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
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or
ss.240.14a-12
UNITY BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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UNITY BANCORP, INC.
64 Old Highway 22
Clinton, New Jersey 08809
March 30, 1998
Dear Unity Bancorp, Inc. Shareholder:
You are cordially invited to attend the annual meeting of shareholders (the
"Annual Meeting") of Unity Bancorp, Inc. (the "Company") to be held on April 24,
1998 at 3:30 p.m. at the main office of First Community Bank, 64 Old Highway 22,
Clinton, New Jersey 08809.
At the Annual Meeting, shareholders will be asked to: (1) elect one member to
the Board of Directors; and (2) approve the Unity Bancorp, Inc. 1998 Stock
Option Plan.
The Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interests of the Company and
its shareholders. For the reasons set forth in the Proxy Statement, the Board
unanimously recommends that you vote "FOR" each matter to be considered.
YOUR COOPERATION IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST BE
REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE
CONDUCT OF BUSINESS. WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED SO
THAT YOUR SHARES WILL BE REPRESENTED.
On behalf of the Board of Directors and all of the employees of the Company, I
thank you for your continued interest and support.
Sincerely yours,
/s/ ROBERT VAN VOLKENBURGH
- --------------------------
Robert Van Volkenburgh
Chairman of the Board and Chief Executive Officer
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UNITY BANCORP, INC.
64 Old Highway 22
Clinton, New Jersey 08809
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1998
Notice is hereby given that the 1998 Annual Meeting of Shareholders (the "Annual
Meeting") of Unity Bancorp, Inc. (the "Company") will be held at the main office
of First Community Bank, 64 Old Highway 22, Clinton, New Jersey 08809, April 24,
1998 at 3:30 p.m. for the purpose of considering and voting upon the following
matters:
1. The election of the nominee named in the accompanying Proxy Statement to
serve as a director of the Company for the term of office specified and
until his successor is duly elected and qualified.
2. Approval of the Unity Bancorp, Inc. 1998 Stock Option Plan.
3. Such other business as may properly come before the Annual Meeting and at
any adjournments thereof, including whether or not to adjourn the meeting.
Shareholders of record at the close of business on March 16, 1998 are entitled
to notice of, and to vote at, the Annual Meeting. All shareholders are cordially
invited to attend the Annual Meeting. Whether or not you contemplate attending
the Annual Meeting, please execute the enclosed proxy and return it to the
Company. You may revoke your proxy at any time prior to the exercise of the
proxy by delivering to the Company a later-dated proxy or by delivering a
written notice of revocation to the Company. A return envelope, which requires
no postage if mailed in the United States, is enclosed for your convenience.
By Order of the Board of Directors,
/s/ ROBERT VAN VOLKENBURGH
- --------------------------
Robert Van Volkenburgh
Chairman of the Board and Chief Executive Officer
March 30, 1998
Clinton, New Jersey
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UNITY BANCORP, INC.
64 Old Highway 22
Clinton, New Jersey 08809
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1998
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement and the accompanying Notice of Annual Meeting of
Shareholders are being furnished to the shareholders of Unity Bancorp, Inc. (the
"Company") in connection with the solicitation by the Board of Directors of the
Company of proxies to be used at the annual meeting of shareholders of the
Company (the "Annual Meeting") to be held at the main office of First Community
Bank, the Company's bank subsidiary (the "Bank"), 64 Old Highway 22, Clinton,
New Jersey 08809 on April 24, 1998, at 3:30 p.m. New Jersey time, and at any
adjournments thereof. These proxy materials are first being mailed on or about
March 30, 1998, to holders of record on March 16, 1998 (the "Record Date") of
the Company's common stock, no par value (the "Common Stock").
A shareholder may revoke a proxy at any time before the proxy is voted by
written notice to the Secretary of the Company, by submission of another proxy
bearing a later date, or by appearing and voting in person at the Annual
Meeting. The mere presence at the Annual Meeting of the shareholder appointing
the proxy will not revoke the appointment. If not revoked, the proxy will be
voted at the Annual Meeting in accordance with the instructions indicated on the
proxy by the shareholder, or, if no instructions are indicated, all shares
represented by valid proxies received pursuant to this solicitation (and not
revoked before they are voted) will be voted "FOR" the election of the nominee
for director named in this Proxy Statement and "FOR" the approval of each of the
other specific proposals presented in this Proxy Statement. As to any other
matter of business that may be brought before the Annual Meeting, all shares
represented by valid proxies will be voted in accordance with the judgment of
the person or persons voting the same.
All expenses of the Company in connection with the solicitation on behalf of the
Board of Directors will be borne by the Company. Proxies may also be solicited
personally or by mail or telephone by directors, officers and other employees of
the Company and the Bank, 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
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beneficially owned by others, to send proxy materials to and obtain proxies from
such beneficial owners, and will reimburse such holders for their reasonable
expenses in doing so.
Holders of record of Common Stock at the close of business on the Record Date
are entitled to receive notice of, and will be entitled to vote at, the Annual
Meeting. At the close of business on the Record Date, the Company had
outstanding 2,011,853 shares of Common Stock. No other class of voting security
of the Company is issued and outstanding. Each share of Common Stock entitles
the holder thereof to one vote on all matters which may come before the Annual
Meeting.
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 nominee
proposed by the Board of Directors, or to "WITHHOLD AUTHORITY" to vote for the
nominee being proposed. Under the Company's 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 the nominee being proposed is withheld.
As to the matters being proposed for shareholder action set forth in Proposal 2,
the proxy card being provided by the Board of Directors enables a shareholder to
check the appropriate box on the proxy card to (i) vote "FOR" the item, (ii)
vote "AGAINST" the item, or (iii) "ABSTAIN" from voting on such item. Under
Delaware law, the affirmative vote of a majority of the votes cast at the Annual
Meeting is required to approve Proposal 2. Shares as to which the "ABSTAIN" box
has been selected will be counted as present and will therefore have the effect
of voting against Proposal 2. In contrast, broker non-votes will not be counted
as present and so will have no effect.
The Board of Directors knows of no matters, other than those disclosed in the
Notice of Annual Meeting, to be presented for consideration at the Annual
Meeting. If, however, any other matters properly come before the Annual Meeting
or any adjournments thereof, it is the intention of the persons named in the
enclosed proxy to vote such proxy in accordance with their judgment on any such
matters. The persons named in the enclosed proxy may also, if a quorum is not
present, vote such proxy to adjourn the Annual Meeting from time to time.
All persons standing for election as director were unanimously nominated by the
Board of Directors. No person being nominated as a director is being proposed
for election pursuant to any agreement or understanding between any such person
and the Company.
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PROPOSALS TO BE VOTED ON AT THE MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
In accordance with the Certificate of Incorporation and the Bylaws of the
Company, the Board of Directors has fixed the number of directors constituting
the Board at five. Directors are elected for staggered terms of three years
each, with the term of office of only one of the three classes of directors
expiring each year. Directors serve until their successors are elected and
qualified. The Board of Directors has nominated and recommends the election of
the nominee listed below for the term set forth for such nominee and until his
successor shall have been elected and qualified. Unless otherwise instructed by
the shareholders, the persons named in the enclosed form of proxy will vote the
shares represented by such proxy "FOR" the election of the nominee named in this
Proxy Statement, subject to the condition that if the named nominee should be
unable to serve, discretionary authority is reserved to vote for a substitute.
No circumstances are presently known which would render the nominee named herein
unable or unwilling to serve. In accordance with the Bylaws of the Company,
directors are elected by a plurality of the votes of the shares present in
person or represented by proxy at the Annual Meeting. In August, 1997 Mr. James
Hyman resigned from his positions as President, Chief Operating Officer and
Director of the Company for personal reasons. In January 1998, Mr. Walter Hazard
resigned from the Company's Board of Directors to devote more time to his
business.
