UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule 14a
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
PARKE BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[PARKE BANCORP LETTERHEAD]
November 18, 2005
Dear Fellow Shareholder:
On behalf of the Board of Directors and management of Parke Bancorp,
Inc., we invite you to attend a Special Meeting of Shareholders to be held at
our main office, 601 Delsea Drive, Washington Township, New Jersey, on December
20, 2005, at 2:00 p.m. The attached Notice of Special Meeting and Proxy
Statement describe the formal business to be transacted at the Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE- PAID RETURN
ENVELOPE AS QUICKLY AS POSSIBLE. This will not prevent you from voting in
person at the meeting, but will assure that your vote is counted if you are
unable to attend the meeting.
Sincerely,
/s/Vito S. Pantilione
Vito S. Pantilione
President and Chief Executive Officer
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PARKE BANCORP, INC.
601 DELSEA DRIVE
WASHINGTON TOWNSHIP, NEW JERSEY 08080
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 20, 2005
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NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Meeting") of
Parke Bancorp, Inc. (the "Company") will be held at the main office of the
Company, 601 Delsea Drive, Washington Township, New Jersey, on December 20,
2005, at 2:00 p.m. The Meeting is for the purpose of considering and acting upon
the following matters:
1. The approval of the Parke Bancorp, Inc. 2005 Stock Option
Plan; and
2. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
Action may be taken on the foregoing proposal at the Meeting on the
date specified above, or on any date or dates to which, by original or later
adjournment, the Meeting may be adjourned. Pursuant to the Company's Bylaws, the
Board of Directors has fixed the close of business on November 14, 2005, as the
record date for determination of the shareholders entitled to vote at the
Meeting and any adjournments thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN, DATE
AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY
REVOKE YOUR PROXY BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN
REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE. IF YOU ARE PRESENT AT
THE MEETING YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT
BEFORE THE MEETING. HOWEVER, IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE NOT
REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR
RECORD HOLDER TO VOTE IN PERSON AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
David O. Middlebrook
Corporate Secretary
Washington Township, New Jersey
November 18, 2005
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
PARKE BANCORP, INC.
601 DELSEA DRIVE
WASHINGTON TOWNSHIP, NEW JERSEY 08080
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SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 20, 2005
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GENERAL
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Parke Bancorp, Inc. (the "Company"), the
bank holding company of Parke Bank, a New Jersey chartered commercial bank (the
"Bank"), to be used at a Special Meeting of Shareholders of the Company which
will be held at the main office of the Company, 601 Delsea Drive, Washington
Township, New Jersey, on December 20, 2005, at 2:00 p.m. (the "Meeting"). The
accompanying Notice of Special Meeting and this Proxy Statement are being first
mailed to shareholders on or about November 18, 2005.
At the Meeting, shareholders will consider and vote upon the approval
of the Parke Bancorp, Inc. 2005 Stock Option Plan (the "Stock Option Plan" or
the "Plan").
The Board of Directors knows of no additional matters that will be
presented for consideration at the Meeting. Execution of a proxy, however,
confers on the designated proxyholder the discretionary authority to vote the
shares represented by such proxy in accordance with their best judgment on such
other business, if any, that may properly come before the Meeting or any
adjournment thereof.
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VOTING AND REVOCABILITY OF PROXIES
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Shareholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company at the address above or by the filing of
a later dated proxy prior to a vote being taken on a particular proposal at the
Meeting. A proxy will not be voted if a shareholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors will be voted as
specified thereon. If no specification is made, signed proxies will be voted
"FOR" the approval of the Stock Option Plan . The proxy confers discretionary
authority on the persons named thereon to vote with respect to matters incident
to the conduct of the Meeting.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Shareholders of record as of the close of business on November 14, 2005
(the "Record Date"), are entitled to one vote for each share of Common Stock
then held. As of the Record Date, the Company had 2,299,010 shares of Common
Stock issued and outstanding.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the Meeting. With respect to any matter, broker non- votes (i.e.,
shares for which a broker indicates on the proxy that it does not have
discretionary authority as to such shares to vote on such matter) will be
considered present for purposes of determining whether a quorum is present. In
the event there are not sufficient votes for a quorum or to ratify any proposal
at the time of the Meeting, the Meeting may be adjourned in order to permit the
further solicitation of proxies.
With respect to the proposal to approve the Stock Option Plan (the
"Proposal"), a shareholder may, by checking the appropriate box: (i) vote "FOR"
the item; (ii) vote "AGAINST" the item; or (iii) vote to "ABSTAIN" on the item.
Approval of the Plan requires the affirmative vote of a majority of the votes
actually cast in person or by proxy at the Meeting. Abstentions and broker
non-votes will have no effect on the Proposal.
Concerning any other matters that may properly come before the Meeting,
unless otherwise required by law, all such matters shall be determined by a
majority of votes cast affirmatively or negatively without regard to broker
non-votes or proxies marked "ABSTAIN" as to that matter.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of Common Stock
beneficially owned as of the Record Date by each director, each executive
officer named in the Summary Compensation Table, each person or group known to
management (based on filings pursuant to Section 13(d) or (g) under the
Securities Exchange Act of 1934, as amended (the "1934 Act")) to beneficially
own more than 5% of the Common Stock as of the Record Date and all executive
officers and directors as a group. Unless otherwise noted, the address of each
director and executive officer named below is c/o the Company, 601 Delsea Drive,
Washington Township, New Jersey 08080.
Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership(1) Outstanding
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Fred G. Choate................................ 660 *
Daniel J. Dalton.............................. 57,222(2) 2.5%
Ernest D. Huggard............................. 53,427(3) 2.3%
David O. Middlebrook.......................... 21,704(4) *
Vito S. Pantilione............................ 136,230(5) 6.0%
Celestino R. Pennoni.......................... 124,908(6) 5.4%
Banc Fund V L.P. and
Banc Fund VI L.P.
208 S. LaSalle Street
Chicago, IL 60604............................. 163,920(7) 7.1%
Jeffrey H. Kripitz
c/o Park Bancorp, Inc.
601 Delsea Drive
Washington Township, NJ 08080................. 150,043(8) 6.5%
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Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership(1) Outstanding
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394,151(9) 29.6%
All directors and executive officers
as a group (6 persons)....................
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* Less than 1%
(1) Includes shares of Common Stock held directly, as well as by spouses or
minor children, in trust and other
indirect beneficial ownership.
(2) Includes 10,500 shares of Common Stock which may be acquired pursuant
to the exercise of warrants within 60 days of the Record Date.
(3) Includes 26,690 shares of Common Stock which may be acquired pursuant
to the exercise of options within 60 days of the Record Date and 7,226
shares of Common Stock which may be acquired pursuant to the exercise
of warrants within 60 days of the Record Date.
(4) Includes 18,770 shares of Common Stock which may be acquired pursuant
to the exercise of options within 60 days of the Record Date and 264
shares of Common Stock which may be acquired pursuant to the exercise
of warrants within 60 days of the Record Date.
(5) Includes 69,031 shares of Common Stock which may be acquired pursuant
to the exercise of options within 60 days of the Record Date and 33,656
shares of Common Stock which may be acquired pursuant to the exercise
of warrants within 60 days of the Record Date.
(6) Includes 36,696 shares of Common Stock which may be acquired pursuant
to the exercise of warrants within 60 days of the Record Date.
(7) This information is based solely on Schedule 13G, dated February 14,
2005, filed with the Securities and Exchange Commission by Banc Fund V
L.P. and Banc Fund VI L.P. According to the Schedule 13G, Charles J.
Moore, the controlling person of each of Banc Fund V L.P. and Banc Fund
VI L.P., exercises sole voting and dispositive power with respect to
all of these shares.
(8) This information is based solely on information as of November 9, 2005
provided to the Company by Mr. Kripitz, a director of the Bank.
Includes 24,391 shares of Common Stock which may be acquired pursuant
to the exercise of warrants within 60 days of the Record Date.
(9) Includes 114,491 shares of Common Stock which may be acquired pursuant
to the exercise of options within 60 days of the Record Date and 88,342
shares of Common Stock which may be acquired pursuant to the exercise
of warrants within 60 days of the Record Date.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Compensation of Directors
Board Fees. Directors receive no compensation for their service on the
Board of Directors of the Company, but each director of the Company is also a
director of the Bank. Each director of the Bank, other than the Chairman and
Vice Chairman, is paid a fee of $300 per meeting. The Chairman and Vice Chairman
of the Bank's Board of Directors receive a fee of $650 and $430, respectively,
per meeting. The total fees paid to directors of the Company for the year ended
December 31, 2004 were approximately $51,800. Mr. Pantilione, who also serves as
President and Chief Executive Officer of the Company and the Bank, does not
receive compensation as a director.
