SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-12
FloridaFirst Bancorp, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a- 6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[FloridaFirst Bancorp, Inc. letterhead]
December 21, 2001
Dear Stockholder:
On behalf of the Board of Directors and management of FloridaFirst
Bancorp, Inc. (the "Company"), I invite you to attend the Annual Meeting of
Stockholders of the Company to be held at 205 East Orange Street, Lakeland,
Florida, on Tuesday, January 29, 2002, at 8:30 a.m., Eastern Time. The attached
Notice of Annual Meeting and Proxy Statement describe the formal business to be
transacted at the Annual Meeting. During the Annual Meeting we will also report
on the operations of the Company. Directors and officers of the Company, as well
as representatives of Hacker, Johnson & Smith PA, certified public accountants,
will be present to respond to stockholder questions.
Your vote is important, regardless of the number of shares you own and
regardless of whether you plan to attend the Annual Meeting. We encourage you to
read the enclosed proxy statement carefully and sign and return your enclosed
proxy card as promptly as possible because a failure to do so could cause a
delay in the Annual Meeting and additional expense to the Company. A
postage-paid return envelope is provided for your convenience. This will not
prevent you from voting in person, but it will assure that your vote will be
counted if you are unable to attend the Annual Meeting. If you do decide to
attend the Annual Meeting and feel for whatever reason that you want to change
your vote at that time, you will be able to do so.
Sincerely,
/s/Gregory C. Wilkes
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Gregory C. Wilkes
President and Chief Executive Officer
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FLORIDAFIRST BANCORP, INC.
205 EAST ORANGE STREET
LAKELAND, FLORIDA 33801-4611
(863) 688-6811
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 29, 2002
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of FloridaFirst Bancorp, Inc. (the "Company"), will be held at 205
East Orange Street, Lakeland, Florida, on Tuesday, January 29, 2002, at 8:30
a.m., Eastern Time, for the following purposes:
I. To elect four directors of the Company;
II. The ratification of the FloridaFirst Bancorp, Inc. 2002 Stock Option Plan;
III. The ratification of the FloridaFirst Bank 2002 Restricted Stock Plan;
IV. The ratification of the FloridaFirst Bancorp, Inc. 1999 Stock Option Plan;
V. The ratification of the FloridaFirst Bank 1999 Restricted Stock Plan; and
VI. To ratify the appointment of Hacker, Johnson & Smith PA as independent
public accountants of the Company for the fiscal year ending September 30,
2002;
all as set forth in the Proxy Statement accompanying this notice, and to
transact such other business as may properly come before the Meeting and any
adjournments. The Board of Directors is not aware of any other business to come
before the Meeting. Stockholders of record at the close of business on December
10, 2001, are the stockholders entitled to vote at the Meeting and any
adjournments thereof.
A copy of the Company's Annual Report for the year ended September 30,
2001 is enclosed.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU
OWN. WE ENCOURAGE YOU TO VOTE BY PROXY SO THAT YOUR SHARES WILL BE REPRESENTED
AND VOTED AT THE MEETING EVEN IF YOU CANNOT ATTEND. ALL STOCKHOLDERS OF RECORD
CAN VOTE BY WRITTEN PROXY CARD. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES
ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER TO VOTE PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Kerry P. Charlet
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Kerry P. Charlet
Secretary
Lakeland, Florida
December 21, 2001
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
FLORIDAFIRST BANCORP, INC.
205 EAST ORANGE STREET
LAKELAND, FLORIDA 33801-4611
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ANNUAL MEETING OF STOCKHOLDERS
JANUARY 29, 2002
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GENERAL
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of FloridaFirst Bancorp, Inc. (the
"Company") to be used at the Annual Meeting of Stockholders of the Company which
will be held at 205 East Orange Street, Lakeland, Florida, on Tuesday, January
29, 2002, at 8:30 a.m., Eastern Time (the "Meeting"). The accompanying Notice of
Annual Meeting of Stockholders and this Proxy Statement are being first mailed
to stockholders on or about December 21, 2001.
All properly executed written proxies that are delivered pursuant to
this Proxy Statement will be voted on all matters that properly come before the
Meeting for a vote. If your signed proxy specifies instructions with respect to
matters being voted upon, your shares will be voted in accordance with your
instructions. If no instructions are specified, your shares will be voted (a)
FOR the election of directors named in Proposal I, (b) FOR Proposal II (the
ratification of the FloridaFirst Bancorp, Inc. 2002 Stock Option Plan (the "2002
Option Plan")); (c) FOR Proposal III (the ratification of the FloridaFirst Bank
2002 Restricted Stock Plan (the "2002 RSP")); (d) FOR Proposal IV (the
ratification of the FloridaFirst Bancorp, Inc. 1999 Stock Option Plan (the "1999
Option Plan")); (e) FOR Proposal V (the ratification of the FloridaFirst Bank
1999 Restricted Stock Plan (the "1999 RSP")); (f) FOR Proposal VI (the
ratification of independent public accountants)); and (g) in the discretion of
the proxy holders, as to any other matters that may properly come before the
Meeting. Your proxy may be revoked at any time prior to being voted by: (i)
filing with the Secretary of the Company (Kerry P. Charlet, at 205 East Orange
Street, Lakeland, Florida 33801-4611) written notice of such revocation, (ii)
submitting a duly executed proxy bearing a later date, or (iii) attending the
Meeting and giving the Secretary notice of your intention to vote in person.
The ratification of the 2002 Option Plan provides for authorizing the
issuance of an additional 314,795 shares of common stock of the Company upon the
exercise of stock options to be awarded to officers, directors, key employees
and other persons providing services to the Company or any present or future
parent or subsidiary of the Company from time to time. The ratification of the
2002 RSP provides for authorization to issue up to an additional 125,918 shares
of common stock upon awards to personnel of experience and ability in key
positions of responsibility with FloridaFirst Bank (the "Bank") from time to
time. At the present time, the Bank intends to acquire such common stock for the
2002 RSP purposes through open-market purchases. The RSP has the authority,
however, to buy such common stock directly from the Company. Ratification of the
2002 Option Plan and the 2002 RSP may be deemed to have certain anti-takeover
effects with regard to the Company. See "Proposal II - Ratification of the 2002
Option Plan - Effect of Mergers, Change of Control and Other Adjustments, and
- -Possible Dilutive Effects of the 2002 Option Plan" and "Proposal III -
Ratification of the 2002 RSP - Possible Dilutive Effects of the 2002 RSP."
1
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VOTING STOCK AND VOTE REQUIRED
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The Board of Directors has fixed the close of business on December 10,
2001 as the record date for the determination of stockholders who are entitled
to notice of, and to vote at, the Meeting. On the record date, there were
5,486,850 shares of the Company's common stock outstanding (the "Common Stock").
Each stockholder of record on the record date is entitled to one vote for each
share held.
The articles of incorporation of the Company ("Articles of
Incorporation") provides that in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a person who beneficially owns in excess of 10% of the then outstanding shares
of Common Stock (the "Limit") be entitled or permitted to any vote with respect
to the shares held in excess of the Limit. Beneficial ownership is determined
pursuant to the definition in the Articles of Incorporation and includes shares
beneficially owned by such person or any of his affiliates (as such terms are
defined in the Articles of Incorporation), or which such person or any of his
affiliates has the right to acquire upon the exercise of conversion rights or
options and shares as to which such person or any of his affiliates have or
share investment or voting power, but neither any employee stock ownership or
similar plan of the Company or any subsidiary, nor any trustee with respect
thereto or any affiliate of such trustee (solely by reason of such capacity of
such trustee), shall be deemed, for purposes of the Articles of Incorporation,
to beneficially own any Common Stock held under any such plan.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting. With respect to any matter, any shares for which a broker indicates on
the proxy that it does not have discretionary authority as to such shares to
vote on such matter (the "Broker Non- Votes") will not be considered present for
purposes of determining whether a quorum is present. In the event there are not
sufficient votes for a quorum or to ratify any proposals at the time of the
Meeting, the Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors, as set forth in Proposal I, the proxy
being provided by the Board enables a stockholder to vote for the election of
the nominees proposed by the Board, or to withhold authority to vote for the
nominees being proposed. Directors are elected by a plurality of votes of the
shares present, in person or represented by proxy, at a meeting and entitled to
vote in the election of directors, without regard to either (i) Broker Non-Votes
or (ii) proxies as to which authority to vote for the nominees being proposed is
withheld.
With respect to Proposal II, Ratification of the 2002 Option Plan,
Proposal III, Ratification of the 2002 RSP, Proposal IV, Ratification of the
1999 Option Plan, and Proposal V, Ratification of the 1999 RSP, such matters
shall be determined by an affirmative vote of a majority of total votes cast on
the matter. Broker Non-Votes will have no impact on the outcome of the vote on
such matters and proxies marked "ABSTAIN" will have the same impact as a vote
"AGAINST" such matters.
With respect to all other matters that may properly come before the
Meeting, including Proposal VI, ratification of the independent public
accountants, a shareholder may check the appropriate box to: (i) vote "FOR" the
item, (ii) vote "AGAINST" the item, or (iii) "ABSTAIN" with respect to the item.
Unless otherwise required by law, all such matters shall be determined by a
majority of votes cast affirmatively or negatively on such matter, without
regard to (i) Broker Non-Votes or (ii) proxies marked "ABSTAIN" as to that
matter.
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PRINCIPAL HOLDERS
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Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth as of the record date, persons or groups who own more than 5%
of the Common Stock. Other than as noted below, management knows of no person or
group that owns more than 5% of the outstanding shares of Common Stock as of the
record date.
Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding (%)
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FloridaFirst Bank Employee Stock 475,086(1) 8.66
Ownership Plan ("ESOP")
205 East Orange Street
Lakeland, Florida
Wellington Management Company, LLP 300,000(2) 5.47
75 State Street
Boston, MA 02109
Thomson Horstmann & Bryant, Inc. 295,607(3) 5.39
Park 80 West
Plaza Two
Saddle Brook, NJ 07663
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(1) The ESOP purchased such shares for the exclusive benefit of plan
participants with funds borrowed from the Company. These shares are held in
a suspense account and will be allocated among ESOP participants annually
as the ESOP debt is repaid. The board of directors of FloridaFirst Bank has
appointed a committee consisting of non-employee directors Llewellyn N.
Belcourt, J. Larry Durrence, Stephen A. Moore, Jr., Nis H. Nissen, III,
Arthur J. Rowbotham and G.F. Zimmermann, III to serve as the ESOP
administrative committee ("ESOP Committee") and to serve as the ESOP
trustees ("ESOP Trustee"). The ESOP Committee or the Board instructs the
ESOP Trustee regarding investment of ESOP plan assets. The ESOP Trustee
must vote all shares allocated to participant accounts under the ESOP as
directed by participants. Unallocated shares and shares for which no timely
voting direction is received will be voted by the ESOP Trustee as directed
by the ESOP Committee. As of the record date, 67,086 shares have been
allocated under the ESOP to participant accounts.
(2) Pursuant to a Schedule 13G dated December 31, 2000 by Wellington Management
Company, LLP ("WMC"). WMC has shared voting power with respect to 58,000
shares and shared dispositive power with respect to 300,000 shares.
(3) Pursuant to a Schedule 13G dated February 5, 2001 by Thomson Horstmann &
Bryant, Inc. ("TH&B"). TH&B has sole voting power with respect to 98,407
shares and sole dispositive power with respect to 295,067 shares.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the 1934 Act, requires the Company's directors and
executive officers to file reports of ownership and changes in ownership of
their equity securities of the Company with the Securities and Exchange
Commission and to furnish the Company with copies of such reports. To the best
of the Company's knowledge, all of the filings by the Company's directors and
executive officers were made on a timely basis during the 2001 fiscal year. The
Company is not aware of other beneficial owners of more than ten percent of its
Common Stock.
3
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PROPOSAL I - ELECTION OF DIRECTORS
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Election of Directors
The Articles of Incorporation require that directors be divided into
three classes, as nearly equal in number as possible, each class to serve for a
three year period, with approximately one-third of the directors elected each
year. The Board of Directors currently consists of seven members, each of whom
also serves as a director of FloridaFirst Bank (the "Bank"). Four directors will
be elected at the Meeting.
Llewellyn N. Belcourt, Gregory C. Wilkes and G.F. Zimmermann, III have
been nominated by the Board of Directors for a term of three years and Arthur J.
Rowbotham has been nominated for a one year term (collectively, the "Nominees").
The Nominees currently serve as directors of the Company. The Nominees will
serve for their respective terms or until his successor has been elected and
qualified.
The persons named as proxies in the enclosed proxy card intend to vote
for the election of the persons listed below, unless the proxy card is marked to
indicate that such authorization is expressly withheld. Should the Nominees
withdraw or be unable to serve (which the Board of Directors does not expect) or
should any other vacancy occur in the Board of Directors, it is the intention of
the persons named in the enclosed proxy card to vote for the election of such
persons as may be recommended to the Board of Directors by the Nominating
Committee of the Board. If there are no substitute nominees, the size of the
Board of Directors may be reduced.
4
The following table sets forth the nominees and the directors
continuing in office, their name, age, the year they first became a director of
the Company or the Bank, the expiration date of their current term as a
director, and the number and percentage of shares of the Common Stock
beneficially owned as of the record date.
Shares of Common Stock
Year First Current Beneficially
Elected or Term to Owned as of Percent of
Name Age(1) Appointed(2) Expire December 10, 2001(3)(4) Class(%)
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BOARD NOMINEE FOR TERM TO EXPIRE IN 2002
Arthur J. Rowbotham 53 2001 2001 200(5)(6) *
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2004
Llewellyn N. Belcourt 69 1989 2002 10,404(5)(6) *
Gregory C. Wilkes 53 1995 2001 86,330 1.55
G. F. Zimmermann, III 57 1993 2001 18,756(5)(6) *
DIRECTORS CONTINUING IN OFFICE
J. Larry Durrence 62 2000 2002 606(5)(6) *
Stephen A. Moore, Jr. 59 1998 2003 55,142(5)(6) *
Nis H. Nissen, III 60 1996 2003 44,174(5)(6) *
CERTAIN EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Don A. Burdett 56 13,245 *
Kerry P. Charlet 48 50,070 *
William H. Cloyd 44 21,968 *
All directors and named
executive officers of the
Company as a group
(11 persons) 315,498 5.67
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(1) As of September 30, 2001.
(2) All directors, except Mr. Rowbotham, became directors of the Company on
July 26, 2000.
(3) Unless otherwise indicated, a director has sole voting power and sole
investment power with respect to the indicated shares. The share amounts
include shares of Common Stock that the following persons may acquire
through the exercise of stock options under the 1999 Option Plan within 60
days of the record date: Llewellyn N. Belcourt - 4,458, Gregory C. Wilkes -
26,332, G. F. Zimmermann, III - 2,229, Stephen A. Moore, Jr. - 4,458, Nis
H. Nissen, III - 4,458, Don A. Burdett - 7,224, Kerry P. Charlet - 13,418
and William H. Cloyd - 10,322. Messrs. Rowbotham and Durrence shares
include no shares that can be acquired through the exercise of stock
options. See "Director and Executive Officer Compensation - Director
Compensation."
(4) Excludes proposed stock options to purchase shares of Common Stock under
the 2002 Stock Option Plan, the granting of which is subject to stockholder
ratification and are not exercisable within 60 days of the record date.
(5) Excludes 475,086 shares under the ESOP for which such individuals exercise
shared voting and investment power with respect to such shares as an ESOP
trustee. Such individuals disclaim beneficial ownership with respect to
such shares held in a fiduciary capacity.
(6) Excludes 58,257 1999 RSP shares which were previously awarded but subject
to forfeiture for which such individuals exercise shared voting and
investment power with respect to such shares as a member of the 1999 RSP
committee. Such individuals disclaim beneficial ownership with respect to
such shares held in a fiduciary capacity.
* Less than 1% of the Common Stock outstanding.
5
Biographical Information
The business experience of each nominee for director, director and
executive officer of the Company is set forth below. All persons have held their
present positions for five years unless otherwise stated.
Nominees for Director:
Arthur J. Rowbotham is an attorney and is President of Hall
Communications, Inc., a company which operates four radio stations in Lakeland,
Florida, which he has been with since 1977 as a director and since 1983 as
General Manager. He currently serves as a director for Cross Country
Communications, LLC, Imperial Symphony Orchestra Advisory Board, City of
Lakeland Civil Service Board, City of Lakeland Pension Board, and Florida
Association of Broadcasters. He is a member of the Broadcasters' Foundation and
the Lakeland Regional Medical Center Community Counselor.
Llewellyn N. Belcourt is a stockholder, Director and Vice President of
Carter, Belcourt & Atkinson, P.A., an accounting firm located in Lakeland,
Florida. He is Treasurer and a Board member of the Community Foundation of
Greater Lakeland and Finance Committee Chairman and a Board member of the
Lakeland Regional Medical Center Foundation.
Gregory C. Wilkes has been FloridaFirst Bank's President, Director and
Chief Executive Officer since 1995. From 1990 to 1995, Mr. Wilkes was employed
by Home Federal Savings Bank in Rome, Georgia, where he served as President,
Director and Chief Executive Officer. He is the Past Chairman of the Lakeland
Chamber of Commerce and also serves as a board member for the Lakeland Chamber
of Commerce, Lakeland Rotary Club, Polk Theatre, the YMCA, the Salvation Army,
the Florida Southern College President's Council, and the Lakeland Regional
Hospital Foundation. In addition, Mr. Wilkes is the elected director for the
State of Florida for the Federal Home Loan Bank of Atlanta and is a member of
the board of the Florida Bankers Association and board and faculty member of the
Florida School of Banking.
G. F. Zimmermann, III is President and majority stockholder of
Zimmermann Associates, Inc., a building design firm located in Lakeland,
Florida, which he has been with since 1974. He has been active with the
Salvation Army, the Kiwanis Club of Lakeland, the Lakeland Kiwanis Foundation
and the Chamber of Commerce. He also has served as a member of the Habitat for
Humanity Board of Directors, the City of Lakeland Civil Service Board, the
Pension Board, the Arbitration Board and the Lakeland Regional Medical Center
Community Board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
ABOVE NOMINEES FOR DIRECTORS.
Continuing Directors:
J. Larry Durrence is President of Polk Community College, a state
institution with campuses in Lakeland and Winter Haven, Florida. He was an
executive manager in the Florida Department of Revenue from late 1992 to early
1998, and prior to that was in higher education. He was also a City Commissioner
and Mayor of Lakeland, 1981-1989. He currently serves on the boards of United
Way of Central Florida, Lakeland Chamber of Commerce, Polk Economic Education
Council, Polk Workforce Development Board, Volunteers in Service to the Elderly
(Advisory), and the Board of Governors of Polk Museum of Art. He serves on the
Commission on Economic and Workforce Development for the American Association of
Community Colleges and is a graduate of the AACC President's Academy.
6
Stephen A. Moore, Jr. is President, Chief Executive Officer and a
Director of Moore Business Service, Inc., an accounting firm and major
franchisee for H&R Block in central Florida with corporate offices in Lakeland,
Florida. He has been with Moore Business Service, Inc. since 1974. Mr. Moore is
a member and Past President of the Lakeland Rotary Club. He has been active as a
board member of the Polk Community College Foundation, as an officer and board
member of the Central Florida Speech and Hearing Center, as a board member and
Past President of Goodwill Industries, Heart of Florida, Inc., as a board member
of the Lakeland Area Chamber of Commerce and as a member of the Lakeland
Regional Medical Center Community Counselor program.
