SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14A-11(c) or ss. 240.14a-12
Community Bancorp of New Jersey
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $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: Common
Stock.
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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the 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:
March 28, 2000
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
of Community Bancorp of New Jersey to be held on Thursday, April 27, 2000 at
7:00 P.M. at Freehold Gardens Hotel, 50 Gibson Place, Freehold, New Jersey.
At the Annual Meeting, shareholders will be asked to consider and vote
upon:
1. The re-election of nine directors to the Company's Board of
Directors;
2. Amendments to the Company's Certificate of Incorporation to:
(a) classify the Board of Directors into three classes, and
(b) prevent removal of the directors by shareholders without
cause;
3. An Amendment to the Company's Certificate of Incorporation to
require the affirmative vote of 80% of the outstanding common
stock of the Company for approval of certain business
combination transactions and to further require an affirmative
vote of 80% of the outstanding common stock to amend this
super-majority voting provision; and
4. An Amendment to the Company's Certificate of Incorporation to
require advance notification of certain shareholder proposals
and nominations.
5. An Amendment to the Company's Certificate of Incorporation to
provide for 1,000,000 shares of series preferred stock, the
terms, conditions and designations of which may be set by the
Board of Directors at the time of issuance; and to increase
the authorized shares of common stock, no par value, to
10,000,000;
6. Approval of the 2000 Employee Stock Option Plan;
7. Approval of the 2000 Stock Option Plan forNon-Emoloyee
Directors; and
8. Such other business as shall properly come before the Annual
Meeting.
The Board of Directors of the Company believes that each of the
proposals being submitted to the shareholders is in the best interests of the
Company and its shareholders and urges you to vote in favor of each of these
proposals.
Very truly yours,
ROBERT D. O'DONNELL
President and Chief
Executive Officer
1
COMMUNITY BANCORP OF NEW JERSEY
3535 Highway 9
Freehold, New Jersey 07728
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 2000
Notice is hereby given that the Annual Meeting of shareholders of
Community Bancorp of New Jersey (the "Company") will be held at The Freehold
Gardens Hotel, 50 Gibson Place, Freehold, New Jersey on Thursday, April 27,
2000, at 7:00 P.M., for the purpose of considering and voting upon the following
matters:
1. The election of the nine persons named in the accompanying
Proxy Statement to serve as directors of the Company for the
ensuing year. However, in the event Proposal 2 is approved,
the term of each director will become the term described under
Proposal 2;
2. Amendments to the Company's Certificate of Incorporation to:
(a) classify the Board of Directors into three classes, and
(b) prevent removal of the directors by shareholders without
cause;
3. An Amendment to the Company's Certificate of Incorporation to
require the affirmative vote of 80% of the outstanding common
stock of the Company for approval of certain business
combination transactions unless approved by a majority of the
Directors and to further require an affirmative vote of 80% of
the outstanding common stock to amend this super-majority
voting provision;
4. An Amendment to the Company's Certificate of Incorporation to
require advance notification of certain shareholder proposals
and nominations;
5. An Amendment to the Company's Certificate of Incorporation to
provide for 1,000,000 shares of series preferred stock, the
terms, conditions and designations of which may be set by the
Board of Directors at the time of issuance; and to increase
the authorized shares of common stock, no par value, to
10,000,000;
6. Approval of the Community Bancorp of New Jersey 2000 Employee
Stock Option Plan, which provides for options to purchase
70,000 shares of common stock to be issued to employees of the
Company;
7. Approval of the Community Bancorp of New Jersey 2000 Stock
Option Plan for Non-Employee Directors, which provides for
options to purchase 85,000 shares of common stock to be issued
to non-employee directors of the Company; and
8. Such other business as shall properly come before the Meeting.
2
Shareholders of record at the close of business on March 21, 2000 are
entitled to notice of and to vote at the Annual Meeting. Whether or not you
contemplate attending the Annual Meeting, it is suggested that the enclosed
proxy be executed and returned to the Company. You may revoke your proxy at any
time prior to the exercise of the proxy by delivering to the Company a later
Proxy or by delivering a written notice of revocation to the Company.
BY ORDER OF THE BOARD OF DIRECTORS
ROBERT D. O'DONNELL
President and Chief Executive Officer
IMPORTANT-PLEASE MAIL YOUR PROXY PROMPTLY
You are urged to sign and return the enclosed Proxy to the Company
promptly in the envelope provided so that there may be sufficient representation
at the Annual Meeting.
3
COMMUNITY BANCORP OF NEW JERSEY
3535 Highway 9
Freehold, New Jersey 07728
PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON APRIL 27, 2000
This Proxy Statement is being furnished to shareholders of Community
Bancorp of New Jersey (the "Company") in connection with the solicitation by the
Board of Directors of proxies to be used at the Annual Meeting of shareholders
to be held on Thursday, April 27, 2000 at 7:00 p.m. at the Freehold Gardens
Hotel, 50 Gibson Place, Freehold, New Jersey.
GENERAL PROXY STATEMENT INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of the Company for use in the Company's
Annual Meeting to be held on April 27, 2000, at 7:00 P.M., at The Freehold
Gardens Hotel, 50 Gibson Place, Freehold, New Jersey (the "Annual Meeting").
The first date on which this Proxy Statement and the enclosed form of
proxy are being sent to the shareholders of the Company is on or about March 28,
2000.
Outstanding Securities and Voting Rights
The record date for determining shareholders entitled to notice of and
to vote at the Annual Meeting is March 21, 2000. Only shareholders of record as
of that date will be entitled to notice of, and to vote at, the Annual Meeting.
On the record date 1,827,766 shares of common stock, no par value per
share, were outstanding and eligible to be voted at the Annual Meeting. Each
share of common stock is entitled to one vote.
All shares represented by valid proxies received pursuant to this
solicitation will be voted in favor of management's nominees to the Board of
Directors, in favor of the Amendments to the Certificate of Incorporation set
forth in Proposals 2, 3, 4 and 5, in favor of the 2000 Employee Stock Option
Plan and in favor of the 2000 Stock Option Plan for Non-Employee Directors,
unless the shareholder specifies a different choice by means of his Proxy or
revokes the proxy prior to the time it is exercised. Should any other matters
properly come before the Annual Meeting, the persons named as proxies will vote
upon such matters according to their discretion unless the shareholder otherwise
specifies in the Proxy.
4
Revocability of Proxies
Any shareholder giving a proxy has the right to attend and vote at the
Annual Meeting in person. A proxy may be revoked prior to the Annual Meeting by
sending written notice of revocation or a duly executed proxy bearing a later
date to the Company, 3535 Highway 9, Freehold, New Jersey 07728, Attn: Robert D.
O'Donnell, President. A proxy may be revoked at the Annual Meeting by filing
written notice of such revocation with the Secretary of the Annual Meeting prior
to the voting of such proxy.
Solicitation of Proxies
This proxy solicitation is being made by the Board of Directors of the
Company and the cost of the solicitation will be borne by the Company. In
addition to the use of the mails, proxies may be solicited personally or by
telephone or facsimile by officers, directors and employees of the Company who
will not be specially compensated for such solicitation activities. Arrangements
may 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 Company will reimburse such persons for their
reasonable expenses incurred in forwarding the materials.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The By-Laws of the Company provide that the number of Directors shall
not be less than 5 nor more than 25 and permit the exact number to be determined
from time to time by the Board of Directors. The Board currently consists of 9
members.
It is intended that the proxies solicited by the Board of Directors
will be voted for the nine persons named below (unless the shareholder otherwise
directs). If, for any reason, any of the nominees becomes unavailable for
election or service on the Board, the proxy solicited by the Board of Directors
will be voted for such substituted nominee(s) as is (are) selected by the Board
of Directors. The Board has no reason to believe that any of the named nominees
are not available or will not serve if elected.
In January 2000, Alan Cohen, a founding director of the Community Bank
of New Jersey (the "Bank"), resigned due to conflicting business obligations.
Each candidate for director has been nominated to serve a one year term
until the 2001 Annual Meeting of the Company and thereafter until his/her
successor shall have been duly elected and shall have qualified. However, in the
event that Proposal 2 is approved, the term of each director will become the
term described in Proposal 2. The names of the nominees for election and certain
information about them are set forth in the following table:
5
NOMINEES FOR ELECTION AS DIRECTORS AT
2000 ANNUAL MEETING
Principal Occupations Director of the
Name, Age and During Past Five Years Bank Since
Position with the Bank
Charles P. Kaempffer, CPA, 62 Certified Public Accountant 1997
Vice Chairman of the Board
Morris Kaplan, 45 President, Kaplan Companies 1997
(building and real estate development)
Robert M. Kaye, 63 President and owner, the PRC Group 1997
(real estate development and management);
also Chairman of the Board and Chief
Executive Officer of Metropolitan
Financial Corp., a thrift holding company
Eli Kramer, 45 Real Estate Developer 1997
Vice Chairman of the Board
William J. Mehr, Esq., 59 Senior Partner, Mehr & LeFrance, Esq. 1997
(attorneys)
Robert D. O'Donnell, 53 President and Chief Executive Officer of 1998
President and Chief Executive the Company and the Bank; Formerly
Officer Senior Executive Officer of Amboy
National Bank for over five (5) years
Arnold Silverman, 55 President, Pavillion Residential LTD 1997
(real estate development)
Howard Schoor, 61 Vice Chairman, D.R. Horton, Inc.-- 1997
Chairman of the Board New Jersey (custom home builder)
Lewis Wetstein, M.D., 52 Surgeon 1997
No director of the Company is also a director of a company having a
class of securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended, or subject to the requirements of Section 15(d) of such Act
or any company registered as an investment company under the Investment Bank Act
of 1940, other than Mr. Robert M. Kaye, who is a director of Metropolitan
Financial Corp., a reporting company under Section 12 of the Securities Exchange
Act of 1934 and Mr. Charles P. Kaempffer, who is a director of Monmouth Capital
Corporation, Monmouth Real Estate Investment Corporation and United Mobile
Homes, Inc., all reporting companies under Section 12 of the Securities Exchange
Act of 1934.
6
Board Meetings; Committees of the Board
During the fiscal year ended December 31, 1999, the Board of Directors
of the Company held two meetings. In addition, the Board of Directors of the
Bank, which consists of the same members as the Board of Directors of the
Company, met fifteen times during 1999. All Directors attended at least 75% of
board meetings and meetings of committees of the Board on which such Directors
served.
The Board of Directors maintained an Audit Committee (the "Audit
Committee") which consisted of Mr. Alan Cohen and Messrs. Kaempffer, Mehr and
Silverman during the fiscal year ended December 31, 1999. For 2000, Dr. Wetstein
has been nominated to replace Mr. Cohen on the Audit Committee. The Audit
Committee arranges for the Company's directors examinations through its
independent certified public accountant, reviews and evaluates the
recommendations of the directors examinations, receives all reports of
examination of the Company and the Bank by regulatory agencies, analyzes such
reports, and reports to the Company's Board the results of its analysis of the
regulatory reports. The Audit Committee met four times in 1999.
The Company maintains a Human Resources Committee which, among other
activities, sets the compensation for executive officers of the Company and the
Bank. During 1999, the Human Resources Committee consisted of Messrs. Kaplan,
O'Donnell, Schoor and Silverman and met twice.
The full Board acted as a nominating committee in 1999.
STOCK OWNERSHIP OF MANAGEMENT
AND PRINCIPAL SHAREHOLDERS
The following table sets forth, as of January 31, 2000, certain
information concerning the ownership of shares of the common stock by (i) each
person who is known by us to own beneficially more than five percent (5%) of the
issued and outstanding common stock, (ii) each director of the Company, (iii)
each named executive officer described in the section of this Proxy Statement
captioned "Executive Compensation," and (iv) all directors and executive
officers as a group. Except as otherwise indicated, each individual named has
sole investment and voting power with respect to the securities shown.
