SCHEDULE 14-A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 toss.240.14a-11(c) orss.240.14a-12
Fidelity Bankshares, Inc.
(Name of Registrant as Specified In Its Charter)
Alan Schick, Luse Lehman Gorman Pomerenk & Schick, PC
(Name of Person(s) Filling 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)(1) 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:
.......................................................................
4) Proposed maximum aggregate value of transaction:
.......................................................................
5) Total fee paid:
.......................................................................
[ ] Fee previously paid:
[ ] 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:
April 21, 2002
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Fidelity Bankshares, Inc. (the "Company"). The Annual Meeting will be held at
the Crowne Plaza Hotel, 1601 Belvedere Road, West Palm Beach, Florida, at 10:00
a.m., (local time) on May 21, 2002.
The enclosed Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted.
The Annual Meeting is being held so that stockholders will be given an
opportunity to elect one director, consider the adoption of the 2002 Incentive
Stock Benefit Plan and to ratify the appointment of Deloitte & Touche LLP as
auditors for the Company's 2002 fiscal year.
The Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interest of the Company and its
stockholders. For the reasons set forth in the proxy statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
On behalf of the Board of Directors, we urge you to sign, date and return
the enclosed proxy card as soon as possible even if you currently plan to attend
the Annual Meeting. Your vote is important, regardless of the number of shares
that you own. Voting by proxy will not prevent you from voting in person, but
will assure that your vote is counted if you are unable to attend the meeting.
Sincerely,
/s/ Vince A. Elhilow
- -----------------------
Vince A. Elhilow
President and Chief Executive Officer
Fidelity Bankshares, Inc.
205 Datura Street
West Palm Beach, Florida 33401
(561) 659-9900
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 21, 2002
Notice is hereby given that the Annual Meeting of Fidelity Bankshares, Inc.
(the "Company") will be held at the Crowne Plaza Hotel, 1601 Belvedere Road,
West Palm Beach, Florida, at 10:00 a.m., (local time) on May 21, 2002.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
1. The election of one director of the Company;
2. The approval of the 2002 Incentive Stock Benefit Plan;
3. The ratification of the appointment of Deloitte & Touche LLP as auditors
for the Company for the fiscal year ended December 31, 2002; and
such other matters as may properly come before the Annual Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Annual Meeting.
Any action may be taken on the foregoing proposals at the Annual Meeting on
the date specified above, or on any date or dates to which by original or later
adjournment the Annual Meeting may be adjourned. Stockholders of record at the
close of business on April 10, 2002 are the stockholders entitled to vote at the
Annual Meeting, and any adjournments thereof.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING
WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE ANNUAL MEETING MAY REVOKE
HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL
MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN
YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN
ORDER TO VOTE PERSONALLY AT THE ANNUAL MEETING.
By Order of the Board of Directors
/s/ Elizabeth Cook
------------------
Secretary
West Palm Beach, Florida
April 21, 2002
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IMPORTANT: A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
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PROXY STATEMENT
of
FIDELITY BANKSHARES, INC.
205 Datura Street
West Palm Beach, Florida 33401
(561) 659-9900
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ANNUAL MEETING OF STOCKHOLDERS
May 21, 2002
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This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Fidelity Bankshares, Inc. (the
"Company") to be used at the Annual Meeting of Stockholders of the Company (the
"Meeting"), which will be held at the Crowne Plaza Hotel, 1601 Belvedere Road,
West Palm Beach, Florida on May 21, 2002 at 10:00 a.m., local time, and all
adjournments thereof. The accompanying Notice of Annual Meeting of Stockholders
and this Proxy Statement are first being mailed to stockholders on or about
April 21, 2002.
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REVOCATION OF PROXIES
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Stockholders who execute proxies in the form solicited hereby retain the
right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon. Where
no instructions are indicated, proxies will be voted "FOR" the proposals set
forth in this Proxy Statement for consideration at the Meeting.
Proxies may be revoked by sending written notice of revocation to the
Secretary of the Company, Elizabeth M. Cook , at the address of the Company
shown above, by delivering a later dated proxy or by attending the Meeting and
voting in person. The presence at the Meeting of any stockholder who had given a
proxy shall not revoke such proxy unless the stockholder delivers his or her
ballot in person at the Meeting or delivers a written revocation to the
Secretary of the Company prior to the voting of such proxy. However, if you are
a stockholder whose shares are not registered in your own name, you will need
appropriate documentation from your record holder to vote personally at the
Meeting.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Holders of record of the Company's common stock, par value $.10 per share
(the "Common Stock"), as of the close of business on April 10, 2002 (the "Record
Date") are entitled to one vote for each share then held. As of the Record Date,
the Company had 15,790,056 shares of Common Stock issued and outstanding. The
presence in person or by proxy of a majority of the outstanding shares of Common
Stock entitled to vote is necessary to constitute a quorum at the Meeting.
Directors are elected by a plurality of the votes cast, without regard to either
broker non-votes or proxies as to which the authority to vote for the nominees
being proposed is withheld. Proposals II and III must be approved by a majority
of the votes cast in person or by proxy at the Meeting without regard to broker
non-votes or proxies marked "abstain."
1
Persons and groups who beneficially own in excess of five percent of the
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC") regarding such ownership pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"). The following table sets forth, as of
the Record Date, the shares of Common Stock beneficially owned by directors and
named executive officers individually, by executive officers and directors as a
group and by each person who was the beneficial owner of more than five percent
of the Company's outstanding shares of Common Stock on the Record Date. The
business address of each director and executive officer is 205 Datura Street,
West Palm Beach, Florida.
Number of Shares Percent of All
Name of of Common Stock Common Stock
Beneficial Owner Beneficially Owned(1) Outstanding(1)
Vince A. Elhilow(2) 325,903 2.07%
Joseph B. Shearouse, Jr. 133,595 0.85
Keith D. Beaty(3) 130,277 0.83
Paul C. Bremer 7,832 0.05
F. Ted Brown, Jr.(4) 77,052 0.49
Donald E. Warren, M.D.(5) 78,287 0.50
Karl H. Watson 4,416 0.03
Richard D. Aldred(6) 98,968 0.63
J. Robert McDonald(7) 124,647 0.79
Joseph C. Bova(8) 71,909 0.46
Robert L. Fugate(9) 105,819 0.67
Christopher H. Cook(10) 12,489 0.08
All directors and executive
Officers as a group.(11) 1,172,194 7.43%
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(1) Based upon 15,781,244 shares outstanding.
(2) Includes 16,000 shares of common stock subject to options pursuant to the
stock option plan that may be exercised within 60 days of the record date
and 69,619 shares held by the management performance plan. Includes 12,708
shares allocated under the Fidelity Federal Bank &Trust employee stock
ownership plan. Includes 31,398 shares held under the savings plan for
employees for the benefit of Mr. Elhilow.
(3) Includes 36,682 shares subject to options that may be exercised within 60
days pursuant to the directors' stock option plan.
(4) Includes 19,332 shares subject to options that may be exercised within 60
days pursuant to the directors' stock option plan.
(5) Includes 36,682 shares subject to options that may be exercised within 60
days pursuant to the directors' stock option plan.
(6) Includes 16,248 shares of common stock subject to options pursuant to the
stock option plan and 22,500 shares held by the management performance
plan. Includes 12,131 shares allocated under the Fidelity Federal Bank
&Trust employee stock ownership plan. Includes 10,337 shares held under the
savings plan for employees for the benefit of Mr. Aldred.
(7) Includes 44,084 shares held by the management performance plan. Includes
11,123 shares allocated under the Fidelity Federal Bank & Trust employee
stock ownership plan. Includes 2,519 shares held under the savings plan for
employees for the benefit of Mr. McDonald.
(8) Includes 16,381 shares of common stock subject to options pursuant to the
stock option plan and 12,877 shares held by the management performance
plan. Includes 10,272 shares allocated under the Fidelity Federal Bank &
Trust employee stock ownership plan. Includes 19,231 shares held under the
savings plan for employees for the benefit of Mr. Bova.
(9) Includes 8,812 shares of common stock subject to options pursuant to the
stock option plan and 18,894 shares held by the management performance
plan. Includes 9,214 shares allocated under the Fidelity Federal Bank &
Trust employee stock ownership plan. Includes 31,167 shares held under the
savings plan for employees for the benefit of Mr. Fugate.
(10) Includes 4,823 shares subject to options that may be exercised pursuant to
the directors' plan. Includes 1,384 shares allocated under the Fidelity
Federal Bank & Trust employee stock ownership plan.
(11) Unless otherwise indicated, includes shares held directly by the
individuals as well as by spouses, in trust, and other indirect forms of
ownership over which shares the individuals effectively exercise sole or
shared voting and investment power. Includes 92,696 shares of common stock
which outside directors of Fidelity Bankshares, Inc. have the right to
acquire within 60 days of the record date pursuant to the exercise of stock
options granted under the Fidelity Federal Bank & Trust stock option plan
for outside directors.
2
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PROPOSAL I--ELECTION OF DIRECTORS
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The Company's Board of Directors currently is composed of seven members.
Effective at the Annual Meeting, Joseph B. Shearouse, Jr. will retire as
Chairman of the Board of Directors of the Company. Concurrent with Mr.
Shearouse's retirement, the Board of Directors will be reduced to six members.
Mr. Shearouse will continue as a director of the Bank. The Company's bylaws
provide that approximately one-third of the directors are to be elected
annually. Directors of the Company are generally elected to serve for a three
year period or until their respective successors shall have been elected and
shall qualify. The terms of the Board of Directors are classified so that
approximately one-third of the directors are up for election in any one year.
One director will be elected at the Meeting. The Board of Directors has
nominated Keith D. Beaty to serve on the Board of Directors.
The table below sets forth certain information regarding the composition of
the Company's Board of Directors, including the terms of office of Board
members. Historical information relates to the Bank and its mutual savings
association predecessor. It is intended that the proxies solicited on behalf of
the Board of Directors (other than proxies in which the vote is withheld as to
one or more nominees) will be voted at the Meeting for the election of the
nominee identified below. If the nominee is unable to serve, the shares
represented by all such proxies will be voted for the election of such
substitute as the Board of Directors may recommend. At this time, the Board of
Directors knows of no reason why the nominee might be unable to serve, if
elected. Except as indicated herein, there are no arrangements or understandings
between the nominee and any other person pursuant to which such nominee was
selected.
Director Current Term
Name Age Positions Held Since (1) to Expire
- ------------------ --------- -------------------- ----------- -----------
NOMINEE
Keith D. Beaty 52 Director 1992 2002
DIRECTORS CONTINUING IN OFFICE
Vince A. Elhilow 62 President and Chief 1984 2003
Executive Officer
Donald E. Warren, M.D. 74 Director 1979 2003
Paul C. Bremer 58 Director 2000 2004
F. Ted Brown 73 Director 1990 2004
Karl H. Watson 60 Director 1999 2004
- ---------------------
(1) Where appropriate refers to the individual's service as a director of
Fidelity Bank & Trust's mutual predecessor.
The principal occupation during the past five years of each director and
executive officer of the Company is set forth below. All directors and executive
officers have held their present positions for five years unless otherwise
stated.
Vince A. Elhilow has been President of Fidelity Federal Bank & Trust since
1987 and Chief Executive Officer of Fidelity Federal Bank & Trust since 1992.
Prior to his appointment as President of Fidelity Federal Bank & Trust, Mr.
Elhilow was manager of the Loan Department from 1973 to 1992 and Executive Vice
President and Chief Operating Officer from 1981 to 1987. Mr. Elhilow joined
Fidelity Federal Bank & Trust in January 1963 and has been a Director since
1984.
Keith D. Beaty is the Chief Executive Officer of Implant Innovations, Inc.
a distributor of dental implants, located in Palm Beach Gardens. Mr. Beaty has
been a director of Fidelity Federal Bank & Trust since 1992.
