June 9, 1997
To Our Stockholders:
We are pleased to invite you to attend the Annual Meeting of Stockholders
("Meeting") of Westwood Financial Corporation ("Company") to be held at the
Westwood Financial Corporation office at 700-88 Broadway, Westwood, New Jersey
on Tuesday, July 15, 1997, at 4:00 p.m.
The enclosed Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Meeting. During the Meeting we will also
report on the operations of the Company. Directors and officers of the Company,
as well as a representative of our independent auditors, RD Hunter & Company LLP
are expected to be present to respond to any questions that stockholders may
have.
At the Annual Meeting, stockholders will be requested to vote on the
election of two directors of the Company, ratify the 1997 Directors Stock Option
Plan, and ratify the appointment of RD Hunter & Company LLP as auditors for the
Company's 1998 fiscal year.
Additional information concerning these items is included in the
accompanying Notice of Annual Meeting and Proxy Statement. The Board of
Directors of the Company has determined that the matters to be considered at the
Annual Meeting are in the best interest of the Company and its stockholders. For
the reasons set forth in the Proxy Statement, the Board of Directors unanimously
recommends a vote "FOR" each matter to be considered.
Also enclosed for your reference is the 1997 Annual Report to
Stockholders, which contains detailed information concerning the activities and
operating performance of the Company.
Your vote as a stockholder is important, regardless of the number of
shares you own. ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE, EVEN IF YOU CURRENTLY
PLAN TO ATTEND THE MEETING. This will not prevent you from voting in person but
will assure that your vote is counted if you are unable to attend the Meeting.
Sincerely,
/s/ William J. Woods
William J. Woods
Chairman
<PAGE>
WESTWOOD FINANCIAL CORPORATION
700-88 BROADWAY
WESTWOOD, NEW JERSEY 07675
(201) 666-5002
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 15, 1997
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Meeting")
of Westwood Financial Corporation ("Westwood" or the "Company"), will be held at
the Westwood Financial Corporation office, 700-88 Broadway, Westwood, New Jersey
on Tuesday, July 15, 1997, at 4:00 p.m. The Meeting is for the purpose of
considering and acting upon the following:
1. The election of two directors of the Company;
2. The ratification of the Company's 1997 Directors Stock Option Plan;
3. The ratification of the appointment of RD Hunter & Company LLP as
auditor for the Company for the fiscal year ending March 31, 1998; and
4. The transaction of such other business as may properly come before the
Meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Meeting,
Any action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Pursuant to the
Bylaws, the Board of Directors has fixed the close of business on May 28, 1997,
as the record date for determination of the stockholders entitled to vote at the
Meeting and any adjournments thereof.
You are requested to complete and to sign the enclosed form of Proxy which
is solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Meeting in
person.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED BY FILING WITH THE SECRETARY OF THE SAVINGS BANK A WRITTEN REVOCATION OR
A DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE
MEETING MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT
BEFORE THE MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT
REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR
RECORD HOLDER TO VOTE PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Joanne Miller
JOANNE MILLER, SECRETARY
Westwood, New Jersey
June 9, 1997
IMPORTANT: PLEASE FILL IN, DATE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY. AN
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES.
<PAGE>
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
WESTWOOD FINANCIAL CORPORATION
700-88 BROADWAY
WESTWOOD, NEW JERSEY 07675
(201) 666-5002
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
JULY 15, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
General
- --------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Westwood Financial Corporation (hereinafter
called "Westwood" or "Company") to be used at the Annual Meeting of Stockholders
of the Company (hereinafter called the "Meeting") which will be held at
Westwood's office at 700-88 Broadway, Westwood, New Jersey, on Tuesday, July 15,
1997, at 4:00 p.m. The accompanying Notice of Meeting and this Proxy Statement
are being first mailed to stockholders on or about June 9, 1997. The Company
first issued its Common Stock effective June 6, 1996 and is the parent company
of the Westwood Savings Bank (the "Bank").
At the Meeting, stockholders will consider and vote upon (i) the election
of two directors, (ii) the ratification of the 1997 Directors Stock Option Plan,
and (iii) the ratification of the independent auditor.
- --------------------------------------------------------------------------------
Revocability of Proxies
- --------------------------------------------------------------------------------
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice delivered in person or mailed to the Secretary of the Company at the
address of the Company shown 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 stockholder attends the Meeting and votes in person. Proxies
solicited by the Board of Directors of the Company will be voted in accordance
with the directions given therein. Where no instructions are indicated, signed
proxies will be voted for the nominees for directors set forth below, and in
favor of each of the other proposals set forth in this Proxy Statement for
consideration at the Meeting or any adjournment thereof.
- --------------------------------------------------------------------------------
Voting Securities and Principal Holders Thereof
- --------------------------------------------------------------------------------
Stockholders of record as of the close of business on May 28, 1997 (the
"Voting Record Date"), are entitled to one vote for each share then held. As of
May 28, 1997, the Company had 645,241 shares of Common Stock issued,
outstanding, and eligible to vote.
As provided in the Certificate of Incorporation of the Company, in no
event shall any record owner of any outstanding Common Stock which is
beneficially owned, directly or indirectly, by a person who beneficially owns in
excess of 10% of the then outstanding shares of Common Stock (the "Limit") be
entitled or permitted to any vote with respect to the shares held in excess of
the Limit. In addition, for a period of five years from the completion of the
conversion of the Bank from mutual to stock form, no person shall directly or
indirectly offer to acquire or acquire the beneficial ownership of more than 10%
of the outstanding shares of Common Stock. Beneficial ownership is determined
pursuant to
<PAGE>
Rule 13d-3 of the General Rules and Regulations promulgated pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and includes
shares beneficially owned by such person or any of his or her affiliates (as
defined in the Certificate of Incorporation), shares which such person or his or
her affiliates have the right to acquire upon the exercise of conversion rights
or options and shares as to which such person and his or her affiliates have or
share investment or voting power, but shall not include shares beneficially
owned by any employee stock ownership or similar plan of the issuer or any
subsidiary.
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, any 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 (the "Broker Non-Votes") 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 proposals at the
time of the Meeting, the Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors (Proposal I), the proxy card being
provided by the Board enables a stockholder to vote for the election of the
nominees proposed by the Board, or to withhold authority to vote for one or more
of the nominees being proposed. Under New Jersey law and the Company's
Certificate of Incorporation and Bylaws, directors are elected by a plurality of
votes cast, without respect to either (i) Broker Non-votes, or (ii) proxies as
to which authority to vote for one or more of the nominees being proposed is
withheld.
As to the ratification of the 1997 Directors Stock Option Plan (Proposal
II), the proxy card being provided by the Board enables a stockholder to (i)
vote "FOR" the proposal, (ii) vote "AGAINST" the proposal or (iii) "ABSTAIN"
from voting on the item. Unless otherwise required by law, the ratification of
the 1997 Stock Option Plan shall be determined by a majority of the votes
present at the Meeting, in person or by proxy, and entitled to vote without
regard to Broker Non-Votes. Proxies marked "Abstain" will have the effect of a
vote "Against" the matter.
As to the ratification of auditors (Proposal III) and all other matters
that may properly come before the Meeting, by checking the appropriate box, a
stockholder may; (i) vote "FOR" the item, or (ii) vote "AGAINST" the item, or
(iii) "ABSTAIN" with respect to the item. Under the Company's Certificate of
Incorporation and Bylaws, unless otherwise required by law, all other matters
shall be determined by a majority of votes cast affirmatively or negatively
without regard to (a) Broker Non-votes, or (b) proxies marked "ABSTAIN" as to
that matter.
Persons and groups owning in excess of five percent of the Common Stock
are required to file certain reports with the Securities and Exchange Commission
("SEC") regarding such ownership pursuant to the Securities Exchange Act of
1934. The following table sets forth, as of May 28, 1997, the shares of Common
Stock beneficially owned by all executive officers and directors as a group and
by each person who was the beneficial owner of more than five percent of the
Westwood Financial Corporation's outstanding shares of Common Stock on May 28,
1997, based solely upon information supplied to the Company by the Company's
stock transfer agent and the filings required pursuant to the Securities
Exchange Act of 1934.
2
<PAGE>
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent of Shares of
of Beneficial Owner Beneficial Ownership(1) Common Stock Outstanding
- ------------------- ----------------------- ------------------------
All Executive Officers and Directors
<S> <C> <C>
as a Group (7 persons) 123,766(2) 19.18(2)
</TABLE>
- ------------------------
(1) Includes all shares of Common Stock held directly as well as by spouses
and minor children, in trust and other indirect ownership, over which
shares the named individuals effectively exercise sole or shared voting
and investment power. Includes shares awarded under the Company's 1993
Management Stock Bonus Plans over which shares the recipient individuals
exercise sole or shared voting rights.
(2) Includes a total of 33,214 options to purchase Common Stock granted to
directors and executive officers pursuant to the 1993 Stock Option Plans
that are exercisable within 60 days.