7
Number of Shares Percent of
Name of Directors and Executive Officers Beneficially Owned(1) Class
Charles P. Kaempffer, CPA, Vice Chairman
of the Board 29,629(2) 1.62%
Morris Kaplan 41,716(3) 2.28%
Robert M. Kaye 17,293(4) 0.95%
Eli Kramer, Vice Chairman of the Board 57,995(5) 3.17%
William J. Mehr 27,493(6) 1.50%
Robert D. O'Donnell, President and CEO 19,776(7) 1.08%
Howard Schoor, Chairman of the Board 92,976(8) 5.09%
Arnold Silverman 43,868(9) 2.40%
Lewis Wetstein, M.D. 71,116(10) 3.89%
------------ --------
All Directors and Executive Officers as
Group (11 persons) 403,407 22.07%
(1) Beneficially owned shares include shares over which the named person
exercises either sole or shared voting power or sole or shared
investment power. It also includes shares owned (i) by a spouse, minor
children or by relatives sharing the same home, (ii) by entities owned
or controlled by the named person, and (iii) by other persons if the
named person has the right to acquire such shares within 60 days by the
exercise of any right or option. Unless otherwise noted, all shares are
owned of record and beneficially by the named person.
(2) Includes 2,060 shares held by a benefit plan of which Mr. Kaempffer is
the beneficiary, 7,725 shares held by his spouse, and 8,926 shares
purchasable upon the exercise of stock options which may be exercised
within sixty (60) days.
(3) Includes 20,600 shares held jointly with Mr. Kaplan's son, and 4,120
shares purchasable upon the exercise of stock options which may be
exercised within sixty (60) days.
(4) Includes 3,775 shares purchasable upon the exercise of stock options
which may be exercised within sixty (60) days.
8
(5) Includes 14,766 shares held by trusts of which Mr. Kramer is trustee
for the benefit of his children, 26,780 shares held by a pension plan
for the benefit of Mr. Kramer, 1,030 shares held by Mr. Kramer's
spouse, and 9,613 shares purchasable upon the exercise of stock options
which may be exercised within sixty (60) days.
(6) Includes 9,579 shares held by Mr. Mehr's spouse, 1,778 shares held in
self directed IRAs for Mr. Mehr and his spouse, and 6,866 shares
purchasable upon the exercise of stock options which may be exercised
within sixty (60) days.
(7) Includes 15,450 shares purchasable upon exercise of stock options which
may be exercised within sixty (60) days.
(8) Includes 2,781 shares owned by Mr. Schoor's spouse and 10,300 shares
purchasable upon the exercise of stock options which may be exercised
within sixty (60) days.
(9) Includes 15,450 shares held in a self-directed IRA account for Mr.
Silverman's benefit, 20,039 shares held in trusts for the benefit of
Mr. Silverman's spouse and children, and 6,864 shares purchasable upon
the exercise of stock options which may be exercised within sixty (60)
days.
(10) Includes 75 shares held jointly with Dr. Wetstein's son and 4,805
shares purchasable upon the exercise of stock options which may be
exercised within sixty (60) days.
9
Compensation of the Board of Directors
We do not currently pay directors' fees to members of our Board,
although we will review payment of director's fees in the future. The Board of
Directors do participate in the 1997 Stock Option Plan for Non-Employee
Directors and the 1997 Stock Option Plan. Pursuant to these Plans, members of
the Board of Directors received stock options to purchase shares of our common
stock. No options were granted to directors under these plans in 1999. If
Proposal 7 is approved by shareholders, it is anticipated that the Board of
Directors will participate in the 2000 Stock Option Plan for Non-Employee
Directors.
Executive Compensation
The following table sets forth a summary of the cash and non-cash
compensation awarded to, earned by, or paid to, the Chief Executive Officer of
the Company since he commenced employment with the Company in May, 1998. The
Chief Executive Officer is the only officer or employee whose cash remuneration
exceeds $100,000.
SUMMARY COMPENSATION TABLE
Cash and Cash Equivalent
Forms of Remuneration
Long Term
Other Compensation
Annual Securities
Name and Principal Annual Annual Compen- Underlying
Position Year Salary Bonus sation Options
- -------- ---- ------ ----- ------ -------
Robert D. O'Donnell, 1999 $151,008 $25,350 $ (2) ---
President and Chief
Executive Office
1998(1) $97,807 $0 $ (2) 75,000
(1) Mr. O'Donnell was hired as President and Chief Executive Officer on May
8, 1998 at an annual salary of $151,000.
(2) Other annual compensation includes expenses incurred for the use of an
automobile. The Company believes the value of the personal use of such
vehicle was less than 10% of Mr. O'Donnell's salary and bonus.
On May 8, 1998, we retained Mr. Robert D. O'Donnell as President and
Chief Executive Officer at an original base salary of $151,000. Mr. O'Donnell
will be entitled to receive an annual increase of at least 10%, provided that
the Company has met certain performance targets. Mr. O'Donnell will also be
entitled to an annual cash bonus in an amount equal to 5% of our after tax net
profit. If Mr. O'Donnell is terminated for any reason other than for "cause", he
is entitled to continue to receive his then current base salary and bonus for
the next twenty-four (24) months. In the event of a change in control of the
Company, Mr. O'Donnell is entitled to twice his then current base salary and
bonus, payable at the option of Mr. O'Donnell either in a lump sum, or over a
period of twenty-four (24)months.
10
STOCK OPTION PLANS
During 1997, the Bank's Board of Directors approved the 1997 Stock
Option Plan, the 1997 Employee Stock Option Plan and the 1997 Option Plan for
Non-Employee Directors. Under the 1997 Stock Option Plan, directors of the Bank,
including employees who are directors of the Bank, may be granted non-qualified
or incentive stock options. The 1997 Stock Option Plan provides for the grant of
options to purchase up to 60,770 shares of common stock. Pursuant to the terms
of the 1997 Stock Option Plan, options which qualify as incentive stock options
under the Internal Revenue Code of 1986, must be granted at an exercise price of
no less than 100% of the then current fair market value of the common stock and
options which are non-statutory options may be granted at an exercise price to
be determined by the Board of Directors at the time of grant, but no less than
85% of the then fair market value of the common stock.
The 1997 Employee Stock Option Plan permits grants of options to
purchase up to 51,500 shares of common stock. Under the 1997 Employee Stock
Option Plan, grants may either be incentive stock options or non-qualified
options. The 1997 Employee Stock Option Plan is administered by the Board of
Directors, which has the authority to determine the officers and employees of
the Bank who will receive options, whether the options will be incentive stock
options or non-qualified options and, subject to the terms of the Plan, the
exercise price for the options. Under the Plan, incentive stock options must
have an exercise price of no less than 100% of the fair market value of the
common stock on the date of grant, and non-qualified options may have an
exercise price to be determined by the Board of Directors at grant, but no less
than 85% of the fair market value of the common stock on the date of grant.
The 1997 Stock Option Plan for Non-Employee Directors permits grants of
options to purchase up to 47,740 shares of common stock. Under the 1997 Stock
Option Plan for Non-Employee Directors, each director who is not an employee of
the Company, upon the adoption of the Plan or when first appointed or elected a
member of the Board, shall receive a grant of non-qualified options under
Section 422 of the Internal Revenue Code of 1986 to purchase 5,000 shares of the
Company's common stock. The exercise price of the options will be the greater of
$11.00 per share or 100 % of the fair market value of the common stock on the
date of grant, whichever is greater.
In May, 1998, the Board of Directors of the Bank adopted the 1998 Stock
Option Plan pursuant to which options may be granted to employees of the Bank.
The 1998 Stock Option Plan provides for the granting of options to purchase up
to 51,500 shares of common stock. The terms of the 1998 Stock Option Plan are
substantially similar to the terms of the 1997 Employee Stock Option Plan.
In January, 2000, the Board of Directors of the Company adopted the
2000 Employee Stock Option Plan pursuant to which options may be granted to
employees of the Company. The 2000 Employee Stock Option Plan provides for the
granting of options to purchase up to 70,000 shares of common stock. The terms
of the 2000 Employee Stock Option Plan are substantially similar to the terms of
the 1997 Employee Stock Option Plan. Implementation of the 2000 Employee Stock
Option Plan is subject to the approval of the shareholders. See Proposal 6.
In January, 2000, the Board of Directors of the Company also adopted
the 2000 Stock Option Plan for Non-Employee Directors pursuant to which options
may be granted to directors who are not employees of the Company. The 2000 Stock
Option Plan for Non-Employee Directors provides for the granting of options to
purchase up to 85,000 shares of common stock. Under the 2000 Stock Option Plan
for Non-Employee Directors, the exercise price for the purchase of shares under
the options is no less than
11
105% of the fair market value of the shares on the date of the grant.
Implementation of the 2000 Stock Option Plan for Non-Employee Directors is
subject to shareholder approval. See Proposal 7.
During 1999, no options were granted to any named executive officer
described in the section of this Proxy Statement captioned "Executive
Compensation".
The following table sets forth information concerning the fiscal
year-end value of unexercised options held by the executive officers of the
Company named in this Proxy Statement under the caption "Executive
Compensation". No stock options were exercised by such executive officers during
1999.
Value of Unexercised In-the-Money
Number of Securities Underlying Options at FY-End (1)
Unexercised Options at FY-End (#) (based on $14.875 per share)
Exercisable/Unexercisable Exercisable/Unexercisable (1)
-------------------------------------- --------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Robert D. O'Donnell 15,450 61,800 $4,656 $18,622
(1) Market value of the underlying securities at year end (based upon the
closing price on the NASDAQ SmallCap Market) minus the exercise price
per share. Options vest and become exercisable over a five year period
beginning one year after the date of grant, subject to acceleration in
certain circumstances.
Certain Transactions with Management
We have in the past and expect to continue in the future to undertake
banking transactions with our directors, executive officers and their associates
(i.e., corporations or organizations for which they serve as officers or
directors or in which they have beneficial ownership interests of ten percent or
more). Pursuant to the order of the New Jersey Department of Banking and
Insurance approving our charter, we are prohibited from making loans to our
directors or certain of their affiliates for three (3) years from the date our
Certificate of Authority was issued May 12, 1997.
Required Vote
Directors will be elected by a plurality of the votes cast at the
Annual Meeting whether in person or by proxy.
Recommendation
The Board of Directors unanimously recommends a vote in favor of its
nominees for Director.
12
OVERVIEW OF THE PROPOSED AMENDMENTS
TO THE COMPANY'S CERTIFICATE OF INCORPORATION
The Board of Directors has unanimously approved and recommended that
the shareholders of the Company approve certain proposed amendments to the
Certificate of Incorporation which are set forth in this proxy statement as
Proposals 2 through 4 (the "Amendments"). The Amendments are discussed in detail
below. In general, the Amendments provide for (i) a classified Board of
Directors; (ii) that directors may not be removed by shareholders without cause;
(iii) that the affirmative vote of 80% of the outstanding shares of common stock
are required to approve a merger, consolidation or sale of substantially all of
the Company's assets, unless such proposed transaction is approved by a majority
of the Board of Directors, and further that any amendment to this super-majority
voting provision require the approval of 80% of the outstanding shares of common
atock; and (iv) prior notice of any shareholder nominations and proposals.