3
Paul C. Bremer is a retired certified public accountant. From 1979 until
his retirement in 2000, Mr. Bremer was a partner with the accounting firm of
Ernst & Young. Mr. Bremer was appointed to the Board of Directors in August
2000.
F. Ted Brown is the President of Ted Brown Real Estate, Inc., located in
North Palm Beach. Mr. Brown has been a director of Fidelity Federal Bank & Trust
since 1990.
Donald E. Warren, M.D. is a retired physician who practiced in West Palm
Beach for over 36 years. He was associated with Intracoastal Health Systems
until his retirement in November 1996. Dr. Warren has been a director of
Fidelity Federal Bank & Trust since 1979.
Karl H. Watson is President of the Quarries, Cement and Construction
Division, Rinker Materials, a concrete and building materials company based in
West Palm Beach. Mr. Watson has been with Rinker Materials for over 35 years.
Mr. Watson was appointed to the Board of Directors on January 19, 1999.
Richard D. Aldred is Executive Vice President, Chief Financial Officer and
Treasurer.
Joseph C. Bova is Executive Vice President and Lending Operations Manager.
Robert L. Fugate is Executive Vice President and Banking Operations
Manager.
Christopher H. Cook became Executive Vice President and corporate counsel
in 1996. Prior to that time, Mr. Cook was a partner with the law firm of
Brackett, Cook, Sned, Welch, D'Angio, Tucker & Farach, P.A.
Ownership Reports by Officers and Directors
The Common Stock is registered pursuant to Section 12(g) of the Exchange
Act. The officers and directors of the Company and beneficial owners of greater
than 10% of the Company's Common Stock ("10% beneficial owners") are required to
file reports on Forms 3, 4, and 5 with the SEC disclosing changes in beneficial
ownership of the Common Stock. SEC rules require disclosure in the Company's
Proxy Statement and Annual Report on Form 10-K of the failure of an officer,
director or 10% beneficial owner of the Company's Common Stock to file a Form 3,
4 or 5 on a timely basis. No disclosure is required with respect to the
Company's officers and directors.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
The business of the Company's Board of Directors is conducted through
meetings and activities of the Board and its committees. During the year ended
December 31, 2001, the Board of Directors of the Company held 15 regular and
special meetings. During the year ended December 31, 2001, no director attended
fewer than 75 percent of the total meetings of the Board of Directors of the
Company and committees on which such director served.
The Company does not have a compensation committee. All cash compensation
paid to executive officers is paid by the Bank. The Executive Compensation
Committee of the Bank meets periodically to review the performance of officers
and employees, and to determine compensation programs and adjustments. During
2001 the Executive Compensation Committee was comprised of Directors Beaty,
Bremer, Brown, Shearouse, Warren and Watson. The Executive Compensation
Committee met once during the year ended December 31, 2001.
The Board of Directors serves as the Nominating Committee. During the year
ended December 31, 2001, one meeting was held.
During 2001 the Audit and Examination Committee of the Bank consisted of
Directors Beaty, Bremer, Shearouse, Warren and Watson. This committee meets on a
quarterly basis with the internal auditor and the Bank's compliance officer to
review audit programs and the results of audits of specific areas as well as
other regulatory compliance issues. The Audit Committee also meets twice a year
with the Company's independent auditors. Each member of the Audit Committee is
"independent" as defined in the listing standards of the National Association of
4
Securities Dealers. The Board of Directors have adopted a written charter for
the Audit Committee. The Audit Committee met four times during the year ended
December 31, 2001.
Audit Fees
The aggregate fees billed by Deloitte & Touche, LLP, the member firms of
Deloitte & Touche Tohmatsu, and their respective affiliates (collectively,
"Deloitte") for professional services rendered for the audit of the Company's
annual financial statements for the fiscal year ended December 31, 2001 and for
the reviews of the financial statements included in the Company's Quarterly
Reports on Form 10-Q for that fiscal year were $189,510.
Financial Information Systems Design and Implementation Fees
Their were no fees billed by Deloitte for professional services rendered
for information technology services relating to financial information systems
design and implementation for the fiscal year ended December 31, 2001.
All Other Fees
The aggregate fees billed by Deloitte for services rendered to the Company,
other than the services described above under "Audit Fees" and "Financial
Information Systems Design and Implementation Fees," for the fiscal year ended
December 31, 2001 were $252,466 for services in connection with the Company's
stock offering which concluded May 15, 2001 and $54,258 for tax services.
The audit committee has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant's independence.
Audit Committee Report
In accordance with rules recently established by the SEC, the Audit
Committee has prepared the following report for inclusion in this proxy
statement:
As part of its ongoing activities, the Audit Committee has:
o Reviewed and discussed with management the Company's audited consolidated
financial statements for the fiscal year ended December 31, 2001;
o Discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, Communications with
Audit Committees, as amended; and
o Received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, and has discussed with the
independent auditors their independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001.
This report has been provided by the Audit
Committee:
Directors Beaty, Bremer, Shearouse, Warren and Watson
Compensation Committee Interlocks and Insider Participation
The Company does not independently compensate its executive officers,
directors, or employees. The Executive Compensation Committee of the Bank
retains the principal responsibility for the compensation of the officers,
directors and employees of the Bank. The Executive Compensation Committee
5
consists of Directors Beaty, Bremer, Brown, Shearouse, Warren and Watson. The
Executive Compensation Committee reviews the benefits provided to the Bank's
officers and employees. During the year ended December 31, 2001 the Executive
Compensation Committee met once.
Report of the Executive Compensation Committee
Under rules established by the SEC, the Company is required to provide
certain data and information in regard to the compensation and benefits provided
to the Company's Chief Executive Officer and other executive officers of the
Company. The disclosure requirements for the Chief Executive Officer and other
executive officers include the use of tables and a report explaining the
rationale and considerations that led to fundamental executive compensation
decisions affecting those individuals. In fulfillment of this requirement, the
Executive Compensation Committee of the Bank, at the direction of the Board of
Directors, has prepared the following report for inclusion in this proxy
statement.
The Executive Compensation Committee of the Bank is delegated the
responsibility of assuring that the compensation of the Chief Executive Officer
and other executive officers is consistent with the compensation strategy,
competitive practices, the performance of the Bank, and the requirements of
appropriate regulatory agencies. All non- employee directors sit on the
Executive Compensation Committee and participate in executive compensation
decision- making. All cash compensation paid to executive officers is paid by
the Bank. The Company does not currently pay any cash compensation to executive
officers.
The primary goal of the Bank and its Executive Compensation Committee is to
provide an adequate level of compensation and benefits in order to attract and
retain key executives. The performance of each officer is reviewed annually to
determine his or her contribution to the overall success of the institution.
Compensation of senior management is reviewed annually on a cycle that
coincides with the Bank's fiscal year end. In general, the purpose of the annual
compensation review is to ensure that the Bank's base salary levels are
competitive with financial institutions similar in size, geographic market and
business profile in order for the Bank to attract and retain persons of high
quality. In this regard, the Executive Compensation Committee utilized six
salary surveys, including the "Florida Bankers Salary Survey," "Savings and
Community Bankers Annual Salary Survey," the "Bank Administration Institute
Salary Survey" and the "SNL Executive Compensation Review." In addition, the
Executive Compensation Committee considers the overall profitability of the Bank
and the executive officer's contribution to the Bank when making its decision.
The Board of Directors approved a base salary for the Bank's Chief
Executive Officer of $368,000 for fiscal year 2002, which represented a 8.2%
increase from the Chief Executive Officer's base salary of $340,000 in fiscal
2001. The 2002 base salary was based upon the Chief Executive Officer's
performance and industry standards.
This report has been provided by the Executive
Compensation Committee:
Directors Beaty, Bremer, Brown, Shearouse, Warren and Watson
6
Performance Graph
Set forth hereunder is a performance graph comparing (a) the total return
on the common stock of the Company and predecessor Bank for the period beginning
on January 1, 1996, through December 31, 2001, (b) the cumulative total return
on stocks included in the Nasdaq Composite Index over such period, and (c) the
yearly cumulative total return on stocks included in the Nasdaq Bank Index over
such period. The cumulative total return on the Company's common stock was
computed assuming the reinvestment of cash dividends.
There can be no assurance that the Company's stock performance will
continue in the future with the same or similar trend depicted in the graph. The
Company will not make or endorse any predictions as to future stock performance.
The graph includes a comparison to Thrifts that are in the mutual holding
company form of ownership. As a result of the Company's offering, completed in
May 2001, the Company is no longer a mutual holding company. Accordingly, this
comparison will not be presented after this year.
Fidelity Bankshares, Inc.
[GRAPHIC OMITTED]
Period Ending
-----------------------------------------------------------------------------------------
Index 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
- --------------------------------- -------------- -------------- ------------- -------------- -------------- -------------
Fidelity Bankshares, Inc. 100.00 189.69 137.81 91.00 134.00 271.47
S&P 500 100.00 133.37 171.44 207.52 188.62 166.22
NASDAQ - Total US* 100.00 122.48 172.68 320.89 193.01 153.155
SNL $1B-$5B Bank Index 100.00 166.77 166.38 152.91 173.52 210.83
MHC Thrifts 100.00 223.95 153.75 136.75 190.68 248.16
- ---------------------------------------------------------------------------------------------------------------------------
<page>
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EXECUTIVE COMPENSATION
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The following table sets forth the cash compensation paid for services
during the years ended December 31, 2001, 2000 and 1999 to Fidelity Bankshares,
Inc.'s Chief Executive Officer and Fidelity Bankshares, Inc.'s five most highly
compensated executive officers other than the Chief Executive Officer.
Summary Compensation Table
====================================================================================================================================
Annual Compensation Long-Term
Compensation Awards
Other Restricted
Annual Stock Options/ All Other
Name and Year Ended Salary Bonus Compensation Award(s) SARs Compensation
Principal Position December 31, ($)(1) ($)(2) ($)(3)(4) ($) (#) Payouts ($)(5)
Vince A. Elhilow 2001 $340,000 $105,071 $49,186 -- -- -- $ 52,392
President and Chief 2000 316,800 159,853 39,707 -- -- -- 45,022
Executive Officer 1999 292,000 26,922 39,362 -- -- -- 134,994
- ------------------- ------------------------- ----------- ----------- ------------- ----------- ----------- ---------------
Joseph C. Bova 2001 $180,000 $35,360 $12,013 -- -- -- $35,055
Executive Vice 2000 165,000 49,597 11,938 -- -- -- 29,318
President--Lending 1999 150,000 13,830 11,878 -- -- -- 46,390
Operations
- ------------------- ------------------------- ----------- ----------- ------------- ----------- ----------- ---------------
Christopher H. Cook 2001 $182,000 $35,360 $8,072 $32,117
Executive Vice 2000 169,000 49,597 7,860 -- -- -- 27,804
President 1999 157,000 14,475 7,625 -- -- -- 21,515
Corporate Counsel -- -- --
- -------------------- ------------------------- ----------- ----------- ------------- ----------- ----------- ---------------
Richard D. Aldred 2001 $182,000 $35,360 $ 550 -- -- -- $36,278
Executive Vice 2000 169,000 49,597 3,050 -- -- -- 30,077
President--Finance 1999 157,000 14,475 2,770 -- -- -- 41,374
- -------------------- ------------------------- ----------- ----------- ------------- ----------- ----------- ---------------
Robert L. Fugate 2001 $177,000 $35,360 $5,280 -- -- -- $34,732
Executive Vice 2000 162,000 49,597 6,314 -- -- -- 28,581
President--Banking 1999 147,000 13,553 6,039 -- -- -- 36,406
Operations Manager
- -------------------- ------------------------- ----------- ----------- ------------- ----------- ----------- ---------------
J. Robert McDonald 2001 $161,000 $16,287 $15,664 -- -- -- $33,348
Executive Vice 2000 152,000 20,338 13,598 -- -- -- 27,671
President--Appraisal; 1999 143,500 13,230 14,717 -- -- -- 44,229
President of FRAS
==================== ========================= =========== =========== ============= =========== =========== ===============
- --------------------------------
(1) Includes compensation deferred at the election of the named individual
under Fidelity Federal Bank & Trust's savings plan for employees,
Fidelity Federal Bank & Trust's flexible benefit plan and Fidelity
Federal Bank & Trust's long-term deferred compensation plan.
