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
[x] Definitive Proxy Statement
[ ] Confidential, for Use of the Commission Only
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Raritan Bancorp Inc.
(Name of Registrant as Specified In Its Charter)
John J. Gorman, Luse Lehman Gorman Pomerenk & Schick
(Name of Person(s) Filling Proxy Statement)
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>
RARITAN BANCORP INC.
9 WEST SOMERSET STREET
RARITAN, NEW JERSEY 08869
(908) 725-0080
March 28, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders (the "Annual Meeting") of Raritan Bancorp Inc. (the
"Company") to be held at the Raritan Valley Country Club, State
Highway No. 28, Somerville, New Jersey on Wednesday, April 23,
1997 at 10:00 a.m., New Jersey time.
As described in the enclosed Proxy Statement, matters
scheduled to be presented for shareholder action at the Annual
Meeting include the election of two directors, the approval of
the 1997 Long-Term Incentive Stock Benefit Plan, and the
ratification of the appointment of independent auditors for the
year ending December 31, 1997. During this meeting, we will also
report on the operations of The Raritan Savings Bank (the
"Bank"), the wholly-owned subsidiary of the Company. Detailed
information concerning the activities and operating performance
of the Company and the Bank during the year ended December 31,
1996 is contained in our Annual Report, which is enclosed.
Directors and officers of the Company, as well as representatives
of our independent auditors, will be present to respond to any
questions which shareholders may have.
We hope you will be able to attend this meeting in person.
Whether or not you expect to attend, we urge you to sign, date
and return the enclosed Proxy Card so that your shares will be
represented.
On behalf of the Board of Directors and all of the employees
of the Company and the Bank, I wish to thank you for your support
and interest. I look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Arlyn D. Rus
-----------------------------------
Arlyn D. Rus
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
RARITAN BANCORP INC.
9 WEST SOMERSET STREET
RARITAN, NEW JERSEY 08869
(908) 725-0080
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 23, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareholders (the "Annual Meeting") of Raritan Bancorp Inc. (the
"Company") will be held at the Raritan Valley Country Club, State
Highway No. 28, Somerville, New Jersey on Wednesday, April 23,
1997 at 10:00 a.m., New Jersey time, for the following purposes:
1. The election of two directors for a term of three years
each;
2. The approval of the Raritan Bancorp Inc. 1997 Long-Term
Incentive Stock Benefit Plan;
3. The ratification of KPMG Peat Marwick LLP as
independent auditors of the Company for the year ending December
31, 1997; and
4. Such other matters as may properly come before the
Annual Meeting or any adjournments thereof.
Pursuant to the Bylaws of the Company, the Board of
Directors has fixed March 10, 1997 as the voting record date for
the determination of shareholders entitled to notice of and to
vote at the Annual Meeting and any adjournments thereof. Only
holders of the Common Stock of the Company as of the close of
business on that date will be entitled to notice of and to vote
at the Annual Meeting or any adjournments thereof. A list of
shareholders entitled to vote at the Annual Meeting will be
available at 9 West Somerset Street, Raritan, New Jersey, for a
period of ten days prior to the Annual Meeting and will also be
available for inspection at the meeting itself.
By Order of the Board of Directors
/s/ Lucille H. Daniel
----------------------------------------
Lucille H. Daniel
Secretary
Raritan, New Jersey
March 28, 1997
EACH SHAREHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE
ANNUAL MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
<PAGE>
RARITAN BANCORP INC.
9 WEST SOMERSET STREET
RARITAN, NEW JERSEY 08869
(908) 725-0080
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
April 23, 1997
Solicitation and Voting of Proxies
This Proxy Statement is being furnished to shareholders of
Raritan Bancorp Inc. (the "Company") in connection with the
solicitation by the Board of Directors of proxies to be used at
the Annual Meeting of Shareholders (the "Annual Meeting") to be
held at the Raritan Valley Country Club, State Highway No. 28,
Somerville, New Jersey on Wednesday, April 23, 1997 at 10:00
a.m., New Jersey time, and any adjournments thereof. The 1996
Annual Report to Shareholders, including the consolidated
financial statements of the Company for the year ended December
31, 1996, accompanies this Proxy Statement and Proxy Card, which
are first being mailed to shareholders on or about March 28,
1997.
Regardless of the number of shares of Common Stock owned, it
is important that shareholders be represented by proxy or be
present in person at the Annual Meeting. Shareholders are
requested to vote by completing the enclosed Proxy Card and
returning it, signed and dated, in the enclosed postage-paid
envelope. Shareholders are urged to indicate the way they wish to
vote in the spaces provided on the proxy card. Proxies solicited
by the Board of Directors of the Company will be voted in
accordance with the directions given therein. Where no
instructions are indicated, signed proxies will be voted FOR the
election of each of the nominees for director named in this Proxy
Statement, FOR the approval of the Raritan Bancorp Inc. 1997
Long-Term Incentive Stock Benefit Plan, and FOR the ratification
of KPMG Peat Marwick LLP as independent auditors of the Company
for the year ending December 31, 1997.
The Board of Directors knows of no additional matters that
will be presented for consideration at the Annual Meeting.
Execution of a proxy, however, confers on the designated
proxyholders discretionary authority to vote the shares in
accordance with their best judgement on such other business, if
any, that may properly come before the Annual Meeting or any
adjournments thereof.
A proxy may be revoked at any time prior to its exercise by
the filing of a written notice of revocation with the Secretary
of the Company, by delivering to the Company a duly executed
proxy bearing a later date, or by attending the Annual Meeting
and voting in person. However, if you are a shareholder whose
shares are not registered in your own name, you will need
appropriate documentation from your record holder to vote
personally at the Annual Meeting.
The cost of solicitation of proxies in the form enclosed
herewith will be borne by the Company. Proxies may also be
solicited personally or by mail, telephone or telegraph by the
Company's Directors, officers and regular employees, without
additional compensation therefor. The Company will also request
persons, firms and corporations holding shares in their names, or
in the name of their nominees, which are beneficially owned by
others, to send proxy material to and obtain proxies from such
beneficial owners, and will reimburse such holders for their
reasonable expenses in doing so. The Company has retained Kissel-
Blake, Inc., a proxy soliciting firm, to assist the Company in
the solicitation of proxies for the Annual Meeting, for a fee of
$4,500, plus out-of-pocket expenses.
<PAGE>
Voting Securities
The securities which may be voted at this Annual Meeting
consist of shares of common stock of the Company, par value $.01
per share (the "Common Stock"), with each share entitling its
owner to one vote on all matters to be voted on at the Annual
Meeting, except as described below. The close of business on
March 10, 1997 has been fixed by the Board of Directors as the
record date (the "Record Date") for the determination of
shareholders entitled to notice of and to vote at the Annual
Meeting and any adjournments thereof. The total number of shares
of the Company's Common Stock outstanding on the Record Date
(exclusive of Treasury shares) was 1,524,084 shares.
The presence, in person or by proxy, of at least a majority
of the total number of shares of Common Stock outstanding and
entitled to vote is necessary to constitute a quorum at this
Annual Meeting. In the event there are not sufficient votes for
a quorum at the time of this Annual Meeting, or to carry any
matter as recommended by the Board, the Annual Meeting may be
adjourned in order to permit the further solicitation of proxies.
In accordance with the provisions of the Company's
Certificate of Incorporation, record holders of Common Stock who
beneficially own in excess of 10% of the outstanding shares of
Common Stock (the "Limit") are not entitled to any vote with
respect to the shares held in excess of the Limit. The Company's
Certificate of Incorporation authorizes the Board of Directors
(i) to make all determinations necessary to implement and apply
the Limit, including determining whether persons or entities are
acting in concert, and (ii) to demand that any person who is
reasonably believed to beneficially own stock in excess of the
Limit supply information to the Company to enable the Board to
implement and apply the Limit.
Voting Procedures and Method of Counting Votes
As to the election of Directors, the proxy card being
provided by the Board of Directors enables a shareholder to vote
FOR the election of the nominees proposed by the Board, or to
WITHHOLD AUTHORITY to vote for one or more of the nominees being
proposed. Under Delaware law and the Company's Certificate of
Incorporation and Bylaws, Directors are elected by a plurality of
votes cast, without regard to either broker non-votes, or proxies
as to which authority to vote for one or more of the nominees
being proposed is withheld.
As to the approval of the Raritan Bancorp Inc. 1997 Long-
Term Incentive Stock Benefit Plan and the ratification of KPMG
Peat Marwick LLP as independent auditors of the Company, by
checking the appropriate box, a shareholder may: (i) vote FOR the
item; (ii) vote AGAINST the item; or (iii) ABSTAIN from voting on
such item. Under the Company's Certificate of Incorporation and
Bylaws, the ratification or approval of either matter shall be
determined by a majority of the votes cast, without regard to
broker non-votes, or proxies marked "ABSTAIN."
Proxies solicited hereby will be returned to the Company,
and will be tabulated by inspectors of election designated by the
Board, who will not be employed by, or a director of, the Company
or any of its affiliates.
<PAGE>
Security Ownership of Certain Beneficial Owners
Persons and groups owning in excess of 5% of the Company's
Common Stock are required to file certain reports regarding such
ownership with the Company and with the Securities and Exchange
Commission (the "SEC"), in accordance with the Securities
Exchange Act of 1934 (the "Exchange Act"). The following table
sets forth information as of the Record Date, as to shares of
Common Stock beneficially owned by each person who was the owner
of more than five percent (5%) of the Company's outstanding
shares of Common Stock as of March 10, 1997.
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Percent
of Beneficial Owner Ownership of Class
- --------------------------------------------------------
<S> <C> <C>
Raritan Savings Bank Employee 150,452 (1) 9.9%
Stock Ownership Plan
9 West Somerset Street
Raritan, New Jersey
Arlyn D. Rus 143,876 (2) 8.9
c/o Raritan Bancorp Inc.
9 West Somerset Street
Raritan, New Jersey
Thomas F. Tansey 80,252 (3) 5.1
c/o Raritan Bancorp Inc.
9 West Somerset Street
Raritan, New Jersey
- --------------------
(1) The ESOP Administrative Committee, consisting of outside directors of the Bank,
administers the Bank's Employee Stock Ownership Plan (the "ESOP"). Under the
terms of the ESOP, shares of Common Stock allocated to the account of employees
are voted in accordance with the instructions of the respective employees.
