SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN Proxy statement
SCHEDULE 14A INFORMATION
Proxy statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the Commission
only (as permitted by Rule 14a 6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant toss.240.14a-11(c) orss.240.14a-12
SUN BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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SUN BANCORP, INC.
226 LANDIS AVENUE
VINELAND, NEW JERSEY 08360
April 16, 2002
Dear Fellow Shareholder:
On behalf of the Board of Directors and management of Sun Bancorp,
Inc., I cordially invite you to attend the Annual Meeting of Shareholders to be
held at the Regency Palace, Route 73 and Fellowship Road, Mount Laurel, New
Jersey, on May 16, 2002, at 9:30 a.m. The attached notice of annual meeting and
proxy statement describe the formal business to be transacted at the annual
meeting. During the annual meeting, I will also report on the operations of the
Company. Directors and officers of the Company, as well as a representative of
the Company's independent auditor, Deloitte & Touche LLP, will be present to
respond to any questions shareholders may have.
At the annual meeting, shareholders will vote upon (i) the election of
directors of the Company; (ii) the ratification of the Sun Bancorp, Inc. 2002
Stock Option Plan. The Board of Directors unanimously recommends a vote "FOR"
both matters.
Whether or not you plan to attend the meeting, please sign and date the
enclosed proxy card and return it in the accompanying postage-paid return
envelope as promptly as possible. This will not prevent you from voting in
person at the meeting, but will assure that your vote is counted if you are
unable to attend. Your vote is very important.
Sincerely,
/s/Bernard A. Brown
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Bernard A. Brown
Chairman of the Board
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SUN BANCORP, INC.
226 LANDIS AVENUE
VINELAND, NEW JERSEY 08360
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2002
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of Sun Bancorp, Inc. (the "Company"), will be held at the Regency
Palace, Route 73 and Fellowship Road, Mount Laurel, New Jersey on May 16, 2002,
at 9:30 a.m.
The Meeting is for the purpose of considering and acting upon the following
matters:
1. The election of sixteen directors of the Company;
2. The ratification of the Sun Bancorp, Inc. 2002 Stock Option Plan; and
3. Such other matters as may properly come before the meeting or any
adjournments thereof.
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 or dates to which, by original or later
adjournment, the Meeting may be adjourned. Shareholders of record at the close
of business on April 1, 2002 are the shareholders entitled to vote at the
Meeting and any adjournments thereof.
EACH SHAREHOLDER, WHETHER OR NOT HE PLANS TO ATTEND THE MEETING, IS REQUESTED TO
SIGN, DATE AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE SHAREHOLDER MAY BE REVOKED BY
FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED
PROXY BEARING A LATER DATE. ANY SHAREHOLDER PRESENT AT THE MEETING MAY REVOKE
HIS PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT BEFORE THE MEETING. HOWEVER,
SHAREHOLDERS WHOSE SHARES ARE NOT REGISTERED IN THEIR OWN NAME WILL NEED
ADDITIONAL DOCUMENTATION FROM THE RECORD HOLDER TO VOTE IN PERSON AT THE
MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Sidney R. Brown
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Sidney R. Brown
Secretary
Vineland, New Jersey
April 16, 2002
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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 AT THE MEETING. 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
SUN BANCORP, INC.
226 LANDIS AVENUE
VINELAND, NEW JERSEY 08360
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ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 2002
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GENERAL
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This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Sun Bancorp, Inc. (the "Company") to be
used at the 2002 Annual Meeting of Shareholders of the Company which will be
held at the Regency Palace, Route 73 and Fellowship Road, Mount Laurel, New
Jersey, on May 16, 2002, 9:30 a.m. The accompanying notice of annual meeting of
shareholders, form of proxy, annual report and this proxy statement are being
first mailed to the Company's shareholders entitled to notice of, and to vote at
the meeting, on or about April 16, 2002.
At the meeting, shareholders will consider and vote upon (i) the
election of sixteen directors, (ii) the ratification of the Sun Bancorp, Inc.
2002 Stock Option Plan (the "2002 Stock Option Plan"), and (iii) such other
matters as may properly come before the meeting or any adjournments thereof. The
Board of Directors of the Company (the "Board" or the "Board of Directors")
knows of no additional matters that will be presented for consideration at the
meeting. Execution of a proxy, however, confers on the designated proxy holder
discretionary authority to vote the shares represented by such proxy in
accordance with their best judgment on such other business, if any, that may
properly come before the meeting or any adjournment thereof.
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VOTING AND REVOCABILITY OF PROXIES
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Shareholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company at the address above or by the filing of
a later dated proxy prior to a vote being taken on a particular proposal at the
meeting. A proxy will not be voted if a shareholder attends the meeting and
votes in person. Proxies solicited by the Board of Directors will be voted as
specified thereon. If no direction is given, signed proxies will be voted "FOR"
the nominees for directors set forth below and "FOR" the ratification of the
2002 Stock Option Plan. The proxy confers discretionary authority on the persons
named thereon to vote with respect to the election of any person as a director
where a nominee is unable to serve, or for good cause will not serve, and with
respect to matters incident to the conduct of the meeting.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Shareholders of record as of the close of business on April 1, 2002
(the "Record Date") are entitled to one vote for each share of common stock of
the Company (the "Common Stock") then held.
As of the Record Date, the Company had 10,639,946 shares of Common
Stock issued and outstanding.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote is necessary to constitute a
quorum at the meeting. For purposes of determining the votes cast with respect
to any matter presented for consideration at the meeting only those votes cast
"FOR" or "AGAINST" are included. Abstentions and broker non-votes (i.e., shares
held by brokers on behalf of their customers, which may not be voted on certain
matters because the brokers have not received specific voting instructions from
their customers with respect to such matters) will be counted solely for the
purpose of determining whether a quorum is present. In the event there are not
sufficient votes for a quorum or to ratify or adopt any proposal at the time of
the meeting, the meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors, the proxy card being provided by the
Board of Directors allows a shareholder to vote for the election of the nominees
proposed by the Board of Directors, or to withhold authority to vote for any or
all of the nominees being proposed. Under the Company's bylaws, directors are
elected by a plurality of votes cast, without respect to either (i) broker
non-votes or (ii) proxies as to which authority to vote for the nominee being
proposed is withheld.
Ratification of the 2002 Stock Option Plan (Proposal II) will require
the affirmative vote of a majority of the votes cast. Proxies marked "ABSTAIN"
will have the same impact as a vote "AGAINST" such matters. Broker Non-Votes
will have no impact on the outcome of the vote on such matters.
Concerning all other matters that may properly come before the meeting,
by checking the appropriate box, a shareholder may: (i) vote "FOR" the item, or
(ii) vote "AGAINST" the item, or (iii) "ABSTAIN" with respect to the item.
Unless otherwise required, such matters shall be determined by a majority of
votes cast affirmatively or negatively without regard to (a) broker non-votes,
or (b) proxies marked "ABSTAIN" as to that matter.
Security Ownership of Certain Beneficial Owners
Persons and groups owning in excess of 5% of the outstanding shares of
Common Stock are required to file reports regarding such ownership pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Other than
as set forth in the following table, management knows of no person or group that
owns more than 5% of the outstanding shares of Common Stock at the Record Date.
Percent of Shares
Amount and Nature of of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
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Bernard A. Brown
71 West Park Avenue
Vineland, New Jersey 08360 3,662,193(1) 31.1%
Jeffrey L. Gendell
237 Park Avenue, 9th Floor
New York, New York 10017 867,030(2) 8.15%
All directors and executive officers
of the Company as a group 5,136,233(3) 42.8%
(footnotes on next page.)
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(1) Includes shares of Common Stock held directly as well as by spouse or minor
children, in trust and other indirect ownership, over which shares the
individual effectively exercises sole voting and investment power, unless
otherwise indicated. Includes 1,135,395 shares of Common Stock that can be
acquired pursuant to options that are exercisable within 60 days of the
Record Date. See "Director and Executive Officer Compensation."
(2) Number of shares is based on an amended Schedule 13D filed with the
Securities and Exchange Commission on February 25, 2002.
(3) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust and other indirect ownership, over which shares
the individuals effectively exercise sole voting and investment power,
unless otherwise indicated. Includes 1,367,394 options that may be
exercised within 60 days of the Record Date to purchase shares of Common
Stock. See "Director and Executive Officer Compensation."
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INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
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Officers, directors and employees of the Company have an interest in a
matter being presented for shareholder ratification. Upon shareholder
ratification of Proposal II, officers, directors and employees of the Company
may be granted stock options or may exercise stock options already granted under
the 2002 Stock Option Plan. The ratification of the 2002 Stock Option Plan is
being presented as Proposal II.
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PROPOSAL I - ELECTION OF DIRECTORS
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General Information
The entire Board of Directors is to be elected at the meeting, each to
serve until the next annual meeting of shareholders or until his or her
successor has been duly elected and qualified. Each nominee is currently a
member of the Board of Directors other than Linwood C. Gerber, Douglas J. Heun,
Vito J. Marseglia, George A. Pruitt, Anthony Russo, III, Edward H. Salmon and
Timothy J. Wilmott, who are currently members of the Board of Directors of Sun
National Bank (the "Bank"), the wholly-owned subsidiary of the Company. All
members of the current Board of Directors are nominees.
It is intended that the proxies solicited by the Board will be voted
for the election of each of the named nominees unless otherwise specified. If
any of the nominees are unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute as the Board of
Directors may recommend or the size of the Board may be reduced to eliminate the
vacancy. At this time, the Board knows of no reason why any of the nominees
might be unavailable to serve.
The following table sets forth information with respect to the
directors and nominees and certain executive officers of the Company, including
their names, ages, the years they first became directors or executive officers
of the Company, and the number and percentage of shares of the Common Stock
beneficially owned by each as of the Record Date.
-3-
Year First Shares of Common Percent
Elected or Stock Beneficially of
Name Age(1) Position Appointed(2) Owned(3) Class
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DIRECTORS AND NOMINEES
Thomas A. Bracken 54 President, CEO and 2001 47,591(5) *
Director
Bernard A. Brown(4) 77 Chairman of the Board 1985 3,662,193(6) 31.1%
Ike Brown(4) 47 Director 1998 186,595 1.75%
Jeffrey S. Brown(4) 42 Director 1999 189,757 1.78%
Sidney R. Brown(4) 44 Vice Chairman, 1990 438,920(7) 4.10%
Treasurer and Secretary
Peter Galetto, Jr. 48 Director 1990 287,208 2.70%
Linwood C. Gerber 61 Nominee 1985 27,327 *
Douglas J. Heun 55 Nominee 1997 20,726 *
Anne E. Koons(4) 49 Director 1990 224,665 2.11%
Vito J. Marseglia 75 Nominee 1985 37,122 *
Alfonse M. Mattia 60 Director 2001 22,623 *
George A. Pruitt 55 Nominee 2001 1,284 *
Anthony Russo, III 59 Nominee 1985 16,620 *
Edward H. Salmon 59 Nominee 1997 3,967 *
John D. Wallace 68 Director 2001 1,356 *
Timothy J. Wilmott 43 Nominee 2001 760 *
CERTAIN EXECUTIVE OFFICERS OF THE COMPANY
Dan A. Chila 53 Executive Vice President 2000 16,588(8) *
and CFO
Bart A. Speziali 51 Executive Vice President 1992 52,236(9) *
of the Bank
John P. Neary 60 Executive Vice President 2001 3,825(10) *
of the Bank
A. Bruce Dansbury 48 Executive Vice President 2001 2,677(11) *
of the Bank
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* Less than 1%.
(1) At December 31, 2001.
(2) For current directors, refers to the year such individual became a director
of the Company. For nominees, refers to the year such individual became a
director of the Bank. For officers, refers to the year such individual
joined the Company or the Bank.
(3) Includes shares held directly by the individual as well as by such
individual's spouse, shares held in trust and in other forms of indirect
ownership over which shares the individual effectively exercises sole
voting and investment power.
(4) Ike Brown, Sidney R. Brown, Anne E. Koons and Jeffrey S. Brown are the
children of Bernard A. Brown.
(5) Includes 26,250 shares of Common Stock that may be acquired pursuant to
options that may be exercised within 60 days of the Record Date.
(6) Includes 1,135,395 shares of Common Stock that may be acquired pursuant to
options that may be exercised within 60 days of the Record Date.
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(7) Includes 172,588 shares of Common Stock that may be acquired pursuant to
options that may be exercised within 60 days of the Record Date.
(8) Includes 8,138 shares of Common Stock that may be acquired pursuant to
options that may be exercised within 60 days of the Record Date.