- --------------------------------------------------------------------------------
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
- --------------------------------------------------------------------------------
Directors of the Company have an interest in certain matters being
presented for stockholder ratification. Directors of the Company have been
granted stock options pursuant to the 1997 Directors Stock Option Plan subject
to ratification of the Plan by the stockholders of the Company. The ratification
of the 1997 Directors Stock Option Plan is being presented as "Proposal II -
Ratification of the 1997 Directors Stock Option Plan." See "Proposal I -
Election of Directors" for information regarding the voting control of shares of
Common Stock held by executive officers and directors.
- --------------------------------------------------------------------------------
FILING OF BENEFICIAL OWNERSHIP REPORTS
- --------------------------------------------------------------------------------
The Common Stock of the Company is registered pursuant to Section 12(g) of
the Securities Exchange Act of 1934 ("Exchange Act"). The executive officers and
directors of the Company and beneficial owners of greater than 10% of the
Company's Common Stock ("10% beneficial owners") are required to file reports on
Forms 3, 4 and 5 with the Securities and Exchange Commission (the "SEC")
disclosing changes in beneficial ownership of the Common Stock. Based on the
Company's review of such ownership reports, none of the executive officers,
directors or 10% beneficial owners of the Company failed to timely file such
ownership reports on a timely basis during the fiscal year ended March 31, 1997.
3
<PAGE>
- --------------------------------------------------------------------------------
PROPOSAL I -- ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
The Company currently has six directors serving on its Board. The
Company's Bylaws provide that Directors are to be elected for terms of three
years, approximately one-third of whom are to be elected annually. Two directors
will be elected at the Annual Meeting to serve for a three-year period.
William J. Woods and Harry Randall, Jr. have been nominated by the Board
of Directors to serve as directors for terms of three years. Mr. Woods currently
serves as a member of the Board. It is intended that the persons named in the
proxies solicited by the Board will vote for the election of the named nominees.
Election of the nominees as directors requires the affirmative vote of a
majority of the votes actually cast at the Meeting. The Company's Certificate of
Incorporation prohibits stockholders of the Company from cumulating their votes
for the election of directors.
If any nominee is unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute as the Board of
Directors may recommend or the Board of Directors may amend the Bylaws and
reduce the size of the Board. At this time, the Board knows of no reason why any
nominee might be unavailable to serve.
The following table sets forth for each nominee and each director
continuing in office his or her name, age (as of March 31, 1997), the year he or
she first became a director of the Company or the Bank, the year in which his or
her current term will expire and the number of shares and percentage of the
Company's Common Stock beneficially owned. Each director of the Company is also
a member of the Board of Directors of the Bank.
<TABLE>
<CAPTION>
SHARES OF
YEAR FIRST COMMON PERCENT OF
ELECTED CURRENT STOCK TOTAL CLASS
OR TERM BENEFICIALLY OUTSTANDING
NAME AGE APPOINTED EXPIRES OWNED(1)(2)(3) (4)
- ---- --- --------- ------- -------------- ---
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2000
<S> <C> <C> <C> <C> <C> <C>
William J. Woods(5) 79 1974 1997 31,255 (6)(7) 4.78%
Harry Randall, Jr. 70 N/A N/A 7,085 (10) 1.01%
DIRECTORS CONTINUING IN OFFICE
Sidney J. Hagan 78 1966 1998 13,687 (7)(8) 2.11%
William J. Durgin 78 1968 1998 16,965 (7)(8) 2.61%
Joanne Miller(5) 43 1993 1999 18,896 (7)(9) 2.90%
John M. Caruso 51 1988 1999 18,599 (7)(8) 2.87%
</TABLE>
- -----------------
(1) Unless otherwise noted, all shares are owned directly by the named
individual or by their spouses and minor children, over which shares the
named individuals effectively exercise sole voting and investment power.
(2) As of May 28, 1997.
(3) Includes shares of Common Stock which have been awarded under the Westwood
Savings Bank Stock Bonus Plans. (4) The total number of shares of Common
Stock outstanding as of the Voting Record Date is 645,241.
(5) Joanne Miller is the daughter of William J. Woods.
(6) Includes 8,929 options awarded to Mr. Woods that are exercisable within 60
days.
(7) Excludes 10,000 options awarded to Mr. Woods and Ms. Miller and 600
options awarded to each non-employee director under the 1997 Directors
Stock Option Plan which are not exercisable prior to stockholder
ratification of the 1997 Directors Stock Option Plan. See "Proposal II -
Ratification of the 1997 Directors Stock Option Plan.
4
<PAGE>
(8) Includes 3,921 stock options that were awarded to the director and are
exercisable within 60 days.
(9) Includes 7,294 options awarded to Ms. Miller that are exercisable within
60 days.
(10) Includes award of options to purchase 600 shares of Common Stock
anticipated to be granted upon election as a director.
The principal occupation during the past five years of each director and
nominee is set forth below. All directors and nominees have held their present
positions for five years unless otherwise stated.
William J. Woods has been a member of the Board of Directors of the Bank
since 1974 and Chairman of the Company since its formation in December 1995. Mr.
Woods became President and Chief Executive Officer of the Bank in 1977 and
Chairman of the Board of the Bank in 1988. Mr. Woods is a member and past
Chairman of the Board of Pascack Valley Hospital and member of the Board of
Directors of Westwood Senior Housing Corp., both non-profit organizations in
Westwood, New Jersey.
Harry Randall, Jr. is a partner in the law firm of Randall, Randall &
Stevens. He serves as General Counsel to the Bank and the Company.
Sidney J. Hagan has served as a director of the Bank since 1966 and has
been a director of the Company since its formation in December 1995. He is a
retired construction official for the Borough of Westwood. Mr. Hagan is also a
member of the Westwood Fire Department.
William J. Durgin has been a member of the Board of Directors of the Bank
since 1968 and has been a director of the Company since its formation in
December 1995. Mr. Durgin has also been with the New York Life Insurance Company
for 52 years and is a member of the Westwood Democratic Committee, Fire
Department and Courthouse Square Club.
Joanne Miller has been the President of the Bank since 1996, and has been
employed by the Bank since 1984. Prior to 1996, she had been Senior Vice
President of the Bank from 1989 to 1996. She was elected to the Board of
Directors of the Bank in February, 1993. Ms. Miller has been a director of the
Company since its formation in December 1995.
John M. Caruso has been a director of the Bank since 1988 and a director
of the Company since its formation in December 1995. Mr. Caruso is the owner of
Caruso Associates, a home restoration and repair company.
Paul F. Becker has been a director of the Bank since 1977 and a director
of the Company since its formation in December 1995. Mr. Becker's term as a
director of the Board of the Company will expire in July, 1997. It is
anticipated that at that time, Mr. Becker will be appointed an Emeritus Director
of the Bank and the Company for a term of one-year, subject to reappointment
thereafter. Mr. Becker was the President and majority stockholder of Becker
Funeral Home in Westwood, New Jersey for thirty-eight years until 1990. He is
presently a consultant to Quinn Funeral Service. He is currently a Charter
Member of Westwood Parking Authority and a retired Westwood Councilman. Mr.
Becker is also the Chairman of the Building Committee for the Borough of
Westwood.
- --------------------------------------------------------------------------------
Meetings and Committees of the Board of Directors
- --------------------------------------------------------------------------------
The business of the Company's Board of Directors is conducted through
meetings of the Board of Directors and its committees. During the fiscal year
ended March 31, 1997, the Board of Directors
5
<PAGE>
held 12 regular meetings and 6 special meetings. No director attended fewer than
75% of the total meetings of the Board of Directors of the Company and
committees on which such director served.
The Salary (Compensation) Committee of the Company consists of Directors
Durgin (Chairman), Caruso and Hagan. The Salary Committee meets in such capacity
periodically to review the performance of Westwood's officers and employees, and
to determine compensation programs and adjustments. The Salary Committee met one
time during fiscal 1997 to consider compensation matters.
The Examination (Audit) Committee of the Company consists of Directors
Caruso (Chairman), Becker, Durgin and Hagan. This committee is responsible for
developing the Company's audit program and monitoring it. This committee meets
with the Company's outside auditors to discuss the results of the annual audit
and any related matters. The members of the committee also receive and review
all the reports and findings and other information presented to them by the
Company's officers regarding financial reporting policies and practices. The
Examination Committee met one time in fiscal 1997.
The Company's Board of Directors serves as a nominating committee to fill
vacancies on the Board. The Board of Directors met one time in its capacity as
the nominating committee during the 1997 fiscal year.
- --------------------------------------------------------------------------------
Director and Executive Compensation
- --------------------------------------------------------------------------------
Directors' Compensation
Non-employee members of Board of Directors of the Company received fees of
$6,000 per year, payable in installments of $1,500 at the first meeting in
January, April, July and October. Non-employee members of the Board were paid
$100 for each special meeting attended during fiscal 1997. Westwood paid a total
of $24,000 in directors' and committee fees for the fiscal year ended March 31,
1997. Directors serving as of December 9, 1993, received awards of stock options
and restricted stock in accordance with the stock benefit plans of the Bank.
Directors shall receive stock options in accordance with the 1997 Directors
Stock Option Plan, subject to stockholder ratification. (See "Proposal II
Ratification of the 1997 Directors Stock Option Plan.")