In forming the Bank, the members of the Board of Directors envisioned a
community-based institution which would serve the local communities surrounding
its branches, while also providing a return to its shareholders. The Board of
Directors has viewed, with increasing concern, the accelerating pace of
consolidation in the banking industry, especially within New Jersey, as local,
community-based institutions are purchased by multi-state bank holding
companies, frequently headquartered outside of New Jersey. The Board believes
that this consolidation and geographical dislocation have caused a reduction in
the commitment of these institutions to their local community. The Board has
also noted certain tactics employed by certain investors, including the
accumulation of substantial holdings of common stock and proxy fights designed
to force the Board of Directors to sell an institution, regardless of its long
term business plan and prospects or service to its communities. The Board
considers these tactics to be highly disruptive to a company, and considers the
aim of these tactics to require a Board of Directors to satisfy the short term
investment objectives of certain investors while ignoring the long-term
prospects of the institution and the communities served by the institution. The
Amendments are being submitted for stockholder approval in response to these
activities.
A classified Board, together with the removal of directors only for
cause and super-majority voting, will by making it more time-consuming for a
substantial shareholder or shareholders to gain control of the Board or the
Company without the consent of the incumbent Board, ensure some continuity of
management of the business and affairs of the Company and provide the Board with
sufficient time to review any proposal from the substantial shareholders. The
requirement that shareholders provide the Board with advance notice of proposals
or nominations, along with certain other information, will ensure that the Board
has adequate time and information to determine whether the proposal or
nomination is in the best interests of the shareholders.
The Amendments are not being recommended in response to any specific
effort of which the Company is aware to accumulate the common stock or to obtain
control of the Company but rather are being recommended to assure fair treatment
of the Company's shareholders in takeover situations.
The Amendments are being presented to shareholders of the Company for
their approval as a single proposal. As more fully described below, the Board of
Directors believes that the Amendments will effectively reduce the possibility
that a third party could effect a sudden change in the majority control of the
Board of Directors without the support of the incumbent directors. However, the
Amendments may have significant effects on the ability of shareholders of the
Company to effect an immediate change in the composition of the Board of
Directors and otherwise to exercise their voting power to affect the composition
of the Board. Accordingly, shareholders are urged to read carefully the
13
following portions of this section of the Proxy Statement and the relevant
portions of Exhibit A hereto, which sets forth the full text of the Amendments,
before voting on the Amendments.
SUMMARY OF AMENDMENTS
Classified Board of Directors. The proposed amendment to Article III of
the Certificate of Incorporation provides that directors will be classified into
three classes, as nearly equal in number as possible, with the terms of office
of one class expiring each year. One class of directors, consisting of Directors
Howard Schoor, Robert Kaye and Arnold Silverman, will hold office initially for
a term expiring at the 2001 annual meeting; a second class of Directors,
consisting of directors William Mehr, Charles Kaempffer and Robert D. O'Donnell
will hold office initially for a term expiring at the 2002 annual meeting; and a
third class of directors, consisting of Directors Dr. Lewis Wetstein, Eli Kramer
and Morris Kaplan would hold office initially for a term expiring at the 2003
annual meeting. At each annual meeting following this initial classification and
election, the successors to the class of directors whose terms expire at that
meeting would be elected for a term of office to expire at the third succeeding
annual meeting after their election and until their successors have been duly
elected and qualified.
The proposed classified board amendment will significantly extend the
time required to effect a change in control of the Board of Directors and may
discourage hostile takeover bids for the Company. Currently, a change in control
of the Board of Directors can be made by shareholders holding a plurality of
votes cast at a single annual meeting. If the Company implements a classified
Board of Directors, it will take at least two annual meetings for a majority of
shareholders to make a change in control of the Board of Directors, because only
a minority of the directors will be elected at each meeting.
Removal of Directors for Cause. New Jersey law states that directors
may be removed without cause by an affirmative vote of a majority of
shareholders unless a corporation's certificate of incorporation provides
otherwise. The Company's Certificate of Incorporation currently does not
prohibit shareholder removal of directors without cause. The proposed amendment
to Article III of the Certificate of Incorporation would deny shareholders the
right to remove a director without cause. According to the amendment,
shareholders may only vote to remove a director for cause which is demonstrated
if the director (i) is convicted of a felony; (ii) is declared by court order to
be of unsound mind or, (iii) has been shown by clear and convincing evidence to
have acted in bad faith to produce a gross abuse of trust.
One effect of the proposed amendment may be to make it more difficult
for holders of a majority of shares of common stock to remove directors, should
they deem it to be in their best interest to do so. In conjunction with the
proposed classified Board amendment, this amendment should render more
difficult, and may discourage, an attempt to acquire control of the Company
without the approval of the Board and the Company's management. The proposed
amendment will make it impossible for someone who acquires voting control of the
Company immediately to remove the incumbent directors who may oppose such person
and to replace them with more friendly directors, and will instead require such
a person to demonstrate cause for removal of an incumbent director or replace
incumbent directors as their terms expire over a period of up to three years.
Shareholders should also recognize that this amendment will also make
more difficult the removal of a director in circumstances which do not
constitute a takeover attempt and where an ultimate change in the incumbent
Board might be desired by a majority shareholders without a showing of cause.
Super-Majority Vote for Approval of Certain Business Combinations. New
Jersey law requires the affirmative vote of a majority of the shares entitled to
vote thereon for approval of a merger or
14
consolidation. A corporation may provide in its certificate of incorporation for
greater voting requirements to approve a merger or consolidation under New
Jersey law. The proposed addition of Article X to the Certificate of
Incorporation requires the affirmative vote of 80% of the outstanding common
stock entitled to vote thereon to approve or authorize a merger, consolidation
or disposition of all or substantially all of the Company's assets.
The requirement for approval by 80% of the outstanding shares of common
stock does not apply, however, to any merger, consolidation or asset sale which
has been approved by a majority of directors prior to the vote of shareholders.
In that case, a simple majority vote would be required to approve such a
transaction.
The proposed amendment also requires the affirmative vote of 80% of the
outstanding shares of common ctock to further amend Article X of the
Certificate of Incorporation. The requirement of an increased shareholder vote
to Article X will prevent a person holding or controlling a majority, but less
than 80%, of the outstanding shares of common stock from avoiding the
requirements of the proposed amendment by simply repealing it.
The proposed amendment requiring a super majority vote for the approval
of certain business combinations could have the effect of preventing the Company
from engaging in a business combination transaction which a majority of the
shareholders believe is financially beneficial and in their best interests. If
the Board of Directors of the Company has not approved the transaction, a
relatively small percentage of shareholders will have the power to block any
proposed transaction. The amendment could, therefore, have the effect of
limiting the ability of shareholders to cause the corporation to engage in
certain business combination transactions.
Advance Notice For the Nomination of Directors and Special Meetings of
Shareholders. This provision requires advance notice for the nomination for the
election of directors and shareholder proposals to be given as provided in the
Company's Bylaws. The Bylaws will be amended to require that notice of a
nomination to the Board, other than by the Board, or a shareholder proposal not
adopted by the Board of Directors, be submitted to the Company at least 75 days
before the intended mailing date of the proxy statement for such meeting, unless
different time periods are required by any Federal law applicable to the
Company.
The purpose of this proposal is to ensure that the Board of Directors
receives adequate information and adequate time to assess the qualifications of
any proposed nominee to the Board of Directors and the merits of any shareholder
proposal. In this way, the Board will have sufficient time and information to
determine whether any proposed nomination or proposal is in he best interest of
the Company's shareholders. The requirement of advance notice of shareholder
proposals for the Company's annual meeting is consistent with the regulations of
the Securities and Exchange Commission applicable to companies which are subject
to the reporting requirements of the Securities Exchange Act of 1934, as
amended.
The proposed amendment requiring advance notice for the nomination of
directors and other shareholder proposals could have the effect of making it
more difficult for a shareholder to nominate a candidate for election to the
Board of Directors in opposition to the current Board of Directors or to
otherwise make a proposal for shareholder approval. The amendment requires that
shareholders wishing to make a nomination to the Board of Directors or propose a
shareholder proposal follow certain procedural requirements. Failure to follow
these requirements could result in the Company not being obligated to recognize
the nomination or proposal. Adoption of this amendment could, therefore, make it
more difficult for a shareholder to nominate a candidate to the Board of
Directors in opposition to the current Board or to otherwise offer a shareholder
proposal.
15
PROPOSAL 2 - APPROVAL OF AMENDMENTS
TO THE CERTIFICATE OF INCORPORATION
REGARDING CLASSIFICATION OF AND REMOVAL OF DIRECTORS
The matters to be considered and voted upon under Proposal 2 consist of
Amendments to the Company's Certificate of Incorporation to provide for (i) a
classified Board of Directors; (ii) a requirement that directors of the Company
may not be removed by shareholders without cause.
Required Vote
In order for the Amendments to be approved, the affirmative vote of a
majority of the shares of common ctock cast at the Annual Meeting is required.
Unless marked to the contrary, the shares represented by the enclosed
proxy card, if executed and returned, will be voted "FOR" approval of the
Amendments.
Recommendation
The Board of Directors unanimously recommends that you vote for Proposal 2.
PROPOSAL 3 - APPROVAL OF AN AMENDMENT
TO THE CERTIFICATE OF INCORPORATION
PROVIDING FOR A SUPER MAJORITY VOTING PROVISION
The matters to be considered and voted upon under Proposal 3 consists
of an Amendment to the Company's Certificate of Incorporation to provide for an
Amendment to the Company's Certificate of Incorporation to require the
affirmative vote of 80% of the outstanding common stock of the Company for
approval of certain business combination transactions and to further require an
affirmative vote of 80% of the outstanding common stock to amend this
super-majority voting provision.
Required Vote
In order for the Amendments to be approved, the affirmative vote of a
majority of the shares of common stock cast at the Annual Meeting is required.
Unless marked to the contrary, the shares represented by the enclosed
proxy card, if executed and returned, will be voted "FOR" approval of the
Amendmens set forth in Proposal 3.
Recommendation
The Board of Directors unanimously recommends that you vote for
Proposal 3.
16
PROPOSAL 4 - APPROVAL OF AN AMENDMENT TO THE
CERTIFICATE OF INCORPORATION TO REQUIRE ADVANCE
NOTIFICATION OF CERTAIN SHAREHOLDER PROPOSALS AND NOMINATIONS
The matters to be considered and voted upon under Proposal 4 consists
of a requirement that the Bylaws of the Company be amended to require that
notice of a nomination to the Board of Directors, other than by the Board, or a
shareholder proposal not adopted by the Board of Directors, be submitted to the
Company at least 75 days before the intended mailing date of the Proxy Statement
for such meeting, unless different time periods are required by any Federal law
applicable to the Company.
Required Vote
In order for Proposal 4 to be approved, the affirmative vote of a
majority of the shares of common stock cast at the Annual Meeting is required.
Unless marked to the contrary, the shares represented by the enclosed
proxy card, if executed and returned, will be voted "FOR" approval of Proposal
4.
Recommendation
The Board of Directors unanimously recommends that you vote for
Proposal 4.
PROPOSAL 5 - APPROVAL OF AN AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
TO CREATE PREFERRED STOCK AND
TO INCREASE THE AUTHORIZED COMMON STOCK
The Board of Directors has unanimously approved and recommended that
the shareholders of the Company approve a proposed amendment (the "Stock
Amendment") to the Company's Certificate of Incorporation creating a new class
of 1,000,000 authorized shares of Series Preferred Stock (the "Preferred
Stock"), and increasing the number of shares of authorized common stock of the
Company from 5,000,000 to 10,000,000. The Stock Amendment will provide the Board
of Directors the authority to set the specific terms, rate of dividends,
preferences and conditions of any series of Preferred Stock upon its issuance,
without further shareholder approval. By increasing the authorized shares of
common stock the Stock Amendment will provide the Board of Directors with
additional flexibility regarding any future issuance of stock, stock dividends,
stock options or other purchase rights.
