SCHEDULE 14-A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-l1(c) or ss.240.14a-12
WAYNE BANCORP, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than 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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<PAGE>
WAYNE BANCORP, INC.
1195 HAMBURG TURNPIKE
WAYNE, NEW JERSEY 07470
(201) 305-5500
December 9, 1996
Fellow Shareholders:
You are cordially invited to attend the special meeting of shareholders
(the "Special Meeting") of Wayne Bancorp, Inc. (the "Company"), the holding
company for Wayne Savings Bank, F.S.B. (the "Bank"), Wayne, New Jersey, in order
to consider the approval of the Wayne Bancorp, Inc. 1996 Stock-Based Incentive
Plan ("Incentive Plan") and such other matters as may properly come before the
Special Meeting, which will be held on January 30, 1997, at 2:00 p.m., Eastern
Time, at the Bank's administrative office at 1195 Hamburg Turnpike, Wayne, New
Jersey.
The attached Notice of the Special Meeting and the Proxy Statement
describes the Incentive Plan. Directors and officers of the Company will be
present at the Special Meeting to respond to any questions that our shareholders
may have regarding the Incentive Plan.
The Board of Directors of Wayne Bancorp, Inc. has determined that approval
of the Incentive Plan at the Special Meeting is in the best interests of the
Company and its shareholders. FOR THE REASONS SET FORTH IN THE PROXY STATEMENT,
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE PLAN.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR COOPERATION
IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST BE REPRESENTED, EITHER
IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE CONDUCT OF BUSINESS.
On behalf of the Board of Directors and all of the employees of the Company
and the Bank, I thank you for your continued interest and support.
Sincerely yours,
/s/ HAROLD P. COOK, III
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Harold P. Cook, III
Chairman of the Board and
Chief Executive Officer
<PAGE>
WAYNE BANCORP, INC.
1195 HAMBURG TURNPIKE
WAYNE, NEW JERSEY 07470
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 30, 1997
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NOTICE IS HEREBY GIVEN that the special meeting of shareholders (the
"Special Meeting") of Wayne Bancorp, Inc. (the "Company"), the holding company
for Wayne Savings Bank, F.S.B. (the "Bank") will be held on January 30, 1997 at
2:00 p.m., Eastern Time, at 1195 Hamburg Turnpike, Wayne, New Jersey.
The purpose of the Special Meeting is to consider and vote upon the
following matters:
1. The approval of the Wayne Bancorp, Inc. 1996 Stock-Based Incentive
Plan; and
2. Such other matters as may properly come before the meeting and at any
adjournments thereof, including whether or not to adjourn the meeting.
The Board of Directors has established December 2, 1996, as the record date
for the determination of shareholders entitled to receive notice of and to vote
at the Special Meeting and at any adjournments thereof. Only record holders of
the common stock of the Company as of the close of business on such record date
will be entitled to vote at the Special Meeting or any adjournments thereof. In
the event there are not sufficient votes for a quorum or to approve the
foregoing proposal at the time of the Special Meeting, the Special Meeting may
be adjourned in order to permit further solicitation of proxies by the Company.
A list of shareholders entitled to vote at the Special Meeting will be available
at Wayne Bancorp, Inc., 1195 Hamburg Turnpike, Wayne, New Jersey 07470, for a
period of ten days prior to the Special Meeting and will also be available at
the Special Meeting itself.
By Order of the Board of Directors
/s/ MICHAEL G. DeBENEDETTE
-----------------------------------
Michael G. DeBenedette
Corporate Secretary
Wayne, New Jersey
December 9, 1996
<PAGE>
WAYNE BANCORP, INC.
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PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
JANUARY 30, 1997
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SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to shareholders of Wayne Bancorp,
Inc. (the "Company") in connection with the solicitation by the Board of
Directors ("Board of Directors" or "Board") of proxies to be used at the special
meeting of shareholders, to be held on January 30, 1997 (the "Special Meeting"),
and at any adjournments thereof. This Proxy Statement is first being mailed to
record holders on or about December 9, 1996.
Regardless of the number of shares of common stock owned, it is important
that record holders of a majority of the shares be represented by proxy or in
person at the Special Meeting. Shareholders are requested to vote by completing
the enclosed proxy card and returning it signed and dated in the enclosed
postage-paid envelope. Shareholders are urged to indicate their vote in the
spaces provided on the proxy card. 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 PROXY CARDS WILL BE VOTED FOR THE
APPROVAL OF THE WAYNE BANCORP, INC. 1996 STOCK-BASED INCENTIVE PLAN (THE
"INCENTIVE PLAN").
Other than the matters listed on the attached Notice of Special Meeting of
Shareholders, the Board of Directors knows of no additional matters that will be
presented for consideration at the Special Meeting. EXECUTION OF A PROXY,
HOWEVER, CONFERS ON THE DESIGNATED PROXY HOLDERS DISCRETIONARY AUTHORITY TO VOTE
THE SHARES IN ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH OTHER BUSINESS, IF
ANY, THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING AND AT ANY ADJOURNMENTS
THEREOF, INCLUDING WHETHER OR NOT TO ADJOURN THE SPECIAL MEETING.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Corporate Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Special Meeting and voting in person. However, if you are a
shareholder whose shares are not registered in your own name, you will need
appropriate documentation from your record holder to vote personally at the
Special Meeting.
The cost of solicitation of proxies on behalf of management will be borne
by the Company. In addition to the solicitation of proxies by mail, Regan &
Associates, Inc., a proxy solicitation firm, will assist the Company in
soliciting proxies for the Special Meeting and will be paid a fee of $4,500,
plus out-of-pocket expenses. Proxies may also be solicited personally or by
telephone by directors, officers and other employees of the Company and its
subsidiary, Wayne Savings Bank, F.S.B. (the "Bank"), without additional
compensation therefor. The
<PAGE>
Company will also request persons, firms and corporations holding shares in
their names, or in the name of their nominees, which are beneficially owned by
others, to send proxy material to and obtain proxies from such beneficial
owners, and will reimburse such holders for their reasonable expenses in doing
so.
VOTING SECURITIES
The securities which may be voted at the Special Meeting consist of shares
of common stock of the Company ("Common Stock"), with each share entitling its
owner to one vote on all matters to be voted on at the Special Meeting, except
as described below.
The close of business on December 2, 1996, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
shareholders of record entitled to notice of and to vote at the Special Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 2,231,383 shares.
As provided in the Company's Certificate of Incorporation, for quorum
purposes, holders of Common Stock who beneficially own in excess of 10% of the
outstanding shares of Common Stock (the "Limit") are not entitled to any vote in
respect of the shares held in excess of the Limit and are treated as not
outstanding for voting purposes. A person or entity is deemed to beneficially
own shares owned by an affiliate of, as well as, by persons acting in concert
with, such person or entity. The Company's Certificate of Incorporation
authorizes the Board of Directors (i) to make all determinations necessary to
implement and apply the Limit, including determining whether persons or entities
are acting in concert, and (ii) to demand that any person who is reasonably
believed to beneficially own stock in excess of the Limit to supply information
to the Company to enable the Board of Directors to implement and apply the
Limit.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote (after
subtracting any shares in excess of the Limit pursuant to the Company's
Certificate of Incorporation) is necessary to constitute a quorum at the Special
Meeting. In the event that there are not sufficient votes for a quorum or to
approve or ratify any proposal at the time of the Special Meeting, the Special
Meeting may be adjourned in order to permit the further solicitation of proxies.
As to the proposed approval of the Incentive Plan submitted for shareholder
action set forth in the Proposal, the proxy card being provided by the Board of
Directors enables a shareholder to check the appropriate box on the proxy card
to (i) vote "FOR" the Proposal, (ii) vote "AGAINST" the Proposal, or (iii)
"ABSTAIN" from voting on such item. Under Delaware law, an affirmative vote of
the holders of a majority of the shares of Common Stock present in person or by
proxy at the Special Meeting at which a quorum is present and entitled to vote
on the Proposal is required to constitute shareholder approval of the Proposal.
Shares as to which the "ABSTAIN" box has been selected on the proxy card with
respect to the Proposal will be counted as present and entitled to vote and have
the effect of a vote against the matter for which the "ABSTAIN" box has been
selected. In contrast, shares underlying broker non-votes are not counted as
present and entitled to vote on the Proposal and have no effect on the vote on
the
2
<PAGE>
Proposal. For further information on the vote required to implement the Proposal
during the first year following Conversion, see the discussion under the
Proposal herein.
Proxies solicited hereby are to be returned to the Company's transfer
agent, Registrar and Transfer Company ("RTC"). The Board of Directors has
designated RTC to act as inspectors of election and tabulate the votes at the
Special Meeting. RTC is not otherwise employed by, or a director of, the Company
or any of its affiliates. After the final adjournment of the Special Meeting,
the proxies will be returned to the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to those persons believed by
management to be beneficial owners of more than 5% of the Company's outstanding
shares of Common Stock on the Record Date or as disclosed in certain reports
received to date regarding such ownership filed by such persons with the Company
and with the Securities and Exchange Commission ("SEC"), in accordance with
Sections 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended
("Exchange Act"). Other than those persons listed below, the Company is not
aware of any person, as such term is defined in the Exchange Act, that owns more
than 5% of the Company's Common Stock as of the Record Date.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS
- -------------------- ------------------------------------------------- ----------------- ----------------
<S> <C> <C> <C>
Common Stock Wayne Savings Bank, F.S.B. Employee Stock 178,511(1) 8.0%
Ownership Plan ("ESOP")
1195 Hamburg Turnpike
Wayne, New Jersey 07470
Common Stock Seidman and Associates, L.L.C.,
Seidman and Associates II., L.L.C.,
Seidman Investment Partnership, L.P.,
Lawrence B. Seidman, Benchmark Partners L.P.,
The Benchmark Company, Inc., S/B International
Fund, Ltd., Richard Whitman, Lorraine DiPaola
750 Lexington Avenue
New York, New York 10022 193,800(2) 8.68%
Common Stock Bay Pond Partners, L.P. 129,700(3) 5.79%
75 State Street
Boston, Massachusetts 02109
</TABLE>
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(1) Shares of Common Stock were acquired by the ESOP in the Bank's stock
conversion. The ESOP Committee administers the ESOP. The ESOP Trustee must
vote all allocated shares held in the ESOP in accordance with the
instructions of the participants. At December 2, 1996, no shares had been
allocated under the ESOP and 178,511 shares remain unallocated. Each
participant, however, will be deemed to have one share of Common Stock in
the ESOP allocated to such participant's account for the purpose of
providing voting instructions to the ESOP Trustee. Under the ESOP,
unallocated shares and allocated shares as to which voting instructions
are not given by participants are to be voted by the ESOP Trustee in a
manner calculated to most accurately reflect the instructions received
from participants regarding the allocated stock so long as such vote is in
accordance with the fiduciary provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
(2) Based on information disclosed by the group of reporting persons set forth
herein in a Schedule 13D filed with the SEC and most recently amended on
October 14, 1996.
(3) Based on information disclosed by the group in a Schedule 13D filed with
the SEC and most recently amended on September 9, 1996.