Nis H. Nissen, III is President and Chief Executive Officer of Nissen
Advertising, Inc., an advertising and public relations firm located in Lakeland,
Florida that he has been affiliated with since 1971. He also is a member of the
Rotary Club, a Director of the Central Florida Speech & Hearing Center, a
Director of Crimestoppers of Polk County, Vice Chairman of the Public
Information Committee, Community Foundation of Lakeland, a member of the Fine
Arts Council of the Florida Southern Foundation of Lakeland, and a member of the
Board of Governors of Florida Southern College.
Named Executive Officers Who Are Not Directors
Don A. Burdett, has been Senior Vice President of Retail Banking of
FloridaFirst Bank since November 1998. Prior to joining FloridaFirst Bank, Mr.
Burdett served as a market executive and held various sales management positions
at Barnett Bank from 1979 to 1998.
Kerry P. Charlet has been Chief Financial and Operations Officer of
FloridaFirst Bank since March 1998. Prior to joining FloridaFirst Bank, Mr.
Charlet served in various positions from 1986 to 1994 at Florida Bank, FSB,
including Executive Vice President and Chief Financial Officer. He was also
employed by AmSouth Bank of Florida from 1995 to 1998, where he served as Senior
Vice President and Chief Financial Officer. Mr. Charlet has also served as an
officer and committee chairman for the Gator Bowl Association, Chairman of
Payment Systems Network, and president and board member of various youth
basketball organizations.
William H. Cloyd has been Chief Lending Officer of FloridaFirst Bank
since January 1998. Previously, Mr. Cloyd was Senior Vice President of Sun Trust
Bank Mid-Florida, N.A. He has also been active with the United Way, the North
Lakeland Rotary Club, the Lakeland Chamber of Commerce, and has served as
Chairman of the Lakeland Downtown Development Authority.
Certain Other Executive Officers Who Are Not Directors
Marion L. Moore, 61, has been Senior Vice President of Deposit
Operations of FloridaFirst Bank since 1984. He has also been active with the
Rotary Club, the Boy Scouts of America, the Lakeland Chamber of Commerce and the
Winter Haven Chamber of Commerce.
Meetings and Committees of the Board of Directors
The Board of Directors conducts its business through meetings of the
board and through activities of its committees. During the fiscal year ended
September 30, 2001, the Board of Directors held twelve regular meetings and one
special meeting. No director attended fewer than 75% of the total meetings of
the Board of Directors and committees on which such director served during the
fiscal year ended September 30, 2001. In addition to other committees, as of
September 30, 2001, the Company had a Nominating Committee, an Executive
Committee, which acts as the Compensation Committee, and an Audit Committee.
7
The Nominating Committee consists of the Board of Directors. The
Nominating Committee, which is not a standing committee, met once during the
fiscal year ended September 30, 2001. Nomination to the Board of Directors made
by stockholders must be made in writing to the Secretary of the Company and
received by the Company not less than 60 days after the end of the Company's
fiscal year end. Notice to the Company of such nominations must include certain
information required pursuant to the Company's Articles of Incorporation.
The Executive (Compensation) Committee currently consists of Directors
Belcourt, Moore, Nissen and Zimmermann. This standing committee meets annually
to review the compensation of the chief executive officer. Subsequent to the
fiscal year ended September 30, 2001, the Committee met once.
The Audit Committee consists of Directors Belcourt, Durrence, Moore and
Zimmermann. The Board of Directors has determined that each of the members of
the Audit Committee is independent in accordance with the listing requirements
for Nasdaq National Market issuers. The Board of Directors has adopted a written
audit committee charter. The Audit Committee is a standing committee and reports
to the Board of Directors. Its primary function is to assist the board in
fulfilling its responsibility to stockholders related to financial accounting
and reporting, the system of internal controls established by management and the
adequacy of auditing relative to these activities. The Audit Committee met four
times during the 2001 fiscal year.
Audit Committee Report
Review of Audited Financial Statements with Management.
The Audit Committee reviewed and discussed the audited financial
statements for the year ended September 30, 2001 with the management of the
Company.
Review of Financial Statements and Other Matters with Independent
Accountant.
The Audit Committee discussed with Hacker, Johnson & Smith PA ("Hacker,
Johnson & Smith"), the Company's independent public accountant, the matters
required to be discussed by the statement on Auditing Standards No. 61
(Communications with Audit Committees), as may be modified or supplemented. The
Audit Committee has received the written disclosures and the letters from
Hacker, Johnson & Smith required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), as may be modified or
supplemented, and has discussed with Hacker, Johnson & Smith its independence.
Recommendation that Financial Statements be Included in Annual Report.
Based on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended September 30, 2001, for filing with the Securities and Exchange
Commission.
Audit Committee:
Llewellyn N. Belcourt, Chairman
J. Larry Durrence
Stephen A. Moore, Jr.
G. F. Zimmermann, III
8
Audit Fees
The aggregate fees billed by Hacker, Johnson & Smith, for professional
services rendered for the audit of the Company's consolidated annual financial
statements for the 2001, 2000 and 1999 fiscal years and the reviews of the
financial statements included in the Company's Forms 10-Q were $70,000. See also
"Proposal VI - Ratification of Independent Public Accountants."
Financial Information Systems Design and Implementation Fees
For the 2001 fiscal year, Hacker, Johnson & Smith performed no services
in regard to financial information systems design and implementation.
All Other Fees
Other than audit fees, there were no other fees billed by Hacker,
Johnson & Smith for the 2001 fiscal year.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Director Compensation
During the fiscal year ended September 30, 2001, each director was paid
a fee of $1,000 for each board meeting attended. The chairman of the board
receives an additional $1,500 fee for each board meeting. Each non-management
director was paid $200 for each committee meeting attended. The total fees paid
to the directors for the fiscal year ended September 30, 2001 were approximately
$139,000.
In addition, the Bank maintains a Directors Consultant and Retirement
Plan. If a director agrees to become a consulting director to our Board after
retirement and completion of at least 10 years of service, he will receive a
monthly payment equal to the Board fee in effect at the date of retirement,
currently $1,000 per month, for a period of 120 months. Benefits under such plan
will begin after a director's retirement. If there is a change in control, all
directors will be presumed to have completed not less than 10 years of service,
and each director will receive a lump sum payment equal to the present value of
future benefits payable. During the fiscal year ended September 30, 2001,
$24,000 was paid to former directors under the plan.
Under the 1999 Option Plan, each non-employee director, except Messrs.
Durrence and Rowbotham, was previously granted 11,146 options to purchase shares
of Common Stock at $8.24 per share. Under the 1999 RSP, each non-employee
director, except Messrs. Durrence and Rowbotham, was previously awarded 4,783
shares of Common Stock. Option shares and RSP shares are exercisable at the rate
of 20% per year commencing on October 19, 2000. Under the 1999 Option Plan and
1999 RSP, Mr. Wilkes received 65,832 options and 27,905 RSP shares. In
accordance with the 1999 RSP, dividends are paid on shares awarded or held in
the 1999 RSP.
2002 Option Plan. The Board of Directors of the Company has adopted the
2002 Option Plan for the benefit of its Directors, officers, and key employees.
The 2002 Option Plan is subject to stockholder ratification. See "Proposal II--
Ratification of the 2002 Option Plan" for a summary of the Plan. The Plan is
included as Appendix A.
9
Restricted Stock Plan. The Board of Directors of the Company has
adopted a 2002 RSP for the benefit of personnel of experience and ability in key
positions of responsibility with the Bank. The 2002 RSP is subject to
stockholder ratification. See "Proposal III -- Ratification of the 2002 RSP" for
a summary of the RSP. The Plan is included as Appendix B.
Executive Compensation
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned, for services rendered by the named
executive officers of the Company for each of the three years ended September
30, 2001. No other executive officer of the Company or Bank had a combined
salary and bonus that exceeded $100,000.
Long-Term Compensation
Annual Compensation Awards
------------------------------------ -----------------------------
Restricted Securities
Name and Fiscal Other Annual Stock Underlying All Other
Principal Position Year Salary($) Bonus($) Compensation($) Awards(s)($)(1) Options#(2) Compensation($)
- ------------------ ---- --------- -------- --------------- --------------- ----------- ---------------
Gregory C. Wilkes, 2001 229,277 - 13,000 - - 78,622(3)
President and 2000 201,440 - 13,000 229,823 65,832 79,608
Chief Executive 1999 185,400 3,875 13,000 - - 106,849
Officer
Don A. Burdett 2001 106,750 7,500 - - - 12,780(4)
Senior Vice President 2000 98,750 10,000 - 85,000 18,061 2,963
1999 67,313 - - - - 570
Kerry P. Charlet, 2001 139,076 10,000 - - - 49,129(5)
Senior Vice President 2000 127,370 10,000 - 153,000 33,543 50,628
and Chief Financial 1999 113,125 22,838 - - - 27,986
Officer
William H. Cloyd, 2001 129,508 7,500 - - - 47,816(6)
Senior Vice President 2000 113,500 5,000 - 127,500 25,802 47,221
and Chief Lending 1999 102,500 11,659 - - - 27,412
Officer
- ---------------
(1) For Messrs. Wilkes, Burdett, Charlet and Cloyd represents awards of 27,905,
10,320, 18,577 and 15,481 shares of Common Stock, respectively, under the
1999 RSP as of October 19, 1999 on which date the market price of such
stock was $8.24 per share. Such stock awards become non-forfeitable at the
rate of 20% shares per year commencing on October 19, 2000. Dividend rights
associated with such stock are accrued and held in arrears to be paid at
the time that such stock becomes non-forfeitable. Based upon a market price
of $16.71 per share as of September 30, 2001, such unvested shares for
Messrs. Wilkes, Burdett, Charlet and Cloyd had a market value of $373,000,
$138,000, $248,000 and $207,000, respectively.
(2) Such awards under the 1999 Option Plan are first exercisable at the rate of
20% per year commencing on October 19, 2000. See "-- Stock Awards".
(3) Includes $59,000 related to an accrual under the supplemental executive
retirement plan; 1,423 shares of Common Stock allocated under the ESOP at a
cost basis of $10.00 per share (such shares had an aggregate market value
at September 30, 2001 of $23,778); and $5,392 in Company matching funds in
the 401(k) retirement plan.
(Footnotes continued on next page)
10
(4) Includes 858 shares of Common Stock allocated under the ESOP at a cost
basis of $10.00 per share (such shares had an aggregate market value at
September 30, 2001 of $14,337); and $4,200 in Company matching funds in the
401(k) retirement plan.
(5) Includes $33,000 related to an accrual under the supplemental executive
retirement plan; 1,185 shares of Common Stock allocated under the ESOP at a
cost basis of $10.00 per share (such shares had an aggregate market value
at September 30, 2001 of $19,801); and $4,279 in Company matching funds in
the 401(k) retirement plan.
(6) Includes $33,000 related to an accrual under the supplemental executive
retirement plan; approximately 1,053 shares of Common Stock scheduled to be
allocated under the ESOP at a cost basis of $10.00 per share (such shares
had an aggregate market value at September 30, 2001 of $17,595); and $4,286
in Company matching funds in the 401(k) retirement plan.
Compensation Committee Interlocks and Insider Participation
The Executive (Compensation) Committee of the Company during the fiscal
year ended September 30, 2001 consisted of Directors Belcourt, Moore, Nissen and
Zimmermann. From time to time, the Company makes loans to its directors and
executive officers and related persons and entities for the financing of homes,
as well as home improvement, consumer and commercial loans. It is the belief of
management that these loans are made in the ordinary course of business, are
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other persons,
and neither involve more than normal risk of collectibility nor present other
unfavorable features.
No member of the Committee is, or was during fiscal 2001, an executive
officer of another company whose board of directors has a comparable committee
on which one of the Company's executive officers serves. None of the executive
officers of the Company is, or was during fiscal 2001, a member of a comparable
compensation committee of a company of which any of the directors of the Company
is an executive officer.
2001 Report of the Compensation Committee on Executive Compensation
The Company's Executive (Compensation) Committee reviews compensation
paid to the chief executive officer. The Committee reviews various published
surveys of compensation paid to employees performing similar duties for
depository institutions and their holding companies, with a particular focus on
the level of compensation paid by comparable stockholder institutions in and
around the Company's market areas, including institutions with total assets of
between $500 million and $1 billion. Although the Compensation Committee does
not specifically set compensation levels for the chief executive officer based
on whether particular financial goals have been achieved by the Company, the
Compensation Committee does consider the overall profitability of the Company
when making these decisions. The Compensation Committee has the following goals
for compensation programs impacting the chief executive officer of the Company:
o to provide motivation for the chief executive officer to enhance
stockholder value by linking compensation to the future value of
the Company's stock;
o to retain the chief executive officer who has led the Company and
Bank to build its existing market franchise and to attract high
quality executive officers in the future by providing total
compensation opportunities which are consistent with competitive
norms of the industry and the Company's level of performance; and
o to maintain reasonable fixed compensation costs by targeting the
base salary at a competitive average.
11
During the year ended September 30, 2001, Gregory C. Wilkes, President
and CEO received a base salary of $225,000 in recognition of his continued
leadership in the management of the Company and the Bank. The Compensation
Committee will consider the annual compensation paid to the presidents and chief
executive officers of publicly owned financial institutions nationally, in the
State of Florida and surrounding Southeastern states with assets of between $500
million and $1 billion and the individual job performance of such individual in
consideration of its specific salary increase decision with respect to
compensation to be paid to the president and chief executive officers in the
future.
Compensation Committee:
Llewellyn N. Belcourt
Stephen A. Moore, Jr.
Nis H. Nissen, III, Chairman
G. F. Zimmermann, III
Stock Awards. The following table sets forth information with respect
to previously awarded stock options to purchase the Common Stock granted in
fiscal 2000 to the named executive officers and held by them as of September 30,
2001. The Company has not granted to the named executive officers any stock
appreciation rights.
OPTION EXERCISES AND YEAR END VALUE TABLE
Aggregated Option Exercises in Last Fiscal Year, and FY-End Option Value
------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Options at FY-End(#) Options at FY-End($)(1)
-------------------- -----------------------
Shares Acquired Value
Name on Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- -------------- ----------- ------------------------- -------------------------
Gregory C. Wilkes -- -- 13,166 / 52,666 111,600 / 446,300
Don A. Burdett -- -- 3,612 / 14,449 30,600 / 122,400
Kerry P. Charlet -- -- 6,709 / 26,834 56,900 / 227,400
William H. Cloyd -- -- 5,160 / 20,642 43,700 / 174,900
- -------------
(1) Information is based on the exercise price of $8.24 and the closing price
on September 30, 2001 of $16.71.
Other Benefits
Employment Agreements. The Bank has entered into separate employment
agreements with Messrs. Wilkes, Burdett, Charlet and Cloyd. Messrs. Wilkes' and
Charlet's employment agreements have a term of three years, while Messrs.
Burdett's and Cloyd's agreement have a term of two years. The agreements may be
terminated by the Bank for "just cause" as defined in the agreement. If the Bank
terminates any of these three individuals without just cause, they will be
entitled to a continuation of their salary from the date of termination through
the remaining term of the agreement, but in no event for a period of less than
one year. The employment agreements contain a provision stating that after
Messrs. Wilkes', Burdett's, Charlet's or Cloyd's employment is terminated in
connection with any change in control, the individual will be paid a lump sum
amount equal to 2.99 times his five-year average annual
12
taxable cash compensation. In the event of a change in control as of September
30, 2001, Messrs. Wilkes, Burdett, Charlet and Cloyd would have received
approximately $601,000, $303,000, $463,000 and $404,000, respectively.
Supplemental Executive Retirement Plan. The Bank has implemented a
supplemental executive retirement plan for the benefit of Messrs. Wilkes,
Charlet and Cloyd. The supplemental executive retirement plan will provide
benefits at age 65 that would be comparable to approximately 83% of the benefits
that would have accrued under the terminated pension plan after retirement at
age 65. If a participant terminates employment prior to age 65, then the target
retirement benefits will be reduced. The accumulated deferred compensation
account for each participant will be payable to such participant at anytime
following termination of employment after attainment of age 55, the death or
disability of the participant, or termination of employment following a change
in control of the Bank whereby the Bank or its parent company is not the
resulting entity. As of the fiscal year ended September 30, 2001, Messrs.
Wilkes, Charlet and Cloyd had aggregate benefit accruals under the supplemental
executive retirement plan of approximately $170,000, $95,000, and $95,000,
respectively, and such benefits for the individuals were not vested.
- --------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------------------------------
The Bank, like many financial institutions, has followed a policy of
granting various types of loans to officers, directors, and employees. The loans
have been made in the ordinary course of business and on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with the Bank's other customers, and do not involve
more than the normal risk of collectibility, or present other unfavorable
features.
- --------------------------------------------------------------------------------
STOCK PERFORMANCE GRAPH
- --------------------------------------------------------------------------------
The following graph compares the cumulative total stockholder return of
the Common Stock with that of (a) the total return index for domestic companies
listed on the Nasdaq Stock Market and (b) the total return index for banks
listed on the Nasdaq Stock Market. These total return indices of the Nasdaq
Stock Market are computed by the Center for Research in Securities Prices
("CRSP") at the University of Chicago. All three investment comparisons assume
the investment of $100 at the market close on April 7, 1999 (the date the Common
Stock was first traded in the mutual holding company form of organization), and
the reinvestment of dividends as paid. The graph provides comparison at the end
of each fiscal year. On December 22, 2000, FloridaFirst Bancorp, the predecessor
Company, completed its reorganization from the mutual holding company form of
organization to a full stock company. The graph reflects the price of the stock
prior to the reorganization and subsequent to the reorganization. At December
22, 2000, the graph includes adjustments to reflect the exchange ratio in the
reorganization. Prior to the reorganization, the common stock of FloridaFirst
Bancorp was also traded on the Nasdaq National Market under the stock symbol
"FFBK" and the Common Stock of the Company continues to trade under the same
stock symbol.
13
[GRAPHIC OMITTED]
04/07/99($) 09/30/99($) 09/30/00($) 12/22/00($) 9/30/01($)
- -------------------------------- ---------------- ---------------- ---------------- ---------------- ---------------
FloridaFirst Bancorp, Inc. 100 106 156 165 226
CRSP Nasdaq U.S. Index 100 108 144 98 58
CRSP Nasdaq Bank Index 100 98 105 113 109
- -------------------------------- ---------------- ---------------- ---------------- ---------------- ---------------
There can be no assurance that the Company's stock performance will
continue with the same or similar trends depicted in the graph below. The
Company will not make or endorse any predictions as to future stock performance.
