SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to
Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/X/ Preliminary Proxy Statement /_/ Confidential, for
/_/ Definitive Proxy Statement use of the
/_/ Definitive Additional Materials Commission Only (as
/_/ Soliciting Material Pursuant permitted by Rule
to Rule 14a-11(c) or Rule 14a-12 14a-6(e)(2))
EQUALITY BANCORP, INC.
(Name of Registrant as Specified in its Charter)
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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/_/ 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:<PAGE>
<PAGE> 2
EQUALITY BANCORP, INC.
9920 Watson Road
St. Louis, Missouri 63126
(314) 965-7090
July 7, 1998
Dear Stockholder:
On behalf of the Board of Directors and the management of Equality
Bancorp, Inc., you are cordially invited to attend the Annual Meeting
of Stockholders of Equality Bancorp, Inc. to be held at 558 Gravois
Road, Fenton, Missouri on Friday, August 14, 1998, at 4:00 p.m.,
Central Time.
The attached Notice of the Annual Meeting and Proxy Statement
describes the formal business to be transacted at the meeting. During
the meeting, we will also report on the operations of the company.
Directors and officers of the company, as well as a representative of
KPMG Peat Marwick LLP, the company's independent auditors, will be
present to respond to any questions stockholders may have.
YOUR VOTE IS VERY IMPORTANT. TO ENSURE PROPER REPRESENTATION OF YOUR
SHARES AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE AS SOON
AS POSSIBLE EVEN IF YOU CURRENTLY PLAN TO ATTEND THE MEETING. THIS
WILL NOT PREVENT YOU FROM VOTING IN PERSON BUT WILL ASSURE THAT YOUR
VOTE IS COUNTED IF YOU ARE UNABLE TO ATTEND THE MEETING.
Thank you for your continued support.
Sincerely,
Richard C. Fellhauer
Chairman of the Board, President and Chief Executive Officer<PAGE>
<PAGE> 3
EQUALITY BANCORP, INC.
9920 Watson Road
St. Louis, Missouri 63126
(314) 965-7090
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 14, 1998
----------------------------------------
NOTICE IS HEREBY GIVEN, that the Annual Meeting of Stockholders
(the "Meeting") of Equality Bancorp, Inc. ("Equality") will be held at
558 Gravois Road, Fenton, Missouri on Friday, August 14, 1998, at 4:00
p.m., Central Time.
The Meeting is for the purpose of considering and acting upon:
1. the election of three directors of Equality;
2. the approval of Equality's 1997 Stock Option and Incentive
Plan (the "Option Plan");
3. the approval of Equality's Management Development and
Recognition Plan (the "MRP");
4. a proposal to adjourn the Meeting in the event that
Equality's management should determine in its sole
discretion, at the time of the Meeting, that such
adjournment is in the best interest of Equality and its
stockholders, which would include adjourning the Meeting to
enable management to solicit additional proxies, which may
be necessary to ensure approval of the Option Plan and the
MRP; and
5. such other matters as may properly come before the Meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on June
30, 1998, as the record date for the determination of stockholders
entitled to vote at the Meeting and any adjournments thereof.<PAGE>
<PAGE> 4
You are requested to complete and sign the enclosed proxy card,
which is solicited by the Board of Directors, and to mail it promptly
in the enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
Richard C. Fellhauer
Chairman of the Board, President and
Chief Executive Officer
St. Louis, Missouri
July 7, 1998
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE EQUALITY THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM.
A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.<PAGE>
<PAGE> 5
PROXY STATEMENT
OF
EQUALITY BANCORP, INC.
9920 Watson Road
St. Louis, Missouri 63126
(314) 965-7090
ANNUAL MEETING OF STOCKHOLDERS
August 14, 1998
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Equality Bancorp,
Inc. to be used at the 1998 Annual Meeting of Stockholders (the
"Meeting"). The Meeting will be held at 558 Gravois Road, Fenton,
Missouri on Friday, August 14, 1998, at 4:00 p.m., Central Time. The
accompanying Notice of Meeting, this Proxy Statement and the Proxy
Card are being first mailed to stockholders on or about July 7, 1998.
Equality Bancorp, Inc. ("Equality") is a Delaware corporation
formed at the direction of Equality Savings and Loan Association,
F.A., in connection with its Plan of Conversion and Reorganization
adopted May 14, 1997, pursuant to which Equality Savings and Loan
Association, F.A. became a wholly-owned subsidiary of Equality
Bancorp, Inc. (the "Reorganization and Conversion") and changed its
name to Equality Savings Bank (the "Bank") on December 1, 1997.
Stockholders who execute proxies retain the right to revoke them
at any time. Unless so revoked, the shares represented by such
proxies will be voted at the Meeting and all adjournments thereof. A
stockholder who has executed a proxy has the power to revoke it at any
time before it is voted by delivering written notice of revocation to
the Secretary of Equality at 9920 Watson Road, St. Louis, Missouri
63126, by executing and delivering a subsequently dated proxy or by
attending the Meeting and voting in person. Proxies solicited by the
Board of Directors of Equality will be voted in accordance with the
directions given therein. WHERE NO INSTRUCTIONS ARE INDICATED,
PROXIES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF DIRECTORS SET FORTH BELOW.
A quorum of stockholders is necessary to take action at the
Meeting. Shares of Common Stock of Equality ("Common Stock")
represented in person or by proxy at the Meeting will be counted for
purposes of determining whether or not a quorum is present at the
Meeting. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of Common Stock at the Meeting will
constitute a quorum. Abstentions and broker non-votes will be counted
for purposes of determining the presence or absence of a quorum. A
"broker non-vote" will occur with respect to a given proposal when a
broker holding shares in street name (I.E., as nominee for the<PAGE>
<PAGE> 6
beneficial owner) returns an executed proxy (or voting directions)
indicating that the broker does not have discretionary authority to
vote on a proposal. Directors are elected by a plurality of the
votes cast by the shares entitled to vote in the election at a meeting
at which a quorum is present. "Plurality" means that the three
individuals with the largest number of votes will be elected as
directors. Abstentions and broker non-votes will not affect the
plurality vote required for the election of directors. The Option
Plan and the MRP must be approved by a majority of the total votes
eligible to be cast at the Meeting. Therefore, abstentions and broker
non-votes will have the same effect as votes against approval of the
Option Plan and the MRP.
The expenses of solicitation, including the cost of printing and
mailing, will be paid by Equality. Proxies are being solicited
principally by mail and by telephone. Illinois Stock Transfer
Company, Chicago, Illinois, has been retained by Equality to act as a
proxy solicitor. In addition, directors, officers and regular
employees of Equality may solicit proxies personally, by telephone, by
fax or by special letter. Equality may also reimburse brokers,
nominees and other fiduciaries for their reasonable expenses in
forwarding proxy solicitation material to beneficial owners.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
-----------------------------------------------
Stockholders of record as of the close of business on June 30,
1998 (the "Record Date"), are entitled to one vote for each share of
Common Stock then held. As of the Record Date, Equality had 2,517,534
shares of Common Stock issued and outstanding.
The following table sets forth, as of March 31, 1998, the number
of shares of Common Stock beneficially owned by each director of
Equality, each executive officer named in the Summary Compensation
Table below, and all directors and executive officers of Equality as a
group. Equality does not know of any other person who is the
beneficial owner of more than five percent of the outstanding shares
of Common Stock.<PAGE>
<PAGE> 7
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OUTSTANDING
------------------------ ------------------------ ----------
<S> <C> <C>
GREATER THAN 5% OWNERS:
Equality Employee Stock
Ownership Plan Trust
4131 South Grand Boulevard
St. Louis, Missouri 63118 198,871 7.94%
DIRECTORS:
Daniel C. Aubuchon 13,958 *
Stacey W. Braswell(2) 20,746 *
LeRoy C. Crook 6,277 *
Michael A. Deelo(3) 78,856 3.12%
Richard C. Fellhauer(4) 103,393 4.08%
Kenneth J. Hrdlicka(5) 16,959 *
Berenice J. Mahacek(6) 49,151 1.96%
Michael J. Walsh(7) 42,817 1.71%
Charles J. Wolter(8) 27,738 *
EXECUTIVE OFFICERS:
Leonard O. Wolter(9) 12,671 *
ALL DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP (10 PERSONS) 372,566 14.45%
* Less than 1%.
1 Unless otherwise indicated, the nature of beneficial ownership for shares shown in this column is sole
voting and investment power.
2 Of the 20,746 shares reported as beneficially owned by Mr. Braswell, 1,594 are held for his minor
children.
3 Mr. Deelo is also an executive officer. Of the 78,856 shares reported as beneficially owned by Mr. Deelo,
9,975 are held by his spouse.
4 Mr. Fellhauer is also an executive officer. Of the 103,393 shares beneficially owned by Mr. Fellhauer,
3,175 are held by his spouse and 1,586 are held for his minor children.
5 Of the 16,959 shares reported as beneficially owned by Mr. Hrdlicka, 1,218 are held by his spouse.
6 Of the 49,151 shares reported as beneficially owned by Ms. Mahacek, 5,326 are held by her spouse.
7 Of the 42,817 shares reported as beneficially owned by Mr. Walsh, 5,101 are held by his spouse.
8 Of the 27,738 shares reported as beneficially owned by Mr. Wolter, 3,000 are held by his spouse.
9 Of the 12,671 shares reported as beneficially held by Mr. Wolter, 2,742 are held by his spouse and 50 are
held for his minor child.
</TABLE>
<PAGE>
<PAGE> 8
PROPOSAL I - ELECTION OF THREE DIRECTORS
Equality's Certificate of Incorporation provides for a Board of
Directors consisting of nine directors, divided into three classes
with staggered three-year terms expiring at the annual meeting in the
years indicated: LeRoy C. Crook, Kenneth J. Hrdlicka and Michael J.
Walsh, 1998, Richard C. Fellhauer, Daniel C. Aubuchon and Stacey W.
Braswell, 1999 and Berenice J. Mahacek, Charles J. Wolter and Michael
A. Deelo, 2000. Upon the recommendation of the nominating committee,
the Board of Directors has nominated for reelection as directors LeRoy
C. Crook, Kenneth J. Hrdlicka and Michael J. Walsh, each for a term of
three years. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
REELECTION OF MESSRS. CROOK, HRDLICKA AND WALSH.
If any nominee is unable to serve, the shares represented by all
valid proxies will be voted for the election of such substitute
nominees as the Board of Directors may recommend or the Board of
Directors may reduce the size of the Board. At this time, the Board
knows of no reason why any nominee might be unavailable to serve. The
three individuals receiving the highest number of votes cast will be
elected as directors of Equality.
The following table sets forth certain information with respect
to the persons who currently serve as members of the Board of
Directors of Equality.
DIRECTORS OF EQUALITY
<TABLE>
<CAPTION>
Age at Position Held Director Term
Name March 31, 1998 With Equality Since* Expires
---- -------------- ------------- ------ ------
<S> <C> <C> <C> <C>
LeRoy C. Crook 89 Director 1965 1998
Kenneth J. Hrdlicka 55 Director 1983 1998
Michael J. Walsh 54 Director 1986 1998
Daniel C. Aubuchon 50 Director 1981 1999
Stacey W. Braswell 54 Director 1982 1999
Richard C. Fellhauer 56 Director, Chairman of the Board, 1973 1999
President and Chief Executive Officer
Michael A. Deelo 42 Director, Treasurer and 1994 2000
Chief Financial Officer
Berenice J. Mahacek 64 Director 1982 2000
Charles J. Wolter 80 Director 1989 2000
* The person named has been a director of Equality or the Bank since
the date indicated.
</TABLE>
The business experience for the past five years of each of the
current directors is as follows:
<PAGE>
<PAGE> 9
LeRoy C. Crook, now retired, was a Vice President of Vess
Bottling Company.
Kenneth J. Hrdlicka has been the Director of Business Development
of Anheuser Busch, Inc. for more than the past five years.
Michael J. Walsh has been a Vice President of Equality Commodity
Corp., a subsidiary of the Bank for more than the past five years.
