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
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12
DS BANCOR, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
DS BANCOR, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(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:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
[LOGO]
DS BANCOR, INC.
33 ELIZABETH STREET
DERBY, CONNECTICUT 06418
March 30, 1994
Dear Shareholder:
You are cordially invited to attend the 1994 annual meeting of shareholders
(the "Annual Meeting") of DS Bancor, Inc. (the "Corporation") to be held on
Wednesday, April 27, 1994, at 10:00 a.m., local time, at the Trumbull Marriott,
180 Hawley Lane, Trumbull, Connecticut.
The Annual Meeting has been called for the following purposes: (1) to elect
three directors for terms of three years each; (2) to consider and vote upon the
Corporation's 1994 stock option plan; (3) to ratify the appointment by the
Corporation's board of directors of the firm of Friedberg, Smith & Co., P.C. as
independent public accountants of the Corporation for the year ending December
31, 1994; and (4) to transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
It is important that your shares be represented at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, you are requested to
complete, date, sign and return the enclosed proxy card in the enclosed envelope
for which postage has been paid.
Very truly yours,
HARRY P. DIADAMO, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
[LOGO]
DS BANCOR, INC.
33 ELIZABETH STREET
DERBY, CONNECTICUT 06418
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 1994
-------------------
NOTICE IS HEREBY GIVEN that the 1994 annual meeting of shareholders (the
"Annual Meeting") of DS Bancor, Inc. (the "Corporation") will be held at the
Trumbull Marriott, 180 Hawley Lane, Trumbull, Connecticut, on Wednesday, April
27, 1994, at 10:00 a.m., local time, for the following purposes:
1. To elect three directors for terms of three years each (Proposal 1);
2. To approve the Company's 1994 stock option plan (Proposal 2);
3. To ratify the appointment by the Corporation's board of directors of
the firm of Friedberg, Smith & Co., P.C. as independent public accountants
of the Corporation for the year ending December 31, 1994 (Proposal 3); and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Pursuant to the Corporation's bylaws, the board of directors of the
Corporation has fixed the close of business on March 18, 1994 as the record date
for the determination of shareholders entitled to notice of and to vote at the
Annual Meeting. Only record holders of Corporation common stock at the close of
business on that date are entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof.
In the event that there are not sufficient votes to approve any one or more
of the foregoing proposals at the time of the Annual Meeting, the Annual Meeting
may be adjourned in order to permit further solicitation by the Corporation.
By Order of the Board of Directors
HARRY P. DIADAMO, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Derby, Connecticut
March 30, 1994
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
[LOGO]
DS BANCOR, INC.
33 ELIZABETH STREET
DERBY, CONNECTICUT 06418
(203) 736-9921
-------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 1994
-------------------
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This proxy statement is furnished to shareholders of DS Bancor, Inc.
("Bancor" or the "Corporation") in connection with the solicitation by the board
of directors of Bancor of proxies for use at the annual meeting of shareholders
(the "Annual Meeting") to be held on Wednesday, April 27, 1994, at 10:00 a.m.,
local time, at the Trumbull Marriott, 180 Hawley Lane, Trumbull, Connecticut,
and at any adjournments thereof.
If the enclosed form of proxy is properly executed and returned to Bancor in
time to be voted at the Annual Meeting, the shares represented thereby will be
voted in accordance with the instructions marked thereon. EXECUTED BUT UNMARKED
PROXIES WILL BE VOTED (1) FOR PROPOSAL 1 TO ELECT THE THREE NOMINEES OF THE
BOARD OF DIRECTORS AS DIRECTORS OF BANCOR; (2) FOR PROPOSAL 2 TO APPROVE THE
COMPANY'S 1994 STOCK OPTION PLAN; AND (3) FOR PROPOSAL 3 TO RATIFY THE
APPOINTMENT OF FRIEDBERG, SMITH & CO., P.C. AS INDEPENDENT PUBLIC ACCOUNTANTS OF
THE CORPORATION FOR THE YEAR ENDING DECEMBER 31, 1994. The Corporation is not
aware of any other matters that are proposed to be presented at the Annual
Meeting. However, if further business is properly presented, the persons named
in the accompanying proxy will vote such proxy as determined by a majority of
the board of directors.
The presence of a shareholder at the Annual Meeting will not automatically
revoke the shareholder's proxy. Shareholders may, however, revoke a proxy at any
time prior to its exercise by filing with the Secretary of the Corporation or
the presiding officer at the Annual Meeting a written notice of revocation, by
delivering to the Secretary of the Corporation or the presiding officer at the
Annual Meeting a duly executed proxy bearing a later date or by attending the
Annual Meeting and voting in person.
The cost of soliciting proxies will be borne by the Corporation. In addition
to use of the mails, proxies may be solicited personally or by telephone or
telegraph by officers, directors and employees of the Corporation or Derby
Savings Bank (the "Bank" or "Derby Savings") who will not be specially
compensated for such solicitation activities. Arrangements will also be made
with brokerage houses and other custodians, nominees and fiduciaries for
forwarding solicitation materials to the beneficial owners of shares held of
record by such persons, and the Corporation will reimburse such persons for
their reasonable expenses incurred in that connection. The Corporation has also
retained Kissell-Blake Inc., a proxy soliciting firm, to assist in the
solicitation of proxies at a fee of $4,000 plus reimbursement of out-of-pocket
expenses. This Proxy Statement, together with the enclosed proxy card, is
initially being mailed to shareholders on or about March 30, 1994.
1
The securities which can be voted at the Annual Meeting consist of shares of
common stock, par value $1.00 per share, of Bancor, with each share entitling
its holder to one vote on all matters, without any right to cumulative voting in
the election of directors. The close of business on March 18, 1994 has been
fixed by the board of directors as the record date for determination of
shareholders entitled to notice of, and to vote at, the Annual Meeting. On the
record date, 2,651,616 shares of Bancor common stock were outstanding and
eligible to be voted at the Annual Meeting.
The presence, in person or by proxy, of at least one-third of the total
number of outstanding shares of Bancor common stock entitled to vote is
necessary to constitute a quorum at the Annual Meeting. Assuming the presence of
a quorum at the Annual Meeting, directors will be elected by a plurality of the
votes of the shares of Bancor common stock present in person or represented by
proxy and entitled to vote, the affirmative votes of the holders of a majority
of the shares present, or represented, and entitled to vote at the Annual
Meeting is required to approve the 1994 stock option plan, and the affirmative
vote of a majority of the votes cast is required to ratify the appointment of
the Corporation's independent public accountants. Shareholders' votes will be
tabulated by the persons appointed by the board of directors to act as
inspectors of election for the Annual Meeting. Abstentions and broker non-votes
will be treated as shares that are present, or represented, and entitled to vote
for purposes of determining the presence of a quorum at the Annual Meeting.
Broker non-votes will not be counted as a vote cast or entitled to vote on any
matter presented at the Annual Meeting. Abstentions will not be counted in
determining the number of votes cast in connection with the ratification of the
appointment of independent public accountants. However, abstentions will have
the same effect as a negative vote on Proposal 2 because approval by a majority
of the shares represented in person or by proxy at the Annual Meeting and
entitled to vote is required for approval of Proposal 2.
A copy of the annual report to shareholders for the year ended December 31,
1993 accompanies this proxy statement. THE CORPORATION IS REQUIRED TO FILE AN
ANNUAL REPORT ON FORM 10-K FOR ITS FISCAL YEAR ENDED DECEMBER 31, 1993 WITH THE
SECURITIES AND EXCHANGE COMMISSION. SHAREHOLDERS MAY OBTAIN, FREE OF CHARGE, A
COPY OF SUCH ANNUAL REPORT ON FORM 10-K (WITHOUT EXHIBITS) BY WRITING TO MR.
JOHN F. COSTIGAN, DS BANCOR, INC., 33 ELIZABETH STREET, DERBY, CONNECTICUT
06418.
STOCK OWNED BY MANAGEMENT
The following table sets forth information as of March 18, 1994 with respect
to the amount of Bancor's common stock beneficially owned by each director of
Bancor, Bancor's Chief Executive Officer and the other most highly compensated
executive officers of Bancor and by all the directors and executive officers of
Bancor as a group.
NAME AND POSITIONS AMOUNT AND NATURE OF PERCENT OF STOCK
WITH THE CORPORATION BENEFICIAL OWNERSHIP (A) OUTSTANDING
- ---------------------------------------- ------------------------ ------------------
Achille A. Apicella (b)................. 7,225 *
Director
Walter R. Archer, Jr. (b)............... 34,049 1.28%
Director
John J. Brennan (b)(c).................. 4,626 *
Director
John F. Costigan (d).................... 49,755 1.85
Director, Executive Vice
President and Secretary
Michael F. Daddona, Jr. (e)............. 318,439 12.01
Chairman of the Board
Harry P. DiAdamo, Jr. (f)............... 94,206 3.45
Director, President and Chief
Executive Officer
2
NAME AND POSITIONS AMOUNT AND NATURE OF PERCENT OF STOCK
WITH THE CORPORATION BENEFICIAL OWNERSHIP (A) OUTSTANDING
- ---------------------------------------- ------------------------ ------------------
Angelo E. Dirienzo (g).................. 2,805 *
Director
Laura J. Donahue (b).................... 8,732 *
Director
Christopher H.B. Mills (h).............. 106,507 4.01
Director
John M. Rak (i)......................... 3,074 *
Director
John P. Sponheimer (j).................. 49,495 1.87
Director
Alfred T. Santoro....................... 43,527 1.62
Vice President and Chief
Financial Officer (k)
Thomas H. Wells......................... 34,066 1.27
Senior Vice President
of Derby Savings Bank (l)
Directors and executive officers as a
group
(13 persons)........................... 756,506 26.52%
<FN>
- ---------
* Less than one percent.
(a) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, a person is deemed to be the beneficial owner of a security for
purposes of the Rule if he or she has or shares voting power or investment
power with respect to such security or has the right to acquire such
ownership within 60 days after March 18, 1994. All persons shown in the
table have sole voting and investment power except as otherwise indicated.
The table includes 201,477 shares of Bancor's common stock subject to
outstanding stock options which are exercisable by directors and executive
officers of Bancor within 60 days of March 18, 1994.
(b) Includes 1,403 shares of Bancor common stock subject to stock options that
may be exercised within 60 days of March 18, 1994.
(c) Includes 3,011 shares owned by Brennan Realty, a partnership of which Mr.
Brennan is a partner.
(d) Includes 44,192 shares of Bancor common stock subject to stock options that
may be exercised within 60 days of March 18, 1994. Also includes shares for
which Mr. Costigan has shared voting and investment power as follows: 5,520
shares with Virginia Costigan (wife).
(e) Includes 1,880 shares for which Mr. Daddona has shared voting and
investment power with Sharon Daddona (wife), 1,000 shares with Michael
Daddona (son), 1,000 shares with Marielle Daddona (daughter), and 1,000
shares with Michaela Daddona (daughter).
(f) Includes 79,384 shares of Bancor common stock subject to stock options that
may be exercised within 60 days of March 18, 1994. Also includes shares for
which Mr. DiAdamo has shared voting and investment power as follows: 7,683
shares with Maureen E. DiAdamo (wife), 138 shares with Harry E. DiAdamo
(son), 358 shares with Kevin DiAdamo (son), and 402 shares with Christopher
DiAdamo (son).
(g) Includes 1,403 shares for which Mr. Dirienzo has shared voting and
investment power with Claire S. Dirienzo (wife). Also includes 1,264 shares
of Bancor common stock subject to stock options that may be exercised
within 60 days of March 18, 1994.
3
(h) Includes 1,403 shares of Bancor common stock subject to stock options that
may be exercised within 60 days of March 18, 1994. See also footnote (b) to
the Stock Owned By Principal Shareholders table set forth below.
(i) Includes shares for which Mr. Rak has shared voting and investment power as
follows: 2,714 shares with Monica Rak (wife), 147 shares with Aaron Rak
(son), 213 shares with Michael Rak (son), and 147 shares with Adam Rak
(son).
(j) Does not include 3,000 shares owned by Mary Ann Sponheimer (wife) as
trustee for Brian Sponheimer (son) as to which Mr. Sponheimer disclaims
beneficial ownership. Also includes 1,403 shares of Bancor common stock
subject to stock options that may be exercised within 60 days of March 18,
1994.