(Footnotes continued on following page)
7
(Footnotes continued from prior page)
(2) Includes amounts deferred at the election of the executive under
Fidelity Federal Bank & Trust's management performance plan.
(3) Includes $29,100, $2,400 and $2,400 of Directors' fees for Fidelity
Federal Bank & Trust and its subsidiaries, payable to Messrs. Elhilow,
McDonald and Bova, respectively, in 2001.
(4) Consists of automobile lease payments or automobile reimbursement
stipends and club dues for the named individual. The aggregate amount
of such benefits did not exceed the lesser of $50,000 or 10% of cash
compensation for the named individual.
(5) Includes amount allocated to executive officers under Fidelity Federal
Bank & Trust employee stock ownership plan, long-term deferred
compensation plan and matching contributions allocated under Fidelity
Federal Bank & Trust's savings plan for employees.
Employment and Severance Arrangements
Employment Agreement. Fidelity Federal Bank & Trust has entered into an
employment agreement with Vince A. Elhilow, President and Chief Executive
Officer of Fidelity Federal Bank & Trust. The employment agreement is intended
to ensure that Fidelity Federal Bank & Trust and Fidelity Bankshares, Inc. will
be able to maintain a stable and competent management. The continued success of
Fidelity Federal Bank & Trust and Fidelity Bankshares, Inc. depends to a
significant degree on the skill and competence of the President and Chief
Executive Officer.
The employment agreement has a three-year "evergreen" term and may be
renewed for an additional year on each anniversary date of the agreement so that
the remaining term is three years, unless written notice of nonrenewal is given
by the Board of Directors after conducting a performance evaluation of the
executive. The agreement provides that the executive's base salary will be
reviewed annually. Effective January 1, 2002, the current base salary of Mr.
Elhilow is $368,000. In addition to the base salary, the employment agreement
provides that the executive will receive all benefits provided to permanent
full-time employees of Fidelity Federal Bank & Trust, including among other
things, participation in stock benefit plans and other fringe benefits
applicable to executive personnel. The employment agreement provides for
termination by Fidelity Federal Bank & Trust for cause at any time. In the event
Fidelity Federal Bank & Trust chooses to terminate his employment for reasons
other than for cause, or upon the termination of his employment for reasons
other than a change in control, as defined in the employment agreement, or in
the event of his resignation from Fidelity Federal Bank & Trust upon: (i)
failure to re-elect him to his current office; (ii) a material change in his
functions, duties or responsibilities which change would cause his position to
become one of lesser responsibility, importance or scope; (iii) relocation of
his principal place of employment by more than 30 miles; (iv) the liquidation or
dissolution of Fidelity Federal Bank & Trust; or (v) a breach of the agreement
by Fidelity Federal Bank & Trust, the executive, or in the event of death, his
beneficiary, would be entitled to receive an amount equal to the greater of the
remaining payments, including base salary, bonuses and other payments due under
the remaining term of the employment agreement or three times the average of the
executive's base salary, including bonuses and other cash compensation paid, and
the amount of any benefits received pursuant to any employee benefit plans
maintained by Fidelity Federal Bank & Trust.
If termination, whether voluntary or involuntary, follows a change in
control of Fidelity Federal Bank & Trust or Fidelity Bankshares, Inc., as
defined in the employment agreement, the executive or, in the event of death,
his beneficiary, would be entitled to a payment equal to the greater of (i) the
payments due under the remaining term of the employment agreement or (ii) 2.99
times his average annual compensation over the five years preceding termination.
Fidelity Federal Bank & Trust would also continue the executive's life, health,
and disability coverage for the remaining unexpired term of the employment
agreement to the extent allowed by the plan or policies maintained by Fidelity
Federal Bank & Trust from time to time.
The employment agreement provides that for a period of one year following
termination (other than in connection with a change in control), the executive
agrees not to compete with Fidelity Federal Bank & Trust in any city, town or
county in which Fidelity Federal Bank & Trust maintains an office or has filed
an application to establish an office.
8
Severance Plan. Fidelity Federal Bank & Trust has entered into severance
agreements (the "Severance Agreements") with Richard D. Aldred, Executive Vice
President, Joseph C. Bova, Executive Vice President, Robert L. Fugate, Executive
Vice President, and Christopher H. Cook, Esquire, Executive Vice
President/Corporate Counsel, providing for certain benefits in the event of a
change of control of Fidelity Federal Bank & Trust or Fidelity Bankshares, Inc.
Following a change of control of Fidelity Bankshares, Inc. or Fidelity Federal
Bank & Trust, as defined in the Severance Agreements, the officer shall be
entitled to a payment under a severance agreement if the officer terminates
employment following any demotion, loss of title, office or significant
authority, reduction in his annual compensation or benefits, or relocation of
his principal place of employment by more than 30 miles.
In the event the officer is entitled to receive payments pursuant to a
severance agreement, he shall receive a cash payment up to a maximum of three
times such officer's annual compensation prior to termination of employment,
plus life and medical coverage for a period of up to 36 months from the date of
termination.
Directors' Compensation
The Chairman of the Board receives a monthly fee of $3,400 and each
director receives a monthly meeting fee of $2,250. Committee chairmen receive
fees of $425 for each meeting attended and committee members receive $300 for
each meeting attended. Fidelity Federal Bank & Trust paid a total of $209,375 in
director and committee fees during the fiscal year ending December 31, 2001. In
addition, Fidelity Federal Bank & Trust has one chairman emeritus who g receives
$1,200 monthly. One director emeritus does not receive any fee; however, he
receives $1,341 monthly under g Fidelity Federal Bank & Trust's Retirement Plan
for directors. The directors emeriti meet informally with members of g Fidelity
Federal Bank & Trust to discuss general matters affecting Fidelity Federal Bank
& Trust. Directors emeriti do g not attend board meetings and they have no
authority to affect Board or management decisions. There are currently three
directors emeriti.
Retirement Plan for Directors. Fidelity Federal Bank & Trust maintains a
non-tax qualified Retirement Plan for Directors that provides directors who
serve on the Board for at least five years with an annual retirement benefit
equal to 80% of such directors' director fees for his or her last full year of
service on the Board. Eligible directors must have served on the Board on or
after January 1, 1990. Retirement benefits are payable monthly over a period
equal to the number of months (including partial months) that a director has
served on the Board. The directors' retirement plan provides for survivor
benefits payable to a designated beneficiary in an amount equal to the
director's regular benefit for a period of up to 180 months or the number of
months the director served on the Board, whichever is less. Survivor benefits
begin the day a deceased director would have reached age 65. Survivors are
entitled to receive the remaining payments due a director who dies after
retirement from the Board but before payment of all benefits under the
directors' retirement plan. During the year ended December 31, 2001, the cost of
the Director's Plan to Fidelity Federal Bank & Trust was $45,499.
Benefits
Defined Benefit Plan. Fidelity Federal Bank & Trust maintains a
noncontributory defined benefit plan. All employees age 21 or older who were
hired prior to January 1, 2001, and who have worked at Fidelity Federal Bank & l
Trust for a period of one year and who have been credited with 1,000 or more
hours of employment with Fidelity Federal Bank & Trust during the year are
eligible to accrue benefits under the defined benefit plan. Fidelity Federal
Bank & Trust contributes annually an amount to the retirement plan necessary to
satisfy the actuarially determined minimum funding requirements in accordance
with the Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Employees who are hired after December 31, 2000 will not be entitled to
participate in the defined benefit plan. Employees who are not eligible to
participate in the defined benefit plan will be entitled to an enhanced benefit
in the Savings Plan for Employees.
At the normal retirement age of 65 (or the fifth anniversary of plan
participation, if later), the plan is designed to provide a life annuity
guaranteed for ten years. The retirement benefit provided is an amount equal to
the sum of (1) and (2), where (1) is 1.46% of a participant's average monthly
compensation multiplied by the participant's credited ) service; and (2) is .44%
of average monthly compensation in excess of $1,417 multiplied by the
participant's credited ) service (not to exceed 35 years). Retirement benefits
are also payable upon retirement due to early and late retirement,) disability
or death. A reduced benefit is payable upon early retirement at or after age 55
and the completion of 15 years of service with Fidelity Federal Bank & Trust.
9
Upon termination of employment other than as specified above, a participant
who was employed by Fidelity Federal Bank & Trust for a minimum of five years is
eligible to receive his or her accrued benefit reduced for early retirement or a
deferred retirement benefit commencing on such participant's normal retirement
date. Benefits are payable in various annuity forms as well as in the form of a
single lump sum payment. At December 31, 2001, the market value of the
retirement plan trust fund was approximately $12.5 million. For the plan year
ended December 31, 2001, Fidelity Federal Bank & Trust made a contribution to
the retirement plan of $1.6 million.
The following table indicates the annual retirement benefit that would be
payable under the retirement plan upon retirement at age 65 in calendar year
2001, expressed in the form of a single life annuity for the final average
salary and benefit service classification specified below.
Years of Service and Benefits Payable at Retirement
Final Average
Compensation 15 20 25 30 35 40
------------ ----------- ------------- -------------- -------------- --------------- ------------
$ 25,000 $ 6,003 $ 8,004 $ 10,005 $ 12,006 $ 14,007 $ 15,832
$ 50,000 13,128 17,504 21,880 26,256 30,632 34,282
$ 75,000 20,253 27,004 33,755 40,506 47,257 52,732
$100,000 27,378 36,504 45,630 54,756 63,882 71,182
$150,000 41,628 55,504 69,380 83,256 97,132 104,596
The following table sets forth the years of credited service (i.e., benefit
service) as of December 31, 2001, for each of the individuals named in the cash
compensation table. Years of Name Credited Service
Vince A. Elhilow............................................. 38.9
J. Robert McDonald........................................... 45.3
Richard D. Aldred............................................ 17.0
Joseph C. Bova............................................... 30.2
Robert L. Fugate............................................. 29.6
Christopher H. Cook.......................................... 5.9
Savings Plan for Employees. Fidelity Federal Bank & Trust maintains a
savings plan for employees which is a qualified, tax-exempt profit sharing plan
with a cash-or-deferred feature under Section 401(k) of the Internal Revenue
Code. All employees who have attained age 21 and have completed one year of
employment during which they worked at least 1,000 hours are eligible to
participate. Since April 1, 2001, new employees and employees not previously
eligible, other than certain excluded employees, have been eligible to make
salary deferral contributions on the first day of the month following their 90th
day of employment. Part-time employees will continue to be eligible to make
salary deferrals on the January 1 or July 1 after attainment of age 21 and
completion of 1,000 hours of service. Funds included in the 401(k) plan are
managed by an independent trustee who is appointed by Fidelity Federal Bank &
Trust's Board d of Directors. d d Under the 401(k) plan, participants are
permitted to make salary reduction contributions to the 401(k) plan equal to a
percentage of up to 15% of compensation (25% of compensation, effective January
1, 2002). For these purposes, "compensation" includes total compensation
(including salary reduction contributions made under the 401(k) plan or the
flexible benefits plan sponsored by Fidelity Federal Bank & Trust), but does not
include compensation in excess of the Code section 401(a)(17) limits. The
participants' salary reduction contribution may be matched by Fidelity Federal
Bank & Trust, in its discretion, in the amount of $.50 per $1.00, up to a
maximum of 6% of the participants' salary. A participant is eligible for
matching contributions on the January 1 or July 1 after attainment of age 21 and
completion of one year of service in which they have 1,000 hours of service.