14
- --------------------------------------------------------------------------------
PROPOSAL II - RATIFICATION OF THE 2002 OPTION PLAN
- --------------------------------------------------------------------------------
General
The Company's Board of Directors has adopted the 2002 Option Plan. The
2002 Option Plan is subject to ratification by the Company's stockholders.
Pursuant to the 2002 Option Plan, up to 314,795 shares of Common Stock (equal to
5.7% of total shares of Common Stock currently outstanding), are to be reserved
under the Company's authorized but unissued shares for issuance by the Company
upon exercise of stock options to be granted to officers, directors, employees,
and other persons from time to time. The purpose of the 2002 Option Plan is to
attract and retain qualified personnel for positions of substantial
responsibility and to provide additional incentive to certain officers,
directors, employees and other persons to promote the success of the business of
the Company and the Bank. The 2002 Option Plan, which shall become effective
upon the date of stockholder ratification ("2002 Plan Effective Date"), provides
for a term of ten years, after which time no awards may be made. The following
summary of the material features of the 2002 Option Plan is qualified in its
entirety by reference to the complete provisions of the 2002 Option Plan which
is attached hereto as Appendix A.
The 2002 Option Plan will be administered by the Board of Directors or
a committee of not less than two non-employee directors appointed by the
Company's Board of Directors and serving at the pleasure of the Board (the "2002
Option Committee"). Members of the 2002 Option Committee shall be deemed
"Non-Employee Directors" within the meaning of Rule 16b-3 pursuant to the 1934
Act. The 2002 Option Committee may select the officers and employees to whom
options are to be granted and the number of options to be granted based upon
several factors including prior and anticipated future job duties and
responsibilities, job performance, the Company's financial performance and a
comparison of awards given by other institutions that have converted from mutual
to stock form. A majority of the members of the 2002 Option Committee shall
constitute a quorum and the action of a majority of the members present at any
meeting at which a quorum is present shall be deemed the action of the 2002
Option Committee.
Officers, directors, employees and other persons who are designated by
the 2002 Option Committee will be eligible to receive, at no cost to them,
options under the 2002 Option Plan (the "2002 Optionees"). Each option granted
pursuant to the 2002 Option Plan shall be evidenced by an instrument in such
form as the 2002 Option Committee shall from time to time approve. It is
anticipated that options granted under the 2002 Option Plan will constitute
either Incentive Stock Options or Non-Incentive Stock Options. Option shares may
be paid for in cash, shares of Common Stock, or a combination of both. The
Company will receive no monetary consideration for the granting of stock options
under the 2002 Option Plan. Further, the Company will receive no consideration
other than the option exercise price per share for Common Stock issued to 2002
Optionees upon the exercise of those options.
Shares issuable under the 2002 Option Plan may be from authorized but
unissued shares, treasury shares or shares purchased in the open market. An
option which expires, becomes unexercisable, or is forfeited for any reason
prior to its exercise will again be available for issuance under the 2002 Option
Plan. No option or any right or interest therein is assignable or transferable
except by will or the laws of descent and distribution. The 2002 Option Plan
shall continue in effect for a term of ten years from the 2002 Plan Effective
Date.
15
Stock Options
The 2002 Option Committee may grant either Incentive Stock Options or
Non-Incentive Stock Options. In general, if a 2002 Optionee ceases to serve as
an employee of the Company for any reason other than disability or death, an
exercisable Incentive Stock Option may continue to be exercisable for three
months but in no event after the expiration date of the option, except as may
otherwise be determined by the 2002 Option Committee at the time of the award.
In the event of the disability or death of a 2002 Optionee during employment, an
exercisable Incentive Stock Option will continue to be exercisable for one year
and two years, respectively, to the extent exercisable by the 2002 Optionee
immediately prior to the 2002 Optionee's disability or death but only if, and to
the extent that, the 2002 Optionee was entitled to exercise such Incentive Stock
Options on the date of termination of employment. The terms and conditions of
Non-Incentive Stock Options relating to the effect of a 2002 Optionee's
termination of employment or service, disability, or death shall be such terms
as the 2002 Option Committee, in its sole discretion, shall determine at the
time of termination of service, disability or death, unless specifically
determined at the time of grant of such options.
The exercise price for the purchase of Common Stock subject to an
option may not be less than one hundred percent (100%) of the Fair Market Value
of the Common Stock covered by the option on the date of grant of such option.
For purposes of determining the Fair Market Value of the Common Stock, if the
Common Stock is traded otherwise than on a national securities exchange at the
time of the granting of an option, then the exercise price per share of the
option shall be not less than the mean between the last bid and ask price on the
date the option is granted or, if there is no bid and ask price on said date,
then on the immediately prior business day on which there was a bid and ask
price. If no such bid and ask price is available, then the exercise price per
share shall be determined in good faith by the 2002 Option Committee. If the
Common Stock is listed on a national securities exchange at the time of the
granting of an the option, then the exercise price per share of the option shall
be not less than the average of the highest and lowest selling price of the
Common Stock on such exchange on the date such option is granted or, if there
were no sales on said date, then the exercise price shall be not less than the
mean between the last bid and ask price on such date. If an officer or employee
owns Common Stock representing more than ten percent of the outstanding Common
Stock at the time an Incentive Stock Option is granted, then the exercise price
shall be not less than one hundred and ten percent (110%) of the Fair Market
Value of the Common Stock at the time the Incentive Stock Option is granted. No
more than $100,000 of Incentive Stock Options can become exercisable for the
first time in any one year for any one person. The 2002 Option Committee may
impose additional conditions upon the right of a 2002 Optionee to exercise any
option granted hereunder which are not inconsistent with the terms of the 2002
Option Plan or the requirements for qualification as an Incentive Stock Option,
if such option is intended to qualify as an Incentive Stock Option.
No shares of Common Stock shall be issued upon the exercise of an
option until full payment has been received by the Company, and no 2002 Optionee
shall have any of the rights of a stockholder of the Company until shares of
Common Stock are issued to such 2002 Optionee. Upon the exercise of an option by
a 2002 Optionee (or the 2002 Optionee's personal representative), the 2002
Option Committee, in its sole and absolute discretion, may make a cash payment
to the 2002 Optionee, in whole or in part, in lieu of the delivery of shares of
Common Stock. Such cash payment to be paid in lieu of delivery of Common Stock
shall be equal to the difference between the Fair Market Value of the Common
Stock on the date of the option exercise and the exercise price per share of the
option. Such cash payment shall be in exchange for the cancellation of such
option. Such cash payment shall not be made in the event that such transaction
would result in liability to the 2002 Optionee and the Company under Section
16(b) of the 1934 Act or any related regulations promulgated thereunder.
16
The 2002 Option Plan provides that the Board of Directors of the
Company may authorize the 2002 Option Committee to direct the execution of an
instrument providing for the modification, extension or renewal of any
outstanding option, provided that no such modification, extension or renewal
shall confer on the 2002 Optionee any right or benefit which could not be
conferred on the 2002 Optionee by the grant of a new option at such time, and
shall not materially decrease the 2002 Optionee's benefits under the option
without the 2002 Optionee's consent, except as otherwise provided under the 2002
Option Plan.
Awards Under the 2002 Option Plan
The Board or the 2002 Option Committee shall from time to time
determine the officers, directors, employees and other persons who shall be
granted options under the 2002 Option Plan, the number of options to be granted
to any individual, and whether the options granted will be Incentive Stock
Options and/or Non-Incentive Stock Options. In selecting 2002 Optionees and in
determining the number of options to be granted, the Board or the 2002 Option
Committee may consider the nature of the services rendered by each such
individual, each individual's current and potential contribution to the Company
and such other factors as may be deemed relevant. The 2002 Optionees may, if
otherwise eligible, be granted additional options. In no event shall options be
granted under the 2002 Option Plan to any individual exceeding 25% of the total
number of available shares of Common Stock under the 2002 Option Plan.
Pursuant to the terms of the 2002 Option Plan, Non-Incentive Stock
Options to purchase up to 15,750 shares of Common Stock will be granted to each
non-employee director of the Company, as of the 2002 Plan Effective Date, at an
exercise price equal to the Fair Market Value of the Common Stock on such date
of grant. Options may be granted to newly appointed or elected non-employee
directors within the sole discretion of the 2002 Option Committee, and the
exercise price shall be equal to the Fair Market Value of such Common Stock on
the date of grant. The options granted to non-employee directors on the 2002
Plan Effective Date will be first exercisable on September 30, 2002 at the rate
of 331/3% and 331/3% annually thereafter, during such period of service as a
director or a director emeritus. Such options granted to non-employee directors
will remain exercisable for up to ten years from the date of grant. Upon the
death or disability of a director or director emeritus, such options shall be
deemed immediately 100% exercisable for their remaining term. All outstanding
options become immediately exercisable in the event of a Change in Control (as
defined in the 2002 Option Plan) of the Company or the Bank.
17
The table below presents information related to stock option awards
anticipated to be awarded upon stockholder ratification of the 2002 Option Plan.
NEW PLAN BENEFIT
2002 OPTION PLAN
----------------
Number of Options
Name and Position Dollar Value (1) to be Granted
- ----------------- ---------------- -------------
Gregory C. Wilkes, President,
CEO and Director (5).......................... N/A 60,000(2)
Don A. Burdett, Senior Vice President........... N/A 25,000(2)
Kerry P. Charlet, Senior Vice President and
Chief Financial Officer....................... N/A 30,000(2)
William H. Cloyd, Senior Vice President
and Senior Lending Officer.................... N/A 25,000(2)
Arthur J. Rowbotham, Director (5)............... N/A 15,750(3)
Llewellyn N. Belcourt, Director (5)............. N/A 15,750(3)
G.F. Zimmermann, III, Director (5).............. N/A 15,750(3)
Executive Group (5 persons)..................... N/A 145,000(2)
Non-Executive Director Group
(6 persons).................................... N/A 94,500(3)
Non-Executive Officer Employee Group
(40 persons) ................................... N/A 75,000(4)
- ---------------
(1) The exercise price of such options shall be equal to the fair market value
of the Common Stock on the date of stockholder ratification of the 2002
Option Plan. Accordingly, the dollar value of the options was not
determinable at the time of mailing this proxy statement. On December 10,
2001, the closing market price of the Common Stock on the Nasdaq National
Market was $16.24 per share.
(2) Options awarded to executive officers will be exercisable as follows:
Options awarded at the time of stockholder approval are first exercisable
at the rate of 331/3% on the September 30, 2002 and 331/3% annually
thereafter during periods of continued service as an employee, director or
director emeritus. Such awards shall be 100% exercisable in the event of
death, disability, or upon a Change in Control of the Company or the Bank.
Options awarded to employees shall continue to be exercisable during
continued service as an employee, director or director emeritus.
(3) Options awarded to directors are first exercisable at a rate of 331/3% on
September 30, 2002 and 331/3% annually thereafter, during such period of
service as a director or director emeritus, and shall remain exercisable
for ten years without regard to continued service as a director or director
emeritus. Upon disability, death, or a Change in Control of the Company or
the Bank, such awards shall be 100% exercisable.
(4) Options generally will be exercisable as follows unless otherwise noted:
20% on September 30, 2002 and 20% annually thereafter. Such awards shall be
100% exercisable in the event of death, disability, or upon a Change in
Control of the Company or the Bank. Options awarded to employees shall
continue to be exercisable during continued service as an employee.
(5) Nominee for Director.
18
Effect of Mergers, Change of Control and Other Adjustments
Subject to any required action by the stockholders of the Company,
within the sole discretion of the 2002 Option Committee, the aggregate number of
shares of Common Stock for which options may be granted hereunder or the number
of shares of Common Stock represented by each outstanding option will be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend or any other increase
or decrease in the number of shares of Common Stock effected without the receipt
or payment of consideration by the Company. Subject to any required action by
the stockholders of the Company, in the event of any Change in Control,
recapitalization, merger, consolidation, exchange of shares, spin-off,
reorganization, tender offer, partial or complete liquidation or other
extraordinary corporate action or event, the 2002 Option Committee, in its sole
discretion, shall have the power, prior to or subsequent to such action or
events, to (i) appropriately adjust the number of shares of Common Stock subject
to options, the exercise price per share of such option, and the consideration
to be given or received by the Company upon the exercise of any outstanding
options; (ii) cancel any or all previously granted options, provided that
appropriate consideration is paid to the 2002 Optionee in connection therewith;
and/or (iii) make such other adjustments in connection with the 2002 Option Plan
as the 2002 Option Committee, in its sole discretion, deems necessary,
desirable, appropriate or advisable. However, no action may be taken by the 2002
Option Committee which would cause Incentive Stock Options granted pursuant to
the 2002 Option Plan to fail to meet the requirements of Section 422 of the Code
without the consent of the 2002 Optionee.
The 2002 Option Committee will at all times have the power to
accelerate the exercise date of all options granted under the 2002 Option Plan.
In the case of a Change in Control of the Company as determined by the 2002
Option Committee, all outstanding options shall become immediately exercisable.
A Change in Control is defined to include (i) the sale of all, or a material
portion, of the assets of the Company; (ii) the merger or recapitalization of
the Company whereby the Company is not the surviving entity; (iii) a change in
control of the Company as otherwise defined or determined by the OTS or its
regulations; or (iv) the acquisition, directly or indirectly, of the beneficial
ownership (within the meaning of Section 13(d) of the 1934 Act and rules and
regulations promulgated thereunder) of 25% or more of the outstanding voting
securities of the Company by any person, trust, entity, or group. This
limitation shall not apply to the purchase of shares by underwriters in
connection with a pubic offering of Company stock or the purchase of shares of
up to 25% of any class of securities of the Company by a tax-qualified employee
stock benefit plan which is exempt from the approval requirements set forth
under 12 C.F.R. ss.574.3(c)(1)(vi).
In the event of a Change in Control, the 2002 Option Committee and the
Board of Directors will take one or more of the following actions to be
effective as of the date of such Change in Control: (i) provide that such
options shall be assumed, or equivalent options shall be substituted,
("Substitute Options") by the acquiring or succeeding Company (or an affiliate
thereof), provided that: (A) any such Substitute options exchanged for Incentive
Stock Options shall meet the requirements of Section 424(a) of the Code, and (B)
the shares of stock issuable upon the exercise of such Substitute Options shall
constitute securities registered in accordance with the Securities Act of 1933,
as amended ("1933 Act") or such securities shall be exempt from such
registration in accordance with Sections 3(a)(2) or 3(a)(5) of the 1933 Act
(collectively, "Registered Securities"), or in the alternative, if the
securities issuable upon the exercise of such Substitute Options shall not
constitute Registered Securities, then the 2002 Optionee will receive upon
consummation of the Change in Control a cash payment for each option surrendered
equal to the difference between (1) the Fair Market Value of the consideration
to be received for each share of Common Stock in the Change in Control times the
number of shares of Common Stock subject to such surrendered options, and (2)
the aggregate exercise price of all such surrendered options, or (ii) in the
event of a transaction
19
under the terms of which the holders of the Common Stock of the Company will
receive upon consummation thereof a cash payment (the "Merger Price") for each
share of Common Stock exchanged in the Change in Control transaction, to make or
to provide for a cash payment to the 2002 Optionees equal to the difference
between (A) the Merger Price times the number of shares of Common Stock subject
to such options held by each 2002 Optionee (to the extent then exercisable at
prices not in excess of the Merger Price) and (B) the aggregate exercise price
of all such surrendered options in exchange for such surrendered options.
The power of the 2002 Option Committee to accelerate the exercise of
options and the immediate exercisability of options in the case of a Change in
Control of the Company could have an anti-takeover effect by making it more
costly for a potential acquiror to obtain control of the Company due to the
higher number of shares outstanding following such exercise of options. The
power of the 2002 Option Committee to make adjustments in connection with the
2002 Option Plan, including adjusting the number of shares subject to options
and canceling options, prior to or after the occurrence of an extraordinary
corporate action, allows the 2002 Option Committee to adapt the 2002 Option Plan
to operate in changed circumstances, to adjust the 2002 Option Plan to fit a
smaller or larger institution, and to permit the issuance of options to new
management following such extraordinary corporate action. However, this power of
the 2002 Option Committee also has an anti-takeover effect, by allowing the 2002
Option Committee to adjust the 2002 Option Plan in a manner to allow the present
management of the Company to exercise more options and hold more shares of the
Company's Common Stock, and to possibly decrease the number of Options available
to new management of the Company.
Although the 2002 Option Plan may have an anti-takeover effect, the
Company's Board of Directors did not adopt the 2002 Option Plan specifically for
anti-takeover purposes. The 2002 Option Plan could render it more difficult to
obtain support for stockholder proposals opposed by the Company's Board and
management in that recipients of options could choose to exercise such options
and thereby increase the number of shares for which they hold voting power.
Also, the exercise of such options could make it easier for the Board and
management to block the approval of certain transactions. In addition, the
exercise of such options could increase the cost of an acquisition by a
potential acquiror.
Amendment and Termination of the 2002 Option Plan
The Board of Directors may alter, suspend or discontinue the 2002
Option Plan, except that no action of the Board shall increase the maximum
number of shares of Common Stock issuable under the 2002 Option Plan, materially
increase the benefits accruing to 2002 Optionees under the 2002 Option Plan or
materially modify the requirements for eligibility for participation in the 2002
Option Plan unless such action of the Board shall be subject to approval or
ratification by the stockholders of the Company.
Possible Dilutive Effects of the 2002 Option Plan
The Common Stock to be issued upon the exercise of options awarded
under the 2002 Option Plan may either be authorized but unissued shares of
Common Stock or shares purchased in the open market. Because the stockholders of
the Company do not have preemptive rights, to the extent that the Company funds
the 2002 Option Plan, in whole or in part, with authorized but unissued shares,
the interests of current stockholders may be diluted. If upon the exercise of
all of the options, the Company delivers newly issued shares of Common Stock
(i.e., 314,795 shares of Common Stock), then the dilutive effect to current
stockholders would be approximately 5.4%. The Company can avoid dilution
resulting from awards under the 2002 Option Plan by delivering shares
repurchased in the open market upon the exercise of options.
20
Federal Income Tax Consequences
Under present federal tax laws, awards under the 2002 Option Plan will
have the following consequences:
1. The grant of an option will not by itself result in the recognition of
taxable income to a 2002 Optionee nor entitle the Company to a tax
deduction at the time of such grant.
2. The exercise of an option which is an "Incentive Stock Option" within the
meaning of Section 422 of the Code generally will not, by itself, result in
the recognition of taxable income to a 2002 Optionee nor entitle the
Company to a deduction at the time of such exercise. However, the
difference between the option exercise price and the Fair Market Value of
the Common Stock on the date of option exercise is an item of tax
preference which may, in certain situations, trigger the alternative
minimum tax for a 2002 Optionee. A 2002 Optionee will recognize capital
gain or loss upon resale of the shares of Common Stock received pursuant to
the exercise of Incentive Stock Options, provided that such shares are held
for at least one year after transfer of the shares or two years after the
grant of the option, whichever is later. Generally, if the shares are not
held for that period, the 2002 Optionee will recognize ordinary income upon
disposition in an amount equal to the difference between the option
exercise price and the Fair Market Value of the Common Stock on the date of
exercise, or, if less, the sales proceeds of the shares acquired pursuant
to the option.
3. The exercise of a Non-Incentive Stock Option will result in the recognition
of ordinary income by the 2002 Optionee on the date of exercise in an
amount equal to the difference between the exercise price and the Fair
Market Value of the Common Stock acquired pursuant to the option.
4. The Company will be allowed a tax deduction for federal tax purposes equal
to the amount of ordinary income recognized by a 2002 Optionee at the time
the optionee recognizes such ordinary income.