(k) Includes 39,063 shares of Bancor common stock subject to stock options that
may be exercised within 60 days of March 18, 1994. Also includes 1,169
shares for which Mr. Santoro has shared voting and investment power with
Jane G. Santoro (wife).
(l) Includes 29,156 shares of Bancor common stock subject to stock options that
may be exercised within 60 days of March 18, 1994. Also includes 700 shares
for which Mr. Wells has shared voting and investment power with Phyllis H.
Wells (wife). Does not include 749 shares owned by Phyllis H. Wells as to
which Mr. Wells disclaims beneficial ownership.
STOCK OWNED BY PRINCIPAL SHAREHOLDERS
The following table sets forth information with respect to the persons
believed by Bancor to be the beneficial owners of more than five percent of the
issued and outstanding shares of Bancor's common stock, based on the most recent
filing with the Securities and Exchange Commission by each such person or entity
as of March 18, 1994 or other information available to Bancor. All such persons
have reported sole voting and dispositive power over the entire number of shares
reported as beneficially owned by them, except as otherwise indicated.
AMOUNT AND NATURE OF PERCENT OF STOCK
NAME AND ADDRESS BENEFICIAL OWNERSHIP OUTSTANDING
- --------------------------------------------- -------------------- ------------------
Michael F. Daddona, Jr. (a).................. 318,439 12.01%
156 Wild Rose Drive
Orange, CT 06477
Dimensional Fund Advisors, Inc............... 176,102 6.64
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
J O Hambro & Company Limited (b)............. 152,104 5.74
30 Queen Anne's Gate
London SW1H 9AL England
<FN>
- ---------
(a) Includes 16,800 shares for which Mr. Daddona has shared voting and
investment power with Sharon Daddona (wife), Michael Daddona (son),
Marielle Daddona (daughter) and Michaela Daddona (daughter). At the
Corporation's 1992 annual meeting, the Corporation's shareholders approved
the acquisition by Mr. Daddona's of up to 24.9% of the Corporation's
outstanding common stock through open market purchases. On May 8, 1992, the
Federal Reserve Bank of Boston approved such proposed acquisition, subject
to the conditions that if the transaction has not been consummated within
one year from such date, or if the terms and conditions concerning the
transaction should change, the Federal Reserve Bank of Boston should be
consulted to determine whether any additional action or notification is
required. On June 8, 1992, the Connecticut State Banking Commissioner
approved Mr. Daddona's proposed acquisition of such shares.
(b) Bancor has been advised by the reporting person that these shares are
beneficially owned as follows: (i) J O Hambro & Partners Limited ("Hambro
Partners"), Growth Financial Services Limited ("GFSL"), North Atlantic
Smaller Companies Investment Trust PLC (formerly Consolidated Venture
4
Trust plc) ("NASCIT"), Christopher H.B. Mills, J O Hambro Investment
Management Limited ("Ham-
bro Investment"), J O Hambro & Company Limited ("Hambro Company") and J O
Hambro Asset Management Limited ("Hambro Asset") own or control, directly
or indirectly, an aggregate of 145,859 shares or 5.74% of the Corporation's
outstanding common stock, as follows: (i) Mr. Mills beneficially owns
105,104 shares, which amount includes the 5,104 shares he personally owns
and has sole voting and dispositive power over as well as the 100,000
shares in respect of which he shares voting and dispositive power with
Hambro Partners by virtue of his role as chief executive and co-investment
adviser to NASCIT; (ii) NASCIT beneficially owns 100,000 shares and shares
voting and dispositive power with Mr. Mills and Hambro Partners, its
co-investment advisers; (iii) GFSL shares voting and dispositive power with
NASCIT and Hambro Partners with respect to the 100,000 shares owned by
NASCIT because of its agreement to provide to NASCIT the services of Mr.
Mills; (iv) Hambro Partners, as co-investment adviser to NASCIT, shares
voting and dispositive power with Mr. Mills and NASCIT with respect to the
100,000 shares owned by NASCIT; (v) Hambro Investment controls voting and
dispositive power with respect to 47,000 shares owned by a private client;
(v) Hambro Asset, by virtue of its control of Hambro Partners and Hambro
Investment, controls (in the case of the 47,000 shares controlled by Hambro
Investment) and shares control of (in the case of the remaining 100,000
shares) the voting and dispositive power with respect to the 147,000 shares
controlled by Hambro Partners and Hambro Investment; and (vi) Hambro
Company, by virtue of its control of Hambro Asset, controls (or, as the
case may be, shares control of) the voting and dispositive power with
respect to the 147,000 shares controlled by Hambro Asset or in respect of
which Hambro Asset shares control.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Corporation's certificate of incorporation provides for a minimum of
nine directors and a maximum of 16. The number of directors of the Corporation
is currently set at 11. Pursuant to the Corporation's certificate of
incorporation, the board of directors is divided into three classes, with the
number of directors in each class to be as nearly equal in number as possible.
At the Annual Meeting, three directors will be elected to terms of three years
each.
Unless otherwise specified on the proxy, it is the intention of the persons
named in the proxy to vote the shares represented by each proxy for the election
as directors of the nominees listed below. The board of directors believes that
such nominees will stand for election and will serve if elected as directors.
If, however, any person nominated by the board of directors fails to stand for
election or is unable to accept election, the proxies will be voted for the
election of such other person or persons as the board of directors may
recommend. Assuming the presence of a quorum at the Annual Meeting, directors
will be elected by a plurality of the votes of the shares of Bancor common stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting. There are no cumulative voting rights in the election of directors.
There are no arrangements or understandings between the Corporation and any
person pursuant to which such person has been nominated or elected as a
director.
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS. The following table
sets forth the names of the three nominees for election as directors and the
names of the eight other directors whose terms of office will continue after the
Annual Meeting. Also set forth is certain other information, some of which has
been supplied by the directors, with respect to each nominee's or director's
principal occupation or employment
5
during the past five years, his or her age, the periods during which he or she
has served as a director of the Corporation and positions currently held with
the Corporation. All of the directors, except Mr. Mills, serve as directors of
Derby Savings.
AGE AT
DECEMBER 31, DIRECTOR FOR TERM POSITION(S) HELD
NAMES 1993 SINCE EXPIRING WITH THE CORPORATION
- ------------------------------ -------------- --------- --------- ---------------------
NOMINEES FOR 3-YEAR TERMS:
Michael F. Daddona, Jr........ 40 1991 1997 Chairman of the Board
Christopher H.B. Mills........ 41 1988 1997 Director
John P. Sponheimer............ 46 1988 1997 Director
TERM
CONTINUING DIRECTORS: EXPIRES
---------
Achille A. Apicella........... 50 1986 1995 Director
John J. Brennan............... 61 1986 1995 Director
John F. Costigan.............. 63 1986 1995 Executive Vice
President, Secretary
and Director
Angelo E. Dirienzo............ 63 1986 1995 Director
Walter R. Archer, Jr.......... 63 1990 1996 Director
Harry P. DiAdamo, Jr.......... 50 1986 1996 President, Chief
Executive Officer and
Director
Laura J. Donahue.............. 45 1986 1996 Director
John M. Rak................... 47 1986 1996 Director
The principal occupations for the past five years of each of the Board of
Directors' three nominees and the eight other directors whose terms of office
will continue after the Annual Meeting are set forth below:
MICHAEL F. DADDONA, JR., a director of the Corporation and Derby Savings
since 1991, became Chairman of the Board of the Corporation and the Bank in
November 1992. Mr. Daddona is the owner/general manager of Automated Services, a
vending machine and food service distribution company he founded in Milford,
Connecticut in 1972. He is also the managing partner of M&M Realty, a real
estate holding company. Mr. Daddona is chairman of the Executive Committee and
also serves on the Stock Option Committee. A member of the United Way Founders
Club, he is also a benefactor of the Toys for Tots program, and Christian
Children's Fund. Mr. Daddona also serves as a corporator of Hewitt Memorial
Hospital.
CHRISTOPHER H.B. MILLS, who became a director of the Corporation in 1988, is
chief executive of North Atlantic Small Companies Trust PLC ("NASCIT"), a London
investment trust company whose investment manager is J O Hambro & Partners
Limited ("Hambro Partners"). Mr. Mills' services are provided by an agreement
between NASCIT and Growth Financial Services Limited, also an affiliate of
Hambro Partners. He is a member of the Stock Option Committee. Mr. Mills serves
as a director of 15 companies in the United Kingdom, as well as the following
companies in the United States: American Electronic Components, Inc.
(electronics), American Plastic Technologies, Inc. (plastics), Financial
Alliance Processing Services, Inc. (credit card processing services), Oak
Industries, Inc. (electronics), W-H Holdings, Inc. (petrochemical, refinery and
oil industry services), Magic Seasoning Blends, Inc. (food preparations), and
Service Stations Inc. (petroleum industry).
JOHN P. SPONHEIMER, who became a director of the Corporation and Derby
Savings in 1988, has been a partner in the Ansonia, Connecticut based law firm
of Hoyle & Sponheimer since 1978. He is Chairman of the Nominating Committee and
serves on the Executive Committee. Mr. Sponheimer was a member of the
Connecticut State Legislature from 1975 to 1981 and served as the chairman of
the Banking Committee of the Connecticut General Assembly and as a member of the
Special Committee on Interstate Banking of the General Assembly from 1980 to
1982.
6
ACHILLE A. APICELLA, a director of Derby Savings since 1983, is president of
the certified public accounting firm of Apicella, Testa & Company P.C. in
Shelton, Connecticut. Mr. Apicella is chairman of the Audit Committee. He is a
director and vice chairman of Hewitt Management Corporation and serves as a
trustee and vice president of Hewitt Memorial Hospital and as corporator of
Valley United Way and Griffin Hospital. Mr. Apicella is also a member of the
Connecticut Society of Certified Public Accountants and American Institute of
Certified Public Accountants.
JOHN J. BRENNAN, a director of Derby Savings since 1983, has been the
president of John J. Brennan Construction Co., Inc. in Shelton, Connecticut
since 1958. Mr. Brennan is a member of the Executive and Nominating Committees.
He also serves as a director of The Recreation Camp in Derby.
JOHN F. COSTIGAN, Executive Vice President and Secretary of the Corporation
and the Bank, joined the staff of Derby Savings in 1961 and has been a director
of the Bank since 1975. He has served in various capacities of increasing
responsibility and since October 1984 has been the Bank's Executive Vice
President and Chief Operating Officer. Mr. Costigan is a member of the
Nominating Committee. Mr. Costigan is president of Friend A. Russ Fund, Inc. of
Shelton, an educational and charitable organization, and secretary and past
chairman of the Tele-media of Western Connecticut Advisory Council. Tele-Media
is a cable television company located in Seymour, Connecticut. He serves on the
finance committee of Saint Mary parish in Derby, and is past trustee and past
vice chairman of Griffin Health Services Corporation and past trustee and past
chairman of Griffin Hospital, a community hospital located in Derby.
ANGELO E. DIRIENZO, a director of Derby Savings since 1979, retired as
Superintendent of Schools in Sherman, Connecticut in 1992, a post he had held
since July 1987. He had previously served as School Superintendent in Oxford,
Connecticut, as well as in Derby. Dr. Dirienzo serves on the Audit Committee. He
is an Adjunct Professor at Southern Connecticut and Western Connecticut State
Universities and a Mediator for the Connecticut State Department of Education.
He has chaired the Scholarship Committee of the New Haven County Sheriffs'
Association since its inception in 1972. A past president of Griffin Hospital
and a corporator, he is also a director of the Valley YMCA and a corporator of
the Valley United Way, a member of the Connecticut Superintendents' Association,
the American Association of College and University Professors, the American
Association of School Administrators, and a life member of the Connecticut
Association of Public School Superintendents. He chaired the annual giving
program of the Olde Derby Historical Society in 1993 and is on the Board of
Directors.
WALTER R. ARCHER, JR., a Director of Derby Savings since 1988, became a
Director of the Corporation in 1990. He serves on the Executive and Nominating
Committees. Mr. Archer is founder of Burtville Associates, a real estate holding
company, and founder and president of Archer Landfill Service Company, both in
Derby. A corporator of Hewitt Memorial Hospital, Mr. Archer also serves as an
executive board member and assistant treasurer of the Housatonic Council, Boy
Scouts of America.
