EX-20 4 formdef14a-49231_svb.txt SVB FINANCIAL SERVICES, INC. NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON THURSDAY, APRIL 24, 2003 5:30 P.M. Notice is hereby given that the Annual Meeting of Shareholders of SVB Financial Services, Inc. will be held at the Raritan Valley Country Club, Route 28, Somerville, New Jersey 08876, on Thursday, April 24, 2003 at 5:30 P.M., for the following purposes: 1. Election of 4 Directors for the terms as set forth in the accompanying Proxy Statement. 2. Approval of the amendment to the 2000 Incentive Stock Option Plan. 3. Approval of the 2003 Directors Stock Option Plan. 4. Transaction of such other business as may properly come before the meeting or any adjournment thereof. Only those shareholders of record of SVB Financial Services, Inc. at the close of business on March 12, 2003, shall be entitled to notice of, and to vote at, the meeting. Each share of stock is entitled to one vote. By order of the Board of Directors Elizabeth J. Balunis Secretary to the Board Somerville, New Jersey March 26, 2003 YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, WE ASK THAT YOU RETURN YOUR COMPLETED PROXY AS SOON AS POSSIBLE USING THE ENVELOPE PROVIDED AND IN ANY CASE NO LATER THAN 3:00 P.M. ON APRIL 23, 2003. -------------------------------------------------------------------------------- IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. -------------------------------------------------------------------------------- SVB FINANCIAL SERVICES, INC. 70 East Main Street P.O. Box 931 Somerville, New Jersey 08876 PROXY STATEMENT --------------- ANNUAL MEETING OF SHAREHOLDERS - APRIL 24, 2003 ----------------------------------------------- This Proxy Statement is furnished to shareholders of SVB Financial Services, Inc. (the "Company") in connection with the solicitation of proxies by the Board of Directors of the Company for the Annual Meeting of Shareholders to be held at 5:30 P.M. on Thursday, April 24, 2003 and all adjournments thereof. This Proxy Statement and accompanying materials are being mailed to shareholders on or about March 26, 2003. The close of business March 12, 2003, has been fixed as the record date for the determination of shareholders entitled to notice of, and to vote at, the meeting. As of the record date there were issued and outstanding 3,652,766 shares of Common Stock, with a par value of $2.09 per share (the "Common Stock"). The Company owns 100% of Somerset Valley Bank (the "Bank"). At this time, the Company's investment in the Bank accounts for virtually all of its assets and sources of income. Accordingly, to avoid misleading or incomplete information, portions of the following material discuss the Bank. Holders of a majority of the outstanding shares of Common Stock present in person or by proxy will constitute a quorum for the purpose of transacting business at the annual meeting. ALL SHAREHOLDERS ARE URGED TO VOTE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY TO THE TRANSFER AGENT IN THE ENCLOSED RETURN ENVELOPE. When properly executed, a proxy will be voted in the manner directed by the shareholder. However, if no contrary specification is made, it will be voted FOR all of the Directors and the proposals listed in this Proxy Statement. A proxy may be revoked at any time before it is exercised by written notice to the Secretary of the Company, 70 East Main Street, Somerville, New Jersey 08876, bearing a date later than the proxy. The presence at the meeting of any shareholder who submitted a proxy shall not revoke such proxy unless such shareholder shall file written notice of revocation with the Secretary of the Company prior to the voting of the proxy. All properly executed proxies which are received by the Secretary and are not revoked will be voted. Where no instructions are indicated, properly executed proxies will be voted "FOR" all of the Directors and the proposals. THIS SOLICITATION IS MADE BY THE MANAGEMENT OF THE COMPANY and the cost thereof shall be borne by the Company. Proxies may be solicited by mail, in person or by telephone or facsimile by directors, officers or employees of the Company and its subsidiary, Somerset Valley Bank. Such persons will receive no additional compensation for their solicitation activities and will be reimbursed only for their actual expenses in connection therewith. The Company will, upon request, reimburse custodians, nominees, and fiduciaries for reasonable expenses in forwarding materials to the proper shareholders. Voting Rights Each share of Common Stock is entitled to one vote (non-cumulative) on all matters presented for shareholder vote. Abstentions and broker non-votes are counted for the purposes of determining the presence or absence of a quorum for the transaction of business. Abstentions are counted separately and are not considered as either a vote "FOR" or "AGAINST" in tabulations of votes cast on proposals by the shareholders. Broker non-votes are not counted at all for purposes of determining whether a proposal has been approved. Under New Jersey law and the Company's By-Laws, a majority of the votes cast at a meeting at which a quorum to transact business is present shall decide the election of Directors. A majority of the votes cast are required to approve proposals 2 and 3. Directors/Principal Shareholders/Executive Officers In accordance with the By-Laws of the Company, its Board of Directors shall, from time to time, fix the exact number of directors, up to 25. The number is presently fixed at 12. All named below as Directors are presently members of the Board and have served since the Company's inception in 1996. They have also been members of the Board of the Bank since 1990 with the exception of Mr. Bernstein, who has been a member since 1991. The terms of each of the Executive Officers runs until the next Annual Meeting. Mr. McCarthy has been employed by the Bank since 1990 and the Company since 1996. Mr. Brattlof has been employed by the Bank since 1992 and the Company since 1996. The Company's Certificate of Incorporation provides that the Board of Directors be classified and divided into three classes, as nearly equal in number as possible. The four (4) Directors listed below have been nominated to serve until the 2006 Annual Meeting or until their successor is elected and qualified, or until their earlier resignation or removal. The following table presents the name, title, address, age and principal occupation of each nominee for Director followed by the remaining Directors and the Executive Officers, the number of shares and the percentage of the outstanding shares of Common Stock of the Company beneficially owned, directly or indirectly, by each of them as of March 12, 2003.
Shares DIRECTORS Beneficially % of Total Name, Title, and Address Age Principal Occupation Owned Outstanding ---------------------------------- --- --------------------------------- ---------------- ----------- Directors Nominated to Serve Until the 2006 Annual Meeting. John K. Kitchen 59 President of Title Central 70,052 (1) 1.84 Chairman of the Board & Director Agency, a title insurance P.O. Box 421 firm Somerville, NJ 08876 Anthony J. Santye, Jr. 52 Managing Partner of 67,566 (1) (2) 1.78 Director A. J. Santye and Co., an 36 East Main Street accounting and consulting Somerville, NJ 08876 firm Herman C. Simonse 71 President of HCS Consultants, 57,608 (1) (8) 1.51 Director Inc. and President of West End 93 Douglass Avenue One Corp. Bernardsville, NJ 07924 Donald R. Tourville 66 Chairman and CEO of Zeus 206,241 (1) 5.42 Director Scientific, Inc., a manufacturer P.O. Box 38 of diagnostic test kits Raritan, NJ 08869
- 2 -
DIRECTORS Shares --------- Beneficially % of Total Name, Title, and Address Age Principal Occupation Owned Outstanding ---------------------------------- --- ---------------------------------- ----- ----------- Directors Whose Terms Expire in 2004. Bernard Bernstein 65 President & CEO, 164,428 (1) 4.32 Director Mid-State Lumber Corp., 200 Industrial Parkway a wholesale lumber Branchburg, NJ 08876 distributor Robert P. Corcoran 62 President & CEO 53,791 (3) 1.41 President, CEO & Director Somerset Valley Bank 12 Harvest Court SVB Financial Services, Inc. Flemington, NJ 08822 Raymond L. Hughes 71 President of N.J. Risk 77,761 (1)(4) 2.04 Director Managers & Consultants 20 West End Avenue Somerville, NJ 08876 Directors Whose Terms Expire in 2005. Willem Kooyker 60 Chairman & CEO of Blenheim 334,292 (5)(9) 8.79 Director Capital Management, LLC, an 2 Worlds Fair Drive international fund management firm Somerset, NJ 08875 Frank Orlando 69 Retired 170,825(1)(6) 4.49 Director 786 Princeton Avenue Brick, NJ 08724 Gilbert E. Pittenger 78 Retired 45,817 1.20 Director 27 Owl Lane New Ringgold, PA 17960 Frederick D. Quick 71 President of Hesco 230,697(1)(7) 6.06 Director Electric Supply Co., Inc., 924 River Road a lighting and electrical Hillsborough, NJ 08844 supply firm Donald Sciaretta 47 President of Claremont 99,880(1) 2.62 Director Construction Group, Inc. P.O. Box 808 Far Hills, NJ 07931 Executive Officers ------------------ Keith B. McCarthy 45 Chief Operating Officer and 55,248(3) 1.45 501 Red School Lane Treasurer of the Company Phillipsburg, NJ 08865 and the Bank Arthur E. Brattlof 59 Executive Vice President and 51,540(3) 1.36 9 Steeple Chase Court Senior Lending Officer Bedminster, NJ 07921 of the Bank ------------------ ----------- Total Directors and Executive Officers as a Group 1,685,746 44.28
The denominator in determining the percentage of Total Outstanding Shares was 3,805,222, which includes outstanding stock options for 152,456 shares and 3,652,766 shares issued and outstanding. - 3 - Principal Shareholder In addition to those named in the above list, the following is a holder of more than 5% of the outstanding shares of the Common Stock. Shares Beneficially % of Total Name and Address Owned Outstanding ---------------- ----- ----------- Mark S. Gold, MD 203,277 5.34 5745 SW 75th Street Gainesville, FL 32608-5504 1) Includes options to purchase 5,342 shares at $7.774 per share which expire April 27, 2005. 2) Includes 23,221 shares held by the A. J. Santye Co., PA Profit Sharing Plan over which he is a trustee. 3) Included in this total are options to purchase 11,025 shares at $8.05 which expire December 13, 2005 and 10,500 shares at $9.524 which expire November 29, 2006. 4) Includes 5,834 shares held by Hughes-Plumer Pension Fund and 32,671 shares held by Hughes-Plumer and Associates Profit Sharing Plan. 5) Includes 116,688 shares held in trusts for his three children and 197,439 shares held in a trust in which his wife is a trustee. 6) Includes 78,764 shares held by Eight Mountain Trail, Inc. Employees Profit Sharing Plan and 14,264 shares held in trusts for his grandchildren. 7) Includes 36,464 shares held by Quick Family Investments LP. 8) West End One Corp., incorporated in the State of Delaware, is a subsidiary of Somerset Valley Investment Company, Inc., which is a subsidiary of Somerset Valley Bank. West End One Corp. manages an investment portfolio similar to that of Somerset Valley Bank. Mr. Simonse has an MBA in Business Administration from Fairleigh Dickinson University, and is the former director of the Division of Economic Development for the Division of Labor and Industry for the State of New Jersey and is a member of the Company's Investment Committee. 9) Includes options to purchase 5,342 shares at $16.30 per share which expire on January 27, 2008. Director Committees All members of the Board of Directors of the Company also serve on the Board of Directors of the Bank. There are seven committees of the Board of Directors of the Company and the Bank. - 4 - The Nominating Committee established on January 30, 2003 is composed of Messrs. Kooyker, Bernstein, Quick and Tourville. The Committee reviews and nominates Directors to be proposed for election or to fill vacancies that occur prior to the Annual Meeting. The Executive Committee is a committee of the Company and composed of Messrs. Bernstein, Corcoran, Kitchen, Kooyker, Quick, Sciaretta and Tourville. The Committee reviews and approves the Bank's budget and establishes the Bank's long range and strategic plans. The Audit Committee is a committee of the Company and composed of Messrs. Bernstein, Orlando, Quick and A. J. Santye, Jr. The Committee formulates the Bank's audit policy, chooses the Company's accounting firm and reviews audits conducted by the Company's internal and external auditors. As required by Rule 4350 (d)(2)(c) of the National Association of Securities Dealers listing standards, a majority of the members of the Audit Committee are independent as defined by Rule 4200 (a)(15) of the National Association of Securities Dealers listing standards. The Audit Committee has reviewed and discussed the financial statements with management. The Audit Committee has discussed with the independent auditors the matters required to be discussed by SAS 61. The Audit Committee has received written disclosures and the letter from the independent accountants required by Independence Standards Board Standard No. 1 and has discussed with the independent accountants the independent accountants' independence. Based on the reviews and discussions above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company's Annual Report on Form 10-KSB for 2002 for filing with the Securities and Exchange Commission. The Board of Directors has adopted a written charter for the Audit Committee. The Loan Committee is a committee of the Bank and composed of Messrs. Bernstein, Corcoran, Hughes, Kitchen, A. J. Santye, Jr., Sciaretta, Simonse and Tourville. The Committee reviews and approves loans within certain predetermined parameters, monitors the quality of the portfolio and insures that credit/rate risks and the mix of loans are consistent with the Bank's loan and asset/liability management policies. The Real Estate Committee is a committee of the Bank and composed of Messrs. Hughes, Sciaretta and Simonse, reviews appraisals for real estate mortgages and construction loans and advises the Loan Committee and the Board with respect to real estate lending. The Investment Committee is a committee of the Bank and composed of Messrs. Bernstein, Kooyker, Orlando, Pittenger and Simonse and periodically reviews the Bank's