10
All employee contributions and earnings thereon are fully and immediately
vested. All employer matching contributions vest at the rate of 20% per year
until a participant is 100% vested after five years of service. Participants
will also vest in employer matching contributions upon the attainment of the
normal retirement age of 65 or later, death or disability, regardless of their
years of service. A participant may also withdraw salary reduction contributions
in the event the participant suffers a financial hardship.
Fidelity Federal Bank & Trust has amended the 401(k) plan to provide that
employees hired on or after January 1, 2001, will be entitled to receive an
employer discretionary contribution once they become eligible to participate in
the 401(k) plan. The employer discretionary contribution will be provided in
lieu of a benefit accrual under the defined benefit plan, which has been closed
to employees who are hired after December 31, 2000. Eligible employees will be
entitled to an employer discretionary contribution equal to (i) 3% of eligible
compensation after the first year of eligibility; (ii) 4% after the 7th year of
eligibility ; and (iii) 5% after the 14th year of eligibility.
Plan benefits will be paid to each participant in either a lump sum or
installments over a period of up to 20 years, at the participant's election.
Upon distribution of a participant's account, the participant will have the
choice of having his account paid to him in common stock (to the extent invested
therein) or in cash. At December 31, 2001, the market value of the 401(k) plan
trust fund equaled approximately $11.7 million. The contribution to the 401(k)
plan for the plan year ended December 31, 2001, was $357,885. During the year
ended December 31, 2001, Fidelity Federal Bank & Trust contributed $5,400,
$5,080, $5,400, $4,534, $5,100 and $5,400 to the accounts of Messrs. Elhilow,
McDonald, Aldred, Bova, Fugate and Cook, respectively.
Supplemental Executive Retirement Plan. Fidelity Federal Bank & Trust
maintains a non-qualified supplemental executive retirement plan for certain
executives of Fidelity Federal Bank & Trust to compensate those executive
participants in Fidelity Federal Bank & Trust's retirement plan whose benefits
are limited by Sections 415 or 401(a)(17) of the Internal Revenue Code. As of
December 31, 2001, there were 15 executive employees participating in the
supplemental executive retirement plan. The supplemental executive retirement
plan provides the designated executive employees with retirement benefits
generally equal to 80% of compensation (the "target percentage"), reduced by the
employee's accrued benefit under Fidelity Federal Bank & Trust's retirement plan
and 50% of the social security benefits. Benefits under the supplemental
executive retirement plan vest over a period ending on normal retirement age
which is age 65 or age 60 with 30 years of service. Participants may increase
their target percentage by 2% of compensation for each year of service beyond
normal retirement age; however, a participant's target percentage may not exceed
100%. Participants may elect to have benefits paid as a single life annuity with
guaranteed 10-year term or as a joint and 100% or joint and 50% survivor
annuity. Benefits for participants who retire before normal retirement age are
reduced 5% per year for each year under normal retirement age.
Pre-retirement survivor benefits are provided for designated beneficiaries
of participants who do not survive until retirement in an amount equal to the
lump sum actuarial equivalent of the participant's accrued benefit under the
Plan. Pre-retirement benefits are payable in 120 equal monthly installments.
The supplemental executive retirement plan is considered an unfunded plan
for tax and Employee Retirement Income Security Act ("ERISA") purposes. All
obligations arising under the supplemental executive retirement plan are payable
from the general assets of Fidelity Federal Bank & Trust; however, Fidelity
Federal Bank & Trust has set up a trust to ensure that sufficient assets will be
available to pay the benefits under the supplemental executive retirement plan.
11
The benefits paid under the supplemental executive retirement plan
supplement the benefits paid by the retirement plan. Fidelity Federal Bank &
Trust is unable to project the actual amounts to be paid to each participant
under the supplemental executive retirement plan. The following table indicates
the expected aggregate annual retirement benefit payable from the retirement
plan, supplemental executive retirement plan and 50% of estimated social
security benefits to supplemental executive retirement plan participants,
expressed in the form of a single life annuity for the final average salary and
benefit service classification specified below.
Years of Service and Benefit Payable at Retirement
Final Average
Compensation 25 30 35 40
------------ --------------------- --------------------- -------------------- --------------
$100,000 $ 80,000 $ 80,000 $ 80,000 $ 80,000
$125,000 100,000 100,000 100,000 100,000
$150,000 120,000 120,000 120,000 120,000
$175,000 140,000 140,000 140,000 140,000
$200,000 160,000 160,000 160,000 160,000
$225,000 180,000 180,000 180,000 180,000
$250,000 200,000 200,000 200,000 200,000
$275,000 220,000 220,000 220,000 220,000
$300,000 240,000 240,000 240,000 240,000
As of December 31,2001, Messrs. Elhilow, McDonald, Aldred, Bova, Fugate and
Cook had 38.9, 45.3, 17.0, 30.2, 29.6 and 5.9 years, respectively, of credited
service under the supplemental executive retirement plan as of December 31,
2001. Mr. Aldred's normal retirement age under the supplemental executive
retirement plan is 60. Mr. Cook's normal retirement age under the supplemental
executive retirement plan is 62. Fidelity Federal Bank & Trust's cost
attributable to the supplemental executive retirement plan was $1,481,987 for
the year ended December 31, 2001.
Long-Term Deferred Compensation Plan. Fidelity Federal Bank & Trust
maintains a long-term deferred compensation plan for selected officers
designated by the Board of Directors. As of December 31, 2001, the Board has
designated 15 executives to participate in the long-term deferred compensation
plan, including Messrs. Elhilow, McDonald, Aldred, Bova, Fugate and Cook. The
long-term deferred compensation plan provides the designated executives with the
option of deferring any percentage of compensation until retirement. In addition
to participant deferrals, Fidelity Federal Bank & Trust may contribute annually
an amount equal to 10% of each participant's compensation. For these purposes,
"compensation" includes salary payable during the calendar year, before
reduction for amounts deferred under this Plan or any other salary reduction
plan, but does not include bonuses, expense reimbursements, or non-cash
compensation. Participant and bank contributions are credited to a separate
account which earns "interest" at an annual rate equal to Moody's corporate bond
index plus 3%. Participants are at all times 100% vested in participant
deferrals but vest in Fidelity Federal Bank & Trust's contributions over a
period of years ending on each participant's normal retirement age of 65 (or age
60 with 30 years of service). Benefits are paid, beginning no later than 60 days
following termination of employment with Fidelity Federal Bank & Trust, either
as a lump sum or, at the participant's election made at the time of deferral,
over a period of 60, 120 or 180 months. Participants may alternatively elect to
withdraw participant deferrals prior to their normal retirement date, but no
less than seven years following the end of the deferral period in which the
participant initially elected the early withdrawal option. Early withdrawals are
available from participant deferrals only and may not be made from bank
contributions or "interest" credited to a participant's account. Although
segregated "accounts" are set up for participants, all amounts credited to a
participant's account remain subject to the claims of Fidelity Federal Bank &
Trust's general creditors. For the year ended December 31, 2001,
12
Fidelity Federal Bank & Trust vested and funded $34,000, $16,100, $18,200,
$18,000, $17,700 and $18,200 to the account balances of Messrs. Elhilow,
McDonald, Aldred, Bova, Fugate and Cook, respectively.
Senior Management Performance Incentive Award Program. Fidelity Federal
Bank & Trust maintains a senior management performance incentive award program
to reward selected members of senior management (i.e., senior officers, vice
presidents and above) for their services which contributed to Fidelity Federal
Bank & Trust's success during the year. The senior management performance award
program has two elements: a bonus program for senior management and a
non-qualified deferred compensation plan available only to certain members of
senior management that are eligible for an award. Under the senior management
performance incentive award program, Fidelity Federal Bank & Trust annually sets
aside a varying percentage of net profits and allocates such sums to key
management employees in accordance with criteria annually determined by the plan
committee. The awards are paid after the end of the calendar year to which they
relate. Participants who are eligible elect either immediate receipt of annual
awards or deferral of such awards in a non-qualified deferred compensation plan
for a designated period of years, or until retirement. Amounts allocated to
participants under the non-qualified deferred compensation plan will be invested
among ten investment funds, including an Employer Stock Fund. Participants in
the non-qualified plan are entitled to direct the investment of amounts
allocated to their accounts towards the purchase of common stock in the
offering. A participant's benefit under the plan will equal the value of the
benefit booked to the participant's account. At the time of distribution,
deferred amounts will be received in a lump sum or in installments.
Supplemental Survivor Benefit Plan. Fidelity Federal Bank & Trust maintains
a Supplemental Survivor Benefit Plan that provides selected bank officers with
life insurance in an amount initially equal to three times such officer's annual
compensation. For these purposes, "officer" means any individual who has
achieved the rank of corporate secretary, vice president or higher. Fidelity
Federal Bank & Trust is the owner and beneficiary of the life insurance
policies; however, each participant is permitted to designate a beneficiary or
beneficiaries to whom benefits under the plan would be paid in the event of such
officer's death. If a participant does not designate a beneficiary, Fidelity
Federal Bank & Trust will pay the participant's benefits to his or her spouse,
children, or estate.
Supplemental Disability Income. Fidelity Federal Bank & Trust also has
purchased long-term disability income insurance policies for the benefit of
Messrs. Elhilow, McDonald, Aldred, Bova, Fugate and Cook to provide disability
income in an amount equal to the lesser of $10,000 per month or 60% of such
participant's basic monthly salary less disability income payable from other
sources. Benefits are payable for periods of up to 60 months for participants
who become disabled prior to age 60 and for progressively shorter periods for
participants who become disabled after age 60.
Employee Stock Ownership Plan and Trust. Fidelity Federal Bank & Trust
maintains an employee stock ownership plan and related trust for eligible
employees. The employee stock ownership plan is a tax-qualified plan subject to
the requirements of ERISA and the Code. Employees who are 21 years or older who
have worked at least 12 months (with at least 1000 hours of work) for Fidelity
Federal Bank & Trust are eligible to participate (employees who satisfy these
requirements after 6 months of employment will be entitled to participate
earlier). The employee stock ownership plan originally purchased 193,200 shares
of common stock in connection with the initial stock offering by Fidelity
Federal Bank & Trust. In April 2001, the employee stock ownership plan purchased
521,758 shares of the Company's common stock in connection with the
mutual-to-stock conversion of Fidelity Federal Bank & Trust's mutual holding
company, and funded such purchase with a loan from the Company. The loan is
being repaid principally from Fidelity Federal Bank & Trust's contributions to
the employee stock ownership plan. Shares purchased by the employee stock
ownership plan are held in a suspense account for allocation among participants
as the loan is repaid.
Contributions to the employee stock ownership plan and shares released from
the suspense account in an amount proportional to the repayment of the employee
stock ownership plan loan are allocated among participants on the basis of
compensation in the year of allocation, up to an annual adjusted maximum level
of compensation. Benefits generally become 100% vested after five years of
credited service. Forfeitures are reallocated among remaining participating
employees in the same proportion as contributions. Benefits may be payable upon
death, retirement, early retirement, disability or separation from service.
Fidelity Federal Bank & Trust's contributions to the employee stock ownership
plan are not fixed, so benefits payable under the employee stock ownership plan
cannot be estimated.
