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:
/ / Preliminary Proxy Statement / / Confidential, for use of
/x/ Definitive Proxy Statement the Commission Only (as
/ / Definitive Additional Materials permitted by Rule 14a-
/ / Soliciting Material Pursuant to 6(e)(2))
Rule 14a-118 or Rule 14a-12
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:
EQUALITY BANCORP, INC.
9920 WATSON ROAD
ST. LOUIS, MISSOURI 63126
(314) 965-7090
July 20, 2000
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 11, 2000, 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 representatives of
KPMG LLP and Rubin Brown Gornstein and Co., 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,
/s/ Richard C. Fellhauer
Chairman of the Board, President and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 11, 2000
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 11, 2000, 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) such other matters as may properly come before the Meeting.
The Board of Directors has fixed the close of business on June
30, 2000, as the record date for the determination of stockholders
entitled to vote at the Meeting and any adjournments thereof.
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
/s/ Richard C. Fellhauer
Chairman of the Board, President
and Chief Executive Officer
St. Louis, Missouri
July 20, 2000
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.
PROXY STATEMENT
OF
EQUALITY BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
August 11, 2000
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 2000 Annual Meeting of Stockholders (the
"Meeting"). The Meeting will be held at 558 Gravois Road, Fenton,
Missouri on Friday, August 11, 2000, 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 20, 2000.
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. 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.
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. 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,
2000 (the "Record Date") are entitled to one vote for each share of
Common Stock then held. As of the Record Date, Equality had 2,386,039
shares of Common Stock issued and outstanding.
The following table sets forth, as of March 31, 2000, the number
of shares of Common Stock beneficially owned by each person known by
Equality to be the beneficial owner of more than five percent of the
outstanding shares of Common Stock, 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.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF COMMON
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP 1 STOCK OUTSTANDING
------------------------ ---------------------- -----------------
<S> <C> <C>
GREATER THAN 5% OWNERS:
Equality Employee Stock Ownership 188,480 7.89%
Plan Trust
4131 South Grand Blvd.
St. Louis, Missouri 63118
Richard C. Fellhauer 127,163 5.28%
DIRECTORS:
Daniel C. Aubuchon 2 15,358 *
Stacey W. Braswell 2,3 22,816 *
LeRoy C. Crook 2 7,677 *
Michael A. Deelo 2,4 92,788 3.87%
Richard C. Fellhauer 2,5 127,163 5.28%
Kenneth J. Hrdlicka 2,6 18,359 *
Berenice J. Mahacek 2,7 50,551 2.12%
Michael J. Walsh 2,8 44,845 1.88%
Charles J. Wolter 2,9 14,071 *
ALL DIRECTORS AND EXECUTIVE OFFICERS
AS A GROUP (10 PERSONS)(10) 426,012 17.46%
</TABLE>
_____________________
* 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 Includes shares issuable pursuant to stock options currently
exercisable or exercisable within 60 days of March 31,
2000; Mr. Aubuchon 1,150 shares, Mr. Braswell 2,279 shares,
Mr. Crook 1,150 shares, Mr. Deelo 12,817 shares, Mr.
Fellhauer 23,334 shares, Mr. Hrdlicka 2,279 shares, Ms.
Mahacek 1,150 shares, Mr. Walsh 2,636 shares, and Mr. Wolter
1,150 shares.
2
3 Of the 22,816 shares reported as beneficially owned by Mr.
Braswell, 1,594 are held for his minor children.
4 Mr. Deelo is also an executive officer. Of the 92,788
shares reported as beneficially owned by Mr. Deelo, 10,200
are held by his spouse.
5 Mr. Fellhauer is also an executive officer. Of the 127,163
shares beneficially owned by Mr. Fellhauer, 3,275 are held
by his spouse and 1,586 are held for his minor children.
6 Of the 18,359 shares reported as beneficially owned by Mr.
Hrdlicka, 1,218 are held by his spouse.
7 Of the 50,551 shares reported as beneficially owned by Ms.
Mahacek, 5,326 are held by her spouse.
8 Of the 44,845 shares reported as beneficially owned by Mr.
Walsh, 5,101 are held by his spouse.
9 Of the 14,071 shares reported as beneficially owned by Mr.
Wolter, 3,000 are held by his spouse.
10 Includes 8,017 shares issuable pursuant to stock options
granted to an executive officer that are currently
exercisable or exercisable within 60 days of March 31, 2000.
3
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: Berenice J. Mahacek, Charles J. Wolter and Michael A.
Deelo, 2000; LeRoy C. Crook, Kenneth J. Hrdlicka and Michael J. Walsh,
2001; and Richard C. Fellhauer, Daniel C. Aubuchon and Stacey W.