5. In accordance with Section 162(m) of the Code, the Company's tax deductions
for compensation paid to the most highly paid executives named in the
Company's Proxy Statement may be limited to no more than $1 million per
year, excluding certain "performance-based" compensation. The Company
intends for the award of options under the 2002 Option Plan to comply with
the requirement for an exception to Section 162(m) of the Code applicable
to stock option plans so that the amount of the Company's deduction for
compensation related to the exercise of options would not be limited by
Section 162(m) of the Code.
Accounting Treatment
The Company expects to use the "intrinsic value based method" as
prescribed by APB Opinion 25. Accordingly, neither the grant nor the exercise of
an option under the 2002 Option Plan currently requires any charge against
earnings under generally accepted accounting principles. Common Stock issuable
pursuant to outstanding options which are exercisable under the 2002 Option Plan
will be considered outstanding for purposes of calculating earnings per share on
a diluted basis.
Stockholder Ratification
Stockholder ratification of the 2002 Option Plan is being sought to
qualify the 2002 Option Plan for the granting of Incentive Stock Options in
accordance with the Code, to enable 2002 Optionees to qualify for certain exempt
transactions related to the short-swing profit recapture provisions of Section
16(b) of the
21
1934 Act, to meet the requirements under the rules of the Nasdaq National Market
for continued listing of the Company's Common Stock, and to meet the
requirements for the tax-deductibility of certain compensation items under
Section 162(m) of the Code. An affirmative vote of the holders of a majority of
the total votes cast at the Meeting in person or by proxy is required to
constitute stockholder ratification of this Proposal III.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
2002 OPTION PLAN.
22
- --------------------------------------------------------------------------------
PROPOSAL III - RATIFICATION OF THE 2002 RSP
- --------------------------------------------------------------------------------
General
The Board of Directors of the Company and the Bank have adopted the
2002 RSP as a method of providing directors, officers, and employees of the Bank
with a proprietary interest in the Company in a manner designed to encourage
such persons to remain in the employment or service of the Bank. The Bank will
contribute sufficient funds to the 2002 RSP to purchase up to 125,918 shares of
Common Stock representing up to 2.3% of the aggregate number of shares presently
outstanding. Alternatively, the 2002 RSP may purchase authorized but unissued
shares of Common Stock or treasury shares from the Company. All of the Common
Stock to be purchased by the 2002 RSP will be purchased at the Fair Market Value
of such stock on the date of purchase. Awards under the 2002 RSP will be made in
recognition of expected future services to the Bank by its directors, officers
and employees responsible for implementation of the policies adopted by the
Bank's Board of Directors and as a means of providing a further retention
incentive. The following is a summary of the material features of the 2002 RSP
which is qualified in its entirety by reference to the complete provisions of
the 2002 RSP which is attached hereto as Appendix B.
Awards Under the 2002 RSP
Benefits under the 2002 RSP ("2002 Plan Share Awards") may be granted
at the sole discretion of a committee comprised of not less than two directors
who are not employees of the Bank or the Company (the "2002 RSP Committee")
appointed by the Bank's Board of Directors. The 2002 RSP is managed by trustees
(the "2002 RSP Trustees") who are non-employee directors of the Bank or the
Company and who have the responsibility to invest all funds contributed by the
Bank to the trust created for the 2002 RSP (the "2002 RSP Trust"). Unless the
terms of the 2002 RSP or the 2002 RSP Committee specifies otherwise, awards
under the 2002 RSP will be earned and non-forfeitable at the rate of twenty
percent (20%) of such awards on September 30, 2002, and 20% annually thereafter,
provided that the recipient of the award remains an employee, director or
director emeritus during such period. A recipient of such restricted stock will
not be entitled to voting rights associated with such shares prior to the
applicable date such shares are earned. Dividends paid on 2002 Plan Share Awards
that are not yet earned shall be paid to the holder of an award as compensation
within 30 days of the applicable dividend payment date. Any shares held by the
2002 RSP Trust which are not yet earned shall be voted by the 2002 RSP Trustees,
as directed by the 2002 RSP Committee. If a recipient of such restricted stock
terminates employment or service for reasons other than death, disability or a
Change in Control (as such term is defined in the 2002 RSP) of the Company or
the Bank, the recipient forfeits all rights to the awards under restriction. If
the recipient's termination of employment or service is caused by death,
disability or a Change in Control of the Company or the Bank all restrictions
expire and all shares allocated shall become unrestricted. The 2002 Plan Share
Awards to directors shall be immediately non-forfeitable in the event of the
death, disability or a Change in Control of the Company or the Bank, of such
director and distributed as soon as practicable thereafter. The Board of
Directors can terminate the 2002 RSP at any time, and if it does so, any shares
not allocated will revert to the Bank. The 2002 Plan Share Awards under the 2002
RSP will be determined by the 2002 RSP Committee. In no event shall any
individual receive 2002 Plan Share Awards in excess of 25% of the aggregate
Common Stock authorized under the 2002 RSP ("2002 Plan Share Reserve").
The aggregate number of 2002 Plan Shares available for issuance
pursuant to the 2002 Plan Share Awards and the number of shares to which any
2002 Plan Share Award relates shall be proportionately adjusted for any increase
or decrease in the total number of outstanding shares of Common Stock issued
subsequent to the effective date of the 2002 RSP, resulting from any split,
subdivision or consolidation of the Common Stock or other capital adjustment,
change or exchange of Common Stock, or other increase
23
or decrease in the number or kind of shares effected without receipt or payment
of consideration by the Company.
The following table presents information related to the anticipated
award of Common Stock under the 2002 RSP upon stockholder ratification of the
2002 RSP as authorized pursuant to the terms of the 2002 RSP or the anticipated
actions of the 2002 RSP Committee.
NEW PLAN BENEFITS
2002 RSP
-----------------
Number of Shares
Name and Position Dollar Value ($) (1) to be Granted
- ----------------- -------------------- -------------
Gregory C. Wilkes, President,
CEO and Director (4)......................... $406,000 25,000(2)
Don A. Burdett, Senior Vice President......... 194,880 12,000(2)
Kerry P. Charlet, Senior Vice President
and Chief Financial Officer.................. 292,320 18,000(2)
William H. Cloyd, Senior Vice President
and Senior Lending Officer................... 243,600 15,000(2)
Arthur J. Rowbotham, Director (4)............. 101,500 6,250(2)
Llewellyn N. Belcourt, Director (4)........... 101,500 6,250(2)
G.F. Zimmermann, III, Director (4)............ 101,500 6,250(2)
Executive Group (5 persons)................... 1,144,920 70,500(2)
Non-Executive Director Group
(6 persons).................................. 609,000 37,500(2)
Non-Executive Officer Employee Group.......... 276,080 17,000(3)
- ----------------
(1) These values are based on the closing market price for the Common Stock as
reported on the Nasdaq National Market on December 10, 2001, which was
$16.24 per share. The exact dollar value of the Common Stock granted will
equal the market price of the Common Stock on the date of vesting of such
awards. Accordingly, the exact dollar value is not presently determinable.
(2) The plan share awards shall be earned at the rate of 331/3% on September
30, 2002 and 331/3% annually thereafter unless otherwise noted. All awards
shall become immediately 100% vested upon death or disability or
termination of service following a Change in Control of the Company or the
Bank. 2002 Plan Share Awards shall continue to vest during periods of
service as an employee, director, or director emeritus.
(3) The plan share awards shall be earned at the rate of 20% on September 30,
2002 and 20% annually thereafter.
(4) Nominee for Director.
Amendment and Termination of the 2002 RSP
The Board may amend or terminate the 2002 RSP at any time. However, no
action of the Board may increase the maximum number of 2002 Plan Shares
permitted to be awarded under the 2002 RSP, except for adjustments in the Common
Stock of the Company, materially increase the benefits accruing to participants
under the 2002 RSP or materially modify the requirements for eligibility for
participation in the 2002 RSP unless such action of the Board shall be subject
to ratification by the stockholders of the Company.
24
Possible Dilutive Effects of the 2002 RSP
It is the Company's present intention to fund the 2002 RSP through
open-market purchases of Common Stock, which will cause no dilutive effect. The
2002 RSP provides, however, that Common Stock to be awarded may be acquired by
the 2002 RSP through open-market purchases or from authorized but unissued
shares of Common Stock from the Company. In that stockholders do not have
preemptive rights, to the extent that the Company utilizes authorized but
unissued shares to fund 2002 Plan Share Awards, the interests of current
stockholders may be diluted. If all 2002 Plan Share Awards are funded with newly
issued shares, the dilutive effect to existing stockholders would be
approximately 2.2%.
Federal Income Tax Consequences
Common Stock awarded under the 2002 RSP is generally taxable to the
recipient at the time that such awards become earned and non-forfeitable, based
upon the Fair Market Value of such stock at the time of such vesting.
Alternatively, a recipient may make an election pursuant to Section 83(b) of the
Code within 30 days of the date of the transfer of such 2002 Plan Share Award to
elect to include in gross income for the current taxable year the Fair Market
Value of such award. Such election must be filed with the Internal Revenue
Service within 30 days of the date of the transfer of the stock award. The Bank
will be allowed a tax deduction for federal tax purposes as a compensation
expense equal to the amount of ordinary income recognized by a recipient of 2002
Plan Share Awards at the time the recipient recognizes taxable ordinary income.
A recipient of a 2002 Plan Share Award may elect to have a portion of such award
withheld by the 2002 RSP Trust in order to meet any necessary tax withholding
obligations.
Accounting Treatment
For accounting purposes, the Bank will recognize compensation expense
in the amount of the Fair Market Value of the Common Stock subject to 2002 Plan
Share Awards at the grant date pro rata over the period of years during which
the 2002 Plan Share Awards are earned.
Stockholder Ratification
The 2002 RSP and awards made thereunder will not be effective until
receipt of stockholder ratification of Proposal III. Stockholder ratification of
the 2002 RSP is being sought to enable recipients of 2002 Plan Share Awards to
qualify for certain exemptive treatment from the short-swing profit recapture
provisions of Section 16(b) of the 1934 Act and to meet the rules of the Nasdaq
National Market for continued listing of the Company's Common Stock. The
affirmative vote of holders of a majority of the total votes cast at the Meeting
in person or by proxy is required to constitute stockholder ratification of this
Proposal III.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE 2002 RSP.
25
- --------------------------------------------------------------------------------
PROPOSAL IV - RATIFICATION OF THE 1999 OPTION PLAN
- --------------------------------------------------------------------------------
General
The Company's Board of Directors adopted the 1999 Option Plan and the
Company's stockholders approved the 1999 Option Plan at a special meeting of
stockholders on October 19, 1999 (the "Effective Date"). There have been no
changes made to the 1999 Option Plan since it was originally adopted by the
Board of Directors and approved by stockholders of the Company on October 19,
1999. The 1999 Option Plan is being resubmitted to stockholders of the Company
for ratification at this time to comply with Office of Thrift Supervision
("OTS") interpretive letters, as discussed below.
Pursuant to the 1999 Option Plan, up to 279,064 shares of Common Stock
(representing up to 5.0% of the total Common Stock of the Company) are reserved
under the Company's authorized but unissued shares for issuance by the Company
upon exercise of stock options to be granted to officers, directors, employees,
and other persons from time to time. The purpose of the 1999 Option Plan is to
attract and retain qualified personnel for positions of substantial
responsibility and to provide additional incentive to certain officers,
directors, employees and other persons to promote the success of the business of
the Company and the Bank.
Pursuant to regulations of the OTS applicable to stock benefit plans
established or implemented within one year following the completion of a
mutual-to-stock conversion of a federally chartered savings institution such as
the Bank, the 1999 Option Plan contains certain restrictions and limitations.
The 1999 Option Plan provides that options granted to employees or directors
become first exercisable no more rapidly than ratably over a five-year period
(with acceleration upon death or disability or a Change in Control, as such term
is defined in the 1999 Option Plan); provided, however, that such accelerated
vesting is not inconsistent with the regulations of the OTS at the time of such
acceleration. Recent OTS interpretive letters permit awards under stock benefit
plans to accelerate vesting of awards upon a Change in Control; provided that
stockholders ratify such plan provisions by action of stockholders taken more
than one year following the completion of the mutual-to-stock conversion. The
Board of Directors is seeking ratification of the 1999 Option Plan (as
previously approved by the stockholders on October 19, 1999) as a means of
complying with the OTS interpretive letters.
Ratification of the 1999 Option Plan does not increase the number of
shares reserved for issuance thereunder, alter the classes of individuals
eligible to participate in the 1999 Option Plan, or otherwise amend or modify
the terms of the 1999 Option Plan. In the event that the 1999 Option Plan is not
ratified by stockholders at the Meeting, the 1999 Option Plan will nevertheless
remain in effect. However, any employee or director of the Company or the Bank
that has their service terminated prior to the vesting of such stock awards may
forfeit such unvested awards to the extent that may be required under applicable
OTS regulations and policies.
The 1999 Option Plan is administered by the Board of Directors or a
committee of not less than two non-employee directors appointed by the Company's
Board of Directors and serving at the pleasure of the Board (the "Option
Committee"). Members of the Option Committee shall be deemed "Non-Employee
Directors" within the meaning of Rule 16b-3 pursuant to the 1934 Act. The Option
Committee may select the officers and employees to whom options are to be
granted and the number of options to be granted based upon several factors
including prior and anticipated future job duties and responsibilities, job
performance, the Bank's financial performance and a comparison of awards given
by other institutions. A majority of the members of the Option Committee shall
constitute a quorum and the action of a majority of the members present at any
meeting at which a quorum is present shall be deemed the action of the Option
Committee.
26
Officers, directors, employees and other persons who are designated by
the Option Committee will be eligible to receive, at no cost to them, options
under the 1999 Option Plan (the "Optionees"). Each option granted pursuant to
the 1999 Option Plan shall be evidenced by an instrument in such form as the
Option Committee shall from time to time approve. Option shares may be paid for
in cash, shares of Common Stock, or a combination of both. The Company will
receive no monetary consideration for the granting of stock options under the
1999 Option Plan. Further, the Company will receive no consideration other than
the option exercise price per share for Common Stock issued to Optionees upon
the exercise of those options.
Shares of Common Stock issuable under the 1999 Option Plan may be from
authorized but unissued shares, treasury shares or shares purchased in the open
market. An option which expires, becomes unexercisable, or is forfeited for any
reason prior to its exercise will again be available for issuance under the 1999
Option Plan. No option or any right or interest therein is assignable or
transferable except by will or the laws of descent and distribution. The 1999
Option Plan shall continue in effect for a term of ten years from the Effective
Date.
Stock Options
The Option Committee may grant either Incentive Stock Options (options
that afford favorable tax treatment to recipients upon compliance with certain
restrictions pursuant to Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), and that do not normally result in tax deductions to the
Company) or Non-Incentive Stock Options (options that do not afford recipients
favorable tax treatment under Code Section 422). In general, if an Optionee
ceases to serve as an employee of the Company for any reason other than
disability or death, an exercisable Incentive Stock Option may continue to be
exercisable for three months but in no event after the expiration date of the
option, except as may otherwise be determined by the Option Committee at the
time of the award. In the event of the disability or death of an Optionee during
employment, an exercisable Incentive Stock Option will continue to be
exercisable for one year and two years, respectively, to the extent exercisable
by the Optionee immediately prior to the Optionee's disability or death but only
if, and to the extent that, the Optionee was entitled to exercise such Incentive
Stock Options on the date of termination of employment. The terms and conditions
of Non-Incentive Stock Options relating to the effect of an Optionee's
termination of employment or service, disability, or death shall be such terms
as the Option Committee, in its sole discretion, shall determine at the time of
termination of service, disability or death, unless specifically determined at
the time of grant of such options.
Currently, the 1999 Option Plan requires that options granted to
employees or directors become first exercisable no more rapidly than ratably
over a five-year period (with acceleration upon death or disability or a Change
in Control, as such terms are defined in the 1999 Option Plan); provided,
however, that such accelerated vesting is not inconsistent with the regulations
of the OTS at the time of such acceleration. Ratification of the 1999 Option
Plan at the Meeting will conform the acceleration of vesting of options upon a
Change in Control with applicable OTS interpretive letters. Such stockholder
ratification will be effective with respect to previously awarded options and
any options that may be granted in the future. Pursuant to the 1999 Option Plan,
upon a Change in Control, all options previously granted and outstanding as of
the date of a Change in Control will automatically become exercisable and
non-forfeitable.
No shares of Common Stock shall be issued upon the exercise of an
option until full payment has been received by the Company, and no Optionee
shall have any of the rights of a stockholder of the Company until shares of
Common Stock are issued to such Optionee. Upon the exercise of an option by an
Optionee (or the Optionee's personal representative), the Option Committee, in
its sole and absolute discretion, may make a cash payment to the Optionee, in
whole or in part, in lieu of the delivery of shares of Common Stock. Such cash
payment to be paid in lieu of delivery of Common Stock shall be equal to the
difference between the fair market value of the Common Stock on the date of the
option exercise and the exercise price per share of the
27
option. Any cash payment shall be in exchange for the cancellation of such
option. A cash payment shall not be made in the event that such transaction
would result in liability to the Optionee and the Company under Section 16(b) of
the 1934 Act, and regulations promulgated thereunder.
The 1999 Option Plan provides that the Board of Directors of the
Company may authorize the Option Committee to direct the execution of an
instrument providing for the modification, extension or renewal of any
outstanding option, provided that no such modification, extension or renewal
shall confer on the Optionee any right or benefit which could not be conferred
on the Optionee by the grant of a new option at such time, and shall not
materially decrease the Optionee's benefits under the option without the
Optionee's consent, except as otherwise provided under the 1999 Option Plan.
Awards Under the 1999 Option Plan
The Board or the Option Committee shall from time to time determine the
officers, directors, employees and other persons who shall be granted options
under the 1999 Option Plan, the number of options to be granted to any
participant, and whether options granted to each such 1999 Option Plan
participant shall be Incentive Stock Options and/or Non-Incentive Stock Options.
In selecting participants and in determining the number of shares of Common
Stock subject to options to be granted to each such participant, the Board or
the Option Committee may consider the nature of the services rendered by each
such participant, each such participant's current and potential contribution to
the Company and such other factors as may be deemed relevant. Participants who
have been granted an option may, if otherwise eligible, be granted additional
options. In no event shall shares of Common Stock subject to options granted to
non-employee directors in the aggregate under the 1999 Option Plan exceed more
than 30% of the total number of shares of Common Stock authorized for delivery
under the 1999 Option Plan, and no more than 5% of total shares of Common Stock
may be awarded to any individual non-employee director. In no event shall shares
of Common Stock subject to options granted to any employee exceed more than 25%
of the total number of shares of Common Stock authorized for delivery under the
1999 Option Plan.
The table below presents information related to options previously
awarded by the Company under the 1999 Option Plan. Ratification of the 1999
Option Plan does not impact the number of options previously awarded.
Stockholder ratification of the 1999 Option Plan confirms the provisions of the
1999 Option Plan previously approved by stockholders of the Company. In
accordance with the 1999 Option Plan, all outstanding options shall become
immediately exercisable in the event of a Change in Control of the Company or
the Bank.