13
The Board of Directors established a Benefits Committee consisting of all
of the non-employee directors of Fidelity Federal Bank & Trust to administer the
employee stock ownership plan, and has appointed an unrelated corporate trustee
for the employee stock ownership plan. The Benefits Committee may instruct the
trustee regarding investment of funds contributed to the employee stock
ownership plan. The employee stock ownership plan trustee will generally vote
all shares of common stock held under the employee stock ownership plan in
accordance with the written instructions of the Benefits Committee. In certain
circumstances, however, the trustee must vote all allocated shares held in the
employee stock ownership plan in accordance with the instructions of the
participating employees, and unallocated shares and shares held in the suspense
account in a manner calculated to most accurately reflect the instructions the
employee stock ownership plan trustee has received from participants regarding
the allocated stock, subject to and in accordance with the fiduciary duties
under ERISA owed by the trustee to the plan participants. Under ERISA, the
Secretary of Labor is authorized to bring an action against the plan trustee for
the failure of the trustee to comply with its fiduciary responsibilities. Such a
suit could seek to enjoin the trustee from violating its fiduciary
responsibilities and could result in the imposition of civil penalties or
criminal penalties if the breach is found to be willful.
Incentive Stock Option Plan. Options to purchase 227,700 shares of common
stock were granted on January 7, 1994, pursuant to the Fidelity Federal Savings
Bank of Florida 1994 Incentive Stock Option Plan. The options (with limited
rights) provide for an exercise price of $9.09 per share (adjusted for a 10%
stock dividend distributed November 30, 1995). Set forth below is information
relative to options granted under the 1994 Incentive Stock Option Plan to named
executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
==========================================================================================================================
Number of Securities
Shares Underlying Value of Unexercised
Name Acquired Value Unexercised In-The-Money
Upon Realized (1) Options at Options at Fiscal
Exercise Fiscal Year-End Year-End (2)
Exercisable/ Exercisable/
Unexercisable Unexercisable
Vince A. Elhilow 14,206 $160,244 16,000/0 $195,360/0
- --------------------------- ----------------- ---------------- --------------------------- ---------------------------
J. Robert McDonald -- -- --/0 $--/0
Richard D. Aldred -- -- 16,248/0 $198,388/0
Joseph C. Bova 5,500 $55,825 16,381/0 $200,012/0
Robert L. Fugate 2,937 $29,076 8,812/0 $107,595/0
- --------------------------- ----------------- ---------------- --------------------------- ---------------------------
Christopher H. Cook -- -- 4,823/0 $58,889/0
=========================== ================= ================ =========================== ===========================
(1) Equals the difference between the aggregate exercise price of the options
exercised and the aggregate fair market value of the shares of common
stock received upon exercise computed using the price of the common stock
as quoted on the Nasdaq National Market at the time of exercise.
(2) Equals the difference between the aggregate exercise price of such options
and the aggregate fair market value of the shares of common stock that
would be received upon exercise, assuming such exercise occurred on
December 31, 2001, at which date the closing price of the common stock as
quoted on the Nasdaq National Market was at $15.97.
Stock Option Plan for Outside Directors. Options to purchase 75,900 shares
of common stock were granted to outside directors on January 7, 1994 under the
Fidelity Federal Savings Bank of Florida 1994 Stock Option Plan for Outside
Directors.
14
The options provide for an exercise $9.09 per share which was equal to the
fair market value of the common stock on the date of grant. All options granted
under the directors' stock option plan expire upon the earlier of ten years from
the date of grant or one year following the date the optionee ceases to be a
director. Options for 15,180 shares of common stock have been awarded to each of
Directors Warren, Brown, and Beaty. The directors' stock option plan further
provides that each new director shall be granted options to purchase 100 shares
of common stock to the extent options remain available in, or are returned to,
the directors' stock option plan. Presently, there are no options reserved for
future grant.
- --------------------------------------------------------------------------------
TRANSACTIONS WITH CERTAIN RELATED PERSONS
- --------------------------------------------------------------------------------
Federal law requires all loans or extensions of credit to executive
officers and directors must be made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with the general public and must not involve more than the normal
risk of repayment or present other unfavorable features. In addition, loans made
to a director or executive officer in excess of the greater of $25,000 or 5% of
Fidelity Federal Bank & Trust's capital and surplus (up to a maximum of
$500,000) must be approved in advance by a majority of the disinterested members
of the Board of Directors.
All transactions between Fidelity Federal Bank & Trust and its executive
officers, directors, holders of 10% or more of the shares of any class of its
common stock and affiliates thereof, will contain terms no less favorable to
Fidelity Federal Bank & Trust than could have been obtained by it in
arm's-length negotiations with unaffiliated persons and will be approved by a
majority of independent outside directors of the bank not having any interest in
the transaction. During the year ended December 31, 2001, Fidelity Federal Bank
& Trust had no loans outstanding to directors or executive officers which were
made on preferential terms.
- --------------------------------------------------------------------------------
PROPOSAL II - APPROVAL OF THE FIDELITY BANKSHARES, INC.
2002 INCENTIVE STOCK BENEFIT PLAN
- --------------------------------------------------------------------------------
The Board of Directors of the Company has adopted the 2002 Incentive Stock
Benefit Plan (the "2002 Stock Benefit Plan") to provide officers, employees and
directors of the Company with additional incentives to share in the growth and
performance of the Company. The following is a summary of the material features
of the 2002 Stock Benefit Plan, which is qualified in its entirety by reference
to the provisions of the Plan attached hereto as Exhibit A.
General
The 2002 Stock Benefit Plan will remain in effect for a period of ten years
following adoption by stockholders. The 2002 Stock Benefit Plan authorizes the
issuance of up to 1,217,432 shares of common stock pursuant to grants of stock
options, limited rights, reload options, dividend equivalent rights or stock
awards; provided, however, that no more than 347,838 shares will be available
for stock awards.
The 2002 Stock Benefit Plan will be administered by a committee (the
"Committee") appointed by the Board of Directors which will include two or more
"Non-employee Directors". The Committee has full and exclusive power within the
limitations set forth in the 2002 Stock Benefit Plan to make all decisions and
determinations regarding the selection of participants and the granting of
awards; establishing the terms and conditions relating to each award; adopting
rules, regulations and guidelines for carrying out the Plan's purposes; and
interpreting and otherwise construing the 2002 Stock Benefit Plan. The 2002
Stock Benefit Plan may be amended by the Board or the Committee, without the
approval of shareholders, but no such amendments may adversely affect any
outstanding awards under the 2002 Stock Benefit Plan without the consent of the
holders thereof.
15
Eligibility
Key employees and directors of the Company or its subsidiaries are eligible
to receive awards under the 2002 Stock Benefit Plan.
Types of Awards
The Committee may determine the type and terms and conditions of awards
under the Plan. Awards may be granted in a combination of options, limited
rights, reload options, dividend equivalent rights or stock awards. Such awards
may have terms providing that the settlement or payment of one type of award
automatically reduces or cancels the remaining award. Awards may include, but
are not limited to, the following:
Stock Options. A stock option gives the recipient or the "optionee" the
right to purchase shares of common stock at a specified price for a specified
period of time. The exercise price of each option may not be less than 100% of
fair market value on the date of grant. Fair market value for purposes of the
2002 Stock Benefit Plan means the reported closing price of the common stock on
the day the option is granted or, if the common stock is not traded on such
date, on the next preceding day on which the common stock was traded.
Stock options are either "incentive" stock options or "non-qualified" stock
options. Incentive stock options have certain tax advantages and must comply
with the requirements of Section 422 of the Internal Revenue Code. Only
employees are eligible to receive incentive stock options. A stock option may be
exercised in whole or in installments, which may be cumulative. Shares of common
stock purchased upon the exercise of a stock option must be paid for in full at
the time of exercise either in cash or with stock of the Company, as determined
by the Committee. Stock options are subject to vesting conditions and
restrictions as determined by the Committee.
Limited Rights. A limited right gives the option holder the right, upon a
change in control of the Company or Fidelity Federal Bank & Trust, to receive
the excess of the market value of the shares represented by the limited right on
the date exercised over the exercise price. Limited rights will generally be
subject to the same terms and conditions and exercisable to the same extent as
stock options, as described above. Payment upon exercise of a limited right will
be in cash or, in the event of a merger transaction, in shares of the acquiring
corporation or its parent, as applicable.
Limited rights may be granted at the time of, and must be related to, the
grant of a stock option. The exercise of a limited right is in lieu of the
exercise of a stock option and vice versa. If a limited right is granted with
and related to an incentive stock option, the limited right must satisfy all the
restrictions and limitations to which the related incentive stock option is
subject.
Reload Options. Reload options entitle the option holder, who has delivered
shares of Company common stock as payment of the exercise price for option
stock, to a new option to acquire additional shares equal in an amount to the
shares the option holder has traded. Reload options may also be granted to
replace option shares retained by the Company for payment of the option holder's
withholding tax. The option price at which additional shares of stock may be
purchased through the exercise of a reload option is equal to the market value
of the common stock that was surrendered to pay the exercise price of the option
at the time it was surrendered. The option period during which the reload option
may be exercised expires at the same time as that of the original option that
was exercised.
Dividend Equivalent Rights. Dividend equivalent rights entitle the option
holder to receive an amount of cash at the time that certain extraordinary
dividends are declared equal to the amount of the extraordinary dividend,
multiplied by the number of options that the person holds. For these purposes,
an extraordinary dividend is defined under the 2002 Stock Benefit Plan as any
dividend paid on shares of common stock where the dividend rate exceeds 150% of
the Bank's weighted average cost of funds on interest-bearing liabilities for
the current quarter and preceding three quarters and the annualized aggregate
dollar amount of the dividend exceeds the Bank's net income after taxes for the
current quarter and preceding three quarters.
Stock Awards. Stock awards may constitute actual shares of common stock or
may be denominated in stock units which entitle the recipient to receive future
payments in either shares, cash, or a combination thereof. Stock awards will be
subject to conditions established by the Committee which are set forth in the
award agreement, and may include, continuous service with the Company,
16
achievement of specific business objectives, and other measurements of
performance. Stock awards may be subject to restrictions and contingencies
regarding vesting and eventual payment as the Committee may determine.
Any stock awards granted under the 2002 Stock Benefit Plan will be subject
to vesting and other contingencies as determined by the Committee. Awards will
be evidenced by agreements approved by the Committee which set forth the terms
and conditions of each award. The Committee, in its discretion, may accelerate
or extend the period for the exercise or vesting of awards.
Generally, all awards, except nonincentive stock options, granted under the
2002 Stock Benefit Plan will be nontransferable except by will or in accordance
with the laws of descent and distribution or pursuant to a domestic relations
order. During the life of the participant, awards can be exercised only by him
or her. The Committee may permit a participant to designate a beneficiary to
exercise or receive any rights that may exist under the 2002 Stock Benefit Plan
upon the participant's death.
Change in Control
Upon the occurrence of an event constituting a change in control of the
Company as defined in the 2002 Stock Benefit Plan, all awards outstanding will
become vested immediately.
Tax Consequences
The following are the federal tax consequences generally arising with
respect to awards granted under the 2002 Stock Benefit Plan. The grant of an
option or limited right will create no tax consequences for an optionee or the
Company. The optionee will have no taxable income upon exercising an incentive
stock option and the Company will receive no deduction when an incentive stock
option is exercised. Upon exercising a non-qualified option, the optionee must
recognize ordinary income equal to the difference between the exercise price and
the fair market value of the stock on the date of exercise, and the Company will
be entitled to a deduction for the same amount. The tax treatment for an
optionee on a disposition of shares acquired through the exercise of an option
depends on how long the shares have been held and whether such shares were
acquired by exercising an incentive stock option or a non-qualified option.
Generally, there will be no tax consequences to the Company in connection with
the disposition of shares acquired pursuant to an option, except that the
Company may be entitled to a deduction if shares acquired pursuant to an
incentive stock option are sold before the required holding periods have been
satisfied.
With respect to other awards granted under the 2002 Stock Benefit Plan that
are settled either in cash or in stock the participant must recognize ordinary
income equal to the cash or the fair market value of shares or other property
received and the Company will be entitled to a deduction for the same amount.