investment portfolio for adherence to policy and approves its investment strategy. The Compensation Committee is a committee of the Bank and composed of Messrs. Bernstein, Kooyker, Orlando, Quick and Tourville. The Committee approves compensation and bonuses for the Bank's officers as well as awards stock options to both directors and officers. - 5 - Messrs. Corcoran and Kitchen are ex-officio members of all the committees, except the Audit, Nominating and Compensation Committees. Mr. McCarthy, is a non-director, non-voting member of the Executive and Investment Committees. Mr. Brattlof is a non-director voting member of the Loan Committee and a non-voting member of Executive Committee. During 2002, the Board of Directors held 12 meetings, the Executive Committee 2 meetings, the Loan Committee 18 meetings, the Audit Committee 4 meetings, the Investment Committee 4 meetings, the Compensation Committee 2 meetings, and the Real Estate Committee 18 meetings. In addition, there is significant communication between the Board of Directors and the Company which occurs apart from the regularly scheduled Board and Committee meetings and as a result, the Company does not regard attendance at meetings to be the primary criterion to evaluate the contribution made by a Director. During 2002, all Directors attended at least 75% of the total Board and Committee meetings with the exception of Mr. Raymond L. Hughes. Attendance percentages for the Loan Committee and Real Estate Committee are not included in these percentages. Because of the frequency of Loan Committee and Real Estate Committee meetings, only three Director Loan Committee members are required to conduct committee meetings as set forth in the Bank's policy. Executive Compensation The following table summarizes all compensation earned in the past three complete fiscal years for services performed in all capacities for the Company and the Bank with respect to the executive officers. The compensation noted in the table has been paid by the Bank. No compensation has been paid by the Company. Annual Compensation All Other Name and Position Year Salary Bonus Compensation ----------------- ---- ------ ----- ------------ Robert P. Corcoran 2002 $185,640 $ 41,566 $ 21,923(1) President and CEO of 2001 176,800 42,785 18,889(1) the Company and the Bank 2000 170,000 28,900 18,936(1) Keith B. McCarthy 2002 131,040 29,341 15,297(2) Chief Operating Officer and 2001 124,800 22,651 12,365(2) Treasurer of the Company 2000 120,000 15,600 12,260(2) and the Bank Arthur E. Brattlof 2002 125,685 28,142 13,310(3) Executive Vice President & Senior 2001 119,700 21,725 5,267(3) Lending Officer of the Bank 2000 114,000 14,820 5,215(3) 1) Includes matching contributions to the 401(k) Plan of $6,592 in 2002, $7,000 in 2001 and $6,800 in 2000. Director fees of $7,800 in 2002 and $5,400 in 2001 and 2000. Term life insurance premiums paid by the Company of $7,531 in 2002, $6,489 in 2001 and $6,736 in 2000. 2) Includes matching contributions to the 401(k) Plan of $6,148 in 2002, $5,616 in 2001 and $5,511 in 2000. Life insurance premiums paid by the Company of $1,349 in 2002, 2001 and 2000. Director fees of $7,800 in 2002 and $5,400 in 2001 and 2000. 3) Represents matching amounts contributed by the Bank to the 401(k) Plan and Director fees of $7,800 in 2002. - 6 - The Bank also maintains various medical, life and disability benefit plans covering all its full time employees. The Bank also provides automobiles to the three executive officers mentioned in the previous table and one other officer of the Bank. Such officers have some personal use of those vehicles such as commuting to and from the Bank. Bonus Plan During 2002, the Compensation Committee of the Board of Directors approved a bonus plan for the three executive officers listed in the previous table. Under the terms of the plan, cash bonuses were paid to the executive officers based upon a formula that includes the Company achieving certain predetermined financial goals. Bonuses were paid to other employees of the Company, who were employed by the Company for the entire year based on the achievement of certain predetermined financial goals. 1997 Restated Incentive Stock Option Plan On April 24, 1997, the shareholders approved the 1997 Restated Incentive Stock Option Plan, which provides for officers and employees of the Company to purchase up to 200,324 shares of Common Stock, as adjusted for splits and stock dividends. The purpose of the Plan is to (i) replace and expand certain existing stock options of the Bank (ii) assist the Company and the Bank in attracting and retaining qualified persons as their employees and (iii) to help insure that employees of the Company and the Bank have shared economic interests with the shareholders of the Company. As of December 31, 2000, all options available were granted under this Plan, 5,523 remain unexercised at December 31, 2002. 2000 Incentive Stock Option Plan On April 27, 2000, the shareholders approved the 2000 Incentive Stock Option Plan which provides for officers and employees to purchase up to 173,643 shares of common stock as adjusted for the stock dividend. The purpose of the Plan is to retain the services of new and existing employees of the Company and its affiliates and to provide incentives for such persons to exert maximum efforts for the success of the Company and its affiliates. - 7 - There were no options granted under this plan in 2002. The following table depicts information with respect to outstanding stock options for the three executive officers listed in the previous table:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND DECEMBER 31, 2002 OPTION/SAR VALUES (1) ----------------------------------------------------------------------------------- NUMBER OF UNEXERCISED VALUE OF NUMBER SECURITIES UNEXERCISED OF UNDERLYING IN-THE-MONEY SHARES OPTIONS/SARs OPTIONS/SARs ACQUIRED AT AT ON DECEMBER 31, DECEMBER 31, EXERCISE VALUE 2002 2002 NAME IN 2002 REALIZED EXERCISABLE EXERCISABLE ----------------- ------- -------- ----------- ----------- Robert P.Corcoran 12,155 $ 95,818 21,525 $159,952 Keith B. McCarthy 12,155 88,281 21,525 159,952 Arthur E. Brattlof 12,155 190,998 21,525 159,952
(1) All data is adjusted for the 5% stock dividends. Certain Agreements The Company has entered into employment agreements with Messrs. Corcoran, McCarthy and Brattlof. The agreements provide for severance payments in the event the officers are terminated without cause or resign with good reason. Such benefits are equivalent to two times the base salary for Mr. Corcoran payable over 24 months and one times the base salary for Messrs. McCarthy and Brattlof payable over 12 months. In the event of a change of control all three officers would receive a severance payment equal to two times base salary payable over 24 months plus an annual payment for two years equivalent to the average bonus paid during the last three years of employment. Benefit Plans The Bank maintains a 401(k) Plan covering substantially all employees. Under the terms of the Plan, the Bank will match 67% of an employee's contribution, up to 6% of the employee's salary. Employees become fully vested in the Bank's contribution after five years of service. The Bank contributed $93,000 to the Plan in 2002. During 1999, the Company established a Supplemental Retirement Plan. The Plan covers the three officers listed in the table above. Mr. Corcoran is covered under a defined benefit plan, which provides a benefit of $75,000 per year upon his retirement at age 65 for a period of ten years. Mr. Brattlof and Mr. McCarthy are covered under a defined contribution plan, the object of which is to provide for an income of $50,000 per year each upon their retirement at age 65 for a period of ten years. The Company expensed $157,000 for these plans in 2002. - 8 - Director Compensation During 2002, Directors of the Bank received compensation for service on the Board of Directors of $650 per Board of Directors meeting attended and $150 for each committee meeting. Mr. John K. Kitchen as Chairman of the Board received compensation of $40,000 in addition to his other per meeting fees. No compensation was paid for Board of Directors meetings of the Company. Directors are paid $150 for each committee meeting attended. 1997 Directors Stock Option Plan On April 24, 1997, the shareholders of the Company approved the 1997 Directors Stock Option Plan. The Plan is intended to promote the Company's interest by establishing a mechanism to reward Directors based on future increases in the value of the Company's stock. This will help retain the services of persons who are now Directors and provide incentives for them to exert maximum efforts for the success of the Company and its affiliates. On June 26, 1997, each non employee member of the Company's Board of Directors was granted an option to purchase 9,030 shares, as adjusted for stock splits and stock dividends, of the Common Stock of the Company at $5.614 per share, which was the fair market value of the Common Stock as of that date, as adjusted. As there were 14 Directors eligible to participate under the 1997 Directors Stock Option Plan, all of the shares available under the Plan were subject to option. All remaining options under this Plan were exercised in 2002. 2000 Directors Stock Option Plan On April 27, 2000, the shareholders of the Company approved the 2000 Directors Stock Option Plan. The Plan is intended to promote the Company's interest by establishing a mechanism to reward Directors based on future increases in the value of the Company's stock. This will help retain the services of persons who are now Directors and provide incentives for them to exert maximum efforts for the success of the Company and its affiliates. Each non employee member of the Company's Board of Directors, with the exception of Mr. Kooyker, was granted an option to purchase 5,342 shares, as adjusted for the stock dividend, of the Common Stock of the Company at $7.774 per share, which was the fair market value of the Common Stock as of that date. Mr. Kooyker was granted an option to purchase 5,342 shares at a price of $16.30 on January 27, 2003. Certain Relationships and Related Transactions It is currently the policy of the Company and Bank not to extend credit or make loans to any of its Directors. A loan totaling $119,000 was outstanding at December 31, 2002 to one member of a Directors' immediate family. Such loan was made on substantially the same terms including interest and collateral, as those prevailing at the time for comparable transactions with other persons and does not involve more than the normal risk of collectibility or present other unfavorable features. - 9 - A partnership made up of, among others, all but one of the Bank's Directors owns and leases the premises to the Bank at 103 West End Avenue and 117 West End Avenue, Somerville. Payments under these leases totaled $192,550 in 2002. Under new rules proposed by the U.S. Securities and Exchange Commission and NASDAQ, a majority of the Board (and all members of the Audit, Compensation and Nominating Committees) would have to meet a new standard for "independence." The Directors who are partners in the partnership would not be "independent" under the new standards, if adopted. The Directors who are partners in the partnership are currently exploring ways to divest themselves of their partnership interests, including a possible sale of the premises to the Bank. The Bank leases its Warren Office from Claremont Mountain Boulevard LLC of which Director Donald Sciaretta is an owner. Payments under this lease beginning in September 2002 totaled $31,000. The Company purchases most of its insurance from Hughes-Plumer and Associates Insurance, Inc. of which Mr. Raymond L. Hughes, II son of Director Raymond L. Hughes, is president. Payments to this company totaled $77,000 in 2002. PROPOSAL TO AMEND THE 2000 INCENTIVE STOCK OPTION PLAN The proposed amendment is as follows. The first sentence of Section 4(a) of the Plan is amended in its entity to read: Subject to the provisions of Section 10 relating to adjustments upon changes in stock, the number of shares of stock that may be sold pursuant to Options is 358,043 of the Company's Common Stock, of which as of the 2003 Annual Meeting of shareholders 266,042 shares of the Company's Common Stock remain available for issuance pursuant to Options. The purpose of the 2000 Incentive Stock Option Plan is to provide a means by which selected employees of the Company and its affiliates (which includes Somerset Valley Bank and subsidiaries) may be given an opportunity to purchase stock of the Company. The Company, by means of the Plan, seeks to retain the services of persons who are now employees of the Company or of its affiliates, to secure and retain the service of new employees of the Company and of its affiliates, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its affiliates. The following is a summary of the features of the 2000 Incentive Stock Option Plan, which is qualified in its entirety by reference to the 2000 Incentive Stock Option Plan which is annexed hereto as Exhibit A. As indicated in the text of the 2000 Incentive Stock Option Plan, any provision of the 2000 Stock Option Plan which is determined to be inconsistent with the applicable laws and regulations will be deemed void. Administration The 2000 Incentive Stock Option Plan is administered by a Committee appointed by the Board of Directors composed of not fewer than two (2) members of the Board to serve in its place with respect to the Plan. All members of such committee shall be Disinterested Persons, to the extent required or desirable under regulations of the United States Securities and Exchange Commission (SEC). Disinterested persons are persons not eligible for awards under the Plan. Under - 10 - the terms of the 2000 Incentive Stock Option Plan, the Committee has the authority to (i) determine the employees who shall receive the grant of incentive stock options, the time or times at which, options shall be granted, the number of shares of stock subject to each option and the vesting schedule of such options (ii) determine the fair market value of the Common Stock of the Company or of its affiliates, (iii) determine the exercise price per