INFORMATION WITH RESPECT TO THE NOMINEE AND
CONTINUING DIRECTORS
The following table sets forth, as of the Record Date, the name of the nominee
and the names of those directors whose terms continue beyond the Annual Meeting
and their ages, a brief description of their recent business experience,
including present occupations and employment, certain directorships held by
each, the year in which each became a director of the Company or the Bank, and
the year in which their terms (or in the case of the nominee, his proposed term)
as director of the Company expire.
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<TABLE>
<CAPTION>
TABLE I - NOMINEE FOR 1998 ANNUAL MEETING
NAME, AGE AND POSITION PRINCIPAL OCCUPATION DURING DIRECTOR TERM
WITH COMPANY (1) PAST FIVE YEARS SINCE EXPIRES
<S> <C> <C> <C>
John F. Tremblay, 49 President of the Company; 1997 2001
Director and President President of the Bank;
formerly held a number of executive
positions with B.M.J. Financial
Corp., including President and
Chief Executive Officer
(1) Mr. Tremblay is also a director of the Bank.
<CAPTION>
TABLE II - DIRECTORS OF THE COMPANY WHOSE TERMS CONTINUE
BEYOND THIS ANNUAL MEETING
NAME, AGE AND POSITION PRINCIPAL OCCUPATION DURING DIRECTOR TERM
WITH COMPANY (1) PAST FIVE YEARS SINCE(2) EXPIRES
<S> <C> <C> <C>
David D. Dallas, 43 Vice Chairman and Corporate 1990 1999
Vice Chairman and Secretary of the Company; Vice
Corporate Secretary Chairman of the Bank; Chief
Executive Officer of Dallas Group
of America (Chemicals)
Peter P. DeTommaso, 72 Retired President 1991 1999
Director Home Owners Heaven, Inc.
(Hardware and Lumber Retail)
Robert J. Van Volkenburgh, 55 Chairman of the Board and Chief 1990 2000
Chairman of the Board and Executive Officer of the Company;
Chief Executive Officer Chairman of the Board of
the Bank; Chief Executive Officer of Total
Packaging Corporation and Best Packaging &
Design Corp.
Charles S. Loring, 56 Owner, Charles S. Loring, CPA 1990 2000
Director (Accountants)
</TABLE>
(1) Each director of the Company is also a director of the Bank.
(2) Includes prior service on Board of Directors of the Bank.
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TABLE III - DIRECTORS OF THE BANK WHO DO NOT SERVE
AS DIRECTORS OF THE COMPANY
The following table sets forth the names of and certain information concerning
those members of the Board of Directors of the Bank who are not also directors
of the Company.
NAME, AGE AND POSITION PRINCIPAL OCCUPATION DURING DIRECTOR
WITH BANK PAST FIVE YEARS SINCE
- --------------------------------------------------------------------------------
Robert H. Dallas, II, 51 Vice President and Chief Operating 1990
Director Officer, Dallas Group of America
(Chemicals)
Peter G. Schoberl, 43 Executive Vice President and Senior 1996
Director, Executive Vice Lending Officer of the Bank since
President and Senior Lending 1995. Previously, Senior Vice
Officer of the Bank President and Senior Lending
Officer of American Union Bank
from 1990 to 1995.
Samuel Stothoff, 65 President, Samuel Stothoff Company 1990
Director (Well Drilling)
Allen Tucker, 71 President, Tucker Enterprises 1995
Director (Real Estate Development)
Robert J. van Volkenburgh, Jr., Physician 1995
M.D., 33
Director
No director of the Company is also a director of any other company registered
pursuant to Section 12 of the Securities Exchange Act of 1934 or any company
registered as an investment company under the Investment Company Act of 1940.
Mr. Robert J. van Volkenburgh, Jr., M.D. is the son of Mr. Robert J. Van
Volkenburgh.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEE MEETINGS
During the fiscal year ended December 31, 1997, the Board of Directors of the
Company held seven (7) meetings. During the fiscal year, no director attended
fewer than 75% of the aggregate of (i) the meetings of the Board of Directors
and (ii) meetings of the Committees of the Board of Directors on which such
director served.
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The Company maintains an Audit Committee of the Board of Directors. In 1997, the
Committee was comprised of Messrs. Dallas, Hazard and DeTommaso. During the
fiscal year of 1997, the Audit Committee held three (3) meetings. Effective
February 1998, Mr. Loring was appointed a member of the Audit Committee,
replacing Mr. Hazard. The Audit Committee arranges for the annual financial
statement audit through the Company's independent certified public accountants,
reviews and evaluates the recommendations of the annual audit, receives reports
of examinations of the Bank by the Bank's internal audit department, analyzes
such internal reports, receives reports of regulatory examinations of the
Company and the Bank by the applicable regulatory agencies, analyzes such
reports, and reports to the Board of Directors the results of this analysis.
The Company does not maintain a separate Nominating Committee. The full Board of
Directors acts as a Nominating Committee.
COMPENSATION OF DIRECTORS
Directors of the Company do not receive cash compensation for their service on
the Company's Board. However, Directors of the Company are eligible to
participate in the 1994 Stock Option Plan, the 1997 Stock Bonus Plan and the
1997 Stock Option Plan, all as described below.
Non-employee directors of the Bank receive an annual retainer of up to $5,000,
depending upon their years of service on the Board. Non-employee directors who
have one year of service receive a $3,000 retainer. Non-employee directors with
two years of service receive a $4,000 retainer. Non-employee directors with
three or more years of service receive the entire $5,000 retainer. Each
Committee Chairman also receives a $1,000 Committee retainer.
Directors also receive $300 for attendance at each Board of Directors meeting
and $150 for attendance at each Committee meeting. In addition, during 1997, Mr.
Van Volkenburgh received an annual retainer of $100,000, payable monthly, for
his services as Chairman of the Board of the Bank and Mr. D. Dallas received an
annual retainer of $50,000, payable monthly, for his service as Vice Chairman of
the Board of the Bank.
The Company maintains the 1994 Stock Option Plan for Non-Employee Directors (the
"Directors Plan") which provides for options to purchase shares of Common Stock
to be issued to non-employee directors of the Company, the Bank and any other
subsidiaries which the Company may acquire or incorporate in the future.
Individual directors to whom options are granted under the Non-Employee Plan are
selected by the Board of Directors, which has the authority to determine the
terms and conditions of options granted
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under the Non-Employee Plan and the exercise price therefor. For the fiscal year
ended December 31, 1997, 24,000 options were granted under the Non-Employee
Plan. Options had an exercise price of $13.375.
The Company maintains the 1997 Stock Bonus Plan under which the Board of
Directors was authorized to grant up to 50,000 shares of Common Stock in the
form of bonuses. Members of the Board of Directors and executive officers of the
Company, the Bank and any subsidiaries the Company may acquire or form in the
future may be eligible to participate in the 1997 Stock Bonus Plan. The 1997
Stock Bonus Plan is administered by the Company's Board of Directors, which has
the authority to determine the participants to whom bonuses will be granted, the
amount of any bonus, and any terms and conditions which may be attached to any
shares underlying a bonus. During 1997, members of the Company's Board of
Directors received grants of 9,000 shares of Common Stock under the 1997 Bonus
Plan.
In addition, the Company maintains the 1997 Stock Option Plan under which
options to purchase shares of the Company's Common Stock may be granted to
members of the Board of Directors and executive officers of the Company, the
Bank, and any subsidiaries which the Company may establish in the future. The
1997 Stock Option Plan is administered by the Board of Directors of the Company,
which has the authority to select the parties to whom stock options will be
granted. Options granted under the 1997 Plan may either be incentive stock
options under the Internal Revenue Code of 1986, as amended (the "Code") or
non-qualified options. Stock Options granted under the 1997 Plan which are
incentive stock options must have an exercise price of 100% of the fair market
value of the Company's stock on the date of grant, and non-qualified options may
have an exercise price of not less than 85% of the fair market value of the
Common Stock on the date of grant, with the actual exercise price determined by
the Board of Directors. During 1997, Mr. Tremblay was the only member of the
Board to receive options under the Plan. See "Options/SAR Grants in Last Fiscal
Year".