28
PREVIOUSLY AWARDED BENEFITS
UNDER THE 1999 OPTION PLAN
--------------------------
Number of Options
Name and Position Previously Granted (1)(2)(3)
- ----------------- ----------------------------
Gregory C. Wilkes, President, CEO and Director (4)... 65,832
Don A. Burdett, Senior Vice President................ 18,061
Kerry P. Charlet, Senior Vice President and
Chief Financial Officer........................... 33,543
William H. Cloyd, Senior Vice President and
Senior Lending Officer........................... 25,802
Arthur J. Rowbotham, Director (4).................... --
Llewellyn N. Belcourt, Director (4).................. 11,147
G.F. Zimmermann, III, Director (4)................... 11,147
Executive Group (5 persons).......................... 153,559
Non-Executive Director Group (4 persons)............. 44,584
Non-Executive Officer Employee Group (30 persons).... 46,956
- ---------------
(1) The exercise price of the options was set on the date of stockholder
approval of the 1999 Option Plan on October 19, 1999. As adjusted for the
Exchange Ratio of 1.0321 shares in the Conversion, the exercise price is
$8.24. The exact dollar value of the options will equal the last reported
sales price of the Common Stock on the date the option is exercised less
the exercise price. As of September 30, 2001, the last reported sale price
of the Common Stock was $16.71 per share.
(2) Awards shall be 100% exercisable in the event of death, disability, or upon
a Change in Control of the Company or the Bank (subject to stockholder
ratification of Proposal II). Options awarded to officers and employees are
first exercisable at the rate of 20% on the one year anniversary of the
date of grant and 20% annually thereafter during periods of continued
service as an employee, director or director emeritus. Options awarded to
employees shall continue to be exercisable during continued service as an
employee, director or director emeritus. Options not exercised within three
months of termination of service as an employee shall thereafter be deemed
non-incentive stock options. Options awarded to directors are first
exercisable at a rate of 20% one year after the date of grant and 20%
annually thereafter, during such period of service as a director or
director emeritus, and shall remain exercisable for ten years without
regard to continued service as a director or director emeritus.
(3) All option awards presented herein have been adjusted to reflect the
Exchange Ratio of 1.0321 shares in the Conversion.
(4) Nominee for Director.
Effect of Mergers, Change of Control and Other Adjustments
Subject to any required action by the stockholders of the Company,
within the sole discretion of the Option Committee, the aggregate number of
shares of Common Stock for which options may be granted hereunder or the number
of shares of Common Stock represented by each outstanding option will be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend or any other increase
or decrease in the number of shares of Common Stock effected without the receipt
or payment of consideration by the Company. Subject to any required action by
the stockholders of the Company, in the event of any Change in Control,
recapitalization, merger, consolidation, exchange of shares, spin-off,
reorganization, tender offer, partial or complete liquidation or other
extraordinary corporate action or event, the Option Committee, in its sole
discretion, shall have the power, prior to or subsequent to such action or
events, to (i) appropriately adjust the number of shares of Common Stock subject
to each option, the exercise price per share of such option, and the
consideration to be given or received by the Company upon the exercise of any
outstanding options; (ii) cancel any or all previously granted options, provided
that
29
appropriate consideration is paid to the Optionee in connection therewith;
and/or (iii) make such other adjustments in connection with the 1999 Option Plan
as the Option Committee, in its sole discretion, deems necessary, desirable,
appropriate or advisable. However, no action may be taken by the Option
Committee which would cause Incentive Stock Options granted pursuant to the 1999
Option Plan to fail to meet the requirements of Section 422 of the Code without
the consent of the Optionee.
The power of the Option Committee to accelerate the exercise of options
and the immediate exercisability of options in the case of a Change in Control
of the Company could have an anti-takeover effect by making it more costly for a
potential acquiror to obtain control of the Company due to the higher number of
shares outstanding following such exercise of options. The power of the Option
Committee to make adjustments in connection with the 1999 Option Plan, including
adjusting the number of shares subject to options and canceling options, prior
to or after the occurrence of an extraordinary corporate action, allows the
Option Committee to adapt the 1999 Option Plan to operate in changed
circumstances, to adjust the 1999 Option Plan to fit a smaller or larger
company, and to permit the issuance of options to new management following such
extraordinary corporate action. However, this power of the Option Committee also
has an anti- takeover effect, by allowing the Option Committee to adjust the
1999 Option Plan in a manner to allow the present management of the Company to
exercise more options and hold more shares of the Common Stock, and to possibly
decrease the number of options available to new management of the Company.
Amendment and Termination of the 1999 Option Plan
The Board of Directors may alter, suspend or discontinue the 1999
Option Plan, except that no action of the Board shall increase the maximum
number of shares of Common Stock issuable under the 1999 Option Plan, materially
increase the benefits accruing to Optionees under the 1999 Option Plan or
materially modify the requirements for eligibility for participation in the 1999
Option Plan unless such action of the Board shall be subject to approval or
ratification by the stockholders of the Company.
Possible Dilutive Effects of the 1999 Option Plan
The Common Stock to be issued upon the exercise of options awarded
under the 1999 Option Plan may either be authorized but unissued shares of
Common Stock or shares purchased in the open market. Because the stockholders of
the Company do not have preemptive rights, to the extent that the Company funds
the 1999 Option Plan, in whole or in part, with authorized but unissued shares,
the interests of current stockholders will be diluted. If upon the exercise of
all of the options, the Company delivers newly issued shares of Common Stock
(i.e., 279,064 shares of Common Stock), then the dilutive effect to current
stockholders would be approximately 4.8%. Ratification of the 1999 Option Plan
does not increase the maximum number of shares issuable under the 1999 Option
Plan as previously approved by stockholders.
Federal Income Tax Consequences
Under present federal tax laws, awards under the 1999 Option Plan will
have the following consequences:
1. The grant of an option will not by itself result in the
recognition of taxable income to an Optionee nor entitle the
Company to a tax deduction at the time of such grant.
2. The exercise of an option which is an "Incentive Stock Option"
within the meaning of Section 422 of the Code generally will not,
by itself, result in the recognition of taxable income to an
Optionee nor entitle the Company to a deduction at the time of
such exercise. However, the difference between the option
exercise price and the fair market value of the Common Stock
30
on the date of option exercise is an item of tax preference which
may, in certain situations, trigger the alternative minimum tax
for an Optionee. An Optionee will recognize capital gain or loss
upon resale of the shares of Common Stock received pursuant to
the exercise of Incentive Stock Options, provided that such
shares are held for at least one year after transfer of the
shares or two years after the grant of the option, whichever is
later. Generally, if the shares are not held for that period, the
Optionee will recognize ordinary income upon disposition in an
amount equal to the difference between the option exercise price
and the fair market value of the Common Stock on the date of
exercise, or, if less, the sales proceeds of the shares acquired
pursuant to the option.
3. The exercise of a Non-Incentive Stock Option will result in the
recognition of ordinary income by the Optionee on the date of
exercise in an amount equal to the difference between the
exercise price and the fair market value of the Common Stock
acquired pursuant to the option.
4. The Company will be allowed a tax deduction for federal tax
purposes equal to the amount of ordinary income recognized by an
Optionee at the time the Optionee recognizes such ordinary
income.
5. In accordance with Section 162(m) of the Code, the Company's tax
deductions for compensation paid to the most highly paid
executives named in the Company's Proxy Statement may be limited
to no more than $1 million per year, excluding certain
"performance-based" compensation. The Company intends for the
award of options under the 1999 Option Plan to comply with the
requirement for an exception to Section 162(m) of the Code
applicable to stock option plans so that the Company's deduction
for compensation related to the exercise of options would not be
subject to the deduction limitation set forth in Section 162(m)
of the Code.
Accounting Treatment
The Company expects to use the "intrinsic value based method" as
prescribed by APB Opinion 25. Accordingly, neither the grant nor the exercise of
an option under the 1999 Option Plan currently require any charge against
earnings under generally accepted accounting principles. Common Stock issuable
pursuant to outstanding options which are exercisable under the 1999 Option Plan
will be considered outstanding for purposes of calculating earnings per share on
a diluted basis.
Stockholder Ratification
Stockholder ratification of the 1999 Option Plan is being sought in
accordance with interpretive letters of the OTS. An affirmative vote of a
majority of the votes cast at the Meeting on the matter, in person or by proxy,
is required to constitute stockholder ratification of the 1999 Option Plan,
submitted as Proposal IV.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR"
RATIFICATION OF THE 1999 OPTION PLAN. ---
31
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PROPOSAL V - RATIFICATION OF THE 1999 RSP
- --------------------------------------------------------------------------------
General
The Board of Directors of the Company and the Bank previously adopted
the 1999 RSP as a method of providing directors, officers, and employees of the
Bank with a proprietary interest in the Company in a manner designed to
encourage such persons to remain in the employment or service of the Bank. There
have been no changes made to the 1999 RSP since it was originally adopted by the
Board of Directors and approved by stockholders of the Company on October 19,
1999. The 1999 RSP is being resubmitted to stockholders of the Company for
ratification at this time to comply with OTS interpretive letters, as discussed
below.
As previously approved by stockholders of the Company on October 19,
1999, the Bank contributed sufficient funds to the 1999 RSP to purchase 111,625
shares of Common Stock. All of the Common Stock purchased by the 1999 RSP was
purchased at the Fair Market Value of such stock on the date of purchase. Awards
under the 1999 RSP were made in recognition of expected future services to the
Bank by its directors, officers and employees responsible for implementation of
the policies adopted by the Bank's Board of Directors and as a means of
providing a further retention incentive.
Pursuant to regulations of the OTS applicable to stock benefit plans
established or implemented within one year following the completion of a
mutual-to-stock conversion of a federally chartered savings institution such as
the Bank, the 1999 RSP contains certain restrictions and limitations. The 1999
RSP provides that stock awards ("Awards") granted to employees or directors
become vested no more rapidly than ratably over a five- year period (with
acceleration upon death or disability or a Change in Control, as such term is
defined in the 1999 RSP); provided, however, that such accelerated vesting is
not inconsistent with the regulations of the OTS at the time of such
acceleration. Recent OTS interpretive letters permit awards under stock benefit
plans to accelerate vesting of awards upon a Change in Control; provided that
stockholders ratify such plan provisions by action of stockholders taken more
than one year following the completion of the mutual-to-stock conversion. The
Board of Directors is seeking ratification of the 1999 RSP (as previously
approved by the stockholders on October 19, 1999) as a means of complying with
the OTS interpretive letters.
Ratification of the 1999 RSP does not increase the number of shares
reserved for issuance thereunder, alter the classes of individuals eligible to
participate in the 1999 RSP, or otherwise amend or modify the terms of the 1999
RSP. In the event that the 1999 RSP is not ratified by stockholders at the
Meeting, the 1999 RSP will nevertheless remain in effect. However, any employee
or director of the Company or the Bank that has their service terminated prior
to the vesting of such stock awards may forfeit such unvested awards to the
extent that may be required under applicable OTS regulations and policies.
Awards Under the 1999 RSP
Currently, the 1999 RSP requires that Awards granted to employees or
directors become first exercisable no more rapidly than ratably over a five-year
period (with accelerated vesting upon death or disability or a Change in
Control); provided, however, that such accelerated vesting is not inconsistent
with the regulations of the OTS at the time of such acceleration. Ratification
of the 1999 RSP at the Meeting will conform the acceleration of vesting of
Awards upon a Change in Control with applicable OTS interpretive letters. Such
stockholder ratification will be effective with respect to previously granted
Awards and any Awards that may be granted in the future. Pursuant to the 1999
RSP, upon a Change in Control, all Awards previously granted and outstanding as
of the date of a Change in Control will automatically become exercisable and
non-forfeitable.
32
Benefits under the 1999 RSP ("Plan Share Awards") may be granted at the
sole discretion of a committee comprised of not less than three directors who
are not employees of the Bank or the Company (the "RSP Committee") appointed by
the Bank's Board of Directors. The 1999 RSP is managed by trustees (the "RSP
Trustees") who are non-employee directors of the Bank or the Company and who
have the responsibility to invest all funds contributed by the Bank to the trust
created for the 1999 RSP (the "RSP Trust"). Unless the terms of the 1999 RSP or
the RSP Committee specifies otherwise, awards under the RSP will be in the form
of restricted stock payable as the Plan Share Awards shall be earned and
non-forfeitable. Twenty percent (20%) of such awards shall be earned and
non-forfeitable on the one year anniversary of the date of grant of such awards,
and 20% annually thereafter, provided that the recipient of the award remains an
employee, director or director emeritus during such period. A recipient of such
restricted stock will not be entitled to voting rights associated with such
shares prior to the applicable date such shares are earned. Dividends paid on
Plan Share Awards shall be held in arrears and distributed upon the date such
applicable Plan Share Awards are earned. Any shares held by the RSP Trust which
are not yet earned shall be voted by the RSP Trustees, as directed by the RSP
Committee. If a recipient of such restricted stock terminates employment or
service for reasons other than death, disability, or a Change in Control of the
Company or the Bank, the recipient forfeits all rights to the awards under
restriction. If the recipient's termination of employment or service is caused
by death, disability, or a Change in Control of the Company or the Bank
(provided that such accelerated vesting is not inconsistent with applicable
regulations of the OTS at the time of such Change in Control), all restrictions
expire and all shares allocated shall become unrestricted. Awards of restricted
stock to directors shall be immediately non-forfeitable in the event of the
death or disability of such director, or a Change in Control of the Company or
the Bank and distributed as soon as practicable thereafter. The Board of
Directors can terminate the 1999 RSP at any time, and if it does so, any shares
not allocated will revert to the Company.
Plan Share Awards under the 1999 RSP will be determined by the RSP
Committee. In no event shall any employee receive Plan Share Awards in excess of
25% of the aggregate Plan Shares authorized under the 1999 RSP ("Plan Share
Reserve"). Plan Share Awards may be granted to newly elected or appointed non-
employee directors of the Bank subsequent to the effective date (as defined in
the 1999 RSP) provided that the Plan Share Awards made to non-employee directors
shall not exceed 30% of total Plan Share Reserve in the aggregate under the 1999
RSP or 5% of the total Plan Share Reserve to any individual non-employee
director.
The aggregate number of Plan Shares available for issuance pursuant to
the Plan Share Awards and the number of shares to which any Plan Share Award
relates shall be proportionately adjusted for any increase or decrease in the
total number of outstanding shares of Common Stock issued subsequent to the
effective date (as defined in the 1999 RSP) of the 1999 RSP resulting from any
split, subdivision or consolidation of the Common Stock or other capital
adjustment, change or exchange of Common Stock, or other increase or decrease in
the number or kind of shares effected without receipt or payment of
consideration by the Company.
The following table presents information related to the previously
granted awards of Common Stock under the 1999 RSP as authorized pursuant to the
terms of the 1999 RSP. Ratification of such 1999 RSP does not change the number
of shares awarded or other terms. Such ratification of the 1999 RSP confirms the
provisions of the 1999 RSP previously approved by the stockholders of the
Company.
33
PRIOR AWARDS UNDER THE
1999 RSP
----------------------
Number of Shares
Name and Position to be Granted (1)(2)(3)
- ----------------- -----------------------
Gregory C. Wilkes, President, CEO and Director (4).......... 27,906
Don A. Burdett, Senior Vice President....................... 10,321
Kerry P. Charlet, Senior Vice President and
Chief Financial Officer.................................. 18,578
William H. Cloyd, Senior Vice President and
Senior Lending Officer.................................. 15,482
Arthur J. Rowbotham, Director (4)........................... --
Llewellyn N. Belcourt, Director (4)......................... 4,784
G.F. Zimmermann, III, Director (4).......................... 4,784
Executive Group (5 persons)................................. 77,964
Non-Executive Director Group (4 persons).................... 19,136
Non-Executive Officer Employee Group........................ --
- -------------
(1) The exact dollar value of the shares of Common Stock granted will equal the
last reported sales price of the Common Stock as reported on the Nasdaq
National Market on the date of vesting of such awards. Accordingly, the
exact dollar value is not presently determinable. The last reported sale
price for the Common Stock on September 30, 2001, was $16.71 per share.
(2) All Plan Share Awards presented herein shall be earned at the rate of 20%
one year from date of grant, and 20% annually thereafter. All awards become
immediately 100% vested upon death, disability, or termination of service
following a Change in Control. Plan Share Awards shall continue to vest
during periods of service as an employee, director, or director emeritus.
(3) All Plan Share Awards presented herein have been adjusted to reflect the
Exchange Ratio of 1.0321 shares in the Conversion.
(4) Nominee for Director.
Amendment and Termination of the 1999 RSP
The Board may amend or terminate the 1999 RSP at any time. However, no
action of the Board may increase the maximum number of Plan Shares permitted to
be awarded under the 1999 RSP, except for adjustments in the Common Stock of the
Company, materially increase the benefits accruing to participants under the
1999 RSP or materially modify the requirements for eligibility for participation
in the 1999 RSP unless such action of the Board shall be subject to ratification
by the stockholders of the Company.
Possible Dilutive Effect of the 1999 RSP
In the event that the 1999 RSP is not ratified at the Meeting, the RSP
will nevertheless remain in effect. Because shares for awards under the 1999 RSP
have already been purchased in the market, current shareholders will suffer no
ownership dilution. However, in the event the 1999 RSP is ratified and a Change
in Control of the Company occurs prior to the time that shares that have been
awarded pursuant to the 1999 RSP would otherwise vest, the aggregate purchase
price received by stockholders could be effectively reduced by the value of
shares that vest solely because of the Change in Control. The Company currently
has no plan in place that will result in a Change in Control.
34
Federal Income Tax Consequences
Common Stock awarded under the 1999 RSP is generally taxable to the
recipient at the time that such awards become earned and non-forfeitable, based
upon the fair market value of such stock at the time of such vesting.
Alternatively, a recipient may make an election pursuant to Section 83(b) of the
Code within 30 days of the date of the transfer of such Plan Share Award to
elect to include in gross income for the current taxable year the fair market
value of such award. Such election must be filed with the Internal Revenue
Service within 30 days of the date of the transfer of the stock award. The
Company will be allowed a tax deduction for federal tax purposes as a
compensation expense equal to the amount of ordinary income recognized by a
recipient of Plan Share Awards at the time the recipient recognizes taxable
ordinary income. A recipient of a Plan Share Award may elect to have a portion
of such award withheld by the RSP Trust in order to meet any necessary tax
withholding obligations.
Accounting Treatment
For accounting purposes, the Bank will recognize compensation expense
in the amount of the Fair Market Value of the Common Stock subject to Plan Share
Awards at the grant date pro rata over the period of years during which the
awards are earned.
Stockholder Ratification
The Company is submitting the 1999 RSP to stockholders for ratification
in accordance with the interpretive letters of the OTS. An affirmative vote of a
majority of the votes cast at the Meeting on the matter, in person or by proxy,
is required to constitute stockholder ratification of the 1999 RSP, submitted as
Proposal V.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE 1999 RSP.
35
- --------------------------------------------------------------------------------
PROPOSAL VI - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
At the meeting, stockholders will consider and vote upon the
appointment of independent public accountants for the fiscal year ending
September 30, 2002. Hacker, Johnson & Smith was the Company's independent public
accountants for the fiscal year ended September 30, 2001. The Board of Directors
has approved the selection of Hacker, Johnson & Smith as its independent public
accountants for the fiscal year ending September 30, 2002, subject to
ratification by the Company's stockholders. A representative of Hacker, Johnson
& Smith is expected to be present at the Meeting to respond to stockholders'
questions and will have the opportunity to make a statement if he or she so
desires.