share (but not less than 100% of fair market value) at which options may be exercised, (iv) determine the terms and provisions of each option granted and the forms of each option agreement, and subject to the consent of the optionee, to modify and amend any outstanding option agreement, (v) accelerate or defer (with the consent of the optionee) the date of any outstanding option, to authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an option previously granted by the Committee, (vi) amend the 2000 Stock Option Plan if required by the Internal Revenue Code of 1986, as amended or by Rule 16(b)-3 of the Exchange Act (vii) construe or interpret the 2000 Stock Option Plan, (viii) authorize the sale of shares of Common Stock in connection with exercise of the options, (ix) to effect, with the consent of the optionee, the cancellation of any outstanding options and to grant in substitution thereof new options relating to the same or different numbers of shares, (x) make all other determinations deemed necessary or advisable for the administration of the plan. Shares Reserved Subject to adjustments for certain changes in the number of shares of Common Stock and the approval of the proposed amendment, a total of 358,043 shares of the Company's Common Stock shall be available for issuance under the 2000 Stock Option Plan of which 266,042 remain available as of the 2003 Annual Meeting of Shareholders. Stock subject to the plan may be unissued shares or reacquired shares, bought on the market or otherwise. Incentive stock options may be granted to eligible persons in such number and at such times as the Committee may determine. However, to the extent that the aggregate fair market value (determined at the time of the grant) of stock with respect to which incentive stock options are exercisable for the first time by any optionee during any calendar year under all plans of the Company and its affiliates exceed One Hundred Thousand ($100,000) Dollars, the options or portions thereof that exceed such limit shall be treated as options not qualified for incentive stock option treatment. Eligibility Options under the 2000 Incentive Stock Option Plan may be granted only to employees of the Company or of its affiliates. A Director shall only be eligible for the benefits of the plan if he or she is also an employee, provided, however, a Director shall in no event be eligible for the benefits of the plan unless at the time discretion is exercised in the selection of the Director as a person to whom options may be granted, or in the determination of the number of optioned shares which may be covered by options granted to the Director: (i) the Committee consists only of non-employee Directors; or (ii) the plan otherwise complies with the requirements of Section 16 (b) and the related SEC roles. This provision does not apply prior to the date of the first registration of an equity security of the Company under Section 12 of the Exchange Act. No person shall be eligible for the grant of an incentive stock option, if, at the time of the grant, such person owns or is deemed to own pursuant to Section 424 (d) of the Internal Revenue Code of 1986, as amended, stock possessing more than ten (10%) of the total combined voting power of all classes of stock of the Company or of any of its affiliates, unless the exercise price of the option is at least one hundred and ten percent (110%) of the fair market - 11 - value (as defined in the 2000 Incentive Stock Option Plan) of such stock at the date of the grant and the incentive stock option is not exercisable after the expiration of five (5) years from the date of the grant. Terms of Options The exercise price shall not be less than one hundred percent (100%) of the fair market value (as defined in the 2000 Incentive Stock Option Plan) of the stock subject to the option on the date the option is granted (except as noted under Eligibility with respect to owners of ten (10%) percent of the total combined voting stock of the Company or of any of its affiliates.) No option shall be exercisable after the expiration of five (5) years from the date it was granted and the term of the option shall be stated in the Option Agreement. Generally, an option shall be deemed exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option Agreement by the person entitled to exercise the option and full payment has been received by the Company. The purchase price of the stock acquired pursuant to the option shall be paid, at the time the option is exercised, to the extent permitted by the statutes and regulations at the time that the option is exercised, either in cash or check. In the event that an optionee's continuous status as an employee (as defined in the 2000 Incentive Stock Option Plan) terminates (other than by death or disability), the optionee may exercise his or her option but only prior to (i) the expiration of three (3) months after the date of such termination and (ii) expiration of the term of the option as set forth in the Option Agreement, and only to the extent that the optionee was entitled to exercise it as of the date of such termination. In the event that an optionee's continuous status as an employee terminates as a result of the optionee's disability, the optionee or his or her personal representative may exercise his or her option, but only within twelve (12) months from the date of such termination, and only to the extent that such optionee was entitled to exercise it on the date of such termination (but in no event later than the expiration of the term of the option as set forth in the Option Agreement). In the event of the death of the optionee, the option may be exercised, at any time within twelve (12) months of the death of the optionee (or such longer or shorter time as may be specified in the Option Agreement) but in no event later than the expiration date of the option as set forth in the Option Agreement. Nontransferability An incentive stock option shall not be transferrable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the optionee only by such person. Amendment The Committee at any time may amend the Plan, provided however, that if required or desirable under SEC Rule 16b-3 no amendment shall be made more than once every six (6) months, other than to comport with the changes in the Code, ERISA, or other rules and regulation promulgated thereunder. It is contemplated that the Committee may amend the Plan in any respect the Committee deems necessary or advisable to bring the Plan and the Options granted thereunder into compliance with the Code and Rule 16b-3. - 12 - The Company will obtain shareholder approval of any Plan amendment to the extent necessary or desirable to comply with Rule 16b-3 or with the Code or any successor rule or statute or other rule or regulation, including the requirements of any exchange or quotation system on which the Common Stock is listed or quoted. The rights and obligations under the options granted before the amendment of the Plan shall not be altered or impaired by the amendment of the Plan unless consented to in writing by the optionee. Termination The Committee may suspend or terminate the Plan at any time, however, the rights and obligations under any obligation granted while the Plan is in effect shall not be altered or impaired by the suspension or termination of the Plan except with the consent of the optionee. Unless sooner terminated, the Plan shall terminate within ten (10) years of the date the Plan was adopted by the Board of Directors or approved by the shareholders whichever date is earlier. Adjustments upon Changes in Capitalization or Merger Subject to any required action by the shareholders of the Company, the number of shares of Common Stock subject to the Plan and the number of shares of Common Stock that have been authorized for issuance under the Plan but as to which no option has yet been granted or have been returned to the Plan upon cancellation or expiration, as well as the price per share of Common Stock shall be proportionally adjusted for any increase or decrease in the number of issued shares of the Common Stock, resulting from a stock split, stock dividend, combination or reclassification of shares of Common Stock effected without consideration by the Company. Such adjustment shall be made by the Committee, whose determination shall be final, binding and conclusive. In the event of dissolution or liquidation of the Company, each outstanding option will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Committee. The Committee may, in its sole discretion, declare that any option shall terminate as of a date fixed by the Committee and give each optionee the right to exercise his or her option as to all or any part of the optioned shares, including the shares as to which the option would not otherwise be exercisable. In the event of a proposed sale of substantially all of the assets of the Company, or the merger, restructure, reorganization or consolidation of the Company with or into another entity or entities in which the shareholders of the Company receive cash or securities of another issuer, or any combination thereof, in exchange for their shares of Common Stock, each outstanding option shall be assumed or an equivalent option shall be substituted by such successor entity or an affiliate of such successor entity, unless the Committee determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, that the optionee shall have the right to exercise the option as to all optioned shares, including shares as to which the option would not otherwise be vested. Notwithstanding anything to the contrary in the Plan, the Committee may grant options which provide for acceleration of the vesting of shares subject to an option upon Change of Control as defined in the Plan. - 13 - Certain Federal Income Tax Consequences The following summary generally describes the principal Federal (and not state and local) income tax consequences of options granted under the 2000 Incentive Stock Option Plan. It is general in nature and is not intended to cover all tax consequences that may apply to a particular participant in the 2000 Incentive Stock Option Plan to the Company. The provisions of the Code and regulations thereunder relating to these matters are complicated and their impact in any one case may depend upon the particular circumstances. This discussion is based on the Code as currently in effect. If an incentive stock option is awarded to a participant in accordance with the terms of the 2000 Incentive Stock Option Plan, no income will be recognized by such participant at the time of the grant. Generally, on exercise of an incentive stock option, the participant will not recognize any income and the Company will not be entitled to a deduction for tax purposes. However, the difference between the purchase price and the fair market value of the shares of Common Stock received on the date of exercise will be treated as a positive adjustment in determining alternative minimum taxable income, which may subject the participant to the alternative minimum tax. Upon the disposition of shares acquired upon exercise of an incentive stock option under the 2000 Incentive Stock Option Plan, the participant will ordinarily recognize long-term or short term capital gain or loss (depending on the applicable holding period). Generally, however, if the participant disposes of shares of Common Stock acquired upon exercise of an incentive stock option within two years after the date of grant or within one year after the date of exercise (a "disqualifying disposition"), the optionee will recognize ordinary income, and the Company will be entitled to a deduction for tax purposes, the amount of the excess of the fair market value of the shares on the date of exercise over the purchase price (or the gain on sale, if less). Any excess of the amount realized by the optionee on the disqualifying disposition over the fair market value of the shares on the date of exercise of the incentive stock option will ordinarily constitute capital gain. In the case of an optionee subject to the restrictions of Section 16(b) of the Exchange Act, the relevant date in measuring the optionee's ordinary income and the Company's tax deduction in connection with any such disqualifying disposition. May be affected by compliance with the requirements of Section 16 (b). Shareholder Approval Required Approval of the amendment to the 2000 Incentive Stock Option Plan by the shareholders is required in order for incentive stock options to qualify as "performance-based" compensation under Section 162(m) of the Code, for incentive stock options to meet the requirements of Section 422 of the Code. Approval is also a listing requirement of the NASDAQ National Market. New Plan Benefits Table The Company has not included a benefits table because the number of incentive stock options that will be awarded to employees in the future pursuant to the 2000 Incentive Stock Option Plan cannot be determined at this time. In addition, because no incentive stock option will have an exercise price of less than the fair market value of the Common Stock at the date of shareholder approval, these incentive stock options have no value at the present time. - 14 - The Board of Directors believes that the amendment to the 2000 Incentive Stock Option Plan is in the best interests of the shareholders. Among other things, the 2000 Incentive Stock Option Plan will tend to encourage the retention of equity ownership in the Company by employees, which will tend to align the interest of such employees with the interests of shareholders. THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF THE AMENDMENT TO THE 2000 INCENTIVE STOCK OPTION PLAN. PROPOSAL TO APPROVE THE 2003 DIRECTORS STOCK OPTION PLAN The 2003 Directors Stock Option Plan was adopted, subject to shareholder approval, by the Board of Directors on January 30, 2003. The 2003 Directors Stock Option Plan is intended to promote the Company's interests by establishing a mechanism to reward Directors based upon future increases in the value of the Company's stock. This will help retain the services of persons who are now Directors and provide incentives for them to exert maximum efforts for the success of the Company and its affiliates. The