<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CRUSADER HOLDING CORPORATION
- -----------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / 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:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
CRUSADER HOLDING CORPORATION
1230 Walnut Street
Philadelphia, Pennsylvania 19107
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, NOVEMBER 12, 1998
To the Shareholders of Crusader Holding Corporation:
The 1998 Annual Meeting of Shareholders (the "Annual Meeting") of Crusader
Holding Corporation, a Pennsylvania corporation (the "Company"), will be held
on Thursday, November 12, 1998, at 3:00 p.m. at the Union League of
Philadelphia, 140 S. Broad Street, Philadelphia, Pennsylvania 19102, for the
following purposes:
1. to elect ten members of the Board of Directors of the Company, each to serve
for a one year term expiring at the annual meeting of shareholders in 1999;
and
2. to transact such other business as may properly come before the Annual
Meeting.
The Board of Directors has fixed the close of business on Friday, October
16, 1998, as the record date for determining the shareholders entitled to
notice of, and to vote at, the Annual Meeting. Only shareholders of record at
that time are entitled to notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof. A complete list of shareholders entitled
to vote at the Annual Meeting will be available at least ten days before the
Annual Meeting, upon written request, for inspection during normal business
hours by any shareholder of the Company prior to the Annual Meeting, for a
proper purpose, at the Company's executive office.
Shareholders are cordially invited to attend the Annual Meeting in person.
To assure your representation at the Annual Meeting, please complete, sign and
date the enclosed proxy and return it promptly. If you choose, you may still
vote in person at the Annual Meeting even though you previously submitted a
proxy.
/s/ Joseph T. Crowley
------------------------------------
Joseph T. Crowley, Secretary
October 22, 1998
<PAGE>
CRUSADER HOLDING CORPORATION PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors (the
"Board") of Crusader Holding Corporation (the "Company") in connection with its
1998 Annual Meeting of Shareholders to be held on Thursday, November 12, 1998,
at 3:00 p.m., at the Union League of Philadelphia, 140 S. Broad Street,
Philadelphia, Pennsylvania 19102, and at any adjournment(s) or postponement(s)
thereof (the "Annual Meeting"). This Proxy Statement and the accompanying proxy
are being mailed to shareholders on or after October 22, 1998.
PURPOSE OF ANNUAL MEETING
At the Annual Meeting, shareholders will be asked to elect ten directors
of the Company (constituting the entire Board) each to serve for a one year
term expiring at the annual meeting of shareholders in 1999 and to transact
such other business as may properly be brought before the Annual Meeting. The
Board recommends a vote in favor of (i.e., "FOR") the election of the ten
nominees for director of the Company listed below.
QUORUM AND VOTING RIGHTS
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting. Only shareholders of record at the close of business on Friday,
October 16, 1998 (the "Record Date") will be entitled to notice of, and to vote
at, the Annual Meeting. As of the Record Date, there were 3,832,504 shares of
Common Stock outstanding and entitled to vote. Holders of Common Stock as of
the Record Date are entitled to one vote for each share held.
All shares of Common Stock represented by properly executed proxies will,
unless the proxies have previously been revoked, be voted in accordance with
the instructions indicated in the proxies. If no instructions are indicated,
the shares will be voted in favor of (i.e., "FOR") the election of the ten
nominees for director of the Company listed below. With respect to all other
matters, the persons named in the accompanying proxy will vote as stated
therein. Any shareholder executing a proxy has the power to revoke the proxy at
any time prior to its exercise. A proxy may be revoked prior to exercise by (a)
filing with the Company a written revocation of the proxy, (b) appearing at the
Annual Meeting and casting a vote contrary to that indicated on the proxy or
(c) submitting a duly executed proxy bearing a later date.
The ten nominees for director each receiving the majority of the votes
cast by shareholders entitled to vote thereon will be elected to serve on the
Board. Votes withheld with respect to the election of directors will be counted
for the purpose of determining whether a quorum is present at the Annual
Meeting but will not be considered as votes cast and will have no effect on the
result of the vote. Broker non-votes will not be counted in determining the
presence of a quorum and will not be considered as votes cast, and thus will
have no effect on the result of the vote.
The cost of preparing, printing, assembling and mailing this Proxy
Statement and other material furnished to shareholders in connection with the
solicitation of proxies will be borne by the Company. In addition to the
solicitation of proxies by use of the mails, officers, directors and regular
employees of the Company may solicit proxies by written communication,
telephone or telegraph. These persons are to receive no special compensation
for any solicitation activities.