Daniel C. Aubuchon has been a partner with the law firm of
Aubuchon, Raniere & Lally, P.C. for more than the past five years.
Stacey W. Braswell has been a principal stockholder and Vice
President of Blaine-Braswell and Associates, an insurance agency, for
more than the past five years.
Richard C. Fellhauer has been affiliated with the Bank since 1966
and assumed the position of Chairman of the Board, President and Chief
Executive Officer in 1982. He became President and Chief Executive
Officer of Equality in June, 1997.
Michael A. Deelo has been a Senior Executive Vice President and
Chief Financial Officer of the Bank since 1997. From August 1996
until August 1997, he served as Executive Vice President and Chief
Financial Officer of the Bank. Prior to that time, he served as Vice
President and Chief Financial Officer of the Bank. He became
Treasurer and Chief Financial Officer of Equality in June, 1997.
Berenice J. Mahacek has been retired since 1996. Prior to that
time she was a Senior Vice President of the Bank.
Charles J. Wolter has been the President of Realty Net-Wolter
Real Estate for more than the past five years. Charles J. Wolter is
the father of Leonard O. Wolter, an executive officer of Equality.
MEETINGS AND COMMITTEES OF THE BOARDS OF DIRECTORS
Equality has established two standing committees: audit and
compensation. The Board of Directors intends for each committee to
meet only a few times each year as needed.
Directors Aubuchon, Hrdlicka and Mahacek are members of the audit
committee. The audit committee is principally responsible for
recommending which firm to engage as Equality's external auditor and
for reviewing Equality's annual financial statements and matters
relating thereto. The audit committee met four times during the
fiscal year ended March 31, 1998.
Directors Aubuchon, Braswell and Hrdlicka are members of the
compensation committee. The compensation committee is principally
responsible for administering Equality's benefit plans and addressing
other compensation issues. The Option Plan and MRP will be
<PAGE>
<PAGE> 10
administered by the compensation committee. The compensation
committee met one time during the fiscal year ended March 31, 1998.
The full Board of Directors of Equality acts on matters relating
to the nomination of directors. The Board of Directors of Equality
conducts its business through meetings and committees of the Board.
During the fiscal year ended March 31, 1998, the Board of Directors
held 17 meetings. No director of Equality attended fewer than 75% of
the total meetings of the Board and committee on which such Board
member served during this period.
DIRECTORS' FEES
Equality's Board of Directors meets quarterly. The Directors of
Equality do not receive any fees in consideration of their service.
Members of the Board of Directors of the Bank receive a fee of
$600 for each Board meeting attended. No fees are paid for attending
committee meetings of the Board. Associate directors of the Bank
receive $500 for each Board meeting attended.
EXECUTIVE OFFICERS
Equality has three executive officers. Mr. Fellhauer is the
President and Chief Executive Officer of Equality. Mr. Deelo is the
Treasurer and Chief Financial Officer of Equality. For information
concerning Messrs. Fellhauer's and Deelo's business experience, see "-
Directors of Equality." Leonard O. Wolter is Vice President of
Equality. Mr. Wolter is also a Vice President of the Bank and Senior
Vice President of Equality Mortgage Corp., a subsidiary of the Bank,
and has held such positions for more than the past five years.
Leonard O. Wolter is the son of Charles J. Wolter, a director of
Equality.
EXECUTIVE COMPENSATION
The table below sets forth the total amount of cash compensation
awarded to, earned by or paid to Richard C. Fellhauer, Equality's
President and Chief Executive Officer, during the fiscal year ended
March 31, 1998. Such compensation was paid to Mr. Fellhauer with
respect to his position as the Bank's President and Chief Executive
Officer. No compensation was paid to Mr. Fellhauer or the other
executive officers of Equality for their services as such. No other
officer of Equality received compensation in excess of $100,000 during
the fiscal year ended March 31, 1998.
<PAGE>
<PAGE> 11
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
------------------------------------- -----------------------------------------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS OPTIONS COMPENSATION(2)
------------------- ---- ------ ----- --------------- ------ ------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard C. 1998 $138,000 -- $10,200 -- $3,000
Fellhauer 1997 $141,000 -- $6,700 -- -- $3,300
President & Chief 1996 $125,000 $10,000 $6,500 -- 5,000 $4,700
Executive Officer
____________________
1 Consisting solely of directors' fees as a director of the Bank.
2 Represents the dollar value of matching and discretionary profit sharing contributions pursuant to the Bank's
tax qualified thrift plan and ESOP contributions (based on the value of the Common Stock on the date the
Common Stock was allocated) made by the Bank for the fiscal years ended March 31, 1996, 1997, and 1998.
</TABLE>
The following table sets forth information regarding the fiscal
year-end values of unexercised options under the 1993 Stock Option and
Incentive Plan of the Bank held by the named executive officer.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
AT FISCAL YEAR END FISCAL YEAR END (1)
------------------------- --------------------
SHARES
ACQUIRED VALUE EXER- UNEXER- EXER- UNEXER-
NAME ON EXERCISE REALIZED CISABLE CISABLE CISABLE CISABLE
---- ---------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Fellhauer 7,505 $90,173 29,947 --- $344,803 ---
President & Chief
Executive Officer
___________________
1 This amount represents the difference between the market value of one share of Equality's Common Stock on
March 31, 1998 ($15.375) and the option exercise price multiplied by the total number of shares subject to
exercisable or unexercisable options, as the case may be.
</TABLE>
EMPLOYMENT AGREEMENTS
Equality has entered into new employment agreements with Richard
C. Fellhauer, President and Chief Executive Officer of Equality and
the Bank, Michael A. Deelo, Treasurer and Chief Financial Officer of
Equality and Executive Vice President and Chief Financial Officer of
the Bank, and Leonard O. Wolter, Vice President of Equality and of the<PAGE>
<PAGE> 12
Bank (each an "executive," or the "executives"). Each employment
agreement provides that the individual will be employed for a three-
year term. Such term may be extended for additional one-year periods
by action of the Board of Directors of Equality taken on each
successive anniversary of the effective date of the employment
agreement. Each of Messrs. Fellhauer, Deelo and Wolter may terminate
their employment agreements at any time upon 90 days' prior written
notice to the Boards of Directors of Equality and the Bank.
Under the employment agreements, the base annual salary for each
executive may be increased from time to time during the term of the
employment agreement in the sole discretion of the Board of Directors
of Equality, but the executive's salary shall not be reduced below the
level then in effect. In addition, the executive will be entitled to
participate in incentive compensation plans or arrangements as may
from time to time be established by Equality or the Bank on a basis
consistent with the treatment of other executive officers of Equality
or the Bank, but recognizing differences in responsibilities among
executive officers. The executive also shall be entitled to receive
any other bonus or discretionary compensation payments as the Board of
Directors of Equality may determine from time to time. Pursuant to
the employment agreements, each executive also will be provided such
other benefits (including but not limited to medical, health, life and
other insurance coverage) and will be entitled to participate in such
retirement plans of Equality and the Bank, as are generally made
available to other executive officers of Equality or the Bank. During
his employment, each executive also will be entitled to customary
vacations in accordance with vacation policies and practices of
Equality or the Bank prevailing from time to time, and to
reimbursement for reasonable expenses incurred on behalf of Equality
or the Bank in accordance with the then prevailing policies and
practices of Equality or the Bank.
Each employment agreement provides for continuing benefits in the
event the executive is terminated by Equality, other than for "just
cause," or in the event the executive voluntarily terminates the
employment agreement for "good reason." Under the employment
agreement, "just cause" would include personal dishonesty,
incompetence, willful misconduct or breach of a fiduciary duty
involving personal profit in the performance of his duties under the
employment agreement, intentional and continued failure to perform
stated duties, willful violation of any law, rule or regulation (other
than a law, rule or regulation relating to a misdemeanor, traffic
violation or similar offense), final cease-and-desist order or
material breach of any provision of the employment agreement. Under
the employment agreement, "good reason" would be deemed to exist if
the executive terminated his employment because, without his express
written consent, Equality breached any of the terms of the employment
agreement. In such instances, the executive generally will continue
to receive all benefits due to him under the employment agreement
through the remaining term of the agreement. If the executive is
terminated within one year after a "change of control" of Equality,<PAGE>
<PAGE> 13
other than for just cause or if the executive terminates his
employment for any reason, then Equality will pay to the executive a
lump sum equal to 2.99 times the "Base Amount," as that term is
defined in Section 280G(b)(3) of the Code, and will continue to
provide coverage for the executive and his dependents, beneficiaries
and estate under all executive benefit plans of Equality and the Bank
for the remainder of the term of the employment agreement. If
payments and benefits under the employment agreements would constitute
an "Excess Parachute Payment" under Section 280G of the Code, then
such payments and benefits will be reduced to one dollar less than the
maximum amount that Equality may pay under Section 280G of the Code
without losing its ability to deduct such payments for tax purposes.
A "change of control" is defined in each employment agreement to
include, among other events, the acquisition of beneficial ownership
of 20% or more of the voting power of Equality's capital stock.
TRANSACTIONS WITH MANAGEMENT
The Bank has followed the policy of offering residential mortgage
loans for the financing of personal residences, share loans and
consumer loans to its officers, directors and employees. The loans
are made in the ordinary course of business and are also made on
substantially the same terms and conditions, including interest rate
and collateral, as those of comparable transactions prevailing at the
time with other persons, and do not include more than the normal risk
of collectibility or present other unfavorable features. As of March
31, 1998, approximately $1.5 million of loans were outstanding from
the Bank to executive officers and directors of Equality and the Bank
and their affiliates.
PROPOSAL II - APPROVAL OF 1997 STOCK OPTION AND INCENTIVE PLAN
In connection with the Reorganization and Conversion, the Board
of Directors of Equality adopted the Option Plan, subject to approval
by the stockholders of Equality. The Option Plan authorizes
discretionary grants of options to purchase shares of Common Stock,
which may be options that are intended to qualify as "incentive stock
options" within the meaning of Section 422 of the Code, or options
that are not intended to so qualify, to officers (including officers
who may also be directors) and other key employees of Equality and the
Bank. The Option Plan also provides for automatic nondiscretionary
grants of nonqualified stock options to nonemployee directors of
Equality and the Bank. THE FOLLOWING SUMMARY DESCRIPTION OF THE
OPTION PLAN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE OPTION
PLAN, WHICH IS ATTACHED HERETO AS APPENDIX A.
PURPOSE
The purpose of the Option Plan is to benefit Equality and its
subsidiaries by recognizing the contributions made to Equality by
officers and other key employees (including directors of Equality who<PAGE>
<PAGE> 14
are also employees) of Equality and its subsidiaries to provide such
persons with additional incentive to devote themselves to the future
success of Equality, and to improve the ability of Equality to
attract, retain and motivate individuals, by providing such persons
with a favorable opportunity to acquire or increase their proprietary
interest in Equality over a period of years through receipt of options
to acquire Common Stock of Equality. In addition, the Option Plan is
intended as an additional incentive to members of the Board of
Directors of Equality who are not employees of Equality to serve on
the Board of Directors of Equality and to devote themselves to the
future success of Equality.
ELIGIBLE DIRECTORS AND OFFICERS AND OTHER KEY EMPLOYEES
There are currently six nonemployee directors of Equality and the
Bank. As of March 31, 1998, there were four officers (including the
President and Chief Executive Officer who is also a director) of
Equality and the Bank.
ADMINISTRATION
The Option Plan will be administered by the Compensation
Committee of the Board of Directors (the "Committee"), which will be
comprised of two or more members of the Board of Directors who are
non-employee directors and who will be appointed by and will serve at
the pleasure of the Board of Directors. Each member of the Committee
will be a "disinterested person" within the meaning of Rule 16b-3
promulgated by the Securities and Exchange Commission under Section
16(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"); I.E., no member of the Committee may be an officer or
employee of Equality or the Bank. The Committee will have the
authority to determine, among other things, which officers and other
key employees and nonemployee directors of Equality or the Bank and
its subsidiaries will be granted options under the Option Plan, the
number of shares to be subject to each option, the expiration date of
each option, the time or times within which the option may be
exercised, the cancellation of the option (with the consent of the
holder thereof) and the other terms and conditions of the grant of the
option. The Committee will also have the sole authority concerning
decisions regarding the Option Plan and the terms and conditions of
options granted thereunder.