HARRY P. DIADAMO, JR., President and Chief Executive Officer of the
Corporation and the Bank, has been a Director of Derby Savings since 1980 and
served as Chairman of the Board from March 1984 to March 1985. He is also a
member of the Executive Committee of the Corporation. Mr. DiAdamo became
President, Treasurer and Chief Executive Officer of the Bank in October 1984.
Mr. DiAdamo is serving his second two-year term on the Board of the Federal Home
Loan Bank of Boston and is chairman of its Audit Committee. He serves on the
Mortgage Finance Committee of the Savings and Community Bankers of America and
on the Legislative Committee of the Connecticut Bankers' Association, as a
director of the New Haven Symphony Orchestra and Griffin Health Services,
president of the Shelton Educational Fund, past president of the board of Notre
Dame High School in West Haven, and past chairman of the United Way Campaign. He
also serves on the New Britain Downtown Council.
LAURA J. DONAHUE, a director of Derby Savings since 1979, has been engaged
in the practice of law in Derby since 1973 and is presently a partner in the law
firm of Donahue & Donahue. Ms. Donahue is a member of the Audit and Nominating
Committees. She is a trustee of Hewitt Memorial Hospital, a director of Hewitt
Management Corporation, a service company which manages long term care
facilities, a trustee and secretary of Friend A. Russ Fund, Inc., an educational
and charitable organization, and a director of Derby Neck Library. She is also a
member of the Advisory Board of the Katherine Matthies Foundation.
7
JOHN M. RAK, a director of Derby Savings since 1984, operates a real estate
and appraisal company under his own name in Derby, Connecticut, and is a
consultant to Insurance Management Incorporated. Mr. Rak is chairman of the
Stock Option Committee and is a member of the Audit and Executive Committees.
Mr. Rak serves as chairman of the City of Derby's Economic Development
Commission, a director of Derby Neck Library and treasurer and past president of
Housatonic Council, Boy Scouts of America, and trustee of Johnson Trust of
Tulsa, OK, which benefits scouting programs in the Naugatuck Valley.
MANAGEMENT RECOMMENDS A VOTE FOR APPROVAL
OF MANAGEMENT'S NOMINEES FOR DIRECTOR
COMPENSATION OF DIRECTORS. Non-management directors of Bancor receive $400
for each board of directors meeting attended, $350 for each committee meeting
attended, $150 for each "mini-meeting" and, assuming attendance at not less than
three of the four regular meetings of the board, a stipend of $4,000 per annum
with a stipend of $16,000 per annum paid to the chairman of the board of
directors. Compensation to non-management directors of Derby Savings is $12,000
per annum ($26,000 per annum for the chairman of the board), assuming attendance
at not less than nine of the 12 regular meetings of the board, plus $400 for
each special meeting of the Bank's board of directors, $350 for each committee
meeting and $150 for each "mini-meeting" attended. Messrs. Daddona and Dirienzo
also receive $100 for each meeting of the advisory board of the New
Britian/Hartford division of the Bank attended. Directors who are officers of
Bancor or Derby Savings receive no additional compensation for serving as
directors or attending meetings of the board or its committees.
In 1986, the Bank established a deferred compensation plan for the benefit
of its directors. Pursuant to the plan, directors are entitled to defer all or a
portion of the fees paid to them as directors of the Bank over a four-year
period. Directors who are officers of the Bank may also participate in the plan
and pursuant to the plan may defer compensation paid to them as officers of the
Bank. Although there is no limitation in the plan on the amount of compensation
that may be deferred by directors who are also officers of the Bank, such
directors currently participating in the plan have only deferred compensation in
an amount which approximates the fees that would have been paid to them if they
were non-management directors of the Bank.
Under the plan, a director who has participated in the plan for four years
or who reaches the age of 65, whichever is later (the "Retirement Date"), and
who is still serving as a director, is entitled to receive benefits payable in
monthly installments over a ten-year period. The aggregate amount of the
benefits payable to a director is actuarially determined using mortality tables.
The plan also provides for the payment of pre-retirement disability benefits in
the event that a director is disabled as a result of illness or injury to the
extent that he or she is unable to perform his or her usual service to the board
of directors. Benefit payments pursuant to this provision of the plan would be
paid in the same manner and amount as normal retirement benefits under the plan
if the director had completed four years of service as a director, and would be
in an aggregate amount equal to 100 percent of the director's deferred fees at
10% interest per annum if the director had not completed four years of service.
In the event of a director's death prior to reaching the Retirement Date, the
plan provides for the payment of benefits to the designated beneficiary of the
director on a monthly basis over a ten-year period in an aggregate amount
actuarially determined using mortality tables. The plan provides that if the
service of a director is terminated voluntarily or involuntarily prior to the
Retirement Date, the director is entitled to receive all amounts deferred plus
interest thereon at a rate of 10% per annum.
BOARD OF DIRECTORS COMMITTEES AND NOMINATIONS BY SHAREHOLDERS
The board of directors of the Corporation has designated Messrs. Archer,
Brennan, Daddona, DiAdamo, Rak and Sponheimer as the executive committee of the
board. Mr. Daddona currently serves as chairman of the executive committee. The
executive committee, when the board of directors is not in session, has and may
exercise all of the power and authority of the board of directors except as
limited pursuant to Article IV, Section 2 of the Corporation's bylaws, pursuant
to which the executive committee may not, among other things, amend the
Corporation's certificate of incorporation or bylaws, adopt an agreement of
8
merger or consolidation, or recommend to the shareholders the sale, lease or
exchange of all or substantially all of the Corporation's assets or the
dissolution of the Corporation. During the year ended December 31, 1993, the
executive committee met two times.
The board of directors of the Corporation has appointed an audit committee,
whose members are Messrs. Apicella, Dirienzo and Rak and Ms. Donahue. Mr.
Apicella serves as chairman of the audit committee. The audit committee reviews
the Corporation's financial statements and reviews the report of the annual
audit by the Corporation's independent accountants prior to submission of that
report to the full board of directors. The audit committee also reviews
management's response to the independent accountant's report. The audit
committee annually reviews the Corporation's contract with its independent
accountants and makes recommendations to the board of directors regarding
renewal of that contract. During the year ended December 31, 1993 the audit
committee met seven times.
The board of directors of the Corporation has appointed a standing stock
option committee consisting of Messrs. Archer, Daddona, Mills and Rak with Mr.
Rak serving as chairman. The stock option committee administers the
Corporation's stock option plan. During the year ended December 31, 1993, the
stock option committee met three times.
Messrs. Archer, Brennan, Costigan and Sponheimer and Ms. Donahue currently
serve as the nominating committee for selecting the nominees of the board for
election as directors. Mr. Sponheimer currently serves as chairman of the
nominating committee. The nominating committee met one time in 1993.
Shareholders of Bancor may nominate directors pursuant to timely notice in
writing to the secretary of Bancor in accordance with Bancor's bylaws. To be
timely, a shareholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation not less than 30 nor more
than 90 days prior to the Annual Meeting; provided, however, that in the event
less than 45 days' notice or prior public disclosure of the date of the meeting
is given or made to shareholders, notice by the shareholder to be timely must be
so received by Bancor not later than the close of business on the 15th day
following the day on which notice of the date of the meeting was mailed or such
public disclosure was made. Under the Corporation's bylaws, shareholder
nominations for the Annual Meeting will be required to have been received on or
before April 14, 1994 in order to be timely. A shareholder's notice of
nomination must set forth certain information specified in Article III, Section
13 of Bancor's bylaws concerning each person the shareholder proposes to
nominate for election and the shareholder giving the notice. The bylaws provide
that no person shall be eligible for election as a director of Bancor unless
nominated in accordance with the procedures set forth in Article III, Section 13
of the bylaws.
During the year ended December 31, 1993 the Corporation's board of directors
held four regular meetings and one special meeting and the Bank's board of
directors held 12 regular monthly meetings and four special meetings. With the
exception of Mr. Mills who attended 50 percent of the board and committee
meetings on which he served, no incumbent director attended fewer than 75
percent of the total number of meetings of the board of directors of the
Corporation and the total number of meetings held by all committees of the board
of directors of the Corporation on which he served.
9
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Because the business of the Corporation currently consists of the business
of Derby Savings, no separate cash compensation is paid to the executive
officers of the Corporation, all of whom are executive officers of Derby Savings
and receive compensation as such. The following table shows, for the years ended
December 31, 1993, 1992 and 1991, the cash compensation paid by Derby Savings,
as well as certain other compensation paid or accrued for those years, to the
chief executive officer and each of the three other highest paid executive
officers of Derby Savings whose cash compensation exceeded $100,000.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
NAME AND ------------------------------------ ----------------- ALL OTHER
PRINCIPAL POSITION(S) FISCAL YEAR SALARY ($) BONUS ($) OPTIONS/SARS (#) COMPENSATION ($)(A)
- ---------------------------------------- ----------- ---------- ----------- ----------------- -------------------
Harry P. DiAdamo, Jr.................... 1993 $ 232,113 $ -- 19,000 $ 3,491
President Chief Executive 1992 228,521 25,000 -- 3,803
Officer and Director 1991 205,885 -- -- 3,133
John F. Costigan........................ 1993 153,362 -- 4,000 2,317
Executive Vice President, 1992 150,913 17,500 -- 2,526
Chief Operating Officer, 1991 139,203 -- -- 2,083
Secretary and Director
Alfred T. Santoro....................... 1993 139,584 -- 11,000 2,163
Vice President and Chief 1992 125,997 15,000 -- 2,115
Financial Officer 1991 102,165 -- -- 1,619
Thomas H. Wells......................... 1993 112,291 -- 2,500 1,717
Senior Vice President 1992 106,654 10,000 -- 1,750
of Derby Savings Bank 1991 95,695 -- -- 1,472
<FN>
- ---------
(a) Consists of employer matching contributions made to the Bank's thrift plan
for the account of each individual.
OPTION/SAR GRANTS
The following table contains information with respect to grants of stock
options and stock appreciation rights ("SARs") to each of the named executive
officers during the year ended December 31, 1993.
OPTION/SAR GRANTS IN 1993 FISCAL YEAR
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
INDIVIDUAL GRANTS RATES
------------------------------------------------------- OF STOCK PRICE
% OF TOTAL APPRECIATION FOR
OPTIONS/SARS OPTION
OPTIONS/ GRANTED TO EXERCISE OR TERM (A)
SARS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ----------------------------------- ----------- ---------------- ----------- ----------- ---------- ----------
Harry P. DiAdamo, Jr............... 19,000 43.6% $ 17.63 11/30/03 $ 210,601 $ 533,705
John F. Costigan................... 4,000 9.2 17.63 11/30/03 44,337 112,359
Alfred T. Santoro.................. 11,000 25.2 17.63 11/30/03 121,927 308,987
Thomas H. Wells.................... 2,500 5.7 17.63 11/30/03 27,711 70,224
<FN>
- ---------
(a) Estimated market value of underlying securities at assumed annual rates of
stock price appreciation for option term minus the exercise price.
10
OPTION/SAR EXERCISES AND HOLDINGS
The following table sets forth the 1993 year end value of all unexercised
options and SARs held by the named executive officers. No options or SARs were
exercised by any of the named executive officers during 1993. All options and
SARs held by the named executive officers as of December 31, 1993 are presently
exercisable. SARs are granted in tandem with options granted under the
Corporation's existing stock option plan.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
VALUE OF SECURITIES
UNDERLYING
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
NAME OPTIONS/SARS AT FY-END (#) SARS AT FY-END ($)(A)
- ---------------------------------------- --------------------------- ---------------------
Harry P. DiAdamo, Jr.................... 79,384 $ 634,596
John F. Costigan........................ 44,192 374,837
Alfred T. Santoro....................... 39,063 250,081
Thomas H. Wells......................... 29,156 190,972
<FN>
- ---------
(a) Market value of underlying securities at exercise or year-end, minus the
exercise or base price.
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENTS
Derby Savings and the Corporation have entered into employment agreements
with Harry P. DiAdamo, Jr. and John F. Costigan. The current term of each
employment agreement is through December 31, 1997. On each December 31, unless
the Bank, the Corporation or the employee has previously given written notice to
the contrary, an additional one-year period is added to the term of the
agreement. The employment agreements provided for initial annual salaries with a
six percent minimum annual increase in subsequent years. In 1993, the annual
salaries pursuant to their employment agreements for Messrs. DiAdamo and
Costigan were $223,516 and $147,682 respectively. The employment agreements also
provide, among other things, for participation in discretionary bonuses as
authorized by the board of directors and for participation in pension, stock
option and other benefits applicable to executive personnel.