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following tables set forth, as of February 28, 1998, certain information
concerning the ownership of shares of Common Stock by (i) each person who is
known by the Company to own beneficially more than five percent (5%) of the
issued and outstanding Common Stock, (ii) each director and nominee for director
of the Company and each director of the Bank, (iii) each named executive officer
described in this Proxy Statement under the caption "Executive Compensation,"
and (iv) all directors and officers of the Company as a group. Information
concerning Mr. Robert H. Dallas, who is deemed to beneficially own 10.62% of the
Company's outstanding Common Stock, is contained in the next table.
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THE COMPANY
NAME AND POSITION NUMBER OF SHARES PERCENT
WITH COMPANY BENEFICIALLY OWNED(1) OF CLASS
- --------------------------------------------------------------------------------
David D. Dallas,
Vice Chairman and
Corporate Secretary 234,875(2) 11.55%
Peter P. DeTommaso, Director 129,435(3) 6.42%
Charles S. Loring, Director 76,311(4) 3.78%
Peter G. Schoberl, Director
and Executive Vice President
of the Bank 11,286(5) .56%
John F. Tremblay,
Director and President 3,500(6) .17%
Robert J. Van Volkenburgh,
Chairman of the Board and
Chief Executive Officer 344,127(7) 16.86%
Directors and Executive Officers
of the Company as a group
(8 persons) 807,493 38.66%
(1) Beneficially owned shares include shares over which the named person
exercises either sole or shared voting power or sole or shared investment
power. It also includes shares owned (i) by a spouse, minor children or
relatives sharing the same home, (ii) by entities owned or controlled by
the named person, and (iii) by other persons if the named person has the
right to acquire such shares within sixty (60) days by the exercise of any
right or option. Unless otherwise noted, all shares are owned of record and
beneficially by the named person.
(2) Includes 19,701 shares and 1,500 shares purchasable upon the exercise of
immediately exercisable warrants owned by the Dallas Group of America
Employee's Profit Sharing Plan and Trust, 61,763 shares owned by the Dallas
Group of America, Inc., 18,201 shares held by Trenton Liberty Insurance
Company, T/A Alexander Insurance Managers, and 60,975 shares and 3,389
shares purchasable upon the exercise of immediately exercisable warrants
owned by Dallas Financial Holdings, LLC. These
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shares are also disclosed as beneficially owned by Robert Dallas. Also
includes 7,524 shares held by Mr. Dallas' minor children in their own
names, and 16,750 shares issuable upon the exercise of options exercisable
within 60 days.
(3) Includes 103,626 shares owned jointly with Mr. DeTommaso's spouse, and
20,416 shares owned jointly by Mr. DeTommaso and his brother. Also includes
4,250 shares issuable upon the exercise of options exercisable within 60
days.
(4) Includes 6,285 shares held by Mr. Loring's spouse in her own name, 13,715
shares owned jointly with his spouse, and 7,650 shares held by Loring
Partnership. Mr. Loring disclaims beneficial ownership of the shares held
by his spouse. Also includes 800 shares purchasable upon the exercise of
immediately exercisable warrants and 4,250 shares issuable upon the
exercise of options exercisable within 60 days.
(5) Includes 7,000 shares issuable upon the exercise of immediately exercisable
options, 18 shares held jointly with Mr. Schoberl's spouse and 196 shares
held by Mr. Schoberl's spouse.
(6) Includes 2,500 shares issuable upon the exercise of immediately exercisable
options.
(7) Includes 68,613 shares held by Mr. Van Volkenburgh's spouse in her own
name, 12,381 shares owned jointly by Mr. Van Volkenburgh and his spouse,
21,513 shares and 8,500 shares held by Total Packaging Corporation and Best
Packaging and Design Corp., respectively, corporations owned by Mr. Van
Volkenburgh, and 4,375 shares held by RJV Capital Management LLC, a limited
liability company owned by Mr. Van Volkenburgh, and 18,750 shares held in a
brokerage account for the benefit of Mr. Van Volkenburgh. Mr. Van
Volkenburgh disclaims beneficial ownership of the shares held by his spouse
in her own name. Also includes 25,125 shares issuable upon the exercise of
options exercisable within 60 days and 4,889 immediately exercisable
warrants.
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THE BANK
The following table sets forth, as of February 28, 1998, certain information
concerning the ownership of shares of the Common Stock by directors of the Bank
who are not also directors of the Company.
NAME AND POSITION NUMBER OF SHARES PERCENT
WITH BANK BENEFICIALLY OWNED(1) OF CLASS
- --------------------------------------------------------------------------------
Robert H. Dallas, II, Director 214,513(2)(5) 10.62%
Samuel Stothoff, Director 50,685(3)(5) 2.51%
Allen Tucker, Director 45,825(4)(5) 2.27%
Robert J. van Volkenburgh, Jr.,
M.D., Director 35,249(5) 1.75%
(1) Beneficially owned shares include shares over which the named person
exercised either sole or shared voting power or sole or shared investment
power. It also includes shares owned (i) by a spouse, minor children or
relatives sharing the same home, (ii) by entities owned or controlled by
the named person, and (iii) by other persons if the named person has the
right to acquire such shares within sixty (60) days by the exercise of any
right or option. Unless otherwise noted, all shares are owned of record and
beneficially by the named person.
(2) Includes 19,701 shares and 1,500 shares purchasable upon the exercise of
immediately exercisable warrants owned by the Dallas Group of America
Employee's Profit Sharing Plan and Trust, 61,763 shares owned by the Dallas
Group of America, Inc., 18,201 shares held by Trenton Liberty Insurance
Company, T/A Alexander Insurance Managers, and 60,975 shares and 3,389
shares purchasable upon the exercise of immediately exercisable warrants
owned by Dallas Financial Holdings, LLC. These shares are also disclosed as
beneficially owned by David Dallas. Also includes 3,762 shares owned by Mr.
Dallas' minor child in his own name.
(3) Includes 34,000 shares held jointly by Mr. Stothoff and his spouse and
4,852 shares held by Mr. Stothoff's spouse in her own name. Mr. Stothoff
disclaims beneficial ownership of the shares held by his spouse.
(4) Includes 11,700 shares held by Mr. Tucker's spouse and 833 shares held by
his daughter.
(5) Includes 4,250 shares issuable upon the exercise of options exercisable
within 60 days.
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EXECUTIVE COMPENSATION
The following table sets forth a summary for the last three fiscal years of the
cash and non-cash compensation awarded to, earned by, or paid to, the Chief
Executive Officer of the Company and each of the four most highly compensated
executive officers of the Company or the Bank whose individual remuneration
exceeded $100,000 for the last fiscal year.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
CASH AND CASH EQUIVALENT FORMS OF REMUNERATION
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
----------------------------------------------------------------------------------
OTHER
ANNUAL AWARDS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPEN- -----------------------------
($) ($) SATION RESTRICTED SECURITIES
($) STOCK UNDERLYING
AWARD(S) OPTIONS
($) SARS (#)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Van Volkenburgh 1997 $100,000(1) $60,188(2) $7,800(3) $0 9,000
Chairman and Chief 1996 100,000(1) 0 8,400(3) 0 9,375
Executive Officer 1995 60,000(1) 0 9,550(3) 0 0
- ------------------------------------------------------------------------------------------------------------------------
James Hyman, President 1997 136,000(4) 70,349(5) 5,100(6) 0 4,000
1996 130,000 6,500 10,162(6) 0 3,750
1995 120,000 27,900(7) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------
John Tremblay, President 1997 24,404(8) 0 600(6) 0 2,500
- ------------------------------------------------------------------------------------------------------------------------
Peter G. Schoberl, 1997 98,000 6,273 3,300(6) 0 2,000
Executive Vice President 1996 94,500 2,962 0 0 1,875
of the Bank 1995 89,654 2,500(3) 0 0 0
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Consists of Mr. Van Volkenburgh's annual retainer as Chairman of the Board
of the Bank. Mr. Van Volkenburgh does not receive compensation for his
services of Chief Executive Officer of the Company.
