UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
COMMUNITY FIRST BANCORP, INC.
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
COMMUNITY FIRST BANCORP, INC.
April 5, 2005
Dear Fellow Stockholder:
You are cordially invited to attend the 2005 Annual Meeting of
Stockholders of Community First Bancorp, Inc., the holding company for Community
First Bank. The Annual Meeting will be held at the main office of the Bank, 2420
North Main Street, Madisonville, Kentucky on Thursday, May 19, 2005 at 8:00 a.m.
The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the meeting. During the meeting, we will
also report on the operations of the Company. Directors and officers of the
Company will be present to respond to any questions stockholders may have.
WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS
POSSIBLE EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. Your vote is
important, regardless of the number of shares you own. Voting by proxy will not
prevent you from voting in person but will assure that your vote is counted if
you are unable to attend the meeting. On behalf of your Board of Directors, we
thank you for your interest and support.
Sincerely,
/s/William M. Tandy
William M. Tandy
President and Chief Executive Officer
2420 NORTH MAIN STREET, MADISONVILLE, KENTUCKY 42431 o (270) 326-3500
COMMUNITY FIRST BANCORP, INC.
2420 North Main Street
Madisonville, Kentucky 42431
(270) 326-3500
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 19, 2005
NOTICE IS HEREBY GIVEN that the annual meeting of the stockholders (the
"Annual Meeting") of Community First Bancorp, Inc. (the "Company") will be held
at the main office of Community First Bank, 2420 North Main Street,
Madisonville, Kentucky on Thursday, May 19, 2005 at 8:00 a.m., Central Time.
A proxy statement and proxy card for the Annual Meeting accompany this
notice.
The Annual Meeting is for the purpose of considering and acting upon
the following matters:
1. The election of three directors;
2. The approval of the Community First Bancorp, Inc.
2005 Restricted Stock Plan; and
3. The consideration of such other matters as may
properly come before the Annual Meeting.
Any action may be taken on any one of the foregoing proposals at the
Annual Meeting on the date specified above or on any date or dates to which, by
original or later adjournment, the Annual Meeting may be adjourned. Only
stockholders of record at the close of business on April 1, 2005 are entitled to
vote at the Annual Meeting and any adjournments thereof.
You are requested to complete and sign the accompanying proxy card
which is solicited by the Board of Directors and to mail it promptly in the
accompanying envelope. The proxy card will not be used if you attend and vote at
the Annual Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/MICHAEL D. WORTHAM
MICHAEL D. WORTHAM
Secretary
Madisonville, Kentucky
April 5, 2005
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. THE
ENCLOSED PROXY CARD IS ACCOMPANIED BY A SELF-ADDRESSED ENVELOPE FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
PROXY STATEMENT
OF
COMMUNITY FIRST BANCORP, INC.
2420 North Main Street
P.O. Box 736
Madisonville, Kentucky 42431
(270) 326-3500
ANNUAL MEETING OF STOCKHOLDERS
May 19, 2005
- --------------------------------------------------------------------------------
GENERAL
- --------------------------------------------------------------------------------
This proxy statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Community First Bancorp,
Inc. (the "Company") to be used at the 2005 Annual Meeting of Stockholders of
the Company and any adjournments or postponements thereof (the "Annual Meeting")
which will be held at the main office of Community First Bank (the "Bank"), 2420
North Main Street, Madisonville, Kentucky on Thursday, May 19, 2005 at 8:00
a.m., Central Time. This proxy statement and the accompanying form of proxy are
first being sent to stockholders on or about April 5, 2005.
- --------------------------------------------------------------------------------
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 properly executed proxies
will be voted at the Annual Meeting and all adjournments or postponements
thereof. Proxies may be revoked by written notice to Michael D. Wortham,
Secretary, at the address shown above, by filing a later-dated proxy prior to a
vote being taken on a particular proposal at the Annual Meeting or by attending
the Annual Meeting and voting in person. The presence of a stockholder at the
Annual Meeting alone will not revoke such stockholder's proxy.
Unless contrary instruction is given, proxies solicited by the Board of
Directors of the Company will be voted for the election as directors of the
nominees set forth below. The proxy confers discretionary authority on the
persons named therein 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 matters incident to the conduct of the Annual Meeting. If any other business
is properly presented at the Annual Meeting, proxies will be voted by those
named therein in accordance with the determination of a majority of the Board of
Directors.
- --------------------------------------------------------------------------------
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
- --------------------------------------------------------------------------------
The securities entitled to vote at the Annual Meeting consist of the
Company's common stock, par value $0.01 per share (the "Common Stock").