2
<PAGE>
ELECTION OF DIRECTORS
Nominees for Election as Director
The Board currently consists of ten (10) members: Thomas J. Knox, Bruce A.
Levy, Joseph T. Crowley, Paul Bachow, Ronald L. Caplan, D. Walter Cohen,
D.D.S., Daniel DiLella, Linda R. Knox, Joel S. Lawson III and Brian McAdams.
All of the directors are to be elected at the Annual Meeting. At the Annual
Meeting, the Board proposes that each of the current directors be elected as a
director of the Company to hold office until the 1999 annual meeting of
shareholders and until their successors are duly elected and qualified. The
nominees have consented to serve if elected to the Board. If the nominees are
unable to serve as directors at the time of the Annual Meeting, an event which
the Board does not anticipate, the persons named in the proxy will vote for
such substitute nominees as may be designated by the Board, unless the Board
reduces the number of directors accordingly.
Set forth below is information about the nominees. For information
concerning the number of shares of Common Stock owned by each director and all
directors and executive officers as a group as of October 16, 1998, see
"Principal Shareholders."
<TABLE>
<CAPTION>
Director
Name Age Position(s) with Company Since
- ---- ----- ----------------------------- ---------
<S> <C> <C> <C>
Nominees to be elected for terms expiring in 1999:
Thomas J. Knox 57 Chairman of the Board, Chief 1988
Executive Officer and Director
Bruce A. Levy 43 President and Director 1996
Joseph T. Crowley 36 Vice President, Secretary, 1993
Treasurer and Director
Paul Bachow 47 Director 1997
Ronald L. Caplan 50 Director 1997
D. Walter Cohen, D.D.S. 72 Director 1997
Daniel DiLella 47 Director 1997
Linda R. Knox 53 Director 1997
Joel S. Lawson III 51 Director 1997
Brian McAdams 56 Director 1997
</TABLE>
Thomas J. Knox. Mr. Knox has served as Chairman and Chief Executive
Officer of the Company since 1988 and Chairman of the Crusader Savings Bank,
FSB, a wholly owned subsidiary of the Company (the "Bank"), since 1993. From
1989 to 1993, Mr. Knox was President of the Board of Directors of the Bank.
From 1993 to 1995, Mr. Knox served as Special Deputy Rehabilitator and Chief
Executive Officer of Fidelity Mutual Life Insurance Company, a $7.5 billion
life insurance company placed in rehabilitation by the Pennsylvania Insurance
Department. From 1992 to 1993, he served as Deputy Mayor of the City of
Philadelphia overseeing the Office of Management and Productivity. He serves as
a director of the City of Philadelphia Productivity Bank, which he chaired from
1992 to 1993, Vice-Chairman of the Philadelphia Airport Advisory Board,
Chairman of the Concerto Soloist Orchestra and Chairman of the Sunday Serenade.
Mr. Knox is a past director of Independence Blue Cross, the Medical College of
Pennsylvania, St. Christopher's Hospital for Children and the Visiting Nurses
Association.
Bruce A. Levy. Mr. Levy has served as President and a director of the
Company and a director of the Bank since 1996. From 1994 to 1996, Mr. Levy was
a private investor and an independent consultant. From 1992 until its sale in
1994, he was the sole shareholder of Philadelphia Benefits Corporation, a
health benefits
3
<PAGE>
consulting and marketing firm. From 1981 to 1992, Mr. Levy served as President
and was a shareholder of Preferred Benefits Corporation, a 401(k) consulting
and administration firm he co-founded. From 1975 to 1981, he served in various
capacities with Ernst & Young. Mr. Levy is a graduate of the Wharton School of
the University of Pennsylvania.
Joseph T. Crowley. Mr. Crowley has served as Vice-President, Secretary,
Treasurer and a director of the Company since 1993, President of the Bank since
1993 and was Chief Financial Officer of the Bank from 1992 to 1993. From 1988
to 1992, Mr. Crowley was Senior Vice President of Hansen Savings Bank. From
1985 to 1988, he was an auditor with KPMG Peat Marwick, specializing in the
banking industry. Mr. Crowley is a graduate of Widener University.
Paul Bachow. Mr. Bachow became a director of the Company in 1997 and has
served as director of the Bank since 1993. Since 1985, Mr. Bachow has been
Senior Managing Director and President of Bachow & Associates, Inc. Mr. Bachow
received a B.A. in Accounting and Finance from American University, a Master's
degree in Tax Law from New York University and a Juris Doctor from Rutgers Law
School. Mr. Bachow is a Certified Public Accountant.
