SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. __)
Filed by the 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 under Rule 14a-12
Berkshire Bancorp Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
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and 0-11.
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computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on
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BERKSHIRE BANCORP INC.
160 BROADWAY
NEW YORK, NEW YORK 10038
TEL: (212) 791-5362
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 2008
To the Stockholders of
BERKSHIRE BANCORP INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Berkshire Bancorp Inc., a Delaware corporation (the "Company"), will be held on
Thursday, May 15, 2008, at 10:00 A.M. (eastern time), at the offices of Blank
Rome LLP, The Chrysler Building, 24th Floor, 405 Lexington Avenue, New York, New
York 10174, for the following purposes:
1. To elect six directors to hold office until the next Annual Meeting
of Stockholders and until their respective successors have been duly
elected and qualified; and
2. To transact such other business as may properly come before the
Annual Meeting of Stockholders and any adjournment(s) thereof.
The Board of Directors has fixed the close of business on April 7, 2008
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting. Only stockholders of record at the close of
business on that date will be entitled to notice of, and to vote at, the Annual
Meeting of Stockholders and any adjournment(s) thereof.
Enclosed with this Notice are a Proxy Statement, a proxy card and return
envelope, and the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 2007 (which includes the Company's Annual Report on Form 10-K
as filed with the Securities and Exchange Commission).
All stockholders are cordially invited to attend the meeting in person.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE POSTAGE PREPAID
ENVELOPE WHICH HAS BEEN PROVIDED.
By Order of the Board of Directors
of BERKSHIRE BANCORP INC.
Emanuel J. Adler
Secretary
Dated: April 16, 2008
BERKSHIRE BANCORP INC.
160 BROADWAY
NEW YORK, NEW YORK 10038
TELEPHONE NO.: (212) 791-5362
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 2008
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APRIL 16, 2008
INFORMATION REGARDING PROXIES
This Proxy Statement is being furnished in connection with the
solicitation of proxies by and on behalf of the Board of Directors of Berkshire
Bancorp Inc. (the "Company", "us", "our" or "we") for use at the Company's
Annual Meeting of Stockholders (the "Annual Meeting") to be held on Thursday,
May 15, 2008, at 10:00 A.M. (eastern time), at the offices of Blank Rome LLP,
The Chrysler Building, 24th Floor, 405 Lexington Avenue, New York, New York
10174 and at any adjournment(s) or postponement(s) thereof for the purposes set
forth in the accompanying Notice of Meeting. This Proxy Statement and the
accompanying proxy card are first being mailed to stockholders of the Company on
or about April 21, 2008.
The principal executive offices of the Company are located at 160
Broadway, New York, New York 10038.
The cost of solicitation of proxies will be borne by the Company. In
addition to the solicitation of proxies principally by the use of the mail,
directors, officers and other employees of the Company, acting on its behalf and
without special compensation, may solicit proxies by telephone, facsimile, email
or personal interview. The Company will, at its expense, request brokers and
other custodians, nominees and fiduciaries to forward proxy soliciting material
to the beneficial owners of shares held of record by such persons. It is
estimated that said solicitation costs will be nominal.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on April 7, 2008
as the record date (the "Record Date") for the determination of stockholders of
the Company who are entitled to receive notice of, and to vote at, the Annual
Meeting. Only stockholders of record on the Record Date shall be entitled to
notice of, and to vote at, the Annual Meeting. At the close of business on the
Record Date, an aggregate of 7,054,183 shares of the Company's common stock were
outstanding, each of which is entitled to one vote on each matter to be voted
upon at the Annual Meeting. The Company's stockholders do not have cumulative
voting rights. The Company has no other class of securities entitled to vote at
the Annual Meeting.
VOTING PROCEDURES; REVOCATIONS
When a proxy card in the form enclosed with this Proxy Statement is
returned properly executed, the shares represented thereby will be voted at the
Annual Meeting in accordance with the directions indicated thereon. If a proxy
card is properly executed but no directions are indicated thereon, the shares
will be voted FOR the election of each of the nominees for director named herein
as shown on the form of proxy card.
The Board of Directors does not know of any other business to come before
the Annual Meeting. However, if any other matters should properly come before
the Annual Meeting or any adjournment or postponement thereof for which specific
authority has not been solicited from the stockholders, then, to the extent
permissible by law, the persons named in the proxies will vote the proxies
(which confer authority upon them to vote on any such matters) in accordance
with their judgment. A stockholder who executes and returns the enclosed proxy
card may revoke it at any time prior to its exercise by giving written notice of
such revocation to the Secretary or Assistant Secretary of the Company, by
executing a subsequently dated proxy card or by voting in person at the Annual
Meeting. Attendance at the Annual Meeting by a stockholder who has executed and
returned a proxy card does not alone revoke such proxy. Votes will be counted
and certified by one or more Inspectors of Election who are expected to be
employees of American Stock Transfer & Trust Company, the Company's transfer
agent. If your shares are held in the name of a bank or broker, you must obtain
a legal proxy from the bank or broker to attend the Annual Meeting and vote in
person.
