UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
(MARK ONE)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
----------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____to ____
Commission file number 1-12431
UNITY BANCORP, INC.
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(NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
Delaware 22-3282551
--------------------------------- --------------------
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
64 Old Highway 22, Clinton, NJ 08809
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE (908) 730-7630
--------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE EXCHANGE ACT: None.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT:
Title of each class: Common Stock, No Par Value
Indicate by check mark whether the Issuer: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-B is not contained herein, and will not be contained, to the
best of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. (X)
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS; COMPLIANCE WITH SECTION 16(A) OF
THE EXCHANGE ACT
The following table sets forth the names of the directors and their ages, a
brief description of their recent business experience, including present
occupations and employment, certain directorships held by each and the year in
which each became a director of the Company.
<TABLE>
<CAPTION>
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NAME, AGE AND POSITION WITH PRINCIPAL OCCUPATION DURING PAST FIVE DIRECTOR
COMPANY(1) YEARS SINCE(2)
------------------------------------------------------------------------------------------------
<S> <C> <C>
Robert J. Van Volkenburgh, 57, Chairman of the Board and Chief Executive 1990
Chairman of the Board and Chief Officer of the Company; Chairman of the
Executive Officer Board of the Bank; Chief
Executive Officer of Total Packaging
Corporation and Best Packaging & Design
Corp.
------------------------------------------------------------------------------------------------
Charles S. Loring, 58, Director Owner, Charles S. Loring, CPA (Accountants) 1990
------------------------------------------------------------------------------------------------
David D. Dallas, 45 Vice Chairman and Corporate Secretary of 1990
Vice Chairman and the Company; Vice Chairman of the Bank;
Corporate Secretary Chief Executive Officer of Dallas Group of
America (Chemicals)
------------------------------------------------------------------------------------------------
Peter P. De Tommaso, 74 Retired President Home Owners Heaven, Inc. 1991
Director (Hardware and Lumber Retail)
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</TABLE>
(1) Each director of the Company is also a director of Unity Bank (the "Bank").
(2) Includes prior service on Board of Directors of Bank
The following table sets forth certain information about each executive
officer of the Company who is not also a director.
<TABLE>
<CAPTION>
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PRINCIPAL OCCUPATION DURING
NAME, AGE AND POSITION PAST FIVE YEARS OFFICER SINCE
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Kevin J. Killian, 43, Chief Financial Officer of the Company and 1998
Chief Financial Officer of the Executive Vice President of the Bank.
Company Previously, Mr. Killian was President of
United Heritage Bank and Chief Financial
Officer of Independence Bancorp.
-----------------------------------------------------------------------------------------------------
Anthony J. Feraro, 52, Senior Vice Executive Vice President of Zion Bancorp 1999
President and Chief Operating
Officer of the Company
=====================================================================================================
</TABLE>
<PAGE>
Based solely on its review of copies of such forms received by it, or
written representation from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the fiscal year
ended December 31, 1999, all filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were met.
ITEM 11. 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 $100,000 for the last fiscal year.
<TABLE>
<CAPTION>
==========================================================================================================================
ANNUAL COMPENSATION LONG-TERM
COMPENSATION
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NAME AND PRINCIPAL SALARY BONUS OTHER AWARDS
POSITION YEAR ($) ($) ANNUAL ---------------------------
COMPEN- RESTRICTED SECURITIES
SATION($)(1) STOCK UNDERLYING
AWARD(S) ($) OPTIONS/
SARS (#)
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999 280,000 114,718(3) 6,450 0 --
Robert J. Van Volkenburgh, ---------------------------------------------------------------------------------------------
Chairman and Chief 1998 125,000(2) 124,658(4) 6,150 0 94,763
Executive Officer ---------------------------------------------------------------------------------------------
1997 100,000(2) 60,188(5) 7,800 0 14,175
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1999 100,000(6) 76,490(7) 6,300 0 --
David D. Dallas, ---------------------------------------------------------------------------------------------
Vice Chairman and 1998 62,500(6) 85,693(8) 6,150 0 41,475
Corporate Secretary ---------------------------------------------------------------------------------------------
1997 50,000(6) 36,781(9) 8,400 0 9,450
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Anthony J. Feraro, Chief
Operating Officer and 1999 33,065(10) -- -- 0 --
Executive Vice President
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Kevin J. Killian, 1999 112,121 2,440(11) -- 0 5,000
Chief Financial Officer ---------------------------------------------------------------------------------------------
and Executive Vice 1998 41,735(12) -- -- 0 8,925
President
==========================================================================================================================
</TABLE>
(1) Other annual compensation includes director fees, insurance premiums and
the personal use of Bank automobiles.
