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 to ss. 240.14a-11(c) or ss. 240.14a-12
SE FINANCIAL CORP.
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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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SE FINANCIAL CORP.
July 17, 2006
Dear Stockholder:
On behalf of the Board of Directors and Management of SE Financial Corp.
(the "Company"), we cordially invite you to attend our Annual Meeting of
Stockholders (the "Meeting") to be held at the main office of St. Edmond's
Federal Savings Bank, 1901-03 East Passyunk Avenue, Philadelphia, Pennsylvania
19148, on August 15, 2006, 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. For the reasons set forth in the Proxy Statement, 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.
Sincerely,
SE Financial Corp.
/s/Marcy C. Panzer
Marcy C. Panzer
Chairman
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SE FINANCIAL CORP.
1901-03 EAST PASSYUNK AVENUE
PHILADELPHIA, PENNSYLVANIA 19148
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 15, 2006
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of SE Financial Corp. (the "Company") will be held at the main office of St.
Edmond's Federal Savings Bank, 1901-03 East Passyunk Avenue, Philadelphia,
Pennsylvania 19148, on August 15, 2006, at 9:00 a.m. The Meeting is for the
purpose of considering and acting upon the following matters:
1. The election of two directors of SE Financial Corp.;
2. The ratification of the SE Financial Corp. 2006 Stock Option Plan;
3. The ratification of the St. Edmond's Federal Savings Bank 2006
Restricted Stock Plan; and
4. The ratification of the appointment of S.R. Snodgrass, A.C. as the
Company's independent auditor for the fiscal year ending October 31,
2006.
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 July 10, 2006, 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
SE Financial Corp.
/s/Samuel Barsky
Samuel Barsky
Secretary
Philadelphia, Pennsylvania
July 17, 2006
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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 RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
SE FINANCIAL CORP.
1901-03 EAST PASSYUNK AVENUE
PHILADELPHIA, PENNSYLVANIA 19148
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ANNUAL MEETING OF STOCKHOLDERS
AUGUST 15, 2006
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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 SE Financial Corp. (the "Company") to be
used at the Annual Meeting of Stockholders of the Company which will be held at
the main office of the Company's subsidiary, St. Edmond's Federal Savings Bank
(the "Bank"), 1901-03 East Passyunk Avenue, Philadelphia, Pennsylvania 19148, on
August 15, 2006, at 9:00 a.m. (the "Meeting"). On or about July 17, 2006, the
accompanying Notice of Annual Meeting of Stockholders and this Proxy Statement
are being mailed to stockholders of record as of the close of business on July
10, 2006.
At the Meeting, stockholders will consider and vote upon (i) the election
of two directors of the Company; (ii) the ratification of the SE Financial Corp.
2006 Stock Option Plan (the "Option Plan"), (iii) the ratification of the St.
Edmond's Federal Savings Bank 2006 Restricted Stock Plan (the "Restricted Stock
Plan") and (iv) the ratification of the appointment of S.R. Snodgrass, A.C. as
the Company's independent auditor for the fiscal year ending October 31, 2006.
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.
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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 directors as set forth herein, "FOR" the ratification of
the Option Plan, "FOR" the ratification of the Restricted Stock Plan and "FOR"
the ratification of S.R. Snodgrass A.C. as the Company's independent auditor for
the fiscal year ending October 31, 2006. 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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At the Meeting, stockholders will consider and vote on ratification of the
Option Plan and Restricted Stock Plan. Directors, officers and employees of the
Company and its subsidiaries may be granted stock options and restricted stock
under these plans.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on July 10, 2006 (the
"Record Date"), are entitled to one vote for each share of common stock of the
Company, par value $0.10 per share (the "Common Stock") then held. As of the
Record Date, the Company had 2,286,375 shares of Common Stock issued and
outstanding.
The articles of incorporation of the Company ("Articles of Incorporation")
provide that in no event shall any record owner of any outstanding Common Stock
which is beneficially owned, directly or indirectly, by a person who
beneficially owns in excess of 10% of the then outstanding shares of Common
Stock (the "Limit") be entitled or permitted to any vote with respect to the
shares held in excess of the Limit. Beneficial ownership is determined pursuant
to the definition in the Articles of Incorporation and includes shares
beneficially owned by such person or any of his or her affiliates (as such terms
are defined in the Articles of Incorporation), or which such person or any of
his or her affiliates has the right to acquire upon the exercise of conversion
rights or options and shares as to which such person or any of his or her
affiliates or associates have or share investment or voting power, but neither
any employee stock ownership or similar plan of the Company or any subsidiary,
nor any trustee with respect thereto or any affiliate of such trustee (solely by
reason of such capacity of such trustee), shall be deemed, for purposes of the
Articles of Incorporation, to beneficially own any Common Stock held under any
such plan.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) 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.
As to the ratification of the Option Plan (Proposal II) and the
ratification of the Restricted Stock Plan (Proposal III), a stockholder may, by
checking the appropriate box: (i) vote "FOR" the item; (ii) vote "AGAINST" the
item; or (iii) vote to "ABSTAIN" on the item. Proposals II and III shall be
determined by a majority of the total votes cast at the Annual Meeting in person
or by proxy including abstentions. Accordingly, an "ABSTAIN" vote will have the
same effect as a vote "AGAINST" Proposals II or III. Broker non-votes will not
be counted as votes cast and will therefore not affect the result.
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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
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 June 30, 2006 (the most recent practicable date),
persons or groups who own more than 5% of the Common Stock and the ownership of
all directors and executive officers of the Company as a group. Other than as
noted below, management knows of no person or group that owns more than 5% of
the outstanding shares of Common Stock at June 30, 2006.
Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
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St. Edmond's Federal Savings Bank Employee Stock 206,310(1) 9.0%
Ownership Plan (the "ESOP")
1901-03 East Passyunk Avenue
Philadelphia, Pennsylvania 19148
SE Financial Corp. Stock Compensation Trust 215,000(2) 9.4%
1901-03 East Passyunk Avenue
Philadelphia, Pennsylvania 19148
All directors and executive officers of the Company 155,911(3) 7.1%
as a group (15 persons)
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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 June 30, 2006, 22,105 shares have been allocated to ESOP
participants and 184,205 shares remain unallocated.
(2) These shares are held in a trust for future use under stock benefit plans
of the Company or Bank.
(3) Beneficial ownership as of June 30, 2006. Includes shares of Common Stock
held directly as well as by spouses or minor children, in trust, and other
indirect beneficial ownership. For Ms. Panzer, includes shares allocated to
her under the ESOP. For directors serving as ESOP trustees, excludes the
206,310 shares held by the ESOP. For directors serving as Stock
Compensation Trust trustees, excludes the 215,000 shares held by the Stock
Compensation Trust.
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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
the outstanding Common Stock. To the best of the Company's knowledge, all
Section 16(a) filing requirements applicable to its officers and directors were
complied with during the 2005 fiscal year other than one late filing for the
purchase of 1,500 shares by Director Saldutti on June 13, 2005 and one late
filing for the purchase of 3,000 shares by Director Shuster on July 18, 2005.
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PROPOSAL I - ELECTION OF DIRECTORS
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The Articles of Incorporation require that the Board of Directors be
divided into four classes, as nearly equal in number as possible, each class to
serve for a four-year period, with approximately one- fourth of the directors
elected each year. The Board of Directors currently consists of nine members.
Two directors will be elected at the Meeting to serve for a four-year term and
until their successors have been elected and qualified.
J. William Parker, Jr. and Susanne Spinell Shuster have been nominated by
the Board of Directors for election to a four-year term to expire in 2010. It is
intended that proxies solicited by the Board of Directors will, unless otherwise
specified, be voted for the election of Mr. Parker and Ms. Shuster. If either 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. At this time, the Board of Directors knows of no reason why either of
the nominees might be unable 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 directors and the executive officers of the Company.