Ronald L. Caplan. Mr. Caplan became a director of the Company in 1997 and
has been a director of the Bank since 1995. Mr. Caplan is the President of
Philadelphia Management Corporation, which he founded in 1982. He is also the
founder and President of Roosevelts, Incorporated. Since 1975, Mr. Caplan has
been actively engaged in acquiring, financing, renovating and managing
residential and commercial real estate in the Greater Philadelphia area, with
his activities largely concentrated in Center City Philadelphia. Mr. Caplan is
a graduate of Northeastern University.
D. Walter Cohen, D.D.S. Dr. Cohen became a director of the Company in 1997
and has served as a director of the Bank since 1994. From 1993 to 1998, Dr.
Cohen was Chancellor of the Allegheny University of the Health Sciences. From
1986 to 1993, Dr. Cohen was President of the Medical College of Pennsylvania.
Dr. Cohen is also a partner in a periodontal practice in Philadelphia. Dr.
Cohen is a graduate of the University of Pennsylvania and earned his D.D.S.
from its School of Dental Medicine. On July 21, 1998, the Allegheny University
of the Health Sciences filed for voluntary bankruptcy protection in the United
States Bankruptcy Court for the Western District of Pennsylvania.
Daniel DiLella. Mr. DiLella became a director of the Company in 1997 and
has served as a director of the Bank since 1991. Mr. DiLella has been President
and CEO of Berwind Property Group since 1983. From 1973 to 1983, Mr. DiLella
was Vice President of Girard Bank. Mr. DiLella is a graduate of Villanova
University and received his MBA from Saint Joseph's University.
Linda R. Knox. Ms. Knox became a director of the Company in 1997, and has
served as President of the Board of Directors of the Bank since 1993 and a
director of the Bank since 1989. Prior to 1993, Ms. Knox was a realtor
specializing in the sale of historical and architecturally significant
properties in the Philadelphia area. Ms. Knox attended Rider University and is
a graduate of the Temple University Real Estate Institute. Ms. Knox is the wife
of Mr. Knox.
Joel S. Lawson III. Mr. Lawson became a director of the Company in 1997
and has served as a director of the Bank since 1994. Mr. Lawson is the Managing
Partner and CEO of Howard, Lawson & Co., an investment banking and corporate
finance firm in Philadelphia, a position he has held since 1980. Mr. Lawson is
also a director of Urban Outfitters, Inc. and several privately-held companies.
He is a graduate of Yale University and received his MBA from the Wharton
School of the University of Pennsylvania.
Brian McAdams. Mr. McAdams became a director of the Company in 1997 and
has served as a director of the Bank since 1989. Mr. McAdams is Chairman and
CEO of STRATVIS Advisement, Chairman of McAdams, Richman & Ong, an advertising
and design firm, and Chairman of Back Health Centers, Inc. Mr. McAdams served
as Chairman and CEO of National Media Corporation from 1994 to 1996, and
continues to serve as a director of that company.
4
<PAGE>
Committees and Meetings of the Board of Directors
In accordance with the Company's Bylaws, all directors hold office for one
year. The term of each of the current directors expires at the Annual Meeting
(in all cases subject to the election and qualification of their successors or
to their earlier death, resignation, or removal). At each annual meeting of
shareholders, the successors to the directors whose terms expire are to be
elected to serve from the time of their election and qualification until the
next annual meeting of shareholders following their election or until their
respective successors have been duly elected and qualified.
The Board held three meetings during the last fiscal year. Each of the
Company's directors attended at least 75% of the aggregate of all meetings of
the Board and of all committees of which he or she was a member held during
that portion of the year that he or she was a Board or committee member with
the exception of Mr. Caplan, Mr. DiLella and Mr. Bachow, each of whom attended
67% of the aggregate of all such meetings. The standing committees of the Board
are the Executive Committee, the Audit Committee, the Nominating Committee and
the Compensation Committee. The Executive Committee, consisting of Messrs.