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of the Record Date as to
shares of Common Stock beneficially owned by directors and current Named
Executive Officers and executive officers individually and by all executive
officers and directors as a group. Ownership information is based upon
information furnished by the respective individuals.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY PERCENT OF
NAME TITLE(1) OWNED(2)(3) CLASS(4)
- ---------------------------- ----------------------------------------- -------------------- ---------------
<S> <C> <C> <C>
DIRECTORS
Harold P. Cook, III Chairman of the Board and Chief 15,000 *
Executive Officer of the Company and
Vice Chairman of the Board of the Bank
Johanna O'Connell President and Director of the Company 2,000 *
and President and Chief Executive
Officer and Director of the Bank
William J. Lloyd Director of the Company and Chairman of 2,500 *
the Board of the Bank
Ronald Higgins Director 1,500 *
Thomas D. Collins Director and Assistant Secretary of the 10,000 *
Company
Nicholas S. Gentile, Jr. Director and Secretary to the Board 100 *
David M. Collins Director 4,500 *
Richard Len Director of the Company and Chairman of 15,000 *
the Board of Wayne Savings Financial
Services Group, Inc.
Charles A. Lota Director 5,000 *
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Michael G. DeBenedette Vice President and Corporate Secretary 3,650 *
of the Company and Executive Vice
President, Chief Operating Officer and
Corporate Secretary of the Bank
EXECUTIVE OFFICER WHO IS NOT A DIRECTOR
Timothy P. Tierney Vice President and Comptroller of the 1,000 *
Company and Vice President and Chief
Financial Officer of the Bank
All directors and
executive officers as a
group (11 persons) 60,250 2.7%
</TABLE>
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* Does not exceed 1.0% of the Company's voting securities.
(1) Titles are for both the Company and the Bank unless otherwise indicated.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family member) voting and dispositive power as to shares
reported.
(3) Does not include options and awards intended to be granted under the
Incentive Plan, which is subject to stockholder approval. For a discussion
of the options and awards that are intended to be granted under the
Incentive Plan, see the Proposal.
(4) As of the Record Date, there were 2,231,383 shares of Common Stock
outstanding.
4
<PAGE>
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
Upon obtaining stockholder approval, the Company and the Bank intend to
grant to non-employee directors, including the director emeritus, and selected
officers and employees of the Bank and the Company stock options and awards in
the form of shares of Common Stock under the Incentive Plan, being presented for
approval in the Proposal.
DIRECTORS' COMPENSATION
DIRECTORS' FEES. All members of the Board of Directors of the Company and
the Bank, except Johanna O'Connell, currently receive an annual retainer fee of
$12,500 and the Chairman of the Board and the Secretary to the Board of the
Company each receives a fee of $200 for each Board meeting attended. No
committee fees are paid by the Company.
The Chairman of the Board of the Bank receives a fee of $1,404 per month,
the Secretary of the Board receives a fee of $835 per month and all directors
except Johanna O'Connell receive a fee of $400 per month, regardless of the
number of meetings held by the Board. The Chairman of each committee of the
Board of Directors of the Bank is paid $50 per meeting if the Chairman prepares
minutes for the committee meeting.
The Bank maintains one Director Emeritus position that is currently filled
by Joseph J. DeLuccia, who served on the Board of Directors of the Bank from
1965 to 1990. Mr. DeLuccia is paid a fee for consulting services.
INCENTIVE PLAN. The Company is presenting to shareholders for approval the
Incentive Plan, under which all directors, including the director emeritus of
the Company and the Bank are eligible to receive awards. See the Proposal for a
summary of the material terms of the Incentive Plan.
5
<PAGE>
EXECUTIVE COMPENSATION. The following table shows, for the year ended
December 31, 1995, the cash compensation paid, as well as certain other
compensation paid or accrued for that year to the Chief Executive Officer of the
Company and the Bank and other executive officers of the Company and the Bank,
who earned and/or received salary and bonus in excess of $100,000 in fiscal year
1995 ("Named Executive Officers"). No other executive officer of the Company or
the Bank earned and/or received salary and bonus in excess of $100,000 in fiscal
year 1995.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION(1)
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OTHER
ANNUAL
NAME AND PRINCIPAL SALARY BONUS COMPENSATION
POSITIONS YEAR ($) ($) ($)(2)
- ---------------------------------------------------- ----------- -------------- --------------- ---------------------
<S> <C> <C> <C> <C>
Johanna O'Connell, 1995 $84,450 $23,808 --
President of the Company and President and
Chief Executive Officer of the Bank(7)
Michael G. DeBenedette, 1995 $76,800 $24,087 --
Vice President of the Company and
Executive Vice President and Chief
Operating Officer of the Bank
Richard Len, 1995 $71,300 $66,759 --
Chairman of Wayne Savings Financial
Services Group, Inc.
William E. Vanderberg, 1995 $124,200 $72,777 --
President and Chief Executive Officer of
the Company and the Bank(7)
- ---------------------------------------------------------------------------------------------------------------------------
LONG-TERM COMPENSATION
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AWARDS PAYOUTS
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RESTRICTED SECURITIES
STOCK UNDERLYING LTIP ALL OTHER
AWARDS OPTIONS PAYOUTS COMPENSATION
($)(3) (#)($)SARS ($)(5) ($)(6)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Johanna O'Connell, -- -- -- $3,386
President of the Company and President and
Chief Executive Officer of the Bank(7)
Michael G. DeBenedette, -- -- -- $3,425
Vice President of the Company and
Executive Vice President and Chief
Operating Officer of the Bank
Richard Len, -- -- -- $5,829
Chairman of Wayne Savings Financial
Services Group, Inc.
William E. Vanderberg, -- -- -- $9,676
President and Chief Executive Officer of
the Company and the Bank(7)
- ----------------
</TABLE>
(1) Under Annual Compensation, the column titled "Salary" includes amounts
deferred by the named executive officer pursuant to the Bank's 401(k) Plan
as hereinafter defined pursuant to which employees may defer up to 15% of
their compensation and executive officers may defer up to the maximum
limits under the Internal Revenue Code of 1986, as amended ("Code") not to
exceed 15% and includes board fees of $17,300 paid to Mr. Len. The column
titled "Bonus" includes cash bonuses paid to Messrs. Vanderberg and
DeBenedette and Ms. O'Connell as well as commissions paid to Mr. Len from
Financial Services. The Board has decided to discontinue the practice of
paying cash bonuses to Messrs. Vanderberg, DeBenedette and Ms. O'Connell
effective upon completion of the Conversion.
(2) For 1995, there were no (a) perquisites over the lesser of $50,000 or 10%
of the individual's total salary and bonus for the year; (b) payments of
above-market preferential earnings on deferred compensation; (c) payments
of earnings with respect to long-term incentive plans prior to settlement
or maturation; (d) tax payment reimbursements; nor (e) preferential
discounts on stock. For 1995, the Bank had no restricted stock or stock
related plans in existence.
(3) No stock awards were granted or earned in 1995. See the Proposal.
(4) No stock options or SARs were earned or granted in 1995. See the Proposal.
(5) For 1994 and 1995, there were no payouts or awards under any long-term
incentive plan.
(6) Includes amounts contributed by the Bank under the Bank's 401(k) Plan and
reimbursement for insurance expenses.
(7) Mr. Vanderberg resigned as President, Chief Executive Officer and Director
of the Company and the Bank. Mr Harold P. Cook, III, assumed the
responsibilities of Chief Executive Officer of the Company and Ms.
O'Connell assumed the positions of President of the Company and President
and Chief Executive Officer of the Bank effective September 6, 1996.
Previously, Ms. O'Connell served as Vice President of the Company and
Senior Vice President and Chief Lending Officer of the Bank.
6
<PAGE>
EMPLOYMENT AGREEMENTS
The Bank and the Company intend to enter into employment agreements with
Ms. O'Connell ("Executive") as described below. These employment agreements are
intended to ensure that the Bank and the Company will be able to maintain a
stable and competent management base. The continued success of the Bank and the
Company depends to a significant degree on the skills and competence of Ms.
O'Connell.
The employment agreements will provide for a three-year term. The Bank
employment agreement will provide that, commencing on the first anniversary date
and continuing each anniversary date thereafter, the Board of the Bank may
extend the agreement for an additional year so that the remaining term shall be
three years, unless written notice of non-renewal is given by the Board of the
Bank after conducting a performance evaluation of the Executive. The term of the
Company employment agreement will be extended on a daily basis unless written
notice of non-renewal is given by the Board of the Company. The agreements will
provide that the Executive's base salary will be reviewed annually. The current
base salary of Ms. O'Connell is $125,000. In addition to the base salary, the
agreements will provide for, among other things, participation in stock benefits
plans and other fringe benefits applicable to executive personnel.
The agreements will provide for termination by the Bank or the Company for
cause as defined in the agreements at any time. Under the agreements, in the
event, the Bank or the Company chooses to terminate the Executive's employment
for reasons other than for cause, or in the event of the Executive's voluntary
resignation from the Bank, or the Company upon: (i) failure to re-elect or
reappoint the Executive to her current offices, unless consented to by
Executive; (ii) a material change in the Executive's functions, duties or
responsibilities which change would cause Executive's position to become one of
lesser responsibility, importance or scope from the position and attributes
thereof described in the agreement, provided that no breach shall be deemed to
have occurred in the event Executive continues to receive the same compensation
and benefits as those being received by the Executive immediately preceding the
change in Executive's functions, duties or responsibilities, unless consented to
by Executive; (iii) a relocation of the Executive's principal place of
employment by more than 15 miles, unless consented to by Executive; (iv) a
material reduction in the benefits and perquisites to the Executive, unless
consented to by Executive; (v) liquidation or dissolution of the Bank or the
Company; or (vi) a breach of the agreement by the Bank or the Company, the
Executive or, in the event of Executive's subsequent death, her beneficiary,
beneficiaries or estate, as the case may be, would be entitled to receive an
amount equal to the remaining base salary payments due to the Executive and the
contributions that would have been made on the Executive's behalf to any
employee benefit plans of the Bank or the Company during the remaining term of
the agreement. The Bank and the Company would also continue and pay for the
Executive's life, health and disability coverage for the remaining term of the
agreements.
Under the agreements, if involuntary termination or voluntary resignation
under the conditions set forth above and as set forth in the agreements, follows
a change in control of the Bank or the Company (as defined in the agreements),
the Executive or, in the event of the Executive's death, her beneficiary,
beneficiaries or estate, as the case may be, would be entitled
7
<PAGE>
to a severance payment equal to the greater of: (i) the payments due for the
remaining term of the agreements; or (ii) three times the average annual
compensation for the five preceding taxable years, as described in the
agreements. The Bank and the Company would also continue the Executive's life,
health, and disability coverage. Notwithstanding that both agreements provide
for a severance payment in the event of a change in control, the Executive would
only be entitled to receive a severance payment under one agreement. Based
solely on the compensation reported in the summary compensation table for 1995,
excluding any benefits under any employee plan which may be payable, following a
change in control and termination of employment Ms. O'Connell would receive
severance payments in the amount of approximately $324,774.