Braswell, 2002. Upon the recommendation of the nominating committee,
the Board of Directors has nominated for reelection as directors
Berenice J. Mahacek, Charles J. Wolter and Michael A. Deelo, each for
a term of three years. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE REELECTION OF MS. MAHACEK, AND MESSRS. WOLTER AND DEELO.
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 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, 2000 With Equality Since * Expires
---- --------------- ------------- ------- -------
<S> <C> <C> <C> <C>
DIRECTOR NOMINEES:
Michael A. Deelo 44 Director, Sr. Ex. Vice President, 1994 2000
and Chief Financial Officer
Berenice J. Mahacek 66 Director 1982 2000
Charles J. Wolter 82 Director 1989 2000
DIRECTORS CONTINUING IN OFFICE:
LeRoy C. Crook 91 Director 1965 2001
Kenneth J. Hrdlicka 57 Director 1983 2001
Michael J. Walsh 56 Director 1986 2001
Daniel C. Aubuchon 52 Director 1981 2002
Stacey W. Braswell 56 Director 1982 2002
Richard C. Fellhauer 58 Director, Chairman of the Board, 1973 2002
President and Chief Executive Officer
</TABLE>
--------------------
* The person named has been a director of Equality or the Bank since
the date indicated.
4
The business experience for the past five years of each of the
current directors is as follows:
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.
LeRoy C. Crook, now retired, was the 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.
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 two times during the
fiscal year ended March 31, 2000.
5
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 compensation committee met one time
during the fiscal year ended March 31, 2000.
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, 2000, the Board of Directors
held 13 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.
Each nonemployee director received an automatic grant of options to
purchase 5,000 shares of common stock on August 14, 1998, and an
automatic award for 1,250 shares of common stock under the Management
Recognition Plan on June 19, 1998. Each award and grant vests 20% per
year over five years.
Members of the Board of Directors of Equality are also members of
the Board of Directors of the Bank, and each receives a fee of $600
for each Board meeting attended. No fees are paid for attending
committee meetings of the Board.
EXECUTIVE OFFICERS
Equality has three executive officers. Mr. Fellhauer is the
President and Chief Executive Officer of Equality. Mr. Deelo is the
Sr. Executive Vice President, 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 Senior Vice
President of the Bank and President of Equality Mortgage Corp., a
subsidiary of the Bank, and has held such positions since 1998. Prior
to being named President of Equality Mortgage Corp., Mr. Wolter was
Senior Vice President for more than 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 and non-cash
compensation awarded to, earned by or paid to Richard C. Fellhauer,
Equality's President and Chief Executive Officer and Michael A. Deelo,
Equality's Sr. Executive Vice President, and Chief Financial Officer,
during the three fiscal years ended March 31, 2000, 1999 and 1998.
Such compensation was paid to Messrs. Fellhauer and Deelo with respect
to their positions at the Bank. No other officer of Equality received
6
salary and bonus compensation in excess of $100,000 during the fiscal
year ended March 31, 2000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------- ----------------------
RESTRICTED SECURITIES
NAME AND OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) AWARDS(3) OPTIONS(4) COMPENSATION(2)
------------------- ---- -------- -------- ------------------ --------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard C. Fellhauer 2000 $157,400 - $8,500 - 2,500 $7,299
President & Chief 1999 159,415 - 8,400 199,688 25,000 9,978
Executive Officer 1998 138,000 - 10,200 - - 8,366
Michael A. Deelo 2000 $100,000 $5,000 $8,500 - 2,000 $5,177
Sr. Exec. Vice 1999 93,750 - 8,400 139,781 17,500 6,650
President & Chief 199 81,095 - 10,200 - - 5,060
Financial Officer
</TABLE>
------------------
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 (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, 2000, 1999, and 1998.
3 Represents awards of 15,000 shares of Common Stock to Mr.
Fellhauer and 10,500 shares of Common Stock to Mr. Deelo under
the MRP based upon the value of such stock of $13.3125 per share
as of the date of such award. As of March 31, 2000, the value of
restricted stock (15,000 shares and 10,500 shares respectively)
was $6.50 per share or $97,500 for Mr. Fellhauer in the aggregate
and $68,250 for Mr. Deelo in the aggregate. Such stock awards
become non-forfeitable at the rate of 20% of total shares per
year commencing on August 14, 1999. Dividends are paid for all
vested shares awarded.
4 Represents award of options exercisable at the rate of 20% per
year commencing on August 14, 1999. The exercise price equals
the average market value of common stock on the date of grant of
$13.90 for 1999 options and $8.00 for 2000 options.