Proxies in the accompanying form are being solicited by, and on behalf of,
the Company's Board of Directors. The persons named in the proxy have been
designated as proxies by the Company's Board of Directors. Pursuant to Delaware
corporate law, the presence of the holders of a majority of the outstanding
shares of the Company's Common Stock entitled to vote, represented at the Annual
Meeting in person or by proxy, will constitute a quorum.
Directions to withhold authority, abstentions and broker non-votes, if
any, will be counted for purposes of determining the existence of a quorum at
the Annual Meeting. The Company does not expect to receive any broker non-votes
because the uncontested election of directors is the only matter to be presented
for action at the Annual Meeting. Broker non-votes occur when a broker or other
nominee that holds shares for a beneficial owner does not vote on a proposal
because the broker or other nominee does not have discretionary authority to
vote on the proposal and has not received voting instructions from the
beneficial owner.
If a quorum is present at the Annual Meeting, the nominees for director
shall be elected by a plurality of the votes present (in person or by proxy) at
the Annual Meeting and entitled to vote thereon, meaning that the six nominees
receiving the highest vote totals will be elected as Directors of the Company;
and all other matters will be approved by a majority of votes cast and entitled
to vote at the meeting.
PROPOSAL 1 - ELECTION OF DIRECTORS
The entire Board of Directors is to be elected at the Annual Meeting. The
Company's by-laws presently limits the size of the Board of Directors to not
less than three (3) nor more than eleven (11) persons. The Board currently has
been set at six (6) persons. Accordingly, at the Annual Meeting, six (6)
nominees will be elected to hold office as directors. The six persons listed
below have been nominated to serve as directors of the Company until the next
annual meeting of stockholders and until their respective successors have been
duly elected and qualified. All of the nominees are currently directors of the
Company. In the unexpected event that any of such nominees should become unable
or decline to serve, proxies may be voted for the election of substitute
nominees as are designated by the Company's Board of Directors.
The names of the nominees for election as directors are listed below,
together with certain personal information, including the present principal
occupation and recent business experience of each nominee (based solely upon
information furnished by such persons). Each of the persons named below has
indicated to the Board of Directors of the Company that he will be able to serve
as a director if elected and each has consented to be named in this Proxy
Statement.
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Proxies in the accompanying form will be voted at the Annual Meeting in
favor of the election of each of the nominees listed below, unless authority to
do so is specifically withheld as to an individual nominee or nominees or all
nominees as a group. Proxies cannot be voted for a greater number of persons
than the number of nominees named. Directors will be elected by a plurality of
the votes present at the Annual Meeting in person or by proxy and entitled to
vote thereon (assuming a quorum exists).
THE NOMINEES
YEAR
COMMENCED
SERVING AS A
NAME, PRINCIPAL OCCUPATION AND OTHER DIRECTOR OF THE
DIRECTORSHIPS AGE COMPANY
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William L. Cohen 66 1993
Mr. Cohen has served as the Chief Executive Officer of Andover
Properties, LLC, a real estate development company specializing in
self storage facilities since November 2003, and has been a
private investor for over five years. Mr. Cohen was President,
Chief Executive Officer and Chairman of the Board of The Andover
Apparel Group Inc., an apparel manufacturing company, from 1980 to
Martin A. Fischer 70 2006
Mr. Fischer has been the President and Chief Executive of Mount
Carmel Cemetery Association, a New York State not-for-profit
corporation, since April 2001. Mr. Fischer was counsel to Warshaw,
Burstein, Cohen, Schlesinger and Kuh, a New York City law firm,
from 1987 until 2001 and served as President, Chief Operating
Officer and a director of Kinney System, Inc. and The Katz Parking
System, Inc. from 1981 to 1986. Mr. Fischer was appointed
Commissioner of the New York State Insurance Fund in 1977 and
served as its Chairman until January 1995.
Moses Krausz 67 2007
Mr. Krausz has held the position of President of the Bank since
March 1992 and Chief Executive Officer since November 1993. Prior
to joining the Bank, Mr. Krausz was Managing Director of SFS
Management Co., L.P., a mortgage banker, from 1987 to 1992 and was
President of UMB Bank and Trust Company, a New York State
chartered bank, from 1978 to 1987.
3
YEAR
COMMENCED
SERVING AS A
NAME, PRINCIPAL OCCUPATION AND OTHER DIRECTOR OF THE
DIRECTORSHIPS AGE COMPANY
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Moses Marx 72 1995
Mr. Marx has been the General Partner of United Equities Company
LLC since 1954 and General Partner of United Equities Commodities
Company since 1972. He is also President of Momar Corp. All of
these are investment companies. Mr. Marx is a director of The
Cooper Companies, Inc. (a developer and manufacturer of healthcare
products).
Steven Rosenberg 59 1995
Mr. Rosenberg has served as President and Chief Executive Officer
of the Company since March 1999 and served as Vice
President-Finance and Chief Financial Officer of the Company from
April 1990 to March 1999. Mr. Rosenberg continues to serve as the
Chief Financial Officer of the Company. From September 1987
through April 1990, he served as President and Director of Scomel
Industries, Inc., a company engaged in international marketing and
consulting. Mr. Rosenberg is a director of The Cooper Companies,
Inc.