The Board does not have any current plans to issue shares of Preferred
Stock, and adoption of Proposal 5 will not cause any current change to the
Company's outstanding capitalization. However, the Board of Directors believes
that having so-called "blank check" Preferred Stock authorized in the Company's
Certificate of Incorporation will provide the Board with greater flexibility in
raising capital for the Company. The use of Preferred Stock may permit the
Company to raise capital without diluting the voting interests or ownership
interests of current holders of the common stock. Permitting the Board to set
the terms, rates, conditions and preferences of any issuance of any series of
Preferred Stock at the time the stock is issued, without further shareholder
approval, will permit the Board the maximum flexibility and allow the Board to
react to potentially changing market conditions or business opportunities which
require capital. In certain situations, issuance of a series of Preferred Stock
could hinder the ability of a third-party to take control of the Company.
17
Similarly, the Board believes that the additional shares of common
stock to be authorized by the Amendment will increase the flexibility of the
Company in the future if the Board should determine that it is in the Company's
best interest to issue additional shares of common stock, whether by means of
stock dividends or otherwise, options or other purchase rights for any purpose,
including to raise capital, undertake acquisitions, issue stock dividends, or
hire, retain or reward the Company's employees or directors.
Required Vote
In order for the Stock Amendment to be approved, the affirmative vote
of a majority of the shares of common stock cast at the Annual Meeting is
required.
Unless marked to the contrary, the shares represented by the enclosed
proxy card, if executed and returned, will be voted "FOR" approval of the Stock
Amendment.
Recommendation
The Board of Directors unanimously recommends that you vote for the
Preferred Stock Amendment.
PROPOSAL 6 - APPROVAL OF THE COMMUNITY BANCORP OF NEW JERSEY
2000 EMPLOYEE STOCK OPTION PLAN
The Board of Directors has approved for submission to the shareholders
The Community Bancorp of New Jersey 2000 Employee Stock Option Plan (the "2000
Employee Option Plan"), set forth as Exhibit B to this Proxy Statement.
Introduction
As the Company has continued to expand, the Board believes that the
Company will need additional senior employees to manage and continue the
Company's growth. The Board believes that the ability to offer potential
employees stock options, permitting the employee to share in the growth in the
Company, is an important recruitment tool. Presently, the Company has no
remaining shares authorized under its existing employee option programs. For
these reasons, the Board of Directors in January 2000 approved the 2000 Employee
Option Plan, subject to shareholder approval.
Administration
The 2000 Employee Option Plan will be administered by the Company's
Board of Directors, which will have power to designate the optionees and to
determine the number of shares subject to each option, the date of grant and the
terms and conditions governing the option, including any vesting schedule. The
Board of Directors will designate whether options granted under the 2000
Employee Option Plan will be non-statutory stock options or incentive stock
options under the Code. In addition, the Board is charged with the
responsibility of interpreting the 2000 Employee Option Plan and making all
administrative determinations thereunder.
18
Eligibility
All employees of the Company are eligible to receive options under the
2000 Employee Option Plan.
Shares Subject to the Plan
The 2000 Employee Option Plan authorizes the Company to issue 70,000
shares of the Company's common stock pursuant to options.
The 2000 Employee Option Plan provides that the number and price of
shares available for stock options and the number of shares covered by
outstanding stock options shall be adjusted equitably for stock splits, stock
dividends, recapitalizations, mergers and other changes in the common stock.
Term
Options granted under the 2000 Employee Option Plan will have terms of
ten years, subject to earlier termination of the options as provided in the 2000
Employee Option Plan.
Exercise Price
The 2000 Employee Option Plan provides that options which qualify as
incentive stock options ("ISO") under the Internal Revenue Code of 1986 (the
"Code") are to be granted at an exercise price equal to 100% of the fair market
value of the common stock purchasable upon exercise of the option on the date of
the grant of the option and non- statutory options may be granted at a price no
less than 85% of the fair market value on the date of grant of the option. Fair
market value is to be determined by the Board of Directors in good faith.
The 2000 Employee Option Plan provides that the purchase price for
shares acquired pursuant to the exercise of any option is payable in full at the
time of exercise.
Options Granted Subject To Approval
The Board of Directors of the Company has approved the following option
grants to the individuals named below, subject to shareholder approval of
Proposal 6.
Number of Shares
Name Subject to Options Exercise Price
---- ------------------ --------------
Robert D. O'Donnell 11,000 $13.871
James Kinghorn 10,000 $13.871
Tax Consequences
Under the 2000 Employee Option Plan, the Board of Directors may
designate whether an option is to be a non-statutory option or an ISO under the
Internal Revenue Code at the time of grant. The grant of a non-statutory option
which has no readily ascertainable fair market value at the time it is granted
is not taxable to the recipient of the option for federal income tax purposes at
the time the option is granted. The options granted under the 2000 Employee
Option Plan should be considered as having no
19
readily ascertainable fair market value at the time of grant because they are
not tradeable on an established market.
The recipient of a non-statutory option realizes compensation taxable
as ordinary income at the time the option is exercised or transferred. The
amount of such compensation is equal to the amount by which the fair market
value of the stock acquired upon exercise of the option exceeds the amount
required to be paid for such stock. At the time the compensation income is
realized by the recipient of the option, the Company is entitled to an income
tax deduction in the amount of the compensation income, provided applicable
rules pertaining to tax withholding are satisfied and the compensation
represents an ordinary and necessary business expense of the Company. The stock
acquired upon exercise of the option has an adjusted basis in the hands of the
recipient equal to its fair market value taken into account in determining the
recipient's compensation and a holding period commencing on the date the stock
is acquired by the recipient. At the time the stock is subsequently sold or
otherwise disposed of by the recipient, the recipient will recognize a taxable
capital gain or loss measured by the difference between the adjusted basis of
the stock at the time it is disposed of and the amount realized in connection
with the transaction. The long term or short term nature of such gain or loss
will depend upon the applicable holding period for such stock.
For federal income tax purposes, no taxable income results to the
optionee upon the grant of an ISO or upon the issuance of shares to the optionee
upon the exercise of the option. Correspondingly, no deduction is allowed to the
Company upon either the grant or the exercise of an ISO.
If shares acquired upon the exercise of an ISO are not disposed of
either within the two-year period following the date the option is granted or
within the one-year period following the date the shares are issued to the
optionee pursuant to exercise of the option, the difference between the amount
realized on any disposition thereafter and the option price will be treated as a
long-term capital gain or loss to the optionee. If a disposition occurs before
the expiration of the requisite holding periods, then the lower of (i) any
excess of the fair market value of the shares at the time of exercise of the
option over the option price or (ii) the actual gain realized on disposition,
will be deemed to be compensation to the optionee and will be taxed at ordinary
income rates. In such event, the Company will be entitled to a corresponding
deduction from its income, provided the Company withholds and deducts as
required by law. Any such increase in the income of the optionee or deduction
from the income of the Company attributable to such disposition is treated as an
increase in income or a deduction from income in the taxable year in which the
disposition occurs. Any excess of the amount realized by the optionee on
disposition over the fair market value of the shares at the time of exercise
will be treated as capital gain.
Recommendation and Vote Required for Approval
The Board has unanimously approved the Option Plan and believes that it
is in the best interests of the shareholders and recommends that the
shareholders approve the 2000 Employee Option Plan. Under the New Jersey
Business Corporation Act, adoption of the 2000 Employee Option Plan by the
Company requires the vote of the majority of votes cast at the Annual Meeting.
The Board of Directors unanimously recommends that you vote in favor of the 2000
Employee Option Plan.
20
PROPOSAL 7 - APPROVAL OF THE COMMUNITY BANCORP OF NEW JERSEY
2000 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
The Board of Directors has approved for submission to the shareholders
The Community Bancorp of New Jersey 2000 Stock Option Plan for Non-Employee
Directors (the "2000 Directors Option Plan") set forth as Exhibit C to this
Proxy Statement.
Introduction
Since the inception of the Bank, directors of the Bank and of the
Company have served without receiving director's fees. The Board elected to
forego director's fees while the Bank and the Company were not profitable, and
have focused on generating returns for shareholders in the early stages of the
Company's profitability. Members of the Board have spent considerable personal
time developing business for the Company and assisting management in expanding
the Company. In recognition of the considerable time spent by members of the
Board on the business of the Bank, and in recognition of the success that the
Company has achieved through its first 2 1/2 years of operations, the Board of
Directors has concluded that it is appropriate and in the best interest of the
shareholders to reward the directors with options which will vest over the next
two years. This vesting schedule will help insure that the Company and the Bank
continue to receive the benefits of the experience and business acumen of
members of the Board of Directors by providing them an incentive to continue to
serve. In addition, under the terms of the 2000 Directors Option Plan, options
are to be granted at an exercise price of 105% of the fair market value of the
common stock. Therefore, since the exercise price of options will be greater
than the fair market value of the common stock, the directors will not benefit
from the options unless all shareholders benefit through the increase in value
of the common stock. For these reasons, the Board of Directors in January 2000
approved the 2000 Directors Option Plan, subject to shareholder approval, and
issued options thereunder.
Administration
The 2000 Directors Option Plan will be administered by the Company's
Board of Directors, which will have power to designate the optionees and to
determine the number of shares subject to each option, the date of grant and the
terms and conditions governing the option, including any vesting schedule. In
addition, the Board is charged with the responsibility of interpreting the 2000
Directors Option Plan and making all administrative determinations thereunder.
The options granted under the 2000 Directors Option Plan will be non-statutory
stock options under the Code.
Eligibility
All directors who are not employees of the Company are eligible to
receive options under the 2000 Directors Option Plan.
Shares Subject to the Plan
The 2000 Directors Option Plan authorizes the Bank to issue 85,000
shares of the common stock pursuant to options.
The 2000 Directors Option Plan provides that the number and price of
shares available for stock options and the number of shares covered by
outstanding stock options shall be adjusted equitably for stock splits, stock
dividends, recapitalizations, mergers and other changes in the common stock.
21
Term
Options granted under the 2000 Directors Option Plan will have terms of
ten years, subject to earlier termination of the options as provided in the 2000
Directors Option Plan.
Exercise Price
The 2000 Directors Option Plan provides that options are to be granted
at an exercise price equal to 105% of the fair market value of the common stock
purchasable upon exercise of the option on the date of the grant of the option.
Fair market value is to be determined by the Board of Directors in good faith.
The purchase price for shares acquired pursuant to the exercise of any option is
payable in full at the time of exercise.
Options Granted Subject To Approval
The Board of Directors of the Company has approved the following option
grants to the individuals named below, subject to shareholder approval of
Proposal 7:
Number of Shares
Name Subject to Options Exercise Price
---- ------------------ --------------
Howard Schoor 11,000 13.781
Eli Kramer 11,000 13.781
Charles Kaempffer 8,000 13.781
William Mehr 8,000 13.781
Arnold Silverman 11,000 13.781
Louis Wetstein, M.D. 8,000 13.781
Morris Kaplan 8,000 13.781
Robert Kaye 8,000 13.781
The exercise price of $13.781 for options granted under the 2000 Plan
was 105% of the fair market value of the Company's common stock on January 20,
2000, the date of grant of these options.
Tax Consequences
The options granted under the 2000 Directors Option Plan will be
treated as non-statutory options for federal income tax purposes. The grant of a
non-statutory option which has no readily ascertainable fair market value at the
time it is granted is not taxable to the recipient of the option for federal
income tax purposes at the time the option is granted. The options granted under
the 2000 Directors Option Plan should be considered as having no readily
ascertainable fair market value at the time of grant because they are not
tradeable on an established market.
