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 toss.240.14a-11(c) orss.240.14a-12
BUCS Financial Corp
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
(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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
[BUCS FINANCIAL CORP LETTERHEAD]
March 27, 2002
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of BUCS Financial
Corp (the "Company"), we cordially invite you to attend our first Annual Meeting
of Stockholders (the "Meeting") to be held at the Pikesville Hilton, 1726
Reistertown Road, Baltimore, Maryland, on April 29, 2002, at 5:30 p.m. The
attached Notice of Annual Meeting of Stockholders and Proxy Statement describe
the formal business to be transacted at the Meeting.
The Board of Directors of the Company has determined that the matters
to be considered at the Meeting, described in the accompanying Notice of Annual
Meeting and Proxy Statement, are in the best interest of the Company and its
stockholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID RETURN
ENVELOPE AS QUICKLY AS POSSIBLE. This will not prevent you from voting in person
at the Meeting, but will assure that your vote is counted if you are unable to
attend the Meeting. Your vote is very important.
Sincerely,
/s/Herbert J. Moltzan
----------------------------------------
Herbert J. Moltzan
President and Chief Executive Officer
- --------------------------------------------------------------------------------
BUCS FINANCIAL CORP
10455 MILL RUN CIRCLE
OWINGS MILLS, MARYLAND 21117
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 29, 2002
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of BUCS Financial Corp (the "Company") will be held at the Pikesville Hilton,
1726 Reistertown Road, Baltimore, Maryland, on Monday, April 29, 2002, at 5:30
p.m. The Meeting is for the purpose of considering and acting upon the following
matters:
1. The election of four directors of BUCS Financial Corp;
2. The ratification of the BUCS Financial Corp 2002 Stock Option Plan
(the "Option Plan");
3. The ratification of the BUCS Federal Bank 2002 Restricted Stock Plan
(the "RSP"); and
4. The ratification of the appointment of Stegman & Company as the
Company's independent auditor for the fiscal year ending December 31,
2002.
The transaction of such other business as may properly come before the
Meeting or any adjournments thereof may also be acted upon. The Board of
Directors is not aware of any other business to come before the Meeting.
The Board of Directors of the Company has determined that the matters
to be considered at the Meeting, described in the accompanying Notice of Annual
Meeting and Proxy Statement, are in the best interest of the Company and its
stockholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
Action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Pursuant to the
Company's Bylaws, the Board of Directors has fixed the close of business on
March 15, 2002, as the record date for determination of the stockholders
entitled to vote at the Meeting and any adjournments thereof.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN, DATE
AND RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. YOU MAY
REVOKE YOUR PROXY BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN
REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE. IF YOU ARE PRESENT AT
THE MEETING YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT
BEFORE THE MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT
REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR
RECORD HOLDER TO VOTE IN PERSON AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/M. Robin Copeland
----------------------------
M. Robin Copeland
Secretary
Owings Mills, Maryland
March 27, 2002
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROXY STATEMENT
OF
BUCS FINANCIAL CORP
10455 MILL RUN CIRCLE
OWINGS MILLS, MARYLAND 21117
- --------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
April 29, 2002
- --------------------------------------------------------------------------------
GENERAL
- --------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of BUCS Financial Corp (the "Company") to
be used at the Annual Meeting of Stockholders of the Company which will be held
at the Pikesville Hilton, 1726 Reistertown Road, Baltimore, Maryland, on April
29, 2002, at 5:30 p.m. (the "Meeting"). The accompanying Notice of Annual
Meeting of Stockholders and this Proxy Statement are being first mailed to
stockholders on or about March 27, 2002. The Company is the parent company of
BUCS Federal Bank (the "Bank"). The Company was formed as a corporation
chartered under the laws of Maryland at the direction of the Bank to acquire all
of the outstanding stock of the Bank issued in connection with the completion of
the Bank's mutual-to-stock conversion on March 14, 2001.
At the Meeting, stockholders will consider and vote upon (i) the
election of four directors of the Company, (ii) the ratification of the BUCS
Financial Corp 2002 Stock Option Plan (the "Option Plan"), (iii) the
ratification of the BUCS Federal Bank 2002 Restricted Stock Plan (the "RSP" or
the "Restricted Stock Plan") and (iv) the ratification of the appointment of
Stegman & Company as the Company's independent auditor for the fiscal year
ending December 31, 2002.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Meeting. Execution of a proxy, however,
confers on the designated proxyholder the discretionary authority to vote the
shares represented by such proxy in accordance with their best judgment on such
other business, if any, that may properly come before the Meeting or any
adjournment thereof.
- --------------------------------------------------------------------------------
VOTING AND REVOCABILITY OF PROXIES
- --------------------------------------------------------------------------------
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company at the address above or by the filing of
a later dated proxy prior to a vote being taken on a particular proposal at the
Meeting. A proxy will not be voted if a stockholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors will be voted as
specified thereon. If no specification is made, signed proxies will be voted
"FOR" the nominees for director as set forth herein, "FOR" the ratification of
the Option Plan, "FOR" the ratification of the RSP, and "FOR" the ratification
of Stegman & Company as the Company's independent auditor for the fiscal year
ending December 31, 2002. The proxy confers discretionary authority on the
persons named thereon to vote with respect to the election of any person as a
director where the nominee is unable to serve, or for good cause will not serve,
and with respect to matters incident to the conduct of the Meeting.
-1-
- --------------------------------------------------------------------------------
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
- --------------------------------------------------------------------------------
Officers, directors and employees of the Company have an interest in a
matter being presented for shareholder ratification. Upon shareholder
ratification of the Option Plan and the RSP, officers, directors and employees
of the Company may be granted stock options or restricted stock under the Option
Plan and the RSP. The ratification of the Option Plan and the RSP are being
presented as Proposal II and Proposal III, respectively.