Randolph B. Stockwell 61 1988
Mr. Stockwell has been a private investor for over five years.
Since 1999, Mr. Stockwell has served as President of Yachting
Systems of America, LLC. He served in various capacities with the
Community Bank, a commercial bank, from September 1972 to January
1987.
There are no family relationships (whether by blood, marriage or adoption)
among any of the Company's current directors or executive officers.
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CORPORATE GOVERNANCE
We have an ongoing commitment to good governance and business practices.
In furtherance of this commitment we regularly monitor developments in the area
of corporate governance, and review our processes and procedures in light of
such developments. We review changes in federal law and the rules and
regulations promulgated by the Securities and Exchange Commission ("SEC") and
the regulations of the NASDAQ Stock Market LLC. We comply with new laws and
rules and implement other corporate governance practices which we believe to be
in the best interest of the Company and its stockholders. We believe that we
have in place policies which are designed to enhance our stockholders'
interests.
The Company qualifies as a Controlled Company under applicable NASDAQ
rules by virtue of more than 50% of the voting power of the Company being
controlled by one individual as set forth below in "Securities Held By
Management," and therefore is exempt from the requirement of NASDAQ Marketplace
Rule 4350(c) that a majority of the Board of Directors must be comprised of
independent directors as well as the requirements of Rule 4350(c) regarding
determination of compensation of officers and nomination of directors.
Compensation is determined by the independent members of the Board and approved
by the disinterested members of the Board, and nominations to the Board are made
by the Board, in each case including both directors who qualify and directors
who do not qualify as independent directors.
Corporate Code of Ethics. We have adopted a Corporate Code of Ethics,
copies of which are available without cost upon written request to the Company's
Chief Executive Officer at the Company's principal executive office. All of our
employees, officers, and directors, including the Chief Executive Officer and
Chief Financial Officer, are required to adhere to our Corporate Code of Ethics
in discharging their work-related responsibilities. Employees are required to
report any conduct that they believe in good faith to be an actual or apparent
violation of the Code of Ethics.
We also have a confidential hotline through which our employees may report
concerns about the Company's business practices. In keeping with the
Sarbanes-Oxley Act of 2002, the Audit Committee has established procedures for
receipt and handling of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters, and to allow for the
confidential, anonymous submission by our employees of concerns regarding
accounting or auditing matters.
BOARD COMMITTEES, MEETINGS AND COMPENSATION
Our Board of Directors has established two Committees, the Audit Committee
and the Stock Incentive Committee. Committee membership is determined by the
Board, and all committee members are independent directors as determined by the
Board in accordance with the independence requirements under corporate
governance rules for companies whose securities are quoted on NASDAQ. Audit
Committee members also meet the independence requirements under Section 10A(m)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules thereunder. Where appropriate, each Committee maintains a written charter
detailing its authority and responsibilities that is adopted by the Board of
Directors. Charters are reviewed periodically as legislative and regulatory
developments and business circumstances warrant. Charters are available without
cost to any stockholder requesting a copy in writing to the attention of Mr.
Steven Rosenberg at the Company's executive offices.
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(i) The Audit Committee is responsible for (a) the quality and integrity
of the Company's financial statements, (b) the Company's compliance with legal
and regulatory requirements regarding accounting matters, (c) the selection,
qualification and monitoring of independence of the independent accounting firm
serving as auditors of the Company and (d) the performance of the Company's
internal audit function and the work of the independent auditors. The Committee
advises and makes recommendations to the Board of Directors regarding the
financial, investment and accounting procedures and practices followed by the
Company. The members of the Committee are Messrs. Stockwell (Chair), Cohen and
Fischer. The Board has determined that Messrs. Stockwell and Cohen are both
deemed to be financial experts under applicable rules of the SEC.
(ii) The Stock Incentive Committee is responsible for the administration
of our 1999 Stock Incentive Plan. The members of the Committee are Messrs. Cohen
(Chair), Fischer and Stockwell.
We do not have a nominating committee. In accordance with NASDAQ
Marketplace rules, nominations of persons to serve on our Board of Directors for
the coming year were made by the Board based upon the recommendation of at least
a majority of the independent members of the Board.
Considering the regulatory requirements and taking into account its
limited size, our Board believes that it is appropriate for the Board, acting as
a whole, to identify, and screen, all nominees for Directors of the Company for
selection and to fulfill all of the functions of a formal nominating committee.
The Board has adopted the following formal procedures for the consideration by
the Board members responsible for identifying, screening and recommending
Director nominees, to receive and consider any such nominees that may be made by
stockholders of the Company.
Stockholders must submit their recommendations in writing to the Company
at its executive offices within the time period and in accordance with the
procedure specified below. The Board will consider nominees recommended by the
Company's stockholders provided that the recommendation contains sufficient
information for them to assess the suitability of the candidate, including the
candidate's qualifications. Candidates recommended by stockholders that comply
with these procedures will receive the same consideration that candidates
recommended by members of the Board receive. Each recommendation for nomination
is required to set forth:
* the name and address of the stockholder making the nomination and the
person or persons nominated;
* a representation that the stockholder is a holder of record of capital
stock of the Company entitled to vote at such a meeting and intends to
appear in person or by proxy at the meeting to vote for the person or
persons nominated and the number of shares owned of record or
beneficially owned by the stockholder;
* a description of all arrangements and understandings between the
stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination was made by
the stockholder;
* such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy statement
filed pursuant to the proxy rules of the SEC had the nominee been
nominated by the Board; and
* the written consent of each nominee to serve as a director of the
Company if so elected.