STOCK COMPENSATION PROGRAMS
The following tables set forth information concerning options
granted to each named executive officer in the last fiscal year and
fiscal year end values of unexercised options.
7
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS EXERCISE ANNUAL RATE (3) OF
UNDERLYING GRANTED TO OR BASE STOCK PRICE
OPTIONS EMPLOYEES IN PRICE EXPIRATION APPRECIATION FOR
NAME GRANTED (#) (1) FISCAL YEAR ($/SH)(2) DATE OPTION TERM
---- -------------- ------------ --------- ---- -----------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Richard C. Fellhauer 2,500 12.50% 8.00 August 14, 2008 12,578 31,875
Michael A. Deelo 2,000 10.00% 8.00 August 14, 2008 10,062 25,500
</TABLE>
________________
1 All options granted in 1999 become exercisable in annual
cumulative installments of 20%, commencing of grant, with full
vesting occurring on the fifth anniversary date of the grant.
2 All options were granted at market value of the date of grant,
based on the closing price of the common stock on the American
Stock Exchange.
3 Potential realizable value is reported net of the option exercise
price but before taxes associated with exercise. Actual gains,
if any, on stock option exercises depend on the future
performance of the common stock, overall market conditions and
the continued employment of the officer. There can be no
assurance that the amounts reflected in this table will be
achieved.
8
AGGREGATE OPTION EXERCISES
IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-the-
Options at Fiscal Money Options at Fiscal Year
Year-End (#) End ($)(2)
--------------------- ---------------------------
Shares Value
Acquired Realized
Name on Exercise ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Fellhauer 12,115 35,715 22,832 22,500 40,908 -
Michael A. Deelo 11,295 48,689 12,417 16,000 18,960 -
</TABLE>
____________________
1 Market value of the underlying securities at the date of exercise
minus the exercise price, multiplied by the number of underlying
securities.
2 Market value of the underlying securities at year-end minus the
exercise price, multiplied by the number of underlying
securities. Based upon the closing price of the Common Stock on
the American Stock Exchange as of March 31, 2000 of $6.50 per
share.
EMPLOYMENT AGREEMENTS
Equality has entered into employment agreements with Richard C.
Fellhauer, President and Chief Executive Officer of Equality and the
Bank, Michael A. Deelo, Sr. Executive Vice President, and Chief
Financial Officer of Equality and Senior Executive Vice President and
Chief Financial Officer of the Bank, and Leonard O. Wolter, Vice
President of Equality and Senior Vice President of the 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
9
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,
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.
10
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, 2000, approximately $732,164 of loans were outstanding from
the Bank to directors of Equality and the Bank and their affiliates.
NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS OF DIRECTORS
Any stockholder wishing to nominate an individual for election as
a director must comply with certain provisions in Equality's
Certificate of Incorporation. Equality's Certificate of Incorporation
establishes an advance notice procedure with regard to the nomination,
other than by or at the direction of the Board of Directors of
Equality, of candidates for election as directors. Generally, such
notice must be delivered to or mailed to and received by the Secretary
of Equality at the principal executive offices of Equality not later
than the close of business on the 40th day nor earlier than the close
of business on the 70th day prior to the first anniversary of the
preceding year's annual meeting. The stockholder must also comply
with certain other provisions set forth in Equality's Certificate of
Incorporation relating to the nomination of an individual for election
as a director. For a copy of all the provisions in Equality's
Certificate of Incorporation relating to the nomination of an
individual for election as a director, an interested stockholder
should contact the Secretary of Equality at 9920 Watson Road, St.
Louis, Missouri, 63126.
NOTICE PROVISIONS FOR STOCKHOLDER PROPOSALS
Any stockholder wishing to bring business before an annual
meeting must comply with certain provisions in Equality's Bylaws.
Equality's Bylaws establish an advance notice procedure with regard to
certain matters to be brought before an annual meeting of stockholders
of Equality other than by or at the direction of the Board of
Directors of Equality. Such notice must be delivered to or mailed to
and received by the Secretary at the principal executive offices of
Equality not later than the close of business on the 60th day nor
earlier than the close of business on the 90th day prior to the first
anniversary of the preceding year's annual meeting. The stockholder
must also comply with certain other provisions set forth in Equality's
Bylaws relating to the bringing of business before an annual meeting.
For a copy of all the provisions in Equality's Bylaws relating to the
bringing of business before an annual meeting, an interested
stockholder should contact the Secretary of Equality at 9920 Watson
Road, St. Louis, Missouri, 63126.
11
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.