Unallocated shares are voted by the ESOP Trustee as directed by the
Administrative Committee. The Administrative Committee shall vote the
unallocated shares in a manner that reflects the directions received from
employees as to allocated shares, unless their fiduciary duties require
otherwise. As of the Record Date, 117,360 shares of stock were allocated under
the ESOP and 33,092 shares remained unallocated.
(2) Includes options to purchase 86,250 shares of Common Stock which are exercisable
within 60 days of the Record Date. Also includes 12,000 shares granted under
the 1997 Stock Benefit Plan subject to future vesting but as to which voting may
currently be directed and 14,844 shares allocated to Mr. Rus' account under the
ESOP.
(3) Includes options to purchase 56,250 shares of Common Stock which are exercisable
within 60 days of the Record Date. Includes 10,225 shares allocated to Mr.
Tansey's account under the ESOP.
</TABLE>
<PAGE>
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1 - ELECTION OF DIRECTORS
In accordance with the Bylaws of the Company, the number of
Directors is currently set at six. Each of the members of the
Board of Directors of the Company also serves on the Board of
Directors of The Raritan Savings Bank (the "Bank"), the Company's
wholly-owned subsidiary. Directors are elected for staggered
terms of three years each, with the term of office of only one
class of Directors expiring in each year. Directors serve until
their successors are elected and qualified.
The nominees proposed by the Board for election at the
Annual Meeting are William T. Kelleher, Jr. and Thomas F. Tansey.
Each of these nominees is presently a Director of the Company.
Set forth below is certain information concerning the nominees
and the other members of the Board as of March 10, 1997. The
Board believes that such nominees will stand for election and
will serve if elected as Director. However, if any of the
nominees proposed by the Board of Directors fails to stand for
election or is unable to accept election, the proxies will be
voted for the election of such other person or persons as the
Board of Directors may recommend.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE NOMINEES WHOSE NAMES APPEAR BELOW.
<TABLE>
NOMINEES
Term to Expire Amount and Nature of
Name, Principal Occupation and Following The Year Beneficial Ownership Percent
Business Experience for Past 5 Years Ending December 31, of Stock (1) of Class
<S> <C> <C> <C>
William T. Kelleher, Jr., Age 45 1999 35,751(2)(3) 2.3%
Mr. Kelleher, Jr. has served as a Director
of the Bank since 1983 and of the Company
since its formation in 1987. He is a partner
in the law firm of Kelleher and Moore, and
has been a municipal court judge in the
Borough of Somerville (New Jersey) since
1983 and in the Township of Branchburg since
1990.
Thomas F. Tansey, Age 52 1999 80,252(4) 5.1
Mr. Tansey has served as Executive Vice
President, Chief Operating Officer and
Treasurer of the Company since its formation
in 1987. He has served as Executive Vice
President, Chief Operating Officer and
Treasurer of the Bank since May 1984.
He has served as a Director of the Bank
since January, 1986 and of the Company
since its formation in 1987.
<PAGE>
CONTINUING DIRECTORS
William T. Anderson, M.D., Age 61 1998 27,046(2)(5) 1.8%
Dr. Anderson has served as a Director
of the Bank since 1981 and of the Company
since its formation in 1987. He is a
physician with a family practice at
Anderson and Jobanputra, M.D. He is also
a director of Somerset Health Care Affiliates.
William W. Crouse, Age 54 1998 11,100(2) .7
Mr. Crouse has served as a Director of
the Company and the Bank since April,
1995. He is Vice Chairman and General
Partner of HealthCare Investment Corporation,
and he has 25 years experience in the health
care industry.
Peter S. Johnson, Age 54 1997 23,100(2) 1.5
Mr. Johnson has served as a Director of the
Company and the Bank since August, 1996.
He is a partner in the public accounting
firm of Gillen & Johnson PA and is the former
Chairman of the Board of Manville Savings Bank.
Arlyn D. Rus, Age 56 1997 143,876(6) 8.9
Mr. Rus has served as Chairman, President
and Chief Executive Officer of the Company
since its formation in 1987. He has served
as Director, President and Chief Executive
Officer of the Bank since 1971. Mr. Rus
currently serves as a member of the Board
of Directors of the Savings and Community
Bankers of New Jersey, and as Chairman
of the Board of Directors of Somerset
Health Care Corporation.
NAMED EXECUTIVE OFFICER NOT A DIRECTOR
John J. Lukens, Age 49 -- 12,836(7) .8
Mr. Lukens has served as Senior Vice
President of the Company and Senior
Vice President and Senior Lending Officer
of the Bank since June, 1992. Prior to
June, 1992, he served as a Credit Officer
at National Westminster Bank.
All directors and executive officers
as a group (12 persons) -- 652,449(8) 37.4%
- -------------------------
(1) Unless otherwise indicated, each person effectively exercises sole
(or shared with spouse) voting and dispositive power as to the shares reported.
(2) Includes 8,100 shares that may be acquired pursuant to the exercise of options
granted under the Directors Option Plan.
(3) Includes 2,726 shares owned of record by Mr. Kelleher as custodian for minor children.
(4) Includes 1,500 shares owned of record by Mr. Tansey's wife, 56,250 shares that may
be acquired pursuant to presently exercisable stock options, and 10,225 shares
allocated to Mr. Tansey's account under the Bank's ESOP.
(footnotes continued on next page)
<PAGE>
(5) Includes 862 shares owned of record by Dr. Anderson's wife.
(6) Includes 2,184 shares owned of record by Mr. Rus' wife, 86,250
shares that may be acquired pursuant to presently exercisable stock
options, 12,000 shares granted under the 1997 Stock Benefit Plan
subject to future vesting but as to which voting may currently be
directed, and 14,844 shares allocated to Mr. Rus' account under the
Bank's ESOP.
(7) Includes 10,500 shares that may be acquired pursuant to presently
exercisable stock options, and 1,886 shares allocated to Mr. Lukens'
account under the Bank's ESOP.
(8) Includes 209,175 shares that may be acquired pursuant to presently
exercisable stock options, 150,452 shares held by the ESOP, and
136,265 shares owned by Directors Emeritus.
</TABLE>
Meetings of the Board of Directors and Committees of the Board
The Board of Directors of the Company has established an
audit committee and a nominating committee. The Bank maintains
an audit committee, nominating committee, personnel committee and
investment committee. The Chairman, President and Chief
Executive Officer serves as an ex officio member of all
committees except the audit committee.
The Board of Directors of the Company and the Bank met
fifteen times during 1996. No Director attended fewer than 75%
in the aggregate of the total number of Board meetings held and
the total number of committee meetings on which he served during
1996.
The audit committee consists of Messrs. Anderson, Crouse,
Johnson and Kelleher, Jr., and meets no less frequently than on a
quarterly basis. The audit committee reviews audit performance
and evaluates policies and procedures relating to auditing
functions and controls. The audit committee met four times in
1996.
The nominating committee consists of Messrs. Anderson,
Crouse, Johnson and Kelleher, Jr., and meets semi-annually to
appoint officers and to nominate directors for election by the
shareholders. While the committee will consider nominees
recommended by shareholders, it has not actively solicited
recommendations from shareholders. Nominations by shareholders
must comply with certain procedural and informational
requirements set forth in the Company's Bylaws. See "Advance
Notice of Business to be Conducted at an Annual Meeting."
The Bank's personnel committee consists of Messrs. Anderson,
Crouse, Johnson and Kelleher, Jr. The personnel committee
reviews compensation, officer promotions, benefits and other
matters of personnel policy and practice. The personnel
committee met two times in 1996.
The Bank's investment committee consists of Messrs. Crouse,
Kelleher, Jr., Tansey and Ms. Daniel, and meets monthly. The
investment committee is responsible for establishing investment
policies for the Bank.
In addition, the Bank has a trust committee, conflict of
interest committee, mortgage and real estate committee, site and
building committee and planning committee, which meet
periodically.
Directors' Compensation
Fees. Directors of the Bank are paid an annual retainer
fee of $4,000, as well as a fee of $750 per board meeting
attended and $200 per committee meeting attended. In addition,
Directors are reimbursed for any amount of out-of-pocket expenses
incurred in attending meetings. Directors do not receive fees
from the Company for services on the Company's Board.
Stock Option Plan for Outside Directors. Under the 1993
Stock Option Plan for Outside Directors, each Outside Director of
the Company who was an Outside Director of the Company or the
Bank at the time of adoption of the Plan, received a non-
statutory option to purchase 7,500
<PAGE>
shares of Common Stock at an exercise price equal to the fair
market value of the Common Stock at the time of the adoption of
the plan. To the extent options for shares are available, each
subsequent Outside Director will be granted, effective as of the
date on which such subsequent Outside Director is qualified and
first begins to serve as an Outside Director, a non-statutory
stock option to purchase 7,500 shares of Common Stock, or such
lesser number of shares as remain in the plan, at an exercise
price equal to the then fair market value of the Common Stock.
An aggregate of 45,000 shares of Common Stock are reserved for
issuance pursuant to the exercise of options granted under the
1993 Stock Option Plan for Outside Directors. Options as to
37,500 shares of Common Stock reserved for issuance under this
plan have been granted as of the date of this Proxy Statement.
Each option may be exercised in whole or in part for a period of
ten years from the date of grant or one year following the date
the Outside Director ceases to be a Director. The exercise price
of a Director's option may be paid in cash or stock. The Board
has adopted the 1997 Stock Benefit Plan, pursuant to which
options to purchase 600 shares of Common Stock have been granted
to each Outside Director. The 1997 Stock Benefit Plan is being
submitted for shareholder approval at the Annual Meeting. See
"Proposal II - Approval of the 1997 Long-Term Incentive Stock
Benefit Plan."
Executive Compensation
Summary Compensation Table. The following table sets forth
the cash compensation paid by the Bank, for services rendered
during the years ended December 31, 1996, 1995 and 1994 to the
Chief Executive Officer, and other executive officers of the Bank
who received an amount in salary and bonus in excess of $100,000
in the year ended December 31, 1996 (the "Named Executive
Officers").