Executive Compensation
Summary Compensation Table. The following table sets forth for the fiscal
years ended March 31, 1997, 1996, and 1995, certain information as to the total
remuneration received by the chief executive officer of the Company who served
in these capacities during such period. No executive officer of the Company
received cash compensation in excess of $100,000 during the 1997 fiscal year.
6
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation(1)
- ---------------------------------------------------- Long Term Compensation
--------------------------------------------------
Awards
Restricted Securities
Name and Principal Fiscal Stock Underlying All Other
Position Year Salary Bonus Award(s)(1) Options(#)(2) Compensation(3)
- ------------------ ------ -------- ------- ----------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
William J. Woods 1997 $80,186 $ -- $ -- -- $ 877
Chairman, President 1996 80,186 -- 9,024 2,768 708
and CEO 1995 80,186 -- -- -- 643
</TABLE>
- ------------------------
(1) Represents 564 shares of Common Stock awarded to Mr. Woods based upon the
market price of $13.25 per share at the time of such award under the
Westwood Savings Bank Stock Bonus Plans. Such shares became non-forfeitable
as of December 12, 1996, at which time the market price of such shares was
$16.00.
(2) These options are exercisable at $8.11 per share and have an aggregate
value of $31,527.52, based upon the average of the closing bid and ask
price of the Common Stock on June 6, 1997 of $19.50 per share.
(3) Includes company contributions to the 401(k) Plan first implemented in
1995.
Long Term Incentive Plans
The Company does not presently sponsor any long-term incentive plans nor
did it make any awards or payouts to Mr. Woods under such plans during the
fiscal year ended March 31, 1997.
Other Benefits
Insurance. Full-time employees of the Company are provided, at no expense
to them, with group plan insurance that covers hospitalization, major medical,
dental, vision, long term disability and life insurance. This insurance is
available generally and on the same basis to all full-time employees after
completion of minimum of 30 days of employment.
401(k) Profit Sharing Plan. The Company sponsors a tax-qualified defined
contribution profit sharing plan, ("401(k) Plan"), for the benefit of its
employees. Under the 401(k) Plan, employees may voluntarily elect to defer up to
15% of compensation, not to exceed applicable limits under the Internal Revenue
Code of 1986, as amended (the "Code") (i.e., $9,600 in 1997). The first 4% of
employee savings is matched by a Company contribution of $.50 for each $1.00 of
employee contribution. Such matching contributions shall be 100% vested
following completion of five years of service. Additionally, the Company may
contribute an annual discretionary contribution to the plan. Such benefits are
allocated to participant accounts as a percentage of base compensation of such
participant to the base compensation of all participants. At the end of each
fiscal year, the Board of Directors determines whether to make a discretionary
contribution and the amount of the contribution to the 401(k) Plan, based upon a
number of factors, such as the Company's retained earnings, profits, regulatory
capital and overall employee performance. Benefits are payable upon termination
of employment, retirement, death, disability or plan termination. It is intended
that the 401(k) Plan operate in compliance with the provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and the
requirements of Section 401(a) of the Code. Total Company contributions to the
401(k) Plan for all employees for the fiscal year ended March 31, 1997, were
$7,213.
7
<PAGE>
Severance Agreements. The Bank has entered into severance agreements with Joanne
Miller, President and Chief Operating Officer, and four other employees. In
accordance with the agreements, the employees may be terminated by the Bank for
"just cause" as defined in the agreements. Joanne Miller's agreement contains a
provision stating that in the event of the termination of employment absent just
cause in connection with any change in control of the Bank, Ms. Miller will be
paid an amount equal to 2.99 times the five year average taxable compensation
and the costs associated with maintaining coverage under the Bank's medical and
dental insurance reimbursement plans for a period of one year thereafter. The
other severance agreements have provisions relating to severance payments equal
to 100% of current salary in the event of termination of employment following a
change in control. If payments as a result of a change in control, as defined in
the agreements, were to be made under all five agreements as of March 31, 1997,
such payments would equal up to approximately $377,000 in the aggregate. The
aggregate payments that would be made to such individuals would be an expense to
the Bank, thereby reducing net income of the Bank when and if paid.
Stock Option Plans
In connection with the Bank's Reorganization in 1993, the Bank's Board of
Directors adopted the 1993 Stock Option Plans (the "Option Plans"), which were
ratified by the Bank's stockholders in July 1994. In accordance with the Option
Plans, 39,224 shares are presently reserved for issuance by the Company upon
exercise of stock options to be granted to officers, directors and other key
employees of the Company from time to time under the Option Plans. The purpose
of the Option Plans is to attract and retain the best available personnel for
positions of substantial responsibility and to provide additional incentives to
certain officers, directors and key employees by facilitating their purchase of
a stock interest in the Company.
The Option Plans are administered by a committee of at least three
non-employee directors designated by the Board of Directors (the "Option
Committee"). Such members of the Option Committee shall be deemed
"disinterested" within the meaning of Rule 16b-3 pursuant to the Securities
Exchange Act of 1934. Directors Caruso, Becker and Durgin have been selected to
serve as the members of the Option Committee. The Option Committee, within its
business judgment, will select the officers and employees to whom options are to
be granted and the number of shares to be granted. Options will be granted based
upon several factors, including seniority, job position, job performance, the
Company's performance and a comparison of options given by other institutions.
No options were awarded during the fiscal year ended March 31, 1997.
8
<PAGE>
The following table sets forth for the fiscal year ended March 31, 1997,
the year end value of stock options held by William J. Woods, Chairman and Chief
Executive Officer, pursuant to the Company's 1993 Stock Option Plans.
OPTION EXERCISES AND YEAR END VALUE TABLE
Aggregated Option Exercises in Last Fiscal Year, and Fiscal Year End
("FY-End") Option Value
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercise Value of Unexercised
Options In-The-Money Options
at FY-End (#) at FY-End ($)(1)
----------------------- -------------------------
Shares Acquired
Name on Exercise (#) Value Realized($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
- ----- --------------- -------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
William J. Woods -- -- 8,929/0 $109,470/0
</TABLE>
- -----------------
(1) Market value of the underlying securities at fiscal year-end based upon
the last reported sale price on March 31, 1997 of $19.00 per share, minus
the average exercise price of $6.74 per share.
Indebtedness of Management and Transactions with Certain Related Parties
The Bank, like many financial institutions, has followed a policy of
granting various types of loans to officers, directors and employees. Currently,
all outstanding loans to executive officers and directors of the Company and the
Bank and members of their immediate family (A) were made in the ordinary course
of business, (B) were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons, and (C) did not involve more than the normal
risk of collectibility or present other unfavorable features. In addition, all
such loans are not disclosed as nonaccrual, past due, restructured or potential
problems. Furthermore, loans to an affiliate must be approved in advance by a
disinterested majority of the Board of Directors of the Bank or be within other
guidelines established as a result of applicable regulations. Loans to executive
officers and directors of the Company and the Bank, and their affiliates,
amounted to approximately $371,874, or 3.7% of the Bank's risk-based capital at
March 31, 1997.
- --------------------------------------------------------------------------------
PROPOSAL II -- RATIFICATION OF THE 1997 DIRECTORS STOCK OPTION PLAN
- --------------------------------------------------------------------------------
General
The Company's Board of Directors has adopted the 1997 Directors Stock
Option Plan (the "1997 Option Plan"). The 1997 Option Plan is subject to
ratification by the Company's stockholders. Pursuant to the 1997 Option Plan, up
to 23,000 shares of Common Stock equal to up to approximately 3.6% of the total
Common Stock outstanding as of the date of the Board's adoption (June 7, 1997)
(the "Effective Date"), are to be reserved under the Company's authorized but
unissued shares for issuance by the Company upon exercise of stock options
granted to directors from time to time. The purpose of the 1997 Option Plan is
to retain qualified personnel as directors to promote the success of the
Company's and the Bank's business. Under the 1997 Option Plan, awards may be
granted for a period of ten years from the Effective Date. The following summary
of the material features of the 1997 Option Plan is qualified in
9
<PAGE>
its entirety by reference to the complete provisions of the 1997 Option Plan
which is attached hereto as Exhibit A.
The 1997 Option Plan will be administered by the Board of Directors or a
committee of not less than two non-employee directors appointed by the Company's
Board of Directors and serving at the pleasure of the Board (the "Option
Committee"). The Option Committee may select the directors to whom options are
to be granted and the number of options to be granted based upon several factors
including prior and anticipated future job duties and responsibilities, job
performance, the Bank's financial performance and a comparison of awards given
by other institutions. A majority of the members of the Option 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 Option
Committee.
Directors who are designated by the Option Committee will be eligible to
receive, at no cost to them, options under the 1997 Option Plan (the
"Optionees"). Each option granted pursuant to the 1997 Option Plan shall be
evidenced by an instrument in such form as the Option Committee shall from time
to time approve. Options granted under the 1997 Option Plan will constitute
either Incentive Stock Options (options that afford favorable tax treatment to
recipients upon compliance with certain restrictions pursuant to Section 422 of
the Code and that do not normally result in tax deductions to the Company) or
Non-Incentive Stock Options (options that do not afford recipients favorable tax
treatment under Section 422 of the Code). Option shares may be paid for in cash,
shares of Common Stock, or a combination of both. The Company will receive no
monetary consideration for the granting of stock options under the 1997 Option
Plan. Further, the Company will receive no consideration other than the option
exercise price per share for Common Stock issued to Optionees upon the exercise
of those Options.