Executive Compensation
Summary Compensation Table. The following table sets forth the
compensation awarded to or earned by the Bank's President, Chief Financial
Officer and Senior Loan Officer for the three years ended December 31, 2004. No
other officer received a total annual salary and bonus in excess of $100,000 for
2004.
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Annual Long-Term Compensation
Compensation Awards
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Securities
Restricted Underlying
Fiscal Stock Options/ All Other
Name and Principal Position Year Salary Bonus Awards SARs(#) Compensation(1)
--------------------------- ---- ------ ----- ------ ------- ---------------
Vito S. Pantilione, President and 2004 $210,000 $105,000 - 600 $4,200
Chief Executive Officer 2003 195,000 97,500 - 13,299 4,000
2002 175,000 87,500 - 7,872 2,745
Ernest D. Huggard, Senior Vice 2004 $113,750 $25,000 - 2,400 $2,415
President and Chief Financial 2003 110,000 15,000 - 9,900 2,500
Officer 2002 95,000 25,000 - 8,580 1,994
David O. Middlebrook, Senior 2004 $94,500 $22,500 - 2,400 $1,961
Vice President, Senior Loan 2003 85,000 28,000 - 6,600 2,260
Officer and Corporate 2002 72,000 10,000 - 4,620 11,308
Secretary
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(1) For the year ended December 31, 2004, consists of Bank's contribution
to the individual's simple IRA account of $4,200, $2,415 and $1,961,
respectively, to Messrs. Pantilione, Huggard and Middlebrook.
Employment Agreements. The Bank has entered into an employment
agreement with Mr. Pantilione. Mr. Pantilione's base salary under the employment
agreement for the year ended December 31, 2004 was $210,000. Mr. Pantilione's
employment agreement has a term of three years that is automatically extended
for one year on January 1st of each year, unless notice of termination of the
automatic extension is given in accordance with the terms of the employment
agreement. The employment agreement may be terminated by the Bank for "cause" as
defined in the agreement. If the Bank terminates Mr. Pantilione's employment
without just cause, he will be entitled to a continuation of his salary from the
date of termination through the remaining term of the agreement. The employment
agreement contains a provision stating that after Mr. Pantilione's employment is
terminated in connection with any change in control, he will be paid a lump sum
amount equal to the balance of the annual compensation due under the agreement
plus an amount equal to 3.0 times the highest rate of bonus awarded to him
during the three years prior to such termination. If payment had been made under
the agreement as of December 31, 2004, the payment to Mr. Pantilione would have
equaled approximately $945,000. The employment agreement also grants the right
of the employee, within six months following a termination without cause or a
voluntary termination by the employee for good reason, to require the Bank to
repurchase all of the employee's shares of Common Stock of the Bank then owned
by the employee at the closing price of such stock on the business day
immediately preceding the date of notice of the employee's exercise of this
right. The employment agreement also contains an agreement not to compete with
the Bank which restricts certain post-employment activities of the employee
within the Counties of Gloucester, Camden, Salem or Cumberland, New Jersey, for
two years following termination of employment with the Bank.
Supplemental Executive Retirement Plan ("SERP"). The Bank implemented a
SERP program effective January 1, 2003. Vito S. Pantilione, President, Ernest D.
Huggard, Senior Vice President, and David O. Middlebrook, Senior Vice President,
are each participants in the SERP. Under the SERP, retirement benefits are
payable to such participant commencing upon retirement after attainment of age
60 at the rate of 50% of their highest base salary paid while an employee of the
Bank for the remainder of their life. If such retirement benefit payments are
made for less than ten years, a survivor benefit will continue
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to be paid for the balance of such ten year period. Such benefits are in
addition to any social security benefits. Upon a change of control of the Bank
prior to the date of retirement of a participant, all benefits shall be deemed
earned and non-forfeitable as if such participant had attained his or her
retirement date at age 60. A participant may elect to retire after age 55 and
such benefits payable shall be actuarially reduced to reflect the earlier
payment commencement date. If a participant dies prior to age 60 while employed
by the Bank, a survivor benefit will be paid equal to 100% of the participant's
highest salary for one year and 50% of such salary for four additional years.
Benefits under the plan may be paid in the form of a lump-sum on an actuarially
equivalent basis. For the year ended December 31, 2004, the Bank had total
accrued plan expense of $206,809 with respect to benefits payable under the
SERP. Benefits under the SERP will be a tax deductible expense to the Bank at
the time that actual benefit payments are made. The Bank has invested in various
life insurance agreements (commonly known as BOLI, for bank-owned life
insurance) with policy proceeds payable to the Bank in the event of the death of
plan participants. Such insurance proceeds and earnings related to such
investments are anticipated to exceed any plan costs related to benefit
payments.
Stock Options. The following table sets forth information concerning
options granted to the executive officers named in the Summary Compensation
Table during the fiscal year ended December 31, 2004. The Bank has not granted
to the named executive officers any stock appreciation rights.
Option Grants in Last Fiscal Year
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Individual Grants
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Number of % of Total
Securities Options
Underlying Granted to Exercise or
Option Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date
---- ----------- ----------- ------ ----
Vito S. Pantilione 600 4.9% $15.00 Feb. 2014
Ernest D. Huggard 2,400 19.6% $15.00 Feb. 2014
David O. Middlebrook 2,400 19.6% $15.00 Feb. 2014
The following table sets forth information concerning options held by
the executive officers named in the Summary Compensation Table as of December
31, 2004. The Bank has not granted to the named executive officers any stock
appreciation rights.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired Options/SARs in-the-Money Options/SARs
Average on Value at Fiscal Year-End at Fiscal Year-End
Exercise Exercise Realized (#) ($)
Name Price (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
---- ----- --- --- ------------------------- ----------------------------
Vito S. Pantilione $8.40 N/A N/A 64,031/0 $677,448/0
Ernest D. Huggard $9.64 N/A N/A 23,190/0 $216,595/0
$10.06 N/A N/A 15,270/0 $136,208/0
David O. Middlebrook
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(1) Based on $18.98 per share, the closing price of the Bank's common stock on
December 31, 2004.
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PROPOSAL I - APPROVAL OF THE PARKE BANCORP, INC.
2005 STOCK OPTION PLAN
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General. The Board of Directors has adopted the Parke Bancorp, Inc.
2005 Stock Option Plan (the "Plan"), subject to approval by the Company's
stockholders. The purpose of the Plan is to provide incentives and rewards to
officers, employees and directors that contribute to the success and growth of
the Company and its subsidiaries, including the Bank, and to assist all these
entities in attracting and retaining directors, executives and other key
employees with experience and ability. The following summary of the material
features of the Plan is qualified in its entirety by reference to the complete
provisions of the Plan which is attached hereto as Appendix A.
Administration. The Board of Directors of the Company or an
administrative committee comprised of not less than two non-employee directors
will administer the Plan. Members of the Committee shall be "Non-Employee
Directors" within the meaning of Rule 16b-3 under to the 1934 Act. A majority of
the members of the Committee shall constitute a quorum, and the action of a
majority of the members present at any meeting at which a quorum is present
shall be deemed the action of the Committee.
The Committee has broad authority under the Plan with respect to Awards
granted thereunder, including, without limitation, the authority to:
o select the individuals to receive Awards under the Plan;
o determine the type, number, vesting requirements and other
features and conditions of individual Awards;
o interpret the Plan and Award Agreements issued with respect to
individual Awards; and
o make all other decisions related to the operation of the Plan.
Each Award granted under the Plan will be evidenced by a written award
agreement that sets forth the terms and conditions of each Award and may include
additional provisions and restrictions as determined by the Committee.
Eligibility. Subject to the terms of the Plan, officers, employees and
outside directors of the Company or the Bank, as the Committee shall determine
from time to time, shall be eligible to receive Awards in accordance with the
Plan.
Shares of Common Stock Subject to the Plan; Share Limits. The maximum
number of shares of the Company Common Stock that may be delivered pursuant to
Awards under the Plan is 230,000 shares. Total Awards to outside directors will
not exceed 120,000 shares in the aggregate, and no individual officer or
employee shall receive options to purchase more than 55,000 shares.
