Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SECURITY BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
SECURITY BANCORP, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11 (a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
N/A
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(2) Form, schedule or registration statement no.:
N/A
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(3) Filing party:
N/A
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(4) Date filed:
N/A
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[Security Bancorp, Inc. Letterhead]
March 16, 1998
Dear Stockholder:
You are cordially invited to attend the First Annual Meeting of
stockholders of Security Bancorp, Inc. ("Company"), the holding company for
Security Federal Savings Bank of McMinnville, TN. The meeting will be held at
the Savings Bank's main office located at 306 West Main Street, McMinnville,
Tennessee, on Thursday, April 16, 1998, at 2:00 p.m., Central Time.
The Notice of First Annual Meeting of Stockholders and Proxy Statement
appearing on the following pages describe the formal business to be transacted
at the meeting. During the meeting, we will also report on the operations of
the Company. Directors and officers of the Company, as well as a
representative of Housholder, Artman and Associates, P.C., the Company's
independent auditors, will be present to respond to appropriate questions of
stockholders.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To ensure that your shares are represented, we urge you to complete
and mail the enclosed proxy card. If you attend the meeting, you may vote in
person even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/Joe H. Pugh
Joe H. Pugh
President and Chief Executive Officer
SECURITY BANCORP, INC.
306 WEST MAIN STREET
MCMINNVILLE, TENNESSEE 37110
(931) 473-4483
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NOTICE OF FIRST ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 16, 1998
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NOTICE IS HEREBY GIVEN that the First Annual Meeting of Stockholders of
Security Bancorp, Inc. ("Company") will be held at the Savings Bank's main
office located at 306 West Main Street, McMinnville, Tennessee, on Thursday,
April 16, 1998, at 2:00 p.m., Central Time, for the following purposes:
1. To elect seven directors;
2. To vote upon a proposal to adopt the Security Bancorp, Inc. 1998
Stock Option Plan;
3. To vote upon a proposal to adopt the Security Bancorp, Inc.
Management Recognition and Development Plan; and
4. To act upon such other matters as may properly come before the
meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Any action may be taken on the foregoing proposals at the meeting on the
date specified above or on any date(s) to which, by original or later
adjournment, the meeting may be adjourned. Only stockholders of record at the
close of business on March 2, 1998 are entitled to notice of and to vote at
the meeting and any adjournments or postponements thereof.
You are requested to complete and sign the enclosed form of proxy, which
is solicited by the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend the meeting and
vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/DONALD R. COLLETTE
DONALD R. COLLETTE
SECRETARY
McMinnville, Tennessee
March 16, 1998
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
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PROXY STATEMENT
OF
SECURITY BANCORP, INC.
306 WEST MAIN STREET
MCMINNVILLE, TENNESSEE 37110
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FIRST ANNUAL MEETING OF STOCKHOLDERS
APRIL 16, 1998
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Security Bancorp, Inc. ("Company"), the
holding company for Security Federal Savings Bank of McMinnville, TN ("Savings
Bank"), to be used at the First Annual Meeting of Stockholders ("Meeting") of
the Company. The Meeting will be held at the Savings Bank's main office
located at 306 West Main Street, McMinnville, Tennessee, on Thursday, April
16, 1998, at 2:00 p.m., Central Time. This Proxy Statement and the enclosed
proxy card are being first mailed to stockholders on or about March 16, 1998.
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VOTING AND PROXY PROCEDURE
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Stockholders Entitled to Vote at Meeting. Only stockholders of record at
the close of business on March 2, 1998 ("Voting Record Date") are entitled to
vote at the Meeting and are entitled to one vote for each share of common
stock ("Common Stock") of the Company then held. As of the close of business
on the Voting Record Date, the Company had 436,425 shares of Common Stock
issued and outstanding. The Common Stock is the only outstanding class of
securities of the Company.
Quorum Requirement. The presence, in person or by proxy, of at least a
majority of the total number of outstanding shares of Common Stock entitled to
vote is necessary to constitute a quorum at the Meeting. Abstentions will be
counted as shares present and entitled to vote at the Meeting for purposes of
determining the existence of a quorum. Broker non-votes will not be
considered shares present and will not be included in determining whether a
quorum is present.
Proxies; Proxy Revocation Procedures. The Board of Directors solicits
proxies so that each stockholder has the opportunity to vote on the proposals
to be considered at the Meeting. When a proxy card is returned properly
signed and dated, the shares represented thereby will be voted in accordance
with the instructions on the proxy card. Where a proxy card is properly
signed and dated but no instructions are indicated, proxies will be voted FOR
the nominees for directors set forth in the following pages, FOR adoption of
the Security Bancorp, Inc. 1998 Stock Option Plan and FOR adoption of the
Security Bancorp, Inc. Management Recognition and Development Plan. If a
stockholder attends the Meeting, he or she may vote by ballot.
Stockholders who execute proxies retain the right to revoke them at any
time. Proxies may be revoked by written notice delivered in person or mailed
to the Secretary of the Company or by filing a later dated proxy before a vote
being taken on a particular proposal at the Meeting. Attendance at the
Meeting will not automatically revoke a proxy, but a stockholder in attendance
may request a ballot and vote in person, thereby revoking a prior granted
proxy.
Participants in the Security Federal Savings Bank of McMinnville, TN
ESOP. If a stockholder is a participant in the Security Federal Savings Bank
of McMinnville, TN Employee Stock Ownership Plan ("ESOP"), the proxy card
represents a voting instruction to the trustees of the ESOP as to the number
of shares in the participant's plan account. Each participant in the ESOP may
direct the trustees as to the manner in which shares of Common Stock allocated
to the participant's plan account are to be voted. Unallocated shares of
Common Stock held by the ESOP and allocated shares for which no voting
instructions are received will be voted by the trustees in the same proportion
as shares for which the trustees have received voting instructions.
Vote Required. The seven directors to be elected at the Meeting will be
elected by a plurality of the votes cast by stockholders present in person or
by proxy and entitled to vote. Stockholders are not permitted to cumulate
their votes for the election of directors. Votes may be cast for or withheld
from each nominee for election as directors. Votes that are withheld and
broker non-votes will have no effect on the outcome of the election because
directors will be elected by a plurality of votes cast.
With respect to the other proposals to be voted upon at the Meeting,
stockholders may vote for or against a proposal or may abstain from voting.
Adoption of the 1998 Stock Option Plan and the Management Recognition and
Development Plan will each require the affirmative vote of a majority of the
outstanding shares of Common Stock present in person or by proxy at the
Meeting and entitled to vote.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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Persons and groups who beneficially own in excess of 5% of the Company's
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC"), and provide a copy to the Company, disclosing
such ownership pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act"). Based on such reports, the following table sets forth, as
of the close of business on the Voting Record Date, certain information as to
those persons who were beneficial owners of more than 5% of the outstanding
shares of Common Stock. Management knows of no persons other than those set
forth below who beneficially owned more than 5% of the outstanding shares of
Common Stock at the close of business on the Voting Record Date. The table
also sets forth, as of the close of business on the Voting Record Date,
certain information as to shares of Common Stock beneficially owned by the
Company's directors and "named executive officers" and all directors and
executive officers as a group.
Number of Shares Percent of Shares
Name Beneficially Owned(1) Outstanding
- ---- ---------------------- -----------------
Beneficial Owners of
More Than 5%
Security Federal Savings 34,914 8.0%
Bank of McMinnville, TN
Employee Stock Ownership
Plan Trust
Salem Investment Counselors, 34,350(2) 7.9
Inc.
P.O. Box 25427
Winston-Salem,
North Carolina 27114-5427
Directors
Earl H. Barr 16,000 3.7
Robert W. Newman 16,000 3.7
Dr. R. Neil Schultz 16,425 3.8
Dr. John T. Mason, III 4,000 0.9
Donald R. Collette 5,500 1.3
Dr. Franklin J. Noblin 11,766 2.7
(table continued on following page)
2
Number of Shares Percent of Shares
Name Beneficially Owned(1) Outstanding
- ---- ---------------------- -----------------
Named Executive Officer(3)
Joe H. Pugh(4) 16,000 3.7%
All Executive Officers and
Directors as a Group (9 persons) 95,036 21.8
_______________
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is
deemed to be the beneficial owner, for purposes of this table, of any
shares of Common Stock if he or she has voting or investment power with
respect to such security. The table includes shares owned by spouses,
other immediate family members in trust, shares held in retirement
accounts or funds for the benefit of the named individuals, and other
forms of ownership, over which shares the persons named in the table
may possess voting and/or investment power.
(2) Based on information disclosed in a Schedule 13D, dated February 5,
1998, filed with the SEC.
(3) SEC regulations define the term "named executive officer" to include
the chief executive officer, regardless of compensation level, and the
four most highly compensated executive officers, other than the chief
executive officer, whose total annual salary and bonus for the last
completed fiscal year exceeded $100,000. Mr. Pugh is the Company's
only "named executive officer" for the fiscal year ended December 31,
1997.
(4) Mr. Pugh is also a director of the Company.