(9) Includes 19,773 shares of Common Stock that may be acquired pursuant to
options that may be exercised within 60 days of the Record Date.
(10) Includes 2,625 shares of Common Stock that may be acquired pursuant to
options that may be exercised within 60 days of the Record Date.
(11) Includes 2,625 shares of Common Stock that may be acquired pursuant to
options that may be exercised within 60 days of the Record Date.
Biographical Information
Directors and Executive Officers of the Company and the Bank. The
principal occupation of each director and executive officer of the Company and
the Bank is set forth below. All directors, nominees and executive officers have
held their present positions for five years unless otherwise stated.
Thomas A. Bracken joined the Company as President and Chief Executive
Officer in February 2001 and is also a director of the Company. Mr. Bracken also
serves as the President and Chief Executive Officer of the Bank and is also a
director of the Bank. Prior to joining the Company, Mr. Bracken was the
Executive Director of the Public Sector Group of First Union National Bank. He
has over 30 years of banking experience in New Jersey and extensive involvement
in civic and non-profit organizations. Mr. Bracken began his banking career in
1969 at New Jersey National Bank. In 1993, he became President and CEO of New
Jersey National Bank. When New Jersey National Bank merged with CoreStates Bank,
N.A., Mr. Bracken was named President of the New Jersey Market. In 1998,
CoreStates merged with First Union National Bank and Mr. Bracken became
Executive Vice President and head of Commercial and Government Banking for New
Jersey, New York, and Connecticut until his appointment in May 2000 to head the
Public Sector Group.
Bernard A. Brown has been the Chairman of the Board of Directors of the
Company since its inception in January 1985. Mr. Brown is also the Chairman of
the Board of Directors of the Bank. Mr. Brown is also the Chairman of the Board
of Directors and President of NFI Industries, Inc., a trucking conglomerate
headquartered in Vineland, New Jersey.
Ike Brown has been a director of the Company since March 1998. Mr.
Brown is Vice Chairman and director of NFI Industries, Inc. and is also one of
the general partners of The Four B's, a partnership which has extensive real
estate holdings in the eastern United States and which primarily engages in
investment in, and the consequent development of, commercial real estate,
leasing and/or sale. Mr. Brown is currently an officer and director of several
other corporations and partnerships in the transportation, equipment leasing,
insurance, warehousing and real estate industries.
Jeffrey S. Brown has been a director of the Company since April 1999.
He is an officer and director of NFI Industries, Inc. and is also one of the
general partners of The Four B's. Mr. Brown is currently an officer and director
of several other corporations and partnerships in the transportation, equipment
leasing, insurance, warehousing and real estate industries.
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Sidney R. Brown is Vice Chairman of the Board of Directors of the
Company and had served as a director, treasurer and secretary since 1990. Mr.
Brown is the chief executive officer of NFI, Inc., its subsidiaries and
affiliates. NFI has a national scope servicing its customers' transportation,
leasing, distribution, warehousing, third party logistics and contract
manufacturing needs. Mr. Brown is a general partner of various real estate
companies with extensive holdings with emphasis in development and management of
commercial and industrial real estate.
Peter Galetto, Jr. has been a director of the Company since April 1990.
He is also a director of the Bank. Mr. Galetto also served as the Secretary of
the Company from April 1990 to March 1997. Mr. Galetto is the President of
Stanker & Galetto, Inc., an industrial building contractor located in Vineland,
New Jersey. He is the Secretary/Treasurer of Tri Mark Building Contractors, Inc.
Mr. Galetto is also an officer and director of several other corporations and
organizations.
Linwood C. Gerber has been nominated to serve as a director of the
Company. Mr. Gerber is also a director of the Bank and was one of its founding
directors in 1985. He is President of L & L Redi-Mix, Inc., a concrete and
construction supply business which he started in 1969. Mr. Gerber is also
president of several other companies involved in real estate holdings, equipment
rental and development. He is also the managing partner in Paxxon Healthcare
Services.
Douglas J. Heun has been nominated to serve as a director of the
Company. He is also a director of the Bank. Mr. Heun is a Certified Public
Accountant and a founding partner of Tracey Heun Brennan & Co., an accounting
and consulting firm in Southern New Jersey. He is licensed by the AICPA as an
accredited business valuator, and is a licensed Certified Financial Planner and
Personal Financial Specialist. In addition to his membership in the AICPA, he is
also a member of the New Jersey Society of CPAs. He is President of the Stone
Harbor Lions Home for the Blind, Vice President of the Helen L. Diller Vacation
Home for Blind Children, Member of the Board of Trustees for the Richard
Stockton College of New Jersey Foundation, The Stainton Society and is the
Treasurer of the Friends of Cape May Jazz, Inc.
Anne E. Koons has been a director of the Company since April 1990. Ms.
Koons is a real estate agent with Prudential Fox & Roach.
Vito J. Marseglia has been nominated to serve as a director of the
Company. Mr. Marseglia is also a director of the Bank and was one of its
founding directors in 1985. He is also owner and president of Bristol Tank &
Welding Co., Inc. since its inception in 1949.
Alfonse M. Mattia has been a director of the Company since May 2001.
Mr. Mattia is a Certified Public Accountant and a founding partner of Amper,
Politziner & Mattia, a regional accounting and consulting firm. He served as
Co-Chairman of the Rutgers University Family Business Forum and has recently
been a member of "The Group of 100," a national group formed by the American
Institute of Certified Public Accountants to protect the public interest and
position the accounting profession for the future. Mr. Mattia is also a member
of the AICPA, the New Jersey Society of CPAs and the Harvard Business School
Club of New York. He is also a board member at several other corporations.
George A. Pruitt has been nominated to serve as a director of the
Company. He is also a director of the Bank. Dr. Pruitt has been President of
Thomas Edison State College since 1982. He is a member, and Past Board Chairman,
of the Mercer County Chamber of Commerce, Trenton, NJ; a member of the National
Advisory Committee on Institutional Quality and Integrity, United States
Department of Education. He sits on the Boards of Directors of Rider University,
Lawrenceville, NJ; Structured
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Employment Economic Development Corporation, New York, NY; and the Union
Institute, Cincinnati, OH. He is a former director of the Trenton Savings Bank.
He has served in an advisory capacity to three Secretaries of Education. He is
the recipient of three honorary degrees in addition to numerous awards, honors,
and commendations. In a study of presidential leadership funded by the Exxon
Education Foundation, Dr. Pruitt was identified as one of the most effective
college presidents in the United States.
Anthony Russo, III has been nominated to serve as a director of the
Company. Mr. Russo is also a director of the Bank and was one of its founding
directors in 1985. He is a lifetime resident of Tabernacle, New Jersey, where he
is President of Russo's Fruit & Vegetable Farm & Greenhouses, Inc., a 400 acre
fruit and vegetable, greenhouse, wholesale and retail operation that has been in
business for over 60 years. Mr. Russo is President of the Tabernacle
Co-Operative Growers Association, serves on the Board of Directors of the
Trenton Farmers Market Growers Cooperative and is actively involved in New
Jersey Farm Bureau and New Jersey Department of Agriculture activities.
Edward H. Salmon has been nominated to serve as a director of the
Company. He is also a director of the Bank. For 27 years, Dr. Salmon served as a
teacher, coach and school administrator in the Millville Public School System.
In addition, he has over 25 years of public service as the Mayor of Millville,
Freeholder Director of Cumberland County, New Jersey State Legislator, and a
member of the Governor's Cabinet serving as President of the New Jersey Board of
Public Utilities. As a State Utilities Regulator, Dr. Salmon served as Vice
President of the National Association of Regulatory Utility Commissioners,
Trustee of the National Regulatory Research Institute, President of the Great
Lakes Conference (16 States) and on the Board of Directors for the National
Society of Rate of Return Analysts. Currently, Dr. Salmon serves as President of
AUS Pathways, an International Company that provides consulting services to
utilities, industry, business, governments, and education.
John D. Wallace has been a director of the Company since May 2001. Mr.
Wallace retired in 1993 as the Chairman and CEO of CoreStates New Jersey
National Bank. He is a member of the Board and Treasurer of The McCarter Theater
of Princeton University, is Vice Chairman of the Board of the Princeton Area
Community Foundation, is a Trustee of the Medical Center at Princeton Foundation
and serves on the Board of Princeton Day School and Trinity Counseling Service.
He is also a member of the First Union Regional Foundation Board and is a
Director Emeritus of the Greater Mercer County Chamber of Commerce.
Timothy J. Wilmott has been nominated to serve as a director of the
Company. He is also a director of the Bank. Mr. Wilmott is a Division President
of Harrah's Entertainment since August 1997. Prior to that, he served as
President and General Manager of Harrah's Atlantic City. Mr. Wilmott serves on
the Boards of the New Jersey State Aquarium, the Jersey Shore Council of the Boy
Scouts of America and the National Conference for Community and Justice -
Atlantic County Chapter.
Dan A. Chila joined the Company in April 2000 as the Executive Vice
President and Chief Financial Officer. He is also an executive officer of the
Bank. He has over 25 years of banking experience and is a Certified Public
Accountant. Prior to joining the Company, Mr. Chila was Senior Vice President
and Chief Financial Officer of Peoples Bancorp, Lawrenceville, New Jersey. Prior
to that, Mr. Chila was a Senior Vice President in the Financial Division of
CoreStates Financial Corporation where he held positions of CFO at several
CoreStates banking subsidiaries and Business Divisions. Mr. Chila is a member of
the American Institute of Certified Public Accountants, the New Jersey Society
of Certified Public Accountants, and the Pennsylvania Institute of Certified
Public Accountants. He is also a member of the President's Advisory Council of
LaSalle University.
-7-
A. Bruce Dansbury joined the Bank in April 2001 and serves as Chief
Credit Policy Officer and Executive Vice President of Business Banking. Mr.
Dansbury has over 25 years of banking experience in New Jersey and prior to
joining the Bank held the title of Business Bank Executive for First Union
National Bank. His professional affiliations and activities include: director
and past president, Trenton Downtown Association; member of Rutgers University
Executive Advisory Council; Rider University Business Advisory Board; director
Mercer County Chamber of Commerce and member of the Langhorne Athletic
Association.
John P. Neary joined the Bank in January 2001 and serves as Executive
Vice President of Community Banking. Prior to joining the Bank, Mr. Neary was a
principal of the Trilenium Group, a consulting firm, from 1998 to January 2001.
Prior to that, he held executive positions with CoreStates Financial Corp.,
CoreStates New Jersey National Bank and Manufacturers Hanover Financial
Services. Mr. Neary serves as chairman of the board of the Thomas Edison State
College Foundation.
Bart A. Speziali has been with the Bank since 1992 as an Executive Vice
President and Senior Lending Officer. Mr. Speziali has over 25 years of banking
experience in the New Jersey marketplace. He serves on the Board of Cumberland
Cape Atlantic YMCA and is a past president. Mr. Speziali also serves on the
Neighborhood Empowerment Council on Housing for the City of Vineland and is a
trustee for the Southern New Jersey Development Council.
Meetings and Committees of the Board of Directors
The Company is governed by a Board of Directors and various committees
of the Board which meet regularly throughout the year. During the fiscal year
ended December 31, 2001, the Board of Directors held twelve regular meetings and
three special meetings. Other then Alfonse M. Mattia, no director attended fewer
than 75% of the total meetings of the Board of Directors and meetings of
committees on which such director served during the year ended December 31,
2001.
The Nominating Committee consists of the entire Board of Directors of
the Company. The Nominating Committee met once during the year ended December
31, 2001. The Nominating Committee is not required to consider nominees
recommended by shareholders.
The Personnel Committee consists of Anne E. Koons, Jeffrey S. Brown,
Sidney R. Brown, Thomas A. Bracken and John D. Wallace. The Personnel Committee
met once during the year ended December 31, 2001.
The Audit Committee consists of Directors Galetto, Mattia and Wallace.
Mr. Galetto has been determined not to be independent in accordance with the
requirements of the Nasdaq Stock Market due to a business relationship between
the Bank and an entity of which he is an officer and part owner. The Board felt,
nonetheless, that Director Galetto would be an effective member of the committee
and that his appointment to the committee was in the best interests of the
Company and its shareholders.
The Audit Committee is responsible for recommending the appointment of
the Company's independent auditor and meeting with such auditor with respect to
the scope and review of the annual audit. Additional responsibilities of the
Audit Committee are to ensure that the Board of Directors receives objective
information regarding policies, procedures and activities of the Company with
respect to auditing, accounting, internal accounting controls, financial
reporting, regulatory matters and such other activities of the Company as may be
directed by the Board of Directors. The Audit Committee met six times during the
year ended December 31, 2001. The Board of Directors has reviewed, assessed the
adequacy of and
-8-
approved a formal written charter for the Audit Committee. The full text of the
charter of the Audit Committee appeared as an appendix to the proxy statement
for the annual meeting of shareholders held in 2001.
