EX-99.1 3 y95732exv99w1.txt PORTIONS OF THE PROXY STATEMENT Exhibit 99.1 BOARD OF DIRECTORS Directors. The following section sets forth the name, age (as of March 31, 2004), principal occupation or employment and the name and principal business of any corporation or other organization in which such occupation or employment was carried on during the past five years, all positions and offices held by the nominee with us and length of board service of each of the persons nominated for election as a director at the meeting. ALAN J. WILZIG joined the board in 1997. Mr. Wilzig, 38, became Chairman of the Board of Trustcompany in January 2003 and President and Chief Executive Officer of Trustcompany in April 2002. Until he assumed his current positions, Mr. Wilzig served Trustcompany as its Senior Vice Chairman of the Board from September 2001 to January 2003 and as Senior Executive Vice President and Chief Operating Officer from 1999 to 2002 and has served in various capacities and positions with Trustcompany since 1987. DONALD R. BRENNER joined the board in 1968 and is currently a Vice Chairman of the Board. Mr. Brenner, 67, is Senior Consultant to Metro Management Properties (a real estate management company) and Chairman, Chief Executive Officer and President of Brenner Ridgefield LLC (a real estate investment company). LAWRENCE R. CODEY joined the board in 1988 and is currently a Vice Chairman of the Board. Mr. Codey, 59, is retired from Public Service Electric and Gas Company, having served as its President from 1992 to February 2000. Mr. Codey is also a director of New Jersey Resources Corporation and Sealed Air Corporation. RICHARD W. KANTER joined the board in 1983. Mr. Kanter, 69, is President of Miller Construction Company. 2 MARTIN J. KAPLITT, M.D. joined the board in 1985. Dr. Kaplitt, 65, is a cardiovascular surgeon and Director, President and Chief Executive Officer of Neurologix, Inc. (a bio-tech research and development company). MARK KUTSHER joined the board in 1996. Mr. Kutsher, 56, is President of Kutsher's Country Club Corp. (a hotel, recreation and entertainment facility), Kutsher's Realty Co., Inc., and Kutsher's Inc. ABRAHAM OSTER joined the board in 2003. Mr. Oster, 57, is the owner of Oster Realty (a real estate development/management company). JEROME QUINT, M.D. joined the board in 2000. Dr. Quint, 67, is a general vascular and transplant surgeon; Chairman of Bon Secours Health System-Warwick Campus Division (St. Anthony Community Hospital; Mt. Alverno Center; and Schervier Pavilion) and a New York State Police Surgeon. MARION WIESEL joined the board in 1997. Ms. Wiesel, 73, is co-founder and Vice President of The Elie Wiesel Foundation for Humanity (a charitable foundation) and Executive Vice President of Elirion Associates, Inc. (a publishing company). Meetings and Committees of the Board of Directors. Your board of directors holds regularly scheduled meetings and meets on other occasions when required by special circumstances. During 2003, the board held a total of 19 meetings. Each of the directors during 2003 attended at least 75% of the aggregate number of meetings of the board of directors and committees thereof on which he or she served during the period of his or her service. In addition to other committees, as of January 1, 2004, we had an Audit and Examination Committee, a Stock Option/Compensation Committee and an Ethics, Governance and Nominating Committee. The members of the Audit and Examination Committee, as of January 1, 2004, were Donald R. Brenner, Lawrence R. Codey and Martin J. Kaplitt, all of whom are independent directors within the meaning of SEC and Nasdaq regulations. The board has determined that Mr. Codey constitutes an "audit committee financial expert," as such term is defined by the SEC. For 2003, the principal functions of the Audit and Examination Committee were (1) nominating, selecting, evaluating and, when appropriate, recommending the replacement of, the outside independent auditors, (2) overseeing the internal auditing function and reviewing and approving, at least annually, the programs and procedures thereunder, (3) review of the scope and results of audits by our outside independent auditors, (4) review of examinations performed by bank regulatory agencies and (5) review of financial reports to appropriate state and federal banking agencies. In discharging its responsibilities, the Audit and Examination Committee makes recommendations to senior management and the full board of directors. During 2003, the Audit and Examination Committee held a total of 14 meetings. A copy of the charter of the Audit and Examination Committee is attached to this document as Appendix A. The members of the Stock Option/Compensation Committee, as of January 1, 2004, were Donald R. Brenner, Mark Kutsher and Jerome Quint, all of whom are independent directors. For 2003, the principal function of the Stock Option/Compensation Committee was to determine compensation for senior management of Trustcompany and grant stock options to employees pursuant to our stock option plans. During 2003, the Stock Option/Compensation Committee held a total of nine meetings. The members of the Ethics, Governance and Nominating Committee, as of January 1, 2004, were Lawrence R. Codey, Mark Kutsher and Marion Wiesel, all of whom are independent directors. For 2003, the principal functions of the Nominating Committee included considering and proposing candidates for election to your board of directors, making recommendations to the full board to fill vacancies in board membership, making recommendations with respect to our corporate governance policies, and overseeing our Code of Conduct and Conflict of Interest Policy, Code of Ethics for Senior Financial Officers and Insider Trading Policy. The Nominating Committee will consider director candidates recommended by shareholders. In considering such recommendations, the Nominating Committee will take into consideration the criteria approved by your board from time to time and such other factors as it deems appropriate. These factors 3 may include judgment, skill, diversity, experience with businesses and other organizations of comparable size, the interplay of the candidate's experience with the experience of other board members, and the extent to which the candidate would be a desirable addition to the board and any committees of the board. To have a candidate considered by the Nominating Committee, a shareholder must submit a recommendation in writing and must include the following information: - The name of the shareholder and evidence of the person's ownership of our common stock, including the number of shares owned and the length of time of ownership; - The name of the candidate, together with a written certification of the candidate (with other documents or information supporting such certification) listing of his or her qualifications to be a director of Trustcompany; - A description of any arrangements or understandings between the shareholder and such candidate (or any third party) pursuant to which the nomination is to be made by the shareholder; - such other information as would be required to be included in a proxy statement soliciting proxies to elect that person as a director; and - the person's consent to be named as a director if selected by the Nominating Committee and nominated by the board. The shareholder recommendation and information described above must be sent to our Secretary at The Trust Company of New Jersey, 35 Journal Square, Jersey City, NJ 07306 and must be received (1) with respect to an election to be held at an annual meeting of shareholders, not less than 60 days nor more than 90 days in advance of the anniversary of the date of the notice of meeting mailed to shareholders in connection with the previous year's annual meeting, and (2) with respect to an election to be held at a special meeting of shareholders for the election of directors, not later than the close of business on the seventh day following the day on which notice of such meeting is first given to shareholders. During 2003, the Nominating Committee held two meetings. A copy of the charter of the Ethics, Governance and Nominating Committee is attached to this document as Appendix B. Attendance at Annual Meetings of Shareholders. We do not have a policy regarding board members' attendance at the annual meeting of shareholders. However, the directors are encouraged to attend such meetings. We currently expect that at least a majority of the directors will attend our annual meeting. Shareholder Communications with Directors. Shareholders interested in communicating directly with directors may do so by writing to the Chief Executive Officer, The Trust Company of New Jersey, 35 Journal Square, Jersey City, NJ 07306 and indicating on the correspondence that it is intended for distribution to the board. The Chief Executive Officer will forward all letters received by him for this purpose to the Secretary. The Secretary will forward a copy of all such correspondence to the members of the board. Director Compensation. Independent directors receive an annual retainer of $10,000, plus $1,450 per board of directors meeting attended and $250 to $600 for each committee meeting attended, depending on the committee. Each vice chairman, the chairman of the audit and examination committee, and the audit committee's designated financial expert receive a double fee. Mr. Codey receives a retainer of $2,500 per quarter for his service on the Executive Committee of our Board. Independent directors may be granted stock options under our 2000 Non-employee Director Stock Option Plan. Each of directors Brenner, Codey, Kanter, Kaplitt, Kutsher, Quint, and Wiesel has been granted options covering 20,000 shares under this plan, 15,000 of which are presently exercisable. Options granted under this plan have a term of ten years after the grant date and an exercise price of 100% of the fair market value of our common stock on the grant date, and are 100% exercisable commencing one year after the