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Company's Board of Directors consists of seven members as required by
the Company's Bylaws. The seven members of the Board are the initial
directors of the Company each of whose term as initial director expires at the
Meeting in accordance with Tennessee law. In accordance with the Company's
Charter, the Board of Directors is divided into three classes with three-year
staggered terms, with approximately one-third of the directors elected each
year. Seven directors will be elected at the Meeting to serve for the
respective term set forth in the following table, or until their respective
successors have been elected and qualified. The nominees for election this
year are Joe H. Pugh, Dr. R. Neil Schultz, Robert W. Newman, Donald R.
Collette, Dr. Franklin J. Noblin, Earl H. Barr and Dr. John T. Mason, III,
each of whom is a current member of the Board of Directors of the Company and
of the Savings Bank.
It is intended that the proxies solicited by the Company's Board of
Directors will be voted for the election of the above named nominees. If any
nominee is unable to serve, the shares represented by all valid proxies will
be voted for the election of such substitute nominee as the Board of Directors
may recommend, or the Board of Directors may adopt a resolution to amend the
Bylaws and reduce the size of the Board. At this time the Board of Directors
knows of no reason why any nominee might be unavailable to serve.
The Board of Directors recommends a vote "FOR" the election of all
nominees for election as directors.
3
The following table sets forth certain information regarding the nominees
for election at the Meeting.
Year First
Elected Term to
Name Age (1) Director (2) Expire
- ---- ------- ------------ -------
BOARD NOMINEES
Robert W. Newman 46 1992 1999(3)
Donald R. Collette 61 1994 1999(3)
Dr. Franklin J. Noblin 59 1993 1999(3)
Earl H. Barr 60 1992 2000(3)
Dr. John T. Mason, III 59 1986 2000(3)
Joe H. Pugh 41 1992 2001(3)
Dr. R. Neil Schultz 61 1992 2001(3)
______________
(1) As of December 31, 1997.
(2) Includes prior service on the Board of Directors of the Savings Bank.
(3) Assuming the individual is elected.
The present principal occupation and other business experience during
the last five years of each nominee for election is set forth below:
Robert W. Newman is a partner with the law firm Galligan & Newman in
McMinnville, Tennessee.
Donald R. Collette is General Manager and Chief Executive Officer of
McMinnville Electric System in McMinnville, Tennessee. He is past president
of the McMinnville Chamber of Commerce and a member of the McMinnville
Economic Development Committee and the McMinnville Rotary Club.
Dr. Franklin J. Noblin, a practicing general dentist, is a Colonel in
the United States Army Reserve-Chief of Professional Services and Brigade
Dental Surgeon. He is also a member of the Reserve Officers' Association.
Earl H. Barr is the owner and manager of Barr's Inc., a retail furniture
store, in McMinnville, Tennessee. He is the past Chairman of the Board of the
Chamber of Commerce and a member of the Board of the McMinnville Housing
Authority. Mr. Barr is a member of the McMinnville Chamber of Commerce Board,
the American Heart Association Board, the American Red Cross-McMinnville
Board, the McMinnville Noon Rotary Club and the Warren County Homebuilders
Association.
Dr. John T. Mason, III is a retired Professor of Chemical Engineering at
Tennessee Tech University.
Joe H. Pugh has been employed by the Savings Bank since 1978 and has
served as President and Chief Executive Officer since 1993. He is a member of
the McMinnville Chamber of Commerce Board and the McMinnville Noon Rotary
Club.
Dr. R. Neil Schultz, a retired orthodontist, is a member and President
elect of the McMinnville Noon Rotary Club and past president of the Tennessee
Association of Orthodontists.
4
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Boards of Directors of the Company and the Savings Bank conduct
their business through meetings of the Boards and through their committees.
During the fiscal year ended December 31, 1997, the Board of Directors of the
Company held one meeting in connection with its initial organization and three
subsequent meetings, and the Board of Directors of the Savings Bank held 12
meetings. No director of the Company or the Savings Bank attended fewer than
75% of the total meetings of the Boards and committees on which such person
served during the 1997 fiscal year.
Committees of the Company's Board. In connection with the Conversion,
the Company's Board of Directors established Executive, Audit and Nominating,
Committees, among others.
The Company's Executive Committee, consisting of Directors Barr, Pugh,
Collette, Noblin and Newman, acts on behalf of the full Board of Directors in
its absence. The Committee has the same authority as the full Board of
Directors. This Committee did not meet during the 1997 fiscal year.
The Company's Audit Committee, consisting of Directors Newman and
Collette, is responsible for reviewing the internal auditors' reports and
results of their examination prior to review by and with the entire Board of
Directors and retains and establishes the scope of engagement of the Company's
independent auditors. This Committee did not meet during the 1997 fiscal
year.
The Company's Nominating Committee, consisting of the full Board of
Directors is responsible for the annual selection of nominees for election as
directors of the Company. The full Board of Directors met once in its
capacity as Nominating Committee during the 1997 fiscal year.
Committees of the Savings Bank's Board. The Savings Bank's Board of
Directors has established Executive, Personnel and Nominating Committees,
among others. These committees were in existence and met during the 1997
fiscal year.
The Executive Committee consists of Directors Collette, Barr, Newman,
Noblin and Pugh. This Committee meets on an as-needed basis and acts on
behalf of the full Board of Directors in its absence. This Committee has the
same authority as the full Board of Directors. This Committee met 15 times
during the 1997 fiscal year.
The Personnel Committee (which also serves as a Compensation Committee)
consists of Directors Newman, Collette and Pugh. This Committee meets on an
as-needed basis and is responsible for reviewing the Savings Bank's personnel
to determine if and when additional personnel are needed. The Committee is
also involved in the interview process for new personnel. This Committee met
13 times during the 1997 fiscal year.
The full Board of Directors acts as a Nominating Committee for the
annual selection of management's nominees for election as directors of the
Savings Bank. The full Board of Directors met once in its capacity as
Nominating Committee during the 1997 fiscal year.
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DIRECTORS' COMPENSATION
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Members of the Savings Bank's Board of Directors receive fees of $500
per Board meeting attended. Outside directors receive $100 per committee
meeting attended and committee chairmans receive an annual $300 committee
chairman fee. Outside directors also receive a $1,200 annual retainer fee.
Total fees paid to directors during the year ended December 31, 1997 were
$64,550. No separate fees are paid for service on the Company's Board of
Directors.
5
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EXECUTIVE COMPENSATION
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Summary Compensation Table
Annual Compensation(1)
----------------------------------------
Name and Other Annual All Other
Position Year Salary Bonus Compensation(2) Compensation(3)
- -------- ---- ------ ----- --------------- ---------------
Joe H. Pugh 1997 $67,500 $ 8,030 $6,000 $3,375
President 1996 65,000 7,530 6,250 6,450
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(1) Information for 1995 is omitted in accordance with SEC regulations
because neither the Company nor the Savings Bank was a public company,
or a subsidiary of a public company, at that time.
(2) Consists of directors' fees. The aggregate amount of perquisites and
other personal benefits was less than 10% of the total annual salary
and bonus reported.
(3) Consists of employer 401(k) plan contributions.
Employment and Severance Agreements
The Company and the Savings Bank (collectively, the "Employers") have
entered into a three-year employment agreement ("Employment Agreement" or
"Agreement") with Mr. Pugh. Under the Employment Agreement, the current base
salary for Mr. Pugh is $67,500, which will be paid by the Savings Bank and may
be increased at the discretion of the Board of Directors or an authorized
committee of the Board of Directors of the Savings Bank. Mr. Pugh's salary
may not be decreased during the term of the Employment Agreement without his
prior written consent. On the anniversary of the commencement date of the
Agreement, the term of the Agreement may be extended by the Board of Directors
for an additional year unless a termination notice is given by Mr. Pugh. The
Agreement is terminable by the Employers for just cause at any time or in
certain events specified by federal regulations.
The Agreement provides for a severance payment and other benefits if
employment is terminated following a change in control. This severance
payment and benefits, which will be made promptly after any change in control,
will have a value equal to 2.99 times the average annual compensation paid to
Mr. Pugh during the five years immediately preceding the change in control.
Under the Agreement, a "change in control" is deemed to occur if, at anytime
during the term of the Agreement, a person other than the Company purchases
shares of common stock pursuant to a tender or exchange offer for such shares,
any person (as such term is used in Sections 13(d) and 14(d)(2) of the
Exchange Act) is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding securities, the membership of the
Board of Directors changes as the result of a contested election, or
stockholders of the Company approve a merger, consolidation, sale or
disposition of all or substantially all of the Company's assets, or a plan of
partial or complete liquidation has occurred. Assuming that a change in
control had occurred at December 31, 1997, Mr Pugh would be entitled to a
severance payment and benefits with a value of approximately $202,000.
The Employers have also entered into employment and severance agreements
with other senior officers of the Company and/or the Savings Bank on
substantially similar terms.