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Each recommendation must also include information regarding the
recommended candidate relevant to a determination of whether the recommended
candidate would be barred from being considered independent under NASDAQ
Marketplace Rule 4200 or, alternatively, a statement that the recommended
candidate would not be so barred. Moreover, no candidate will be considered if
the candidate (i) is involved as a plaintiff in on-going litigation with the
Company or any of its subsidiaries or is employed by an entity which is involved
as a plaintiff in on-going litigation with the Company or any of its
subsidiaries or (ii) is the subject of any on-going criminal investigation or
any investigation of any regulatory authority, including any investigations for
fraud or financial misconduct or (iii) is affiliated with a competitor of the
Company or any of its subsidiaries. A nomination which does not comply with the
above requirements or is not submitted within the time period specified below
will not be considered.
A stockholder wishing to nominate a candidate for election to the Board at
a meeting of stockholders at which directors are to be elected is required to
give the written notice containing the required information specified above and
addressed to the Chief Executive Officer/President of the Company so that it is
received by the Company's Chief Executive Officer/President no later than (i)
the latest date upon which stockholder proposals must be submitted to the
Company for inclusion in its proxy statement relating to such meeting pursuant
to Rule 14a-8 under the Exchange Act or other applicable rules or regulations
under the federal securities laws or, if no such rules apply, at least 90 days
prior to the date one year from the date of the immediately preceding annual
meeting of stockholders, and (ii) with respect to an election to be held at a
special meeting of stockholders, 30 days prior to the printing of the Company's
proxy materials with respect to such meeting or if no proxy materials are being
distributed to stockholders, at least the close of business on the fifth day
following the date on which notice of such meeting is first given to
stockholders.
The qualities and skills sought in prospective members of the Board
generally require that director candidates be qualified individuals who, if
added to the Board, would provide the mix of director characteristics,
experience, perspectives and skills appropriate for the Company. Criteria for
selection of candidates include, but are not limited to: (i) business and
financial acumen, as determined by the Board in its discretion, (ii) qualities
reflecting a proven record of accomplishment and ability to work with others,
(iii) knowledge of the Company's industry, (iv) relevant experience and
knowledge of corporate governance practices, and (v) expertise in an area
relevant to the Company. Such persons should not have commitments that would
conflict with the time commitments of a Director of the Company. Such persons
shall have other characteristics considered appropriate for membership on the
Board of Directors, as determined by the Board.
We do not have a compensation committee. It is the view of the Board of
Directors that it is appropriate for us not to have a compensation committee
because we are a "Controlled Company" under the applicable Marketplace Rules of
NASDAQ. Executive compensation, except compensation governed by the terms of an
employment agreement, is determined by the independent members of the Board and
for fiscal 2008 such determination was made by Messrs. William L. Cohen, Martin
A. Fischer and Randolph B. Stockwell, the independent members of the Board and
approved by the disinterested members of the Board, which is comprised of all
the members of the Board present at the meeting at which compensation was
considered, except for Mr. Steven Rosenberg's compensation, in which case the
disinterested members did not include Mr. Rosenberg, and Mr. Moses Krausz'
compensation, in which case the disinterested members did not include Mr.
Krausz.
During the fiscal year ended December 31, 2007, the Board met two times
and acted seven times by unanimous written consent. The Audit Committee met
seven times during fiscal year 2007. The Stock Incentive Committee did not meet
during fiscal year 2007. Each director attended all of the total number of
meetings of
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the Board, except Mr. Stockwell who did not attend one meeting of the Board, and
not less than 75% of the meetings of the committees of the Board on which he
served. The Company does not have a policy requiring the directors to attend
Annual Meetings of Stockholders. However, each director attended the Company's
2007 Annual Meeting of Stockholders.
For a description of compensation paid to Directors, see "Management
Compensation - Compensation of Directors."
THE BOARD OF DIRECTORS
Our Board is elected annually, and each director stands for election every
year. We do not have a classified or staggered board. Our Board is comprised of
six Directors, of which two are employees, one is a significant stockholder of
the Company and three have been affirmatively determined by the Board to be
independent, meeting the objective requirements set forth by NASDAQ and the SEC,
and having no other relationship to the Company other than their service on the
Board of Directors.
Stockholders wishing to communicate with the Board of Directors or with a
specific Board member may do so by writing to the Board, or to the particular
Board member, and delivering the communication in person or mailing it to:
Steven Rosenberg, Chief Executive Officer, Berkshire Bancorp Inc., 160 Broadway,
New York, New York 10038.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is information regarding persons deemed executive officers
of the Company who are not also directors or nominees for director.
NAME AGE OFFICE
---- --- ------
David Lukens 58 Executive Vice President and Chief Financial
Officer of The Berkshire Bank
Mr. Lukens has been Senior Vice President and Chief Financial Officer of
the Bank since December 1999 and Executive Vice President since December 2003.