Knox, Levy and Lawson, did not meet during the last fiscal year. The Executive
Committee is generally responsible to act on behalf of the Board of Directors
on all matters between regular and special meetings of the Board. The Audit
Committee, consisting of Messrs. Levy, McAdams and Dr. Cohen, met once during
the last fiscal year. The Audit Committee reviews, acts on, and reports to the
Board with respect to various auditing and accounting matters, including the
selection of the Company's independent auditors, the scope of the annual
audits, fees to be paid to the auditors, the performance of the Company's
auditors, and the accounting practices of the Company. The Nominating
Committee, consisting of Messrs. Knox and Levy and Ms. Knox, did not meet
during the last fiscal year. The Nominating Committee is responsible for
considering potential nominees to the Board of Directors. The Compensation
Committee, consisting of Mr. McAdams and Dr. Cohen did not meet during the last
fiscal year. The Compensation Committee handles personnel matters and
establishes compensation policy for the executive officers of the Company.
Director Compensation
Directors are reimbursed for expenses incurred in connection with
performing their respective duties as directors of the Company. In fiscal years
1996 and 1997, grants of options to purchase 27,100 shares were made to certain
directors (other than Mr. Knox, Mr. Levy, Mr. Crowley and Ms. Knox) under a
phantom stock option plan. In December 1997, such directors renounced their
rights to such phantom options and received options to purchase an aggregate of
54,200 shares of Common Stock at $15 per share. Mr. Bachow, Mr. Caplan, Dr.
Cohen, Mr. DiLella, Mr. Lawson and Mr. McAdams received options to purchase
3,800, 14,000, 10,200, 7,200, 11,600 and 7,400 shares, respectively. Annual
Stock Options were granted to each non-employee director on February 9, 1998
(the effective date of the Company's Registration Statement for its initial
public offering) and Annual Stock Options will be granted each year on the date
of the Company's Annual Meeting of Shareholders. In the initial grant, each
non-employee director who served on one or more committees of the Board or the
Board of Directors of the Bank (the "Bank Board") received Annual Stock Options
to purchase 1,000 shares of Common Stock and each non-employee director who did
not serve on any committee of the Board or the Bank Board received Annual Stock
Options to purchase 500 shares. In each subsequent grant, the number of shares
of Common Stock subject to the Annual Stock Option will be determined by
dividing $15,000 (or $7,500 in the case of a non-employee director who does not
serve on any committee of the Board) by the fair market value of a share of
Common Stock on the date of grant, and rounding up to the next higher whole
number. The exercise price for the initial grant of Annual Stock Options was
$15 per share; the exercise price for all subsequent grants will be 100% of the
fair market value of a share of Common Stock on the date of grant. All Annual
Stock Options become exercisable one year after the date of grant and expire
five years after the date of grant. Directors may be granted additional options
pursuant to the Director Stock Option Plan, which is administered by the Board
in its discretion.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table sets forth information with respect to all
compensation awarded to, earned by, or paid for services rendered to the
Company by the Company's Chairman and Chief Executive Officer, President and
Vice President in the fiscal year ended June 30, 1998 (collectively, the "Named
Executive Officers"). Except as set forth below, no executive officer of the
Company was paid salary and bonus during the fiscal year that exceeded $100,000
for services rendered in all capacities to the Company.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual
Compensation
------------------------------------
Fiscal All Other
Name and Principal Position Year Salary Bonus Compensation
- ----------------------------------------- -------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
Thomas J. Knox 1998 $ 61,800 -- --
Chairman and Chief Executive Officer
Bruce A. Levy 1998 $150,000 -- --
President
Joseph T. Crowley 1998 $100,000 $ 30,000 $ 6,000(1)
Vice President, Secretary and Treasurer
</TABLE>
- ------------
(1) Represents automobile allowance of $6,000.
Stock Option Information
The following table sets forth, for each of the Named Executive Officers,
certain information concerning the grant of options in fiscal 1998.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants for Option Term
------------------------------------------------------------ ------------------------
Number % of
of Total Exercise
Securities Options or
Underlying Granted to Base
Options Employees in Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
- ------------------- --------------- -------------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. Knox -- -- -- -- -- --
Bruce A. Levy -- -- -- -- -- --
Joseph T. Crowley 20,000(1) 50% $ 12.00 12/8/02 $66,400 $146,600
8,000(1) 20% $ 15.00 2/9/03 $33,120 $ 73,280
</TABLE>
- ------------
(1) Non-Qualified Stock Options.
