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
[X] Definitive Proxy Statement Only (as permitted by Rule 14a 6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant toss.240.14a-11(c) orss.240.14a-12
Synergy Financial Group, 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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SYNERGY FINANCIAL GROUP, INC.
310 NORTH AVENUE EAST
CRANFORD, NEW JERSEY 07016
March 18, 2003
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Synergy Financial
Group, Inc. (the "Company"), we invite you to attend our first Annual Meeting of
Stockholders (the "Meeting") to be held at the offices of Synergy Bank, 310
North Avenue East, Cranford, New Jersey, on April 22, 2003, at 9:00 a.m. The
attached Notice of Annual Meeting of Stockholders and Proxy Statement describe
the formal business to be transacted at the Meeting.
The Board of Directors of the Company has determined that the matters
to be considered at the Meeting, described in the accompanying Notice of Annual
Meeting and Proxy Statement, are in the best interest of the Company and its
stockholders. The Board of Directors unanimously recommends a vote "FOR" each
matter to be considered.
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 QUICKLY 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 the Meeting. Your vote is very important.
IF YOU PLAN TO ATTEND:
Please note that space limitations make it necessary to limit
attendance to stockholders only. Admission to the meeting will be on a
first-come, first-served basis. Registration will begin at 8:30 a.m. Each
stockholder may be asked to present valid picture identification, such as a
driver's license or passport. Stockholders holding stock in brokerage accounts
("street name" holders) will need to bring a copy of a brokerage statement
reflecting stock ownership as of the record date. Cameras, recording devices and
other electronic devices will not be permitted at the meeting.
Sincerely,
/s/John S. Fiore
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John S. Fiore
President and Chief Executive Officer
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SYNERGY FINANCIAL GROUP, INC.
310 NORTH AVENUE EAST
CRANFORD, NEW JERSEY 07016
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 22, 2003
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of Synergy Financial Group, Inc. (the "Company") will be held at the offices of
Synergy Bank, 310 North Avenue East, Cranford, New Jersey, on April 22, 2003, at
9:00 a.m. The Meeting is for the purpose of considering and acting upon the
following matters:
1. The election of three directors of Synergy Financial Group, Inc.;
2. The approval of the Synergy Financial Group, Inc. 2003 Stock Option
Plan;
3. The approval of the Synergy Financial Group, Inc. 2003 Restricted
Stock Plan; and
4. The ratification of the appointment of Grant Thornton LLP as the
Company's independent auditor for the fiscal year ending December 31,
2003.
The transaction of such other business as may properly come before the
Meeting, or any adjournments thereof, may also be acted upon. The Board of
Directors is not aware of any other business to come before the Meeting.
The Board of Directors of the Company has determined that the matters
to be considered at the Meeting, described in the accompanying Notice of Annual
Meeting and Proxy Statement, are in the best interest of the Company and its
stockholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
Action may be taken on any one of 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. Pursuant to the
Company's Bylaws, the Board of Directors has fixed the close of business on
February 28, 2003, as the record date for determination of the stockholders
entitled to vote at the Meeting and any adjournments thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN, DATE
AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY
REVOKE YOUR PROXY BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN
REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE. IF YOU ARE PRESENT AT
THE MEETING YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT
BEFORE THE MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT
REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR
RECORD HOLDER TO VOTE IN PERSON AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Kevin A. Wenthen
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Kevin A. Wenthen
Corporate Secretary
Cranford, New Jersey
March 18, 2003
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE 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
SYNERGY FINANCIAL GROUP, INC.
310 NORTH AVENUE EAST
CRANFORD, NEW JERSEY 07016
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ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 2003
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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 Synergy Financial Group, Inc. (the
"Company") to be used at the Annual Meeting of Stockholders of the Company which
will be held at the offices of Synergy Bank, 310 North Avenue East, Cranford,
New Jersey, on April 22, 2003, at 9:00 a.m. (the "Meeting"). The accompanying
Notice of Annual Meeting of Stockholders and this Proxy Statement are being
first mailed to stockholders on or about March 18, 2003.
At the Meeting, stockholders will consider and vote upon (i) the
election of three directors of the Company, (ii) the approval of the Synergy
Financial Group, Inc. 2003 Stock Option Plan (the "Option Plan"), (iii) the
approval of the Synergy Financial Group, Inc. 2003 Restricted Stock Plan (the
"Restricted Stock Plan") and (iv) the ratification of the appointment of Grant
Thornton LLP as the Company's independent auditor for the fiscal year ending
December 31, 2003.
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 proxyholder the 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.
The Company is the parent company of Synergy Bank (the "Bank"). The
Company was formed as a corporation chartered by the Office of Thrift
Supervision in connection with the Bank's mutual holding company reorganization
in March 2001, and it is the majority-owned subsidiary of Synergy, MHC. Because
Synergy, MHC owns approximately 56.5% of the Company's outstanding common stock,
the votes cast by Synergy, MHC will be determinative in the voting on Proposal I
(election of directors) and Proposal IV (ratification of auditors). Proposal II
(approval of the Option Plan) and Proposal III (approval of the Restricted Stock
Plan) will require the affirmative vote of holders of a majority of outstanding
shares, excluding shares held by Synergy, MHC.
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VOTING AND REVOCABILITY OF PROXIES
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Stockholders 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 stockholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors will be voted as
specified thereon. If no specification is made, signed proxies will be voted
"FOR" the nominees for director as set forth herein, "FOR" the approval of the
Option Plan, "FOR" the approval of the Restricted Stock Plan, and "FOR" the
ratification of Grant Thornton LLP as the
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Company's independent auditor for the fiscal year ending December 31, 2003. The
proxy confers discretionary authority on the persons named thereon to vote with
respect to the election of any person as a director where the 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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INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
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Officers, directors and employees of the Company and its subsidiaries
have an interest in a matter being presented for shareholder approval. Upon
shareholder approval of the Option Plan and the Restricted Stock Plan, officers,
directors and employees of the Company and its subsidiaries may be granted stock
options or restricted stock under the Option Plan and the Restricted Stock Plan.
The approval of the Option Plan and the Restricted Stock Plan are being
presented as Proposal II and Proposal III, respectively.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on February 28, 2003
(the "Record Date"), are entitled to one vote for each share of Common Stock
then held. As of the Record Date, the Company had 3,344,252 shares of Common
Stock issued and outstanding.
As provided in the Charter of the Company, for a period of five years
from September 17, 2002, the date of the completion of the Company's stock
offering, no person, except for Synergy, MHC, is permitted to beneficially own
in excess of 10% of the Company's outstanding common stock (the "Limit"), and
any shares acquired in violation of this Limit, are not entitled to any vote. A
person or entity is deemed to beneficially own shares owned by an affiliate of,
as well as persons acting in concert with, such person or entity.
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. With respect to any matter, broker non- votes (i.e.,
shares for which a broker indicates on the proxy that it does not have
discretionary authority as to such shares to vote on such matter) will be
considered present for purposes of determining whether a quorum is present. In
the event there are not sufficient votes for a quorum or to ratify any proposals
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 (Proposal I), the proxy provided by the
Board of Directors allows a stockholder to vote for the election of the nominees
proposed by the Board of Directors, or to withhold authority to vote for the
nominees being proposed. Under the Company's bylaws, directors are elected by a
plurality of votes cast, without regard to either (i) broker non-votes or (ii)
proxies as to which authority to vote for the nominees being proposed is
withheld.
With respect to the approval of the Option Plan (Proposal II) and
approval of the Restricted Stock Plan (Proposal III), such matters shall be
determined by an affirmative vote of holders of a majority of outstanding
shares, excluding shares held by Synergy, MHC. 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,
including the ratification of the independent auditors (Proposal IV), by
checking the appropriate box, a shareholder may: (i) vote "FOR" the item, (ii)
vote "AGAINST" the item, or (iii) "ABSTAIN" with respect to the item. Unless
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otherwise required by law, all such matters shall be determined by a majority of
votes cast affirmatively or negatively without regard to (i) broker non-votes or
(ii) 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 "1934 Act"). The following
table sets forth, as of the Record Date, the ownership of the Company's employee
stock ownership plan and the ownership of all executive officers and directors
of the Company as a group. 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 of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
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Synergy Financial Group, Inc. Bank Employee Stock
Ownership Plan Trust (the "ESOP") 116,380(1) 3.5%
310 North Avenue East
Cranford, New Jersey 07016
All directors and executive officers of the
Company as a group (12 persons) 151,007(2) 4.5%
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(1) These shares are held in a suspense account and are allocated among
participants annually on the basis of compensation as the ESOP debt is
repaid. As of the Record Date, 3,879 shares have been allocated to ESOP
participants. The Board of Directors appointed all non-employee
directors to serve as ESOP Trustees and appointed John S. Fiore,
President and Chief Executive Officer, Kevin A. Wenthen, Senior Vice
President, and Janice L. Ritz, a Vice President of the Bank, as members
of the ESOP Plan Committee. The ESOP Plan Committee directs the vote of
all unallocated shares and shares allocated to participants if timely
voting directions are not received for such shares.
(2) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust and other indirect ownership. Excludes 115,657
shares held by the ESOP (116,380 shares less 723 shares allocated to
executive officers of the Company).
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the Securities and Exchange Act of 1934, as amended,
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 Securities and Exchange Commission and to
provide copies of those reports to the Company. The Company is not aware of any
beneficial owner, as defined under Section 16(a), of more than ten percent of
its Common Stock. To the Company's knowledge, all Section 16(a) filing
requirements applicable to its officers and directors were complied with during
the 2002 fiscal year.
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PROPOSAL I - ELECTION OF DIRECTORS
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The Company's charter requires that the Board of Directors be divided
into three classes, as nearly equal in number as possible, each class to serve
for a three-year period, with approximately one-third of the directors elected
each year. The Board of Directors currently consists of nine members. Three
directors will be elected at the Meeting, each to serve for a three-year term
and until their successors have been elected and qualified.
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Nancy A. Davis, John S. Fiore and W. Phillip Scott have been nominated
by the Board of Directors to serve as directors. Each of the nominees is
currently a member of the Board of Directors. It is intended that proxies
solicited by the Board of Directors will, unless otherwise specified, be voted
for the election of the named nominees. If any of the nominees is 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 of
Directors knows of no reason why any of the nominees might be unavailable to
serve.
The following table sets forth the names, ages, terms of, length of
board service and the number and percentage of shares of Common Stock
beneficially owned by the nominees, the directors continuing in officer and the
executive officers of the Company.