Prior to joining the Bank, Mr. Lukens was Senior Vice President and Chief
Financial Officer of First Washington State Bank, a New Jersey commercial bank,
from 1994 to 1999 and was Vice President and Controller at the Philadelphia, PA
branch of Bank Leumi Le-Israel B.M., an international commercial bank, from 1978
to 1994.
SECTION 16(a) COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers (as defined therein), directors and persons owning more than ten (10%)
percent of a registered class of the Company's equity securities to file reports
of ownership and changes in ownership of all equity and derivative securities of
the Company with the SEC. SEC regulations also require that a copy of all such
Section 16(a) forms filed be furnished to the Company by the filer.
Based solely on a review of the copies of such forms and amendments
thereto received by the Company, or on written representations from our
executive officers and directors that no Forms 5 were required to be filed, we
believe that during fiscal 2007 all Section 16(a) filing requirements applicable
to our executive officers, directors and beneficial owners of more than ten
(10%) percent of our Common Stock were met.
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SECURITIES HELD BY MANAGEMENT
The following table sets forth information regarding beneficial ownership
of our common stock as of the Record Date by (i) each person known to us to own
5% or more of our common stock, (ii) each of our current directors, (iii) the
individuals named in the Summary Compensation Table set forth below and (iv) all
of our current directors and executive officers as a group. Under the rules of
the SEC, a person is deemed to be a beneficial owner of a security if he has or
shares the power to vote or direct the voting of such security or the power to
dispose or direct the disposition of such security. A person is also deemed to
be a beneficial owner of any security of which that person has the right to
acquire beneficial ownership within sixty (60) days of the Record Date.
AMOUNT AND NATURE OF
NAME AND ADDRESS OF BENEFICIAL OWNERSHIP PERCENT
TITLE OF CLASS BENEFICIAL OWNER (a) AS OF THE RECORD DATE OF CLASS
--------------------- ------------------------------------------- ------------------------ -----------
Common Stock William L. Cohen 7,500 *
Common Stock Martin A. Fischer 9,800 *
Common Stock Moses Krausz 90,464 (1) 1.3%
Common Stock David Lukens 600 *
Common Stock Moses Marx 3,842,419 (2) 54.5%
160 Broadway
New York, NY 10038
Common Stock Steven Rosenberg 62,580 *
Common Stock Randolph B. Stockwell 21,000 *
Common Stock All executive officers and directors as a
group (7 persons) 4,034,363 57.2%
------------------------------------------------------------------
* Less than 1%
(a) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act.
(1) Includes 2,100 shares owned by Mr. Krausz's spouse.
(2) Includes 285,000 shares owned by Momar Corporation and 386,163 shares
owned by Terumah Foundation. Does not include 37,302.32 shares
representing 23.0% of the shares owned by Eva and Esther, L.P., of which
Mr. Marx has a 23.0% limited partnership interest. Mr. Marx's daughters
and their husbands are the general partners of Eva and Esther, L.P.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank has made loans to certain of its directors and their affiliates
and, assuming continued compliance with generally applicable credit standards,
it expects to continue to make such loans. All of these loans (i) were made in
the ordinary course of business, (ii) were made on the same terms, including
interest rates, as those available to other persons not related to the Company,
and (iii) did not involve more than the normal risk of collectibility or present
other unfavorable features.
In January 2000, the Bank entered into a lease agreement with Bowling
Green Associates, LP, the principal owner of which is Mr. Moses Marx, a director
of the Company, for commercial space to open a bank branch. We obtained an
appraisal of the market rental value of the space from an independent appraisal
firm and management believes that the terms of the lease, including the annual
rent of $368,000 paid in fiscal 2007, is comparable to the terms and annual rent
that would be paid to non-affiliated parties in a similar commercial transaction
for similar commercial space. We currently pay an annual rent of $368,000
pursuant to this lease.
EXECUTIVE COMPENSATION
Our Board of Directors has delegated primary authority for executive
compensation to the three independent members of the Board, or Independent
Directors, who, though not a formal compensation committee of the Board, act in
such capacity.
CHANGE OF CONTROL TERMINATION POLICIES
We have no change of control agreements with any of our employees.
RETIREMENT PLAN
Substantially all full-time employees are eligible to participate in the
Berkshire Bancorp Inc. Retirement Income Plan after one year of employment. We
believe that retirement plan benefits are an integral part of compensation of
our executive officers and other employees. We provide these benefits in order
to make an income stream available to the recipients that will assist in meeting
their post-retirement needs. Benefits are determined by compensation and years
of service. Further detail regarding the retirement plan is provided in
"Post-Employment Compensation - Retirement Income Plan".
DEFERRED COMPENSATION
Certain named executives are eligible to participate in the Deferred
Compensation Plan of The Berkshire Bank. This plan, adopted in July 2006, is
designed to allow executives to defer base salary and annual incentives until a
future date. The interest rates at which these deferrals accrue are not
guaranteed and we believe are in line with competitive practice in our industry.