following is a summary of the proposed features of the 2003 Directors Stock Option Plan, which is qualified in its entirety by reference to the 2003 Directors Stock Option Plan which is annexed hereto as Exhibit B. As indicated in the text of the 2003 Directors Stock Option Plan, any provision of the 2003 Directors Stock Option Plan which is determined to be inconsistent with the applicable laws and regulations will be deemed void. Administration The 2003 Directors Stock Option Plan may be administered by a Committee appointed by the Board of Directors composed of not fewer than two (2) members of the Board to serve in its place with respect to the Plan. No member of the Committee may be an employee or officer of the Company or any affiliate. Under the terms of the 2000 Directors Stock Option Plan, the Committee has the authority to (i) determine the fair market value of the Common Stock of the Company or of its affiliates, (ii) determine the terms and provisions of each option granted and the forms of each option agreement, and subject to the consent of the optionee, to modify and amend any outstanding option agreement, (iii) accelerate or defer (with the consent of the optionee) the date of any outstanding option, (iv) authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an option, (v) construe or interpret the 2003 Directors Stock Option Plan, (vi) authorize the sale of shares of Common Stock in connection with exercise of the options, (vii) to effect, with the consent of the optionee, the cancellation of any outstanding options and to grant in substitution thereof new options relating to the same or different numbers of shares, (viii) make all other determinations deemed necessary or advisable for the administration of the plan. Shares Reserved Subject to adjustments for certain changes in the number of shares of Common Stock. A total of 122,934 shares of the Company's Common Stock shall be available for issuance under the 2003 Directors Stock Option Plan. Stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise. - 15 - Eligibility and Grant of Options Upon approval of the 2003 Directors Stock Option Plan each non-employee member of the Company's Board of Directors as of December 31, 2003 will be granted an option to purchase 7,500 shares of the Common Stock at 100% of the fair market value as of the date of shareholder approval. As of March 12, 2003, the fair market value of the Common Stock is $16.84 per share. A Director is not eligible to participate if he or she is also a full time officer or employee. The only person who is both a Director and an Officer is Mr. Robert Corcoran. Terms of Options The exercise price shall not be less than one hundred percent (100%) of the fair market value (as defined in the 2003 Directors Stock Option Plan) of the stock subject to the option on the date the option is granted. No Option shall be exercisable after the expiration of five (5) years from the date it was granted and the term of the option shall be stated in the Option Agreement. Generally, an option shall be deemed exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option Agreement by the person entitled to exercise the option and full payment has been received by the Company. The purchase price of the stock acquired pursuant to the option shall be paid, at the time the option is exercised, to the extent permitted by the statutes and regulations at the time that the option is exercised, either in cash or check. In the event that an optionee's continuous status as a Director (as defined in the 2003 Directors Stock Option Plan) terminates (other than by death or disability), the optionee may exercise his or her option but only prior to (i) the expiration of three (3) months after the date of such termination and (ii) expiration of the term of the option as set forth in the Option Agreement, and only to the extent that the optionee was entitled to exercise it as of the date of such termination. In the event that an optionee's continuous status as a Director terminates as a result of the optionee's disability, the optionee or his or her personal representative may exercise his or her option, but only within twelve (12) months from the date of such termination, and only to the extent that such optionee was entitled to exercise it on the date of such termination (but in no event later than the expiration of the term of the option as set forth in the Option Agreement). In the event of the death of the optionee, the option may be exercised, at any time within twelve (12) months of the death of the optionee (or such longer or shorter time as may be specified in the Option Agreement) but in no event later than the expiration date of the option as set forth in the Option Agreement. Transferability A Director's stock option shall not be transferrable except: (i) by will or by laws of descent and distribution or pursuant to a qualified domestic relations order, as defined by the Code or Title I of the Employee Retirement Income Act, as amended ("ERISA"), or the rules thereunder (a "QDRO") and shall be exercisable during the lifetime of the optionee only by such person or any transferee pursuant to a QDRO; or (ii) without payment of consideration, to immediate family members (i.e., spouses, children and grandchildren) of the optionee or to a trust for the benefit of such family members, or partnership whose only partners are such family members. - 16 - Adjustments upon Changes in Capitalization or Merger Subject to any required action by the shareholders of the Company, the number of shares of Common Stock subject to the Plan and the number of shares of Common Stock that have been authorized for issuance under the Plan but as to which no option has yet been granted or have been returned to the Plan upon cancellation or expiration, as well as the price per share of Common Stock shall be proportionally adjusted for any increase or decrease in the number of issued shares of the Common Stock, resulting from a stock split, stock dividend, combination or reclassification of shares of Common Stock effected without consideration by the Company. Such adjustment shall be made by the Committee, whose determination shall be final, binding and conclusive. In the event of dissolution or liquidation of the Company, each outstanding option will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Committee. The Committee may, in its sole discretion, declare that any option shall terminate as of a date fixed by the Committee and give each optionee the right to exercise his or her option as to all or any part of the optioned shares, including the shares as to which the option would not otherwise be exercisable. In the event of a proposed sale of substantially all of the assets of the Company, or the merger, restructure, reorganization or consolidation of the Company with or into another entity or entities in which the shareholders of the Company receive cash or securities of another issuer, or any combination thereof, in exchange for their shares of Common Stock, each outstanding option shall be assumed or an equivalent option shall be substituted by such successor entity or an affiliate of such successor entity, unless the Committee determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, that the optionee shall have the right to exercise the option as to all optioned shares, including shares as to which the option would not otherwise be vested. Notwithstanding anything to the contrary in the Plan, the Committee may grant options which provide for acceleration of the vesting of shares subject to an option upon Change of Control as defined in the Plan. Certain Federal Income Tax Consequences The following summary generally describes the principal federal (and not state and local) income tax consequences of options granted under the 2003 Directors Stock Option Plan. It is general in nature and is not intended to cover all tax consequences that may apply to a particular participant in the 2003 Directors Stock Option Plan or to the Company. The provisions of the Code and the regulations thereunder relating to these matters are complicated and their impact in any one case may depend upon the particular circumstances. This discussion is based on the Code as currently in effect. If a grant is awarded to a participant in accordance with the terms of the 2003 Directors Stock Option Plan, no income will be recognized by such participant at the time the grant is awarded. Generally, on exercise of a nonqualified stock option, the amount by which the fair market value of the Common Stock on the date of exercise exceeds the purchase price of such shares will be taxable to the participant as ordinary income, and will be deductible for tax purposes by the Company, in the year in which the participant recognizes the ordinary income. The disposition of - 17 - shares acquired upon exercise of a nonqualified stock option ordinarily will result in long term or short term capital gain or loss (depending on the applicable holding period) in an amount equal to the difference between (i) the amount realized on such disposition and (ii) the sum of (x) the purchase price and (y) the amount of ordinary income recognized in connection with the exercise of the nonqualified stock option. Section 16(b) of the Exchange Act generally requires officers, directors and ten percent shareholders of the Company to disgorge profits from buying and selling the Common Stock within a six month period. Generally, unless the participants in the 2003 Directors Stock Option Plan elect otherwise, the relevant date for measuring the amount of ordinary income to be recognized upon the exercise of a nonqualified stock option will generally be the date of exercise. If a nonqualified stock option is exercised through the use of Common Stock previously owned by the participant, such exercise generally will not be considered a taxable disposition of the previously owned shares and, thus, no gain or loss will be recognized with respect to the shares used to exercise the option. Shareholder Approval While shareholder approval of the 2003 Directors Stock Option Plan is no longer required by Section 16(b) of Exchange Act or by New Jersey law, such approval is required by the explicit terms of the Plan and by the listing requirements. Should shareholder approval not be obtained the Plan will not take effect. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 2003 DIRECTORS STOCK OPTION PLAN. New Plan Benefit Table The Company has not included a benefits table because the options will have exercise prices equal to the fair market value of the Common Stock as of the date of shareholder approval, these options have no value at the present time. Independent Public Accountants The Board of Directors has selected Grant Thornton LLP to be the independent public accountants for the Company for the fiscal year ending December 31, 2003. A member of that firm will be present at the Annual Meeting and available to respond to appropriate questions from the shareholders, and make a statement if desired to do so. Financial and Other Information Incorporated by Reference A copy of the Company's 2002 Annual Report is being sent to each shareholder along with this Proxy Statement and is incorporated herein by reference. This information should be read by shareholders in conjunction with this Proxy Statement. Other Matters Which May Properly Come Before the Meeting The Board of Directors knows of no other business that will be presented for consideration at the Annual Meeting other than that stated in the Notice. Should any other matter properly come before the meeting and any adjournment thereof, it is intended that proxies in the enclosed form will be voted in respect thereof in accordance with the judgment of the person or persons voting the proxies. - 18 - Proposals by Security Holders Proposals by shareholders intended to be presented at the 2004 Annual Meeting of Shareholders (which the Company currently intends to hold in April of 2004) must be received by the Secretary of the Company by November 24, 2003 for inclusion in its Proxy Statement and form of proxy relating to that meeting. Nominations for Directors to be elected at the 2004 Annual Meeting may be submitted to the Chairman of the Nominating Committee by November 1, 2003 at the same mailing address. The name of the shareholder making the nomination along with a resume of the shareholder nominee should be included. If the date of the next annual meeting is changed by more than 30 calendar days from such anticipated time frame, the Company shall, in a timely manner, inform its shareholders of the change and the date by which proposals of shareholders must be received. All such proposals should be directed to the attention of the Secretary, SVB Financial Services, Inc., 70 East Main Street, Somerville, New Jersey 08876. - 19 - EXHIBIT A SVB FINANCIAL SERVICES, INC. 2000 INCENTIVE STOCK OPTION PLAN 1. PURPOSES. (a) Opportunity to Purchase Stock. The purpose of the Plan is to provide a means by which selected Employees of the Company and its Affiliates may be given an opportunity to purchase stock of the Company. The Company, by means of the Plan, seeks to retain the services of persons who are now Employees of the Company and its Affiliates, to secure and retain the services of new Employees of the Company and its Affiliates, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates. (b) Incentive Stock Options. The Company intends that the Options issued under the Plan shall be Incentive Stock Options. (c) The 2000 Incentive Stock Option Plan is an incentive stock option plan in addition to the Company's existing 1997 Restated Incentive Stock Option Plan. 2. DEFINITIONS. (a) "Affiliate" means any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) respectively of the Code, whether such corporations are now or are hereafter existing. (b) "Board" means the Board of Directors of the Company. (c) "Change of Control" means the occurrence, at any time after December 31, 1996, of (i) a merger or consolidation of the Company with or into another Person or the merger of another Person into the Company or the transfer ownership of any voting stock of the Company to any Person or "group" (as such term is defined in Section 13 (d)(3) of the