Principal Accounting Firm Fees
Audit Fees. The aggregate fees billed by Deloitte and Touche LLP, the
member firms of Deloitte Touche Tohmatsu, and their respective affiliates
(collectively, "Deloitte") for professional services rendered for the audit of
the Company's annual financial statements for the fiscal year ended December 31,
2001 and for the review of the financial statements included in the Company's
Quarterly Reports on Form 10-Q for that fiscal year were $110,000.
Financial Information Systems Design and Implementation Fees. There
were no fees billed by Deloitte for professional services rendered for
information technology services relating to financial information systems design
and implementation for the fiscal year ended December 31, 2001.
All Other Fees. The aggregate fees billed by Deloitte for services
rendered to the Company, other than the services described above under "Audit
Fees," for the fiscal year ended December 31, 2001 were $64,000, including audit
related services of $11,000 and non-audit related services of $53,000. Audit
related services generally include fees for consents and the audit of the
Company's 401(k) plan.
The audit committee has considered and determined that the rendering of
non-audit services is compatible with maintaining the principal accountant's
independence.
Report of the Audit Committee
For the fiscal year ended December 31, 2001, the Audit Committee (i)
reviewed and discussed the Company's audited financial statements with
management, (ii) discussed with the Company's independent auditor, Deloitte, all
matters required to be discussed under Statement on Auditing Standards No. 61,
and (iii) received from Deloitte disclosures regarding Deloitte's independence
as required by Independence Standards Board Standard No. 1 and discussed with
Deloitte its independence. Based on the foregoing review and discussions, the
Audit Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001.
Audit Committee: Peter Galetto, Jr., Alfonse M. Mattia and John D. Wallace
- --------------------------------------------------------------------------------
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
- --------------------------------------------------------------------------------
Directors' Compensation
Each member of the Board of Directors, except for the Chairman and
employee directors, received a fee of $300 for each board meeting and $100 for
each committee meeting attended for the year ended December 31, 2001. Directors
who are executive officers do not receive any fees for their services as
directors. For the year ended December 31, 2001, total directors fees for the
Company and the Bank were $41,500, all of which was paid in shares of Common
Stock.
-9-
Each director has been awarded options to purchase Common Stock in
accordance with the 2002 Stock Option Plan, subject to shareholder ratification
of such plan. See "Proposal II - Ratification of the 2002 Stock Option Plan."
Executive Compensation
Summary Compensation Table. The following table sets forth compensation
awarded to the Chief Executive Officer and certain other executive officers of
the Company for the year ended December 31, 2001.
Long Term
Compensation
Annual Compensation Awards
------------------- -------------
Securities
Name and Underlying All Other
Principal Position Year Salary Bonus Options(#)(1) Compensation
------------------ ---- ------ ----- ------------- -------------
Thomas A. Bracken(2) 2001 $309,000 $ -- 52,500 $ --
President and Chief Executive Officer
Philip W. Koebig, III(3) 2001 313,000 -- -- 1,337 (4)
(former President and Chief Executive 2000 315,000 -- -- 9,230
Officer) 1999 315,000 110,000 55,184 8,151
Bernard A. Brown 2001 293,000 -- -- --
Chairman 2000 245,125 -- -- --
1999 162,500 55,000 311,761 --
Dan A. Chila(5) 2001 190,000 10,000 -- --
Executive Vice President and CFO 2000 106,731 -- 10,763 --
Bart A. Speziali 2001 190,000 15,000 -- --
Executive Vice President of the Bank 2000 145,000 7,000 8,006 --
1999 134,000 24,000 2,894 --
James S. Killough(6) 2001 181,000 5,000 -- --
Executive Vice President of the Bank 2000 165,000 7,000 5,906 --
1999 155,000 31,500 2,894 --
John P. Neary(7) 2001 180,000 -- 5,250 --
Executive Vice President of the Bank
- -----------------------------------------
(1) Prior awards adjusted for stock dividends.
(2) Mr. Bracken joined the Company in February 2001.
(3) Mr. Koebig is no longer serving as an officer or employee of the Company or
any subsidiary. The Company entered into a Non-Competition and Severance
Agreement with its former president and chief executive officer, Philip W.
Koebig, III. Under the terms of the agreement, Mr. Koebig received total
compensation of $236,250 during the term of the agreement, which ended
November 30, 2001.
(4) Consists of life and disability insurance premiums.
(5) Mr. Chila joined the Company in April 2000.
(6) Mr. Killough is no longer serving as an officer or employee of the Bank.
(7) Mr. Neary joined the Bank in January 2001.
Stock Option Plans. The Company has adopted the 1995 Stock Option Plan
and the 1997 Stock Option Plan (the "Option Plans"). Officers, directors and
employees are eligible to receive, at no cost to them, options under the Option
Plans. Options granted under the Option Plans may be either incentive stock
options (options that afford favorable tax treatment to recipients upon
compliance with certain
-10-
restrictions pursuant to Section 422 of the Internal Revenue Code and that do
not normally result in tax deductions to the Company) or options that do not so
qualify. The option price may not be less than 100% of the fair market value of
the shares on the date of the grant. Option shares may be paid for in cash,
shares of the common stock, or a combination of both. Options are exercisable
for a period of ten years from the date of grant.
The following tables set forth additional information concerning
options granted under the Option Plans.
Option Grants in 2001 Fiscal Year Potential Realizable
--------------------------------- Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
------------------------------------------------------------------ ----------------------
Percent of Total
Number of Options Granted
Options to Employees in Exercise Price Expiration
Name Granted Fiscal Year ($/Share) Date 5% ($) 10% ($)
---- ------- ----------- --------- ---- ------ -------
Thomas A. Bracken 12,352 12.3 8.10 2/27/11 62,922 159,456
40,148 40.0 8.10 3/9/11 204,516 518,283
John P. Neary 5,250 5.2 7.62 1/8/11 25,159 63,758
Aggregated Option Exercises in 2001 Fiscal Year and Fiscal Year End Option Values
---------------------------------------------------------------------------------
Value of
Number of Options In-the-money Options
Shares Acquired Value at Fiscal Year-End (#) at Fiscal Year-End ($)
Name on Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable (1)
---- --------------- ------------ ------------------------- -----------------------------
Thomas A. Bracken -- -- -- / 52,500 -- /113,400
Philip W. Koebig, III 110,140 633,866 159,140 / -- 431,789 / --
Bernard A. Brown 215,727 1,665,877 1,135,395 / -- 2,302,296 / --
Dan A. Chila -- -- 5,382 / 5,382 18,968 / 18,968
Bart A. Speziali 18,093 115,795 18,395 / 4,003 51,510 / 13,578
James S. Killough -- -- 40,034 / 1,378 105,835 / 6,158
John P. Neary -- -- -- / 5,250 -- / 13,860
- -------------------
(1) Based upon the difference between the option exercise price and the market
price of stock of $10.26 per share as of December 31, 2001.
Change in Control Severance Agreements. The Company and the Bank have
entered into change in control severance agreements with each of the executive
officers named above in the compensation table (the "other named executive
officers"). The agreements with Bernard Brown, Chairman of Board of Directors of
the Company and the Bank, are for three-year terms. If Mr. Brown is terminated
without just
-11-
cause within two years following a "change in control" of the Company or the
Bank, as defined in the agreements, he will be entitled to receive a payment
equal to three times his aggregate taxable compensation for the most recently
completed calendar year. If such payment were to be made under the agreements as
of December 31, 2001, such payment would equal approximately $1.6 million. The
agreements may be renewed annually by the Board of Directors of the Company and
the Bank upon a determination of satisfactory performance within the boards'
sole discretion.
The Company and the Bank have also entered into change in control
agreements with Thomas Bracken, the President and Chief Executive Officer of the
Company and the Bank. The agreements with Mr. Bracken provide for a payment
equal to three times his aggregate taxable compensation for the most recently
completed calendar year if he is terminated without just cause within eighteen
months following a change in control. If such payment were to be made under the
agreements as of December 31, 2001, such payment would equal approximately $1.1
million. Mr. Bracken's agreements have a term of twenty- four months and may be
renewed annually by the Board of Directors of the Company and the Bank.
The Company and the Bank have also entered into change in control
agreements with the other named executive officers, excluding Messrs. Koebig and
Killough. The change in control severance agreements with the other named
executive officers are for twenty-four month terms. If the officer is terminated
without just cause within eighteen months following a change in control, the
officer would be entitled to a payment equal to three times the officer's
aggregate taxable compensation for the most recently completed calendar year. If
payments were to be made under the agreements as of December 31, 2001, the
aggregate amount of such payments would equal approximately $1.5 million. No
payments are due under the agreements if the officer is terminated for cause
following a change in control of the Company or the Bank.
Each agreement provides that such payments to be made will not exceed
the amounts that are deductible by the Company or the Bank for federal tax
purposes under Section 280G of the Internal Revenue Code.
Personnel Committee Report on Executive Compensation
The Personnel Committee (the "Committee") has furnished the following
report on executive compensation:
Under the supervision of the Board of Directors, the Company has
developed and implemented compensation policies, plans and programs which seek
to enhance the profitability of the Company, and thus shareholder value, by
aligning closely the financial interests of the Company's employees, including
its Chief Executive Officer ("CEO"), Chairman and other senior management, with
the interests of its shareholders. With regard to compensation actions affecting
the CEO or executive officers, all of the non- employee members of the Board of
Directors acted as the approving body.
The executive compensation program of the Company is designed to:
o Support a pay-for-performance policy that differentiates
compensation based on corporate and individual performance;
o Motivate employees to assume increased responsibility and reward
them for their achievement;
-12-
o Provide compensation opportunities that are comparable to those
offered by other leading companies, allowing the Company to
compete for and retain top quality, dedicated executives who are
critical to the Company's long-term success; and
o Align the interests of executives with the long-term interests of
shareholders through award opportunities that can result in
ownership of Common Stock.
At present, the executive compensation program is comprised of salary,
annual cash incentive opportunities, long-term incentive opportunities in the
form of stock options, and miscellaneous benefits typically offered to
executives in comparable corporations. The Committee considers the total
compensation (earned or potentially available) in establishing each element of
compensation so that total compensation paid is competitive with the market
place, based on an independent consultant's survey of salary competitiveness of
other financial institutions. The Committee is advised periodically by
independent compensation consultants concerning salary competitiveness.
As an executive's level of responsibility increases, a greater portion
of his or her potential total compensation opportunity is based on Company
performance incentives rather than on salary. Reliance on Company performance
causes greater variability in the individual's total compensation from year to
year. By varying annual and long-term compensation and basing both on corporate
performance, the Company believes executive officers are encouraged to continue
focusing on building profitability and shareholder value. The mix of annual and
long-term compensation was set subjectively. In determining the mix, the
Committee balanced rewards for past corporate performance with incentives for
future corporate performance improvement.
Base Salary. Annual base salaries for all executive officers are
generally set at competitive levels. Effective January 1, 2001, the Board of
Directors, acting on the recommendation of the Committee, increased the base
salary paid to executive officers. The increase reflected consideration of
competitive data provided by an independent consulting firm, the Committee's and
the Board's assessment of the executive officer's performance over the previous
year and recognition of the improvement in performance by the Company during
2000 as compared with the Company's goals included in its business plan.
Long-Term Incentive Compensation. The Company relies to a large degree
on annual and longer term incentive compensation to attract and retain corporate
officers and other employees and to motivate them to perform to the full extent
of their abilities. The long-term incentive compensation consists of stock
option awards. The Committee believes that issuing stock options to executives
benefits the Company's shareholders by encouraging and enabling executives to
own stock of the Company, thus aligning executive pay with shareholder
interests.
2001 Compensation for the CEO. Mr. Bracken has served as President and
Chief Executive Officer since February 2001. His salary for 2001 of $309,000
reflected the Board's assessment of compensation levels for the industry. In
addition, during 2001, Mr. Bracken was awarded stock options to purchase 52,500
shares of Common Stock with an exercise price of $8.10 per share.
Personnel Committee: Anne E. Koons, Jeffrey S. Brown, Sidney R. Brown,
Thomas A. Bracken and John D. Wallace.
-13-
Stock Performance Graph
Set forth below is a stock performance graph comparing the cumulative
total shareholder return on the Common Stock with (a) the cumulative total
shareholder return on stocks included in the Nasdaq Stock Market index and (b)
the cumulative total shareholder return on stocks included in the Nasdaq Bank
index, as prepared for Nasdaq by the Center for Research in Security Prices
("CRSP") at the University of Chicago. All three investment comparisons assume
the investment of $100 as of December 31, 1996. The cumulative total returns for
the Nasdaq Stock Market index and the Nasdaq Bank index are computed assuming
the reinvestment of dividends.