The employment agreements may be terminated for cause at any time by the
board of directors. Each contract is also terminable by the Corporation or the
Bank without cause, whereupon the employee would be entitled to a lump sum cash
payment equal to the full amount of his salary for the remaining term of the
agreement, and continuation for the remaining term of the agreement of all
vested retirement or employee benefits and then existing fringe benefits. The
employees have no right to terminate their agreements prior to the end of the
terms without approval of the boards of directors of the Bank and the
Corporation except in connection with or within two years after a "change in
control" of the Corporation or the Bank, in which case they will receive
severance payments of three times average annual compensation based on the prior
five-year period. The agreements include an employee covenant not to compete for
a period of the lesser of one year or the balance of the term plus six months in
the event the employee terminates his employment during the term of the
agreement without board approval. Under the terms of the agreements, if the
employment of Messrs. DiAdamo or Costigan were terminated by the Bank or the
Corporation other than for cause or by the employee during 1994, the severance
payment which each would receive is $1,036,465 and $684,816, respectively. If
their employment was terminated in 1994 voluntarily or involuntarily in
connection with or within two years after a "change in control," they would be
entitled to receive severance payments of $612,506 and $401,377, respectively.
As defined in the agreements, a "change in control" will be deemed to have
occurred if (i) any person becomes the beneficial owner of 20% or more of the
total number of voting shares of the Corporation; (ii) any person becomes the
beneficial owner of 10% or more, but less than 20%, of the total number of
voting shares of the Corporation if the board of directors determines that such
beneficial ownership constitutes or will constitute control of the Corporation;
(iii) any person (other than the persons named as proxies solicited on behalf of
the board of directors of the Corporation) holds revocable or irrevocable
11
proxies, as to the election or removal of two or more directors of the
Corporation, for 25% or more of the total number of voting shares of the
Corporation; (iv) any person has commenced a tender or exchange offer, or
entered into an agreement or received an option, to acquire beneficial ownership
of 20% or more of the total number of voting shares of the Corporation; or (v)
as a result of, or in connection with, any cash tender or exchange offer,
merger, or other business combination, sale of assets or contested election or
any combination of the foregoing transactions, the persons who were directors of
the Corporation before such transaction shall cease to constitute at least
two-thirds of the board of directors of the Corporation or any successor
institution. A "change in control" of the Bank will be deemed to have taken
place if the Corporation's beneficial ownership of the total number of voting
shares of the Bank is reduced to less than 50% unless the transaction that
causes such reduction is approved by two-thirds of the board of directors of the
Bank. For purposes of the foregoing, the term "person" includes an individual, a
corporation, a partnership, a trust, or a group acting in concert.
The Bank and the Corporation have entered into severance payment agreements
with Alfred T. Santoro and Thomas H. Wells which generally provide that in the
event the employee's employment is terminated, voluntarily or involuntarily
(other than by normal retirement, disability or death), in connection with or
within two years after a change in control of the Bank or the Corporation, they
would be entitled to receive lump sum cash severance payments. The amount of
this payment would equal approximately three times the employee's average annual
compensation includible in his income for federal income tax purposes with
respect to the five-year period prior to the change in control of the Bank or
the Corporation. For purposes of the agreements, the term "change in control"
has a definition substantially the same definition of "change in control" in the
employment agreements of Messrs. DiAdamo and Costigan. Under the terms of the
agreements, if the employment of Messrs. Santoro and Wells were terminated by
the Bank or the Corporation in 1994, in connection with a change in control, the
severance payment which each would receive is $326,231 and $290,950,
respectively.
REPORT ON EXECUTIVE COMPENSATION
Pursuant to the rules recently adopted by the Securities and Exchange
Commission designed to enhance the disclosure of company policies toward
executive compensation, set forth below is a report submitted by the board of
directors of the Bank and the stock option committee of the board of directors
of the corporation addressing executive officer compensation policies for 1993.
As noted above, because the business of the Corporation currently consists of
the business of the Bank, no separate cash compensation is paid to the executive
officers of the Corporation.
Decisions on compensation (other than stock options) for Messrs. DiAdamo and
Costigan are made by the Bank's board of directors (with Messrs. DiAdamo and
Costigan not participating). Decisions on compensation paid to other executive
officers of the Bank (other than stock options) are made by Messrs. DiAdamo and
Costigan. Decisions as to the grant of stock options are made by the stock
option committee of the board of directors of the Corporation.
The Bank's executive compensation policies provide competitive levels of
compensation designed to integrate pay with the Bank's and the Corporation's
annual and long term performance goals. Underlying this objective are the
following concepts: supporting an individual pay-for-performance policy that
differentiates compensation levels based on corporate, business unit, and
individual performance; motivating key senior officers to achieve strategic
business objectives and rewarding them for that achievement; providing
compensation opportunities which are competitive to those offered in the
marketplace, thus allowing the Bank and the Corporation to compete for and
retain talented executives who are critical to the Bank's and the Corporation's
long term success; and aligning the interests of executives with the long term
interests of the Corporation's shareholders.
Executive compensation consists of three components: cash compensation,
including base salary and cash bonuses; long term incentive compensation in the
form of stock options; and executive and retirement benefits. The components are
intended to provide incentives to achieve short term and long term objectives
and to reward exceptional performance. Performance is evaluated not only with
respect to earnings but also with respect to comparable industry performance,
the accomplishment of business objectives, and the individual's contribution to
earnings and shareholder value.
12
CASH COMPENSATION. Pursuant to their employment agreements with the
Corporation and the Bank, Messrs. DiAdamo and Costigan annually are entitled to
receive a minimum 6.0% increase in their base salaries. For 1993, Messrs.
DiAdamo and Costigan received increases in their base salaries of 6.0%, as
determined by the board after evaluation of the factors set forth above. The
Corporation's two other executive officers received increases of approximately
16.9% and 9.9%, respectively, as determined by Messrs. DiAdamo and Costigan
after evaluation of the above criteria.
Each year, upon review of the recommendations of the Bank's Ad Hoc Committee
on Bonuses, the board determines whether to award discretionary bonuses to
executive officers. In 1993, the Ad Hoc Committee on Bonuses was comprised of
all directors of the Bank with the exception of Messrs. DiAdamo and Costigan.
The board considers granting bonuses only when it determines that performance is
meritorious and exceptional, and only after consideration of such factors as the
Bank's overall performance for such year, especially when compared to peer
institutions, and the time and talent exerted by management. No bonuses were
awarded in 1993.
STOCK OPTIONS. To encourage growth in shareholder value, stock options are
granted by the Corporation from time to time under the Corporation's stock
option plan to officers and other employees. During 1993, the Company granted a
total of 43,573 stock options, in tandem with SARs, including 35,500 options to
the Company's four executive officers. All options that were granted during 1993
had an exercise price of $17.63 per share and will expire in November 2003.
EXECUTIVE AND RETIREMENT BENEFITS. In addition to the compensation
described above, the executive officers receive all normal employee fringe
benefits, as well as benefits under the Bank's thrift plan and pension plan. The
Bank also provides automobile allowances to executive officers, club memberships
(in the case of Messrs. DiAdamo and Costigan), and pays life and disability
insurance premiums for Mr. DiAdamo.
CEO COMPENSATION. As noted above, under the terms of Mr. DiAdamo's
employment agreement, Mr. DiAdamo is entitled to a six percent minimum annual
increase in salary. In 1993, Mr. DiAdamo received a salary increase of 6.0%.
During 1993, Mr. DiAdamo also received a grant of a ten-year stock option for
19,000 shares of Corporation common stock. The per share exercise price was
$17.63, which equaled the fair market value of a share of Corporation common
stock on the date of grant. The board believes the compensation Mr. DiAdamo
received for 1993 appropriately rewards Mr. DiAdamo for the results he achieved
during that year.
BOARD OF DIRECTORS STOCK OPTION COMMITTEE OF THE
OF THE BANK BOARD OF DIRECTORS OF THE CORPORATION
Michael F. Daddona, Jr., Chairman John M. Rak, Chairman
Achille A. Apicella Walter R. Archer, Jr.
Walter R. Archer, Jr. Michael F. Daddona, Jr.
John J. Brennan Christopher H.R. Mills
John F. Costigan
Harry P. DiAdamo, Jr.
Angelo E. Dirienzo
Laura J. Donahue
John M. Rak
John P. Sponheimer
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. DiAdamo and Costigan serve on the board of directors of the Bank. As
such, they participate in compensation decisions with respect to the Bank's
executive officers. Neither Mr. DiAdamo nor Mr. Costigan participate or vote in
decisions on their own compensation.
13
COMPARATIVE COMPANY PERFORMANCE
The following graph shows a five year comparison of cumulative total returns
for the Corporation, the NASDAQ Stock Market and the KBW New England Savings
Bank Index.
[GRAPHIC]
Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93
D.S. Bancor, Inc. 100 100.1 69.8 53.6 139.9 181.2
NASDAQ Stock Market Index (US) 100 121.2 103.0 165.2 192.1 219.2
KBW New England Savings Bank Index 100 84.5 42.4 74.7 130.7 174.4
Assumes $100 invested on December 31, 1988 with full reinvestment of dividends,
if any.
PENSION PLAN
The following table sets forth estimated annual retirement benefits of
representative years of service and annual compensation under the Company's
pension plan.
PENSION PLAN TABLE
YEARS OF SERVICE (A)
ANNUAL --------------------------------------------------------
COMPENSATION 15 20 25 30 35
- ------------- --------- --------- ---------- ---------- ----------
$ 125,000 $ 34,116 $ 45,488 $ 56,860 $ 68,232 $ 71,357
150,000 41,616 55,488 69,360 83,232 86,982
175,000 49,116 65,488 81,860 98,232 102,607
200,000 56,616 75,488 94,360 113,232 115,641
225,000 61,501 82,002 102,502 115,641 115,641
250,000 62,383 83,178 103,972 115,641 115,641
<FN>
- ---------
(a) For participants aged 65 retiring in 1993 and based on 1993 Social
Security benefit levels. Pension benefits payable beginning January 1,
1994 are currently subject to a statutory maximum of $118,800 per year,
subject to cost of living adjustments. Additionally, for 1994, annual
compensation earned in excess of $150,000 may not be used in the
calculation of retirement benefits.
At December 31, 1993, Messrs. DiAdamo, Costigan, Santoro and Wells had 8,
31, 7 and 18 years, respectively, of credited service.
Contributions to the pension plan are determined on an actuarial basis for
the benefit of all qualifying employees. Employees become eligible for
participation on attainment of age 21 and the accumulation of 1,000 hours of
employment in a year. Annual normal retirement benefits are computed at the rate
of 60 percent of the participant's final earnings less 50 percent of the
participant's social security amount for participants with exactly 30 years of
credited service.
14
For participants with more than 30 years of credited service, annual normal
retirement benefits are computed as for participants with exactly 30 years of
credited service plus 1/2 of 1 percent of the participant's final earnings for
each year (up to ten) of credited service in excess of 30 years. For
participants with less than 30 years of credited service, annual normal
retirement benefits are computed by multiplying the annual normal retirement
benefit of a participant with exactly 30 years of credited service by the ratio
that the number of that participant's years of credited service bears to 30. The
plan also provides for optional early retirement benefits within ten years of a
participant's normal retirement date provided the participant has completed 15
years of credited service.
A participant's final earnings equals the highest average annual earnings
received in any five consecutive years during the last ten years before the
normal retirement date. Years of credited service equals the number of years of
employment, not including the first year of service, between ages 25 (for an
employee who became a participant prior to July 1, 1985, otherwise age 21) and
65. For participants retiring at normal or early retirement dates, a pension
equal to 50 percent of the participant's retirement income is payable to the
surviving spouse. As an alternative to the 50 percent continuation, a
participant when he or she retires may elect to pay 100 percent to the
participant's spouse or 66 2/3 percent to the spouse and retain 33 1/3 percent
of the benefit.