Securities and Exchange Act of 1934, as amended (the "Exchange Act")), of Persons as a consequence of which those Persons who held the voting stock of the Company immediately prior to such merger, consolidation or transfer do not hold either directly or indirectly a majority of the voting stock of the Company (or, if applicable, the surviving company of such merger or consolidation) after the consummation of such merger, consolidation or transfer; (ii) the sale of all or substantially all of the assets of the Company to any Person or "group" of Persons (other than to an entity which owns a majority or more of the Common Stock of the Company, a subsidiary of the Company, or an entity whose equity interests are owned directly or indirectly by the Company or by an entity which owns directly or indirectly a majority or more of the Common Stock of the Company); or (iii) any event or series of events (which event or series of events must include a proxy fight or proxy solicitation with respect to the election of directors of the Company made in opposition to the nominees recommended by the Continuing Directors) during any period of 12 consecutive months all or any portion of which A1 is after as a result of which a majority of the Board of Directors of the Company consists of individuals other than Continuing Directors. (d) "Code" means the Internal Revenue Code of 1986, as amended. (e) "Committee" means the Board of Directors of the Company unless a separate Committee has been appointed by the Board in accordance with Section 3(c) of the Plan. (f) "Common Stock" means the common stock of SVB Financial Services, Inc., a New Jersey corporation. (g) "Company" means SVB Financial Services, Inc., a New Jersey corporation. (h) "Continuing Directors of the Company" means with respect to any period of 12 consecutive months (i) any members of the Board of Directors of the Company on the first day of such period, (ii) any member of the Board of Directors of the Company elected after the first day of such period at any annual meeting of the shareholders who were nominated by the Board of Directors or a committee thereof, if a majority of the members of the Board of Directors or such Committee were Continuing Directors at the time of such nomination, and (iii) any members of the Board of Directors of the Company elected to succeed Continuing Directors of the Board of Directors or a committee thereof, if a majority of the members of the Board of Directors or such committee were Continuing Directors at the time of such election. (i) "Continuous Status as an Employee" means the employment or relationship as an employee is not interrupted or terminated with the Company or any Affiliate. Continuous Status as an Employee shall not be considered interrupted in the case of: (1) any sick leave, military leave, or any leave of absence approved by the Committee; provided, however, that for purposes of the Incentive Stock Options, any such leave is for a period of not more than ninety (90) days or reemployment upon the expiration of such leave is guaranteed by contract or statute; or (2) transfers between locations of the Company or between the Company and its Affiliates or between the Company or its Affiliates on the one hand and their successors, on the other hand. (j) "Director" means a member of the Board. (k) "Disability" means permanent and total disability as defined in Section 22 (e) (3) of the Code. (l) "Non-Employee Director" means a Director who is considered to be a "non-employee director" in accordance with Section (b) (3) (i) of Rule 16b-3, and any other applicable rules, regulations and interpretations of the Securities and Exchange Commission. (m) "Employee" means any person, including officers and Directors, employed by the Company or any Affiliate. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company. (n) "Exchange Act" means the Securities and Exchange Act of 1934, as amended. A2 (o) "Fair Market Value" means, as of the any date, the value of the Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation (NASDAQ) System, the Fair Market Value of a share of Common Stock shall be the Closing sales price for such stock on the date of determination (or, if no such price is reported on such date, such price as reported on the nearest preceding day) as quoted on such system or exchange (or exchange with the greatest volume of trading in the Common Stock), as reported in The Wall Street Journal or such other source as the Committee deems reliable; (ii) If the Common Stock is quoted on the NASDAQ System (but not on the National Market System thereof) or is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a share of Common Stock shall be the mean of the closing bid and the asked prices for the Common Stock on the date of determination (or, if such prices are not reported for such date, such prices as reported on the nearest preceding date), as reported in the Wall Street Journal or such other source as the Committee deems reliable; (iii)If the Fair Market Value is not determined pursuant to (i) or (ii) above, then the Fair Market Value shall be determined in good faith by the Committee. (p) "Incentive Stock Option" means an Option qualifying as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. (q) "Nonstatutory Stock Option" means an Option not qualifying as an Incentive Stock Option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. (r) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (s) "Option" means a stock option granted pursuant to the Plan. (t) "Option Agreement" means a written agreement between the Company and the Optionee evidencing the conditions of an individual Option grant. The Option Agreement shall be subject to the terms and conditions of the Plan. (u) "Optioned Shares" means with respect to any Option the Shares of the Common Stock subject to the Option. (v) "Optionee" means an Employee or Consultant who holds an outstanding option (w) "Person" means an individual or an entity. A3 (x) "Plan" means the SVB Financial Services, Inc. 2000 Incentive Stock Option Plan. (y) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16-3. (z) "Shares" mean a share of Common Stock, as adjusted in accordance with Section 10. 3. ADMINISTRATION. (a) Committee. The Plan shall be administered by the Committee. (b) Powers. The Committee shall have the power, subject to, and within the limitations of, the express provisions of the Plan to: (i) grant Options; (ii) determine, in accordance with Section 6 of the Plan, the Fair Market Value per Share of the Common Stock; (iii)determine, in accordance with Section 6, the exercise price per Share at which Options may be exercised; (iv) determine the Employees to whom, and the time or times at which, Options shall be granted, the number of shares of Optioned Stock subject to each Option and the vesting schedule of such Options; (v) determine the terms and provisions of each Option granted (which need not be identical) and the forms of Option Agreements and, with the consent of the Optionee, and subject to Section 11, to modify or amend any outstanding Option; (vi) accelerate or defer (with the consent of the Optionee) the date of any outstanding Option; (vii)authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an Option previously granted by the Committee; (viii) amend the Plan as provided in Section 11; (ix) construe and interpret the Plan and Options granted under it, and to establish, amend and revoke rules and regulations for the administration of the Plan, subject to Section 11; including correcting any defect, omission or inconsistency in the Plan or in any Option Agreement, in any manner and to the extent it shall deem necessary or expedient to make the Plan Fully effective; (x) authorize the sale of shares of the Company's Common Stock in connection with the exercise of the Options; A4 (xi) effect, at any time and from time to time, with the consent of the affected Optionee, the cancellation of any or all outstanding Options and grant in substitution thereof new Options relating to the same or different numbers of Shares, but having an exercise price per share consistent with Section 6(b) at the date of the new Option grant; and (xii)make all other determination deemed necessary or advisable for the administration of the Plan. (c) Committee. The Board may appoint a committee composed of not fewer than two (2) members of the Board to serve in its place with respect to the Plan. All of the members of such Committee shall be Disinterested Persons, if required under Section 3 (d). From time to time, the Board may increase the size of the Committee and appoint such additional members, remove members (with or without cause) and substitute new members of the committee, fill vacancies, (however caused) and remove members of the committee and thereafter directly administer the Plan, all to the extent permitted by the rules governing plans intended to qualify as a discretionary plan under Rule 16b-3. (d) Exchange Act Registration. Any requirement that an administrator of the Plan be a Disinterested Person shall not apply (i) prior to the date of the first registration of an equity security of the Company under Section 12 of the Exchange Act or (ii) if the Board or the Committee expressly declares that such requirement shall not apply. Any Disinterested Person shall otherwise comply with the requirements of Rule 16b-3. 4. SHARES SUBJECT TO PLAN. (a) Number of Shares. Subject to the provisions of Section 10 relating to adjustments upon changes in stock, the number of shares of stock that may be sold pursuant to Options is 358,043 of the Company's Common Stock, of which as of the 2003 Annual Meeting of shareholders 266,042 shares of the Company's Common Stock remain available for issuance pursuant to Options. If any Option shall for any reason expire or otherwise terminate without having been exercised in full, the Optioned Shares not purchased under such Option shall revert to and again become available for issuance under the Plan unless the Plan shall have terminated; provided, however, that Shares that have actually been issued under the Plan shall not be returned to the Plan and shall not become available for future issuance under the Plan. (b) Stock Subject to Plan. The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise. 5. ELIGIBILITY. (a) Employees. Incentive Stock Options may be granted to Employees only. (b) 10% Holders. No person shall be eligible for the grant of an Incentive Stock Option, if, at the time of the grant, such person owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten (10%) of the total combined voting power of all classes of stock of the Company or of any of its Affiliates unless the exercise price of the Option is at least one A5 hundred ten percent (110%) of the Fair Market Value of such stock at the date of the grant and the Incentive Stock Option is not exercisable after the expiration of five (5) years from the date of the grant. (c) Directors. A Director shall only be eligible for the benefits of this Plan if he or she is also an Employee, provided, however, a Director shall in no event be eligible for the benefits of the Plan unless at the time discretion is exercised in the selection of the Director as a person to whom Options may be granted, or in the selection of the Director as a person to whom Options may be granted, or in the determination of the number of Optioned Shares which may be covered by Options granted to the Director: (i) the Committee consists only of Non-Employee Directors; or, (ii) the Plan otherwise complies with the requirements of Section 16b-3. (d) Other Limits on Incentive Stock Options. To the extent that the aggregate Fair Market Value (determined at the time of the grant) of stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year under all plans of the Company and its Affiliates exceeds One Hundred Thousand ($100,000) Dollars, the Options or portions thereof that exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options. 6. OPTION PROVISIONS. Each Option Agreement shall be in such form and contain such terms and conditions as the Committee shall deem appropriate. In the event that any provision of the Option Agreement and the Plan conflict, the provisions of the Plan shall control. The provisions of separate Options need not be identical, but each Option Agreement shall include (through incorporation of provisions hereof by reference in the Option Agreement or otherwise) the substance of each of the following provisions: (a) Term. No Option shall be exercisable after the expiration of five (5) years from the date it was granted and the term of each Option shall be stated in the Option Agreement. (b) Price. Subject to Section 5, the exercise price shall be not less than one hundred percent (100%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted. The exercise price of each Stock Option shall not be less than the par value of the Optioned Shares on the date the Option was exercised. (c) Consideration. The purchase price of stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations at the time the Option is exercised, either in cash or check. (d) Exercise. Subject to 9(f), an Option shall be deemed exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option Agreement by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company by cash or check. Each Optionee who exercises an Option shall, upon notification of the amount due (if any) and prior to or concurrent with delivery of the certificate representing the Shares, pay to the Company by cash or check, A6 amounts necessary to satisfy applicable federal, state or local tax withholding requirements. (e) Non-Transferability. An Incentive Stock Option shall not be transferable except by will or by laws of descent and distribution and shall be exercisable during the lifetime of the Optionee only by such person. (f) Vesting. The total number of shares of stock subject to an Option may, but need not, be allocated in periodic installments (which may, but need not, be equal). The Option Agreement may provide that from time to time during each of the installment periods, the option may become exercisable ("Vest") with respect to some of all of the Shares allotted to that period and may be exercised with respect to some or all of the Shares