6
<PAGE>
The following table sets forth certain information concerning stock
options exercised during fiscal 1998 and the number of unexercised options held
by the Named Executive Officers at June 30, 1998 and the value thereof.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End(#) at Fiscal Year-End (1)
Shares Acquired ------------------------------ -----------------------------
Name on Exercise (#) Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------------- -------------------- ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Thomas J. Knox -0- -0- -0- -0- -0- -0-
Bruce A. Levy -0- -0- -0- -0- -0- -0-
Joseph T. Crowley -0- -0- 8,000 20,000 $13,000 $92,500
</TABLE>
- ------------
(1) These values represent the difference between the closing price per share
on the Nasdaq National Market on June 30, 1998 ($16.63) and the per share
exercise price of the option.
Employment Contracts
The Company has a five-year employment agreement, dated March 1, 1996,
with Bruce A. Levy. Under the terms of the agreement, Mr. Levy devotes
substantially all of his time and effort to conducting the business activities
of the Company as President and is entitled to receive an annual salary of
$150,000. Mr. Levy's employment is terminable by the Company for cause as
defined in the agreement, and is terminable by Mr. Levy upon written notice to
the Company. Upon termination, Mr. Levy is not permitted to compete with the
Company or any subsidiary or affiliate of the Company by soliciting its
employees or soliciting business from its customers or suppliers for a period
of one year following such termination.
The Bank has a three-year employment agreement, dated December 11, 1997
with Joseph T. Crowley. Under the terms of the agreement, Mr. Crowley devotes
substantially all of his time and effort to conducting the business activities
of the Bank as President thereof and receives an annual salary of $100,000 with
an eight percent increase as of July 1, 1999. In addition, Mr. Crowley is
eligible for an annual bonus as determined by the Bank's Board of Directors.
Upon termination, Mr. Crowley is not permitted to compete with the Bank in any
of its businesses in the relevant market areas for such businesses for varying
periods following termination depending upon the reason therefor. If Mr.
Crowley's employment is prematurely terminated by the Bank without cause, Mr.
Crowley is eligible to receive a severance payment equal to two times his
annual salary if such termination occurs in the initial year of the employment
agreement, and a severance payment equal to his annual salary if such
termination occurs during the second or third year of the employment agreement.
Compensation Committee Interlocks and Insider Participation
Determinations regarding compensation of the Company's executive officers
are made by the Company's Compensation Committee. Mr. McAdams and Dr. Cohen
currently serve on the Compensation Committee. The Bank extended Mr. McAdams a
$60,000 personal line of credit in September 1997. Amounts outstanding under
the line of credit accrue interest at the prime rate as reported in the Wall
Street Journal ("Prime") minus 0.5% and outstanding amounts are secured by
certain marketable securities. The Bank has also extended a term loan in the
amount of $280,000 to Bastille Associates, L.P., a partnership of which Mr.
McAdams is a general partner. Amounts outstanding under the term loan accrue
interest at a rate of Prime plus 1.5% (adjusted annually) and outstanding
amounts are secured by certain assets of the partnership. Mr. McAdams
personally guaranteed 50% of the loan. In March 1996, the Bank extended a
$125,000 business line of credit to a partnership of which Dr. Cohen is a
general partner. The loan was repaid on June 8, 1998 through the issuance of a
$500,000 commercial loan at a rate of 9.00%. The loan is secured by certain
assets of Dr. Cohen's dental practice as well as personal assets of the
partners, including Dr. Cohen. Each of the partners and their spouses have
personally guaranteed the loan. Dr. Cohen is also a limited partner in Bastille
Associates, L.P. Each of these loans has been current throughout its term and
was made on substantially the same terms, including interest rates and
collateral requirements, as those prevailing at the time for comparable
transactions with unrelated persons.
7
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
Introduction
The Compensation Committee (the "Committee") has responsibility for
matters related to compensation, including compensation policy, approval of
salaries, bonuses, and other compensation for the Company's executive officers.
During the last fiscal year, the Compensation Committee did not meet and its
responsibilities were carried out by the Board. The Company's various stock
option plans are also administered by the Board.
Executive Compensation Components
The Company's executive compensation policy is designed to enable the
Company to attract, motivate and retain highly qualified executive officers.
The key components of the Company's compensation program are base salary,
annual incentive bonus awards, and equity participation in the form of stock
options. In arriving at specific levels of compensation for executive officers,
the Board has relied on the recommendations of management, benchmarks provided
by generally available compensation surveys, and the experience of Board
members and their knowledge of compensation paid by other companies in the
banking industry and/or in the same geographic area as the Company. The Board
also seeks to ensure that an appropriate relationship exists between executive
pay and corporate performance. Executive officers are also entitled to
customary benefits generally available to all employees of the Company,
including group medical, dental, and life insurance and the Company's 401(k)
plan. The Company has long-term employment agreements with certain of its
executive officers to provide them with the employment security and severance
deemed necessary by the Board to retain them.