With respect to awards that are settled in stock, the participant must recognize
ordinary income equal to the fair market value of the shares received at the
time the shares became transferable or not subject to substantial risk of
forfeiture, whichever occurs earlier. The Company will be entitled to a
deduction for the same amount.
No options have been granted under the 2002 Stock Benefit Plan as of the
date of this Proxy Statement. There are six outside directors of the Company and
its subsidiaries and 606 employees eligible to participate in the 2002 Stock
Benefit Plan.
As of April 10, 2002, the last sale price of the Common Stock, as reported
on the Nasdaq National Market, was $19.80. The affirmative vote of the holders
of a majority of the votes cast at the Annual Meeting is required to approve the
2002 Stock Benefit Plan. The purpose of obtaining shareholder approval of the
2002 Stock Benefit Plan is to qualify the plan for the granting of incentive
stock options and to satisfy the requirement for listing the Company's Common
Stock on the Nasdaq National Market.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
FIDELITY BANKSHARES, INC. 2002 INCENTIVE STOCK BENEFIT PLAN.
17
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PROPOSAL III--RATIFICATION OF APPOINTMENT OF AUDITORS
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The Board of Directors of the Company has approved the engagement of
Deloitte & Touche LLP to be the Company's auditors for the 2002 fiscal year,
subject to the ratification of the engagement by the Company's stockholders. At
the Meeting, stockholders will consider and vote on the ratification of the
engagement of Deloitte & Touche LLP for the Company's fiscal year ending
December 31, 2002. A representative of Deloitte & Touche LLP is expected to
attend the Meeting to respond to appropriate questions and to make a statement
if he so desires.
In order to ratify the selection of Deloitte & Touche LLP as the auditors
for the 2002 fiscal year, the proposal must receive at least a majority of the
votes cast, either in person or by proxy, in favor of such ratification. The
Board of Directors recommends a vote "FOR" the ratification of Deloitte & Touche
LLP as auditors for the 2002 fiscal year.
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STOCKHOLDER PROPOSALS
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In order to be eligible for inclusion in the Company's proxy materials for
next year's Annual Meeting of Stockholders, any stockholder proposal must be
received at the Company's executive office, 205 Datura Street, West Palm Beach,
Florida 33401, no later than December 22, 2002. Any such proposals shall be
subject to the requirements of the proxy rules adopted under the Exchange Act.
The Bylaws of the Company provide an advance notice procedure before
certain business or nominations to the Board of Directors, may be brought before
an annual meeting. In order for a stockholder to properly bring business before
an annual meeting, or to propose a nominee to the Board, the stockholder must
give written notice to the Secretary of the Company not less than 90 days before
the date fixed for such meeting; provided, however, that in the event that less
than 100 days notice or prior public disclosure of the date of the meeting is
given or made, to be timely, notice by the stockholder must be received no later
than the close of business on the tenth day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure
was made. The notice must include the stockholder's name, record address, and
number of shares owned by the stockholder, describe briefly the proposed
business, the reasons for bringing the business before the annual meeting, and
any material interest of the stockholder in the proposed business. In the case
of nominations to the Board, certain information regarding the nominee must be
provided. Nothing in the paragraph shall be deemed to require the Company to
include in its proxy statement and proxy relating to an annual meeting any
stockholder proposal which does not meet all of the requirements for inclusion
established by the SEC in effect at the time such proposal is received.
The date on which the Annual Meeting of Stockholders is expected to be held
is April 15, 2003. Accordingly, advance written notice of business or
nominations to the Board of Directors to be brought before the next Annual
Meeting of Stockholders must be given to the Company no later than January 15,
2003.
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MISCELLANEOUS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than the matters described above in this Proxy Statement. However,
if any matters should properly come before the Meeting, it is intended that
holders of the proxies will act as directed by a majority of the Board of
Directors, except for matters related to the conduct of the Meeting, as to which
they shall act in accordance with their best judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Bank may solicit proxies
personally or by telegraph or telephone without additional compensation.
18
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2001 will be furnished without charge to stockholders as of
the record date upon written request to the Corporate Secretary, Fidelity
Bankshares, Inc., 205 Datura Street, West Palm Beach, Florida 33401.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Elizabeth Cook
------------------
West Palm Beach, Florida
April 21, 2002
APPENDIX A
FIDELITY BANKSHARES, INC.
2002 INCENTIVE STOCK BENEFIT PLAN
1. PURPOSE. The purpose of the Fidelity Bankshares, Inc. 2002 Incentive
Stock Benefit Plan (the "Plan") is to (i) provide outside directors and key
employees of Fidelity Bankshares, Inc. (the "Company") and its affiliates, with
additional incentives to improve the growth and performance of the Company, and
(ii) to attract and retain qualified and experienced personnel to the Company
and its affiliates.
2. TERM. The Plan shall be effective as of the date of stockholder
approval, which is expected to be May 21, 2002 (the "Effective Date"), and shall
remain in effect for ten years thereafter, unless sooner terminated by the
Company's Board of Directors (the "Board"). After termination of the Plan, no
additional awards may be granted but previously granted awards shall remain
outstanding in accordance with their applicable terms and conditions and the
terms and conditions of the Plan.
3. PLAN ADMINISTRATION. A committee (the "Committee") appointed by the
Board shall be responsible for administering the Plan. The Committee shall
consist of either (i) at least two "Non-Employee Directors" of the Company, or
(ii) the entire Board of the Company. A "Non-Employee Director" means, for
purposes of the Plan, a director who: (a) is not employed by the Company or an
affiliate; (b) does not receive compensation directly or indirectly from the
Company as a consultant (or in any capacity other than as a director) greater
than $60,000; (c) does not have an interest in a transaction requiring
disclosure under Item 404(a) of Regulation S-K; or (d) is not engaged in a
business relationship for which disclosure would be required pursuant to Item
404(b) of Regulation S-K. Actions and decisions of the Committee shall be
approved by a majority of the members of the Committee. The Committee shall have
full and exclusive power to interpret and implement the Plan and any rules,
regulations, guidelines or agreements adopted hereunder, and to adopt such
rules, regulations and guidelines for carrying out the Plan as it may deem
necessary or proper. These powers shall include, but not be limited to: (i)
determination of the type or types of awards to be granted under the Plan; (ii)
determination of the terms and conditions of any awards under the Plan; (iii)
determination of whether, to what extent and under what circumstances awards may
be settled, paid or exercised in cash, shares, other securities, other awards,
other property, or accelerated, canceled, extended, forfeited or suspended; (iv)
adoption of modifications, amendments, procedures, and subplans as may be
necessary; (v) subject to the rights of participants, modification, amendment or
cancellation of any award to correct an administrative error; and (vi) taking
any other action the Committee deems necessary or desirable for the
administration of the Plan. All determinations, interpretations, and other
decisions under or with respect to the Plan or any award by the Committee shall
be final, conclusive and binding upon the Company, any participant, any holder
or beneficiary of any award under the Plan and any employee of the Company.
4. ELIGIBILITY TO PARTICIPATE. Key employees of the Company shall be
eligible to receive Incentive Stock Options, Non-Statutory Stock Options, Stock
Awards, Limited Rights, Reload Options and /or Dividend Equivalent Rights under
the Plan (collectively, "awards"). Outside directors shall be eligible to
receive Non-Statutory Stock Options, Reload Options, Dividend Equivalent Rights
and Stock Awards under the Plan. The term "Company" includes any entity that is
directly or indirectly controlled by the Company or any entity in which the
Company has a significant equity interest, as determined by the Committee. An
"outside director" means a director of the Company or an affiliate who is not an
employee of the Company or an affiliate.
5. SHARES OF STOCK SUBJECT TO THE PLAN. 1,217,432 shares of common stock of
the Company ("Common Stock") in the aggregate are reserved for issuance under
the Plan, which shares shall be available for issuance (subject to adjustment as
provided in Section 6 pursuant to the exercise of Stock Options, granted under
Sections 7(a) and 7(c) of the Plan, or Stock Awards, under Section 7(d) of the
Plan. The maximum number of Stock Options that may be granted to any one
employee of the Company is 225,000. The maximum number of shares that may be
awarded as Stock Awards under the Plan is 347,838.
Any shares that are issued by the Company, and any awards that are granted
by, or become obligations of, the Company, through the assumption by the Company
or an affiliate thereof, or in substitution for, outstanding awards
A-1
previously granted by an acquired company, shall not be counted against the
shares available for issuance under the Plan. In addition, any shares that are
used for the full or partial payment of the exercise price of any option in
connection with a Reload Option will not be counted as issued under the Plan and
will be available for future grants under the Plan.
Any shares issued under the Plan may consist in whole or in part, of
authorized and unissued shares, treasury shares or shares purchased by the Plan.
No fractional shares shall be issued under the Plan. Cash may be paid in lieu of
any fractional shares in settlement of awards under the Plan.
6. ADJUSTMENTS.
If the number of outstanding shares of Common Stock is increased or
decreased or the shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company on account
of any recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend or other distribution
payable in capital stock, or other increase or decrease in such shares effected
without receipt of consideration by the Company occurring after the Effective
Date, the number and kinds of shares for which grants of awards may be made
under the Plan shall be adjusted proportionately and accordingly by the Company.
In addition, the number and kind of shares for which grants are outstanding
shall be adjusted proportionately and accordingly so that the proportionate
interest of the grantee immediately following such event shall, to the extent
practicable, be the same as immediately before such event. Any such adjustment
in outstanding Stock Options shall not change the aggregate Stock Option
purchase price payable with respect to shares that are subject to the
unexercised portion of the Stock Option outstanding but shall include a
corresponding proportionate adjustment in the Stock Option purchase price per
share.
Adjustments under this Section 6 relating to shares of Common Stock or
securities of the Company shall be made by the Committee, whose determination in
that respect shall be final, binding and conclusive. No fractional shares or
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share. The granting of awards pursuant to
the Plan shall not affect or limit in any way the right or power of the Company
to make adjustments, reclassifications, reorganizations, or changes of its
capital or business structure or to merge, consolidate, dissolve, or liquidate,
or to sell or transfer all or any part of its business or assets.
7. AWARDS. The Committee shall determine the type or types of award(s) to
be made to each participant under the Plan and shall approve the terms and
conditions governing these awards in accordance with Section 11. Awards may be
granted singly, in combination or in tandem so that the settlement or payment of
one automatically reduces or cancels the other. The types of awards that may be
made under the Plan are set forth below.
(a) Stock Option - A Stock Option is a grant of a right to purchase a
specified number of shares of Common Stock under the Plan during
a specified period. A Stock Option may be in the form of an
Incentive Stock Option, which complies with Section 422 of the
Code, as amended, and the regulations thereunder at the time of
grant, or of a Non-Statutory Stock Option, as defined in this
paragraph. A Non-Statutory Stock Option means an option granted
by the Committee to (i) an outside director or (ii) to any other
participant, and such option is either (A) not designated by the
Committee as an Incentive Stock Option, or (B) fails to satisfy
the requirements of an Incentive Stock Option as set forth in
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations thereunder. The exercise price of
each Stock Option shall be the per share Fair Market Value of
Common Stock on the date the award is granted. However, if a key
employee owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or
its affiliates (or under Section 424(d) of the Code, is deemed to
own stock representing more than 10% of the total combined voting
power of all classes of stock of the Company or its affiliates by
reason of the ownership of such classes of stock, directly or
indirectly, by or for any brother, sister, spouse, ancestor or
lineal descendent of such key employee, or by or for any
corporation, partnership, estate or trust of which such key
employee is a shareholder, partner or beneficiary), the purchase
price per share of Common Stock deliverable upon the exercise of
each Incentive Stock Option shall not be less than 110% of the
Fair Market Value of the Company's Common Stock on the date the
Incentive Stock Option is granted. A Stock Option may be
exercised in whole or in installments, which may be cumulative.