allotted to such period and/or any prior period as to which the Option became vested but has not been fully exercised. During the remainder of the term of the Option, (if its term extends beyond the end of the installment period), the Option may be exercised from time to time with respect to any Shares then remaining subject to the Option. The provisions of the this subsection are subject to any Option provisions governing minimum number of Shares as to which an Option may be exercised. Options may not be exercised in fractional shares. (g) Securities Compliance. The Company may require any Optionee, or any person to whom an Option is transferred under Section 6 (f), as a condition of exercising such Option, (i) to give written assurances satisfactory to the Company as to the Optionee's knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, and that he or she is capable of evaluating, alone, or together with the purchaser representative, the merits and risks of exercising the Option; (ii) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the Option for such person's own account and not with the present intention of selling or otherwise distributing the stock; and (iii) to deliver such other documentation as may be necessary to comply with federal and state securities laws. These requirements and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the Shares upon the exercise of the Option has been registered under a then effective registration statement under the Securities Act of 1933, as amended (the "Securities Act"), and all applicable state securities laws, or (ii) as to any such requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the applicable securities laws. The Company may, upon advice of Counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary and appropriate in order to comply with applicable securities laws, including but not limited to, legends restricting the transfer of the stock, and may enter stop-transfer orders against the transfer of the Shares of Common Stock issued upon the exercise of an Option. The Company has no obligation to undertake registration of Options or the Shares of Common Stock issued upon the exercise of an Option. (h) Termination of Employment. In the event an Optionee's Continuous Status an Employee terminates (other than by the Optionee's death or disability), the Optionee may exercise his or her Option but only prior to the (i) expiration of three (3) months after the date of such termination and (ii) expiration of the term of the Option as set forth in the Option Agreement, and only to the extent that the Optionee was entitled to exercise it at the date of such termination. If, at the date of such termination, the Optionee is not entitled to exercise his or her entire Option, the Shares covered by the unexercisable portion of the Option shall revert to and again become available A7 for issuance under the Plan. If after termination, the Optionee does not fully exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate and the Shares covered by the unexercised portion of the such Plan shall revert to and again become available under the Plan. (i) Disability of Optionee. In the event that an Optionee's Continuous Status as an Employee terminates as a result of the Optionee's Disability, the Optionee or his or her personal representative may exercise his or her Option, but only within twelve (12) months from the date of such termination, and only to the extent that the Optionee was entitled to exercise it on the date of such termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). If, at the date of such termination, the Optionee is not entitled to exercise his or her entire Option, the Shares covered by the unexercisable portion of the Option shall revert to and again be available under the Plan. If, after such termination, the Optionee does not fully exercise his or her Option within the time period specified herein, the Option shall terminate and the Shares covered by the unexercised portion of the Option shall revert to and again become available under the Plan. (j) Death of Optionee. In the event of the death of an Optionee, the Option may be exercised, at any time within twelve (12) months following the date of death (or such longer or shorter time as may be specified in the Option Agreement) but in no event later than the expiration date of the Option as set forth in the Option agreement, by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent that the Optionee was entitled to exercise the Option as of the date of his or her death. If at the time of death, the Optionee was not entitled to exercise his or her entire Option, then the Shares covered by the unexercisable portion of the Option shall revert to and again become available under the Plan. If, after death, the Optionee's estate or a person who acquired the right to exercise the Option, does not fully exercise the Option within the time period specified herein, then the Shares covered by the unexercised portion of the Option shall revert to and again become available under the Plan. 7. COVENANTS OF THE COMPANY. (a) Reserves. During the term of the Options, the Company shall keep available at all times and shall reserve the number of shares required to satisfy such Options upon exercise. (b) Regulatory Approvals. The Company shall seek and obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell Shares upon exercise of the Options; provided, however, that this undertaking shall not require the Company to register under the Securities Act either the Plan or any Option or any Shares issued or issuable pursuant to such Options. If, after reasonable efforts, the Company is unable to obtain from such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance and sale of the Shares under the Plan, the Company shall be relieved from any liability for failure to issue or sell Shares upon exercise of such Options unless and until authority is obtained. 8. USE OF PROCEEDS FROM STOCK. A8 Proceeds from the sale of the stock pursuant to Options shall constitute general funds of the Company. 9. MISCELLANEOUS. (a) Acceleration of Vesting. The committee shall have the power to accelerate the time at which an Option may first be exercised or the time during which an Option or any part thereof will Vest pursuant to Section 6 (g), notwithstanding the provisions in the Option Agreement stating the time at which it may first be exercised or the time during which it will Vest. (b) No Rights as Shareholder. Neither an Optionee nor any person to whom an Option is transferred under Section 6(f) shall be deemed to be the holder of or to have any of the rights of a holder with respect to, any Shares subject to such Option including, but not limited to, rights to vote or to receive dividends unless and until such person has satisfied all requirements for the exercise of the Option according to its terms, the certificates evidencing such Shares have been issued and such person has become the record owner of such Shares. (c) No Right To Continue as Employee. Nothing in the Plan or any instrument executed or Option granted pursuant thereto shall confer upon any Employee, or Optionee any right to continue in the employ of the Company, or any Affiliate or shall affect the right of the Company or any Affiliate to terminate the employment or the relationship of any Employee or Optionee with or without cause. (d) Date of Grant. Once shareholder approval of the Plan has been obtained, the date of grant of an Option shall, for all purposes, be the date on which the Committee makes the determination granting such Option. Notice of the determination shall be given to each Optionee within a reasonable time after the date of such grant. The Code may cause the grant date to be recognized as the date of the grant even though shareholder approval has not been obtained. (e) Rule 16b-3. With respect to persons subject to Section 16 of the Exchange Act, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 and with respect to such persons all transactions shall be subject to such conditions regardless of whether they are expressly set forth in the Plan or the Option Agreement. To the extent any provision of the Plan or action by the Committee fails to comply, it shall not apply to such persons or their transactions and shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. (f) Conditions Upon Exercise of Options. Notwithstanding any other provisions, Shares shall not be issued and Options shall not be exercised unless he exercise of such Option and the Issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including without limitation, the Securities Act of 1933, as amended, applicable state securities laws, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange (including NASDAQ) upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. (g) Grants Exceeding Allotted Shares. If the Optioned Shares exceed, as of the date of A9 the grant, the number of shares that may be issued under the Plan without additional shareholder approval, such Option shall be void with respect to such excess Shares, unless shareholder approval of an amendment to the Plan sufficiently increasing the number of Shares subject to the Plan is timely obtained in accordance with Section 11 of the Plan. (h) Notice. Any written notice to the Company required by any of the provisions of the Plan shall be addressed to the Secretary of the Company and shall be effective when it is received. Any written notice to Optionee required by the Plan shall be addressed to the Optionee at the address on file for the Optionee with the Company and shall become effective 3 days after it is mailed by certified mail, postage prepaid to such address or at the time of delivery if delivered sooner by messenger or overnight delivery service. 10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. (a) Changes in Capitalization. Subject to any required action by the shareholders of the Company, the maximum number of Shares of Common Stock subject to the Plan, the number of shares of Common Stock covered by each outstanding Option and the number of shares of Common Stock that have been authorized for issuance under the Plan but as to which no Option has yet been granted or have been returned to the plan upon cancellation or expiration of an option, as well as the price per share of Common Stock shall be proportionally adjusted for any increase or decrease in the number of issued shares of the Common Stock, resulting from a stock split, stock dividend, combination or reclassification of shares of Common Stock effected without consideration by the Company; provided, however that the conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or exercise price of Optioned Shares. (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, each outstanding Option will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Committee. The Committee may, in the exercise of its sole discretion in such instances, declare that any Option shall terminate as of a date fixed by the Committee and give each Optionee the right to exercise his or her Option as to all or any part of the Optioned Shares, including Shares as to which the Option would not otherwise be exercisable. (c) Merger or Asset Sale. Subject to Section 10 (b), in the event of a proposed sale of all or substantially all of the assets of the Company, or the merger, restructure, reorganization or consolidation of the Company with or into another entity or entities in which the shareholders of the Company receive cash or securities of another issuer, or any combination thereof, in exchange for their shares of Common Stock, each outstanding Option shall be assumed or an equivalent option shall be substituted by such successor entity or an Affiliate of such successor, entity, unless the Committee determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, that the Optionee shall have the right to exercise the Option as to all Optioned Shares, including Shares as to which the Option would not otherwise be vested. If the Committee makes an A10 Option fully exercisable in lieu of assumption or substitution in the event of a merger, restructure, reorganization, consolidation or sale of assets, the Committee shall notify the Optionee that the Option shall be fully exercisable for a period of thirty (30) days from the notice, and the Option will terminate upon the expiration of such period. For the purposes of this Section, the Option shall be considered to be assumed if following the merger, restructure, reorganization, consolidation or sale of assets, the Option confers the right to purchase, for each Optioned Share immediately prior to the merger, restructure, reorganization, consolidation or sale of assets, the consideration (whether in stock, cash, or other securities or property) received in the merger or sale of asset by holders of Common Stock for each share of Common Stock held on the effective date of the consummation of the transaction (and if holders were offered a choice of consideration, the type of consideration, the type of Common Stock); provided, however, that if such consideration received in the solely common equity of the successor entity or its Affiliates, the Committee may, with the consent of the successor entity the Optionee, provide for the consideration to be received upon the exercise of the Option, for each Optioned Share, to be solely Common Stock of the successor entity or its Affiliates equal Common Stock in the merger, restructure, reorganization, consolidation or sale of assets. (d) Change of Control. Notwithstanding anything to the contrary, the Committee may grant options which provide for the acceleration of the vesting of shares subject to an Option upon a Change of Control. Such provisions shall be set forth in the Option Agreement. 