SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ ] Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
FFD FINANCIAL CORPORATION
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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] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-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 O-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 O-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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FFD FINANCIAL CORPORATION
321 North Wooster Avenue
Dover, Ohio 44622
(330) 364-7777
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 1996 Annual Meeting of Shareholders of
FFD Financial Corporation ("FFD) will be held at 321 North Wooster Avenue,
Dover, Ohio 44622, on October 8, 1996 at 1:00 p.m., local time (the "Annual
Meeting"), for the following purposes, all of which are more completely set
forth in the accompanying Proxy Statement:
1. To elect three directors of FFD for terms expiring in 1998;
2. To approve the FFD Financial Corproation 1996 Stock Option and
Incentive Plan, a copy of which is attached hereto as Exhibit A;
3. To approve the First Federal Savings Bank of Dover Recognition and
Retention Plan and Trust Agreement, a copy of wich is attached
hereto as Exhibit B;
4. To ratify the selection of Grant Thornton LLP as the auditors of FFD
for the current fiscal year; and
5. To transact such other busienss as may properly come before the
Annual Meeting or any adjournments thereof.
Only shareholders of FFD of record at the close of business on August
20, 1996, will be entitled to receive notice of and to vote at the Annual
Meeting and at any adjournments thereof. Whether or nto you expect to attend
the Annual Meeting, we urge you to consider the accompanying Proxy Statement
carefully and to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO THAT
YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A
QUORUM MAY BE ASSSURED. The giving of a Proxy does not affect your right to
vote in person in the event you attend the Annual Meeting.
By Order of the Board of Directors
Dover, Ohio Robert R. Gerber
August 22, 1996
THIS PAGE INTENTIONALLY LEFT BLANK
FFD FINANCIAL CORPORATION
321 North Wooster Avenue
Dover, Ohio 44622
(330) 364-7777
PROXY STATEMENT
PROXIES
The enclosed Proxy is being solicited by the Board of Directors of FFD
Financial Corporation ("FFD") for use at the 1996 Annual Meeting of
Shareholders of FFD to be held at 321 North Wooster Avenue, Dover, Ohio 44622,
on October 8, 1996, at 1:00 p.m., local time, and at any adjournments thereof
(the "Annual Meeting"). Without affecting any vote previously taken, the Proxy
may be revoked by a shareholder executing a later dated proxy which is
received by FFD before the Proxy is exercised or by giving notice of
revocation to FFD in writing or in open meeting before the Proxy is exercised.
Attendance at the Annual Meeting will not, of itself, revoke a Proxy.
Each properly executed Proxy received prior to the Annual Meeting and
not revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted:
FOR the reelection of Messrs. Stephen G. Clinton, Robert R. Gerber
and Richard J. Herzig as directors of FFD for terms expiring in
1998;
FOR the approval of the FFD Financial Corporation 1996 Stock Option
and Incentive Plan (the "Stock Option Plan"), a copy of which is
attached hereto as Exhibit A;
FOR the approval of the First Federal Savings Bank of Dover
Recognition and Retention Plan and Trust Agreement (the "RRP"), a
copy of which is attached hereto as Exhibit B;
FOR the ratification of the selection of Grant Thornton LLP ("Grant
Thornton") as the auditors of FFD for the current fiscal year.
Proxies may be solicited by the directors, officers and other employees
of FFD and First Federal Savings Bank of Dover ("First Federal"), in person or
by telephone, telegraph or mail only for use at the Annual Meeting. Such
Proxies will not be used for any other meeting. The cost of soliciting Proxies
will be borne by FFD.
Only shareholders of record as of the close of business on August 20,
1996 (the "Voting Record Date"), are entitled to vote at the Annual Meeting.
Each such shareholder will be entitled to cast one vote for each share owned.
FFD's records disclose that, as of the Voting Record Date, there were
1,454,750 votes entitled to be cast at the Annual Meeting.
This Proxy Statement is first being mailed to shareholders of FFD on or
about August 30, 1996.
VOTE REQUIRED
Election of Directors
Under Ohio law and FFD's Code of Regulations (the "Regulations"), the
three nominees receiving the greatest number of votes will be elected as
directors. Shares as to which the authority to vote is withheld and shares
held by a nominee for a beneficial owner which are represented in person or by
proxy but not voted with respect to the election of directors are not counted
toward the election of directors or toward the election of the individual
nominees specified on the Proxy.
Approval of the Stock Option Plan and the RRP
The affirmative vote of the holders of a majority of the outstanding
shares is necessary to approve the Stock Option Plan and the RRP. Under Ohio
law, shares held by a nominee for a beneficial owner which are represented in
person or by proxy but not voted with respect to such proposals ("non-votes")
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are counted as present. The effect of an abstention or a non-vote is the same
as a vote against the approval of the Stock Option Plan and the RRP. If the
accompanying Proxy is signed and dated by the shareholder but no vote is
specified thereon, however, the shares held by such shareholder will be voted
FOR the adoption of the Stock Option Plan and the RRP and will not be
considered "non-votes."
Ratification of Selection of Auditors
The affirmative vote of the holders of a majority of the shares
represented in person or by proxy at the Annual Meeting is necessary to ratify
the selection of Grant Thornton as the auditors of FFD for the current fiscal
year. Under Ohio law and the Regulations, non-votes are counted as present.
The effect of an abstention or a non-vote is the same as a "no" vote. If the
accompanying Proxy is signed and dated by the shareholder but no vote is
specified thereon, however, the shares held by such shareholder will be voted
FOR the ratification of the selection of Grant Thornton as auditors and will
not be considered "non-votes."
VOTING SECURITIES AND OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
only person known to FFD to own beneficially more than five percent of the
outstanding common shares of FFD as of August 15, 1996:
Amount and Nature of Percent of
Name and Address Beneficial Ownership Shares Outstanding
- - ------------------------- -------------------- ------------------
First Bankers Trust, N.A.
1201 Broadway
Quincy, Illinois 62301 116,380(1) 8.00%
- - -------------------------
(1) Consists of the shares held by First Bankers Trust, N.A. as the Trustee
for the FFD Financial Corporation Employee Stock Ownership Plan (the
"ESOP").
The following table sets forth certain information with respect to the
number of common shares of FFD beneficially owned by each director of FFD and
by all directors and executive officers of FFD as a group as of August 15,
1996:
Amount and Nature of Percent of
Beneficial Ownership Shares Outstanding
----------------------------- ------------------
Sole Voting and Shared Voting and
Name and Address(1) Investment Power Investment Power
- - ------------------- ---------------- --------------------
Stephen G. Clinton 2,150 1,850 0.27%
Robert R. Gerber 3,000 5,000 0.54
J. Richard Gray - 20,000 1.37
Richard J. Herzig - 12,500 0.86
Roy O. Mitchell, Jr. 12,500 2,000 1.00
Robert D. Sensel 10,000 10,000 1.37
All directors and
executive officers
of FFD as a group
(8 people) 28,850 51,350 5.51%
- - ----------------------------
(1) Each of the persons listed in this table may be contacted at the address
of FFD.
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BOARD OF DIRECTORS
Election of Directors
The Regulations provide for a Board of Directors consisting of six
persons. Each of the directors of FFD is also a director of First Federal.
In accordance with Section 2.03 of the Regulations, nominees for
election as directors may be proposed only by the directors or by a
shareholder entitled to vote for directors if such shareholder has submitted a
written nomination to the Secretary of FFD by the later of the July 31st
immediately preceding the annual meeting of shareholders or the sixtieth day
before the first anniversary of the most recent annual meeting of shareholders
held for the election of directors. Each such written nomination must state
the name, age, business or residence address of the nominee, the principal
occupation or employment of the nominee, the number of common shares of FFD
owned either beneficially or of record by each such nominee and the length of
time such shares have been so owned.
The Board of Directors proposes the reelection of the following persons
to terms which will expire in 1998:
Director Director
of FFD of First Federal
Name Age(1) Position(s) Held Since (2) Since
- - ---- ------ ---------------- ---------- ----------------
Stephen G. Clinton 43 Director 1995 1993
Robert R. Gerber 47 Director and 1995 1990
President
Richard J. Herzig 71 Director 1995 1971
- - -----------------------------
(1) As of August 15, 1996.