<TABLE>
Annual Compensation Long-Term Compensation
Awards Payouts
Other Annual Restricted Options/ All Other
Name and Year Ended Compensation Stock SARS LTIP Compensation
Principal Position December 31 Salary(1) Bonus (2) Awards (#)(4) Payouts (5)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Arlyn D. Rus 1996 $198,750 $43,500 $-- $276,000(3) 11,000 $-- $33,341
Chairman, 1995 190,500 33,750 -- -- -- -- 32,325
President and Chief 1994 184,500 36,000 -- -- -- -- 53,325
Executive Officer
Thomas F. Tansey 1996 $136,250 $26,000 $-- -- 4,000 $-- $29,381
Executive Vice 1995 130,500 20,250 -- -- -- -- 26,881
President, Chief 1994 123,000 21,000 -- -- -- -- 34,995
Operating Officer
and Treasurer
John J. Lukens
Senior Vice President 1996 $ 99,000 $16,706 -- -- 2,000 $-- $17,239
1995 95,000 13,360 -- -- -- -- 13.100
1994 90,000 10,632 -- -- -- -- 15,663
(1) Salary amounts for Messrs. Rus and Tansey include directors
fees in the amounts of $11,250, $10,500 and $10,500 for the
years 1996, 1995, and 1994, respectively.
(2) Perquisites did not exceed the lesser of $50,000 or 10% of
the individual's salary and bonus for any of the years.
Personal benefits include an automobile provided by the Bank
to Messrs. Rus and Tansey, and club membership for Mr. Rus.
(3) Relates to an award as to 12,000 shares of Common Stock
granted pursuant to the 1997 Stock Benefit Plan in December,
1996, subject to shareholder approval of the plan. The
market value per share of the Common Stock was $23.00 on the
date of grant. Such award vests in six equal installments,
although voting may currently be directed, and will be 100%
vested upon termination of employment due to death,
disability or normal retirement or following a change in
control. Pending distribution or forfeiture, the recipient
will also receive dividends declared with respect to the
shares.
(4) Relates to options granted pursuant to the 1997 Stock
Benefit Plan, subject to shareholder approval of the plan,
which options become exercisable in three equal installments
commencing one year from the date of grant, and are fully
exercisable following a change in control. The first
installment of options becomes exercisable on December 19,
1997.
(5) Reflects the Bank's matching contributions to the Employee's
Deferred Compensation 401(k) Plan with respect to Mr. Rus in
the amounts of $4,750, $4,620 and $4,620, with respect to
Mr. Tansey in the amounts of $4,750, $4,620 and $3,375, and
with respect to Mr. Lukens in the amounts of $2,970, $2,832,
and $2,233 for the years 1996, 1995 and 1994, respectively.
Also includes the market value of shares at December 31 of
each year which have been allocated to the employee's
account pursuant to the Employee Stock Ownership Plan during
such fiscal year; for Mr. Rus in the amounts of $28,591,
$27,705 and $48,705, for Mr. Tansey in the amounts of
$24,631, $22,261 and $31,620, and for Mr. Lukens in the
amounts of $14,269, $10,367 and $13,430 for the years 1996,
1995 and 1994, respectively.
</TABLE>
<PAGE>
Report of the Compensation Committee on Executive Compensation
Under rules established by the SEC, the Company is required
to provide certain data and information in regard to the
compensation and benefits provided to its Chief Executive Officer
and other executive officers. The disclosure requirements for
the Chief Executive Officer and other executive officers include
the use of tables and a report explaining the rationale and
considerations that led to fundamental executive compensation
decisions affecting those individuals. The Chief Executive
Officer and other executive officers do not receive compensation
from the Company. Consequently, in fulfillment of this
requirement, the Compensation Committee of the Bank's Board of
Directors has prepared the following report for inclusion in this
proxy statement.
The Compensation Committee annually reviews the performance
of the Chief Executive Officer and other executive officers and
approves changes to base compensation as well as the level of
bonus, if any, to be awarded. In addition, the Compensation
Committee determines the budget for salaries for other officers,
and reviews the report of the Chief Executive Officer regarding
the allocation of compensation of such other officers. In
determining whether the base salary of the Chief Executive
Officer, Executive Vice President and Senior Vice President
should be increased, the budget for other officers and whether to
approve the Chief Executive Officer's allocation of such amounts,
the Compensation Committee takes into account individual
performance, performance of the Company, the size of the Company
and the complexity of its operations. In evaluating changes to
compensation, the Compensation Committee uses a peer comparison
developed by KPMG Peat Marwick for purposes of determining the
competitive market for compensation paid to top executives of
thrifts with total assets in the range of the Company's total
asset size and performance results comparable to those of the
Company.
While the Compensation Committee does not use strict
numerical formulas to determine changes in compensation for the
Chief Executive Officer, Executive Vice President and Senior Vice
President; and while it weighs a variety of different factors in
its deliberations, it has emphasized and will continue to
emphasize earnings, profitability, capital position and income
level, and return on average shareholder's equity as factors in
setting the compensation of the Chief Executive Officer,
Executive Vice President and Senior Vice President. Other non-
quantitative factors considered by the Compensation Committee in
fiscal 1996 included general management oversight of the Bank,
the quality of communication with the Board of Directors, and the
productivity of employees. Finally, the Compensation Committee
considered the standing of the Bank with customers and the
community, as evidenced by the level of customer/community
complaints and compliments. While each of the quantitative and
non-quantitative factors described above was considered by the
Compensation Committee, such factors were not assigned a specific
weight in evaluating the performance of the Chief Executive
Officer, Executive Vice President and Senior Vice President.
Rather, all factors were considered, and based upon the
effectiveness of such officers in addressing each of the factors,
and the range of compensation paid to officers of peer
institutions, the Compensation Committee approved an increase in
the base salary of the Chief Executive Officer, Executive Vice
President and Senior Vice President. In addition, the
Compensation Committee approved salary increases totaling $64,250
for the Bank's 25 officers, bringing fiscal 1997 total base
compensation for all officers to $1,470,450. Also, stock options
as to 17,000 shares of Common Stock were granted to the Named
Executive Officers, including 11,000 stock options to the Chief
Executive Officer, and 12,000 shares of restricted stock were
granted to the Chief Executive Officer, in December 1996 pursuant
to the 1997 Stock Benefit Plan, which plan is being submitted to
shareholders for their approval at the Annual Meeting.
This report has been provided by the Compensation Committee
consisting of outside Directors: William T. Kelleher, Jr.,
William T. Anderson, M.D., William W. Crouse and Peter S.
Johnson.
<PAGE>
Stock Performance Graph. The following graph compares the
cumulative total return including dividends on (a) the Company's
Common Stock for the five year period ended December 31, 1996,
(b) stocks including in the Nasdaq Total Return Index for the
five year period ended December 31, 1996, and (c) stocks
included in the SNL Thrift Index for the five year period ended
December 31, 1996.
<PAGE>
<TABLE>
Raritan Bancorp Inc.
Total Return Performance
12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
<S> <C> <C> <C> <C> <C> <C>
Raritan Bancorp, Inc. 100.00 171.31 278.58 330.62 428.71 476.72
Nasdaq Total Return Index 100.00 116.38 133.59 130.59 130.59 227.16
SNL All Thrift Index 100.00 140.80 176.71 174.63 174.63 271.63
</TABLE>
<PAGE>
Employment Agreements. The Company and the Bank entered
into amended employment agreements with Arlyn D. Rus, Chairman,
President and Chief Executive Officer, and Thomas F. Tansey,
Executive Vice President, Chief Operating Officer and Treasurer,
in January 1990. The employment agreements each provided for a
five-year term. Commencing on the third anniversary date of each
agreement and continuing each anniversary date thereafter, unless
prior notice of non-renewal is given, each agreement
automatically extends for an additional year so that the
remaining term shall be three years. The current base salary
under the agreements, which may be increased at the discretion of
the Board of Directors, is $195,950 for Mr. Rus and $130,650 for
Mr. Tansey. In addition to the base salary, each agreement
provides, among other things, for participation in stock option
plans and other fringe benefits applicable to executive
personnel.
Each agreement provides for termination by the Company and
the Bank for "cause," as defined in the agreements, at any time.
In the event the Company and the Bank choose to terminate the
executive's employment for reasons other than for cause, or in
the event of their resignation from the Company and Bank upon
failure to re-elect them to their current offices or because of a
material lessening of their functions, duties or
responsibilities, or in the event of a liquidation, dissolution,
consolidation, or merger in which the Company or Bank is not the
resulting institution, or upon breach of the agreement by the
Company or the Bank, the officer or, in the event of death, his
beneficiary, would be entitled to a lump sum cash payment equal
to the greater of (i) thirty-six times his highest monthly rate
of compensation or (ii) the payments owed for the remaining term
of the agreement. If termination of employment follows a change
in control of the Company, as defined in the agreements, each
officer would be entitled to a (i) severance payment equal to
thirty-six times the highest monthly compensation paid to him
under the contract plus a "special retirement benefit." The
special retirement benefit would be an additional payment in an
amount intended to compensate the officer for reduced retirement
benefits under the Bank's pension plan in the event of his
termination following a change of control. The change of control
severance payment to Mr. Rus and Mr. Tansey, based on the annual
compensation and special retirement benefit, would be $810,744
and $772,103 respectively. The Bank and the Company have agreed
to indemnify the officers for the amount of any excise tax
imposed on such payments under Section 280G of the Internal
Revenue Code of 1986. The agreements also permit Mr. Rus and Mr.
Tansey to terminate their employment voluntarily and receive a
severance payment equal to the highest annual rate of
compensation paid to the officer under such agreement for a one-
year period or until he obtains other employment, if earlier.
Special Termination Agreement. The Company has entered
into a thirty-six month special termination agreement with John
J. Lukens, Senior Vice President. The agreement renews for an
additional month at the end of each month so that the term of the
agreement continues to be thirty-six months unless prior written
notice of non-extension is given. The agreement provides that at
any time following a change in control of the Company as defined
therein, should the Company or the Bank terminate the executive's
employment with the Company or the Bank, for any reason other
than "cause," or if the executive terminates his employment
following a demotion, loss of title, office, significant
authority, a reduction in annual compensation, or relocation of
his principal place of employment, he would be entitled to
receive a payment in an amount equal to the product of (a) the
monthly rate of base annual salary paid to him by the Company and
the Bank immediately prior to his termination, times (b) the
number of months remaining under the agreement. Upon termination
for cause, no payments or benefits are due to the executive;
however, if termination of employment following a change in
control is purported to be for cause, which is disputed, the
Company shall continue to provide the executive with salary and
other benefits and the dispute shall be settled by arbitration.