- --------------------------------------------------------------------------------
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
- --------------------------------------------------------------------------------
Stockholders of record as of the close of business on March 15, 2002
(the "Record Date"), are entitled to one vote for each share of Common Stock
then held. As of the Record Date, the Company had 405,085 shares of Common Stock
issued and outstanding.
The articles of incorporation of the Company ("Articles of
Incorporation") provide that in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a person who beneficially owns in excess of 10% of the then outstanding shares
of Common Stock (the "Limit") be entitled or permitted to any vote with respect
to the shares held in excess of the Limit. Beneficial ownership is determined
pursuant to the definition in the Articles of Incorporation and includes shares
beneficially owned by such person or any of his or her affiliates (as such terms
are defined in the Articles of Incorporation), or which such person or any of
his or her affiliates has the right to acquire upon the exercise of conversion
rights or options and shares as to which such person or any of his or her
affiliates or associates have or share investment or voting power, but neither
any employee stock ownership or similar plan of the Company or any subsidiary,
nor any trustee with respect thereto or any affiliate of such trustee (solely by
reason of such capacity of such trustee), shall be deemed, for purposes of the
Articles of Incorporation, to beneficially own any Common Stock held under any
such plan.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting. With respect to any matter, 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 be considered present for
purposes of determining whether a quorum is present. In the event there are not
sufficient votes for a quorum or to ratify any proposals at the time of the
Meeting, the Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors (Proposal I), the proxy provided by the
Board of Directors allows a stockholder to vote for the election of the nominees
proposed by the Board of Directors, or to withhold authority to vote for the
nominees being proposed. Under the Company's bylaws, directors are elected by a
plurality of votes cast, without regard to either (i) Broker Non-Votes or (ii)
proxies as to which authority to vote for the nominees being proposed is
withheld.
With respect to Proposal II, Ratification of the Option Plan, and
Proposal III, Ratification of the RSP, such matters shall be determined by an
affirmative vote of a majority of total votes cast on the matter. Proxies marked
"ABSTAIN" will have the same impact as a vote "AGAINST" such matters. Broker
Non-Votes will have no impact on the outcome of the vote on such matters.
Concerning all other matters that may properly come before the Meeting,
the ratification of the independent auditors at Proposal IV, by checking the
appropriate box, a shareholder may: (i) vote "FOR"
-2-
the item, (ii) vote "AGAINST" the item, or (iii) "ABSTAIN" with respect to the
item. Unless otherwise required by law, all such matters shall be determined by
a majority of votes cast affirmatively or negatively without regard to (i)
Broker Non-Votes or (ii) proxies marked "ABSTAIN" as to that matter.
Security Ownership of Certain Beneficial Owners
Persons and groups owning in excess of 5% of the outstanding shares of
Common Stock are required to file reports regarding such ownership pursuant to
the Securities Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth, as of the Record Date, persons or groups who own more than 5%
of the Common Stock and the ownership of all executive officers and Directors of
the Company as a group. Other than as noted below, management knows of no person
or group that owns more than 5% of the outstanding shares of Common Stock at the
Record Date.
Percent of Shares of
Amount and Nature of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
- ------------------------------------ -------------------- --------------------
BUCS Federal Bank Employee Stock Ownership Plan ("ESOP")
10455 Mill Run Circle 32,410(1) 8.0%
Owings Mills, Maryland 21117
Jeffrey L. Gendell
200 Park Avenue, Suite 3900 32,500(2) 8.0%
New York, New York 10166
All directors and executive officers of the
Company as a group (12 persons) 52,235(3) 12.9%
- --------------------------------------------
(1) These shares are held in a suspense account and are allocated among
participants annually on the basis of compensation as the ESOP debt is
repaid. As of the Record Date, 2,593 shares have been allocated to ESOP
participants.
(2) Based upon a Schedule 13D filed with the SEC on March 28, 2001.
(3) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust and other indirect ownership, over which shares
the individuals effectively exercise sole voting and investment power,
unless otherwise indicated. Excludes 29,817 unallocated shares held by the
ESOP over which the ESOP Plan Committee exercises sole voting power. The
Board of Directors appointed Directors Pescrille, Bowers, Ohrt and Summers
to serve as the ESOP Trustees and as the ESOP Plan Committee. The ESOP Plan
Committee directs the vote of unallocated shares and shares for which
timely voting directions are not received. Such individuals disclaim
beneficial ownership with respect to shares held by the ESOP.
- --------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of the Common Stock, to file reports of ownership and changes in
ownership of the Common Stock with the Securities and Exchange Commission and to
provide copies of those reports to the Company. The Company is not aware of any
beneficial owner, as defined under Section 16(a), of more than ten percent of
its Common Stock. To the best of the Company's knowledge, all Section 16(a)
filing requirements applicable to its officers and directors were complied with
during the 2001 fiscal year.
-3-
- --------------------------------------------------------------------------------
PROPOSAL I - ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
The Articles of Incorporation require that the Board of 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 ten members.
Four directors will be elected at the Meeting, each to serve for a three-year
term or until their successors have been elected and qualified.
Allen Maier, M. Robin Copeland, Herbert J. Moltzan and Thomas Markel
have been nominated by the Board of Directors to serve as directors. Each of the
nominees is currently a member of the Board of Directors. It is intended that
proxies solicited by the Board of Directors will, unless otherwise specified, be
voted for the election of the named nominees. If either of the nominees is
unable to serve, the shares represented by all valid proxies will be voted for
the election of such substitutes as the Board of Directors may recommend or the
size of the Board may be reduced to eliminate the vacancy. At this time, the
Board of Directors knows of no reason why either of the nominees might be
unavailable to serve.
The following table sets forth the names, ages, terms of, length of
board service and the number and percentage of shares of Common Stock
beneficially owned by both nominees and for each other director of the Company
who will continue to serve as a director after the Meeting.