Shares of
Age at Year First Current Common Stock Percent
December 31, Elected or Term to Beneficially of
Name 2002 Appointed(1) Expire Owned(2) Class
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Board Nominees for Term to Expire in 2006
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Nancy A. Davis 63 1977 2003 9,349(3) 0.3%
John S. Fiore 45 2000 2003 27,711 0.8%
W. Phillip Scott 51 1996 2003 5,250(3) 0.2%
Directors Continuing in Office
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Kenneth S. Kasper 48 1993 2005 10,300(3) 0.3%
Magdalena M. De Perez 52 2001 2005 1,000(3) - %
David H. Gibbons, Jr. 32 2001 2004 11,884(3) 0.4%
Paul T. LaCorte 50 2001 2004 5,750(3) 0.2%
George Putvinski 54 1993 2005 9,000(3) 0.3%
Albert N. Stender 57 1999 2004 5,700(3) 0.2%
Executive Officers of the Company
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Kevin M. McCloskey 44 N/A N/A 47,171 1.4%
Kevin A. Wenthen 48 N/A N/A 7,221 0.2%
Ralph A. Fernandez 38 N/A N/A 10,671 0.3%
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(1) Refers to the year the individual first became a director of the Bank. All
directors of the Bank in March 2001 became directors of the Company at that
time.
(2) Beneficial ownership as of the Record Date. Includes shares of Common Stock
held directly as well as by spouses or minor children, in trust, and other
indirect beneficial ownership.
(3) Excludes 116,380 shares of Common Stock held under the ESOP over which such
individual, as an ESOP Trustee, exercises shared voting power.
Biographical Information
Directors and Executive Officers of the Company. Set forth below is the
business experience for the past five years of each of the directors, nominees
and executive officers of the Company.
Kenneth S. Kasper has served as Chairman of the Board of Directors of
the Company since its formation in 2001. He has been a director of the Bank
since 1993, and has served as Chairman of the Board of Directors of the Bank
since 1998. Mr. Kasper is a Compliance Director with Schering-Plough
Corporation, a pharmaceutical research and manufacturing company, a position he
has held since 1991. Prior
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to that time, Mr. Kasper served as Senior Counsel for Schering-Plough. Mr.
Kasper is also actively involved in civic activities, serving as chairman for
the Chester Borough Board of Adjustment, Chair-Elect of the Board of
Environmental Health & Safety Auditor Certifications ("BEAC"), and Director of
the Council of Engineering and Scientific Specialty Boards.
Nancy A. Davis has served on the Board of Directors of the Company
since its formation in 2001, and the Bank since 1977. Ms. Davis retired from
Schering-Plough Corporation in 2002. She was employed by that company since
1965, most recently as a Senior Legal Assistant.
Magdalena M. De Perez has served on the Board of Directors of the
Company and the Bank since 2001. Ms. De Perez is Vice President of Investments
and a Quantum Portfolio Manager for Prudential Securities Inc. She has worked in
the financial services industry since 1983 and acts as a financial advisor to
several community service organizations in Union County.
John S. Fiore has been the President and Chief Executive Officer of the
Company since its formation in 2001 and has served as President and Chief
Executive Officer of the Bank since 1995. He also serves as a member of both
Boards of Directors. He has been employed by the Bank since 1989. Mr. Fiore also
serves as Chairman of the Board of Directors of Synergy Financial Services,
Inc., a wholly-owned subsidiary of the Company.
David H. Gibbons, Jr. has served on the Board of Directors of the
Company and the Bank since 2001. Mr. Gibbons is Executive Vice President and
General Counsel of David O. Evans, Inc. and Gibbons Realty Group, Inc., the
operating companies for the affiliate commercial real estate holding companies
known as Vestal Development Co., Elberon Development Co., Pitney Partners, L.P.,
and Portview Properties, LLC. Since 1999, Mr. Gibbons has been a salesperson
with Kay Realty Services, LLC, a real estate brokerage company. Mr. Gibbons is
also active in the community and serves as Immediate Past Chairman of the Board
of Directors of Elizabeth Development Co., as a Trustee for Trinitas Hospital
and as a Director of the YMCA of Eastern Union County, the Union County Alliance
and Elizabeth Chamber of Commerce. In addition, Mr. Gibbons serves as a Trustee
for the National Association of Office and Industrial Properties, a commercial
real estate trade and lobbying organization.
Paul T. LaCorte has served on the Board of Directors of the Company and
the Bank since 2001. Mr. LaCorte is currently President of Hamilton Holding
Company and V & F, Inc., and a partner with Ditullio and LaCorte Associates,
LLC, all of which are real estate management service companies. He is currently
a member and former Chairman of the Cranford Downtown Management Corporation and
the Union County Economic Development Corporation. He is also a member and
former President of the Cranford Chamber of Commerce.
George Putvinski has served on the Board of Directors of the Company
since its formation in 2001, and the Bank since 1993. Mr. Putvinski is employed
as the Director of Manufacturing Finance for Schering-Plough Corporation. He has
been employed by Schering-Plough Corporation since 1979.
W. Phillip Scott has served on the Board of Directors of the Company
since its formation in 2001, and the Bank since 1996. Mr. Scott is employed as
the Manager of Sales and Logistics Accounting for Schering-Plough Corporation.
He has been employed by Schering-Plough Corporation since 1980. Mr. Scott is a
certified public accountant.
Albert N. Stender has served on the Board of Directors of the Company
since its formation in 2001, and the Bank since 1999. Mr. Stender is a partner
with the law firm of Stender & Hernandez where he has
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practiced law since 1985. He is also a partner in Mid-October Company. Mr.
Stender serves as a Director of the Cranford Chamber of Commerce, and prosecutor
for the Boroughs of Kenilworth and Roselle Park.
Kevin M. McCloskey has served as Senior Vice President and Chief
Operating Officer since 2000. Prior to that time, Mr. McCloskey was the Vice
President and Chief Operating Officer for Lakeview Savings Bank. Mr. McCloskey
is a Board member and Treasurer of the YMCA of Eastern Union County, a member of
the Board of Trustees for Union County Economic Development Corporation and is a
Trustee of the Trinitas Health Foundation.
Kevin A. Wenthen has served as Senior Vice President and Chief
Administrative Officer since 1996 and as Secretary since 2002. Mr. Wenthen is
also President and Chief Executive Officer of Synergy Financial Services, Inc.,
a wholly-owned subsidiary of the Company. Mr. Wenthen serves on the advisory
board of the Center for Kids and Family, a division of Union Hospital.
Ralph A. Fernandez has served as Vice President and Chief Financial
Officer for the Company and the Bank since 2000 and was Vice President of
Finance for the Bank from 1999. Prior to that time, Mr. Fernandez was a regional
executive policy committee member, a senior examiner and a senior analyst for
the Office of Thrift Supervision.
Meetings and Committees of the Board of Directors
The Board of Directors conducts its business through meetings of the
Board and through activities of its committees. During the year ended December
31, 2002, the Board of Directors met thirteen times, including regularly
scheduled meetings and special meetings. No director attended fewer than 75% of
the total meetings of the Board of Directors and committees on which he or she
served during the year ended December 31, 2002. The Board maintains an Audit
Committee, as well as an Executive and Compensation Committee, a Budget and
Asset/Liability Management Committee and a Nominating Committee.
The Audit Committee consists of Directors Gibbons (Chair), Davis, De
Perez, Kasper and LaCorte. All members of the Audit Committee are independent
under the rules of the Nasdaq stock market. The Board of Directors is not
required to and has not adopted a written charter for the Audit Committee. The
Audit Committee typically meets every other month with the internal auditor and
periodically as needed with the external auditors. Its main responsibilities
include oversight of the internal and external auditors and monitoring of
management and staff compliance with the Board's audit policies, and applicable
laws and regulations. During the year ended December 31, 2002, this committee
met eight times.
The Executive and Compensation Committee consists of Directors Kasper
(Chair), Gibbons, Fiore, Putvinski and Stender. This committee serves as an
interim decision-making body to address matters that arise between regularly
scheduled meetings of the full Board. This committee also makes recommendations
to the Board of Directors on corporate governance matters and exercises
supervision of major agenda items for and periodic reports presented at full
Board meetings. The responsibilities of this committee with regard to
compensation include appraisal of the chief executive officer's performance,
administration of management incentive compensation plans and review of the
directors' compensation. Director Fiore does not participate in committee
discussions regarding his compensation as President and Chief Executive Officer.
During the year ended December 31, 2002, this committee met two times.
The Budget and Asset/Liability Management Committee consists of
Directors Putvinski (Chair), De Perez, Fiore, Scott and Stender. This committee
oversees the Bank's investments, loans, other assets and its liabilities,
primarily its sources of funds, for the purpose of maintaining profitable
spreads between the cost of liabilities and the yield on assets consistent with
prudent risk. This committee meets generally during
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October and November each year with the goal of developing an annual business
and operating plan for presentation to the full Board at the regular November
meeting. In addition, at least one non-employee member of this committee meets
monthly with management to review investment policies, loan and deposit pricing
and production volumes, interest rate risk analysis, liquidity and borrowing
needs, and a variety of other asset and liability management topics. The results
of each monthly meeting are presented to the full Board at its regular monthly
meeting. During the year ended December 31, 2002, this committee met thirteen
times.
The Nominating Committee consists of Directors Stender (Chair), De
Perez, Gibbons, Kasper, LaCorte and Putvinski. This committee recommends
candidates for election to the Board of Directors. This committee is not
required to consider nominees recommended by stockholders. During the year ended
December 31, 2002, this committee met one time.
Report of the Audit Committee. For the fiscal year ended December 31,
2002, the Audit Committee: (i) reviewed and discussed the Company's audited
financial statements with management, (ii) discussed with the Company's
independent auditor, Grant Thornton LLP, all matters required to be discussed
under Statement on Auditing Standards No. 61, and (iii) received from Grant
Thornton LLP disclosures regarding Grant Thornton LLP's independence as required
by Independence Standards Board Standard No. 1 and discussed with Grant Thornton
LLP 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-KSB for the
fiscal year ended December 31, 2002.
Audit Committee:
David H. Gibbons, Jr. (Chair)
Nancy A. Davis
Magdalena M. De Perez
Kenneth S. Kasper
Paul T. LaCorte
Audit Fees. For the year ended December 31, 2002, the Company paid
$6,535 for professional services rendered by its former auditor, Fontanella and
Babitts, Certified Public Accountants, in connection with the review of the
quarterly financial statements and $51,500 for professional services rendered by
its current auditor, Grant Thornton LLP, in connection with the audit of the
annual financial statements.
Financial Information Systems Design and Implementation Fees. There
were no fees billed by the Company's former or current independent auditor for
professional services rendered for information technology services relating to
financial information systems design and implementation for the fiscal year
ended December 31, 2002.
All Other Fees. Fees billed by Fontanella and Babitts for services
rendered to the Company for the fiscal year ended December 31, 2002, other than
the services described above under "Audit Fees," included $7,950 for tax
preparation services, $50,037 for services in connection with the Company's
stock offering completed in September 2002 and $7,250 for services in connection
with the Bank's acquisition of First Bank of Central Jersey completed in January
2003. There were no fees billed by Grant Thornton LLP for services rendered to
the Company for the fiscal year ended December 31, 2002, other than the services
rendered above under "Audit Fees."
