
As of April 15, 1994, all principal officers as a group (7 in number), held
options to purchase 275,367 shares of the Bank's Common Stock at exercise prices
ranging between $1.50 and $2.00 per share. There are no options outstanding
other than those described in the table above.
-14-
Transactions with Management
In the ordinary course of its business, the Bank enters into banking
transactions with related parties, including directors, principal shareholders
and their affiliates on substantially the same terms, including interest rates
and collateral, as to unaffiliated parties. At December 31, 1993, there were no
such borrowings.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Bank's
directors and executive officers, and any person who owns more than ten percent
of the Bank's common stock, to file with the FDIC initial reports of ownership
and reports of changes in ownership of common stock of the Bank. Directors,
executive officers and greater than ten-percent shareholders, if any, are
required by FDIC regulations to furnish the Bank with copies of all Section
16(a) forms they file. To the Bank's knowledge, based solely on review of the
copies of such reports furnished to the Bank and written representations that no
other reports were required, during the fiscal year ended December 31, 1993, all
directors and executive officers of the Bank were in compliance with the
applicable Section 16(a) filing requirements, except as follows: Director Louis
G. Fifer purchased 500 shares of common stock in 1993. The purchase was
required to be reported on a Form F-8, which was not filed; however, an FDIC
Form F-8A disclosing the purchase was filed with the FDIC four days after the
Form F-8A filing deadline of February 14, 1993. Florence Bellacosa, the Vice
President and Trust Department Manager of the Bank was late in filing a Form F-
7.
PROPOSAL TWO: AMENDMENT TO STOCK OPTION PLAN
Shareholders are being asked to approve an amendment to the Stock Option
Plan, which amendment was approved by the Board of Directors on April 20, 1994.
The amendment would increase the number of shares available under the Stock
Option Plan from 306,023 to 500,000. Certain information regarding the Stock
Option Plan, including information regarding the purpose of, administration of,
persons eligible under, and option grants under, the Stock Option Plan, is
summarized above under "PROPOSAL ONE: ELECTION OF DIRECTORS -- Compensation
Plans -Stock Options." Certain additional information, including information
regarding shares available for grant under the Stock Option Plan and federal tax
consequences of option grants and exercises, is summarized below. A copy of the
proposed amendment to the Stock Option Plan is attached hereto as Appendix A.
-15-
Assuming the amendment to the Stock Option Plan is approved by the
shareholders, the grant of options entitling optionees to purchase in excess of
306,023 shares of the Bank's Common Stock under the Stock Option Plan and the
issuance of shares pursuant to the exercise of such options is subject to
obtaining a permit from the California State Banking Department. The Bank will
apply for such a permit as soon as practicable.
Shares Subject to the Plan
As indicated above, under the Stock Option Plan, the Bank may issue stock
options with respect to an aggregate of 306,023 shares of common stock. As of
April 15, 1994, 275,367 shares of common stock were subject to outstanding
options granted under the Stock Option Plan and 30,656 shares remained available
for subsequent option grants. Options may be either incentive stock options or
nonqualified stock options. If the shareholders of the Bank approve the
amendment to the Stock Option Plan attached hereto as Appendix A and the Bank
obtains a permit from the California State Banking Department, the Bank will be
permitted to issue stock options with respect to an aggregate of 500,000 shares
of common stock.
Adjustment Upon Changes in Capitalization or Merger
The number of shares of common stock reserved for issuance under the Stock
Option Plan, the number of shares of common stock covered by each outstanding
option and the exercise price as to outstanding options shall be proportionately
adjusted for any increase or decrease in the number of issued shares of common
stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Bank's common stock, or any other
increase or decrease in the number of issued shares of common stock effected
without receipt of consideration by the Bank. In the event of a sale of the
Bank, or a merger or consolidation in which the Bank is not the surviving or
resulting corporation, outstanding options will become exercisable in full for a
period of thirty days prior to the consummation of such event if the surviving
or resulting corporation has determined not to assume outstanding options
granted under the Stock Option Plan. In the event of dissolution or liquidation
of the Bank, outstanding options will terminate.
Amendment and Termination of the Plan
The Stock Option Plan became effective upon its adoption by the Board of
Directors and will continue for a term of 10 years unless sooner terminated by
the Board of Directors. The Board of Directors may amend or terminate the Stock
Option Plan from time to time as they deem advisable. No such amendment or
termination will affect outstanding options without the consent of the affected
optionee.
-16-
The Board may not, without the approval of the Bank's shareholders (to the
extent such shareholder approval is required by applicable law), amend the Stock
Option Plan to (i) materially increase the benefits accruing to participants
under the Stock Option Plan, (ii) materially increase the number of shares which
may be issued under the Stock Option Plan, or (iii) materially modify the
requirements as to eligibility for participation in the Plan.