Shares of
Age at Year First Current Common Stock Percent
December 31, Elected or Term to Beneficially of
Name 2001 Appointed(1) Expire Owned(2) Class
- ---- -------------- ------------ ------ -------- -----
Board Nominees for Term to Expire in 2005
Allen Maier 53 1983 2002 2,000 *
M. Robin Copeland 46 1992 2002 250 *
Herbert J. Moltzan 56 1998 2002 10,465 2.6%
Thomas Markel 48 1994 2002 10,590 2.6%
THE BOARD OF DIRECTORS RECOMMENDS THAT ITS NOMINEES
BE REELECTED AS DIRECTORS
Directors Continuing in Office
Joseph Pescrille 64 1995 2004 7,009(3) 1.7%
A. Virginia Wampler 55 1983 2004 6,000 1.5%
Dale Summers 43 1991 2004 2,850(3) *
Brian Bowers 38 1995 2003 0 *
Harry Fox 53 1987 2003 2,500 *
Peg Ohrt 53 1999 2003 1,000(3) *
- ------------------------------
* Less than 1%.
(1) Refers to the year the individual first became a director of the Bank.
(2) Beneficial ownership as of the Record Date. Includes shares of Common
Stock held directly as well as by spouses or minor children, in trust,
and other indirect ownership, over which shares the individuals
effectively exercise sole or shared voting and investment power, unless
otherwise indicated.
(3) Excludes 29,817 unallocated shares of Common Stock held under the ESOP
over which such individual, an ESOP Trustee, exercises sole voting
power. Such individual disclaims beneficial ownership with respect to
ESOP shares.
-4-
Biographical Information
Directors and Executive Officers of the Company. Set forth below is the
business experience for the past five years of each of the directors, nominees
and executive officers of the Company. All directors of the Bank in October 2000
became directors of the Company at that time.
Allen Maier has been a director of the Bank since 1983 and has served
as Chairman since 1996. Mr. Maier is a Sales Representative with CareFirst
BlueCross BlueShield, a position he has held since 1972. Mr. Maier also serves
on the Board of Directors for the Leukemia Society of Maryland. Mr. Maier is a
cousin of the wife of Director Fox.
M. Robin Copeland has been a director of the Bank since 1992 and has
served as Secretary since 1994. Ms. Copeland has been the Assistant Treasurer
and Vice President of Treasury for Magellan Behavioral Health, a managed care
organization, since 1995. Her duties include management of relationships with
banks.
Herbert J. Moltzan has been a director of the Bank since January 1999.
He has served as President and Chief Executive Officer of the Bank since 1985.
Mr. Moltzan also serves as the senior loan officer of the Bank and as the chief
financial officer. Mr. Moltzan is active in the Red Cross and serves as
Committee Chairman for a local Boy Scout troop. He is also a member of the Board
of Directors of The 1st Tee Howard County and The Howard County Volunteer
Center, and is Treasurer of the Rotary Club of Columbia, Maryland.
Thomas Markel has been a director of the Bank since 1994. Mr. Markel is
a certified public accountant and since 1985 has served as the Controller and
the Assistant Vice President in Finance for Med Star Physician Partners, a
physician practice management firm.
Joseph Pescrille has been a director of the Bank since 1996. Mr.
Pescrille retired during 1999. He was self-employed as an actuary/financial
consultant from 1996 to 1999. From 1994 to 1996, Mr. Pescrille served as the
Chief Financial Officer of United Health Care of Mid Atlantic. Prior to that, he
was a Senior Vice President and the Chief Actuary for Blue Cross and Blue Shield
of Maryland, Inc. He is active in volunteering for the Baltimore County
Department of Aging and is a member of the Board of Advisors for Play Centers
Inc., a non-profit child care organization.
A. Virginia Wampler has been a director of the Bank since 1983. Ms.
Wampler retired in January 2002. She served as a Systems Manager for CareFirst
BlueCross BlueShield since 1966 and is responsible for business design and
support of core software systems for health insurance products and claim
processing administration.
Dale Summers has served as a director of the Bank since 1991. Mr.
Summers has been employed as a marketing manager by Advance Paradigm, a health
benefits management company, since 1998. From 1995 to 1998, he was employed as
the Director of Management Services for Ascendia Healthcare Management. Mr.
Summers is also active in fund-raising for educational institutions in the local
community.
Brian Bowers has served as a director and Treasurer of the Bank since
1995. Mr. Bowers is licensed as a broker-dealer and was recently employed as
Chief Financial Officer/Portfolio Manager with FBR Asset Investment Corp. He
currently manages mortgage-backed securities, money market mutual fund, and bond
mutual fund portfolios totalling over $3 billion. From April 2000 until March
2002, he was
-5-
employed as a consultant/analyst with BB&T Capital Markets. For 10 years prior
to that, he was a Portfolio Manager for CareFirst BlueCross BlueShield.
Harry Fox has been a director of the Bank since 1987. Mr. Fox has been
an Account Manager in large group renewal and upgrade sales for CareFirst
BlueCross BlueShield since 1972. He also serves on the Board of Directors for
the Pikesville Chamber of Commerce. Mr. Fox's wife is a cousin of Director
Maier.
Peg Ohrt has been a director of the Bank since 1999. Since 1998, Ms.
Ohrt has served as a Vice President of Human Resources for Corporate Office
Properties Trust, a business engaged in real estate investment trusts. From 1996
to 1997, Ms. Ohrt was employed by Aether Technologies Inc., a software
development company, and served as its Vice President of Human Resources and
Customer Service.
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 year ended December
31, 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 the committees on which he served during the year ended
December 31, 2001.
Nominating Committee. The entire Board of Directors serves as a
Nominating Committee to select persons to be nominated to serve as directors of
the Company and met once in such capacity during the year ended December 31,
2001. The Nominating Committee is not required to consider nominees recommended
by stockholders of the Company.