[GRAPHIC OMITTED]
===========================================================================================
12/31/96 12/31/97 12/31/98 12/31/99 12/29/00 12/31/01
- -------------------------------------------------------------------------------------------
CRSP Nasdaq U.S. Index $100 $122 $173 $321 $193 $153
- -------------------------------------------------------------------------------------------
CRSP Nasdaq Bank Index 100 167 166 160 182 197
- -------------------------------------------------------------------------------------------
Sun Bancorp, Inc. 100 164 218 123 93 140
===========================================================================================
- -------------------
(1) The cumulative total return for Sun Bancorp, Inc. reflects 5% stock
dividends paid in October 1996, June 1997, May 1998, June 1999, June
2000 and June 2001 and 50% stock dividends paid in September 1997 and
March 1998 and has been calculated based on the historical closing
prices of $22.50 on August 29, 1996 (the first day of trading on the
Nasdaq Stock Market), $21.00 on December 31, 1996, $21.83 on December
31, 1997, $18.50 on December 31, 1998, $9.94 on December 31, 1999,
$7.125 on December 31, 2000 and $10.26 on December 31, 2001.
There can be no assurance that the Company's future stock performance
will be the same or similar to the historical stock performance shown in the
graph above. The Company neither makes nor endorses any predictions as to stock
performance.
The information set forth above under the subheadings "Personnel
Committee Report on Executive Compensation" and "Stock Performance Graph" (i)
shall not be deemed to be "soliciting material" or to be "filed" with the
Commission or subject to Regulation 14A or the liabilities of Section 18 of the
Exchange Act, and (ii) notwithstanding anything to the contrary that may be
contained in any filing by the Company under such Act or the Securities Act,
shall not be deemed to be incorporated by reference in any such filing.
-14-
- --------------------------------------------------------------------------------
PROPOSAL II - RATIFICATION OF THE 2002 STOCK OPTION PLAN
- --------------------------------------------------------------------------------
General
The Company's Board of Directors has adopted the 2002 Stock Option Plan
effective January 24, 2002 (the "2002 Plan Effective Date"). The 2002 Option
Plan is subject to ratification by the Company's shareholders. Pursuant to the
2002 Option Plan, up to 750,000 shares of Common Stock (equal to 7.05% of total
shares of Common Stock outstanding at April 1, 2002), are to be reserved under
the Company's authorized but unissued shares for issuance by the Company upon
exercise of stock options to be granted to officers, directors, employees, and
other persons from time to time. The purpose of the 2002 Option Plan is to
attract and retain qualified personnel for positions of substantial
responsibility and to provide additional incentive to certain officers,
directors, employees and other persons to promote the success of the business of
the Company and the Bank. The 2002 Option Plan provides for a term of ten years,
after which time no awards may be made. The following summary of the material
features of the 2002 Option Plan is qualified in its entirety by reference to
the complete provisions of the 2002 Option Plan which is attached hereto as
Appendix A.
The 2002 Option Plan will be administered by the Board of Directors or
a committee of not less than two non-employee directors appointed by the
Company's Board of Directors and serving at the pleasure of the Board (the "2002
Option Committee"). Members of the 2002 Option Committee shall be deemed "Non-
Employee Directors" within the meaning of Rule 16b-3 pursuant to the 1934 Act.
The 2002 Option Committee may select the directors, officers and employees to
whom options are to be granted and the number of options to be granted based
upon several factors including prior and anticipated future job duties and
responsibilities, job performance and the Company's financial performance. A
majority of the members of the 2002 Option Committee shall constitute a quorum
and the action of a majority of the members present at any meeting at which a
quorum is present shall be deemed the action of the 2002 Option Committee.
Officers, directors, employees and other persons who are designated by
the 2002 Option Committee will be eligible to receive, at no cost to them,
options under the 2002 Option Plan (the "2002 Optionees"). Each option granted
pursuant to the 2002 Option Plan shall be evidenced by an instrument in such
form as the 2002 Option Committee shall from time to time approve. It is
anticipated that options granted under the 2002 Option Plan will constitute
either Incentive Stock Options or Non-Incentive Stock Options. Option shares may
be paid for in cash, shares of Common Stock, or a combination of both. The
Company will receive no monetary consideration for the granting of stock options
under the 2002 Option Plan. Further, the Company will receive no consideration
other than the option exercise price per share for Common Stock issued to 2002
Optionees upon the exercise of those options.
Shares issuable under the 2002 Option Plan may be from authorized but
unissued shares, treasury shares or shares purchased in the open market. An
option which expires, becomes unexercisable, or is forfeited for any reason
prior to its exercise will again be available for issuance under the 2002 Option
Plan. The 2002 Option Plan shall continue in effect for a term of ten years from
the 2002 Plan Effective Date.
Stock Options
The 2002 Option Committee may grant either Incentive Stock Options or
Non-Incentive Stock Options. In general, if a 2002 Optionee ceases to serve as
an employee of the Company for any reason other than disability or death, an
exercisable Incentive Stock Option may continue to be exercisable for three
months but in no event after the expiration date of the option, except as may
otherwise be determined by the
-15-
2002 Option Committee at the time of the award. In the event of the disability
of a 2002 Optionee during employment, an Incentive Stock Option will be
immediately exercisable and will continue to be exercisable for one year
thereafter. In the event of death of a 2002 Optionee during employment, an
Incentive Stock Option will be immediately exercisable and will continue to be
exercisable for the remaining term of such Incentive Stock Option. The terms and
conditions of Non-Incentive Stock Options relating to the effect of a 2002
Optionee's termination of employment or service, disability, or death shall be
such terms as the 2002 Option Committee, in its sole discretion, shall determine
at the time of termination of service, disability or death, unless specifically
determined at the time of grant of such options.
The exercise price for the purchase of Common Stock subject to an
option may not be less than one hundred percent (100%) of the Fair Market Value
of the Common Stock covered by the option on the date of grant of such option.
For purposes of determining the Fair Market Value of the Common Stock, if the
Common Stock is traded otherwise than on a national securities exchange at the
time of the granting of an option, then the exercise price per share of the
option shall be not less than the last reported sale price of such Common Stock
on such date, or if there are no sales on such date, then the mean between the
last bid and ask price on such date or, if there is no bid and ask price on said
date, then on the immediately prior business day on which there was a bid and
ask price. If no such bid and ask price is available, then the exercise price
per share shall be determined in good faith by the 2002 Option Committee. If the
Common Stock is listed on a national securities exchange at the time of the
granting of an the option, then the exercise price per share of the option shall
be not less than the last reported sale price of such Common Stock on such date,
or if there are no sales on such date, then the average of the highest and
lowest selling price of the Common Stock on such exchange on such date or, if
there were no sales on said date, then the exercise price shall be not less than
the mean between the last bid and ask price on such date. If an officer or
employee owns Common Stock representing more than ten percent of the outstanding
Common Stock at the time an Incentive Stock Option is granted, then the exercise
price shall be not less than one hundred and ten percent (110%) of the Fair
Market Value of the Common Stock at the time the Incentive Stock Option is
granted. No more than $100,000 of Incentive Stock Options can become exercisable
for the first time in any calendar year for any one person. The 2002 Option
Committee may impose additional conditions upon the right of a 2002 Optionee to
exercise any option granted hereunder which are not inconsistent with the terms
of the 2002 Option Plan or the requirements for qualification as an Incentive
Stock Option, if such option is intended to qualify as an Incentive Stock
Option.
No shares of Common Stock shall be issued upon the exercise of an
option until full payment has been received by the Company, and no 2002 Optionee
shall have any of the rights of a shareholder of the Company until shares of
Common Stock are issued to such 2002 Optionee. Upon the exercise of an option by
a 2002 Optionee (or the 2002 Optionee's personal representative), the 2002
Option Committee, in its sole and absolute discretion, may make a cash payment
to the 2002 Optionee, in whole or in part, in lieu of the delivery of shares of
Common Stock. Such cash payment to be paid in lieu of delivery of Common Stock
shall be equal to the difference between the Fair Market Value of the Common
Stock on the date of the option exercise and the exercise price per share of the
option. Such cash payment shall be in exchange for the cancellation of such
option. Such cash payment shall not be made in the event that such transaction
would result in liability to the 2002 Optionee and the Company under Section
16(b) of the 1934 Act or any related regulations promulgated thereunder.
The 2002 Option Plan provides that the Board of Directors of the
Company may authorize the 2002 Option Committee to direct the execution of an
instrument providing for the modification, extension or renewal of any
outstanding option, provided that no such modification, extension or renewal
shall confer on the 2002 Optionee any right or benefit which could not be
conferred on the 2002 Optionee by the grant of
-16-
a new option at such time, and shall not materially decrease the 2002 Optionee's
benefits under the option without the 2002 Optionee's consent, except as
otherwise provided under the 2002 Option Plan.
In addition, the 2002 Option Plan authorizes the grant of a "reload"
feature related to the grant of options. The award of a reload option allows the
optionee to receive the grant of an additional stock option in the event that
such optionee exercises all or part of an option (an "original option") by
surrendering already owned shares of Common Stock in full or partial payment of
the option price under such original option. The exercise of an additional
option issued in accordance with the "reload" feature will reduce the total
number of shares eligible for award under the 2002 Option Plan.
Transferability
An incentive stock option shall not be assignable or transferable
otherwise than by will or by the laws of descent and distribution. A
nonqualified stock option, on the other hand, may, with the prior written
consent of the Option Committee, be assigned or transferred during the
Optionee's lifetime for valid estate planning purposes.
Awards Under the 2002 Option Plan
The Board or the 2002 Option Committee shall from time to time
determine the officers, directors, employees and other persons who shall be
granted options under the 2002 Option Plan, the number of options to be granted
to any individual, and whether the options granted will be Incentive Stock
Options and/or Non-Incentive Stock Options. In selecting 2002 Optionees and in
determining the number of options to be granted, the Board or the 2002 Option
Committee may consider the nature of the services rendered by each such
individual, each individual's current and potential contribution to the Company
and such other factors as may be deemed relevant. The 2002 Optionees may, if
otherwise eligible, be granted additional options. In no event shall options be
granted under the 2002 Option Plan to any individual exceeding 50% of the total
number of available shares of Common Stock under the 2002 Option Plan.
The table below presents information related to stock option awards
granted as of January 24, 2002, subject to shareholder ratification of the 2002
Option Plan. These option awards are from the plan reserves under the 1997 Stock
Option Plan and the 2002 Stock Option Plan.
NEW PLAN BENEFIT
2002 OPTION PLAN
----------------
Number of Options
Name and Position Dollar Value(1) to be Granted
----------------- --------------- -------------
Thomas A. Bracken, President,
CEO and Director(2)......................... $250,000 200,000(3)
Bernard A. Brown, Chairman of the Board(2).... 218,750 175,000(3)
Ike Brown, Director(2)........................ 3,750 3,000(4)
Jeffrey S. Brown, Director(2)................. 3,750 3,000(4)
Sidney R. Brown, Vice Chairman, Treasurer
and Secretary(2).......................... 168,750 135,000(3)
Peter Galetto, Jr., Director(2)............... 25,000 20,000(4)
Linwood C. Gerber, Director(2)................ 3,750 3,000(4)
Douglas J. Heun, Director(2).................. 3,750 3,000(4)
Anne E. Koons, Director(2).................... 3,750 3,000(4)
-17-
Number of Options
Name and Position Dollar Value(1) to be Granted
----------------- --------------- -------------
Vito J. Marseglia, Director(2).................... $ 3,750 3,000(4)
Alfonse M. Mattia, Director(2).................... 3,750 3,000(4)
George A. Pruitt, Director(2)..................... 3,750 3,000(4)
Anthony Russo, III, Director(2)................... 3,750 3,000(4)
Edward H. Salmon, Director(2)..................... 3,750 3,000(4)
John D. Wallace, Director(2)...................... 3,750 3,000(4)
Timothy J. Wilmott, Director(2)................... 3,750 3,000(4)
Dan A. Chila, Executive Vice President
and CFO....................................... 125,000 100,000(3)
Bart A. Speziali, Executive Vice President........ 125,000 100,000(3)
John P. Neary, Executive Vice President........... 125,000 100,000(3)
A. Bruce Dansbury, Executive Vice President....... 75,000 60,000(3)
Executive Officer Group (5 persons)............... 700,000 560,000(3)
Non-Executive Director Group (15 persons)......... 457,500 366,000(4)
Non-Executive Officer Group (2 persons)........... 12,500 10,000(3)
- -----------------
(1) The exercise price of such options is $11.95, the last reported sales
price of the Common Stock on January 23, 2002. The dollar value of the
options will equal the last reported sales price of the Common Stock on
the date the option is exercised less the exercise price. Accordingly,
the exact dollar value of the options is not determinable until
exercise. On the Record Date, the last reported sales price of the
Common Stock on the Nasdaq National Market was $13.20 per share. The
table presented above shows the dollar value of the options as though
exercised on the Record Date.