grant date. 4 Stock Option/Compensation Committee Report. The following report regarding executive compensation is provided at the direction of the Stock Option/Compensation Committee of the board of directors. The compensation package for executive officers may consist of base salary, a performance based bonus and annual stock option grants. Base salaries for executive officers in 2003 were based generally on the level of performance, experience, years of service and overall corporate performance. In the case of newly-hired executive officers, greater emphasis was placed on the qualifications and prior experience of such officers. Consideration was given to the relative performance of peer group banks and bank holding companies and the compensation paid to executive officers of such other companies and banks. Consideration was also given to the duties and responsibilities of an individual executive officer with respect to such officer's role in increasing loan volume, profitability of Trustcompany and its growth generally and reducing non-performing assets as a percentage of Trustcompany's overall portfolio. After considering the foregoing factors and as part of Trustcompany's strategy to provide a compensation program that is fair and competitive, it was determined to adjust the level of compensation of Trustcompany's executive officers when appropriate to attract and retain highly motivated and experienced individuals, a practice customary in the banking industry. The bonus for each executive officer was determined based on the level of performance of the individual executive officer in relation to the goals and factors considered in setting base salary levels and to overall corporate performance. As was the case in the committee's determination of base salary for executive officers, the committee also considered the relative performance of peer group banks and bank holding companies and their pay scales, the officer's ability to manage and improve the performance of the officer's department and such department's contribution to the overall performance of Trustcompany. Among the factors considered by the committee in judging corporate performance were the net income of Trustcompany, the amount of dividends paid on Trustcompany's common stock, Trustcompany's earnings per share and the growth of Trustcompany. In the case of Mr. Wilzig's base salary ($470,000) and bonus, in addition to the minimum base salary requirement of his employment agreement, the specific factors considered by the committee included Trustcompany's growth over the past two years in the number of its branches and the amount of its deposits and assets without any significant acquisition or merger, the increase in Trustcompany's common stock price, his valuable contributions to business development, increasing loan volume and the success of Trustcompany, his leadership and expertise generally and specifically with respect to Trustcompany's operations, his service and devotion to Trustcompany and his executive and administrative responsibilities to Trustcompany as President and Chief Executive Officer. Stock option grants are also determined by Trustcompany's Stock Option/Compensation Committee in a manner intended to foster the continued retention and loyalty of quality Trustcompany employees. STOCK OPTION/COMPENSATION COMMITTEE: Donald R. Brenner Mark Kutsher Jerome Quint EXECUTIVE OFFICERS The following section sets forth the name, age (as of March 31, 2004), positions held with Trustcompany and a brief biography of each person currently serving as an executive officer of Trustcompany. ALAN J. WILZIG, see under "-- Board of Directors" above. WILLIAM S. BURNS, 44, has served Trustcompany as its Chief Financial Officer since January 2003 and Executive Vice President since joining Trustcompany in November 2002. Prior to joining Trustcompany, 5 Mr. Burns was Senior Vice President, Director of Corporate Finance and Investor Relations of The Dime Savings Bank of New York, FSB from 1997 to 2002. RAYMOND CATLAW, 54, has served Trustcompany as an Executive Vice President since March 2002. Prior to that time, Mr. Catlaw held the following positions within Trustcompany: First Senior Vice President from February 1999 to March 2002 and Senior Vice President from January 1993 to February 1999. STEVEN EICHHORN, 63, has served Trustcompany as an Executive Vice President since February 2000 and as First Senior Vice President from 1993 to January 2000. PETER J. O'BRIEN, 70, has served Trustcompany as an Executive Vice President since 1995. Mr. O'Brien has held the following positions within Trustcompany: Treasurer from 1995 to February 2003 and Secretary from 2000 to April 2002 and July 2002 to February 2003. FRANK T. VAN GROFSKI, 59, has served Trustcompany as its Chief Operating Officer since September 2002 and Senior Executive Vice President since April 1997. WILLIAM A. WAGNER, 58, has served Trustcompany as an Executive Vice President and Chief Lending Officer since joining Trustcompany in August 2002. Prior to that time, Mr. Wagner served as Senior Credit Officer for Sovereign Bank from 2001 to August 2002; Senior Vice President and Senior Credit Officer for Summit Bank from 2000 to 2001 and President of Navesink Associates, LLC, a consulting and investment firm, from 1997 to 1999. SHARON V. WEINER, 48, has served Trustcompany as Secretary since February 2003 and as Senior Vice President and General Counsel since joining Trustcompany in June 2002. Prior to that time, Ms. Weiner was a Senior Attorney with the Office of Thrift Supervision from 1991 to May 2002. COMPENSATION AND EMPLOYEE BENEFIT PLANS Executive Compensation. The following table sets forth for the last three fiscal years the cash and other compensation paid or accrued to the chief executive officer and each of our other four most highly compensated executive officers (the "named executives"). SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION ----------------------------------- LONG-TERM OTHER COMPENSATION ANNUAL AWARDS, ALL OTHER COMPEN- OPTIONS AND COMPEN- NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION($)(1) SARS(#) SATION($)(2) --------------------------- ---- --------- -------- ------------ ------------ ------------ Alan J. Wilzig.................. 2003 $508,154 $770,625 -0- 17,500 $3,969,242 Chairman of the Board, President..................... 2002 415,231 758,750 -0- 50,000 6,189 and Chief Executive Officer 2001 281,923 145,000 -0- 50,000(3) 3,981 William S. Burns(4)............. 2003 237,312 248,750 -0- 5,000 725,775 Executive Vice President and 2002 26,923 25,000 -0- 65,000 0 Chief Financial Officer Frank T. Van Grofski............ 2003 200,000 85,000 -0- 10,000 8,044 Senior Executive Vice President 2002 140,346 -0- -0- 10,000 5,481 and Chief Operating Officer 2001 72,000 5,000 -0- 5,000 2,602 William A. Wagner(5)............ 2003 179,407 90,000 -0- 10,000 78,687 Executive Vice President and 2002 57,211 20,000 -0- 10,000 71 Chief Lending Officer Sharon V. Weiner(6)............. 2003 169,987 92,500 -0- 9,000 203,340 Senior Vice President, General 2002 82,500 7,500 -0- 15,000 78 Counsel and Secretary
6 --------------- (1) Amounts shown do not include amounts expended by us, which may have a value as a personal benefit to the named individual. The value of such benefits did not exceed the lesser of $50,000 or 10% of the total annual salary and bonus reported for any individual named. (2) For 2003, represents: (i) for Mr. Wilzig, contributions made by Trustcompany of $7,000 to Trustcompany's 401(k) plan to match 2003 pre-tax elective deferral contributions (included under "Salary") made by Mr. Wilzig to such plan, $56 for group term life insurance, $107 paid by Trustcompany as a premium for life insurance, $204 paid by Trustcompany as a premium for other life insurance for officers and key employees and $3,961,875 paid by Trustcompany in advance of the severance payments due under the terms of Mr. Wilzig's employment agreement; (ii) for Mr. Burns, contributions made by Trustcompany of $592 to Trustcompany's 401(k) plan to match 2003 pre-tax elective deferral contributions made by Mr. Burns to such plan, $55 for group term life insurance, $128 paid by Trustcompany as a premium for life insurance and $725,000 paid by Trustcompany in advance of certain severance payments due under the terms of Mr. Burns' employment agreement; (iii) for Mr. Van Grofski, contributions made by Trustcompany of $7,000 to Trustcompany's 401(k) plan to match 2003 pre-tax elective deferral contributions made by Mr. Van Grofski to such plan, $258 for group term life insurance, $470 paid by Trustcompany as a premium for life insurance and $316 paid by Trustcompany as a premium for other life insurance for officers and key employees; (iv) for Mr. Wagner, contributions made by Trustcompany of $1,940 to Trustcompany's 401(k) plan to match 2003 pre-tax elective deferral contributions made by Mr. Wagner to such plan, $258 for group term life insurance, $470 paid by Trustcompany as a premium for life insurance, $1,019 paid by Trustcompany as a premium for other life insurance for officers and key employees and $75,000 paid by Trustcompany in advance of certain severance payments due under the terms of Mr. Wagner's change-in-control agreement; and (v) for Ms. Weiner, contributions made by Trustcompany of $2,726 to Trustcompany's 401(k) plan to match 2003 pre-tax elective deferral contributions made by Ms. Weiner to such plan, $90 for group term life insurance, $216 paid by Trustcompany as a premium for life insurance, $308 paid by Trustcompany as a premium for other life insurance for officers and key employees and $200,000 paid by Trustcompany in advance of certain severance payments due under the terms of Ms. Weiner's employment agreement. (3) Options were granted in 2001 in tandem with an equivalent number of stock appreciation rights. A stock appreciation right permits the holder of a stock option, in lieu of exercising the option, to receive from Trustcompany an amount (payable in shares of common stock, cash, or a combination of shares and cash, as determined by the committee which administers the stock option plan) equal to the product of the excess of (i) the fair market value of one share of common stock at the time of exercise over (ii) the option exercise price per share times the number of shares covered by the stock option, or portion thereof, which is surrendered. (4) Mr. Burns joined Trustcompany in November 2002 as Executive Vice President and was appointed Chief Financial Officer in January 2003. (5) Mr. Wagner joined Trustcompany in August 2002 as Executive Vice President and Chief Lending Officer. (6) Ms. Weiner joined Trustcompany in June 2002 as Senior Vice President and General Counsel and was appointed Secretary in February 2003. Stock Options. The following table sets forth information regarding grants of stock options to any of the named executives in 2003 to purchase shares of our common stock. OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE -------------------------------------------------------- VALUE AT ASSUMED ANNUAL NUMBER OF RATES OF STOCK PRICE SECURITIES TOTAL OPTIONS APPRECIATION FOR OPTION UNDERLYING GRANTED TO EXERCISE OR TERM(2) OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------- NAME GRANTED(#)(1) 2003 ($/SH) DATE 5% ($) 10% ($) ---- ------------- ------------- ----------- ---------- ---------- ---------- Alan J. Wilzig.......... 