Compensation Committee. The Company has no full time employees and
relies on the employees of the Bank for the limited services required by the
Company. All compensation paid to executive officers of the Company is paid by
the Bank. The Compensation Committee of the Bank's Board of Directors consists
of Directors Pescrille, Bowers, Summers, Ohrt and Moltzan. The Compensation
Committee met six times during the year ended December 31, 2001.
Audit Committee. The Audit Committee consists of Directors Markel,
Wampler and Fox. All members of the Audit Committee are independent under the
rules of the Nasdaq stock market. As the Company's stock is traded on the OTC
Electronic Bulletin Board, the Company is not required to and has not adopted a
written charter for the Audit Committee. The Audit Committee generally meets
quarterly and meets with the Company's independent auditor to review the results
of the annual audit and other related matters. The Audit Committee met two times
during the year ended December 31, 2001.
Report of the Audit Committee. For the fiscal year ended December 31,
2001, the Audit Committee: (i) reviewed and discussed the Company's audited
financial statements with management, (ii) discussed with the Company's
independent auditor, Stegman & Company, all matters required to be discussed
under Statement on Auditing Standards No. 61, and (iii) received from Stegman &
Company disclosures regarding Stegman & Company's independence as required by
Independence Standards Board Standard No. 1 and discuss with Stegman & Company
its independence. Based on the foregoing review and discussions, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2001.
Audit Committee:
Thomas Markel, A. Virginia Wampler and Harry Fox.
-6-
Audit Fees. For the year ended December 31, 2001, the Company paid
approximately $27,500 for professional services rendered by Stegman & Company in
connection with the audit of the annual financial statements and review of the
quarterly financial statements. In addition, the Company paid approximately
$26,275 for professional services rendered by the Company's prior independent
auditor, Jameson & Associates, P.A., in connection with performance of various
internal audit procedures.
Financial Information Systems Design and Implementation Fees. There
were no fees billed by Stegman & Company for professional services rendered for
information technology services relating to financial information systems design
and implementation for the fiscal year ended December 31, 2001.
All Other Fees. The aggregate fees paid by the Company to Jameson &
Associates for services rendered to the Company, other than the services
described above under "Audit Fees," for the fiscal year ended December 31, 2001
were $5,000 for tax preparation services.
The audit committee has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant's independence.
Certain Relationships and Related Transactions
The Bank, like many financial institutions, has followed a policy of
offering residential mortgage loans for the financing of personal residences and
consumer loans to its officers, directors and employees. Loans are made in the
ordinary course of business on substantially the same terms and conditions,
including interest rate and collateral, as those of comparable transactions
prevailing at the time with other persons, and do not include more than the
normal risk of collectibility or present other unfavorable features.
- --------------------------------------------------------------------------------
DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
- --------------------------------------------------------------------------------
Compensation of Directors
Board Fees. The Company does not presently compensate its directors for
membership on the Board of Directors. Each director of the Company is also a
director of the Bank. During 2001, each director was paid a fee of $100 per
meeting attended. Directors do not receive compensation for attending committee
meetings. The total fees paid to the directors for the year ended December 31,
2001 were approximately $10,800.
Stock Awards. Each non-employee director will be awarded options to
purchase 200 shares of Common Stock upon stockholder ratification of the Option
Plan, at an exercise price equal to the fair market value of the Common Stock on
the date of stockholder ratification. At the present time, no determination has
been made as to granting of any awards under the RSP. Ratification of these
plans is being presented in this Proxy Statement as Proposal II and Proposal
III.
Executive Compensation
General. The Company has no full time employees and relies on the
employees of the Bank for the limited services required by the Company. All
compensation paid to officers of the Company is paid by the Bank.
-7-
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the Company's President and Chief
Executive Officer. No executive officer received a total annual salary and bonus
in excess of $100,000 for the fiscal year ended December 31, 2001.
Annual Compensation
----------------------------------------
Name and Fiscal Other Annual
Principal Position Year Salary Bonus Compensation(1)
- ------------------- ---- ------ ----- ---------------
Herbert J. Moltzan, President and CEO 2001 $117,568 $15,000 $15,488
2000 107,578 10,700 7,958
1999 101,312 14,532 7,543
- ------------------------------
(1) For 2001, represents the award of 465 shares under the ESOP as of December
31, 2001, based upon the last reported sales price of the Common Stock on
the date of the award of $16.80, and includes the Bank's contribution to
Mr. Moltzan's account under a 401(k) Plan of $7,678 during 2001.
Employment Agreements. The Bank has entered into an employment
agreement with its President and Chief Executive Officer, Herbert J. Moltzan.
Mr. Moltzan's current base salary under the employment agreement is $130,000.
The employment agreement has a term of three years. The agreement is terminable
by the Bank for "just cause" as defined in the agreement. If Mr. Moltzan is
terminated without just cause, he will be entitled to a continuation of his
salary from the date of termination through the remaining term of the agreement,
but in no event for a period of less than 1 year. The employment agreement
contains a provision stating that in the event of the termination of employment
in connection with any change in control of the Bank or the Company, Mr. Moltzan
will be paid a lump sum amount equal to 2.99 times his five-year average annual
taxable cash compensation. If a payment had been made under the agreement as of
December 31, 2001, the payment would have equaled approximately $338,500. The
aggregate payment that would have been made to Mr. Moltzan would be an expense
to the Bank and would have resulted in reductions to the Bank's net income and
capital. The agreement may be renewed annually by the Bank's Board of Directors
upon a determination of satisfactory performance within the board's sole
discretion. If Mr. Moltzan shall become disabled during the term of the
agreement, he shall continue to receive payment of 100% of his base salary for a
period of 12 months and 65% of his base salary for the remaining term of the
agreement. The payments shall be reduced by any other benefit payments made
under other disability programs in effect for the Bank's employees.