Payments under the employment agreements and the change in control
agreements, described below, in the event of a change in control may constitute
some portion of an excess parachute payment under Section 280G of the Internal
Revenue Code (the "Code") for executive officers, resulting in the imposition of
an excise tax on the recipient and denial of the deduction for such excess
amounts to the Company and the Bank.
Payments to the Executive under the Bank's agreement will be guaranteed by
the Company in the event that payments or benefits are not paid by the Bank.
Payment under the Company's agreement would be made by the Company. All
reasonable costs and legal fees paid or incurred by the Executive pursuant to
any dispute or question of interpretation relating to the Agreements would be
paid by the Bank or Company, respectively, if the Executive is successful on the
merits pursuant to a legal judgment, arbitration or settlement. The employment
agreements also provide that the Bank and Company shall indemnify the Executive
to the fullest extent allowable under federal and Delaware law, respectively.
CHANGE IN CONTROL AGREEMENTS
For similar reasons as with the employment agreements, the Bank and the
Company intend to enter into change in control agreements with Mr. DeBenedette
and with the Chief Financial Officer (individually, the "Executive").
Additionally, Wayne Savings Financial Services Group, Inc. ("Financial
Services") intends to enter into a change in control agreement with Richard Len.
Each change in control agreement will provide for a two year term. The Bank's
change in control agreements will provide that, commencing on the first
anniversary date and continuing on each anniversary thereafter, the Bank's
change in control agreements may be renewed by the Board of Directors for an
additional year. The Company's change in control agreements will provide that,
commencing on the date of the execution of the Company's change in control
agreement, the term will be extended for one day each day until such time as the
Board of Directors of the Company or the Executive elects by written notice not
to extend the term, at which time the change in control agreement will end on
the second anniversary of the date of notice. The Company's change in control
agreement will provide that at any time following a change in control of the
Bank or the Company (as defined in the agreement), if the Company terminates the
Executive's employment for any reason other than cause, or if the Executive
voluntary resigns following any demotion, loss of title, office or significant
authority, coupled with a reduction in compensation and benefits from those
being received by the Executive immediately preceding the change in Executive's
functions, duties or responsibilities, and
8
<PAGE>
reduction in annual compensation or material reduction in benefits, or
relocation of the principal place of employment by more than 15 miles, the
Executive, or in the event of Executive's subsequent death, Executive's
beneficiary or beneficiaries or estate, as the case may be, would be entitled to
a sum equal to the greater of the payments due for the remaining term of the
agreement or two (2) times the Executive's average annual compensation, as
described in the agreement, for the preceding two taxable years. The Company
would also continue the Executive's life, medical and disability coverage for
the remaining term of the Agreement. The Bank's and Financial Services' change
in control agreements are similar to that of the Company; however, any payments
to the Executive under the Bank's change in control agreement would be
subtracted from any amount due simultaneously under the Company's change in
control agreement and in the case of Financial Services' change in control
agreement, amounts due under that agreement would be subtracted from amounts due
under the Bank agreement guaranteeing the Financial Services agreement. Payments
to the Executive under the Bank's change in control agreement will be guaranteed
by the Company in the event that payments or benefits are not paid by the Bank.
Payments under Financial Services' agreement would be guaranteed by the Bank in
the event payments or benefits are not paid by Financial Services. Based solely
on the compensation reported in the summary compensation table for 1995 for the
Named Executive Officers and similar compensation data for the Chief Financial
Officer and excluding any benefits under any employee plan which may be payable,
following a change in control and termination of employment, the three officers
to be covered by the change in control agreements would receive severance
payments in the aggregate amount of approximately $627,892.
INCENTIVE PLAN. The Company is presenting to stockholders for approval the
Incentive Plan under which all employees of the Company and the Bank are
eligible to receive awards. See the Proposal for a summary of the material terms
of the Incentive Plan.
PENSION PLAN. The Bank maintains the Wayne Savings Bank, F.S.B. Pension
Plan ("Pension Plan"), which is a defined benefit pension plan, for the benefit
of salaried employees employed by the Bank prior to attaining age 60. The
Pension Plan is administered by the Bank. The Bank annually contributes an
amount necessary to fully fund the actuarially determined minimum funding
requirements established by the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"). Under the plan's funding method, the actuarial present
value of projected benefits of each individual is allocated on a level basis
over the expected future earnings period through the assumed retirement date.
The Bank makes a contribution to the plan for all eligible employees in
accordance with the plan's guidelines.
Employees of the Bank who have attained the age of 21, have completed six
months of service, and were hired prior to age 60 are eligible to participate in
the Pension Plan. Employee benefits under the Pension Plan begin vesting at 20%
after the second year of service and increase by 20% each year for the following
four years thereafter until full vesting occurs after six years. Payments made
by the Bank pursuant to and for the purpose of funding its obligation under the
Pension Plan totalled $88,000 for the 1995 plan year. The Bank is currently
considering discontinuing the Pension Plan.
9
<PAGE>
The table below sets forth annual benefits under the Retirement Plan
assuming retirement during 1995 at various levels of compensation and years of
credited service.
ESTIMATED ANNUAL RETIREMENT BENEFIT
PAYABLE AT AGE 65
STRAIGHT LIFE ANNUITY BASIS TO AN EMPLOYEE RETIRING IN 1996(1)(2)
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
FINAL AVERAGE -----------------------------------------------------------------------------------------
EARNINGS 15 20 25 30 35
- --------------------- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 9,225 $11,700 $13,500 $16,500 $17,500
75,000 14,850 19,200 21,750 25,200 28,665
100,000 20,475 25,800 31,125 36,450 41,790
125,000 26,100 33,300 40,500 47,700 54,915
150,000 31,725 40,800 49,895 58,950 68,040
200,000 37,350 55,800 60,625 81,450 94,290
250,000 42,975 72,300 87,375 103,950 120,540
300,000 48,600 87,300 106,125 126,450 146,790
</TABLE>
- -----------
(1) The compensation utilized for formula purposes includes the salary and
bonuses in the "Summary Compensation Table."
(2) The benefit amounts shown in the preceding table are not subject to any
deductions for social security benefits or other offset amounts.
As of December 2, 1996, Ms. O'Connell had 7 years, 5 months of credited
service, Mr. DeBenedette had 8 years, 8 months of credited service, Richard Len
had 7 years, 1 month of credited service and Timothy P. Tierney had 2 years, 2
months of credited service.
401(K) PLAN. The Bank has a 401(k) salary deferral plan (the "401(k) Plan")
for the benefit of its employees. The 401(k) Plan provides for participation by
all employees of the Bank. The Bank matches 50% of the employee's contributions
up to the first 6% of the employee's salary. Under the 401(k) Plan, the Bank may
make a special employer contribution in addition to its matching contributions.
To date, the Bank has not made a special contribution. The determination of
whether to make a special contribution and the amount of the special
contribution is established by the Bank's Board of Directors. All participants
in the 401(k) Plan are fully vested in their 401(k) Plan account balance upon
entry into the Plan. Upon the employee's retirement, disability or death, the
entire balance of an employee's account may be paid in a lump sum amount or in
monthly installments over a period of up to 10 years. The 401(k) Plan has a
number of investment options for participants, including the ability to invest
in the common stock of the Company.
10
<PAGE>
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST. The Bank established an ESOP and
related trust for eligible employees effective June 27, 1996. Full-time
employees employed with the Bank as of January 1, 1996 and full-time employees
of the Company or the Bank employed after such date, who have been credited with
at least 1,000 hours during a twelve month period and who have attained the age
of 21 are participants. The ESOP purchased 8% or 178,511 shares of the Common
Stock issued by the Company in connection with the Bank's conversion to stock
form. In order to fund the ESOP's purchase of the Common Stock, the ESOP
borrowed funds from the Company equal to 100% of the aggregate purchase price of
the Common Stock. The loan will be repaid principally from the Company's or the
Bank's contributions to the ESOP over a period of ten years and the collateral
for the loan will be the Common Stock purchased by the ESOP and not allocated to
participants. Upon a change in control, all participants would become 100%
vested in their ESOP benefits.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Bank's current policy provides that all loans made by the Bank to its
directors and executive officers are made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve more than the
normal risk of collectibility or present other unfavorable features. Any loan to
an executive officer or director must be approved by the Board of Directors
prior to its being committed.
PROPOSAL: APPROVAL OF THE
WAYNE BANCORP, INC.
1996 STOCK-BASED INCENTIVE PLAN
The Board of Directors of the Company is presenting for stockholder
approval the Wayne Bancorp, Inc. 1996 Stock-Based Incentive Plan ("Incentive
Plan"), in the form attached hereto as Appendix A. The purpose of the Incentive
Plan is to attract and retain qualified personnel in key positions, provide
officers, employees and non-employee directors, including directors emeritus and
advisory directors, with a proprietary interest in the Company as an incentive
to contribute to the success of the Company, promote the attention of management
to other stockholders' concerns and reward employees for outstanding
performance. The following is a summary of the material terms of the Incentive
Plan, which is qualified in its entirety by the complete provisions of the
Incentive Plan attached as Appendix A.
GENERAL
The Incentive Plan authorizes the granting of options to purchase Common
Stock, option-related awards and awards of Common Stock (collectively,
"Awards"). Subject to certain adjustments to prevent dilution of Awards to
participants, the maximum number of shares reserved for Awards under the
Incentive Plan is 312,393 shares, provided such number is not in excess of 14%
of the outstanding shares of the Common Stock as of the effective date of the
Incentive Plan. The maximum number of shares reserved for purchase pursuant to
the exercise
11
<PAGE>
of options and option-related Awards which may be granted under the Incentive
Plan is 223,138 shares, provided such number is not in excess of 10% of the
outstanding shares of Common Stock as of the effective date of the Incentive
Plan. The maximum number of the shares reserved for the award of shares of
Common Stock ("Stock Awards") is 89,255 shares, provided such number is not in
excess of 4% of the outstanding shares of Common Stock as of the effective date
of the Incentive Plan. All officers, other employees and non-employee directors,
including advisory directors and directors emeritus, of the Company and its
affiliates are eligible to receive Awards under the Incentive Plan. The
Incentive Plan will be administered by a committee (the "Committee"). Authorized
but unissued shares or shares previously issued and reacquired by the Company
may be used to satisfy Awards under the Incentive Plan. The grant of Stock
Awards and the exercise of options granted under the Incentive Plan will result
in an increase in the number of shares outstanding, and may have a dilutive
effect on the holdings of existing stockholders.
AWARDS TO EMPLOYEES
TYPES OF AWARDS. The Incentive Plan authorizes the grant of Awards to
employees in the form of: (i)Eoptions to purchase the Company's Common Stock
intended to qualify as incentive stock options under Section 422 of the Code
(options which afford tax benefits to the recipients upon compliance with
certain conditions and which do not result in tax deductions to the Company),
referred to as "Incentive Stock Options"; (ii) options that do not so qualify
(options which do not afford income tax benefits to recipients, but which may
provide tax deductions to the Company), referred to as "Non-statutory Stock
Options"; (iii) limited rights which are exercisable only upon a change in
control of the Company (as defined in the Incentive Plan) ("Limited Rights");
and (iv) Stock Awards, which provide a grant of Common Stock that vests over
time (a portion of such vesting as determined by the Committee will be
contingent upon the attainment of stated performance goals for all officers and
employees who receive such Stock Awards).