17,500 6.42% $32.33 10/29/13 $355,812 $901,699 William S. Burns........ 5,000 1.83% $32.33 10/29/13 101,660 257,628 Frank T. Van Grofski.... 10,000 3.67% $32.33 10/29/13 203,321 515,256 William A. Wagner....... 10,000 3.67% $32.33 10/29/13 203,321 515,256 Sharon V. Weiner........ 9,000 3.30% $32.33 10/29/13 182,989 463,731
--------------- (1) Currently, we maintain four stock option plans for officers and employees, the 1993 Incentive Stock Option Plan, the 1993 Executive Stock Option Plan, the 2002 Stock Option Plan and the 2002 Executive Stock Option Plan. The 1993 plans expired in 2003. For this reason, during 2003 all options granted by us were granted under the 2002 plans. All options granted during 2003 were granted at an exercise price equal to 100% of such market value, have a term of ten years and are exercisable in cumulative installments of 20% after six months and 20% for each year after the date of grant such that 100% of such options will be exercisable after four years. The plans provide that all outstanding stock options will become immediately exercisable upon the occurrence of a "change in control event," as defined in the plans. 7 (2) Amounts represent hypothetical gains that could be achieved if the options described in the table were exercised at the end of the option term. These gains are based on assumed rates of stock price appreciation of 5% and 10% for all option grants, compounded annually from the date the options were granted to their expiration date, based upon the fair market value of our common stock as of the date the options were granted. Actual gains, if any, on stock option exercises and common stock holdings are dependent upon our future performance and overall financial market conditions. There can be no assurance that amounts reflected in this table will be achieved. The following table sets forth certain information regarding options exercised by the named executives in 2003 and the number and value of unexercised options held at the end of 2003 by each of the named executives. AGGREGATED OPTIONS/SARS EXERCISED IN LAST FISCAL YEAR FISCAL YEAR-END OPTION VALUE
NUMBER OF SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED OPTIONS/SARS AT FISCAL IN THE MONEY OPTIONS AT SHARES YEAR-END(#) FISCAL YEAR-END($)(1) ACQUIRED ON VALUE --------------------------- --------------------------- NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- ----------- ----------- ----------- ------------- ----------- ------------- Alan J. Wilzig........ 1,300 $26,650 146,000 87,500 $3,687,676 $1,738,060 William S. Burns...... -- -- 14,891 55,109 234,129 740,099 Frank T. Van Grofski............. -- -- 17,000 19,000 381,622 262,788 William A. Wagner..... -- -- 4,000 16,000 58,820 161,730 Sharon V. Weiner...... -- -- 6,000 18,000 100,380 216,720
--------------- (1) Calculated for each option/SAR as the fair market value of a share of the underlying common stock on December 31, 2003, minus the exercise price for such option, multiplied by the number of shares covered by the option. Such fair market value was $39.68, the closing price of our common stock as reported on the Nasdaq National Market System on December 31, 2003. Employees' Retirement Plans. We maintain two retirement plans: one for administrative employees and one for non-administrative employees. The following table shows estimated annual benefits payable under the retirement plan for administrative employees.
AVERAGE OF CREDITED YEARS OF SERVICE HIGHEST FIVE ------------------------------------------------------------- YEARS' SALARY(1) 15 20 25 30 35 40 ---------------- ------- ------- -------- -------- -------- -------- $ 50,000 $ 9,764 $13,019 $ 16,273 $ 19,528 $ 22,783 $ 26,037 75,000 15,622 20,829 26,036 31,244 36,451 41,658 100,000 21,818 29,091 36,364 43,637 50,910 58,182 150,000 34,318 45,758 57,197 68,637 80,076 91,516 200,000 46,818 62,425 78,031 93,637 109,243 124,849 250,000 50,638 70,411 90,184 109,957 129,730 149,503 300,000 50,638 74,578 98,517 122,457 146,396 165,000 350,000 50,638 78,745 106,851 134,957 163,063 165,000 400,000 50,638 82,911 115,184 147,457 165,000 165,000 450,000 50,638 87,078 123,517 159,957 165,000 165,000 500,000 50,638 91,245 131,851 165,000 165,000 165,000
--------------- Note: The IRS announced a defined benefit dollar limit of $165,000 effective January 1, 2004. (1) This table takes into consideration that beginning in 1989, the Tax Reform Act of 1986 requires that no more than $200,000 of compensation (as adjusted for cost of living) can be taken into account in determining benefits under a qualified plan. By 1993, the compensation limit had increased to $235,840. For 1994, the limit was reduced to $150,000 and steadily increased thereafter, until recent legislation established a $200,000 limit retroactively back to 1994. This limit increased to $205,000 effective in 2004. Annual benefits to be paid upon retirement are determined by taking 1 2/3% of the average of an employee's highest five consecutive years' salary during his or her last ten years of employment reduced by 1% of estimated annual social security benefits, and multiplying this amount by the number of credited 8 years of service up to a maximum of 40 credited years of service. The estimated amounts shown in the table are based on the assumption that payments commence at age 65, the customary retirement age. The years of credited service under the retirement plan for Messrs. Wilzig, Burns, Van Grofski and Wagner and Ms. Weiner as of January 1, 2004, were 16, 1, 7, 1 and 1 years, respectively. Covered compensation under the retirement plan is the participant's base annual salary. Bonus compensation is not taken into account under the plan. EMPLOYMENT AGREEMENTS AND CHANGE-IN-CONTROL ARRANGEMENTS Alan J. Wilzig. We have entered into an employment agreement with Mr. Wilzig, to secure his services as Chairman, President and Chief Executive Officer. The employment agreement has a fixed term of three years and automatically renews for an additional one year on each anniversary date unless a party gives notice that the agreement should not automatically renew. The agreement provides for a minimum annual salary of $470,000, an annual cash bonus of at least 50% of his salary at the time of the bonus, and participation on generally applicable terms and conditions in other compensation and fringe benefit plans. The agreement also guarantees customary corporate indemnification and errors and omissions insurance coverage throughout the employment term and for six years after termination. We may terminate Mr. Wilzig's employment, and he may resign, at any time with or without cause. However, if we terminate Mr. Wilzig's employment without cause during the term of the employment agreement, we will pay to him a lump sum severance payment generally equal to the value, without discount, of the cash compensation, and fringe benefits that he would have received, if he had continued working for the remainder of the term of the agreement, but in no event less than two years, and accelerate his stock options to the extent permitted under the applicable stock option plans. The same severance benefits would be payable if he resigns during the term following: a loss of title, office or membership on the board of directors; material reduction in duties, functions or responsibilities; involuntary relocation of Mr. Wilzig's principal place of employment to a location over 40 miles in distance from our principal office in Jersey City, New Jersey; or other material breach of the employment agreement by us which is not cured within 30 days. For 90 days after a change of control, Mr. Wilzig may resign for any reason and collect a lump sum severance benefit equal to three years' salary and bonus (without discount), as well as three years of fringe benefits. In the event that we terminate Mr. Wilzig's employment, or he resigns for one of the reasons specified above, and a change of control becomes pending prior to the later of the expiration of the employment agreement or six months following the date of termination of employment, we will pay to Mr. Wilzig, upon the consummation of the change of control transaction, the payment that would have been payable if a change of control had occurred on the date of his termination of employment. The employment agreement also provides certain uninsured death and disability benefits. William S. Burns. We have entered into an employment agreement with Mr. Burns, to secure his services as Executive Vice President and Chief Financial Officer. The employment agreement has a fixed term of two years and automatically renews for an additional one year on each anniversary date