- --------------------------------------------------------------------------------
PROPOSAL II - RATIFICATION OF THE OPTION PLAN
- --------------------------------------------------------------------------------
General
The Company's Board of Directors has adopted the Option Plan. The
Option Plan is subject to ratification by the Company's stockholders. Pursuant
to the Option Plan, up to 40,508 shares of Common Stock (equal to 10% 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 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 Option Plan, which shall become effective upon the date of stockholder
ratification (the "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 Option Plan is qualified in its entirety by reference to the
complete provisions of the Option Plan which is attached hereto as Appendix A.
-8-
The 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 "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 directors, directors emeritus, 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 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.
Officers, directors, directors emeritus, employees and other persons
who are designated by the Option Committee will be eligible to receive, at no
cost to them, options under the Option Plan (the "Optionees"). Each option
granted pursuant to the Option Plan shall be evidenced by an instrument in such
form as the Option Committee shall from time to time approve. 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 Option Plan. Further, the Company will receive no consideration other
than the option exercise price per share for Common Stock issued to Optionees
upon the exercise of those options.
Shares issuable under the Option Plan may be 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 Option
Plan. No option or any right or interest therein is assignable or transferable
except by will or the laws of descent and distribution. The Option Plan shall
continue in effect for a term of ten years from the Plan Effective Date.
Stock Options
The Option Committee may grant options. The terms and conditions of
options relating to the effect of a 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.
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 Option Committee. If the Common
Stock is listed on a national securities exchange at the time of the granting of
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. The Option Committee may impose additional
conditions upon the right of a Optionee to exercise any option granted hereunder
which are not inconsistent with the terms of the Option Plan.
-9-
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 a
Optionee (or the Optionee's personal representative), the Option Committee, in
its sole and absolute discretion, may make a cash payment to the Optionee, in
whole or in part, in lieu of the delivery of shares of Common Stock. Such cash
payment to be paid in lieu of delivery of Common Stock shall be equal to the
difference between the Fair Market Value of the Common Stock on the date of the
option exercise and the exercise price per share of the option. Such cash
payment shall be in exchange for the cancellation of such option. Such cash
payment shall not be made in the event that such transaction would result in
liability to the Optionee and the Company under Section 16(b) of the 1934 Act or
any related regulations promulgated thereunder.
The Option Plan provides that the Board of Directors of the Company may
authorize the Option Committee to direct the execution of an instrument
providing for the modification, extension or renewal of any outstanding option,
provided that no such modification, extension or renewal shall confer on the
Optionee any right or benefit 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 Option Plan.
Awards Under the Option Plan
The Board or the Option Committee shall from time to time determine the
officers, directors, directors emeritus, employees and other persons who shall
be granted options under the Option Plan and the number of options to be granted
to any individual. In selecting Optionees and in determining the number of
options to be granted, the Board or the Option Committee may consider the nature
of the services rendered by each such individual, each individual's current and
potential contribution to the Company and such other factors as may be deemed
relevant. The Optionees may, if otherwise eligible, be granted additional
options. In no event shall options be granted under the Option Plan to any
individual exceeding 25% of the total number of available shares of Common Stock
under the Option Plan. In no event shall options be granted under the Option
Plan to non-employee directors exceed more than 8,000 options in the aggregate.
Pursuant to the terms of the Option Plan, options to purchase up to 200
shares of Common Stock will be granted to each non-employee director of the
Company, as of the 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 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 Plan Effective Date will be first exercisable on
the Plan Effective Date at the rate of 331/3% on the date of the grant 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 Option Plan) of the Company.
-10-
The table below presents information related to stock option awards
anticipated to be awarded upon stockholder ratification of the Option Plan.
NEW PLAN BENEFIT
OPTION PLAN
----------------
Number of Options
Name and Position Dollar Value(1) to be Granted
- ----------------- --------------- -------------
Herbert J. Moltzan, President,
CEO and Director N/A 3,000(2)(4)
Allen Maier, Director N/A 200(3)(4)
M. Robin Copeland, Director N/A 200(3)(4)
Thomas Markel, Director N/A 200(3)(4)
Executive Group (3 persons) N/A 5,000(2)
Non-Executive Director Group (9 persons) N/A 1,800(3)
Non-Executive Officer Employee Group
(6 persons) N/A 3,500(2)
- ------------------
(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 Option Plan. Accordingly, the dollar value of the options was not
determinable at the time of mailing this proxy statement. On March 15,
2002, the last reported sales price of the Common Stock on the OTC
Electronic Bulletin Board was $19.00 per share.
(2) Options awarded to employees will be exercisable as follows: Options
awarded at the time of stockholder approval are first exercisable at
the rate of 331/3% on the date of the grant 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.
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 the date of the grant 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, such awards shall be 100% exercisable.
(4) Nominee for election as a 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 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
-11-
appropriate consideration is paid to the Optionee in connection therewith;
and/or (iii) make such other adjustments in connection with the Option Plan as
the Option Committee, in its sole discretion, deems necessary, desirable,
appropriate or advisable.
The Option Committee will at all times have the power to accelerate the
exercise date of all options granted under the Option Plan. In the case of a
Change in Control of the Company as determined by the 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 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:
the shares of stock issuable upon the exercise of such Substitute Options shall
constitute securities registered in accordance with the Securities Act of 1933,
as amended ("1933 Act") or such securities shall be exempt from such
registration in accordance with Sections 3(a)(2) or 3(a)(5) of the 1933 Act
(collectively, "Registered Securities"), or in the alternative, if the
securities issuable upon the exercise of such Substitute Options shall not
constitute Registered Securities, then the Optionee will receive upon
consummation of the Change in Control a cash payment for each option surrendered
equal to the difference between (1) the Fair Market Value of the consideration
to be received for each share of Common Stock in the Change in Control times the
number of shares of Common Stock subject to such surrendered options, and (2)
the aggregate exercise price of all such surrendered options, or (ii) in the
event of a transaction under the terms of which the holders of the Common Stock
of the Company will receive upon consummation thereof a cash payment (the
"Merger Price") for each share of Common Stock exchanged in the Change in
Control transaction, to make or to provide for a cash payment to the Optionees
equal to the difference between (A) the Merger Price times the number of shares
of Common Stock subject to such options held by each Optionee (to the extent
then exercisable at prices not in excess of the Merger Price) and (B) the
aggregate exercise price of all such surrendered options in exchange for such
surrendered options.