Shares issuable under the 1997 Option Plan may be from authorized but
unissued shares or shares purchased in the open market. An Option which expires,
becomes unexercisable, or is forfeited for any reason prior to its exercise will
again be available for issuance under the 1997 Option Plan. No Option or any
right or interest therein is assignable or transferable except by will or the
laws of descent and distribution. The 1997 Option Plan shall continue in effect
for a term of ten years from the Effective Date. Options awarded as of June 7,
1997 under the 1997 Option Plan shall be conditioned upon receipt of stockholder
ratification of the 1997 Option Plan.
Stock Options
The Option Committee may grant either Incentive Stock Options or
Non-Incentive Stock Options. In general, if an Optionee ceases to serve as an
employee of the Company for any reason other than disability or death, an
exercisable Incentive Stock Option may continue to be exercisable for three
months but in no event after the expiration date of the option, except as may
otherwise be determined by the Option Committee at the time of the award. In the
event of the disability or death of an 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 disability or death 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. The terms and conditions of
Non-Incentive Stock Options relating to the effect of an Optionee's termination
of employment or service, disability, or death shall be such terms as the Option
Committee, in its sole discretion, shall determine at the time of termination of
service, disability or death, unless specifically determined at the time of
grant of such options.
10
<PAGE>
The exercise price for the purchase of Common Stock subject to an Option
may not be less than one hundred percent (100%) of the Fair Market Value of the
Common Stock covered by the Option on the date of grant of such Option. For
purposes of determining the Fair Market Value of the Common Stock, the exercise
price per share of the Option shall be equal to the last reported sale price of
such Common Stock on the date of grant, or if no sales price is reported then
the mean between the last bid and ask price on such date, or, if there is no bid
and ask price on that date, then on the immediately prior business day on which
there was a reported sale or bid and ask price. If no reported price is
available, then the exercise price per share shall be determined in good faith
by the Option Committee. Actions of the Option Committee taken prior to the
commencement of trading of the Common Stock on a business day shall be based
upon information reported at the closing of the prior business day. The Option
Committee may impose additional conditions upon the right of an Optionee to
exercise any Option granted hereunder that are not inconsistent with the terms
of the 1997 Option Plan or the requirements for qualification as an Incentive
Stock Option, if such Option is intended to qualify as an Incentive Stock
Option.
No shares of Common Stock shall be issued upon the exercise of an Option
until full payment therefor has been received by the Company, and no Optionee
shall have any of the rights of a stockholder of the Company until shares of
Common Stock are issued to the Optionee, except to the extent that dividend
equivalent rights are awarded under the 1997 Option Plan. Upon the exercise of
an Option by an Optionee (or the Optionee's personal representative), the Option
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 and shall
not be made in the event that the transaction would result in liability to the
Optionee and the Company under the Exchange Act or regulations promulgated
thereunder.
The 1997 Option Plan provides that the Board of Directors of the Company
may authorize the Option Committee to direct the execution of an instrument
providing for the modification, extension, or renewal of any outstanding option,
provided that no such modification, extension, or renewal shall confer on the
Optionee any right or benefit that could not be conferred on the Optionee by the
grant of a new Option at such time, and shall not materially decrease the
Optionee's benefits under the Option without the Optionee's consent, except as
otherwise provided under the 1997 Option Plan.
Awards Under the 1997 Option Plan
The Board or the Option Committee shall from time to time determine the
employees, officers and directors who shall be granted Awards under the 1997
Option Plan, the number of Awards to be granted to any Participant under the
1997 Option Plan, and whether Awards granted to each Participant under the 1997
Option Plan shall be Incentive Stock Options and/or Non-Incentive Stock Options.
In selecting Participants and in determining the number of shares of Common
Stock subject to Options to be granted to each such Participant, the Board or
the Option Committee may consider the nature of the past and anticipated future
services rendered by each such Participant, each such Participant's current and
potential contribution to the Company and such other factors as may be deemed
relevant. Participants who have been granted an Award may, if otherwise
eligible, be granted additional Awards.
11
<PAGE>
Pursuant to the terms of the 1997 Option Plan, Non-Incentive Stock Options
to purchase 600 shares of Common Stock have been granted to each of four
non-employee Directors of the Company, as of the Effective Date, at an exercise
price equal to the Fair Market Value of the Common Stock on such date of grant
($19.50 per share). Options may be granted to newly appointed or elected
non-employee Directors within the sole discretion of the Option Committee, and
the exercise price shall be equal to the Fair Market Value of such Common Stock
on the date of grant. The Options granted to non-employee Directors on the
Effective Date will be immediately exercisable.
The table below presents information related to stock option awards
granted by the Plan Committee as of the date of Board adoption of the Plan on
June 7, 1997, subject to ratification of the Plan by stockholders.
NEW PLAN BENEFIT
1997 DIRECTORS STOCK OPTION PLAN
<TABLE>
<CAPTION>
Number of Options
Name and Position Dollar Value(1) to be Granted
- ------------------------------------------ --------------- ------------------
William J. Woods
<S> <C> <C>
Chief Executive Officer and Director (2) N/A 10,000(3)
Joanne Miller
Executive Vice President and Director N/A 10,000(3)
Harry Randall, Jr. (2)(4)............ N/A 600(5)
Executive Officer Director Group
(two persons)....................... N/A 20,000
Non-Employee Director Group
(four persons)..................... N/A 2,400
</TABLE>
- ----------------------
(1) The exercise price of Options is equal to the average of the last reported
bid and ask price on June 6, 1997, of $19.50 per share. As of the mailing
date, such Options have no ascertainable value. Such Options are
immediately exercisable upon stockholder ratification of the Plan.
(2) Nominee for director.
(3) Such Options shall constitute 5,128 Incentive Stock Options and 4,872
non-incentive stock options, and shall be exercisable for a period of ten
years from the June 7, 1997, Date of Grant. If such options are not
exercised within three months following termination of employment, all
such options shall be deemed non-incentive stock options and shall remain
exercisable for the remainder of the ten-year period.
(4) Mr. Randall is not an employee of the Company or the Bank.
(5) It is anticipated that such options shall be awarded to such individual as
of July 15, 1997, following stockholder election as director.
Effect of Mergers, Change of Control and Other Adjustments
Subject to any required action by the stockholders of the Company, within
the sole discretion of the Option Committee, the aggregate number of shares of
Common Stock for which Options may be granted hereunder or the number of shares
of Common Stock represented by each outstanding Option will be proportionately
adjusted for any increase or decrease in the number of issued and outstanding
shares of Common Stock resulting from a subdivision or consolidation of shares
or the payment of a stock dividend or any other increase or decrease in the
number of shares of Common Stock effected without the receipt or payment of
consideration by the Company. Subject to any required action by the
12
<PAGE>
stockholders of the Company, in the event of any change in control,
recapitalization, merger, consolidation, exchange of shares, spin-off,
reorganization, tender offer, partial or complete liquidation, or other
extraordinary corporate action or event, the Option Committee, in its sole
discretion, has the power, prior to or subsequent to the action or events, to
(i) appropriately adjust the number of shares of Common Stock subject to each
Option, the exercise price per share of each Option, and the consideration to be
given or received by the Company upon the exercise of any outstanding Options;
(ii) cancel any or all previously granted Options, provided that appropriate
consideration is paid to the Optionee in connection therewith; and/or (iii) make
such other adjustments in connection with the 1997 Option Plan as the Option
Committee, in its sole discretion, deems necessary, desirable, appropriate, or
advisable. However, no action may be taken by the Option Committee that would
cause Incentive Stock Options granted pursuant to the 1997 Option Plan to fail
to meet the requirements of Section 422 of the Code without the consent of the
Optionee. Upon the payment of a special or non-recurring cash dividend that has
the effect of a return of capital to the stockholders, if any, the Option
exercise price per share will be adjusted proportionately.
The Option Committee will at all times have the power to accelerate the
exercise date of all Options granted under the 1997 Option Plan. In the case of
a Change in Control of the Company as determined by the Option Committee, all
outstanding options shall become immediately exercisable. A change in control is
defined to include (i) the sale of all, or a material portion, of the assets of
the Company; (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 or its
regulations; or (iv) the acquisition, directly or indirectly, of the beneficial
ownership (within the meaning of Section 13(d) of the Exchange Act and rules and
regulations promulgated thereunder) of 25% or more of the outstanding voting
securities of the Company by any person, trust, entity, or group. This
limitation does not apply to the purchase of shares by underwriters in
connection with a pubic offering of Company stock or the purchase of shares of
up to 25% of any class of securities of the Company by a tax-qualified employee
stock benefit plan.