Further detail on the interest rates we pay is provided in "Post-Employment
Compensation - Deferred Compensation Plan".
PERQUISITES AND OTHER BENEFITS
We do not provide perquisites of any kind to our named executive officers.
However, our executives are eligible to participate in the benefit plans
available to all of our employees.
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EXECUTIVE COMPENSATION
The following table shows the compensation paid to the individual who
served as our Chief Executive Officer and Chief Financial Officer for the fiscal
years ended December 31, 2007 and 2006, and to each of the other executive
officers of the Bank whose total compensation was more than $100,000 during the
fiscal years ended December 31, 2007 and 2006 (our "named executive officers").
SUMMARY COMPENSATION TABLE
CHANGE IN
PENSION VALUE
AND
NONQUALIFIED
DEFERRED
COMPENSATION ALL OTHER
NAME AND PRINCIPAL SALARY BONUS EARNINGS COMPENSATION TOTAL
POSITION YEAR $ $ $ $ $
Steven Rosenberg 2006 200,000 25,000 232,267 -- 457,267
President, Chief Executive Officer 2007 220,000 30,000 301,822 -- 551,822
and Chief Financial Officer
Moses Krausz 2006 422,130 250,000 -- 11,424 683,554
President and Chief Executive Officer 2007 436,201 275,000 818 11,575 723,594
of The Berkshire Bank
David Lukens 2006 174,000 25,000 11,996 7,658 218,654
Executive Vice President and Chief 2007 183,000 30,000 13,822 8,736 235,558
Financial Officer of The Berkshire
Bank
NARRATIVE TO SUMMARY COMPENSATION TABLE
Mr. Rosenberg does not have an employment agreement with us. The amounts
reported for Change in Pension Value and Nonqualified Deferred Compensation
Earnings includes only the change in the value of his benefit payable under our
Retirement Income Plan. Mr. Rosenberg does not participate in the Bank's 401(k)
Plan or its Deferred Compensation Plan.
Mr. Krausz has an employment agreement with us. The agreement expires on April
30, 2010 unless automatically renewed for up to three additional years as
provided for in the agreement. The agreement provides for the payment to Mr.
Krausz of a specified base salary with fixed annual increases, the payment of a
discretionary bonus and participation in our employee benefit plans. There are
no change in control provisions in Mr. Krausz's employment agreement. Mr. Krausz
is a participant in the Bank's 401(k) Plan and its Deferred Compensation Plan.
The amounts reported in All Other Compensation consists of contributions we made
to Mr. Krausz's 401(k) account of $6,750 and $6,600 in 2007 and 2006,
respectively, and income associated with life insurance coverage.
Mr. Lukens has an employment agreement with us. The agreement will expire on
June 30, 2008 unless renewed for up to three additional years as provided for in
the agreement. The agreement provides for the payment to Mr. Lukens of a base
salary and annual bonus, and participation in our employee benefit plans. There
are no change in control provisions in Mr. Lukens' employment agreement. Mr.
Lukens is a participant in the Bank's 401(k) Plan and its Deferred Compensation
Plan. The amounts reported for Change in Pension Value and Nonqualified Deferred
Compensation Earnings includes the change in the value of Mr. Luken's benefit
payable under our Retirement Income Plan and earnings on the Deferred
Compensation Plan. The amounts reported in All Other Compensation consists of
contributions we made to Mr. Lukens' 401(k) account of $6,161 and $5,970 in 2007
and 2006, respectively, and income associated with life insurance coverage.
11
GRANTS OF PLAN-BASED AWARDS IN FISCAL YEAR ENDED DECEMBER 31, 2007
There were no grants of awards made to any of our named executive officers
in 2007 under any non-equity or equity incentive plan.
1999 STOCK INCENTIVE PLAN
Our 1999 Stock Incentive Plan permits the granting of awards in the form
of nonqualified stock options, incentive stock options, restricted stock,
deferred stock, and other stock-based incentives. Up to 600,000 shares of our
common stock may be issued pursuant to the 1999 Stock Incentive Plan (subject to
appropriate adjustment in the event of changes in our corporate structure).
Officers, directors and other key employees of us or any of our subsidiaries are
eligible to receive awards under the 1999 Stock Incentive Plan. The option
exercise price of all options which are granted under the 1999 Stock Incentive
Plan must be at least equal to 100% of the fair market value of a share of
common stock of the Company on the date of grant. At December 31, 2007, options
to acquire 550,257 shares of our common stock have been granted under this plan,
2,076 options are outstanding and exercisable, and 49,743 options are available
for future grants.
POST-EMPLOYMENT COMPENSATION
RETIREMENT INCOME PLAN. Our Retirement Income Plan is a noncontributory defined
benefit plan covering substantially all of our full-time, non-union United
States employees. Under the Retirement Income Plan, our benefits were based upon
a combination of employee compensation and years of service. We paid the entire
cost of the plan for our employees and funded such costs as they accrued. Our
funding policy was to make annual contributions within minimum and maximum
levels required by applicable regulations. Our customary contributions were
designed to fund normal cost on a current basis and fund over 30 years the
estimated prior service cost of benefit improvements (15 years of annual gains
and losses). The projected unit cost method was used to determine the annual
cost. Plan assets consist principally of equity and fixed income mutual funds.