Cash
Base Salary. Subject to the above policy and to the requirements of
applicable employment agreements, compensation for each of the executive
officers for fiscal 1998 was based on the executive's duties and
responsibilities, the performance of the Company, both financial and otherwise,
and the success of the executive in developing and executing the Company's
business and strategic plans.
Bonus. Mr. Crowley was the only executive officer to receive a cash bonus
for fiscal 1998. Mr. Crowley's bonus of $30,000 represents 30% of his base
salary. The decision to award Mr. Crowley such a bonus was based on the degree
of the Company's achievement of its financial and other objectives and the
degree of achievement by Mr. Crowley of his individual objectives as approved
by the Board. Because of Mr. Knox's and Mr. Levy's significant ownership of
shares of the Company's Common Stock, each has requested that the Board not
consider him for a cash bonus for fiscal 1998.
Stock Options. Equity participation is a key component of the Company's
executive compensation program. Stock options are granted to executive officers
primarily based on the officer's actual and expected contribution to the
Company's development. Options are designed to retain executive officers and
motivate them to enhance shareholder value by aligning their financial
interests with those of the Company's shareholders. Stock options provide an
effective incentive for management to create shareholder value over the long
term since the option value depends on appreciation in the price of the Common
Stock over a number of years.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
the deductibility of annual compensation over $1 million to the Chief Executive
Officer and the other executive officers unless certain conditions are met. The
Company's Chief Executive Officer and the other executive officers have not
received annual compensation over $1 million, and the Company has not yet
determined what measures, if any, it should take to comply with Section 162(m).
Chief Executive Officer and President Compensation
Mr. Knox is paid annual compensation of $61,800. The Company and Mr. Levy
are parties to an employment agreement, with a term ending on March 1, 2001.
Pursuant to this agreement, Mr. Levy is entitled to receive, effective as of
March 1, 1996, a minimum annual base salary of $150,000.
Board of Directors
Thomas J. Knox, Chairman
8
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of October 16, 1998 by: (i) each
person known by the Company to be the beneficial owner of more than five
percent of the outstanding shares of Common Stock; (ii) each director and Named
Executive Officer of the Company; and (iii) all executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
Number of Shares Percentage
Name of Beneficial Owner(1) Beneficial Owned(2) Ownership
- --------------------------- ------------------- -----------
<S> <C> <C>
Thomas J. Knox(3) .......................................... 1,558,200 40.66%
Bruce A. Levy .............................................. 724,500 18.90
Joseph T. Crowley(4) ....................................... 13,415 *
Paul Bachow ................................................ 3,800 *
Ronald L. Caplan ........................................... 32,900 *
D. Walter Cohen, D.D.S. .................................... 20,700 *
Daniel DiLella ............................................. 17,700 *
Linda R. Knox(5) ........................................... 132,300 3.45
Joel S. Lawson III ......................................... 22,100 *
Brian McAdams .............................................. 17,900 *
All directors and officers as a group (10 persons) ......... 2,543,515 65.22%
</TABLE>
- ------------
* Constitutes less than 1%.
(1) Unless otherwise indicated, the address of all beneficial owners is in care
of the Company.
(2) Unless otherwise indicated, includes shares held directly by the individual
as well as by such individual's spouse, shares held in trust and in other
forms of indirect ownership over which shares the individual effectively
exercises sole voting and investment power and shares which the named
individual has a right to acquire pursuant to the exercise of stock
options within sixty days of October 16, 1998.
(3) Excludes 132,300 shares of Common Stock held by Linda R. Knox in trust for
the children of Linda R. and Thomas J. Knox, as to which he disclaims
beneficial ownership.
(4) Includes 215 shares of Common Stock owned by WBL Investment Club, as to
which Mr. Crowley shares voting and investment power as a general partner.
The address for WBL Investment Club is 2 Jessica Way, Media, PA 19063.
(5) All shares of Common Stock held in trust for the children of Linda R. and
Thomas J. Knox. Does not include 1,558,200 shares beneficially owned by
her husband, Thomas J. Knox, as to which shares she disclaims beneficial
ownership.