11. AMENDMENT OF THE PLAN. (a) Amendments by the Committee. The Committee at any time, from time to time, may amend the Plan, provided, however, that if required by Rule 16b-3, no amendment shall be made more than once every six months, other than to comport with the changes in the Code, ERISA or the rules and regulations promulgated thereunder. (b) Compliance with the Code and Rule 16b-3. It is expressly contemplated that the Committee may amend the Plan in any respect the Committee deems necessary or advisable to bring the Plan and the Options granted hereunder into compliance with the Code and Rule 16b-3. (c) Shareholder Approval. Notwithstanding anything to the contrary, the Company shall obtain shareholder approval of any Plan amendment to the extent necessary or desirable to comply with Rule 16b-3 or with the Code (or any successor rule or statute or other applicable law, rule or regulation, including the requirements or any exchange or quotation system on which the Common Stock is listed or quoted). Such shareholder approval, if required shall be obtained in such manner and to such degree as is required by the applicable law, rule or regulation. (d) Rights and Obligations Granted Prior to Amendments. Rights and obligations under any Option granted before amendment of the Plan shall not be altered or impaired by any amendment of the Plan unless (i) the Company requests the consent of the Optionee or his or her successor and (ii) such person consents in writing. 12. TERMINATION OR SUSPENSION OF THE PLAN. A11 (a) Termination Date. The Committee may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate within ten (10) years of the date the Plan is adopted by, the Board of Directors or approved by shareholders of the Company which ever date is earlier. No Options may be granted under the Plan while it is suspended or after it is terminated. (b) Alteration of Existing Rights. Rights and obligations under any Option granted while the Plan is in effect shall not be altered or impaired by the suspension or termination of the Plan except with the consent of the Optionee or his or her successor. 13. EFFECTIVE DATE OF PLAN. The Plan shall become effective as determined by the Board, but no Options granted under the Plan shall be exercised unless and until the Plan has been approved by the shareholders of the Company. Continuance of the Plan shall be subject to the approval of the shareholders within 12 months from the date of the Plan or the Board. A12 EXHIBIT B SVB FINANCIAL SERVICES, INC. 2003 DIRECTORS STOCK OPTION PLAN 1. PURPOSES. (a) Opportunity to Purchase Stock. The purpose of the Plan is to provide a means by which Directors of the Company and its Affiliates may be given an opportunity to purchase stock of the Company. The Company, by means of the Plan, seeks to retain the services of persons who are now Non-Employee Directors of the Company and its Affiliates, and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Affiliates. (b) Nonstatutory Stock Options. The Company intends that the Options issued under the Plan shall be Nonstatutory Stock Options. 2. DEFINITIONS. (a) "Affiliate" means any parent corporation or subsidiary corporation of the Company, as those terms are defined in Sections 424(e) and (f) respectively of the Code, whether such corporations are now or are hereafter existing. (b) "Board" means the Board of Directors of the Company. (c) "Code" means the Internal Revenue Code of 1986, as amended. (d) "Committee" means the Board of Directors of the Company unless a separate Committee has been appointed by the Board in accordance with Section 3(c) of the Plan. (e) "Common Stock" means the common stock of SVB Financial Services, Inc., a New Jersey corporation. (f) "Company" means SVB Financial Services, Inc., a corporation of the State of New Jersey. (g) "Continuous Status as a Director" means the relationship as a member of the Board of Directors is not interrupted or terminated with the Company or any Affiliate. Continuous Status as a Director shall not be considered interrupted in the case of: (1) any sick leave, military leave, or any leave of absence approved by the Committee. (h) "Director" means a member of the Board and includes Directors who are officers and Employees of the Company or its Affiliates and Directors that are neither Employees or Officers of the Company or any of its Affiliates. (i) "Disability" means permanent and total disability as defined in Section 22 (e) (3) of the Code. B1 (j) "Non-Employee Director" means a Director who is considered to be a "non-employee director" in accordance with Section (b) (3) (i) of Rule 16b-3, and any other applicable rules, regulations and interpretations of the Securities and Exchange Commission. (k) "Employee" means any person, including officers and Directors, employed by the Company or any Affiliate. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company. (l) "Exchange Act" means the Securities and Exchange Act of 1934, as amended. (m) "Fair Market Value" means, as of the any date, the value of the Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the National Market System of the National Association of Securities Dealers, Inc. Automated Quotation (NASDAQ) System, the Fair Market Value of a Share of Common Stock shall be the Closing sales price for such stock on the date of determination (or, if no such price is reported on such date, such price as reported on the nearest preceding day) as quoted on such system or exchange (or exchange with the greatest volume of trading in the Common Stock), as reported in The Wall Street Journal or such other source as the Committee deems reliable; (ii) If the Common Stock is quoted on the NASDAQ System (but not on the National Market System thereof) or is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean of the closing bid and the asked prices for the Common Stock on the date of determination (or, if such prices are not reported for such date, such prices as reported on the nearest preceding date), as reported in the Wall Street Journal or such other source as the Committee deems reliable; (iii)If the Fair Market Value is not determined pursuant to (i) or (ii) above, then the Fair Market Value shall be determined in good faith by the Committee. (n) "Non-Statutory Stock Option" means an Option not qualifying as an Incentive Stock Option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. (o) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (p) "Option" means a stock option granted pursuant to the Plan. (q) "Option Agreement" means a written agreement between the Company and the Optionee evidencing the conditions of an individual Option grant. The Option Agreement shall be subject to the terms and conditions of the Plan. B2 (r) "Optioned Shares" means with respect to any Option the Shares of the Common Stock subject to the Option. (s) "Optionee" means a Director who holds an outstanding Option. (t) "Person" means an individual or an entity. (u) "Plan" means the SVB Financial Services, Inc. 2003 Directors Stock Option Plan. (v) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3. (w) "Shares" shall mean a Share of Common Stock, as adjusted in accordance with Section 10. 3. ADMINISTRATION. (a) Committee. The Plan shall be administered by the Committee. (b) Powers. The Committee shall have the power, subject to, and within the limitations of, the express provisions of the Plan to: (i) determine, in accordance with Section 6 of the Plan, the Fair Market Value per Share of the Common Stock; (ii) determine the terms, provisions, and the forms of Option Agreements and, with the consent of the Optionee, and subject to Section 11, to modify or amend any outstanding Option; (iii)accelerate or defer (with the consent of the Optionee) the date of any outstanding Option; (iv) authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an Option; (v) construe and interpret the Plan and Options granted under it, and to establish, amend and revoke rules and regulations for the administration of the Plan, subject to Section 11; including correcting any defect, omission or inconsistency in the Plan or in any Option Agreement, in any manner and to the extent it shall deem necessary or expedient to make the Plan Fully effective; (vi) effect, at any time and from time to time, with the consent of the affected Optionee, the cancellation of any or all outstanding Options and grant in substitution thereof new Options relating to the same numbers of Shares, but having an exercise price per Share consistent with Section 6(b) at the date of the new Option grant; and B3 (vii)make all other determination deemed necessary or advisable for the administration of the Plan. (c) Committee. The Board may appoint a committee composed of not fewer than two (2) members of the Board to serve in its place with respect to the Plan. All of the members of such Committee shall be Non-Employee Directors, if required under Section 3(d). From time to time, the Board may increase the size of the Committee and appoint such additional members, remove members (with or without cause) and substitute new members of the committee, fill vacancies, (however caused) and remove members of the committee and thereafter directly administer the Plan, all to the extent permitted by the rules governing plans intended to qualify as a discretionary plan under Rule 16b-3. (d) Exchange Act Registration. Any requirement that an administrator of the Plan be a Non-Employee Director shall not apply if the Board or the Committee expressly declares that such requirement shall not apply. Any Non-Employee Director shall otherwise comply with the requirements of Rule 16b-3. 4. GRANT OF OPTIONS AND SHARES SUBJECT TO PLAN. (a) Upon the Effective Date of the Plan as set forth in Section 13 hereof, each Non- Employee Director as of December 31, 2003 shall be granted an Option to purchase 7,500 Shares of the Common Stock at Fair Market Value on said Effective Date. (b) Number of Shares. Subject to the provisions of Section 10 relating to adjustments upon changes in stock, the stock that may be sold pursuant to Options is 122,934 Shares of the Company's Common Stock. If any Option shall for any reason expire or otherwise terminate without having been exercised in full, the Optioned Shares not purchased under such Option shall not become available for future issuance under the Plan. (c) Stock Subject to Plan. The stock subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise. 5. ELIGIBILITY. (a) Directors Eligible. Nonstatutory Stock Options shall be granted to each of the Non- Employee Directors upon the Effective Date of the Plan as set forth in Section 13 hereof immediately following adoption of the Plan by the Board and approval thereof by the stockholders as provided in Section 13 hereafter. (b) Directors. A Director shall be eligible for the benefits of the Plan only if he/she is a Non-Employee Director. 6. OPTION PROVISIONS. Each Option Agreement shall be in such form and contain such terms and conditions as the Committee shall deem appropriate. In the event that any B4 provision of the Option Agreement and the Plan conflict, the provisions of the Plan shall control. The provisions of separate Options need not be identical, but each Option Agreement shall include (through incorporation of provisions hereof by reference in the Option Agreement or otherwise) the substance of each of the following provisions: (a) Term. No Option shall be exercisable after the expiration of five (5) years from the date it was granted and the term of each Option shall be stated in the Option Agreement. (b) Price. The exercise price shall be not less than one hundred percent (100%) of the Fair Market Value of the stock subject to the Option on the date the Option is granted. The exercise price of each Stock Option shall not be less than the par value of the Optioned Shares on the date the Option was exercised. (c) Consideration. The purchase price of stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations at the time the Option is exercised, either in cash or check. (d) Exercise. Subject to 9(f), an Option shall be deemed exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Option Agreement by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company by cash or check. Each Optionee who exercises an Option shall, upon notification of the amount due (if any) and prior to or concurrent with delivery of the certificate representing the Shares, pay to the Company by cash or check, amounts necessary to satisfy applicable federal, state or local tax withholding requirements. (e) Non-Transferability. A Directors Stock Option shall not be transferable except: (I) by will or by laws of descent and distribution or pursuant to a qualified domestic relations order, as defined by the Code or Title I of the Employee Retirement 'Income Act, as amended ("ERISA), or the rules thereunder (a "QDRO") and shall be exercisable during the lifetime of the Optionee only by such person or any transferee pursuant to a QDRO; or (ii) without payment of consideration, to immediate family members (i.e. spouses, children and grandchildren) of the Optionee or to a trust for the benefit of such family members, or partnership whose only partners are such family members. (f) Securities Compliance. The Company may require any Optionee, or any person to whom an Option is transferred under Section 6 (f), as a condition of exercising such Option, (i) to give written assurances satisfactory to the Company as to the Optionee's knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable and experienced in financial and business matters, and that he or she is capable of evaluating, alone, or together with the purchaser representative, the merits and risks of exercising the Option; (ii) to give written assurances satisfactory to the Company stating that such person is acquiring the stock subject to the Option for such person's own account and not with the present intention of selling or otherwise distributing the stock; and (iii) to deliver such other documentation as may be necessary to comply with federal and state securities laws. These requirements and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the Shares upon the exercise of the Option has been registered under a then effective B5 registration statement under the Securities Act of 1933, as amended (the "Securities Act"), and all applicable state securities laws, or (ii) as to any such requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the applicable securities laws. The Company may, upon advice of Counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary and appropriate in order to comply with applicable securities laws, including but not limited to, legends restricting the transfer of the stock, and may enter