Shares of
Common
Age at Year First Current Stock Percent
October 31, Elected or Term to Beneficially of
Name 2005 Appointed(1) Expire Owned(2) Class
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Board Nominees for Term to Expire in 2010
J. William Parker, Jr. 46 2002 2006 7,500 0.3%
Susanne Spinell Shuster 55 2001 2006 3,850 0.2%
Directors Continuing in Office
Samuel Barsky 51 1989 2009 6,950 0.3%
Charles M. Cahn 50 2005 2008 22,000 1.0%
Andrew A. Hines 78 1985 2009 3,000 0.1%
Megan L. Mahoney 45 2003 2007 4,500 0.2%
Marcy C. Panzer 55 1983 2008 57,091 2.5%
David M. Rosenberg 53 2005 2007 5,000 0.2%
William F. Saldutti, III 46 2001 2009 9,520 0.4%
Certain Executive Officers of the Company and the Bank
Pamela M. Cyr 38 2005 N/A 15,000 0.7%
J. Christopher Jacobsen 38 2005 N/A 15,000 0.7%
Charles Frederick Miller 42 2005 N/A 6,500 0.3%
Douglas R. Moore 45 2006 N/A 7,150 0.3%
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(1) Refers to the year the individual first became a director or officer of the
Bank. Upon formation of the Company in connection with the mutual-to-stock
conversion of the Bank in 2004, each then-existing director of the Bank
became a director of the Company.
(2) Beneficial ownership as of June 30, 2006. Includes shares of Common Stock
held directly as well as by spouses or minor children, in trust, and other
indirect beneficial ownership. For Ms. Panzer, includes shares allocated to
her under the ESOP. For directors serving as ESOP trustees, excludes the
206,310 shares held by the ESOP. For directors serving as Stock
Compensation Trust trustees, excludes the 215,000 shares held by the Stock
Compensation Trust.
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The business experience of each director and executive officer of the
Company is set forth below. Except as otherwise indicated, each has held his or
her present position for at least the past five years.
Directors
Marcy C. Panzer has been a director since 1983. She served as Secretary and
Vice Chairman of the Board until 2002 when she became Chairman of the Board. Ms.
Panzer is an attorney admitted to practice in the Commonwealth of Pennsylvania.
She was previously employed as Senior Vice President and Counsel by American
Business Financial Services until 2000.
Charles M. Cahn was appointed to the Board in December 2005. He is the
President and Chief Executive Officer of Stewart Business Systems, LLC, a
subsidiary of Global Imaging Systems Inc., a publicly traded NASDAQ company. Mr.
Cahn was previously the president and chief executive officer of Stewart
Industries, a document imaging company that was acquired by Global Imaging
Systems Inc. in 2004. Mr. Cahn is also a partner in CKS Real Estate Holdings,
LLC., a real estate investment company, with apartment units located in
Philadelphia, Pennsylvania and Columbus, Ohio.
Samuel Barsky has been a director since 1989 and Secretary of the Bank
since May 2002. Mr. Barsky is a public accountant with the firm of Gitomer &
Berenholz P.C.
Andrew A. Hines has been a director since 1985. Mr. Hines is retired from
the Atlantic Richfield Company (ARCO).
Megan L. Mahoney has been a director since 2003. In 2005, Ms. Mahoney
became a Senior Vice President in charge of client relations and contract
finance with Luminent Mortgage Capital, Inc. She was previously a regional sales
manager with Platinum Direct Funding and prior to that was employed by American
Business Financial Services, Inc. as a senior vice president.
J. William Parker, Jr. has been a director since 2002. Mr. Parker is a
certified public accountant and the sole owner of Signator Financial Network,
which provides retirement, investment and insurance planning services.
David M. Rosenberg was appointed to the Board in December 2005. He has been
a principal in Marsh Creek Corporate Services, an entrepreneurial company
located in Exton, Pennsylvania, since 1999. Businesses acquired and grown over
the years include: executive transportation, record storage and document
shredding, security, fitness and insurance.
William F. Saldutti, III has been a director since 2001. Mr. Saldutti is an
attorney and a partner at the law firm of Dembo & Saldutti. He is admitted to
practice law in New Jersey and Pennsylvania.
Susanne Spinell Shuster has been a director since 2001. Ms. Shuster is a
certified public accountant with a masters in taxation. She is chairman of Asher
& Co., Ltd. Enterprise Group. She is also an adjunct professor at the Fox School
of Business and Management at Temple University in the MBA program. Ms. Shuster
serves as the Company's Audit Committee Chairman and is the Audit Committee
Financial Expert.
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Executive Officers
Pamela M. Cyr became President and Chief Executive Officer of the Company
and of the Bank in March 2005. She was appointed to the Board of Directors of
the Bank at the same time. She was previously the Executive Vice President and
Chief Risk Officer/Chief Financial Officer of Susquehanna Patriot Bank, a post
she held from January 2004 until she joined the Company and the Bank. Prior to
that, she was Senior Vice President and Chief Financial Officer of Thistle Group
Holdings, Co. and its subsidiary Roxborough-Manayunk Bank until its merger into
Citizens Financial Group, Inc. in January 2004. She joined Thistle in September
1998 as Director of Investor Relations. Ms. Cyr is a certified public accountant
and also held positions as Controller of Commerce Capital Markets from 1995 to
1998 and Manager in the financial services group at Deloitte & Touche LLP.
J. Christopher Jacobsen became the chief operating officer of the Company
and the Bank in March 2005. Mr. Jacobsen joined the Company and the Bank from
his position as Senior Vice President, Business Strategy at Citizens Bank, a
post he held from January 2004 until he joined the Company and the Bank. Prior
to that, he was Senior Vice President, Retail Banking of Roxborough-Manayunk
Bank until its merger into Citizens Financial Group, Inc. in January 2004. Mr.
Jacobsen joined Roxborough-Manayunk Bank in 2000 as Vice President, Marketing
and also held marketing positions of increasing responsibility at Commerce Bank
and Advanta Mortgage Corp.
Charles Frederick Miller became the chief lending and credit officer of the
Company and the Bank in March 2005. Prior to joining the Company, Mr. Miller
served as Executive Vice President and Senior Commercial Lending Officer of
Susquehanna Patriot Bank, a post he held from June 2004 until he joined the
Company and the Bank. From August of 2002 through June of 2004 Mr. Miller was
Senior Vice President and Chief Lending Officer of Equity Bank. Before that Mr.
Miller worked approximately twelve years with Founders Bank, the last three
years of which he was Senior Vice President and Chief Lending and Credit
Officer. Mr. Miller began his career at Fidelity Bank in 1986, where he
completed that bank's credit training program before becoming a commercial loan
officer.
Douglas R. Moore was appointed to be the chief financial officer of the
Company and the Bank in July 2006. From March 2004 until June 2006, he was the
treasurer and then Chief Operating Officer of Alliance Bank. From September 1998
until January 2004, Mr. Moore was the treasurer, SVP for finance and operations
and ultimately the chief operating officer for Roxborough-Manayunk Bank and
Thistle Group Holdings, which merged into Citizens Financial Group, Inc. in
January 2004. Mr. Moore is an actively licensed CPA in Pennsylvania and holds
the following NASD licenses: Series 7, 24, 27, and 63.
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. The Board of Directors of the Company
and the Bank met fourteen times during the year ended October 31, 2005,
including regular and special meetings. No director attended fewer than 75% of
the total meetings of the Board of Directors and the committees on which he or
she served during the year ended October 31, 2005.
Human Resources Committee. The Human Resources Committee serves the
functions of a compensation committee and currently consists of Directors Samuel
Barsky, Andrew A. Hines, Charles M. Cahn, Megan L. Mahoney, Marcy C. Panzer and
David M. Rosenberg. This committee meets at least quarterly and met four times
for the year ended October 31, 2005.
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Audit Committee. The Audit Committee consists of Directors Susanne Spinell
Shuster, Samuel Barsky, Marcy C. Panzer and J. William Parker, Jr. This
committee meets quarterly with the internal auditor and independent auditors and
periodically as needed with the Company's compliance auditors. The committee met
four times for the year ended October 31, 2005. All members of the Audit
Committee are independent under the rules of the Nasdaq stock market, other than
Ms. Panzer and Mr. Barsky, who are compensated as officers of the Company and
the Bank for their services as Chairman and Secretary, respectively. The Board
of Directors has determined that Ms. Shuster is an audit committee financial
expert within the meaning of the regulations of the Securities and Exchange
Commission. The Board of Directors has adopted a written charter for the Audit
Committee, a copy of which was attached to the proxy statement for the 2005
annual meeting.