(2) Each nominee became a director of FFD in connection with the conversion
of First Federal from mutual to stock form (the "Conversion") and the
formation of FFD as the holding company for First Federal.
If any nominee is unable to stand for election, any Proxies granting
authority to vote for such nominee will be voted for such substitute as the
Board of Directors recommends.
The following directors will continue to serve after the Annual Meeting
for the terms indicated:
Director Director of
of FFD First Federal
Name Age(1) Positions Held Since (2) Since Term Expires
- - ---- ------ -------------- --------- ------------- ------------
J. Richard Gray 69 Director 1995 1969 1997
Roy O. Mitchell, Jr. 69 Director 1995 1965 1997
Robert D. Sensel 51 Director 1995 1993 1997
- - -----------------------------
(1) As of August 15, 1996.
(2) Each director became a director of FFD in connection with the Conversion.
Stephen G. Clinton has been employed by National Capital Companies LLC
("National Capital"), a financial consulting and investment banking firm
specializing in the financial services industry, since 1990. Although National
Capital is headquartered in Chevy Chase, Maryland, Mr. Clinton operates out of
an office in Dover, Ohio. Mr. Clinton has been President of National Capital
since August 1995.
Robert R. Gerber has served as President of First Federal since 1992.
From 1984 to 1992, Mr. Gerber was a loan officer and the Secretary of First
Federal.
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J. Richard Gray has been employed by Hanhart Agency, Inc., an insurance
agency in Dover, since 1951. Mr. Gray has served as that company's Chairman
for the past two years.
Richard J. Herzig is the Chairman and retired President of Toland-Herzig
Funeral Homes, Inc. located in Dover, Ohio.
Roy O. Mitchell, Jr. served as Managing Officer of First Federal from
1967 until his retirement from First Federal in 1992.
Robert D. Sensel has been President and Chief Executive Officer of Dover
Hydraulics, Inc., Dover, Ohio, since 1984. Dover Hydraulics is involved in the
manufacture, repair and distribution of hydraulic cylinders and components for
the steel, construction and mining industries.
Meetings of Directors
FFD was incorporated in November 1995. The Board of Directors of FFD met
six times for regularly scheduled and special meetings during the fiscal year
ended June 30, 1996. Each director attended at least 75% of the aggregate of
such meetings. No FFD Board of Directors committee meetings were held during
fiscal year 1995.
Each director of FFD is also a director of First Federal. The Board of
Directors of First Federal met 20 times for regularly scheduled and special
meetings during the fiscal year ended June 30, 1996. Each director attended at
least 75% of the aggregate of such meetings and all meetings of committees of
the Board of Directors of which such director was a member.
Committees of Directors
The Board of Directors of FFD does not currently have any committees. The
Board of Directors of First Federal has an Executive Committee, which
functions primarily as a loan approval committee, although the Executive
Committee is authorized to act on other matters. The Executive Committee is
composed of at least three directors of First Federal, and there are no
standing appointments to the committee. The Executive Committee met 26 times
during the fiscal year ended June 30, 1996.
EXECUTIVE OFFICERS
In addition to Mr. Gerber, the President of both FFD and First Federal,
the following persons are executive officers of FFD and First Federal and hold
the designated positions:
Name Age(1) Position(s) Held
------ -------- ----------------------------
Robert S. Grant 29 Treasurer of FFD and First Federal and
Vice President of First Federal
Shirley A. Wallick 51 Secretary of FFD and First Federal
-----------------------------
(1) As of August 15, 1996.
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Robert S. Grant is the Treasurer, Chief Financial Officer and a Vice
President of First Federal and the Treasurer of FFD. He has worked for First
Federal since 1993. From 1989 to 1993, Mr. Grant was an accounting supervisor
with the Federal Reserve Bank of Cleveland.
Shirley A. Wallick is the Secretary of First Federal and FFD. She is
responsible for teller operations, bookkeeping and on-line coordination of
First Federal's data processing system. She has been an employee of First
Federal since December 1982.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
The following table sets forth the compensation paid to Robert R.
Gerber, the President of FFD and First Federal, for the fiscal years ended
June 30, 1996, 1995 and 1994. No executive officer of FFD earned salary and
bonus in excess of $100,000 during such period.
Summary Compensation Table
|----------------------|----------------|
| Annual Compensation | All Other |
| | Compensation(1)|
|----------------|-------|-----------|----------| |
| | | | | |
|Name and | Year | Salary ($)| Bonus ($)| |
|Principal | | | | |
|Position | | | | |
| | | | | |
|----------------|-------|-----------|----------|----------------|
| | | | | |
|Robert R. Gerber| 1996 | $73,933 | $6,376 | $12,275(2) |
| President | 1995 | $62,545 | $6,110 | $16,483(3) |
| | 1994 | $55,700 | $5,070 | $15,791(4) |
- - -------------------------
(1) Does not include amounts attributable to other miscellaneous benefits,
the cost of which was less than 10% of Mr. Gerber's cash compensation.
(2) Consists of directors' fees of $3,900 and First Federal's contribution
of $8,375 for the benefit of Mr. Gerber under First Federal's
tax-qualified profit sharing plan (the "Profit Sharing Plan").
(3) Consists of directors' fees of $7,350 and First Federal's contribution
of $9,133 for the benefit of Mr. Gerber under the Profit Sharing Plan.
(4) Consists of directors' fees of $7,425 and First Federal's contribution
of $8,366 for the benefit of Mr. Gerber under the Profit Sharing Plan.
Director Compensation
As of January 1, 1996, each director who is not an executive officer of
FFD receives a fee of $300 per regular meeting attended and $50 per special
meeting attended and each director who is not an executive officer of First
Federal receives a fee of $700 per regular meeting attended and $50 per
special meeting attended. In addition, directors who are not executive
officers of either FFD or First Federal receive a fee of $25 per committee
meeting attended. Prior to January 1, 1996, each director of First Federal,
including executive officers, received a fee of $600 per regular meeting
attended and $50 per special meeting attended.
-5-
NEW PLAN BENEFITS
General. The Stock Option Plan and the RRP must be approved by the
holders of a majority of the outstanding shares of FFD. The Board of Directors
of FFD recommends that the shareholders of FFD approve the Stock Option Plan
and the RRP.
The following table sets forth certain information with respect to the
options expected to be granted pursuant to the Stock Option Plan and the
awards expected to be made pursuant to the RRP:
Stock Option Plan(1)
-------------------- RRP
Shares Subject To --------------------------
Name and Position Options Dollar Value(2) Shares
- - ----------------- ----------------- --------------- ------
Robert R. Gerber, President 21,820 $ 59,364 5,820
All executive officers,
as a group (3 persons) 29,070 35,547 3,485
All directors who are not
executive officers,
as a group (5 persons) 36,365 148,359 14,545
All employees who are not
executive officers, as
a group (8 persons) 14,750 29,580 2,900
- - ------------------------------
(1) The dollar value of the shares subject to options under the Stock Option
Plan is not determinable.
(2) Based upon the number of shares awarded multiplied by the $10.20 per
share closing sales price quoted by the Nasdaq Small-Cap Market
("Nasdaq") on August 19, 1996.
Stock Option Plan
The following is a summary of the terms of the Stock Option Plan and is
qualified in its entirety by reference to the full text of the Stock Option
Plan, a copy of which is attached hereto as Exhibit A.
Purpose. The purposes of the Stock Option Plan include retaining and
providing incentives to the directors, managerial and other key employees of
FFD and First Federal by facilitating their purchase of a stock interest in
FFD. Pursuant to the Stock Option Plan, 145,475 common shares have been
reserved for issuance by FFD upon the exercise of options to be granted to
certain directors, officers and employees of First Federal and FFD from time
to time under the Stock Option Plan.
Administration and Eligibility. The Stock Option Plan will be
administered by a committee of directors composed of at least three directors
of FFD who are not employees of FFD (the "Committee"). The Committee may grant
options under the Stock Option Plan at such times as it deems most beneficial
to First Federal and FFD on the basis of the individual participant's
responsibility, tenure and future potential to First Federal and FFD. Grants
must be made in accordance with the Office of Thrift Supervision ("OTS")
regulations, which provide that no individual may receive options to purchase
more than 25% of the shares which may be subject to options pursuant to the
Stock Option Plan, and directors who are not employees of FFD or First Federal
may not receive options to purchase more than 5% of such shares individually
or 30% in the aggregate.