22
The recipient of a non-statutory option realizes compensation taxable
as ordinary income at the time the option is exercised or transferred. The
amount of such compensation is equal to the amount by which the fair market
value of the stock acquired upon exercise of the option exceeds the amount
required to be paid for such stock. At the time the compensation income is
realized by the recipient of the option, the Company is entitled to an income
tax deduction in the amount of the compensation income, provided applicable
rules pertaining to tax withholding are satisfied and the compensation
represents an ordinary and necessary business expense of the Company. The stock
acquired upon exercise of the option has an adjusted basis in the hands of the
recipient equal to its fair market value taken into account in determining the
recipient's compensation and a holding period commencing on the date the stock
is acquired by the recipient. At the time the stock is subsequently sold or
otherwise disposed of by the recipient, the recipient will recognize a taxable
capital gain or loss measured by the difference between the adjusted basis of
the stock at the time it is disposed of and the amount realized in connection
with the transaction. The long term or short term nature of such gain or loss
will depend upon the applicable holding period for such stock.
Recommendation and Vote Required for Approval
The Board has unanimously approved the 2000 Directors Option Plan and
believes that it is in the best interests of the shareholders and recommends
that the shareholders approve the 2000 Directors Option Plan. Under the New
Jersey Business Corporation Act, adoption of the 2000 Directors Option Plan by
the Company requires the vote of the majority of votes cast at the Annual
Meeting. The Board of Directors unanimously recommends that you vote in favor of
the 2000 Directors Option Plan.
RELATIONSHIP WITH INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The firm of Grant Thornton LLP, independent certified public
accountants, has audited the books and records of the Company for 1999. The
Board expects to retain Grant Thornton LLP as the Company's independent
certified public accountants for the 2000 fiscal year.
Grant Thornton LLP has advised the Company that one or more of its
representatives will be present at the Annual Meeting to make a statement if
they so desire and to respond to appropriate questions.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater than ten percent
stockholders are required by regulation of the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) forms they
file.
The Company believes that during the fiscal year ended December 31,
1999, Dr. Lewis Wetstein, a director, failed to timely file reports based on the
purchase of 855 shares of common stock in several transactions in 1999. Dr.
Wetstein subsequently filed a Form 5 reporting these transactions. In addition,
23
Arnold Silverman, a director, failed to timely file one report based on the
purchase of 900 shares of common stock. He has also subsequently reported this
transaction on a Form 5. The Company believes that all other persons subject to
Section 16(a) have made all required filings for the fiscal year ended December
31, 1999.
SHAREHOLDER PROPOSALS
Proposals of shareholders to be included in the Company's 2001 proxy
material must be received by the Secretary of the Company no later than November
24, 2000.
At the 2001 annual meeting of stockholders or special meeting in lieu
thereof, the persons named as proxies in the Company's proxy for the meeting may
vote the proxy in their discretion on any proposal received by the Company after
February 6, 2001.
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come
before the Annual Meeting. However, in the event such other matters come before
the meeting, it is the intention of the persons named in the proxy to vote on
any such matters in accordance with the recommendation of the Board of
Directors.
Shareholders are urged to sign the enclosed proxy, which is solicited
on behalf of the Board of Directors, and return it in the enclosed envelope.
24
EXHIBIT A
Article III of the Certificate of Incorporation is deleted in
its entirety and replaced as follows:
(A) The number of directors constituting the entire
Board of Directors shall be governed by the Bylaws of the
Corporation. The Board of Directors shall be divided into
three (3) classes, as nearly identical in number as the then
total number of directors constituting the entire board
permits, with the term of office of one class expiring each
year. Upon adoption of this provision, the Board shall select
the class into which each Director is assigned. At the first
annual meeting of stockholders after adoption of this
provision, directors of the first class shall be elected to
hold office for a term expiring at the next succeeding annual
meeting, directors of the second class shall be elected to
hold office for a term expiring at the second succeeding
annual meeting and directors of the third class shall be
elected to hold office for a term expiring at the third
succeeding annual meeting. Any vacancies in the Board of
Directors for any reason, and any directorships resulting from
any increase in the number of directors, may be filled by the
Board of Directors, acting by a majority of the directors then
in office, although less than a quorum, and any directors so
chosen shall hold office until the next election of the class
for which such directors shall have been chosen and until
their successors shall be elected and qualified. At each
annual meeting of stockholders the successors to the class of
directors whose term shall then expire shall be elected to
hold office for a term expiring at the third succeeding annual
meeting.
(B) None of the present or future directors of the
Corporation may be removed without cause by the shareholders
of the Corporation. The term "cause" as used herein is defined
to mean (i) conviction of the director of a felony, (ii)
declaration by order of a court that the director is of
unsound mind; (iii) breach of fiduciary duty involving
personal profit which is proven by clear and convincing
evidence to have been committed in bad faith; or (iv)
violation of any final cease and desist order issued by any
regulatory agency having jurisdiction over the Corporation or
its business. The Board of Directors shall have the power to
remove directors and to suspend directors pending a final
determination that cause exists for removal.
Article V of the Certificate of Incorporation is deleted in
its entirety and replaced as follows:
(A) The total authorized capital stock of the
Corporation shall be 11,000,000 shares, consisting of
10,000,000 shares of Common Stock and 1,000,000 shares of
Preferred Stock which may be issued in one or more classes or
series. The shares of Common Stock and the shares of Preferred
Stock of each class or series shall be without nominal or par
value, except that the amendment authorizing the initial
issuance of any class or series of Preferred Stock, adopted by
the Board of Directors as provided herein, may provide that
shares of any class or series shall have a specified par value
per share, in which event all of the shares of such class or
series shall have the par value per share so specified.
(B) The Board of Directors of the
Corporation is expressly authorized from time to time
to adopt and to cause to be executed and filed
without further approval of the shareholders,
amendments to this Certificate of Incorporation
authorizing the issuance of one or more classes or
series of Preferred Stock for such consideration as
the Board of Directors may fix. In an amendment
authorizing any class or series of Preferred Stock,
the Board of Directors is expressly authorized to
determine:
(1) The distinctive designation of the
class or series and the number of shares which will
constitute the class or series, which number may be
increased or decreased (but not below the number of
shares then outstanding in that class or above the
total shares authorized herein) from time to time by
action of the Board of Directors;
(2) The dividend rate of the class or
series, whether dividends will be cumulative, and, if
so, from what date or dates;
(3) The price or prices at which, and the
terms and conditions on which, the shares of the
class or series may be redeemed at the option of the
Corporation;
(4) Whether or not the shares of the class
or series will be entitled to the benefit of a
retirement or sinking fund to be applied to the
purchase or redemption of such shares and, if so
entitled, the amount of such fund and the terms and
provisions relative to the operation thereof;
(5) Whether or not the shares of the class
or series will be convertible into, or exchangeable
for, any other shares of stock of the Corporation or
other securities, and if so convertible or
exchangeable, the conversion price
or prices, or the rates of exchange, and any
adjustments thereof, at which such conversion or
exchange may be made, and any other terms and
conditions of such conversion or exchange;
(6) The rights of the shares of the class or
series in the event of voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation;
(7) Whether or not the shares of the class
or series will have priority over, parity with, or be
junior to the shares of any other class or series in
any respect, whether or not the shares of the class
or series will be entitled to the benefit of
limitations restricting the issuance of shares of any
other class or series having priority over or on
parity with the shares of such class or series and
whether or not the shares of the class or series are
entitled to restrictions on the payment of dividends
on, the making of other distributions in respect of,
and the purchase or redemption of shares of any other
class or series of Preferred Stock and/or Common
Stock ranking junior to the shares of the class or
series;
(8) Whether the class or series will have
voting rights, in addition to any voting rights
provided by law, and if so, the terms of such voting
rights; and
(9) Any other preferences, qualifications,
privileges, options and other relative or special
rights and limitations of that class or series.
A new Article IX of the Certificate of Incorporation is added
to read in its entirety as follows:
Advance notice of nomination for the election of
directors, other than by the Board of Directors or a committee
thereof, shall be given within the time and in the manner
provided in the Corporation's Bylaws. Any shareholder who
wishes to make a proposal at any meeting of shareholders shall
provide advanced notification within the time and in the
manner provided in the Corporation's Bylaws.
A new Article X of the Certificate of Incorporation is added
to read in its entirety as follows:
(A) No proposed transaction resulting in a Business
Combination (as defined below) shall be valid unless first
approved by the affirmative vote, cast in person or by proxy,
of the holders of record of at least sixty-six and two-thirds
percent (80%) of the outstanding shares of the capital stock
of the Corporation entitled to vote thereon; provided,
however, that if any such action has been approved prior to
the vote of shareholders by a majority of the Corporation's
Board of Directors, the affirmative vote of the holders of a
majority of the outstanding shares of capital stock then
entitled to vote on such matters shall be required.
(B) This Article X may not be amended except by the
affirmative vote, cast in person or by proxy, of the holders
of record of at least sixty-six and two-thirds percent (80%)
of the outstanding shares of the capital stock of the
Corporation entitled to vote thereon.
(C) "Business Combination" as used herein shall mean
any of the following proposed transactions, when entered into
by the Corporation or a subsidiary of the Corporation with, or
upon a proposal by or on behalf of, a related entity or
person:
(i) the merger or consolidation of the
Corporation or any subsidiary of the Corporation;
(ii) the sale, exchange, transfer or other
disposition (in one or a series of transactions) of
substantially all of the assets of the Corporation or
any subsidiary of the Corporation; or
(iii) any offer for the exchange of
securities of another entity for the securities of
the Corporation.
EXHIBIT B
COMMUNITY BANCORP OF NEW JERSEY
2000 EMPLOYEE STOCK OPTION PLAN
Section 1. Purpose
The Community Bancorp of New Jersey 2000 Employee Stock Option Plan
(the "Plan") is hereby established to foster and promote the long-term success
of Community Bancorp of New Jersey(the "Company") and its shareholders by
providing officers and employees of the Company and its affiliates with an
equity interest in the Company. The Plan will assist the Company in attracting
and retaining the highest quality of experienced persons as officers and
employees and in aligning the interests of such persons more closely with the
interests of the Company's shareholders by encouraging such parties to maintain
an equity interest in the Company.
Section 2. Definitions
Capitalized terms not specifically defined elsewhere herein shall have
the following meaning:
"Act" means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations promulgated thereunder.
"Company" means Community Bancorp of New Jersey and any present or
future subsidiary corporations of Community Bancorp of New Jersey (as defined in
Section 424 of the Code) or any successor to such corporations.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.
"Common Stock" or "Stock" means the common stock, no par value per
share, of the Company.
"Disability" shall mean a permanent disability which qualifies as total
disability under the terms of the Bank's Long- Term Disability Plans; provided,
however, with respect to a Participant who has been granted an Incentive Stock
Option such term shall have the meaning set forth in Section 422(c)(6) of the
Code.
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"Fair Market Value" means, with respect to shares of Common Stock, the
fair market value as determined by the Board in good faith and in a manner
established by the Board from time to time, taking into account such factors as
the Board shall deem relevant, including the book value of the Common Stock and,
to the extent there is an established trading market for the Common Stock, the
market value of the Common Stock.
"Incentive Stock Option" means an option to purchase shares of Common
Stock granted to a Participant under the Plan which is intended to meet the
requirements of Section 422 of the Code.
"Non-Qualified Stock Option" means an option to purchase shares of
Common Stock granted to a Participant under the Plan which is not intended to be
an Incentive Stock Option.
"Option" means an Incentive Stock Option or a Non-Qualified Stock
Option granted hereunder.
"Participant" means an employee of the Company selected by the Board to
receive an Option under the Plan.
"Plan" means the Community Bancorp of New Jersey 2000 Employee Stock
Option Plan.
"Termination for Cause" means termination because of Participant's
intentional failure to perform stated duties, personal dishonesty, willful
violation of any law, rule regulation (other than traffic violations or similar
offenses) or final cease and desist order issued by any regulatory agency having
jurisdiction over the Participant or the Company.