The Audit Committee has determined that the provision of non-audit
services is compatible with maintaining the principal accountant's independence.
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Certain Relationships and Related Transactions
No directors, officers or their immediate family members were engaged
in transactions with the Company or any subsidiary involving more than $60,000
(other than through a loan) during the two years ended December 31, 2002.
Furthermore, the Company had no "interlocking" relationships in which (1) any
officer is a member of the board of directors of another entity with an officer
who is a member of the Company's Board of Directors, or where (2) any officer is
a member of the compensation committee of another entity, one of whose officers
is a member of the Company's Board of Directors.
The Bank, like many financial institutions, has followed the policy of
offering residential mortgage loans for the financing of personal residences and
consumer loans to its officers, directors and employees. Loans are made in the
ordinary course of business and are also made on substantially the same terms
and conditions, other than a 1% discount for employees on the interest rate paid
while the person remains an employee, as those of comparable transactions
prevailing at the time with other persons, and do not include more than the
normal risk of collectibility or present other unfavorable features. As of
December 31, 2002, the aggregate principal balance of loans outstanding to all
directors and executive officers of the Company was approximately $2.0 million.
- --------------------------------------------------------------------------------
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
- --------------------------------------------------------------------------------
Compensation of Directors
Board Fees. Each director is paid a fee of $1,000 per Board meeting and
$300 per committee meeting for each such meeting attended. The Chairman receives
an additional annual fee of $3,000. Each director also received a profit sharing
award of $3,000 for 2002. The total compensation paid to the directors for the
year ended December 31, 2002, including profit sharing, was approximately
$144,650. Directors who also serve as employees of the Bank do not receive
compensation as directors.
Stock Awards. Each non-employee director will be awarded options to
purchase shares of Common Stock upon stockholder approval of the Option Plan, at
an exercise price equal to the fair market value of the Common Stock on the date
of stockholder approval. In addition, each non-employee director will be awarded
shares of restricted stock upon stockholder approval of the Restricted Stock
Plan. Approval of these plans is being presented in this Proxy Statement as
Proposal II and Proposal III.
Executive Compensation
Summary Compensation Table. The following table sets forth the
compensation awarded to or earned by the Company's President and Chief Executive
Officer and certain other executive officers for the years ended December 31,
2002, 2001 and 2000. No other officer received a total annual salary and bonus
in excess of $100,000 during the reporting period.
Annual Compensation(1)
----------------------
Fiscal All Other
Name and Principal Position Year Salary Bonus Compensation
- --------------------------- ---- ------ ----- ------------
John S. Fiore, 2002 $204,120 $205,140 $56,831(2)
President and Chief 2001 189,000 68,040 49,333
Executive Officer 2000 175,000 94,500 44,969
-8-
Annual Compensation(1)
----------------------
Name and Principal Position Year Salary Bonus Compensation
- --------------------------- ---- ------ ----- ------------
Kevin M. McCloskey, 2002 $130,000 $124,150 $26,745(3)
Senior Vice President and 2001 122,000 37,820 6,288
Chief Operating Officer 2000 115,000 42,263 -
Kevin A. Wenthen, 2002 $125,000 $119,375 $25,790(4)
Senior Vice President and 2001 115,000 35,650 11,443
Chief Administrative Officer 2000 103,000 49,870 9,904
Ralph A. Fernandez, 2002 $95,000 $90,725 $19,609(5)
Vice President and Chief 2001 88,000 27,280 8,760
Financial Officer 2000 80,000 39,200 6,077
- --------------
(1) All compensation set forth in the table was paid by the Bank
(2) For 2002, includes the Bank's accrual of $8,306 under the individual's
Phantom Stock Plan, which was terminated in 2002 and replaced with a
Deferred Compensation Plan, under which the Bank's accrual for 2002
totaled $4,718. The Deferred Compensation Plan is scheduled to be
terminated upon adoption of the Stock Option Plan. For 2002, also
includes the Bank's contribution under the individual's Supplemental
Executive Retirement Plan of $22,188, the Bank's contribution to the
individual's account under a 401(k) Plan of $16,951, and the award of
263 shares under the ESOP as of December 31, 2002, based on the last
reported sales price of the Common Stock on the OTC Electronic Bulletin
Board on December 31, 2002 of $17.75 per share.
(3) For 2002, includes the Bank's contribution under the individual's
Supplemental Executive Retirement Plan of $13,000, the Bank's
contribution to the individual's account under a 401(k) Plan of
$10,710, and the award of 171 shares under the ESOP as of December 31,
2002, based on the last reported sales price of the Common Stock on the
OTC Electronic Bulletin Board on December 31, 2002 of $17.75 per share.
(4) For 2002, includes the Bank's contribution under the individual's
Supplemental Executive Retirement Plan of $12,500, the Bank's
contribution to the individual's account under a 401(k) Plan of
$10,379, and the award of 164 shares under the ESOP as of December 31,
2002, based on the last reported sales price of the Common Stock on the
OTC Electronic Bulletin Board on December 31, 2002 of $17.75 per share.
(5) For 2002, includes contribution to the individual's account under the
Bank's Supplemental Executive Retirement Plan of $9,500, the Bank's
contribution to the individual's account under a 401(k) Plan of $7,890,
and the award of 125 shares under the ESOP as of December 31, 2002,
based on the last reported sales price of the Common Stock on the OTC
Electronic Bulletin Board on December 31, 2002 of $17.75 per share.
Employment Agreements. The Bank has entered into an employment
agreement with Mr. Fiore. Mr. Fiore's base salary under the employment agreement
for the year ended December 31, 2002 was $204,120. Mr. Fiore's employment
agreement has a term of three years and may be terminated by the Bank for
"cause" as defined in the agreement. If the Bank terminates Mr. Fiore's
employment without just cause, he will be entitled to a continuation of his
salary from the date of termination through the remaining term of the agreement.
The employment agreement contains a provision stating that after Mr. Fiore's
employment is terminated in connection with any change in control, he will be
paid a lump sum amount equal to 2.99 times his base salary and the highest rate
of bonus awarded to him during the three years prior to such termination. If
payment had been made under the agreement as of December 31, 2002, the payment
to Mr. Fiore would have equaled approximately $815,460. In addition, the Board
has entered into Change in Control Severance Agreements with Officers McCloskey,
Wenthen and Fernandez. Under such agreements, if their employment is terminated
within eighteen months of a change in control of the Bank, such individuals
would receive severance benefits equal to approximately three times their
average annual compensation. At December 31, 2002, such payments would have
equaled $367,000, $343,000 and $263,000, respectively, upon termination
following a change in control. All payments to be made under these agreements
shall be reduced as may be necessary so that such payments will not exceed the
tax deductible limits under Section 280G of the Code.
-9-
- --------------------------------------------------------------------------------
PROPOSAL II - APPROVAL OF THE OPTION PLAN
- --------------------------------------------------------------------------------
General
The Company's Board of Directors has adopted the Option Plan. The
Option Plan is subject to approval by the Company's stockholders. Pursuant to
the Option Plan, up to 165,746 shares of Common Stock, 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 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 its
wholly-owned subsidiaries, Synergy Bank and Synergy Financial Services, Inc. The
Option Plan, which shall become effective upon the date of stockholder approval
("Effective Date"), provides for a term of ten years, after which time no awards
may be made. The following summary of the material features of the Option Plan
is qualified in its entirety by reference to the complete provisions of the
Option Plan which is attached hereto as Appendix A. The Option Plan has been
drafted to comply with regulations of the Office of Thrift Supervision ("OTS")
applicable to stock benefit plans established or implemented within one year of
the Company's plan of stock issuance.
The 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 "Option
Committee"). Members of the Option Committee shall be deemed "Non-Employee
Directors" within the meaning of Rule 16b-3 pursuant to the 1934 Act. The Option
Committee may select the 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, the Company's financial performance and a comparison of awards
given by other institutions that have converted from mutual to stock form. A
majority of the members of the 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 Option Committee.
Officers, directors, employees and other persons who are designated by
the Option Committee will be eligible to receive, at no cost to them, Options
under the Option Plan (the "Optionees"). Each Option granted pursuant to the
Option Plan shall be evidenced by an instrument in such form as the Option
Committee shall from time to time approve. It is anticipated that Options
granted under the Option Plan will constitute either Incentive Stock Options
(options that afford favorable tax treatment to recipients upon compliance with
certain restrictions pursuant to Section 422 of the Internal Revenue Code of
1986, as amended ("Code"), and that do not normally result in tax deductions to
the Company) or Non-Incentive Stock Options (options that do not afford
recipients favorable tax treatment under Code Section 422). Option shares may be
paid for in cash, shares of Common Stock, or a combination of both. Common Stock
utilized in full or partial payment of the exercise price must have been owned
by the person exercising such Option not less than six months prior to the date
of exercise. The Company will receive no monetary consideration for the granting
of stock options under the Option Plan. Further, the Company will receive no
consideration other than the option exercise price per share for Common Stock
issued to Optionees upon the exercise of those Options.
Shares issuable under the 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 Option
Plan. No Option
-10-
or any right or interest therein is assignable or transferable except by will or
the laws of descent and distribution. The Option Plan shall continue in effect
for a term of ten years from the Effective Date.
Stock Options
The Option Committee may grant either Incentive Stock Options or
Non-Incentive Stock Options. In general, if an 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 Option Committee at the time of the award. In the
event of the disability or death of an Optionee during employment, an
exercisable Incentive Stock Option will continue to be exercisable for one year
and two years, respectively, to the extent exercisable by the Optionee
immediately prior to the Optionee's disability or death but only if, and to the
extent that, the Optionee was entitled to exercise such Incentive Stock Options
on the date of termination of employment. The terms and conditions of
Non-Incentive Stock Options relating to the effect of an Optionee's termination
of employment or service, disability, or death shall be such terms as the 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 mean between the last bid and ask price on the
date the Option is granted 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 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 average of the highest and lowest selling price of the Common Stock on
such exchange on the date such Option is granted 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 one
year for any one person. The Option Committee may impose additional conditions
upon the right of an Optionee to exercise any Option granted hereunder which are
not inconsistent with the terms of the 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 Optionee
shall have any of the rights of a stockholder of the Company until shares of
Common Stock are issued to such Optionee. Upon the exercise of an Option by an
Optionee (or the Optionee's personal representative), the Option 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 and the Company under Section 16(b) of the 1934 Act or
any related regulations promulgated thereunder.
-11-
The Option Plan provides that the Board of Directors of the Company may
authorize the 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
Optionee any right or benefit which could not be conferred on the Optionee by
the grant of a new Option at such time, and shall not materially decrease the
Optionee's benefits under the Option without the Optionee's consent, except as
otherwise provided under the Option Plan.