SHARES OF COMMON STOCK ISSUABLE
The aggregate number of shares of Common Stock that may be issued
and sold under the Option Plan is initially 132,250. Shares of Common
Stock covered by options that expire or are canceled or otherwise
terminated prior to exercise will again be available for future grants
under the Option Plan. The aggregate number of shares of Common Stock
that may be issued and sold under the Option Plan is also subject to
adjustment in the event of any stock dividend, stock split,<PAGE>
<PAGE> 15
combination of shares or other change in the capital structure of
Equality, as described under "Adjustments" below.
NONEMPLOYEE DIRECTOR OPTIONS
GRANTS. Each person who is a nonemployee director of Equality on
the date of the Meeting will be automatically granted on that date a
nonqualified stock option to purchase 5,000 shares of Common Stock.
Nonemployee directors shall also be eligible to receive discretionary
grants of NSOs as determined by the Committee from time to time.
EXERCISE PRICE AND PAYMENT THEREOF. The purchase price per share
(the "Exercise Price") payable upon exercise of a nonqualified stock
option granted to a nonemployee director under the Option Plan will be
the fair market value of a share of Common Stock on the date of grant.
For purposes of the Option Plan, "fair market value" means the average
of the closing price of the Common Stock as reported on The American
Stock Exchange for the 20 business days ending on the third business
day preceding the date in question (E.G., the date of grant or the
date of exercise). The closing price of the Common Stock on The American
Stock Exchange on March 31, 1998 was $15.375. The Exercise Price may be
paid (i) in cash, including proceeds from the deferred sale through a
broker of some or all of the shares subject to the exercise, (ii) by
surrendering to Equality shares of Common Stock that are already owned
by the optionee and have a fair market value on the date of exercise
equal to the Exercise Price, (iii) by having Equality withhold shares
of Common Stock that are otherwise issuable pursuant to the exercise
and have a fair market value on the date of exercise equal to the
Exercise Price, (iv) by such other medium as the Committee may
authorize at the time of grant, or (v) by any combination of the
foregoing.
VESTING AND TERMINATION. A nonqualified stock option granted to
a nonemployee director will become exercisable with respect to 20
percent of the shares covered thereby on each of the first five
anniversaries of the date of grant unless otherwise provided by the
Committee in its sole discretion and will terminate on the earlier of
(i) termination of the optionee's service as a director for any reason
other than his or her death, disability or retirement in accordance
with Equality's retirement policy for directors or (ii) the date the
option expires in accordance with its terms which may not be more than
10 years from the date of grant. In the event of an optionee's death
or disability, his or her options will become fully exercisable on the
date of his or her death or disability and will terminate on the
earlier of (i) the first anniversary of the date of his or her death
or disability or (ii) the date the option expires in accordance with
its terms, which may not be later than the tenth anniversary of the
date on which the option is originally granted. In the event that an
optionee retires from the Board of Directors in accordance with
Equality's retirement policy for directors, his or her options will
continue to vest and remain exercisable in the same manner, and to the<PAGE>
<PAGE> 16
same extent, as if he or she had continued his or her service as a
director.
OFFICERS AND OTHER KEY EMPLOYEE OPTIONS
GRANTS. The Committee may from time to time grant incentive
stock options or nonqualified stock options to officers and other key
employees of Equality and its subsidiaries ("Key Employees"). Unless
otherwise expressly provided at the time of grant, options granted to
Key Employees will be incentive stock options. Pursuant to Section
422 of the Code, however, the aggregate fair market value (determined
with respect to each incentive stock option at the time it is granted)
of shares of Common Stock with respect to which incentive stock
options are exercisable for the first time by a particular optionee
during any calendar year may not exceed $100,000.
EXERCISE PRICE AND PAYMENT THEREOF. The Exercise Price payable
upon exercise of an option granted to a Key Employee under the Option
Plan will be the fair market value on the date of grant. Pursuant to
the Code, however, if an incentive stock option is granted to a Key
Employee who owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of Equality (a "Ten
Percent Holder"), the Exercise Price will not be less than 110 percent
of the fair market value on the date of grant. The determination of
"fair market value" for incentive stock options will be made in the
same manner as that used to determine fair market value for
nonqualified stock options. The Exercise Price may be paid (i) in
cash, including proceeds from the deferred sale through a broker of
some or all of the shares subject to the exercise, (ii) by
surrendering to Equality shares of Common Stock that are already owned
by the optionee and have a fair market value on the date of exercise
equal to the Exercise Price, (iii) by having Equality withhold shares
of Common Stock that are otherwise issuable pursuant to the exercise
and have a fair market value on the date of exercise equal to the
Exercise Price, (iv) by such other medium as the Committee may
authorize at the time of grant or (v) by any combination of the
foregoing.
VESTING AND TERMINATION. Options granted to a Key Employee will
become exercisable with respect to 20 percent of the shares covered
thereby on each of the first five anniversaries of the date of grant,
unless otherwise provided by the Committee in its sole discretion,
and will terminate on the earlier of (i) termination of the optionee's
employment for any reason other than his or her death or disability
or, in the case of an officer who is also a director, his or her
retirement as an officer if his or her service as a director continues
or (ii) the date it expires by its terms which may not be longer than
10 years from the date of grant or, in the case of an incentive stock
option granted to a Ten Percent Holder, five years from the date of
grant. In the event of an optionee's death or disability, his or her
options will become fully exercisable on the date of his or her death
or disability and will terminate on the earlier of (i) the first<PAGE>
<PAGE> 17
anniversary of his or her death or disability or (ii) the date it
expires by its terms which may not be longer than the tenth
anniversary of the date on which the option is originally granted or,
in the case of an incentive stock option granted to a Ten Percent
Holder, the fifth anniversary of the date on which the option is
originally granted. In the event that an officer who is also a
director retires as an officer but continues to serve as a director,
his or her options will continue to vest and remain exercisable in
accordance with the terms and conditions thereof.
CONSIDERATION FOR OPTION GRANTS
No consideration will be paid to Equality by nonemployee
directors or Key Employees for grants of options under the Option
Plan. The only consideration will be the past and present
contributions of the optionees to the success of Equality.
ADJUSTMENTS
The number of shares of Common Stock subject to the Option Plan
and to options granted under the Option Plan is subject to adjustment
as follows: (a) proportionately in the event of stock dividend, stock
split or combination of shares; (b) in the event of any merger,
consolidation or reorganization of Equality with any other corporation
or corporations, an equitable substitution (as determined by the Committee)
for the shares of Common Stock subject to the Option Plan and options
granted under the Option Plan of the number and kind of shares of stock,
other securities, cash or other property to which the holders of Common
Stock of Equality are entitled pursuant to the transaction; and (c) in
the event of any other change in the capitalization of Equality, an
equitable adjustment (as determined by the Committee). In the event
of any such adjustment, the exercise price per share shall be
proportionately adjusted.
WITHHOLDING TAXES
If an optionee is required to pay any federal, state or local
withholding taxes in connection with his or her exercise of an option
granted under the Option Plan, he or she may satisfy that obligation
by (i) having Equality withhold such number of shares of Common Stock
otherwise issuable pursuant to the exercise as have an aggregate fair
market value on the date of exercise equal to the amount of tax to be
withheld or (ii) surrendering to Equality shares of Common Stock that
are already owned by the optionee and have an aggregate fair market
value on the date of exercise equal to the amount of tax to be
withheld.
<PAGE>
<PAGE> 18
TRANSFERABILITY OF OPTIONS
Options granted pursuant to the Option Plan may not be
transferred except by will or the laws of descent and distribution,
pursuant to a "qualified domestic relations order" as defined by the
Code or, if the Committee so permits, by assignment by the optionee of
all or any portion of a nonqualified stock option to his or her spouse
or lineal descendant, the trustee of a trust for the primary benefit
of his or her spouse or lineal descendant, a partnership in which his
or her spouse and lineal descendants are the only partners, or a tax
exempt organization as described in Section 501(c)(3) of the Code,
provided in each case that the optionee does not receive any
consideration for the assignment.
AMENDMENT AND TERMINATION
The Board of Directors or the Committee may terminate, suspend or
amend the Option Plan in whole or in part at any time and from time to
time without approval of the stockholders of Equality, to the extent
allowed by law. No amendment or termination of the Option Plan shall
in any manner adversely affect any option theretofore granted without
the consent of the optionee, except that the Committee may amend the
Option Plan in a manner that does affect options theretofore granted
upon a finding by the Committee that such amendment is in the best
interest of the holders of outstanding options affected thereby.
EFFECTIVE DATE
The Option Plan will be effective on the date when it is first
approved by the stockholders.
LIMITATION ON LIABILITY; INDEMNIFICATION
The Option Plan provides that, in the absence of bad faith, no
member of the Committee will be liable for any act or omission
relating to his or her service on the Committee. As directors of
Equality, members of the Committee are also entitled to
indemnification in accordance with the certificate of incorporation
and bylaws of Equality.<PAGE>
<PAGE> 19
NEW OPTION PLAN BENEFITS
If the Option Plan is approved by the stockholders at the
Meeting, options will be granted as follows to directors and officers
of Equality, effective as of the date of the Meeting:
<TABLE>
<CAPTION>
Potential Realizable Value at
Number of % of Assumed Annual Rates of Stock
Recipient Options Granted Total Options Price Appreciation for Option Term(1)
------------------------ --------------- ------------- -------------------------------------------
0% 5% 10%
--- -- ---
<S> <C> <C> <C> <C> <C>
NONEMPLOYEE DIRECTORS:
Daniel C. Aubuchon 5,000 3.78% $0 $48,346 $122,519
Stacey W. Braswell 5,000 3.78% $0 $48,346 $122,519
LeRoy C. Crook 5,000 3.78% $0 $48,346 $122,519
Kenneth J. Hrdlicka 5,000 3.78% $0 $48,346 $122,519
Berenice J. Mahacek 5,000 3.78% $0 $48,346 $122,519
Charles J. Wolter 5,000 3.78% $0 $48,346 $122,519
NONEMPLOYEE DIRECTORS AS
A GROUP 30,000 22.68% $0 $290,076 $735,114
OFFICERS:
Richard C. Fellhauer 25,000 18.90% $0 $241,731 $612,595
Michael A. Deelo 17,500 13.23% $0 $169,212 $428,816
Leonard O. Wolter 5,000 3.78% $0 $ 48,346 $122,519
Michael J. Walsh 5,000 3.78% $0 $ 48,346 $122,519
OFFICERS AS A GROUP 52,500 39.70% $0 $507,636 $1,286,449
ALL DIRECTORS AND
OFFICERS AS A GROUP (10
PERSONS) 82,500 62.38% $0 $797,714 $2,021,563
1 Assumes the options are granted at the closing price of the Common Stock on The American Stock Exchange on March
31, 1998 ($15.375 per share), the options have a 10-year term, the market price of the Common Stock underlying the
option appreciates annually in value from the date of grant to the end of the option term at a compounded rate of
either 5% or 10% as indicated in the columns. There can be no assurance that the Common Stock will appreciate
annually at a compounded rate of 5% or 10%. Equality is unaware of any formula that provides an accurate
determination of the value of a stock option as of the date of grant.
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain of the federal income
tax consequences of certain transactions under the Option Plan based
on federal income tax laws in effect on June 30, 1998. This summary
is not intended to be exhaustive and does not describe state or local
tax consequences.<PAGE>
<PAGE> 20
Tax Consequences to Optionees:
-----------------------------
NONQUALIFIED STOCK OPTIONS. In general: (i) no income will be
recognized by an optionee at the time a nonqualified stock option is
granted; (ii) at the time of exercise of a nonqualified stock option,
ordinary income will be recognized by the optionee in an amount equal
to the difference between the Exercise Price and the fair market value
of the shares on the date of exercise; and (iii) at the time of sale
of shares acquired pursuant to the exercise of a nonqualified stock
option, any appreciation (or depreciation) in the value of the shares
after the date of exercise will be treated as either short-term or
long-term capital gain (or loss) depending on how long the shares have
been held.