To the extent that an Award is settled in cash or a form other than
shares of Common Stock, the shares that would have been delivered had there been
no such cash or other settlement shall be counted against the shares available
for issuance under the Plan. Shares that are subject to or underlie Awards which
expire or for any reason are canceled or terminated, are forfeited, fail to
vest, or for any other reason are not paid or delivered under the Plan shall
again be available for subsequent Awards under the Plan.
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Awards. The Plan authorizes grants of Stock Option Awards. Such Awards
may be made by the Committee or in accordance with the specific terms of the
Plan.
Stock Option Awards. A Stock Option gives the recipient the right to
purchase shares of Common Stock at a future date at a specified price per share
(the "exercise price"). The per share exercise price of a Stock Option may not
be less than the Fair Market Value of a share of Common Stock on the date of
grant. For the purposes of the Plan, "Fair Market Value" means the closing sales
price reported on the NASDAQ Capital Market (as published by The Wall Street
Journal, if published) on such date or, if the Common Stock was not traded on
such date, on the immediately preceding day on which the Common Stock was traded
thereon. The Committee may impose additional conditions upon the right of an
optionee to exercise any Option granted hereunder which are not inconsistent
with the terms of the Plan. If such Option is intended to qualify as an
Incentive Stock Option, within the meaning of Section 422 of the Internal
Revenue Code, then such Awards will also comply with additional restrictions
under Section 422 of the Internal Revenue Code as set forth in the Plan. (See
"Federal Income Tax Treatment of Awards under the Plan" below).
No shares of Common Stock may be issued upon the exercise of an Option
until the Company has received full payment of the exercise price, and no
optionee shall have any of the rights of a stockholder of the Company until
shares of Common Stock are issued to such optionee. Upon the exercise of an
Option by an optionee (or the optionee's personal representative), the
Committee, in its sole and absolute discretion, may make a cash payment to the
optionee, in whole or in part, in lieu of the delivery of shares of Common
Stock. Such cash payment to be paid in lieu of delivery of Common Stock shall be
equal to the difference between the Fair Market Value of the Common Stock on the
date of the Option exercise and the exercise price per share of the Option. Such
cash payment shall be in exchange for the cancellation of such Option. Such cash
payment shall not be made in the event that such transaction would result in
liability to the optionee and the Company under Section 16(b) of the Exchange
Act or any related regulations promulgated thereunder.
Pursuant to the terms of the Plan, Non-Statutory Stock Options to
purchase shares of Common Stock as detailed below will be granted to each
outside director of the Company or the Bank, as of the Effective Date, at an
exercise price equal to the Fair Market Value of the Common Stock on such date
of grant. Options may be granted to newly appointed or elected outside directors
within the sole discretion of the Committee, and the exercise price shall be
equal to the Fair Market Value of such Common Stock on the date of grant.
Options granted to outside directors on the Effective Date will be immediately
exercisable upon grant. Such Options granted to outside directors will remain
exercisable for up to ten years from the date of grant.
Award Payouts. Payouts related to Awards may be made in the form of
cash, Common Stock or combinations of cash and stock, as determined by the
Committee.
Effect of Termination of Service on Awards. Generally, the Committee
will determine the impact of a termination of service upon an Award at the time
of such Award. Generally, except as may otherwise be determined by the Committee
at the time of the Award, an Incentive Stock Option may only be exercised while
the optionee serves as an employee of the Company or the Bank or within three
months after termination of employment for a reason other than death or
disability (but in no event after the expiration date of the Option).
Effect of Death or Disability on Awards. Generally, the Committee will
determine the impact of death or disability upon an Award at the time of such
Award. In the event of the death or disability of an
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optionee during employment, an exercisable Incentive Stock Option will continue
to be exercisable for one year and two years, respectively, to the extent
exercisable by the optionee immediately prior to the optionee's death or
disability but only if, and to the extent that, the optionee was entitled to
exercise such Incentive Stock Options on the date of termination of employment.
Specific Benefits Under the Plan
The table below presents information related to Stock Option Awards to
be awarded to outside directors of the Company and the Bank upon stockholder
approval of the Plan. The Plan provides that each outside director will receive
from 7,500 to 10,000 stock options on the date of stockholder approval of the
Plan. No specific determination has been made with respect to Awards that may be
made to the officers and employees of the Company and the Bank. It is
anticipated that the Committee will make a determination related to such Awards
to officers and employees prior to December 31, 2005, and that such Awards will
be immediately exercisable so that such Awards will not result in any financial
reporting expense recognition that will be required for options that will vest
or be awarded after December 31, 2005 in accordance with FAS 123(r) (See,
"Accounting Treatment"). The Committee will consider such information as it
deems necessary and appropriate in making its determination related to any
Awards, including job responsibilities, individual and Company performance, the
Company's compensation philosophy and programs, and stock compensation practices
by other financial institutions.
NEW PLAN BENEFITS
Parke Bancorp, Inc. 2005 Stock Option Plan
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Number of
Dollar Options
Value to be Awarded
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Named Executive Officers:
Vito S. Pantilione, President and -- TBD(1)
Chief Executive Officer
Ernest D. Huggard, Senior Vice President and -- TBD(1)
Chief Financial Officer
David O. Middlebrook, Senior Vice -- TBD(1)
President and Corporate Secretary
Directors:
Fred G. Choate -- (2) 10,000(3)
Daniel J. Dalton -- (2) 7,500(3)
Celestino R. Pennoni -- (2) 10,000(3)
Non-employee directors as a group -- (2) 27,500(3)
Executive officers as a group -- TBD(1)
Non-executive officer employees as a group -- TBD(1)
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-------------------------
(1) To be determined. It is anticipated that if the Plan receives
stockholder approval, Awards to officers and employees may be made by
the Committee during the calendar quarter ending December 31, 2005,
however, at this time, no assurances can be made that such Awards will
in fact be made, the recipient of such Awards, or the level of such
individual Awards.
(2) The exercise price of such Options shall be equal to the Fair Market
Value of the Common Stock on the date of award. Thus, on the date of
stockholder approval, the Options have no value for the recipient. The
value of the Options will equal the difference between the exercise
price of such Options and the market price of the Common Stock on the
date of exercise of an Option. Accordingly, the value to the recipient
is not determinable until the Option is exercised.
(3) Options awarded to outside directors are immediately exercisable on the
date of grant, and shall remain exercisable for ten years without
regard to continued service as a director or director emeritus.
Acceleration of Awards. Unless otherwise determined by the Committee,
upon a Change in Control of the Company or the Bank, each Stock Option then
outstanding shall become fully vested and remain exercisable for its remaining
term.
For the purposes of the Plan, "Change in Control" shall mean: (i) the
sale of all, or a material portion, of the assets of the Company or its
subsidiaries; (ii) the merger or recapitalization of the Company whereby the
Company is not the surviving entity; or (iii) the acquisition, directly or
indirectly, of the beneficial ownership (within the meaning of that term as it
is used in Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) of twenty-five percent (25%) or more of the outstanding
voting securities of the Company by any person, trust, entity or group. The term
"person" refers to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.
The power of the Committee to accelerate the exercisability of Options
and the immediate exercisability of Options in the case of a Change in Control
of the Company or the Bank could have an anti-takeover effect by making it more
costly for a potential acquiror to obtain control of the Company due to the
higher number of shares outstanding following such exercise of Options. The
power of the Committee to make adjustments in connection with the Plan,
including adjusting the number of shares subject to Options and canceling
Options, prior to or after the occurrence of an extraordinary corporate action,
allows the Committee to adapt the Plan to operate in changed circumstances, to
adjust the Plan to fit a smaller or larger institution, and to permit the
issuance of Options to new management following such extraordinary corporate
action. However, this power of the Committee also has an anti-takeover effect,
by allowing the Committee to adjust the Plan in a manner to allow the present
management of the Company to exercise more Options and hold more shares of the
Company's Common Stock, and to possibly decrease the number of Options available
to new management of the Company.
Although the Plan may have an anti-takeover effect, the Company's Board
of Directors did not adopt the Plan specifically for anti-takeover purposes. The
Plan could render it more difficult to obtain support for stockholder proposals
opposed by the Company's Board and management in that recipients of Options
could choose to exercise such Options and thereby increase the number of shares
for which they hold voting power. Also, the exercise of such Options could make
it easier for the Board and management to block the approval of certain
transactions. In addition, the exercise of such Options could increase the cost
of an acquisition by a potential acquiror.