If cause is determined in arbitration to have existed, the
executive shall return cash payments made to him.
The executive would also be entitled to the continuation of
life, health and disability insurance coverage maintained by the
Bank at the time of such termination for the earlier of the
expiration of the number of months remaining under the agreement
or his employment by another employer. If a change in control
were to occur, and assuming it occurred on December 31, 1996
followed by the termination of Mr. Lukens' employment, the
aggregate cash amount payable to him under the special
termination agreement as severance payments in addition to other
non-cash benefits provided for under the agreement would have
been approximately $297,000.
Retirement Plan. The Bank maintains and funds a tax-
qualified, non-contributory defined benefit pension plan for its
employees, which is administered by the Retirement System Group
Inc. All full-time employees aged twenty-one (21) or older who
have completed at least one year of service participate in the
plan. The plan provides an
<PAGE>
annual benefit payable at age 65 equal to two percent of the
employee's "average annual salary" (the average of the highest
three years base salary) multiplied by credited service, up to a
maximum of thirty (30) years, and reduced by a portion of the
employee's primary Social Security benefit. The maximum annual
benefit is 60% of the average annual salary, reduced by a portion
of the employee's primary social security benefit.
The table below presents annual benefits under the retirement plan
assuming retirement during 1996, at various levels of compensation and years
of credited service. At December 31, 1996, Messrs. Rus, Tansey and Lukens had
34, 12, and 4 years of credited service, respectively, under this retirement
plan.
<TABLE>
Amount of Annual Retirement Benefit
With Credited Service (in Years) of:
Annual Compensation 15 20 25 30
<S> <C> <C> <C> <C>
$ 80,000 $20,021 $26,695 $ 33,369 $ 40,0442
100,000 26,021 34,695 43,369 52,042
120,000 32,021 42,695 53,369 64,042
140,000 38,021 50,695 63,369 76,042
160,000 44,021 58,695 73,369 88,042
180,000 50,021 66,695 83,369 100,042
200,000 56,021 74,695 93,369 112,042
220,000 62,021 82,695 103,369 120,000
</TABLE>
Compensation covered by the retirement plan is salary
(before reducing such compensation pursuant to a deferral
election of the employee under any plan of the Bank established
in accordance with the provisions of Section 401(k) or Section
125 of the Internal Revenue Code of 1986) received from the Bank,
excluding bonuses, overtime, commissions, director's fees or
other forms of special compensation. Under the Code, the maximum
annual compensation which may be taken into account for
calculating contributions under qualified defined benefit plans
is $150,000, and the maximum annual benefit payable under the
retirement plan is $120,000 (in each case as adjusted from time
to time by the Internal Revenue Service).
Supplemental Executive Retirement Plans. The Bank maintains
a non-qualified supplemental executive retirement plan ("SERP I")
for certain executives of the Bank to compensate those executive
participants in the Bank's tax-qualified benefit plans whose
benefits are limited by Section 415 or Section 401(a)(17) of the
Internal Revenue Code (the "Code"). As of December 31, 1996,
Messrs. Rus and Tansey were participating in the SERP I. The
SERP I provides participants with retirement benefits generally
equal to the difference between the annual benefit the
participant would have received under the Retirement Plan if such
benefits were computed without giving effect to the limitations
on benefits imposed by application of Section 401(a)(17) and
Section 415 of the Code and the amounts actually payable to the
Participant under the terms of the Retirement Plan. In addition,
the Participant is entitled to an ESOP benefit in a dollar amount
equal to the difference between the fair market value of the
number of shares of common stock of the Bank that would have been
allocated to the account of the Participant had the limitations
of Section 401(a)(17) and 415 of the Code not been applicable and
the fair market value of the number of shares of common stock
actually allocated to the account of the Participant. SERP I
also provides the Participant with any matching contribution that
he is unable to receive under the Bank's 401(k) Plan as a result
of certain limitations of the Code. Benefits are payable in the
same form as benefits in the Retirement Plan, ESOP and the 401(k)
Plan.
The SERP I is considered an unfunded plan for tax and ERISA
purposes. All obligations arising under the SERP I are payable
from the general assets of the Bank; however, the Bank has set up
a trust to ensure that sufficient
<PAGE>
assets will be available to pay the benefits under the SERP I.
The Bank's pension cost attributable to the SERP I was $46,562
for the year ended December 31, 1996.
The Bank also maintains a non-qualified supplemental
executive retirement plan ("SERP II") for certain executives of
the Bank to provide participants and their beneficiaries with
certain pension benefits not obtainable under the Bank's
Retirement Plan and certain welfare benefits not obtainable under
the Bank's Post-Retirement Welfare Benefit Plan. SERP II credits
the participant with five additional years of service under the
Bank's Retirement and Welfare Benefit Plan for purposes of
determining benefits under the Retirement and Welfare Benefit
Plan formula. The additional benefits provided by the additional
years of service are funded through SERP II. Currently, Mr.
Tansey is the only participant in SERP II.
The SERP II is considered an unfunded plan for tax and ERISA
purposes. All obligations arising under the SERP II are payable
from the general assets of the Bank; however, the Bank has set up
a trust to ensure that sufficient assets will be available to pay
the benefits under the SERP II. The Bank's pension cost
attributable to the SERP II was $12,000 for the year ended
December 31, 1996.
Incentive Stock Option Plans. The Board of Directors of the
Company has established stock option plans which provide
discretionary awards to its officers and key employees. The
grant of awards to employees under the option plans is determined
by a committee of the Board of Directors consisting of "Non-
Employee" directors (the "Option Plan Committee"). The 1997 Stock
Benefit Plan is being submitted for shareholder approval at the
Annual Meeting. See "Proposal II - Approval of the 1997 Long-Term
Incentive Stock Benefit Plan."
Set forth below is information relating to options granted
under the Stock Option Plans to the Named Executive Officers
during 1996.
<TABLE>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
Percent of Total
Options Granted
to Employees in Exercise or Expiration
Name Options Granted FY 1996 Base Price Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Arlyn D. Rus 11,000(1) 43.5% $23.00 12/19/06 $159,060 $403,260
Thomas F. Tansey 4,000(1) 15.8% $23.00 12/19/06 $ 57,840 $146,640
John J. Lukens 2,000(1) 7.9% $23.00 12/19/06 $ 28,920 $ 73,320
- -----------------------
(1) These options become exercisable in three equal installments commencing December 19, 1997.
</TABLE>
<PAGE>
Set forth below is certain information concerning options
outstanding to the Named Executive Officers at December 31, 1996.
No options were exercised by a Named Executive Officer during
1996.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised In-
Options at The-Money Options at
Fiscal Year-End Fiscal Year-End(1)
Shares Acquired Value
Name Upon Exercise Realized Exercisable/Unexercisable(#) Exercisable/Unexercisable($)
<S> <C> <C> <C> <C>
Arlyn D. Rus -- $ -- 86,250/11,000 $1,233,653/$2,750
Thomas F. Tansey -- -- 56,250/4,000 $800,798/$1,000
John J. Lukens -- -- 10,500/2,000 $146,160/$500
(1) Equals the difference between the aggregate exercise price
of such options and the aggregate fair market value of the
shares of Common Stock that would be received upon exercise,
assuming such exercise occurred on December 31, 1996, at
which date the last sale price of the Common Stock as quoted
on the Nasdaq National Market was $23.25.
</TABLE>
Transactions With Certain Related Persons
The Bank offers residential mortgage loans and consumer
loans to its employees in the ordinary course of business and at
a preferred rate, which is 1/2% below the rate otherwise charged.
The Bank requires that an eligible employee have been with the
Bank for a minimum of one year. If the employee no longer works
for the Bank, the rate charged is increased to the market rate in
effect at the inception of the loan. The Bank also charges
eligible employees 1/2% percentage point less than the
origination fee normally charged to its customers on loans.
Prior to November 1996, the Bank was not permitted under federal
banking laws to make loans on preferential terms to executive
officers or directors. The terms set above will be made
available to executive officers and directors beginning in 1997.
All loans made by the Bank to its employees, executive officers
and Directors and their immediate family members and related
interests, have been, and will be, made in the ordinary course of
business, and except as set forth above, on substantially the
same terms as those prevailing at the time for comparable
transactions with other persons, and do not involve more than the
normal risk of collectibility or present other unfavorable
features.
The Bank has utilized the services of the Kelleher & Moore
law firm to provide general legal services during 1996. William
T. Kelleher, Jr., a Director, is a member of that law firm.
During 1996, the Bank paid $96,400 in fees to Kelleher & Moore,
and the Bank has and will continue to utilize the services of
other law firms.
PROPOSAL 2 - APPROVAL OF THE RARITAN BANCORP INC.
1997 LONG-TERM INCENTIVE STOCK
BENEFIT PLAN
The Board of Directors of the Company has adopted the 1997
Long-Term Incentive Stock Benefit Plan (the "1997 Stock Benefit
Plan"). The Board of Directors adopted this plan in order to
provide the Company the flexibility and advantages needed to
attract, retain and motivate key employees and directors. The
purpose of the 1997 Stock Benefit Plan is to advance the
interests of the Company and to increase shareholder value by
providing officers, employees and directors of the Company with a
proprietary interest in the growth and performance of the Company
and with incentives for continued service to the Company. The
following is a summary of the material features of the 1997 Stock
Benefit Plan, which is qualified in its entirety by reference to
the provisions of the Plan attached hereto as Exhibit A.
General
The 1997 Stock Benefit Plan became effective on December 19,
1996, subject to the approval by shareholders of the Company at
the Annual Meeting, and will remain in effect for a period of ten
years. The 1997 Stock Benefit Plan
<PAGE>
authorizes the issuance of up to 168,000 shares of Common Stock
of the Company issuance pursuant to the grants of stock options,
stock appreciation rights, or stock awards.