Benefit accruals were frozen as of September 15, 1988, resulting in a plan
curtailment. As a result of such curtailment, we did not accrue benefits for
future services; however, we did continue to contribute as necessary for any
unfunded liabilities. In 2000, we reinstated the Retirement Income Plan to cover
substantially all of our full-time, non-union United States employees.
Except for Mr. Rosenberg whose benefit is subject to the laws governing
the Retirement Income Plan, a participant in the Retirement Income Plan
accumulates a balance in his or her retirement account by receiving: (i) an
annual retirement credit of 5% of gross wages paid during the year, but not in
excess of the applicable annual maximum compensation permitted to be taken into
account under Internal Revenue Service guidelines for each year of service; and
(ii) an annual interest credit based upon the 30-year U. S. Treasury securities
rate. We pay the entire cost of the Retirement Income Plan for our employees and
fund such costs as they accrue.
Our plan provides for a normal retirement age of 65. However, the
estimated annual unreduced benefits payable under the Retirement Income Plan
upon earlier retirement at age 62 for Messrs. Rosenberg and Lukens are
approximately $160,000 and $16,000, respectively. In accordance with the laws
currently governing the Retirement Income Plan, the estimated annual benefit
payable to Mr. Rosenberg is not expected to increase. Mr. Krausz is not a
participant in the Retirement Income Plan.
12
DEFERRED COMPENSATION PLAN. The Bank's deferred compensation plan was
established in July 2006 to provide for a systematic method by which key
employees of the Bank may defer payment of not less than 3% and not more than
50% of his or her compensation that would otherwise be payable during the year.
The Deferred Compensation Plan is intended to be a nonqualified and unfunded
plan maintained primarily for the purpose of providing deferred compensation for
a select group of management or highly compensated employees pursuant to
Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income
Security Act of 1974, as amended.
On June 30 and December 31 of each year, account balances are credited
with the applicable earnings rate, the highest deposit rate paid by the Bank on
its generally available interest bearing deposit accounts (excluding time
deposits), in effect at that time. Distributions from the Deferred Compensation
Plan may be made upon (i) termination of employment, (ii) an unforeseeable
emergency, (iii) death, (iv) disability, as defined under Section 409A of the
Code and (v) a Change in Control Event, to the extent such Change in Control
Event constitutes permissible payment under Section 409A of the Code.
COMPENSATION OF DIRECTORS
DIRECTOR COMPENSATION FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007.
FEES EARNED OR
PAID IN CASH ALL OTHER
$ COMPENSATION TOTAL
NAME $ $
William L. Cohen 32,500 -- 32,500
Moses Marx 27,500 -- 27,500
Martin A. Fischer (a) 29,333 -- 29,333
Randolph B. Stockwell 32,500 -- 32,500
Each director who is not also an employee receives a stipend of $25,000
per annum and $1,500 for each day during which he participates in a meeting of
the Board or a Committee of the Board. Each of these directors also receives a
fee of $1,000 for telephonic meetings of the Board or a Board Committee.
EQUITY COMPENSATION PLANS
The following table details information regarding our existing equity
compensation plans as of December 31, 2007.
(C)
NUMBER OF SECURITIES
(A) (B) REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
BE ISSUED UPON EXERCISE EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A),
------------- ------------------- ------------------- ------------------------
Equity compensation 2,076 $ 9.76 49,743
plans approved by
security holders
Equity compensation -- -- --
plans not approved by
security holders
Total 2,076 $ 9.76 49,743
13
REPORT OF THE AUDIT COMMITTEE
The Audit Committee (the "Audit Committee") of the Company is comprised of
three independent directors and operates under a written charter adopted by the
Board.
The primary function of the Audit Committee is to provide advice with
respect to the Company's financial matters and to assist the Board of Directors
in fulfilling its oversight responsibilities regarding finance, accounting, tax
and legal compliance. The Audit Committee's primary duties and responsibilities
are to:
a. Periodically assess the integrity of the Company's financial
reporting process and systems of internal control regarding
accounting.
b. Select the Company's outside auditors and periodically assess their
independence and performance.
c. Provide an avenue of communication among the Company's independent
accountants, management and the Board of Directors.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with auditing standards generally accepted in the
United States of America and to issue a report thereon. The Audit Committee's
responsibility is to monitor and oversee these processes.
The Audit Committee held seven meetings during fiscal year 2007. During
these meetings, the Audit Committee reviewed and discussed the Company's
financial statements with management and Grant Thornton LLP ("Grant Thornton"),
its independent certified public accountants.
The Audit Committee reviewed and discussed the audited financial
statements of the Company for the fiscal year ended December 31, 2007 with the
Company's management and management represented to the Audit Committee that the
Company's financial statements were prepared in accordance with accounting
principles generally accepted in the United States of America. The Audit
Committee discussed with Grant Thornton matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
The Audit Committee received the written disclosures and conforming letter
from Grant Thornton required by Independence Standards Board Standard No. 1
(Independence Discussion with Audit Committees), and the Audit Committee
discussed with Grant Thornton their independence from the Company. It considered
the non-audit services provided by Grant Thornton and determined that the
services provided are compatible with maintaining Grant Thornton's independence.