Report of the Audit Committee. For the fiscal year ended October 31, 2005,
the Audit Committee: (i) reviewed and discussed the Company's audited financial
statements with management, (ii) discussed with the Company's independent
auditor, S.R. Snodgrass, A.C. ("Snodgrass"), all matters required to be
discussed under Statement on Auditing Standards No. 61, and (iii) received from
Snodgrass disclosures regarding the independence of Snodgrass as required by
Independence Standards Board Standard No. 1 and discussed with Snodgrass 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
October 31, 2005.
Audit Committee: Suzanne Spinell Shuster, Samuel Barsky,
Marcy C. Panzer and J. William Parker, Jr.
Director Nomination Process
The Nominating Committee currently consists of all members of the Board of
Directors. The Nominating Committee met once during the year ended October 31,
2005. As defined by the rules of the Nasdaq Stock Market, each member of the
committee is an independent director, other than Ms. Panzer and Mr. Barsky, who
are compensated as officers of the Company and the Bank for their services as
Chairman and Secretary, respectively. The responsibilities of the members of the
Nominating Committee are set forth in the committee's charter.
The Company does not pay fees to any third party to identify or evaluate or
assist in identifying or evaluating potential nominees. The process for
identifying and evaluating potential nominees of the Board includes soliciting
recommendations from directors and officers of the Company and its wholly-owned
subsidiary, St. Edmond's Federal Savings Bank. Additionally, the Board may
consider persons recommended by stockholders of the Company in selecting
nominees of the Board for election as directors. The manner of evaluation for
all potential nominees is the same.
To be considered in the Board's selection of nominees of the Board,
recommendations from stockholders must be received by the Company in writing by
at least 120 days prior to the date the proxy statement for the previous year's
annual meeting was first distributed to stockholders. Recommendations must
comply with the requirements of the Nominating Committee Charter and, among
other requirements, identify the submitting stockholder, the person recommended
for consideration and the reasons the submitting stockholder believes such
person should be considered. Persons recommended for consideration as nominees
of the Board should meet the director qualification requirements set forth in
the Company's Bylaws, which require that (i) directors may not serve as a
management official of another depository institution or depository holding
company as those terms are defined by the regulations of the Office of Thrift
Supervision; (ii) directors must be persons of good character and integrity and
must also have been
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nominated by persons of good character and integrity; (iii) directors must be
stockholders of the Company, owning at least 500 shares and (iv) directors must
reside within 50 miles of the home office or branch office location of the Bank.
The Board also believes potential directors should be knowledgeable about the
business activities and market areas in which the Company and its subsidiaries
engage.
The good character and integrity requirement is embodied in Section 4.17 of
the Company's Bylaws, which states that a person is not eligible to serve as
director if he or she: (1) is under indictment for, or has ever been convicted
of, a criminal offense, involving dishonesty or breach of trust and the penalty
for such offense could be imprisonment for more than one year; (2) is a person
against whom a federal or state bank regulatory agency has, within the past ten
years, issued a cease and desist order for conduct involving dishonesty or
breach of trust and that order is final and not subject to appeal; (3) has been
found either by any federal or state regulatory agency whose decision is final
and not subject to appeal, or by a court to have (a) committed a willful
violation of any law, rule or regulation governing banking, securities,
commodities or insurance, or any final cease and desist order issued by a
banking, securities, commodities or insurance regulatory agency or (b) breached
a fiduciary duty involving personal profit; or (4) has been nominated by a
person who would be disqualified from serving as a director under clauses (1),
(2) or (3).
Stockholder Communications
The Board of Directors does not have a formal process for stockholders to
send communications to the Board. In view of the infrequency of stockholder
communications to the Board of Directors, the Board does not believe that a
formal process is necessary. Written communications received by the Company from
stockholders are shared with the full Board no later than the next regularly
scheduled Board meeting. The Board encourages directors to attend the annual
meeting of stockholders.
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 loans with the Bank) during the years ended October 31, 2005
and 2004.
The Bank has a policy of offering residential mortgage loans for the
financing of personal residences and consumer loans to its officers, directors
and employees. These loans are made in the ordinary course of business and are
also made on substantially the same terms and conditions as those of comparable
transactions prevailing at the time with other persons, other than a 1% discount
for employees on the interest rate paid while the person remains an employee.
These loans do not include more than the normal risk of collectibility or
present other unfavorable features.
- --------------------------------------------------------------------------------
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
- --------------------------------------------------------------------------------
Compensation of Directors
Board Fees. For the year ended October 31, 2005, each director was paid an
annual retainer of $5,000. The Chairman of the Board and the Secretary received
an additional retainer of $50,000 and $17,500, respectively. Directors received
$50 per committee meeting attended and committee chairpersons received an
additional $500 per year. The Audit Committee Chairman receives $1,000 per year.
The total fees paid to the directors for the year ended October 31, 2005 were
approximately $71,650. Committee
-8-
members who are also full-time Company or Bank employees do not receive
compensation as committee members.
Executive Compensation
Summary Compensation Table. The following table sets forth the compensation
awarded to or earned by certain executive officers of the Company and the Bank.
Annual Compensation Long-Term Compensation
-----------------------------------------------------
Fiscal LTIP All Other
Name and Principal Position Year (1) Salary Bonus Payouts Compensation
- --------------------------- -------- ------ ----- ------- ------------
Pamela M. Cyr, President and CEO 2005 $ 89,423 $ - $ - $ -
J. Christopher Jacobsen, COO 2005 $ 74,519 $15,000 $ - $ -
Charles Frederick Miller, Chief 2005 $ 74,519 $15,000 $ - $ -
Lending and Credit Officer
Frank S. DePaolo (former president) 2005 $ 44,308 $ - $12,844 $79,049(2)
2004 123,837 9,370 - 17,826
2003 116,568 8,490 - 5,828
- --------------------
(1) Ms. Cyr and Messrs. Jacobsen and Miller were appointed to their positions
in March 2005. Mr. DePaolo resigned from his position in February 2005.
Thus, the compensation shown above for the year ended October 31, 2005 does
not reflect a full year.
(2) For 2005, consists of $73,878 paid in connection with Mr. DePaolo's
resignation, the award of shares under the ESOP valued at $2,956 and an
employee matching contribution to the 401(k) Plan of $2,215.
Management Severance Agreements
The Bank has entered into Management Severance Agreements with Chairman
Marcy C. Panzer, President and Chief Executive Officer Pamela M. Cyr, Chief
Operating Officer J. Christopher Jacobsen, and Chief Lending and Credit Officer
Charles Frederick Miller.
The agreements have terms of thirty-six months and provide for an annual
extension of the term of the agreement upon determination of the Board of
Directors that the executive's performance has met the requirements and
standards of the Board. If the individual's employment is terminated under
certain circumstances relating to a change in control of the Bank, as detailed
in the agreement, such individual will be paid an amount equal to 2.999 times
his or her average annual aggregate taxable compensation for the most recently
completed five calendar years, provided, however that any payments under the
agreement will be reduced as may be necessary to not exceed the tax deductible
limits under Section 280G of the Code.
Such agreements also provide that upon an involuntary termination of
employment, absent termination for just cause, such individuals will receive a
severance payment equal to twelve months of pay at the then-effective pay rate
of his or her monthly base salary payable in installments at the regular pay
intervals of the Bank. The current annual base salaries for these individuals
are as follows: Ms. Panzer $50,000; Ms. Cyr $157,500, Mr. Jacobsen $135,000 and
Mr. Miller $135,000. If change in control
-9-
severance payments were to be made under the agreements as of October 31, 2005,
the aggregate amount of such payments would have equaled approximately $1.43
million.
Incentive Retirement Plan
The Bank implemented an incentive compensation plan, effective January 1,
2004, to reward key management and the Board of Directors for achieving
strategic goals of the Bank. Under such plan, the future value of units awarded
to plan participants will be based upon the accumulation of future retained
earnings of the Bank, on an unconsolidated basis, above the level of the Bank's
retained earnings at January 1, 2004. As of the date of such award on January 1,
2004, such units had no value. The aggregate future value of such units may
equal up to 10% of the accumulated future retained earnings of the Bank.