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 Stock filed all such
reports on a timely basis during or with respect to the year ended
March 31, 2000, except that a Form 5 was filed by each of the nine
directors of Equality and Leonard Wolter on May 30, 2000, after the
due date of May 14, 2000. These Forms 5 voluntarily updated end of
year ownership data as well as stock option grant data for the year
ended March 31, 2000.
ANNUAL REPORT AND FINANCIAL STATEMENTS
Attention is directed to the financial statements contained in
Equality's Annual Report for the year ended March 31, 2000. A copy of
the Annual Report is being sent concurrently to all stockholders of
record as of June 30, 2000.
AVAILABILITY OF FORM 10-KSB
A copy of Equality's annual securities report for the year ended
March 31, 2000, 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.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in Equality's proxy
materials for next year's Annual Meeting of Stockholders, any
stockholder proposal to take action at such meeting must be received
at Equality's main office not later than March 11, 2001. Any such
proposal shall be subject to the requirements of the proxy rules
adopted under the Securities Exchange Act of 1934.
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INDEPENDENT PUBLIC ACCOUNTANTS
On March 15, 2000, the Board of Directors of Equality engaged the
accounting firm of Rubin Brown Gornstein & Co. LLP ("Rubin Brown") as
its independent accountants, for the year commencing April 1, 2000 and
ending March 31, 2001, replacing KPMG LLP ("KPMG") as Equality's
independent accountant. KPMG will complete its audit of Equality's
consolidated financial statements for the year ending March 31, 2000
and issue its report thereon. Rubin Brown currently performs the
audit work solely for Equality Mortgage Corporation, a subsidiary of
the Bank. Equality decided to engage Rubin Brown for all of its audit
and tax work. The decision to change accountants was approved by
Equality's Board of Directors.
A representative of each firm will be present at the annual
meeting and 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 of
each firm that the representative does not presently intend to make
such a statement.
During the years ended March 31, 2000 and 1999, there have been
no disagreements with KPMG on any matter of accounting principles or
practices, financial statement disclosure, auditing scope or
procedure, which, if not resolved to KPMG's satisfaction, would have
caused KPMG to make reference to the subject matter of the
disagreement.
KPMG's audit report on the consolidated financial statements of
Equality and subsidiaries for the years ended March 31, 2000 and 1999
contained no adverse opinion or disclaimer of opinion and was not
modified as to uncertainty, audit scope of accounting principles,
except as follows: KPMG's audit reports on the consolidated financial
statements of Equality and subsidiaries as of and for the years ended
March 31, 2000 and 1999, state they "did not audit the financial
statements of Equality Mortgage Corporation, which statements reflect
total assets constituting 2% and 3% in 2000 and 1999, respectively,
and total interest income and noninterest income constituting 13%,
20%, and 19% in 2000, 1999, and 1998, respectively, and total interest
income and noninterest income constituting 20%, 19%, and 16% in 1999,
1998 and 1997, respectively, of the related consolidated totals.
Those statements were audited by other auditors whose report has been
furnished to us, and in our opinion, insofar as it relates to the
amounts included for Equality Mortgage Corporation, is based solely on
the report of the other auditors."
None of the following events has occurred within Equality's two
most recent fiscal years:
(A) KPMG has not advised Equality that the internal controls
necessary for Equality to develop reliable financial statements did
not exist;
(B) KPMG has not advised Equality that information had come to
its attention that made it unwilling to rely on management's
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representations, or that it made it unwilling to be associated with
the financial statements prepared by management;
(C) KPMG has not advised Equality that the scope of its audit
should be expanded significantly, or that information has come to its
attention that it has concluded will, or if further investigated
might, (I) materially impact the fairness or reliability of a
previously issued audit report or the underlying financial
statements, or the financial statements issued or to be issued
covering the fiscal periods subsequent to the date of the most recent
audited financial statements (including information that might
preclude the issuance of an unqualified audit report) and KPMG has not
advised Equality of any issue that was not resolved to KPMG's
satisfaction prior to its dismissal.
During the two most recent fiscal years, except for the current
and sole past performance by Rubin Brown of Equality Mortgage
Corporation's audit work, neither Equality nor anyone on its behalf
consulted Rubin Brown regarding either (i) the application of
accounting principles to a specific competed or contemplated
transaction, or the type of audit opinion that might be rendered on
Equality's financial statements, where either written or oral advice
was provided that was an important factor considered by Equality in
reaching a decision as to the accounting, auditing or financial
reporting issue; or (ii) any matter that was the subject of a
disagreement as defined in paragraph 304(a)(1)(iv) of Regulation S-B.
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 20, 2000
/s/ Patricia R. Todd, Secretary
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