(2) Nominee for election as director.
(3) Options awarded to employees will be first exercisable at the rate of
20% as of six months from January 24, 2002, the date of the grant, and
20% on each of the next four anniversaries of the first vesting event
thereafter during periods of continued service as an employee, director
or director emeritus. Such awards shall be 100% exercisable in the
event of death, disability, or upon a Change in Control of the Company
or the Bank. Options awarded to employees shall continue to be
exercisable during continued service as an employee, director or
director emeritus.
(4) Options awarded to each non-employee director are first exercisable as
of January 24, 2002, the date of the grant, subject to shareholder
ratification. Options awarded to Director Galetto will be first
exercisable at the rate of 20% as of six months from January 24, 2002,
and 20% on each of the next four anniversaries of the first vesting
event thereafter during periods of continued service as a director or
director emeritus and shall remain exercisable for ten years without
regard to continued service as a director or director emeritus. Upon
disability, death, or a Change in Control of the Company or the Bank,
such awards shall be 100% exercisable.
Effect of Mergers, Change of Control and Other Adjustments
Subject to any required action by the shareholders of the Company,
within the sole discretion of the 2002 Option Committee, the aggregate number of
shares of Common Stock for which options may be granted hereunder or the number
of shares of Common Stock represented by each outstanding option will be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend or any other increase
or decrease in the number of shares of Common Stock effected without the receipt
or payment of consideration by the Company. Subject to any required action by
the shareholders of the Company, in the event of any Change in Control,
recapitalization, merger, consolidation, exchange of shares, spin-off,
reorganization, tender offer, partial or complete liquidation or other
extraordinary corporate
-18-
action or event, the 2002 Option Committee, in its sole discretion, shall have
the power, prior to or subsequent to such action or events, to (i) appropriately
adjust the number of shares of Common Stock subject to options, the exercise
price per share of such option, and the consideration to be given or received by
the Company upon the exercise of any outstanding options; (ii) cancel any or all
previously granted options, provided that appropriate consideration is paid to
the 2002 Optionee in connection therewith; and/or (iii) make such other
adjustments in connection with the 2002 Option Plan as the 2002 Option
Committee, in its sole discretion, deems necessary, desirable, appropriate or
advisable. However, no action may be taken by the 2002 Option Committee which
would cause Incentive Stock Options granted pursuant to the 2002 Option Plan to
fail to meet the requirements of Section 422 of the Code without the consent of
the 2002 Optionee.
The 2002 Option Committee will at all times have the power to
accelerate the exercise date of all options granted under the 2002 Option Plan.
In the case of a Change in Control of the Company, all outstanding options shall
become immediately exercisable. A Change in Control is defined to include (i)
the sale of all, or substantially all, of the assets of the Company; (ii) the
merger or recapitalization of the Company whereby the Company is not the
surviving entity; (iii) a change in control of the Company as otherwise defined
or determined by the Federal Reserve Board or its regulations; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of Section 13(d) of the 1934 Act and rules and regulations promulgated
thereunder) of 25% or more of the outstanding voting securities of the Company
by any person, trust, entity, or group.
In the event of a Change in Control, the 2002 Option Committee and the
Board of Directors will take one or more of the following actions to be
effective as of the date of such Change in Control: (i) provide that such
options shall be assumed, or equivalent options shall be substituted,
("Substitute Options") by the acquiring or succeeding Company (or an affiliate
thereof), provided that: (A) any such Substitute options exchanged for Incentive
Stock Options shall meet the requirements of Section 424(a) of the Code, and (B)
the shares of stock issuable upon the exercise of such Substitute Options shall
constitute securities registered in accordance with the Securities Act of 1933,
as amended ("1933 Act") or such securities shall be exempt from such
registration in accordance with Sections 3(a)(2) or 3(a)(5) of the 1933 Act
(collectively, "Registered Securities"), or in the alternative, if the
securities issuable upon the exercise of such Substitute Options shall not
constitute Registered Securities, then the 2002 Optionee will receive upon
consummation of the Change in Control a cash payment for each option surrendered
equal to the difference between (1) the Fair Market Value of the consideration
to be received for each share of Common Stock in the Change in Control times the
number of shares of Common Stock subject to such surrendered options, and (2)
the aggregate exercise price of all such surrendered options, or (ii) in the
event of a transaction under the terms of which the holders of the Common Stock
of the Company will receive upon consummation thereof a cash payment (the
"Merger Price") for each share of Common Stock exchanged in the Change in
Control transaction, to make or to provide for a cash payment to the 2002
Optionees equal to the difference between (A) the Merger Price times the number
of shares of Common Stock subject to such options held by each 2002 Optionee (to
the extent then exercisable at prices not in excess of the Merger Price) and (B)
the aggregate exercise price of all such surrendered options in exchange for
such surrendered options.
The power of the 2002 Option Committee to accelerate the exercise of
options and the immediate exercisability of options in the case of a Change in
Control of the Company could have an anti-takeover effect by making it more
costly for a potential acquiror to obtain control of the Company due to the
higher number of shares outstanding following such exercise of options. The
power of the 2002 Option Committee to make adjustments in connection with the
2002 Option Plan, including adjusting the number of shares subject to options
and canceling options, prior to or after the occurrence of an extraordinary
corporate action, allows the 2002 Option Committee to adapt the 2002 Option Plan
to operate in changed circumstances, to
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adjust the 2002 Option Plan to fit a smaller or larger institution, and to
permit the issuance of options to new management following such extraordinary
corporate action. However, this power of the 2002 Option Committee also has an
anti-takeover effect, by allowing the 2002 Option Committee to adjust the 2002
Option Plan in a manner to allow the present management of the Company to
exercise more options and hold more shares of the Company's Common Stock, and to
possibly decrease the number of Options available to new management of the
Company.
Although the 2002 Option Plan may have an anti-takeover effect, the
Company's Board of Directors did not adopt the 2002 Option Plan specifically for
anti-takeover purposes. The 2002 Option Plan could render it more difficult to
obtain support for shareholder proposals opposed by the Company's Board and
management in that recipients of options could choose to exercise such options
and thereby increase the number of shares for which they hold voting power.
Also, the exercise of such options could make it easier for the Board and
management to block the approval of certain transactions. In addition, the
exercise of such options could increase the cost of an acquisition by a
potential acquiror.
Amendment and Termination of the 2002 Option Plan
The Board of Directors may alter, suspend or discontinue the 2002
Option Plan, except that no action of the Board shall increase the maximum
number of shares of Common Stock issuable under the 2002 Option Plan, materially
increase the benefits accruing to 2002 Optionees under the 2002 Option Plan or
materially modify the requirements for eligibility for participation in the 2002
Option Plan unless such action of the Board shall be subject to approval or
ratification by the shareholders of the Company.
Possible Dilutive Effects of the 2002 Option Plan
The Common Stock to be issued upon the exercise of options awarded
under the 2002 Option Plan may either be authorized but unissued shares of
Common Stock or shares purchased in the open market. Because the shareholders of
the Company do not have preemptive rights, to the extent that the Company funds
the 2002 Option Plan, in whole or in part, with authorized but unissued shares,
the interests of current shareholders may be diluted. If upon the exercise of
all of the options, the Company delivers newly issued shares of Common Stock
(i.e., 750,000 shares of Common Stock), then the dilutive effect to current
shareholders would be approximately 6.58%. The Company can avoid dilution
resulting from awards under the 2002 Option Plan by delivering shares
repurchased in the open market upon the exercise of options.
Federal Income Tax Consequences
Under present federal tax laws, awards under the 2002 Option Plan will
have the following consequences:
1. The grant of an option will not by itself result in the recognition of
taxable income to a 2002 Optionee nor entitle the Company to a tax
deduction at the time of such grant.
2. The exercise of an option which is an "Incentive Stock Option" within
the meaning of Section 422 of the Code generally will not, by itself,
result in the recognition of taxable income to a 2002 Optionee nor
entitle the Company to a deduction at the time of such exercise.
However, the difference between the option exercise price and the Fair
Market Value of the Common Stock on the date of option exercise is an
item of tax preference which may, in certain situations, trigger the
alternative minimum tax for a 2002 Optionee. A 2002 Optionee will
recognize capital gain or loss upon resale of the shares of Common
Stock received pursuant to the exercise of Incentive Stock
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Options, provided that such shares are held for at least one year after
transfer of the shares or two years after the grant of the option,
whichever is later. Generally, if the shares are not held for that
period, the 2002 Optionee will recognize ordinary income upon
disposition in an amount equal to the difference between the option
exercise price and the Fair Market Value of the Common Stock on the
date of exercise, or, if less, the sales proceeds of the shares
acquired pursuant to the option.
3. The exercise of a Non-Incentive Stock Option will result in the
recognition of ordinary income by the 2002 Optionee on the date of
exercise in an amount equal to the difference between the exercise
price and the Fair Market Value of the Common Stock acquired pursuant
to the option.
4. The Company will be allowed a tax deduction for federal tax purposes
equal to the amount of ordinary income recognized by a 2002 Optionee at
the time the optionee recognizes such ordinary income.
5. In accordance with Section 162(m) of the Code, the Company's tax
deductions for compensation paid to the most highly paid executives
named in the Company's Proxy Statement may be limited to no more than
$1 million per year, excluding certain "performance-based"
compensation. The Company intends for the award of options under the
2002 Option Plan to comply with the requirement for an exception to
Section 162(m) of the Code applicable to stock option plans so that the
amount of the Company's deduction for compensation related to the
exercise of options would not be limited by Section 162(m) of the Code.
Accounting Treatment
The Company uses the "intrinsic value based method" as prescribed by
APB Opinion 25. Accordingly, neither the grant nor the exercise of an option
under the 2002 Option Plan currently requires any charge against earnings under
generally accepted accounting principles. Common Stock issuable pursuant to
outstanding options which are exercisable under the 2002 Option Plan will be
considered outstanding for purposes of calculating earnings per share on a
diluted basis.
Shareholder Ratification
Shareholder ratification of the 2002 Option Plan is being sought to
qualify the 2002 Option Plan for the granting of Incentive Stock Options in
accordance with the Code, to enable 2002 Optionees to qualify for certain exempt
transactions related to the short-swing profit recapture provisions of Section
16(b) of the 1934 Act, to meet the requirements under the rules of the Nasdaq
National Market for continued listing of the Company's Common Stock, and to meet
the requirements for the tax-deductibility of certain compensation items under
Section 162(m) of the Code. An affirmative vote of the holders of a majority of
the total votes cast at the Meeting in person or by proxy is required to
constitute shareholder ratification of the 2002 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
2002 OPTION PLAN.
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ADDITIONAL INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------------------------------------------------------
Certain Relationships and Related Transactions
Bernard A. Brown, the Chairman of the Board of Directors of the Company
and the Bank, is an owner of Vineland Construction Company, 226 Landis Avenue
Associates, LLC and Racetrack Supermarket LLC (the "Related Companies"). The
Company and the Bank lease office space from the Related Companies. The Company
believes that the transactions with the Related Companies are on terms
substantially the same, or at least as favorable to the Bank, as those that
would be provided by a non-affiliate. The Company paid approximately $1.0
million to the Related Companies during the year ended December 31, 2001. The
Bank is also party to two lease agreements for office buildings with two
partnerships comprised of directors and shareholders of the Company and the
Bank. The Company paid approximately $135,000 in annual rent under these lease
agreements during the year ended December 31, 2001.
Peter Galetto, Jr., a director of the Company, is an officer and part
owner of Tri Mark Building Contractors, Inc., to which the Bank paid
approximately $111,000 during the year ended December 31, 2001 for construction
services.
Linwood C. Gerber, Vito J. Marseglia and Anthony Russo, III, all
nominated to serve as directors of the Company, are general partners of MedSun
Bank Properties, to which the Bank paid approximately $97,000 during the year
ended December 31, 2001 in annual rent under a lease obligation.
Douglas J. Heun is a partner in Tricount Investors and Benefits 21,
Inc. During the year ended December 31, 2001, the Bank paid approximately
$38,000 in annual rent under a lease obligation to Tricount Investors and paid
approximately $36,000 for record keeping services for the Bank's 401(k) plan to
Benefits 21, Inc.