The 1997 Stock Benefit Plan will be administered by a
committee (the "Committee") appointed by the Board of Directors,
or by the Board of Directors itself (references to the Committee
shall include the Board to the extent it administers the Plan).
The Committee will be comprised of two or more "Non-employee
Directors" of the Board of Directors, as such term is defined in
Rule 16b-3 of the Exchange Act. Presently, the Committee is
comprised of Messrs. Anderson, Crouse and Johnson. The Committee
has full and exclusive power within the limitations set forth in
the 1997 Stock Benefit Plan to make all decisions and
determinations regarding the selection of participants and the
granting of awards; establishing the terms and conditions
relating to each award; adopting rules, regulations and
guidelines for carrying out the Plan's purposes; and interpreting
and otherwise construing the 1997 Stock Benefit Plan. The 1997
Stock Benefit Plan may be amended by the Board or the Committee,
without the approval of shareholders, but no such amendments may
adversely affect any outstanding awards under the 1997 Stock
Benefit Plan without the consent of the holders thereof.
Eligibility
Any employee or director of the Company or of any of its
subsidiaries shall be eligible to receive an award under the 1997
Stock Benefit Plan.
Types of Awards
The Committee shall determine the type or types of awards to
be made to each participant under the Plan and shall approve the
terms and conditions governing these awards. Awards may be
granted singly, in combination or in tandem so that the
settlement or payment of one automatically reduces or cancels the
other. The 1997 Stock Benefit Plan provides flexibility in
structuring long-term incentive agreements for various groups and
levels of executives, directors and other participants. The
flexibility will permit the Company to grant one form of award or
combination of awards to certain participants while using another
award type or mix for others. Awards may include, but are not
limited to, the following:
Stock Options. Stock options will constitute rights
entitling their holders to purchase shares of the Company's
Common Stock during a specified period. The purchase price of
each option may not be less than 100% of fair market value on the
date of grant. Fair market value for purposes of the 1997 Stock
Benefit Plan means the reported closing price of the Common Stock
on the day of grant or if the Common Stock is not traded on such
date, on the next preceding day on which the Common Stock was
traded.
Any stock option granted in the form of any incentive stock
option will be intended to comply with the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended.
Only options granted to employees qualify for incentive stock
option treatment. A stock option may be exercised in whole or in
installments, which may be cumulative. Shares of Common Stock
purchased upon the exercise of a stock option must be paid for in
full at the time of the exercise in cash or such other method as
provided by the Committee. Such payment may include tendering
shares of Common Stock or surrendering of a stock award, or a
combination of methods. Accelerated ownership stock option rights
may be granted simultaneously with, or subsequent to, the grant
of any option. If an option grant contains an accelerated
ownership stock option right, and if a participant pays all or
part of the exercise price of the option with previously owned
shares of Common Stock, then upon exercise of the option the
participant will be granted an accelerated ownership stock option
to purchase at the fair market value as of the date of grant of
the accelerated ownership stock option, a number of shares of
Common Stock equal to the number of whole shares used by the
participant to pay for the exercise of the initial option and the
number of whole shares, if any, withheld by the Company in
payment for withholding tax in connection with the exercise of
the initial option. Accordingly, the accelerated ownership stock
option rights do not increase the total number of shares owned by
a participant, or the aggregate shares outstanding, but permit
the participant to use previously owned shares of Common Stock to
exercise stock options without decreasing his or her proprietary
interest in the Company. An accelerated ownership option may not
be exercised prior to the expiration of six months from the date
of the grant of the accelerated ownership option.
<PAGE>
Stock Appreciation Rights. Stock appreciation rights
("SARs") entitle their recipients to receive payments in cash,
shares of Common Stock, or a combination thereof, as determined
by the Committee. Any such payments shall represent the
appreciation in market value of a specified number of shares from
the date of grant until the date of exercise. Such appreciation
will be measured by the excess of the fair market value on the
date of exercise over the fair market value of the Company's
Common Stock on the date of grant of the SAR or the grant of an
award which the SAR replaced.
Stock Awards. Stock awards may constitute actual shares of
Common Stock or may be denominated in stock units which entitle
the recipient to receive future payments in either shares, cash,
or a combination thereof. Stock awards may be subject to
conditions established by the Committee and set forth in the
award agreement, and which may include, but are not limited to,
continuous service with the Company, achievement of specific
business objectives, and other measurements of performance.
Stock awards may be subject to restrictions and contingencies
regarding vesting and eventual payment as the Committee may
determine.
Any awards made under the 1997 Stock Benefit Plan may be
subject to vesting and other contingencies as determined by the
Committee. Awards will be evidenced by agreements approved by
the Committee which set forth the terms and conditions of each
award.
The Committee may provide that awards under the 1997 Stock
Benefit Plan earn dividend equivalents, to be paid currently or
at a later date or dates, subject to such conditions as the
Committee may establish. Award payments may also be deferred as
determined by the Committee. Such deferral settlements may
include the crediting of dividend equivalents if denominated in
stock awards, or interest if denominated in cash. Shares of
Common Stock underlying stock awards may be voted by the
participant prior to vesting.
Generally, all awards, except nonincentive stock options,
granted under the 1997 Stock Benefit Plan shall be
nontransferable except by will or in accordance with the laws of
descent and distribution or pursuant to a domestic relations
order. During the life of the participant, awards can be
exercised only by him or her. The Committee may permit a
participant to designate a beneficiary to exercise or receive any
rights that may exist under the 1997 Stock Benefit Plan upon the
participant's death.
Change in Control
Upon the occurrence of an event constituting a change in
control of the Company, all awards outstanding will become
immediately vested, and stock awards will be distributed.
A change in control is defined, generally, to mean (i) a
change in control of the nature that would be required to be
reported in response to Item 1(a) of the Current Report on Form
8-K, or as defined under the Change in Bank Control Act and the
Rules and Regulations thereunder ; (ii) the acquisition of 25% or
more of the Common Stock; (iii) a tender offer, a merger, sale of
assets, or change of a majority of the current Board of Directors
(generally disregarding any change approved by such Board); or
(iv) a solicitation of proxies by someone other than the
management of the Company, seeking shareholder approval of a
business combination.
Tax Consequences
The following are the federal tax consequences generally
arising with respect to awards granted under the 1997 Stock
Benefit Plan. The grant of an option or SAR will create no tax
consequences for an optionee or the Company. The optionee will
have no taxable income upon exercising an incentive stock option
(except that the alternative minimum tax may apply), and the
Company will receive no deduction when an incentive stock option
is exercised. Upon exercising an option other than an incentive
stock option, the optionee must recognize ordinary income equal
to the difference between the exercise price and the fair market
value of the stock on the date of exercise; the Company will be
entitled to a deduction for the same amount. The tax treatment
for an optionee on a disposition of shares acquired through the
exercise of an option depends on how long the shares have been
held and whether such shares were acquired by exercising an
incentive stock option or by exercising an option other than an
incentive stock option.
<PAGE>
Generally, there will be no tax consequences to the Company in
connection with the disposition of shares acquired under an
option except that the Company may be entitled to a deduction in
the case of a disposition of shares acquired under the incentive
stock option before the applicable incentive stock option holding
periods have been satisfied.
With respect to other awards granted under the 1997 Stock
Benefit Plan that are settled either in cash or in stock or other
property that is either transferable or not subject to
substantial risk of forfeiture, the participant must recognize
ordinary income equal to the cash or the fair market value of
shares or other property received; the Company will be entitled
to a deduction for the same amount. With respect to awards that
are settled in stock or other property that is restricted as to
transferability or subject to substantial risk of forfeiture, the
participant must recognize ordinary income equal to the fair
market value of the shares or other property received at the time
the shares or other property became transferable or not subject
to substantial risk of forfeiture, whichever occurs earlier; the
Company will be entitled to a deduction for the same amount.
Additional Information
Options have been granted under the 1997 Stock Benefit Plan
to the following employees and outside directors in the amounts
set forth in the table below. As of March 17, 1997, the last sale
price of the Common Stock, as reported on the Nasdaq National
Market, was $25.50. All options have been granted at an exercise
price of $23.00 per share, which was the fair market value of a
share of Common Stock on the date of grant (December 19, 1996).
<TABLE>
<CAPTION>
Number of Shares
Name and to be Received upon
Principal Position Exercise of Options (1)
<S> <C>
Arlyn D. Rus 11,000
President and Chief Executive
Officer and Director
Thomas F. Tansey 4,000
Executive Vice President and Chief
Operating Officer
John J. Lukens 2,000
Senior Vice President
William T. Anderson 600
Director
William W. Crouse 600
Director
Peter S. Johnson 600
Director
William T. Kelleher, Jr. 600
Director
All executive officers as a 18,700
group (five persons)
All nonemployee directors
as a group (four persons) (2) 2,400
(continued on next page)
<PAGE>
All employees, excluding
executive officers, as a group 6,600
- -------------------------
(1) The value of the stock options is not determinable because
the exercise price was equal to the fair market value of the
Company's Common Stock at the time of the award. For an
estimate of the value of the stock options granted to the
Named Executive Officers assuming certain rates of stock
price appreciation over the option term, see "Executive
Compensation - Option Grants in Last Fiscal Year."
(2) All options granted to nonemployee directors will be
nonstatutory stock options.
</TABLE>
Awards of restricted stock have been granted under the 1997
Stock Benefit Plan to the following person as indicated in the
table below.
<TABLE>
<CAPTION>
Name and Number of Shares
Principal Position Subject to Award Dollar Value (1)
<S> <C> <C>
Arlyn D. Rus
President and Chief Executive 12,000 $276,000
Officer and Director
All executive officers as a 12,000 $276,000
group (five persons)
All nonemployee directors -- --
as a group (four persons)
All employees, excluding
executive officers, as a group -- --
- ------------------
(1) Based on the market value of the Common Stock on the date of grant.
</TABLE>
As of March 17, 1997, the last sale price of the Common
Stock, as reported on the Nasdaq National Market, was $25.50. The
affirmative vote of the holders of a majority of the votes cast
at the Annual Meeting is required for approval of the 1997 Stock
Benefit Plan. The purpose of obtaining shareholder approval of
the 1997 Stock Benefit Plan is to qualify the Plan for the
granting of incentive stock options and to satisfy the
requirement for the listing of the Company's Common Stock on the
NASDAQ National Market.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE RARITAN BANCORP INC. 1997 LONG-TERM INCENTIVE STOCK BENEFIT
PLAN.