Without further approval of the shareholders, the Board of Directors may
at any time terminate the Stock Option Plan or may amend it from time to time
in such respects as the Board of Directors may deem advisable, except that the
Board of Directors may not, without the approval of the shareholders, make any
amendment which would (a) increase the aggregate number of common shares which
may be issued under the Stock Option Plan (except for adjustments to reflect
certain changes in the capitalization of FFD), (b) materially modify the
requirements as to eligibility for participation in the Stock Option Plan, or
(c) materially increase the benefits accruing to participants under the Stock
Option Plan. Notwithstanding the foregoing, the Board of Directors may amend
the Stock Option Plan to take into account changes in applicable securities,
federal income tax and other applicable laws.
-6-
Option Terms. Options granted to the officers and employees under the
Stock Option Plan may be "incentive stock options" ("ISOs") within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
Options granted under the Stock Option Plan to directors who are not employees
of FFD or First Federal will not qualify under the Code and thus will not be
incentive stock options ("Non-Qualified Stock Options").
The option exercise price of each option granted under the Stock Option
Plan will be determined by the Committee at the time of option grant, although
the exercise price must not be less than 100% of the fair market value of the
shares on the date of the grant. In addition, the exercise price of an ISO may
not be less than 110% of the fair market value of the shares on the date of
the grant if the recipient owns more than 10% of FFD's outstanding common
shares. The Committee shall fix the term of each option, except that an ISO
shall not be exercisable after the expiration of ten years from the date it is
granted; provided, however, that if a recipient of an ISO owns a number of
shares representing more than 10% of the FFD shares outstanding at the time
the ISO is granted, the term of the ISO shall not exceed five years. One-fifth
of such stock options awarded under the Stock Option Plan will become
exercisable on each of the first five anniversaries of the date of the award.
If the fair market value of shares awarded pursuant to ISOs exercisable for
the first time by a participant under the Stock Option Plan during any
calendar year exceeds $100,000, however, the ISOs will be considered
Non-Qualified Stock Options to the extent of such excess.
An option recipient cannot transfer or assign an option other than by
will or in accordance with the laws of descent and distribution. Termination
for cause, as defined in the Stock Option Plan, will result in the annulment
of any outstanding exercisable options and any options which have not yet
become exercisable shall terminate upon the resignation, removal or retirement
of a director of FFD or First Federal, or upon the termination of employment
of an officer or employee of FFD or First Federal, except in the case of death
or disability.
FFD will receive no monetary consideration for the granting of options
under the Stock Option Plan. Upon the exercise of options, FFD will receive
payment of cash or, if acceptable to the Committee, FFD common shares or
outstanding awarded stock options. The market value of the common shares
underlying the options reserved for the Stock Option Plan is $1,483,845 based
upon the number of shares reserved, multiplied by the $10.20 per share closing
sales price quoted by Nasdaq on August 19, 1996.
Tax Treatment of Incentive Stock Options. An optionee who is granted an
ISO does not recognize taxable income either on the date of grant or on the
date of exercise. Upon disposition of shares acquired from the exercise of an
ISO, long-term capital gain or loss is generally recognized in an amount equal
to the difference between the amount realized on the sale or disposition and
the exercise price. However, if the optionee disposes of the shares within two
years of the date of grant or within one year from the date of the transfer of
the shares to the optionee (a "Disqualifying Disposition"), then the optionee
will recognize ordinary income, as opposed to capital gain, at the time of
disposition in an amount generally equal to the lesser of (i) the amount of
gain realized on the disposition, or (ii) the difference between the fair
market value of the shares received on the date of exercise and the exercise
price. Any remaining gain or loss is treated as a short-term or long-term
capital gain or loss, depending upon the period of time the shares have been
held.
FFD is not entitled to a tax deduction upon either the exercise of an
ISO or the disposition of shares acquired pursuant to such exercise, except to
the extent that the optionee recognizes ordinary income in a Disqualifying
Disposition. Ordinary income from a Disqualifying Disposition will constitute
compensation but will not be subject to tax withholding, nor will it be
considered wages for payroll tax purposes.
If the holder of an ISO pays the exercise price, in whole or in part,
with previously acquired shares, the exchange should not affect the ISO tax
treatment of the exercise. Upon such exchange, and except as otherwise
described herein, no gain or loss is recognized by the optionee upon
delivering previously acquired shares to FFD, and shares received by the
optionee equal in number to previously acquired common stock exchanged
therefor will have the same basis and holding period for long-term capital
gain purposes as the previously acquired shares. (The optionee, however, will
not be able to utilize the prior holding period for the purpose of satisfying
the ISO statutory holding period requirements for avoidance of a Disqualifying
Disposition.) Shares received by the optionee in excess of the number of
shares previously acquired will have a basis of zero and a holding period
which commences as of the date the shares are transferred to the optionee upon
exercise of the ISO. If the exercise of an ISO is effected using shares
previously acquired through the exercise of an ISO, the exchange of such
previously acquired shares will be considered a disposition of such shares for
the purpose of determining whether a Disqualifying Disposition has occurred.
-7-
Tax Treatment of Non-Qualified Stock Options. An optionee receiving a
Non-Qualified Stock Option does not recognize taxable income on the date of
grant of the option, provided that the option does not have a readily
ascertainable fair market value at the time it is granted. The optionee must
recognize ordinary income generally at the time of exercise of a Non-Qualified
Stock Option in the amount of the difference between the fair market value of
the shares on the date of exercise and the option price. The ordinary income
received will constitute compensation for which tax withholding by FFD
generally will be required. The amount of ordinary income recognized by an
optionee will be deductible by FFD in the year that the optionee recognizes
the income if FFD complies with the applicable withholding requirement.
If, at the time of exercise, the sale of the shares could subject the
optionee to short-swing profit liability under Section 16(b) of the Securities
Exchange Act of 1934, such person generally will not recognize ordinary income
until the date that the optionee is no longer subject to such Section 16(b)
liability. Upon such date, the optionee will recognize ordinary income in an
amount equal to the fair market value of the shares on such date less the
option exercise price. Nevertheless, the optionee may elect under Section
83(b) of the Code within 30 days of the date of exercise to recognize ordinary
income as of the date of exercise, without regard to the restriction of
Section 16(b).
Shares acquired upon the exercise of a Non-Qualified Stock Option will
have a tax basis equal to their fair market value on the exercise date or
other relevant date on which ordinary income is recognized, and the holding
period for the shares generally will begin on the date of exercise or such
other relevant date. Upon subsequent disposition of the shares, the optionee
will recognize long-term capital gain or loss if the optionee has held the
shares for more than one year prior to disposition or short-term capital gain
or loss if the optionee has held the shares for one year or less.
If a holder of a Non-Qualified Stock Option pays the exercise price, in
whole or in part, with previously acquired shares, the optionee will recognize
ordinary income in the amount by which the fair market value of the shares
received exceeds the exercise price. The optionee will not recognize gain or
loss upon delivering such previously acquired shares to FFD. Shares received
by an optionee equal in number to the previously acquired shares exchanged
therefor will have the same basis and holding period as such previously
acquired shares. Shares received by an optionee in excess of the number of
such previously acquired shares will have a basis equal to the fair market
value of such additional shares as of the date ordinary income is recognized.
The holding period for such additional shares will commence as of the date of
exercise or such other relevant date.
Proposed Awards. If the shareholders approve the Stock Option Plan, the
Board of Directors of FFD expects to grant options to the following persons to
purchase the number of common shares indicated: 21,280 shares to Mr. Gerber,
3,625 shares to each of Mr. Grant and Ms. Wallick, Mr. Douglas Baker and Ms.
Jennifer Thomas; 1,500 shares to each of Ms. Kimberly Hammerstrom, Ms. Jodi
Frantz, Ms. Linda Schott and Ms. Mary Mitchell; 750 shares to Ms. Tammy Klein;
and 7,273 to each of the five directors who are not full-time employees of FFD
or First Federal and Mr. William R. Gerber, Director Emeritus of First
Federal. Such awards shall become exercisable at the rate of one-fifth per
year commencing on the date that is one year after the date of grant of the
award. No determination has yet been made with respect to the extent to which
the options granted to employees will be ISOs.