Awards Under the Option Plan
The Board or the Option Committee shall from time to time determine the
officers, directors, employees and other persons who shall be granted Options
under the 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 Optionees and in determining the
number of Options to be granted, the Board or the 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. Optionees may, if otherwise eligible, be granted additional
Options. In no event shall Common Stock subject to Options granted to
non-employee directors in the aggregate under the Option Plan exceed 30% of the
total number of shares authorized under the Option Plan, and no more than 5% of
the available shares of Common Stock may be awarded to any individual
non-employee director. In no event shall Common Stock subject to Options granted
to any Employee exceed 25% of the total number of the available shares of Common
Stock.
Pursuant to the terms of the Option Plan, Non-Incentive Stock Options
to purchase up to 6,215 shares of Common Stock will be granted to each
non-employee director of the Company, as of the Effective Date, at an exercise
price equal to the Fair Market Value of the Common Stock on such date of grant.
Options may be granted to newly appointed or elected non-employee directors
within the sole discretion of the Option Committee, and the exercise price shall
be equal to the Fair Market Value of such Common Stock on the date of grant.
Twenty percent of the Options granted to non-employee directors on the Effective
Date will be first exercisable commencing on the one year anniversary of
stockholder approval of the Option Plan and 20% annually thereafter, during such
period of service as a director or a director emeritus. Such Options granted to
non-employee directors will remain exercisable for up to ten years from the date
of grant. Upon the death or disability of a director or director emeritus, such
Options shall be deemed immediately 100% exercisable for their remaining term.
All outstanding Options become immediately exercisable in the event of a change
in control (as defined in the Option Plan) of the Company or the Bank.
The table below presents information related to stock option awards
anticipated to be awarded upon stockholder approval of the Option Plan.
NEW PLAN BENEFIT
OPTION PLAN
----------------
Number of Options
Name and Position Dollar Value (1) to be Granted
- ----------------- ---------------- -----------------
John S. Fiore, President N/A 41,022(2)(3)
and Chief Executive Officer
Kevin M. McCloskey, Senior Vice President N/A 20,000(2)
and Chief Operating Officer
Kevin A. Wenthen, Senior Vice President N/A 20,000(2)
and Chief Administrative Officer
Ralph A. Fernandez, Vice President N/A 20,000(2)
and Chief Financial Officer
Kenneth S. Kasper, Director N/A 6,215(4)
-12-
Number of Options
Name and Position Dollar Value (1) to be Granted
- ----------------- ---------------- -----------------
Nancy A. Davis, Director N/A 6,215(3)(4)
Magdalena M. De Perez, Director N/A 6,215(4)
David H. Gibbons, Jr., Director N/A 6,215(4)
Paul T. LaCorte, Director N/A 6,215(4)
George Putvinski, Director N/A 6,215(4)
W. Phillip Scott, Director N/A 6,215(3)(4)
Albert N. Stender, Director N/A 6,215(4)
Executive Group (4 persons) N/A 101,022(2)
Non-Executive Director Group (8 persons) N/A 49,720(4)
Non-Executive Officer Employee Group N/A 15,000(2)
(10 persons)
- ------------------------
(1) The exercise price of such Options shall be equal to the fair market
value of the Common Stock on the date of stockholder approval of the
Option Plan. Thus, on the date of stockholder approval, the Options
will have zero value. The exact dollar value of the Options will equal
the difference between the exercise price of such Options and the
market price of the Common Stock on the date of exercise of an Option.
Accordingly, the exact dollar value is not presently determinable.
(2) Options awarded to officers and employees will be exercisable as
follows: Options awarded at the time of stockholder approval are first
exercisable at the rate of 20% on the one year anniversary of the date
of grant and 20% annually 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. Options not exercised
within three months of termination of service as an employee shall
thereafter be deemed non-incentive stock options.
(3) Nominee for reelection as a director of the Company.
(4) Options awarded to directors are first exercisable at a rate of 20% one
year after the date of grant and 20% annually thereafter, during such
period of 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 stockholders of the Company,
within the sole discretion of the 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 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 (including a special or non-recurring
dividend that has the effect of a return of capital distribution to
stockholders), the 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 Optionee in connection therewith; and/or (iii) make such other adjustments
in connection with the Option Plan as the Option Committee, in its sole
discretion, deems necessary, desirable, appropriate or advisable. However, no
action may be taken by the Option Committee which would cause Incentive Stock
Options granted pursuant to the Option Plan to fail to meet the requirements of
Section 422 of the Code without the consent of the Optionee.
-13-
The Option Committee will at all times have the power to accelerate the
exercise date of all Options granted under the Option Plan. In the case of a
Change in Control of the Bank or the Company as determined by the Option
Committee, all outstanding Options shall become immediately exercisable. A
Change in Control is defined to include (i) the sale of all, or a material
portion, of the assets of the Company or the Bank; (ii) the merger or
recapitalization of the bank or the Company whereby the Bank or the Company is
not the surviving entity; (iii) a change in control of the Bank or the Company
as otherwise defined or determined by the OTS 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. This limitation shall not apply to the
purchase of shares by underwriters in connection with a pubic offering of
Company stock or the purchase of shares of up to 25% of any class of securities
of the Company by a tax-qualified employee stock benefit plan which is exempt
from the approval requirements set forth under 12 C.F.R. ss.574.3(c)(1)(vi).
Change in Control shall not include a transaction whereby Synergy, MHC shall
merge into the Company or the Bank and a new parent of the Company or the Bank
is formed.
In the event of a Change in Control, the 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 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 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 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.
The power of the 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 Option
Committee to make adjustments in connection with the 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
Option Committee to adapt the Option Plan to operate in changed circumstances,
to adjust the 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 Option Committee also has an anti-takeover
effect, by allowing the Option Committee to adjust the 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.
-14-
Although the Option Plan may have an anti-takeover effect, the
Company's Board of Directors did not adopt the Option Plan specifically for
anti-takeover purposes. The Option Plan could render it more difficult to obtain
support for stockholder 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.
In the event that the Bank shall be deemed critically undercapitalized
(as defined at 12 C.F.R. 565.4),is subject to enforcement action by the OTS, or
receives a capital directive under 12 C.F.R. 565.7, then all Options awarded to
executive officers or directors of the Company or its subsidiaries must exercise
such options or forfeit such Options.
Amendment and Termination of the Option Plan
The Board of Directors may alter, suspend or discontinue the Option
Plan, except that no action of the Board shall increase the maximum number of
shares of Common Stock issuable under the Option Plan, materially increase the
benefits accruing to Optionees under the Option Plan or materially modify the
requirements for eligibility for participation in the Option Plan unless such
action of the Board shall be subject to approval or ratification by the
stockholders of the Company.
Pursuant to OTS regulations applicable to stock benefit plans
established or implemented within one year following the completion of a
mutual-to-stock conversion or plan of stock issuance of a federally chartered
savings institution such as the Bank, the Option Plan contains certain
restrictions and limitations, including among others, provisions requiring the
vesting of Options granted to occur no more rapidly than ratably over a five
year period and the resultant prohibition against accelerated vesting of option
grants upon the occurrence of an event other than the death or disability of the
Option holder or a Change in Control of the Company or the Bank. The Company
does not have any present intention to engage in any transaction that would
result in the accelerated vesting of Options as permitted by the Option Plan,
however, the Board has determined that the implementation of such plan
provisions is in the best interests of the stockholders of the Company, as well
as the officers, directors and employees of the Company.
Possible Dilutive Effects of the Option Plan
The Common Stock to be issued upon the exercise of Options awarded
under the Option Plan may either be authorized but unissued shares of Common
Stock or shares purchased in the open market. Because the stockholders of the
Company do not have preemptive rights, to the extent that the Company funds the
Option Plan, in whole or in part, with authorized but unissued shares, the
interests of current stockholders may be diluted. If upon the exercise of all of
the Options, the Company delivers newly issued shares of Common Stock (i.e.,
165,746 shares of Common Stock), then the dilutive effect to current
stockholders would be approximately 4.7%. The Company can avoid dilution
resulting from awards under the 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 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 an Optionee nor entitle the Company to a tax deduction at
the time of such grant.
-15-
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 an 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 an Optionee. An
Optionee will recognize capital gain or loss upon resale of the shares of
Common Stock received pursuant to the exercise of Incentive Stock 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 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 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 an 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 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 expects to use the "intrinsic value based method" as
prescribed by Accounting Principles Board Opinion 25. Accordingly, neither the
grant nor the exercise of an Option under the Option Plan currently requires any
charge against earnings under accounting principles generally accepted in the
United States of America. Common Stock issuable pursuant to outstanding Options
under the Option Plan will be considered outstanding for purposes of calculating
earnings per share on a diluted basis.
Stockholder Approval
Stockholder approval of the Option Plan is being sought in accordance
with OTS regulations. Additional purposes of requesting stockholder approval of
the Option Plan are to qualify the Option Plan for the granting of Incentive
Stock Options in accordance with the Code, to enable Optionees to qualify for
certain exempt transactions related to the short-swing profit recapture
provisions of Section 16(b) of the 1934 Act, 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
eligible to be cast at the Meeting (excluding shares of Common Stock held by the
MHC) in person or by proxy is required to constitute stockholder approval of
this Proposal I in accordance with OTS regulations. In addition, a vote of
approval by a majority of the shares of Common Stock of all holders, shall
constitute approval by the stockholders shall be necessary for the Option Plan
to be deemed approved by the stockholders of the Company.
-16-
THE OTS DOES NOT ENDORSE OR APPROVE THE OPTION PLAN IN ANY WAY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE OPTION PLAN.
- --------------------------------------------------------------------------------
PROPOSAL III - APPROVAL OF THE RESTRICTED STOCK PLAN
- --------------------------------------------------------------------------------
General
The Board of Directors of the Company have adopted the Restricted Stock
Plan (the "RSP") as a method of providing directors, officers, and employees of
the Company and its wholly-owned subsidiaries, Synergy Bank and Synergy
Financial Services, Inc., with a proprietary interest in the Company in a manner
designed to encourage such persons to remain in the employment or service of the
Bank or Synergy Financial Services, Inc. The Company will contribute sufficient
funds to the RSP to purchase Common Stock representing up to 66,298 shares of
Common Stock. The RSP may purchase such shares in the open market or from the
Company from authorized but unissued shares of Common Stock or treasury shares.
All of the Common Stock to be purchased by the RSP will be purchased at the Fair
Market Value of such stock on the date of purchase. Awards under the RSP will be
made in recognition of expected future services to the Company by its directors,
officers and employees responsible for implementation of the policies adopted by
the Company's Board of Directors and as a means of providing a further retention
incentive. The following is a summary of the material features of the RSP which
is qualified in its entirety by reference to the complete provisions of the RSP
which is attached hereto as Appendix B. The RSP has been drafted to comply with
OTS regulations applicable to stock benefit plans implemented within one year of
the Company's plan of stock issuance.