OPTIONS. Assuming the requisite stockholder approval is obtained for
the Incentive Plan, the Board of Directors intends to grant options to employees
(including executive officers) for 140,577 shares (with Limited Rights) and
options to outside directors and the director emeritus for 66,941 shares (with
Limited Rights). Options for 15,620 shares will be reserved and available under
the Incentive Plan for future grant to directors, directors emeritus and/or
employees. All options granted to employees will be qualified as Incentive Stock
Options to the extent permitted under Section 422 of the Code. Incentive Stock
Options, at the discretion of the Committee with the concurrence of the holder,
may be converted into Non-Statutory Stock Options. Pursuant to the Incentive
Plan, the Committee has the authority to determine the date or dates on which
each stock option shall become exercisable; provided, however, under the terms
of the Incentive Plan any stock option granted prior to June 27, 1997 may not
vest in annual installments of greater than 20% of the number of shares
underlying the options awarded, commencing at least one year from the date of
grant, and the vesting of such options may not be accelerated except in the case
of death or disability. The Board of Directors intends to amend this feature in
the future, see "New Plan Benefits" below. The exercise price of all Incentive
Stock Options must be 100% of the fair market value of the underlying Common
Stock at the time of grant, except as provided
12
<PAGE>
below. The exercise price may be paid in cash or in Common Stock at the
discretion of the Committee. See "Payout Alternatives" and "Alternative Option
Payments."
Incentive Stock Options may only be granted to employees. In order to
qualify as Incentive Stock Options under Section 422 of the Code, the exercise
price must not be less than 100% of the fair market value on the date of grant.
Incentive Stock Options granted to any person who is the beneficial owner of
more than 10% of the outstanding voting stock may be exercised only for a period
of five years from the date of grant and the exercise price must be at least
equal to 110% of the fair market value of the underlying Common Stock on the
date of grant.
TERMINATION OF EMPLOYMENT. Unless otherwise determined by the Committee,
upon termination of an employee's services for any reason other than death,
disability or termination for cause, the Incentive Stock Options shall be
exercisable for a period of three months following termination, except that in
the event of termination of a participant's employment due to retirement, the
participant shall have up to one year following the participant's cessation of
employment to exercise any Incentive Stock Options exercisable on that date and
if exercised after three months following termination due to retirement, the
Incentive Stock Options shall be redesignated by the Committee as Non-statutory
Stock Options. In the event of termination for cause, all rights under any
Incentive Stock Options granted shall expire immediately upon termination.
Notwithstanding the foregoing, in the event of death or disability, options will
become fully vested and shall be exercisable for up to one year thereafter.
LIMITED RIGHTS. Limited Rights are related to specific options granted and
become exercisable in the event of a change in control of the Bank or the
Company. Upon exercise, the optionee will be entitled to receive in lieu of
purchasing the stock underlying the option, a lump sum cash payment equal to the
difference between the exercise price of the related option and the fair market
value of the shares of Common Stock subject to the option on the date of
exercise of the right less any applicable tax withholding.
OPTION GRANTS. It is currently intended that the options proposed to be
granted will include Limited Rights and will vest and become exercisable on a
cumulative basis in equal installments over five (5) years commencing one year
from the date of grant; provided, however, that all options will be immediately
exercisable in the event the optionee's employment is terminated due to death or
disability. The exercise price of all such options will be 100% of the fair
market value of the underlying Common Stock at the time of grant, which is
intended to be the date of the Special Meeting. See "New Plan Benefits Table"
below for information concerning options intended to be granted under the
Incentive Plan, assuming stockholder approval.
As of December 2, 1996, the closing price per share of Common Stock, as
reported on the Nasdaq National Market, was $14.375.
13
<PAGE>
STOCK AWARDS. The Incentive Plan also authorizes the granting of Stock
Awards to employees. The Committee has the authority to determine the dates on
which Stock Awards granted to an employee will vest; provided, however, that any
Stock Award granted prior to June 27, 1997 may not vest at a rate greater than
20% per year, commencing at least one year from the date of grant and the
vesting of any Stock Award may not be accelerated except in the case of death or
disability. The Board of Directors intends to amend this feature in the future,
see "New Plan Benefits" below. All Stock Award grants will immediately vest upon
termination of employment due to death or disability. Under the Incentive Plan,
the vesting of Stock Awards may also be made contingent upon the attainment of
certain performance goals by the Company, Bank or grantee, which performance
goals, if any, would be established by the Committee. The Committee intends to
make a portion of the Stock Awards granted subject to the attainment of
performance goals. An agreement setting forth the terms of the Stock Awards
("Stock Award Agreement") shall set forth the vesting period and performance
goals, that must be attained. The performance goals may be set by the Committee
on an individual basis, for all Stock Awards made during a given period of time,
or for all Stock Awards for indefinite periods. A Stock Award may only be
granted from the shares reserved and available for grant under the Incentive
Plan. No Stock Award that is subject to a performance goal is to be distributed
to the employee until the Committee confirms that the underlying performance
goal has been achieved.
Stock Awards are generally nontransferable and nonassignable as provided in
the Incentive Plan. The Committee has the power, under the Incentive Plan, to
permit transfers. When plan shares are distributed in accordance with the
Incentive Plan, the recipients will also receive amounts equal to accumulated
cash and stock dividends (if any) with respect thereto plus earnings thereon
minus any required tax withholding amounts. Prior to vesting, recipients of
Stock Awards may direct the voting of shares of Common Stock granted to them and
held in the trust. Shares of Common Stock held by the Incentive Plan trust which
have not been allocated or for which voting has not been directed are voted by
the trustee in the same proportion as the awarded shares are voted in accordance
with the directions given by all recipients of Stock Awards.
AWARDS TO OUTSIDE DIRECTORS
Each member of the Board of Directors of the Company who is not employed on
a full-time basis with the Company or the Bank and the director emeritus
("Outside Director") will receive Non-statutory Stock Options to purchase 8,367
shares of Common Stock and Stock Awards for 3,347 shares of Common Stock
(collectively "Directors' Awards").
The Directors' Awards initially granted under the Incentive Plan will vest
over a five-year period, at a rate of 20% each year commencing with the first
anniversary of the date of the grant. All Directors' Awards will continue to
vest regardless of whether a Director resigns as a Director, provided the
Director is elected as a director emeritus or serves as a consultant or advisory
director to the Bank or Company. All Directors' Awards will immediately vest
upon termination of employment due to death or disability. See "New Plan
Benefits" below.
14
<PAGE>
The exercise price of each option shall equal the fair market value of the
Common Stock on the date the option is granted, which is intended to be the date
of the Special Meeting. All unexercised options granted under the Incentive Plan
expire 10 years following the date of grant.
When Stock Awards are distributed in accordance with the Incentive Plan,
the recipients will also receive amounts equal to accumulated cash and stock
dividends (if any) with respect thereto plus earnings. Prior to vesting,
recipients of Stock Awards may direct the voting of shares of Common Stock
granted to them and held in the trust. Shares of Common Stock held by the
Incentive Plan trust will be voted as provided for under "Awards to Employees --
Stock Awards."
TAX TREATMENT
STOCK OPTIONS. An optionee will generally not be deemed to have recognized
taxable income upon grant or exercise of any Incentive Stock Option, provided
that shares transferred in connection with the exercise are not disposed of by
the optionee for at least one year after the date the shares are transferred in
connection with the exercise of the option and two years after the date of grant
of the option. If the holding periods are satisfied, upon disposal of the
shares, the aggregate difference between the per share option exercise price and
the fair market value of the Common Stock is recognized as income taxable at
long term capital gains rates. No compensation deduction may be taken by the
Company as a result of the grant or exercise of Incentive Stock Options,
assuming those holding periods are met.
In the case of the exercise of a Non-statutory Stock Option, an optionee
will be deemed to have received ordinary income upon exercise of the stock
option in an amount equal to the aggregate amount by which the per share
exercise price is exceeded by the fair market value of the Common Stock. In the
event shares received through the exercise of an Incentive Stock Option are
disposed of prior to the satisfaction of the holding periods (a "disqualifying
disposition"), the exercise of the option will be treated as the exercise of a
Non-statutory Stock Option, except that the optionee will recognize the ordinary
income for the year in which the disqualifying disposition occurs. The amount of
any ordinary income deemed to have been received by an optionee upon the
exercise of a Non-statutory Stock Option or due to a disqualifying disposition
will be a deductible expense of the Company for tax purposes.
In the case of Limited Rights, the option holder would have to include the
amount paid to him upon exercise in his gross income for federal income tax
purposes in the year in which the payment is made and the Company would be
entitled to a deduction for federal income tax purposes of the amount paid.
STOCK AWARDS. When shares of Common Stock, as Stock Awards, are
distributed, the recipient is deemed to receive ordinary income equal to the
fair market value of such shares at the date of distribution plus any dividends
and earnings on such shares (provided such date is more than six months after
the date of grant) and the Company is permitted a commensurate compensation
expense deduction for income tax purposes.
15
<PAGE>
PAYOUT ALTERNATIVES
The Committee has the sole discretion to determine what form of payment it
shall use in distributing payments for all Awards. If the Committee requests any
or all participants to make an election as to form of payment, it shall not be
considered bound by the election. Any shares of Common Stock tendered in payment
of an obligation arising under the Incentive Plan or applied to any tax
withholding amounts shall be valued at the fair market value of the Common
Stock. The Committee may use treasury stock, authorized but unissued stock or
may direct the market purchase of shares of Common Stock to satisfy its
obligations under the Incentive Plan.
ALTERNATE OPTION PAYMENTS
The Committee also has the sole discretion to determine the form of payment
for the exercise of an option. The Committee may indicate acceptable forms in
the Award Agreement covering such options or may reserve its decision to the
time of exercise. No option is to be considered exercised until payment in full
is accepted by the Committee. The Committee may permit the following forms of
payment for options: (a) in cash or by certified check; (b) through borrowed
funds, to the extent permitted by law; or (c) by tendering previously acquired
shares of Common Stock. Any shares of Common Stock tendered in payment of the
exercise price of an option shall be valued at the Fair Market Value of the
Common Stock on the date prior to the date of exercise.
AMENDMENT
The Board of Directors may amend the Incentive Plan in any respect, at any
time, provided that no amendment may affect the rights of an Awardholder without
his or her permission. The Board of Directors intends to amend the Plan in the
future, see "New Plan Benefits" below.
ADJUSTMENTS
In the event of any change in the outstanding shares of Common Stock of the
Company by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, or other increase or decrease in such shares
without receipt or payment of consideration by the Company, or in the event a
capital distribution is made, the Committee may make such adjustments to
previously granted Awards, to prevent dilution, diminution or enlargement of the
rights of the Awardholder. All Awards under this Incentive Plan shall be binding
upon any successors or assigns of the Company.