Section 3. Administration
(a) The Plan shall be administered by the Board. Among other things,
the Board shall have authority, subject to the terms of the Plan, to grant
Options, to determine the individuals to whom and the time or times at which
Options may be granted, to determine whether such Options are to be Incentive
Options or Non-Qualified Stock Options (subject to the requirements of the
Code), to determine the terms and conditions of any Option granted hereunder,
including whether to impose any vesting period, and the exercise price thereof,
subject to the requirements of this Plan.
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(b) Subject to the other provisions of the Plan, the Board shall have
authority to adopt, amend, alter and repeal such administrative rules,
guidelines and practices governing the operation of the Plan as it shall from
time to time consider advisable, to interpret the provisions of the Plan and any
Option and to decide all disputes arising in connection with the Plan; provided,
however, that the Board shall have no authority to take any step which would
cause the Plan to fail to comply with Rule 16b-3 under the Act or any successor
or replacement regulation. The Board may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any option agreement
in the manner and to the extent it shall deem appropriate to carry the Plan into
effect, in its sole and absolute discretion. The Board's decision and
interpretations shall be final and binding. Any action of the Board with respect
to the administration of the Plan shall be taken pursuant to a majority vote or
by the unanimous written consent of its members.
(c) The Board may employ such legal counsel, consultants and agents as
it may deem desirable for the administration of the Plan and may rely upon any
opinion received from any such counsel or consultant and any computation
received from any such consultant or agent.
Section 4. Eligibility and Participation
Officers and employees of the Company shall be eligible to participate
in the Plan. The Participants under the Plan shall be selected from time to time
by the Board, in its sole discretion, from among those eligible, and the Board
shalldetermine in its sole discretion the numbers of shares to be covered by the
Option or Options granted to each Participant.
Section 5. Shares of Stock Available for Options
(a) The maximum number of shares of Common Stock which may be issued
and purchased pursuant to Options granted under the Plan is 70,000, subject to
the adjustments as provided in Section 5 and Section 9, to the extent
applicable. If an Option granted under this Plan expires or terminates before
exercise or is forfeited for any reason, without a payment in the form of Common
Stock being granted to the Participant, the shares of Common Stock subject to
such Option, to the extent of such expiration, termination or forfeiture, shall
again be available for subsequent grant under Plan. Shares of Common Stock
issued under the Plan may consist in whole or in part of authorized but unissued
shares or treasury shares.
(b) In the event that the Board determines, in its sole discretion,
that any stock dividend, stock split, reverse stock split or combination,
extraordinary cash dividend, creation of a
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class of equity securities, recapitalization, reclassification, reorganization,
merger, consolidation, split-up, spin-off, combination, exchange of shares,
warrants or rights offering to purchase Common Stock at a price substantially
below Fair Market Value, or other similar transaction affects the Common Stock
such that an adjustment is required in order to preserve the benefits or
potential benefits intended to be granted or made available under the Plan to
Participants, the Board shall have the right to proportionately and
appropriately adjust equitably any or all of (i) the maximum number and kind of
shares of Common Stock in respect of which Options may be granted under the Plan
to Participants, (ii) the number and kind of shares of Common Stock subject to
outstanding Options held by Participants, and (iii) the exercise price with
respect to any Options held by Participants, without changing the aggregate
purchase price as to which such Options remain exercisable, and if considered
appropriate, the Board may make provision for a cash payment with respect to any
outstanding Options held by a Participant, provided that no adjustment shall be
made pursuant to this Section if such adjustment would cause the Plan to fail to
comply with Section 422 of the Code with regard to any Incentive Stock Options
granted hereunder or with Rule 16b-3 under the Act. No fractional Shares shall
be issued on account of any such adjustment.
(c) Any adjustments under this Section will be made by the Board, whose
determination as to what adjustments, if any, will be made and the extent
thereof will be final, binding and conclusive.
Section 6. Non-Qualified Stock Options
6.1 Grant of Non-Qualified Stock Options.
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Subject to the provisions hereof, the Board may, from time to time,
grant Non-Qualified Stock Options to Participants upon such terms and conditions
as the Board may determine, and may grant Non-Qualified Stock Options in
exchange for and upon surrender of previously granted Options under this Plan.
Non- Qualified Stock Options granted under this Plan are subject to the
following terms and conditions:
(a) Price. The purchase price per share of Common Stock deliverable
upon the exercise of each Non-Qualified Stock Option shall be determined by the
Board on the date the option is granted; provided, however, that such purchase
price shall not be less than 85% of the Fair Market Value or the par value of
the Common Stock, whichever is greater. Shares may be purchased only upon full
payment of the purchase price.
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(b) Terms of Options. The term during which each Non- Qualified Stock
Option may be exercised shall be determined by the Board, but in no event shall
a Non-Qualified Stock Option be exercisable in whole or in part more than ten
(10) years from the date of grant.
(c) Termination of Service. Except as provided herein, unless otherwise
determined by the Board, upon the termination of a Participant's service as an
employee for any reason other than Disability, death or Termination for Cause,
the Participant's Non-Qualified Stock Options shall be exercisable only as to
those shares which were immediately exercisable by the participant at the date
of termination and only for a period of three months following termination.
Notwithstanding any provision set forth herein nor contained in any Agreement
relating to the award of an Option, in the event of Termination for Cause, all
rights under the Participant's Non-Qualified Stock Options shall expire upon
termination. In the event of death or termination of service as a result of
Disability of any Participant, all Non-Qualified Stock Options held by the
Participant, whether or not exercisable at such time, shall be exercisable by
the Participant or his legal representatives or beneficiaries of the Participant
for one year or such longer period as determined by the Board following the date
of the Participant's death or termination of service due to Disability, provided
that in no event shall the period extend beyond the expiration of the
Non-Qualified Stock Option
term.
(d) Transferability. Except as provided for hereunder, no Option
granted under the Plan shall be assignable or transferable by a Participant, and
any attempted disposition thereof shall be null and void and of no effect. A
Participant may transfer or assign an Option granted hereunder to an immediate
family member or trust or benefit plan established for an immediate family
member. For terms of this provision, the term "immediate family member" means a
Participant's spouse, parents and offspring. Nothing contained herein shall be
deemed to prevent transfers by will or by the applicable laws of descent and
distribution.
Section 7. Incentive Stock Options
7.1 Grant of Incentive Stock Options.
--------------------------------
The Board may, from time to time, grant Incentive Stock Options to
eligible employees. Incentive Stock Options granted pursuant to the Plan shall
be subject to the following terms and conditions:
(a) Price. The purchase price per share of Common Stock deliverable
upon the exercise of each Incentive Stock Option shall be not less than one
hundred percent (100%) of the Fair Market Value of the Common Stock on the date
of grant. However,
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if a Participant owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of Common Stock, the purchase price per
share of Common Stock deliverable upon the exercise of each Incentive Stock
Option shall not be less than one hundred ten percent (110%) of the Fair Market
Value of the Common Stock on the date of grant or the par value of the Common
Stock, whichever is greater. Shares may be purchased only upon payment of the
full purchase price.
(b) Amounts of Options. Incentive Stock Options may be granted to any
eligible employee in such amounts as determined by the Board. In the case of an
option intended to qualify as an Incentive Stock Option, the aggregate Fair
Market Value (determined as of the time the option first becomes exercisable) of
the Common Stock with respect to which Incentive Stock Options granted are
exercisable for the first time by the Participant during any calendar year shall
not exceed $100,000. The provisions of this Section 7.1(b) shall be construed
and applied in accordance with Section 422(d) of the Code and the regulations,
if any, promulgated thereunder. To the extent an award is in excess of such
limit, it shall be deemed a Non- Qualified Stock Option. The Board shall have
discretion to redesignate options granted as Incentive Stock Options as Non-
Qualified options.
(c) Terms of Options. The term during which each Incentive Stock Option
may be exercised shall be determined by the Board, but in no event shall an
Incentive Stock Option be exercisable in whole or in part more than ten (10)
years from the date of grant. If at the time an Incentive Stock Option is
granted to an employee, the employee owns Common Stock representing more than
ten percent (10%) of the total combined voting power of the Company (or, under
Section 422(d) of the Code, is deemed to own Common Stock representing more than
ten percent (10%) of the total combined voting power of all such classes of
Common Stock, by reason of the ownership of such classes of Common Stock,
directly or indirectly, by or for any brother, sister, spouse, ancestor or
lineal descendent of such employee, or by or for any corporation, partnership,
estate or trust of which such employee is a shareholder, partner or
beneficiary), the Incentive Stock Option granted to such employee shall not be
exercisable after the expiration of five years from the date of grant.
(d) Termination of Employment. Except as provided in Section 7.1(e)
hereof, upon the termination of a Participant's service for any reason other
than Disability, death or Termination for Cause, the Participant's Incentive
Stock Options which are then exercisable at the date of termination may only be
exercised by the Participant for a period of three months following termination.
Notwithstanding any provisions set forth herein nor contained in any Agreement
relating to an award of an Option, in the event of Termination for Cause all
rights under the
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Participant's Incentive Stock Options shall expire immediately upon termination.
Unless otherwise determined by the Board, in the event of death or
termination of service as a result of Disability of any Participant, all
Incentive Stock Options held by such Participant, whether or not exercisable at
such time, shall be exercisable by the Participant or the Participant's legal
representatives or beneficiaries of the Participant for one year following the
date of the participant's death or termination of employment as a result of
Disability. In no event shall the exercise period extend beyond the expiration
of the Incentive Stock Option term.
(e) Transferability. No Incentive Stock Option granted under the Plan
shall be assignable or transferable by a Participant, except pursuant to the
laws of descent and distribution, and any attempted disposition of an Incentive
Stock Option shall be void and of no effect.
(f) Compliance with Code. The options granted under this Section 7 of
the Plan are intended to qualify as incentive stock options within the meaning
of Section 422 of the Code, but the Company makes no warranty as to the
qualification of any option as an incentive stock option within the meaning of
Section 422 of the Code. A Participant shall notify the Board in writing in the
event that he disposes of Common Stock acquired upon exercise of an Incentive
Stock Option within the two-year period following the date the Incentive Stock
Option was granted or within the one-year period following the date he received
Common Stock upon the exercise of an Incentive Stock Option and shall comply
with any other requirements imposed by the Company in order to enable the
Company to secure the related income tax deduction to which it will be entitled
in such event under the Code.
Section 8. Extension
The Board may, in its sole discretion, extend the dates during which
all or any particular Option or Options granted under the Plan may be exercised;
provided, however, that no such extension shall be permitted if it would cause
Incentive Stock Options issued
under the Plan to fail to comply with Section 422 of the Code.
Section 9. General Provisions Applicable to Options
(a) Each Option under the Plan shall be evidenced by a writing
delivered to the Participant specifying the terms and conditions thereof and
containing such other terms and conditions not inconsistent with the provisions
of the Plan as the Board considers necessary or advisable to achieve the
purposes of the Plan or comply with applicable tax and regulatory laws and
accounting principles.
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(b) Each Option may be granted alone, in addition to or in relation to
any other Option. The terms of each Option need not be identical, and the Board
need not treat Participants uniformly. Except as otherwise provided by the Plan
or a particular Option, any determination with respect to an Option may be made
by the Board at the time of grant or at any time thereafter.