Awards Under the Restricted Stock Plan
Benefits under the RSP ("Plan Share Awards") may be granted at the sole
discretion of a committee comprised of not less than two directors who are not
employees of the Company (the "RSP Committee") appointed by the Company's Board
of Directors. The RSP is managed by trustees (the "RSP Trustees") who are
non-employee directors of the Company and who have the responsibility to invest
all funds contributed by the Bank to the trust created for the RSP (the "RSP
Trust"). Unless the terms of the RSP or the RSP Committee specifies otherwise,
awards under the RSP will be in the form of restricted stock payable as the Plan
Share Awards shall be earned and non-forfeitable. Twenty percent (20%) of such
awards shall be earned and non-forfeitable on the one year anniversary of the
date of grant of such awards, and 20% annually thereafter, provided that the
recipient of the award remains an employee, director or director emeritus during
such period. A recipient of such restricted stock will not be entitled to voting
rights associated with such shares prior to the applicable date such shares are
earned. Dividends paid on Plan Share Awards shall be held in arrears and
distributed upon the date the Plan Share Awards are earned. Any shares held by
the RSP Trust which are not yet earned shall be voted by the RSP Trustees, as
directed by the RSP Committee. If a recipient of such restricted stock
terminates employment or service for reasons other than death, disability or a
Change in Control of the Company or the Bank, the recipient forfeits all rights
to the awards under restriction. If the recipient's termination of employment or
service is caused by death, disability or a Change in Control of the Company or
the Bank, all restrictions expire and all shares allocated shall become
unrestricted. Plan Share Awards to directors shall be immediately
non-forfeitable in the event of the death, disability or a Change in Control of
the Company or the Bank, of such director and distributed as soon as practicable
thereafter. The Board of Directors can terminate the RSP at any time, and if it
does so, any shares not allocated will revert to the Bank.
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Plan Share Awards under the RSP will be determined by the RSP
Committee. In no event shall any employee receive Plan Share Awards in excess of
25% of the aggregate Common Stock authorized under the RSP ("Plan Share
Reserve"). Plan Share Awards may be granted to newly elected or appointed non-
employee directors subsequent to the effective date of the RSP, provided that
the Plan Share Awards made to non-employee directors shall not exceed 30% of the
Plan Share Reserve in the aggregate or 5% of the total Plan Share Reserve to any
individual non-employee director.
The aggregate number of Plan Shares available for issuance pursuant to
the Plan Share Awards and the number of shares to which any Plan Share Award
relates shall be proportionately adjusted for any increase or decrease in the
total number of outstanding shares of Common Stock issued subsequent to the
effective date of the RSP, resulting from any split, subdivision or
consolidation of the Common Stock or other capital adjustment, change or
exchange of Common Stock, or other increase or decrease in the number or kind of
shares effected without receipt or payment of consideration by the Company.
The following table presents information related to the anticipated
award of Common Stock under the RSP as authorized pursuant to the terms of the
RSP or the anticipated actions of the RSP Committee.
NEW PLAN BENEFITS
RESTRICTED STOCK PLAN
---------------------
Number of Shares
Name and Position Dollar Value ($)(1) to be Granted (2)
- ----------------- ------------------- -----------------
John S. Fiore, President $299,464 16,409(3)
and Chief Executive Officer
Kevin M. McCloskey, Senior Vice President $136,875 7,500
and Chief Operating Officer
Kevin A. Wenthen, Senior Vice President $136,875 7,500
and Chief Administrative Officer
Ralph A. Fernandez, Vice President $136,875 7,500
and Chief Financial Officer
Kenneth S. Kasper, Director $ 45,369 2,486
Nancy A. Davis, Director $ 45,369 2,486(3)
Magdalena M. De Perez, Director $ 45,369 2,486
David H. Gibbons, Jr., Director $ 45,369 2,486
Paul T. LaCorte, Director $ 45,369 2,486
George Putvinski, Director $ 45,369 2,486
W. Phillip Scott, Director $ 45,369 2,486(3)
Albert N. Stender, Director $ 45,369 2,486
Executive Group (4 persons) $710,089 38,909
Non-Executive Director Group (8 persons) $362,956 19,888
Non-Executive Officer Employee Group $136,875 7,500
(10 persons)
- ----------------------
(1) These values are based on the last reported sales price of the Common
Stock on the OTC Electronic Bulletin Board on February 28, 2003, which
was $18.25 per share. The exact dollar value of the Common Stock
granted will equal the market price of the Common Stock on the date of
vesting of such awards. Accordingly, the exact dollar value is not
presently determinable.
(2) All Plan Share Awards presented herein shall be earned at the rate of
20% one year after the date of grant and 20% annually thereafter. All
awards shall become immediately 100% vested upon death or disability or
termination of service following a change in control of the Company or
the Bank (as defined in the RSP). Plan Share Awards shall continue to
vest during periods of service as an employee, director, or director
emeritus.
(3) Nominee for reelection as a director of the Company.
-18-
Amendment and Termination of the Restricted Stock Plan
The Board may amend or terminate the RSP at any time. However, no
action of the Board may increase the maximum number of Plan Shares permitted to
be awarded under the RSP, except for adjustments in the Common Stock of the
Company, materially increase the benefits accruing to Participants under the RSP
or materially modify the requirements for eligibility for participation in the
RSP unless such action of the Board shall be subject to ratification by the
stockholders of the Company.
Pursuant to OTS regulations applicable to stock benefit plans
established or implemented within one year following the completion of a
mutual-to-stock conversion or a plan of stock issuance of a federally chartered
savings institution such as the Bank, the RSP contains certain restrictions and
limitations, including among others, provisions requiring the vesting of awards
granted to occur no more rapidly than ratably over a five year period and the
resultant prohibition against accelerated vesting of award grants upon the
occurrence of an event other than the death or disability of the Plan Share
Award recipient or upon a Change in Control of the Company or the Bank. The
Company does not have any present intention to engage in any transaction that
would result in the accelerated vesting of Plan Share Awards as permitted by the
RSP, however, the Board has determined that the implementation of such plan
provisions is in the best interests of the stockholders of the Company, as well
as the officers, directors and employees of the Company.
Possible Dilutive Effects of the Restricted Stock Plan
It is the Company's present intention to fund the RSP through
open-market purchases of Common Stock, which will cause no dilutive effect. The
RSP provides, however, that Common Stock to be awarded may be acquired by the
RSP through open-market purchases or from authorized but unissued shares of
Common Stock from the Company. In that stockholders do not have preemptive
rights, to the extent that the Company utilizes authorized but unissued shares
to fund Plan Share Awards, the interests of current stockholders may be diluted.
If all Plan Share Awards (i.e., 66,298 shares of Common Stock) are funded with
newly issued shares, the dilutive effect to existing stockholders would be
approximately 1.9%.
Federal Income Tax Consequences
Common Stock awarded under the RSP is generally taxable to the
recipient at the time that such awards become earned and non-forfeitable, based
upon the Fair Market Value of such stock at the time of such vesting.
Alternatively, a recipient may make an election pursuant to Section 83(b) of the
Code within 30 days of the date of the transfer of such Plan Share Award to
elect to include in gross income for the current taxable year the Fair Market
Value of such award. Such election must be filed with the Internal Revenue
Service within 30 days of the date of the transfer of the stock award. The Bank
will be allowed a tax deduction for federal tax purposes as a compensation
expense equal to the amount of ordinary income recognized by a recipient of Plan
Share Awards at the time the recipient recognizes taxable ordinary income. A
recipient of a Plan Share Award may elect to have a portion of such award
withheld by the RSP Trust in order to meet any necessary tax withholding
obligations.
Accounting Treatment
For accounting purposes, the Company will recognize compensation
expense for Common Stock subject to Plan Share Awards over the vesting period at
the fair market value of the shares on the date they are awarded.
-19-
Stockholder Approval
The Company is submitting the RSP to stockholders for approval in
accordance with OTS regulations. The RSP and awards made thereunder will not be
effective until receipt of stockholder approval of Proposal II. Additionally,
stockholder approval of the RSP will enable recipients of Plan Share Awards to
qualify for certain exemptive treatment from the short-swing profit recapture
provisions of Section 16(b) of the 1934 Act. The affirmative vote of holders of
a majority of the total votes eligible to be cast at the Meeting (excluding
shares of Common Stock held by the MHC) in person or by proxy is required to
constitute stockholder approval of this Proposal II in accordance with OTS
regulations.
THE OTS DOES NOT ENDORSE OR APPROVE THE RESTRICTED STOCK PLAN IN ANY
WAY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
RESTRICTED STOCK PLAN.
- --------------------------------------------------------------------------------
PROPOSAL IV - RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
On December 5, 2002, the Company dismissed Fontanella and Babitts,
Certified Public Accountants, as the Company's independent auditors and
appointed Grant Thornton LLP as its new independent auditors. The decision to
change accountants was approved by the Company's Board of Directors. Fontanella
and Babitts' reports on the Company's consolidated financial statements for the
two fiscal years ended December 31, 2001 did not contain an adverse opinion or
disclaimer of opinion, and were not qualified or modified as to uncertainty,
audit scope or accounting principles. In connection with audits of the two
fiscal years ended December 31, 2001 and any subsequent interim period preceding
the date hereof, there were no disagreements or reportable events between the
Company and Fontanella and Babitts on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to the satisfaction of Fontanella and Babitts, would have
caused them to make a reference to the subject matter of the disagreements or
reportable events in connection with their reports. During the two most recent
fiscal years and the subsequent interim period to the date hereof, the Company
did not consult with Grant Thornton LLP regarding the application of accounting
principals to any transaction or as to any accounting, auditing or financial
reporting issues.
The Board of Directors of the Company has appointed Grant Thornton LLP
as the Company's independent auditor for the fiscal year ending December 31,
2003, subject to ratification by the Company's stockholders. A representative of
Grant Thornton LLP is expected to be present at the Meeting, will have the
opportunity to make a statement if he so desires, and is expected to be
available to respond to appropriate questions.
Ratification of the appointment of the auditors requires the
affirmative vote of a majority of the votes cast, in person or by proxy, by the
stockholders of the Company at the Meeting. The Board of Directors recommends
that stockholders vote "FOR" the ratification of the appointment of Grant
Thornton LLP as the Company's auditors for the 2003 fiscal year.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be considered for inclusion in the Company's proxy
materials for the annual meeting of stockholders to be held in 2004, all
stockholder proposals must be received at the Company's executive
-20-
office at 310 North Avenue East, Cranford, New Jersey 07016 by November 8, 2003.
Stockholder proposals must meet other applicable criteria as set forth in the
Company's bylaws in order to be considered for inclusion in the Company's proxy
materials.