6
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COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
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Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than 10% of any registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the SEC. Executive officers, directors and greater
than 10% stockholders are required by regulation to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms it has received
and written representations provided to the Company by the above referenced
persons, the Company believes that, during the fiscal year ended December 31,
1997, all filing requirements applicable to its reporting officers, directors
and greater than 10% stockholders were properly and timely complied with.
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TRANSACTIONS WITH MANAGEMENT
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Federal regulations require that all loans or extensions of credit to
executive officers and directors must be made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons (unless the loan or extension of
credit is made under a benefit program generally available to all other
employees and does not give preference to any insider over any other employee)
and does not involve more than the normal risk of repayment or present other
unfavorable features. The Savings Bank is therefore prohibited from making
any new loans or extensions of credit to the Savings Bank's executive officers
and directors and at different rates or terms than those offered to the
general public and has adopted a policy to this effect. The aggregate amount
of loans by the Savings Bank to its executive officers and directors was
approximately $605,000 at December 31, 1997. Such loans (i) were made in the
ordinary course of business, (ii) were made on substantially the same terms
and conditions, including interest rates and collateral, as those prevailing
at the time for comparable transactions with the Savings Bank's other
customers, and (iii) did not involve more than the normal risk of
collectibility or present other unfavorable features when made.
Director Earl H. Barr owns and manages Barr's Inc., a retail furniture
store, from which the Savings Bank has purchased furniture at a price
generally equal to 10% above cost. The Savings Bank purchased an immaterial
dollar amount of furniture during the year ended December 31, 1997.
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PROPOSAL II -- RATIFICATION OF 1998 STOCK OPTION PLAN
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General
The Board of Directors of the Company adopted, subject to stockholder
approval, the Security Bancorp, Inc. 1998 Stock Option Plan ("Plan") on March
7, 1998.
The objective of the Plan is to reward performance and build the
participant's equity interest in the Company by providing long-term incentives
and rewards to officers, key employees and other persons who provide services
to the Company and the Savings Bank and who contribute to the success of the
Company by their innovation, ability, industry, loyalty and exceptional
service.
The following summary is a brief description of the material features of
the Plan. This summary is qualified in its entirety by reference to the Plan,
a copy of which is attached as Exhibit A.
7
Summary of the Plan
Type of Stock Option Grants. The Plan provides for the grant of
incentive stock options ("ISOs"), within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended ("Code"), and Non-Qualified Stock
Options ("NQSOs"), which do not satisfy the requirements for ISO treatment.
Administration. The Plan is administered by the Company's Board of
Directors. Subject to the terms of the Plan and resolutions of the Board, the
Board interprets the Plan and is authorized to make all determinations and
decisions thereunder. The Board also determines the participants to whom
stock options will be granted, the type and amount of stock options that will
be granted and the terms and conditions applicable to such grants.
Participants. All officers and employees of the Company and its
subsidiaries, as well as other persons who render services to the Company, are
eligible to participate in the Plan. In addition, non-employee directors of
the Company are eligible to participate in the Plan.
Number of Shares of Common Stock Available. The Company has reserved
43,643 shares of Common Stock for issuance under the Plan in connection with
the exercise of options. Shares of Common Stock to be issued under the Plan
may be either authorized but unissued shares, or reacquired shares held by the
Company in its treasury. Any shares subject to an award that expires or is
terminated unexercised will again be available for issuance under the Plan.
Stock Option Grants. The exercise price of each ISO or NQSO will not be
less than the fair market value of the Common Stock on the date the ISO or
NQSO is granted. The aggregate fair market value of the shares for which ISOs
granted to any employee may be exercisable for the first time by such employee
during any calendar year (under all stock option plans of the Company and its
subsidiaries) may not exceed $100,000.
The exercise price of an option may be paid in cash, Common Stock or
other property, by the surrender of all or part of the option being exercised,
by the immediate sale through a broker of the number of shares being acquired
sufficient to pay the purchase price, or by a combination of these methods, as
and to the extent permitted by the Board.
Under the Plan, the Board may permit participants to transfer options to
eligible transferees (as such eligibility is determined by the Board). Each
option may be exercised during the holder's lifetime, only by the holder or
the holder's guardian or legal representative, and after death only by the
holder's beneficiary or, absent a beneficiary, by the estate or by a person
who acquired the right to exercise the option by will or the laws of descent
and distribution. Options may become exercisable in full at the time of grant
or at such other times and in such installments as the Board determines or as
may be specified in the Plan. It is anticipated that initial option grants
under the Plan will become exercisable in equal installments over a five-year
period following the date of grant. Options may be exercised during periods
before and after the participant terminates employment, as the case may be, to
the extent authorized by the Board or specified in the Plan. However, no
option may be exercised after the tenth anniversary of the date the option was
granted. The Board may, at any time and without additional consideration,
accelerate the date on which an option becomes exercisable.
Effect of a Change in Control. In the event of a change in control (as
defined in the Plan) of the Company, each outstanding stock option grant will
become fully vested and immediately exercisable. In addition, in the event of
a change in control, the Plan provides for the cash settlement of any
outstanding stock option if provision is not made for the assumption of the
options in connection with the change in control.
Term of the Plan. The Plan will be effective on July 1, 1998 but only
if, before that date, the Plan is approved by the stockholders of the Company.
By postponing the effective date of the Plan, options granted under the Plan
will not be subject to certain restrictions under Office of Thrift Supervision
("OTS") regulations (including a limitation on the acceleration of vesting in
the event of a change in control) otherwise applicable to stock compensation
plans
8
implemented prior to the first anniversary of the Savings Bank's
mutual-to-stock conversion. The Plan will expire on the tenth anniversary of
the effective date, unless terminated sooner by the Board.
Amendment of the Plan. The Plan allows the Board to amend the Plan
without stockholder approval unless such approval is required to comply with a
tax law or regulatory requirement.
Certain Federal Income Tax Consequences. The following brief
description of the tax consequences of stock option grants under the Plan is
based on federal income tax laws currently in effect and does not purport to
be a complete description of such federal income tax consequences.
There are no federal income tax consequences either to the optionee or
to the Company upon the grant of an ISO or and NQSO. On the exercise of an
ISO during employment or within three months thereafter, the optionee will not
recognize any income and the Company will not be entitled to a deduction,
although the excess of the fair market value of the shares on the date of
exercise over the option price is includible in the optionee's alternative
minimum taxable income, which may give rise to alternative minimum tax
liability for the optionee. Generally, if the optionee disposes of shares
acquired upon exercise of an ISO within two years of the date of grant or one
year of the date of exercise, the optionee will recognize ordinary income, and
Company will be entitled to a deduction, equal to the excess of the fair
market value of the shares on the date of exercise over the option price
(limited generally to the gain on the sale). The balance of any gain or loss
will be treated as a capital gain or loss to the optionee. If the shares are
disposed of after the two year and one year periods mentioned above, the
Company will not be entitled to any deduction, and the entire gain or loss for
the optionee will be treated as a capital gain or loss.
On exercise of an NQSO, the excess of the date-of-exercise fair market
value of the shares acquired over the option price will generally be taxable
to the optionee as ordinary income and deductible by the Company, provided the
Company properly withholds taxes in respect of the exercise. This disposition
of shares acquired upon the exercise of a NQSO will generally result in a
capital gain or loss for the optionee, but will have no tax consequences for
the Company.
New Plan Benefits
The following table sets forth information regarding the number of
options anticipated to be granted under the Plan following the effective date
of the Plan.
Anticipated Stock
Name and Position Option Grant
- ----------------- ------------
Joe H. Pugh 10,910
President and Chief Executive Officer
All executive officers 6,546
as a group (two persons)
All non-employee directors 13,092
as a group (six persons)
All non-executive officers and 6,546
employees as a group (three persons)
The balance of the options that may be granted under the Plan are
expected to be allocated in the future to current and prospective non-employee
directors, officers and employees.
9
Board of Directors Recommendation
The Board of Directors recommends a vote "FOR" the adoption of the Plan
attached as Exhibit A.
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PROPOSAL III -- RATIFICATION OF THE
MANAGEMENT RECOGNITION AND DEVELOPMENT PLAN
- ------------------------------------------------------------------------------
General
The Board of Directors of the Company adopted, subject to stockholder
approval, the Security Bancorp, Inc. Management Recognition and Development
Plan ("MRDP") on March 7, 1998.
The objective of the MRDP is to reward performance and build the
participant's equity interest in the Company by providing long-term incentives
and rewards to officers, key employees and other persons who provide services
to the Company and the Savings Bank and who contribute to the success of the
Company by their innovation, ability, industry, loyalty and exceptional
service. In addition, the company believes that the MRDP will provide an
important retention incentive for key personnel.
The following summary is a brief description of the material features of
the MRDP. This summary is qualified in its entirety by reference to the MRDP,
a copy of which is attached as Exhibit B.
Summary of the MRDP
Type of Stock Awards. The MRDP provides for the award of Common Stock
in the form of restricted stock awards which are subject to the restrictions
specified in the MRDP or as determined by the Company's Board of Directors.