Expenses accrued for the increases in the future value of units awarded will
reduce the Bank's future earnings.
The units were awarded to the executive officers and directors of the Bank
as of January 1, 2004 in proportion to the 2003 compensation paid to such
persons. Sixty percent of such units were awarded to the directors of the Bank
and 40% of such units were awarded to executive officers serving as of January
1, 2004. These executive officers terminated their employment with the Bank
during 2005, and benefits totaling $21,602 were paid. Such units are earned and
non-forfeitable after participants have completed not less than three years of
service (including service prior to implementation of the plan) with the Bank.
Distributions of benefits under the plan will be made following retirement,
termination of service, death or a change in control of the Bank. The benefit
paid to a plan participant will be the accumulated value of his or her units
calculated based upon the growth in the Bank's reported retained earnings
between January 1, 2004 and the time of distribution of the benefit to a plan
participant. Payments are forfeited if the participant violates a non-compete
agreement with the Bank, if any. The future value of such units awarded and the
annual expense of the plan is based upon the future earnings of the Bank and
increases in the Bank's future retained earnings on an unconsolidated basis.
- --------------------------------------------------------------------------------
PROPOSAL II - RATIFICATION OF THE 2006 STOCK OPTION PLAN
- --------------------------------------------------------------------------------
General. The Board of Directors has adopted the SE Financial Corp. 2006
Stock Option Plan (the "Option Plan"). Pursuant to the Option Plan, up to
228,637 shares of the Common Stock are to be reserved from the Company's
authorized but unissued shares for issuance by the Company upon exercise of
stock options to be granted to directors, officers, employees and directors
emeritus from time to time ("Options"). 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 directors,
officers, employees and directors emeritus to promote the success of the
business of the Company and its subsidiaries. The Option Plan has a term of ten
years from the date of Board approval of such Option Plan ("Effective Date"),
after which time no further 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 will be administered by the Board of Directors (the "Option
Committee"). The Option Committee may select the individuals 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.
-10-
Directors, officers, Employees and Directors Emeritus 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, but may provide the
Company with a tax deductible expense at the time of option exercise). Option
shares may be paid for in cash, shares of the Common Stock, or a combination of
both. Common Stock used 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 authorized but unissued
shares, treasury shares, shares obtained from any grantor trust of the Company
or the Bank that may be established from time to time for the purposes of
funding stock compensation plans of the Company or the Bank, or shares purchased
in the open market. Shares applicable to an Option that 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 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.
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.
Stock Options. The Option Committee may grant either Incentive Stock
Options or Non-Incentive Stock Options. Generally, except as may otherwise be
determined by the Option Committee at the time of the award, an Incentive Stock
Option may only be exercised while the Optionee serves as an employee of the
Company or within three months after termination of employment for a reason
other than disability, as defined in the Option Plan pursuant to the Code, or
death (but in no event after the expiration date of the Option). 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. Upon an Optionee's disability or death,
an Incentive Stock Option that would otherwise have become earned and
exercisable within six months shall become immediately earned and exercisable
upon the death or disability of the Optionee. An Incentive Stock Option that
would not otherwise have become earned and exercisable within six months shall
be forfeited upon the death or disability of the Optionee. 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.
-11-
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 that 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 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 that 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 may be issued upon the exercise of an Option
until the Company has received full payment of the exercise price, 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 Securities
Exchange Act of 1934 ("Exchange Act") or any related regulations promulgated
thereunder.
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 that 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 directors, officers, employees and directors emeritus
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 reserved 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.
-12-
No specific determination has been made with respect to Awards that may be
made to the directors, officers, employees or directors emeritus of the Company
or the Bank. It is anticipated that the Committee will make a determination
related to such Awards during October 2006. The Committee will consider such
information as it deems necessary and appropriate in making its determination
related to any Awards, including job responsibilities, individual and Company
performance, the Company's compensation philosophy and programs, and stock
compensation practices by other financial institutions.
Accounting Treatment. To the extent that Stock Options are awarded prior to
November 1, 2006 and such Stock Options, or a portion of such Stock Options, are
immediately exercisable and non- forfeitable, the Company will not be required
to recognize a financial reporting expense associated with such Stock Options.
Stock Options that are awarded which shall be first exercisable on or after
November 1, 2006 will require that the Company recognize a financial reporting
expense associated with the fair value of such awards determined as of the date
of such award in accordance with FAS 123(r). The Company anticipates that a
portion of the Stock Options that may be awarded in October 2006 will be
immediately exercisable, resulting in no financial reporting expense, and a
portion of such Stock Options to be awarded will become first exercisable during
the subsequent three year period, resulting in a financial reporting expense
based upon the fair value of such Awards determined as of the date of such
Award.
Effect of Mergers, Change of Control and Other Adjustments. 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. 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.
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 earned, non-
forfeitable and 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 Exchange 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 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
-13-
plan which is exempt from the approval requirements set forth under Section
574.3(c)(1)(vii) of OTS Regulations (12 C.F.R. ss.574.3(c)(1)(vii)).
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 Board members and 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 Board members and management of
the Company.
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. The Board has determined, however, that such plan provisions
are in the best interest of the Company and its stockholders.
Amendment and Termination of the Option Plan. The Board of Directors may
amend, suspend or discontinue the Option Plan, except for amendments that
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 eligibility requirements for participation in the
Option Plan.
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, treasury shares, shares obtained
from any grantor trust of the Company or the Bank that may be established
-14-
from time to time for the purposes of funding stock compensation plans of the
Company or the Bank, or shares purchased in the open market. In that 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 shares other than
shares purchased in the market, the interests of current stockholders may be
diluted. If upon the exercise of all of the Options, the Company delivers shares
of Common Stock other than through market purchases (i.e., 228,637 shares of
Common Stock), then the dilutive effect to current stockholders would be
approximately 9.1%. 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.
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.
Stockholder Ratification. Shareholder ratification of the Option Plan is
being sought (i) in order to qualify the Option Plan for the granting of
Incentive Stock Options in accordance with the Code, (ii) to enable Optionees to
qualify for certain exempt transactions related to the short-swing profit
recapture provisions of Section 16(b) of the Exchange Act, and (iii) to meet the
requirements for the tax-deductibility of certain compensation items under
Section 162(m) of the Code. The affirmative vote of holders of a majority of the
total votes cast at the Annual Meeting in person or by proxy including
abstentions is required for stockholder ratification of this Proposal II.
Accordingly, an abstention will have the same
-15-
effect as a vote against Proposal II. Broker non-votes will not be counted as
votes cast and will therefore not affect the result.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
OPTION PLAN.
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PROPOSAL III - RATIFICATION OF THE 2006 RESTRICTED STOCK PLAN
- --------------------------------------------------------------------------------
General. The Board of Directors has adopted the St. Edmond's Federal
Savings Bank 2006 Restricted Stock Plan (the "Restricted Stock Plan") as a
method of providing directors, officers, employees and directors emeritus of the
Company or its subsidiaries with an increased equity interest in the Company in
a manner designed to align the interests of such persons with the stockholders
of the Company. The Bank will contribute sufficient funds to the Restricted
Stock Plan to purchase Common Stock representing up to 91,455 shares of Common
Stock. Awards under the Restricted Stock Plan will be made in recognition of
expected future services to the Company or its subsidiaries by its directors,
officers, employees and directors emeritus responsible for implementation of the
policies adopted by the Board of Directors and as a means of providing a further
retention incentive. The following is a summary of the material features of the
Restricted Stock Plan which is qualified in its entirety by reference to the
complete provisions of the Restricted Stock Plan which is attached hereto as
Appendix B.