The Board of Directors of FFD recommends that the shareholders of FFD
approve the Stock Option Plan.
Recognition and Retention Plan
The following is a summary of the terms of the RRP and is qualified in
its entirety by reference to the full text of the RRP, a copy of which is
attached hereto as Exhibit B.
Purpose. First Federal has proposed the RRP to compensate such directors
and key employees for services to First Federal in a manner which will provide
such persons with an additional incentive to put forth maximum efforts for the
success of First Federal and FFD. First Federal expects to contribute
sufficient funds to enable the RRP to purchase up to 58,190 common shares of
FFD.
Administration and Eligibility. The RRP will be administered by a
committee of directors composed of at least three directors of First Federal
who are not employees of First Federal (the "RRP Committee").
The RRP Committee will determine which directors and employees of First
Federal will be awarded shares under the RRP and the number of shares awarded;
-8-
provided, however, that the aggregate number of shares covered by awards to
any one person shall not exceed 25% of the shares held pursuant to the RRP and
directors who are not employees of First Federal may not receive more than 5%
of such shares individually or 30% in the aggregate.
Terms. Unless the RRP Committee specifically states to the contrary at
the time of an award of shares, one-fifth of such shares will be earned and
non-forfeitable on each of the first five anniversaries of the date of the
award. Until shares awarded are earned by the participant, such shares will be
forfeited in the event that the participant ceases to be either a director or
an employee of First Federal, except that in the event of the death or
disability of a participant, the participant's shares will be deemed to be
earned and nonforfeitable.
The shares, together with any cash dividends or distributions paid
thereon, will be distributed as soon as practicable after they are earned. A
participant may direct the voting of all shares awarded to him or her which
have been earned, but have not yet been distributed to him or her. Shares that
have been awarded, but not earned, may not be transferred.
The Board of Directors of First Federal may, by resolution, amend or
terminate the RRP.
Tax Treatment of Shares Awarded Under the RRP. Persons receiving shares
under the RRP generally will not recognize income upon the award of such
shares, but will recognize ordinary income when and to the extent the
restrictions on such shares lapse, in an amount equal to the fair market value
of the shares at the time such restrictions lapse plus the amount of any
dividends distributed to the participant with respect to such shares. If
applicable withholding requirements are satisfied, FFD will be entitled to a
deduction each year in an amount equal to the income, if any, recognized by
participants for such year.
Under Section 83(b) of the Code, a participant may elect, within 30 days
after the shares are awarded, to recognize ordinary income on the date the
shares are awarded based on the fair market value of the shares on such date.
If the election is made, First Federal would be entitled to a deduction for an
equivalent amount. A participant making such an election will have a tax basis
in the shares equal to the amount of ordinary income recognized, and the
participant's holding period for capital gains purposes for such shares will
commence on the date the shares are awarded. If a Section 83(b) election is
made, however, and the shares are subsequently forfeited, the participant will
not be entitled to either a deduction of the amount previously recognized as
income with respect to such shares or a refund of any tax paid thereon.
Proposed Awards. If the shareholders approve the RRP, the Board of
Directors of First Federal expects to make the following grants: 5,820 shares
to Mr. Gerber; 2,035 shares to Ms. Wallick; 1,450 shares to each of Mr. Grant,
Mr. Baker and Ms. Thomas; and 2,909 shares to each of the five directors who
are not full-time employees of FFD or First Federal.
The Board of Directors of FFD recommends that the shareholders of FFD
approve the RRP.
SELECTION OF AUDITORS
The Board of Directors has selected Grant Thornton LLP as the auditors
of FFD and First Federal for the current fiscal year and recommends that the
shareholders ratify the selection. Management expects that a representative of
Grant Thornton will be present at the Annual Meeting, will have the
opportunity to make a statement if he or she so desires and will be available
to respond to appropriate questions.
-9-
PROPOSALS OF SHAREHOLDERS AND OTHER MATTERS
Any proposals of shareholders intended to be included in FFD's proxy
statement for the 1997 Annual Meeting of Shareholders should be sent to FFD by
certified mail and must be received by FFD not later than April 24, 1997.
Management knows of no other business which may be brought before the
Annual Meeting. It is the intention of the persons named in the enclosed Proxy
to vote such Proxy in accordance with their best judgment on any other matters
which may be brought before the Annual Meeting.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND
RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
By Order of the Board of Directors
Robert R. Gerber, President
Dover, Ohio
August 22, 1996
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EXHIBIT A
FFD FINANCIAL CORPORATION
1996 STOCK OPTION AND INCENTIVE PLAN
1. Purpose. The purpose of the FFD Financial Corporation 1996 Stock
Option and Incentive Plan (this "Plan") is to promote and advance the
interests of FFD Financial Corporation (the "Company"), and its shareholders
by enabling the Company to attract, retain and reward directors, managerial
and other key employees of the Company and any Subsidiary (hereinafter
defined), and to strengthen the mutuality of interests between such directors
and employees and the Company's shareholders by providing such persons with a
proprietary interest in pursuing the long-term growth, profitability and
financial success of the Company.
2. Definitions. For purposes of this Plan, the following terms shall have
the meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended, or
any successor thereto, together with rules, regulations and
interpretations promulgated thereunder.
(c) "Committee" means the Committee of the Board constituted as
provided in Section 3 of this Plan.
(d) "Common Shares" means the common shares, without par value, of
the Company or any security of the Company issued in
substitution, in exchange or in lieu thereof.
(e) "Company" means FFD Financial Corporation, an Ohio corporation,
or any successor corporation.
(f) "Employment" means regular employment with the Company or a
Subsidiary and does not include service as a director only.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
(h) "Fair Market Value" shall be determined as follows:
(i) If the Common Shares are traded on a national securities
exchange at the time of grant of the Stock Option, then
the Fair Market Value shall be the average of the highest
and the lowest selling price on such exchange on the date
such Stock Option is granted or, if there were no sales on
such date, then on the next prior business day on which
there was a sale.
(ii) If the Common Shares are quoted on The Nasdaq Stock Market
at the time of the grant of the Stock Option, then the
Fair Market Value shall be the mean between the closing
high bid and low asked quotation with respect to a Common
Share on such date on The Nasdaq Stock Market.
(iii)If the Common Shares are not traded on a national
securities exchange or quoted on The Nasdaq Stock Market,
then the Fair Market Value shall be as determined by the
Committee.
(i) "Incentive Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of this Plan that is
intended to be and is specifically designated as an "incentive
stock option" within the meaning of Section 422 of the Code.
(j) "Non-Qualified Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of this Plan that is
not an Incentive Stock Option.
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(k) "OTS" means the Office of Thrift Supervision, Department of the
Treasury.
(l) "Participant" means an employee or director of the Company or a
Subsidiary who is granted an Award under this Plan.
Notwithstanding the foregoing, for the purposes of the granting
of any Incentive Stock Option under this Plan, the term
"Participant" shall include only employees of the Company or a
Subsidiary.
(m) "Plan" means the FFD Financial Corporation 1996 Stock Option
and Incentive Plan, as set forth herein and as it may be
hereafter amended from time to time.
(n) "Stock Option" means an award to purchase Common Shares granted
pursuant to the provisions of Section 6 of this Plan.
(o) "Subsidiary" means any corporation or entity in which the
Company directly or indirectly controls 50% or more of the
total voting power of all classes of its stock having voting
power and includes, without limitation, First Federal Savings
Bank of Dover.
(p) "Terminated for Cause" means any removal of a director or
discharge of an employee for the personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform
stated duties, willful violation of a material provision of any
law, rule or regulation (other than traffic violations or
similar offenses), a material violation of a final
cease-and-desist order or any other action of a director or
employee which results in a substantial financial loss to the
Company or a Subsidiary.
3. Administration.
(a) This Plan shall be administered by the Committee to be
comprised of not less than three of the members of the Board
who are not employees of the Company. The members of the
Committee shall be appointed from time to time by the Board.
Members of the Committee shall serve at the pleasure of the
Board, and the Board may from time to time remove members from,
or add members to, the Committee. A majority of the members of
the Committee shall constitute a quorum for the transaction of
business. An action approved in writing by a majority of the
members of the Committee then serving shall be fully as
effective as if the action had been taken by unanimous vote at
a meeting duly called and held.