Under the Company's bylaws, stockholder proposals that are not included
in the Company's proxy statement for the 2004 annual meeting, will only be
considered at such meeting if the stockholder submits notice of the proposal to
the Company at the above address by February 21, 2004. Stockholder proposals
must meet other applicable criteria as set forth in the Company's bylaws in
order to be considered at the 2004 annual meeting.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any other matters to come before
the Meeting. However, if any other matters should properly come before the
Meeting or any adjournments, 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.
- --------------------------------------------------------------------------------
FORM 10-KSB
- --------------------------------------------------------------------------------
A copy of the Company's annual report on Form 10-KSB for the fiscal
year ended December 31, 2002 will be furnished without charge to stockholders as
of the Record Date upon written request to the Secretary, Synergy Financial
Group, Inc., 310 North Avenue East, Cranford, New Jersey 07016.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Kevin A. Wenthen
-------------------
Kevin A. Wenthen
Corporate Secretary
-21-
APPENDIX A
SYNERGY FINANCIAL GROUP, INC.
2003 STOCK OPTION PLAN
1. Purpose of the Plan. The Plan shall be known as the Synergy
Financial Group, Inc. ("Company") 2003 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,
directors, employees and other persons 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 Synergy Bank, 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 a material
portion, of the assets of the Company or its Subsidiaries; (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 Office of Thrift Supervision 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,
or the purchase of shares of up to 25% of any class of securities of the Company
by a tax-qualified employee stock benefit plan which is exempt from the approval
requirements, set forth under 12 C.F.R. ss.574.3(c)(1)(vi) as now in effect or
as may hereafter be amended. 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. A Change in Control shall not include a transaction
whereby Synergy, MHC shall merge into the Company or the Bank and a new Parent
of the Company or the Bank is formed.
"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.
A-1
"Common Stock" shall mean common stock of the Company, or any successor
or parent corporation thereto.
"Company" shall mean the Synergy Financial Group, 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 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 the date specified in Section 15 hereof.
"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 the mean between the last bid and ask price of such
Common Stock 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 average of the highest and lowest selling price
of such Common Stock on such exchange on such date, or if there were no sales on
said date, then the Fair Market Value 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.
"MHC" shall mean Synergy, MHC, the mutual holding company of the Bank.
"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.
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"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.
"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 Director, 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 Synergy Financial Group, Inc. 2003 Stock Option
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, including the Bank or Synergy Financial Services, Inc.
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 165,746 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, 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
C.F.R. 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
A-3
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 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,
Directors, Employees and other persons 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 non-employee
Directors in the aggregate under this Plan exceed more than 30% of the total
number of Shares authorized for delivery under this Plan pursuant to Section 3
herein or more than 5% to any individual non-employee Director. In no event
shall Shares subject to Options granted to any Employee exceed more than 25% 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:
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(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% on the one year anniversary
of the date of grant and 20% annually thereafter during such periods of service
as an Employee, Director or Director Emeritus.
(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. The Option shall not be deemed exercised until
the Company has received full payment for the exercise price of such Option.
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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) Options Granted to Directors. Subject to the limitations of Section
6(c), Non- Incentive Stock Options to purchase 6,215 shares of Common Stock will
be granted to each Director who is not an Employee as of the Effective Date, at
an exercise price equal to the Fair Market Value of the Common Stock on such
date of grant. The Options will be first exercisable at the rate of 20% on the
one year anniversary of the Effective Date and 20% annually thereafter during
such periods of service as a Director or Director Emeritus. Upon the death or
Disability of the Director or Director Emeritus, such Option shall be deemed
immediately 100% exercisable. Such Options 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 as a Director or Director Emeritus. 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. All outstanding Awards shall become
immediately exercisable in the event of a Change in Control of the Bank or the
Company. 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.
(b) 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.
(c) 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.
(d) 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.
(e) 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
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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% on the one
year anniversary of the date of grant and 20% annually thereafter during such
periods of service as an Employee, Director or Director Emeritus.
(f) 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. The Option shall not be deemed exercised until
the Company has received full payment for the exercise price of such Option.
(g) Transferability. Any Non-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.
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 based upon the Optionee's
continuing status as a Director or Director Emeritus of the Bank or the Company,
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
which is two (2) years after the date of death of such Optionee but only if, and
to the extent that, the Optionee was entitled to exercise any such
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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 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, and provided further that any such
terms and conditions may not be inconsistent with applicable regulations of the
Office of Thrift Supervision or other appropriate banking regulatory agency.
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).
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(b) Change in Control. All outstanding Awards shall become immediately
exercisable in the event of a Change in Control of the Company or the Bank. 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:
(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;
provided that such action is not contrary to regulations of the OTS or other
appropriate banking regulatory agency then in effect.
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(e) Non-recurring Dividends. Notwithstanding anything herein to the
contrary, upon the payment of a special or non-recurring dividend that has the
effect of a return of capital distribution to the stockholders, the Company
shall, within the discretion of the Committee, either:
(i) adjust the Option exercise price per share in a proportionate and
equitable manner to reflect the payment of such capital distribution, or
(ii) make an equivalent payment to each Participant holding an
outstanding Option as of the dividend record date of such dividend. Such payment
shall be made at substantially the same time, in substantially the same form and
in substantially the same amount per Optioned Stock as the dividend or other
distribution paid with respect to outstanding Shares; provided, however, that if
any dividend or distribution on outstanding Shares is paid in property other
than cash, the Company, in the Committee's discretion, may make such payment in
a cash amount per Optioned Stock equal in fair market value to the fair market
value of the non-cash dividend or distribution; or
(iii) take the action described in Section 13(e)(i) with respect
to certain outstanding Options and the action described in Section 13(e)(ii)
with respect to the remaining outstanding Options.
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 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 upon the date of
approval of the Plan by the stockholders of the Company, subject to approval or
non-objection by the Office of Thrift Supervision, if applicable. The Committee
may make a determination related to Awards prior to the Effective Date with such
Awards to be effective upon the date of stockholder approval of the Plan.
16. Approval by Stockholders. The Plan shall be approved by
stockholders of the Company within twelve (12) months before or after the date
the Plan is approved by the Board. A vote of approval by a majority of the
shares of Common Stock, excluding shares of Common Stock owned by the MHC shall
constitute approval by the stockholders for purposes of compliance with
regulations of the Office of Thrift Supervision. In addition, a vote of approval
by a majority of the shares of Common Stock of all holders shall constitute
approval by the stockholders shall be necessary for the Plan to be deemed
approved by the stockholders of the Company.
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.
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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.
(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 defined at 12 C.F.R. 563.39(b)(1) as determined by
the Board of Directors, 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.
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(f) In the event that the Bank shall be deemed critically
undercapitalized (as defined at 12 C.F.R. 565.4), is subject to enforcement
action by the Office of Thrift Supervision, or receives a capital directive
under 12 C.F.R. 565.7, then all Options awarded to executive officers or
directors of the Company or its Subsidiaries must exercise such options or
forfeit such Options.
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 Director, Employee or other person 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, Director Emeritus or in any other capacity with the Company,
the Bank or other Subsidiaries.
23. 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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APPENDIX B
SYNERGY FINANCIAL GROUP, INC.
2003 RESTRICTED STOCK PLAN
AND TRUST AGREEMENT
Article I
---------
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 Synergy Financial Group, Inc. ("Company") hereby establishes the
Restricted Stock Plan (the "Plan") and Trust (the "Trust") upon the terms and
conditions hereinafter stated in this Restricted Stock Plan and Trust Agreement
(the "Agreement").
1.02 The Trustee hereby accepts this Trust and agrees to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions hereinafter stated.
Article II
----------
PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to reward and to retain personnel of
experience and ability in key positions of responsibility with the Company and
its subsidiaries, by providing such personnel of the Company and its
subsidiaries with an equity interest in the Company as compensation for their
prior and anticipated future professional contributions and service to the
Company and its subsidiaries.
Article III
-----------
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.
"Bank" means Synergy Bank, a federal stock savings bank.
"Beneficiary" means the person or persons designated by the Participant
to receive any benefits payable under the Plan in the event of such
Participant's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Participant's surviving spouse, if
any, or if none, the Participant's estate.
"Board" means the Board of Directors of the Company, or any successor
corporation thereto.
"Cause" means the personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profits, intentional
failure to perform stated duties, willful violation of a material provision of
any law, rule or regulation (other than traffic violations and similar offense),
or a material violation of a final cease-and-desist order or any other action
which results in a substantial financial loss to the Company or its
Subsidiaries.
B-1
"Change in Control" shall mean: (i) the sale of all, or a material
portion, of the assets of the Company or the Bank; (ii) the merger or
recapitalization of the Company or the Bank whereby the Company or the Bank is
not the surviving entity; (iii) a change in control of the Company or the Bank,
as otherwise defined or determined by the Office of Thrift Supervision ("OTS")
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 1934 Act 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 of up to 25% of any class
of securities of the Company by a tax-qualified employee stock benefit plan
which is exempt from the approval requirements, set forth under 12 C.F.R.
ss.574.3(c)(1)(vi) as now in effect or as may hereafter be amended. 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. The
decision of the Committee as to whether a Change in Control has occurred shall
be conclusive and binding. A Change in Control shall not include a transaction
whereby MHC shall merge into the Company or the Bank and a new parent
corporation of the Bank or the Company is formed.
"Committee" means the Board of Directors of the Company or the
Restricted Stock Plan Committee appointed by the Board of Directors of the
Company pursuant to Article IV hereof.
"Common Stock" means shares of the common stock of the Company, or any
successor corporation or parent thereto.
"Company" means Synergy Financial Group, Inc., and any successor
corporation thereto.
"Conversion" means the effective date of the stock charter of the Bank
and simultaneous acquisition of all of the outstanding stock of the Bank by the
Company.
"Director" means a member of the Board of the Company or any
Subsidiary.
"Director Emeritus" means 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 Company or the Bank from time to
time.
"Disability" means any physical or mental impairment which renders the
Participant incapable of continuing in the employment or service of the Company
or any Subsidiary in his current capacity as determined by the Committee.
"Employee" means any person who is employed by the Company or a
Subsidiary.
"Effective Date" shall mean the date of stockholder approval of the
Plan by the Company stockholders.
"MHC" means Synergy, MHC, the mutual holding company of the Bank.
"Participant" means an Employee or Director who receives a Plan Share
Award under the Plan.
"Plan Shares" means shares of Common Stock held in the Trust which are
awarded or issuable to a Participant pursuant to the Plan.
B-2
"Plan Share Award" or "Award" means a right granted to a Participant
under this Plan to earn or to receive Plan Shares.
"Plan Share Reserve" means the shares of Common Stock held by the Trust
pursuant to Sections 5.03 and 5.04.
"Subsidiary" means those subsidiaries of the Company which, with the
consent of the Board, agree to participate in this Plan.