Awards Under the Restricted Stock Plan. Benefits under the Restricted Stock
Plan ("Plan Share Awards") may be granted at the sole discretion of the Board of
Directors of the Bank (the "Restricted Stock Plan Committee"). The Restricted
Stock Plan is managed by trustees (the "Restricted Stock Plan Trustees") who are
non-employee directors and who have the responsibility to invest all funds
contributed by the Company to the trust created for the Restricted Stock Plan
(the "Restricted Stock Plan Trust"). Unless the terms of the Restricted Stock
Plan or the Restricted Stock Plan Committee specifies otherwise, awards under
the Restricted Stock Plan will be in the form of restricted stock deliverable
and payable as the Plan Share Awards are earned and non-forfeitable. A recipient
of such restricted stock award will not be entitled to voting rights associated
with such shares prior to the applicable date such shares are earned and
non-forfeitable. Dividends paid on the Common Stock prior to the date that a
Plan Share Award shall be earned and distributed shall result in a cash payment
being paid to the recipient of such stock award within thirty days of the date
that such stock award be earned and distributed. Any shares held by the
Restricted Stock Plan Trust which are not yet earned shall be voted by the
Restricted Stock Plan Trustees, as directed by the Restricted Stock Plan
Committee. If a recipient of such restricted stock terminates employment or
service for reasons other than death, disability, as defined in the Restricted
Stock Plan pursuant to the Code, 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 or
disability, any awards that would have otherwise become earned within six month
of such termination shall nevertheless be deemed earned and any awards that
would not have otherwise become earned within six months shall be forfeited.
Upon a Change in Control of the Company or the Bank, all restrictions expire and
all shares allocated shall become unrestricted. The Board of Directors can
terminate the Restricted Stock Plan at any time, and if it does so, any shares
not allocated will revert to the Company.
No specific determination has been made with respect to Plan Share Awards
that may be made to the directors, officers and employees of the Company or the
Bank. It is anticipated that the Restricted Stock Plan Committee will make a
determination related to such Awards during October 2006. The Restricted Stock
Plan Committee will consider such information as it deems necessary and
appropriate in making its determination related to any Awards, including job
responsibilities, individual and Company performance, the Company's compensation
philosophy and programs, and stock compensation practices by other financial
institutions.
-16-
It is anticipated that such Awards with be earned and non-forfeitable at
the rate of 25% on the one year anniversary of such Award and 25% annually
thereafter for the next three years. 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 Restricted Stock Plan. The
Board has determined, however, that such plan provisions are in the best
interest of the Company and its stockholders.
Plan Share Awards under the Restricted Stock Plan will be determined by the
Restricted Stock Plan Committee. In no event shall any individual receive Plan
Share Awards in excess of 25% of the aggregate Common Stock authorized under the
Restricted Stock Plan ("Plan Share Reserve"). Plan Share Awards may be granted
to non-employee directors 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 Restricted Stock Plan, 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.
Amendment and Termination of the Restricted Stock Plan. The Board may amend
or terminate the Restricted Stock Plan at any time, except for amendments that
increase the maximum number of Plan Shares permitted to be awarded under the
Restricted Stock Plan, materially increase the benefits accruing to Participants
under the Restricted Stock Plan or materially modify the eligibility
requirements for participation in the Restricted Stock Plan.
Possible Dilutive Effects of the Restricted Stock Plan. It is the Company's
present intention to fund the Restricted Stock Plan through open-market
purchases of Common Stock, which will cause no dilutive effect. The Restricted
Stock Plan provides, however, that the Common Stock to be awarded may be
acquired by the Restricted Stock Plan from (i) authorized but unissued shares of
Common Stock or treasury shares from the Company, (ii) shares obtained from any
grantor trust of the Company or the Bank that may be established from time to
time for the purposes of funding stock compensation plans of the Company or the
Bank, or (iii) shares purchased in the open market. In that stockholders do not
have preemptive rights, to the extent that the Restricted Stock Plan acquires
shares of Common Stock other than through market purchases to fund Plan Share
Awards, the interests of current stockholders may be diluted. If all Plan Share
Awards (i.e., 91,455 shares of Common Stock) are funded other than through
market purchases, the dilutive effect to existing stockholders would be
approximately 3.8%.
Federal Income Tax Consequences. Common Stock awarded under the Restricted
Stock Plan 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 Company will be allowed a tax deduction for
federal tax purposes 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 Restricted Stock Plan Trust in
order to meet any necessary tax withholding obligations.
-17-
Accounting Treatment. For accounting purposes, the Bank 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.
Stockholder Ratification. The Company is submitting the Restricted Stock
Plan for a ratification vote by stockholders to 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 Exchange Act. The affirmative vote
of holders of a majority of the total votes cast at the Annual Meeting in person
or by proxy including abstentions is required for stockholder ratification of
this Proposal III. Accordingly, an abstention will have the same effect as a
vote against Proposal III. Broker non-votes will not be counted as votes cast
and will therefore not affect the result.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
RESTRICTED STOCK PLAN.
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PROPOSAL IV - RATIFICATION OF APPOINTMENT OF AUDITORS
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The Audit Committee of Board of Directors of the Company has appointed S.R.
Snodgrass, A.C. as the Company's independent auditor for the fiscal year ending
October 31, 2006. This appointment is being submitted to the Company's
stockholders for ratification. S.R. Snodgrass was the Company's independent
auditor for the fiscal year ended October 31, 2005. A representative of S.R.
Snodgrass 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 S.R. Snodgrass as
the Company's auditors for the 2006 fiscal year.
Principal Accounting Fees and Services
Effective July 30, 2002, the Securities and Exchange Act of 1934 was
amended by the Sarbanes-Oxley Act of 2002 to require all auditing services and
non-audit services provided by an issuer's independent auditor be approved by
the issuer's audit committee prior to such services being rendered or be
approved pursuant to pre-approval policies and procedures established by the
issuer's audit committee. The Company's Audit Committee has not established
pre-approval procedures and instead specifically approves each service prior to
the engagement of the auditor for all audit and non-audit services. All of the
services listed below were approved by the Audit Committee prior to the service
being rendered.
Audit Fees. Audit fees consist of fees for professional services rendered
for the audit of the Company's consolidated financial statements and review of
the consolidated financial statements included in the Company's quarterly
reports, and services normally provided by the independent auditor in connection
with statutory and regulatory filings or engagements. The aggregate audit fees
billed by Snodgrass were $50,238 and $96,641 for the years ended October 31,
2005 and 2004, respectively. Audit fees for the year ended October 31, 2004
included professional services rendered for assistance with and review of the
Company's initial public offering filings.
Audit Related Fees. Audit related fees consist principally of attestation
services related to the minimum servicing standards identified in the Mortgage
Bankers Association of America's Uniform Single
-18-
Attestation Program for Mortgage Bankers. The aggregate audit related fees
billed by Snodgrass were $1,500 and $1,667 for the years ended October 31, 2005
and 2004, respectively.
Tax Fees. The aggregate fees billed by Snodgrass for professional services
rendered for tax return preparation, compliance, advice, consulting and planning
were $11,808 and $14,153 for the years ended October 31, 2005 and 2004,
respectively.
All Other Fees. The aggregate fees billed by Snodgrass for professional
services rendered for services or products other than those listed under the
captions "Audit Fees," "Audit-Related Fees," and "Tax Fees" totaled $3,560 and
$0 for the years ended October 31, 2005 and 2004, respectively. Such services
consisted primarily of consulting services for the facilitating of strategic
planning meetings.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
Under the rules of the Securities and Exchange Commission, in order to be
considered for inclusion in the Company's proxy materials for an annual meeting
of stockholders, a stockholder proposal must be received at the Company's
executive office at 1901-03 East Passyunk Avenue, Philadelphia, Pennsylvania
19148 not less than 120 days before the date of the Company's proxy statement
released to shareholders in connection with the prior year's annual meeting.
However, if the date of the annual meeting changes by more than 30 days from the
date of the prior year's annual meeting, then the deadline is a reasonable time
before the Company begins to print and mail its proxy materials. Accordingly,
because the Company expects to hold its next annual meeting of stockholders (for
the fiscal year ending October 31, 2006) in mid-March 2007 and expects to mail
its proxy materials for that meeting in mid-February 2007, more than 30 days
before the prior annual meeting, any proposal for inclusion in the Company's
proxy materials for that meeting must be received at the Company's executive
office no later than October 15, 2006. Stockholder proposals must meet other
applicable criteria as set forth in the Company's bylaws and Securities and
Exchange Commission rules in order to be considered for inclusion in the
Company's proxy materials.
- --------------------------------------------------------------------------------
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.