Based on the Audit Committee's discussions with management and Grant
Thornton LLP and the Audit Committee's review of the representations of
management and the report of Grant Thornton LLP to the Audit Committee, the
Audit Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2007 for filing with the Securities and
Exchange Commission.
THE AUDIT COMMITTEE
RANDOLPH B. STOCKWELL (CHAIRMAN)
WILLIAM L. COHEN
MARTIN A. FISCHER
14
OTHER MATTERS
The Board of Directors of the Company knows of no other matters to be
presented at the Annual Meeting, but if any such matters properly come before
the Annual Meeting, the persons holding the accompanying proxy will vote in
accordance with their judgment.
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
Grant Thornton LLP has audited and reported upon the financial statements
of the Company for the fiscal year ended December 31, 2007. It is currently
anticipated that Grant Thornton LLP will be selected by the Audit Committee of
the Board of Directors to examine and report upon our financial statements for
the fiscal year ending December 31, 2008. A representative of Grant Thornton LLP
is expected to be present at the Annual Meeting with the opportunity to make a
statement if he or she desires to do so and is expected to be available to
respond to appropriate questions.
The total fees paid to Grant Thornton for the last two fiscal years are as
follows:
FISCAL YEAR ENDED FISCAL YEAR ENDED
DECEMBER 31, 2007 DECEMBER 31, 2006
----------------------- ---------------------
AUDIT FEES: $ 316,380 $ 281,540
AUDIT RELATED FEES: Professional services rendered for $ -- $ --
employee benefit plan audits, accounting assistance in
connection with acquisitions and consultations related to
financial accounting and reporting standards
TAX FEES: Tax consulting, preparation of returns $ 68,910 $ 68,200
ALL OTHER FEES: Professional services rendered for corporate $ -- $ --
support
The Audit Committee has established its pre-approval policies and
procedures, pursuant to which the Audit Committee approved the foregoing audit
and permissible non-audit services provided by Grant Thornton LLP in 2007.
Consistent with the Audit Committee's responsibility for engaging the Company's
independent auditors, all audit and permitted non-audit services require
pre-approval by the Audit Committee. The full Audit Committee approves proposed
services and fee estimates for these services. The Audit Committee chairperson
has been designated by the Audit Committee to approve any audit and permissible
non-audit services arising during the year that were not pre-approved by the
Audit Committee and services that were pre-approved. Services approved by the
Audit Committee chairperson are communicated to the full Audit Committee at its
next regular quarterly meeting and the Audit Committee reviews services and fees
for the fiscal year at each such meeting. Pursuant to these procedures, the
Audit Committee approved the foregoing audit and permissible non-audit services
provided by Grant Thornton LLP.
15
SUBMISSION OF STOCKHOLDER PROPOSALS
A stockholder proposal that complies with all of the applicable
requirements under Rule 14a-8 of the Exchange Act and any other applicable
regulation or statute must be received by the Company on or prior to December
18, 2008 at the address of the Company set forth on the first page of this Proxy
Statement in order to be eligible for inclusion in the Company's proxy statement
for the 2009 Annual Meeting of Stockholders. Any such proposal should be
directed to the Secretary or Assistant Secretary of the Company.
In accordance with Rules 14a-4(c) and 14a-5(e) promulgated under the
Exchange Act, the Company hereby notifies its stockholders that it did not
receive notice of any proposed matter to be submitted for stockholder vote at
the Annual Meeting and, therefore, any proxies received in respect of the Annual
Meeting will be voted in the discretion of the Company's management on any other
matters which may properly come before the Annual Meeting. The Company further
notifies its stockholders that if the Company does not receive notice by March
6, 2009 of a proposed matter to be submitted by a stockholder for stockholders
vote at the 2009 Annual Meeting of Stockholders, then any proxies held by
persons designated as proxies by the Company's Board of Directors in respect of
such Annual Meeting may be voted at the discretion of such persons on such
matter if it shall properly come before such Annual Meeting.
By Order of the Board of Directors
Emanuel J. Adler
Secretary
Dated: April 16, 2008
16
BERKSHIRE BANCORP INC.
160 BROADWAY
NEW YORK, NEW YORK 10038
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 15, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Steven Rosenberg and Emanuel Adler, and
each of them, as proxies, with full power of substitution in each of them, in
the name, place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of Berkshire Bancorp Inc. on Thursday, May 15, 2008, at 405
Lexington Avenue, New York, New York, or at any adjournment or adjournments
thereof, according to the number of votes that the undersigned would be entitled
to vote if personally present, upon the following matters:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY BELOW). to vote for all nominees
listed below.
William L. Cohen, Martin A. Fischer, Moses Krausz, Moses Marx, Steven Rosenberg
and Randolph B. Stockwell
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE BELOW.)
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES LISTED ABOVE.
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE.
IF NOINSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED "FOR" ALL BOARD
NOMINEES LISTED IN PROPOSAL 1.
DATED: ___________________, 2008 Please sign exactly as name appears
hereon. When shares are held by joint
tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
----------------------------------
Signature
----------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.