INCENTIVE STOCK OPTIONS. No income generally will be recognized
by an optionee upon the grant or exercise of an incentive stock option
(except as a preference item for minimum tax purposes). If shares of
Common Stock are issued to an optionee pursuant to the exercise of an
incentive stock option and no disqualifying disposition of the shares
is made by the optionee within two years after the date of grant or
within one year after the transfer of the shares to the optionee, then
upon the sale of the shares any amount realized in excess of the
Exercise Price will be taxed to the optionee as a long-term capital
gain and any loss sustained will be a long-term capital loss.
If shares of Common Stock acquired upon the exercise of an
incentive stock option are disposed of prior to the expiration of
either holding period described above, the optionee generally will
recognize ordinary income in the year of disposition in an amount
equal to any excess of the fair market value of the shares at the time
of exercise (or, if less, the amount realized on the disposition of
the shares in a sale or exchange) over the Exercise Price. Any
further gain (or loss) realized by the optionee generally will be
taxed as short-term or long-term capital gain (or loss) depending on
the holding period.
Tax Consequences to Employer:
----------------------------
To the extent that an optionee recognizes ordinary income in the
circumstances described above, his or her employer will be entitled to
a corresponding deduction, provided that, among other things, the
income meets the test of reasonableness, is an ordinary and necessary
business expense, is not subject to the annual compensation limitation
set forth in Section 162(m) of the Code and is not an "excess
parachute payment" within the meaning of Section 280G of the Code.<PAGE>
<PAGE> 21
REGULATORY GUIDELINES
Under presently effective regulations and policies of the OTS,
the shares of Common Stock for which options may be granted during the
first year following the Conversion may not exceed 10% of the total
number of shares of Common Stock sold in the public stock offering as
part of the Reorganization and Conversion. Furthermore, during that
first year following the Reorganization and Conversion no individual
may be granted options to purchase more than 25% of the total shares
covered by the Option Plan, and nonemployee directors may not be
granted options to purchase more than 5% individually, or more than
30% as a group, of the shares covered by the Option Plan, unless the
OTS allows greater awards. The Option Plan may not and will not be
established in the absence of stockholder approval.
The Option Plan complies with the regulations of the OTS. The
OTS in no way endorses or approves the Option Plan. Any written or
oral representation to the contrary is not permitted.
VOTE REQUIRED TO APPROVE THE OPTION PLAN
The Option Plan must be approved by a majority of the total votes
eligible to be cast at the Meeting. THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR APPROVAL OF THE OPTION PLAN.
PROPOSAL III - APPROVAL OF MANAGEMENT DEVELOPMENT AND
RECOGNITION PLAN
In connection with the Reorganization and Conversion, the Board
of Directors adopted the MRP, subject to approval by the stockholders
of Equality. The MRP authorizes discretionary grants of shares of
Common Stock ("Awards") to officers and other key employees of
Equality and its subsidiaries. The MRP also provides for automatic
nondiscretionary Awards and additional discretionary Awards to
nonemployee directors of Equality or the Bank. THE FOLLOWING SUMMARY
DESCRIPTION OF THE MRP IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE MRP, WHICH IS ATTACHED HERETO AS APPENDIX B.
PURPOSE
The purpose of the MRP is to allow Equality to retain personnel
of experience and ability in key positions by providing such key
employees with a proprietary interest in Equality as compensation for
their contributions to Equality and its subsidiaries and as an
incentive to make such contributions in the future. The MRP is also
intended as an additional incentive to non-employee directors to serve
on the Board and to devote themselves to the future success of
Equality and its subsidiaries by providing them with a favorable
opportunity to acquire or increase their proprietary interest in
Equality.<PAGE>
<PAGE> 22
ELIGIBLE DIRECTORS AND OFFICERS AND OTHER KEY EMPLOYEES
There are currently six nonemployee directors of Equality and of
the Bank. As of March 31, 1998, there were four officers (including
the President and Chief Executive Officer who is a director) of
Equality and of the Bank.
ADMINISTRATION
The MRP will be administered by the Committee. Members of the
Committee will serve at the pleasure of the Board of Directors. The
Committee will have the authority to determine, among other things,
which employees and directors will be granted Awards under the MRP,
the timing of such granted and the number of shares of Common Stock to
be covered by each Award. The Committee will also have the sole
authority to interpret the provisions of the MRP and the terms and
conditions of Awards granted thereunder.
SHARES OF COMMON STOCK COVERED
The number of shares of Common Stock covered by Awards granted
prior to August 14, 1999 shall not exceed 65,500, which, in
conjunction with stock covered by MRP awards previously granted,
equals 4% of the total shares of Common Stock issued pursuant to the
Reorganization and Conversion. Shares of Common Stock that are
forfeited by a recipient of an Award granted under the MRP will again
be available for grants of future Awards thereunder.
NONEMPLOYEE DIRECTOR AWARDS
GRANTS. Each person who is a nonemployee director of Equality on
the date of the Meeting will be automatically granted on that date an
Award of 1,250 shares of Common Stock. The Committee may, from time
to time, grant additional discretionary Awards to nonemployee
directors.
VESTING, FORFEITURE AND DISTRIBUTION. The Shares of Common Stock
covered by an Award granted to a nonemployee director will vest and
become nonforfeitable at the rate of 20 percent per year over a period
of five years from the date of grant, or at the rate of such lesser
percentage over such longer period of time as the Committee may
specify, for so long as he or she continues to serve as a director of
Equality. In the event that a nonemployee director ceases to be a
director of Equality prior to the fifth anniversary of the date of
grant (or such later date as the Committee may specify) for any reason
other than his or her death or disability, the shares of Common Stock
covered by his or her Award that have not then vested and become
nonforfeitable will be forfeited by him or her. In the event that a
nonemployee director ceases to be a director of Equality prior to the
fifth anniversary of the date of grant (or such later date as the
Committee may specify) as a result of his or her death or disability,
all of the shares of Common Stock covered by his or her Award will<PAGE>
<PAGE> 23
immediately upon his or her death or disability become fully vested
and nonforfeitable. Shares of Common Stock covered by an Award
granted to a nonemployee director will be distributed to him or her as
soon as practicable after they have vested and become nonforfeitable.
OFFICER AND OTHER KEY EMPLOYEE AWARDS
GRANTS. The Committee may from time to time grant Awards to
officers and other key employees of the Bank ("Key Employees"). In
selecting the Key Employees to whom Awards will be granted under the
MRP, the Committee will consider the position and responsibilities of
each of the Key Employees, the value of his or her services to
Equality and any other factors the Committee may deem relevant,
including the recommendations of the Chairman of the Board.
VESTING, FORFEITURE AND DISTRIBUTION. The shares of Common Stock
covered by an Award granted to a Key Employee will vest and become
nonforfeitable at the rate of 20 percent per year over a period of
five years from the date of grant, or at the rate of such lesser
percentage over such longer period of time as the Committee may
specify, for so long as he or she continues to be employed by
Equality. In the event that a Key Employee ceases to be employed by
Equality prior to the fifth anniversary of the date of grant (or such
later date as the Committee may specify) for any reason other than his
or her death or disability, the shares of Common Stock covered by his
or her Award or Awards that have not then vested and become
nonforfeitable will be forfeited by him or her. In the event that a
Key Employee ceases to be employed by Equality prior to the fifth
anniversary of the date of grant (or such later date as the Committee
may specify) as a result of his or her death or disability, all of the
shares of Common Stock covered by his or her Award or Awards will
immediately upon his or her death or disability become fully vested
and nonforfeitable. Shares of Common Stock covered by an Award
granted to a Key Employee will be distributed to him or her as soon as
practicable after they have vested and become nonforfeitable.
DIVIDENDS AND VOTING RIGHTS
No Award recipient shall have any voting or dividend rights or
other rights of a stockholder with respect to any MRP shares covered
by an Award prior to the time said shares are actually earned and
distributed to him. A recipient shall be entitled to receive an
amount equal to cash dividends declared on shares subjected to an
Award granted to him, only after such shares are earned by and
distributed to the recipient. Stock dividends declared on shares
subject to an Award granted to a recipient shall be distributed to him
or her only after such shares are earned by and distributed to the
recipient.<PAGE>
<PAGE> 24
REVOCATION OF AWARDS FOR MISCONDUCT
The MRP provides that the Board of Directors may revoke, rescind
and terminate any Award (or any portion thereof) granted thereunder to
the extent that shares of Common Stock covered thereby have not been
distributed to him or her, regardless of whether the shares have
vested and otherwise become nonforfeitable, if the recipient is
discharged by Equality or a subsidiary or from membership on the Board
of Directors for "cause" (as defined in the MRP) or it is discovered
following termination of the recipient's employment or service as a
director that he or she engaged in conduct that would have justified
his or her discharge for cause.
CONSIDERATION FOR AWARDS
No consideration will be paid to Equality by nonemployee
directors or Key Employees for Awards granted under the MRP. The only
consideration will be the past and present contributions of the
recipients to the success of Equality.
TRANSFERABILITY OF AWARDS
Awards granted under the MRP may not be transferred except by
will or the laws of descent and distribution, pursuant to a "qualified
domestic relations order" as defined by the Code.
AMENDMENT; TERM AND TERMINATION
The Board of Directors may by resolution, at any time amend or
terminate the MRP in whole or in part without the approval of the
stockholders of Equality, to the extent allowed by law. The MRP will
be effective on the date when it is first approved by the stockholders
and will terminate on the earlier of (i) termination by the Board,
(ii) the distribution to Award recipients or their beneficiaries or to
Equality or the Bank of all of the assets of any trust formed pursuant
to Section 7.07 of the MRP or (iii) 21 years from the effective date.
LIMITATION ON LIABILITY; INDEMNIFICATION
The MRP provides that no member of the Board or the Committee
shall be liable for any determination made in good faith with respect
to the MRP or any shares or Awards it grants. If a member of the
Board or the Committee is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of
anything done or not done by him in such capacity under or with
respect to the MRP, Equality and its subsidiaries shall indemnify such
member against expense (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by
such member in connection with such action, suit or proceeding if the
member acted in good faith and in the manner he reasonably believed to
be in the best interests of Equality and its subsidiaries and, with<PAGE>
<PAGE> 25
respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful.
NEW MRP BENEFITS
If the MRP is approved by the stockholders at the Meeting, Awards
will be granted as follows to the directors and officers of Equality
and the Bank on the date of the Meeting:
<TABLE>
<CAPTION>
Number % of Potential Realizable Value at Assumed
of Shares Total MRP Annual Rates of Stock Price Appreciation
Recipient Awarded Shares for Ten Years from Grant Date(1)
--------- --------- --------- ------------------------------------
0% 5% 10%
-- -- ---
<S> <C> <C> <C> <C> <C>
Nonemployee Directors:
Daniel C. Aubuchon 1,250 1.91% $19,219 $31,305 $49,848
Stacey W. Braswell 1,250 1.91% $19,219 $31,305 $49,848
LeRoy C. Crook 1,250 1.91% $19,219 $31,305 $49,848
Kenneth J. Hrdlicka 1,250 1.91% $19,219 $31,305 $49,848
Berenice J. Mahacek 1,250 1.91% $19,219 $31,305 $49,848
Charles J. Wolter 1,250 1.91% $19,219 $31,305 $49,848
NONEMPLOYEE DIRECTORS AS A GROUP 7,500 11.45% $115,314 $187,830 $299,088
OFFICERS:
Richard C. Fellhauer 15,000 22.90% $230,625 $375,664 $598,182
Michael A. Deelo 10,500 16.03% $161,438 $262,965 $418,727
Leonard O. Wolter 4,000 6.11% $ 61,500 $100,177 $159,515
Michael J. Walsh 2,000 3.05% $ 30,750 $ 50,089 $ 79,758
OFFICERS AS A GROUP 31,500 48.09% $484,313 $788,894 $1,256,182
ALL DIRECTORS AND OFFICERS AS A
GROUP (10) PERSONS 39,000 59.54% $599,625 $976,726 $1,555,273
1 Assumes the MRP awards are granted at the closing price of the Common Stock on The American Stock Exchange
on March 31, 1998 ($15.375 per share) and the market price of the Common Stock underlying the MRP award
appreciates annually in value from the date of grant until 10 years thereafter at a compounded rate of either
5% or 10% as indicated in the columns. MRP awards do not have a term like stock options; however, in order
to compare the value of the MRP awards to the value of the stock options granted to these named individuals a
comparable 10-year time period has been used. There can be no assurance that the Common Stock will
appreciate annually at a compounded rate of either 5% or 10%.