(2) Consists of Mr. Van Volkenburgh's annual retainer as Chairman of the Board.
(3) This bonus represents the value of 10,713 shares issued to Mr. Van
Volkenburgh under the Company's 1997 Stock Bonus Plan.
<PAGE>
(4) This bonus represents the value of 9,450 shares issued to Mr. Van
Volkenburgh under the Company's 1997 Stock Bonus Plan.
(5) This bonus represents the value of 4,500 shares issued to Mr. Van
Volkenburgh under the Company's 1997 Stock Bonus Plan.
(6) Consists of Mr. Dallas's annual retainer as Vice Chairman.
(7) This bonus represents the value of 7,143 shares issued to Mr. Dallas under
the Company's 1997 Stock Bonus Plan.
(8) This bonus represents the value of 6,496 shares issued to Mr. Dallas under
the Company's 1997 Stock Bonus Plan.
(9) This bonus represents the value of 4,331 shares issued to Mr. Dallas under
the Company's 1997 Stock Bonus Plan.
(10) Mr. Feraro was hired in as the Company's Chief Operating Officer and
Executive Vice President in November 1999. Pursuant to Mr. Feraro's
employment agreement, he is to receive an annual salary of $250,000,
subject to increase, as well as certain bonus payments. See "Employment
Agreements."
(11) This bonus represents the value of 227 shares issued to Mr. Killian under
the Company's 1994 Stock Bonus Plan.
(12) Mr. Killian was hired as the Company's Chief Financial Officer in July
1998.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Mr. Van
Volkenburgh to serve as the Company's Chairman and Chief Executive Officer. Mr.
Van Volkenburgh's agreement provides for a three-year term, automatically
renewable on each anniversary date for an additional one year period unless,
ninety days prior to such anniversary date, either party provides written notice
of its intention not to renew. The employment agreement provides that Mr. Van
Volkenburgh will receive an annual base salary, to be reviewed annually by the
Board of Directors. Mr. Van Volkenburgh's initial salary under the agreement is
$280,000, plus an annual bonus as determined by the Board of Directors. The
agreement permits the Company to terminate Mr. Van Volkenburgh's employment for
"cause" at any time. The agreement defines "cause" to mean personal dishonesty,
incompetence, wilful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, wilful violation of any
law, rule or regulation (other than traffic violations or similar offenses),
final cease and desist order, or material breach of any provision of the
agreement and any of which cause a material adverse impact upon the Company. In
the event Mr. Van Volkenburgh is terminated for any reason other than cause, or
in the event Mr. Van Volkenburgh resigns his employment because
a) he is reassigned to a position of lesser rank or status than Chairman
of the Board and Chief Executive Officer; or
b) his place of employment is relocated by more than thirty miles from
its location as of the date of the employment agreement or his
compensation or other benefits are reduced; then
Mr. Van Volkenburgh or, in the event of death, his beneficiary will be entitled
to severance pay in an amount equal to thirty-six (36) months of Mr. Van
Volkenburgh's then current base salary. Mr. Van Volkenburgh's agreement further
provides that upon the occurrence of a change in control, as defined in the
agreement, Mr. Van Volkenburgh will be entitled to receive his then current base
salary for a period of thirty-six (36) months, grossed-up for the tax impact.
The employment agreement also prohibits Mr. Van Volkenburgh from competing with
the Company for a period of one year following the termination of his
employment.
On October 18, 1999, the Bank entered into an employment agreement with
Mr. Anthony J. Feraro to serve as Executive Vice President and Chief Operating
Officer of the Bank. Mr. Feraro's agreement provides for a two-year term,
automatically renewable on each anniversary date for an additional one-year
period unless, 90 days prior to such anniversary date, either party provides
written notice of its intention not to renew. The employment agreement provides
that Mr. Feraro will receive an annual base salary, to be reviewed annually by
the Board of Directors. Mr. Feraro's initial salary under the agreement is
$250,000, plus an override commission equal to 25 basis points of the guaranteed
portion of all small business administration loans originated by the Bank after
<PAGE>
January 1, 2000 up to a maximum commission of $75,000 per year. Mr. Feraro shall
also be entitled to a performance bonus based upon mutually acceptable
performance criteria in the year 2000 in the amount of up to $125,000. The
agreement permits the Company to terminate Mr. Feraro's employment for cause at
any time. The agreement defines cause to mean personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule
or regulation or final cease and desist order for material breach of any
provision of this agreement. In the event that Mr. Feraro is terminated for any
reason other than cause during the first year of the agreement, Mr. Feraro shall
be entitled to receive his then-current base salary for 12 months. If such
termination occurs during the second year of his employment, Mr. Feraro shall be
entitled to receive his then-current base salary, pro rated, for a period of
nine months. Thereafter, if Mr. Feraro's employment is terminated without cause,
Mr. Feraro will be entitled to receive his then-current base salary, pro rated,
for a period of three months. Mr. Feraro has the right to terminate his
employment upon the occurrence of a change in control and shall be entitled to
receive a lump sum payment equal to his then-current base salary. The employment
agreement also prohibits Mr. Feraro from competing with the Bank for a period of
one year following the termination of his employment.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS
The Company maintains a supplemental executive retirement plan for Mr.