The power of the Option Committee to accelerate the exercise of options
and the immediate exercisability of options in the case of a Change in Control
of the Company could have an anti-takeover effect by making it more costly for a
potential acquiror to obtain control of the Company due to the higher number of
shares outstanding following such exercise of options. The power of the Option
Committee to make adjustments in connection with the Option Plan, including
adjusting the number of shares subject to options and canceling options, prior
to or after the occurrence of an extraordinary corporate action, allows the
Option Committee to adapt the Option Plan to operate in changed circumstances,
to adjust the Option Plan to fit a smaller or larger institution, and to permit
the issuance of options to new management following such extraordinary corporate
action. However, this power of the Option Committee also has an anti-takeover
effect, by allowing the Option Committee to adjust the Option Plan in a manner
to allow the present 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.
-12-
Although the Option Plan may have an anti-takeover effect, the
Company's Board of Directors did not adopt the Option Plan specifically for
anti-takeover purposes. The Option Plan could render it more difficult to obtain
support for stockholder proposals opposed by the Company's Board and management
in that recipients of options could choose to exercise such options and thereby
increase the number of shares for which they hold voting power. Also, the
exercise of such options could make it easier for the Board and management to
block the approval of certain transactions. In addition, the exercise of such
options could increase the cost of an acquisition by a potential acquiror.
Amendment and Termination of the Option Plan
The Board of Directors may alter, suspend or discontinue the Option
Plan, except that no action of the Board shall increase the maximum number of
shares of Common Stock issuable under the Option Plan, materially increase the
benefits accruing to Optionees under the Option Plan or materially modify the
requirements for eligibility for participation in the 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 Option Plan
The Common Stock to be issued upon the exercise of options awarded
under the Option Plan may either be authorized but unissued shares of Common
Stock 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
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.,
40,508 shares of Common Stock), then the dilutive effect to current stockholders
would be approximately 9.1%. The Company can avoid dilution resulting from
awards under the Option Plan by delivering shares repurchased in the open market
upon the exercise of options.
Federal Income Tax Consequences
The options awarded under the Option Plan are not intended to qualify
as "incentive stock options" in accordance with Section 422 of Internal Revenue
Code of 1986, as amended (the "Code"). Under present federal tax laws, awards
under the Option Plan will have the following consequences:
1. The grant of an option will not by itself result in the recognition of
taxable income to a Optionee nor entitle the Company to a tax deduction
at the time of such grant.
2. The exercise of an 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.
3. The Company will be allowed a tax deduction for federal tax purposes
equal to the amount of ordinary income recognized by a Optionee at the
time the optionee recognizes such ordinary income.
4. In accordance with Section 162(m) of the Code, the Company's tax
deductions for compensation paid to the most highly paid executives
named in the Company's Proxy Statement may be limited to no more than
$1 million per year, excluding certain "performance-based"
compensation. The Company intends for the award of options under the
Option Plan to comply with the requirement for an exception to Section
162(m) of the Code applicable to stock option plans so that the amount
of the
-13-
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 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 Option Plan will be
considered outstanding for purposes of calculating earnings per share on a
diluted basis.
Stockholder Ratification
Stockholder ratification of the Option Plan is being sought to enable
Optionees to qualify for certain exempt transactions related to the short-swing
profit recapture provisions of Section 16(b) of the 1934 Act 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 II.
The Board of Directors recommends a vote "FOR" the ratification of the Option
Plan.
- --------------------------------------------------------------------------------
PROPOSAL III - RATIFICATION OF THE RESTRICTED STOCK PLAN
- --------------------------------------------------------------------------------
General
The Board of Directors of the Company and the Bank have adopted the
Restricted Stock Plan 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 RSP to purchase up to
16,203 shares of Common Stock representing up to 4% of the aggregate number of
shares presently outstanding. Alternatively, the 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 RSP will be purchased at the Fair Market
Value of such stock on the date of purchase. Awards under the 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 RSP which
is qualified in its entirety by reference to the complete provisions of the RSP
which is attached hereto as Appendix B.
Awards Under the RSP
Benefits under the RSP ("RSP 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 "RSP Committee") appointed by the
Bank's Board of Directors. The 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 RSP (the "RSP Trust"). The RSP Committee shall determine the terms and
conditions of the RSP Share Awards. A recipient of such restricted
-14-
stock will not be entitled to voting rights associated with such shares prior to
the applicable date such shares are earned. Dividends paid on RSP 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
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 (as such term is defined in the 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 RSP Share Awards 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 recipient and distributed as soon as
practicable thereafter. The Board of Directors can terminate the RSP at any
time, and if it does so, any shares not allocated will revert to the Bank. The
RSP Share Awards under the RSP will be determined by the RSP Committee. In no
event shall any individual receive RSP Share Awards in excess of 50% of the
aggregate Common Stock authorized under the RSP ("RSP Share Reserve").
The aggregate number of RSP Shares available for issuance pursuant to
the RSP Share Awards and the number of shares to which any RSP 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 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.
At the present time, no determination has been made as to the granting
of any RSP Share Awards under the RSP.
Amendment and Termination of the RSP
The Board may amend or terminate the RSP at any time. However, no
action of the Board may increase the maximum number of RSP Shares permitted to
be awarded under the RSP, except for adjustments in the Common Stock of the
Company, materially increase the benefits accruing to participants under the RSP
or materially modify the requirements for eligibility for participation in the
RSP unless such action of the Board shall be subject to ratification by the
stockholders of the Company.