Adjustments. As is customary in equity incentive plans of this nature,
each share limit and the number and kind of shares available under the Plan and
any outstanding Awards as well as the exercise or purchase prices of Awards, are
subject to proportional adjustment in the event of certain reorganizations,
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mergers, combinations, recapitalizations, stock splits, stock dividends or
similar events that change the number or kind of shares outstanding, as well as
in the case of extraordinary dividends or distributions of property to the
stockholders. In the event of such an adjustment as described above, the
Committee may, if it deems it appropriate and equitable under the circumstances,
make provision for a cash payment or for the assumption, substitution or
exchange of any or all outstanding Awards, based upon the distribution or
consideration payable to holders of the Common Stock.
Transfer Restrictions. Unless otherwise determined by the Committee, an
individual may not transfer, assign, hypothecate, or dispose of an Option in any
manner, other than by will or the laws of intestate succession. The Committee
may provide for the transfer or assignment of a non-statutory stock option if it
determines that the transfer or assignment is for valid estate planning
purposes.
Amendment or Termination of the Plan. The Committee may amend, modify
or terminate the Plan, except that no such amendment may have the effect of
repricing the exercise price of Options and any material amendments to the Plan
shall be subject to a ratification vote by the Company's stockholders.
Federal Income Tax Treatment of Awards Under the Plan
The following discussion of the general tax principles applicable to
the Plan summarizes the federal income tax consequences of the Plan under
current federal law, which is subject to change at any time. This summary is not
intended to be exhaustive and, among other considerations, does not describe
state or local tax consequences.
Nonstatutory Stock Options. The optionee generally recognizes taxable
income in an amount equal to the difference between the Option exercise price
and the Fair Market Value of the shares at the time of exercise. The Company
will receive a tax deduction equal to the ordinary income recognized by the
optionee. Employees exercising non-statutory stock options are also subject to
federal, state, and local (if any) tax withholding on the option income. Outside
directors are not subject to tax withholding.
Incentive Stock Options. The optionee generally does not recognize
taxable income upon exercise of an Incentive Stock Option. If the optionee does
not dispose of the Common Stock acquired upon exercise for the required holding
periods of two years from the date of grant and one year from the date of
exercise, income from a subsequent sale of the shares is treated as a capital
gain for tax purposes. However, the difference between the Option exercise price
and the Fair Market Value of the Common Stock on the date of Option exercise is
an item of tax preference which may, in certain situations, trigger the
alternative minimum tax for an optionee. However, if the optionee disposes of
the shares prior to the expiration of the required holding periods, the optionee
has made a disqualifying disposition of the stock. Upon a disqualifying
disposition, the optionee will recognize taxable income equal to the difference
between the exercise price and the Fair Market Value of the Company Common Stock
on the date of exercise, and the Company will receive a tax deduction equal to
the ordinary income recognized by the optionee. Currently, the Internal Revenue
Service does not require tax withholding on disqualifying dispositions.
In accordance with Section 162(m) of the Internal Revenue Code, the
Company's tax deductions for compensation paid to the most highly paid
executives named in the Company's Proxy Statement may be limited to no more than
$1 million per year, excluding certain "performance-based" compensation. The
award of Options under the Plan is intended to comply with the requirement for
an exception to Section 162(m) of the Code applicable to stock option plans so
that the amount of the Company's deduction for
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compensation related to the exercise of Options would not be limited by Section
162(m) of the Internal Revenue Code.
Accounting Treatment. Common Stock issuable pursuant to outstanding
Options under the Plan will be considered outstanding for purposes of
calculating earnings per share on a diluted basis. The Financial Accounting
Standards Board has announced a change in the required accounting methods
applicable to stock options effective after June 15, 2005. Under such accounting
requirements, the Company will be required to recognize compensation expense
beginning as of January 1, 2006, related to stock options outstanding based upon
the fair value of such awards at the date of grant over the period that such
awards are earned. Awards to outside directors and anticipated Awards to
officers and employees made during December 2005 are anticipated to be
immediately exercisable and, therefore, not require any financial reporting
expensing of such Awards in the future.
Possible Dilutive Effects of the Plan. The Common Stock to be issued
upon the exercise of Options awarded under the Plan may either be authorized but
unissued shares of Common Stock or shares purchased in the open market. Because
the stockholders of the Company do not have preemptive rights, to the extent
that the Company funds the Plan, in whole or in part, with authorized but
unissued shares, the interests of current stockholders may be diluted. If upon
the exercise of all of the Options, the Company delivers newly issued shares of
Common Stock (i.e., 230,000 shares of Common Stock), then the dilutive effect to
current stockholders would be approximately 9.1%. The Company can avoid dilution
resulting from awards under the Plan by delivering shares repurchased in the
open market upon the exercise of Options.
Securities Authorized for Issuance Under Equity Compensation Plans
Set forth below is information as of December 31, 2004 with respect to
compensation plans under which equity securities of the Company are authorized
for issuance.
EQUITY COMPENSATION PLAN INFORMATION
(a) (b) (c)
Number of securities
remaining available for future
issuance under equity
Number of securities to be Weighted-average compensation plans
issued upon exercise of exercise price of (excluding securities reflected
outstanding options outstanding options in column (a))
------------------- ------------------- --------------
Equity compensation plans
approved by shareholders............. 133,967 $9.39 71,243
------- ----- ------
TOTAL............................ 133,967 $9.39 71,243
======= ===== ======
Shareholder Approval
Shareholder approval of the Plan is being sought in accordance with the
listing standards of the NASDAQ Capital Market. Additional purposes of
requesting shareholder approval of the Plan are to permit the Options to qualify
as Incentive Stock Options in accordance with the Internal Revenue Code and to
meet the requirements for the tax-deductibility of certain compensation items
under Section 162(m) of the Internal
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Revenue Code. Additionally, shareholder approval of the Plan will enable
recipients of Stock Options to qualify for certain exemptive treatment from the
short-swing profit recapture provisions of Section 16(b) of the Exchange Act.
In voting on the approval of the Plan, you may vote in favor of the
proposal, against the proposal or abstain from voting. To be approved, this
matter requires the affirmative vote of a majority of the votes cast at the
Meeting. Abstentions and broker non-votes will have no effect on the voting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF
THE PARKE BANCORP, INC. 2005 STOCK OPTION PLAN.
--------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
--------------------------------------------------------------------------------
In order to be considered for inclusion in the Company's proxy
materials for the annual meeting of shareholders to be held in 2006, all
shareholder proposals must be received at the executive office of the Company at
601 Delsea Drive, Washington Township, New Jersey 08080 by November 25, 2005.
Shareholder proposals must meet other applicable criteria as set forth in the
bylaws in order to be considered for inclusion in the proxy materials.
Shareholder proposals that are not included in the Company's proxy
statement for the 2006 annual meeting will only be considered at such meeting if
the shareholder submits notice of the proposal to the Company at the above
address by February 25, 2006. Shareholder proposals must meet other applicable
criteria as set forth in the bylaws in order to be considered at the 2006 annual
meeting.
--------------------------------------------------------------------------------
OTHER MATTERS
--------------------------------------------------------------------------------
The Board of Directors is not aware of any other matters to come before
the Meeting. However, if any other matters should properly come before the
Meeting or any adjournments, it is intended that proxies in the accompanying
form will be voted in respect thereof in accordance with the judgment of the
persons named in the accompanying proxy.
--------------------------------------------------------------------------------
MISCELLANEOUS
--------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company or the Bank may
solicit proxies personally or by telegraph or telephone without additional
compensation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/David O. Middlebrook
David O. Middlebrook
Corporate Secretary
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--------------------------------------------------------------------------------
PARKE BANCORP, INC.
601 DELSEA DRIVE
WASHINGTON TOWNSHIP, NEW JERSEY 08080
--------------------------------------------------------------------------------
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 20, 2005
--------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of Parke
Bancorp, Inc. (the "Company"), or its designee, with full powers of
substitution, to act as attorneys and proxies for the undersigned, to vote all
shares of Common Stock of the Company, which the undersigned is entitled to vote
at the Special Meeting of Shareholders (the "Meeting"), to be held at the main
office of the Company, 601 Delsea Drive, Washington Township, New Jersey, on
December 20, 2005, at 2:00 p.m. and at any and all adjournments thereof, in the
following manner:
FOR AGAINST ABSTAIN
1. Approval of the
Parke Bancorp., Inc.