Stockholders of record as of the close of business on April 1, 2005 (the "Record
Date") are entitled to one vote for each share then held. At the Record Date,
there were 277,725 shares of the Common Stock outstanding. The presence, in
person or by proxy, of at least a majority of the total number of shares of
Common Stock outstanding and entitled to vote is required for a quorum at the
Annual Meeting.
The following table sets forth, as of the Record Date, certain
information as to those persons who were known to be the beneficial owners of
more than five percent (5%) of the Company's outstanding shares of Common Stock
and the shares of Common Stock beneficially owned by all executive officers and
directors of the Company as a group.
Percent of Shares of
Name and Address Amount and Nature of Common Stock
of Beneficial Owner Beneficial Ownership1 Outstanding2
- ------------------- --------------------- ------------
Gary B. Kivett 18,800 6.77%
P.O. Box 707
Spruce Pine, NC 28777
Israel Englander 27,300 3 9.83%
Millenium Management, L.L.C.
Millenco, L.P.
666 Fifth Avenue
New York, NY 10103
All directors and executive officers 38,948 4 13.86%
as a group (10 persons)
- ----------------
1 For purposes of this table, a person is deemed to be the beneficial
owner of any shares of Common Stock if he or she has or shares voting
or investment power with respect to such Common Stock or has a right to
acquire beneficial ownership at any time within 60 days from the Record
Date. As used herein, "voting power" is the power to vote or direct the
voting of shares and "investment power" is the power to dispose or
direct the disposition of shares. Except as otherwise noted, ownership
is direct, and the named persons exercise sole voting and investment
power over the shares of the Common Stock.
2 In calculating the percentage ownership of an individual or group, the
number of shares outstanding is deemed to include any shares which the
individual or group may acquire through the exercise of options within
60 days of the Record Date.
3 According to the Statement on Schedule 13G filed by the Reporting
Persons on February 14, 2005, Millennium Management, L.L.C. is the
general partner of Millenco, L.P. and Israel Englander is the managing
member of Millennium Management, L.L.C.
4 Includes 3,283 shares which directors and executive officers have the
right to acquire within 60 days of the Record Date pursuant to options
issued under the 2004 Stock Option Plan.
- --------------------------------------------------------------------------------
PROPOSAL I -- ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
The Company's Board of Directors is composed of nine members. Under the
Company's Articles of Incorporation, directors are divided into three classes,
as nearly equal in number as possible. Each class serves for a three-year
period, with approximately one-third of the directors elected each year. The
Board of Directors has nominated directors Michael D. Wortham, Ralph T. Teague
and Charles G. Ramsey to serve as directors for additional three-year terms.
If any nominee is unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute 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 knows of no reason why any nominee might be
unavailable to serve.
2
Under the Company's Bylaws, directors are elected by a plurality of the
votes of the shares present in person or by proxy at the Annual Meeting. Votes
which are not cast at the Annual Meeting, either because of abstentions or
broker non-votes, are not considered in determining the number of votes which
have been cast for or withheld from a nominee. Unless otherwise specified on the
proxy, it is intended that the persons named in the proxies solicited by the
Board will vote for the election of the named nominees.
The following table sets forth the names of the Board's nominees for
election as directors of the Company and of those directors who will continue to
serve as such after the Annual Meeting. Also set forth is certain other
information with respect to each person's age, their positions with the Company,
the year he or she first became a director of the Company's wholly owned
subsidiary, Community First Bank (the "Bank" or "Community First"), the
expiration of his or her term as a director, and the number and percentage of
shares of the Common Stock beneficially owned. All of the directors were
initially appointed as directors of the Company in 2003 in connection with the
Company's incorporation.
Year First Shares of
Elected as Current Common Stock
Director Term Beneficially Percent
Name and Position Age* of the Bank to Expire Owned*1 of Class2
- ----------------- ---- ----------- --------- ------- ---------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2008
Michael D. Wortham 34 1998 2005 775 0.27%
Vice President, Chief Financial Officer
and Director
Ralph T. Teague 86 1979 2005 5,244 1.89%
Vice Chairman and Director
Charles G. Ramsey 54 2001 2005 5,121 1.84%
Director
DIRECTORS CONTINUING IN OFFICE
Paul W. Arison 54 1993 2006 4,779 1.72%
Director
Charlotte E. Baldwin 73 1991 2006 2,208 0.79%
Director
C. Barry Vaughn 57 1999 2006 3,136 1.13%
Director
William M. Tandy 50 2001 2007 3,233 1.16%
President, Chief Executive Officer and
Director
Steven E. Carson 53 1991 2007 4,208 1.51%
Director
J. Craig Riddle 80 1970 2007 10,244 3.64%
Chairman of the Board and Director
(footnotes on following page)
3
- ----------------------
* As of the Record Date.