The price at which shares of Common Stock may be purchased under
A-2
a Stock Option shall be paid in full at the time of the exercise,
in either cash or such other methods as provided by the Committee
at the time of grant or as provided in the form of agreement
approved in accordance herewith, including tendering (either
actually or by attestation) Common Stock at Fair Market Value on
the date of surrender, or any combination thereof.
(b) Limited Right - A Limited Right is the right to receive an amount
of cash based upon the terms set forth in Section 12.
(c) Reload Options - A Reload Option is an additional Stock Option
granted pursuant to Section 13.
(d) Stock Award - A Stock Award is an award under the Plan, made in
stock or denominated in units of stock. All or part of any Stock
Award may be subject to conditions established by the Committee,
and set forth in the award agreement, which may include, but are
not limited to, continuous service with the Company, achievement
of specific business objectives, and other measurements of
individual, business unit or Company performance.
8. DEFERRALS AND SETTLEMENTS. Payment of awards may be in the form of
Common Stock or other awards, or in the case of Limited Rights, cash, or in
combinations thereof as the Committee determines at the time of grant, and with
such restrictions as it may impose. No Stock Option is to be considered
exercised until payment in full is accepted by the Committee. The means by which
a recipient of an award may make payment is set forth below.
(a) Cash Payment. The exercise price may be paid in cash or by
certified check. To the extent permitted by law, the Committee
may permit all or a portion of the exercise price of a Stock
Option to be paid from borrowed funds.
(b) Cashless Exercise. Subject to vesting requirements, if
applicable, a participant may engage in a "cashless exercise" of
the Stock Option. Upon a cashless exercise, the participant shall
give the Company written notice of the exercise of the Stock
Option together with an order to a registered broker-dealer or
equivalent third party, to sell part or all of the Common Stock
subject to the Stock Option and to deliver enough of the proceeds
to the Company to pay the Stock Option exercise price and any
applicable withholding taxes. If the participant does not sell
the Common Stock subject to the Stock Option through a registered
broker-dealer or equivalent third party, the participant may give
the Company written notice of the exercise of the Stock Option
and the third-party purchaser of the Common Stock subject to the
Stock Option shall pay the Stock Option exercise price plus
applicable withholding taxes to the Company.
(c) Exchange of Common Stock. The Committee may permit payment of the
Stock Option exercise price by the tendering of previously
acquired shares of Common Stock. All shares of Common Stock
tendered in payment of the exercise price of a Stock Option shall
be valued at the Fair Market Value of the Common Stock. No
tendered shares of Common Stock which were acquired by the
participant upon the prior exercise of a Stock Option or as
awards under this or any other stock award plan sponsored by the
Company shall be accepted for exchange unless the participant has
held such shares (without restrictions imposed by said plan or
award) for at least six months prior to the exchange.
9. FAIR MARKET VALUE. Fair Market Value for all purposes under the Plan
shall mean the reported closing price of Common Stock as reported by the Nasdaq
stock market on such date, or if the Common Stock was not traded on such date,
on the next preceding day on which Common Stock was traded thereon. Under no
circumstances shall Fair Market Value be less than the par value of the Common
Stock.
10. TRANSFERABILITY AND EXERCISABILITY. All awards under the Plan, other
than Non- Statutory Stock Options, will be nontransferable and shall not be
assignable, alienable, saleable or otherwise transferable by the participant
other than by will or the laws of descent and distribution, except pursuant to a
domestic relations order entered by a court of competent jurisdiction or as
otherwise determined by the Committee.
A-3
If so permitted by the Committee, a participant may designate a beneficiary
or beneficiaries to exercise his rights under any Stock Option, Reload Option,
Limited Right or Dividend Equivalent Right he would be entitled to and receive
any distributions under the Plan upon the participant's death. However, in the
case of participants who are subject to Section 16 of the Securities Exchange
Act 1934 (the "1934 Act"), any contrary requirements of Rule 16b-3 under the
1934 Act, or any successor rule, shall prevail over the provisions of this
Section.
Awards granted pursuant to the Plan may be exercisable pursuant to a
vesting schedule as determined by the Committee. The Committee may, in its sole
discretion, accelerate or extend the time during which any Stock Option may be
exercised, or any Stock Award may vest, in whole or in part, provided, however,
that with respect to an Incentive Stock Option, it must be consistent with the
terms of Section 422 of the Code in order to continue to qualify as an Incentive
Stock Option. Notwithstanding the above, in the event of Retirement (as defined
in Section 26 hereof), death or Disability (as defined in Section 26 hereof),
all awards shall immediately vest.
11. AWARD AGREEMENTS. Each award of Stock Options, Reload Options, Limited
Rights, Dividend Equivalent Rights and Stock Award under the Plan shall be
evidenced by an agreement that is approved by the Committee. The agreement must
set forth the terms, conditions and limitations to an award and the provisions
applicable in the event the participant's employment terminates, provided,
however, in no event shall the term of any Incentive Stock Option exceed a
period of ten years from the date of its grant. If any key employee, at the time
an Incentive Stock Option is granted to him, owns stock representing more than
10% of the total combined voting power of all classes of stock of the Company or
its affiliate (or, under Section 424(d) of the Code, is deemed to own stock
representing more than 10% of the total combined voting power of all classes of
stock, by reason of the ownership of such classes of stock, directly or
indirectly, by or for any brother, sister, spouse, ancestor or lineal descendent
of such key employee, or by or for any corporation, partnership, estate or trust
of which such key employee is a shareholder, partner or beneficiary), the
Incentive Stock Option granted to him shall not be exercisable after the
expiration of five years from the date of grant.
In addition, to the extent required by Section 422 of the Code, the
aggregate Fair Market Value (determined at the time the option is granted) of
the Common Stock for which Incentive Stock Options are exercisable for the first
time by a participant during any calendar year (under all plans of the Company
and its affiliates) shall not exceed $100,000. In the event the amount
exercisable shall exceed $100,000, the first $100,000 of Incentive Stock Options
(determined as of the date of grant) shall be exercisable as Incentive Stock
Options and any excess shall be exercisable as Non-Statutory Stock Options.
12. LIMITED RIGHTS. The Committee may grant a Limited Right simultaneously
with the grant of any Stock Option, with respect to all or some of the shares
covered by such option. Limited Rights granted under the Plan are subject to the
following terms and conditions:
(a) Terms of Limited Rights. A Limited Right shall not be exercisable
in whole or in part before the expiration of six months from the
date of grant of the Limited Right. A Limited Right may be
exercised only in the event of a Change in Control of the
Company.
The Limited Right may be exercised only when the underlying Stock
Option is eligible to be exercised; provided that the Fair
Market Value of the underlying shares on the day of exercise is
greater than the exercise price of the related Stock Option.
Upon exercise of a Limited Right, the related Stock Option shall
cease to be exercisable. Upon exercise or termination of a Stock
Option, any related Limited Rights shall terminate. The Limited
Right may be for no more than 100% of the difference between the
exercise price and the Fair Market Value of the Common Stock
subject to the underlying Stock Option. The Limited Right is
transferable only when the underlying Stock Option is
transferable and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall
promptly receive from the Company an amount of cash equal to
the positive difference between the Fair Market Value on the
date of grant of the related Stock Option and the Fair
Market Value of the underlying shares on the date the
Limited Right is exercised, multiplied by the number of
shares with respect to which such Limited Right is being
exercised. In the event of a merger transaction, the Limited
Right shall be exercisable solely
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for shares of the acquiring corporation or its parent, as
applicable. The number of shares to be received on the
exercise of such Limited Right shall be determined by
dividing the amount of cash that would have been available
under the first sentence above by the Fair Market Value at
the time of exercise of the shares underlying the option
subject to the Limited Right.
13. RELOAD OPTION. Simultaneously with the grant of any Stock Option to a
participant, the Committee may grant a Reload Option with respect to all or some
of the shares covered by such Stock Option. A Reload Option may be granted to a
participant who satisfies all or part of the exercise price of the Stock Option
with shares of Common Stock. The Reload Option represents an additional Stock
Option to acquire the same number of shares of Common Stock used by the
participant to pay for the original Stock Option. Reload Options may also be
granted to replace Common Stock withheld by the Company for payment of a
participant's withholding tax under Section 16. A Reload Option is subject to
all of the same terms and conditions as the original Stock Option, including the
remaining option exercise term, except that (i) the exercise price of the shares
of Common Stock subject to the Reload Option will be determined at the time the
original Stock Option is exercised, and (ii) such Reload Option will conform to
all provisions of the Plan at the time the original option is exercised.
14. DIVIDEND EQUIVALENT RIGHTS. Simultaneously with the grant of any Stock
Option to a participant, the Committee may grant a Dividend Equivalent Right
with respect to all or some of the shares covered by such Stock Option. Dividend
Equivalent Rights granted under this Plan are subject to the following terms and
conditions:
(a) Terms of Rights. The Dividend Equivalent Right provides the
participant with a cash benefit per share for each share
underlying the unexercised portion of the related Stock
Option equal to the amount of any extraordinary dividend (as
defined in Section 14 (c)) per share of Common Stock
declared by the Company. The terms and conditions of any
Dividend Equivalent Right shall be evidenced in the option
agreement entered into with the participant and shall be
subject to the terms and conditions of the Plan. The
Dividend Equivalent Right is transferable only when the
related option is transferable and under the same
conditions.
(b) Payment. Upon the payment of an extraordinary dividend, the
participant holding a Dividend Equivalent Right with respect
to Stock Options or portions thereof which have vested shall
promptly receive from the Company or its affiliate, as
applicable, the amount of cash equal to the amount of the
extraordinary dividend per share of Common Stock, multiplied
by the number of shares of Common Stock underlying the
unexercised portion of the related Stock Option. With
respect to Stock Options or portions thereof which have not
vested, the amount that would have been received pursuant to
the Dividend Equivalent Right with respect to the shares
underlying such unvested Stock Option or portion thereof
shall be paid to the participant holding such Dividend
Equivalent Right together with earnings thereon, on such
date as the Stock Option or portion thereof becomes vested.
Payment of an extraordinary dividend will be decreased by
the amount of any applicable tax withholding prior to
distribution to the participant as set forth in Section 16.
(c) Extraordinary Dividend. For purposes of this Section 14, an
extraordinary dividend is any dividend paid on shares of
Common Stock where (i) the dividend rate exceeds 150% of the
Bank's weighted average cost of funds on interest-bearing
liabilities for the current quarter and preceding three
quarters, and (ii) the annualized aggregate dollar amount of
the dividend exceeds the Bank's net income after taxes for
the current quarter and preceding three quarters. For
purposes of this Section 14, the dividend rate equals the
quotient, expressed as a percentage, of (i) the annualized
dollar amount of the dividend, and (ii) the last trade price
of the Company's Common Stock on the day immediately before
the dividend is declared.
15. PLAN AMENDMENT. The Board or the Committee may modify or amend the Plan
as it deems necessary or appropriate or modify or amend an award received by key
employees and/or outside directors. No such amendment shall adversely affect any
outstanding awards under the Plan without the consent of the holders thereof.
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16. TAX WITHHOLDING. The Company may deduct from any settlement of an award
made under the Plan, including the delivery or vesting of shares, an amount
sufficient to cover the minimum withholding required by law for any federal,
state or local taxes or to take such other action as may be necessary to satisfy
any such withholding obligations. The Committee may permit shares to be used to
satisfy the minimum required tax withholding and such shares shall be valued at
the Fair Market Value as of the settlement date of the applicable award.
17. OTHER COMPANY BENEFIT AND COMPENSATION PROGRAMS. Settlements of awards
received by participants under the Plan shall not be deemed a part of a
participant's regular, recurring compensation for purposes of calculating
payments or benefits from any Company benefit plan, severance program or
severance pay law of any country, unless otherwise determined by the Committee,
or unless the contrary is specifically provided in a Company benefit plan that
is exempt from tax under Section 401(a) of the Code.