unless a party gives notice that the agreement should not automatically renew. The agreement provides for a minimum annual salary of $275,000, an annual cash bonus of at least $150,000, and participation on generally applicable terms and conditions in other compensation and fringe benefit plans. The agreement also guarantees customary corporate indemnification and errors and omissions insurance coverage throughout the employment term and for a period of six years after termination. We may terminate Mr. Burns' employment, and he may resign, at any time with or without cause. However, if Mr. Burns' employment is terminated without cause during the term of the employment agreement, we will pay to Mr. Burns his cash compensation, and provide fringe benefits that he would have received, if he had continued working for the remainder of the term of the agreement, but in no event less than six months, and will accelerate his stock options to the extent permitted under the applicable stock option plans. The same severance benefits would be payable if he resigns during the term following a material breach of certain sections of the employment agreement by us which, if subject to cure, is not cured after being given a reasonable opportunity to cure. For 90 days after a change of control, 9 Mr. Burns may resign for any reason and collect a payment equal to twice his salary in effect at such time plus twice the greatest annual cash bonus paid to Mr. Burns, but in no event will the payment be less than $950,000. In the event that we terminate Mr. Burns' employment, or he resigns because of our breach of certain sections of the agreement, as specified above, and a change of control becomes pending prior to the later of the expiration of the employment agreement or six months following the date of termination of employment, we will pay to Mr. Burns, upon the consummation of the change of control transaction, the payment that would have been payable if a change of control had occurred on the date of his termination of employment. Sharon V. Weiner. We have entered into an employment agreement with Ms. Weiner, to secure her services as Senior Vice President, General Counsel and Secretary. The employment agreement has a fixed term of two years and automatically renews for an additional one year on each anniversary date unless a party gives notice that the agreement should not automatically renew. The agreement provides for a minimum annual salary of $165,000, an annual cash bonus of at least $25,000, and participation on generally applicable terms and conditions in other compensation and fringe benefit plans. The agreement also guarantees customary corporate indemnification and errors and omissions insurance coverage throughout the employment term and for a period of six years after termination. We may terminate Ms. Weiner's employment, and she may resign, at any time with or without cause. However, if Ms. Weiner's employment is terminated without cause during the term of the employment agreement, we will pay to Ms. Weiner her cash compensation, and provide fringe benefits that she would have received, if she had continued working for the remainder of the term of the agreement, but in no event less than six months, and will accelerate her stock options to the extent permitted under the applicable stock option plans. The same severance benefits would be payable if she resigns during the term following a material breach of certain sections of the employment agreement by us which, if subject to cure, is not cured after being given a reasonable opportunity to cure. For 90 days after a change of control, Ms. Weiner may resign for any reason and collect a payment equal to twice her salary in effect at such time plus twice the greatest annual cash bonus paid to Ms. Weiner. If we experience a change in ownership, a change in effective ownership or control or a change in the ownership of a substantial portion of assets as contemplated by section 280G of the Internal Revenue Code, a portion of any severance payments under Messrs. Wilzig's or Burns' or Ms. Weiner's employment agreements might constitute an "excess parachute payment" under current federal tax laws. Federal tax laws impose a 20% excise tax, payable by the executive, on excess parachute payments. Under their employment agreements, we would reimburse Mr. Wilzig, Mr. Burns or Ms. Weiner for the amount of this excise tax and would make an additional gross-up payment so that, after payment of the excise tax and all income and excise taxes imposed on the reimbursement and gross-up payments, they will retain approximately the same net-after tax amounts under the employment agreement that they would have retained if there was no 20% excise tax. The effect of this provision is that we, rather than the executive, bears the financial cost of the excise tax. We could not claim a federal income tax deduction for an excess parachute payment, excise tax reimbursement payment or gross-up payment. At North Fork's request, on December 31, 2003, we paid Mr. Wilzig $3,961,875 in satisfaction of the cash payment he is entitled to receive on consummation of the merger in accordance with the terms of his existing employment agreement. On the same date, we paid Mr. Burns an amount equal to $725,000 and Ms. Weiner an amount equal to $200,000, in each case, in partial satisfaction of the amounts the executives are entitled to receive on consummation of the merger under the terms of their existing employment agreements. On the consummation of the merger, Mr. Burns and Ms. Weiner will be entitled to $272,500 and $350,000, respectively, under their agreements if their employment terminates. Existing Change-in-Control Agreements with Named Executives. We are also party to "change-in-control" agreements with Frank T. Van Grofski and William A. Wagner. Under the terms of Mr. Van Grofski's agreement, if he is terminated without "cause," or he resigns for "good reason" (each as defined below) within one year after a change of control, he will be entitled to a lump-sum cash payment equal to his salary at the time of termination and the bonus paid him for the year prior to the change of control, 10 together with continued health insurance benefits for one year after the termination. Under the terms of Mr. Wagner's agreement, if he is terminated without cause, or he resigns for good reason within one year after a change of control, he will be entitled to a lump-sum cash payment equal to 1 1/2 times his salary at the time of termination and the bonus paid him for the year prior to the change of control, together with continued health insurance benefits for 18 months after the termination. The consummation of the merger will be a change in control for purposes of these existing agreements. "Cause" means that the officer (1) has willfully or intentionally failed to perform his or her assigned duties in any material respect or materially violated our policies in place from time to time of which the officer had prior notice; (2) has engaged in dishonest or illegal conduct in connection with his or her performance of services for us; (3) has been convicted of a felony or engaged in an act of moral turpitude; or (4) has violated in any respect any final cease-and-desist order from, or written agreement with, any judicial or regulatory authority having jurisdiction over us with respect to his or her performance of services for us. "Good reason" is generally defined to mean a termination in the officer's employment by the officer if we, without the officer's consent, (1) reduce his or her annual base salary; (2) make a material adverse change to his or her functions, duties or responsibilities; or (3) relocate his or her existing work location to a new location that is more than 35 miles distant from the existing location. At North Fork's request, on December 31, 2003, we paid Mr. Wagner an amount equal to $75,000 in partial satisfaction of the lump-sum payment he would be entitled to receive on resignation or termination after consummation of the merger under the circumstances described in his change-in-control agreement. On the consummation of the merger, and subject to their respective termination or resignation as described above, the remainder of these lump-sum payments for Messrs. Van Grofski and Wagner will be $260,000 and $337,500, respectively, under the terms of their change-in-control agreements. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The only persons who own of record, or who are known by us to own beneficially, more than 5% of our outstanding common stock are the Estate of Siggi B. Wilzig, Alan J. Wilzig and Ivan L. Wilzig. Their holdings, as of March 10, 2004, were as follows:
NAME AND ADDRESS NUMBER OF SHARES OF BENEFICIAL OWNER OWNED BENEFICIALLY PERCENT OF CLASS(A) ------------------- ------------------ ------------------- Estate of Siggi B. Wilzig......................... 4,416,562(b) 23.94% Two Penn Plaza Newark, NJ 07105 Alan J. Wilzig.................................... 1,086,010(b)(c) 5.89% 35 Journal Square Jersey City, NJ 07306 Ivan L. Wilzig.................................... 974,721(b)(d) 5.28% 35 Journal Square Jersey City, NJ 07306
--------------- (a) As of March 10, 2004, there were 18,447,525 shares of our common stock outstanding. (b) Includes 39,741 shares of our common stock held in a family charitable foundation for which Alan J. Wilzig, Ivan L. Wilzig, Naomi Wilzig and Sherry Wilzig Izak are co-trustees and exercise investment discretion. (c) See footnote (c) under "-- Security Ownership of Directors and Executive Officers." (d) Includes 42,000 shares Ivan L. Wilzig has the right to acquire within 60 days (through May 9, 2004) under outstanding stock options. 11 SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth information as of March 10, 2004 regarding the ownership of our common stock by each director, by each person named in the Summary Compensation Table above who as of such date was an executive officer of Trustcompany and by all directors and executive officers as a group.