(b) The Committee is authorized to construe and interpret this Plan
and to make all other determinations necessary or advisable for
the administration of this Plan. The Committee may designate
persons other than members of the Committee to carry out its
responsibilities under such conditions and limitations as it
may prescribe. Any determination, decision or action of the
Committee in connection with the construction, interpretation,
administration, or application of this Plan shall be final,
conclusive and binding upon all persons participating in this
Plan and any person validly claiming under or through persons
participating in this Plan. The Company shall effect the
granting of Stock Options under this Plan in accordance with
the determinations made by the Committee, by execution of
instruments in writing in such form as approved by the
Committee.
4. Duration of, and Common Shares Subject to, this Plan.
(a) Term. This Plan shall terminate on the date which is ten (10)
years from the date on which this Plan is adopted by the Board,
except with respect to Stock Options then outstanding.
Notwithstanding the foregoing, no Incentive Stock Option may be
granted under this Plan after the date which is ten (10) years
from the date on which this Plan is adopted by the Board or the
date on which this Plan is approved by the shareholders of the
Company, whichever is earlier.
(b) Common Shares Subject to Plan. The maximum number of Common
Shares in respect of which Stock Options may be granted under
this Plan, subject to adjustment as provided in Section 9 of
this Plan, shall be ten percent of the total Common Shares sold
in connection with the conversion of First Federal Savings Bank
of Dover from mutual to stock form.
For the purpose of computing the total number of Common Shares available
for Stock Options under this Plan, there shall be counted against the
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foregoing limitations the number of Common Shares subject to issuance upon the
exercise or settlement of Stock Options as of the dates on which such Stock
Options are granted. If any Stock Options are forfeited, terminated or
exchanged for other Stock Options, or expire unexercised, the Common Shares
which were theretofore subject to such Stock Options shall again be available
for Stock Options under this Plan to the extent of such forfeiture,
termination or expiration of such Stock Options.
Common Shares which may be issued under this Plan may be either
authorized and unissued shares or issued shares which have been reacquired by
the Company. No fractional shares shall be issued under this Plan.
5. Eligibility and Grants. Persons eligible for Stock Options under this
Plan shall consist of directors and managerial and other key employees of the
Company or a Subsidiary who hold positions with significant responsibilities
or whose performance or potential contribution, in the judgment of the
Committee, will benefit the future success of the Company or a Subsidiary. In
selecting the directors and employees to whom Stock Options will be awarded
and the number of shares subject to such Stock Options, the Committee shall
consider the position, duties and responsibilities of the eligible directors
and employees, the value of their services to the Company and the Subsidiaries
and any other factors the Committee may deem relevant.
6. Stock Options. Stock Options granted under this Plan may be in the
form of Incentive Stock Options or Non-Qualified Stock Options, and such Stock
Options shall be subject to the following terms and conditions as the
Committee shall deem desirable:
(a) Grant. Stock Options may be granted under this Plan on terms
and conditions not inconsistent with the provisions of this
Plan and in such form as the Committee may from time to time
approve and shall contain such additional terms and conditions,
not inconsistent with the express provisions of this Plan;
provided, however, that no more than 25% of the shares subject
to Stock Options may be awarded to any individual who is an
employee of the Company or a Subsidiary, no more than 5% of
such shares may be awarded to any director who is not an
employee of the Company or a Subsidiary and no more than 30% of
such shares may be awarded to non-employee directors in the
aggregate.
(b) Stock Option Price. The option exercise price per Common Share
purchasable under a Stock Option shall be determined by the
Committee at the time of grant; provided, however, that in no
event shall the exercise price of a Stock Option be less than
100% of the Fair Market Value of the Common Shares on the date
of the grant of such Stock Option. Notwithstanding the
foregoing, in the case of a Participant who owns Common Shares
representing more than 10% of the outstanding Common Shares at
the time an Incentive Stock Option is granted, the option
exercise price shall in no event be less than 110% of the Fair
Market Value of the Common Shares at the time an Incentive
Stock Option is granted to such Participant.
(c) Stock Option Terms. Subject to the right of the Company to
provide for earlier termination in the event of any merger,
acquisition or consolidation involving the Company, the term of
each Stock Option shall be fixed by the Committee; except that
the term of Incentive Stock Options will not exceed ten years
after the date the Incentive Stock Option is granted; provided,
however, that in the case of a Participant who owns a number of
Common Shares representing more than 10% of the Common Shares
outstanding at the time an Incentive Stock Option is granted,
the term of the Incentive Stock Option granted to such
Participant shall not exceed five years.
(d) Exercisability. Except as set forth in Section 6(f) and Section
7 of this Plan, Stock Options awarded under this Plan shall
become exercisable at the rate of one-fifth per year commencing
on the date that is one year after the date of the grant of the
Stock Option and shall be subject to such other terms and
conditions as shall be determined by the Committee at the date
of grant.
(e) Method of Exercise. A Stock Option may be exercised, in whole
or in part, by giving written notice of exercise to the Company
specifying the number of Common Shares to be purchased. Such
notice shall be accompanied by payment in full of the purchase
price in cash or, if acceptable to the Committee in its sole
discretion, in Common Shares already owned by the Participant,
or by surrendering outstanding Stock Options. The Committee may
also permit Participants, either on a selective or aggregate
basis, to simultaneously exercise Options and sell Common
Shares thereby acquired, pursuant to a brokerage or similar
arrangement, approved in advance by the Committee, and use the
proceeds from such sale as payment of the purchase price of
such shares.
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(f) Special Rule for Incentive Stock Options. With respect to
Incentive Stock Options granted under this Plan, to the extent
the aggregate Fair Market Value (determined as of the date the
Incentive Stock Option is granted) of the number of shares with
respect to which Incentive Stock Options are exercisable under
all plans of the Company or a Subsidiary for the first time by
a Participant during any calendar year exceeds $100,000, or
such other limit as may be required by the Code, such Stock
Options shall be Non-Qualified Stock Options to the extent of
such excess.
7. Termination of Employment or Directorship.
(a) Except in the event of the death or disability of a
Participant, upon the resignation, removal or retirement from
the board of directors of any Participant who is a director of
the Company or a Subsidiary or upon the termination of
Employment of a Participant who is not a director of the
Company or a Subsidiary, any Stock Option which has not yet
become exercisable shall thereupon terminate and be of no
further force or effect, and, subject to extension by the
Committee, any Stock Option which has become exercisable shall
terminate if it is not exercised within 12 months of such
resignation, removal or retirement.
(b) Unless the Committee shall specifically state otherwise at the
time an Option is granted, all Options granted under this Plan
shall become exercisable in full on the date of termination of
a Participant's employment or directorship with the Company or
a Subsidiary because of his death or disability, and, subject
to extension by the Committee, all Options shall terminate if
not exercised within 12 months of the Participant's death or
disability.
(c) In the event the Employment or the directorship of a
Participant is Terminated for Cause, any Option which has not
been exercised shall terminate as of the date of such
termination for cause.
8. Non-transferability of Stock Options. No Stock Option under this Plan,
and no rights or interests therein, shall be assignable or transferable by a
Participant except by will or the laws of descent and distribution. During the
lifetime of a Participant, Stock Options are exercisable only by, and payments
in settlement of Stock Options will be payable only to, the Participant or his
or her legal representative.
9. Adjustments Upon Changes in Capitalization.
(a) The existence of this Plan and the Stock Options granted
hereunder shall not affect or restrict in any way the right or
power of the Board or the shareholders of the Company to make
or authorize the following: any adjustment, recapitalization,
reorganization or other change in the Company's capital
structure or its business; any merger, acquisition or
consolidation of the Company; any issuance of bonds,
debentures, preferred or prior preference stocks ahead of or
affecting the Company's capital stock or the rights thereof;
the dissolution or liquidation of the Company or any sale or
transfer of all or any part of its assets or business; or any
other corporate act or proceeding, including any merger or
acquisition which would result in the exchange of cash, stock
of another company or options to purchase the stock of another
company for any Stock Option outstanding at the time of such
corporate transaction or which would involve the termination of
all Stock Options outstanding at the time of such corporate
transaction.