1 Includes stock held in joint tenancy; stock owned as tenants in common;
stock owned or held by a spouse or other member of the individual's
household; stock allocated through certain employee benefit plans of
the Company; stock in which the individual either has or shares voting
and/or investment power and shares which the individual has the right
to acquire at any time within 60 days of the Record Date. Each person
or relative of such person whose shares are included herein exercises
sole or shared voting and dispositive power as to the shares reported.
Includes 244 shares which Messrs. Teague and Riddle each have the right
to acquire pursuant to the exercise of options within 60 days of the
Record Date, 208 shares which Ms. Baldwin and Mr. Carson each have the
right to acquire, 179 shares which Mr. Arison has the right to acquire,
136 shares which Mr. Vaughn has the right to acquire, 121 shares which
Mr. Ramsey has the right to acquire, 1,388 shares which Mr. Tandy has
the right to acquire and 555 shares which Mr. Wortham has the right to
acquire.
2 In calculating the percentage ownership of an individual or group, the
number of shares outstanding is deemed to include any share which the
individual or group may acquire through the exercise of options within
60 days of the Record Date.
The principal occupation of each director and executive officer of the
Company for the last five years is set forth below.
Michael D. Wortham has been employed with the Bank since 1994 and
currently serves as the Bank's Chief Financial Officer, Secretary and Treasurer.
Mr. Wortham has served as a board member with the Madisonville Chamber of
Commerce and the United Way and as President of the Kiwanis Club.
Ralph T. Teague is a retired coal company executive. He is active in
the Madisonville Kiwanis Club.
Charles G. Ramsey is Vice President - Finance and Chief Financial
Officer of the Renshaw Automotive Group in Hopkinsville, Kentucky. He is active
in the Kiwanis Club and a member of the Chamber of Commerce. Mr. Ramsey is a
Certified Public Accountant.
Paul W. Arison has been employed in the Commissary at the Hopkins
County Detention Facility since 2001. Prior to that time, he managed Kuester's
Hardware Store in Madisonville. Mr. Arison is active in the local Kiwanis Club.
Charlotte E. Baldwin, a former mayor of Madisonville and Secretary of
the Kentucky Cabinet of Natural Resources and Environmental Protection, is a
member of the Madisonville Chamber of Commerce and First United Methodist
Church. A graduate of the University of Evansville, she is a Hospice volunteer
and a reading mentor at Grapevine Elementary School.
C. Barry Vaughn is the President and co-owner of Happy's of
Madisonville, an office equipment dealer located in Madisonville. Mr. Vaughn is
a past member of the board of the Madisonville Chamber of Commerce, is a member
of the Kiwanis Club and has been active with the United Way.
4
William M. Tandy has served as President and Chief Executive Officer of
the Bank from November 2001 to the present. From 1993 to 2001, Mr. Tandy served
as President of Hacienda Bank, Santa Maria, California. Mr. Tandy has been in
the banking industry since 1974 and has been brought in as Chief Executive
Officer by three different banks to successfully effect turnarounds. Mr. Tandy
is a member of the Madisonville Rotary Club and is past president of the Santa
Maria Valley Economic Association and a past board member of the Santa Maria
Chamber of Commerce and the Santa Barbara County Workforce Investment Board.
Steven E. Carson is the owner/operator of Barnett-Strother Funeral
Home, Inc., in Madisonville. Mr. Carson has been active with the Lions Club.
J. Craig Riddle is a retired insurance agent. Mr. Riddle was the owner
and principal of the J. Craig Riddle Insurance Co., a full-line insurance broker
in Madisonville, Kentucky. Mr. Riddle is a founding member of the Kentucky Lake
Sailing Club.
Executive Officer Who is Not a Director
Charlotte Sellers serves as Senior Lender, Senior Vice President and
has been employed by the Bank since September 2003. Prior to joining the Bank,
she was an Assistant Vice President at Fifth Third Bank in Madisonville,
Kentucky. She has six years of banking experience in Commercial Lending. She is
a board member of the Madisonville Hopkins County Chamber of Commerce and is
active in the Kiwanis Club.
- --------------------------------------------------------------------------------
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
The Company's Board of Directors holds regular and special meetings as
needed. The Board of Directors of the Bank held 12 regular meetings and met
informally on a weekly basis. During the year ended December 31, 2004, the
Company's Board of Directors met twice. No director attended fewer than 75% of
the total number of meetings of the Board of Directors held during 2004 and the
total number of meetings held by all committees on which the director served
during the year. The Company encourages directors to attend annual meetings of
stockholders. Eight directors attended last year's annual meeting. Stockholders
may send communications to the Board of Directors by addressing them to the
Corporate Secretary at the main office.