Possible Dilutive Effects of the RSP
It is the Company's present intention to fund the RSP through
open-market purchases of Common Stock, which will cause no dilutive effect. The
RSP provides, however, that Common Stock to be awarded may be acquired by the
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 RSP Share Awards, the interests of current stockholders may be diluted.
If all RSP Share Awards are funded with newly issued shares, the dilutive effect
to existing stockholders would be approximately 3.8%.
Federal Income Tax Consequences
Common Stock awarded under the 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
-15-
30 days of the date of the transfer of such RSP 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 RSP Share Awards at the
time the recipient recognizes taxable ordinary income. A recipient of a RSP
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 RSP Share
Awards at the grant date pro rata over the period of years during which the RSP
Share Awards are earned.
Stockholder Ratification
The RSP and awards made thereunder will not be effective until receipt
of stockholder ratification of Proposal III. Stockholder ratification of the RSP
is being sought to enable recipients of RSP Share Awards to qualify for certain
exemptive treatment from the short-swing profit recapture provisions of Section
16(b) of the 1934 Act. 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
Restricted Stock Plan.
- --------------------------------------------------------------------------------
PROPOSAL IV - RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors of the Company has appointed Stegman & Company
as the Company's independent auditor for the fiscal year ending December 31,
2002, subject to ratification by the Company's stockholders. A representative of
Stegman & Company is expected to be present at the Meeting, will have the
opportunity to make a statement if he or she so desires, and is expected to be
available to respond to appropriate questions.
On April 12, 2001, the Company received notice from Jameson &
Associates, P.A., of their resignation from their engagement as the Company's
independent auditor. Jameson & Associates's reports on the Company's
consolidated financial statements for the two fiscal years ended December 31,
2000 did not contain an adverse opinion or disclaimer of opinion, and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
In connection with audits of the two fiscal years ended December 31, 2000 and
the subsequent interim period preceding the date their resignation, there were
no disagreements between the Company and Jameson & Associates on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which, if not resolved to the satisfaction of Jameson &
Associates, would have caused them to make a reference to the subject matter of
the disagreements in connection with their reports.
On July 29, 2001, the Company appointed the accounting firm of Stegman
& Company as independent accountants for the year ending December 31, 2001. The
Board of Directors approved the selection of Stegman & Company as new
independent accountants upon the recommendation of the
-16-
Company's Audit Committee. Management did not consult with Stegman & Company on
any accounting, auditing or reporting matter, prior to their appointment as
independent accountants.
Ratification of the appointment of the auditors requires the
affirmative vote of a majority of the votes cast, in person or by proxy, by the
stockholders of the Company at the Meeting. The Board of Directors recommends
that stockholders vote "FOR" the ratification of the appointment of Stegman &
Company as the Company's auditors for the 2002 fiscal year.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be considered for inclusion in the Company's proxy
materials for the annual meeting of stockholders for the fiscal year ending
December 31, 2002, all stockholder proposals must be received at the Company's
executive office at 10455 Mill Run Circle, Owings Mills, Maryland 21117 no later
than November 27, 2002. In addition, stockholder proposals must meet other
applicable criteria as set forth in the Company's bylaws in order to be
considered for inclusion in the Company's proxy materials.
Under the Company's bylaws, stockholder proposals that are not included
in the Company's proxy statement for the fiscal year ending December 31, 2002,
will only be considered at the annual meeting to be held in 2003 if the
stockholder submits notice of the proposal to the Company at the above address
by March 31, 2003. In addition, stockholder proposals must meet other applicable
criteria as set forth in the Company's bylaws in order to be considered at the
2003 annual meeting.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any other matters to come before
the Meeting. However, if any other matters should properly come before the
Meeting or any adjournments, it is intended that proxies in the accompanying
form will be voted in respect thereof in accordance with the judgment of the
persons named in the accompanying proxy.
- --------------------------------------------------------------------------------
FORM 10-KSB
- --------------------------------------------------------------------------------
A copy of the Company's annual report on Form 10-KSB for the fiscal
year ended December 31, 2001 will be furnished without charge to stockholders as
of the Record Date upon written request to the Secretary, BUCS Financial Corp,
10455 Mill Run Circle, Owings Mills, Maryland 21117.
BY ORDER OF THE BOARD OF DIRECTORS
/s/M. Robin Copeland
--------------------
M. Robin Copeland
Secretary
-17-
APPENDIX A
BUCS FINANCIAL CORP
2002 STOCK OPTION PLAN
1. Purpose of the Plan. The Plan shall be known as the BUCS Financial
Corp (the "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 Stock Options that do
not qualify as incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (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 a Stock Option, as provided
in the Plan.
"Bank" shall mean BUCS Federal 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.
"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.
A-1
"Company" shall mean the BUCS Financial Corp, the parent corporation of
the Bank, or any successor or Parent thereof.
"Continuous Employment" or "Continuous Status as an Employee" shall
mean the absence of any interruption or termination of employment with the
Company or any present or future Parent or Subsidiary of the Company. Employment
shall not be considered interrupted in the case of sick leave, 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 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 later of: a) the date the Plan is
approved by the Board of the Company, or b) the date that such Plan is ratified
by the stockholders of the Company.
"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.
"Option" or "Stock Option" shall mean an option to purchase Shares
granted pursuant to Section 8 hereof, which option is not intended to qualify
under Section 422 of the Code, 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
A-2
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 BUCS Financial Corp 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 11 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed 40,508 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 of the Company, a
minimum of six months must elapse between the date of the grant of an Option and
the date of the sale of the Common Stock received through the exercise of such
Option.
5. Administration of the Plan.
(a) Composition of the Committee. The Plan shall be administered by the
Board of Directors of the Company 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 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.