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- --------------------------------------------------------------------------------
FORM 10-KSB
- --------------------------------------------------------------------------------
A copy of the Company's annual report on Form 10-KSB for the fiscal year
ended October 31, 2005 without exhibits will be furnished without charge to
stockholders as of the Record Date upon written request to the Secretary, SE
Financial Corp., 1901-03 East Passyunk Avenue, Philadelphia, Pennsylvania 19148.
BY ORDER OF THE BOARD OF DIRECTORS
SE Financial Corp.
/s/Samuel Barsky
Samuel Barsky
Secretary
-20-
APPENDIX A
SE FINANCIAL CORP.
2006 STOCK OPTION PLAN
1. Purpose of the Plan. The Plan shall be known as the SE Financial
Corp. ("Company") 2006 Stock Option Plan (the "Plan"). The purpose of the Plan
is to attract and retain qualified persons for positions of substantial
responsibility in and to the Company and to provide additional incentive to
Directors, officers, Employees and Directors Emeritus 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 ("Section 422") of
the Internal Revenue Code of 1986, as amended (the "Code") and Non-Incentive
Stock Options, options that do not so qualify under Section 422. The provisions
of the Plan relating to Incentive Stock Options shall be interpreted to conform
to the requirements of Section 422.
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 St. Edmond's Federal Savings Bank, or any
successor entity to it.
"Board" shall mean the Board of Directors of the Company, or
any successor or parent entity 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, as now in effect and as they may hereafter be amended) 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. Section
574.3(c)(1)(vii) 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.
"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.
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"Common Stock" shall mean common stock of the Company, or any
successor thereto or parent entity thereof.
"Company" shall mean SE Financial Corp., 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 or disability
leave (other than upon Disability), 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 thereto or parent corporation thereof.
"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 the "permanent and total disability" of the
Employee as such term is defined at Section 22(e)(3) of the Code.
"Effective Date" shall mean the date of adoption of the Plan
by the Board of Directors.
"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, including the Nasdaq National
Market, 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.
If no such bid and ask price is available, then the Fair Market Value shall be
determined by the Committee in good faith.
"Incentive Stock Option" or "ISO" shall mean an option to
purchase Shares granted by the Committee pursuant to Section 8, and subject to
the limitations and restrictions of Section 8 hereof and is intended to qualify
as an incentive stock option under Section 422 of the Code.
"Non-Incentive Stock Option" or "Non-ISO" shall mean an option
to purchase Shares granted by the Committee pursuant to Section 9 hereof, which
option is not intended to qualify under Section 422 of the Code.
"Option" shall mean an Incentive Stock Option or Non-Incentive
Stock Option (subject to specification as the context requires) granted pursuant
to this Plan providing the holder of such Option with the right to purchase
Common Stock.
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"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, Employee or
Director Emeritus 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 SE Financial Corp. 2006 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" of the Company as defined in
Sections 424(f) and (g) of the Code, including the Bank.
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 228,637 Shares.
Such Shares may either be from authorized but unissued shares, treasury shares
or shares obtained from any grantor trust of the Parent or the Bank that may be
established from time to time that is established for the purposes of funding
stock compensation plans of the Parent or the Bank. If an Award shall expire
prior to its exercise, become unexercisable, or is forfeited for any reason
prior to its exercise, new Awards may be granted under the Plan with respect to
such Shares associated with such prior Awards.
4. Six Month Holding Period. Subject to vesting requirements, if
applicable, except in the event of death or Disability of the Optionee or a
Change in Control of the Company, a minimum of six months must elapse between
the date of the grant of an Option and the date of the sale of the Common Stock
received through the exercise of such Option.
5. Administration of the Plan.
(a) Composition of the Committee. The Plan shall be
administered by the Board of Directors of the Company.
(b) Powers of the Committee. The Committee is authorized (but
only to the extent not contrary to the express provisions of the Plan or to
resolutions adopted by the Board) to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine the form and
content of Awards to be issued under the Plan and to make other determinations
necessary or advisable for the administration of the Plan, and shall have and
may exercise such other power and authority as may be delegated to it by the
Board from time to time. A majority of the entire Committee shall constitute a
quorum and the action of a majority of the members present at any meeting at
which a quorum is present shall be deemed the action of the Committee. In no
event may the Committee revoke outstanding Awards without the consent of the
Participant.
The Chairman 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
A-3
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 made by 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
Participants who shall be granted Awards under the Plan, the number of Awards to
be granted to each such Participant, 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:
A-4
(a) Option Price.
(i) The price per Share at which each Incentive Stock
Option granted by the Committee under the Plan
may be exercised shall not, as to any particular Incentive Stock Option, be less
than the Fair Market Value of the Common Stock on the date that such Incentive
Stock Option is granted.
(ii) In the case of an Employee who owns Common Stock
representing more than ten percent (10%) of the outstanding Common Stock at the
time the Incentive Stock Option is granted, the Incentive Stock Option exercise
price shall not be less than one hundred and ten percent (110%) of the Fair
Market Value of the Common Stock on the date that the Incentive Stock Option is
granted.
(b) Payment. Full payment for each Share of Common Stock
purchased upon the exercise of any Incentive Stock Option granted under the Plan
shall be made at the time of exercise of each such Incentive Stock Option and
shall be paid in cash (in United States Dollars), Common Stock or a combination
of cash and Common Stock. Common Stock utilized in full or partial payment of
the exercise price must have been owned by the party exercising such Option for
not less than six months prior to the date of exercise of such Option, and such
Common Stock shall be valued at the Fair Market Value at the date of exercise.
The Company shall accept full or partial payment in Common Stock only to the
extent permitted by applicable law. No Shares of Common Stock shall be issued
until full payment has been received by the Company, and no Optionee shall have
any of the rights of a stockholder of the Company until Shares of Common Stock
are issued to the Optionee.
(c) Term of Incentive Stock Option. The term of exercisability
of each Incentive Stock Option granted pursuant to the Plan shall be not more
than ten (10) years from the date each such Incentive Stock Option is granted,
provided that in the case of an Employee who owns stock representing more than
ten percent (10%) of the Common Stock outstanding at the time the Incentive
Stock Option is granted, the term of exercisability of the Incentive Stock
Option shall not exceed five (5) years.
(d) Exercise Generally. Except as otherwise provided in
Section 10 hereof, no Incentive Stock Option may be exercised unless the
Optionee shall have been in the employ of the Company at all times during the
period beginning with the date of grant of any such Incentive Stock Option and
ending on the date three (3) months prior to the date of exercise of any such
Incentive Stock Option. The Committee may impose additional conditions upon the
right of an Optionee to exercise any Incentive Stock Option granted hereunder
which are not inconsistent with the terms of the Plan or the requirements for
qualification as an Incentive Stock Option. Except as otherwise provided by the
terms of the Plan or by action of the Committee at the time of the grant of the
Options, the Options will be first exercisable at the rate of 25% as of the date
of grant and 25% 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. Non-Incentive
Stock Options may be granted to Participants who are Directors, Directors
Emeritus or Employees. Each Non-Incentive Stock Option granted pursuant to the
Plan shall be evidenced by an instrument in such form as the Committee shall
from time to time approve. Each Non-Incentive Stock Option granted pursuant to
the Plan shall comply with and be subject to the following terms and conditions.
(a) Option Price. The exercise price per Share of Common Stock
for each Non-Incentive Stock Option granted pursuant to the Plan shall be at
such price as the Committee may determine in its sole discretion, but in no
event less than the Fair Market Value of such Common Stock on the date of grant
as determined by the Committee in good faith.
(b) Payment. Full payment for each Share of Common Stock
purchased upon the exercise of any Non-Incentive Stock Option granted under the
Plan shall be made at the time of exercise of each such Non-Incentive Stock
Option and shall be paid in cash (in United States Dollars), Common Stock or a
combination of cash and Common Stock. Common Stock utilized in full or partial
payment of the exercise price must have been owned by the party exercising such
Option for not less than six months prior to the date of exercise of such
Option, and such Common Stock shall be valued at the Fair Market Value at the
date of exercise. The Company shall accept full or partial payment in Common
Stock only to the extent permitted by applicable law. No Shares of Common Stock
shall be issued until full payment has been received by the Company and no
Optionee shall have any of the rights of a stockholder of the Company until the
Shares of Common Stock are issued to the Optionee.