2005 Stock Option Plan |_| |_| |_|
The Board of Directors recommends a vote "FOR" the above listed
proposal.
THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR THE PROPOSAL STATED. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS SIGNED PROXY WILL BE VOTED BY THOSE
NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting, or
at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the shareholder's decision to terminate this Proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this Proxy by filing a
subsequently dated Proxy or by written notification to the Secretary of the
Company of his or her decision to terminate this Proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Special Meeting of Shareholders and a
Proxy Statement dated November 18, 2005.
o Check Box if You Plan
Dated: ___________________________ to Attend the Special Meeting.
___________________________________ _________________________________
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
___________________________________ _________________________________
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
Please sign exactly as your name appears on this Proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title.
--------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
--------------------------------------------------------------------------------
APPENDIX A
----------
PARKE BANCORP, INC.
2005 STOCK OPTION PLAN
1. PURPOSE OF PLAN.
The purpose of this 2005 Stock Option Plan is to provide incentives and rewards
to officers, employees and directors that contribute to the success and growth
of Parke Bancorp, Inc. and its Affiliates, and to assist all these entities in
attracting and retaining directors, executives and other key employees with
experience and ability.
2. DEFINITIONS.
"Affiliate" means any "parent corporation" or "subsidiary corporation" of the
Company, as such terms are defined in Sections 424(e) and 424(f) of the Code.
"Award" means a grant of Stock Options, as set forth in Section 6 of the Plan.
"Bank" means Parke Bank, and any successors thereto.
"Beneficiary" means the person or persons designated by the Participant to
receive any benefits payable under the Plan in the event of such Participant's
death. Such person or persons shall be designated in writing by the Participant
and addressed to the Company or the Committee on forms provided for this purpose
by the Committee, and delivered to the Company or the Committee. Such
Beneficiary designation may be changed from time to time by similar written
notice to the Committee. A Participant's last will and testament or any codicil
thereto shall not constitute written designation of a Beneficiary. In the
absence of such written designation, the Beneficiary shall be the Participant's
surviving spouse, if any, or if none, the Participant's estate.
"Board of Directors" means the board of directors of the Company.
"Cause" or "Termination for Cause" shall include termination resulting from
allegations of theft; falsification of records; fraud; embezzlement; gross
negligence or willful misconduct; causing the Company to violate any federal,
state or local law, or administrative regulation or ruling having the force and
effect of law; insubordination; conflict of interest; diversion of corporate
opportunity; or conduct that results in publicity that reflects unfavorably on
the Company.
"Change in Control" shall mean: (i) the sale of all, or a material portion, of
the assets of the Company or its Affiliates; (ii) the merger or recapitalization
of the Company whereby the Company is not the surviving entity; (iii) a change
in control of the Company, as otherwise defined or determined by the New Jersey
Department of Banking and Insurance ("Department") or regulations promulgated by
it; or (iv) the acquisition, directly or indirectly, of the beneficial ownership
(within the meaning of that term as it is used in Section 13(d) of the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder) of twenty percent (20%) or more of the outstanding voting securities
of the Company by any person, trust, entity or group. This limitation shall not
apply to the purchase of shares by underwriters in connection with a public
offering of Company stock. The term "person" refers to an individual or a
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corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Board of Directors of the Company or the administrative
committee designated, pursuant to Section 3 of the Plan, to administer the Plan.
"Common Stock" means the common stock of the Company.
"Company" means Parke Bancorp, Inc., and any successor entity or any future
parent corporation of the Bank.
"Director" means a person serving as a member of the Board of Directors of the
Company from time to time.
"Director Emeritus" means a person serving as a director emeritus, advisory
director, consulting director or other similar position as may be appointed by
the Board of Directors of the Company or an Affiliate from time to time.
"Disability" means (a) with respect to Incentive Stock Options, the "permanent
and total disability" of the Employee as such term is defined at Section
22(e)(3) of the Code; and (b) with respect to other Awards, any physical or
mental impairment which renders the Participant incapable of continuing in the
employment or service of the Company or its Affiliates in his or her then
current capacity as determined by the Committee.
"Effective Date" shall mean the date of stockholder approval of the Plan by the
stockholders of the Company.
"Eligible Participant" means an Employee or Outside Director who may receive an
Award under the Plan.
"Employee" means any person employed by the Company or an Affiliate. Directors
who are also employed by the Company or an Affiliate shall be considered
Employees under the Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price" means the price at which an individual may purchase a share of
Common Stock pursuant to an Option.
"Fair Market Value" means the closing sales price reported on the Nasdaq Capital
Market (as published by The Wall Street Journal, if published) on such date or,
if the Common Stock was not traded on such date, on the immediately preceding
day on which the Common Stock was traded thereon or the last previous date on
which a sale is reported.
"Incentive Stock Option" means a Stock Option granted under the Plan, that is
intended to meet the requirements of Section 422 of the Code.
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"Non-Statutory Stock Option" means a Stock Option granted to an individual under
the Plan that is not intended to be and is not identified as an Incentive Stock
Option, or an Option granted under the Plan that is intended to be and is
identified as an Incentive Stock Option, but that does not meet the requirements
of Section 422 of the Code.
"Option" or "Stock Option" means an Incentive Stock Option or a Non-Statutory
Stock Option, as applicable.
"Outside Director" means a member of the Board of Directors of the Company or an
Affiliate who is not also an Employee.
"Parent" means any present or future corporation which would be a "parent
corporation" of the Bank or the Company as defined in Sections 424(e) and (g) of
the Code.
"Participant" means an individual who is granted an Award pursuant to the terms
of the Plan.
"Plan" means this Parke Bancorp, Inc. 2005 Stock Option Plan.
3. ADMINISTRATION.
(a) The Committee shall administer the Plan. The Committee shall
consist of two or more disinterested directors of the Company,
who shall be appointed by the Board of Directors. A member of the
Board of Directors shall be deemed to be disinterested only if he
or she satisfies: (i) such requirements as the Securities and
Exchange Commission may establish for non-employee directors
administering plans intended to qualify for exemption under Rule
16b-3 (or its successor) of the Exchange Act and (ii) and to the
extent deemed appropriate by the Board of Directors, such
requirements as the Internal Revenue Service may establish for
outside directors acting under plans intended to qualify for
exemption under Section 162(m)(4)(C) of the Code; provided,
however, a failure to comply with the requirements of this
subparagraph (ii) shall not disqualify any actions taken by the
Committee. A majority of the entire Committee shall constitute a
quorum and the action of a majority of the members present at any
meeting at which a quorum is present shall be deemed the action
of the Committee. In no event may the Committee revoke
outstanding Awards without the consent of the Participant. All
decisions, determinations and interpretations of the Committee
shall be final and conclusive on all persons affected thereby.
(b) Subject to paragraph (a) of this Section 3, the Committee shall:
(i) select the individuals who are to receive grants of
Awards under the Plan;
(ii) determine the type, number, vesting requirements and
other features and conditions of Awards made under the
Plan;
(iii) interpret the Plan and Award Agreements (as defined
below); and
(iv) make all other decisions related to the operation of
the Plan.
(c) Each Award granted under the Plan shall be evidenced by
a written agreement (i.e., an
A-3
"Award Agreement"). Each Award Agreement shall constitute a
binding contract between the Company or an Affiliate and the
Participant, and every Participant, upon acceptance of an
Award Agreement, shall be bound by the terms and restrictions
of the Plan and the Award Agreement. The terms of each Award
Agreement shall be set in accordance with the Plan, but each
Award Agreement may also include any additional provisions and
restrictions determined by the Committee. In particular, and
at a minimum, the Committee shall set forth in each Award
Agreement:
(i) the type of Award granted;
(ii) the Exercise Price for any Option;
(iii) the number of shares or rights subject to the Award;
(iv) the expiration date of the Award;
(v) the manner, time and rate (cumulative or otherwise) of
exercise or vesting of the Award; and
(vi) the restrictions, if any, placed on the Award, or upon
shares which may be issued upon the exercise or vesting
of the Award.
The Chairman of the Committee and/or the President of the Company are
hereby authorized to execute Award Agreements on behalf of the Company
or an Affiliate and to cause them to be delivered to the Participants
granted Awards under the Plan.