(2) This bonus represents the value of 4,500 shares issued to Mr. Van
Volkenburgh under the Company's 1997 Stock Bonus Plan.
(3) Mr. Van Volkenburgh received directors fees only.
(4) Mr. Hyman resigned as President and Chief Operating Officer of the Company
in August, 1997. Pursuant to a severance agreement between Mr. Hyman and
the Company, Mr. Hyman will continue to receive his
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annual salary as of August, 1997, $136,000, through August 31, 1998 and the
Company will continue to provide Mr. Hyman with certain insurance benefits
through such date.
(5) Included in this amount, $16,719 represents the value of 2,750 shares
issued to Mr. Hyman under the Company's 1997 Stock Bonus Plan and $45,545
represents compensation realized upon the exercise of non-qualified stock
options.
(6) Other annual compensation includes director fees, insurance premiums and
the personal use of Bank automobiles.
(7) $20,000 of the 1995 annual bonus paid to James Hyman represents the value
of 3,071 shares of Common Stock issued to
Mr. Hyman under the Company's Stock Bonus Plan.
(8) Mr. Tremblay was hired as the Company's President on October 23, 1997.
Pursuant to Mr. Tremblay's employment agreement, he is to receive an annual
salary of $135,000, subject to increase.
EMPLOYMENT AGREEMENTS
The Company and the Bank have entered into an employment agreement (the
"Employment Agreement") with Mr. Tremblay. The Employment Agreement provides for
a one year term commencing on November 24, 1997. The Employment Agreement calls
for an initial base salary of $135,000, and further provides that Mr. Tremblay
may be entitled to receive an annual bonus as determined by the Board of
Directors. Mr. Tremblay is also entitled to receive use of an automobile and
standard insurance benefits. In the event that the Company elects to terminate
Mr. Tremblay's employment prior to the end of the initial term for reasons other
than cause, as defined in the Employment Agreement, Mr. Tremblay will be
entitled to receive his then current base compensation for a period three (3)
months after termination and the Company will further be required to maintain in
effect medical and other insurance benefits for Mr. Tremblay for a period of
18-months after termination. In the event of a change in control of the Company,
followed by Mr. Tremblay's involuntary termination of employment or his
voluntary termination of employment in certain circumstances, Mr. Tremblay will
be entitled to receive his then current salary for a period of six (6) months
from the date of such termination and Mr. Tremblay will be entitled to receive
insurance and other benefits in effect at the time of his termination for a
period of six (6) months. The Employment Agreement defines a change in control
to include (i) a reorganization, merger, consolidation or sale of all or
substantially all of the assets of the Company or any similar transaction in
which the Company is not the resulting entity, (ii) changes to the Board of
Directors of the Company whereby individuals who constitute the current Board of
Directors cease to constitute a majority of the Board of Directors, (iii) the
acquisition by any person directly or indirectly, of securities of the Company
representing 25% or more of the Company's outstanding securities ordinarily
having the right to vote for the election of directors, or (iv) a tender offer
is made for 25% or more of the voting securities of the Company and shareholders
owning beneficially or of record 25% or more of the outstanding
14
<PAGE>
securities of the Company have tendered or offered to sell their shares pursuant
to such tender offer and such tendered shares have been accepted by the tender
offeror.
CHANGE IN CONTROL AGREEMENT
The Company has entered into a Change in Control Agreement (the "Agreement")
with Peter Schoberl, Director, Executive Vice President and Senior Lending
Officer of the Bank. The Agreement has a four year term from January 1, 1995
through December 31, 1998. The Agreement provides that upon the occurrence of a
change in control (as defined in the Agreement) of the Company and in the event
Mr. Schoberl is terminated for reasons other than cause (as defined in the
Agreement), he will be entitled to severance pay in amounts equal to 100%, 75%,
50% and 25% of his base salary, respectively, in each of the first four years of
the Agreement. The Agreement further provides that Mr. Schoberl will be entitled
to receive benefits under the Agreement in the event he resigns from his
employment with the Company within 18 months of a change in control and within
thirty days of the occurrence of any of the following events after such change
in control: (i) he is reassigned to a position of lesser rank or status than his
position at the time of the change in control; (ii) his place of employment is
relocated by more than thirty miles from its location prior to the change in
control; or (iii) his compensation or other benefits are reduced. Had a change
of control occurred during 1997 and had Mr. Schoberl become entitled to
severance pay, he would have received $45,000.
STOCK BENEFIT PLANS
The Company maintains the 1994 Incentive Stock Option Plan (the "Employee Plan")
under which options to purchase 62,500 shares of Common Stock have been reserved
for issuance, subject to adjustment as set forth therein. Officers and other key
employees of the Company (including officers and employees who are directors),
the Bank and any other subsidiaries which the Company may acquire or incorporate
may participate in the Employee Plan. The Board of Directors administers the
Employee Plan, and has the authority to determine the key employees who will
receive options under the Employee Plan, the terms and conditions of options
granted under the Employee Plan and the exercise price therefor.
The Company maintains a Stock Bonus Plan (the "Stock Bonus Plan"). Under the
Stock Bonus Plan, 21,929 shares of Common Stock remain reserved for issuance.
Officers and other key employees of the Company, the Bank and any other
subsidiaries which the Company may acquire or incorporate may participate in the
Stock Bonus Plan. The Board of Directors of the Company administers and
supervises the Stock Bonus Plan. The Board has the authority to determine the
key employees who will receive awards under the Plan and the number of shares
awarded to each recipient.
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<PAGE>
In addition, officers and employees, along with directors, are eligible to
participate in the 1997 Stock Option Plan and the 1997 Bonus Plan. See
"Compensation of Directors."
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL PRESENT
SECURITIES OPTIONS/SARS VALUE OF
UNDERLYING GRANTED TO EXERCISE OR EXPIRATION GRANT ON
OPTIONS/SARS EMPLOYEES IN BASE PRICE DATE GRANT DATE
NAME GRANTED (#)(1) FISCAL YEAR ($/SH) ($)(2)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Van Volkenburgh 9,000 22.39% $13.375 1/11/02 $38,610
James Hyman 4,000 9.95% 11.47 1/1/02 18,120
John F. Tremblay 2,500 6.22% 13.92 11/22/02 15,550
Peter G. Schoberl 2,000 4.98% 11.47 1/1/02 9,060
</TABLE>
(1) All Options are immediately exercisable.
(2) The present value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted
average assumptions: dividend yield of 1.50%; expected volatility of
47.06%; risk-free interest rates of 6.08%; and expected lives of 2 years
and 6 months.
The following table sets forth information concerning the fiscal year-end value
of unexercised options held by the executive officers of the Company named in
the table above.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FY-END OPTION/SAR VALUES
- -------------------------------------------------------------------------------------------------------------------------
VALUE OF UNEXERCISED
IN-THE-MONEY
NUMBER OF SECURITIES OPTIONS/SARS AT
UNDERLYING UNEXERCISED FY-END ($) (BASED
VALUE OPTIONS/SARS AT FY-END ON $19.25 PER
SHARES ACQUIRED REALIZED (#) EXERCISABLE/ SHARE EXERCISABLE/
NAME ON EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert J. Van Volkenburgh 0 $0 18,375 $132,094
James Hyman 7,750 45,545 0(1) 0(1)
John F. Tremblay 0 0 2,500 13,325
Peter G. Schoberl 0 0 3,875 33,429
</TABLE>
16
<PAGE>
(1) Mr. Hyman resigned as President and Chief Operating Officer of the Company
on August 31, 1997 and exercised all of his outstanding stock options. He
therefore had no options outstanding at year end.