NONTRANSFERABILITY
Unless determined otherwise by the Committee, no Award under the
Incentive Plan shall be transferable by the recipient other than by will or the
laws of intestate succession or pursuant to a qualified domestic relations
order. With the consent of the Committee, an employee or
16
<PAGE>
Outside Director may designate a person or his or her estate as beneficiary of
any award to which the recipient would then be entitled, in the event of the
death of the employee.
STOCKHOLDER APPROVAL
The Incentive Plan complies with the regulations of the Office of Thrift
Supervision ("OTS"). The OTS has not endorsed or approved the Incentive Plan.
Pursuant to OTS regulations, the Incentive Plan may not be implemented during
the first year after the Bank's stock conversion (the "Conversion") unless the
affirmative vote of the holders of a majority of the total votes eligible to be
cast at this Special Meeting is received. If such approval is not obtained, but
the Incentive Plan receives the affirmative vote of a majority of the shares
present at the Special Meeting and eligible to be cast on the Proposal, the
Incentive Plan will not become effective at this time, but will become effective
immediately following a period of one year after the Conversion without further
stockholder approval. The Board of Directors also could determine to have the
Incentive Plan become effective (one year after the Conversion) even if the
Incentive Plan does not receive the requisite affirmative vote of stockholders
at this Special Meeting. In the absence of stockholder approval, the option
awards under the Incentive Plan would not qualify as incentive stock options
under the Code, and the Company's qualification to have its stock traded on the
Nasdaq Stock Market National Market System could be adversely affected.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED PROXY
CARD, IF EXECUTED AND RETURNED, WILL BE VOTED "FOR" THE APPROVAL OF THE WAYNE
BANCORP, INC. 1996 STOCK-BASED INCENTIVE PLAN.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
WAYNE BANCORP, INC. 1996 STOCK-BASED INCENTIVE PLAN.
NEW PLAN BENEFITS
The following table provides certain information with respect to all Awards
which are intended to be granted immediately after the Special Meeting, assuming
stockholder approval is obtained, under the Incentive Plan, specifying the
amounts to be granted to the Named Executive Officers individually, all current
executive officers as a group, all current directors who are not executive
officers as a group, and all employees, including all current officers who are
not executive officers, as a group.
All awards granted to the officers and directors of the Company and the
Bank reflected in the table below become vested and exercisable in equal annual
installments of 20% each year commencing one year from the date of grant. All
such awards will immediately vest and become exercisable upon termination of
employment due to death or disability. Additionally, on or after June 27, 1997,
the Board of Directors intends to amend the Plan or the awards reflected below
to provide for acceleration of the vesting of such awards upon a change in
control of the
17
<PAGE>
Company or the Bank (as defined in the Incentive Plan). The Incentive Plan
generally defines that a change in control will be deemed to occur when a person
or group of persons acting in concert acquires beneficial ownership of 20% or
more of any class of equity security, such as the Common Stock of the Company or
the Bank, or in the event of a tender offer or exchange offer, merger or other
form of business combination, sale of assets or contested election of directors
which results in a change in control of a majority of the incumbent Board of
Directors of the Company or the Bank. Stockholder approval after one year
following the Conversion may be required to satisfy the requirements of the OTS
for such an amendment.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
STOCK OPTION AWARDS STOCK AWARDS
--------------------------------- -------------------------------
DOLLAR NUMBER DOLLAR NUMBER
NAME AND POSITION VALUE (1) OF UNITS (2) VALUE (3) OF UNITS (2)
---------------- ------------- ----------------- -------------- ---------------
<S> <C> <C> <C> <C>
Harold P. Cook, III, Chairman of the Board and - 8,367 $48,113 3,347
Chief Executive Officer of the Company and
Vice Chairman of the Board of the Bank
Johanna O'Connell, President and Director of the - 44,627 $256,608 17,851
Company and President and Chief Executive Officer
and Director of the Bank
Michael G. DeBenedette - 17,851 $102,638 7,140
Vice President of the Company and Executive Vice
President, Chief Operating Officer and Corporate
Secretary of the Bank
Richard Len - 33,470 $192,453 13,388
Chairman of Financial Services and Director of the
Company and the Bank
All current executive officers as a group - 140,018 $805,106 56,007
(6 persons, including Mr. Cook)
All current directors of the Company and Bank as a - 58,573 $336,791 23,429
group who are not executive officers (7 persons,
including one Director Emeritus)
All employees who are not executive officers - 8,925 -- --
as a group (8 persons)
</TABLE>
- -------------
(1) The "dollar value" for options to be granted pursuant to the Incentive Plan
on the date of grant will be zero, as the exercise price for such options
will be the fair market value on the date of grant which is intended to be
the date stockholder approval is obtained.
(2) 15,619 stock option Awards and 9,818 Stock Awards remain unallocated under
the Incentive Plan.
(3) Based upon $14.375, the closing price of the Common Stock, as reported on
the Nasdaq National Market on December 2, 1996.
18
<PAGE>
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement and form of
proxy relating to the 1997 Annual Meeting of Shareholders, a shareholder
proposal must be received by the Secretary of the Company at the address set
forth on the first page of this Proxy Statement not later than December 31,
1996. The Company intends to hold its 1997 Annual Meeting on April 30, 1997;
however, if the date for such meeting is moved to a date more than 30 calendar
days from April 30, 1997, a stockholder proposal must be received by a
reasonable time before the proxy solicitation for such annual meeting is made.
Any such proposal will be subject to 17 C.F.R. ss. 240.14a-8 of the Rules and
Regulations under the Securities Exchange Act of 1934, as amended.
NOTICE OF BUSINESS TO BE CONDUCTED AT A SPECIAL OR ANNUAL MEETING
The Bylaws of the Company set forth the procedures by which a shareholder
may properly bring business before a meeting of shareholders. Pursuant to the
Bylaws, only business brought by or at the direction of the Board of Directors
may be conducted at a special meeting. The Bylaws of the Company provide an
advance notice procedure for a shareholder to properly bring business before an
annual meeting. The shareholder must give written advance notice to the
Secretary of the Company not less than ninety (90) days before the date
originally fixed for such meeting; provided, however, that in the event that
less than one hundred (100) days notice or prior public disclosure of the date
of the meeting is given or made to shareholders, notice by the shareholder to be
timely must be received not later than the close of business on the tenth day
following the date on which the Company's notice to shareholders of the annual
meeting date was mailed or such public disclosure was made. The advance notice
by shareholders must include the shareholder's name and address, as they appear
on the Company's record of shareholders, a brief description of the proposed
business, the reason for conducting such business at the annual meeting, the
class and number of shares of the Company's capital stock that are beneficially
owned by such shareholder and any material interest of such shareholder in the
proposed business. In the case of nominations to the Board of Directors, certain
information regarding the nominee must be provided. Nothing in this paragraph
shall be deemed to require the Company to include in its proxy statement or the
proxy relating to any annual meeting any shareholder proposal which does not
meet all of the requirements for inclusion established by the SEC in effect at
the time such proposal is received.
19
<PAGE>
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented for
consideration at the Special Meeting other than as stated in the Notice of
Special Meeting of Shareholders. If, however, other matters are properly brought
before the Special Meeting, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
Whether or not you intend to be present at the Special Meeting, you are
urged to return your proxy card promptly. If you are then present at the Special
Meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the Special Meeting.
By Order of the Board of Directors
/s/ MICHAEL G. DeBENEDETTE
-------------------------------------
Michael G. DeBenedette
Corporate Secretary
Wayne, New Jersey
December 9, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE
REQUESTED TO SIGN, DATE AND PROMPTLY RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
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APPENDIX A
WAYNE BANCORP, INC.
1996 STOCK-BASED INCENTIVE PLAN
1. DEFINITIONS.
(a) "Affiliate" means (i) a member of a controlled group of corporations of
which the Holding Company is a member or (ii) an unincorporated trade or
business which is under common control with the Holding Company as determined in
accordance with Section 414(c) of the Code and the regulations issued
thereunder. For purposes hereof, a "controlled group of corporations" shall mean
a controlled group of corporations as defined in Section 1563(a) of the Code
determined without regard to Section 1563(a)(4) and (e)(3)(C).
(b) "Alternate Option Payment Mechanism" refers to one of several methods
available to a Participant to fund the exercise of a stock option set out in
Section 13 hereof. These mechanisms include: broker assisted cashless exercise
and stock for stock exchange.
(c) "Award" means a grant of one or some combination of one or more
Non-statutory Stock Options, Incentive Stock Options and Stock Awards under the
provisions of this Plan.
(d) "Bank" means Wayne Savings Bank, FSB.
(e) "Board of Directors" or "Board" means the board of directors of the
Holding Company or the Bank and Directors Emeritus of the Holding Company or the
Bank.
(f) "Change in Control" means a change in control of the Bank or Holding
Company of a nature that; (i) would be required to be reported in response to
Item 1 of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Exchange Act; or (ii) results in a Change
in Control within the meaning of the Home Owners' Loan Act of 1933, as amended
("HOLA") and the Rules and Regulations promulgated by the Office of Thrift
Supervision ("OTS") (or its predecessor agency), as in effect on the date hereof
(provided, that in applying the definition of change in control as set forth
under such rules and regulations the Board shall substitute its judgment for
that of the OTS); or (iii) without limitation such a Change in Control shall be
deemed to have occurred at such time as (A) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Bank or the Holding Company representing 20% or
more of the Bank's or the Holding Company's outstanding securities except for
any securities of the Bank purchased by the Holding Company and any securities
purchased by any tax qualified employee benefit plan of the Bank; or (B)
individuals who constitute the Board of Directors of the Holding Company on the
date hereof (the "Incumbent Board") cease for any reason to constitute at least
a majority thereof, provided that any person becoming a director subsequent to
the date hereof whose election was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board,
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or whose nomination for election by the Holding Company's stockholders was
approved by a Nominating Committee serving under an Incumbent Board, shall be,
for purposes of this clause (B), considered as though he were a member of the
Incumbent Board; or (C) a plan of reorganization, merger, consolidation, sale of
all or substantially all the assets of the Bank or the Holding Company or
similar transaction occurs in which the Bank or Holding Company is not the
resulting entity; or (D) after a solicitation of shareholders of the Holding
Company, by someone other than current management of the Holding Company,
stockholders approve a plan of reorganization, merger or consolidation of the
Holding Company or Bank or similar transaction with one or more corporations, as
a result of which the outstanding shares of the class of securities then subject
to the plan would be exchanged for or converted into cash or property or
securities not issued by the Bank or the Holding Company; or (E) a tender offer
is made for 20% or more of the voting securities of the Bank or the Holding
Company.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means a committee consisting of the entire Board of
Directors or consisting solely of two or more members of the Board of Directors
who are defined as Non-Employee Directors as such term is defined under Rule
16b-3(b)(3)(i) under the Exchange Act as promulgated by the Securities and
Exchange Commission.
(i) "Common Stock" means the Common Stock of the Holding Company, par
value, $.01 per share or any stock exchanged for shares of Common Stock pursuant
to Section 17 hereof.
(j) "Date of Grant" means the effective date of an Award.