(d) Six Month Holding Period. Subject to vesting requirements, if
applicable, except in the event of death or Disability of the
Participant or a Change in Control of the Company, a minimum of
six months must elapse between the date of the grant of an Option
and the date of the sale of the Common Stock received through the
exercise of such Option.
4. ELIGIBILITY.
Subject to the terms of the Plan, Employees and Outside Directors, as the
Committee shall determine from time to time, shall be eligible to receive Awards
in accordance with the Plan.
5. SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMITS.
5.1 Shares Available. Subject to the provisions of Section 7, the Common Stock
that may be delivered under this Plan shall be shares of the Company's
authorized but unissued Common Stock, shares of Common Stock purchased in the
open-market by the Company or any trust established for purposes of
administration of the Plan and any shares of Common Stock held as treasury
shares.
5.2 Share Limits. The maximum number of shares of Common Stock that may be
delivered pursuant to Awards granted under this Plan (the "Share Limit") equals
230,000 shares.
5.3 Awards Settled in Cash, Reissue of Awards and Shares. To the extent that an
Award is settled in cash or a form other than shares of Common Stock, the shares
that would have been delivered had there been no such cash or other settlement
shall be counted against the shares available for issuance under this Plan.
Shares that are subject to or underlie Awards which expire or for any reason are
cancelled or terminated, are forfeited, fail to vest, or for any other reason
are not paid or delivered under this Plan shall again be available for
subsequent Awards under this Plan.
A-4
5.4 Reservation of Shares; No Fractional Shares; Minimum Issue. The Company
shall at all times reserve a number of shares of Common Stock sufficient to
cover the Company's obligations and contingent obligations to deliver shares
with respect to Awards then outstanding under this Plan. No fractional shares
shall be delivered under this Plan. The Committee may pay cash in lieu of any
fractional shares in settlements of Awards under this Plan. No fewer than 100
shares may be purchased on exercise of any Stock Option unless the total number
purchased or exercised is the total number at the time available for purchase or
exercise by the Participant.
6. AWARDS.
6.1 Except as otherwise detailed herein, the Committee shall determine the type
or types of Award(s) to be made to each Eligible Participant or Outside
Director. Awards may be granted singularly, in combination or in tandem. Awards
also may be made in combination or in tandem with, in replacement of, as
alternatives to, or as the payment form for grants or rights under any other
employee or compensation plan of the Company. The types of Awards that may be
granted under this Plan are Stock Options which qualify as either Incentive
Stock Options or Non-Statutory Stock Options, as follows:
(a) STOCK OPTIONS.
The Committee may, subject to the limitations of this Plan and
the availability of shares of Common Stock reserved but not
previously awarded under the Plan, grant Stock Options to
Employees and Outside Directors, subject to terms and
conditions as it may determine, to the extent that such terms
and conditions are consistent with the following provisions:
(i) EXERCISE PRICE. The Exercise Price of Stock Options
shall not be less than one hundred percent (100%) of
the Fair Market Value of the Common Stock on the date
of grant.
(ii) TERMS OF OPTIONS. In no event may an individual
exercise an Option, in whole or in part, more than ten
(10) years from the date of grant.
(iii) NON-TRANSFERABILITY. Unless otherwise determined by
the Committee, an individual may not transfer, assign,
hypothecate, or dispose of an Option in any manner,
other than by will or the laws of intestate succession.
The Committee may, however, in its sole discretion,
permit the transfer or assignment of a Non- Statutory
Stock Option, if it determines that the transfer or
assignment is for valid estate planning purposes and is
permitted under the Code and Rule 16b-3 of the Exchange
Act. For purposes of this Section 6.1(a), a transfer
for valid estate planning purposes includes, but is not
limited to, transfers:
(1) to a revocable INTER VIVOS trust, as to
which an individual is both settlor and
trustee;
(2) for no consideration to: (a) any member of
the individual's Immediate Family; (b) a
trust solely for the benefit of members of
the individual's Immediate Family; (c) any
partnership whose only partners are members
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of the individual's Immediate Family; or (d)
any limited liability corporation or other
corporate entity whose only members or
equity owners are members of the
individual's Immediate Family.
For purposes of this Section 6.1, "Immediate
Family" includes, but is not necessarily
limited to, a Participant's parents,
grandparents, spouse, children,
grandchildren, siblings (including half
brothers and sisters), and individuals who
are family members by adoption. Nothing
contained in this Section 6.1 shall be
construed to require the Committee to give
its approval to any transfer or assignment
of any Non-Statutory Stock Option or portion
thereof, and approval to transfer or assign
any Non-Statutory Stock Option or portion
thereof does not mean that such approval
will be given with respect to any other
Non-Statutory Stock Option or portion
thereof. The transferee or assignee of any
Non- Statutory Stock Option shall be subject
to all of the terms and conditions
applicable to such Non-Statutory Stock
Option immediately prior to the transfer or
assignment and shall be subject to any other
conditions prescribed by the Committee with
respect to such Non-Statutory Stock Option.
(iv) SPECIAL RULES FOR INCENTIVE STOCK OPTIONS.
Notwithstanding the foregoing provisions, the following
rules shall further apply to grants of Incentive Stock
Options:
(1) If an Employee owns or is treated as owning,
for purposes of Section 422 of the Code,
Common Stock representing more than ten
percent (10%) of the total combined voting
securities of the Company at the time the
Committee grants the Incentive Stock Option
(a "10% Owner"), the Exercise Price shall
not be less than one hundred and ten percent
(110%) of the Fair Market Value of the
Common Stock on the date of grant.
(2) An Incentive Stock Option granted to a 10%
Owner shall not be exercisable more than
five (5) years from the date of grant.
(3) To the extent the aggregate Fair Market
Value of shares of Common Stock with respect
to which Incentive Stock Options are
exercisable for the first time by an
Employee during any calendar year, under the
Plan or any other stock option plan of the
Company, exceeds $100,000, or such higher
value as may be permitted under Section 422
of the Code, Incentive Stock Options in
excess of the $100,000 limit shall be
treated as Non-Statutory Stock Options. Fair
Market Value shall be determined as of the
date of grant for each Incentive Stock
Option.
(4) Each Award Agreement for an Incentive Stock
Option shall require the individual to
notify the Committee within ten (10) days of
any disposition of shares of Common Stock
under the circumstances described in Section
421(b) of the Code (relating to certain
disqualifying
A-6
dispositions).
(5) Incentive Stock Options may only be awarded
to an Employee of the Company or its
Affiliates.
(v) OPTION AWARDS TO OUTSIDE DIRECTORS. Subject to the
limitations of Section 6.4(a), Non-Statutory Stock
Options to purchase shares of Common Stock will be
granted to each Outside Director as of the Effective
Date, at an Exercise Price equal to the Fair Market
Value of the Common Stock on such date of grant, as
follows:
C.R. Pennoni 10,000
Fred G. Choate 10,000
Tom Hedenberg 8,500
Jeff Kripitz 7,500
Jack Sheppard 7,500
Daniel J. Dalton 7,500
Edward Infantolino 7,500
Anthony Janetti 7,500
Ray H. Tresch 7,500
Richard Phalines 7,500
Arret Dodson 7,500
The Options will be first exercisable as of such date
of grant. Such Options shall continue to be
exercisable for a period of ten years following the
date of grant without regard to the continued
services of such Outside Director as a director or
Director Emeritus. In the event of the Outside
Director's death, such Options may be exercised by
the Beneficiary or the personal representative of his
estate or person or persons to whom his rights under
such Option shall have passed by will or by the laws
of descent and distribution. Options may be granted
to newly appointed or elected Outside Directors
within the sole discretion of the Committee. The
Exercise Price per share of such Options granted
shall be equal to the Fair Market Value of the Common
Stock at the time such Options are granted. Unless
otherwise inapplicable, or inconsistent with the
provisions of this paragraph, the Options to be
granted to Outside Directors hereunder shall be
subject to all other provisions of this Plan.
6.2 Award Payouts. Awards may be paid out in the form of cash, Common Stock, or
combinations thereof as the Committee shall determine, and with such
restrictions as it may impose.
6.3 Consideration for Stock Options. The Exercise Price for any Stock Option
granted under this Plan may be paid by means of any lawful consideration as
determined by the Committee, including, without limitation, one or a combination
of the following methods:
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(a) cash, check payable to the order of the Company, or
electronic funds transfer;
(b) the delivery of previously owned shares of Common
Stock; or
(c) subject to such procedures as the Committee may
adopt, pursuant to a "cashless exercise" with a third
party who provides financing for the purposes of (or
who otherwise facilitates) the purchase or exercise
of such Stock Option.