CERTAIN TRANSACTIONS WITH MANAGEMENT
The Bank has made in the past and, assuming continued satisfaction of generally
applicable credit standards, expects to continue to make loans to directors,
executive officers and their associates (i.e. corporations or organizations for
which they serve as officers or directors or in which they have beneficial
ownership interests of ten percent or more). These loans have all been made in
the ordinary course of the Bank's business on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and do not involve more than the
normal risk of collectibility or present other unfavorable features.
The Company leases both its headquarters and its Scotch Plains office from
partnerships consisting of Messrs. Van Volkenburgh, R. Dallas and D. Dallas.
Under the leases for these facilities, the partnerships received in 1997 rental
payments of $419,054. The Company believes that these rent payments reflect
market rents and that the leases reflect terms which are comparable to those
which could have been obtained in a lease with an unaffiliated third party.
Pursuant to these leases, the annual base rent during the second and third year
will increase by 6% annually. Starting in year four, the annual base rent will
increase by the higher of the Urban Consumer Price Index or 3% annually.
17
<PAGE>
RECOMMENDATION AND VOTE REQUIRED
Directors will be elected by a plurality of the votes cast at the Annual
Meeting, whether in person or by proxy. THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE NOMINEE NAMED ABOVE.
PROPOSAL 2. APPROVAL OF THE UNITY BANCORP, INC.
1998 STOCK OPTION PLAN
The Board of Directors of the Company is presenting for shareholder approval the
1998 Stock Option Plan (the "1998 Option Plan"), which is attached hereto as
Exhibit A. The purpose of the 1998 Option Plan is to promote the growth and
profitability of the Company and the Bank by providing an incentive in the form
of stock options to attract and retain skilled and experienced management
personnel, including directors. The Board believes it is in the best interest of
the shareholders that management receive a significant portion of their
compensation in the form of equity and stock options, thereby more closely
linking the interests of management and the shareholders. The following is a
summary of the material terms of the 1998 Option Plan which is qualified in its
entirety by the complete provisions of the attached 1998 Option Plan document at
Exhibit A.
The 1998 Option Plan authorizes the granting of incentive stock options ("ISOs")
and non-statutory options for a total of 150,000 shares of Common Stock to
certain members of management of the Company and the Bank. Participants in the
1998 Option Plan will be chosen by the Board of Directors of the Company from
among the executive officers and directors of the Company, the Bank and any
other subsidiaries the Company may acquire or form.
The exercise price for options granted under the 1998 Option Plan will be
determined by the Board of Directors at the time of grant, but may not be less
than 85% of the fair market value of the Common Stock on the date of grant. The
exercise price for any ISOs must be 100% of the fair market value of the common
stock on the date of grant.
The 1998 Option Plan may be amended from time to time by the Board of Directors
of the Company. The rights and obligations under any option granted before an
amendment shall not be altered or impaired by any such amendment without the
written consent of the optionee.
The options granted under the 1998 Option Plan may either be ISO's or
non-statutory options. The grant of a non-statutory option which does not have a
readily ascertainable fair market value at the time it is granted is not taxable
18
<PAGE>
to the recipient of the option for federal income tax purposes at the time the
option is granted. The non-statutory options granted under the 1998 Option Plan
should be considered as not having a readily ascertainable fair market value at
the time of grant because they are not tradable on an established market.
The recipient of a non-statutory option realizes compensation taxable as
ordinary income at the time the option is exercised or transferred. The amount
of such compensation is equal to the amount (i) by which the fair market value
of the stock acquired upon exercise of the option exceeds the amount required to
be paid for such stock, or (ii) the amount received for such option if it is
transferred prior to exercise. Upon exercise of the option, the Company is
entitled to an income tax deduction in the amount of the compensation income,
provided applicable rules pertaining to tax withholding are satisfied and the
compensation represents an ordinary and necessary business expense of the
Company. The stock acquired upon exercise of the option has an adjusted basis in
the hands of the recipient equal to the amount paid for the stock plus the
amount taxed at exercise and a holding period commencing on the date the stock
is acquired by the recipient. At the time the stock is subsequently sold or
otherwise disposed of by the recipient, the recipient will recognize a taxable
capital gain or loss measured by the difference between the adjusted basis of
the stock at the time it is disposed of and the amount realized in connection
with the transaction. The long term or short term nature of such gain or loss
will depend upon the applicable holding period for such stock.
For federal income tax purposes, no taxable income results to the optionee upon
the grant of an ISO or upon the issuance of shares to the optionee upon the
exercise of the option. Correspondingly, no deduction is allowed to the Company
upon either the grant or the exercise of an ISO.
If shares acquired upon the exercise of an ISO are not disposed of within the
two-year period following the date the option is granted and within the one-year
period following the date the shares are issued to the optionee pursuant to
exercise of the option and at all times during the period beginning on the date
of granting of the option and ending on the day three (3) months before the date
of such exercise, the recipient of the option was an employee of the Company,
the difference between the amount realized on any disposition thereafter and the
option price will be treated as a long-term capital gain or loss to the
optionee. If a disposition occurs before the expiration of the requisite periods
described above, then the lower of (i) any excess of the fair market value of
the shares at the time of exercise of the option over the option price or (ii)
the actual gain realized on disposition, will be deemed to be compensation to
the optionee and will be taxed at ordinary income rates. In such event, the
Company will be entitled to a corresponding deduction from
19
<PAGE>
its income, provided that the deduction is reasonable and that the Company
withholds and deducts as required by law. Any such increase in the income of the
optionee or deduction from the income of the Company attributable to such
disposition is treated as an increase in income or a deduction from income in
the taxable year in which the disposition occurs. Any excess of the amount
realized by the optionee on disposition of the shares over the fair market value
of the shares at the time of exercise will be treated as capital gain.
Shareholder approval of the 1998 Option Plan is being sought in order to comply
with certain requirements of the American Stock Exchange and the Internal
Revenue Code of 1986, with regard to ISO's.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED PROXY
CARD, IF EXECUTED AND RETURNED, WILL BE VOTED "FOR" THE APPROVAL OF THE 1998
OPTION PLAN.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE 1998
OPTION PLAN.
OTHER MATTERS
At the date of this Proxy Statement, the Company has no knowledge of any
business other than that described above that will be presented at the Annual
Meeting. If any other business should come before the Annual Meeting, it is
intended that the persons named in the enclosed proxy will have discretionary
authority to vote the shares that they represent.
INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December 31, 1997
were Arthur Andersen LLP. A representative of Arthur Andersen LLP will be
available at the Annual Meeting to answer appropriate questions. The Company
will select its independent auditors for 1998 after the Annual Meeting.
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than ten percent shareholders are
required by regulation of the Securities and Exchange Commission to furnish the
Company with copies of all Section 16(a) forms they file.
20
<PAGE>
Based solely on its review of copies of such forms received by it, or written
representations from certain reporting persons that no Forms 5 were required for
those persons, the Company believes that, during the fiscal year ended December
31, 1997, all filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were met.
SUBMISSION OF SHAREHOLDER PROPOSALS
FOR THE 1999 ANNUAL MEETING
Any shareholder who wishes to submit a proposal for inclusion in the proxy
material to be distributed by the Company in connection with its 1999 Annual
Meeting must do so no later than December 15, 1998.
21
<PAGE>
EXHIBIT A
UNITY BANCORP, INC.