Federal Tax Consequences
Options granted under the Stock Option Plan may be either Incentive Options
which satisfy the requirements of Section 422 of the Code or Nonstatutory
Options which do not meet such requirements. The federal income tax treatment
for the two types of options differs as follows:
Incentive Options. No taxable income is recognized by an optionee at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. However, the excess of the fair market value of
the Bank's common stock received upon the exercise of an Incentive Option over
the exercise price is includable in the employee's alternative minimum taxable
income ("AMTI") and may be subject to the alternative minimum tax ("AMT"). For
AMT purposes only, the basis of the Bank's common stock received upon exercise
of an Incentive Option is increased by the amount of such excess.
An optionee will recognize taxable income in the year in which the
purchased shares acquired upon exercise of an Incentive Option are sold or
otherwise disposed. For federal tax purposes, dispositions are divided into two
categories: (i) qualifying and (ii) disqualifying. An optionee will make a
qualifying disposition of the purchased shares if the sale or disposition is
made more than two years after the grant date of the option and more than one
year after the exercise date. If an optionee fails to satisfy either of these
two holding periods prior to sale or disposition, then a disqualifying
disposition of the purchased shares will result.
Upon a qualifying disposition, an optionee will recognize long-term capital
gain or loss in an amount equal to the difference between the amount realized
upon the sale or other disposition of the purchased shares and the exercise
price paid for the shares except that for AMT purposes, the gain or loss would
be the difference between the amount realized upon the sale or other disposition
of the purchased shares and the employee's basis increased as described above.
If there is a disqualifying disposition of the shares, then the optionee will
generally recognize ordinary income to the extent of the lesser of the
difference between the exercise price and (i) the fair market value of the
Bank's common stock on the date of exercise; or (ii) the amount realized on such
disqualifying disposition. Any additional gain recognized upon the disposition
will be
-17-
capital gain. If the amount realized is less than the exercise price, the
optionee will, in general, recognize a capital loss. If the optionee makes a
disqualifying disposition of the purchased shares, then the Bank will be
entitled to an income tax deduction, for the taxable year in which such
disposition occurs, to the extent the optionee recognizes ordinary income. In
no other instance will the Bank be allowed a deduction with respect to the
optionee's disposition of the purchased shares.
Nonstatutory Options. No taxable income is recognized by an optionee upon
the grant of a Nonstatutory Option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of purchased shares on the date of exercise over
the exercise price paid for such shares, and the optionee will be required to
satisfy the tax withholding requirements applicable to such income. Upon a
subsequent sale of the purchased shares, the optionee will generally recognize
either a capital gain or a capital loss depending on whether the amount realized
is more or less than the exercise price plus the difference between the exercise
price and the fair market value on the date of exercise.
The Bank will be entitled to a business expense deduction equal to the
amount of ordinary income recognized by the optionee with respect to an
exercised Nonstatutory Option. The deduction will in general be allowed for the
taxable year of the Bank in which ordinary income is recognized by the optionee
in connection with the acquisition of the option shares.
Accounting Treatment
Under present accounting rules, neither the grant nor the exercise of
options issued at fair market value under the Stock Option Plan will result in
any charge to the Bank's earnings. However, the number of outstanding options
under the Stock Option Plan may be a factor in determining earnings per share.
All of the existing accounting rules for stock compensation plans are currently
being reviewed by the Financial Accounting Standards Board and may be the
subject of significant changes in the near future. The proposals under
consideration, if adopted, could result in a charge against earnings; however,
the Bank cannot now determine the impact, if any, of such proposals on the
Bank's financial position or results of operations.
Vote Required
The amendment to the Stock Option Plan described herein is subject to
approval by the Bank's shareholders. The affirmative vote of the holders of a
majority of the shares of the Bank's common stock present in person or
represented by proxy and entitled to vote at the Meeting, and by the holders of
a majority of the disinterested shares present in person or represented by proxy
and voting at the Annual Meeting, is required to
-18-
approve the amendment provided that the number of affirmative votes equals at
least a majority of the shares constituting the required quorum. For this
purpose, "disinterested shares" are shares held by persons who have not been
granted an option under the Stock Option Plan. Abstentions will be counted for
purposes of determining the number of shares entitled to vote on the proposal
and will have the effect of a vote against the proposal. Although "broker non-
votes" (shares held by brokers or nominees which are present in person or
represented by proxy at the meeting but as to which voting instructions have not
been received from the beneficial owners or persons entitled to vote such shares
and the broker or nominee does not have discretionary voting power under
applicable New York Stock Exchange rules or other rules applicable to brokers)
with respect to Proposal Two, if any, will be counted to determine the presence
or absence of a quorum, broker nonvotes with respect to this proposal will not
be counted in determining the number of shares entitled to vote on this
proposal.
The Board recommends a vote for Proposal Two.
---
PROPOSAL THREE: RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
During 1993, management obtained proposals from independent public
accounting firms to act as independent accountants for the Bank for the 1993
fiscal year. The decision to request such proposals was not based upon any
disagreement with the prior accountants, Arthur Andersen & Co. Rather,
management desired to seek proposals in an attempt to secure responsive services
at a competitive price. The firm of KPMG Peat Marwick served as the Bank's
independent public accountants for the 1993 fiscal year.