"Trustee" or "Trustee Committee" means that person(s) or entity
nominated by the Committee and approved by the Board pursuant to Sections 4.01
and 4.02 to hold legal title to the Plan assets for the purposes set forth
herein.
Article IV
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ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered and
interpreted by the Board of Directors of the Company or a Committee appointed by
said Board, which shall consist of not less than two non-employee members of the
Board, which shall have all of the powers allocated to it in this and other
sections of the Plan. All persons designated as members of the Committee shall
be "Non-Employee Directors" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended ("1934 Act"). The interpretation and
construction by the Committee of any provisions of the Plan or of any Plan Share
Award granted hereunder shall be final and binding. The Committee shall act by
vote or written consent of a majority of its members. Subject to the express
provisions and limitations of the Plan, the Committee may adopt such rules,
regulations and procedures as it deems appropriate for the conduct of its
affairs. The Committee shall report its actions and decisions with respect to
the Plan to the Board at appropriate times, but in no event less than one time
per calendar year. The Committee shall recommend to the Board one or more
persons or entity to act as Trustee in accordance with the provision of this
Plan and Trust and the terms of Article VIII hereof.
4.02 Role of the Board. The members of the Committee and the Trustee
shall be appointed or approved by, and will serve at the pleasure of the Board.
The Board may in its discretion from time to time remove members from, or add
members to, the Committee, and may remove, replace or add Trustees. The Board
shall have all of the powers allocated to it in this and other sections of the
Plan, may take any action under or with respect to the Plan which the Committee
is authorized to take, and may reverse or override any action taken or decision
made by the Committee under or with respect to the Plan, provided, however, that
the Board may not revoke any Plan Share Award already made except as provided in
Section 7.01(b) herein.
4.03 Limitation on Liability. No member of the Board, the Committee or
the Trustee shall be liable for any determination made in good faith with
respect to the Plan or any Plan Share Awards granted. If a member of the Board,
Committee or any Trustee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by any reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Company
shall indemnify such member against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him or her in connection with such action, suit or proceeding if he or she
acted in good faith and in a manner
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he or she reasonably believed to be in the best interests of the Company and its
Subsidiaries and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Article V
---------
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Board of Directors of the
Company shall determine the amounts (or the method of computing the amounts) to
be contributed by the Company to the Trust established under this Plan. Such
amounts shall be paid to the Trustee at the time of contribution. No
contributions to the Trust by Participants shall be permitted except with
respect to amounts necessary to meet tax withholding obligations.
5.02 Initial Investment. Any funds held by the Trust prior to
investment in the Common Stock shall be invested by the Trustee in such
interest-bearing account or accounts at the Bank as the Trustee shall determine
to be appropriate.
5.03 Investment of Trust Assets. Following approval of the Plan by
stockholders of the Company and receipt of any other necessary regulatory
approvals, the Trust shall purchase Common Stock of the Company in an amount
equal to up to 100% of the Trust's assets, after providing for any required
withholding as needed for tax purposes, provided, however, that the Trust shall
not purchase more than 66,298 shares of Common Stock. The Trustee may purchase
shares of Common Stock in the open market or, in the alternative, may purchase
authorized but unissued shares of the Common Stock or treasury shares from the
Company sufficient to fund the Plan Share Reserve.
5.04 Effect of Allocations, Returns and Forfeitures Upon Plan Share
Reserves. Upon the allocation of Plan Share Awards under Sections 6.02 and 6.05,
or the decision of the Committee to return Plan Shares to the Company, the Plan
Share Reserve shall be reduced by the number of Shares subject to the Awards so
allocated or returned. Any Shares subject to an Award which are not earned
because of forfeiture by the Participant pursuant to Section 7.01 shall be added
to the Plan Share Reserve.
Article VI
----------
ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Employees are eligible to receive Plan Share Awards
within the sole discretion of the Committee. Directors who are not otherwise
Employees shall receive Plan Share Awards pursuant to Section 6.05.
6.02 Allocations. The Committee will determine which of the Employees
will be granted Plan Share Awards and the number of Shares covered by each
Award, provided, however, that in no event shall any Awards be made which will
violate the Charter or Bylaws of the Company or its Subsidiaries or any
applicable federal or state law or regulation. In the event Shares are forfeited
for any reason or additional Shares are purchased by the Trustee, the Committee
may, from time to time, determine which of the Employees will be granted Plan
Share Awards to be awarded from forfeited Shares. In selecting those Employees
to whom Plan Share Awards will be granted and the number of shares covered by
such Awards, the Committee shall consider the prior and anticipated future
position, duties and responsibilities of the Employees, the value of their prior
and anticipated future services to the Company and its Subsidiaries, and any
other factors the Committee may deem relevant. All actions by the Committee
shall be deemed
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final, except to the extent that such actions are revoked by the Board.
Notwithstanding anything herein to the contrary, in no event shall any
Participant receive Plan Share Awards in excess of 25% of the aggregate Plan
Shares authorized under the Plan.
6.03 Form of Allocation. As promptly as practicable after a
determination is made pursuant to Section 6.02 or Section 6.05 that a Plan Share
Award is to be made, the Committee shall notify the Participant in writing of
the grant of the Award, the number of Plan Shares covered by the Award, and the
terms upon which the Plan Shares subject to the award may be earned. The date on
which the Committee makes its award determination or the date the Committee so
notifies the Participant shall be considered the date of grant of the Plan Share
Awards as determined by the Committee. The Committee shall maintain records as
to all grants of Plan Share Awards under the Plan.
6.04 Allocations Not Required. Notwithstanding anything to the contrary
at Sections 6.01, 6.02 or 6.05, no Employee shall have any right or entitlement
to receive a Plan Share Award hereunder, such Awards being at the sole
discretion of the Committee and the Board, nor shall the Employees as a group
have such a right. The Committee may, with the approval of the Board (or, if so
directed by the Board) return all Common Stock in the Plan Share Reserve to the
Company at any time, and cease issuing Plan Share Awards.
6.05 Awards to Directors. Notwithstanding anything herein to the
contrary, upon the Effective Date, a Plan Share Award consisting of 2,486 Plan
Shares shall be awarded to each Director of the Company that is not otherwise an
Employee. Such Plan Share Award shall be earned and non-forfeitable at the rate
of one-fifth as of the one-year anniversary of the Effective Date and an
additional one-fifth following each of the next four successive years during
such periods of service as a Director or Director Emeritus. Such Plan Share
Award shall be immediately 100% earned and non-forfeitable in the event of the
death or Disability of such Director or Director Emeritus. Such Plan Share Award
shall be immediately 100% earned and non-forfeitable upon a Change in Control of
the Company or the Bank. Subsequent to the Effective Date, Plan Share Awards may
be awarded to newly elected or appointed Directors of the Company by the
Committee, provided that total Plan Share Awards granted to non- employee
Directors of the Company shall not exceed 30% of the total Plan Share Reserve in
the aggregate under the Plan or 5% of the total Plan Share Reserve to any
individual non-employee Director.
Article VII
-----------
EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earnings Plan Shares; Forfeitures.
(a) General Rules. Unless the Committee shall specifically state to the
contrary at the time a Plan Share Award is granted, Plan Shares subject to an
Award shall be earned and non-forfeitable by a Participant at the rate of
one-fifth of such Award following one year after the granting of such Award, and
an additional one-fifth following each of the next four successive years;
provided that such Participant remains an Employee, Director, or Director
Emeritus during such period. Notwithstanding anything herein to the contrary, in
no event shall a Plan Share Award granted hereunder be earned and
non-forfeitable by a Participant more rapidly than at the rate of one-fifth of
such Award as of the one year anniversary of the date of grant and an additional
one-fifth following each of the next four successive years.
B-5
(b) Revocation for Misconduct. Notwithstanding anything herein to the
contrary, the Board shall, by resolution, immediately revoke, rescind and
terminate any Plan Share Award, or portion thereof, previously awarded under
this Plan, to the extent Plan Shares have not been delivered thereunder to the
Participant, whether or not yet earned, in the case of a Participant who is
discharged from the employ or service of the Company or a Subsidiary for Cause,
or who is discovered after termination of employment or service to have engaged
in conduct that would have justified termination for Cause. A determination of
Cause shall be made by the Board within its sole discretion.
(c) Exception for Terminations Due to Death or Disability.
Notwithstanding the general rule contained in Section 7.01(a) above, all Plan
Shares subject to a Plan Share Award held by a Participant whose employment or
service with the Company or a Subsidiary terminates due to death or Disability,
shall be deemed earned and nonforfeitable as of the Participant's last date of
employment or service with the Company or a Subsidiary and shall be distributed
as soon as practicable thereafter.
(d) Exception for Termination after a Change in Control.
Notwithstanding the general rule contained in Section 7.01 above, all Plan
Shares subject to a Plan Share Award held by a Participant shall be deemed to be
immediately 100% earned and non-forfeitable in the event of a Change in Control
of the Company or the Bank and shall be distributed as soon as practicable
thereafter.
7.02 Accrual and Payment of Dividends. A holder of a Plan Share Award,
whether or not earned, shall also be entitled to receive an amount equal to any
cash dividends declared and paid with respect to shares of Common Stock
represented by such Plan Share Award between the date the relevant Plan Share
Award was granted to such Participant and the date the Plan Shares are
distributed. Such cash dividend amounts shall be held in arrears under the Trust
and distributed upon the earning of the applicable Plan Share Award. Such
payment shall also include an appropriate amount of earnings, if any, of the
Trust assets with respect to any cash dividends so distributed.
7.03 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Except as provided in
Subsections (d) and (e) below, Plan Shares shall be distributed to the
Participant or his Beneficiary, as the case may be, as soon as practicable after
they have been earned. No fractional shares shall be distributed.
Notwithstanding anything herein to the contrary, at the discretion of the
Committee, Plan Shares may be distributed prior to such Shares being 100%
earned, provided that such Plan Shares shall contain a restrictive legend
detailing the applicable limitations of such shares with respect to transfer and
forfeiture.
(b) Form of Distribution. All Plan Shares, together with any shares
representing stock dividends, shall be distributed in the form of Common Stock.
One share of Common Stock shall be given for each Plan Share earned. Payments
representing cash dividends (and earnings thereon) shall be made in cash.
Notwithstanding anything within the Plan to the contrary, upon a Change in
Control whereby substantially all of the Common Stock of the Company shall be
acquired for cash, all earned Plan Shares associated with Plan Share Awards,
together with any shares representing stock dividends associated with earned
Plan Share Awards, shall be, at the sole discretion of the Committee,
distributed as of the effective date of such Change in Control, or as soon as
administratively feasible thereafter, in the form of cash equal to the
consideration received in exchange for such Common Stock represented by such
Plan Shares.