In the event of a Change in Control, the Option Committee and the Board of
Directors will take one or more of the following actions to be effective as of
the date of the Change in Control: (i) provide that Options will be assumed, or
equivalent options will be substituted, ("Substitute Options") by the acquiring
or succeeding corporation (or an affiliate thereof), provided that: (A) any
Substitute Options exchanged for Incentive Stock Options must meet the
requirements of Section 424(a) of the Code, and (B) the shares of stock issuable
upon the exercise of Substitute Options constitute securities registered in
accordance with the Securities Act of 1933, as amended, (the "Securities Act")
or such securities shall be exempt from such registration in accordance with
Sections 3(a)(2) or 3(a)(5) of the Securities Act, (collectively, "Registered
Securities"), or in the alternative, if the securities issuable upon the
exercise of Substitute Options do not constitute Registered Securities, then the
Optionee will receive upon consummation of the Change in Control transaction a
cash payment for each Option surrendered equal to the difference between (1) the
Fair Market Value of the consideration to be received for each share of Common
Stock in the Change in Control transaction times the number of shares of Common
Stock subject to the surrendered Options, and (2) the aggregate exercise price
of all surrendered Options, or (ii) in the event of a transaction under the
terms of which the holders of the Common Stock of the Company will receive upon
consummation thereof a cash payment (the "Merger Price") for each share of
Common Stock exchanged in the Change in Control transaction, to make or to
provide for a cash payment to the Optionees equal to the difference between (A)
the Merger Price times the number of shares of Common Stock subject to the
Options held by each Optionee (to the extent then exercisable at prices not in
excess of the Merger Price) and (B) the aggregate exercise price of all
surrendered Options in exchange for surrendered Options.
13
<PAGE>
The power of the Option Committee to accelerate the exercise of Options
and the immediate exercisability of Options in the case of a Change in Control
of the Company 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 Option
Committee to make adjustments in connection with the 1997 Option 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
Option Committee to adapt the 1997 Option Plan to operate in changed
circumstances, to adjust the 1997 Option Plan to fit a smaller or larger
company, and to permit the issuance of Options to new management following an
extraordinary corporate action. However, this power of the Option Committee may
also have an anti-takeover effect, by allowing the Option Committee to adjust
the 1997 Option 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 1997 Option Plan may have an anti-takeover effect, the Board
of Directors did not adopt the 1997 Option Plan specifically for anti-takeover
purposes. The 1997 Option Plan could render it more difficult to obtain support
for stockholder proposals opposed by the 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 Options could
make it easier for the Board and management to block the approval of certain
transactions requiring the voting approval of 80% of the Common Stock in
accordance with the Certificate of Incorporation. In addition, the exercise of
Options could increase the cost of an acquisition by a potential acquiror.
Amendment and Termination of the 1997 Option Plan
The Board of Directors may alter, suspend, or discontinue the 1997 Option
Plan, except that no action of the Board shall increase the maximum number of
shares of Common Stock issuable under the 1997 Option Plan, materially increase
the benefits accruing to Optionees under the 1997 Option Plan or materially
modify the requirements for eligibility for participation in the 1997 Option
Plan unless such action of the Board is subject to ratification by the
stockholders of the Company.
Potential Dilutive Effects of the 1997 Option Plan
The Common Stock to be issued upon the exercise of Options awarded under
the 1997 Option 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
1997 Option Plan, in whole or in part, with authorized but unissued shares, the
interests of current stockholders will be diluted. If upon the exercise of all
of the Options, the Company delivers newly issued shares of Common Stock (i.e.,
23,000 shares of Common Stock), then the effect to current stockholders would be
to dilute their current ownership percentages by approximately 3.4%. Such
dilution does not consider the effects of the other stock option plans in
effect.
14
<PAGE>
Federal Income Tax Consequences
Under present federal tax laws, awards under the 1997 Option Plan will
have the following consequences:
1. The grant of an Option will not by itself result in the recognition
of taxable income to an Optionee nor entitle the Company to a tax
deduction at the time of such grant.
2. The exercise of an Option which is an "Incentive Stock Option"
within the meaning of Section 422 of the Code generally will not, by
itself, result in the recognition of taxable income to an Optionee
nor entitle the Company to a deduction at the time of such exercise.
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. An Optionee
will recognize capital gain or loss upon resale of the shares of
Common Stock received pursuant to the exercise of Incentive Stock
Options, provided that such shares are held for at least one year
after transfer of the shares or two years after the grant of the
Option, whichever is later. Generally, if the shares are not held
for that period, the Optionee will recognize ordinary income upon
disposition in an amount equal to the difference between the Option
exercise price and the Fair Market Value of the Common Stock on the
date of exercise, or, if less, the sales proceeds of the shares
acquired pursuant to the Option.
3. The exercise of a Non-Incentive Stock Option will result in the
recognition of ordinary income by the Optionee on the date of
exercise in an amount equal to the difference between the exercise
price and the Fair Market Value of the Common Stock acquired
pursuant to the Option.
4. The Company will be allowed a tax deduction for federal tax purposes
equal to the amount of ordinary income recognized by an Optionee at
the time the Optionee recognizes such ordinary income.
Accounting Treatment
The Company expects to use the "intrinsic value based method" as
prescribed by APB Opinion 25. Accordingly, neither the grant nor the exercise of
an Option under the Option Plan currently requires any charge against earnings
under generally accepted accounting principles. In certain circumstances, Common
Stock issuable pursuant to outstanding Options which are exercisable under the
Option Plan might be considered outstanding for purposes of calculating primary
earnings per share and earnings per share on a fully diluted basis.
Stockholder Ratification
Stockholder ratification of the 1997 Option Plan is being sought to
qualify the 1997 Option Plan for the granting of Incentive Stock Options in
accordance with the Code, to enable Optionees to qualify for certain exemptive
treatment from the short-swing profit recapture provisions of Section 16(b) of
the Exchange Act, and to meet the requirements for the tax-deductibility of
certain compensation items under Section 162(m) of the Code. An affirmative vote
of a majority of the votes present, in person or by proxy, and entitled to vote
on the matter at the Meeting, is required to constitute stockholder ratification
of this proposal.
15
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE 1997
DIRECTORS STOCK OPTION PLAN.
- --------------------------------------------------------------------------------
PROPOSAL III -- RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
At the Meeting, stockholders will consider and vote upon the appointment
of independent auditors for the Company's fiscal year to end March 31, 1998. RD
Hunter & Company LLP was the Company's independent certified public accountant
for the fiscal year ended March 31, 1997. The Board of Directors has approved to
renew the Company's arrangements with RD Hunter & Company LLP to be its auditors
for the fiscal year ending March 31, 1998, subject to ratification by the
Company's stockholders. A representative of RD Hunter & Company LLP is expected
to be present at the Meeting to respond to stockholders' questions and will have
the opportunity to make a statement, if so desired.
The appointment of the Company's auditors must be approved by a majority
of the votes cast by the stockholders of the Company at the Meeting. The Board
of Directors recommends that stockholders vote "FOR" the approval of the
appointment of RD Hunter & Company LLP as the Company's auditors.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement,
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting the proxies.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of solicitation of 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 may solicit proxies
personally or by telegraph or telephone without receiving additional
compensation.
The Company's 1997 Annual Report to Stockholders, including financial
statements, has been mailed to all persons who were listed as stockholders of
record as of the close of business on May 28, 1997. Any stockholder who has not
received a copy of such Annual Report may obtain a copy by writing the Company.
Such Annual Report is not to be treated as a part of the proxy solicitation
material or as having been incorporated herein by reference.
16
<PAGE>
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy materials for
the 1998 Annual Meeting of Stockholders, any stockholder proposal to take action
at such meeting must be received at the Company's main office at 700-88
Broadway, Westwood, New Jersey 07675, no later than February 9, 1998. Any such
proposals shall be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934, as amended.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Joanne Miller
JOANNE MILLER
SECRETARY
Westwood, New Jersey
June 9, 1997
- --------------------------------------------------------------------------------
ANNUAL REPORT ON FORM 10-KSB
- --------------------------------------------------------------------------------
A COPY OF THE ANNUAL REPORT ON FORM 10-KSB AS FILED WITH THE SEC WILL BE
FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN
REQUEST TO THE SECRETARY, WESTWOOD FINANCIAL CORPORATION, 700- 88 BROADWAY,
WESTWOOD, NEW JERSEY 07675.
- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
WESTWOOD FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
JULY 15, 1997
- --------------------------------------------------------------------------------
The undersigned hereby appoints the official proxy committee of the Board
of Directors of the Company 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 Annual Meeting of
Stockholders, to be held at Westwood's office at 700-88 Broadway, Westwood, New
Jersey, on Tuesday, July 15, 1997, at 4:00 p.m. and at any and all adjournments
thereof, as follows:
1. The election as director of all nominees FOR WITHHELD
listed below for the terms listed (except
as marked to the contrary below). |_| |_|
William J. Woods
Harry Randal, Jr.
INSTRUCTIONS: To withhold your vote for any individual nominee(s),
write the nominee's name on the line below.