The Board of Directors also recently selected KPMG Peat Marwick as the
Bank's independent accountants for the current year. Representatives of KPMG
Peat Marwick will be present at the Meeting, will have the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
Unless marked to the contrary, proxies received will be voted "For" the
ratification of the appointment of KPMG Peat Marwick as the independent public
accountants for the Bank for the current year.
PROPOSALS OF SHAREHOLDERS
Under certain circumstances, shareholders are entitled to present proposals
at shareholder meetings. Any such proposal to be included in the proxy
statement for the Bank's 1995 Annual Meeting of Shareholders must be received no
later than January 3, 1995, in a form that complies with applicable FDIC
-19-
regulations. Proposals should be sent to the attention of the Corporate
Secretary, CapitolBank Sacramento, P.O. Box 2311, Sacramento, California 95812-
2311.
OTHER MATTERS
The Board of Directors does not know of any other matters which may be
presented at the Meeting. If other matters properly come before the Meeting, it
is the intention of the persons named in the accompanying proxy to vote the
proxy in accordance with the judgment of the person or persons voting such
proxies.
In addition to the matters described above, there will be an address by the
Chairman of the Board and a general discussion period during which shareholders
will have an opportunity to ask questions about the business of the Bank.
CAPITOLBANK SACRAMENTO
/s/ Thayer T. Prentice
Thayer T. Prentice
Vice Chairman &
Chief Executive Officer
Dated: May 4, 1994
Shareholders may obtain a copy of the Bank's annual report to the
Federal Deposit Insurance Corporation on Form F-2 which includes financial
statements for the fiscal year ended December 31, 1993 and all supplemental
schedules thereto, by writing to CapitolBank Sacramento, P.O. Box 2311,
Sacramento, California 95812-2311.
-20-
APPENDIX A
3. Stock Subject to the Plan. Subject to the provisions of Section
-------------------------
12 of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is 500,000 shares of Common Stock. If an Option should
expire or become unexercisable for any reason without having been exercised in
full, the unpurchased Shares which were subject thereto shall, unless the Plan
shall have been terminated, become available for future grant under the Plan.
-21-
CAPITOLBANK SACRAMENTO
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thayer T. Prentice, Vice Chairman of
the Board & Chief Executive Officer and Bernard Rao, Senior Vice President &
Chief Administrative Officer and each of them, with full power of substitution,
as proxies of the undersigned, to attend the Annual Meeting of Shareholders of
CapitolBank Sacramento to be held at the Sutter Club, 1229 9th Street,
Sacramento, California, on Wednesday, May 24, 1994 at 5:00 p.m. and any
adjournment or postponement thereof, and to vote the number of shares the
undersigned would be entitled to vote if personally present upon the following
items and to vote according to their discretion on any other matter which may
properly be presented for action at said meeting or any adjournment or
postponement thereof:
1. Election of Directors.
[_] FOR all nominees [_] WITHHOLD AUTHORITY to vote for all
listed below nominees listed below
(except as
indicated to the
contrary below)
Louis G. Fifer, Carolyn G. Reid, Thomas J. Hammer, Jr.
Robert Jenkins, John A. Wickland, III, Thayer T. Prentice
William J. Martin, Ralph Andersen
INSTRUCTION: To withhold authority to vote for any individual nominee(s), write
that nominee's name in the space provided below.
- - -------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR the foregoing nominees.
2. Amendment to Stock Option Plan. Proposal to approve an amendment to the
Bank's 1992 Stock Option Plan to increase the number of shares available
thereunder from 306,023 to 500,000.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Ratification of Independent Public Accountants. Proposal to ratify the
appointment of KPMG Peat Marwick as independent public accountants for the
Bank for the current year.
[_] FOR [_] AGAINST [_] ABSTAIN
(To be completed and signed on the reverse side)
(Continued from other side)
THIS PROXY WILL BE VOTED AS SPECIFIED, OR IF NO CHOICE IS SPECIFIED, WILL
BE VOTED FOR THE NINE NOMINEES FOR ELECTION AS DIRECTORS, FOR THE AMENDMENT TO
THE STOCK OPTION PLAN AND FOR THE RATIFICATION OF KPMG PEAT MARWICK AS
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE CURRENT YEAR. THE PROXYHOLDERS NAMED ON
THE REVERSE SIDE OF THIS CARD SHALL HAVE THE DISCRETIONARY AUTHORITY TO CUMULATE
VOTES REPRESENTED BY THE SHARES OF THE UNDERSIGNED IN THE ELECTION OF DIRECTORS
IF THE REQUIREMENTS FOR CUMULATIVE VOTING ARE SATISFIED. (Please sign exactly as
name appears. When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership, please sign in
partnership name by authorized person.)
Dated: ____________________________, 1994
Signature ________________________________
Signature, if held
jointly __________________________________
SHAREHOLDERS ARE URGED TO MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.