CERTAIN TRANSACTIONS
Derby Savings makes loans to its directors, officers, members of their
immediate families and other employees and holders of five percent or more of
the issued and outstanding shares of Bancor's common stock for the financing of
their homes as well as for home improvement and consumer loans. The Bank also
makes loans to business entities with which such shareholders of Bancor,
directors or officers of the Bank or members of their immediate families may be
associated. It is the Bank's policy that these loans are made in the ordinary
course of business and neither involve more than normal risk of collectability
nor present other unfavorable features. These loans are made on substantially
the same terms (including interest rate, fees and collateral) as those
prevailing at the time for comparable transactions with non-affiliated persons
and have been made in compliance with the requirements of state and federal law
applicable to loans to such persons. As of December 31, 1993, loans to holders
of five percent or more of Bancor's issued and outstanding common stock,
directors and executive officers of Derby Savings and their affiliated
businesses totaled approximately $1,275,000.
During 1993, the Bank made payments totaling $115,548 to Mr. Rak, a director
of the Corporation and the Bank, for appraisal and realtor services performed by
him. Additionally, the Bank made payments totaling $84,937 to John J. Brennan
Construction Co., Inc. for snow removal services for the Bank and its branches
and construction repairs to several of the Bank's offices. Mr. Brennan, a
director of the Corporation and the Bank, is president of John J. Brennan
Construction Co., Inc. The Corporation believes the terms of all such
transactions were substantially the same as the terms that could have been
obtained at the time from an unaffiliated third party.
APPROVAL OF 1994 STOCK OPTION PLAN
(PROPOSAL 2)
On February 28, 1994, the board of directors adopted the 1994 Stock Option
Plan (the "1994 Option Plan" or the "Plan") for the benefit of directors,
officers and employees of the Corporation and its subsidiaries, subject to
approval of shareholders at the Annual Meeting. As of the date of adoption of
the Plan by the board, there were nine non-employee directors and approximately
321 officers and employees of the Corporation and its subsidiaries who were
eligible to participate in the Plan.
THE PRINCIPAL PROVISIONS OF THE 1994 OPTION PLAN ARE SUMMARIZED BELOW. SUCH
SUMMARY DOES NOT, HOWEVER, PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS
ENTIRETY BY THE TERMS OF THE 1994 OPTION PLAN, THE ENTIRE TEXT OF WHICH IS
ATTACHED HERETO AS EXHIBIT A AND INCORPORATED HEREIN BY REFERENCE.
15
REASONS FOR 1994 OPTION PLAN
The board believes that stock options are important to increase the
incentive and encourage the continued service and employment of directors,
officers and employees by facilitating their purchase of a stock interest in the
Corporation. The board believes that adoption of the 1994 Option Plan is
appropriate in order to assure that a meaningful number of stock options will
continue to be available for grant to directors, officers and employees of the
Corporation and its subsidiaries. At December 31, 1993, 2,110 options were
available for grant to directors, officers and employees under the Corporation's
existing stock option plan.
DESCRIPTION OF THE 1994 OPTION PLAN
Under the terms of the 1994 Option Plan, 260,000 shares of authorized but
unissued common stock of the Corporation, or approximately 10% of the
outstanding shares of common stock at December 31, 1993, will be reserved for
issuance. Of such shares, 60,000 shares are reserved for issuance upon the
exercise of options granted to non-employee directors of the Corporation and
200,000 shares are reserved for issuance upon the exercise of options granted to
other eligible individuals. The 1994 Option Plan provides for the grant of
options that are intended to qualify as "incentive stock options" under Section
422 of the Code as well as nonqualified options. Unlike the Company's existing
stock option plan, the 1994 Option Plan does not provide for SARs.
The 1994 Option Plan will be administered by the Stock Option Committee of
the board (the "Option Committee"). The Option Committee will select the
officers and employees and non-employee directors of subsidiaries to whom
options may be granted. As described below, option grants to non-employee
directors of the Corporation are fixed pursuant to the terms of the Plan.
Under the terms of the 1994 Option Plan, each non-employee director of the
Corporation who was serving on the board on February 28, 1994, the effective
date of the Plan (each director of the Company except Messrs. DiAdamo and
Costigan) was granted a ten-year nonqualified option to purchase 1,500 shares of
the Corporation's common stock, subject to shareholder approval of the Plan. The
per-share option exercise price of each of those options was $24.00, which
equaled the fair market value of a share of common stock on the effective date
of the Plan, as determined in accordance with the Plan. Thereafter, subject to
the availability of shares, on the date of the first meeting of the board next
following the 1994 Annual Meeting and following each annual meeting of
shareholders of the Corporation thereafter, an option to purchase 1,000 shares
of Corporation common stock will be granted to each person who is then serving
as a non-employee director of the Corporation. If the number of shares remaining
available for grant is insufficient to make any such annual option grants, the
annual option grants for that year shall be correspondingly reduced on a pro
rata basis.
The option exercise price of options granted under the 1994 Option Plan may
not be less than 100% of the fair market value of the common stock on the date
of grant of the option, as determined in accordance with the Plan. The maximum
option term is 10 years. Each option granted to a non-employee director of the
Corporation under the 1994 Option Plan will be exercisable commencing on the
date of grant and ending upon the expiration or termination of the option. Each
option granted to persons other than non-employee directors of the Corporation
under the Plan will be exercisable, at any time and from time to time, over a
period commencing on the date of grant and ending upon expiration or termination
of the option, as the Option Committee shall determine and set forth in the
option agreement relating thereto. No person may receive any incentive stock
option if, at the time of grant, such person owns directly or indirectly more
than 10% of the total combined voting power of the Corporation unless the option
price is at least 110% of the fair market value of the common stock and the
exercise period of such incentive option is by its terms limited to five years.
There is also a $100,000 limit on the value of stock (determined at the time of
grant) covered by incentive stock options that first become exercisable by an
optionee in any calendar year. The maximum number of shares subject to options
that can be granted under the Plan to any executive officer or other employee
of the Corporation or any subsidiary is 75,000 shares. No option may be
granted more than 10 years after the effective date of the Plan.
Payment for shares purchased under the 1994 Option Plan may be made either
in cash or cash equivalents, or, if permitted by the option agreement, by
exchanging shares of common stock of the
16
Corporation with a fair market value equal to or less than the total option
price plus cash for any difference, or by a combination of the foregoing.
Options generally also may be exercised by the optionee directing that
certificates for the shares purchased be delivered to a licensed broker
acceptable to the Corporation as agent for the optionee, provided that the
broker tenders to the Corporation cash or cash equivalents equal to the
option exercise price plus the amount of any taxes that the Corporation
may be required to withhold in connection with the exercise of the option.
No fractional shares will be issued by the Corporation on exercise of options
and no cash will be paid in lieu of any fractional shares.
No option may be exercised before the date of shareholder approval of the
Plan. If an option is exercised prior to the date that is six months from the
later of (i) the date of grant of the option or (ii) the date of shareholder
approval of the Plan and the individual exercising the option is a reporting
person under Section 16(a) of the Securities Exchange Act of 1934, as amended,
the Plan provides that the certificate or certificates issued upon exercise of
the option shall bear a legend restricting the transfer of stock covered thereby
until the expiration of six months from the later of the date of grant or
shareholder approval of the Plan.
Options granted under the Plan are not transferable and may be exercised
only by the optionee during his or her lifetime. If an employee's employment
with the Corporation or a subsidiary terminates by reason of death or permanent
and total disability, his or her options, whether or not then exercisable, may
be exercised within one year after such death or disability unless otherwise
provided in the option agreement (but not later than the date the option would
otherwise expire). If the employee's employment terminates for any reason other
than death or disability, options held by such optionee terminate three months
after the date of such termination unless otherwise provided in the option
agreement (but not later than the date the option would otherwise expire).
Options granted to non-employee directors of the Corporation terminate upon the
expiration of one year following the date on which the non-employee director
ceases to be a member of the board by reason of death or permanent and total
disability and three months following the date on which the non-employee
director ceases to be a member of the board for any other reason (one year in
the event of the non-employee director's death during such three month period),
but not more than ten years after the date of grant. In the case of an option
granted to an employee, the Option Committee may extend the period during which
the option may be exercised (but not later than the date the option would
otherwise expire) by so providing in the option agreement.
If the outstanding shares of the Corporation's common stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
or securities of the Corporation, by reason of any recapitalization,
reclassification, stock split-up, combination of shares, exchange of shares,
stock dividend or other distribution payable in capital stock, or other increase
or decrease in such shares without receipt of consideration by the Corporation,
an appropriate and proportionate adjustment will be made in the number and kinds
of shares subject to the 1994 Option Plan, and in the number, kinds, and per
share exercise price of shares subject to the unexercised portion of options
granted prior to any such change. Any such adjustment in an outstanding option,
however, will be made without a change in the total price applicable to the
unexercised portion of the option but with a corresponding adjustment in the per
share option price.
Upon any dissolution or liquidation of the Corporation, or upon a merger,
consolidation, reorganization or other business combination in which the
Corporation is not the surviving corporation, or upon the sale of all or
substantially all of the assets of the Corporation to another corporation, or
upon any transaction (including, without limitation, a merger or reorganization
in which the Corporation is the surviving corporation) approved by the board
which results in any person or entity owning 80% or more of the total combined
voting power of all classes of stock of the Corporation, the 1994 Option Plan
and the options issued thereunder will terminate, unless provision is made in
connection with such transaction for the continuation of the Plan and/or the
assumption of the options or for the substitution for such options of new
options covering the stock of a successor corporation or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kinds of
shares and the per share exercise price. In the event of such
termination, all outstanding options shall be exercisable in full during such
period immediately prior to the occurrence of such termination as the Option
Committee in its discretion shall determine.
17
The board may amend the 1994 Option Plan with respect to shares of common
stock as to which options have not been granted. However, the Corporation's
shareholders must approve any amendment that would (1) change the requirements
as to eligibility to receive options; (2) materially increase the benefits
accruing to participants under the Plan; or (3) increase the maximum number of
shares that be sold pursuant to options granted under the Plan (except for
adjustments upon changes in capitalization).
The board at any time may terminate or suspend the 1994 Option Plan. Unless
previously terminated, the Plan will terminate automatically on February 28,
2004, the tenth anniversary of the effective date of the Plan. No termination,
suspension or amendment of the Plan may, without the consent of the optionee to
whom an option has been granted, adversely affect the rights of the holder of
the option.
NEW PLAN BENEFITS
The table below indicates stock options granted to date under the 1994
Option Plan, all of which are subject to shareholder approval of the Plan. In
each case, the option exercise price of options granted under the Plan was not
less than fair market value of a share of the Corporation's common stock on the
date of grant, as determined in accordance with the Plan. All options granted to
date under the Plan to employees are incentive options. All options granted to
date under the Plan to non-employee directors are nonqualified options.
NEW PLAN BENEFITS
1994 STOCK OPTION PLAN
------------------------------------
PER SHARE
NAME AND POSITION EXERCISE PRICE NUMBER OF OPTIONS
- ---------------------------------------- ----------------- -----------------
Harry P. DiAdamo, Jr.................... $24 3/4(a) 10,000
President, Chief Executive
Officer and Director
John F. Costigan........................ 24 3/4(a) 2,500
Executive Vice President,
Chief Operating Officer,
Secretary and Director
Alfred T. Santoro....................... 24 3/4(a) 5,000
Vice President and Chief
Financial Officer
Non-Executive Officer................... 24 3/4(a) 1,000
Employee Group (1 person)
Non-Executive Director.................. 24 13,500
Group (9 persons)(b)
<FN>
- ---------
(a) These options were granted on March 16, 1994, subject to shareholder
approval of the Plan. The per share exercise price equals the fair market
value of a share of Corporation common stock on the date of grant, as
determined in accordance with the Plan. In each case, the option term is
ten years.
(b) On February 28, 1994, each of the Corporation's non-employee directors
(each director of the Corporation other than Messrs. DiAdamo and Costigan)
was granted a ten-year option to purchase 1,500 shares.
Shareholder approval of the 1994 Option Plan will constitute approval of the
foregoing option grants, and of the continuing automatic annual grant to
non-employee directors of the Corporation of a ten-year option for 1,000 shares,
as specified in the Plan.
Based on the closing sale price of the Corporation's common stock on March
18, 1994 of $27 1/8, the aggregate market value of the 260,000 shares to be
reserved under the 1994 Option Plan is $ 7,052,500.