In no event shall any shares newly-issued by the Company be issued for less than
the minimum lawful consideration for such shares or for consideration other than
consideration permitted by applicable state law. In the event that the Committee
allows a Participant to exercise an Option by delivering shares of Common Stock
previously owned by such Participant, any such shares delivered which were
initially acquired by the Participant from the Company (upon exercise of a stock
option or otherwise) must have been owned by the Participant for at least six
months prior to such date of delivery. Shares of Common Stock used to satisfy
the Exercise Price of an Option shall be valued at their Fair Market Value on
the date of exercise. The Company will not be obligated to deliver any shares
unless and until it receives full payment of the Exercise Price and any related
withholding obligations under Section 9.5 have been satisfied, or until any
other conditions applicable to exercise or purchase have been satisfied. No
Shares of Common Stock shall be issued until full payment has been received by
the Company, and no Participant shall have any of the rights of a stockholder of
the Company until shares of Common Stock are issued upon the exercise of such
Stock Options. Unless expressly provided otherwise in the applicable Award
Agreement, the Committee may at any time within its sole discretion eliminate or
limit a Participant's ability to pay the purchase or Exercise Price of any Award
by any method other than a cash payment to the Company.
6.4 Limitations on Awards.
(a) Stock Option Award Limitations. In no event shall Shares subject
to Options granted to Outside Directors in the aggregate under
this Plan exceed more than 120,000 shares of Common Stock
authorized for delivery under this Plan. In no event shall Shares
subject to Options granted to any single Employee exceed more
than 55,000 shares of Common Stock authorized for delivery under
the Plan.
(b) Vesting of Awards. Except as otherwise provided by the terms of
the Plan or by action of the Committee at the time of the grant
of an Award, Stock Options will be first exercisable as of the
date of grant of such Award.
7. EFFECT OF TERMINATION OF SERVICE ON AWARDS.
7.1 General. The Committee shall establish the effect of a termination of
employment or service on the continuation of rights and benefits available under
an Award, and, in so doing, may make distinctions based upon, INTER ALIA, the
recipient of such Award, the cause of termination and the type of the Award.
Notwithstanding the foregoing, the terms of Awards shall be consistent with the
following, as applicable:
(a) Termination of Employment. In the event that any Participant's
employment with the Company shall terminate for any reason, other
than Disability or death, all of any such Participant's Incentive
Stock Options, and all of any such Participant's rights to
purchase or receive shares of Common Stock pursuant thereto,
shall automatically terminate on
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(A) the earlier of (i) or (ii): (i) the respective expiration
dates of any such Incentive Stock Options, or (ii) the expiration
of not more than three (3) months after the date of such
termination of employment; or (B) at such later date as is
determined by the Committee at the time of the grant of such
Award based upon the Participant's continuing status as a
Director or Director Emeritus of the Bank or the Company, but
only if, and to the extent that, the Participant was entitled to
exercise any such Incentive Stock Options at the date of such
termination of employment, and further that such Award shall
thereafter be deemed a Non-Statutory Stock Option.
(b) Disability. In the event that any Participant's employment with
the Company shall terminate as the result of the Disability of
such Participant, such Participant may exercise any Incentive
Stock Options granted to the Participant pursuant to the Plan at
any time prior to the earlier of (i) the respective expiration
dates of any such Incentive Stock Options or (ii) the date which
is one (1) year after the date of such termination of employment,
but only if, and to the extent that, the Participant was entitled
to exercise any such Incentive Stock Options at the date of such
termination of employment.
(c) Death. In the event of the death of a Participant, any Incentive
Stock Options granted to such Participant may be exercised by the
Participant's Beneficiary or the person or persons to whom the
Participant's rights under any such Incentive Stock Options pass
by will or by the laws of descent and distribution (including the
Participant's estate during the period of administration) at any
time prior to the earlier of (i) the respective expiration dates
of any such Incentive Stock Options or (ii) the date which is two
(2) years after the date of death of such Participant, but only
if, and to the extent that, the Participant was entitled to
exercise any such Incentive Stock Options at the date of death.
For purposes of this Section 7.1(c), any Incentive Stock Option
held by an Participant shall be considered exercisable at the
date of his death if the only unsatisfied condition precedent to
the exercisability of such Incentive Stock Option at the date of
death is the passage of a specified period of time. At the
discretion of the Committee, upon exercise of such Options, the
Beneficiary may receive Shares or cash or a combination thereof.
If cash shall be paid in lieu of shares of Common Stock, such
cash shall be equal to the difference between the Fair Market
Value of such Shares and the exercise price of such Options on
the exercise date.
7.2 Events Not Deemed Terminations of Employment or Service. Unless Company
policy or the Committee provides otherwise, the employment relationship shall
not be considered terminated in the case of (a) sick leave, (b) military leave,
or (c) any other leave of absence authorized by the Company or the Committee;
provided that, unless reemployment upon the expiration of such leave is
guaranteed by contract or law, such leave is for a period of not more than 90
days. In the case of any Employee on an approved leave of absence, continued
vesting of the Award while on leave may be suspended until the Employee returns
to service, unless the Committee otherwise provides or applicable law otherwise
requires. In no event shall an Award be exercised after the expiration of the
term set forth in the Award Agreement.
7.3 Effect of Change of Affiliate Status. For purposes of this Plan and any
Award, if an entity ceases to be an Affiliate of the Company, a termination of
employment or service shall be deemed to have occurred with respect to each
individual who does not continue as an Employee or Outside Director with another
entity within the Company after giving effect to the Affiliate's change in
status.
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8. ADJUSTMENTS; ACCELERATION UPON A CHANGE IN CONTROL.
8.1 Adjustments. Upon any reclassification, recapitalization, stock split
(including a stock split in the form of a stock dividend) or reverse stock split
("stock split"); any merger, combination, consolidation, or other
reorganization; any spin-off, split-up, or similar extraordinary dividend
distribution with respect to the Common Stock (whether in the form of securities
or property); any exchange of Common Stock or other securities of the Company,
or any similar, unusual or extraordinary corporate transaction affecting the
Common Stock; or a sale of all or substantially all the business or assets of
the Company in its entirety; then the Committee shall, in such manner, to such
extent (if any) and at such times as it deems appropriate and equitable under
the circumstances:
(a) proportionately adjust any or all of: (1) the number and type of
shares of Common Stock (or other securities) that thereafter may
be made the subject of Awards (including the specific Share
Limits, maximums and numbers of shares set forth elsewhere in
this Plan); (2) the number, amount and type of shares of Common
Stock (or other securities or property) subject to any or all
outstanding Awards; (3) the grant, purchase, or Exercise Price of
any or all outstanding Awards; (4) the securities, cash or other
property deliverable upon exercise or payment of any outstanding
Awards; or (5) the performance standards applicable to any
outstanding Awards; or
(b) make provision for a cash payment or for the assumption,
substitution or exchange of any or all outstanding Awards, based
upon the distribution or consideration payable to holders of the
Common Stock.
8.2 The Committee may adopt such valuation methodologies for outstanding Awards
as it deems reasonable in the event of a cash or property settlement and, in the
case of Options, may base such settlement solely upon the excess, if any, of the
per share amount payable upon or in respect of such event over the Exercise
Price or base price of the Award. With respect to any Award of an Incentive
Stock Option, the Committee may make an adjustment that causes the Option to
cease to qualify as an Incentive Stock Option without the consent of the
affected Participant.
8.3 Upon any of the events set forth in Section 8.1, the Committee may take such
action prior to such event to the extent that the Committee deems the action
necessary to permit the Participant to realize the benefits intended to be
conveyed with respect to the Awards in the same manner as is or will be
available to stockholders of the Company generally. In the case of any stock
split or reverse stock split, if no action is taken by the Committee, the
proportionate adjustments contemplated by Section 8.1(a) above shall
nevertheless be made.
8.4 Automatic Acceleration of Awards. Unless otherwise determined by the
Committee, upon the death or Disability of an Award recipient or upon a Change
in Control of the Company or the Bank, each Stock Option then outstanding shall
become fully vested and exercisable and remain exercisable for its remaining
term.
8.5 Acceleration of Vesting. The Committee shall at all times have the power to
accelerate the exercise date of Options with respect to previously granted
Awards.