TRUSTCOMPANY COMMON STOCK ---------------------------------------------- AMOUNT OWNED BENEFICIALLY AS OF NAME AND POSITION MARCH 10, 2004(A) PERCENT OF CLASS(B) ----------------- -------------------- ------------------- Alan J. Wilzig, Chairman of the Board, President and Chief Executive Officer...... 1,086,010(c)(d) 5.89% Donald R. Brenner, Director and Vice Chairman................................... 546,845(c)(e) 2.96% Lawrence R. Codey, Director and Vice Chairman................................... 24,000(c) * Richard W. Kanter, Director.................. 332,266(c)(f) 1.80% Martin J. Kaplitt, Director.................. 61,890(c)(g) * Mark Kutsher, Director....................... 22,500(c) * Abraham Oster, Director...................... 250 * Jerome Quint, Director....................... 67,900(c)(h) * Marion Wiesel, Director...................... 70,000(c)(i) * William S. Burns, Executive Vice President and Chief Financial Officer................ 16,292(c) * Frank T. Van Grofski, Senior Executive Vice President and Chief Operating Officer...... 19,622(c) * William A. Wagner, Executive Vice President and Chief Lending Officer.................. 6,558(c) * Sharon V. Weiner, Senior Vice President, General Counsel and Secretary.............. 14,253(c) * ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (16 PERSONS)......................... 2,400,782 13.01%
--------------- * Represents less than one percent of our outstanding common stock. (a) The shares are owned directly and beneficially, and the holders have sole voting and investment power, except as otherwise noted. The amounts do not include shares held by adult children, as to which beneficial ownership is disclaimed. (b) As of December 31, 2003, there were 18,447,525 shares of our common stock outstanding. (c) Includes shares which may be acquired within 60 days (through May 9, 2004) under outstanding stock options as follows: Mr. Wilzig -- 149,500 shares; Mr. Brenner -- 20,000 shares; Mr. Codey -- 20,000 shares; Mr. Kanter -- 20,000 shares; Dr. Kaplitt -- 20,000 shares; Mr. Kutsher -- 20,000 shares; Dr. Quint -- 20,000 shares; Ms. Wiesel -- 20,000 shares; Mr. Burns -- 15,891 shares; Mr. Van Grofski -- 19,000 shares; Mr. Wagner -- 6,000 shares; Ms. Weiner -- 7,800 shares; all directors and executive officers as a group (16 persons) -- 422,391 shares. (d) Includes 39,741 shares of common stock held in a family charitable foundation for which Alan J. Wilzig, Ivan L. Wilzig, Naomi Wilzig and Sherry Wilzig Izak are co-trustees and exercise investment discretion. (e) Includes 90,000 shares held by Mr. Brenner's wife, 3,900 shares owned by a family foundation for which Mr. Brenner serves as president and trustee, 286,902 shares held in trust for Mr. Brenner and members of Mr. Brenner's family and for which Mr. Brenner serves trustee and 19,500 shares held in a separate IRA account. Mr. Brenner disclaims beneficial ownership of these shares, except to the extent of his interest in the IRA account. (f) Includes 208,900 shares held by a company in which Mr. Kanter has a controlling interest and 100,808 shares held in trust for Mr. Kanter's wife and for which Mr. Kanter is a co-trustee. (g) Includes 27,750 shares held in a family trust for which Dr. Kaplitt is a co-trustee, 13,000 shares held in Dr. Kaplitt's KEOGH account, 90 shares held in Dr. Kaplitt's spouse's IRA account, and 800 shares held in Dr. Kaplitt's IRA account. (h) Includes 17,400 shares held jointly with Dr. Quint's spouse, 13,000 shares held by Dr. Quint's spouse and 14,500 shares in Dr. Quint's spouse's IRA account. (i) Includes 25,000 shares held jointly with Ms. Wiesel's spouse. 12 SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE FDIC rules require that each of our directors, executive officers and shareholders holding more than 10% of our common stock file with the FDIC certain reports regarding such person's ownership of our securities. We are required to disclose any failures to file such reports on a timely basis during 2003. Based solely upon a review of the copies of those reports and amendments thereto received by us, and certain written representations received from such persons, we believe that all applicable filing requirements were complied with for 2003 and do not know of any such persons who may have failed to file on a timely basis any required form, except as follows: Mr. Siggi B. Wilzig, a former director, executive officer and 10% shareholder of Trustcompany, did not timely file Form F-8s reflecting the purchase of 848,070 shares of our common stock during the period from January 30, 1992 through September 10, 2001 and the sale of 119,675 shares of our common stock during the period from January 26, 1998 through February 12, 2002. These transactions were reported on a Form F-8 filed by the Estate of Mr. Siggi B. Wilzig on November 22, 2003. Each of the directors Messrs. Brenner, Codey, Kanter, Kaplitt, Kutsher and Quint and Ms. Wiesel did not timely file a Form F-8 reflecting the granting of an option to purchase 5,000 shares of our common stock granted to him or her on April 28, 2003. Each of these transactions was reported on a Form F-8 filed by each director on May 8, 2003. Mr. Raymond Catlaw, an executive officer, did not timely file a Form F-8 reflecting the exercise of an option to purchase 1,500 shares of our common stock on December 12, 2003. This transaction was reported on a Form F-8 filed on December 17, 2003. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Stock Option/Compensation Committee, comprised of Messrs. Brenner, Kutsher and Quint, has performed the function of a compensation committee. During 2003 there were no, and there are no, interlocks requiring disclosure under applicable FDIC rules and regulations. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS Some of our directors and officers and their associates were customers of and had loan transactions with us in the ordinary course of business during the past three fiscal years. Similar transactions may be expected to take place in the future. Outstanding loans to and commitments made with our directors and officers and their associates were made in the ordinary course of business on substantially the same terms, including interest rates, collateral and repayment terms, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectibility or present any other unfavorable features. The balance of loans outstanding to our directors, executive officers and their associates was $21.6 million at December 31, 2003, $26.1 million at December 31, 2002 and $24.4 million at December 31, 2001. Richard Kanter, his wife and certain companies controlled by Mr. Kanter, were indebted to us as of December 31, 2003, December 31, 2002 and December 31, 2001 pursuant to various loans in the aggregate principal amount of $12.0 million, $16.8 million and $15.3 million, respectively. Approximately 81% of these loans were secured by first mortgages on real estate at December 31, 2003. Miller Construction Company, of which Mr. Kanter, a director, is the controlling shareholder and President, received during 2003, 2002 and 2001 approximately $17,000, $260,000 and $161,000, respectively, in payment for construction and renovation of various Trustcompany properties. In addition to the foregoing, we have made loans to Wilshire Enterprises, Inc., formerly known as Wilshire Oil Company of Texas, of which the estate of the late Mr. Siggi B. Wilzig is a substantial shareholder. Such loans aggregated approximately $21.2 million at December 31, 2003, $32.3 million at December 31, 2002 and $34.6 million at December 31, 2001 and are all, and have been, secured by first mortgages and marketable securities. 13 PERFORMANCE GRAPH The following graph compares the cumulative total return over a five-year period on a hypothetical $100 investment made on December 31, 1998 in (1) our common stock, (2) the S&P 500 Index(1) and (3) the KBW 50 Index(2). (Performance Graph) --------------- * Source: CRSP, Center for Research in Security Prices, Graduate School of Business, The University of Chicago 2004. Used with permission. All rights reserved. crsp.com. (1) The "S&P 500" and "S&P 500 Index" are trademarks of Standard & Poor's Corporation. (2) The KBW 50 Index is prepared by Keefe, Bruyette & Woods, Inc. and is composed of the stock price performance of fifty of the nation's most important banks, including money-center and most major regional banks. AUDIT AND EXAMINATION COMMITTEE REPORT In connection with the preparation and filing of Trustcompany's Annual Report on Form 10-K for the year ended December 31, 2003: (1) the Audit and Examination Committee reviewed and discussed the audited financial statements with Trustcompany's management; (2) the Audit and Examination Committee discussed with Trustcompany's independent auditors the matters required to be discussed by SAS 61 (Codification of Statements on Auditing Standards); (3) the Audit and Examination Committee received and reviewed the written disclosures and the letter from Trustcompany's independent auditors required by the Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and discussed with Trustcompany's independent auditors the independent auditors' independence; and 14 (4) based on the review and discussions referred to above, the Audit and Examination Committee recommended to Trustcompany's board of directors that the audited financial statements be included in the 2003 Annual Report on Form 10-K. AUDIT AND EXAMINATION