PROPOSAL 3 - RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the year ended
December 31, 1996 were KPMG Peat Marwick LLP. The Company's Board
of Directors has reappointed KPMG Peat Marwick LLP to continue as
independent auditors for the Company for the year ending December
31, 1997, subject to ratification of such appointment by the
shareholders. Representatives of KPMG Peat Marwick LLP are
expected to attend the Annual Meeting. They will be given the
opportunity to make a statement if they desire to do so and will
be available to respond to appropriate questions from
shareholders present at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31,
1997.
<PAGE>
SHAREHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
To be considered for inclusion in the Company's proxy
statement in connection with the annual meeting of shareholders
to be held following the year ending December 31, 1997, a
shareholder proposal must be received by the Secretary of the
Company, at the address set forth on the first page of this Proxy
Statement, no later than November 28, 1997. Any shareholder
proposal submitted to the Company will be subject to SEC Rule
14a-8 under the Securities Exchange Act of 1934.
ADVANCE NOTICE OF BUSINESS TO BE CONDUCTED
AT AN ANNUAL MEETING
The Bylaws of the Company provide an advance notice
procedure for certain business, or nominations to the Board of
Directors, to be brought before an annual meeting. In order for a
shareholder to properly bring business before an annual meeting,
or to propose a nominee to the Board, the shareholder must give
written notice to the Secretary of the Company not less than
ninety (90) days before the date fixed for such meeting,
provided, however, that in the event that less than one hundred
(100) days notice or prior public disclosure of the date of the
meeting is given or made, notice by the shareholder to be timely
must be received not later than the close of business on the
tenth day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made.
The notice must include the shareholder's name, record address,
and number of shares owned by the shareholder, and describe
briefly the proposed business, the reasons for bringing the
business before the annual meeting, and any material interest of
the shareholder in the proposed business. In the case of
nominations to the Board, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be
deemed to require the Company to include in its proxy statement
and proxy relating to an annual meeting any shareholder proposal
which does not meet all of the requirements for inclusion
established by the SEC in effect at the time such proposal is
received. The date on which the 1998 Annual Meeting of
Shareholders is expected to held is April 22, 1998. Accordingly,
advance written notice for certain business, or nominations to
the Board of Directors, to be brought before the 1998 Annual
Meeting must be given to the Company by January 22, 1998.
By Order of the Board of Directors
/s/ Lucille H. Daniel
-----------------------------------
Lucille H. Daniel
Secretary
Raritan, New Jersey
March 28, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE
REQUESTED TO SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE>
EXHIBIT A
RARITAN BANCORP INC.
1997 LONG-TERM INCENTIVE STOCK BENEFIT PLAN
1. PURPOSE. The purpose of the Raritan Bancorp Inc. 1997
Long-Term Incentive Stock Benefit Plan (the "Plan") is to advance
the interest of Raritan Bancorp Inc. (the "Company") and to
increase shareholder value by providing outside directors and key
employees of the Company and its affiliates, including The
Raritan Savings Bank (the "Bank"), upon whose judgment,
initiative and efforts the successful conduct of the business of
the Company and its affiliates largely depends, with additional
incentive in the form of a proprietary interest in the growth and
performance of the Company and to encourage their continued
service with the Company and its affiliates. A purpose of the
Plan is also to attract people of experience and ability to the
Company and its affiliates.
2. TERM. The Plan shall be effective as of December 19,
1996 (the date of board of directors approval) (the "Effective
Date") and shall remain in effect until December 19, 2006 (ten
years from such date) unless sooner terminated by the Company's
Board of Directors (the "Board"). The effectiveness of the Plan
is contingent upon stockholder approval, and any awards granted
prior to such stockholder approval shall be null and void if such
approval is not obtained, and any such award may not be exercised
or vested prior to the receipt of stockholder approval. After
termination of the Plan, no future awards may be granted but
previously made awards shall remain outstanding in accordance
with their applicable terms and conditions and the terms and
conditions of the Plan.
3. PLAN ADMINISTRATION. A committee (the "Committee")
appointed by the Board shall be responsible for administering the
Plan. The Committee shall be comprised of either (i) at least
two "Non-Employee Directors" of the Company, or (ii) the entire
Board of the Company. A "Non-Employee Director" means, for
purposes of the Plan, a director who (a) is not employed by the
Company or an affiliate; (b) does not receive compensation
directly or indirectly as a consultant (or in any other capacity
than as a director) greater than $60,000; (c) does not have an
interest in a transaction requiring disclosure under Item 404(a)
of Regulation S-K; or (d) is not engaged in a business
relationship for which disclosure would be required pursuant to
Item 404(b) of Regulation S-K. Actions and decisions of the
Committee shall be approved by a majority of the members of the
Committee. The Committee shall have full and exclusive power to
interpret, construe and implement the Plan and any rules,
regulations, guidelines or agreements adopted hereunder and to
adopt such rules, regulations and guidelines for carrying out the
Plan as it may deem necessary or proper. These powers shall
include, but not be limited to, (i) determination of the type or
types of awards to be granted under the Plan; (ii) determination
of the terms and conditions of any awards under the Plan; (iii)
determination of whether, to what extent and under what
circumstances awards may be settled, paid or exercised in cash,
shares, other securities, or other awards, or other property, or
accelerated, canceled, extended, forfeited or suspended; (iv)
adoption of modifications, amendments, procedures, subplans and
the like as are necessary; (v) subject to the rights of
participants, modification, change, amendment or cancellation of
any award to correct an administrative error; and (vi) taking any
other action the Committee deems necessary or desirable for the
administration of the Plan. All determinations, interpretations,
and other decisions under or with respect to the Plan or any
award by the Committee shall be final, conclusive and binding
upon the Company, any participant, any holder or beneficiary of
any award under the Plan and any employee of the Company.
4. ELIGIBILITY. Any employee of the Company shall be
eligible to receive Incentive Stock Options, Non-Statutory Stock
Options, Stock Appreciation Rights, Stock Awards, Dividends, and
Dividend Equivalents under the Plan. Outside directors shall be
eligible to receive Non-Statutory Stock Options, Stock Awards,
Dividends, and Dividend Equivalents under the Plan, provided that
the term "Company" includes any entity that is directly or
indirectly controlled by the Company or any entity in which the
Company has a significant equity interest, as determined by the
Committee. An "outside director" means a director of the Company
or an Affiliate who is not an employee of the Company or an
Affiliate.
<PAGE>
5. SHARES OF STOCK SUBJECT TO THE PLAN. There shall be
168,000 shares of Common Stock in the aggregate reserved for
issuance under the Plan, which shares shall be available for
issuance (subject to adjustment as provided in Section 6)
pursuant to the exercise of stock options and stock awards,
granted under Sections 7(a) and (c) of the Plan. The maximum
number of shares that may be subject to all awards granted to any
one employee of the Company is 100,000.
In instances where a stock appreciation right ("SAR") or
other award is settled in cash or any form other than shares,
then the shares covered by these settlements shall not be deemed
issued and shall remain available for issuance under the Plan.
Further, the payment in shares of dividends and dividend
equivalents in conjunction with outstanding awards shall not be
counted against the shares available for issuance. Any shares
that are issued by the Company, and any awards that are granted
by, or become obligations of, the Company, and any awards that
are granted by, or become obligations of, the Company, through
the assumption by the Company or an affiliate of, or in
substitution for, outstanding awards previously granted by an
acquired company shall not be counted against the shares
available for issuance under the Plan. In addition, any shares
that are used for the full or partial payment of the exercise
price of any option in connection with an Accelerated Ownership
Option Right will be available for future grants under the Plan.
Any shares issued under the Plan may consist in whole or in
part, of authorized and unissued shares or of treasury shares,
and no fractional shares shall be issued under the Plan. Cash
may be paid in lieu of any fractional shares in settlements of
awards under the Plan.
6. ADJUSTMENTS AND REORGANIZATIONS.
(a) Changes in Stock. If the number of outstanding shares
of Common Stock is increased or decreased or the shares of Common
Stock are changed into or exchanged for a different number of
kind of shares or other securities of the Company on account of
any recapitalization, reclassification, stock split, reverse
split, combination of shares, exchange of shares, stock dividend
or other distribution payable in capital stock, or other increase
or decrease in such shares effected without receipt of
consideration by the Company occurring after the Effective Date,
the number and kinds of shares for which grants of Stock Options
and Stock Awards may be made under the Plan shall be adjusted
proportionately and accordingly by the Company. In addition, the
number and kind of shares for which grants are outstanding shall
be adjusted proportionately and accordingly so that the
proportionate interest of the grantee immediately following such
event shall, to the extent practicable, be the same as
immediately before such event. Any such adjustment in
outstanding Stock Options shall not change the aggregate Stock
Option purchase price payable with respect to shares that are
subject to the unexercised portion of the Stock Option
outstanding but shall include a corresponding proportionate
adjustment in the Stock Option purchase price per share.
(b) Reorganization in Which the Company Is the Surviving
Entity and in Which No Change of Control Occurs. Subject to
Section 23 hereof, if the Company shall be the surviving entity
in any reorganization, merger, or consolidation of the Company
with one ore more other entities, any Stock Option theretofore
granted pursuant to the Plan shall pertain to and apply to the
securities to which a holder of the number of shares of stock
subject to such Stock Option would have been entitled immediately
following such reorganization, merger or consolidation, with a
corresponding proportionate adjustment of the Stock Option
purchase price per share so that the aggregate Stock Option
purchase price thereafter shall be the same as the aggregate
Stock Option purchase price of the shares remaining subject to
the Stock Option immediately prior to such reorganization,
merger, or consolidation. Subject to any contrary language in an
Award Agreement evidencing a Stock Award Grant, any restrictions
applicable to such Stock Award shall apply as well to any
<PAGE>
replacement shares received by the Grantee as a result of the
reorganization, merger or consolidation.