1998 STOCK OPTION PLAN
SECTION 1. PURPOSE
The Unity Bancorp, Inc. 1998 Stock Option Plan (the "Plan") is hereby
established to foster and promote the long-term success of Unity Bancorp, Inc.
(the "Corporation") and its shareholders by providing directors and officers of
the Corporation with an equity interest in the Corporation. The Plan will assist
the Corporation in attracting and retaining the highest quality of experienced
persons as directors and officers and in aligning the interests of such persons
more closely with the interests of the Corporation's shareholders by encouraging
such parties to maintain an equity interest in the Corporation.
SECTION 2. DEFINITIONS
Capitalized terms not specifically defined elsewhere herein shall have the
following meaning:
"Act" means the Securities Exchange Act of 1934, as amended from time to time,
and the rules and regulations promulgated thereunder.
"Board" means the Board of Directors of the Corporation.
"Code" means the Internal Revenue Code of 1986, as amended from time to time,
and the regulations promulgated thereunder.
"Common Stock" or "Stock" means the common stock, no par value, of the
Corporation.
"Corporation" means Unity Bancorp, Inc. and any present or future subsidiary
corporations of Unity Bancorp, Inc. (as defined in Section 424(f) of the Code)
or any successor to such corporations.
"Disability" shall mean permanent and total disability which if a Participant
were an employee of the Corporation would be treated as a total disability under
the terms of the Corporation's long-term disability plan for employees as in
effect from time to time; provided, however, with respect to a Participant who
has been granted an Incentive Stock Option such term shall have the meaning set
forth in Section 422(e)(3) of the Code.
"Fair Market Value" means, with respect to shares of Common Stock, the fair
market value as determined by the Board of Directors in good faith and in a
manner established by the Board from time to time; provided, however, so long as
the shares of Common Stock are last sale reported securities, then the
A-1
<PAGE>
"fair market value" of such shares on any date shall be the closing price
reported in the consolidated reporting system, on the business day immediately
preceding the date in question, as reported on the American Stock Exchange.
"Incentive Stock Option" means an option to purchase shares of Common Stock
granted to a Participant under the Plan which is intended to meet the
requirements of Section 422 of the Code.
"Non-Employee Director" shall have the meaning ascribed to such term under
Securities and Exchange Commission Rule 16b-3(b)(3).
"Non-Qualified Stock Option" means an option to purchase shares of Common Stock
granted to a Participant under the Plan which is not intended to be an Incentive
Stock Option.
"Option" means an Incentive Stock Option or a Non-Qualified Stock Option.
"Participant" means a member of the Board of Directors or employee of the
Corporation selected by the Board to receive an Option under the Plan.
"Plan" means the Unity Bancorp, Inc. 1998 Stock Option Plan.
"Retirement," with regard to an employee, means termination of employment in
accordance with the retirement provisions of any retirement or pension plan
maintained by the Corporation or any of its subsidiaries. With regard to a
Non-Employee Director, "Retirement" shall mean cessation of service on the
Corporation's Board of Directors after age 60 with at least 10 years of service
as a member of the Corporation's Board of Directors. For purposes of this
provision, service on the Board of Directors of First Community Bank shall be
deemed to be service on the Board of Directors of the Corporation.
"Termination for Cause" means termination because of Participant's intentional
failure to perform stated duties, personal dishonesty, willful violation of any
law, rule, regulation (other than traffic violations or similar offenses) or
final cease and desist order issued by any regulatory agency having jurisdiction
over the Participant or the Corporation.
A-2
<PAGE>
SECTION 3. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors. Among other
things, the Board of Directors shall have authority, subject to the terms
of the Plan, to grant Options, to determine the individuals to whom and the
time or times at which Options may be granted, to determine whether such
Options are to be Incentive Stock Options or Non-Qualified Stock Options
(subject to the requirements of the Code), to determine the terms and
conditions of any Option granted hereunder, and the exercise price thereof.
(b) Subject to the other provisions of the Plan, the Board of Directors shall
have authority to adopt, amend, alter and repeal such administrative rules,
guidelines and practices governing the operation of the Plan as it shall
from time to time consider advisable, to interpret the provisions of the
Plan and any Option and to decide all disputes arising in connection with
the Plan. The Board may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any option agreement in the
manner and to the extent it shall deem appropriate to carry the Plan into
effect, in its sole and absolute discretion. The Board's decision and
interpretations shall be final and binding. Any action of the Board with
respect to the administration of the Plan shall be taken pursuant to a
majority vote or by the unanimous written consent of its members.
(c) The Board of Directors may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may
rely upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent.
SECTION 4. ELIGIBILITY AND PARTICIPATION
Officers, employees and members of the Board of Directors of the Corporation
shall be eligible to participate in the Plan. The Participants under the Plan
shall be selected from time to time by the Board of Directors, in its sole
discretion, from among those eligible, and the Board shall determine in its sole
discretion the numbers of shares to be covered by the Option or Options granted
to each Participant. Options intended to qualify as Incentive Stock Options
shall be granted only to persons who are eligible to receive such options under
Section 422 of the Code.
SECTION 5. SHARES OF STOCK AVAILABLE FOR OPTIONS
(a) The maximum number of shares of Common Stock which may be issued and
purchased pursuant to Options granted under the Plan is 150,000, subject to
the adjustments as provided in Section 5 and Section 9, to the
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<PAGE>
extent applicable. If an Option granted under this Plan expires or
terminates before exercise or is forfeited for any reason, without a
payment in the form of Common Stock being granted to the Participant, the
shares of Common Stock subject to such Option, to the extent of such
expiration, termination or forfeiture, shall again be available for
subsequent grant under the Plan. Shares of Common Stock issued under the
Plan may consist in whole or in part of authorized but unissued shares or
treasury shares.
(b) In the event that the Board of Directors determines, in its sole
discretion, that any stock dividend, stock split, reverse stock split or
combination, extraordinary cash dividend, creation of a class of equity
securities, recapitalization, reclassification, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares,
warrants or rights offering to purchase Common Stock at a price
substantially below Fair Market Value, or other similar transaction affects
the Common Stock such that an adjustment is required in order to preserve
the benefits or potential benefits intended to be granted or made available
under the Plan to Participants, the Board shall have the right to
proportionately and appropriately adjust equitably any or all of (i) the
maximum number and kind of shares of Common Stock in respect of which
Options may be granted under the Plan to Participants, (ii) the number and
kind of shares of Common Stock subject to outstanding Options held by
Participants, and (iii) the exercise price with respect to any Options held
by Participants, without changing the aggregate purchase price as to which
such Options remain exercisable, and if considered appropriate, the Board
may make provision for a cash payment with respect to any outstanding
Options held by a Participant, provided that no adjustment shall be made
pursuant to this Section if such adjustment would cause the Plan to fail to
comply with Section 422 of the Code with regard to any Incentive Stock
Options granted hereunder. No fractional Shares shall be issued on account
of any such adjustment.
(c) Any adjustments under this Section will be made by the Board of Directors,
whose determination as to what adjustments, if any, will be made and the
extent thereof will be final, binding and conclusive.
SECTION 6. NON-QUALIFIED STOCK OPTIONS
6.1 GRANT OF NON-QUALIFIED STOCK OPTIONS.
The Board of Directors may, from time to time, grant Non-Qualified Stock Options
to Participants upon such terms and conditions as the Board of Directors may
determine. Non-Qualified Stock Options granted under this Plan are subject to
the following terms and conditions:
A-4
<PAGE>
(a) PRICE. The purchase price per share of Common Stock deliverable upon the
exercise of each Non-Qualified Stock Option shall be determined by the
Board of Directors on the date the option is granted. Such purchase price
shall not be less than eighty-five percent (85%) of the Fair Market Value
of the Common Stock on the date of grant. Shares may be purchased only upon
full payment of the purchase price. Payment of the purchase price may be
made, in whole or in part, through the surrender of shares of the Common
Stock at the Fair Market Value of such shares on the date of surrender.