Administration. The MRDP is administered by the Board. Subject to the
terms of the MRDP and resolutions of the Board, the Board interprets the MRDP
and is authorized to make all determination and decisions thereunder. The
Board also determines the participants to whom restricted stock awards will be
made, the number of shares of Common Stock covered by each award and the terms
and conditions applicable to such award.
Participants. All officers and employees of the Company and its
subsidiaries, as well as other persons who render services to the Company, are
eligible to participate in the MRDP. In addition, non-employee directors of
the Company are eligible to participate in the MRDP.
Number of Shares of Common Stock Available. The Company has reserved
17,457 shares of Common Stock for issuance under the MRDP in the form of
restricted stock. Shares of Common Stock to be issued under the MRDP may be
either authorized but unissued shares, or reacquired shares held by the
Company in its treasury. Any shares subject to an award which is forfeited or
is terminated will again be available for issuance under the MRDP.
Restricted Stock Awards. Awards under the MRDP will be made in the form
of restricted shares of Common Stock that are subject to restrictions on
transfer of ownership. It is anticipated that the initial awards under the
MRDP will vest in equal installments over a five-year period beginning on the
first anniversary of the date of grant. Compensation expense in the amount of
the fair market value of the Common Stock at the date of the grant to the
officer or director will be recognized during the period over which the shares
vest. If a recipient terminates employment or service with the Company or its
subsidiaries for reasons other than death or disability, the recipient
forfeits all rights to shares under restriction. If such termination is
caused by death or disability, all restrictions expire and all shares
allocated become unrestricted. A recipient will be entitled to voting and
other stockholder rights with respect to the shares while restricted.
Dividends paid during the period of restriction will, at the Board's
discretion, be distributed
10
to the recipient when paid or held in escrow for the benefit of the recipient
until the shares to which the dividends relate are vested.
Effect of a Change in Control. In the event of a change in control (as
defined in the MRDP) of the Company, each outstanding award under the MRDP
will become fully vested.
Term of the MRDP. The MRDP will be effective on July 1, 1998 but only
if, before that date, the MRDP is approved by the stockholders of the Company.
By postponing the effective date of the MRDP, awards under the MRDP will not
be subject to certain restrictions under OTS regulations (including a
limitation on the acceleration of vesting in the event of a change in control)
otherwise applicable to stock compensation plans implemented prior to the
first anniversary of the Savings Bank's mutual-to-stock conversion. The MRDP
will expire on thetenth anniversary of the effective date, unless sooner
terminated by the Board.
Amendment of the MRDP. The MRDP allows the Board to amend the MRDP
without stockholder approval unless such approval is required to comply with a
tax law or regulatory requirement.
Certain Federal Income Tax Consequences. The following brief
description of the tax consequences of awards of restricted stock under the
MRDP is based on federal income tax laws currently in effect and does not
purport to be a complete description of such federal income tax consequences.
A participant who has been awarded restricted stock under the MRDP and
does not make an election under Section 83(b) of the Code will not recognize
taxable income at the time of the award. At the time any transfer or
forfeiture restrictions applicable to the restricted stock award lapse, the
recipient will recognize ordinary income and the Company will be entitled to a
corresponding deduction equal to the excess of the fair market value of such
stock at such time over the amount paid therefor. Any dividend paid to the
recipient on the restricted stock at or prior to such time will be ordinary
compensation income to the recipient and deductible as such by the Company.
A recipient of a restricted stock award who makes an election under
Section 83(b) of the Code will recognize ordinary income at the time of the
award and the Company will be entitled to a corresponding deduction equal to
the fair market value of such stock at such time over the amount paid
therefor. Any dividends subsequently paid to the recipient on the restricted
stock will be dividend income to the recipient and not deductible by the
Company. If the recipient makes a Section 83(b) election, there are no federal
income tax consequences either to the recipient or the Company at the time any
transfer or forfeiture restrictions applicable to the restricted stock award
lapse.
New Plan Benefits
The following table sets forth information regarding the number of
restricted shares anticipated to be granted under the MRDP following its
effective date.
Anticipated Restricted
Name and Position Stock Grant
- ----------------- -----------
Joe H. Pugh 4,364
President and Chief Executive Officer
All executive officers 2,618
as a group (two persons)
(table continued on following page)
11
Anticipated Restricted
Name and Position Stock Grant
- ----------------- -----------
All non-employee directors 5,238
as a group (six persons)
All non-executive officers and 2,619
employees as a group (three persons)
The balance of the shares that may be issued pursuant to the MRDP is
expected to be allocated in the future to current and prospective non-employee
directors, officers and employees.
Recommendation of the Board of Directors
The Board of Directors recommends a vote "FOR" the adoption of the MRDP
attached as Exhibit B.
- ------------------------------------------------------------------------------
INDEPENDENT AUDITORS
- ------------------------------------------------------------------------------
The Company's Board of Directors has renewed its engagement with
Housholder, Artman and Associates, P.C., independent public accountants, and
has appointed it to serve as the independent auditors for the fiscal year
ending December 31, 1998. A representative of Housholder, Artman and
Associates, P.C. is expected to be present at the Meeting to respond to
appropriate questions from stockholders and will have the opportunity to make
a statement if he or she so desires.
- ------------------------------------------------------------------------------
OTHER MATTERS
- ------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form, that are properly executed and
dated, will be voted in respect thereof in accordance with the judgment of the
person or persons voting the proxies.
- ------------------------------------------------------------------------------
MISCELLANEOUS
- ------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in mailing proxy
solicitation materials to beneficial owners of the Common Stock. In addition
to solicitations by mail, directors, officers and regular employees of the
Company may solicit proxies personally or by telecopier or telephone without
additional compensation.
The Company's 1997 Annual Report to Stockholders, including consolidated
financial statements, has been mailed to all stockholders of record at the
close of business on the Voting Record Date. Any stockholder who has not
received a copy of such annual report may obtain a copy by writing to the
Company. The Annual Report is not to be treated as part of the proxy
solicitation material or having been incorporated herein by reference.
A copy of the Company's Form 10-KSB for the fiscal year ended December
31, 1997, as filed with the SEC, will be furnished without charge to
stockholders of record as of the close of business on the Voting Record Date
upon written request to Donald R. Collette, Corporate Secretary, Security
Bancorp, Inc., P.O. Box 7027, McMinnville, Tennessee 37111.
12
- ------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- ------------------------------------------------------------------------------
Proposals of stockholders intended to be presented at the Company's
annual meeting next year must be received by the Company no later than
November 17, 1998 to be considered for inclusion in the proxy solicitation
materials and form of proxy relating to such meeting. Any such proposals
shall be subject to the requirements of the proxy solicitation rules adopted
under the Exchange Act.
The Company's Charter provides that in order for a stockholder to make
nominations for the election of directors or proposals for business to be
brought before a meeting of stockholders, a stockholder must deliver written
notice of such nominations and/or proposals to the Secretary not less than 30
nor more than 60 days prior to the date of the meeting; provided that if less
than 40 days' notice of the meeting is given to stockholders, such notice must
be delivered not later than the close of the tenth day following the day on
which notice of the meeting was mailed to stockholders. As specified in the
Charter, the written notice with respect to nominations for election of
directors must set forth certain information regarding each nominee for
election as a director, including such person's written consent to being named
in the proxy statement as a nominee and to serving as a director, if elected,
and certain information regarding the stockholder giving such notice. The
notice with respect to business proposals to be brought before the Meeting
must state the stockholder's name, address and number of shares of Common
Stock held, and briefly discuss the business to be brought before the Meeting,
the reasons for conducting such business at the Meeting and any interest of
the stockholder in the proposal.
BY ORDER OF THE BOARD OF DIRECTORS
/s/DONALD R. COLLETTE
DONALD R. COLLETTE
SECRETARY
McMinnville, Tennessee
March 16, 1998
13
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EXHIBIT A
SECURITY BANCORP, INC.
1998 STOCK OPTION PLAN
SECTION 1. PURPOSE
The Security Bancorp, Inc. 1998 Stock Option Plan is hereby established
to foster and promote the long-term success of Security Bancorp, Inc. and its
shareholders by providing directors, officers and employees of the Corporation
and its subsidiaries with an equity interest in the Corporation. The Plan will
assist the Corporation in attracting and retaining the highest quality of
experienced persons as directors, officers and employees and in aligning the
interests of such persons more closely with the interests of the Corporation's
shareholders by encouraging such parties to maintain an equity interest in the
Corporation.
SECTION 2. DEFINITIONS
For purposes of this Plan, the capitalized terms set forth below shall
have the following meanings:
BOARD means the Board of Directors of the Corporation.
CHANGE IN CONTROL shall mean an event deemed to occur if and when (a) an
offeror other than the Corporation purchases shares of the stock of the
Corporation pursuant to a tender or exchange offer for such shares, (b) any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of securities
of the Corporation representing twenty-five percent (25%) or more of the
combined voting power of the Corporation's then outstanding securities, (c)
the membership of the board of directors of the Corporation changes as the
result of a contested election, such that individuals who were directors at
the beginning of any twenty-four (24) month period (whether commencing before
or after the date of adoption of this Plan) do not constitute a majority of
the Board at the end of such period, or (d) shareholders of the Corporation
approve a merger, consolidation, sale or disposition of all or substantially
all of the Corporation's assets, or a plan of partial or complete liquidation.