(c) Term. The term of exercisability of each Non-Incentive
Stock Option granted pursuant to the Plan shall be not more than ten (10) years
from the date each such Non-Incentive Stock Option is granted.
(d) Exercise Generally. The Committee may impose additional
conditions upon the right of any Participant to exercise any Non-Incentive Stock
Option granted hereunder which is not inconsistent with the terms of the Plan.
Except as otherwise provided by the terms of the Plan or by action of the
Committee at the time of the grant of the Options, the Options will be first
exercisable at the rate of 25% on the date of grant and 25% 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 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. Such 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. 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 not
exercised, 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. Upon
termination of employment or service as a result of Disability, any Awards that
would otherwise have become earned and exercisable within six months following
such date of termination of employment or service, absent such termination of
employment or service, shall nevertheless become deemed earned and exercisable
as of such date of termination; and any such Awards that would otherwise become
earned and exercisable more than six months from such date of termination shall
be deemed forfeited as of such date of termination of employment or service.
(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 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 time of six months or less, and any such Awards
that would otherwise become earned and exercisable more than six months from
such date of death shall be deemed forfeited as of such date of death. 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.
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(d) Incentive Stock Options Deemed Exercisable. For purposes
of Sections 10(a), 10(b) and 10(c) above, any Incentive Stock Option held by any
Optionee shall be considered exercisable at the date of termination of
employment if any such Incentive Stock Option would have been exercisable at
such date of termination of employment without regard to the Disability or death
of the Participant.
(e) Termination of Incentive Stock Options. Except as may be
specified by the Committee at the time of grant of an Option, to the extent that
any Incentive Stock Option granted under the Plan to any Optionee whose
employment with the Company terminates shall not have been exercised within the
applicable period set forth in this Section 10, any such Incentive Stock Option,
and all rights to purchase or receive Shares of Common Stock pursuant thereto,
as the case may be, shall terminate on the last day of the applicable period.
11. Effect of Termination of Employment, Disability or Death on Non-
Incentive Stock Options. The terms and conditions of Non-Incentive Stock Options
relating to the effect of the termination of an Optionee's employment or
service, Disability of an Optionee or his death shall be such terms and
conditions as the Committee shall, in its sole discretion, determine at the time
of termination of service, unless specifically provided for by the terms of the
Agreement at the time of grant of the award.
12. Withholding Tax. The Company shall have the right to deduct from
all amounts paid in cash with respect to the cashless exercise of Options any
taxes required by law to be withheld with respect to such cash payments. Where a
Participant or other person is entitled to receive Shares pursuant to the
exercise of an Option, the Company shall have the right to require the
Participant or such other person to pay the Company the amount of any taxes
which the Company is required to withhold with respect to such Shares, or, in
lieu thereof, to retain, or to sell without notice, a number of such Shares
sufficient to cover the amount required to be withheld.
13. Recapitalization, Merger, Consolidation, Change in Control and
Other Transactions.
(a) Adjustment. Within the sole discretion of the Committee,
the aggregate number of Shares of Common Stock for which Options may be granted
hereunder, the number of Shares of Common Stock covered by each outstanding
Option, and the exercise price per Share of Common Stock of each such Option,
shall all be proportionately adjusted for any increase or decrease in the number
of issued and outstanding Shares of Common Stock resulting from a subdivision or
consolidation of Shares (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares, or
otherwise) or the payment of a stock dividend (but only on the Common Stock) or
any other increase or decrease in the number of such Shares of Common Stock
effected without the receipt or payment of consideration by the Company (other
than Shares held by dissenting stockholders).
(b) Change in Control. Notwithstanding anything herein to the
contrary, all outstanding Awards shall by their terms become immediately earned
and non-forfeitable and 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
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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, 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.
(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
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(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 be effective as of the date of
adoption of the Plan by the Board of Directors.
16. 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.
17. Modification of Options. At any time and from time to time, the
Board may authorize the Committee to direct the execution of an instrument
providing for the modification of any outstanding Option, provided no such
modification, extension or renewal shall confer on the holder of said Option any
right or benefit which could not be conferred on the Optionee by the grant of a
new Option at such time, or shall not materially decrease the Optionee's
benefits under the Option without the consent of the holder of the Option,
except as otherwise permitted under Section 18 hereof.
18. Amendment and Termination of the Plan.
(a) Action by the Board. The Board may alter, suspend or
discontinue the Plan, except that no action of the Board may increase (other
than as provided in Section 13 hereof) the maximum number of Shares permitted to
be issued 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. Notwithstanding anything herein to
the contrary, in no event shall the Board or the Committee amend the Plan or
amend an Award under the Plan which allows the exercise price of any Option
granted under the Plan to be reduced after the date of grant, except as
otherwise permitted in accordance with Section 13 of the Plan.
(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,
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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 or the
delivery of the Shares, the Company may require the person exercising the Option
or receiving delivery of the Shares 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 or the Committee, all Options held by such Participant
shall cease to be exercisable as of the date of such termination of employment
or service.
(e) Upon the exercise of an Option by an Optionee (or the
Optionee's personal representative), the Committee, in its sole and absolute
discretion, may make a cash payment to the Optionee, in whole or in part, in
lieu of the delivery of shares of Common Stock. Such cash payment to be paid in
lieu of delivery of Common Stock shall be equal to the difference between the
Fair Market Value of the Common Stock on the date of the Option exercise and the
exercise price per share of the Option. Such cash payment shall be in exchange
for the cancellation of such Option. Such cash payment shall not be made in the
event that such transaction would result in liability to the Optionee or the
Company under Section 16(b) of the Securities Exchange Act of 1934, as amended,
and regulations promulgated thereunder.
(f) In the event that the Bank shall be deemed critically
undercapitalized (as defined at 12 C.F.R. Section 565.4), is subject to
enforcement action by the Office of Thrift Supervision, or receives a capital
directive under 12 C.F.R. Section 565.7, then all Options awarded to executive
officers or directors of the Company or its Subsidiaries must be exercised or
forfeited.
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 that may become payable to any Participant.
22. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, except to the
extent that federal law shall be deemed to apply.
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APPENDIX B
ST. EDMOND'S FEDERAL SAVINGS BANK
2006 RESTRICTED STOCK PLAN AND TRUST AGREEMENT
Article I
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ESTABLISHMENT OF THE PLAN AND TRUST
1.01 St. Edmond's Federal Savings Bank ("Bank") 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
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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 Bank and its
subsidiaries, by providing such personnel of the Bank and its subsidiaries with
an increased equity interest in the parent corporation of the Bank, SE Financial
Corp. ("Parent"), as compensation for their prior and anticipated future
professional contributions and service to the Bank and its subsidiaries and to
align the interests of such persons with the stockholders of the Company.
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 St. Edmond's Federal Savings 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 by
the Participant and addressed to the Bank or the Committee on forms provided for
this purpose by the Committee and delivered to the Bank and may be changed from
time to time by similar written notice to the Committee. A Participant's last
will and testament or any codicil thereto shall not constitute written
designation of a Beneficiary. In the absence of such 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 Bank, or any successor
corporation thereto.
"Cause" means 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
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violation of a final cease-and-desist order or any other action which results in
a substantial financial loss to the Bank or its Subsidiaries.
"Change in Control" shall mean: (i) the sale of all, or a material
portion, of the assets of the Parent or the Bank; (ii) the merger or
recapitalization of the Parent or the Bank whereby the Parent or the Bank is not
the surviving entity; (iii) a change in control of the Parent 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 Parent 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 Parent 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.
"Committee" means the Board of Directors of the Parent or the
Restricted Stock Plan Committee appointed by the Board of Directors of the
Parent pursuant to Article IV hereof.
"Common Stock" means shares of the common stock of the Parent, or any
successor corporation or parent 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
Parent.
"Director" means a member of the Board of the Bank.
"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 Parent or the Bank from time to time.
"Disability" means the "permanent and total disability" of the
Participant as such term is defined at Section 22(e)(3) of the Code.
"Effective Date" shall mean the date of adoption of the Plan by the
Board of Directors.