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain of the federal income
tax consequences of certain transactions under the MRP based on
federal income tax laws. This summary is not intended to be
exhaustive and does not describe state or local tax consequences.<PAGE>
<PAGE> 26
TAX CONSEQUENCES TO AWARD RECIPIENTS. An Award recipient
generally will not recognize any income upon the grant of the Award.
The recipient generally will be taxed at ordinary income rates on the
fair market value of shares of Common Stock on the date that the
Awards vest, and the capital gain (or loss) holding period for such
shares will also commence on that date. Any appreciation (or
depreciation) from and after the date the Award vests will be taxed as
long-term or short-term capital gain or loss on the date the shares of
Common Stock are sold. Dividends or other earnings or distributions
paid on shares of Common Stock allocated to an Award recipient's trust
account will also be taxed to the recipient at ordinary income rates
at the time the Awards vest.
TAX CONSEQUENCES TO EMPLOYER. To the extent that an Award
recipient recognizes ordinary income in the circumstances described
above, his or her employer will be entitled to a corresponding
deduction, provided that, among other things, the income meets the
test of reasonableness, is an ordinary and necessary business expense,
is not subject to the annual compensation limitation set forth in
Section 162(m) of the Code and is not an "excess parachute payment"
within the meaning of Section 280G of the Code.
REGULATORY GUIDELINES
Under presently effective regulations and policies of the OTS,
during the first year following the Reorganization and Conversion no
individual may be awarded more than 25% of the total number of shares
of Common Stock held by the MRP and Nonemployee Directors may not be
awarded more than 5% individually, or more than 30% as a group, of the
number of shares of Common Stock held by the MRP unless the OTS allows
greater awards. The MRP may not and will not be established in the
absence of stockholder approval.
The MRP complies with the regulations of the OTS. The OTS in no
way endorses or approves the MRP. Any written or oral representation
to the contrary is not permitted.
VOTE REQUIRED TO APPROVE THE MRP
The MRP must be approved by a majority of the total votes
eligible to be cast at the Meeting. THE BOARD OF DIRECTORS RECOMMENDS
THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE MRP.
PROPOSAL IV - ADJOURNMENT OF MEETING
Under certain circumstances, Equality's management may determine
at the time of the Meeting that it is in the best interests of
Equality and its stockholders to adjourn the Meeting to a later date.
For example, in the event that the number of shares present, in person
or by proxy, at the Meeting is insufficient to constitute a quorum or
to approve the Option Plan and the MRP, Equality might decide to
adjourn the Meeting to permit further solicitation of proxies. <PAGE>
<PAGE> 27
Equality might also decide to adjourn the Meeting in the event that
events occurring subsequent to the date of this Proxy Statement
require Equality to furnish additional proxy soliciting information to
the stockholders and to give the stockholders an opportunity to
assimilate such information. If the Meeting is adjourned to a date
not more than 30 days after the original Meeting date, no further
notice of the time and place of the adjourned meeting is required to
be given to Equality's stockholders other than an announcement of such
time and place at the Meeting.
The vote of a majority of the shares present at the Meeting, in
person or by proxy, whether or not a quorum is present, is required to
approve a proposal for adjournment of the Meeting. In order to allow
Equality's management to vote proxies received by Equality at the time
of the Meeting in favor of such an adjournment, in the event that
Equality determines, in its sole discretion, that such an adjournment
is in the best interests of Equality and its stockholders, Equality
has submitted the question of adjournment as a separate matter for the
consideration and vote of the stockholders. THE BOARD OF DIRECTORS
RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE PROPOSAL TO ADJOURN THE
MEETING SO THAT SUCH PROXIES MAY BE VOTED IN FAVOR OF SUCH ADJOURNMENT
UNDER SUCH CIRCUMSTANCES.
OTHER MATTERS
The Board of Directors of Equality is not aware of any business
to come before the Meeting other than those matters described above in
this Proxy Statement. However, if any other matters should properly
come before the Meeting, it is intended that proxies in the
accompanying form will be voted in respect of such other matters in
accordance with the judgment of the person or persons voting the
proxies.
STOCKHOLDER NOMINATIONS AND PROPOSALS
Any stockholder who wishes to nominate a person for election to
Equality's Board of Directors at the 1999 annual meeting must notify
the Secretary of Equality in writing not later than the close of
business on July 6, 1999 nor earlier than the close of business on
June 5, 1999. The notice must include the information specified in
Section 4 of Equality's certificate of incorporation.
Any stockholder who wishes to submit business to be considered by
the stockholders at the 1999 annual meeting must notify the Secretary
of Equality in writing not later than June 15, 1999 nor earlier than
May 15, 1999. The notice must include the information specified in
Section 2.12 of Equality's bylaws.
Any proposal submitted will also be subject to the rules of the
Securities and Exchange Commission (the "SEC") regarding stockholder
proposals.<PAGE>
<PAGE> 28
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon its review of the Forms 3, 4 and 5 furnished to
Equality pursuant to Section 16(a) of the Securities Exchange Act of
1934, Equality believes that all of its directors, officers and
beneficial owners of more than 10% of its Common Shares filed all such
reports on a timely basis during the year ended March 31, 1998.
ANNUAL REPORT AND FINANCIAL STATEMENTS
Attention is directed to the financial statements contained in
Equality's Annual Report for the year ended March 31, 1998. A copy of
the Annual Report is being sent concurrently to all stockholders of
record as of June 30, 1998.
AVAILABILITY OF FORM 10-KSB
A copy of Equality's annual securities report for the year ended
March 31, 1998, as filed with the SEC on Form 10-KSB, including the
financial statements and the financial statement schedules, but
without exhibits, will be provided without charge to any stockholder
or beneficial owner of Equality's shares upon written request Patricia
R. Todd, Secretary, Equality Bancorp, Inc., 9920 Watson Road, St.
Louis, Missouri 63126.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG Peat Marwick LLP has been selected by the Board of Directors
to serve as Equality's independent public accountants for the fiscal
year ended March 31, 1999. A representative of that firm will be
present at the annual meeting, will be given an opportunity to make a
statement if he or she so desires and will also be available to
respond to questions from stockholders. Equality has been informed by
the representative that the representative does not presently intend
to make such a statement.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
STOCKHOLDERS ARE URGED TO VOTE, DATE, SIGN AND RETURN THE ENCLOSED
PROXY. NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
BY ORDER OF THE BOARD OF DIRECTORS
Dated July 7, 1998
Patricia R. Todd, Secretary<PAGE>
<PAGE> 29
APPENDIX A
----------
EQUALITY BANCORP, INC.
1997 STOCK OPTION AND INCENTIVE PLAN
------------------------------------
SECTION 1. PURPOSE.
-------
The purpose of the Equality Bancorp, Inc. 1997 Stock Option and
Incentive Plan (the "Plan") is to benefit Equality Bancorp, Inc. (the
"Company") and its Subsidiaries (as defined in Section 2) by
recognizing the contributions made to the Company by officers and
other key employees (including Directors of the Company who are also
employees) of the Company and its Subsidiaries, to provide such
persons with additional incentive to devote themselves to the future
success of the Company, and to improve the ability of the Company to
attract, retain and motivate individuals, by providing such persons
with a favorable opportunity to acquire or increase their proprietary
interest in the Company over a period of years through receipt of
options to acquire common stock of the Company. In addition, the Plan
is intended as an additional incentive to members of the Board of
Directors of the Company who are not employees of the Company ("Non-
Employee Directors") to serve on the Board of Directors of the Company
(the "Board") and to devote themselves to the future success of the
Company by providing them with a favorable opportunity to acquire or
increase their proprietary interest in the Company through receipt of
options to acquire common stock of the Company.
The Company may grant stock options that constitute "incentive
stock options" ("ISOs") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or stock
options that do not constitute ISOs ("NSOs") (ISOs and NSOs being
hereinafter collectively referred to as "Options").
SECTION 2. ELIGIBILITY.
-----------
Non-Employee Directors shall participate in the Plan only in
accordance with the provisions of Section 5 of the Plan. The
Committee (as defined in Section 3) shall initially, and from time to
time thereafter, select those officers and other key employees
(including Directors of the Company who are also employees)
(collectively referred to herein as "Key Employees") of the Company or
any other entity of which the Company is the direct or indirect
beneficial owner of not less than fifty percent (50%) of all issued
and outstanding equity interests ("Subsidiaries"), to participate in
the Plan on the basis of the special importance of their services in<PAGE>
<PAGE> 30
the management, development and operations of the Company or its
Subsidiaries (each such Director and Key Employee receiving Options
granted under the Plan is referred to herein as an "Optionee").
SECTION 3. ADMINISTRATION.
--------------
3.1. THE COMMITTEE. The Plan shall be administered by the
Compensation Committee of the Board (the "Committee"). The Committee
shall be comprised of two (2) or more members of the Board who are
"non-employee directors" within the meaning of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "1934
Act"), or any successor rule or regulation.
3.2. AUTHORITY OF THE COMMITTEE. No person, other than members
of the Committee, shall have any authority concerning decisions
regarding the Plan. Subject to the express provisions of this Plan,
including but not limited to Section 5, the Committee shall have sole
discretion concerning all matters relating to the Plan and Options
granted hereunder. The Committee, in its sole discretion, shall
determine the Key Employees of the Company and its Subsidiaries to
whom, and the time or times at which Options will be granted, the
number of shares to be subject to each Option, the expiration date of
each Option, the time or times within which the Option may be
exercised, the cancellation of the Option (with the consent of the
holder thereof) and the other terms and conditions of the grant of the
Option. The terms and conditions of the Options need not be the same
with respect to each Optionee or with respect to each Option.
The Committee may, subject to the provisions of the Plan,
establish such rules and regulations as it deems necessary or
advisable for the proper administration of the Plan, and may make
determinations and may take such other action in connection with or in
relation to the Plan as it deems necessary or advisable. Each
determination or other action made or taken pursuant to the Plan,
including interpretation of the Plan and the specific terms and
conditions of the Options granted hereunder by the Committee shall be
final and conclusive for all purposes and upon all persons including,
but without limitation, the Company, its Subsidiaries, the Committee,
the Board, officers and the affected employees of the Company and/or
its Subsidiaries and their respective successors in interest.
No member of the Committee shall, in the absence of bad faith, be
liable for any act or omission with respect to service on the
Committee. Service on the Committee shall constitute service as a
Director of the Company so that members of the Committee shall be
entitled to indemnification pursuant to the Company's Certificate of
Incorporation and By-Laws.<PAGE>
<PAGE> 31
SECTION 4. SHARES OF COMMON STOCK SUBJECT TO PLAN.
--------------------------------------
4.1. The total number of shares of common stock, par value $.01
per share, of the Company (the "Common Stock"), that may be issued and
sold under the Plan initially shall be 132,250. To effectuate the
adjustments set forth in Section 4.2 hereof, the total number of
shares of Common Stock that may be available for Options under the
Plan shall be adjusted on January 1 of each calendar year, within the
Applicable Period (as defined below), so that the total number of
shares of Common Stock that may be issued and sold under the Plan as
of January 1 of each calendar year within the Applicable Period shall
be equal to ten percent (10%) of the outstanding shares of Common
Stock of the Company on such date, less the number of shares of Common
Stock that may be issued and sold under the Equality Savings and Loan
Association 1993 Stock Option and Incentive Plan; provided, however,
that no such adjustment shall reduce the total number of shares of
Common Stock that may be issued and sold under the Plan below 132,250.