(b) In the event of any change in capitalization affecting the
Common Shares of the Company, such as a stock dividend, stock
split, recapitalization, merger, consolidation, split-up,
combination or exchange of shares or other form of
reorganization, or any other change affecting the Common
Shares, such proportionate adjustments, if any, as the Board in
its discretion may deem appropriate to reflect such change
shall be made with respect to the aggregate number of Common
Shares for which Stock Options in respect thereof may be
granted under this Plan, the maximum number of Common Shares
which may be sold or awarded to any Participant, the number of
Common Shares covered by each outstanding Stock Option, and the
exercise price per share in respect of outstanding Stock
Options.
A-4
(c) The Committee may also make such adjustments in the number of
shares covered by, and the exercise price or other value of,
any outstanding Stock Options in the event of a spin-off or
other distribution (other than normal cash dividends) of
Company assets to shareholders. In the event that another
corporation or business entity is being acquired by the
Company, and the Company agrees to assume outstanding employee
stock options and/or the obligation to make future grants of
options or rights to employees of the acquired entity, the
aggregate number of Common Shares available for Stock Options
under Section 4 of this Plan may be increased accordingly.
10. Amendment and Termination of this Plan. Without further approval of
the shareholders, the Board may at any time terminate this Plan or may amend
it from time to time in such respects as the Board may deem advisable, except
that the Board may not, without approval of the shareholders, make any
amendment which would (a) increase the aggregate number of Common Shares which
may be issued under this Plan (except for adjustments pursuant to Section 9 of
this Plan), (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) materially increase the benefits accruing
to Participants under this Plan. The above notwithstanding, the Board may
amend this Plan to take into account changes in applicable securities, federal
income tax and other applicable laws.
11. Modification of Options. The Board may authorize the Committee to
direct the execution of an instrument providing for the modification of any
outstanding Stock Option which the Board believes to be in the best interests
of the Company; provided, however, that no such modification, extension or
renewal shall reduce the exercise price or confer on the holder of such Stock
Option any right or benefit which could not be conferred on him by the grant
of a new Stock Option at such time and shall not materially decrease the
Participant's benefits under the Stock Option without the consent of the
holder of the Stock Option, except as otherwise permitted under this Plan.
12. Miscellaneous.
(a) Tax Withholding. The Company shall have the right to deduct
from any settlement, including the delivery or vesting of
Common Shares, made under this Plan any federal, state or local
taxes of any kind required by law to be withheld with respect
to such payments or to take such other action as may be
necessary in the opinion of the Company to satisfy all
obligation for the payment of such taxes. If Common Shares are
used to satisfy tax withholding, such shares shall be valued
based on the Fair Market Value when the tax withholding is
required to be made.
(b) No Right to Employment. Neither the adoption of this Plan nor
the granting of any Stock Option shall confer upon any employee
of the Company or a Subsidiary any right to continued
Employment with the Company or a Subsidiary, as the case may
be, nor shall it interfere in any way with the right of the
Company or a Subsidiary to terminate the Employment of any of
its employees at any time, with or without cause.
(c) Annulment of Stock Options. The grant of any Stock Option under
this Plan payable in cash is provisional until cash is paid in
settlement thereof. The grant of any Stock Option payable in
Common Shares is provisional until the Participant becomes
entitled to the certificate in settlement thereof. In the event
the Employment or the directorship of a Participant is
Terminated for Cause, any Stock Option which is provisional
shall be annulled as of the date of such termination.
(d) Other Company Benefit and Compensation Programs. Payments and
other benefits received by a Participant under a Stock Option
made pursuant to this Plan shall not be deemed a part of a
Participant's regular, recurring compensation for purposes of
the termination indemnity or severance pay law of any country
and shall not be included in, nor have any effect on, the
determination of benefits under any other employee benefit plan
or similar arrangement provided by the Company or a Subsidiary
unless expressly so provided by such other plan or arrangement,
or except where the Committee expressly determines that a Stock
Option or portion of a Stock Option should be included to
accurately reflect competitive compensation practices or to
recognize that a Stock Option has been made in lieu of a
portion of competitive annual cash compensation. Stock Options
under this Plan may be made in combination with or in tandem
with, or as alternatives to, grants, stock options or payments
under any other plans of the Company or a Subsidiary. This Plan
notwithstanding, the Company or any Subsidiary may adopt such
other compensation programs and additional compensation
arrangements as it deems necessary to attract, retain and
reward directors and employees for their service with the
Company and its Subsidiaries.
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(e) Securities Law Restrictions. No Common Shares shall be issued
under this Plan unless counsel for the Company shall be
satisfied that such issuance will be in compliance with
applicable federal and state securities laws. Certificates for
Common Shares delivered under this Plan may be subject to such
stock-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any
stock exchange upon which the Common Shares are then listed,
and any applicable federal or state securities law. The
Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such
restrictions.
(f) Stock Option Agreement. Each Participant receiving a Stock
Option under this Plan shall enter into an agreement with the
Company in a form specified by the Committee agreeing to the
terms and conditions of the Stock Option and such related
matters as the Committee shall, in its sole discretion,
determine.
(g) Cost of Plan. The costs and expenses of administering this Plan
shall be borne by the Company.
(h) Governing Law. This Plan and all actions taken hereunder shall
be governed by and construed in accordance with the laws of the
State of Ohio, except to the extent that federal law shall be
deemed applicable.
(i) Effective Date. This Plan shall be effective upon the later of
adoption by the Board and approval by the Company's
shareholders. This Plan shall be submitted to the shareholders
of the Company for approval at an annual or special meeting of
shareholders to be held no sooner than six months after the
effective date of the Conversion.
A-6
EXHIBIT B
FIRST FEDERAL SAVINGS BANK
OF DOVER
RECOGNITION AND RETENTION PLAN
AND TRUST AGREEMENT
ARTICLE I
DEFINITIONS
The following words and phrases when used in this Agreement with an
initial capital letter shall have the meanings set forth below, unless the
context clearly indicates otherwise. Wherever appropriate, the masculine
pronoun shall include the feminine pronoun and the singular shall include the
plural:
1.01 "Agreement" means the First Federal Savings Bank of Dover
Recognition and Retention Plan and Trust Agreement.
1.02 "Award" means a right granted to a Director or an Employee under
this Plan to receive Plan Shares.
1.03 "Bank" means the First Federal Savings Bank of Dover, a savings bank
chartered under the laws of the United States.
1.04 "Beneficiary" means the person or persons designated by a Recipient
to receive any benefits payable under this Plan in the event of such
Recipient's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time
to time by similar written notice to the Committee. In the absence of a
written designation, the Beneficiary shall be the Recipient's estate.
1.05 "Board" means the Board of Directors of the Bank.
1.06 "Committee" means the Recognition and Retention Plan Committee
appointed by the Board pursuant to Article IV hereof.
1.07 "Common Shares" means common shares of the Corporation.
1.08 "Conversion" means the conversion of the Bank from mutual to stock
form.
1.09 "Corporation" means FFD Financial Corporation, a savings and loan
holding company incorporated under the laws of the State of Ohio for the
purpose of holding all of the common shares of the Bank issued in connection
with the Conversion.
1.10 "Director" means any person who is a member of the Board of
Directors of the Corporation, the Bank or a Subsidiary.
1.11 "Employee" means any person who is employed by the Corporation, the
Bank or a Subsidiary.
1.12 "Person" means an individual, corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization or any other form of entity not specifically
listed herein.
1.13 "Plan" means the Recognition and Retention Plan established by this
Agreement.
1.14 "Plan Shares" means the Common Shares held pursuant to the Trust and
which are awarded or issuable to a Recipient pursuant to the Plan.
1.15 "Plan Share Reserve" means the Common Shares held by the Trustee
pursuant to Sections 5.02 and 5.03 of this Agreement.
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1.16 "Recipient" means any Director or Employee who receives an Award
under the Plan.
1.17 "Subsidiaries" means subsidiaries of the Bank which, with the
consent of the Board, agree to participate in the Plan.
1.18 "Trust" means the trust established by this Agreement.
1.19 "Trustee" means the person or persons or entity 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 II
ESTABLISHMENT OF THE PLAN AND TRUST
2.01 The Bank hereby establishes a Recognition and Retention Plan and
Trust upon the terms and subject to the conditions set forth in this
Agreement.