The Company believes that the transactions described above are on terms
substantially the same, or at least as favorable to the Bank, as those that
would be provided by a non-affiliate.
The Bank has a policy of offering various types of loans to officers,
directors and employees of the Bank and of the Company. These loans have been
made in the ordinary course of business and on substantially the same terms and
conditions (including interest rates and collateral requirements) as, and
following credit underwriting procedures that are not less stringent than, those
prevailing at the time for comparable transactions by the Bank with its other
unaffiliated customers and do not involve more than the normal risk of
collectibility, nor present other unfavorable features. All of these loans were
current at December 31, 2001.
Compensation Committee Interlocks and Insider Participation
The members of the Personnel Committee of the Company's Board of
Directors during the year ended December 31, 2001 were Anne E. Koons, Jeffrey S.
Brown, Sidney R. Brown, Thomas A. Bracken and John D. Wallace. Each was also a
member of the Board of Directors of the Company during 2001. Mr. Bracken was
also a director and officer of the Company and the Bank and did not participate
in matters involving his personal compensation. No member of the Committee is,
or was during 2001, an executive officer of another company whose board of
directors has a comparable committee on which one of the Company's executive
officers serves. None of the executive officers of the Company is, or was during
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2001, a member of a comparable compensation committee of a company of which any
of the directors of the Company is an executive officer.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of the Common Stock, to
file reports of ownership and changes in ownership of the Common Stock with the
Commission and the Nasdaq National Market, and to provide copies of those
reports to the Company.
Based upon a review of the copies of the forms furnished to the
Company, or written representations from certain reporting persons, the Company
believes that all Section 16(a) filing requirements applicable to its executive
officers and directors were complied with during the year ended December 31,
2001.
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OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
meeting other than those matters described in this proxy statement. However, if
any other matters should properly come before the meeting, it is intended that
proxies in the accompanying form will be voted in respect thereof in accordance
with the judgment of the persons named in the accompanying proxy.
- --------------------------------------------------------------------------------
INDEPENDENT AUDITOR
- --------------------------------------------------------------------------------
A representative of Deloitte & Touche LLP, the Company's independent
auditor, is expected to be present at the Meeting, will have the opportunity to
make a statement at the meeting if he desires to do so, and will be available to
respond to appropriate questions.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of soliciting 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 sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telephone without additional compensation.
- --------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS AND NOMINATIONS
- --------------------------------------------------------------------------------
In order to be considered for inclusion in the Company's proxy
materials for next year's annual meeting of shareholders, any shareholder
proposal to take action at such meeting must be received at the Company's
executive offices at 226 Landis Avenue, Vineland, New Jersey 08360, no later
than December 17, 2002. Any such proposal shall be subject to the requirements
of the proxy rules adopted by the Commission under the Exchange Act.
-23-
Under the Company's bylaws, shareholder proposals that are not included
in the Company's proxy materials for next year's annual meeting of shareholders,
will only be considered at the annual meeting if the shareholder submits notice
of the proposal to the Company at the above address by March 17, 2003. In
addition, shareholder proposals must meet other applicable criteria as set forth
in the Company's bylaws in order to be considered at next year's meeting.
The Company's bylaws include provisions setting forth specific
conditions under which persons may be nominated as directors of the Company at
an annual meeting of shareholders. A copy of such provisions is available upon
request to: Sun Bancorp, Inc., 226 Landis Avenue, Vineland, New Jersey 08360,
Attention: Corporate Secretary.
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FORM 10-K
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2001, WILL BE FURNISHED WITHOUT CHARGE (WITHOUT EXHIBITS) TO
SHAREHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, SUN
BANCORP, INC., 226 LANDIS AVENUE, VINELAND, NEW JERSEY 08360.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Sidney R. Brown
----------------------------------
Sidney R. Brown
Secretary
Vineland, New Jersey
April 16, 2002
-24-
APPENDIX A
SUN BANCORP, INC.
2002 STOCK OPTION PLAN
1. Purpose of the Plan. The Plan shall be known as the Sun Bancorp,
Inc. ("Company") 2002 Stock Option Plan (the "Plan"). The purpose of the Plan is
to attract and retain qualified personnel for positions of substantial
responsibility and to provide additional incentive to officers and employees
providing services to the Company, or any present or future parent or subsidiary
of the Company to promote the success of the business. The Plan is intended to
provide for the grant of "Incentive Stock Options," within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and
Non-Incentive Stock Options, options that do not so qualify. The provisions of
the Plan relating to Incentive Stock Options shall be interpreted to conform to
the requirements of Section 422 of the Code.
2. Definitions. The following words and phrases when used in this Plan
with an initial capital letter, unless the context clearly indicates otherwise,
shall have the meaning as set forth below. Wherever appropriate, the masculine
pronoun shall include the feminine pronoun and the singular shall include the
plural.
"Award" means the grant by the Committee of an Incentive Stock Option
or a Non-Incentive Stock Option, or any combination thereof, as provided in the
Plan.
"Bank" shall mean Sun National Bank, Vineland, New Jersey, or any
successor corporation thereto.
"Board" shall mean the Board of Directors of the Company, or any
successor or parent corporation thereto.
"Change in Control" shall mean: (i) the sale of all, or substantially
all, of the assets of the Company; (ii) the merger or recapitalization of the
Company whereby the Company is not the surviving entity; (iii) a change in
control of the Company, as otherwise defined or determined by the Federal
Reserve Board or regulations promulgated by it; or (iv) the acquisition,
directly or indirectly, of the beneficial ownership (within the meaning of that
term as it is used in Section 13(d) of the Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder) of twenty-five percent (25%)
or more of the outstanding voting securities of the Company by any person,
trust, entity or group. This limitation shall not apply to the purchase of
shares by underwriters in connection with a public offering of Company stock.
The term "person" refers to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
"Committee" shall mean the Board or the Stock Option Committee
appointed by the Board in accordance with Section 5(a) of the Plan.
"Common Stock" shall mean common stock of the Company, or any
successor or parent corporation thereto.
A-1
"Company" shall mean Sun Bancorp, Inc., the parent corporation of the
Bank, or any successor or Parent thereof.
"Continuous Employment" or "Continuous Status as an Employee" shall
mean the absence of any interruption or termination of employment with the
Company or any present or future Parent or Subsidiary of the Company. Employment
shall not be considered interrupted in the case of sick leave, military leave or
any other leave of absence approved by the Company or in the case of transfers
between payroll locations, of the Company or between the Company, its Parent,
its Subsidiaries or a successor.
"Director" shall mean a member of the Board of the Company or the
Bank, or any successor or parent corporation thereto.
"Director Emeritus" shall mean a person serving as a director
emeritus, advisory director, consulting director or other similar position as
may be appointed by the Board of Directors of the Bank or the Company from time
to time.
"Disability" means (a) with respect to Incentive Stock Options, the
"permanent and total disability" of the Employee as such term is defined at
Section 22(e)(3) of the Code; and (b) with respect to Non-Incentive Stock
Options, any physical or mental impairment which renders the Participant
incapable of continuing in the employment or service of the Bank or the Parent
in his then current capacity as determined by the Committee.
"Effective Date" shall mean January 24, 2002.
"Employee" shall mean any person employed by the Company or any
present or future Parent or Subsidiary of the Company.
"Fair Market Value" shall mean: (i) if the Common Stock is traded
otherwise than on a national securities exchange, then the Fair Market Value per
Share shall be equal to not less than the last reported sale price of such
Common Stock on such date, or if there are no sales on such date, then the mean
between the last bid and ask price on such date or, if there is no bid and ask
price on said date, then on the immediately prior business day on which there
was a bid and ask price. If no such bid and ask price is available, then the
Fair Market Value shall be determined by the Committee in good faith; or (ii) if
the Common Stock is listed on a national securities exchange, then the Fair
Market Value per Share shall be not less than the last reported sale price of
such Common Stock on such date, or if there are no sales on such date, then the
average of the highest and lowest selling price of the Common Stock on such
exchange on such date or, if there were no sales on said date, then the exercise
price shall be not less than the mean between the last bid and ask price on such
date.
"Incentive Stock Option" or "ISO" shall mean an option to purchase
Shares granted by the Committee pursuant to Section 8 hereof which is subject to
the limitations and restrictions of Section 8 hereof and is intended to qualify
as an incentive stock option under Section 422 of the Code.
"Non-Incentive Stock Option" or "Non-ISO" shall mean an option to
purchase Shares granted pursuant to Section 9 hereof, which option is not
intended to qualify under Section 422 of the Code.
"Option" shall mean an Incentive Stock Option or Non-Incentive Stock
Option granted pursuant to this Plan providing the holder of such Option with
the right to purchase Common Stock.
A-2
"Optioned Stock" shall mean stock subject to an Option granted
pursuant to the Plan.
"Optionee" shall mean any person who receives an Option or Award
pursuant to the Plan.
"Parent" shall mean any present or future corporation which would be
a "parent corporation" of the Bank or the Company as defined in Sections 424(e)
and (g) of the Code.
"Participant" means any officer or employee of the Company or any
Parent or Subsidiary of the Company or any other person providing a service to
the Company who is selected by the Committee to receive an Award, or who by the
express terms of the Plan is granted an Award.
"Plan" shall mean the Sun Bancorp, Inc. 2002 Stock Option Plan.
"Reload Option" shall mean an Option awarded in accordance with
Section 23 of the Plan.
"Share" shall mean one share of the Common Stock.
"Subsidiary" shall mean any present or future corporation which
constitutes a "subsidiary corporation" as defined in Sections 424(f) and (g) of
the Code.
3. Shares Subject to the Plan. Except as otherwise required by the
provisions of Section 13 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed 750,000 Shares.
Such Shares may either be from authorized but unissued shares, treasury shares
or shares purchased in the market for Plan purposes. If an Award shall expire,
become unexercisable, or be forfeited for any reason prior to its exercise, new
Awards may be granted under the Plan with respect to the number of Shares as to
which such expiration has occurred.
4. Six Month Holding Period.
Subject to vesting requirements, if applicable, except in the event
of death or Disability of the Optionee or a Change in Control of the Company, a
minimum of six months must elapse between the date of the grant of an Option and
the date of the sale of the Common Stock received through the exercise of such
Option.
5. Administration of the Plan.
(a) Composition of the Committee. The Plan shall be administered by
the Board of Directors of the Company or a Committee which shall consist of not
less than two Directors of the Company appointed by the Board and serving at the
pleasure of the Board. All persons designated as members of the Committee shall
meet the requirements of a "Non-Employee Director" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934, as amended, as found at 17 CFR
ss.240.16b-3.
(b) Powers of the Committee. The Committee is authorized (but only to
the extent not contrary to the express provisions of the Plan or to resolutions
adopted by the Board) to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the form and content of
Awards to be issued under the Plan and to make other determinations necessary or
advisable for the administration of the Plan, and shall have and may exercise
such other power and authority as may be delegated to it by the Board from time
to time. A majority of the entire Committee shall constitute a quorum and the
action of a majority of the members present at any meeting at which a quorum is
present
A-3
shall be deemed the action of the Committee. In no event may the Committee
revoke outstanding Awards without the consent of the Participant.
The President of the Company and such other officers as
shall be designated by the Committee are hereby authorized to execute written
agreements evidencing Awards on behalf of the Company and to cause them to be
delivered to the Participants. Such agreements shall set forth the Option
exercise price, the number of shares of Common Stock subject to such Option, the
expiration date of such Options, and such other terms and restrictions
applicable to such Award as are determined in accordance with the Plan or the
actions of the Committee.
(c) Effect of Committee's Decision. All decisions, determinations and
interpretations of the Committee shall be final and conclusive on all persons
affected thereby.
6. Eligibility for Awards and Limitations.
(a) The Committee shall from time to time determine the officers and
employees who shall be granted Awards under the Plan, the number of Awards to be
granted to each such persons, and whether Awards granted to each such
Participant under the Plan shall be Incentive and/or Non-Incentive Stock
Options. In selecting Participants and in determining the number of Shares of
Common Stock to be granted to each such Participant, the Committee may consider
the nature of the prior and anticipated future services rendered by each such
Participant, each such Participant's current and potential contribution to the
Company and such other factors as the Committee may, in its sole discretion,
deem relevant. Participants who have been granted an Award may, if otherwise
eligible, be granted additional Awards.
(b) The aggregate Fair Market Value (determined as of the date the
Option is granted) of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by each Employee during any calendar year
(under all Incentive Stock Option plans, as defined in Section 422 of the Code,
of the Company or any present or future Parent or Subsidiary of the Company)
shall not exceed $100,000. Notwithstanding the prior provisions of this Section
6, the Committee may grant Options in excess of the foregoing limitations,
provided said Options shall be clearly and specifically designated as not being
Incentive Stock Options.