9
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STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in cumulative total
shareholder return on the Common Stock since February 13, 1998, the date the
Company's shares began trading on the Nasdaq National Market, with the
cumulative total return over the same period on (i) the Nasdaq Stock Market
Index and (ii) the Nasdaq Bank Index. The comparison assumes $100 was invested
on February 13, 1998 in the Common Stock and in each of the indices and assumes
reinvestment of dividends, if any, from that date to June 30, 1998. The Company
has not paid cash dividends on the Common Stock. The market value of the Common
Stock has been adjusted to reflect the 5% August 1998 stock dividend. Historic
stock prices are not indicative of future stock price performance.
Comparison of Total Shareholder Return
112 |----------------------------------------------------------------|
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L 106 |----------------------------------------------------------------|
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13-Feb-98 30-Jun-98
# = Crusader Holding * = Nasdaq ! = Nasdaq Bank Index
Note: Returns for the period for Crusader Holding and NASDAQ are indentical.
CERTAIN TRANSACTIONS
The Company is party to the following transactions with its executive
officers, directors, and principal shareholders.
The Company was indebted to certain of its shareholders in the aggregate
principal amount of $3.2 million. Such debts were evidenced by promissory notes
dated March 1, 1996, January 31, 1997 and September 30, 1997 and which accrued
interest at a rate of six percent per annum. Thomas J. Knox and Bruce A. Levy
held notes for the principal amounts of $2,218,228 and $950,670, respectively,
and each of Ronald L. Caplan, D. Walter Cohen, Daniel DiLella, Joel S. Lawson
III and Brian McAdams held notes for $13,800. The funds obtained in exchange
for the issuance of the notes were contributed as capital to the Bank. Interest
on each of the Notes was payable quarterly; provided, however, that such
interest payments were due only to the extent that such sums were available for
payment pursuant to all applicable federal banking regulations. With the
exception of Mr. Knox and Mr. Levy, the shareholders to whom the Company was
indebted did not receive any interest on their respective notes upon repayment.
Interest payments have been made to Mr. Knox and Mr. Levy in the amount of
$97,850 and $88,775, respectively. All of the Notes were repaid upon
consummation of the Company's initial public offering in February 1998.
The Bank's headquarters and Center City Philadelphia branch, located at
1230 Walnut Street, are leased from Walnut Square Partners, a partnership
controlled by Ronald L. Caplan, a director of the Company and the Bank. The
Lease covers approximately 6,000 square feet of space on the first and second
floors of the property. The lease expires in 2014, assuming the Bank exercises
its option to renew the lease for two additional terms
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of five years each. The base rent under the lease is $48,000 per annum for the
initial ten year term. The base rent increases to $60,000 and $72,000 per annum
for the first and second optional renewal terms, respectively. The terms of the
lease were reached through arms length negotiations and are comparable to the
terms the Company could have obtained from a third party.
QUEST, a wholly-owned subsidiary of the Bank, formed a partnership with
Ronald L. Caplan, a director of the Company, through which the partnership
acquired an office building located at 1334--36 Walnut Street for a total price
of $410,000. Crusader Mortgage Corporation, a wholly-owned subsidiary of the
Bank ("CMC"), leases approximately 6,000 square feet of space in this building
at an annual rent of $60,000. The terms of CMC's lease were reached through
arms length negotiations and are comparable to the terms the Company could have
obtained from a third party.
The Bank has made loans to or to entities controlled by officers,
directors and employees of the Company and the Bank. All such loans were made
in the ordinary course of the Bank's business, were made on substantially the
same terms, including interest rates and collateral requirements, as those
prevailing at the time for comparable transactions with unrelated persons and,
in the opinion of management, do not involve more than the normal risk of
collectibility or present other unfavorable features. For information
concerning the terms of certain of these loans, see "Executive Compensation and
Other Information -- Compensation Committee Interlocks and Insider
Participation."
For information regarding employment agreements with Named Executive
Officers, see "Executive Compensation and Other Information -- Employment
Contracts." For information regarding compensation of directors and options
granted to Named Executive Officers and directors, see "Election of Directors
- -- Director Compensation" and "Executive Compensation and Other Information --
Stock Option Information."