stop-transfer orders against the transfer of the Shares of Common Stock issued upon the exercise of an Option. The Company has no obligation to undertake registration of Options or the Shares of Common Stock issued upon the exercise of an Option. (g) Termination of Service. In the event an Optionee's Continuous Status a Director terminates (other than by the Optionee's death or disability), the Optionee may exercise his or her Option but only prior to the (i) expiration of three (3) months after the date of such termination and (ii) expiration of the term of the Option as set forth in the Option Agreement, and only to the extent that the Optionee was entitled to exercise it at the date of such termination. If after termination, the Optionee does not fully exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate. (h) Disability of Optionee. In the event that an Optionee's Continuous Status as a Director terminates as a result of the Optionee's Disability, the Optionee or his or her personal representative may exercise his or her Option, but only within twelve (12) months from the date of such termination, and only to the extent that the Optionee was entitled to exercise it on the date of such termination (but in no event later than the expiration of the term of the Option as set forth in the Option Agreement). If, after such termination, the Optionee does not fully exercise his or her Option within the time period specified herein, then the Option shall terminate. (i) Death of Optionee. In the event of the death of an Optionee, the Option may be exercised, at any time within twelve (12) months following the date of death (or such longer or shorter time as may be specified in the Option Agreement) but in no event later than the expiration date of the Option as set forth in the Option agreement, by the Optionee's estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent that the Optionee was entitled to exercise the Option as of the date of his or her death. If, after death, the Optionee's estate or a person who acquired the right to exercise the Option, does not fully exercise the Option within the time period specified herein, then the Option shall terminate. 7. COVENANTS OF THE COMPANY. (a) Reserves. During the term of the Options, the Company shall keep available at all times and shall reserve the number of Shares required to satisfy such Options upon exercise. (b) Regulatory Approvals. The Company shall seek and obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell Shares upon exercise of the Options; provided, however, that this undertaking shall not require the Company to register under the Securities Act either the Plan or any Option or any Shares issued or issuable pursuant to such Options. If, after reasonable efforts, the Company is unable to obtain from such regulatory commission or agency the authority that counsel for the Company deems necessary for the lawful issuance B6 and sale of the Shares under the Plan, the Company shall be relieved from any liability for failure to issue or sell Shares upon exercise of such Options unless and until authority is obtained. 8. USE OF PROCEEDS FROM STOCK. Proceeds from the sale of the stock pursuant to Options shall constitute general funds of the Company. 9. MISCELLANEOUS. (a) No Rights as Shareholder. Neither an Optionee nor any person to whom an Option is transferred under Section 6(f) shall be deemed to be the holder of or to have any of the rights of a holder with respect to, any Shares subject to such Option including, but not limited to, rights to vote or to receive dividends unless and until such person has satisfied all requirements for the exercise of the Option according to its terms, the certificates evidencing such Shares have been issued and such person has become the record owner of such Shares. (b) No Right To Continue as Director. Nothing in the Plan or any instrument executed or Option granted pursuant thereto shall confer upon any Director or Optionee any right to continue in the employ of the Company, or any Affiliate, or to continue to serve as a member of the Board of Directors of the Company or any Affiliate or shall affect the right of the Company or any Affiliate to terminate the employment or the relationship of any Director, Employee, Officer or Optionee with or without cause. (c) Date of Grant. Once Shareholder approval of the Plan has been obtained, the date of grant of an Option shall, for all purposes, be the date on which the Shareholder approval of the Plan was obtained. Notice shall be given to each Optionee within a reasonable time after the date of such grant. (d) Rule 16b-3. With respect to persons subject to Section 16 of the Exchange Act, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 and with respect to such persons all transactions shall be subject to such conditions regardless of whether they are expressly set forth in the Plan or the Option Agreement. To the extent any provision of the Plan or action by the Committee fails to comply, it shall not apply to such persons or their transactions and shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. (e) Conditions Upon Exercise of Options. Notwithstanding any other provisions, Shares shall not be issued and Options shall not be exercised unless the exercise of such Option and the Issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including without limitation, the Securities Act of 1933, as amended, applicable state securities laws, the Exchange Act, the rules and regulations promulgated thereunder, and the requirements of any stock exchange (including NASDAQ) upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. (f) Notice. Any written notice to the Company required by any of the provisions of the B7 Plan shall be addressed to the Secretary of the Company and shall be effective when it is received. Any written notice to Optionee required by the Plan shall be addressed to the Optionee at the address on file for the Optionee with the Company and shall become effective 3 days after it is mailed by certified mail, postage prepaid to such address or at the time of delivery if delivered sooner by messenger or overnight delivery service. 10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. (a) Changes in Capitalization. Subject to any required action by the Shareholders of the Company, the maximum number of Shares of Common Stock subject to the Plan, the number of Shares of Common Stock covered by each outstanding Option and the number of Shares of Common Stock that have been authorized for issuance under the Plan but have been returned to the plan upon cancellation or expiration of an option, as well as the price per Share of Common Stock shall be proportionally adjusted for any increase or decrease in the number of issued Shares of the Common Stock, resulting from a stock split, stock dividend, combination or reclassification of Shares of Common Stock effected without consideration by the Company; provided, however that the conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of Shares of stock of any class, or securities convertible into Shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or exercise price of Optioned Shares. (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, each outstanding Option will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Committee. The Committee may, in the exercise of its sole discretion in such instances, declare that any Option shall terminate as of a date fixed by the Committee and give each Optionee the right to exercise his or her Option as to all or any part of the Optioned Shares, including Shares as to which the Option would not otherwise be exercisable. (c) Merger or Asset Sale. Subject to Section 10 (b), in the event of a proposed sale of all or substantially all of the assets of the Company, or the merger, restructure, reorganization or consolidation of the Company with or into another entity or entities in which the Shareholders of the Company receive cash or securities of another issuer, or any combination thereof, in exchange for their Shares of Common Stock, each outstanding Option shall be assumed or an equivalent option shall be substituted by such successor entity or an Affiliate of such successor entity, unless the Committee determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, that the Optionee shall have the right to exercise the Option as to all Optioned Shares, including Shares as to which the Option would not otherwise be vested. If the Committee makes an Option fully exercisable in lieu of assumption or substitution in the event of a merger, restructure, reorganization, consolidation or sale of assets, the Committee shall notify the Optionee that the Option shall be fully exercisable for a period of thirty (30) days from the notice, and the Option will terminate upon the expiration of such period. For the purposes of this Section, the Option shall be considered to be assumed if following the merger, restructure, reorganization, consolidation or sale of assets, the Option confers the right to purchase, for each Optioned Share immediately prior to the merger, restructure, reorganization, consolidation or sale of assets, the consideration (whether in stock, cash, or other securities or property) received in the merger or sale of asset by holders of Common Stock for each Share of Common Stock held on the effective date of the consummation of B8 the transaction (and if holders were offered a choice of consideration, the type of consideration, the type of Common Stock); provided, however, that if such consideration received in the solely common equity of the successor entity or its Affiliates, the Committee may, with the consent of the successor entity the Optionee, provide for the consideration to be received upon the exercise of the Option, for each Optioned Share, to be solely Common Stock of the successor entity or its Affiliates equal Common Stock in the merger, restructure, reorganization, consolidation or sale of assets. 11. AMENDMENT OF THE PLAN. (a) Amendments by the Committee. The Committee at any time, from time to time, may amend the Plan, provided, however, that if required by Rule 16b-3, no amendment shall be made more than once every six months, other than to comport with the changes in the Code, ERISA or the rules and regulations promulgated thereunder. (b) Compliance with the Code and Rule 16b-3. It is expressly contemplated that the Committee may amend the Plan in any respect the Committee deems necessary or advisable to bring the Plan and the Options granted hereunder into compliance with the Code and Rule 16b-3. (c) Shareholder Approval. Notwithstanding anything to the contrary, the Company shall obtain Shareholder approval of any Plan amendment to the extent necessary or desirable to comply with Rule 16b-3 or with the Code (or any successor rule or statute or other applicable law, rule or regulation, including the requirements of any exchange or quotation system on which the Common Stock may be listed or quoted). Such Shareholder approval, if required, shall be obtained in such manner and to such degree as is required by the applicable law, rule or regulation. (d) Rights and Obligations Granted Prior to Amendments. Rights and obligations under any Option granted before amendment of the Plan shall not be altered or impaired by any amendment of the Plan unless (i) the Company requests the consent of the Optionee or his or her successor and (ii) such person consents in writing. 12. TERMINATION OR SUSPENSION OF THE PLAN. (a) Termination Date. The Committee may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate within ten (10) years of the date the Plan is adopted by, the Board of Directors or approved by Shareholders of the Company which ever date is earlier. No Options may be granted under the Plan while it is suspended or after it is terminated. (b) Alteration of Existing Rights. Rights and obligations under any Option granted while the Plan is in effect shall not be altered or impaired by the suspension or termination of the Plan except with the consent of the Optionee or his or her successor. B9 13. EFFECTIVE DATE OF PLAN AND GRANT OF OPTIONS. The Plan and the Options granted hereunder shall become effective as of the date of approval of the Plan by the affirmative votes of the holders of a majority of the Common Stock present, or represented, and entitled to vote at the 2003 Annual Meeting of the Shareholders duly held in accordance with the applicable laws of the State of New Jersey. B10 REVOCABLE PROXY SVB FINANCIAL SERVICES, INC. PLEASE MARK VOTES |X| AS IN THIS EXAMPLE SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS APRIL 24, 2003 The undersigned shareholder hereby constitutes and appoints each of ARTHUR E. BRATTLOF and MICHAEL A. NOVAK, with full power of substitution, to act as proxy for and to vote all shares of Common Stock which the undersigned is entitled to vote at the Annual Meeting of Shareholders to be held on April 24, 2003 at 5:30 P.M. prevailing local time at the Raritan Valley Country Club, Route 28, Somerville, New Jersey, or at any adjournment(s) thereof, on all matters coming before the meeting, including (but not limited to) the election of any person to the directorship for which a nominee named hereon is unable to serve.
The undersigned instructs said proxies to vote: Please be sure to sign and date Date this Proxy in the box below. -------------------------------------- -------------------------------------------------------------------------------------------------------------------------- Shareholder sign above Co-holder (if any) sign above With- For All For Hold Except I. Election of Directors: |_| |_| |_| For a term to continue to the 2006 Annual Meeting: John K. Kitchen, Anthony J. Santye, Jr., Herman C. Simonse, Donald R. Tourville II. Approval of the amendment to the 2000 Incentive |_| |_| |_| Stock Option Plan III. Approval of the 2003 Directors Stock Option Plan |_| |_| |_|
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. -------------------------------------------------------------------------------- THE PROXIES SHALL VOTE AS SPECIFIED ABOVE, OR IF A CHOICE IS NOT SPECIFIED FOR ANY OF THE ABOVE NOMINEES, THE PROXIES WILL VOTE "FOR" THE ELECTION OF THE BOARD OF DIRECTORS NOMINEES AND THE PROPOSALS.