(b) TERMS OF OPTIONS. The term during which each Non-Qualified Stock Option may
be exercised shall be determined by the Board of Directors, but in no event
shall a Non-Qualified Stock Option be exercisable in whole or in part more
than ten (10) years from the date of grant. No Non-Qualified Stock Option
granted under this Plan is transferable except by will or the laws of
descent and distribution.
(c) TERMINATION OF SERVICE. Except as provided in Section 6.1(d) and (e)
hereof, unless otherwise determined by the Board of Directors, upon the
termination of a Participant's service as an employee or member of the
Board of Directors for any reason other than Disability, death or
Termination for Cause, the Participant's Non-Qualified Stock Options shall
be exercisable only as to those shares which were immediately exercisable
by the Participant at the date of termination and only for a period of
three months following termination. Notwithstanding any provision set forth
herein nor contained in any Agreement relating to the award of an Option,
in the event of Termination for Cause, all rights under the Participant's
Non-Qualified Stock Options shall expire upon termination. In the event of
death or termination of service as a result of Disability of any
Participant, all Non-Qualified Stock Options held by the Participant,
whether or not exercisable at such time, shall be exercisable by the
Participant or his legal representatives or beneficiaries of the
Participant for one year or such longer period as determined by the Board
following the date of the Participant's death or termination of service due
to Disability, provided that in no event shall the period extend beyond the
expiration of the Non-Qualified Stock Option term.
(d) EXCEPTION FOR RETIREMENT. Notwithstanding the general rule contained in
Section 6.1(c) above, all options which are exercisable held by a
Participant whose employment with the Corporation terminates due to
Retirement may be exercised for the lesser of (i) the remaining term of the
option, or (ii) twelve (12) months.
A-5
<PAGE>
(e) TERMINATION OF SERVICE UPON A CHANGE IN CONTROL. Upon the termination of a
Participant's service as an employee or member of the Board of Directors in
connection with a change in control of the Corporation (as defined below),
the Participant's Non-Qualified Stock Options shall be exercisable,
regardless of their then remaining term, for a period of 12 months. For
purposes of this provision, the term "change in control of the Corporation"
shall mean a reorganization, merger, consolidation or sale of all or
substantially all of the assets of the Corporation, or similar transaction
in which the Corporation is not the surviving entity.
SECTION 7. INCENTIVE STOCK OPTIONS
7.1 GRANT OF INCENTIVE STOCK OPTION.
The Board of Directors may, from time to time, grant Incentive Stock Options to
eligible employees. Incentive Stock Options granted pursuant to the Plan shall
be subject to the following terms and conditions:
(a) PRICE. The purchase price per share of Common Stock deliverable upon the
exercise of each Incentive Stock Option shall be not less than one hundred
percent (100%) of the Fair Market Value of the Common Stock on the date of
grant. However, if a Participant owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of Common
Stock, the purchase price per share of Common Stock deliverable upon the
exercise of each Incentive Stock Option shall not be less than one hundred
ten percent (110%) of the Fair Market Value of the Common Stock on the date
of grant. Shares may be purchased only upon payment of the full purchase
price. Payment of the purchase price may be made, in whole or in part,
through the surrender of shares of the Common Stock at the Fair Market
Value of such shares on the date of surrender.
(b) AMOUNTS OF OPTIONS. Incentive Stock Options may be granted to any eligible
employee in such amounts as determined by the Board of Directors. In the
case of an option intended to qualify as an Incentive Stock Option, the
aggregate Fair Market Value (determined as of the time the option is
granted) of the Common Stock with respect to which Incentive Stock Options
granted are exercisable for the first time by the Participant during any
calendar year shall not exceed $100,000. The provisions of this Section
7.1(b) shall be construed and applied in accordance with Section 422(d) of
the Code and the regulations, if any, promulgated thereunder. To the extent
an award is in excess of such limit, it shall be deemed a Non-Qualified
Stock Option. The Board shall have discretion to redesignate options
granted as Incentive Stock Options as Non-Qualified options.
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<PAGE>
(c) TERMS OF OPTIONS. The term during which each Incentive Stock Option may be
exercised shall be determined by the Board of Directors, but in no event
shall an Incentive Stock Option be exercisable in whole or in part more
than ten (10) years from the date of grant. If at the time an Incentive
Stock Option is granted to an employee, the employee owns Common Stock
representing more than ten percent (10%) of the total combined voting power
of the Corporation (or, under Section 422(d) of the Code, is deemed to own
Common Stock representing more than ten percent (10%) of the total combined
voting power of all such classes of Common Stock, by reason of the
ownership of such classes of Common Stock, directly or indirectly, by or
for any brother, sister, spouse, ancestor or lineal descendent of such
employee, or by or for any corporation, partnership, estate or trust of
which such employee is a shareholder, partner or beneficiary), the
Incentive Stock Option granted to such employee shall not be exercisable
after the expiration of five years from the date of grant. No Incentive
Stock Option granted under this Plan is transferable except by will or the
laws of descent and distribution.
(d) TERMINATION OF EMPLOYMENT. Except as provided in Section 7.1(e) hereof,
upon the termination of a Participant's service for any reason other than
Disability, death or Termination for Cause, the Participant's Incentive
Stock Options which are then exercisable at the date of termination may
only be exercised by the Participant for a period of three months following
termination, after which time they shall be void. Notwithstanding any
provisions set forth herein nor contained in any Agreement relating to an
award of an Option, in the event of Termination for Cause all rights under
the Participant's Incentive Stock Options shall expire immediately upon
termination.
Unless otherwise determined by the Board of Directors, in the event of
death or termination of service as a result of Disability of any
Participant, all Incentive Stock Options held by such Participant, whether
or not exercisable at such time, shall be exercisable by the Participant or
the Participant's legal representatives or the beneficiaries of the
Participant for one year following the date of the Participant's death or
termination of employment as a result of Disability. In no event shall the
exercise period extend beyond the expiration of the Incentive Stock Option
term.
(e) EXCEPTIONS FOR RETIREMENT.
(i) Notwithstanding the general rule contained in Section 7.1(d) above, all
options held by a Participant whose employment with the Corporation
terminates due to Retirement may be exercised for the lesser of (i) the
remaining term of the option or (ii) twelve (12) months. Any Incentive
Stock Option exercised more than three (3) months after a Participant's
Retirement will be treated as a Non-Qualified Stock Option.
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(ii) Notwithstanding the general rule contained in Section 7.1(d) above, in
the event a Participant's employment with the Corporation terminates as
a result of a Change in Control of the Corporation (as defined in
Section 6.1(e)) hereunder, a Participant may continue to exercise any
Options then held, regardless of their remaining term, for a period of
12 months after the date of such Change in Control. To the extent that
this provision would permit any Incentive Stock Option to be exercised
more than three months after a Participant's cessation of employment,
such Options shall be treated as a Non-Qualified Stock Option
hereunder.
(f) COMPLIANCE WITH CODE. The options granted under this Section 7 of the Plan
are intended to qualify as incentive stock options within the meaning of
Section 422 of the Code, but the Corporation makes no warranty as to the
qualification of any option as an incentive stock option within the meaning
of Section 422 of the Code. A Participant shall notify the Board in writing
in the event that he disposes of Common Stock acquired upon exercise of an
Incentive Stock Option within the two-year period following the date the
Incentive Stock Option was granted or within the one-year period following
the date he received Common Stock upon the exercise of an Incentive Stock
Option and shall comply with any other requirements imposed by the
Corporation in order to enable the Corporation to secure the related income
tax deduction to which it will be entitled in such event under the Code.