"Eligible Participant" means an Employee, Director or Director Emeritus
who may receive a Plan Share Award under the Plan.
"Employee" means any person who is employed by the Bank or a
Subsidiary.
"Parent" means SE Financial Corp., and any successor corporation
thereto.
"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.
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"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 Bank 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 or a Committee appointed by the Board that shall have
all of the powers allocated to it in this and other sections of the Plan. 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 present a report of its actions and
decisions with respect to the Plan to the Board at a regular or special meeting
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 Bank shall
indemnify, hold harmless and defend 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 he or she reasonably
believed to be in the best interests of the Bank and its Subsidiaries and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.
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Article V
---------
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Board of Directors of the
Bank shall determine the amounts (or the method of computing the amounts) to be
contributed by the Bank to the Trust established under this Plan. Such
contribution 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. The Trust shall purchase Common Stock
of the Parent in an amount equal to up to 100% of the Trust's cash assets, after
providing for any required withholding as needed for tax purposes, provided,
however, that the Trust shall not purchase more than 91,455 shares of Common
Stock. The Trustee may purchase shares of Common Stock in the open market, from
authorized but unissued shares of the Common Stock or treasury shares from the
Parent, or from any grantor trust of the Parent or the Bank that is established
from time to time for purposes of funding stock compensation plans of the Parent
or the Bank in an amount 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 Parent, 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
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ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Eligible Participants may receive Plan Share Awards
within the sole discretion of the Board or the Committee.
6.02 Allocations. The Committee will determine which of the Eligible
Participants 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 Articles of Incorporation or Bylaws of the Parent 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 Board or the Committee may, from time to time, determine which of
the Eligible Participants will be granted Plan Share Awards to be awarded from
forfeited Shares. In selecting such Eligible Participants to whom Plan Share
Awards will be granted and the number of shares covered by such Awards, the
Board or the Committee shall consider the prior and anticipated future position,
duties and responsibilities of the Eligible Participants, the value of their
prior and anticipated future services to the Bank and its Subsidiaries, and any
other factors the Committee may deem relevant. All actions by the Committee
shall be deemed 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; nor shall any non-employee Director receive
Plan Share Awards in excess of 5% of the aggregate Plan Shares
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authorized under the Plan; nor shall aggregate awards to all non-employee
Directors exceed 30% of the aggregate Plan Shares authorized.
6.03 Form of Allocation. As promptly as practicable after a
determination is made pursuant to Section 6.02 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 or 6.02, no Eligible Participant 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 Eligible
Participants, 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 Bank at any time, and cease issuing Plan Share Awards.
Article VII
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EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earning 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-fourth of such Award following one year after the granting of such Award,
and an additional one-fourth following each of the next three successive years;
provided that such Participant remains an Employee, Director or Director
Emeritus during such period.
(b) Revocation for Misconduct. Notwithstanding anything herein to the
contrary, in the case of a Participant who is discharged from the employ or
service of the Bank 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, 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. 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, upon
termination of employment or service with the Bank or a Subsidiary as a result
of the death or Disability of a Participant, any Plan Share Award that would
otherwise have become earned within six months following such date of
termination of employment or service, absent such termination of employment or
service resulting from death or Disability, shall nevertheless become deemed
earned as of such date of termination; and any such Plan Share Award that would
otherwise become earned more than six months from such date of termination shall
be deemed forfeited as of such date of termination of employment or service.
(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
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be deemed to be immediately 100% earned and non-forfeitable as of the date of a
Change in Control of the Parent or the Bank and shall be distributed as soon as
practicable thereafter.
7.02 Payment of Dividends. A holder of a Plan Share Award, whether or
not then earned and non-forfeitable, shall also be entitled to receive
compensation in 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 compensation amounts applicable to
Plan Share Awards shall be accrued and held in arrears and paid by the Trust or
the Bank to the Participant within thirty calendar days of the date that such
applicable Plan Share Award shall be deemed earned and shall be distributed to
such Participant. Such cash payment shall be reported as compensation paid by
the Bank to such individual at the time of such payment.
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; provided,
however, shares of Common Stock may be distributed, within the sole discretion
of the Committee, prior to the time that such Plan Shares shall be earn if such
Common Stock will be subject to an applicable restrictive legend indicating the
applicable limitations and restrictions associated with such shares of Common
Stock. 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 of the Bank or the Parent, all Plan Shares associated with such Plan
Share Awards, together with any shares representing stock dividends associated
with such Plan Share Awards, shall be distributed as of the effective date of
such Change in Control, or as soon as administratively feasible thereafter.
(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 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 Bank or any 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
of the Parent, unless such action is approved in advance by a majority vote of
disinterested directors of the Board of the Parent. Any Plan Shares remaining
undistributed solely by reason of the operation of this Subsection (d) shall be
distributed to the Participant or his Beneficiary as soon as administratively
feasible on or after the date that is five years from the effective date of the
Conversion, or upon a Change in Control of the Parent or the Bank.
B-6
(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.
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 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
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TRUST
8.01 Trust. The Trustee shall receive, hold, administer, invest and
make distributions and disbursements from the Trust solely for the benefit of
the Plan Participants 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, both consistent
with the provisions and intent of this Plan and Agreement, 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 these 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 Parent or from any other source, and such Common Stock
so purchased may be outstanding, newly issued, or treasury shares.
(b) To invest any Trust assets not otherwise invested in accordance
with (a) above in such insured deposit accounts, and certificates of
deposit (including those issued by the Bank), obligations of the United
States government or its agencies or such other investments as shall be
considered the equivalent of cash.
(c) Consistent with the obligations under the Trust, 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.
B-7
(f) To employ brokers, agents, custodians, consultants and accountants.
(g) To hire counsel to render advice with respect to the Trustee's
rights, duties and obligations hereunder, and such other legal services
or representation as deemed necessary or 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 Bank the 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 the Board, the Committee and
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 Bank.
8.06 Indemnification. Subject to the requirements and limitations of
applicable laws and regulations, the Parent and the Bank shall indemnify, defend
and hold the Trustee harmless against all claims, expenses and liabilities
arising out of or related to the exercise of the Trustee's powers and the
discharge of its duties hereunder, unless the same shall be due to its gross
negligence or willful misconduct.
Article IX
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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 Bank.
B-8
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 Bank 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.
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 and dividends (cash or stock) may only be earned by and
delivered 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 Parent, the
Bank, 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 Parent, the Bank, 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 Commonwealth of Pennsylvania, except to the
extent that Federal Law shall be deemed applicable.
9.07 Effective Date. The Plan shall be effective as of the date
of adoption of the Plan by the Board of Directors.
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 delivered, 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 Bank 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-9
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SE FINANCIAL CORP.
1901-03 EAST PASSYUNK AVENUE
PHILADELPHIA, PENNSYLVANIA 19148
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 15, 2006
- --------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of SE Financial
Corp. (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 main office of St. Edmond's
Federal Savings Bank, 1901-03 East Passyunk Avenue, Philadelphia, Pennsylvania
19148, on August 15, 2006, at 9:00 a.m and at any and all adjournments thereof,
in the following manner:
FOR WITHHELD
--- --------
1. The election as directors of the nominees
listed with a term to expire in 2010
(except as marked to the contrary below): |_| |_|
J. William Parker, Jr.
Susanne Spinell Shuster
INSTRUCTIONS: To withhold your vote for any nominee, write the nominee's name on
- ------------
the line provided below.
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote "FOR" the above listed nominees.
FOR AGAINST ABSTAIN
--- ------- -------
2. Ratification of the SE Financial Corp.
2006 Stock Option Plan. |_| |_| |_|
The Board of Directors recommends a vote "FOR" the above listed proposal.
3. Ratification of the St. Edmond's Federal
Savings Bank 2006 Restricted Stock Plan. |_| |_| |_|
The Board of Directors recommends a vote "FOR" the above listed proposal.
4. Ratification of the appointment
of S.R. Snodgrass as the Company's
independent auditor for the fiscal year
ending October 31, 2006. |_| |_| |_|
The Board of Directors recommends a vote "FOR" the above listed proposal.
- --------------------------------------------------------------------------------
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 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, a Proxy
Statement, and the 2005 Annual Report to Stockholders.
|_| 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.