(l) "Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of a Participant to perform the work
customarily assigned to him or, in the case of a Director, to serve on the
Board. Additionally, a medical doctor selected or approved by the Board of
Directors must advise the Committee that it is either not possible to determine
when such Disability will terminate or that it appears probable that such
Disability will be permanent during the remainder of said Participant's
lifetime.
(m) "Dividend Equivalent Rights" means the right to receive an amount of
cash based upon the terms set forth in Section 10 hereof.
(n) "Effective Date" means ________________, the effective date of the
Plan.
(o) "Employee" means any person who is currently employed by the Holding
Company or an Affiliate, including officers, but such term shall not include
Outside Directors.
(p) "Employee Participant" means an Employee who holds an outstanding Award
under the terms of the Plan.
(p) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
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(q) "Exercise Price" means the purchase price per share of Common Stock
deliverable upon the exercise of each Option in order for the option to be
exchanged for shares of Common Stock.
(r) "Fair Market Value" means, when used in connection with the Common
Stock on a certain date, the average of the high and low sales prices of the
Common Stock as reported by the American Stock Exchange ("AMEX") or the New York
Stock Exchange ("NYSE") or other national securities exchange which is the
primary trading market for such Common Stock or the average of the high and low
bid prices of the Common Stock as reported by Nasdaq Stock Market ("NASDAQ") if
the NASDAQ serves as the primary trading market for the Common Stock, each as
published in the Wall Street Journal, if published, on such date or, if the
Common Stock was not traded on such date, on the next preceding day on which the
Common Stock was traded thereon or the last previous date on which a sale was
reported. If the Common Stock is not traded on a national securities exchange or
the NASDAQ or the NYSE, the Fair Market Value of the Common Stock is the value
so determined by the Board in good faith.
(s) "Holding Company" means Wayne Bancorp, Inc.
(t) "Incentive Stock Option" means an Option granted by the Committee to a
Participant, which Option is designated by the Committee as an Incentive Stock
Option pursuant to Section 7 hereof and is intended to be such under Section 422
of the Code.
(u) "Limited Right" means the right to receive an amount of cash based upon
the terms set forth in Section 8 hereof.
(v) "Non-statutory Stock Option" means an Option to a Participant pursuant
to Section 6 hereof, which is not designated by the Committee as an Incentive
Stock Option or which is redesignated by the Committee as a Non-statutory Stock
Option or which is designated an Incentive Stock Option under Section 7 hereof,
but does not meet the requirements of such under Section 422 of the Code.
(w) "Option" means the right to buy a fixed amount of Common Stock at the
Exercise Price within a limited period of time designated as the term of the
option as granted under Section 6 or 7 hereof.
(x) "Outside Director" means a member of the Board of Directors or a
director emeritus of the Holding Company or its Affiliates, who is not also an
Employee.
(y) "Outside Director Participant" means an Outside Director who holds an
outstanding Award under the terms of the Plan.
(y) "Participant(s)" means collectively an Employee Participant and/or an
Outside Director Participant who hold(s) outstanding Awards under the terms of
the Plan.
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(z) "Retirement" with respect to an Employee Participant means termination
of employment which constitutes retirement under any tax qualified plan
maintained by the Bank. However, "Retirement" will not be deemed to have
occurred for purposes of this Plan if a Participant continues to serve as a
consultant to or on the Board of Directors of the Holding Company or its
Affiliates even if such Participant is receiving retirement benefits under any
retirement plan of the Holding Company or its Affiliates. With respect to an
Outside Director Participant, "Retirement" means the termination of service from
the Board of Directors of the Holding Company or its Affiliates following
written notice to the Board as a whole of such Outside Director's intention to
retire, except that an Outside Director Participant shall not be deemed to have
"retired" for purposes of the Plan in the event he continues to serve as a
consultant to the Board or as an advisory director or director emeritus,
including pursuant to any retirement plan of the Holding Company or the Bank.
(aa) "Stock Awards" are Awards of Common Stock which may vest immediately
or over a period of time. Vesting of Stock Awards under Section 9 hereof may be
contingent upon the occurrence of specified events or the attainment of
specified performance goals as determined by the Committee.
(bb) "Termination for Cause" shall mean, in the case of a Director, removal
from the Board of Directors, or, in the case of an Employee, termination of
employment, in both such cases as determined by the Board of Directors, because
of Participant's personal dishonesty, incompetence, willful misconduct, any
breach of fiduciary duty involving personal profit, intentional failure to
perform stated duties, willful violation of any law, rule or regulation (other
than traffic violations or similar offenses).
(cc) "Trust" means a trust established by the Board in connection with this
Plan to hold Plan assets for the purposes set forth herein.
(dd) "Trustee" means that person or persons and entity or entities approved
by the Board to hold legal title to any of the Trust assets for the purposes set
forth herein.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Committee. The Committee is
authorized, subject to the provisions of the Plan, to grant awards to Employees
and establish such rules and regulations as it deems necessary for the proper
administration of the Plan and to make whatever determinations and
interpretations in connection with the Plan it deems necessary or advisable. All
determinations and interpretations made by the Committee shall be binding and
conclusive on all Employee Participants and Outside Director Participants in the
Plan and on their legal representatives and beneficiaries.
(b) Awards to Outside Directors of the Holding Company or its Affiliates
shall be granted by the Board of Directors or the Committee, pursuant to the
terms of this Plan.
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(c) Actual transference of the Award requires no, nor allows any,
discretion by the Trustee.
3. TYPES OF AWARDS AND RELATED RIGHTS.
The following Awards and related rights as described below in Paragraphs 6
through 14 hereof may be granted under the Plan:
(a) Non-statutory Stock Options
(b) Incentive Stock Options
(c) Limited Right
(d) Stock Awards
4. STOCK SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 17 hereof, the maximum number
of shares of Common Stock reserved for Awards under the Plan is 312,393 shares
which number may not be excess of 14% of the outstanding shares of the Common
Stock determined immediately as of the Effective Date. Subject to adjustment as
provided in Section 17 hereof, the maximum number of shares of Common Stock
reserved hereby for purchase pursuant to the exercise of Options and
Option-related Awards granted under the Plan is 223,138 shares, which number may
not be in excess of 10% of the outstanding shares of Common Stock as of the
Effective Date. The maximum number of the shares of Common Stock reserved for
award as Stock Awards is 89,255 shares, which number is not in excess of 4% of
the outstanding shares of Common Stock as of the Effective Date. These shares of
Common Stock may be either authorized but unissued shares or authorized shares
previously issued and reacquired by the Holding Company. To the extent that
Options and Stock Awards are granted under the Plan, the shares underlying such
Awards will be unavailable for any other use including future grants under the
Plan except that, to the extent that Stock Awards or Options terminate, expire,
or are forfeited without having been exercised (or in cases where a Limited
Right has been granted in connection with an option, the amount of such Limited
Right received in lieu of the exercise of such option), new Awards may be made
with respect to those shares underlying such terminated, expired or forfeited
Options or Stock Awards.
5. ELIGIBILITY.
Subject to the terms herein, all Employees and Outside Directors shall be
eligible to receive Awards under the Plan.
6. NON-STATUTORY STOCK OPTIONS.
The Committee may, subject to the limitations of the Plan and the
availability of shares reserved but unawarded under the Plan, from time to time,
grant Non-statutory Stock Options to Employees and Outside Directors, upon such
terms and conditions as the Committee may determine and grant Non-statutory
Stock Options in exchange for and upon surrender of
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previously granted Awards under this Plan under such terms and conditions as the
Committee may determine. Non-statutory Stock Options granted under this Plan are
subject to the following terms and conditions:
(a) Exercise Price. The Exercise Price of each Non-statutory Stock Option
shall be determined by the Committee. Such Exercise Price shall not be less than
100% of the Fair Market Value of the Holding Company's Common Stock on the Date
of Grant. Shares of Common Stock underlying a Non-statutory Stock Option may be
purchased only upon full payment of the Exercise Price or upon operation of an
Alternate Option Payment Mechanism set out in Section 13 hereof.
(b) Terms of Non-statutory Stock Options. The term during which each
Non-statutory Stock Option may be exercised shall be determined by the
Committee, but in no event shall a Non-statutory Stock Option be exercisable in
whole or in part more than 10 years from the Date of Grant. The Committee shall
determine the date on which each Non-statutory Stock Option shall become
exercisable. The Committee may also determine as of the Date of Grant any other
specific conditions or specific performance goals which must be satisfied prior
to the Non-statutory Stock Option becoming exercisable. The shares of Common
Stock underlying each Non-statutory Stock Option installment may be purchased in
whole or in part by the Participant at any time during the term of such
Non-statutory Stock Option after such installment becomes exercisable. The
Committee may, in its sole discretion, accelerate the time at which any
Non-statutory Stock Option may be exercised in whole or in part, subject to
applicable rules and regulations. The acceleration of any Non-statutory Stock
Option under the authority of this paragraph shall create no right, expectation
or reliance on the part of any other Participant or that certain Participant
regarding any other unaccelerated Non-statutory Stock Options. Unless determined
otherwise by the Committee and except in the event of the Participant's death or
pursuant to a domestic relations order, a Non-statutory Stock Option is not
transferable and may be exercisable in his lifetime only by the Participant to
whom it is granted. Upon the death of a Participant, a Non-statutory Stock
Option is transferable by will or the laws of descent and distribution.
(c) NSO Agreement. The terms and conditions of any Non-statutory Stock
Option granted shall be evidenced by an agreement (the "NSO Agreement") which
shall be subject to the terms and conditions of the Plan.
(d) Termination of Employment or Service. Unless otherwise determined by
the Committee, upon the termination of a Participant's employment or service for
any reason other than Disability, death or Termination for Cause, the
Participant's Non-statutory Stock Options shall be exercisable only as to those
shares that were immediately exercisable by the Participant at the date of
termination and only for a period of three months following termination;
provided that in the event of termination of a Participant's employment or
service due to Retirement, the Participant shall have up to one year following
the Participant's cessation of employment or service to exercise the
Participant's immediately exercisable Non-statutory Options. Notwithstanding any
provisions set forth herein or contained in any NSO Agreement relating to an
award of a Non-statutory Stock Option, in the event of termination of the
Participant's
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employment or service for Disability or death, all Non-statutory Stock Options
held by such Participant shall immediately vest and be exercisable for one year
after such termination of service, and, in the event of a Termination for Cause,
all rights under the Participant's Non-statutory Stock Options shall expire
immediately upon such Termination for Cause. Notwithstanding the above, in no
event shall any Non-statutory Stock Options be exercisable beyond the expiration
of the Non-Statutory Stock Option term.