SECTION 8. EXTENSION
The Board of Directors may, in its sole discretion, extend the dates during
which all or any particular Option or Options granted under the Plan may be
exercised; provided, however, that no such extension shall be permitted if it
would cause Incentive Stock Options issued under the Plan to fail to comply with
Section 422 of the Code.
SECTION 9. GENERAL PROVISIONS APPLICABLE TO OPTIONS
(a) Each Option under the Plan shall be evidenced by a writing delivered to the
Participant specifying the terms and conditions thereof and containing such
other terms and conditions not inconsistent with the provisions of the Plan
as the Board of Directors considers necessary or advisable to achieve the
purposes of the Plan or comply with applicable tax and regulatory laws and
accounting principles.
(b) Each Option may be granted alone, in addition to or in relation to any
other Option. The terms of each Option need not be identical, and the Board
of Directors need not treat Participants uniformly. Except as
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otherwise provided by the Plan or a particular Option, any determination
with respect to an Option may be made by the Board at the time of grant or
at any time thereafter.
(c) In the event of a consolidation, reorganization, merger or sale of all or
substantially all of the assets of the Corporation in each case in which
outstanding shares of Common Stock are exchanged for securities, cash or
other property of any other corporation or business entity or in the event
of a liquidation of the Corporation, the Board of Directors may, in its
discretion, provide for any one or more of the following actions, as to
outstanding options: (i) provide that such options shall be assumed, or
equivalent options shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), provided that any such options
substituted for Incentive Stock Options shall meet the requirements of
Section 424(a) of the Code, (ii) upon written notice to the Participants,
provide that all unexercised options will terminate immediately prior to
the consummation of such transaction unless exercised (to the extent then
exercisable) by the Participant within a specified period following the
date of such notice, (iii) in the event of a merger under the terms of
which holders of the Common Stock of the Corporation will receive upon
consummation thereof a cash payment for each share surrendered in the
merger (the "Merger Price"), make or provide for a cash payment to the
Participants equal to the difference between (A) the Merger Price times the
number of shares of Common Stock subject to such outstanding Options (to
the extent then exercisable at prices not in excess of the Merger Price)
and (B) the aggregate exercise price of all such outstanding Options in
exchange for the termination of such Options, and (iv) provide that all or
any outstanding Options shall become exercisable in full immediately prior
to such event.
(d) The Participant shall pay to the Corporation, or make provision
satisfactory to the Board of Directors for payment of, any taxes required
by law to be withheld in respect of Options under the Plan no later than
the date of the event creating the tax liability. In the Board's sole
discretion, a Participant (other than a Participant subject to Section 16
of the Act (a "Section 16 Participant"), who shall be subject to the
following sentence) may elect to have such tax obligations paid, in whole
or in part, in shares of Common Stock, including shares retained from the
Option creating the tax obligation. With respect to Section 16
Participants, upon the issuance of shares of Common Stock in respect of an
Option, such number of shares issuable shall be reduced by the number of
shares necessary to satisfy such Section 16 Participant's federal, and
where applicable, state withholding tax obligations. For withholding tax
purposes, the value of the shares of Common Stock shall be the Fair
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Market Value on the date the withholding obligation is incurred. The
Corporation may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to the Participant.
(e) For purposes of the Plan, the following events shall not be deemed a
termination of employment of a Participant:
(i) a transfer to the employment of the Corporation from a subsidiary or
from the Corporation to a subsidiary, or from one subsidiary to
another, or
(ii) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Corporation, if the Participant's
right to reemployment is guaranteed either by a statute or by contract
or under the policy pursuant to which the leave of absence was granted
or if the Board of Directors otherwise so provides in writing.
(f) The Board of Directors may at any time, and from time to time, amend,
modify or terminate the Plan or any outstanding Option held by a
Participant, including substituting therefor another Option of the same or
a different type or changing the date of exercise or realization, provided
that the Participant's consent to each action shall be required unless the
Board of Directors determines that the action, taking into account any
related action, would not materially and adversely affect the Participant.
SECTION 10. MISCELLANEOUS
(a) No person shall have any claim or right to be granted an Option, and the
grant of an Option shall not be construed as giving a Participant the right
to continued employment or service on the Corporation's Board of Directors.
The Corporation expressly reserves the right at any time to dismiss a
Participant free from any liability or claim under the Plan, except as
expressly provided in the applicable Option.
(b) Nothing contained in the Plan shall prevent the Corporation from adopting
other or additional compensation arrangements.
(c) Subject to the provisions of the applicable Option, no Participant shall
have any rights as a shareholder (including, without limitation, any rights
to receive dividends, or non cash distributions with respect to such
shares) with respect to any shares of Common Stock to be distributed under
the Plan until he or she becomes the holder thereof.
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<PAGE>
(d) Notwithstanding anything to the contrary expressed in this Plan, any
provisions hereof that vary from or conflict with any applicable Federal or
State securities laws (including any regulations promulgated thereunder)
shall be deemed to be modified to conform to and comply with such laws.
(e) No member of the Board of Directors shall be liable for any action or
determination taken or granted in good faith with respect to this Plan nor
shall any member of the Board of Directors be liable for any agreement
issued pursuant to this Plan or any grants under it. Each member of the
Board of Directors shall be indemnified by the Corporation against any
losses incurred in such administration of the Plan, unless his action
constitutes serious and willful misconduct.
(f) Subject to the approval of the shareholders of the Corporation, the Plan
shall be effective on the date of such approval. Prior to such approval,
Options may be granted under the Plan expressly subject to shareholder
approval.
(g) The Board may amend, suspend or terminate the Plan or any portion thereof
at any time, provided that no amendment shall be granted without
shareholder approval if such approval is necessary to comply with any
applicable tax laws or regulatory requirement.
(h) Options may not be granted under the Plan after January 1, 2008, but then
outstanding Options may extend beyond such date.
(i) To the extent that State laws shall not have been preempted by any laws of
the United States, the Plan shall be construed, regulated, interpreted and
administered according to the other laws of the State of New Jersey.
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<PAGE>
UNITY BANCORP, INC.
P REVOCABLE PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
R
O APRIL 24, 1998
X
Y SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the Board of Directors of Unity
Bancorp, Inc. (the "Company"), to vote all of the shares of the
Company standing in the undersigned's name at the Annual Meeting of
Shareholders of the Company, to be held at the main office of First
Community Bank (the "Bank"), 64 Old Highway 22, Clinton, New Jersey,
Friday, April 24, 1998, at 3:30 P.M., and at any adjournment thereof.
The undersigned hereby revokes any and all proxies heretofore given
with respect to such meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED BELOW. IF NO CHOICE IS
SPECIFIED, THE PROXY WILL BE VOTED "FOR" MANAGEMENT'S NOMINEES TO THE
BOARD OF DIRECTORS.
The Board of Directors recommends a vote for each of these proposals.
COMMON STOCK -----------
SEE REVERSE
SIDE
-----------
(This proxy is continued from the reverse side)
PLEASE MARK YOUR
[X] VOTES AS IN THIS 9394
EXAMPLE.
1. Election of the following nominee to serve on the Board of Directors for a
term of three (3) years and until his successor is elected and duly
qualified: John Tremblay
FOR WITHHOLD AUTHORITY
|_| |_|
2. Approval of the Unity Bancorp, Inc. 1998 Stock Option Plan, as described in
the accompanying Proxy Statement.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. In their discretion, such other business as may properly come before the
meeting.
Dated: _________________________, 1998
______________________________________
Signature
______________________________________
Signature
(Please sign exactly as your name
appears. When signing as an executor,
administrator, guardian, trustee or
attorney, please give your title as
such. If signer is a corporation,
please sign the full corporate name
and then an authorized officer should
sign his name and print his name and
title below his signature. If the
shares are held in joint name, all
joint owners should sign.)
PLEASE DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE.