If any of the events enumerated in clauses (a) - (d) occur, the Board shall
determine the effective date of the change in control resulting therefrom, for
purposes of the Plan.
CODE means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.
CORPORATION means Security Bancorp, Inc., a Tennessee corporation.
DIRECTOR shall mean a director of the Corporation who is not also an
employee of the Corporation or its subsidiaries.
DISABILITY means any physical or mental injury or disease of a permanent
nature which renders a Participant incapable of meeting the requirements of
the employment or service performed by such Participant immediately prior to
the commencement of such disability. The determination of whether a
Participant is disabled shall be made by the Board in its sole and absolute
discretion.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations promulgated thereunder.
FAIR MARKET VALUE shall be determined as follows:
(a) If the Stock is traded or quoted on the Nasdaq Stock Market or
other national securities exchange on any date, then the Fair Market Value
shall be the average of the highest and lowest selling price on such exchange
on such date or, if there were no sales on such date, then on the next prior
business day on which there was a sale.
(b) If the Stock is not traded or quoted on the Nasdaq Stock Market
or other national securities exchange, then the Fair Market Value shall be a
value determined by the Board in good faith on such basis as it deems
appropriate.
INCENTIVE STOCK OPTION means an option to purchase shares of Stock
granted to a Participant under the Plan which is intended to meet the
requirements of Section 422 of the Code.
NON-QUALIFIED STOCK OPTION means an option to purchase shares of Stock
granted to a Participant under the Plan which is not intended to be an
Incentive Stock Option.
OPTION means an Incentive Stock Option or a Non-Qualified Stock Option.
PARTICIPANT means a Director or employee of the Corporation or its
subsidiaries selected by the Board to receive an Option under the Plan.
PLAN means this Security Bancorp, Inc. 1998 Stock Option Plan.
STOCK means the common stock, $0.01 par value, of the Corporation.
TERMINATION FOR CAUSE shall mean termination because of a Participant's
personal dishonesty, incompetence, willful misconduct, breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or material breach of any provision of any
employment agreement between the Corporation and/or any subsidiary of the
Corporation and a Participant.
SECTION 3. ADMINISTRATION
(a) The Plan shall be administered by the Board. Among other things,
the Board shall have authority, subject to the terms of the Plan, to grant
Options, to determine the individuals to whom and the time or times at which
Options may be granted, to determine whether such Options are to be Incentive
Stock Options or Non-Qualified Stock Options (subject to the requirements of
the Code), to determine the terms and conditions of any Option granted
hereunder, and the exercise price thereof.
(b) Subject to the other provisions of the Plan, the Board shall have
authority to adopt, amend, alter and repeal such administrative rules,
guidelines and practices governing the operation of the Plan as it shall from
time to time consider advisable, to interpret the provisions of the Plan and
any Option and to decide all disputes arising in connection with the Plan. The
Board may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement in the manner and to the
extent it shall deem appropriate to carry the Plan into effect, in its sole
and absolute discretion. The Board's decision and interpretations shall be
final and binding. Any action of the Board with respect to the administration
of the Plan shall be taken pursuant to a majority vote or by the unanimous
written consent of its members.
SECTION 4. ELIGIBILITY AND PARTICIPATION
Officers and employees of the Corporation and its subsidiaries and
Directors shall be eligible to participate in the Plan. The Participants under
the Plan shall be selected from time to time by the Board, in its sole
discretion, from among those eligible, and the Board shall determine, in its
sole discretion, the numbers of shares to be covered by the Option or Options
granted to each Participant. Options intended to qualify as Incentive Stock
Options shall be granted only to persons who are eligible to receive such
options under Section 422 of the Code.
A-2
SECTION 5. SHARES OF STOCK AVAILABLE FOR OPTIONS
(a) The maximum number of shares of Stock which may be issued and
purchased pursuant to Options granted under the Plan is 43,643, subject to the
adjustments as provided in this Section 5 and Section 9, to the extent
applicable. If an Option granted under this Plan expires or terminates before
exercise or is forfeited for any reason, the shares of Stock subject to such
Option, to the extent of such expiration, termination or forfeiture, shall
again be available for subsequent Option grants under Plan. Shares of Stock
issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.
(b) In the event that the Board determines, in its sole discretion,
that any stock dividend, stock split, reverse stock split or combination,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reclassification, reorganization, merger, consolidation,
split-up, spin-off, combination, exchange of shares, or other similar
transaction affects the Stock such that an adjustment is required in order to
preserve the benefits or potential benefits intended to be granted or made
available under the Plan to Participants, the Board shall have the right to
proportionately and appropriately adjust equitably any or all of (i) the
maximum number and kind of shares of Stock in respect of which Options may be
granted under the Plan to Participants, (ii) the number and kind of shares of
Stock subject to outstanding Options held by Participants, and (iii) the
exercise price with respect to any Options held by Participants, without
changing the aggregate purchase price as to which such Options remain
exercisable, provided that no adjustment shall be made pursuant to this
Section if such adjustment would cause the Plan to fail to comply with Section
422 of the Code with regard to any Incentive Stock Options granted hereunder.
No fractional Shares shall be issued on account of any such adjustment.
(c) Any adjustments under this Section will be made by the Board,
whose determination as to what adjustments, if any, will be made and the
extent thereof will be final, binding and conclusive.
SECTION 6. NON-QUALIFIED STOCK OPTIONS
The Board may, from time to time, grant Non-Qualified Stock Options to
Participants upon such terms and conditions as the Board may determine.
Non-Qualified Stock Options granted under this Plan are subject to the
following terms and conditions:
(a) Price. The purchase price per share of Stock deliverable upon the
exercise of each Non-Qualified Stock Option shall be determined by the Board
on the date the option is granted. Such purchase price shall not be less than
one hundred percent (100%) of the Fair Market Value of the Stock on the date
of grant. Shares may be purchased only upon full payment of the purchase
price. Payment of the purchase price may be made, in whole or in part, through
the surrender of shares of the Stock at the Fair Market Value of such shares
on the date of surrender or through a "cashless exercise" involving a stock
brokerage firm.
(b) Terms of Options. The term during which each Non-Qualified Stock
Option may be exercised shall be determined by the Board, but in no event
shall a Non-Qualified Stock Option be exercisable in whole or in part more
than ten (10) years from the date of grant. Except as provided herein, no
Non-Qualified Stock Option granted under this Plan is transferable except by
will or the laws of descent and distribution. The Board shall have
discretionary authority to permit the transfer of any Non-Qualified Stock
Option to members of a Participant's immediate family, including trusts for
the benefit of such family members and partnerships in which such family
members are the only partners; provided, however, that a transferred
Non-Qualified Stock Option may be exercised by the transferee on any date only
to the extent that the Participant would have been entitled to exercise the
Non-Qualified Stock Option on such date had the Non-Qualified Stock Option not
been transferred. Any transferred Non-Qualified Stock Option shall remain
subject to the terms and conditions of the Participant's stock option
agreement.
(c) Termination of Service. Unless otherwise determined by the
Board, upon the termination of a Participant's employment (or, in the case of
a Director, service as a member of the Board) for any reason other than
A-3
Disability, death or Termination for Cause, the Participant's Non-Qualified
Stock Options shall be exercisable only as to those shares which were
immediately exercisable by the Participant at the date of termination and only
for a period of one (1) year following termination. Notwithstanding any
provision set forth herein nor contained in any Agreement relating to the
award of an Option, in the event of Termination for Cause, all rights under
the Participant's Non-Qualified Stock Options shall expire upon termination.
In the event of death or termination as a result of Disability of any
Participant, all Non-Qualified Stock Options held by the Participant, whether
or not exercisable at such time, shall be exercisable by the Participant or
his legal representatives or beneficiaries of the Participant for two (2)
years or such longer period as determined by the Board following the date of
the Participant's death or termination of service due to Disability, provided
that in no event shall the period extend beyond the expiration of the
Non-Qualified Stock Option term.
SECTION 7. INCENTIVE STOCK OPTIONS
The Board may, from time to time, grant Incentive Stock Options to
eligible employees. Incentive Stock Options granted pursuant to the Plan shall
be subject to the following terms and conditions:
(a) Price. The purchase price per share of Stock deliverable upon
the exercise of each Incentive Stock Option shall be not less than one hundred
percent (100%) of the Fair Market Value of the Stock on the date of grant.
However, if a Participant owns (or, under Section 422(d) of the Code, is
deemed to own) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of Stock, the purchase price per share of
Stock deliverable upon the exercise of each Incentive Stock Option shall not
be less than one hundred ten percent (110%) of the Fair Market Value of the
Stock on the date of grant. Shares may be purchased only upon payment of the
full purchase price. Payment of the purchase price may be made, in whole or in
part, through the surrender of shares of the Stock at the Fair Market Value of
such shares on the date of surrender or through a "cashless exercise"
involving a stock brokerage firm.