Van Volkenburgh. Under this plan, Mr. Van Volkenburgh will receive a retirement
benefit equal to 60% of his average final compensation determined by his last
three years of employment. In certain circumstances, such as in a change in
control, Mr. Van Volkenburgh will be paid 60% of his "final scheduled
compensation", which is calculated by taking his then current compensation and
increasing it five percent (5%) per year for each year remaining until Mr. Van
Volkenburgh reaches age 65. In this case, Mr. Van Volkenburgh will also receive
a tax allowance. Annual retirement payments are to be made for 20 years under
the supplemental executive retirement plan.
STOCK BENEFIT PLANS FOR EMPLOYEES
The Company maintains the Company's 1994 Incentive Stock Option Plan
(the "Employee Plan") under which 591 shares of common stock are currently
reserved for issuance, subject to adjustments as set forth therein. The
Company's officers and other key employees (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 the 1994 Stock Bonus Plan, under which 25,548
shares of common stock are currently reserved for issuance. The Company's
officers and other key employees of the bank and any other subsidiaries which
the Company may acquire or incorporate may participate in the Stock Bonus Plan.
The Company's Board of Directors administers and supervises the Stock Bonus
Plan. The Board has the authority to determine the key employees or directors
who will receive awards under the Plan and the number of shares awarded to each
recipient.
In addition, officers and employees are eligible to participate in both
the 1997, 1998 and 1999 Stock Option Plans and the 1997 Stock Bonus Plan
discussed under the heading "Compensation of Directors."
The following table provides certain information concerning option
grants in 1999:
<PAGE>
<TABLE>
<CAPTION>
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INDIVIDUAL GRANTS
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NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR PRESENT VALUE OF
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION GRANT ON DATE
GRANTED (#)(1) FISCAL YEAR ($/SH) DATE ($)(2)
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<S> <C> <C> <C> <C> <C>
Kevin Killian 5,000 3.49 10.00 2009 $36,450
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</TABLE>
(1) These options are not exercisable until the fifth anniversary of the
date of grant.
(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 0.0%; expected
volatility of 90.0%; risk-free interest rate of 5.75%; and expected
lives of 3 years and 8 months.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth, as of March 31, 2000, 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, (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.
<TABLE>
<CAPTION>
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NAME AND POSITION NUMBER OF SHARES PERCENT
WITH COMPANY BENEFICIALLY OWNED (1) OF CLASS
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
David D. Dallas, Vice Chairman and Corporate Secretary 507,123(2) 12.68%
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Peter P. DeTommaso, Director 190,108(3) 4.90%
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Anthony J. Feraro, Executive Vice President and Chief
Operating Officer of the Bank 15,500(4) 0.40%
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Kevin Killian, Executive Vice President, Chief Financial
Officer 32,627(5) 0.84%
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Charles S. Loring, Director 133,266(6) 3.43%
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Robert J. Van Volkenburgh, Director and Chief Executive
Officer 736,739(7) 18.11%
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Directors and Executive Officers of the Company as a Group
(6 persons) 1,615,363(8) 37.66%
===================================================================================================================
5% Shareholders:
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Robert Dallas, Director of the Bank 455,495(9) 11.47%
===================================================================================================================
</TABLE>
<PAGE>
(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 60,769 shares issuable upon the exercise of immediately
exercisable options held by Mr. Dallas and 6,900 shares issuable upon the
conversion of preferred shares. Also includes 6,743 shares held by Jessica
Lynn Dallas and 6,743 shares held by David Tyler Dallas, Mr. Dallas' minor
children. Shares also disclosed as beneficially owned by Mr. Dallas
include 35,147 shares held by Dallas Group of America, Inc. Employees'
Profit Sharing Trust, 101,295 shares held by Dallas Group of America,
Inc., 105,478 shares and 69,000 shares issuable upon the conversion of
preferred shares held by Dallas Financial Holdings, LLC and 28,666 shares
held by Trenton Liberty Ins. Co. These shares are also disclosed as
beneficially owned by Mr. Robert Dallas.