------------------------
<TABLE>
<CAPTION>
<C> <C> <C> <C>
2. The ratification of the 1997 Stock FOR AGAINST ABSTAIN
Option Plan --- ------- -------
|_| |_| |_|
3. The ratification of the appointment of Rd FOR AGAINST ABSTAIN
Hunter & Company LLP as auditor for --- ------- -------
the Company for the fiscal year ending |_| |_| |_|
March 31, 1998.
</TABLE>
The Board of Directors recommends a vote "FOR" all of the listed
propositions.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
SIGNED PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING. THIS PROXY
ALSO CONFERS DISCRETIONARY AUTHORITY ON THE OFFICIAL PROXY COMMITTEE TO VOTE
WITH RESPECT TO THE ELECTION OF ANY PERSON AS DIRECTOR WHERE THE NOMINEE IS
UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE, AND MATTERS INCIDENT TO THE
CONDUCT OF THE 1997 ANNUAL MEETING.
- --------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elects to vote at the Annual
Meeting, or at any adjournment thereof, and after notification to the Secretary
of the Company at the Meeting of the stockholder'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 acknowledges receipt from the Company prior to the
execution of this proxy of notice of the Meeting, a proxy statement dated June
9, 1997, and the 1997 Annual Report to Stockholders.
Dated: , 1997 |_| Please check here if you plan to attend
--------------- the Meeting.
- ---------------------------------- -------------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ---------------------------------- -------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the enclosed card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE>
Exhibit A
WESTWOOD FINANCIAL CORPORATION
1997 DIRECTORS STOCK OPTION PLAN
1. Purpose of the Plan. The Plan shall be known as the Westwood Financial
Corporation ("Company") 1997 Directors Stock Option Plan (the "Plan"). The
purpose of the Plan is to retain qualified personnel as directors providing
services to the Company, or any present or future parent or subsidiary of the
Company to promote the success of the business. The Plan is intended to provide
for the grant of "Incentive Stock Options," within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code") and Non-Incentive
Stock Options, options that do not so qualify. The provisions of the Plan
relating to Incentive Stock Options shall be interpreted to conform to the
requirements of Section 422 of the Code.
2. Definitions. The following words and phrases when used in this Plan
with an initial capital letter, unless the context clearly indicates otherwise,
shall have the meaning as set forth below. Wherever appropriate, the masculine
pronoun shall include the feminine pronoun and the singular shall include the
plural.
(a) "Award" means the grant by the Committee of an Incentive Stock
Option or a Non-Incentive Stock Option, or any combination thereof, as provided
in the Plan.
(b) "Board" shall mean the Board of Directors of the Company, or any
successor or parent corporation thereto.
(c) "Change in Control" shall mean: (i) the sale of all, or a
material portion, of the assets of the Company; (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 ("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-five percent (25%) 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, or the purchase of shares of up to 25% of any
class of securities of the Company by a tax-qualified employee stock benefit
plan. 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 decision of the Committee as to whether a Change in Control has
occurred shall be conclusive and binding.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and regulations promulgated thereunder.
(e) "Committee" shall mean the Board or the Stock Option Committee
appointed by the Board in accordance with Section 5(a) of the Plan.
A-1
<PAGE>
(f) "Common Stock" shall mean the common stock of the Company, or
any successor or parent corporation thereto.
(g) "Continuous Employment" or "Continuous Status as an Employee"
shall mean the absence of any interruption or termination of employment with the
Company or any present or future Parent or Subsidiary of the Company. Employment
shall not be considered interrupted in the case of sick leave, military leave or
any other leave of absence approved by the Company or in the case of transfers
between payroll locations, of the Company or between the Company, its Parent,
its Subsidiaries or a successor.
(h) "Company" shall mean the Westwood Financial Corporation, the
parent corporation of the Savings Bank, or any successor or Parent thereof.
(i) "Director" shall mean a member of the Board of the Company, or
any successor or parent corporation thereto.
(j) "Director Emeritus" shall mean 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 Savings Bank or the Company
from time to time.
(k) "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 Non-Incentive Stock
Options, any physical or mental impairment which renders the Participant
incapable of continuing in the employment or service of the Savings Bank or the
Parent in his then current capacity as determined by the Committee.
(l) "Effective Date" shall mean the date specified in Section 14
hereof.
(m) "Employee" shall mean any person employed by the Company or any
present or future Parent or Subsidiary of the Company who is also serving as a
Director at the time of the grant of an Award.
(n) "Fair Market Value" shall mean: (i) if the Common Stock is
traded otherwise than on a national securities exchange, then the Fair Market
Value per Share shall be equal to the mean between the last bid and ask price of
such Common Stock on such date or, if there is no bid and ask price on said
date, then on the immediately prior business day on which there was a bid and
ask price. If no such bid and ask price is available, then the Fair Market Value
shall be determined by the Committee in good faith; or (ii) if the Common Stock
is listed on a national securities exchange, then the Fair Market Value per
Share shall be not less than the average of the highest and lowest selling price
of such Common Stock on such exchange on such date, or if there were no sales on
said date, then the Fair Market Value shall be not less than the mean between
the last bid and ask price on such date.
(o) "Incentive Stock Option" or "ISO" shall mean an option to
purchase Shares granted by the Committee pursuant to Section 8 hereof which is
subject to the limitations and restrictions of Section 8 hereof and is intended
to qualify as an incentive stock option under Section 422 of the Code.
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(p) "Non-Incentive Stock Option" or "Non-ISO" shall mean an option
to purchase Shares granted pursuant to Section 9 hereof, which option is not
intended to qualify under Section 422 of the Code.
(q) "Option" shall mean an Incentive Stock Option or Non-Incentive
Stock Option granted pursuant to this Plan providing the holder of such Option
with the right to purchase Common Stock.
(r) "Optioned Stock" shall mean stock subject to an Option granted
pursuant to the Plan.
(s) "Optionee" shall mean any person who receives an Option or Award
pursuant to the Plan.
(t) "Parent" shall mean any present or future corporation which
would be a "parent corporation" as defined in Sections 424(e) and (g) of the
Code.
(u) "Participant" means any Director of the Company or any Parent or
Subsidiary of the Company or any other person providing a service to the Company
who is selected by the Committee to receive an Award, or who by the express
terms of the Plan is granted an Award.
(v) "Plan" shall mean the Westwood Financial Corporation 1997
Directors Stock Option Plan.
(w) "Savings Bank" shall mean Westwood Savings Bank, Westwood, New
Jersey, or any successor corporation thereto.
(x) "Share" shall mean one share of the Common Stock.
(y) "Subsidiary" shall mean any present or future corporation which
constitutes a "subsidiary corporation" as defined in Sections 424(f) and (g) of
the Code.
3. Shares Subject to the Plan. Except as otherwise required by the
provisions of Section 12 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed *23,000 Shares.
Such Shares may either be from authorized but unissued shares or shares
purchased in the market for Plan purposes.
If an Award shall expire, become unexercisable, or be forfeited for any
reason prior to its exercise, new Awards may be granted under the Plan with
respect to the number of Shares as to which such expiration has occurred.
4. Six Month Holding Period.
Subject to vesting requirements, if applicable, except in the event
of death or disability of the Optionee, or a change in control of the Company, a
minimum of six months must elapse between
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* 3.6% of shares outstanding as of date of Board adoption.
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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.
5. Administration of the Plan.
(a) Composition of the Committee. The Plan shall be administered by
the Board of Directors of the Company or a Committee which shall consist of not
less than two Directors of the Company appointed by the Board and serving at the
pleasure of the Board. All persons designated as members of the Committee shall
meet the requirements of a "Non-Employee Director" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934, as amended, as found at 17 CFR
ss.240.16b-3.
(b) Powers of the Committee. The Committee is authorized (but only
to the extent not contrary to the express provisions of the Plan or to
resolutions adopted by the Board) to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine the form and
content of Awards to be issued under the Plan and to make other determinations
necessary or advisable for the administration of the Plan, and shall have and
may exercise such other power and authority as may be delegated to it by the
Board from time to time. 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.
The President of the Company and such other officers as shall be
designated by the Committee are hereby authorized to execute written agreements
evidencing Awards on behalf of the Company and to cause them to be delivered to
the Participants. Such agreements shall set forth the Option exercise price, the
number of shares of Common Stock subject to such Option, the expiration date of
such Options, and such other terms and restrictions applicable to such Award as
are determined in accordance with the Plan or the actions of the Committee.
(c) Effect of Committee's Decision. All decisions, determinations
and interpretations of the Committee shall be final and conclusive on all
persons affected thereby.
6. Eligibility for Awards and Limitations.
(a) The Committee shall from time to time determine the
Directors who shall be granted Awards under the Plan, the number of Awards to be
granted to each such persons, and whether Awards granted to each such
Participant under the Plan shall be Incentive and/or Non-Incentive Stock
Options. In selecting Participants and in determining the number of Shares of
Common Stock to be granted to each such Participant, the Committee may consider
the nature of the prior and anticipated future services rendered by each such
Participant, each such Participant's current and potential contribution to the
Company and such other factors as the Committee may, in its sole discretion,
deem relevant. Participants who have been granted an Award may, if otherwise
eligible, be granted additional Awards.