(b) Amounts of Options. Subject to Sections 4(b) and (c), Incentive
Stock Options may be granted to any eligible employee in such amounts as
determined by the Board. In the case of an option intended to qualify as an
Incentive Stock Option, the aggregate Fair Market Value (determined as of the
time the option is granted) of the Stock with respect to which Incentive Stock
Options granted are exercisable for the first time by the Participant during
any calendar year shall not exceed $100,000. The provisions of this Section
7(b) shall be construed and applied in accordance with Section 422(d) of the
Code and the regulations, if any, promulgated thereunder. To the extent an
award is in excess of such limit, it shall be deemed a Non-Qualified Stock
Option. The Board shall have discretion to redesignate options granted as
Incentive Stock Options as Non-Qualified Stock Options.
(c) Terms of Options. The term during which each Incentive Stock
Option may be exercised shall be determined by the Board, but in no event
shall an Incentive Stock Option be exercisable in whole or in part more than
ten (10) years from the date of grant. If at the time an Incentive Stock
Option is granted to an employee, the employee owns Stock representing more
than ten percent (10%) of the total combined voting power of the Corporation
(or, under Section 422(d) of the Code, is deemed to own Stock representing
more than ten percent (10%) of the total combined voting power of all such
classes of Stock, by reason of the ownership of such classes of Stock,
directly or indirectly, by or for any brother, sister, spouse, ancestor or
lineal descendent of such employee, or by or for any corporation, partnership,
estate or trust of which such employee is a shareholder, partner or
beneficiary), the Incentive Stock Option granted to such employee shall not be
exercisable after the expiration of five (5) years from the date of grant. No
Incentive Stock Option granted under this Plan is transferable except by will
or the laws of descent and distribution.
(d) Termination of Employment. Upon the termination of a
Participant's service for any reason other than Disability, death or
Termination for Cause, the Participant's Incentive Stock Options which are
then exercisable at the date of termination may only be exercised by the
Participant for a period of three (3) months following termination, after
which time they shall be void. Notwithstanding any provisions set forth herein
nor contained in any Agreement relating
A-4
to an award of an Option, in the event of Termination for Cause, all rights
under the Participant's Incentive Stock Options shall expire immediately upon
termination.
Unless otherwise determined by the Board, in the event of death or
termination of service as a result of Disability of any Participant, all
Incentive Stock Options held by such Participant, whether or not exercisable
at such time, shall be exercisable by the Participant or the Participant's
legal representatives or the beneficiaries of the Participant for one (1) year
following the date of the Participant's death or termination of employment as
a result of Disability. In no event shall the exercise period extend beyond
the expiration of the Incentive Stock Option term.
(f) Compliance with Code. The options granted under this Section 7
of the Plan are intended to qualify as incentive stock options within the
meaning of Section 422 of the Code, but the Corporation makes no warranty as
to the qualification of any option as an incentive stock option within the
meaning of Section 422 of the Code. A Participant shall notify the Board in
writing in the event that he disposes of Stock acquired upon exercise of an
Incentive Stock Option within the two-year period following the date the
Incentive Stock Option was granted or within the one-year period following the
date he received Stock upon the exercise of an Incentive Stock Option and
shall comply with any other requirements imposed by the Corporation in order
to enable the Corporation to secure the related income tax deduction to which
it will be entitled in such event under the Code.
SECTION 8. EXTENSION
The Board may, in its sole discretion, extend the dates during which all
or any particular Option or Options granted under the Plan may be exercised;
provided, however, that no such extension shall be permitted without the
Participant's consent if it would cause Incentive Stock Options issued under
the Plan to fail to comply with Section 422 of the Code.
SECTION 9. GENERAL PROVISIONS APPLICABLE TO OPTIONS
(a) Each Option under the Plan shall be evidenced by a writing
delivered to the Participant specifying the terms and conditions thereof and
containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Board considers necessary or advisable to
achieve the purposes of the Plan or comply with applicable tax and regulatory
laws and accounting principles.
(b) Each Option may be granted alone, in addition to or in relation
to any other Option. The terms of each Option need not be identical, and the
Board need not treat Participants uniformly. Except as otherwise provided by
the Plan or a particular Option, any determination with respect to an Option
may be made by the Board at the time of grant or at any time thereafter.
(c) Notwithstanding anything in this Plan to the contrary, in the
event of a Change in Control, all then outstanding Options shall become one
hundred percent (100%) vested and exercisable as of the effective date of the
Change in Control. If, in connection with or as a consequence of a Change in
Control, the Corporation is merged into or consolidated with another
corporation, if the Corporation becomes a subsidiary of another corporation or
if the Corporation sells or otherwise disposes of substantially all of its
assets to another corporation, then unless provisions are made in connection
with such transactions for the continuance of the Plan and/or the assumption
or substitution of then outstanding Options with new options covering the
stock of the successor corporation, or parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices, such
Options shall be canceled as of the effective date of the merger,
consolidation, or sale and the Participant shall be paid in cash an amount
equal to the difference between the Fair Market Value of the Stock subject to
the Options on the effective date of such corporate event and the exercise
price of the Options. Notwithstanding anything in this Section 9(c) or any
Option agreement to the contrary, in the event that the consummation of a
Change in Control is contingent on using pooling of interests accounting
methodology, the Board may, in its discretion, take any action necessary to
preserve the use of pooling of interests accounting.
A-5
(d) The Corporation shall be entitled to withhold (or secure payment
from the Participant in lieu of withholding) the amount of any withholding or
other tax required by law to be withheld or paid by the Corporation with
respect to any Options exercised under this Plan, and the Corporation may
defer issuance of Stock hereunder until and unless indemnified to its
satisfaction against any liability for any such tax. The amount of such
withholding or tax payment shall be determined by the Board or its delegate
and shall be payable by the Participant at such time as the Board determines.
To the extent authorized by the Board, such withholding obligation may also be
satisfied by the payment of cash by the Participant to the Corporation, the
tendering of previously acquired shares of Stock of the Participant or the
withholding, at the appropriate time, of shares of Stock otherwise issuable to
the Participant, in a number sufficient, based upon the Fair Market Value of
such Stock, to satisfy such tax withholding requirements. The Board shall be
authorized, in its sole discretion, to establish such rules and procedures
relating to any such withholding methods as it deems necessary or appropriate,
including, without limitation, rules and procedures relating to elections by
Participants who are subject to the provisions of Section 16 of the Exchange
Act.
(e) Subject to the terms of the Plan, the Board may at any time, and
from time to time, amend, modify or terminate the Plan or any outstanding
Option held by a Participant, including substituting therefor another Option
of the same or a different type or changing the date of exercise or
realization, provided that the Participant's consent to each action shall be
required unless the Board determines that the action, taking into account any
related action, would not materially and adversely affect the Participant.
SECTION 10. MISCELLANEOUS
(a) No person shall have any claim or right to be granted an Option,
and the grant of an Option shall not be construed as giving a Participant the
right to continued employment or service on the Board. The Corporation
expressly reserves the right at any time to dismiss a Participant free from
any liability or claim under the Plan, except as expressly provided in the
Plan or the applicable Option.
(b) Nothing contained in the Plan shall prevent the Corporation from
adopting other or additional compensation arrangements.
(c) Subject to the provisions of the applicable Option, no
Participant shall have any rights as a shareholder (including, without
limitation, any rights to receive dividends, or non cash distributions with
respect to such shares) with respect to any shares of Stock to be distributed
under the Plan until he or she becomes the holder thereof.
(d) Notwithstanding anything to the contrary expressed in this Plan,
any provisions hereof that vary from or conflict with any applicable Federal
or State securities laws (including any regulations promulgated thereunder)
shall be deemed to be modified to conform to and comply with such laws.
(e) No member of the Board shall be liable for any action or
determination taken or granted in good faith with respect to this Plan nor
shall any member of the Board be liable for any agreement issued pursuant to
this Plan or any grants under it. Each member of the Board shall be
indemnified by the Corporation against any losses incurred in such
administration of the Plan, unless his action constitutes serious and willful
misconduct.
(f) The Plan shall be effective on July 1, 1998 but only if, prior to
such date, the Plan is approved by the Corporation's shareholders. The Plan
will be so approved if at an annual or special meeting of shareholders held
prior to such date a quorum is present and the votes of the holders of a
majority of the securities of the Corporation present or represented by proxy
and entitled to vote on such matter shall be cast in favor of its approval.
(g) The Board may amend, suspend or terminate the Plan or any portion
thereof at any time, provided that no amendment shall be made without
shareholder approval if such approval is necessary to comply with any
applicable tax laws or regulatory requirement.
A-6
(h) Options may not be granted under the Plan after the tenth
anniversary of the effective date of the Plan, but then outstanding Options
may extend beyond such date.
(i) To the extent that State laws shall not have been preempted by
any laws of the United States, the Plan shall be construed, regulated,
interpreted and administered according to the other laws of the State of
Tennessee.