9. MISCELLANEOUS PROVISIONS.
9.1 Compliance with Laws. This Plan, the granting and vesting of Awards under
this Plan, the offer, issuance and delivery of shares of Common Stock, the
acceptance of payment of money under this Plan or under Awards are subject to
compliance with all applicable federal and state laws, rules and regulations
(including, but not limited to, state and federal securities laws) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be
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necessary or advisable in connection therewith. The person acquiring any
securities under this Plan will, if requested by the Company, provide such
assurances and representations to the Company as may be deemed necessary or
desirable to assure compliance with all applicable legal and accounting
requirements.
9.2 Claims. No person shall have any claim or rights to an Award (or additional
Awards, as the case may be) under this Plan, subject to any express contractual
rights to the contrary (set forth in a document other than this Plan).
9.3 No Employment/Service Contract. Nothing contained in this Plan (or in any
other documents under this Plan or in any Award Agreement) shall confer upon any
Participant any right to continue in the employ or other service of the Company,
constitute any contract or agreement of employment or other service or affect an
Employee's status as an employee-at-will, nor interfere in any way with the
right of the Company to change a Participant's compensation or other benefits,
or terminate his or her employment or other service, with or without cause.
Nothing in this Section 9.3, however, is intended to adversely affect any
express independent right of such Participant under a separate employment or
service contract other than an Award Agreement.
9.4 Plan Not Funded. Awards payable under this Plan shall be payable in shares
of Common Stock or from the general assets of the Company. No Participant,
beneficiary or other person shall have any right, title or interest in any fund
or in any specific asset (including shares of Common Stock, except as expressly
provided otherwise) of the Company by reason of any Award hereunder. Neither the
provisions of this Plan (or of any related documents), nor the creation or
adoption of this Plan, nor any action taken pursuant to the provisions of this
Plan shall create, or be construed to create, a trust of any kind or a fiduciary
relationship between the Company and any Participant, Beneficiary or other
person. Notwithstanding the foregoing, the Company may establish a trust with
respect to Awards made in accordance with Section 6.1(b) herein. To the extent
that a Participant, Beneficiary or other person acquires a right to receive
payment pursuant to any Award hereunder, such right shall be no greater than the
right of any unsecured general creditor of the Company.
9.5 Tax Withholding. Upon any exercise, vesting, or payment of any Award, the
Company shall have the right, within its sole discretion, to:
(a) require the Participant (or the Participant's personal
representative or Beneficiary, as the case may be) to pay or
provide for payment of at least the minimum amount of any taxes
which the Company may be required to withhold with respect to
such Award or payment; or
(b) deduct from any amount otherwise payable in cash to the
Participant (or the Participant's personal representative or
Beneficiary, as the case may be) the minimum amount of any taxes
which the Company may be required to withhold with respect to
such cash payment, or
( c) in any case where tax withholding is required in connection
with the delivery of shares of Common Stock under this Plan, the
Committee may, in its sole discretion, pursuant to such rules and
subject to such conditions as the Committee may establish, reduce
the number of shares to be delivered to the Participant by the
appropriate number of shares, valued in a consistent manner at
their Fair Market Value as necessary to satisfy the minimum
applicable withholding obligation. In no event shall the shares
withheld exceed the minimum whole number of shares required for
tax withholding under applicable law.
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9.6 Effective Date, Termination and Suspension, Amendments.
(a) This Plan is effective upon the later of approval of the Plan by
the Board of Directors of the Company or the vote of approval by
the stockholders of the Company ("Approval Date"). Unless earlier
terminated by the Board, this Plan shall terminate at the close
of business on the day before the tenth anniversary of the
Approval Date. After the termination of this Plan either upon
such stated expiration date or its earlier termination by the
Board, no additional Awards may be granted under this Plan, but
previously granted Awards (and the authority of the Committee
with respect thereto, including the authority to amend such
Awards) shall remain outstanding in accordance with their
applicable terms and conditions and the terms and conditions of
this Plan.
(b) Board Authorization. Subject to applicable laws and regulations,
the Board of Directors may, at any time, terminate or, from time
to time, amend, modify or suspend this Plan, in whole or in part;
provided, however, that no such amendment may have the effect of
repricing the Exercise Price of Options. No Awards may be granted
during any period that the Board of Directors suspends this Plan.
(c) Stockholder Approval. Stockholder approval of such Plan shall be
determined by an affirmative vote of a majority of the votes cast
on the matter at a meeting of stockholders of the Company. Any
material amendment to the Plan deemed to require a ratification
vote of stockholders shall be ratified by an affirmative vote of
a majority of the votes cast at a meeting of stockholders of the
Company.
(d) Limitations on Amendments to Plan and Awards. No amendment,
suspension or termination of this Plan or change affecting any
outstanding Award shall, without the written consent of the
Participant, affect in any manner materially adverse to the
Participant any rights or benefits of the Participant or
obligations of the Company under any Award granted under this
Plan prior to the effective date of such change. Changes,
settlements and other actions contemplated by Section 8 shall not
be deemed to constitute changes or amendments for purposes of
this Section 9.6.
9.7 Governing Law; Compliance with Regulations; Construction; Severability.
(a) This Plan, the Awards, all documents evidencing Awards and all
other related documents shall be governed by, and construed in
accordance with, the laws of the State of New Jersey to the
extent not preempted by Federal law.
(b) Severability. If a court of competent jurisdiction holds any
provision invalid and unenforceable, the remaining provisions of
this Plan shall continue in effect.
(d) Plan Construction; Rule 16b-3. It is the intent of the Company
that the Awards and transactions permitted by Awards be
interpreted in a manner that, in the case of Participants who are
or may be subject to Section 16 of the Exchange Act, qualify, to
the maximum extent compatible with the express terms of the
Award, for exemption from matching liability under Rule 16b-3
promulgated under the Exchange Act. Notwithstanding the
foregoing, the Company shall have no liability to any Participant
for Section 16 consequences of Awards or events affecting Awards
if an Award or event does not so qualify.
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(e) Shares of Common Stock shall not be issued with respect to any
Award granted under the Plan unless the issuance and delivery of
such shares shall comply with all relevant provisions of
applicable law, including, without limitation, the Securities Act
of 1933, as amended, the rules and regulations promulgated
thereunder, any applicable state securities laws and the
requirements of any stock exchange upon which the shares may then
be listed.
(f) The inability of the Company to obtain any necessary
authorizations, approvals or letters of non-objection from any
regulatory body or authority deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any shares of
Common Stock issuable hereunder shall relieve the Company of any
liability with respect to the non-issuance or sale of such
shares.
(g) As a condition to the exercise of any Option or the delivery of
shares in accordance with an Award, the Company may require the
person exercising the Option or receiving delivery of the shares
to make such representations and warranties as may be necessary
to assure the availability of an exemption from the registration
requirements of federal or state securities law.
(h) Notwithstanding anything herein to the contrary, upon the
termination of employment or service of a Participant by the
Company or an Affiliate for "cause" as determined by the Board of
Directors or the Committee, all Awards held by such Participant
which have not yet been delivered shall be forfeited by such
Participant as of the date of such termination of employment or
service.
(i) Upon the exercise of an Option, the Committee, in its sole and
absolute discretion, may make a cash payment to the Participant,
in whole or in part, in lieu of the delivery of shares of Common
Stock. Such cash payment to be paid in lieu of delivery of Common
Stock shall be equal to the difference between the Fair Market
Value of the Common Stock on the date of the Option exercise and
the exercise price per share of the Option. Such cash payment
shall be in exchange for the cancellation of such Option. Such
cash payment shall not be made in the event that such transaction
would result in liability to the Participant or the Company under
Section 16(b) of the Exchange Act and regulations promulgated
thereunder, or subject the Participant to additional tax
liabilities related to such cash payments pursuant to Section
409A of the Code.
9.8 Captions. Captions and headings are given to the sections and subsections of
this Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of this Plan or any provision thereof.
9.9 Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to
limit the authority of the Board of Directors or the Committee to grant Awards
or authorize any other compensation, with or without reference to the Common
Stock, under any other plan or authority.
9.10 Limitation on Liability. No Director, member of the Committee shall be
liable for any determination made in good faith with respect to the Plan or any
Awards granted. If a Director or member of the Committee is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
any reason of anything done or not done by him in such capacity under or with
respect to the Plan, the Company shall indemnify such person against expenses
(including attorney's fees), judgments, fines and
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amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in the best interests of the
Company and its Affiliates and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
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