7. INCENTIVE STOCK OPTIONS.
The Committee may, subject to the limitations of the Plan and the
availability of shares reserved but unawarded under the Plan, from time to time,
grant Incentive Stock Options to Employees upon such terms and conditions as the
Committee may determine. Incentive Stock Options granted pursuant to the Plan
shall be subject to the following terms and conditions:
(a) Exercise Price. The Exercise Price of each Incentive Stock Option shall
be not less than 100% of the Fair Market Value of the Common Stock on the Date
of Grant. However, if at the time an Incentive Stock Option is granted to an
Employee Participant, such Employee Participant owns Common Stock representing
more than 10% of the total combined voting securities of the Holding Company
(or, under Section 424(d) of the Code, is deemed to own Common Stock
representing more than 10% of the total combined voting power of all classes of
stock of the Holding Company, by reason of the ownership of such classes of
stock, directly or indirectly, by or for any brother, sister, spouse, ancestor
or lineal descendent of such Employee Participant, or by or for any corporation,
partnership, estate or trust of which such Employee Participant is a
shareholder, partner or beneficiary), ("10% Owner"), the Exercise Price per
share of Common Stock deliverable upon the exercise of each Incentive Stock
Option shall not be less than 110% of the Fair Market Value of the Common Stock
on the Date of Grant. Shares may be purchased only upon payment of the full
Exercise Price or upon operation of an Alternate Option Payment Mechanism set
out in Section 13 hereof.
(b) Amounts of Incentive Stock Options. Incentive Stock Options may be
granted to any Employee in such amounts as determined by the Committee; provided
that the amount granted is consistent with the terms of Section 422 of the Code.
In the case of an Option intended to qualify as an Incentive Stock Option, the
aggregate Fair Market Value (determined as of the time the Option is granted) of
the Common Stock with respect to which Incentive Stock Options granted are
exercisable for the first time by the Employee Participant during any calendar
year (under all plans of the Employee Participant's employer corporation and its
parent and subsidiary corporations) shall not exceed $100,000. The provisions of
this Section 7(b) shall be construed and applied in accordance with Section
422(d) of the Code and the regulations, if any, promulgated thereunder. To the
extent an Award of an Incentive Stock Option under this Section 7 exceeds this
$100,000 limit, the portion of the Award in excess of such limit shall be deemed
a Non-statutory Stock Option. The Committee shall have discretion to redesignate
Options granted as Incentive Stock Options as Non-Statutory Stock Options. Such
Non-statutory Stock Options shall be subject to Section 6 hereof.
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(c) Terms of Incentive Stock Options. The term during which each Incentive
Stock Option may be exercised shall be determined by the Committee, but in no
event shall an Incentive Stock Option be exercisable in whole or in part more
than 10 years from the Date of Grant. If at the time an Incentive Stock Option
is granted to an Employee Participant who is a 10% Owner, the Incentive Stock
Option granted to such Employee Participant shall not be exercisable after the
expiration of five years from the Date of Grant. No Incentive Stock Option is
transferable except by will or the laws of descent and distribution and is
exercisable in his lifetime only by the Employee Participant to whom it is
granted. The designation of a beneficiary does not constitute a transfer.
The Committee shall determine the date on which each Incentive Stock Option
shall become exercisable. The Committee may also determine as of the Date of
Grant any other specific conditions or specific performance goals which must be
satisfied prior to the Incentive Stock Option becoming exercisable. The shares
comprising each installment may be purchased in whole or in part at any time
during the term of such Incentive Stock Option after such installment becomes
exercisable. The Committee may, in its sole discretion, accelerate the time at
which any Incentive Stock Option may be exercised in whole or in part, subject
to applicable rules and regulations. The acceleration of any Incentive Stock
Option under the authority of this paragraph shall not create a right,
expectation or reliance on the part of any other Participant or that certain
Participant regarding any other unaccelerated Incentive Stock Options.
(d) ISO Agreement. The terms and conditions of any Incentive Stock Option
granted shall be evidenced by an agreement (the "ISO Agreement") which shall be
subject to the terms and conditions of the Plan.
(e) Termination of Employment. Unless otherwise determined by the
Committee, upon the termination of an Employee Participant's employment for any
reason other than Disability, death or Termination for Cause, the Employee
Participant's Incentive Stock Options shall be exercisable only as to those
shares that were immediately exercisable by the Participant at the date of
termination and only for a period of three months following termination, except
that in the event of the termination of an Employee Participant's employment due
to Retirement, the Participant shall have up to one year following the
Participant's cessation of employment to exercise any Incentive Stock Options
exercisable on that date. Notwithstanding any provision set forth herein or
contained in any ISO Agreement relating to an award of an Incentive Stock
Option, in the event of termination of the Employee Participant's employment for
Disability or death, all Incentive Stock Options held by such Employee
Participant shall immediately vest and be exercisable for one year after such
termination, and, in the event of Termination for Cause, all rights under the
Employee Participant's Incentive Stock Options shall expire immediately upon
termination. Notwithstanding anything contained herein to the contrary, no
Incentive Stock Option shall be eligible for treatment as an Incentive Stock
Option in the event such Incentive Stock Option is exercised more than three
months following the date of a Participant's cessation of employment. In no
event shall an Incentive Stock Option be exercisable beyond the expiration of
the Incentive Stock Option term.
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(f) Compliance with Code. The Incentive Stock Options granted under this
Section 7 are intended to qualify as "incentive stock options" within the
meaning of Section 422 of the Code, but the Holding Company makes no warranty as
to the qualification of any Option as an incentive stock option within the
meaning of Section 422 of the Code. All Options that do not so qualify shall be
treated as Non-statutory Stock Options.
8. LIMITED RIGHT.
Simultaneously with the grant of any Option to an Employee, the Committee
may grant a Limited Right with respect to all or some of the shares covered by
such Option. Limited Rights granted under this Plan are subject to the following
terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be exercisable in
whole or in part before the expiration of six months from the Date of Grant of
the Limited Right. A Limited Right may be exercised only in the event of a
Change in Control.
The Limited Right may be exercised only when the underlying Option is
eligible to be exercised, and only when the Fair Market Value of the underlying
shares on the day of exercise is greater than the Exercise Price of the
underlying Option.
Upon exercise of a Limited Right, the underlying Option shall cease to be
exercisable. Upon exercise or termination of an Option, any related Limited
Rights shall terminate. The Limited Rights may be for no more than 100% of the
difference between the purchase price and the Fair Market Value of the Common
Stock subject to the underlying option. The Limited Right is transferable only
when the underlying option is transferable and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall promptly
receive from the Holding Company an amount of cash equal to the difference
between the Exercise Price of the underlying option and the Fair Market Value of
the Common Stock subject to the underlying Option on the date the Limited Right
is exercised, multiplied by the number of shares with respect to which such
Limited Right is exercised. Payments shall be less any applicable tax
withholding as set forth in Section 18 hereof.
9. STOCK AWARD.
The Committee (or in the case of an Outside Director Participant, the Board
of Directors) may, subject to the limitations of the Plan, from time to time,
make an Award of shares of Common Stock to Employees and Outside Directors
("Stock Awards"). The Stock Awards shall be made subject to the following terms
and conditions:
(a) Payment of the Stock Award. The Stock Award may only be made in whole
shares of Common Stock. Stock Awards may only be granted from shares reserved
under the Plan but unawarded at the time the new Stock Award is made.
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(b) Terms of the Stock Awards. The Committee shall determine the dates on
which Stock Awards granted to a Participant shall vest and any specific
conditions or performance goals which must be satisfied prior to the vesting of
any installment or portion of the Stock Award. Notwithstanding other paragraphs
in this Section 9, the Committee may, in its sole discretion, accelerate the
vesting of any Stock Award. The acceleration of any Stock Award under the
authority of this paragraph shall create no right, expectation or reliance on
the part of any other Participant or that certain Participant regarding any
other unaccelerated Stock Awards.
(c) Stock Award Agreement. The terms and conditions of any Stock Award
shall be evidenced by an agreement (the "Stock Award Agreement") which such
Stock Award Agreement will be subject to the terms and conditions of the Plan.
Each Stock Award Agreement shall set forth:
(i) the period over which the Stock Award will vest;
(ii) the performance goals, if any, which must be satisfied prior to
the vesting of any installment or portion of the Stock Award. The
performance goals may be set by the Committee on an individual
level, for all Participants, for all Awards made during a given
period of time, or for all Awards for indefinite periods;
(d) Certification of Attainment of the Performance Goal. No Stock Award or
portion thereof that is subject to a performance goal is to be distributed to
the Participant until the Committee certifies that the underlying performance
goal has been achieved.
(e) Termination of Employment or Service. Unless otherwise determined by
the Committee, upon the termination of a Participant's employment or service for
any reason other than Disability, death or Termination for Cause, the
Participant's unvested Stock Awards as of the date of termination shall be
forfeited and any rights the Participant had to such unvested Stock Awards shall
become null and void. Notwithstanding any provisions set forth herein or
contained in any NSO Agreement relating to an award of a Non-statutory Stock
Option, in the event of termination of the Participant's service due to
Disability or death, all unvested Stock Awards held by such Participant shall
immediately vest and, in the event of the Participant's Termination for Cause,
the Participant's unvested Stock Awards as of the date of such termination shall
be forfeited and any rights the Participant had to such unvested Stock Awards
shall become null and void.
(f) Non-Transferability. Except to the extent permitted by the Code, the
rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules:
(i) The recipient of a Stock Award shall not sell, transfer, assign,
pledge, or otherwise encumber shares subject to the Stock Award
until full vesting of such shares has occurred. For purposes of
this section, the separation of beneficial ownership and legal
title through the use of any "swap" transaction is deemed to be a
prohibited encumbrance.
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(ii) Unless determined otherwise by the Committee and except in the
event of the Participant's death or pursuant to a domestic
relations order, a Stock Award is not transferable and may be
earned in his lifetime only by the Participant to whom it is
granted. Upon the death of a Participant, a Stock Award is
transferable by will or the laws of descent and distribution. The
designation of a beneficiary does not constitute a transfer.
(iii) If a recipient of a Stock Award is subject to the provisions of
Section 16 of the Exchange Act, shares of Common Stock subject to
such Stock Award may not, without the written consent of the
Committee (which consent may be given in the Stock Award
Agreement), be sold or otherwise disposed of within six months
following the date of grant of the Stock Award.
(g) Accrual of Dividends. Whenever shares of Common Stock underlying a
Stock Award are distributed to a Participant or beneficiary thereof under the
Plan, such Participant or beneficiary shall also be entitled to receive, with
respect to each such share distributed, a payment equal to any cash dividends or
distributions (other than distributions in shares of Common Stock) and the
number of shares of Common Stock equal to any stock dividends, declared and paid
with respect to a share of the Common Stock if the record date for determining
shareholders entitled to receive such dividends falls between the date the
relevant Stock Award was granted and the date the relevant Stock Award or
installment thereof is issued. There shall also be distributed an appropriate
amount of net earnings, if any, of the Trust with respect to any dividends paid
out.
(h) Voting of Stock Awards. After a Stock Award has been granted but for
which the shares covered by such Stock Award have not yet been earned and
distributed to the Participant pursuant to the Plan, the Participant shall be
entitled to direct the Trustee as to the voting of such shares of Common Stock
which the Stock Award covers subject to the rules and procedures adopted by the
Committee for this purpose. All shares of Common Stock held by the Trust as to
which Participants are not entitled to direct, or have not directed, the voting,
shall be voted by the Trustee in the same proportion as the Common Stock covered
by Stock Awards which have been awarded is voted.