On May 22, 2001, the Board of Directors the Company terminated the
services of KPMG LLP ("KPMG"). At the same meeting the Board of Directors
selected the accounting firm of Hacker, Johnson & Smith as independent public
accountants for the September 30, 2001 year. The determination to replace KPMG
was recommended by the Audit Committee and approved by the full Board of
Directors of the Company. The Company's decisions were effective on May 22,
2001.
KPMG audited the consolidated financial statements of the Company's
predecessor, FloridaFirst Bancorp, for the years ended September 30, 2000 and
1999. The Company and FloridaFirst Bancorp are hereinafter referred to as the
"Company." KPMG's report on the financial statements for the last two fiscal
years of the Company did not contain an adverse opinion or disclaimer of
opinion, nor were such reports qualified or modified as to uncertainty, audit
scope or accounting principles.
During the two fiscal years ended September 30, 2000 and 1999 and the
subsequent interim period October 1, 2000 to May 22, 2001, there were no
disagreements between the Company and KPMG on any matter of accounting
principals or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of KPMG,
would have caused it to make reference to the subject matter of the
disagreements in connection with its reports.
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT PUBLIC ACCOUNTANTS
REQUIRES THE APPROVAL OF A MAJORITY OF THE VOTES CAST, AFFIRMATIVELY OR
NEGATIVELY BY THE STOCKHOLDERS OF THE COMPANY AT THE MEETING. THE BOARD OF
DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF HACKER, JOHNSON & SMITH AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2002.
- --------------------------------------------------------------------------------
2003 ANNUAL MEETING STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be considered for inclusion in the Company's proxy
statement for the annual meeting of stockholders to be held in 2003, all
stockholder proposals must be submitted to the Secretary at the Company's
office, 205 East Orange Street, Lakeland, Florida 33801-4611, on or before
August 22, 2002. Under the Company's bylaws, in order to be considered for
possible action by stockholders at the 2003 annual meeting of stockholders,
stockholder nominations for director and stockholder proposals not included in
the Company's proxy statement must be submitted to the Secretary of the Company,
at the address set forth above, no later than November 29, 2002.
36
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors does not know of any other matters that are
likely to be brought before the Meeting. If any other matters, not now known,
properly come before the Meeting or any adjournments, the persons named in the
enclosed proxy card, or their substitutes, will vote the proxy in accordance
with their judgment on such matters.
The cost of soliciting 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 Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
- --------------------------------------------------------------------------------
FORM 10-K
- --------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED SEPTEMBER 30, 2001 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF
THE RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, FLORIDAFIRST BANCORP,
INC., 205 EAST ORANGE STREET, LAKELAND, FLORIDA 33801-4611.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Kerry P. Charlet
----------------------------------
Kerry P. Charlet
Secretary
Lakeland, Florida
December 21, 2001
37
APPENDIX A
FLORIDAFIRST BANCORP, INC.
2002 STOCK OPTION PLAN
1. Purpose of the Plan. The Plan shall be known as the FLORIDAFIRST
BANCORP, INC. ("Company") 2002 Stock Option Plan (the "Plan"). The purpose of
the Plan is to attract and retain qualified personnel for positions of
substantial responsibility and to provide additional incentive to officers,
directors, employees and other persons providing services to the Company, or any
present or future parent or subsidiary of the Company to promote the success of
the business. The Plan is intended to provide for the grant of "Incentive Stock
Options," within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") and Non-Incentive Stock Options, options that do
not so qualify. The provisions of the Plan relating to Incentive Stock Options
shall be interpreted to conform to the requirements of Section 422 of the Code.
2. Definitions. The following words and phrases when used in this Plan
with an initial capital letter, unless the context clearly indicates otherwise,
shall have the meaning as set forth below. Wherever appropriate, the masculine
pronoun shall include the feminine pronoun and the singular shall include the
plural.
"Award" means the grant by the Committee of an Incentive Stock
Option or a Non-Incentive Stock Option, or any combination thereof, as provided
in the Plan.
"Bank" shall mean FloridaFirst Bank, or any successor
corporation thereto.
"Board" shall mean the Board of Directors of the Company, or
any successor or parent corporation thereto.
"Change in Control" shall mean: (i) the sale of all, or a
material portion, of the assets of the Company; (ii) the merger or
recapitalization of the Company whereby the Company is not the surviving entity;
(iii) a change in control of the Company, as otherwise defined or determined by
the Office of Thrift Supervision or regulations promulgated by it; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of that term as it is used in Section 13(d) of the Securities Exchange
Act of 1934 and the rules and regulations promulgated thereunder) of twenty-five
percent (25%) or more of the outstanding voting securities of the Company by any
person, trust, entity or group. This limitation shall not apply to the purchase
of shares by underwriters in connection with a public offering of Company stock,
or the purchase of shares of up to 25% of any class of securities of the Company
by a tax-qualified employee stock benefit plan which is exempt from the approval
requirements, set forth under 12 C.F.R. ss.574.3(c)(1)(vi) as now in effect or
as may hereafter be amended. The term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein. The decision of the Committee as to whether a Change
in Control has occurred shall be conclusive and binding.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and regulations promulgated thereunder.
A-1
"Committee" shall mean the Board or the Stock Option Committee
appointed by the Board in accordance with Section 5(a) of the Plan.
"Common Stock" shall mean common stock of the Company, or any
successor or parent corporation thereto.
"Company" shall mean the FloridaFirst Bancorp, Inc., the
parent corporation of the Bank, or any successor or Parent thereof.
"Continuous Employment" or "Continuous Status as an Employee"
shall mean the absence of any interruption or termination of employment with the
Company or any present or future Parent or Subsidiary of the Company. Employment
shall not be considered interrupted in the case of sick leave, military leave or
any other leave of absence approved by the Company or in the case of transfers
between payroll locations, of the Company or between the Company, its Parent,
its Subsidiaries or a successor.
"Director" shall mean a member of the Board of the Company, or
any successor or parent corporation thereto.
"Director Emeritus" shall mean a person serving as a director
emeritus, advisory director, consulting director or other similar position as
may be appointed by the Board of Directors of the Bank or the Company from time
to time.
"Disability" means (a) with respect to Incentive Stock
Options, the "permanent and total disability" of the Employee as such term is
defined at Section 22(e)(3) of the Code; and (b) with respect to Non-Incentive
Stock Options, any physical or mental impairment which renders the Participant
incapable of continuing in the employment or service of the Bank or the Parent
in his then current capacity as determined by the Committee.
"Effective Date" shall mean the date specified in Section 15
hereof.
"Employee" shall mean any person employed by the Company or
any present or future Parent or Subsidiary of the Company.
"Fair Market Value" shall mean: (i) if the Common Stock is
traded otherwise than on a national securities exchange, then the Fair Market
Value per Share shall be equal to the mean between the last bid and ask price of
such Common Stock on such date or, if there is no bid and ask price on said
date, then on the immediately prior business day on which there was a bid and
ask price. If no such bid and ask price is available, then the Fair Market Value
shall be determined by the Committee in good faith; or (ii) if the Common Stock
is listed on a national securities exchange, then the Fair Market Value per
Share shall be not less than the average of the highest and lowest selling price
of such Common Stock on such exchange on such date, or if there were no sales on
said date, then the Fair Market Value shall be not less than the mean between
the last bid and ask price on such date.
"Incentive Stock Option" or "ISO" shall mean an option to
purchase Shares granted by the Committee pursuant to Section 8 hereof which is
subject to the limitations and restrictions of Section 8 hereof and is intended
to qualify as an incentive stock option under Section 422 of the Code.
"Non-Incentive Stock Option" or "Non-ISO" shall mean an option
to purchase Shares granted pursuant to Section 9 hereof, which option is not
intended to qualify under Section 422 of the Code.
A-2
"Option" shall mean an Incentive Stock Option or Non-Incentive
Stock Option granted pursuant to this Plan providing the holder of such Option
with the right to purchase Common Stock.
"Optioned Stock" shall mean stock subject to an Option granted
pursuant to the Plan.
"Optionee" shall mean any person who receives an Option or
Award pursuant to the Plan.
"Parent" shall mean any present or future corporation which
would be a "parent corporation" of the Bank or the Company as defined in
Sections 424(e) and (g) of the Code.
"Participant" means any Director, Director Emeritus, officer
or employee of the Company or any Parent or Subsidiary of the Company or any
other person providing a service to the Company who is selected by the Committee
to receive an Award, or who by the express terms of the Plan is granted an
Award.
"Plan" shall mean the FloridaFirst Bancorp, Inc. 2002 Stock
Option Plan.
"Share" shall mean one share of the Common Stock.
"Subsidiary" shall mean any present or future corporation
which constitutes a "subsidiary corporation" as defined in Sections 424(f) and
(g) of the Code.
3. Shares Subject to the Plan. Except as otherwise required by the
provisions of Section 13 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed 314,795 Shares.
Such Shares may either be from authorized but unissued shares, treasury shares
or shares purchased in the market for Plan purposes. If an Award shall expire,
become unexercisable, or be forfeited for any reason prior to its exercise, new
Awards may be granted under the Plan with respect to the number of Shares as to
which such expiration has occurred.
4. Six Month Holding Period.
Subject to vesting requirements, if applicable, except in the
event of death or Disability of the Optionee or a Change in Control, a minimum
of six months must elapse between the date of the grant of an Option and the
date of the sale of the Common Stock received through the exercise of such
Option.
5. Administration of the Plan.
(a) Composition of the Committee. The Plan shall be
administered by the Board of Directors of the Company or a Committee which shall
consist of not less than two Directors of the Company appointed by the Board and
serving at the pleasure of the Board. All persons designated as members of the
Committee shall meet the requirements of a "Non-Employee Director" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, as
found at 17 CFR ss.240.16b-3.
(b) Powers of the Committee. The Committee is authorized (but
only to the extent not contrary to the express provisions of the Plan or to
resolutions adopted by the Board) to interpret the
A-3
Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the form and content of Awards to be issued under the Plan
and to make other determinations necessary or advisable for the administration
of the Plan, and shall have and may exercise such other power and authority as
may be delegated to it by the Board from time to time. A majority of the entire
Committee shall constitute a quorum and the action of a majority of the members
present at any meeting at which a quorum is present shall be deemed the action
of the Committee. In no event may the Committee revoke outstanding Awards
without the consent of the Participant.
The President of the Company and such other officers as
shall be designated by the Committee are hereby authorized to execute written
agreements evidencing Awards on behalf of the Company and to cause them to be
delivered to the Participants. Such agreements shall set forth the Option
exercise price, the number of shares of Common Stock subject to such Option, the
expiration date of such Options, and such other terms and restrictions
applicable to such Award as are determined in accordance with the Plan or the
actions of the Committee.
(c) Effect of Committee's Decision. All decisions,
determinations and interpretations of the Committee shall be final and
conclusive on all persons affected thereby.
6. Eligibility for Awards and Limitations.
(a) The Committee shall from time to time determine the
officers, Directors, Directors Emeritus, employees and other persons who shall
be granted Awards under the Plan, the number of Awards to be granted to each
such persons, and whether Awards granted to each such Participant under the Plan
shall be Incentive and/or Non-Incentive Stock Options. In selecting Participants
and in determining the number of Shares of Common Stock to be granted to each
such Participant, the Committee may consider the nature of the prior and
anticipated future services rendered by each such Participant, each such
Participant's current and potential contribution to the Company and such other
factors as the Committee may, in its sole discretion, deem relevant.
Participants who have been granted an Award may, if otherwise eligible, be
granted additional Awards.
(b) The aggregate Fair Market Value (determined as of the date
the Option is granted) of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by each Employee during any calendar
year (under all Incentive Stock Option plans, as defined in Section 422 of the
Code, of the Company or any present or future Parent or Subsidiary of the
Company) shall not exceed $100,000. Notwithstanding the prior provisions of this
Section 6, the Committee may grant Options in excess of the foregoing
limitations, provided said Options shall be clearly and specifically designated
as not being Incentive Stock Options.
(c) In no event shall Shares subject to Options granted to any
Participant exceed more than 25% of the total number of Shares authorized for
delivery under the Plan.
7. Term of the Plan. The Plan shall continue in effect for a term of
ten (10) years from the Effective Date, unless sooner terminated pursuant to
Section 18 hereof. No Option shall be granted under the Plan after ten (10)
years from the Effective Date.
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8. Terms and Conditions of Incentive Stock Options. Incentive Stock
Options may be granted only to Participants who are Employees. Each Incentive
Stock Option granted pursuant to the Plan shall be evidenced by an instrument in
such form as the Committee shall from time to time approve. Each Incentive Stock
Option granted pursuant to the Plan shall comply with, and be subject to, the
following terms and conditions:
(a) Option Price.
(i) The price per Share at which each Incentive Stock
Option granted by the Committee under the Plan may be exercised shall not, as to
any particular Incentive Stock Option, be less than the Fair Market Value of the
Common Stock on the date that such Incentive Stock Option is granted.
(ii) In the case of an Employee who owns Common Stock
representing more than ten percent (10%) of the outstanding Common Stock at the
time the Incentive Stock Option is granted, the Incentive Stock Option exercise
price shall not be less than one hundred and ten percent (110%) of the Fair
Market Value of the Common Stock on the date that the Incentive Stock Option is
granted.
(b) Payment. Full payment for each Share of Common Stock
purchased upon the exercise of any Incentive Stock Option granted under the Plan
shall be made at the time of exercise of each such Incentive Stock Option and
shall be paid in cash (in United States Dollars), Common Stock or a combination
of cash and Common Stock. Common Stock utilized in full or partial payment of
the exercise price must have been owned by the party exercising such Option for
not less than six months prior to the date of exercise of such Option, and such
Common Stock shall be valued at the Fair Market Value at the date of exercise.
The Company shall accept full or partial payment in Common Stock only to the
extent permitted by applicable law. No Shares of Common Stock shall be issued
until full payment has been received by the Company, and no Optionee shall have
any of the rights of a stockholder of the Company until Shares of Common Stock
are issued to the Optionee.
(c) Term of Incentive Stock Option. The term of exercisability
of each Incentive Stock Option granted pursuant to the Plan shall be not more
than ten (10) years from the date each such Incentive Stock Option is granted,
provided that in the case of an Employee who owns stock representing more than
ten percent (10%) of the Common Stock outstanding at the time the Incentive
Stock Option is granted, the term of exercisability of the Incentive Stock
Option shall not exceed five (5) years.
(d) Exercise Generally. Except as otherwise provided in
Section 10 hereof, no Incentive Stock Option may be exercised unless the
Optionee shall have been in the employ of the Company at all times during the
period beginning with the date of grant of any such Incentive Stock Option and
ending on the date three (3) months prior to the date of exercise of any such
Incentive Stock Option. The Committee may impose additional conditions upon the
right of an Optionee to exercise any Incentive Stock Option granted hereunder
which are not inconsistent with the terms of the Plan or the requirements for
qualification as an Incentive Stock Option. Except as otherwise provided by the
terms of the Plan or by action of the Committee at the time of the grant of the
Options, the Options will be first exercisable as of the date of grant of such
Options.
(e) Cashless Exercise. Subject to vesting requirements, if
applicable, an Optionee who has held an Incentive Stock Option for at least six
months may engage in the "cashless exercise" of the
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Option. Upon a cashless exercise, an Optionee gives the Company written notice
of the exercise of the Option together with an order to a registered
broker-dealer or equivalent third party, to sell part or all of the Optioned
Stock and to deliver enough of the proceeds to the Company to pay the Option
exercise price and any applicable withholding taxes. If the Optionee does not
sell the Optioned Stock through a registered broker-dealer or equivalent third
party, the Optionee can give the Company written notice of the exercise of the
Option and the third party purchaser of the Optioned Stock shall pay the Option
exercise price plus any applicable withholding taxes to the Company.
(f) Transferability. An Incentive Stock Option granted
pursuant to the Plan shall be exercised during an Optionee's lifetime only by
the Optionee to whom it was granted and shall not be assignable or transferable
otherwise than by will or by the laws of descent and distribution.
9. Terms and Conditions of Non-Incentive Stock Options. Each
Non-Incentive Stock Option granted pursuant to the Plan shall be evidenced by an
instrument in such form as the Committee shall from time to time approve. Each
Non-Incentive Stock Option granted pursuant to the Plan shall comply with and be
subject to the following terms and conditions.
(a) Options Granted to Directors. Non-Incentive Stock Options
to purchase 15,750 shares of Common Stock will be granted to each Director who
is not an Employee as of the Effective Date, at an exercise price equal to the
Fair Market Value of the Common Stock on such date of grant. One-third of such
Options granted as of the Effective Date shall be first exercisable as of
September 30, 2002, and an additional one-third annually thereafter. Such
Options shall continue to be exercisable for a period of ten years following the
date of grant without regard to the continued services of such Director as a
Director or Director Emeritus. In the event of the Optionee's death, such
Options may be exercised by the personal representative of his estate or person
or persons to whom his rights under such Option shall have passed by will or by
the laws of descent and distribution. Options may be granted to newly appointed
or elected non-employee Directors within the sole discretion of the Committee.
The exercise price per Share of such Options granted shall be equal to the Fair
Market Value of the Common Stock at the time such Options are granted. Unless
otherwise inapplicable, or inconsistent with the provisions of this paragraph,
the Options to be granted to Directors hereunder shall be subject to all other
provisions of this Plan.
(b) Option Price. The exercise price per Share of Common Stock
for each Non-Incentive Stock Option granted pursuant to the Plan shall be at
such price as the Committee may determine in its sole discretion, but in no
event less than the Fair Market Value of such Common Stock on the date of grant
as determined by the Committee in good faith.
(c) Payment. Full payment for each Share of Common Stock
purchased upon the exercise of any Non-Incentive Stock Option granted under the
Plan shall be made at the time of exercise of each such Non-Incentive Stock
Option and shall be paid in cash (in United States Dollars), Common Stock or a
combination of cash and Common Stock. Common Stock utilized in full or partial
payment of the exercise price must have been owned by the party exercising such
Option for not less than six months prior to the date of exercise of such
Option, and such Common Stock shall be valued at the Fair Market Value at the
date of exercise. The Company shall accept full or partial payment in Common
Stock only to the extent permitted by applicable law. No Shares of Common Stock
shall be issued until full payment has been received by the Company and no
Optionee shall have any of the rights of a stockholder of the Company until the
Shares of Common Stock are issued to the Optionee.
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(d) Term. The term of exercisability of each Non-Incentive
Stock Option granted pursuant to the Plan shall be not more than ten (10) years
from the date each such Non-Incentive Stock Option is granted.
(e) Exercise Generally. The Committee may impose additional
conditions upon the right of any Participant to exercise any Non-Incentive Stock
Option granted hereunder which is not inconsistent with the terms of the Plan.
Except as otherwise provided by the terms of the Plan or by action of the
Committee at the time of the grant of the Options, the Options will be first
exercisable as of the date of grant of such Options.
(f) Cashless Exercise. Subject to vesting requirements, if
applicable, an Optionee who has held a Non-Incentive Stock Option for at least
six months may engage in the "cashless exercise" of the Option. Upon a cashless
exercise, an Optionee gives the Company written notice of the exercise of the
Option together with an order to a registered broker-dealer or equivalent third
party, to sell part or all of the Optioned Stock and to deliver enough of the
proceeds to the Company to pay the Option exercise price and any applicable
withholding taxes. If the Optionee does not sell the Optioned Stock through a
registered broker-dealer or equivalent third party, the Optionee can give the
Company written notice of the exercise of the Option and the third party
purchaser of the Optioned Stock shall pay the Option exercise price plus any
applicable withholding taxes to the Company.