2.02 The Trustee hereby accepts the 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 of this Agreement.
ARTICLE III
PURPOSE OF THE PLAN
3.01 The purpose of the Plan is to reward and retain the Directors and
Employees of the Corporation, the Bank and the Subsidiaries who are in key
positions of responsibility by providing such Directors and Employees with an
equity interest in the Corporation as reasonable compensation for their
contributions to the Corporation, the Bank and the Subsidiaries.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered and
interpreted by the Committee, which shall consist of not less than three
members of the Board who are not employees of the Bank. The Committee shall
have all of the powers set forth in this Plan. The interpretation and
construction by the Committee of any provisions of this Agreement or of any
Award granted hereunder shall be final, conclusive and binding. The Committee
shall act by the vote, or the written consent, of a majority of its members.
The Committee shall report actions and decisions with respect to the Plan to
the Board upon request by the Board.
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 one or more Trustees.
The Board, in its absolute discretion, 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 or take any other action reserved to the Board under this
Agreement; provided, however, that the Board may not revoke any Award already
granted under this Agreement. All decisions, determinations and
interpretations of the Board shall be final, conclusive and binding upon all
parties having an interest in the Plan.
B-2
4.03 Limitation on Liability. No member of the Board or the Committee,
nor any Trustee, shall be liable for any determination made in good faith with
respect to the Plan or any Plan Shares or Awards granted under the Plan. If a
member of the Board or of the 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 reason of anything done or not done by such member in such capacity under
or with respect to this Plan, the Bank shall indemnify such member against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such member in connection with
such action, suit or proceeding if such member acted in good faith and in a
manner such member reasonably believed to be in or not opposed to the best
interests of the Corporation, the Bank and the Subsidiaries and, with respect
to any criminal action or proceeding, had no reasonable cause to believe such
member's conduct was unlawful.
ARTICLE V
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Board shall determine the
amounts (or the method of computing the amounts) to be contributed by the Bank
to the Trust. Such amounts shall be paid to the Trustee at the time of
contribution. No contributions to the Trust by Directors or Employees shall be
permitted.
5.02 Investment of Trust Assets. Except as otherwise permitted by Section
8.02 of this Agreement, the Trustee shall invest all of the Trust's assets,
after providing for any required withholding as needed for tax purposes,
exclusively in Common Shares; provided, however, that the Trust shall not
purchase a number of Common Shares equal to more than 3% of the number of
Common Shares issued in connection with the Conversion, except that if the
Bank's tangible capital exceeds 10%, the Trust may purchase a number of Common
Shares equal to up to 4% of the Common Shares issued in connection with the
Conversion. After such investment, the Common Shares shall be held by the
Trustee in the Plan Share Reserve until such Common Shares are subject to one
or more Awards. Any funds held by the Trust before purchasing Common Shares
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 Effect of Allocations, Returns and Forfeitures Upon Plan Share
Reserves. Upon the allocation of Awards under Section 6.02 of this Agreement,
or the decision of the Committee to return Plan Shares to the Corporation, the
Plan Share Reserve shall be reduced by the number of Plan Shares so allocated
or returned. Any Plan Shares subject to an Award which is subject to
forfeiture by the Recipient pursuant to Section 7.01 of this Agreement shall
be retained in the Plan Share Reserve.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Directors and Employees are eligible to receive Awards
within the sole discretion of the Committee.
6.02 Allocations. The Committee will determine which of the Directors and
Employees will be granted Awards and the number of Plan Shares covered by each
Award; provided, however, that: (a) the aggregate number of Plan Shares
covered by Awards to any one Employee shall not exceed 25% of the total number
of Plan Shares, (b) no more than 5% of the Plan Shares shall be awarded to any
Director who is not an Employee, and (c) no more than 30% of the Plan Shares
shall be awarded in the aggregate to Directors who are not Employees. In the
event Plan Shares are forfeited for any reason or additional Plan Shares are
purchased by the Trustee, the Committee may, from time to time, determine
which of the Employees will be granted additional Awards to be awarded from
forfeited or additional Plan Shares.
In selecting the Directors and Employees to whom Awards will be granted
and the number of shares covered by such Awards, the Committee shall consider
the position, duties and responsibilities of the eligible Directors and
Employees, the value of their services to the Corporation, the Bank and the
Subsidiaries and any other factors the Committee may deem relevant. All
allocations by the Committee shall be subject to review and approval or
rejection by the Board.
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6.03 Form of Allocation. As promptly as practicable after a determination
is made pursuant to Section 6.02 of this Agreement that an Award is to be
made, the Committee shall notify the Recipient 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 determines that an Award is to be made or a later date designated by
the Committee shall be considered the date of grant of the Awards. The
Committee shall maintain records as to all grants of Awards under the Plan.
6.04 Allocations Not Required. None of the Directors or Employees, either
individually or as a group, shall have any right or entitlement to receive an
Award under the Plan. The Committee may, with the approval of the Board, and
shall, if so directed by the Board, return all Common Shares and other assets
in the Plan Share Reserve to the Corporation at any time and thereafter cease
issuing Awards.
6.05 Shareholder Approval. This Agreement shall be submitted to the
shareholders of the Corporation at an annual or special meeting to be held no
sooner than six months after the effective date of the Conversion.
Notwithstanding anything to the contrary in this Agreement, no Awards shall be
granted hereunder until the shareholders of the Corporation approve this
Agreement.
ARTICLE VII
EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earning Plan Shares; Forfeitures.
(a) General Rules. Unless the Committee shall specifically state a
longer period of time over which Awards shall be earned and
non-forfeitable at the time an Award is granted, Plan Shares
covered by each Award shall be earned and non-forfeitable by a
Recipient over a period of five years at the rate of one-fifth
per year commencing on the date which is one year after the
date of the grant of such Award. As Plan Shares become earned
and non-forfeitable, any cash dividends, returned capital and
earnings thereon shall also be earned and non-forfeitable.
(b) Revocation. Unless otherwise permitted by applicable laws and
regulations, any Plan Shares and any cash dividends, returned
capital and earnings thereon that have not been earned and are
not non-forfeitable in accordance with Section 7.01(a) of this
Agreement shall be forfeited in the event that (i) a Recipient
who is a Director ceases to serve on the Board or (ii) a
Recipient who is not a Director of the Bank ceases to be an
Employee of the Bank, except as otherwise provided in
subsection (c) of this Section 7.01.
(c) Exception for Terminations Due to Death or Disability. All Plan
Shares and cash dividends, returned capital and earnings
thereon subject to an Award held by a Recipient whose service
as a Director or Employee of the Corporation, the Bank or a
Subsidiary terminates due to (i) death or (ii) disability (as
determined by the Committee) shall be deemed fully earned and
non-forfeitable as of the later of the Recipient's last day of
service as a Director or as an Employee and shall be
distributed as soon as practicable thereafter.
7.02 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Except as otherwise
provided in this Agreement, Plan Shares shall be distributed to
the Recipient or his or her Beneficiary, as the case may be, as
soon as practicable after they have been earned, together with
any cash, dividends, returned capital and earnings thereon with
respect to such Plan Shares that have been earned.
(b) Form of Distribution. All distributions of Plan Shares,
together with any shares representing stock dividends, shall be
distributed in the form of Common Shares. No fractional shares
shall be distributed. Payments representing cash dividends,
returned capital and earnings thereon shall be made in cash.
(c) Withholding. The Trustee may withhold from any cash payment
made under this Plan sufficient amounts to cover any applicable
withholding and employment taxes and, if the amount of such
cash payment is not sufficient, the Trustee may require the
Recipient or Beneficiary to pay to the Trustee the amount
required to be withheld as a condition of delivering the Plan
Shares. The Trustee shall pay over to the Bank or the
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Subsidiary which employs or employed such Recipient or which
the Recipient serves or served as a Director, any such amount
withheld from or paid by the Recipient or Beneficiary.
(d) Regulatory Exceptions. Notwithstanding anything to the contrary
in this Agreement, no Plan Shares, upon becoming fully earned
and non-forfeitable, shall be distributed unless and until all
of the requirements of all applicable laws and regulations
shall have been met.