Adjustments under this Section 6 related to shares of Stock or
securities of the Company shall be made by the Committee, whose
determination in that respect shall be final, binding and
conclusive. No fractional shares or other securities shall be
issued pursuant to any such adjustment, and any fractions
resulting from any such adjustment shall be eliminated in each
case by rounding downward to the nearest whole share. The
granting of awards pursuant to the Plan shall not affect or limit
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or
business structure or to merge, consolidate, dissolve, or
liquidate, or to sell or transfer all or any part of its business
or assets.
7. AWARDS. The Committee shall determine the type or
types of award(s) to be made to each participant under the Plan
and shall approve the terms and conditions governing these awards
in accordance with Section 12. Awards may be granted singly, in
combination or in tandem so that the settlement or payment of one
automatically reduces or cancels the other. Awards may also be
made in combination or in tandem with, in replacement of, as
alternatives to, or as the payment form for, grants or rights
under any other employee or compensation plan of the Company,
including the plan of any acquired entity.
(a) Stock Option - is a grant of a right to purchase a
specified number of shares of Common Stock during a specified
period. The purchase price of each option shall be the Fair
Market Value of a share on the date such other award was granted.
However, if a key employee owns stock possessing more than 10%
of the total combined voting power of all classes of stock of the
Company or its affiliates (or under Section 424(d) of the
Internal Revenue Code of 1986, as amended (the "Code") is deemed
to own stock representing more than 10% of the total combined
voting power of all classes of stock of the Company or its
affiliates by reason of the ownership of such classes of stock,
directly or indirectly, by or for any brother, sister, spouse,
ancestor or lineal descendent of such key employee, or by or for
any corporation, partnership, estate or trust of which such key
employee is a shareholder, partner or beneficiary), the purchase
price per share of Common Stock deliverable upon the exercise of
each Incentive Stock Option shall not be less than 110% of the
Fair Market Value of the Company's Common Stock on the date the
Incentive Stock Option is granted. A stock option may be
exercised in whole or in installments, which may be cumulative.
A stock option may be in the form of an Incentive Stock Option
which complies with Section 422 of the Code, as amended, and the
regulations thereunder at the time of grant, or a Non-Statutory
Stock Option. A Non-Statutory Stock Option means an option
granted by the Committee to (i) an outside director or (ii) to
any other participant, and such option is either (A) not
designated by the Committee as an Incentive Stock Option, or (B)
fails to satisfy the requirements of an Incentive Stock Option as
set forth in Section 422 of the Code and the regulations
thereunder. The price at which shares of Common Stock may be
purchased under a stock option shall be paid in full at the time
of the exercise, in either cash or such other methods as provided
by the Committee at the time of grant or as provided in the form
of agreement approved in accordance herewith, including tendering
(either actually or by attestation) Common Stock at Fair Market
Value, surrendering a stock award valued at Fair Market Value on
the date of surrender, or any combination thereof.
(b) Stock Appreciation Right - is a right to receive a
payment, in cash and/or Common Stock, as determined by the
Committee, equal to the excess of the Fair Market Value of a
specified number of shares of Common Stock on the date the SAR is
exercised over the Fair Market Value on the date of grant of the
SAR as set forth in the applicable award agreement, except that,
in the case of an SAR granted retroactively in tandem with or as
a substitution for another award, the exercise or designated
price may be no lower than the Fair Market Value of a share on
the date such other award was granted.
<PAGE>
(c) Stock Award - is an award made in stock or denominated
in units of stock. All or part of any stock award may be subject
to conditions established by the Committee, and set forth in the
award agreement, which may include, but are not limited to,
continuous service with the Company, achievement of specific
business objectives, and other measurements of individual,
business unit or Company performance.
8. DIVIDENDS AND DIVIDEND EQUIVALENTS. The Committee may
provide that stock awards earn dividends or dividend equivalents.
Such dividend equivalents may be paid currently or may be
credited to an account established by the Committee under the
plan in the name of the participant. In addition, dividends or
dividend equivalents paid on outstanding awards or issued shares
may be credited in such account rather than paid currently. Any
crediting of dividends or dividend equivalents may be subject to
such restrictions and conditions as the Committee may establish,
including reinvestment in additional shares or share equivalents.
9. DEFERRALS AND SETTLEMENTS. Payment of awards may be
in the form of cash, stock, other awards, or in combinations
thereof as the Committee shall determine at the time of grant,
and with such restrictions as it may impose. The Committee may
also require or permit participants to elect or defer the
issuance of shares or the settlement of awards in cash under such
rules and procedures as it may establish under the Plan. It may
also provide that deferred settlements include the payment or
crediting of interest on the deferral amounts or the payment or
crediting of dividend equivalents on deferred settlements
denominated in shares.
10. FAIR MARKET VALUE. Fair Market Value for all purposes
under the Plan shall mean the reported closing price of Common
Stock as reported by the National Association of Securities
Dealers Automatic Quotation System ("NASDAQ") (as published in
The Wall Street Journal) on such date or if the Common Stock was
not traded on such date, on the next preceding day on which
Common Stock was traded thereon. Under no circumstances shall
Fair Market Value be less than the par value of the Common Stock.
11. TRANSFERABILITY AND EXERCISABILITY. All awards other
than Non-Statutory Stock Options under the Plan will be
nontransferable and shall not be assignable, alienable, saleable
or otherwise transferable by the participant other than by will
or the laws of descent and distribution, except pursuant to a
domestic relations order entered by a court of competent
jurisdiction or as otherwise determined by the Committee. In the
event that a participant terminates employment with Company to
assume a position with a governmental, charitable, educational or
similar non-profit institution, the Committee may authorize a
third party, including but not limited to a "blind" trust, to act
on behalf of and for the benefit of the representative
participant with respect to any outstanding awards.
If so permitted by the Committee, a participant may
designate a beneficiary or beneficiaries to exercise the rights
of the participant and receive any distributions under the Plan
upon the death of the Participant. However, in the case of
participants covered by Section 16 of the 1934 Act, any contrary
requirements of Rule 16b-3 under the 1934 Act, or any successor
rule, shall prevail over the provisions of this Section.
Awards granted pursuant to the Plan may be exercisable
pursuant to a vesting schedule as determined by the Committee.
The Committee may, in its sole discretion, accelerate or extend
the time at which any Stock Option may be exercised in whole or
in part, or the vesting of any Stock Award, provided, however,
that with respect to an Incentive Stock Option, it must be
consistent with the terms of Section 422 of the Code in order to
continue to qualify as an Incentive Stock Option. The Committee
may also, in its sole discretion, extend the time period within
which a stock option must be exercised before it expires.
Notwithstanding the above, in the event of Retirement (as herein
defined), death or Disability, all awards shall immediately vest.
"Retirement" means retirement as the normal retirement date as
set forth in the Bank's pension plan or as determined by the
Board of Directors in the event there is no such plan.
"Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an employee to perform
the work customarily assigned to him, or of a director to serve
as such. Additionally, in the case of an employee, a medical
doctor selected or approved by the Board must advise the
<PGAE>
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 paid
employee's lifetime.
12. AWARD AGREEMENTS. Awards under the Plan shall be
evidenced by an agreement as shall be approved by the Committee
that sets forth the terms, conditions and limitations to an award
and the provisions applicable in the event the participant's
employment terminates, provided however, in no event shall the
term of any Incentive Stock Option exceed a period of ten years
from the date of its grant. However, if any key employee, at the
time an Incentive Stock Option is granted to him, owns stock
representing more than 10% of the total combined voting power of
all classes of stock of the Company or its affiliate (or, under
Section 424(d) of the Code, is deemed to own stock representing
more than 10% of the total combined voting power of all classes
of stock, by reason of the ownership of such classes of stock,
directly or indirectly, by or for any brother, sister, spouse,
ancestor or lineal descendent of such key employee, or by or for
any corporation, partnership, estate or trust of which such key
employee is a shareholder, partner or beneficiary), the Incentive
Stock Option granted to him shall not be exercisable after the
expiration of five years from the date of grant.
In addition, to the extent required by Section 422 of the
Code, the aggregate Fair Market Value (determined at the time the
option is granted) of the Common Stock for which Incentive Stock
Options are exercisable for the first time by a Participant
during any calendar year (under all plans of the Company and its
affiliates) shall not exceed $100,000. In the event the amount
exercisable shall exceed $100,000, the first $100,000 of
Incentive Stock Options (determined as of the date of grant)
shall be exercisable as Incentive Stock Options and any excess
shall be exercisable as Non-Statutory Stock Options.
13. ACCELERATED OWNERSHIP STOCK OPTION RIGHTS. The
Committee may grant the right to receive an Accelerated Ownership
Option simultaneously with, or subsequent to, the grant of any
stock option, with respect to all or some of the shares covered
by such stock option. In the event an Accelerated Ownership
Option Right has been granted, upon the exercise of the related
Stock Option, the participant will be granted an Accelerated
Ownership Stock Option (which may be an Incentive or Non-
Incentive Stock Option) to purchase a number of shares of Common
Stock equal to the sum of the number of whole shares of Common
Stock used by the participant in payment of the purchase price of
the Stock Option. The exercise price of the Accelerated
Ownership Option shall be the Fair Market Value of the Common
Stock on the date of grant of the Accelerated Ownership Option.
The term during which the Accelerated Ownership Option may be
exercised (and the other terms and conditions) shall be
determined by the Committee, but in no event shall an Accelerated
Ownership Option be exercisable in whole or in part before the
expiration of six months from the date of the grant of the
Accelerated Ownership Option.
14. PLAN AMENDMENT. The Board or the Committee may modify
or amend the Plan as it deems necessary or appropriate or modify
or amend an award received by key employees and/or outside
directors. No such amendment shall adversely affect any
outstanding awards under the Plan without the consent of the
holders thereof.
15. TAX WITHHOLDING. The Company may deduct from any
settlement of an award made under the Plan, including the
delivery or vesting of shares, an amount sufficient to cover
withholding required by law for any federal, state or local taxes
or to take such other action as may be necessary to satisfy any
such withholding obligations. The Committee may permit shares to
be used to satisfy required tax withholding and such shares shall
be valued at the Fair Market Value as of the settlement date of
the applicable award.
16. OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS.
Unless otherwise determined by the Committee, settlements of
awards received by participants under the Plan shall not be
deemed a part of a participant's regular, recurring compensation
for purposes of calculating payments or benefits from any Company
benefit plan, severance program or severance pay law of any
country.
17. UNFUNDED PLAN. Unless otherwise determined by the
Committee, the Plan shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The
Plan shall not establish any
<PAGE>
fiduciary relationship between the Company and any participant or
other person. To the extent any person holds any rights by
virtue of a grant awarded under the Plan, such right (unless
otherwise determined by the Committee) shall be no greater than
the right of an unsecured general creditor of the Company.
18. FUTURE RIGHTS. No person shall have any claim or
rights to be granted an award under the Plan, and no participant
shall have any rights by reason of the grant of any award under
the Plan to continued employment by the Company or any subsidiary
of the Company.
19. GENERAL RESTRICTION. Each award shall be subject to
the requirement that, if at any time the Committee shall
determine, in its sole discretion, that the listing, registration
or qualification of any award under the Plan upon any securities
exchange or under any sate or federal law, or the consent or
approval of any government regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting
of such award or the grant or settlement thereof, such award may
not be exercised or settled in whole or in part unless such
listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not
acceptable to the Committee.
20. GOVERNING LAW. The validity, construction and effect
of the Plan and any actions taken or relating to the Plan shall
be determined in accordance with the laws of the State of
Delaware and applicable Federal law.
21. SUCCESSORS AND ASSIGNS. The Plan shall be binding on
all successors and permitted assigns of a participant, including,
without limitation, the guardian or estate of such participant
and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the
participant's creditors.
22. RIGHTS AS A SHAREHOLDER. A participant shall have no
rights as a shareholder with respect to awards under the Plan
until he or she becomes the holder of record of shares granted
under the Plan.
23. CHANGE IN CONTROL. Notwithstanding anything to the
contrary in the Plan, the following shall apply to all
outstanding awards granted under the Plan:
(a) Definitions. The following definitions shall apply to
this Section:
"Change in Control" of the Bank or the Company means a Change in
Control of a nature that: (i) would be required to be reported
in response to Item 1(a) of the current report on Form 8-K, as in
effect on the date hereof pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii)
results in a Change in Control of the Bank or the Company within
the meaning of the Change in Bank Control Act, as administered by
the Federal Reserve Board, as in effect on the effective date of
this Plan. In addition to the above, a Change in Control shall
be deemed to have occurred at such time and payments and benefits
under this Section shall be made as (iii) any "person" (as the
term is used in Sections 13(d) and 14(d) of the Exchange Act) is
or becomes the "beneficial owner" (as defined in Rule d-3 under
the Exchange Act), directly or indirectly, of securities of the
Bank or the Company representing 25% or more of the Bank's or the
Company's outstanding securities ordinarily having the right to
vote at the election of directors except for any securities of
the Bank purchased by the Company in connection with the
conversion of the Bank to the stock form and any securities
purchased by the Bank's employee stock ownership plan and trust;
or (iv) individuals who constituted the Board on the Effective
Date (the "Incumbent Board") cease for any reason to constitute
at least a majority thereof, provided that any person becoming a
director subsequent to the Effective Date whose election was
approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board, or whose nomination for election
by the Company's shareholders was approved by the same nominating
board serving under an Incumbent Board, shall be, for purposes of
this clause (iv), considered as though he were a member of the
Incumbent Board; or (v) a merger, consolidation or sale of all or
substantially all the assets of the Bank or the Company in which
the Bank or Company is not
<PAGE>
the surviving institution occurs; or (vi) a proxy statement,
whether or not supported by management or the Board of Directors,
soliciting proxies from stockholders of the Company, by someone
other than the current management of the Company, seeking
stockholder approval of a plan of reorganization, merger or
consolidation of the Company or Bank or similar transaction with
one or more corporations as a result of which the outstanding
shares of the class of securities then subject to the plan or
reorganization are exchanged for or converted into cash or
property or securities not issued by the Bank or the Company
shall be distributed; or (vii) a tender offer is made for 25% or
more of the voting securities of the Bank or the Company.
Notwithstanding the above, the Board of Directors shall have the
right to determine that a Change in Control has occurred.
(b) Acceleration of Vesting and Payment of SARs, Stock
Awards, and Dividends and Dividend Equivalents.
(1) Upon the occurrence of an event constituting a
Change in Control, all SARs, stock awards, stock options,
dividends and dividend equivalents or any other award granted
pursuant to this Plan outstanding on such date shall become 100%
vested. All awards other than options shall be distributed as
soon as may be practicable. Upon such distribution, such awards
shall be cancelled.
(2) Upon the occurrence of an event constituting a
Change in Control involving an exchange of stock, all stock
options shall become options to purchase the exchanged stock at
the applicable exchange ratio (with no change in the aggregate
exercise price).
24. COMPLIANCE WITH SECTION 16. With respect to persons
subject to Section 16 of the 1934 Act, transactions under this
Plan are intended to comply with all applicable conditions of
Rule 16b-3 or its successors under the 1934 Act. To the extent
any provisions of the Plan or actions of the Committee fail to so
comply, it shall be deemed null and void, to the extent permitted
by law and deemed advisable by the Committee administrators.
25. TERMINATION OF EMPLOYMENT. Upon the termination of an
employee's service for any reason other than Disability,
Retirement, Change in Control, death or Termination for Cause,
the employee's Stock Options shall be exercisable, and awards
shall vest, only as to those shares that were immediately
purchasable by, or vested in, such employee at the date of
termination, and options may be exercised only for a period of
three months following termination. In the event of termination
of employment for cause (as defined herein) all rights and awards
granted to an employee under the Plan not exercised or vested
shall expire upon termination of employee.
"Termination for Cause" means the termination upon an
intentional failure to perform stated duties, or a breach of a
fiduciary duty involving personal dishonesty, or a willful
violation of any law, rule, regulation (other than traffic
violations or similar offenses) or a final cease-and-desist order
- -- any of which results in material loss to the Company or one of
its affiliates.
No option shall be eligible for treatment as an Incentive Stock
Option in the event such option is exercised more than three
months following the date of his Retirement or termination of
employment following a Change in Control; and provided further,
that no option shall be eligible for treatment as an Incentive
Stock Option in the event such option is exercised more than one
year following termination of employment due to death or
Disability and provided further, in order to obtain Incentive
Stock Option treatment for options exercised by heirs or devisees
of an optionee, the optionee's death must have occurred while
employed or within three (3) months of termination of employment.
Upon the termination of an employee's service for reason of
Disability, Retirement, Change in Control or death, the
employee's Stock Options shall be exercisable, and Stock Awards
shall vest, as to all shares subject to an outstanding award,
whether or not otherwise immediately purchasable by, or vested
in, such employee at the date of termination and options may be
exercised for a period of one year following termination. In no
event shall the exercise period extend beyond the expiration of
the Stock Option term.
<PAGE>
Upon the termination of a director's service for any reason
other than Disability, Retirement, Change in Control, death or
Termination for Cause, the director's Stock Options shall be
exercisable, and Stock Awards shall vest, only as to those shares
that were immediately purchasable by, or vested in, such director
at the date of termination, and options may be exercised for a
period of one year following termination of service. In the
event of termination of service for cause (as defined above) all
rights and awards granted to the director under the Plan not
exercised by or vested in such director shall expire upon
termination of service. Upon the termination of a director's
service for reason of Disability, Retirement, Change in Control
or death, Stock Options shall be exercisable, and Stock Awards
shall vest, as to all shares subject to an outstanding award,
whether or not otherwise immediately purchasable by, or vested
in, such director at the date of termination and options may be
exercised for a period of one year following termination.
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
RARITAN BANCORP INC.
ANNUAL MEETING OF SHAREHOLDERS
April 23, 1997
The undersigned hereby appoints Arlyn D. Rus and William Peter S.
Johnson, or either of them with full powers of substitution, to
act as attorneys and proxies for the undersigned to vote all
shares of Common Stock of Raritan Bancorp Inc. which the
undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held at the Raritan Valley Country Club, State
Highway 28, Somerville, New Jersey on Wednesday, April 23, 1997
at 10:00 a.m., New Jersey time and at any adjournments thereof.
The official proxy committee is authorized to cast all votes to
which the undersigned is entitled as follows.
This proxy will be voted as directed, but if no instructions are
specified, this proxy will be voted for proposals 1, 2 and 3. If
any other business is presented at the meeting, this proxy will
be voted by the proxy holders in their discretion.
Should the undersigned be present and elect to vote at the Annual
Meeting or at any adjournment thereof and after notification to
the Secretary of the Company at the Annual Meeting of the
shareholder's decision to terminate this proxy, then the power of
said attorneys and proxies shall be terminated and of not further
force and effect. This proxy may also be revoked by sending
written notice to the Secretary of the Company at the address set
forth on the Notice of Annual Meeting of Shareholders, or by the
filing of a later proxy prior to a vote being taken on a
particular proposal at the Annual Meeting.
The undersigned acknowledges receipt from the Company prior to
the execution of this proxy of a Notice of Annual Meeting and of
a Proxy Statement dated March 28, 1997.
This Proxy is continued and to be signed on the reverse side.
<PAGE>
This proxy when properly executed will be voted in the
manner directed herein. If no direction is made, this proxy will
be voted for proposals 1, 2 and 3.
FOR WITHHELD
1. The election as directors of all / / / /
nominees listed below (except as
marked to the contrary below)
William T. Kelleher, Jr.
Thomas F. Tansey
INSTRUCTION: To withhold your
vote for one or more nominees,
write the name of the nominee(s)
on the line below.
FOR AGAINST ABSTAIN
2. The approval of the Raritan / / / / / /
Bancorp Inc. 1997 Long-Term
Incentive Stock Benefit Plan.
FOR AGAINST ABSTAIN
3. The ratification of the appointment / / / / / /
of KPMG Peat Marwick LLP as auditors
for the fiscal year ending December
31, 1997.
/ / Check Box if You Plan
to Attend Annual Meeting
PLEASE DATE
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Date
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Signature
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Signature if held jointly
Please sign exactly as your name appears on this card. When
signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held
jointly, each holder should sign.
Please complete, sign and date this proxy and return it promptly
in the enclosed postage-prepaid envelope.