(b) The aggregate Fair Market Value (determined as of the date
the Option is granted) of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by each Employee during any calendar
year (under all Incentive Stock Option plans, as defined in Section 422 of the
Code, of the Company or any present or future Parent or Subsidiary of the
Company) shall
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not exceed $100,000. Notwithstanding the prior provisions of this Section 6, the
Committee may grant Options in excess of the foregoing limitations, provided
said Options shall be clearly and specifically designated as not being Incentive
Stock Options.
(c) In no event shall Shares subject to Options granted to
non-employee Directors in the aggregate under this Plan exceed more than 15% of
the total number of Shares authorized for delivery under this Plan pursuant to
Section 3 herein or more than 5% to any individual non-employee Director. In no
event shall Shares subject to Options granted to any Employee exceed more than
45% of the total number of Shares authorized for delivery under the Plan.
7. Term of the Plan. The Plan shall continue in effect for a term of ten
(10) years from the Effective Date, unless sooner terminated pursuant to Section
17 hereof. No Option shall be granted under the Plan after ten (10) years from
the Effective Date.
8. Terms and Conditions of Incentive Stock Options. Incentive Stock
Options may be granted only to Participants who are Employees. Each Incentive
Stock Option granted pursuant to the Plan shall be evidenced by an instrument in
such form as the Committee shall from time to time approve. Each Incentive Stock
Option granted pursuant to the Plan shall comply with, and be subject to, the
following terms and conditions:
(a) Option Price.
(i) The price per Share at which each Incentive Stock Option
granted by the Committee under the Plan may be exercised shall not, as to any
particular Incentive Stock Option, be less than the Fair Market Value of the
Common Stock on the date that such Incentive Stock Option is granted.
(ii) In the case of an Employee who owns Common Stock
representing more than ten percent (10%) of the outstanding Common Stock at the
time the Incentive Stock Option is granted, the Incentive Stock Option 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 that the Incentive Stock Option is
granted.
(b) Payment. Full payment for each Share of Common Stock purchased
upon the exercise of any Incentive Stock Option granted under the Plan shall be
made at the time of exercise of each such Incentive Stock Option and shall be
paid in cash (in United States Dollars), Common Stock or a combination of cash
and Common Stock. Common Stock utilized in full or partial payment of the
exercise price shall be valued at the Fair Market Value at the date of exercise.
The Company shall accept full or partial payment in Common Stock only to the
extent permitted by applicable law. No Shares of Common Stock shall be issued
until full payment has been received by the Company, and no Optionee shall have
any of the rights of a stockholder of the Company until Shares of Common Stock
are issued to the Optionee.
(c) Term of Incentive Stock Option. The term of exercisability of
each Incentive Stock Option granted pursuant to the Plan shall be not more than
ten (10) years from the date each such Incentive Stock Option is granted,
provided that in the case of an Employee who owns stock representing more than
ten percent (10%) of the Common Stock outstanding at the time the Incentive
Stock Option is granted, the term of exercisability of the Incentive Stock
Option shall not exceed five (5) years.
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(d) Exercise Generally. Except as otherwise provided in Section 10
hereof, no Incentive Stock Option may be exercised unless the Optionee shall
have been in the employ of the Company at all times during the period beginning
with the date of grant of any such Incentive Stock Option and ending on the date
three (3) months prior to the date of exercise of any such Incentive Stock
Option. The Committee may impose additional conditions upon the right of an
Optionee to exercise any Incentive Stock Option granted hereunder which are not
inconsistent with the terms of the Plan or the requirements for qualification as
an Incentive Stock Option.
(e) Cashless Exercise. Subject to vesting requirements, if
applicable, an Optionee who has held an Incentive Stock Option for at least six
months may engage in the "cashless exercise" of the Option. Upon a cashless
exercise, an Optionee shall give the Company written notice of the exercise of
the Option together with an order to a registered broker-dealer or equivalent
third party, to sell part or all of the Optioned Stock and to deliver enough of
the proceeds to the Company to pay the Option exercise price and any applicable
withholding taxes. If the Optionee does not sell the Optioned Stock through a
registered broker-dealer or equivalent third party, the Optionee can give the
Company written notice of the exercise of the Option and the third party
purchaser of the Optioned Stock shall pay the Option exercise price plus any
applicable withholding taxes to the Company.
(f) Transferability. An Incentive Stock Option granted pursuant to
the Plan shall be exercised during an Optionee's lifetime only by the Optionee
to whom it was granted and shall not be assignable or transferable otherwise
than by will or by the laws of descent and distribution.
9. Terms and Conditions of Non-Incentive Stock Options. Each
Non-Incentive Stock Option granted pursuant to the Plan shall be evidenced by an
instrument in such form as the Committee shall from time to time approve. Each
Non-Incentive Stock Option granted pursuant to the Plan shall comply with and be
subject to the following terms and conditions.
(a) Options Granted to Directors. Subject to the limitations of
Section 6(c), Non- Incentive Stock Options to purchase 600 shares of Common
Stock will be granted to each Director who is not an Employee as of the
Effective Date, at an exercise price equal to the Fair Market Value of the
Common Stock on such date of grant ($19.50 per share). The Options shall be
immediately exercisable on the Effective Date, subject to stockholder
ratification of the Plan. 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 Director as a Director or Director Emeritus. In the event of
the Optionee's death, such Options may be exercised by 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 non-employee 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
Directors hereunder shall be subject to all other provisions of this Plan.
(b) Option Price. The exercise price per Share of Common Stock for
each Non-Incentive Stock Option granted pursuant to the Plan shall be at such
price as the Committee may determine in its sole discretion, but in no event
less than the Fair Market Value of such Common Stock on the date of grant as
determined by the Committee in good faith.
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(c) Payment. Full payment for each Share of Common Stock purchased
upon the exercise of any Non-Incentive Stock Option granted under the Plan shall
be made at the time of exercise of each such Non-Incentive Stock Option and
shall be paid in cash (in United States Dollars), Common Stock or a combination
of cash and Common Stock. Common Stock utilized in full or partial payment of
the exercise price shall be valued at its Fair Market Value at the date of
exercise. The Company shall accept full or partial payment in Common Stock only
to the extent permitted by applicable law. No Shares of Common Stock shall be
issued until full payment has been received by the Company and no Optionee shall
have any of the rights of a stockholder of the Company until the Shares of
Common Stock are issued to the Optionee.
(d) Term. The term of exercisability of each Non-Incentive Stock
Option granted pursuant to the Plan shall be not more than ten (10) years from
the date each such Non-Incentive Stock Option is granted.
(e) Exercise Generally. The Committee may impose additional
conditions upon the right of any Participant to exercise any Non-Incentive Stock
Option granted hereunder which is not inconsistent with the terms of the Plan.
(f) Cashless Exercise. Subject to vesting requirements, if
applicable, an Optionee who has held a Non-Incentive Stock Option for at least
six months may engage in the "cashless exercise" of the Option. Upon a cashless
exercise, an Optionee shall give the Company written notice of the exercise of
the Option together with an order to a registered broker-dealer or equivalent
third party, to sell part or all of the Optioned Stock and to deliver enough of
the proceeds to the Company to pay the Option exercise price and any applicable
withholding taxes. If the Optionee does not sell the Optioned Stock through a
registered broker-dealer or equivalent third party, the Optionee can give the
Company written notice of the exercise of the Option and the third party
purchaser of the Optioned Stock shall pay the Option exercise price plus any
applicable withholding taxes to the Company.
(g) Transferability. Any Non-Incentive Stock Option granted pursuant
to the Plan shall be exercised during an Optionee's lifetime only by the
Optionee to whom it was granted and shall not be assignable or transferable
otherwise than by will or by the laws of descent and distribution.
10. Effect of Termination of Employment, Disability or Death on
Incentive Stock Options.
(a) Termination of Employment. In the event that any Optionee's
employment with the Company shall terminate for any reason, other than
Disability or death, all of any such Optionee's Incentive Stock Options, and all
of any such Optionee's rights to purchase or receive Shares of Common Stock
pursuant thereto, shall automatically terminate on (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 Optionee's
continuing status as a Director or Director Emeritus of the Savings Bank or the
Company, but only if, and to the extent that, the Optionee 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-Incentive Stock Option. In the event that a Subsidiary ceases to be a
Subsidiary of the Company, the employment of all of its employees who are not
immediately thereafter employees of the Company shall be deemed to terminate
upon the date such Subsidiary so ceases to be a Subsidiary of the Company.
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(b) Disability. In the event that any Optionee's employment with the
Company shall terminate as the result of the Disability of such Optionee, such
Optionee may exercise any Incentive Stock Options granted to the Optionee
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 Optionee 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 an Optionee, any Incentive
Stock Options granted to such Optionee may be exercised by the person or persons
to whom the Optionee's rights under any such Incentive Stock Options pass by
will or by the laws of descent and distribution (including the Optionee'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 Optionee but only if, and
to the extent that, the Optionee was entitled to exercise any such Incentive
Stock Options at the date of death. For purposes of this Section 10(c), any
Incentive Stock Option held by an Optionee 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 Optionee may receive Shares or cash or a
combination thereof. If cash shall be paid in lieu of Shares, 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.