(c) In the event of a consolidation, reorganization, merger or sale of all or
substantially all of the assets of the Company in each case in which outstanding
shares of Common Stock are exchanged for securities, cash or other property of
any other corporation or business entity or in the event of a liquidation of the
Company, the Board will provide for any one or more of the following actions, as
to outstanding options: (i) provide that such options shall be assumed, or
equivalent options shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), provided that any such options
substituted for Incentive Stock Options shall meet the requirements of Section
424(a) of the Code, (ii) upon written notice to the Participants, provide that
all unexercised options will terminate immediately prior to the consummation of
such transaction unless exercised (to the extent then exercisable) by the
Participant within a specified period following the date of such notice, (iii)
in the event of a merger under the terms of which holders of the Common Stock of
the Company will receive upon consummation thereof a cash payment for each share
surrendered in the merger (the "Merger Price"), make or provide for a cash
payment to the Participants equal to the difference between (A) the Merger Price
times the number of shares of Common Stock subject to such outstanding Options
(to the extent then exercisable at prices not in excess of the Merger Price) and
(B) the aggregate exercise price of all such outstanding Options in exchange for
the termination of such Options, and (iv) provide that all or any outstanding
Options shall become exercisable in full immediately prior to such event.
(d) The Participant shall pay to the Company, or make provision
satisfactory to the Board for payment of, any taxes required by law to be
withheld in respect of Options under the Plan no later than the date of the
event creating the tax liability. In the Board's sole discretion, a Participant
may elect to have such tax obligations paid, in whole or in part, in shares of
Common Stock, including shares retained from the Option creating the tax
obligation. For withholding tax purposes, the value of the shares of Common
Stock shall be the Fair Market Value on the date the withholding obligation is
incurred. The Company may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to the Participant.
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(e) For purposes of the Plan, the following events shall not be deemed a
termination of employment of a Participant:
(i) a transfer to the employment of the Company from a
subsidiary or from the Company to a subsidiary, or from one
subsidiary to another, or
(ii) an approved leave of absence for military service or
sickness, or for any other purpose approved by the Company, if the
Participant's right to reemployment is guaranteed either by a statute
or by contract or under the policy pursuant to which the leave of
absence was granted or if the Board otherwise so provides in writing.
(f) The Board may at any time, and from time to time, amend, modify or
terminate the Plan or any outstanding Option held by a Participant, including
substituting therefor another Option of the same or a different type or changing
the date of exercise or realization, provided that the Participant's consent to
each action shall be required unless the Board determines that the action,
taking into account any related action, would not materially and adversely
affect the Participant, and further provided that no amendment increasing the
number of shares subject to the Plan, decreasing the exercise price for any
option provided for under the Plan or a change in the parties eligible to
participate in the Plan may be effectuated without the approval of the
shareholders of the Company; further provided, however, that the Board shall not
adopt any such amendment or modification if such amendment or modification shall
cause the Plan to fail to comply with Rule 16b-3 under the
Act or any successor or replacement regulation.
Section 10. Miscellaneous
(a) No person shall have any claim or right to be granted an Option,
and the grant of an Option shall not be construed as giving a Participant the
right to continued employment or service on the Company's Board. The Company
expressly reserves the right at any time to dismiss a Participant free from any
liability or claim under the Plan, except as expressly provided in the
applicable Option.
(b) Nothing contained in the Plan shall prevent the Company
from adopting other or additional compensation arrangements.
(c) Subject to the provisions of the applicable Option, no Participant
shall have any rights as a shareholder (including, without limitation, any
rights to receive dividends, or non cash distributions with respect to such
shares) with respect to any shares of Common Stock to be distributed under the
Plan until he or she becomes the holder thereof.
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(d) Notwithstanding anything to the contrary expressed in this Plan,
any provisions hereof that vary from or conflict with any applicable Federal or
State securities laws (including any regulations promulgated thereunder) shall
be deemed to be modified to conform to and comply with such laws.
(e) No member of the Board shall be liable for any action or
determination taken or granted in good faith with respect to this Plan nor shall
any member of the Board be liable for any agreement issued pursuant to this Plan
or any grants under it. Each member of the Board shall be indemnified by the
Company against any losses incurred in such administration of the Plan, unless
his action constitutes serious and willful misconduct.
(f) This Plan shall become effective upon its approval by the holders
of a majority of the Common Stock of the Company voting on approval of the Plan.
Prior to such approval, Options may be granted under the Plan expressly subject
to such approval.
(g) Options may not be granted under the Plan more than ten (10) years
after approval of the Plan by the Company's Shareholders, but then outstanding
Options may extend beyond such date.
(h) To the extent that State laws shall not have been preempted by any
laws of the United States, the Plan shall be construed, regulated, interpreted
and administered according to the other laws of the State of New Jersey.
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EXHIBIT C
COMMUNITY BANCORP OF NEW JERSEY
2000 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
SECTION 1. Purpose
The Community Bancorp of New Jersey 2000 Stock Option Plan For
Non-Employee Directors (the "Plan") is hereby established to foster and promote
the long-term success of The Community Bancorp of New Jersey (the "Company") and
its shareholders by providing directors who are not employees with an equity
interest in the Company. The Plan will assist the Company in attracting and
retaining the highest quality of experienced persons as directors and in
aligning the interests of non-employee directors of the Company more closely
with the interests of the Company's shareholders.
SECTION 2. Definitions
Capitalized terms not specifically defined elsewhere herein shall have
the following meanings:
"Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations promulgated thereunder.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean a Non-Employee Director (i) being convicted of a
crime, other than a traffic violation, (ii) being the subject of a final,
non-appealable order by any regulatory agency involving a breach of duty owed to
the Company by such Non-Employee Director, or (iii) habitual abuse of alcohol or
drugs.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated thereunder.
"Common Stock" or "Stock" shall mean the common stock, no par value per
share, of the Company.
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"Company" shall mean Community Bancorp of New Jersey and any present or
future subsidiary corporations of Community Bancorp of New Jersey (as defined in
Section 424 of the Code) or any successor to such corporations.
"Disability" shall mean permanent and total disability which if the
Non-Employee Director were an employee of the Company would be treated as a
total disability under the terms of the Company's long-term disability plan for
employees as in effect from time to time.
"Fair Market Value" means, with respect to shares of Common Stock, the
fair market value as determined by the Board in good faith and in a manner
established by the Board from time to time, taking into account such factors as
the Board shall deem relevant, including the book value of the Common Stock and,
to the extent there is a trading market for the Common Stock, the market value
of the Common Stock.
"Non-Employee Director" shall mean a member of the Board who is not a
common law employee of the Company.
"Plan" shall mean The Community Bancorp of New Jersey 2000 Stock Option
Plan for Non-Employee Directors.
"Stock Option" or "Option" shall mean a right to purchase Common Stock
of the Company granted to a Non-Employee Director pursuant to the Plan which is
not intended to be an incentive stock option under Section 422 of the Code.
SECTION 3. Administration
(a) The Plan shall be administered by the Board which shall hold meetings
at such times as may be necessary for the proper administration of the Plan. Any
action of the Board with respect to the administration of the Plan shall be
taken by a majority vote, or by unanimous written consent of its members.
(b) Subject to the express terms and conditions set forth herein, the Board
shall have the power from time to time:
(i) to construe and interpret the Plan and the Stock
Options granted thereunder and to establish, amend and revoke
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rules, regulations, guidelines and practices for the administration of the Plan
as it shall from time to time consider advisable, including, but not limited to,
correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Stock Option, in the manner and to the
extent it shall deem necessary or advisable to make the Plan fully effective;
provided, however, that the Board shall have no discretion with respect to
designating (x) the recipient of a Stock Option, (y) the number of shares of
Common Stock that are subject to a Stock Option, or (z) the exercise price for a
Stock Option. All decisions and determinations by the Board in the exercise of
this power shall be final and binding upon the Company and the Non-Employee
Directors; and
(ii)to exercise such powers and to perform such acts as are deemed
necessary or advisable to promote the best interests of the Company with respect
to the Plan.
(c) The Board may employ such legal counsel, consultants and agents as it
may deem desirable for the administration of the Plan and may rely upon any
opinion received from any such counsel or consultant and any computation
received from any such consultant or agent.
SECTION 4. Eligibility and Participation
Each Non-Employee Director of the Company shall participate in the Plan.
SECTION 5. Common Stock Subject to Plan
(a) The maximum number of shares of Common Stock that may be made subject
to Stock Options granted pursuant to the Plan is 85,000, subject to adjustments
pursuant to Section 9. The Company shall reserve such number of shares of Common
Stock for the purposes of the Plan, out of its authorized but unissued Common
Stock or out of Common Stock held in the Company's treasury, or partly out of
each, as shall be determined by the Board. No fractional shares of Common Stock
shall be issued with respect to Stock Options granted under the Plan.
(b) If any Stock Option in respect of shares of Common Stock
expires or is canceled without having been fully exercised, the
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number of shares subject to such Stock Option but as to which such Stock Option
was not exercised prior to its expiration or cancellation may again be available
for the grant of Stock Options under the Plan.
SECTION 6. Grant of Stock Options
(a) The Board shall have authority, subject to the terms of this Plan, to
grant Options, to determine the individuals to whom and the time or times at
which Options may be grantee, to determine the terms and conditions of any
Option granted hereunder, including whether to impose any vesting period, and
the exercise price thereof, subject to the requirements of this Plan. All Stock
Options granted under the Plan shall be non-statutory options not entitled to
special tax treatment under Section 422 of the Code.
(b) The grant of any Stock Option shall be evidenced by a written agreement
which shall state the number of shares of Common Stock that are subject to the
Stock Option, the exercise price, the term of the Stock Option, and other terms,
as the Board may deem appropriate, that are not inconsistent with requirements
of this Plan.
SECTION 7. Terms and Conditions
(a) The purchase price of the shares of Common Stock subject to each Stock
Option shall be 105% of the Fair Market Value of such Common Stock (or the par
value of such shares, if higher) on the day such Stock Option is granted. All
Stock Options shall have a term of ten (10) years from the date of grant,
subject to earlier termination pursuant to the terms set forth herein.
(b) In the event a Non-Employee Director's membership on the Board ceases
by reason of his Disability or death, all Stock Options then held by such
Non-Employee Director shall immediately become exercisable and may remain
exercisable until the expiration of their original term.
(c) In the event a Non-Employee Director's membership on the Board ceases
for Cause, all Stock Options then held by such Non- Employee Director, whether
or not exercisable, shall immediately terminate.
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(d) In the event a Non-Employee Director's membership on the Board ceases
for any reason other than death, Disability or Cause, all Stock Options then
held and exercisable by such Non-Employee Director will remain exercisable until
the expiration of their original term.
(e) If a Non-Employee Director becomes an employee of the Company or any of
its subsidiaries, the Non-Employee Director shall be treated as continuing in
service for purposes of this Plan, but shall not be eligible to receive future
grants hereunder while an employee. If the Non-Employee Director's service as an
employee terminates without his again becoming a Non-Employee Director, the
provisions of this Section 7 shall apply as if such termination of employment
were the termination of the Non-Employee Director's membership on the Board.
(f) Subject to the terms of this Plan, Stock Options granted pursuant to
this Plan shall be subject to the following vesting schedule, and no Stock
Option granted hereunder shall be exercisable until such time as it shall have
vested: on the first anniversary of the date of grant of any Stock Option, such
Stock Option shall be exercisable for one-third (1/3) of the shares of Common
Stock covered thereby; on the second anniversary of the date of grant of any
Stock Option, such Stock Option shall be exercisable for two-thirds (2/3) of the
shares of Common Stock covered thereby; and on and after the third anniversary
of the date of grant of any Stock Option, such Stock Option shall be exercisable
for all shares of Common Stock covered thereby.
(g) Except as otherwise provided in this Section 7, no Stock Option granted
under the Plan shall be assignable or transferable by the Non-Employee Director,
and any attempt to disposition thereof shall be null and void and of no effect.
Nothing contained in this Section 7 shall prevent transfers of Stock Options to
members of the immediate family of the Non-Employee Director, or any trust or
benefit plan established for the benefit of such immediate family member of a
Non-Employee Director, nor shall anything in this Section 7 prevent transfers by
will or by the applicable laws of descent and distribution. For purposes of this
Section, "Immediate Family" shall mean a Non-Employee Director's spouse, parents
or offspring.