(c) In no event shall Shares subject to Options granted to any
Participant exceed more than 50% of the total number of Shares authorized for
delivery under the Plan.
7. Term of the Plan. The Plan shall continue in effect for a term of
ten (10) years from the Effective Date, unless sooner terminated pursuant to
Section 18 hereof. No Option shall be granted under the Plan after ten (10)
years from the Effective Date.
8. Terms and Conditions of Incentive Stock Options. Incentive Stock
Options may be granted only to Participants who are Employees. Each Incentive
Stock Option granted pursuant to the Plan shall be evidenced by an instrument in
such form as the Committee shall from time to time approve. Each Incentive Stock
Option granted pursuant to the Plan shall comply with, and be subject to, the
following terms and conditions:
A-4
(a) Option Price.
(i) The price per Share at which each Incentive Stock Option
granted by the Committee under the Plan may be exercised shall not, as to any
particular Incentive Stock Option, be less than the Fair Market Value of the
Common Stock on the date that such Incentive Stock Option is granted.
(ii) In the case of an Employee who owns Common Stock representing
more than ten percent (10%) of the outstanding Common Stock at the time the
Incentive Stock Option is granted, the Incentive Stock Option exercise price
shall not be less than one hundred and ten percent (110%) of the Fair Market
Value of the Common Stock on the date that the Incentive Stock Option is
granted.
(b) Payment. Full payment for each Share of Common Stock purchased
upon the exercise of any Incentive Stock Option granted under the Plan shall be
made at the time of exercise of each such Incentive Stock Option and shall be
paid in cash (in United States Dollars), Common Stock or a combination of cash
and Common Stock. Common Stock utilized in full or partial payment of the
exercise price must have been owned by the party exercising such Option for not
less than six months prior to the date of exercise of such Option, and such
Common Stock shall be valued at the Fair Market Value at the date of exercise.
The Company shall accept full or partial payment in Common Stock only to the
extent permitted by applicable law. No Shares of Common Stock shall be issued
until full payment has been received by the Company, and no Optionee shall have
any of the rights of a stockholder of the Company until Shares of Common Stock
are issued to the Optionee.
(c) Term of Incentive Stock Option. The term of exercisability of
each Incentive Stock Option granted pursuant to the Plan shall be not more than
ten (10) years from the date each such Incentive Stock Option is granted,
provided that in the case of an Employee who owns stock representing more than
ten percent (10%) of the Common Stock outstanding at the time the Incentive
Stock Option is granted, the term of exercisability of the Incentive Stock
Option shall not exceed five (5) years.
(d) Exercise Generally. Except as otherwise provided in Section 10
hereof, no Incentive Stock Option may be exercised unless the Optionee shall
have been in the employ of the Company at all times during the period beginning
with the date of grant of any such Incentive Stock Option and ending on the date
three (3) months prior to the date of exercise of any such Incentive Stock
Option. The Committee may impose additional conditions upon the right of an
Optionee to exercise any Incentive Stock Option granted hereunder which are not
inconsistent with the terms of the Plan or the requirements for qualification as
an Incentive Stock Option. Except as otherwise provided by the terms of the Plan
or by action of the Committee at the time of the grant of the Options, the
Options will be first exercisable at the rate of 20% as of the date of grant of
such Options and 20% on each anniversary thereafter.
(e) Cashless Exercise. Subject to vesting requirements, if
applicable, an Optionee who has held an Incentive Stock Option for at least six
months may engage in the "cashless exercise" of the Option. Upon a cashless
exercise, an Optionee gives the Company written notice of the exercise of the
Option together with an order to a registered broker-dealer or equivalent third
party, to sell part or all of the Optioned Stock and to deliver enough of the
proceeds to the Company to pay the Option exercise price and any applicable
withholding taxes. If the Optionee does not sell the Optioned Stock through a
registered broker-dealer or equivalent third party, the Optionee can give the
Company written notice of the exercise of the Option and the third party
purchaser of the Optioned Stock shall pay the Option exercise price plus any
applicable withholding taxes to the Company.
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(f) Transferability. An Incentive Stock Option granted pursuant to
the Plan shall be exercised during an Optionee's lifetime only by the Optionee
to whom it was granted and shall not be assignable or transferable otherwise
than by will or by the laws of descent and distribution.
9. Terms and Conditions of Non-Incentive Stock Options. Each
Non-Incentive Stock Option granted pursuant to the Plan shall be evidenced by an
instrument in such form as the Committee shall from time to time approve. Each
Non-Incentive Stock Option granted pursuant to the Plan shall comply with and be
subject to the following terms and conditions.
(a) Option Price. The exercise price per Share of Common Stock for
each Non-Incentive Stock Option granted pursuant to the Plan shall be at such
price as the Committee may determine in its sole discretion, but in no event
less than the Fair Market Value of such Common Stock on the date of grant as
determined by the Committee in good faith.
(b) Payment. Full payment for each Share of Common Stock purchased
upon the exercise of any Non-Incentive Stock Option granted under the Plan shall
be made at the time of exercise of each such Non-Incentive Stock Option and
shall be paid in cash (in United States Dollars), Common Stock or a combination
of cash and Common Stock. Common Stock utilized in full or partial payment of
the exercise price must have been owned by the party exercising such Option for
not less than six months prior to the date of exercise of such Option, and such
Common Stock shall be valued at the Fair Market Value at the date of exercise.
The Company shall accept full or partial payment in Common Stock only to the
extent permitted by applicable law. No Shares of Common Stock shall be issued
until full payment has been received by the Company and no Optionee shall have
any of the rights of a stockholder of the Company until the Shares of Common
Stock are issued to the Optionee.
(c) Term. The term of exercisability of each Non-Incentive Stock
Option granted pursuant to the Plan shall be not more than ten (10) years from
the date each such Non-Incentive Stock Option is granted.
(d) Exercise Generally. The Committee may impose additional
conditions upon the right of any Participant to exercise any Non-Incentive Stock
Option granted hereunder which is not inconsistent with the terms of the Plan.
Except as otherwise provided by the terms of the Plan or by action of the
Committee at the time of the grant of the Options, the Options will be first
exercisable at the rate of 20% as of the date of grant of such Options and 20%
on each anniversary thereafter.
(e) Cashless Exercise. Subject to vesting requirements, if
applicable, an Optionee who has held a Non-Incentive Stock Option for at least
six months may engage in the "cashless exercise" of the Option. Upon a cashless
exercise, an Optionee gives the Company written notice of the exercise of the
Option together with an order to a registered broker-dealer or equivalent third
party, to sell part or all of the Optioned Stock and to deliver enough of the
proceeds to the Company to pay the Option exercise price and any applicable
withholding taxes. If the Optionee does not sell the Optioned Stock through a
registered broker-dealer or equivalent third party, the Optionee can give the
Company written notice of the exercise of the Option and the third party
purchaser of the Optioned Stock shall pay the Option exercise price plus any
applicable withholding taxes to the Company.
(f) Transferability. Notwithstanding any provisions of the Plan to
the contrary, the Committee may, in its sole discretion, permit transferability
or assignment of a Non-Incentive Stock Option by a Participant if such transfer
or assignment is, in the Committee's sole determination, for valid estate
planning purposes and such transfer or assignment is permitted under the Code.
For purposes of this
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Section, a transfer for valid estate planning purposes includes, but is not
limited to: (a) a transfer to a revocable inter vivos trust as to which the
Participant is both the settlor and trustee, or (b) a transfer for no
consideration to: (i) any member of the Participant's Immediate Family, (ii) any
trust solely for the benefit of members of the Participant's Immediate Family,
(iii) any partnership whose only partners are members of the Participant's
Immediate Family, and (iv) any limited liability corporation or corporate entity
whose only members or equity owners are members of the Participant's Immediate
Family. For purposes of this Section, "Immediate Family" includes, but is not
necessarily limited to, a Participant's parents, grandparents, spouse, children,
grandchildren, siblings (including half bothers and sisters), and individuals
who are family members by adoption. Nothing contained in this Section shall be
construed to require the Committee to give its approval to any transfer or
assignment of any Non-Incentive Stock Option or portion thereof, and approval to
transfer or assign any Non-Incentive Stock Option or portion thereof does not
mean that such approval will be given with respect to any other Non-Incentive
Stock Option or portion thereof. The transferee or assignee of any Non-Incentive
Stock Option shall be subject to all of the terms and conditions applicable to
such Non-Incentive Stock Option immediately prior to the transfer or assignment
and shall be subject to any other conditions proscribed by the Committee with
respect to such Non-Incentive Stock Option.
10. Effect of Termination of Employment, Disability or Death on Incentive
Stock Options.
(a) Termination of Employment. In the event that any Optionee's
employment with the Company shall terminate for any reason, other than
Disability or death, all of any such Optionee's Incentive Stock Options, and all
of any such Optionee's rights to purchase or receive Shares of Common Stock
pursuant thereto, shall automatically terminate on (A) the earlier of (i) or
(ii): (i) the respective expiration dates of any such Incentive Stock Options,
or (ii) the expiration of not more than three (3) months after the date of such
termination of employment; or (B) at such later date as is determined by the
Committee at the time of the grant of such Award, but only if, and to the extent
that, the Optionee was entitled to exercise any such Incentive Stock Options at
the date of such termination of employment, and further that such Award shall
thereafter be deemed a Non-Incentive Stock Option. In the event that a
Subsidiary ceases to be a Subsidiary of the Company, the employment of all of
its employees who are not immediately thereafter employees of the Company shall
be deemed to terminate upon the date such Subsidiary so ceases to be a
Subsidiary of the Company.
(b) Disability. In the event that any Optionee's employment with the
Company shall terminate as the result of the Disability of such Optionee, such
Optionee may exercise any Incentive Stock Options granted to the Optionee
pursuant to the Plan at any time prior to the earlier of (i) the respective
expiration dates of any such Incentive Stock Options or (ii) the date which is
one (1) year after the date of such termination of employment, but only if, and
to the extent that, the Optionee was entitled to exercise any such Incentive
Stock Options at the date of such termination of employment.
(c) Death. In the event of the death of an Optionee, any Incentive
Stock Options granted to such Optionee may be exercised by the person or persons
to whom the Optionee's rights under any such Incentive Stock Options pass by
will or by the laws of descent and distribution (including the Optionee's estate
during the period of administration) at any time prior to the earlier of (i) the
respective expiration dates of any such Incentive Stock Options or (ii) the
date, if any, specified at the time of grant of such Award, but in either case
only if, and to the extent that, the Optionee was entitled to exercise any such
Incentive Stock Options at the date of death. For purposes of this Section
10(c), any Incentive Stock Option held by an Optionee shall be considered
exercisable at the date of his death if the only unsatisfied condition precedent
to the exercisability of such Incentive Stock Option at the date of death is the
passage
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of a specified period of time. At the discretion of the Committee, upon exercise
of such Options the Optionee may receive Shares or cash or a combination
thereof. If cash shall be paid in lieu of Shares, such cash shall be equal to
the difference between the Fair Market Value of such Shares and the exercise
price of such Options on the exercise date.
(d) Incentive Stock Options Deemed Exercisable. For purposes of
Sections 10(a), 10(b) and 10(c) above, any Incentive Stock Option held by any
Optionee shall be considered exercisable at the date of termination of
employment if any such Incentive Stock Option would have been exercisable at
such date of termination of employment without regard to the Disability or death
of the Participant.
(e) Termination of Incentive Stock Options. Except as may be
specified by the Committee at the time of grant of an Option, to the extent that
any Incentive Stock Option granted under the Plan to any Optionee whose
employment with the Company terminates shall not have been exercised within the
applicable period set forth in this Section 10, any such Incentive Stock Option,
and all rights to purchase or receive Shares of Common Stock pursuant thereto,
as the case may be, shall terminate on the last day of the applicable period.
11. Effect of Termination of Employment, Disability or Death on
Non-Incentive Stock Options. The terms and conditions of Non-Incentive Stock
Options relating to the effect of the termination of an Optionee's employment or
service, Disability of an Optionee or his death shall be such terms and
conditions as the Committee shall, in its sole discretion, determine at the time
of termination of service, unless specifically provided for by the terms of the
Agreement at the time of grant of the award.
12. Withholding Tax. The Company shall have the right to deduct from
all amounts paid in cash with respect to the cashless exercise of Options any
taxes required by law to be withheld with respect to such cash payments. Where a
Participant or other person is entitled to receive Shares pursuant to the
exercise of an Option, the Company shall have the right to require the
Participant or such other person to pay the Company the amount of any taxes
which the Company is required to withhold with respect to such Shares, or, in
lieu thereof, to retain, or to sell without notice, a number of such Shares
sufficient to cover the amount required to be withheld.