7.03 Voting of Plan Shares. All Common Shares held by the Trustee in the
Plan Share Reserve which have not yet been earned by a Recipient pursuant to
Section 7.01 of this Agreement shall be voted by the Trustee. A Recipient
shall be entitled to direct the voting of Plan Shares which have been earned
pursuant to Section 7.01 of this Agreement but have not yet been distributed
to him.
ARTICLE VIII
TRUST
8.01 Trust. The Trustee shall receive, hold, administer, invest and make
distributions and disbursements from the Trust in accordance with the
provisions of the Plan and the Trust and the applicable directions, rules,
regulations, procedures and policies established by the Committee pursuant to
this Agreement.
8.02 Management of Trust. The Trustee shall have complete authority and
discretion with respect to the management, control and investment of the
Trust, and 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 Shares to the fullest extent practicable,
and 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. The Trustee shall have the power to do all things and execute such
instruments as may be deemed necessary or proper with respect to the duties of
the Trustee hereunder, including the following powers:
(a) To invest up to 100% of all Trust assets in Common Shares
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 Shares from the Corporation or
from any other source. Such Common Shares so purchased may be
outstanding, newly issued or treasury shares;
(b) To invest any Trust assets not otherwise invested in accordance
with Section 8.02(a) of this Agreement in such 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) 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
reasonable, in the opinion of the Trustee, for the proper
operation of the Plan and the Trust;
(f) To employ brokers, agents, custodians, consultants and
accountants;
(g) To hire counsel to render advice with respect to the rights,
duties and obligations of the Trustee hereunder, and such other
legal services or representation as the Trustee may deem
desirable; and
(h) To hold funds and securities representing the amounts to be
distributed to a Recipient or his or her Beneficiary as a
consequence of a dispute as to the disposition thereof, whether
in a segregated account or held in common with other assets of
the Trust.
B-5
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 court for the exercise of any power
herein contained, or to give bond.
8.03 Records and Accounts. The Trustee shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled
person or entity to the extent required by applicable law, or any other person
determined by the Committee.
8.04 Earnings. All earnings, gains and losses with respect to Trust
assets shall be allocated, in accordance with a reasonable procedure adopted
by the Committee, to bookkeeping accounts for Recipients or to the general
account of the Trust, depending on the nature and allocation of the assets
generating such earnings, gains and losses. Without limiting the generality of
the foregoing, any earnings on cash dividends or returned capital received
with respect to Plan Shares shall be allocated (a) to accounts for Recipients,
if such shares which are the subject of outstanding Awards, and shall become
earned and distributed as specified in Article VII of this Agreement or (b)
otherwise to the Plan Share Reserve if such Plan Shares are not the subject of
outstanding awards.
8.05 Expenses. All costs and expenses incurred in the operation and
administration of the Plan shall be paid by the Bank.
ARTICLE IX
MISCELLANEOUS
9.01 Adjustments for Capital Changes. The aggregate number of Plan Shares
available for issuance pursuant to the Awards and the number of Plan Shares to
which any Award relates shall be proportionately adjusted for any increase or
decrease in the total number of outstanding Common Shares issued subsequent to
the effective date of the Plan if such increase or decrease resulted from any
split, subdivision or consolidation of shares or other capital adjustment, or
other increase or decrease in such shares effected without receipt or payment
of consideration by the Corporation.
9.02 Amendment and Termination of 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 Corporation or
the Bank all or any part of the assets of the Trust, including Common Shares
held in the Plan Share Reserve, as well as Common Shares and other assets
subject to Awards which are not yet earned by the Directors or Employees to
whom they are allocated; provided, however, that the termination of the Trust
shall not affect a Recipient's right to earn Awards and to the distribution of
Common Shares relating thereto, including earnings thereon, in accordance with
the terms of this Agreement and the grant by the Committee or the Board.
9.03 Nontransferable. Awards shall not be transferable by a Recipient.
During the lifetime of the Recipient, an Award may only be earned by and paid
to the Recipient who was notified in writing of the Award by the Committee
pursuant to Section 6.03 of this Agreement. No Recipient or Beneficiary shall
have any right in or claim to any assets of the Plan or the Trust, nor shall
the Corporation, the Bank or any Subsidiary be subject to any claim for
benefits hereunder.
9.04 Directorship Rights. Neither this Agreement nor any grant of an
Award 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 Director to continue to serve as a Director of the
Bank or a Subsidiary.
9.05 Employment Rights. Neither this Agreement nor any grant of an Award
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 Employee to continue in the employ of the Corporation, the
Bank or a Subsidiary.
9.06 Voting and Dividend Rights. No Recipient shall have any voting or
dividend rights or other rights of a shareholder in respect of any Plan Shares
covered by an Award, except as expressly provided in Sections 7.01, 7.02 and
7.03 of this Agreement, prior to the time such Plan Shares are actually
distributed to such Recipient.
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9.07 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Ohio, except to the extent that federal law
shall be deemed applicable.
9.08 Effective Date. Subject to Section 6.05 of this Agreement, this
Agreement shall be effective as of the ___ day of ____________, 1996.
9.09 Term of Plan. The Plan shall remain in effect until the earlier of
(a) the termination of the Plan by the Board or (b) the distribution of all
assets from the Trust. The termination of the Plan shall not affect any Awards
previously granted and such Awards shall remain valid and in effect until they
have been earned and paid or by their terms expire or are forfeited.
9.10 Tax Status of Trust. It is intended that the trust established
hereby 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 (26
U.S.C. ss. 671 et seq.).
IN WITNESS WHEREOF, the following Trustees execute this Agreement,
accepting and binding themselves to undertake and perform the obligations and
duties of the Trustee hereunder and consenting to the foregoing Agreement
effective the ___ day of _________________, 1996.
By: ___________________________ (Trustee)
By: ___________________________ (Trustee)
IN WITNESS WHEREOF, the Bank has caused this Agreement to be executed by
its duly authorized officer and duly attested, all as of the ___ day of
_________________, 1996.
FIRST FEDERAL SAVINGS BANK OF DOVER
By:______________________________________
Robert R. Gerber
its President
ATTEST:
- - ---------------------------------
Shirley A. Wallick
its Secretary
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REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
FFD FINANCIAL CORPORATION
FFD FINANCIAL CORPORATION 1996 ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 8, 1996
The undersigned shareholder of FFD Financial Corporation ("FFD") hereby
constitutes and appoints J. Richard Gray and Roy O. Mitchell, Jr., or either
one of them, as the Proxy or Proxies of the undersigned with full power of
substitution and resubstitution, to vote at the Annual Meeting of Shareholders
of FFD to be held at 321 North Wooster Avenue, Dover, Ohio 44622, on October
8, 1996, at 1:00 p.m. local time (the "Annual Meeting"), all of the shares of
FFD which the undersigned is entitled to vote at the Annual Meeting, or at any
adjournment thereof, on each of the following proposals, all of which are
described in the accompanying Proxy Statement:
1. The election of three directors:
FOR all nominees WITHHOLD authority to
______ listed below ______ vote for all nominees
(except as marked to the listed below:
contrary below):
Stephen G. Clinton
Robert R. Gerber
Richard J. Herzig
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).
- - --------------------------------------------------------------------------------
2. The approval of the FFD Financial Corporation 1996 Stock Option and
Incentive Plan.
______ FOR ______ AGAINST ______ ABSTAIN
3. The approval of the First Federal Savings Bank of Dover Recognition and
Retention Plan and Trust Agreement.
______ FOR ______ AGAINST ______ ABSTAIN
IMPORTANT: Please sign and date this Proxy on the reverse side.
4. The ratification of the selection of Grant Thornton LLP, certified public
accountants, as the auditors of FFD for the current fiscal year.
______ FOR ______ AGAINST ______ ABSTAIN
5. In their discretion, upon such other business as may properly come before
the Annual Meeting or any adjournments thereof.
The Board of Directors recommends a vote "FOR" the nominees and the
proposals listed above.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. Unless otherwise specified, the shares
will be voted FOR proposals 1,2,3 and 4.
All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the 1996 Annual Meeting of Shareholders of FFD and of
the accompanying Proxy Statement is hereby acknowledged.
Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should
give their full titles.
____________________________ ______________________________
Signature Signature
____________________________ ______________________________
Print or Type Name Print or Type Name
Dated: _____________________ Dated: _______________________
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED FOR MAILING IN THE U.S.A.