COMMITTEE: Donald R. Brenner Lawrence R. Codey Martin Kaplitt 15 APPENDIX A CHARTER OF THE AUDIT AND EXAMINATION COMMITTEE OF THE TRUST COMPANY OF NEW JERSEY I. STATEMENT OF POLICY The Audit and Examination Committee (the "Audit Committee") shall assist the Board of Directors (the "Board") of The Trust Company of New Jersey (the "Bank") in fulfilling its oversight responsibility by reviewing the accounting and financial reporting processes of the Bank, the Bank's system of internal controls regarding finance, accounting, legal compliance and ethics that management and the Board have established, and the audits of the Bank's financial statements. In so doing, it is the responsibility of the Audit Committee to maintain free and open means of communication among the Bank's Board of Directors, outside auditors, internal audit and senior management. The Audit Committee's primary responsibilities and duties are: Serve as an independent and objective party to monitor the Bank's financial reporting process, internal control system and disclosure control system. Review and appraise the audit efforts of the Bank's independent accountants and internal audit. Assume direct responsibility for the appointment, compensation and oversight of the work of the outside auditors and for the resolution of disputes between the outside auditors and the Bank's management regarding financial reporting issues. Provide an open avenue of communication among the independent accountants, financial and senior management, internal audit, and the Board. The Audit Committee will primarily fulfill these responsibilities by carrying out the activities identified in Section IV of this Charter. II. COMPOSITION OF THE COMMITTEE The Audit Committee shall consist of at least three, but not more than five, "independent" Directors of the Bank and shall serve at the pleasure of the Board. An "independent" Director is defined as an individual who (a) is not an officer or salaried employee of the Bank, (b) does not have any relationship that, in the opinion of the Board, would interfere with his or her exercise of independent judgment as an Audit Committee member, (c) meets the NASDAQ Stock Market's definition of independent director, and (d) except as would be permitted by the SEC, does not accept any consulting, advisory or other compensatory fee from the Bank. In selecting the members of the Audit Committee, the Board of Directors will take into account the requirements imposed by, and the interpretations of, the applicable federal and state banking regulators. At least one member of the Audit Committee shall have accounting or related financial management expertise. Each Audit Committee member must be able to read and understand financial statements, including a balance sheet, income statement, and cash flow statement. The members of the Audit Committee shall be designated by the full Board of Directors from time to time. The Board shall designate one member of the Audit Committee to serve as chairperson of the Audit Committee. A-1 III. MINUTES The Audit Committee shall maintain minutes of each meeting of the Audit Committee and shall report the actions of the Audit Committee to the Board, with such recommendations as the Audit Committee deems appropriate. IV. RESPONSIBILITIES AND DUTIES OF THE AUDIT COMMITTEE The Audit Committee shall oversee and monitor the Bank's accounting and financial reporting process, internal control system and disclosure control system, review the audits of the Bank's financial statements and review and evaluate the performance of the Bank's outside auditors and internal audit function. In fulfilling these duties and responsibilities, the Audit Committee shall take the following actions, in addition to performing such functions as may be assigned by law, the Bank's certificate of incorporation, the Bank's bylaws or the Board. 1. The Audit Committee shall nominate, select, evaluate and, when appropriate, recommend the replacement of the outside auditors. As part of the audit process, the Audit Committee shall meet with the outside auditors to discuss and decide the audit's scope. The Audit Committee shall determine that the outside audit team engaged to perform the external audit consists of competent, experienced, financial institution auditing professionals. The Audit Committee shall also review and approve the compensation to be paid to the outside auditors. 2. The Audit Committee shall take, or recommend that the full Board take, appropriate action to ensure the independence of the outside auditors. The Audit Committee shall require the outside auditors to advise the Bank of any facts or circumstances that might adversely affect the outside auditors' independence or judgment with respect to the Bank under applicable auditing standards. The Audit Committee shall require the outside auditors to submit, on an annual basis, a formal written statement setting forth all relationships between the outside auditors and the Bank that may affect the objectivity and independence of the outside auditors. Such statement shall confirm that the outside auditors are not aware of any conflict of interest prohibited by Section 10A(i) of the Securities Exchange Act of 1934. The Audit Committee shall actively engage in a dialogue with the outside auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the outside auditors. 3. The Audit Committee shall require the outside auditors to advise the Audit Committee in advance in the event that the outside auditors intend to provide any professional services to the Bank other than services provided in connection with an audit or a review of the Bank's financial statements ("non-audit services"). 4. The Audit Committee shall review all non-audit services provided by the Bank's auditors. The Audit Committee shall obtain confirmations from time to time from the Bank's outside auditing firm that such firm is not providing to the Bank (i) any of the non-auditing services listed in Section 10A(g) of the Securities Exchange Act of 1934, or (ii) any other non-audit service or any auditing service that has not been approved in advance by the Audit Committee. The Audit Committee shall have the authority to approve the provision of non-audit services that have not been pre-approved by the Audit Committee, but only to the extent that such non-audit services qualify under the de minimus exception set forth in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934. The Audit Committee shall record in its minutes and report to the Board all approvals of non-audit services granted by the Audit Committee. 5. The Audit Committee shall meet with the outside auditors, with no management in attendance, to openly discuss the quality of the Bank's accounting principles as applied in its financial reporting, including issues such as (a) the appropriateness, not just the acceptability, of the accounting principles and financial disclosure practices used or proposed to be used by the Bank, (b) the clarity of the Bank's financial disclosures and (c) the degree of aggressiveness or conservatism that exists in the Bank's accounting principles and underlying estimates and other A-2 significant decisions made by the Bank's management in preparing the Bank's financial disclosures. The Audit Committee shall then meet, without operating management or the outside auditors being present, to discuss the information presented to it. 6. The Audit Committee shall require the outside auditors to comply with any federal or state banking regulations applicable to the audit of the Bank's financial statements. 7. The Audit Committee shall meet with the outside auditors and management to review the Bank's quarterly reports on Form 10-Q and annual report on Form 10-K and discuss any significant adjustments, management judgments and accounting estimates and any significant new accounting policies before such forms are filed with the Federal Deposit Insurance Corporation. The Audit Committee shall require the outside auditors to report to the Audit Committee all critical accounting policies and practices to be used, all alternative treatments of financial information within generally accepted accounting principles that have been discussed with the Bank's management, ramifications of the use of such alternative disclosures and treatments, the treatments preferred by the outside auditors and other material written communications between the outside auditors and the Bank's management, including management's letters and schedules of unadjusted differences. 8. Upon the completion of the annual audit, the Audit Committee shall review the audit findings reported to it by the outside auditors, including any comments or recommendations of the outside auditors, with the entire Board. 9. The Audit Committee shall review all reports received from the federal and state regulatory authorities and assure that the Board is aware of the findings and results. In addition, it will meet with the appropriate members of senior management designated by the Audit Committee to review the responses to the respective regulatory reports. 10. The Audit Committee shall meet at least annually with the Bank's internal audit function. The Audit Committee shall review the internal audit function of the Bank, including the independence and authority of its reporting obligations, the proposed audit plans for the coming year and the coordination of such plans with the independent auditors. 