(c) Withholding. The Trustee may withhold from any payment or
distribution made under this Plan sufficient amounts of cash or shares of Common
Stock necessary to cover any applicable withholding and employment taxes, and if
the amount of such payment or distribution is not sufficient, the
B-6
Trustee may require the Participant or Beneficiary to pay to the Trustee the
amount required to be withheld in taxes as a condition of delivering the Plan
Shares. The Trustee shall pay over to the Company or a Subsidiary which employs
or employed such Participant any such amount withheld from or paid by the
Participant or Beneficiary.
(d) Timing: Exception for 10% Shareholders. Notwithstanding Subsection
(a) above, no Plan Shares may be distributed prior to the date which is five
years from the effective date of the Conversion to the extent the Participant or
Beneficiary, as the case may be, would after receipt of such Shares own in
excess of ten percent (10%) of the issued and outstanding shares of Common Stock
held by parties other than the MHC, unless such action is approved in advance by
a majority vote of disinterested directors of the Board of the Company. Any Plan
Shares remaining undistributed solely by reason of the operation of this
Subsection (d) shall be distributed to the Participant or his Beneficiary on the
date which is five years from the effective date of the Conversion.
(e) Regulatory Exceptions. No Plan Shares shall be distributed,
however, unless and until all of the requirements of all applicable law and
regulation shall have been fully complied with, including the receipt of
approval of the Plan by the stockholders of the Company by such vote, if any, as
may be required by applicable law and regulations.
7.04 Voting of Plan Shares. After a Plan Share Award has become earned
and non-forfeitable, the Participant shall be entitled to direct the Trustee as
to the voting of the Plan Shares which are associated with the Plan Share Award
and which have not yet been distributed pursuant to Section 7.03, subject to
rules and procedures adopted by the Committee for this purpose. All shares of
Common Stock held by the Trust as to which Participants have not yet earned and
are not entitled to direct, or have not directed, the voting of such Shares,
shall be voted by the Trustee as directed by the Committee.
Article VIII
------------
TRUST
8.01 Trust. The Trustee shall receive, hold, administer, invest and
make distributions and disbursements from the Trust in accordance with the
provisions of the Plan and Trust and the applicable directions, rules,
regulations, procedures and policies established by the Committee pursuant to
the Plan.
8.02 Management of Trust. It is the intention of this Plan and Trust
that the Trustee shall have complete authority and discretion with respect to
the management, control and investment of the Trust, and that the Trustee shall
invest all assets of the Trust, except those attributable to cash dividends paid
with respect to Plan Shares not held in the Plan Share Reserve, in Common Stock
to the fullest extent practicable, except to the extent that the Trustee
determines that the holding of monies in cash or cash equivalents is necessary
to meet the obligations of the Trust. In performing their duties, the Trustees
shall have the power to do all things and execute such instruments as may be
deemed necessary or proper, including the following powers:
(a) To invest up to one hundred percent (100%) of all Trust
assets in the Common Stock without regard to any law now or hereafter
in force limiting investments for Trustees or other fiduciaries. The
investment authorized herein may constitute the only investment of the
Trust, and in making such investment, the Trustee is authorized to
purchase Common Stock from the Company or from any other source, and
such Common Stock so purchased may be outstanding, newly issued, or
treasury shares.
B-7
(b) To invest any Trust assets not otherwise invested in
accordance with (a) above in such deposit accounts, and certificates of
deposit (including those issued by the Company), obligations of the
United States government or its agencies or such other investments as
shall be considered the equivalent of cash.
(c) To sell, exchange or otherwise dispose of any property at
any time held or acquired by the Trust.
(d) To cause stocks, bonds or other securities to be
registered in the name of a nominee, without the addition of words
indicating that such security is an asset of the Trust (but accurate
records shall be maintained showing that such security is an asset of
the Trust).
(e) To hold cash without interest in such amounts as may be in
the opinion of the Trustee reasonable for the proper operation of the
Plan and Trust.
(f) To employ brokers, agents, custodians, consultants and
accountants.
(g) To hire counsel to render advice with respect to their
rights, duties and obligations hereunder, and such other legal services
or representation as they may deem desirable.
(h) To hold funds and securities representing the amounts to
be distributed to a Participant or his Beneficiary as a consequence of
a dispute as to the disposition thereof, whether in a segregated
account or held in common with other assets.
(i) As may be directed by the Committee or the Board from time
to time, the Trustee shall pay to the Company earnings of the Trust
attributable to the Plan Share Reserve.
Notwithstanding anything herein contained to the contrary, the Trustee
shall not be required to make any inventory, appraisal or settlement or report
to any court, or to secure any order of a court for the exercise of any power
herein contained, or to maintain bond.
8.03 Records and Accounts. The Trustee shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled person
or entity to the extent required by applicable law, or any other person
determined by the Committee.
8.04 Earnings. All earnings, gains and losses with respect to Trust
assets shall be allocated in accordance with a reasonable procedure adopted by
the Committee, to bookkeeping accounts for Participants or to the general
account of the Trust, depending on the nature and allocation of the assets
generating such earnings, gains and losses. In particular, any earnings on cash
dividends received with respect to shares of Common Stock shall be allocated to
accounts for Participants, except to the extent that such cash dividends are
distributed to Participants, if such shares are the subject of outstanding Plan
Share Awards, or, otherwise to the Plan Share Reserve.
8.05 Expenses. All costs and expenses incurred in the operation and
administration of this Plan, including those incurred by the Trustee, shall be
paid by the Company.
8.06 Indemnification. Subject to the requirements and limitations of
applicable laws and regulations, the Company shall indemnify, defend and hold
the Trustee harmless against all claims,
B-8
expenses and liabilities arising out of or related to the exercise of the
Trustee's powers and the discharge of their duties hereunder, unless the same
shall be due to their gross negligence or willful misconduct.
Article IX
----------
MISCELLANEOUS
9.01 Adjustments for Capital Changes. The aggregate number of Plan
Shares available for issuance pursuant to the Plan Share Awards and the number
of Shares to which any Plan Share Award relates shall be proportionately
adjusted for any increase or decrease in the total number of outstanding shares
of Common Stock issued subsequent to the effective date of the Plan resulting
from any split, subdivision or consolidation of the Common Stock or other
capital adjustment, change or exchange of the Common Stock, or other increase or
decrease in the number or kind of shares effected without receipt or payment of
consideration by the Company.
9.02 Amendment and Termination of the Plan. The Board may, by
resolution, at any time, amend or terminate the Plan. The power to amend or
terminate the Plan shall include the power to direct the Trustee to return to
the Company all or any part of the assets of the Trust, including shares of
Common Stock held in the Plan Share Reserve, as well as shares of Common Stock
and other assets subject to Plan Share Awards which have not yet been earned by
the Participants to whom they have been awarded. However, the termination of the
Trust shall not affect a Participant's right to earn Plan Share Awards and to
the distribution of Common Stock relating thereto, including earnings thereon,
in accordance with the terms of this Plan and the grant by the Committee or the
Board. Notwithstanding the foregoing, no action of the Board may increase (other
than as provided in Section 9.01 hereof) the maximum number of Plan Shares
permitted to be awarded under the Plan as specified at Section 5.03, 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 ratification by the stockholders of
the Company.
9.03 Nontransferable. Plan Share Awards and rights to Plan Shares shall
not be transferable by a Participant, and during the lifetime of the
Participant, Plan Shares may only be earned by and paid to the Participant who
was notified in writing of the Award by the Committee pursuant to Section 6.03.
No Participant or Beneficiary shall have any right in or claim to any assets of
the Plan or Trust, nor shall the Company, or any Subsidiary be subject to any
claim for benefits hereunder.
9.04 No Employment Rights. Neither the Plan nor any grant of a Plan
Share Award or Plan Shares hereunder nor any action taken by the Trustee, the
Committee or the Board in connection with the Plan shall create any right,
either express or implied, on the part of any Participant to continue in the
employ or service of the Company, or a Subsidiary thereof.
9.05 Voting and Dividend Rights. No Participant shall have any voting
or dividend rights of a stockholder with respect to any Plan Shares covered by a
Plan Share Award, except as expressly provided in Sections 7.02 and 7.04 above,
prior to the time said Plan Shares are actually distributed to such Participant.
9.06 Governing Law. The Plan and Trust shall be governed by and
construed under the laws of the State of New Jersey, except to the extent that
Federal Law shall be deemed applicable.
B-9
9.07 Effective Date. The Plan shall be effective as of the date of
approval of the Plan by stockholders of the Company, subject to the receipt of
approval or non-objection by the OTS or other applicable banking regulator, if
applicable.
9.08 Term of Plan. This Plan shall remain in effect until the earlier
of (i) termination by the Board, (ii) the distribution of all assets of the
Trust, or (iii) 21 years from the Effective Date. Termination of the Plan shall
not effect any Plan Share Awards previously granted, and such Plan Share Awards
shall remain valid and in effect until they have been earned and paid, or by
their terms expire or are forfeited.
9.09 Tax Status of Trust. It is intended that the Trust established
hereby shall be treated as a grantor trust of the Company under the provisions
of Section 671 et seq. of the Internal Revenue Code of 1986, as amended, as the
same may be amended from time to time.
B-10
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SYNERGY FINANCIAL GROUP, INC.
310 NORTH AVENUE EAST
CRANFORD, NEW JERSEY 07016
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 2003
- --------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of Synergy
Financial Group, 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 Stockholders (the "Meeting"), to be held at the offices
of Synergy Bank, 310 North Avenue East, Cranford, New Jersey, on April 22, 2003,
at 9:00 a.m. and at any and all adjournments thereof, in the following manner:
FOR WITHHELD
--- --------
1. The election as director of the nominees
listed with terms to expire in 2006
(except as marked to the contrary below): |_| |_|
Nancy A. Davis
John S. Fiore
W. Phillip Scott
INSTRUCTIONS: To withhold your vote for any nominee, write the nominee's name on
the line provided below.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. The approval of the
Synergy Financial Group, Inc.
2003 Stock Option Plan. |_| |_| |_|
3. The approval of the Synergy Financial
Group, Inc. 2003 Restricted Stock Plan. |_| |_| |_|
4. The ratification of the appointment
of Grant Thornton LLP as the
Company's independent auditor for the
fiscal year ending December 31, 2003. |_| |_| |_|
The Board of Directors recommends a vote "FOR" all of the above listed
nominees and proposals.
- --------------------------------------------------------------------------------
THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR THE NOMINEES LISTED AND ALL OF
THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS
SIGNED 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
Should the undersigned be present and elect to vote at the Meeting, or
at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the stockholder's decision to terminate this Proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this Proxy by filing a
subsequently dated Proxy or by written notification to the Secretary of the
Company of his or her decision to terminate this Proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders and a
Proxy Statement dated March 18, 2003.
[ ] Check Box if You Plan
Dated: to Attend the Annual Meeting.
------------------------
- ------------------------------ -----------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------ -----------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
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, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
- --------------------------------------------------------------------------------