(g) Transferability. Any Non-Incentive Stock Option granted
pursuant to the Plan shall be exercised during an Optionee's lifetime only by
the Optionee to whom it was granted and shall not be assignable or transferable
otherwise than by will or by the laws of descent and distribution.
10. Effect of Termination of Employment, Disability or Death on
Incentive Stock Options.
(a) Termination of Employment. In the event that any
Optionee's employment with the Company shall terminate for any reason, other
than Disability or death, all of any such Optionee's Incentive Stock Options,
and all of any such Optionee's rights to purchase or receive Shares of Common
Stock pursuant thereto, shall automatically terminate on (A) the earlier of (i)
or (ii): (i) the respective expiration dates of any such Incentive Stock
Options, or (ii) the expiration of not more than three (3) months after the date
of such termination of employment; or (B) at such later date as is determined by
the Committee at the time of the grant of such Award, but in either case only
if, and to the extent that, the Optionee was entitled to exercise any such
Incentive Stock Options at the date of such termination of employment, and
further that such Award shall thereafter be deemed a Non-Incentive Stock Option.
In the event that a Subsidiary ceases to be a Subsidiary of the Company, the
employment of all of its employees who are not immediately thereafter employees
of the Company shall be deemed to terminate upon the date such Subsidiary so
ceases to be a Subsidiary of the Company.
(b) Disability. In the event that any Optionee's employment
with the Company shall terminate as the result of the Disability of such
Optionee, such Optionee may exercise any Incentive Stock Options granted to the
Optionee pursuant to the Plan at any time prior to the earlier of (i) the
respective expiration dates of any such Incentive Stock Options or (ii) the date
which is one (1) year after the date of such termination of employment, but only
if, and to the extent that, the Optionee was entitled to exercise any such
Incentive Stock Options at the date of such termination of employment.
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(c) Death. In the event of the death of an Optionee, any
Incentive Stock Options granted to such Optionee may be exercised by the person
or persons to whom the Optionee's rights under any such Incentive Stock Options
pass by will or by the laws of descent and distribution (including the
Optionee's estate during the period of administration) at any time prior to the
earlier of (i) the respective expiration dates of any such Incentive Stock
Options or (ii) the date which is two (2) years after the date of death of such
Optionee but only if, and to the extent that, the Optionee was entitled to
exercise any such Incentive Stock Options at the date of death. For purposes of
this Section 10(c), any Incentive Stock Option held by an Optionee shall be
considered exercisable at the date of his death if the only unsatisfied
condition precedent to the exercisability of such Incentive Stock Option at the
date of death is the passage of a specified period of time. At the discretion of
the Committee, upon exercise of such Options the Optionee may receive Shares or
cash or a combination thereof. If cash shall be paid in lieu of Shares, such
cash shall be equal to the difference between the Fair Market Value of such
Shares and the exercise price of such Options on the exercise date.
(d) Incentive Stock Options Deemed Exercisable. For purposes
of Sections 10(a), 10(b) and 10(c) above, any Incentive Stock Option held by any
Optionee shall be considered exercisable at the date of termination of
employment if any such Incentive Stock Option would have been exercisable at
such date of termination of employment without regard to the Disability or death
of the Participant.
(e) Termination of Incentive Stock Options. Except as may be
specified by the Committee at the time of grant of an Option, to the extent that
any Incentive Stock Option granted under the Plan to any Optionee whose
employment with the Company terminates shall not have been exercised within the
applicable period set forth in this Section 10, any such Incentive Stock Option,
and all rights to purchase or receive Shares of Common Stock pursuant thereto,
as the case may be, shall terminate on the last day of the applicable period.
11. Effect of Termination of Employment, Disability or Death on
Non-Incentive Stock Options. The terms and conditions of Non-Incentive Stock
Options relating to the effect of the termination of an Optionee's employment or
service, Disability of an Optionee or his death shall be such terms and
conditions as the Committee shall, in its sole discretion, determine at the time
of termination of service, unless specifically provided for by the terms of the
Agreement at the time of grant of the award.
12. Withholding Tax. The Company shall have the right to deduct from
all amounts paid in cash with respect to the cashless exercise of Options any
taxes required by law to be withheld with respect to such cash payments. Where a
Participant or other person is entitled to receive Shares pursuant to the
exercise of an Option, the Company shall have the right to require the
Participant or such other person to pay the Company the amount of any taxes
which the Company is required to withhold with respect to such Shares, or, in
lieu thereof, to retain, or to sell without notice, a number of such Shares
sufficient to cover the amount required to be withheld.
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13. Recapitalization, Merger, Consolidation, Change in Control and
Other Transactions.
(a) Adjustment. Subject to any required action by the
stockholders of the Company, within the sole discretion of the Committee, the
aggregate number of Shares of Common Stock for which Options may be granted
hereunder, the number of Shares of Common Stock covered by each outstanding
Option, and the exercise price per Share of Common Stock of each such Option,
shall all be proportionately adjusted for any increase or decrease in the number
of issued and outstanding Shares of Common Stock resulting from a subdivision or
consolidation of Shares (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares, or
otherwise) or the payment of a stock dividend (but only on the Common Stock) or
any other increase or decrease in the number of such Shares of Common Stock
effected without the receipt or payment of consideration by the Company (other
than Shares held by dissenting stockholders).
(b) Change in Control. All outstanding Awards shall become
immediately exercisable in the event of a Change in Control of the Company. In
the event of such a Change in Control, the Committee and the Board of Directors
will take one or more of the following actions to be effective as of the date of
such Change in Control:
(i) provide that such Options shall be assumed, or
equivalent options shall be substituted, ("Substitute Options") by the acquiring
or succeeding corporation (or an affiliate thereof), provided that: (A) any such
Substitute Options exchanged for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, and (B) the shares of stock issuable
upon the exercise of such Substitute Options shall constitute securities
registered in accordance with the Securities Act of 1933, as amended, ("1933
Act") or such securities shall be exempt from such registration in accordance
with Sections 3(a)(2) or 3(a)(5) of the 1933 Act, (collectively, "Registered
Securities"), or in the alternative, if the securities issuable upon the
exercise of such Substitute Options shall not constitute Registered Securities,
then the Optionee will receive upon the exercise of the Substitute Options a
cash payment for each Option surrendered equal to the difference between (1) the
Fair Market Value of the consideration to be received for each share of Common
Stock in the Change in Control transaction times the number of shares of Common
Stock subject to such surrendered Options, and (2) the aggregate exercise price
of all such surrendered Options, or
(ii) in the event of a transaction under the terms
of which the holders of the Common Stock of the Company will receive upon
consummation thereof a cash payment (the "Merger Price") for each share of
Common Stock exchanged in the Change in Control transaction, to make or to
provide for a cash payment to the Optionees equal to the difference between (A)
the Merger Price times the number of shares of Common Stock subject to such
Options held by each Optionee (to the extent then exercisable at prices not in
excess of the Merger Price) and (B) the aggregate exercise price of all such
surrendered Options in exchange for such surrendered Options.
(c) Extraordinary Corporate Action. Notwithstanding any
provisions of the Plan to the contrary, subject to any required action by the
stockholders of the Company, in the event of any Change in Control,
recapitalization, merger, consolidation, exchange of Shares, spin-off,
reorganization, tender offer, partial or complete liquidation or other
extraordinary corporate action or event, the Committee, in its sole discretion,
shall have the power, prior or subsequent to such action or event to:
A-9
(i) appropriately adjust the number of Shares of
Common Stock subject to each Option, the Option exercise price per Share of
Common Stock, and the consideration to be given or received by the Company upon
the exercise of any outstanding Option;
(ii) cancel any or all previously granted Options,
provided that appropriate consideration is paid to the Optionee in connection
therewith; and/or
(iii) make such other adjustments in connection with
the Plan as the Committee, in its sole discretion, deems necessary, desirable,
appropriate or advisable; provided, however, that no action shall be taken by
the Committee which would cause Incentive Stock Options granted pursuant to the
Plan to fail to meet the requirements of Section 422 of the Code without the
consent of the Optionee.
(d) Acceleration. The Committee shall at all times have the
power to accelerate the exercise date of Options previously granted under the
Plan.
Except as expressly provided in Sections 13(a) and
13(b), no Optionee shall have any rights by reason of the occurrence of any of
the events described in this Section 13.
14. Time of Granting Options. The date of grant of an Option under the
Plan shall, for all purposes, be the date on which the Committee makes the
determination of granting such Option. Notice of the grant of an Option shall be
given to each individual to whom an Option is so granted within a reasonable
time after the date of such grant in a form determined by the Committee.
15. Effective Date. The Plan shall become effective upon the date of
ratification of the Plan by the stockholders of the Company. The Committee may
make a determination related to Awards prior to the Effective Date with such
Awards to be effective upon the date of stockholder ratification of the Plan.
16. Ratification by Stockholders. The Plan shall be ratified by
stockholders of the Company within twelve (12) months before or after the date
the Plan is approved by the Board.
17. Modification of Options. At any time and from time to time, the
Board may authorize the Committee to direct the execution of an instrument
providing for the modification of any outstanding Option, provided no such
modification, extension or renewal shall confer on the holder of said Option any
right or benefit which could not be conferred on the Optionee by the grant of a
new Option at such time, or shall not materially decrease the Optionee's
benefits under the Option without the consent of the holder of the Option,
except as otherwise permitted under Section 18 hereof.
18. Amendment and Termination of the Plan.
(a) Action by the Board. The Board may alter, suspend or
discontinue the Plan, except that no action of the Board may increase (other
than as provided in Section 13 hereof) the maximum number of Shares permitted to
be optioned under the Plan, materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements for
eligibility for participation in the Plan unless such action of the Board shall
be subject to approval or ratification by the stockholders of the Company.
A-10
(b) Change in Applicable Law. Notwithstanding any other
provision contained in the Plan, in the event of a change in any federal or
state law, rule, regulation or policy which would make the exercise of all or
part of any previously granted Option unlawful or subject the Company to any
penalty, the Committee may restrict any such exercise without the consent of the
Optionee or other holder thereof in order to comply with any such law, rule or
regulation or to avoid any such penalty.
19. Conditions Upon Issuance of Shares; Limitations on Option
Exercise; Cancellation of Option Rights.
(a) Shares shall not be issued with respect to any Option
granted under the Plan unless the issuance and delivery of such Shares shall
comply with all relevant provisions of applicable law, including, without
limitation, the Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities laws and the
requirements of any stock exchange upon which the Shares may then be listed.
(b) The inability of the Company to obtain any necessary
authorizations, approvals or letters of non-objection from any regulatory body
or authority deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares issuable hereunder shall relieve the Company of
any liability with respect to the non-issuance or sale of such Shares.
(c) As a condition to the exercise of an Option, the Company
may require the person exercising the Option to make such representations and
warranties as may be necessary to assure the availability of an exemption from
the registration requirements of federal or state securities law.
(d) Notwithstanding anything herein to the contrary, upon the
termination of employment or service of an Optionee by the Company or its
Subsidiaries for "cause" as defined at 12 C.F.R. 563.39(b)(1) as determined by
the Board of Directors, all Options held by such Participant shall cease to be
exercisable as of the date of such termination of employment or service.
(e) Upon the exercise of an Option by an Optionee (or the
Optionee's personal representative), the Committee, in its sole and absolute
discretion, may make a cash payment to the Optionee, in whole or in part, in
lieu of the delivery of shares of Common Stock. Such cash payment to be paid in
lieu of delivery of Common Stock shall be equal to the difference between the
Fair Market Value of the Common Stock on the date of the Option exercise and the
exercise price per share of the Option. Such cash payment shall be in exchange
for the cancellation of such Option. Such cash payment shall not be made in the
event that such transaction would result in liability to the Optionee or the
Company under Section 16(b) of the Securities Exchange Act of 1934, as amended,
and regulations promulgated thereunder.
20. Reservation of Shares. During the term of the Plan, the Company
will reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
21. Unsecured Obligation. No Participant under the Plan shall have any
interest in any fund or special asset of the Company by reason of the Plan or
the grant of any Option under the Plan. No trust fund shall be created in
connection with the Plan or any grant of any Option hereunder and there shall be
no required funding of amounts which may become payable to any Participant.
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22. No Employment Rights. No Director, Employee or other person shall
have a right to be selected as a Participant under the Plan. Neither the Plan
nor any action taken by the Committee in administration of the Plan shall be
construed as giving any person any rights of employment or retention as an
Employee, Director or in any other capacity with the Company, the Bank or other
Subsidiaries.
23. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Florida, except to the extent that
federal law shall be deemed to apply.
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APPENDIX B
FloridaFirst Bank
2002 Restricted Stock Plan
and Trust Agreement
Article I
---------
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 FloridaFirst Bank ("Bank") hereby establishes the 2002 Restricted
Stock Plan (the "Plan") and Trust (the "Trust") upon the terms and conditions
hereinafter stated in this 2002 Restricted Stock Plan and Trust Agreement (the
"Agreement").
1.02 The Trustee hereby accepts this Trust and agrees to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions hereinafter stated.
Article II
----------
PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to reward and to retain personnel of
experience and ability in key positions of responsibility with the Bank and its
subsidiaries, by providing such personnel of the Bank and its subsidiaries with
an equity interest in the parent corporation of the Bank, FloridaFirst Bancorp,
Inc. ("Parent"), as compensation for their prior and anticipated future
professional contributions and service to the Bank and its subsidiaries.
Article III
-----------
DEFINITIONS
The following words and phrases when used in this Plan with an initial
capital letter, unless the context clearly indicates otherwise, shall have the
meaning as set forth below. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun and the singular shall include the plural.
"Bank" means FloridaFirst Bank, and any successor corporation thereto.
"Beneficiary" means the person or persons designated by the Participant
to receive any benefits payable under the Plan in the event of such
Participant's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Participant's surviving spouse, if
any, or if none, the Participant's estate.
B-1
"Board" means the Board of Directors of the Bank, or any successor
corporation thereto.
"Cause" means the personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profits, intentional
failure to perform stated duties, willful violation of a material provision of
any law, rule or regulation (other than traffic violations and similar offense),
or a material violation of a final cease-and-desist order or any other action
which results in a substantial financial loss to the Parent, Bank or its
Subsidiaries.
"Change in Control" shall mean: (i) the sale of all, or a material
portion, of the assets of the Parent or Bank; (ii) the merger or
recapitalization of the Parent or the Bank whereby the Parent or Bank is not the
surviving entity; (iii) a change in control of the Parent or Bank, as otherwise
defined or determined by the Office of Thrift Supervision ("OTS") or regulations
promulgated by it; or (iv) the acquisition, directly or indirectly, of the
beneficial ownership (within the meaning of that term as it is used in Section
13(d) of the 1934 Act and the rules and regulations promulgated thereunder) of
twenty-five percent (25%) or more of the outstanding voting securities of the
Parent or Bank by any person, trust, entity or group. This limitation shall not
apply to the purchase of shares of up to 25% of any class of securities of the
Parent or Bank by a tax-qualified employee stock benefit plan which is exempt
from the approval requirements, set forth under 12 C.F.R. ss.574.3(c)(1)(vi) as
now in effect or as may hereafter be amended. The term "person" refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein. The decision of the Committee as
to whether a Change in Control has occurred shall be conclusive and binding.
"Committee" means the Board of Directors of the Bank or the Restricted
Stock Plan Committee appointed by the Board of Directors of the Bank pursuant to
Article IV hereof.
"Common Stock" means shares of the common stock of the Parent, or any
successor corporation or parent thereto.
"Director" means a member of the Board of the Bank.
"Director Emeritus" means a person serving as a director emeritus,
advisory director, consulting director, or other similar position as may be
appointed by the Board of Directors of the Bank or the Parent from time to time.
"Disability" means any physical or mental impairment which renders the
Participant incapable of continuing in the employment or service of the Bank or
the Parent in his current capacity as determined by the Committee.
"Employee" means any person who is employed by the Bank or a
Subsidiary.
"Effective Date" shall mean the date of stockholder ratification of the
Plan by the Parent's stockholders.
"Parent" shall mean FloridaFirst Bancorp, Inc., the parent corporation
of the Bank.
B-2
"Participant" means an Employee, Director or Director Emeritus who
receives a Plan Share Award under the Plan.
"Plan Shares" means shares of Common Stock held in the Trust which are
awarded or issuable to a Participant pursuant to the Plan.
"Plan Share Award" or "Award" means a right granted to a Participant
under this Plan to earn or to receive Plan Shares.
"Plan Share Reserve" means the shares of Common Stock held by the Trust
pursuant to Sections 5.03 and 5.04.
"Subsidiary" means those subsidiaries of the Bank which, with the
consent of the Board, agree to participate in this Plan.
"Trustee" or "Trustee Committee" means that person(s) or entity
nominated by the Committee and approved by the Board pursuant to Sections 4.01
and 4.02 to hold legal title to the Plan assets for the purposes set forth
herein.
Article IV
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ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered and
interpreted by the Board of Directors of the Bank or a Committee appointed by
said Board, which shall consist of not less than two non-employee members of the
Board, which shall have all of the powers allocated to it in this and other
sections of the Plan. All persons designated as members of the Committee shall
be "Non-Employee Directors" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended ("1934 Act"). The interpretation and
construction by the Committee of any provisions of the Plan or of any Plan Share
Award granted hereunder shall be final and binding. The Committee shall act by
vote or written consent of a majority of its members. Subject to the express
provisions and limitations of the Plan, the Committee may adopt such rules,
regulations and procedures as it deems appropriate for the conduct of its
affairs. The Committee shall report its actions and decisions with respect to
the Plan to the Board at appropriate times, but in no event less than one time
per calendar year. The Committee shall recommend to the Board one or more
persons or entity to act as Trustee in accordance with the provision of this
Plan and Trust and the terms of Article VIII hereof.
4.02 Role of the Board. The members of the Committee and the Trustee
shall be appointed or approved by, and will serve at the pleasure of the Board.
The Board may in its discretion from time to time remove members from, or add
members to, the Committee, and may remove, replace or add Trustees. The Board
shall have all of the powers allocated to it in this and other sections of the
Plan, may take any action under or with respect to the Plan which the Committee
is authorized to take, and may reverse or override any action taken or decision
made by the Committee under or with respect to the Plan, provided, however, that
the Board may not revoke any Plan Share Award already made except as provided in
Section 7.01(b) herein.
B-3
4.03 Limitation on Liability. No member of the Board, the Committee or
the Trustee shall be liable for any determination made in good faith with
respect to the Plan or any Plan Share Awards granted. If a member of the Board,
Committee or any Trustee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by any reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Parent and
the Bank shall indemnify such member against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with such action, suit or proceeding if he
or she acted in good faith and in a manner he or she reasonably believed to be
in the best interests of the Parent, the Bank and its Subsidiaries and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. Notwithstanding anything herein to the contrary, in no
event shall the Bank take any actions with respect to this Section 4.03 which is
not in compliance with the limitations or requirements set forth at 12 CFR
545.121, as may be amended from time to time.
Article V
---------
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Board of Directors of the
Bank shall determine the amounts (or the method of computing the amounts) to be
contributed by the Bank to the Trust established under this Plan. Such amounts
shall be paid to the Trustee at the time of contribution. No contributions to
the Trust by Participants shall be permitted except with respect to amounts
necessary to meet tax withholding obligations.