For purposes of the preceding sentence, Applicable Period shall be the
ten-year period commencing on the Effective Date (as defined in
Section 14) and ending on the date that is ten years thereafter. The
number of shares of Common Stock delivered by any such Optionee or
withheld by the Company on behalf of any such Optionee pursuant to
Section 8.2 or 8.3 of the Plan shall once again be available for
issuance pursuant to subsequent Options. Any shares of Common Stock
subject to issuance upon exercise of Options but which are not issued
because of a surrender (other than pursuant to Sections 8.2 or 8.3 of
the Plan), forfeiture, expiration, termination or cancellation of any
such Option, to the extent consistent with applicable law, rules and
regulations, shall once again be available for issuance pursuant to
subsequent Options.
4.2. The number of shares of Common Stock subject to the Plan and
to Options granted under the Plan shall be adjusted as follows: (a)
in the event that the number of outstanding shares of Common Stock is
changed by any stock dividend, stock split or combination of shares,
the number of shares subject to the Plan and to Options previously
granted thereunder shall be proportionately adjusted; (b) in the event
of any merger, consolidation or reorganization of the Company with any
other corporation or corporations, there shall be substituted on an
equitable basis as determined by the Board of Directors, in its sole
discretion, for each share of Common Stock then subject to the Plan
and for each share of Common Stock then subject to an Option granted
under the Plan, the number and kind of shares of stock, other
securities, cash or other property to which the holders of Common
Stock of the Company are entitled pursuant to the transaction; and (c)
in the event of any other change in the capitalization of the Company,
the Committee, in its sole discretion, shall provide for an equitable
adjustment in the number of shares of Common Stock then subject to the
Plan and to each share of Common Stock then subject to an Option
granted under the Plan. In the event of any such adjustment, the
exercise price per share shall be proportionately adjusted.<PAGE>
<PAGE> 32
SECTION 5. GRANT OF OPTIONS TO NON-EMPLOYEE DIRECTORS.
------------------------------------------
5.1. GRANTS. Each individual who is a Non-Employee Director on
the effective date of the Plan shall be granted automatically a NSO to
purchase 5,000 shares of Common Stock on the effective date of the
Plan. Non-Employee Directors shall also be eligible to receive
discretionary grants of NSOs as determined by the Committee from time
to time.
5.2. EXERCISE PRICE AND PERIOD. The per share Option exercise
price of each such NSO granted to a Non-Employee Director shall be the
"Fair Market Value," on the date on which the Option is granted, of
the Common Stock subject to the Option. "Fair Market Value" shall
mean the average of the closing price for Company Stock as reported on
The Nasdaq Stock Market for the 20 business days ending on the third
business day preceding the date with respect to which such Company
Stock is being valued, for which trades in Company Stock were reported
on The Nasdaq Stock Market. If no trades occur on a certain day, the
closing price for the last preceding day on which trading occurred
will be used as the closing price for that day. In the event that
Company Stock is not readily tradable on an established securities
market, the fair market value of Company Stock shall be determined by
an independent appraiser meeting requirements similar to the
requirements of the treasury regulations promulgated under
Section 170(a)(1) of the Code.
Each such NSO shall become exercisable with respect to one-fifth
of the total number of shares of Common Stock subject to the Option on
the date twelve months after the date of its grant and with respect to
an additional one-fifth of the total number of shares of Common Stock
subject to the Option at the end of each twelve-month period
thereafter during the succeeding four years. Each NSO shall expire on
the date ten years after the date of grant.
In addition to the terms and conditions set forth in this
Section 5, NSOs also shall be subject to such terms and conditions
applicable to ISOs according to Sections 6.2, 6.3, 6.4 and 6.6,
PROVIDED, HOWEVER, such additional terms and conditions are not
inconsistent with the terms and conditions set forth in Section 5 of
this Plan.
SECTION 6. GRANTS OF OPTIONS TO EMPLOYEES.
------------------------------
6.1. GRANT. Subject to the terms of the Plan, the Committee may
from time to time grant Options, which may be ISOs or NSOs, to Key
Employees of the Company or any of its Subsidiaries. Unless otherwise
expressly provided at the time of the grant, Options granted under the
Plan to Key Employees will be ISOs.<PAGE>
<PAGE> 33
6.2. OPTION AGREEMENT. Each Option shall be evidenced by a
written Option Agreement specifying the type of Option granted, the
Option exercise price, the terms for payment of the exercise price,
the expiration date of the Option, the number of shares of Common
Stock to be subject to each Option and such other terms and conditions
established by the Committee, in its sole discretion, not inconsistent
with the Plan.
6.3. EXPIRATION. Except to the extent otherwise provided in or
pursuant to Section 7, each Option shall expire, and all rights to
purchase shares of Common Stock shall expire, on the tenth anniversary
of the date on which the Option was granted.
6.4. EXERCISE PERIOD. Except to the extent otherwise provided in
or pursuant to Section 7 or in the proviso to this sentence, Options
shall become exercisable pursuant to the following schedule: with
respect to one-fifth of the total number of shares of Common Stock
subject to Option on the date twelve months after the date of its
grant and with respect to an additional one-fifth of the total number
of shares of Common Stock subject to the Option at the end of each
twelve-month period thereafter during the succeeding four years;
provided, however, that the Committee, in its sole discretion, shall
have the authority to shorten or lengthen the exercise schedule with
respect to any or all Options, or any part thereof, granted to Key
Employees under the Plan, subject to applicable law.
6.5. REQUIRED TERMS AND CONDITIONS OF ISOs. Each ISO granted to
a Key Employee shall be in such form and subject to such restrictions
and other terms and conditions as the Committee may determine, in its
sole discretion, at the time of grant, subject to the general
provisions of the Plan, the applicable Option Agreement, and the
following specific rules:
(a) Except as provided in Section 6.5(d), the per share
exercise price of each ISO shall be the Fair Market Value of the
shares of Common Stock on the date such ISO is granted.
(b) The aggregate Fair Market Value (determined with
respect to each ISO at the time such Option is granted) of the
shares of Common Stock with respect to which ISOs are exercisable
for the first time by an individual during any calendar year
(under all incentive stock option plans of the Company and its
parent and subsidiary corporations) shall not exceed $100,000.
If the aggregate Fair Market Value (determined at the time of
grant) of the Common Stock subject to an Option, which first
becomes exercisable in any calendar year exceeds the limitation
of this Section 6.5(b), so much of the Option that does not
exceed the applicable dollar limit shall be an ISO and the
remainder shall be a NSO; but in all other respects, the original
Option Agreement shall remain in full force and effect.<PAGE>
<PAGE> 34
(c) As used in this Section 6, the words "parent" and
"subsidiary" shall have the meanings given to them in Section
424(e) and 424(f) of the Code.
(d) Notwithstanding anything herein to the contrary, if an
ISO is granted to an individual who owns stock possessing more
than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of its parent or subsidiary
corporations, within the meaning of Section 422(b)(6) of the
Code, (i) the purchase price of each share of Common Stock
subject to the ISO shall be not less than one hundred ten percent
(110%) of the Fair Market Value of the Common Stock on the date
the ISO is granted, and (ii) the ISO shall expire and all rights
to purchase shares thereunder shall cease no later than the fifth
anniversary of the date the ISO was granted.
(e) No ISOs may be granted under the Plan after September
26, 2007.
6.6. REQUIRED TERMS AND CONDITIONS OF NSOS. Each NSO granted to
Key Employees or Non-employee Directors shall be in such form and
subject to such restrictions and other terms and conditions as the
Committee may determine, in its sole discretion, at the time of grant,
subject to the general provisions of the Plan, the applicable Option
Agreement, and the following specific rule: the per share exercise
price of each NSO shall be the Fair Market Value of the shares of
Common Stock on the date the NSO is granted; provided however, that in
no event may the exercise price be less than the par value of the
shares of Common Stock subject to such NSO.
SECTION 7. EFFECT OF TERMINATION OF EMPLOYMENT.
-----------------------------------
7.1. TERMINATION GENERALLY. Except as provided in Sections 7.2
and 7.3, or by the Committee, in its sole discretion, any Option not
yet exercisable shall terminate on the date of the Optionee's
termination of employment with the Company and its Subsidiaries or
termination of service on the Board for any reason. An Optionee's
transfer of employment from the Company to a Subsidiary, or from a
Subsidiary to the Company, or from a Subsidiary to another Subsidiary,
shall not constitute a termination of employment for purposes of the
Plan. Options granted under the Plan shall not be affected by any
change of duties in connection with the employment of the Optionee or
by leave of absence authorized by the Company or a Subsidiary.
7.2. DEATH AND DISABILITY. In the event of an Optionee's death
or Disability (as defined below) during employment with the Company or
any of its Subsidiaries or during service on the Board, all Options
held by the Optionee shall become fully exercisable on such date of
death or Disability. Each of the Options held by such an Optionee
shall expire on the earlier of: (a) the first anniversary of the date
of the Optionee's death or Disability; or (b) the date that such<PAGE>
<PAGE> 35
Option expires in accordance with its terms. For purposes of this
Section 7.2, "Disability" shall mean the inability of an individual to
discharge current job responsibilities by reason of any medical
determinable physical or mental impairment which is expected to result
in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months. The Committee,
in its sole discretion, shall determine the date of any Disability.
7.3. RETIREMENT OF EMPLOYEES.
(a) NON-EMPLOYEE DIRECTORS. In the event the service of a
Non-Employee Director on the Board shall be terminated by reason
of the retirement of such Non-Employee Director of the Company in
accordance with the Company's retirement policy for Directors,
any Options granted to such Non-Employee Director shall continue
to vest and remain exercisable pursuant to Section 5, in the same
manner and to the same extent as if such Director had continued
his or her service on the Board during such period.
(b) KEY EMPLOYEES WHO ARE ALSO DIRECTORS. Section 7.3(a)
shall be applicable to Options held by any Key Employee who is
also a Director in the event the employment of such Key Employee
with the Company and/or its Subsidiaries shall be terminated by
reason of Employee Retirement, so long as the service of such Key
Employee on the Board continues after such Employee Retirement.
SECTION 8. EXERCISE OF OPTIONS.
-------------------
8.1. NOTICE. A person entitled to exercise an Option may do so
by delivery of a written notice to that effect specifying the number
of shares of Common Stock with respect to which the Option is being
exercised and any other information the Committee may prescribe. The
notice shall be accompanied by payment as described in Section 8.2.
The notice of exercise shall be accompanied by the Optionee's copy of
the writing or writings evidencing the grant of the Option. All
notices or requests provided for herein shall be delivered to the
Secretary of the Company.
8.2. EXERCISE PRICE. Except as otherwise provided in the Plan or
in any Option Agreement, the Optionee shall pay the purchase price of
the shares of Common Stock upon exercise of any Option: (a) in cash;
(b) in cash received from a broker-dealer to whom the Optionee has
submitted an exercise notice consisting of a fully endorsed Option
(however, in the case of an Optionee subject to Section 16 of the 1934
Act, this payment option shall only be available to the extent such
insider complies with Regulation T issued by the Federal Reserve
Board); (c) by delivering shares of Common Stock having an aggregate
Fair Market Value on the date of exercise equal to the Option exercise
price; (d) by directing the Company to withhold such number of shares
of Common Stock otherwise issuable upon exercise of such Option having
an aggregate Fair Market Value on the date of exercise equal to the<PAGE>
<PAGE> 36
Option exercise price; (e) in the case of a Key Employee or Non-
Employee Director, by such other medium of payment as the Committee,
in its discretion, shall authorize at the time of grant; or (f) by any
combination of (a), (b), (c), (d) and (e). In the case of an election
pursuant to (a) or (b) above, cash shall mean cash or a check issued
by a federally insured bank or savings and loan, and made payable to
the Company. In the case of payment pursuant to (b), (c) or (d)
above, the Optionee's election must be made on or prior to the date of
exercise and shall be irrevocable. In lieu of a separate election
governing each exercise of an Option, an Optionee may file a blanket
election with the Committee that shall govern all future exercises of
Options until revoked by the Optionee. The Company shall issue, in
the name of the Optionee, stock certificates representing the total
number of shares of Common Stock issuable pursuant to the exercise of
any Option as soon as reasonably practicable after such exercise,
provided that any shares of Common Stock purchased by an Optionee
through a broker-dealer pursuant to clause (b) above shall be
delivered to such broker-dealer in accordance with 12 C.F.R. Section
220.3(e)(4) or other applicable provision of law.