* * *
A-7
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EXHIBIT B
SECURITY BANCORP, INC.
MANAGEMENT RECOGNITION AND DEVELOPMENT PLAN
SECTION 1. PURPOSE AND ADOPTION OF THE PLAN
(a) PURPOSE. The purpose of the Security Bancorp, Inc. Management
Recognition and Development Plan is to assist the Corporation and its
subsidiaries in attracting, retaining and motivating key management employees
and non-employee directors who will contribute to the Corporation's success.
The Plan is intended to recognize the contributions of key management
personnel to the success of the Corporation and its subsidiaries, to link the
benefits paid to eligible employees and directors who have substantial
responsibility for the successful operation, administration and management of
the Corporation with the enhancement of shareholder value and to provide
eligible employees and directors with an opportunity to acquire a greater
proprietary interest in the Corporation through the grant of restricted shares
of Stock which, in accordance with the terms and conditions set forth below,
will vest only if the employees meet the vesting criteria established by the
Board and this Plan.
(b) ADOPTION AND EFFECTIVE DATE. The Plan shall be effective on July
1, 1998 but only if, prior to such date, the Plan is approved by the
Corporation's shareholders. The Plan will be so approved if at an annual or
special meeting of shareholders held prior to such date a quorum is present
and the votes of the holders of a majority of the securities of the
Corporation present or represented by proxy and entitled to vote on such a
matter shall be cast in favor of its approval.
SECTION 2. DEFINITIONS
For purposes of this Plan, the capitalized terms set forth below shall
have the following meanings:
AWARD AGREEMENT means a written agreement between the Corporation and a
Participant specifically setting forth the terms and conditions of an award of
Restricted Stock granted to a Participant pursuant to Section 5 of the Plan.
BOARD means the Board of Directors of the Corporation.
CHANGE IN CONTROL shall mean an event deemed to occur if and when (a) an
offeror other than the Corporation purchases shares of the common stock of the
Corporation pursuant to a tender or exchange offer for such shares, (b) any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of securities
of the Corporation representing twenty-five percent (25%) or more of the
combined voting power of the Corporation's then outstanding securities, (c)
the membership of the board of directors of the Corporation changes as the
result of a contested election, such that individuals who were directors at
the beginning of any twenty-four (24) month period (whether commencing before
or after the date of adoption of this Plan) do not constitute a majority of
the Board at the end of such period, or (d) shareholders of the Corporation
approve a merger, consolidation, sale or disposition of all or substantially
all of the Corporation's assets or a plan of partial or complete liquidation.
If any of the events enumerated in clauses (a) - (d) occur, the Board shall
determine the effective date of the change in control resulting therefrom.
CORPORATION means Security Bancorp, Inc., a Tennessee corporation, and
its successors.
DATE OF GRANT means the date as of which an award of Restricted Stock is
granted in accordance with Section 5.
DIRECTOR means a member of the Board of Directors of the Corporation who
is not also an employee of the Corporation or its subsidiaries.
DISABILITY means any physical or mental injury or disease of a permanent
nature which renders a Participant incapable of meeting the requirements of
the employment or service performed by such Participant immediately prior to
the commencement of such disability. The determination of whether a
Participant is disabled shall be made by the Board in its sole and absolute
discretion.
EFFECTIVE DATE means the date as of which the Plan shall become
effective, as determined in accordance with Section 1(b).
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
FAIR MARKET VALUE shall be determined as follows:
(a) If the stock is traded or quoted on the Nasdaq Stock Market or
other national securities exchange on any date, then the Fair Market Value
shall be the average of the highest and lowest selling price on such exchange
on such date or, if there were no sales on such date, then on the next prior
business day on which there was a sale.
(b) If the stock is not traded or quoted on the Nasdaq Stock Market or
other national securities exchange, then the Fair Market Value shall be a
value determined by the Board in good faith on such basis as it deems
appropriate.
PARTICIPANT means any person selected by the Board, pursuant to Section
3(b), to participate under the Plan.
PLAN means this Security Bancorp, Inc. Management Recognition and
Development Plan, as the same may be amended from time to time.
RESTRICTED STOCK means shares of Stock awarded to a Participant subject
to restrictions as described in Section 5.
STOCK means the common stock, par value $0.01 per share, of the
Corporation.
SECTION 3. ADMINISTRATION AND PARTICIPATION
(a) ADMINISTRATION. The Plan shall be administered by the Board which
shall have exclusive and final authority and discretion in each determination,
interpretation or other action affecting the Plan and its Participants. The
Board shall have the sole and absolute authority and discretion to interpret
the Plan, to establish and modify administrative rules for the Plan, to
select, in accordance with Section 3(b), the persons who will be Participants
hereunder, to impose, in accordance with Section 5(a), such conditions and
restrictions as it determines appropriate and to take such other actions and
make such other determinations in connection with the Plan as it may deem
necessary or advisable.
(b) DESIGNATION OF PARTICIPANTS. Participants in the Plan shall be
such employees of the Corporation and its subsidiaries or Directors as the
Board, in its sole discretion, may designate. The Board shall consider such
factors as it deems pertinent in selecting Participants.
SECTION 4. STOCK ISSUABLE UNDER THE PLAN
(a) NUMBER OF SHARES OF STOCK ISSUABLE. Subject to adjustments as
provided in Section 6(c), the maximum number of shares of Stock available for
issuance under the Plan shall be 17,457. The Stock to be offered under the
Plan shall be authorized and unissued Stock, Stock which shall have been
reacquired by the Corporation and held in its treasury, or Stock held in a
trust established by the Corporation for the purpose of funding awards under
the Plan with shares acquired on the open market with funds contributed by the
Corporation or any subsidiary.
B-2
(b) SHARES SUBJECT TO TERMINATED AWARDS. Shares of Stock forfeited as
provided in Section 5(b) may again be issued under the Plan.
SECTION 5. RESTRICTED STOCK
Subject to the terms of this Plan, the Board may grant to any Participant
an award of Restricted Stock in respect of such number of shares of Stock, and
subject to such terms and conditions relating to forfeitability and
restrictions on delivery and transfer (whether based on performance standards,
periods of service or otherwise), as the Board shall determine in its sole
discretion. The terms of all such Restricted Stock awards shall be set forth
in an Award Agreement between the Corporation and the Participant which shall
contain such provisions, not inconsistent with this Plan, as shall be
determined by the Board.
(a) ISSUANCE OF RESTRICTED STOCK. As soon as practicable after the
Date of Grant of Restricted Stock, the Corporation shall cause to be
transferred on the books of the Corporation shares of Stock, registered on
behalf of the Participant, evidencing such Restricted Stock, but subject to
forfeiture to the Corporation retroactive to the Date of Grant if an Award
Agreement delivered to the Participant by the Corporation with respect to the
Restricted Stock is not duly executed by the Participant and timely returned
to the Corporation. Unless the Board determines otherwise, until the lapse or
release of all restrictions applicable to an award of Restricted Stock, the
stock certificates representing such Restricted Stock shall be held in custody
by the Corporation or its designee. Notwithstanding the foregoing, the
Corporation may, in its sole discretion, establish a trust for the purpose of
holding Restricted Stock awarded pursuant to this Plan. In the event that a
trust is established, the Corporation may elect to hold any or all shares of
Stock subject to awards in the name of the trust for the benefit of the
Participant and subject to the forfeiture conditions applicable to the award.
(b) SHAREHOLDER RIGHTS. Beginning on the Date of Grant of the
Restricted Stock and subject to execution of the Award Agreement as provided
in Section 5(a), the Participant shall become a shareholder of the Corporation
with respect to all Stock subject to the Award Agreement and shall have all of
the rights of a shareholder, including, but not limited to, the right to vote
such Stock and the right to receive dividends and other distributions paid
with respect to such Stock; provided, however, that any Stock distributed as a
dividend or otherwise with respect to any Restricted Stock as to which the
restrictions have not yet lapsed shall be subject to the same restrictions as
such Restricted Stock and shall be held as prescribed in Section 5(a). Cash
dividends paid with respect to Restricted Stock may, at the Board's
discretion, be held by the Corporation in escrow until such time as the
Participant vests in such shares or distributed to the Participant during the
forfeiture period. The Corporation may credit a reasonable rate of interest
to such cash dividends prior to distribution.
(c) RESTRICTION ON TRANSFERABILITY. None of the Restricted Stock may
be assigned, transferred (other than by will or the laws of descent and
distribution), pledged, sold or otherwise disposed of prior to lapse or
release of the restrictions applicable thereto.
(d) DELIVERY OF STOCK UPON RELEASE OF RESTRICTIONS. Upon expiration
or earlier termination of the forfeiture period without a forfeiture, and the
satisfaction of or release from any other conditions prescribed by the Board,
the restrictions applicable to the Restricted Stock shall lapse. As promptly
as administratively feasible thereafter, subject to the requirements of
Section 6(b), the Corporation shall deliver to the Participant or, in case of
the Participant's death, to the Participant's legal representatives, one or
more stock certificates for the appropriate number of shares of Stock, free of
all such restrictions, except for any restrictions that may be imposed by law.