18
FEDERAL INCOME TAX CONSEQUENCES OF THE 1994 OPTION PLAN
The grant of an option will not be a taxable event for the optionee or the
Corporation.
An optionee will not recognize taxable income upon exercise of an incentive
option, and any gain realized upon a disposition of shares of stock received
pursuant to the exercise of an incentive option will be taxed as long-term
capital gain if the optionee holds the shares for at least two years after the
date of grant and for one year after the date of exercise. However, the excess
of the fair market value of stock subject to an incentive option on the exercise
date over the option exercise price will be included in the optionee's
alternative minimum taxable income in the year of exercise (except that, if the
optionee is subject to certain securities law restrictions, determination of the
amount included in alternative minimum taxable income will be deferred, unless
the optionee elects within 30 days following exercise to have income determined
without regard to such restrictions) for purposes of the alternative minimum
tax. An optionee may be entitled to a credit against regular tax liability in
future years for minimum taxes paid with respect to the exercise of incentive
options. The Corporation will not be entitled to any business expense deduction
with respect to the exercise of an incentive option, except as discussed below.
For the exercise of an option to qualify for the foregoing tax treatment,
the optionee generally must be an employee of the Corporation or a subsidiary
from the date the option is granted through a date within three months before
the date of exercise of the option. In the case of an optionee who is disabled,
the three-month period for exercise following termination of employment is
extended to one year. In the case of an employee who dies, both the time for
exercising incentive stock options after termination of employment and the
holding period for stock received pursuant to the exercise of the option are
waived.
If all of the foregoing requirements are met except the special holding
period rules mentioned above, the optionee will recognize ordinary income upon
the disposition of the stock in an amount generally equal to the excess of the
fair market value of the stock at the time the option was exercised over the
option exercise price (but not in excess of the gain realized on the sale). The
balance of the realized gain, if any, will be capital gain. The employer
corporation will be allowed a business expense deduction to the extent the
optionee recognizes ordinary income.
If an optionee exercises an incentive option by tendering shares of common
stock with a fair market value equal to part or all of the option exercise
price, the exchange of shares will be treated as a nontaxable exchange (except
that this treatment would not apply if the optionee had acquired the shares
being transferred pursuant to the exercise of an incentive option and had not
satisfied the special holding period requirements summarized above). If the
exercise is treated as a tax free exchange, the optionee would have no taxable
income from the exchange and exercise (other than minimum taxable income as
discussed above) and the tax basis of the shares exchanged would be treated as
the substituted basis for the shares received. If the optionee used shares
received pursuant to the exercise of an incentive option (or another statutory
option) as to which the optionee had not satisfied the applicable holding period
requirement, the exchange would be treated as a taxable disqualifying
disposition of the exchanged shares.
Upon exercising a nonqualified option, an optionee will recognize ordinary
income in an amount equal to the difference between the exercise price and the
fair market value of the stock on the date of exercise (except that, if the
optionee is subject to certain restrictions imposed by the securities laws, the
measurement date will be deferred, unless the optionee makes a special tax
election within 30 days after exercise to have income determined without regard
to the restrictions). If the employer corporation complies with applicable
withholding requirements, it will be entitled to a business expense deduction in
the same amount and at the same time as the optionee recognizes ordinary income.
Upon a subsequent sale or exchange of shares acquired pursuant to the exercise
of a nonqualified option, the optionee will have taxable gain or loss
measured by the difference between the amount realized on the disposition and
the tax basis of the shares (generally, the amount paid for the shares plus the
amount treated as ordinary income at the time the option was exercised).
If the optionee surrenders shares of common stock in payment of part or all
of the exercise, price for nonqualified options, no gain or loss will be
recognized with respect to the shares surrendered (regardless of
19
whether the shares were acquired pursuant to the exercise of an incentive
option) and the optionee will be treated as receiving an equivalent number of
shares pursuant to the exercise of the option in a nontaxable exchange. The
basis of the shares surrendered will be treated as the substituted tax
basis for an equivalent number of option shares received and the new shares
will be treated as having been held for the same holding period as had
expired with respect to the transferred shares. The difference between the
aggregate option exercise price and the aggregate fair market value of the
shares received pursuant to the exercise of the option will be taxed as
ordinary income. The optionee's basis in the additional shares will be equal to
the amount included in the optionee's income.
Under current federal income tax law, the highest tax rate on ordinary
income is 36%, plus a 10% surtax, and long-term capital gains are subject to a
maximum tax rate of 28%. Because of certain provisions in the law relating to
the "phase out" of personal exemptions and certain limitations on itemized
deductions, the federal income tax consequences to a particular taxpayer of
receiving additional amounts of ordinary income or capital gain may be greater
than would be indicated by application of the foregoing tax rates to the
additional amount of income or gain.
REQUIRED VOTE
The approval by the affirmative votes of the holders of a majority of the
shares present, or represented, and entitled to vote at the Annual Meeting is
required to approve the 1994 Option Plan. Abstentions will have the same effect
as a negative vote. THE BOARD RECOMMENDS A VOTE FOR APPROVAL OF THE 1994 OPTION
PLAN.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(PROPOSAL 3)
The board of directors has appointed the firm of Friedberg, Smith & Co.,
P.C. to continue as independent public accountants for the Corporation for the
year ending December 31, 1994. Friedberg, Smith & Co., P.C. has been acting as
independent public accountants of the Corporation since its formation in 1987
and for Derby Savings since 1982. Unless otherwise indicated, properly executed
proxies will be voted in favor of ratifying the appointment of Friedberg, Smith
& Co., P.C., independent public accountants, to audit the books and accounts of
the Corporation and its subsidiary for the year ending December 31, 1994. No
determination has been made as to what action the board of directors would take
if the shareholders do not ratify the appointment.
Assuming the presence of a quorum at the Annual Meeting, the affirmative
vote of the holders of at least a majority of the votes cast at the Annual
Meeting is required to ratify the appointment of Friedberg, Smith & Co., P.C. as
the Corporation's independent public accountants for the year ending December
31, 1994.
Representatives of Friedberg, Smith & Co., P.C. will be present at the
Annual Meeting. They will be given an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
SHAREHOLDERS' PROPOSALS
Proposals of shareholders intended to be presented at the 1995 annual
meeting of shareholders must be received by Bancor at its principal executive
offices on or before November 30, 1994 in order to be considered for inclusion
in its proxy statement and form of proxy relating to the 1995 annual meeting.
Nothing in this paragraph should be deemed to require the Corporation to include
in its proxy statement and proxy relating to the 1995 annual meeting any
shareholder proposal which may be omitted from the Corporation's proxy
materials pursuant to applicable regulations of the SEC in effect at the
time such proposal is received.
The bylaws of Bancor provide that in order for any director nominations and
new business to be properly brought before an annual meeting by a shareholder,
the shareholder must have given timely notice thereof in writing to the
secretary of the Corporation. To be timely, a shareholder's notice must be
delivered
20
to or mailed and received at the principal executive offices of Bancor not less
than 30 nor more than 90 days prior to the date of the meeting; provided,
however, that in the event less than 45 days' notice or prior public
disclosure of the date of the meeting is given or made to shareholders, notice
by the shareholder to be timely must be so received not later than the close of
business on the 15th day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made. A
shareholder's notice must set forth certain information specified in Article II,
Section 3 of Bancor's bylaws with respect to each matter the shareholder
proposes to bring before the annual meeting. Bancor's bylaws provide that no
business shall be conducted at an annual meeting except in accordance with the
procedures set forth in Article II, Section 3 of the bylaws.
OTHER MATTERS
As of the date of this proxy statement, the board of directors of Bancor
knows of no matters to be brought before the Annual Meeting other than those
specifically listed in the Notice of Annual Meeting of Shareholders. However, if
further business is properly presented, the persons named in the accompanying
proxy will vote such proxy as determined by a majority of the board of
directors.
The board of directors of Bancor urges each shareholder, whether or not he
or she intends to be present at the Annual Meeting, to complete, sign and return
the enclosed proxy as promptly as possible.
By Order of the Board of Directors
HARRY P. DIADAMO, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Derby, Connecticut
March 30, 1994
21
EXHIBIT A
DS BANCOR, INC.
1994 STOCK OPTION PLAN
DS Bancor, Inc. (the "Company") sets forth herein the terms of this 1994
Stock Option Plan (the "Plan") as follows:
1. PURPOSE
The Plan is intended to advance the interests of the Company by providing
eligible individuals (as designated pursuant to Section 4 below) with an
opportunity to acquire or increase a proprietary interest in the Company, which
thereby will create a stronger incentive to expend maximum effort for the growth
and success of the Company and its subsidiaries, and will encourage such
eligible individuals to remain in the employ or service of the Company or that
of one or more of its subsidiaries. Each stock option granted under the Plan (an
"Option") is intended to be an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, or the corresponding provision
of any subsequently-enacted tax statute, as amended from time to time (the
"Code") ("Incentive Stock Option"), except (i) to the extent that any such
Option would exceed the limitations set forth in Section 7 below; (ii) for
Options specifically designated at the time of grant as not being "incentive
stock options"; and (iii) for Options granted to members of the Board of
Directors of the Company who are not officers or other employees of the Company
or any "subsidiary corporation" (a "Subsidiary") thereof within the meaning of
Section 424(f) of the Code ("Non-Employee Directors") or to directors of any
Subsidiary who are not Non-Employee Directors and who are not officers or other
salaried employees of the Company or any Subsidiary (a "Subsidiary Director").
2. ADMINISTRATION
(a) BOARD. The Plan shall be administered by the Board of Directors of the
Company (the "Board"), which shall have the full power and authority to take all
actions, and to make all determinations required or provided for under the Plan
or any Option granted or Option Agreement (as defined in Section 8 below)
entered into hereunder and all such other actions and determinations not
inconsistent with the specific terms and provisions of the Plan deemed by the
Board to be necessary or appropriate to the administration of the Plan or any
Option granted or Option Agreement entered into hereunder. All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting at which any issue relating to the Plan is
properly raised for consideration or without a meeting by written consent of the
Board executed in accordance with the Company's Certificate of Incorporation and
By-Laws, and with applicable law. The interpretation and construction by the
Board of any provision of the Plan or of any Option granted or Option Agreement
entered into hereunder shall be final and conclusive.
(b) COMMITTEE. The Board may from time to time appoint a Stock Option
Committee (the "Committee") consisting of not less than two members of the
Board, none of whom shall be an officer or other salaried employee of the
Company or any of its subsidiaries, and each of whom shall qualify in all
respects as a "disinterested person" as defined in Rule 16b-3 of the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The Board, in its sole discretion, may provide that the
role of the Committee shall be limited to making recommendations to the Board
concerning any determinations to be made and actions to be taken by the Board
pursuant to or with respect to the Plan, or the Board may delegate to the
Committee such powers and authorities related to the administration of the Plan,
as set forth in Section 2(a) above, as the Board shall determine, consistent
with the Certificate of Incorporation and By-Laws of the Company and applicable
law. The Board may remove members, add members, and fill vacancies on the
Committee from time to time, all in accordance with the Company's Certificate of
Incorporation and By-Laws, and with applicable law. The majority vote of the
Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee.
(c) NO LIABILITY. No member of the Board or of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Option granted or Option Agreement entered into hereunder.
A-1
(d) DELEGATION TO THE COMMITTEE. In the event that the Plan or any Option
granted or Option Agreement entered into hereunder provides for any action to be
taken by or determination to be made by the Board, such action may be taken by
or such determination may be made by the Committee if the power and authority to
do so has been delegated to the Committee by the Board as provided for in
Section 2(b) above. Unless otherwise expressly determined by the Board, any such
action or determination by the Committee shall be final and conclusive.
(e) ACTION BY THE BOARD. The Board may act under the Plan with respect to
any Option granted to or Option Agreement entered into with an officer, director
or shareholder of the Company who is subject to Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") other than by, or in
accordance with the recommendations of, the Committee, constituted as set forth
in Section 2(b) above, only if all of the members of the Board are
"disinterested persons" as defined in Rule 16b-3 of the Securities and Exchange
Commission under the Exchange Act.
3. STOCK
The stock that may be issued pursuant to Options granted under the Plan
shall be shares of Common Stock, par value $1.00 per share, of the Company (the
"Stock"), which shares may be treasury shares or authorized but unissued shares.