11. The Audit Committee shall assure itself that the internal audit function is free from operational duties, and that the internal audit function reports directly to the Audit Committee regarding any audit concerns or problems. 12. The Audit Committee shall receive from the Bank's internal audit function a quarterly update, which includes a summary of findings from completed internal audits and a progress report on the internal audit plan, together with explanations for any deviations from the original plan. 13. The Audit Committee shall review and concur in the appointment, replacement or dismissal of the Bank's internal audit function. 14. The Audit Committee shall consider and review with management and internal audit: (a) significant findings during the year and management's responses thereto, including the status of previous audit recommendations, (b) any difficulties encountered in the course of their audits, including any restrictions on the scope of activities or access to required information and (c) any changes required in the planned scope of the internal audit plan. 15. The Audit Committee shall consider and approve, if appropriate, changes to the Bank's auditing and accounting principles and practices, as suggested by the outside auditors, internal audit, or management, and the Audit Committee shall review with the outside auditors, internal audit and management the extent to which such changes have been implemented (to be done at an appropriate amount of time subsequent to the implementation of such changes as decided by the Audit Committee). 16. The Audit Committee shall prepare a letter for inclusion in the Bank's proxy statement describing the discharge of the Audit Committee's responsibilities. A-3 17. The Audit Committee will review and update this Charter periodically, at least annually, and as conditions may dictate. The Audit Committee Charter shall be presented to the full Board for its approval of any changes. 18. Commencing on such date as Section 102(a) of the Sarbanes-Oxley Act of 2002 (the "Act") becomes effective, the Audit Committee shall obtain confirmation from the outside auditors at the commencement of each audit that such firm is a "registered public accounting firm" as such term is defined under the Act. 19. The Audit Committee shall have the authority to engage independent counsel and other advisers as it determines necessary to perform its duties. 20. The Audit Committee shall establish procedures for (i) the receipt, retention and treatment of complaints received by the Bark regarding accounting, internal accounting controls or auditing matters and (ii) the confidential, anonymous submission by employees of the Bank of concerns regarding questionable accounting or auditing matters. 21. The Audit Committee shall investigate or consider such other matters within the scope of its responsibilities and duties as the Audit Committee may, in its discretion, determine to be advisable. A-4 APPENDIX B THE TRUST COMPANY OF NEW JERSEY ETHICS, GOVERNANCE AND NOMINATING COMMITTEE CHARTER I. PURPOSE The purpose of the Ethics, Governance and Nominating Committee (the "Committee") of The Trust Company of New Jersey (the "Bank") and its subsidiaries (together, the "Company") shall be: A. To monitor, oversee and review compliance by the Company's directors, officers, administrative employees, and agents (each, an "Individual") with, as applicable, (i) the Company's Code of Conduct and Conflict of Interest Policy (the "Code of Conduct"), (ii) the Company's Code of Ethics for Senior Financial Officers (the "Code of Ethics"), (iii) the Company's Insider Trading and Related Compliance Policies and Procedures for Directors and Executive Officers and Other Designated Officers and Employees (the "Insider Trading Policy") and (iv) such other applicable policies of the Company as the Committee or the Board of Directors (the "Board") deems necessary or desirable (together, the "Corporate Governance Policies"), such Corporate Governance Policies to be reviewed by the Committee and the full Board at least once a year; B. To recommend to the Board changes, alterations and modifications to the Company's Corporate Governance Policies; and C. To assist the Board in: (i) identifying qualified persons to become directors of the Company, (ii) determining the size and composition of the Board and its committees, and (iii) establishing procedures for the nomination process. When exercising its powers, the Committee shall consider the Company's mission, vision and values as an integral element in its decision making process. It is the Committee's mission to ensure that all Individuals act in accordance with high standards of professional and ethical conduct. II. COMMITTEE MEMBERSHIP The Committee shall consist of no fewer than three (3) directors, each of whom shall be independent. Each director member of the Committee shall meet the NASDAQ Stock Market's definition of independent director. A majority of the members of the Committee shall constitute a quorum. The Secretary of the Committee shall be the Company's Corporate Secretary, or in her absence, an Assistant Secretary of the Company. The members of the Committee shall be appointed and replaced by the Board on an annual basis. III. MEETINGS Meetings of the Committee shall be held periodically, but not less than semi-annually, and at such additional times as the Committee Chairman or the Board may require. The Chairman of the Committee shall make regular reports to the Board. IV. COMMITTEE AUTHORITY AND RESPONSIBILITY The scope of authority and responsibilities of the Committee are as follows: A. The Committee shall make recommendations to the Board with respect to changes, alterations and modifications of the Company's Corporate Governance Policies. B. The Committee shall, except as set forth in the next sentence, monitor and review compliance with the Company's Corporate Governance Policies. Monitoring of compliance with the provisions of the Company's Code of Ethics to the extent the issue relates to (i) accounting, disclosures or regulations of the Securities Exchange Commission (the "SEC"), the Federal Deposit Insurance B-1 Corporation (the "FDIC"), the New Jersey Department of Banking and Insurance (the "NJDOBI"), the National Association of Securities Dealers (the "NASD"), the Office of Thrift Supervision (the "OTS") or other bank regulatory agency with oversight authority, and (ii) financial statements or related financial information, will be referred to the Audit Committee for action. C. The Committee shall, except as set forth in the next sentence, (i) serve as the initial reviewing council for allegations of violations of the Company's Corporate Governance Policies, including allegations of wrongdoing concerning directors and the President, and (ii) make recommendations to the Board as to whether an internal investigation, outside investigation or some other action should be initiated by the Company and whether the Company should report any information to appropriate federal and/or state regulatory bodies. Allegations of wrongdoing or failure to comply with the provisions of the Company's Code of Ethics to the extent the issue relates to accounting, disclosures or regulations of the SEC, the FDIC, the NJDOBI, the NASD, the OTS or other bank regulatory agency with oversight authority, and financial statements or related financial information, will be referred to the Audit Committee for action. D. The Committee shall, except as set forth in the next sentence, make recommendations to the Board about responses to communications with regulatory authorities and agencies arising out of inquiries and investigations relating to the Company's Corporate Governance Policies and applicable state and federal laws, to the extent the Committee deems necessary or appropriate. Issues relating to inquiries or investigations regarding the quality of financial reports filed by the Company with the SEC or FDIC, or otherwise distributed to the public, shall be referred to the Audit Committee for action. E. The Committee shall make recommendations to the Board and to management with respect to the interpretation and enforcement of the Company's Corporate Governance Policies. The Audit Committee also may make recommendations to the Board with respect to the Company's Corporate Governance Policies. F. The Committee shall lead the search for persons qualified to become directors of the Company, consistent with criteria approved by the Board, and shall select, or recommend to the Board, director nominees to be presented for shareholder approval at the next annual meeting. This process shall take place within the time frame set by the Board for such purposes. The Committee shall recommend to the Board for its approval directors to serve as members of each committee, shall review such committee appointments annually, and shall recommend additional directors to fill vacancies as needed. The Committee shall have the authority to retain any search firm to assist in identifying director candidates. The Committee shall review and recommend any changes to the nomination process to the Board for its approval. In selecting or recommending candidates, the Committee shall take into consideration the criteria approved by the Board from time to time and such other factors as it deems appropriate. These factors may include judgment, skill, diversity, experience with businesses and other organizations of comparable size, the interplay of the candidate's experience with