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SECTION 8. Exercise of Option
(a) Any Stock Option may be exercised in whole or in part at any time
subsequent to such Stock Option becoming exercisable, during the term of such
Stock Option; provided, however, that each partial exercise shall be for whole
shares of Common Stock only.
(b) Options may be exercised by written notice of exercise accompanied by
payment of the exercise price in full for the purchased shares of Common Stock,
along with any amounts which the Company is required to withhold under federal,
state or local law, in cash or by certified or cashier's check payable to the
Company. Upon receipt of such notice and payment of the exercise price, the
Company shall make application to the New Jersey Department of Banking to issue
the shares for which the Option is being exercised.
(c) In the event that the Stock Option or portion thereof shall be
exercised pursuant to Section 7 by any person or persons other than the
Non-Employee Director, appropriate proof shall be provided of the right of such
person or persons to exercise the Stock Option or portion thereof.
SECTION 9. Capital Adjustments and Corporate Reorganizations
(a) If, through or as a result of any merger, consolidation, sale of all or
substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, split up,
spin-off, combination, exchange of shares, reverse stock split, or other similar
transaction, (i) the outstanding shares of Common Stock are increased or
deceased or are exchanged for a different number or kind of shares or other
securities of the Company, or (ii) additional shares or new or different shares
or other securities of the Company or other non- cash assets are distributed
with respect to such shares of Common Stock or other securities, an appropriate
and proportionate adjustment shall automatically be made in (x) the maximum
number and kind of shares of Common Stock reserved for issuance under the Plan,
(y) the number and kind of shares or other securities subject to the outstanding
Options under the Plan, and (z) the purchase price for each share of Common
Stock subject to any then outstanding Options under the Plan, without changing
the aggregate purchase price (except for any change resulting from rounding off
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of share quantities or price) as to which such Options remain exercisable. No
fractional shares will be issued under the Plan on account of any such
adjustment.
(b) In the event of a consolidation, merger, reorganization or sale of all
or substantially all of the assets of the Company in which outstanding shares of
Common Stock are exchanged for securities, cash or other property of any other
corporation or business entity or in the event of a liquidation of the Company
(collectively an "Extraordinary Event"), the following rules shall apply: (i)
upon the announcement of a proposed Extraordinary Event, all outstanding Stock
Options shall immediately become exercisable, whether or not previously vested
under Section 7(f), (ii) holders of Options shall continue to have the right to
exercise their unexercised but currently exercisable Options on or before the
day before the date of consummation of the Extraordinary Event, (iii) if any
Option holders shall not have exercised their Options on or before the date of
such consummation and if, under the terms of the Extraordinary Event holders of
the Common Stock of the Company will receive upon consummation thereof payment
in cash, securities or other property (the "Event Payment") for each share
surrendered in the Extraordinary Event (the "Event Price"), then an Event
Payment equal to the difference between (A) the Event Price times the number of
shares of Common Stock subject to each Non- Employee Director's outstanding
Options (to the extent then exercisable at prices not in excess of the Event
Price) and (B) the aggregate exercise price of all such outstanding Options
shall be made to each Non-Employee Director in exchange for the termination of
such Options, (iv) notwithstanding the foregoing provisions of clause (iii), if
the Extraordinary Event involves an exchange by the acquiring party solely of
its voting securities in a reorganization pursuant to which holders of the
Company's Common Stock will not recognize gain or loss on the exchange of such
securities until such holders dispose of the new voting securities acquired in
such exchange, then the acquiring party shall have the right to provide that
such Options shall be assumed, or equivalent options shall be substituted by the
acquiring or succeeding corporation (or an affiliate thereof); provided that the
Non- Employee Director shall not, as a result of such provision, be required to
recognize gain or loss on the exchange of Options, and (v) in the unlikely event
any Options shall remain outstanding after giving effect to the foregoing
provisions such Options shall terminate on the date the Extraordinary Event is
consummated.
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SECTION 10. General Provisions Applicable to Options
To the extent permitted by applicable law, upon the issuance of shares of
Common Stock in respect of an Option exercised by a Non-Employee Director, such
number of shares issuable shall be reduced by the number of shares necessary to
satisfy such Non- Employee Director's federal, and where applicable, state
withholding tax obligations. For withholding tax purposes, the value of the
shares of Common Stock shall be the Fair Market Value on the date the
withholding obligation is incurred. To the extent such reduction is not
permitted under law, such Non-Employee Director shall be required to pay all
applicable taxes. The Company may, to the extent permitted by law, deduct any
such tax obligations from any payment of any kind otherwise due to the Non-
Employee Director.
SECTION 11. Other Provisions
(a) The validity, interpretation and administration of the Plan and any
rules, regulations, determinations or decisions made thereunder, and the rights
of any and all persons having or claiming to have any interest therein or
thereunder, shall be determined exclusively in accordance with the laws of the
State of New Jersey, to the extent such state laws are not preempted by any laws
of the United States.
(b) As used herein, the masculine gender shall include the feminine gender.
(c) The headings in the Plan are for reference purposes only and shall not
affect the meaning or interpretation of the Plan.
(d) All notices or other communications made or given pursuant to this Plan
shall be in writing and shall be sufficiently made or given if hand-delivered or
mailed by certified mail, addressed to any Non-Employee Director at the address
contained in the records of the Company, or to the Company at its principal
office.
(e) Nothing in this Plan or in any Stock Option granted hereunder shall
confer upon any Non-Employee Director any right to continue to serve as a
director of the Company or shall interfere with or restrict in any way the
right, which right is hereby
-8-
expressly reserved, to remove any Non-Employee Director as a director in
accordance with the by-laws and certificate of incorporation of the Company and
applicable law.
(f) The obligation of the Company to sell or deliver shares of Common Stock
with respect to Stock Options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Board.
(g) All expenses and costs incurred in connection with the operation of the
Plan shall be borne by the Company.
(h) The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company. Nothing in this Plan shall be
construed to limit the right of the Company to establish, alter or terminate any
other forms of incentives, benefits or compensation for directors of the
Company, including, without limitation, conditioning the right to receive other
incentives, benefits or compensation on a director not participating in this
Plan; or to grant or assume options otherwise than under this Plan in connection
with any proper corporate purpose, including, without limitation, the grant or
assumption of stock options in connection with the acquisition by purchase,
lease, merger, consolidation or otherwise, of the business, stock, or assets of
any corporation, firm or association.
(i) Holders of Stock Options under the Plan shall have no rights as
shareholders of the Company unless and until certificates for shares of Common
Stock of Common Stock are registered in their names in satisfaction of a
properly exercised Stock Option.
(j) The terms of the Plan shall be binding upon the Company,
the Non-Employee Directors and their successors and assigns.
SECTION 12. Amendment or Termination of the Plan
The Board may amend, suspend or terminate the Plan or any portion thereof
at any time, provided that no amendment shall affect the rights of any holder of
any outstanding Stock Option and further provided that no amendment may increase
the number of shares subject to this Plan, change the exercise price for any
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option as provided under Section 7(a) hereof, or expand the parties eligible to
participate in the Plan without shareholder approval, and no amendment may cause
the Plan to fail to comply with the provisions of Rule 16b-3 under the Act, or
any successor or replacement regulation.
SECTION 13. Effective Date and Term of the Plan
This Plan shall become effective upon its approval by the holders of a
majority of the Common Stock of the Company voting on the approval of the Plan.
Prior to such approval, Options granted under the Plan are expressly subject to
such approval. Options may not be granted under the Plan after the tenth
anniversary of the day before such shareholder approval.
-10-
REVOCABLE PROXY
COMMUNITY BANCORP OF NEW JERSEY
[ X ] PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF SHAREHOLDERS
APRIL 27, 2000
Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Ralph Cavall and James A. Kinghorn and each of
them, with full power of substitution, to vote all of the shares of Community
Bancorp of New Jersey (the "Company") standing in the undersigned's name at the
Annual Meeting of Shareholders of the Company, to be held at Freehold Gardens
Hotel, 50 Gibson Place, Freehold, New Jersey, on Thursday, April 27, 2000, at
7:00 P.M., and at any adjournment thereof. The undersigned hereby revokes any
and all proxies heretofore given with respect to such meeting.
1. Election of the following nine (9) nominees to each serve on the Board of
Directors until the next Annual Meeting and until their successors are elected
and duly qualified:
Charles P. Kaempffer, CPA, Morris Kaplan, Robert M. Kaye, Eli Kramer, William
J. Mehr, Robert D. O'Donnell, Howard Schoor, Arnold Silverman,and Lewis
Wetstein, M.D.
With- For All
For hold Except
[ ] [ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
2. Approval of Proposal 2, amendments to the Company's Certificate of
Incorporation to: (a) classify the Board of Directors into three classes; and
(b) prevent removal of the Directors by shareholders without cause, as more
fully described in the accompanying proxy statement.
For Against Abstain
[ ] [ ] [ ]
3. Approval of Proposal 3, an amendment to the Company's Certificate of
Incorporation to require the affirmative vote of 80% of the outstanding common
stock of the Company for approval of certain business combination transactions
and to amend the super majority voting provision, as more fully described in the
accompanying proxy statement.
For Against Abstain
[ ] [ ] [ ]
4. Approval of Proposal 4, an amendment to the Company's Certificate of
Incorporation to require advance notification of certain shareholder proposals
and nominations, as more fully described in the accompanying proxy statement.
For Against Abstain
[ ] [ ] [ ]
5. Approval of Proposal 5, an amendment to the Company's Certificate of
Incorporation to provide for 1,000,000 shares of series preferred stock, the
terms, conditions and designations of which may be set by the Board of Directors
at the time of issuance; and to increase the authorized shares of common stock,
no par value, to 10,000,000, as more fully described in the accompanying proxy
statement.
For Against Abstain
[ ] [ ] [ ]
6. Approval of Proposal 6, the Community Bancorp of New Jersey 2000 Employee
Stock Option Plan, as more fully described in the accompanying proxy statement.
For Against Abstain
[ ] [ ] [ ]
7. Approval of Proposal 7, the Community Bancorp of New Jersey 2000 Stock Option
Plan for Directors, as more fully described in the accompanying proxy statement.
8. In their discretion, such other business as may properly come before the
meeting.
Please be sure to sign and date this Proxy in the box below.
_________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
COMMUNITY BANCORP OF NEW JERSEY
This proxy will be voted as specified above. If no choice is specified, the
proxy will be voted "FOR" (1) Management's nominees to the Board of Directors;
(2) Approval of amendments to the Company's Certificate of Incorporation to: (a)
classify the Board of Directors into three classes; and (b) prevent removal of
the Directors by shareholders without cause; (3) Approval of an amendment to the
Company's Certificate of Incorporation to require the affirmative vote of 80% of
the outstanding common stock of the Company for approval of certain business
combination transactions and to amend this super-majority voting provision; (4)
Approval of an amendment to the Company's Certificate of Incorporation to
require advance notification of certain shareholder proposals and nominations;
(5) Approval of an amendment to the Company's Certificate of Incorporation to
provide for 1,000,000 shares of series preferred stock and to increase the
authorized shares of common stock to 10,000,000; (6) Approval of the 2000
Employee Stock Option Plan; and (7) Approval of the 2000 Stock Option Plan for
Directors.
Please sign exactly as your name appears. When signing as executor,
administrator, guardian, trustee or attorney, please give your title as such. If
signer is a corporation, please sign the full corporate name and then an
authorized officer should sign his name and print his name and title below his
signature. If the shares are held in joint name, all joint owners should sign.
PLEASE DATE, SIGN AND RETURN THIS PROXY
IN THE ENCLOSED RETURN ENVELOPE.