13. Recapitalization, Merger, Consolidation, Change in Control and
Other Transactions.
(a) Adjustment. Subject to any required action by the stockholders of
the Company, within the sole discretion of the Committee, the aggregate number
of Shares of Common Stock for which Options may be granted hereunder, the number
of Shares of Common Stock covered by each outstanding Option, and the exercise
price per Share of Common Stock of each such Option, shall all be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding Shares of Common Stock resulting from a subdivision or
consolidation of Shares (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares, or
otherwise) or the payment of a stock dividend (but only on the Common Stock) or
any other increase or decrease in the number of such Shares of Common Stock
effected without the receipt or payment of consideration by the Company (other
than Shares held by dissenting stockholders).
(b) Change in Control. All outstanding Awards shall become
immediately exercisable in the event of a Change in Control of the Company. In
the event of such a Change in Control, the Committee and the Board of Directors
will take one or more of the following actions to be effective as of the date of
such Change in Control:
A-8
(i) provide that such Options shall be assumed, or equivalent
options shall be substituted, ("Substitute Options") by the acquiring or
succeeding corporation (or an affiliate thereof), provided that: (A) any such
Substitute Options exchanged for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, and (B) the shares of stock issuable
upon the exercise of such Substitute Options shall constitute securities
registered in accordance with the Securities Act of 1933, as amended, ("1933
Act") or such securities shall be exempt from such registration in accordance
with Sections 3(a)(2) or 3(a)(5) of the 1933 Act, (collectively, "Registered
Securities"), or in the alternative, if the securities issuable upon the
exercise of such Substitute Options shall not constitute Registered Securities,
then the Optionee will receive upon the exercise of the Substitute Options a
cash payment for each Option surrendered equal to the difference between (1) the
Fair Market Value of the consideration to be received for each share of Common
Stock in the Change in Control transaction times the number of shares of Common
Stock subject to such surrendered Options, and (2) the aggregate exercise price
of all such surrendered Options, or
(ii) in the event of a transaction under the terms of which
the holders of the Common Stock of the Company will receive upon consummation
thereof a cash payment (the "Merger Price") for each share of Common Stock
exchanged in the Change in Control transaction, to make or to provide for a cash
payment to the Optionees equal to the difference between (A) the Merger Price
times the number of shares of Common Stock subject to such Options held by each
Optionee (to the extent then exercisable at prices not in excess of the Merger
Price) and (B) the aggregate exercise price of all such surrendered Options in
exchange for such surrendered Options.
(c) Extraordinary Corporate Action. Notwithstanding any provisions of
the Plan to the contrary, subject to any required action by the stockholders of
the Company, in the event of any Change in Control, recapitalization, merger,
consolidation, exchange of Shares, spin-off, reorganization, tender offer,
partial or complete liquidation or other extraordinary corporate action or
event, the Committee, in its sole discretion, shall have the power, prior or
subsequent to such action or event to:
(i) appropriately adjust the number of Shares of Common Stock
subject to each Option, the Option exercise price per Share of Common Stock, and
the consideration to be given or received by the Company upon the exercise of
any outstanding Option;
(ii) cancel any or all previously granted Options, provided
that appropriate consideration is paid to the Optionee in connection therewith;
and/or
(iii) make such other adjustments in connection with the Plan
as the Committee, in its sole discretion, deems necessary, desirable,
appropriate or advisable; provided, however, that no action shall be taken by
the Committee which would cause Incentive Stock Options granted pursuant to the
Plan to fail to meet the requirements of Section 422 of the Code without the
consent of the Optionee.
(d) Acceleration. The Committee shall at all times have the power to
accelerate the exercise date of Options previously granted under the Plan.
Except as expressly provided in Sections 13(a) and 13(b), no
Optionee shall have any rights by reason of the occurrence of any of the events
described in this Section 13.
14. Time of Granting Options. The date of grant of an Option under
the Plan shall, for all purposes, be the date on which the Committee makes the
determination of granting such Option. Notice
A-9
of the grant of an Option shall be given to each individual to whom an Option is
so granted within a reasonable time after the date of such grant in a form
determined by the Committee.
15. Effective Date. The Plan shall become effective as of January 24,
2002, subject to ratification of the Plan by the stockholders of the Company.
16. Ratification by Stockholders. The Plan shall be ratified by
stockholders of the Company within twelve (12) months before or after the date
the Plan is approved by the Board.
17. Modification of Options. At any time and from time to time, the
Board may authorize the Committee to direct the execution of an instrument
providing for the modification of any outstanding Option, provided no such
modification, extension or renewal shall confer on the holder of said Option any
right or benefit which could not be conferred on the Optionee by the grant of a
new Option at such time, or shall not materially decrease the Optionee's
benefits under the Option without the consent of the holder of the Option,
except as otherwise permitted under Section 18 hereof.
18. Amendment and Termination of the Plan.
(a) Action by the Board. The Board may alter, suspend or discontinue
the Plan, except that no action of the Board may increase (other than as
provided in Section 13 hereof) the maximum number of Shares permitted to be
optioned under the Plan, materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements for
eligibility for participation in the Plan unless such action of the Board shall
be subject to approval or ratification by the stockholders of the Company.
(b) Change in Applicable Law. Notwithstanding any other provision
contained in the Plan, in the event of a change in any federal or state law,
rule, regulation or policy which would make the exercise of all or part of any
previously granted Option unlawful or subject the Company to any penalty, the
Committee may restrict any such exercise without the consent of the Optionee or
other holder thereof in order to comply with any such law, rule or regulation or
to avoid any such penalty.
19. Conditions Upon Issuance of Shares; Limitations on Option Exercise;
Cancellation of Option Rights.
(a) Shares shall not be issued with respect to any Option granted
under the Plan unless the issuance and delivery of such Shares shall comply with
all relevant provisions of applicable law, including, without limitation, the
Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder, any applicable state securities laws and the requirements of any
stock exchange upon which the Shares may then be listed.
(b) The inability of the Company to obtain any necessary
authorizations, approvals or letters of non-objection from any regulatory body
or authority deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares issuable hereunder shall relieve the Company of
any liability with respect to the non-issuance or sale of such Shares.
(c) As a condition to the exercise of an Option, the Company may
require the person exercising the Option to make such representations and
warranties as may be necessary to assure the availability of an exemption from
the registration requirements of federal or state securities law.
A-10
(d) Notwithstanding anything herein to the contrary, upon the
termination of employment or service of an Optionee by the Company or its
Subsidiaries for "cause" as as determined by the Board of Directors or the
Committee, all Options held by such Participant shall cease to be exercisable as
of the date of such termination of employment or service.
(e) Upon the exercise of an Option by an Optionee (or the Optionee's
personal representative), the Committee, in its sole and absolute discretion,
may make a cash payment to the Optionee, in whole or in part, in lieu of the
delivery of shares of Common Stock. Such cash payment to be paid in lieu of
delivery of Common Stock shall be equal to the difference between the Fair
Market Value of the Common Stock on the date of the Option exercise and the
exercise price per share of the Option. Such cash payment shall be in exchange
for the cancellation of such Option. Such cash payment shall not be made in the
event that such transaction would result in liability to the Optionee or the
Company under Section 16(b) of the Securities Exchange Act of 1934, as amended,
and regulations promulgated thereunder.
20. Reservation of Shares. During the term of the Plan, the Company
will reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
21. Unsecured Obligation. No Participant under the Plan shall have any
interest in any fund or special asset of the Company by reason of the Plan or
the grant of any Option under the Plan. No trust fund shall be created in
connection with the Plan or any grant of any Option hereunder and there shall be
no required funding of amounts which may become payable to any Participant.
22. No Employment Rights. No officer or Employee shall have a right to
be selected as a Participant under the Plan. Neither the Plan nor any action
taken by the Committee in administration of the Plan shall be construed as
giving any person any rights of employment or retention as an Employee, Director
or in any other capacity with the Company, the Bank or other Subsidiaries.
23. Reload Options. The Committee shall have the authority to specify
at the time of grant of an Option that an Optionee shall be granted the right to
a further Option (a "Reload Option") in the event such Optionee exercises all or
a part of an Option (an "Original Option"), by surrendering already owned shares
of Common Stock in full or partial payment of the Option exercise price under
such Original Option. Each such Reload Option shall be granted on the date of
exercise of the Original Option, shall cover a number of shares of Common Stock
not exceeding the whole number of shares of Common Stock surrendered in payment
of the Option exercise price under such Original Option, and any shares of
Common Stock used to satisfy any taxes incident to the exercise of the Original
Option, shall have an Option exercise price equal to the Fair Market Value of
the Common Stock on the date of grant of such Reload Option, shall expire on the
stated expiration date of the Original Option and shall be subject to such other
terms and conditions as the Committee may determine.
24. Award of Options to Directors.
As of January 24, 2002, each Director who is not an employee of the
Company or any subsidiary thereof (except Peter Galetto, Jr.), shall be awarded
Non-Incentive Stock Options to purchase 3,000 shares of Common Stock at an
exercise price equal to $11.95, that being the Fair Market Value of the Common
Stock at the time of grant. Such options will be first exercisable as of such
date of grant, subject to ratification of the Plan by the shareholders of the
Company. As of January 24, 2002, Director Peter Galetto, Jr. shall be awarded
Non-Incentive Stock Options to purchase 20,000 shares of Common Stock at an
exercise price equal to $11.95, that being the Fair Market Value of the Common
Stock at the time
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of grant. Such options will be first exercisable at the rate of 20% as of six
months from the date of grant, and 20% on each of the next four anniversaries of
the first vesting event thereafter, subject to ratification of the Plan by the
shareholders of the Company. Such Options awarded in accordance with this
section shall continue to be exercisable for a period of ten years following the
date of grant without regard to the continued services of such Director. In the
event of the Optionee's death, such Options may be exercised by the personal
representative of his estate or person or persons to whom his rights under such
Option shall have passed by will or by the laws of descent and distribution.
Options may be granted to newly appointed or elected non-employee Directors
within the sole discretion of the Committee. The exercise price per Share of
such Options granted shall be equal to the Fair Market Value of the Common Stock
at the time such Options are granted. Unless otherwise inapplicable, or
inconsistent with the provisions of this paragraph, the Options to be granted to
Directors hereunder shall be subject to all other provisions of this Plan.
25. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of New Jersey, except to the extent that
federal law shall be deemed to apply.
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SUN BANCORP, INC.
226 LANDIS AVENUE
VINELAND, NEW JERSEY 08360
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Annual Meeting of Shareholders
May 16, 2002
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The undersigned hereby appoints the Board of Directors of Sun Bancorp,
Inc. (the "Company"), or its designee, with full powers of substitution, to act
as attorneys and proxies for the undersigned, to vote all shares of Common Stock
of the Company which the undersigned is entitled to vote at the annual meeting
of shareholders (the "Meeting"), to be held at the Regency Palace, Route 73 and
Fellowship Road, Mount Laurel, New Jersey on May 16, 2002, at 9:30 a.m. and at
any and all adjournments thereof, in the following manner:
FOR WITHHELD
--- --------
1. The election as directors of the nominees
listed below (except as marked to the |_| |_|
contrary below):
Thomas A. Bracken Anne E. Koons
Bernard A. Brown Vito J. Marseglia
Ike Brown Alfonse M. Mattia
Jeffrey S. Brown George A. Pruitt
Sidney R. Brown Anthony Russo, III
Peter Galetto, Jr. Edward H. Salmon
Linwood C. Gerber John D. Wallace
Douglas J. Heun Timothy J. Wilmott
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name on the line provided below)
----------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of
the Sun Bancorp, Inc.
2002 Stock Option Plan. |_| |_| |_|
The Board of Directors recommends a vote "FOR" both of the above listed
proposals. ---
In their discretion, such attorneys and proxies are authorized to vote on any
other business that may properly come before the meeting or any adjournments
thereof.
Note: Executing this proxy permits such attorneys and proxies to vote, in their
discretion, upon such other business as may properly come before the Meeting or
any adjournments thereof.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
SIGNED PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS AND NOMINEES LISTED. IF ANY
OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE
NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a notice of annual meeting of shareholders, a proxy
statement dated April 16, 2002, and the 2001 Annual Report.
Dated: , 2002
-----------------------------
- ---------------------------------- -------------------------------------
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
- ---------------------------------- -------------------------------------
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
Please sign exactly as your name appears on this proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, SIGN, DATE, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
- --------------------------------------------------------------------------------