A-3
(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 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
other terms and conditions of such Awards in accordance with the Plan. 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) In no event shall Shares subject to Options granted to non-employee
Directors in the aggregate under this Plan exceed more than 8,000 Shares
authorized for delivery under this Plan. 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 15 hereof. No Option shall be granted under the Plan after ten (10)
years from the Effective Date.
8. Terms and Conditions of Stock Options. Each 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 Stock Option granted pursuant to
the Plan shall comply with and be subject to the following terms and conditions.
(a) Options Granted to Directors. Subject to the limitations of Section
6(b), Stock Options to purchase 200 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 will be first exercisable as of the Effective Date and
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
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 Stock Option granted under the Plan shall be made at the
time of exercise of each such
A-4
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.
(d) Term. The term of exercisability of each Stock Option granted
pursuant to the Plan shall be not more than ten (10) years from the date each
such Stock Option is granted.
(e) Exercise Generally. The Committee may impose additional conditions
upon the right of any Participant to exercise any Stock Option granted hereunder
which is not inconsistent with the terms of the Plan. Except as otherwise
provided by the terms of the Plan or by action of the Committee at the time of
the grant of the Options, the Options will be first exercisable at the rate of
one-third of such Award as of the date of grant and one-third annually
thereafter
(f) Cashless Exercise. Subject to vesting requirements, if applicable,
an Optionee who has held a 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 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. Effect of Termination of Employment, Disability or Death on Stock
Options.
The terms and conditions of Stock Options relating to the effect of the
termination of an Optionee's employment or service, or the Disability or death
of an Optionee 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.
10. 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.
A-5
11. 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:
(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;
A-6
(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.
(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 11(a) and 11(b), no Optionee
shall have any rights by reason of the occurrence of any of the events described
in this Section 11.
12. 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.
13. 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.
14. 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 15 hereof.
15. 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 11 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.
(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.
16. 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
A-7
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.
17. 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.
18. 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.
19. 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.
20. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Maryland, except to the extent that
federal law shall be deemed to apply.
A-8
APPENDIX B
BUCS Federal Bank
2002 Restricted Stock Plan
and Trust Agreement
Article I
---------
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 BUCS Federal Bank (the "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, BUCS Financial Corp
("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 BUCS Federal 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.
"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.
B-1
"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 BUCS Financial Corp, the parent corporation of the
Bank.
"Participant" means an Employee, Director or Director Emeritus who
receives a Plan Share Award in accordance with the Plan or action by the Plan
Committee.
"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.
B-2
"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
----------
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.
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.
B-3
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 16,203 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.
Article VI
----------
ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Participants are eligible to receive Plan Share
Awards within the sole discretion of the Committee or in accordance with
specific provisions of the Plan. Participants may be Employees, Directors and
Directors Emeritus within the sole discretion of the Committee or the Board.
6.02 Allocations. The Committee will determine which of the Employees,
Directors and Directors Emeritus 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, Directors and Directors Emeritus will be granted Plan Share
Awards to be awarded from forfeited Shares. In selecting those Employees,
Directors 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
B-4
to the contrary, in no event shall any Participant receive Plan Share Awards in
excess of 50% 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, Director and Directors Emeritus
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, Directors and Directors Emeritus as a group have such a
right. The Committee may, with the approval of the Board (or, if so directed by
the Board) return all Common Stock in the Plan Share Reserve to the Bank at any
time, and cease issuing Plan Share Awards.
Article VII
-----------
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.
B-5
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) 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
B-6
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.
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-7
(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.
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
B-8
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 Maryland, 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-9
- --------------------------------------------------------------------------------
BUCS FINANCIAL CORP
10455 MILL RUN CIRCLE
OWINGS MILLS, MARYLAND 21117
ANNUAL MEETING OF STOCKHOLDERS
- --------------------------------------------------------------------------------
April 29, 2002
- --------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of BUCS
Financial Corp (the "Company"), or its designee, with full powers of
substitution, to act as attorneys and proxies for the undersigned, to vote all
shares of Common Stock of the Company, which the undersigned is entitled to vote
at the Annual Meeting of Stockholders (the "Meeting"), to be held at the
Pikesville Hilton, 1726 Reistertown Road, Baltimore, Maryland, on Monday, April
29, 2002, at 5:30 p.m. and at any and all adjournments thereof, in the following
manner:
FOR WITHHELD
--- --------
1. The election as director of the nominees
listed with terms to expire in 2005
(except as marked to the contrary below): [ ] [ ]
Allen Maier
M. Robin Copeland
Herbert J. Moltzan
Thomas Markel
INSTRUCTIONS: To withhold your vote for either nominee, write the nominee's name
on the line provided below.
- ------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of the
BUCS Financial Corp
2002 Stock Option Plan. [ ] [ ] [ ]
3. The ratification of the
BUCS Federal Bank
2002 Restricted Stock Plan. [ ] [ ] [ ]
4. The ratification of the appointment
of Stegman & Company as the
Company's independent auditor for the
fiscal year ending December 31, 2002. [ ] [ ] [ ]
The Board of Directors recommends a vote "FOR" all of the above listed
proposals.
- --------------------------------------------------------------------------------
THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR THE NOMINEES LISTED AND ALL OF
THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING,
THIS SIGNED PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST
JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE MEETING.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting, or
at any adjournments thereof, and after notification to the Secretary of the
Company at the Meeting of the stockholder's decision to terminate this Proxy,
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned may also revoke this Proxy by filing a
subsequently dated Proxy or by written notification to the Secretary of the
Company of his or her decision to terminate this Proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders and a
Proxy Statement dated March 27, 2002.
[ ] Check Box if You Plan
Dated: to Attend the Annual Meeting.
----------------------------
- ----------------------------------- ------------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ----------------------------------- ------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this Proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
- --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
- --------------------------------------------------------------------------------