8.3. TAXES GENERALLY. At the time of the exercise of any Option,
as a condition of the exercise of such Option, the Company may require
the Optionee to pay the Company an amount equal to the amount of the
tax the Company or any Subsidiary may be required to withhold to
obtain a deduction for federal and state income tax purposes as a
result of the exercise of such Option by the Optionee or to comply
with applicable law.
8.4. PAYMENT OF TAXES. At any time when an Optionee is required
to pay an amount required to be withheld under applicable income tax
or other laws in connection with the exercise of an Option, the
Optionee may satisfy this obligation in whole or in part by: (a)
directing the Company to withhold such number of shares of Common
Stock otherwise issuable upon exercise of such Option having an
aggregate Fair Market Value on the date of exercise equal to the
amount of tax required to be withheld; or (b) delivering shares of
Common Stock of the Company having an aggregate Fair Market Value
equal to the amount required to be withheld. In the case of payment
of taxes pursuant to (a) or (b) above, the Optionee's election must be
made on or prior to the date of exercise and shall be irrevocable.
The Committee may disapprove any election or delivery or may suspend
or terminate the right to make elections or deliveries. In lieu of a
separate election governing each exercise of an Option, an Optionee
may file a blanket election with the Committee which shall govern all
future exercises of Options until revoked by the Optionee.
SECTION 9. TRANSFERABILITY OF OPTIONS.
--------------------------
No Option granted pursuant to the Plan shall be transferable
otherwise than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the<PAGE>
<PAGE> 37
Code. Notwithstanding the preceding sentence, an Option Agreement for
NSOs may provide that the Optionee, at any time prior to his death,
may assign all or any portion of an Option granted to him to (i) his
spouse or lineal descendant, (ii) the trustee of a trust for the
primary benefit of his spouse or lineal descendant, (iii) a
partnership of which his spouse and lineal descendants are the only
partners, or (iv) a tax exempt organization as described in Code
Section 501(c)(3). In such event, the spouse, lineal descendant,
trustee, partnership or tax exempt organization will be entitled to
all of the rights of the Optionee with respect to the assigned portion
of such Option, and such portion of the Option will continue to be
subject to all of the terms, conditions and restrictions applicable to
the Option, as set forth herein and in the related Option Agreement
immediately prior to the effective date of the assignment. Any such
assignment will be permitted only if: (i) the Optionee does not
receive any consideration therefore; and (ii) the assignment is
expressly permitted by the applicable Agreement as approved by the
Committee. Any such assignment shall be evidenced by an appropriate
written document executed by the Optionee, and a copy thereof shall be
delivered to the Company on or prior to the effective date of the
assignment.
SECTION 10. RIGHTS AS STOCKHOLDER.
---------------------
An Optionee or a transferee of an Optionee pursuant to Section 9
shall have no rights as a stockholder with respect to any Common Stock
covered by an Option or receivable upon the exercise of an Option
until the Optionee or transferee shall have become the holder of
record of such Common Stock, and no adjustments shall be made for
dividends in cash or other property or other distributions or rights
in respect to such Common Stock for which the record date is prior to
the date on which the Optionee shall have in fact become the holder of
record of the shares of Common Stock acquired pursuant to the Option.
SECTION 11. POSTPONEMENT OF EXERCISE.
------------------------
The Committee may postpone any exercise of an Option for such
time as the Committee in its sole discretion may deem necessary in
order to permit the Company (a) to effect, amend or maintain any
necessary registration of the Plan or the shares of Common Stock
issuable upon the exercise of an Option under the Securities Act of
1933, as amended, or the securities laws of any applicable
jurisdiction, (b) to permit any action to be taken in order to (i)
list such shares of Common Stock on a stock exchange if shares of
Common Stock are then listed on such exchange or (ii) comply with
restrictions or regulations incident to the maintenance of a public
market for its shares of Common Stock, including any rules or
regulations of any stock exchange on which the shares of Common Stock
are listed, or (c) to determine that such shares of Common Stock and
the Plan are exempt from such registration or that no action of the<PAGE>
<PAGE> 38
kind referred to in (b)(ii) above needs to be taken; and the Company
shall not be obligated by virtue of any terms and conditions of any
Option or any provision of the Plan to recognize the exercise of an
Option or to sell or issue shares of Common Stock in violation of the
Securities Act of 1933 or the law of any government having
jurisdiction thereof. Any such postponement shall not extend the term
of an Option and neither the Company nor its directors or officers
shall have any obligation or liability to an Optionee, to the
Optionee's successor or to any other person with respect to any shares
of Common Stock as to which the Option shall lapse because of such
postponement.
Section 12. TRUST AGREEMENT.
---------------
The Company may enter into a trust agreement ("Trust Agreement")
whereby the Company shall agree to contribute to a trust ("Trust") for
the purpose of accumulating shares of Common Stock to assist the
Company in fulfilling its obligations to Optionees hereunder. Such
Trust Agreement shall be substantially in the form of the model trust
agreement set forth in Internal Revenue Service Revenue Procedure 92-
64, or any subsequent Internal Revenue Service Revenue Procedure, and
shall include provisions required in such model trust agreement that
all assets of the Trust shall be subject to the creditors of the
Company in the event of insolvency.
SECTION 13. TERMINATION OR AMENDMENT OF PLAN.
--------------------------------
The Board or the Committee may terminate, suspend, or amend the
Plan, in whole or in part, from time to time, without the approval of
the stockholders of the Company to the extent allowed by law.
The Committee may correct any defect or supply an omission or
reconcile any inconsistency in the Plan or in any Option granted
hereunder in the manner and to the extent it shall deem desirable, in
its sole discretion, to effectuate the Plan.
No amendment or termination of the Plan shall in any manner
affect any Option theretofore granted without the consent of the
Optionee, except that the Committee may amend the Plan in a manner
that does affect Options theretofore granted upon a finding by the
Committee that such amendment is in the best interest of holders of
outstanding Options affected thereby.
This Plan is intended to comply with all applicable requirements
of Rule 16b-3 or its successors under the 1934 Act, insofar as
participants subject to Section 16 of the 1934 Act are concerned. To
the extent any provision of the Plan does not so comply, the provision
shall, to the extent permitted by law and deemed advisable by the
Committee, be deemed null and void with respect to such participants.<PAGE>
<PAGE> 39
SECTION 14. EFFECTIVE DATE.
--------------
The Plan shall be effective upon the date of approval of the Plan
by an affirmative vote of a majority of the shares of the voting stock
of the Company entitled to be voted by the holders of stock
represented at a duly held stockholders' meeting, within 12 months
after the date of adoption of the Plan by the Board.<PAGE>
<PAGE> 40
APPENDIX B
----------
EQUALITY BANCORP, INC.
MANAGEMENT DEVELOPMENT AND RECOGNITION PLAN
-------------------------------------------
ARTICLE I
ESTABLISHMENT OF THE PLAN
-------------------------
1.01. Equality Bancorp, Inc. (the "Company") hereby
establishes the Management Development and Recognition Plan (the
"Plan") upon the terms and conditions hereinafter stated in this
Management Development and Recognition Plan (the "Plan").
ARTICLE II
PURPOSE OF THE PLAN
-------------------
2.01. The purpose of the Plan is to retain personnel of
experience and ability in key positions by providing such key
employees with a proprietary interest in the Company as compensation
for their contributions to the Company and its Subsidiaries and as an
incentive to make such contributions in the future.
ARTICLE III
DEFINITIONS
-----------
The following words and phrases, when used in this Plan with an
initial capital letter, unless the context clearly indicates
otherwise, shall have the meanings set forth below. Whenever
appropriate, the masculine pronoun shall include the feminine pronoun
and the singular shall include the plural.
3.01. "Association" means Equality Savings and Loan
Association, F.A., a Federally-chartered savings association, and its
successors and assigns. The Association, with the consent of the
Board, has agreed to participate in this Plan.
3.02. "Beneficiary" means the person or persons designated by
a Recipient to receive any benefits payable under the Plan in the
event of such Recipient's death. Such person or persons shall be
designated in writing on forms provided for this purpose by the
Committee and may be changed from time to time by similar written
notice to the Committee. In the absence of a written designation, the
Beneficiary shall be the Recipient's surviving spouse, if any, or if
none, the Recipient's estate.<PAGE>
<PAGE> 41
3.03. "Board" means the Board of Directors of the Company.
3.04. "Committee" means the Compensation Committee of the
Board.
3.05. "Common Stock" means shares of the common stock, $.01
par value per share, of the Company.
3.06. "Company" means Equality Bancorp, Inc., a Savings and
Loan Holding Company registered under Section 10(b) of the Home
Owners' Loan Act that owns 100% of the Capital Stock of the
Association.
3.07. "Director" means a member of the Board of Directors of
the Company or the Association.
3.08. "Disability" means the permanent and total inability by
reason of mental or physical infirmity, or both, of a Recipient to
perform the work customarily assigned to him. A medical doctor
selected or approved by the Board 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 the Recipient's lifetime.
3.09. "Effective Date" means the date stockholders of the
Company approve the Plan.
3.10. "Employee" means any person who is currently employed
by the Company, the Association or a Subsidiary, including officers.
3.11. "Non-Employee Director" means a member of the Board of
Directors of the Company or the Association who is not an Employee.
3.12. "Plan Shares" means shares of Common Stock issued or
issuable to a Recipient pursuant to the Plan.
3.13. "Plan Share Award" means a right granted under this
Plan to earn Plan Shares.
3.14. "Recipient" means an Employee or Non-Employee Director
who receives a Plan Share Award under the Plan.
3.15. "Retirement" means retirement at the normal or early
retirement date as set forth in the Association's Employee Stock
Ownership Plan.
3.16. "Subsidiary" means any other entity of which the
Company is the direct or indirect beneficial owner of not less than
fifty percent (50%) of all issued and outstanding equity interests. A
Subsidiary may, with the consent of the Board, agree to participate in
this Plan.<PAGE>
<PAGE> 42
ARTICLE IV
ADMINISTRATION OF THE PLAN
--------------------------
4.01. ROLE OF THE COMMITTEE. The Plan shall be administered
and interpreted by the Committee, which shall be appointed by the
Board. The Committee shall be comprised of two (2) or more members
of the Board who are "non-employee directors" within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934. The Committee
shall have all of the powers allocated to it in this and other
Sections of the Plan. The Committee shall have the power to interpret
and construe the terms and provisions of the Plan or of any Plan Share
Award granted hereunder, and all such interpretations and
constructions by the Committee shall be final and binding. The
Committee, in its sole discretion, shall determine the Employees and
Directors of the Company and its Subsidiaries to whom, and the time or
times at which Plan Share Awards will be granted, the number of Plan
Share Awards, the expiration date of each Plan Share Award, the
cancellation of the Plan Share Award (with the consent of the holder
thereof) and the other terms and conditions of the grant of the Plan
Share Award. The terms and conditions of the Plan Share Awards need
not be the same with respect to each Recipient or with respect to each
Plan Share Award.
The Committee shall act by vote or written consent of a
majority of its members. Subject to the express provisions and
limitations of the Plan, the Committee may adopt such rules,
regulations and procedures as it deems appropriate for the conduct of
its affairs. The Committee shall report its actions and decisions
with respect to the Plan to the Board at appropriate times, but in no
event less than one time per calendar year.