(e) TERMS OF RESTRICTED STOCK; FORFEITURE OF RESTRICTED STOCK. All
Restricted Stock shall be forfeited and returned to the Corporation and all
rights of the Participant with respect to such Restricted Stock shall cease
and terminate in their entirety if during the forfeiture period the employment
(or, in the case of a Director, service) of the Participant with the
Corporation and/or its subsidiaries terminates for any reason. Subject to the
terms of the Plan, the Board, in its sole discretion, shall establish the
forfeiture period for each grant of Restricted Stock, and
B-3
may provide for the forfeiture period to lapse in installments.
Notwithstanding the foregoing, upon the termination of a Participant's
employment (or, in the case of a Director, service) by reason of death or
Disability, all forfeiture restrictions imposed on Restricted Stock shall
immediately and fully lapse. In addition, upon the effective date of a Change
in Control, all forfeiture restrictions imposed on outstanding Restricted
Stock awards shall immediately and fully lapse.
SECTION 6. MISCELLANEOUS
(a) LIMITATIONS ON TRANSFER. The rights and interest of a Participant
under the Plan may not be assigned or transferred other than by will or the
laws of descent and distribution. During the lifetime of a Participant, only
the Participant personally may exercise rights under the Plan.
(b) TAXES. The Corporation shall be entitled to withhold (or secure
payment from the Participant in lieu of withholding) the amount of any
withholding or other tax required by law to be withheld or paid by the
Corporation with respect to any Stock issuable under this Plan, or with
respect to any income recognized upon the lapse of restrictions applicable to
Restricted Stock and the Corporation may defer issuance of Stock hereunder
until and unless indemnified to its satisfaction against any liability for any
such tax. The amount of such withholding or tax payment shall be determined
by the Board or its delegate and shall be payable by the Participant at such
time as the Board determines. To the extent authorized by the Board, such
withholding obligation may be satisfied by the payment of cash by the
Participant to the Corporation, the tendering of previously acquired shares of
Stock of the Participant or the withholding, at the appropriate time, of
shares of Stock otherwise issuable to the Participant, in a number sufficient,
based upon the Fair Market Value of such Stock, to satisfy such tax
withholding requirements. The Board shall be authorized, in its sole
discretion, to establish such rules and procedures relating to any such
withholding methods as it deems necessary or appropriate, including, without
limitation, rules and procedures relating to elections by Participants who are
subject to the provisions of Section 16 of the Exchange Act.
(c) ADJUSTMENTS TO REFLECT CAPITAL CHANGES. The amount and kind of
Stock available for issuance under the Plan and the limit on the number of
shares of Stock in respect of which awards may be made to any Participant in
any calendar year shall be appropriately adjusted to reflect any stock
dividend, stock split, combination or exchange of shares, merger,
consolidation or other change in capitalization with a similar substantive
effect upon the Plan. The Board shall have the power and sole discretion to
determine the nature and amount of the adjustment, if any, to be made pursuant
to this Section 6(c).
(d) NO RIGHT TO AWARD; NO RIGHT TO EMPLOYMENT. No employee or other
person shall have any claim of right to be permitted to participate or be
granted an award under this Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee any right to be retained
in the employ of the Corporation.
(e) GOVERNING LAW. The Plan and all determinations made and actions
taken pursuant to the Plan shall be governed by the laws of the State of
Tennessee other than the conflict of laws provisions of such laws, and shall
be construed in accordance therewith.
(f) CAPTIONS. The captions (i.e., all Section and subsection
headings) used in the Plan are for convenience only, do not constitute a part
of the Plan, and shall not be deemed to limit, characterize or affect in any
way any provisions of the Plan, and all provisions of the Plan shall be
construed as if no captions had been used in the Plan.
(g) SEVERABILITY. Whenever possible, each provision in the Plan and
every Award Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of the Plan or any Award
Agreement shall be held to be prohibited by or invalid under applicable law,
then (x) such provision shall be deemed amended to accomplish the objectives
of the provision as originally written to the fullest extent permitted by law
and (y) all other provisions of the Plan and every Award Agreement shall
remain in full force and effect.
B-4
(h) LEGENDS. All certificates for Stock delivered under the Plan
shall be subject to such transfer restrictions set forth in the Plan and such
other restrictions as the Board may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Stock is then listed and any applicable
federal or state securities law, and the Board may cause a legend or legends
to be endorsed on any such certificates making appropriate references to such
restrictions.
(i) AMENDMENT AND TERMINATION.
(A) AMENDMENT. Subject to applicable law and regulations, the Board
shall have complete power and authority to amend the Plan at any time it is
deemed necessary or appropriate; provided, however, that no amendment shall be
made without shareholder approval if such approval is necessary for the
Corporation to comply with an applicable tax law or regulatory requirement.
No termination or amendment of the Plan may, without the consent of the
Participant to whom any award shall theretofore have been granted under the
Plan, adversely affect the right of such individual under such award.
(B) TERMINATION. The Board shall have the right and the power to
terminate the Plan at any time. Unless sooner terminated by action of the
Board, the Plan shall automatically terminate, without further action of the
Board or the Corporation's shareholders, on the tenth anniversary of the
Effective Date. No award shall be granted under the Plan after the
termination of the Plan, but the termination of the Plan shall not have any
other effect and any award outstanding at the time of the termination of the
Plan shall continue in effect in accordance with its terms as if the Plan has
not terminated.
* * *
B-5
[x] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS SAMPLE SECURITY BANCORP, INC.
With For All
For hold Except
1. The election as
FIRST ANNUAL MEETING OF STOCKHOLDERS director of the [ ] [ ] [ ]
APRIL 16, 1998 nominees listed
(except as marked
The undersigned hereby appoints the To the contrary
official Proxy Committee of below):
the Board of Directors of Security
Bancorp, Inc. ("Company"), consisting Robert W. Newman (1-year term)
of Donald R. Collette, with full Dr. Franklin
powers of substitution to act as J. Noblin (1-year term)
attorneys and proxies for the under- Donald R. Collette (1-year term)
signed, to vote all shares of Earl H. Barr (2-year term)
Common Stock of the Company which the Dr. John T.
undersigned is entitled to vote at Mason, III (2-year term)
the Meeting of Stockholders, to Joe H. Pugh (3-year term)
be held at the Savings Bank's main Dr. Neil R. Neil
office located at 306 West Main Street, Schultz (3-year term)
McMinnville, Tennessee, on Thursday,
April 16, 1998, at 2:00 p.m., Central INSTRUCTIONS: To withhold authority
Time, and at any and all adjournments to vote for any individual nominee,
thereof, as set forth to the right: mark 'For All Except' and write that
nominee's name in the space provided
below.
-------------------
For Against Abstain
2. The adoption [ ] [ ] [ ]
of the
Security Ban-
corp, Inc.
1998 Stock
Option Plan.
3. The adoption [ ] [ ] [ ]
of the
Security
Bancorp, Inc.
Management
Recognition
and Develop-
ment Plan.
4. In their discretion, upon such
other matters as may properly
come before the meeting.
-----------
Please be sure to sign and Date The Board of Directors recommends a
date this Proxy in the Vote 'FOR' the listed proposals.
box below.
- ---------------------------------------- THIS PROXY, PROPERLY SIGNED AND
DATED, WILL BE VOTED AS DIRECTED, BUT
IF NO INSTRUCTIONS ARE SPECIFIED THIS
- ---------------------------------------- PROXY WILL BE VOTED FOR THE PROPOSALS
Stockholder sign Co-holder (if any) STATED. IF ANY OTHER BUSINESS IS PRE-
above sign above AT SUCH MEETING, THIS PROXY WILL BE
VOTED BY THE BOARD OF DIRECTORS IN
ITS BEST JUDGMENT. PRESENTLY, THE
BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE
MEETING. THIS PROXY ALSO CONFERS
DISCRETIONARY AUTHORITY ON THE BOARD
OF DIRECTORS TO VOTE WITH RESPECT TO
THE ELECTION OF ANY PERSON AS
DIRECTOR WHERE THE NOMINEES ARE
UNABLE TO SERVE OR FOR GOOD CAUSE
WILL NOT SERVE AND MATTERS INCIDENT
TO THE CONDUCT OF THE MEETING.
- ------------------------------------------------------------------------------
Detach above card, sign, date and mail in
postage paid envelope provided.
SECURITY BANCORP, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote in person at the
Meeting or at any adjournment thereof and after notification to the Secretary
of the Company at the Meeting of the stockholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed terminated
and of no further force and effect.
The above signed acknowledges receipt from the Company prior to the
execution of this proxy of the Notice of First Annual Meeting of Stockholders,
a Proxy Statement for the First Annual Meeting of Stockholders, and the 1997
Annual Report to Stockholders.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, indicate your full
title. If shares are held jointly, only one registered holder need sign but
both holders should sign, if possible.
PLEASE ACT PROMPTLY
SIGN, DATE AND MAIL YOUR PROXY CARD TODAY