18. UNFUNDED PLAN. Unless otherwise determined by the Committee, the Plan
is an unfunded plan. The Plan shall not create (or be construed to create) a
trust or a separate fund or funds. The Plan shall not establish any fiduciary
relationship between the Company and any participant or other person. To the
extent any person holds any rights by virtue of a grant awarded under the Plan,
such right (unless otherwise determined by the Committee) shall be no greater
than the right of an unsecured general creditor of the Company.
19. FUTURE RIGHTS. No person shall have any claim or right to be granted an
award under the Plan, and no participant shall have any rights by reason of the
grant of any award under the Plan to continued employment by the Company or any
subsidiary of the Company.
20. GENERAL RESTRICTION. Each award shall be subject to the requirement
that, if at any time the Committee shall determine, in its sole discretion, that
the listing, registration or qualification of any award under the Plan upon any
securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such award or the grant or
settlement thereof, such award may not be exercised or settled in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Committee.
21. GOVERNING LAW. The validity, construction and effect of the Plan and
any actions taken or relating to the Plan shall be determined in accordance with
the laws of the State of Delaware.
22. SUCCESSORS AND ASSIGNS. The Plan shall be binding on all successors and
permitted assigns of a participant, including, without limitation, the guardian
or estate of such participant and the executor, administrator or trustee of such
estate, or any receiver or trustee in bankruptcy or representative of the
participant's creditors.
23. RIGHTS AS A SHAREHOLDER. A participant shall have no rights as a
shareholder with respect to awards under the Plan until he or she becomes the
holder of record of shares granted under the Plan.
24. CHANGE IN CONTROL. Notwithstanding anything to the contrary in the
Plan, the following shall apply to all outstanding awards granted under the Plan
in the event of a Change in Control:
(a) Definition. A "Change in Control" of Fidelity Federal Bank
and Trust (the "Bank") or the Company means a change in
control of a nature that: (i) would be required to be
reported in response to Item 1(a) of the current report on
Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act"); or (ii) results in a Change in Control
of the Bank or the Company within the meaning of the Home
Owners' Loan Act, as amended ("HOLA"), and applicable rules
and regulations promulgated thereunder, as in effect at the
time of the Change in Control; or (iii) without limitation
such a Change in Control shall be deemed to have occurred at
such time as (a) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined voting
power of Company's outstanding securities except for any
securities purchased by the Bank's employee stock ownership
plan or trust; or (b) individuals who constitute the Board
on the date hereof (the "Incumbent Board") cease for any
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reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent
Board, or whose nomination for election by the Company's
stockholders was approved by the same Nominating Committee
serving under an Incumbent Board, shall be, for purposes of
this clause (b), considered as though he were a member of
the Incumbent Board; or (c) a plan of reorganization,
merger, consolidation, sale of all or substantially all the
assets of the Bank or the Company or similar transaction in
which the Bank or Company is not the surviving corporation
occurs; or (d) a proxy statement soliciting proxies
from stockholders of the Company, by someone other than
the current management of the Company, seeking stockholder
approval of a plan of reorganization, merger or
consolidation of the Company or similar transaction with one
or more corporations as a result of which the outstanding
shares of the class of securities then subject to the Plan
are to be exchanged for or converted into cash or property
or securities not issued by the Company; or (e) a tender
offer is made for 25% or more of the voting securities of
the Company and the shareholders owning beneficially or of
record 25% or more of the outstanding securities of the
Company have tendered or offered to sell their shares
pursuant to such tender offer and such tendered shares have
been accepted by the tender offeror.
(b) Acceleration of Vesting and Payment of Limited Rights.
(1) Upon the occurrence of an event constituting a Change in
Control, all Limited Rights, Stock Options, Stock Awards or
any other award granted pursuant to this Plan outstanding on
such date shall become 100% vested.
(2) Upon the occurrence of an event constituting a Change in
Control involving an exchange of stock, all Stock Options
shall become options to purchase the exchanged stock at the
applicable exchange ratio (with no change in the aggregate
exercise price).
(c) Effect of a Change in Control on Stock Option Awards. In the
event of a Change in Control, the Committee and the Board of
Directors will take one or more of the following actions to
be effective as of the date of such Change in Control:
(1) provide that such Stock Options shall be assumed, or
equivalent stock options shall be substituted ("Substitute
Options") by the acquiring or succeeding corporation (or an
affiliate thereof), provided that: (A) any such Substitute
Options exchanged for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, and (B) the
shares of stock issuable upon the exercise of such
Substitute Options shall be registered in accordance with
the Securities Act of 1933, as amended ("1933 Act") or such
securities shall be exempt from such registration in
accordance with Sections 3(a)(2) or 3(a)(5) of the 1933 Act,
(collectively, "Registered Securities"), or in the
alternative, if the securities issuable upon the exercise of
such Substitute Options shall not constitute Registered
Securities, then the Participant will receive upon
consummation of the Change in Control a cash payment for
each Stock Option surrendered equal to the difference
between the (1) fair market value of the consideration to be
received for each share of Common Stock in the Change in
Control times the number of shares of Common Stock subject
to such surrendered Stock Options, and (2) the aggregate
exercise price of all such surrendered Stock Options; or
(2) in the event of a Change in Control transaction whereby the
holders of Common Stock will receive a cash payment (the
"Merger Price") for each share of Common Stock exchanged in
the Change in Control transaction, make or provide for a
cash payment to the participants equal to the difference
between (1) the Merger Price times the number of shares of
Common Stock subject to such Stock Options held by each
participant (to the extent then exercisable at prices not in
excess of the Merger Price), and (2) the aggregate exercise
price of all such surrendered Stock Options.
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25. COMPLIANCE WITH SECTION 16. With respect to persons subject to Section
16 of the 1934 Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the 1934 Act. To the
extent any provisions of the Plan or actions of the Committee fail to so comply,
it shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee administrators.
26. TERMINATION OF EMPLOYMENT. Upon the terminatio of an employee's
employment for any reason other than Disability, Retirement, Change in Control,
death or Termination for Cause, the employee's Stock Options shall be
exercisable, but only as to those shares that were immediately purchasable by,
or vested in, such employee at the date of termination, and such options may be
exercised only for a period of three (3) months following such termination. Upon
the termination of an employee's service because of Disability, Retirement,
Change in Control or death, the employee's Stock Options shall be exercisable as
to all shares whether or not then exercisable, and the employee's Stock Awards
shall vest as to all shares subject to an outstanding award, whether or not
otherwise immediately vested in such employee at the date of termination and
options may be exercised for a period of five (5) years following termination.
Notwithstanding anything to the contrary herein, in no event shall the exercise
period extend beyond the expiration of the Stock Option term. In the event of
termination of employment or service for Cause (as defined herein) all rights
and awards granted to an employee or director under the Plan not exercised or
vested shall expire upon termination.
No option shall be eligible for treatment as an Incentive Stock Option in
the event such option is exercised more than three (3) months following the date
of the employee's Retirement or termination of employment following a Change in
Control; and provided further, that no option shall be eligible for treatment as
an Incentive Stock Option in the event such option is exercised more than one
year following termination of employment due to Disability and provided further,
in order to obtain Incentive Stock Option treatment for options exercised by
heirs or devisees of an optionee, the optionee's death must have occurred while
employed or within three (3) months of termination of employment.
"Disability" means, with respect to an employee, the permanent and total
inability by reason of mental or physical infirmity or both, of an employee to
perform the work customarily assigned to him. Additionally, a medical doctor
selected or approved by the Board of Directors must advise the Committee that it
is either not possible to determine when such Disability will terminate or that
it appears probable that such Disability will be permanent during the remainder
of the employee's lifetime.
"Retirement" means, with respect to an employee, retirement at the normal
or early retirement date set forth in the Retirement Plan for Employees of
Fidelity Federal Bank & Trust, or as determined by the Board of Directors, or
such other time as determined by written resolution of the Committee.
Termination "for Cause" means the termination upon personal dishonesty,
willful misconduct, any breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, or the willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or a
final cease-and-desist order, any of which results in a material loss to the
Company or an affiliate.
27. TERMINATION OF SERVICE AS A DIRECTOR. Upon the termination of a
director's service for any reason other than Disability, Retirement, Change in
Control, death or Termination for Cause, the director's Stock Options shall be
exercisable, but only as to those shares that were immediately purchasable by,
or vested in, such director at the date of termination, and options may be
exercised for a period of one (1) year following termination of service, and all
of the director's unvested Stock Awards shall be forfeited. In the event of
termination of service for Cause (as defined above) all rights granted to the
director under the Plan not exercised by or vested in such director shall expire
upon termination of service. Upon the termination of a director's service
because of Retirement, Disability, Change in Control or death, the director's
Stock Options shall be exercisable as to all shares, whether or not then
exercisable, and the director's Stock Awards shall vest as to all shares subject
to an outstanding award, whether or not otherwise immediately vested in such
director at the date of termination, and options may be exercised for a period
of five (5) years following such termination. In no event shall the exercise
period extend beyond the expiration of the Stock Option term.
"Disability" means, with respect to an outside director, the permanent and
total inability by reason of mental or physical infirmity or both, of a director
to carry out the responsibilities of a director of the Company or an affiliate,
as required by applicable state and federal law.
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"Retirement" means, with respect to a director, retirement on or after
attainment of age sixty-five (65) or seven (7) years of service at the Company
or an affiliate, or such other time as determined by written resolution of the
Committee.
"Termination for Cause" has the same meaning as set forth under Paragraph
26 above.
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REVOCABLE PROXY
FIDELITY BANKSHARES, INC.
ANNUAL MEETING OF STOCKHOLDERS
May 21, 2002
The undersigned hereby appoints the full Board of Directors, with full
powers of substitution to act as attorneys and proxies for the undersigned to
vote all shares of Common Stock of the Company which the undersigned is entitled
to vote at a Annual Meeting of Stockholders ("Meeting") to be held at the Crowne
Plaza Hotel, 1601 Belvedere Road, West Palm Beach, Florida, at 10:00 a.m. (local
time) on May 21, 2002. The official proxy committee is authorized to cast all
votes to which the undersigned is entitled as follows:
VOTE
FOR WITHHELD
1. The election as director |-| |-|
of the nominee listed
below (except as marked
to the contrary below)
Keith D. Beaty
INSTRUCTION: To withhold your vote for the
nominee, write the name of the nominee on the lines
below.
FOR AGAINST ABSTAIN
2. Adoption of the Fidelity |-| |-| |-|
Bankshares, Inc. 2002
Incentive Stock Benefit Plan.
FOR AGAINST ABSTAIN
3. The ratification of the |-| |-| |-|
appointment of Deloitte &
Touche LLP as auditors for
the fiscal year ending
December 31, 2002.
The Board of Directors recommends a vote "FOR" each of the listed proposals.
- --------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED ABOVE. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THE
ABOVE-NAMED PROXIES AT THE DIRECTION OF A MAJORITY OF THE BOARD OF DIRECTORS. AT
THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
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Should the undersigned be present and elect to vote at the Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Meeting of the stockholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated and of no further
force and effect. This proxy may also be revoked by sending written notice to
the Secretary of the Company at the address set forth on the Notice of Annual
Meeting of Stockholders, or by the filing of a later proxy statement prior to a
vote being taken on a particular proposal at the Meeting.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of the Meeting and a proxy statement dated
April 21, 2002.
Dated: _________________, 2002 |_| Check Box if You Plan
to Attend Meeting
- ------------------------------- -----------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------- -----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
Please complete and date this proxy and return it promptly in the enclosed
postage-prepaid envelope.
- --------------------------------------------------------------------------------
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