(3) Includes 163,210 shares owned jointly with Mr. DeTommaso's spouse. Also
includes 12,412 shares issuable upon the exercise of immediately
exercisable options and 9,660 shares issuable upon conversion of preferred
shares.
(4) Includes 100 shares held by Mr. Feraro's spouse in her own name. Also
includes 13,800 shares issuable upon conversion of preferred shares.
(5) Includes 23,925 shares issuable upon the exercise of immediately
exercisable options held by Mr. Killian and 6,900 shares issuable upon
conversion of preferred shares.
(6) Includes 9,898 shares held by Mr. Loring's spouse in her own name, 21,600
shares owned jointly with his spouse, and 12,048 shares held by The Loring
Partnership. Mr. Loring disclaims beneficial ownership of the shares held
by his spouse. Also includes 11,278 shares purchasable upon the exercise
of immediately exercisable options and 6,900 shares issuable upon
conversion of preferred shares.
(7) Includes 108,064 shares held by Mr. Van Volkenburgh's spouse in her own
name, 19,499 shares owned jointly by Mr. Van Volkenburgh and his spouse,
33,882 shares and 31, 887 shares held by Total Packaging Corporation and
Best Packaging & Design Corp., respectively, corporations owned by Mr. Van
Volkenburgh, and 29,531 shares held in a brokerage account for the benefit
of Mr. Van Volkenburgh. Also includes 123,704 shares issuable upon
exercise of immediately exercisable options and 82,800 shares issuable
upon conversion of preferred shares. Mr. Van Volkenburgh disclaims
beneficial ownership of the shares held by his spouse in her own name.
Also includes 6,890 shares held by RJV Capital Management LLC, a limited
liability company owned by Mr. Van Volkenburgh.
(8) Includes 232,088 shares issuable upon the exercise of immediately
exercisable options and 195,960 shares issuable upon conversion of
preferred shares.
(9) Includes 6,587 shares held by Mr. Dallas' son, 35,176 shares issuable upon
the exercise of immediately exercisable options held by Mr. Dallas and
6,900 shares issuable upon the conversion of preferred shares. Also
disclosed as beneficially owned by Mr. Dallas are 35,147 shares held by
Dallas Group of America, Inc. Employees' Profit Sharing Trust, 101,295
shares held by Dallas Group of America, Inc., 105,478 shares and 69,000
shares issuable upon the conversion of preferred shares held by Dallas
Financial Holdings, LLC and 28,666 shares held by Trenton Liberty Ins. Co.
These shares are also disclosed as beneficially owned by Mr. David Dallas.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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 1999 rental
payments of $496,813. 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. The
annual base rent will increase by the higher of the Urban Consumer Price Index
or 3% annually. In addition, the Company intends to lease additional space in
its headquarters facility. The Company anticipates that the additional rental
payments for this additional space will be comparable to rents which could have
been obtained in comparable leases with unaffiliated third parties.
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
10. Employment Agreement dated April 1, 1999 by and among Robert J. Van
Volkenburgh and Unity Bancorp, Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, hereunto duly authorized.
UNITY BANCORP, INC.
Dated: June 8, 2000 By:/s/ Robert J. Van Volkenburgh
--------------------------
ROBERT J. VAN VOLKENBURGH,
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
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NAME TITLE DATE
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<S> <C> <C>
/s/ Robert J. Van Volkenburgh Chairman of the Board and Chief June 8, 2000
--------------------------------- Executive Officer
Robert J. Van Volkenburgh
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/s/ Kevin J. Killian Chief Financial Officer (Principal June 8, 2000
--------------------------------- Financial and Accounting Officer)
Kevin J. Killian
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/s/ David D. Dallas Vice Chairman and Corporate June 8, 2000
--------------------------------- Secretary
David D. Dallas
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/s/ Charles S. Loring Director June 8, 2000
---------------------------------
Charles S. Loring
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/s/ Peter P. DeTommaso Director June 8, 2000
---------------------------------
Peter P. DeTommaso
===================================================================================================================
</TABLE>