4.02. ROLE OF THE BOARD. The Board shall appoint or approve
members of the Committee and any trustee or the trustees of a Trust
established pursuant to Section 7.07. The Board may, in its
discretion, from time to time, remove members from or add members to
the Committee and may remove, replace or add Trustees. The Board may
not revoke any Plan Share Award already made without the consent of
the Recipient.
4.03. LIMITATION ON LIABILITY. No member of the Board or the
Committee shall be liable for any determination made in good faith
with respect to the Plan or any Plan Shares or Plan Share Awards it
grants. If a member of the Board or the Committee is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of anything done or not done by him in such
capacity under or with respect to the Plan, the Company and its
Subsidiaries shall indemnify such member against expense (including
attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such member in connection with
such action, suit or proceeding if the member acted in good faith and<PAGE>
<PAGE> 43
in the manner he reasonably believed to be in the best interests of
the Company and its Subsidiaries and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
ARTICLE V
ELIGIBILITY AND ALLOCATIONS
---------------------------
5.01. ELIGIBILITY. Officers and key management Employees of
the Company, the Association and its Subsidiaries are eligible to
receive Plan Share Awards. Non-Employee Directors also may receive
Plan Share Awards pursuant to Article VIII hereof and discretionary
grants made by the Committee from time to time.
5.02. ALLOCATIONS. The number of Shares covered by Plan
Share Awards may not exceed, prior to the first anniversary of the
Effective Time of the Conversion and Reorganization (as defined in the
Plan of Conversion and Reorganization of First Missouri Financial,
M.H.C. and Equality Savings and Loan Association, F.A., as first
adopted on May 16, 1997 (the "Plan of Conversion and
Reorganization")), 65,550 shares of Common Stock. In no event shall
any Awards be made which will violate the Certificate of Incorporation
or Bylaws of the Company, the Federal Stock Charter or Bylaws of the
Association or Plan of Conversion and Reorganization, or any
applicable federal or state law or regulation. In the event Plan
Shares are forfeited for any reason, the Committee may determine which
of the Employees will be granted additional Plan Shares to be awarded
from forfeited Plan Shares. In selecting those Employees to whom Plan
Share Awards will be granted and the number of Shares covered by such
Awards, the Committee shall consider the position and responsibilities
of the eligible Employees, the value of their services to the Company
and the Association and its Subsidiaries, and any other factors the
Committee may deem relevant, including the recommendations of the
Chairman of the Board.
5.03. FORM OF ALLOCATION. As promptly as practicable after a
determination is made pursuant to Section 5.02 that a Plan Share Award
is to be issued, the Committee shall notify the Recipient in writing
of the grant of the Award, the number of Plan Shares covered by the
Award and the terms upon which the Plan Shares subject to the Award
may be earned. The date on which the Committee so notifies the
Recipient shall be considered the date of grant of the Plan Share
Award. The Committee shall maintain records as to all grants of Plan
Share Awards under the Plan.
5.04. ALLOCATIONS NOT REQUIRED. Notwithstanding anything to
the contrary in Sections 5.01 and 5.02, no Employee or Director shall
have any right or entitlement to receive a Plan Share Award hereunder,
such Awards being at the total discretion of the Committee, nor shall
the salaried Employees as a group have such a right.<PAGE>
<PAGE> 44
ARTICLE VI
EARNING AND DISTRIBUTION OF PLAN SHARES
VOTING RIGHTS
---------------------------------------
6.01. EARNING PLAN SHARES: FORFEITURES. Unless the Committee
shall specifically state to the contrary at the time a Plan Share
Award is granted, Plan Shares subject to an Award shall be earned by a
Recipient in five equal annual installments over the first five years
after the date of grant, if the Employee remains employed with the
Company or a Subsidiary continuously throughout such period, PROVIDED,
HOWEVER, that the Committee may provide for a less rapid earnings rate
than that set forth herein for all Awards or for any given Award. If
the employment of a Recipient is terminated prior to the fifth
anniversary (or such later date as the Committee shall determine) of
the date of grant of an Award for any reason (except as specifically
provided in subsections (a) and (b) below), the Recipient shall
forfeit the right to earn any shares subject to the Award which have
not theretofore been earned. No fractional shares shall be issued.
(a) EXCEPTION FOR TERMINATIONS DUE TO DEATH OR DISABILITY.
Notwithstanding the general rule contained in this Section, Plan
Shares subject to a Plan Share Award held by a Recipient whose
employment with the Company or a Subsidiary terminates due to
Death or Disability, or any part of such Award that has not
theretofore been earned, shall be deemed earned as of the
Recipient's last day of employment with the Company or a
Subsidiary.
(b) REVOCATION FOR MISCONDUCT. Notwithstanding anything
herein to the contrary, the Board may, by resolution, immediately
revoke, rescind and terminate any Plan Share Award, or portion
thereof, previously awarded under this Plan, to the extent Plan
Shares have not been delivered thereunder to the Recipient,
whether or not yet earned, in the case of an Employee or Director
who is discharged from the Company or a Subsidiary for cause (as
hereinafter defined), or who is discovered after termination of
employment to have engaged in conduct that would have justified
termination for cause. "Cause" is defined as personal
dishonesty, willful misconduct, any breach of fiduciary duty
involving personal profit, intentional failure to perform stated
duties, or the willful violation of any law, rule or regulation
(other than traffic violations or similar offenses) which results
in a material loss to the Company or its Subsidiaries, or final
cease and desist order.
6.02. DISTRIBUTION OF PLAN SHARES. Plan Shares shall be
distributed to the Recipient or his Beneficiary, as the case may be,
as soon as is practicable after a Plan Share Award is made. All Plan
Shares shall be distributed in the form of Common Stock. One share of
Common Stock shall be given for each Plan Share earned and payable.<PAGE>
<PAGE> 45
6.04. VOTING AND DIVIDEND RIGHTS. No Recipient shall have
any voting or dividend rights or other rights of a stockholder with
respect to any Plan Shares covered by a Plan Share Award prior to the
time said Plan Shares are actually distributed to him. When cash
dividends are paid with respect to Plan Shares allocated to a
Recipient, such Recipient shall be entitled to receive an amount equal
to such cash dividend, but only after the related Plan Shares are
earned by the Recipient. Stock dividends with respect to shares
allocated to a Recipient shall be distributed when the Plan Shares
with respect to which they are declared are so distributable.
ARTICLE VII
MISCELLANEOUS
-------------
7.01. AMENDMENT AND TERMINATION OF PLAN. The Board may, by
resolution, at any time, amend or terminate the Plan.
7.02. NONTRANSFERABLE. Plan Share Awards and rights to Plan
Shares shall not be transferable by a Recipient and, during the
lifetime of the Recipient, Plan Shares may only be earned by and paid
to the Recipient who was notified in writing of the Award by the
Committee pursuant to Section 5.03. No Recipient or Beneficiary shall
have any right in or claim to any assets of the Plan or Trust, nor
shall the Company or any Subsidiary be subject to any claim for
benefits hereunder.
7.03. EMPLOYMENT RIGHTS. Neither the Plan nor any grant of a
Plan Share Award or Plan Shares hereunder nor any action taken by the
Committee or the Board in connection with the Plan shall create any
right on the part of any Employee to continue in the employ of the
Company, the Association or a Subsidiary.
7.04. GOVERNING LAW. The Plan shall be governed by the laws
of the State of Missouri.
7.05. TERM OF PLAN. This Plan shall remain in effect until
the earlier of: (1) termination by the Board of Directors; (2) the
distribution to Recipients, Beneficiaries, the Company or the
Association of all assets of the Trust; or (3) 21 years from the
Effective Date. Termination of the Plan shall not, unless expressly
specified, affect any Plan Share Awards previously granted, and such
Awards shall remain valid and in effect until they have been paid, or
by their terms expire or are forfeited.
7.06. EXPENSES. All costs and expenses incurred in the
operation and administration of this Plan shall be borne by the
Company and its Subsidiaries.
7.07. TRUST AGREEMENT. Notwithstanding any other terms of
this Plan, the Company may enter into a trust agreement ("Trust
Agreement") whereby the Company shall agree to contribute to a trust<PAGE>
<PAGE> 46
("Trust") for the purpose of accumulating assets to assist the Company
in fulfilling its obligations to Recipients hereunder. Such Trust
Agreement shall be substantially in the form of the model trust
agreement set forth in Internal Revenue Service Revenue Procedure 92-
64, or any subsequent Internal Revenue Service Revenue Procedure, and
shall include provisions required in such model trust agreement that
all assets of the Trust shall be subject to the creditors of the
Company in the event of insolvency.
ARTICLE VIII
OUTSIDE DIRECTOR AWARDS
-----------------------
Each Non-Employee Director on the Effective Date shall be granted
a Plan Share Award equal to 1,250 shares, subject to availability, to
vest in five equal annual installments beginning with the first
anniversary of the Effective Date.
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed by its duly authorized officers and the corporate seal to be
affixed and duly attested, all on this 19th day of June, 1998.
EQUALITY BANCORP, INC.
By: /s/ RICHARD C. FELLHAUER
------------------------------
Richard C. Fellhauer
President and Chief
Executive Officer
ATTEST:
/s/ PATRICIA R. TODD
-----------------------------
Patricia R. Todd
Secretary<PAGE>
<PAGE> 47
EQUALITY BANCORP, INC.
REVOCABLE PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
EQUALITY BANCORP, INC.
The undersigned hereby appoint(s) Richard C. Fellhauer and
Michael A. Deelo, or either of them, as proxies for the undersigned,
with full power of substitution, to act and to vote all of the shares
of common stock of Equality Bancorp, Inc. that the undersigned would
be entitled to vote if personally present at the Annual Meeting of
Stockholders to be held at 558 Gravois Road, Fenton, Missouri, on
proxies are directed to vote as instructed on the matters set forth on
this card and otherwise at their discretion. The undersigned
acknowledges that he/she has received a copy of the Notice of Annual
Meeting and Proxy Statement.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTIONS
ARE GIVEN, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES FOR
DIRECTOR AND FOR
--- ---
EACH OF THE PROPOSALS LISTED BELOW.
(PLEASE MARK, SIGN, DATE AND MAIL PROMPTLY IN THE ENCLOSED RETURN
ENVELOPE.)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES
FOR DIRECTOR AND "FOR" EACH OF THE OTHER PROPOSALS.
PLEASE MARK YOUR VOTE IN THE BOX IN THE FOLLOWING MANNER USING DARK
INK ONLY: /X/
Proposal 1 To elect LeRoy C. Crook, Kenneth J. Hrdlicka and
Michael J. Walsh as directors to serve on the Board of
Directors, each for a three year term and until their
respective successors are elected and qualified.
FOR WITHHOLD AUTHORITY
ALL NOMINEES LISTED TO VOTE FOR ALL NOMINEES LISTED
/_/ /_/
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name on the space provided below.)<PAGE>
<PAGE> 48
______________________________________________________________________
Proposal 2. Approval of Equality Bancorp, Inc. 1997 Stock Option
and Incentive Plan (the "Option Plan").
FOR AGAINST ABSTAIN
/_/ /_/ /_/
Proposal 3. Approval of Equality Bancorp, Inc. Management
Development and Recognition Plan (the "MRP").
FOR AGAINST ABSTAIN
/_/ /_/ /_/
Proposal 4. Proposal to adjourn the Meeting in the event that
Equality's management should determine that such
adjournment is in the best interests of Equality and
its stockholders, as more fully described in the
accompanying Proxy Statement, which would include
adjourning the Meeting to enable management to solicit
additional proxies which may be necessary to ensure
approval of the Option Plan and the MRP.
FOR AGAINST ABSTAIN
/_/ /_/ /_/
Dated: ____________, 1998 __________________________________
Signature of Stockholder
_________________________________
Signature of Stockholder
(if held jointly)
IMPORTANT: Please sign exactly as
your name or names appear on this
card. If stock is held jointly,
all joint owners must sign.
Executers, administrators,
trustees, guardians, custodians,
corporate officers and others
signing in a representative
capacity should put their full
title.
PLEASE CHECK THE FOLLOWING BOX IF
YOU PLAN TO ATTEND THE MEETING. /_/<PAGE>