10. PAYOUT ALTERNATIVES
Payments due to a Participant upon the exercise or redemption of an Award,
may be made subject to the following terms and conditions:
(a) Discretion of the Committee. The Committee has the sole discretion to
determine what form of payment (whether monetary, Common Stock, a combination of
payout alternatives or otherwise) it shall use in making distributions of
payments for all Awards. If the Committee requests any or all Participants to
make an election as to form of distribution or payment, it shall not be
considered bound by the election.
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(b) Payment in the form of Common Stock. Any shares of Common Stock
tendered in satisfaction of an obligation arising under this Plan shall be
valued at the Fair Market Value of the Common Stock on the day preceding the
date of the issuance of such stock to the Participant.
11. ALTERNATE OPTION PAYMENT MECHANISM
The Committee has sole discretion to determine what form of payment it will
accept for the exercise of an Option. The Committee may indicate acceptable
forms in the ISO or NSO Agreement covering such Options or may reserve its
decision to the time of exercise. No Option is to be considered exercised until
payment in full is accepted by the Committee or its agent.
(a) Cash Payment. The exercise price may be paid in cash or by certified
check.
(b) Borrowed Funds. To the extent permitted by law, the Committee may
permit all or a portion of the exercise price of an Option to be paid through
borrowed funds.
(c) Exchange of Common Stock.
(i) The Committee may permit payment by the tendering of previously
acquired shares of Common Stock. This includes the use of
"pyramiding transactions" whereby some number of Options are
exercised; then the shares gained through the exercise are
tendered back to the Holding Company as payment for a greater
number of Options. This transaction may be repeated as needed to
exercise all of the Options available.
(ii) Any shares of Common Stock tendered in payment of the exercise
price of an Option shall be valued at the Fair Market Value of
the Common Stock on the date prior to the date of exercise.
12. RIGHTS OF A SHAREHOLDER: NONTRANSFERABILITY.
No Participant shall have any rights as a shareholder with respect to any
shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such shares. Nothing in this Plan or in any Award granted
confers on any person any right to continue in the employ or service of the
Holding Company or its Affiliates or interferes in any way with the right of the
Holding Company or its Affiliates to terminate a Participant's services as an
officer or other employee at any time.
Except as permitted under the Code (with respect to Incentive Stock
Options) and the rules promulgated pursuant to Section 16(b) of the Exchange Act
or any successor statutes or rules, no Award under the Plan shall be
transferable by the Participant other than by will or the laws of intestate
succession or pursuant to a domestic relations order or unless determined
otherwise by the Committee.
A-12
<PAGE>
13. AGREEMENT WITH GRANTEES.
Each Award will be evidenced by a written agreement(s) (whether
constituting an NSO Agreement, ISO Agreement, Stock Award Agreement or any
combination thereof), executed by the Participant and the Holding Company or its
Affiliates that describes the conditions for receiving the Awards including the
date of Award, the Exercise Price if any, the terms or other applicable periods,
and other terms and conditions as may be required or imposed by the Plan, the
Committee, or the Board of Directors, and may describe or specify tax law
considerations or applicable securities law considerations.
14. DESIGNATION OF BENEFICIARY.
A Participant may, with the consent of the Committee, designate a person or
persons to receive, in the event of death, any Award to which the Participant
would then be entitled. Such designation will be made upon forms supplied by and
delivered to the Holding Company and may be revoked in writing. If a Participant
fails effectively to designate a beneficiary, then the Participant's estate will
be deemed to be the beneficiary.
15. DILUTION AND OTHER ADJUSTMENTS.
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Holding Company, or in the event a capital
distribution is made the Committee will make such adjustments to Awards to
prevent dilution, diminution or enlargement of the rights of the Participant, as
the Committee deems appropriate, including any or all of the following:
(a) adjustments in the aggregate number or kind of shares of Common Stock
or other securities that may underlie future Awards under the Plan;
(b) adjustments in the aggregate number or kind of shares of Common Stock
or other securities underlying Awards already made under the Plan;
(c) adjustments in the exercise price of outstanding Incentive and/or
Non-statutory Stock Options, or any Limited Rights attached to such Options.
Alternatively, the Committee could provide the participant with a cash
benefit for shares underlying vested, but unexercised options, in order to
achieve the aforementioned effect. All Awards under this Plan shall be binding
upon any successors or assigns of the Holding Company.
A-13
<PAGE>
16. TAX WITHHOLDING.
Awards under this Plan shall be subject to tax withholding to the extent
required by any governmental authority. Any withholding shall comply with Rule
16b-3 or any amendment or successive rule. Shares of Common Stock withheld to
pay for tax withholding amounts shall be valued at their Fair Market Value on
the date the Award is deemed taxable to the Participant.
17. AMENDMENT OF THE PLAN.
The Board of Directors may at any time, and from time to time, subject to
applicable rules and regulations, modify or amend the Plan or any Award granted
under the Plan in any respect, prospectively or retroactively; provided however,
that provisions governing grants of Incentive Stock Options, unless permitted by
the rules and regulations or staff pronouncements promulgated under the Code
shall be submitted for shareholder approval to the extent required by such law,
regulation or interpretation.
Failure to ratify or approve amendments or modifications by shareholders
shall be effective only as to the specific amendment or modification requiring
such ratification. Other provisions, sections, and subsections of this Plan will
remain in full force and effect.
No such termination, modification or amendment may adversely affect the
rights of a Participant under an outstanding Award without the written
permission of such Participant.
18. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon being presented to shareholders for
ratification for purposes of: (i) obtaining preferential tax treatment for
Incentive Stock Options; and (ii) maintaining the listing of the Common Stock on
the NASDAQ Stock Market National Market System. The failure to obtain
shareholder ratification for such purposes will not effect the validity of the
Plan and the Options thereunder, provided, however, that if the Plan is not
ratified, the Plan shall remain in full force and effect, and any Incentive
Stock Options granted under the Plan shall be deemed to be Non-statutory Stock
Options.
19. TERMINATION OF THE PLAN.
The right to grant Awards under the Plan will terminate upon the earlier
of: (i) ten (10) years after the Effective Date; (ii) the issuance of a number
of shares of Common Stock pursuant to the exercise of Options or the
distribution of Stock Awards which together with the exercise of Limited Rights
is equivalent to the maximum number of shares reserved under the Plan as set
forth in Section 4. The Board of Directors has the right to suspend or terminate
the Plan at any time, provided that no such action will, without the consent of
a Participant, adversely affect a Participant's vested rights under a previously
granted Award.
A-14
<PAGE>
20. APPLICABLE LAW.
The Plan will be administered in accordance with the laws of the State of
Delaware and applicable federal law.
21. COMPLIANCE WITH OTS CONVERSION REGULATIONS
Notwithstanding any other provision contained in this Plan:
(a) unless the Plan is approved by a majority vote of the outstanding
shares of the total votes eligible to be cast at a duty called meeting of
stockholders to consider the Plan, as required by 12 CFR ss.563b.3(g)(4)(vii),
the Plan shall not become effective or implemented prior to June 27, 1997;
(b) no Award granted prior to one year from the Bank's conversion from
mutual to stock form shall become vested or exercisable at a rate in excess of
20% per year of the total number of Stock Awards or Options (whichever may be
the case) granted to such Participant, provided, that Awards shall become fully
vested or immediately exercisable in the event of a Participant's termination of
service due to death or Disability;
(c) no Award granted to any individual employee prior to June 27, 1997 may
exceed 25% of the total amount of Awards which may be granted under the Plan;
(d) no Award granted to any individual Outside Director prior to June 27,
1997 may exceed 5% of the total amount of Awards which may be granted under the
Plan; and
(e) the aggregate amount of Awards granted to all Outside Directors prior
to June 27, 1997 may not exceed 30% of the total amount of Awards which may be
granted under the Plan.
22. DELEGATION OF AUTHORITY
The Committee may delegate all authority for: the determination of forms of
payment to be made by or received by the Plan; the execution of Award
agreements; the determination of Fair Market Value; the determination of all
other aspects of administration of the plan to the executive officer(s) of the
Holding Company or the Bank. The Committee may rely on the descriptions,
representations, reports and estimate provided to it by the management of the
Holding Company or the Bank for determinations to be made pursuant to the Plan,
including the attainment of performance goals. However, only the Committee or a
portion of the Committee may certify the attainment of a performance goal.
A-15
<PAGE>
IN WITNESS WHEREOF, the Holding Company has established this Plan to be
executed by its duly authorized executive officer and the corporate seal to be
affixed and duly attested, effective as of the ______ day of ________________,
1996.
[CORPORATE SEAL] WAYNE BANCORP, INC.
By:
- -------------------------- -------------------------------
Date Chairman of the Board
ADOPTED BY THE BOARD OF DIRECTORS:
By:
- -------------------------- -------------------------------
Date Secretary
APPROVED BY STOCKHOLDERS:
By:
- -------------------------- -------------------------------
Date Secretary
A-16
<PAGE>
<TABLE>
<CAPTION>
PROXY
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
<S> <C> <C> <C> <C>
WAYNE BANCORP, INC. 1. The approval of the Wayne For Against Abstain
Bancorp, Inc. 1996 Stock-Based [ ] [ ] [ ]
SPECIAL MEETING OF SHAREHOLDERS Incentive Plan.
JANUARY 30, 1997
2:00 p.m. Eastern Time
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS THE LISTED PROPOSAL.
The undersigned hereby appoints the official proxy The undersigned acknowledges receipt from the Company
committee of the Board of Directors of Wayne Bancorp, Inc. prior to the execution of this proxy of a Notice of Special
(the "Company"), each with full power of substitution, to Meeting of Shareholders and of a Proxy Statement dated
act as proxies for the undersigned, and to vote all shares December 9, 1996.
of Common Stock of the Company which the undersigned is
entitled to vote only at the Special Meeting of
Stockholders, to be held on January 30, 1997, at 2:00 p.m.
Eastern Time, at Wayne Savings Bank, FSB's administrative
office at 1195 Hamburg Turnpike, Wayne, New Jersey, and at
any and all adjournments thereof.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED,
BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE
VOTED FOR THE PROPOSAL LISTED. IF ANY OTHER BUSINESS IS
PRESENTED AT THE SPECIAL MEETING, INCLUDING WHETHER OR NOT
TO ADJOURN THE 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 SPECIAL MEETING.
________________________
Please be sure to sign and date | Date |
this Proxy in the box below. | |
___________________________________________|________________________|
| |
| |
| |
| |
|____Stockholder sign above________Co-holder (if any) sign above____|
- ----------------------------------------------------------------------------------------------------------------------------------
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
_________________________________________________________________________________________________________________________________
| |
| WAYNE BANCORP, INC. |
| |
| NOTE: Please sign exactly as your name appears on this card. When signing as attorney, executor, administrator, trustee or |
| guardian, please give your full title. If shares are held jointly, each holder may sign but only one signature is required. |
| |
| IMPORTANT: IF YOU RECEIVE MORE THAN ONE CARD, PLEASE SIGN AND RETURN ALL CARDS IN THE ACCOMPANYING ENVELOPE. |
| |
| PLEASE ACT PROMPTLY |
| |
| SIGN, DATE & MAIL YOUR PROXY CARD TODAY |
|________________________________________________________________________________________________________________________________|
</TABLE>