(d) Incentive Stock Options Deemed Exercisable. For purposes of
Sections 10(a), 10(b) and 10(c) above, any Incentive Stock Option held by any
Optionee shall be considered exercisable at the date of termination of
employment if any such Incentive Stock Option would have been exercisable at
such date of termination of employment without regard to the Disability or death
of the Participant.
(e) Termination of Incentive Stock Options. Except as may be
specified by the Committee at the time of grant of an Option, to the extent that
any Incentive Stock Option granted under the Plan to any Optionee whose
employment with the Company terminates shall not have been exercised within the
applicable period set forth in this Section 10, any such Incentive Stock Option,
and all rights to purchase or receive Shares of Common Stock pursuant thereto,
as the case may be, shall terminate on the last day of the applicable period.
11. Effect of Termination of Employment, Disability or Death on
Non-Incentive Stock Options. The terms and conditions of Non-Incentive Stock
Options relating to the effect of the termination of an Optionee's employment or
service, Disability of an Optionee or his death shall be such terms and
conditions as the Committee shall, in its sole discretion, determine at the time
of termination of service, unless specifically provided for by the terms of the
Agreement at the time of grant of the Award.
12. Recapitalization, Merger, Consolidation, Change in Control and Other
Transactions.
(a) Adjustment. Subject to any required action by the stockholders
of the Company, within the sole discretion of the Committee, the aggregate
number of Shares of Common Stock for which Options may be granted hereunder, the
number of Shares of Common Stock covered by each outstanding Option, and the
exercise price per Share of Common Stock of each such Option, shall all be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding Shares of
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Common Stock resulting from a subdivision or consolidation of Shares (whether by
reason of merger, consolidation, recapitalization, reclassification, split-up,
combination of shares, or otherwise) or the payment of a stock dividend (but
only on the Common Stock) or any other increase or decrease in the number of
such Shares of Common Stock effected without the receipt or payment of
consideration by the Company (other than Shares held by dissenting
stockholders).
(b) Change in Control. All outstanding Awards shall become
immediately exercisable in the event of a Change in Control of the Company, as
determined by the Committee. In the event of such a Change in Control, the
Committee and the Board of Directors will take one or more of the following
actions to be effective as of the date of such Change in Control:
(i) provide that such Options shall be assumed, or equivalent
options shall be substituted, ("Substitute Options") by the acquiring or
succeeding corporation (or an affiliate thereof), provided that: (A) any such
Substitute Options exchanged for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, and (B) the shares of stock issuable
upon the exercise of such Substitute Options shall constitute securities
registered in accordance with the Securities Act of 1933, as amended, ("1933
Act") or such securities shall be exempt from such registration in accordance
with Sections 3(a)(2) or 3(a)(5) of the 1933 Act, (collectively, "Registered
Securities"), or in the alternative, if the securities issuable upon the
exercise of such Substitute Options shall not constitute Registered Securities,
then the Optionee will receive upon consummation of the Change in Control
transaction a cash payment for each Option surrendered equal to the difference
between (1) the Fair Market Value of the consideration to be received for each
share of Common Stock in the Change in Control transaction times the number of
shares of Common Stock subject to such surrendered Options, and (2) the
aggregate exercise price of all such surrendered Options, or
(ii) in the event of a transaction under the terms of which the
holders of the Common Stock of the Company will receive upon consummation
thereof a cash payment (the "Merger Price") for each share of Common Stock
exchanged in the Change in Control transaction, to make or to provide for a cash
payment to the Optionees equal to the difference between (A) the Merger Price
times the number of shares of Common Stock subject to such Options held by each
Optionee (to the extent then exercisable at prices not in excess of the Merger
Price) and (B) the aggregate exercise price of all such surrendered Options in
exchange for such surrendered Options.
(c) Extraordinary Corporate Action. Notwithstanding any provisions
of the Plan to the contrary, subject to any required action by the stockholders
of the Company, in the event of any Change in Control, recapitalization, merger,
consolidation, exchange of Shares, spin-off, reorganization, tender offer,
partial or complete liquidation or other extraordinary corporate action or
event, the Committee, in its sole discretion, shall have the power, prior or
subsequent to such action or event to:
(i) appropriately adjust the number of Shares of Common Stock
subject to each Option, the Option exercise price per Share of Common Stock, and
the consideration to be given or received by the Company upon the exercise of
any outstanding Option;
(ii) cancel any or all previously granted Options, provided
that appropriate consideration is paid to the Optionee in connection therewith;
and/or
(iii) make such other adjustments in connection with the Plan
as the Committee, in its sole discretion, deems necessary, desirable,
appropriate or advisable; provided,
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however, that no action shall be taken by the Committee which would cause
Incentive Stock Options granted pursuant to the Plan to fail to meet the
requirements of Section 422 of the Code without the consent of the Optionee.
(d) Acceleration. The Committee shall at all times have the power to
accelerate the exercise date of Options previously granted under the Plan.
(e) Non-recurring Dividends. Upon the payment of a special or
non-recurring cash dividend that has the effect of a return of capital to the
stockholders, the Option exercise price per share shall be adjusted
proportionately.
Except as expressly provided in Sections 12(a), 12(b) and 12(e) hereof, no
Optionee shall have any rights by reason of the occurrence of any of the events
described in this Section 12.
13. Time of Granting Options. The date of grant of an Option under the
Plan shall, for all purposes, be the date on which the Committee makes the
determination of granting such Option. Notice of the grant of an Option shall be
given to each individual to whom an Option is so granted within a reasonable
time after the date of such grant in a form determined by the Committee.
14. Effective Date. The Plan shall become effective upon the date of
approval of the Plan by the Company.
15. Ratification by Stockholders. The Plan shall be ratified by
stockholders of the Company within twelve (12) months before or after the date
the Plan is approved by the Board.
16. Modification of Options. At any time and from time to time, the Board
may authorize the Committee to direct the execution of an instrument providing
for the modification of any outstanding Option, provided no such modification,
extension or renewal shall confer on the holder of said Option any right or
benefit which could not be conferred on the Optionee by the grant of a new
Option at such time, or shall not materially decrease the Optionee's benefits
under the Option without the consent of the holder of the Option, except as
otherwise permitted under Section 17 hereof.
17. Amendment and Termination of the Plan.
(a) Action by the Board. The Board may alter, suspend or discontinue
the Plan, except that no action of the Board may increase (other than as
provided in Section 12 hereof) the maximum number of Shares permitted to be
optioned under the Plan, materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements for
eligibility for participation in the Plan unless such action of the Board shall
be subject to ratification by the stockholders of the Company.
(b) Change in Applicable Law. Notwithstanding any other provision
contained in the Plan, in the event of a change in any federal or state law,
rule or regulation which would make the exercise of all or part of any
previously granted Option unlawful or subject the Company to any penalty, the
Committee may restrict any such exercise without the consent of the Optionee or
other holder thereof in order to comply with any such law, rule or regulation or
to avoid any such penalty.
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18. Conditions Upon Issuance of Shares; Limitations on Option Exercise;
Cancellation of Option Rights.
(a) Shares shall not be issued with respect to any Option 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.
(b) 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 issuable hereunder shall relieve the Company of any liability with
respect to the non-issuance or sale of such Shares.
(c) As a condition to the exercise of an Option, the Company may require
the person exercising the Option 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.
(d) Notwithstanding anything herein to the contrary, upon the termination
of employment or service of an Optionee by the Company or its Subsidiaries for
"cause" as determined by the Board of Directors, all Options held by such
Participant shall cease to be exercisable as of the date of such termination of
employment or service.
(e) 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 or the
Company under Section 16(b) of the Securities Exchange Act of 1934, as amended,
and regulations promulgated thereunder.
19. Reservation of Shares. During the term of the Plan, the Company will
reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
20. Unsecured Obligation. No Participant under the Plan shall have any
interest in any fund or special asset of the Company by reason of the Plan or
the grant of any Option under the Plan. No trust fund shall be created in
connection with the Plan or any grant of any Option hereunder and there shall be
no required funding of amounts which may become payable to any Participant.
21. Withholding Tax. The Company shall have the right to deduct from all
amounts paid in cash with respect to the cashless exercise of Options under the
Plan any taxes required by law to be withheld with respect to such cash
payments. Where a Participant or other person is entitled to receive Shares
pursuant to the exercise of an Option, the Company shall have the right to
require the Participant or such other person to pay the Company the amount of
any taxes which the Company is required to withhold with respect to such Shares,
or, in lieu thereof, to retain, or to sell without notice, a number of such
Shares sufficient to cover the amount required to be withheld.
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22. No Employment Rights. No Director, Employee or other person shall have
a right to be selected as a Participant under the Plan. Neither the Plan nor any
action taken by the Committee in administration of the Plan shall be construed
as giving any person any rights of employment or retention as an Employee,
Director or in any other capacity with the Company, the Savings Bank or other
Subsidiaries.
23. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of New Jersey, except to the extent that
federal law shall be deemed to apply.
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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
Section 240.14a-11(c) or Section 240.14a-12
Westwood Financial Corporation
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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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