The number of shares of Stock that may be issued pursuant to Options granted
under the Plan shall not exceed in the aggregate 260,000 shares, of which up to
60,000 shares may be issued pursuant to options granted to Non-Employee
Directors and up to 200,000 shares may be issued pursuant to options granted to
other eligible individuals. The foregoing numbers of shares are subject to
adjustment as provided in Section 17 below. If any Option expires, terminates,
or is terminated or canceled for any reason prior to exercise in full, the
shares of Stock that were subject to the unexercised portion of such Option
shall be available for future Options granted under the Plan and such number of
shares shall be restored to the number of shares available for issuance under
Options granted to Non-Employee Directors or to other eligible individuals,
whichever is applicable.
4. ELIGIBILITY
(a) EMPLOYEES AND SUBSIDIARY DIRECTORS. Options may be granted under the
Plan to any employee of the Company or any Subsidiary (including any such
employee who is an officer or director of the Company or any Subsidiary) or to
any Subsidiary Director as the Board shall determine and designate from time to
time prior to expiration or termination of the Plan. The maximum number of
shares of Stock subject to Options that may be granted under the Plan to any
executive officer or other employee of the Company or any Subsidiary is 75,000
shares (subject to adjustment as provided in Section 17 hereof).
(b) NON-EMPLOYEE DIRECTORS. On the effective date of the Plan as described
in Section 5(a) hereof, each member then serving on the Board of Directors of
the Company who is a Non-Employee Director shall be granted an Option to
purchase 1,500 shares. Thereafter, subject to the availability of shares, on the
date of the first meeting of the Board next following the 1994 annual meeting of
shareholders of the Company and following each annual meeting of shareholders of
the Company thereafter, an Option to purchase 1,000 shares of Stock shall be
granted to each person who is then serving as a Non-Employee Director. If the
number of shares remaining available for grant is insufficient to make any such
annual option grants, the annual option grants for that year shall be
correspondingly reduced on a pro rata basis. Each Option granted to a
Non-Employee Director shall be granted at an Option Price equal to the greater
of par value or 100 percent of the fair market value of a share of Stock on the
date of grant (determined under Section 9 below) and upon the other terms and
conditions specified in the Plan. The foregoing numbers of shares are subject to
adjustment as provided in Section 17 below. Except as provided in this Section
4(b), no Non-Employee Director shall be eligible to be granted Options under
this Plan.
(c) MULTIPLE GRANTS. An individual may hold more than one Option, subject
to such restrictions as are provided herein.
5. EFFECTIVE DATE AND TERM OF THE PLAN
(a) EFFECTIVE DATE. The Plan shall be effective as of the date of adoption
by the Board, which date is set forth below, subject to approval of the Plan
within one year of such effective date by a majority of the
A-2
votes present and entitled to vote at a duly held meeting of the shareholders of
the Company at which a quorum representing a majority of all outstanding voting
stock is present, either in person or by proxy; PROVIDED, HOWEVER, that upon
approval of the Plan by the shareholders of the Company as set forth above, all
Options granted under the Plan on or after the effective date shall be fully
effective as if the shareholders of the Company had approved the Plan on the
effective date. If the shareholders fail to approve the Plan within one year of
such effective date, any options granted hereunder shall be null and void and of
no effect.
(b) TERM. The Plan shall terminate on the date ten years from the effective
date.
6. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Board may, at any time
and from time to time, prior to the date of termination of the Plan, grant to
such eligible individuals as the Board may determine ("Optionees"), Options to
purchase such number of shares of the Stock on such terms and conditions as the
Board may determine, including any terms or conditions which may be necessary to
qualify such Options as "incentive stock options" under Section 422 of the Code.
The date on which the Board approves the grant of an Option (or such later date
as is specified by the Board) shall be considered the date on which such Option
is granted.
7. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option (other than an Option described in exception (ii) or (iii) of
Section 1) shall constitute an Incentive Stock Option to the extent that the
aggregate fair market value (determined at the time the option is granted) of
the stock with respect to which Incentive Stock Options are exercisable for the
first time by any Optionee during any calendar year (under the Plan and all
other plans of the Optionee's employer corporation and its parent and subsidiary
corporations within the meaning of Section 422(d) of the Code) does not exceed
$100,000. This limitation shall be applied by taking Options into account in the
order in which they were granted.
8. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by written
agreements ("Option Agreements"), to be executed by the Company and by the
Optionee, in such form or forms as the Board shall from time to time determine.
Option Agreements covering Options granted from time to time or at the same time
need not contain similar provisions; PROVIDED, HOWEVER, that all such Option
Agreements shall comply with all terms of the Plan.
9. OPTION PRICE
The purchase price of each share of the Stock subject to an Option (the
"Option Price") shall be fixed by the Board and stated in each Option Agreement,
and shall be not less than the greater of par value or 100 percent of the fair
market value of a share of the Stock on the date the Option is granted (as
determined in good faith by the Board); PROVIDED, HOWEVER, that in the event the
Optionee would otherwise be ineligible to receive an Incentive Stock Option by
reason of the provisions of Sections 422(b)(6) and 424(d) of the Code (relating
to stock ownership of more than ten percent), the Option Price of an Option that
is intended to be an Incentive Stock Option shall be not less than the greater
of par value or 110 percent of the fair market value of a share of Stock at the
time such Option is granted. In the event that the Stock is listed on an
established national or regional stock exchange, is admitted to quotation on the
National Association of Securities Dealers Automated Quotation System, or is
publicly traded on an established securities market, in determining the fair
market value of the Stock, the Board shall use the closing price of the Stock on
such exchange or System or in such market (the highest such closing price if
there is more that one such exchange or market) on the trading date immediately
before the Option is granted (or, if there is no such closing price, then the
Board shall use the mean between the high and low prices on such date), or, if
no sale of the Stock had been made on such day, on the next preceding day on
which any such sale shall have been made.
10. TERM AND EXERCISE OF OPTIONS
(a) TERM. Each Option granted under the Plan shall terminate and all rights
to purchase shares thereunder shall cease upon the expiration of ten years from
the date such Option is granted, or, with respect to Options granted to persons
other than Non-Employee Directors, on such date prior thereto as may be
A-3
fixed by the Board and stated in the Option Agreement relating to such Option;
PROVIDED, HOWEVER, that in the event the Optionee would otherwise be ineligible
to receive an Incentive Stock Option by reason of the provisions of Sections
422(b)(6) and 424(d) of the Code (relating to stock ownership of more than ten
percent), an Option granted to such Optionee that is intended to be an Incentive
Stock Option shall in no event be exercisable after the expiration of five years
from the date it is granted.
(b) OPTION PERIOD AND LIMITATIONS ON EXERCISE. Each Option granted to
persons other than Non-Employee Directors under the Plan shall be exercisable,
in whole or in part, at any time and from time to time, over a period commencing
on or after the date of grant and ending upon the expiration or termination of
the Option, as the Board shall determine and set forth in the Option Agreement
relating to such Option. Without limiting the foregoing, the Board, subject to
the terms and conditions of the Plan, may in its sole discretion provide that an
Option may not be exercised in whole or in part for any period or periods of
time during which such Option is outstanding; PROVIDED, HOWEVER, that any such
limitation on the exercise of an Option contained in any Option Agreement may be
rescinded, modified or waived by the Board, in its sole discretion, at any time
and from time to time after the date of grant of such Option, so as to
accelerate the time at which the Option may be exercised. Each Option granted to
Non-Employee Directors shall be exercisable, in whole or in part, at any time
and from time to time, over a period commencing on the date of grant and ending
upon the expiration of the Option. Notwithstanding any other provision of the
Plan, no Option granted to an Optionee under the Plan shall be exercisable in
whole or in part prior to the date the Plan is approved by the shareholders of
the Company as provided in Section 5 above.
(c) METHOD OF EXERCISE. An Option that is exercisable hereunder may be
exercised by delivery to the Company on any business day, at its principal
office, addressed to the attention of the corporate secretary of the Company, of
written notice of exercise, which notice shall specify the number of shares with
respect to which the Option is being exercised. The minimum number of shares of
Stock with respect to which an Option may be exercised, in whole or in part, at
any time shall be the lesser of 100 shares or the maximum number of shares
available for purchase under the Option at the time of exercise. Except as
provided in the next following sentence, payment in full of the Option Price of
the shares for which the Option is being exercised shall accompany the written
notice of exercise of the Option and shall be made either (i) in cash or in cash
equivalents; (ii) through the tender to the Company of shares of Stock, which
shares shall be valued, for purposes of determining the extent to which the
Option Price has been paid thereby, at their fair market value (determined in
the manner described in Section 9 above) on the date of exercise; or (iii) by a
combination of the methods described in (i) and (ii); provided, however, that
the Board may in its discretion impose and set forth in the Option Agreement
pertaining to an Option granted to persons other than Non-Employee Directors
such limitations or prohibitions on the use of shares of Stock to exercise
Options as it deems appropriate. Unless the Board shall provide otherwise in the
case of an Option Agreement relating to an Option granted to someone other than
a Non-Employee Director, payment in full of the Option Price need not accompany
the written notice of exercise provided the notice of exercise directs that the
Stock certificate or certificates for the shares for which the Option is
exercised be delivered to a licensed broker acceptable to the Company as the
agent for the individual exercising the Option and, at the time such Stock
certificate or certificates are delivered, the broker tenders to the Company
cash (or cash equivalents acceptable to the Company) equal to the Option Price
for the shares of Stock purchased pursuant to the exercise of the Option plus
the amount (if any) of federal and other taxes which the Company may, in its
judgment, be required to withhold with respect to the exercise of the Option. An
attempt to exercise any Option granted hereunder other than as set forth above
shall be invalid and of no force and effect. Promptly after the exercise of an
Option and the payment in full of the Option Price of the shares of Stock
covered thereby, the individual exercising the Option shall be entitled to the
issuance of a Stock certificate or certificates evidencing his ownership of such
shares. A separate Stock certificate or certificates shall be issued for any
shares purchased pursuant to the exercise of an Option which is an Incentive
Stock Option, which certificate or certificates shall not include any shares
which were purchased pursuant to the exercise of an Option which is not an
Incentive Stock Option. An individual holding or exercising an Option shall have
none of the rights of a shareholder until the shares of Stock covered thereby
are fully paid and issued to him and, except as provided in Section 18 below, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date of such issuance.
A-4
(d) RESTRICTIONS ON TRANSFER OF STOCK. If an Option is exercised prior to
the date that is six months from the later of (i) the date of grant of the
Option or (ii) the date of shareholder approval of the Plan and the individual
exercising the Option is a reporting person under Section 16(a) of the Exchange
Act, then such certificate or certificates shall bear a legend restricting the
transfer of the Stock covered thereby until the expiration of six months from
the later of the date specified in clause (i) above or the date specified in
clause (ii) above.
11. TRANSFERABILITY OF OPTIONS
During the lifetime of an Optionee to whom an Option is granted, only such
Optionee (or, in the event of legal incapacity or incompetence, the Optionee's
guardian or legal representative) may exercise the Option. No Option shall be
assignable or transferable by the Optionee to whom it is granted, other than by
will or the laws of descent and distribution.
12. TERMINATION OF SERVICE OR EMPLOYMENT
(a) EMPLOYEES AND SUBSIDIARY DIRECTORS. Upon the termination of the
employment or service of an Optionee (other than a Non-Employee Director) with
the Company or a Subsidiary, other than by reason of the death or "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, any Option granted to an Optionee pursuant to the Plan shall terminate
three months after the date of such termination of employment, unless earlier
terminated pursuant to Section 10(a) above, and such Optionee shall have no
further right to purchase shares of Stock pursuant to such Option; PROVIDED,
HOWEVER,that the Board may provide, by inclusion of appropriate language in any
Option Agreement, that the Optionee may (subject to the general limitations on
exercise set forth in Section 10(b) above), in the event of termination of
service or employment of the Optionee with the Company or a Subsidiary, exercise
an Option, in whole or in part, at any time subsequent to such termination of
service or employment and prior to termination of the Option pursuant to Section
10(a) above, either subject to or without regard to any installment limitation
on exercise imposed pursuant to Section 10(b) above. Whether a leave of absence
or leave on military or government service shall constitute a termination of
service or employment for purposes of the Plan shall be determined by the Board,
which determination shall be final and conclusive. For purposes of the Plan, a
termination of employment with the Company or a Subsidiary shall not be deemed
to occur if the Optionee is immediately thereafter employed with or in the
service of the Company or any Subsidiary.