5.02 Initial Investment. Any funds held by the Trust prior to
investment in the Common Stock shall be invested by the Trustee in such
interest-bearing account or accounts at the Bank as the Trustee shall determine
to be appropriate.
5.03 Investment of Trust Assets. Following ratification of the Plan by
stockholders of the Parent and receipt of any other necessary regulatory
approvals, the Trust shall purchase Common Stock of the Parent in an amount
equal to up to 100% of the Trust's assets, after providing for any required
withholding as needed for tax purposes, provided, however, that the Trust shall
not purchase more than 125,918 shares of Common Stock. The Trustee may purchase
shares of Common Stock in the open market or, in the alternative, may purchase
authorized but unissued shares of the Common Stock or treasury shares from the
Parent sufficient to fund the Plan Share Reserve.
5.04 Effect of Allocations, Returns and Forfeitures Upon Plan Share
Reserves. Upon the allocation of Plan Share Awards under Sections 6.02 and 6.05,
or the decision of the Committee to return Plan Shares to the Parent, the Plan
Share Reserve shall be reduced by the number of Shares subject to the Awards so
allocated or returned. Any Shares subject to an Award which are not earned
because of forfeiture by the Participant pursuant to Section 7.01 shall be added
to the Plan Share Reserve.
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Article VI
----------
ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Employees are eligible to receive Plan Share Awards
within the sole discretion of the Committee. Directors who are not otherwise
Employees shall receive Plan Share Awards pursuant to Section 6.05.
6.02 Allocations. The Committee will determine which of the Employees
will be granted Plan Share Awards and the number of Shares covered by each
Award, provided, however, that in no event shall any Awards be made which will
violate the Charter or Bylaws of the Bank or its Parent or Subsidiaries or any
applicable federal or state law or regulation. In the event Shares are forfeited
for any reason or additional Shares are purchased by the Trustee, the Committee
may, from time to time, determine which of the Employees will be granted Plan
Share Awards to be awarded from forfeited Shares. In selecting those Employees
and Directors Emeritus to whom Plan Share Awards will be granted and the number
of shares covered by such Awards, the Committee shall consider the prior and
anticipated future position, duties and responsibilities of the Employees, the
value of their prior and anticipated future services to the Bank and its
Subsidiaries, and any other factors the Committee may deem relevant. All actions
by the Committee shall be deemed final, except to the extent that such actions
are revoked by the Board. Notwithstanding anything herein to the contrary, in no
event shall any Participant receive Plan Share Awards in excess of 25% of the
aggregate Plan Shares authorized under the Plan.
6.03 Form of Allocation. As promptly as practicable after a
determination is made pursuant to Section 6.02 or Section 6.05 that a Plan Share
Award is to be made, the Committee shall notify the Participant in writing of
the grant of the Award, the number of Plan Shares covered by the Award, and the
terms upon which the Plan Shares subject to the award may be earned. The date on
which the Committee makes its award determination or the date the Committee so
notifies the Participant shall be considered the date of grant of the Plan Share
Awards as determined by the Committee. The Committee shall maintain records as
to all grants of Plan Share Awards under the Plan.
6.04 Allocations Not Required. Notwithstanding anything to the contrary
at Sections 6.01, 6.02 or 6.05, no Employee shall have any right or entitlement
to receive a Plan Share Award hereunder, such Awards being at the sole
discretion of the Committee and the Board, nor shall the Employees as a group
have such a right. The Committee may, with the approval of the Board (or, if so
directed by the Board) return all Common Stock in the Plan Share Reserve to the
Bank at any time, and cease issuing Plan Share Awards.
6.05 Awards to Directors. Notwithstanding anything herein to the
contrary, upon the Effective Date, a Plan Share Award consisting of 6,250 Plan
Shares shall be awarded to each Director of the Bank that is not otherwise an
Employee. Such Plan Share Award shall be earned and non-forfeitable at the rate
of one-third as of September 30, 2002 and an additional one-third following each
of the next two successive years during such periods of service as a Director or
Director Emeritus. Such Plan Share Award shall be immediately 100% earned and
non-forfeitable in the event of the death or Disability of such Director or
Director Emeritus. Further, such Plan Share Award shall be immediately 100%
earned and non-forfeitable upon a Change in Control of the Bank or Parent.
Subsequent to the Effective Date, Plan Share Awards may be awarded to newly
elected or appointed Directors of the Bank by the Committee.
B-5
Article VII
-----------
EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earnings Plan Shares; Forfeitures.
(a) General Rules. Unless the Committee shall specifically state to the
contrary at the time a Plan Share Award is granted, Plan Shares subject to an
Award shall be earned and non-forfeitable by a Participant at the rate of
one-fifth of such Award following one year after the granting of such Award, and
an additional one-fifth following each of the next four successive years;
provided that such Participant remains an Employee, Director, or Director
Emeritus during such period.
(b) Revocation for Misconduct. Notwithstanding anything herein to the
contrary, the Board shall, by resolution, immediately revoke, rescind and
terminate any Plan Share Award, or portion thereof, previously awarded under
this Plan, to the extent Plan Shares have not been delivered thereunder to the
Participant, whether or not yet earned, in the case of a Participant who is
discharged from the employ or service of the Parent, Bank or a Subsidiary for
Cause, or who is discovered after termination of employment or service to have
engaged in conduct that would have justified termination for Cause. A
determination of Cause shall be made by the Board within its sole discretion.
(c) Exception for Terminations Due to Death or Disability.
Notwithstanding the general rule contained in Section 7.01(a) above, all Plan
Shares subject to a Plan Share Award held by a Participant whose employment or
service with the Parent, Bank or a Subsidiary terminates due to death or
Disability, shall be deemed earned and nonforfeitable as of the Participant's
last date of employment or service with the Parent, Bank or Subsidiary and shall
be distributed as soon as practicable thereafter.
(d) Exception for Termination after a Change in Control.
Notwithstanding the general rule contained in Section 7.01 above, all Plan
Shares subject to a Plan Share Award held by a Participant shall be deemed to be
immediately 100% earned and non-forfeitable in the event of a Change in Control
of the Parent or Bank and shall be distributed as soon as practicable
thereafter.
7.02 Accrual and Payment of Dividends. A holder of a Plan Share Award,
whether or not earned, shall also be entitled to receive an amount equal to any
cash dividends declared and paid with respect to shares of Common Stock
represented by such Plan Share Award between the date the relevant Plan Share
Award was granted to such Participant and the date the Plan Shares are
distributed. Such cash dividend amounts shall be paid out within 30 days of the
applicable dividend payment date.
7.03 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Except as provided in
Subsections (d) and (e) below, Plan Shares shall be distributed to the
Participant or his Beneficiary, as the case may be, as soon as practicable after
they have been earned. No fractional shares shall be distributed.
Notwithstanding anything herein to the contrary, at the discretion of the
Committee, Plan Shares may be distributed prior to such Shares being 100%
earned, provided that such Plan Shares shall contain a restrictive legend
detailing the applicable limitations of such shares with respect to transfer and
forfeiture.
B-6
(b) Form of Distribution. All Plan Shares, together with any shares
representing stock dividends, shall be distributed in the form of Common Stock.
One share of Common Stock shall be given for each Plan Share earned. Payments
representing cash dividends (and earnings thereon) shall be made in cash.
Notwithstanding anything within the Plan to the contrary, upon a Change in
Control whereby substantially all of the Common Stock of the Parent shall be
acquired for cash, all earned Plan Shares associated with Plan Share Awards,
together with any shares representing stock dividends associated with earned
Plan Share Awards, shall be, at the sole discretion of the Committee,
distributed as of the effective date of such Change in Control, or as soon as
administratively feasible thereafter, in the form of cash equal to the
consideration received in exchange for such Common Stock represented by such
Plan Shares.
(c) Withholding. The Trustee may withhold from any payment or
distribution made under this Plan sufficient amounts of cash or shares of Common
Stock necessary to cover any applicable withholding and employment taxes, and if
the amount of such payment or distribution is not sufficient, the Trustee may
require the Participant or Beneficiary to pay to the Trustee the amount required
to be withheld in taxes as a condition of delivering the Plan Shares. The
Trustee shall pay over to the Parent, Bank or Subsidiary which employs or
employed such Participant any such amount withheld from or paid by the
Participant or Beneficiary.
(d) Timing: Exception for 10% Shareholders. Notwithstanding Subsection
(a) above, no Plan Shares may be distributed prior to the date which is five
years from the effective date of the Conversion to the extent the Participant or
Beneficiary, as the case may be, would after receipt of such Shares own in
excess of ten percent (10%) of the issued and outstanding shares of Common Stock
held by parties other than Parent, unless such action is approved in advance by
a majority vote of disinterested directors of the Board of the Parent. Any Plan
Shares remaining undistributed solely by reason of the operation of this
Subsection (d) shall be distributed to the Participant or his Beneficiary on the
date which is five years from the effective date of the Conversion.
(e) Regulatory Exceptions. No Plan Shares shall be distributed,
however, unless and until all of the requirements of all applicable law and
regulation shall have been fully complied with, including the receipt of
approval of the Plan by the stockholders of the Parent by such vote, if any, as
may be required by applicable law and regulations.
7.04 Voting of Plan Shares. After a Plan Share Award has become earned
and non-forfeitable, the Participant shall be entitled to direct the Trustee as
to the voting of the Plan Shares which are associated with the Plan Share Award
and which have not yet been distributed pursuant to Section 7.03, subject to
rules and procedures adopted by the Committee for this purpose. All shares of
Common Stock held by the Trust as to which Participants have not yet earned and
are not entitled to direct, or have not directed, the voting of such Shares,
shall be voted by the Trustee as directed by the Committee.
B-7
Article VIII
------------
TRUST
8.01 Trust. The Trustee shall receive, hold, administer, invest and
make distributions and disbursements from the Trust in accordance with the
provisions of the Plan and Trust and the applicable directions, rules,
regulations, procedures and policies established by the Committee pursuant to
the Plan.
8.02 Management of Trust. It is the intention of this Plan and Trust
that the Trustee shall have complete authority and discretion with respect to
the management, control and investment of the Trust, and that the Trustee shall
invest all assets of the Trust, except those attributable to cash dividends paid
with respect to Plan Shares not held in the Plan Share Reserve, in Common Stock
to the fullest extent practicable, except to the extent that the Trustee
determines that the holding of monies in cash or cash equivalents is necessary
to meet the obligations of the Trust. In performing their duties, the Trustees
shall have the power to do all things and execute such instruments as may be
deemed necessary or proper, including the following powers:
(a) To invest up to one hundred percent (100%) of all Trust assets in
the Common Stock without regard to any law now or hereafter in force
limiting investments for Trustees or other fiduciaries. The investment
authorized herein may constitute the only investment of the Trust, and
in making such investment, the Trustee is authorized to purchase Common
Stock from the Parent or from any other source, and such Common Stock
so purchased may be outstanding, newly issued, or treasury shares.
(b) To invest any Trust assets not otherwise invested in accordance
with (a) above in such deposit accounts, and certificates of deposit
(including those issued by the Bank), obligations of the United States
government or its agencies or such other investments as shall be
considered the equivalent of cash.
(c) To sell, exchange or otherwise dispose of any property at any time
held or acquired by the Trust.
(d) To cause stocks, bonds or other securities to be registered in the
name of a nominee, without the addition of words indicating that such
security is an asset of the Trust (but accurate records shall be
maintained showing that such security is an asset of the Trust).
(e) To hold cash without interest in such amounts as may be in the
opinion of the Trustee reasonable for the proper operation of the Plan
and Trust.
(f) To employ brokers, agents, custodians, consultants and accountants.
(g) To hire counsel to render advice with respect to their rights,
duties and obligations hereunder, and such other legal services or
representation as they may deem desirable.
B-8
(h) To hold funds and securities representing the amounts to be
distributed to a Participant or his Beneficiary as a consequence of a
dispute as to the disposition thereof, whether in a segregated account
or held in common with other assets.
(i) As may be directed by the Committee or the Board from time to time,
the Trustee shall pay to the Bank earnings of the Trust attributable to
the Plan Share Reserve.
Notwithstanding anything herein contained to the contrary, the Trustee
shall not be required to make any inventory, appraisal or settlement or report
to any court, or to secure any order of a court for the exercise of any power
herein contained, or to maintain bond.
8.03 Records and Accounts. The Trustee shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled person
or entity to the extent required by applicable law, or any other person
determined by the Committee.
8.04 Earnings. All earnings, gains and losses with respect to Trust
assets shall be allocated in accordance with a reasonable procedure adopted by
the Committee, to bookkeeping accounts for Participants or to the general
account of the Trust, depending on the nature and allocation of the assets
generating such earnings, gains and losses. In particular, any earnings on cash
dividends received with respect to shares of Common Stock shall be allocated to
accounts for Participants, except to the extent that such cash dividends are
distributed to Participants, if such shares are the subject of outstanding Plan
Share Awards, or, otherwise to the Plan Share Reserve.
8.05 Expenses. All costs and expenses incurred in the operation and
administration of this Plan, including those incurred by the Trustee, shall be
paid by the Bank.
8.06 Indemnification. Subject to the requirements and limitations of
applicable laws and regulations, the Parent and the Bank shall indemnify, defend
and hold the Trustee harmless against all claims, expenses and liabilities
arising out of or related to the exercise of the Trustee's powers and the
discharge of their duties hereunder, unless the same shall be due to their gross
negligence or willful misconduct.
Article IX
----------
MISCELLANEOUS
9.01 Adjustments for Capital Changes. The aggregate number of Plan
Shares available for issuance pursuant to the Plan Share Awards and the number
of Shares to which any Plan Share Award relates shall be proportionately
adjusted for any increase or decrease in the total number of outstanding shares
of Common Stock issued subsequent to the effective date of the Plan resulting
from any split, subdivision or consolidation of the Common Stock or other
capital adjustment, change or exchange of the Common Stock, or other increase or
decrease in the number or kind of shares effected without receipt or payment of
consideration by the Parent.
B-9
9.02 Amendment and Termination of the Plan. The Board may, by
resolution, at any time, amend or terminate the Plan. The power to amend or
terminate the Plan shall include the power to direct the Trustee to return to
the Parent all or any part of the assets of the Trust, including shares of
Common Stock held in the Plan Share Reserve, as well as shares of Common Stock
and other assets subject to Plan Share Awards which have not yet been earned by
the Participants to whom they have been awarded. However, the termination of the
Trust shall not affect a Participant's right to earn Plan Share Awards and to
the distribution of Common Stock relating thereto, including earnings thereon,
in accordance with the terms of this Plan and the grant by the Committee or the
Board. Notwithstanding the foregoing, no action of the Board may increase (other
than as provided in Section 9.01 hereof) the maximum number of Plan Shares
permitted to be awarded under the Plan as specified at Section 5.03, materially
increase the benefits accruing to Participants under the Plan or materially
modify the requirements for eligibility for participation in the Plan unless
such action of the Board shall be subject to ratification by the stockholders of
the Parent.
9.03 Nontransferable. Plan Share Awards and rights to Plan Shares shall
not be transferable by a Participant, and during the lifetime of the
Participant, Plan Shares may only be earned by and paid to the Participant who
was notified in writing of the Award by the Committee pursuant to Section 6.03.
No Participant or Beneficiary shall have any right in or claim to any assets of
the Plan or Trust, nor shall the Parent, Bank, or any Subsidiary be subject to
any claim for benefits hereunder.
9.04 No Employment Rights. Neither the Plan nor any grant of a Plan
Share Award or Plan Shares hereunder nor any action taken by the Trustee, the
Committee or the Board in connection with the Plan shall create any right,
either express or implied, on the part of any Participant to continue in the
employ or service of the Parent, Bank, or a Subsidiary thereof.
9.05 Voting and Dividend Rights. No Participant shall have any voting
or dividend rights of a stockholder with respect to any Plan Shares covered by a
Plan Share Award, except as expressly provided in Sections 7.02 and 7.04 above,
prior to the time said Plan Shares are actually distributed to such Participant.
9.06 Governing Law. The Plan and Trust shall be governed by and
construed under the laws of the State of Florida, except to the extent that
Federal Law shall be deemed applicable.
9.07 Effective Date. The Plan shall be effective as of the date of
ratification of the Plan by stockholders of the Parent, subject to the receipt
of approval or non-objection by the OTS or other applicable banking regulator,
if applicable.
9.08 Term of Plan. This Plan shall remain in effect until the earlier
of (i) termination by the Board, (ii) the distribution of all assets of the
Trust, or (iii) 21 years from the Effective Date. Termination of the Plan shall
not effect any Plan Share Awards previously granted, and such Plan Share Awards
shall remain valid and in effect until they have been earned and paid, or by
their terms expire or are forfeited.
9.09 Tax Status of Trust. It is intended that the Trust established
hereby shall be treated as a grantor trust of the Bank under the provisions of
Section 671 et seq. of the Internal Revenue Code of 1986, as amended, as the
same may be amended from time to time.
B-10
APPENDIX C
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FLORIDAFIRST BANCORP, INC.
205 EAST ORANGE STREET
LAKELAND, FLORIDA 33801-4611
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ANNUAL MEETING OF STOCKHOLDERS
JANUARY 29, 2002
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The undersigned hereby appoints the Board of Directors of FloridaFirst
Bancorp, Inc. (the "Company"), or its designee, with full powers of
substitution, to act as attorneys and proxies for the undersigned, to vote all
shares of common stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders (the "Meeting"), to be held at 205 East
Orange Street, Lakeland, Florida, on Tuesday, January 29, 2002 at 8:30 a.m.,
Eastern Time, and at any and all adjournments thereof, in the following manner:
FOR WITHHELD
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I. To elect four directors as listed below
with terms to expire during the year listed.
Arthur J. Rowbotham (2002) [_] [_]
Llewellyn N. Belcourt (2004) [_] [_]
Gregory C. Wilkes (2004) [_] [_]
G.F. Zimmermann, III (2004) [_] [_]
INSTRUCTIONS: To withhold your vote for any individual nominee, write
the nominee(s)' name(s) on the line below.
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FOR AGAINST ABSTAIN
--- ------- -------
II. The ratification of the FloridaFirst Bancorp, Inc.
2002 Stock Option Plan. [_] [_] [_]
III. The ratification of the FloridaFirst Bank
2002 Restricted Stock Plan. [_] [_] [_]
IV. The ratification of the FloridaFirst Bancorp, Inc.
1999 Stock Option Plan. [_] [_] [_]
V. The ratification of the FloridaFirst Bank
1999 Restricted Stock Plan. [_] [_] [_]
VI. To ratify the appointment of Hacker,
Johnson & Smith PA as independent
public accountants of the Company for
the fiscal year ending September 30, 2002. [_] [_] [_]
The Board of Directors recommends a vote "FOR" all of the above listed
propositions. ---
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THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elects to vote at the Meeting, or
at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the stockholder's decision to terminate this proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this proxy by filing a
subsequently dated proxy or by written notification to the Secretary of the
Company of his decision to terminate this proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders and a
Proxy Statement dated December 21, 2001.
[_] Please check here if you
Dated: plan to attend the Meeting.
- ----------------------------------- --------------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ----------------------------------- --------------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
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PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
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