the experience of other Board members, and the extent to which the candidate would be a desirable addition to the Board and any committees of the Board. The Committee shall consider all candidates recommended by the Company's shareholders in accordance with the procedures set forth in Exhibit A attached hereto. The Committee may consider candidates proposed by management, but is not required to do so. G. The Committee shall develop and recommend to the Board standards to be applied in making determinations as to the absence of material relationships between the Bank and a director. H. The Committee shall identify Board members qualified to fill vacancies on any committee of the Board (other than the Committee) and recommend that the Board appoint the identified member or members to the respective committee. In nominating a candidate for committee membership, the Committee shall take into consideration the criteria approved by the Board from time to time and the factors set forth in the charter of that committee, if any, as well as any other factors it deems B-2 appropriate, including without limitation the consistency of the candidate's experience with the goals of the committee and the interplay of the candidate's experience with the experience of other committee members. I. The Committee shall assist management in the preparation of the disclosure in the Company's annual proxy statement regarding the operations of the Committee. J. The Committee shall review and reassess the adequacy of this Charter and the Company's Corporate Governance Policies annually and recommend any proposed changes to the Board for approval. K. The Committee shall take such other action as authorized by the Board. V. ACCESS, AUTHORITY AND RELIANCE A. In carrying out its responsibilities, the Committee shall have access to all of the Company's books, records and Individuals. B. The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including the authority to select, retain, terminate, and approve the fees and other retention terms of special counsel or other experts or consultants, as it deems appropriate, without seeking approval of the Board or management. With respect to consultants or search firms used to identify director candidates, this authority shall be vested solely in the Committee. C. The Committee, and each member of the Committee in his or her capacity as such, shall be entitled to rely, in good faith, on information, opinions, reports or statements, or other information prepared or presented by (i) Individuals of the Company who the member reasonably believes to be reliable and competent in the matters presented, and (ii) counsel, public accountants or other persons as to matters which the member reasonably believes to be within the professional competence of such person. VI. CONFIDENTIALITY In order to facilitate the full development and examination of issues brought before the Committee and to encourage all Individuals to fully and frankly communicate with the Committee, all proceedings and records of the Committee shall be confidential, except as necessary to conduct appropriate investigations, invoke appropriate corrective action, and to the extent required by law or regulation or by a court of law. B-3 EXHIBIT A PROCEDURE FOR SHAREHOLDER NOMINATIONS OF DIRECTORS 1. No nominations for directors except those made by the Board shall be voted upon at a meeting of shareholders other than nominations made by any shareholder entitled to vote in the election of directors who gives written notice of such shareholder's intent to make such nomination or nominations, either by personal delivery or by United States mail, postage prepaid, to the secretary of the Bank: (a) with respect to an election to be held at an annual meeting of shareholders, not less than 60 days nor more than 90 days in advance of the anniversary of the date of the notice of meeting mailed to shareholders in connection with the previous year's annual meeting of shareholders; and (b) with respect to an election to be held at a special meeting of shareholders for the election of directors, not later than the close of business on the seventh day following the day on which notice of such meeting is first given to shareholders. 2. Each such notice of a shareholder's intent to make such nomination or nominations shall set forth: (a) the name and address of the shareholder who intends to make the nomination or nominations and of the person or persons to be nominated; (b) a representation that the shareholder is a holder of record of stock of the Bank entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, and a statement of the number of shares owned by such shareholder, beneficially and of record; (c) a description of any arrangement or understanding (written or verbal, express or implied) (i) between such shareholder and each nominee, (ii) between such shareholder and any other person or persons (such notice to include the names of such other person or persons) and (iii) to the extent known by such shareholder, between each nominee and any other person or persons (such notice to include the names of such other person or persons), pursuant to which the nomination or nominations is or are to be made by the shareholder or relating to such nomination (for purposes of this Section the term "shareholder" shall be deemed to include any person on whose behalf the shareholder is acting); (d) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated or intended to be nominated by the Board; (e) the written consent of each nominee to serve as a director of the Bank if elected; and (f) the written certification of each nominee (with other documents or information supporting such certification) that the nominee is qualified to be a director of the Bank pursuant to the qualification requirements established by the Board or the Corporate Governance Policies of the Bank (such qualification requirements to be made available to a shareholder upon written request for the purpose of complying with this provision). The presiding officer of any meeting of the shareholders may refuse to acknowledge the nomination of any person if not made in compliance with these requirements. Ballots bearing the names of all the persons so nominated by the board and by shareholders shall be provided for use at the meeting. 3. No shareholder nomination for director shall be acknowledged at a meeting of shareholders unless the shareholder who gave written notice of his or her intent to make such nomination is present in person or by proxy at such meeting and makes the nomination. B-4 PROCEDURE FOR SHAREHOLDER PROPOSALS 1. Any shareholder may make a proposal to be acted upon at an annual meeting of shareholders, provided that any such proposal by a shareholder is made in writing and delivered either by personal delivery or by United States mail, postage prepaid, to the secretary of the Bank not less than 60 days nor more than 90 days in advance of the anniversary of the date of the notice of meeting mailed to shareholders in connection with the previous year's annual meeting of shareholders. Each such shareholder proposal must set forth: (a) the name and address of the shareholder making the proposal; (b) a representation that the shareholder is a holder of record of stock of the Bank entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to move such proposal; (c) a brief description of the proposal to be made; and (d) a description of any material interest (other than proportionally as a shareholder) of such shareholder in such proposal. 2. Any such proposal may be deemed out of order and need not be discussed, considered, acted or voted upon or laid over for action at any meeting of shareholders if the Chief Executive Officer (or such other officer of the Bank who shall preside at the relevant meeting of shareholders) determines that such proposal was not delivered in compliance with these guidelines or that such proposal deals or relates to: (a) any action or matter that, if taken or effectuated by the Bank, would be in violation of, or contrary to, any applicable law or regulation or would result in a breach or violation by the Bank of any contractual obligation; (b) any action or matter that is impossible or beyond the Bank's power to take or effectuate; (c) any action or matter that is not a proper subject for action by the shareholders of the Bank; (d) any action or matter involving or relating to the conduct of the ordinary business of the Bank; (e) any action or matter that is substantially duplicative of, or counter to, any business or proposal that is to be considered at such meeting of shareholders; (f) any action or matter that has been rendered moot; or (g) the redress of a personal claim or grievance against the Bank or any other person or entity, or any action or matter that is designated to result in a benefit to the shareholder or to further a personal interest, which benefit or interest is not shared with the other shareholders of the Bank at large. 3. No more than two proposals from any shareholder or group of shareholders acting as such may be discussed, considered, acted or voted upon or laid over for action at any annual or other meeting of shareholders. 4. No proposal from a shareholder shall be discussed, considered, acted or voted upon or laid over for action at an annual or other meeting of shareholders unless such shareholder is present in person or by proxy at such annual or other meeting of shareholders. B-5