(b) NON-EMPLOYEE DIRECTORS. Except as provided in Section 13, and subject
to Section 17(c) below, any Option granted to a Non-Employee Director shall
terminate upon the expiration of three months after the termination of the
Non-Employee Director's service with the Company or any Subsidiary other than
because of death or "permanent and total disability" as defined above, or, if
earlier, upon the expiration of ten years after grant of the Option.
13. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
(a) DEATH. If an Optionee dies while in the employ or service of the
Company or a Subsidiary or within the period following the termination of
employment or service during which the Option is exercisable under Section 12
above or Section 13(b) below, the executors or administrators or legatees or
distributees of such Optionee's estate shall have the right (subject to the
general limitations on exercise set forth in Section 10(b) above), at any time
within one year after the date of such Optionee's death and prior to termination
of the Option pursuant to Section 10(a) above, to exercise any Option held by
such Optionee at the date of such Optionee's death, whether or not such Option
was exercisable immediately prior to such Optionee's death; PROVIDED, HOWEVER,
that with respect to an Option granted other than to a Non-Employee Director,
the Board may provide by inclusion of appropriate language in the Option
Agreement that, in the event of the death of the Optionee, the executors or
administrators or legatees or distributees of such Optionee's estate may
exercise an Option (subject to the general limitations on exercise set forth in
Section 10(b) above), in whole or in part, at any time subsequent to such
Optionee's death and prior to termination of the Option pursuant to Section
10(a) above, either subject to or without regard to any installment limitation
on exercise imposed pursuant to Section 10(b) above.
A-5
(b) DISABILITY. If an Optionee terminates employment or service with the
Company or a Subsidiary by reason of the "permanent and total disability"
(within the meaning of Section 22(e)(3) of the Code) of such Optionee, then such
Optionee shall have the right (subject to the general limitations on exercise
set forth in Section 10(b) above), at any time within one year after such
termination of service or employment and prior to termination of the Option
pursuant to Section 10(a) above, to exercise, in whole or in part, any Option
held by such Optionee at the date of such termination of service or employment,
whether or not such Option was exercisable immediately prior to such termination
of service or employment; PROVIDED, HOWEVER,that with respect to an Option
granted other than to a Non-Employee Director, the Board may provide, by
inclusion of appropriate language in the Option Agreement, that the Optionee may
(subject to the general limitations on exercise set forth in Section 10(b)
above), in the event of the termination of service or employment of the Optionee
with the Company or a Subsidiary by reason of the "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, exercise an Option in whole or in part, at any time subsequent to such
termination of service or employment and prior to termination of the Option
pursuant to Section 10(a) above, either subject to or without regard to any
installment limitation on exercise imposed pursuant to Section 10(b) above.
Whether a termination of service or employment is to be considered by reason of
"permanent and total disability" for purposes of this Plan shall be determined
by the Board, which determination shall be final and conclusive.
14. USE OF PROCEEDS
The proceeds received by the Company from the sale of Stock pursuant to
Options granted under the Plan shall constitute general funds of the Company.
15. REQUIREMENTS OF LAW
(a) VIOLATIONS OF LAW. The Company shall not be required to sell or issue
any shares of Stock under any Option if the sale or issuance of such shares
would constitute a violation by the individual exercising the Option or the
Company of any provisions of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations. Specifically in connection with the Securities Act of 1933 (as now
in effect or as hereafter amended), upon exercise of any Option, unless a
registration statement under such Act is in effect with respect to the shares of
Stock covered by such Option, the Company shall not be required to sell or issue
such shares unless the Board has received evidence satisfactory to it that the
holder of such Option may acquire such shares pursuant to an exemption from
registration under such Act. Any determination in this connection by the Board
shall be final, binding, and conclusive. The Company may, but shall in no event
be obligated to, register any securities covered hereby pursuant to the
Securities Act of 1933 (as now in effect or as hereafter amended). The Company
shall not be obligated to take any affirmative action in order to cause the
exercise of an Option or the issuance of shares pursuant thereto to comply with
any law or regulation of any governmental authority. As to any jurisdiction that
expressly imposes the requirement that an Option shall not be exercisable unless
and until the shares of Stock covered by such Option are registered or are
subject to an available exemption from registration, the exercise of such Option
(under circumstances in which the laws of such jurisdiction apply) shall be
deemed conditioned upon the effectiveness of such registration or the
availability of such an exemption.
(b) COMPLIANCE WITH RULE 16B-3. The intent of this Plan is to qualify for
the exemption provided by Rule 16b-3 under the Exchange Act. To the extent any
provision of the Plan does not comply with the requirements of Rule 16b-3, it
shall be deemed inoperative to the extent permitted by law and deemed advisable
by the Board and shall not affect the validity of the Plan. In the event Rule
16b-3 is revised or replaced, the Board, or the Committee acting on behalf of
the Board, may exercise discretion to modify this Plan in any respect necessary
to satisfy the requirements of the revised exemption or its replacement.
16. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
granted; PROVIDED, HOWEVER, that no amendment by the Board shall, without
approval by a majority of the votes present and entitled to vote at a duly held
meeting of the shareholders of the Company at which a quorum representing a
majority of all outstanding voting stock is, either in person or by proxy,
present and voting on the amendment, or by written consent in accordance
A-6
with applicable state law and the Certificate of Incorporation and By-Laws of
the Company, materially increase the benefits accruing to participants under the
Plan, change the requirements as to eligibility to receive Options or increase
the maximum number of shares of Stock in the aggregate that may be sold pursuant
to Options granted under the Plan (except as permitted under Section 17 hereof).
Except as permitted under Section 17 hereof, no amendment, suspension or
termination of the Plan shall, without the consent of the holder of the Option,
alter or impair rights or obligations under any Option theretofore granted under
the Plan.
17. EFFECT OF CHANGES IN CAPITALIZATION
(a) CHANGES IN STOCK. If the outstanding shares of Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of any recapitalization,
reclassification, stock split, reverse split, combination of shares, exchange of
shares, stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration by
the Company, occurring after the effective date of the Plan, the number and
kinds of shares for the purchase of which Options may be granted under the Plan
shall be adjusted proportionately and accordingly by the Company. In addition,
the number and kind of shares for which Options are outstanding shall be
adjusted proportionately and accordingly so that the proportionate interest of
the holder of the Option immediately following such event shall, to the extent
practicable, be the same as immediately prior to such event. Any such adjustment
in outstanding Options shall not change the aggregate Option Price payable with
respect to shares subject to the unexercised portion of the Option outstanding
but shall include a corresponding proportionate adjustment in the Option Price
per share.
(b) REORGANIZATION IN WHICH THE COMPANY IS THE SURVIVING
CORPORATION. Subject to Subsection (c) hereof, if the Company shall be the
surviving corporation in any reorganization, merger, or consolidation of the
Company with one or more other corporations, any Option theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option would have been
entitled immediately following such reorganization, merger, or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger, or consolidation.
(c) REORGANIZATION IN WHICH THE COMPANY IS NOT THE SURVIVING CORPORATION OR
SALE OF ASSETS OR STOCK. Upon the dissolution or liquidation of the Company, or
upon a merger, consolidation, reorganization or other business combination of
the Company with one or more other entities in which the Company is not the
surviving entity, or upon a sale of all or substantially all of the assets of
the Company to another entity, or upon any transaction (including, without
limitation, a merger or reorganization in which the Company is the surviving
corporation) approved by the Board which results in any person or entity (or
persons or entities acting as a group or otherwise in concert) owning 80 percent
or more of the combined voting power of all classes of stock of the Company, the
Plan and all Options outstanding hereunder shall terminate, except to the extent
provision is made in writing in connection with such transaction for the
continuation of the Plan and/or the assumption of the Options theretofore
granted, or for the substitution for such Options of new options covering the
stock of a successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares and exercise prices, in which
event the Plan and Options theretofore granted shall continue in the manner and
under the terms so provided. In the event of any such termination of the Plan,
each individual holding an Option shall have the right (subject to the general
limitations on exercise set forth in Section 10(b) above and except as otherwise
specifically provided in the Option Agreement relating to such Option),
immediately prior to the occurrence of such termination and during such period
occurring prior to such termination as the Board in its sole discretion shall
determine and designate, to exercise such Option in whole or in part, whether or
not such Option was otherwise exercisable at the time such termination occurs
and without regard to any installment limitation on exercise imposed pursuant to
Section 10(b) above. The Board shall send written notice of an event that will
result in such a termination to all individuals who hold Options not later than
the time at which the Company gives notice thereof to its shareholders.
A-7
(d) ADJUSTMENTS. Adjustments under this Section 17 related to stock or
securities of the Company shall be made by the Board, whose determination in
that respect shall be final, binding, and conclusive. No fractional shares of
Stock or units of other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share or unit.
(e) NO LIMITATIONS ON COMPANY. The grant of an Option pursuant to the Plan
shall not affect or limit in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge, consolidate, dissolve or liquidate, or to sell
or transfer all or any part of its business or assets.
18. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ or service of the Company or any
Subsidiary, or to interfere in any way with the right and authority of the
Company or any Subsidiary either to increase or decrease the compensation of any
individual at any time, or to terminate any employment or other relationship
between any individual and the Company or any Subsidiary.
19. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options or stock
appreciation rights otherwise than under the Plan.
* * *
This Plan was duly adopted and approved by the Board of Directors of the
Company by resolution at a meeting held on the 28th day of February, 1994.
/s/ John F. Costigan__________________
SECRETARY OF THE COMPANY
This Plan was duly approved by the shareholders of the Company at a meeting
of the shareholders held on the of , 1994.
______________________________________
SECRETARY OF THE COMPANY
A-8
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
-------------------
TABLE OF CONTENTS
PAGE
-----
Solicitation, Voting and Revocability of
Proxies...................................... 1
Stock Owned by Management...................... 2
Stock Owned by Principal Shareholders.......... 4
Election of Directors.......................... 5
Executive Compensation and Other Information... 10
Approval of 1994 Stock Option Plan............. 15
Ratification of Appointment of Independent
Public Accountants........................... 20
Shareholders' Proposals........................ 20
Other Matters.................................. 21
Exhibit A...................................... A-1
[LOGO]
DS BANCOR, INC.
------------
PROXY STATEMENT
MARCH 30, 1994
------------
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
DS BANCOR, INC.
33 ELIZABETH STREET
DERBY, CONNECTICUT 06418
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
P
R
O
X
Y
The undersigned shareholder of DS Bancor, Inc. (the "Corporation") hereby
appoints Harry P. DiAdamo, Jr. and John F. Costigan, and each of them,
with full power of substitution, as proxies to cast all votes, as designated
below, which the undersigned shareholder is entitled to cast at the 1994
annual meeting of shareholders (the "Annual Meeting") to be held on
April 27, 1994 at 10:00 a.m., local time, at the Trumbull Marriott, 180
Hawley Lane, Trumbull, Connecticut, and at any adjournments thereof, upon
the following matters.
This proxy will be voted as directed by the undersigned shareholder. UNLESS
CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSALS 2 AND 3, AND IN ACCORDANCE WITH
THE RECOMMENDATIONS OF A MAJORITY OF THE BOARD OF DIRECTORS AS TO OTHER
MATTERS.
The undersigned shareholder hereby acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement and hereby revokes any proxy or proxies heretofore
given. This proxy may be revoked at any time prior to its exercise.
See Reverse side
(Continued and to be signed and dated on reverse side)
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
3101
FOR all nominees listed below (except as marked to the contrary below)
WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: Michael F. Daddona, Jr.,
Christopher H.B. Mills and
John P. Sponheimer
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
For Against Abstain
1. To elect three directors each for a three-year term.
2. To approve the Corporation's 1994 stock option plan.
3. To ratify the appointment by the Corporation's board of directors of the
firm of Friedberg, Smith & Co., P.C. as independent public accountants of the
Corporation for the year ending December 31, 1994.
If you receive more than one proxy card, please date, sign and return all cards
in the accompanying envelope.
SIGNATURE(S)_______________________________ DATE ___________________
(Please date and sign here exactly as name appears at left. When signing as
attorney, administrator, trustee or guardian, give full title as such; and when
stock has been issued in the name of two or more persons, all should sign.)