INDEPENDENT AUDITORS
Grant Thornton LLP, independent auditors, audited the financial statements
of the Company for the fiscal year ended June 30, 1998. Representatives of
Grant Thornton LLP are expected to attend the Annual Meeting, will have the
opportunity to make a statement if they desire to do so, and are expected to be
available to respond to appropriate questions. The Board has selected Grant
Thornton LLP as the independent auditors to audit the Company's financial
statements for the fiscal year ending June 30, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
officers (including persons performing a principal policy-making function), and
persons who own more than 10% of a registered class of the Company's equity
securities ("10% Holders") to file with the Securities and Exchange Commission
(the "SEC") initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Directors, officers,
and 10% Holders are required by the regulations under the Exchange Act to
furnish the Company with copies of all of the Section 16(a) reports which they
file. Based solely upon a review of the copies of the forms furnished to the
Company and the representations made by the reporting persons to the Company,
the Company believes that during fiscal 1998 its directors, officers, and 10%
Holders complied with the filing requirements under Section 16(a) of the
Exchange Act, with the following exceptions: Mr. Crowley and Mr. Caplan each
filed one late form that reported one transaction that was not reported on a
timely basis.
SHAREHOLDER PROPOSALS
Shareholders may submit proposals on matters appropriate for shareholder
action at the Company's annual meetings consistent with regulations adopted by
the SEC. For shareholder proposals to be considered by the Board for inclusion
in the Proxy Statement and form of proxy relating to the 1999 annual meeting of
shareholders, they must be received by the Company not later than June 24,
1999. If any shareholder wishes to present a proposal to the 1999 annual
meeting of shareholders that is not included in the Board's Proxy Statement
relating to such meeting and fails to submit such proposal to the President of
the Company on or before September 7, 1999, then the Board will be allowed to
use its discretionary voting authority when the proposal is raised at the
Annual Meeting, without any discussion of the matter in its proxy statement.
All proposals should be
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addressed to the Company at 1230 Walnut Street, Philadelphia, Pennsylvania
19107, Attention: President. Nothing in this paragraph shall be deemed to
require the Company to include in its proxy materials relating to such annual
meeting of shareholders any shareholder proposal which does not meet all of the
requirements for inclusion established by the SEC and the Company's By-laws at
that time in effect.
OTHER MATTERS
The Board does not intend to present any business at the Annual Meeting
other than the election of ten directors. However, if other matters requiring
the vote of the shareholders properly come before the Annual Meeting, which
under applicable proxy regulations need not be included in this Proxy
Statement, or which the Board did not know would be presented at a reasonable
time before this solicitation, the persons named in the enclosed proxy will
have discretionary authority to vote the proxies held by them with respect to
such matters in accordance with their best judgment on such matters.
By Order of the Board of Directors
/s/ Joseph T. Crowley
----------------------------------
Joseph T. Crowley, Secretary
October 22, 1998
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PROXY CRUSADER HOLDING CORPORATION
The undersigned shareholder of Crusader Holding Corporation (the
"Company") hereby appoints Bruce A. Levy and Joseph T. Crowley, and each of
them, attorneys and proxies, with power of substitution in each of them, to
vote and act for and on behalf of the undersigned at the Annual Meeting of the
Shareholders to be held at the Union League of Philadelphia, 140 S. Broad
Street, Philadelphia, Pennsylvania 19102 at 3:00 p.m. on Thursday, November 17,
1998, and at all postponements and adjournments thereof, according to the
number of shares which the undersigned would be entitled to vote if then
personally present, as indicated hereon and in their discretion upon such other
business as may come before the meeting, all as set forth in the notice of the
meeting and in the proxy statement furnished herewith, copies of which have
been received by the undersigned; and hereby ratifies and confirms all that
said attorneys and proxies may do or cause to be done by virtue hereof.
The proxies are directed to vote as follows:
Election of the following persons as directors of the Company.
Name Vote For Vote Withheld
---- ---------- --------------
Thomas J. Knox / / / /
Bruce A. Levy / / / /
Joseph T. Crowley / / / /
Paul Bachow / / / /
Ronald L. Caplan / / / /
D. Walter Cohen, D.D.S. / / / /
Daniel DiLella / / / /
Linda R. Knox / / / /
Joel S. Lawson III / / / /
Brian McAdams / / / /
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS,
WHICH RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE NOMINEES FOR DIRECTOR.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED HEREIN.
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR"
EACH OF THE ABOVE NOMINEES FOR DIRECTOR.
IMPORTANT: Please date this proxy and sign exactly as your name or names is
printed below. If shares are registered in more than one name, all owners
should sign. When signing as an executor, administrator, trustee, guardian or
in another representative capacity, please give your full title(s). If this
proxy is submitted by a corporation or partnership, it should be executed in
the full corporate or partnership name by a duly authorized person.
-----------------------------
(Signature)
-----------------------------
(Signature)
Dated----------------- , 1998
PLEASE SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED PRE-ADDRESSED, STAMPED ENVELOPE.