Audit Committee. The Company's Audit Committee consists of all of the
directors other than Messrs. Tandy and Wortham. The Company has adopted a
written charter for the Audit Committee. The members of the Audit Committee
would be considered independent under the listing standards of The Nasdaq Stock
Market. The Board of Directors has determined that Charles G. Ramsey is an audit
committee financial expert within the meaning of the regulations of the
Securities and Exchange Commission based on his credentials as a Certified
Public Accountant and his experience as a Chief Financial Officer. The Board of
Directors has determined that Mr. Ramsey is independent within the meaning of
the listing requirements of The Nasdaq Stock Market. The Audit Committee met
twice during 2004.
Compensation Committee. The Company's Personnel Committee, consisting
of all directors, acts as a compensation committee. The Personnel Committee
annually reviews the compensation paid to the Chief Executive Officer and other
officers and makes recommendations to the full Board of
5
Directors. Messrs. Tandy and Wortham do not participate in discussions regarding
their compensation. The Personnel Committee met once during the 2004 fiscal
year.
Nominating Committee and Director Nomination Process. The Company does
not have a standing nominating committee or committee performing similar
functions. Instead, the full Board of Directors acts as a nominating committee
for the selection of management's nominees for director and each director
participates in the nomination process. All nominees are approved by a majority
of the independent directors. The Board of Directors believes that its
procedures provide adequate assurance that nominations are approved by
independent directors. The Board of Directors will consider director candidates
recommended by stockholders. Any such recommendations must be submitted to the
Secretary at least 120 days prior to the date of the Annual Meeting and should
include the nominee's name and qualifications for board membership. The Board
believes that all nominees for director, including stockholder nominees, should
have the highest personal and professional ethics and integrity; substantial
business or other professional experience in the primary market area served by
the Company and the Bank; commitment to enhancing the business and prospects of
the Company and the Bank; ability to work with existing board members and
management; ability to make appropriate level of commitment of time and
resources to their duties as director; an understanding of banking and financial
matters and the role of directors in the management of the Company; and
substantial personal investment in the Company common stock. All Board nominees
for election at this year's annual meeting are incumbent directors standing for
re-election. The Board of Directors held one meeting as a nominating committee
during 2004 in order to make nominations for directors.
- --------------------------------------------------------------------------------
DIRECTOR COMPENSATION
- --------------------------------------------------------------------------------
Directors do not receive separate compensation for their service on the
Company's Board of Directors. Directors (including directors who are also
employees) of the Bank receive a monthly fee of $400. Total fees paid to the
directors for the year ended December 31, 2004 were $43,200.
- --------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
Summary Compensation Table. The following table sets forth the cash and
noncash compensation awarded to or earned by the Chief Executive Officer of the
Company and the Bank and by each executive officer whose salary and bonus earned
in fiscal year 2004 exceeded $100,000 for services rendered in all capacities to
the Company and its subsidiaries (the "Named Executive Officers").
Long-Term
Compensation
Annual Compensation Awards
-------------------------------------------- ------------
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Options Compensation
- --------------------------- ---- ------ ----- ------------ ------- ------------
William M. Tandy 2004 $105,040 $ 500 $ -- 6,943 $13,338(1)
Chief Executive Officer 2003 100,000 7,340 -- -- 13,450
2002 100,000 500 -- -- 13,950
- ---------------
(1) Consisted of $4,800 in directors fees, $6,000 automobile allowance and
$2,538 in unused sick leave.
6
Option Grants in Fiscal Year 2004. The following table contains
information concerning the grants of stock options during the year ended
December 31, 2004 to the Named Executive Officers. All such options were granted
under the 2004 Stock Option Plan and vest at the rate of 20% per year beginning
one year from the date of grant.
Number of Percent of
Securities Total Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted Fiscal Year Price Date
- ---- ------- ----------- ----- ----
William M. Tandy 6,943 71% $16.00 5/20/13
Aggregated Option Exercises in Fiscal Year 2004 and Year-End Option
Values. The following table sets forth information concerning the value of
options held by the Named Executive Officers at the end of the fiscal year. No
SARs have been granted to any of the Named Executive Officers.
Number of Securities Underlying Value of Unexercised
Unexercised Options In-The-Money Options
at Fiscal Year End at Fiscal Year-End (1)
-------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
William M. Tandy 1,388 5,556 $ -- $ --
- ---------------
(1) Based on the difference between the exercise price and the fair market
value of the underlying securities at fiscal year-end.
Employment Agreement. We have entered into an employment agreement with
our President, William M. Tandy. The agreement has a term of three years which
may be extended for an additional one- year period on each anniversary date if
the Board of Directors determines that Mr. Tandy has met the requirements of the
Board. The Board of Directors has determined that Mr. Tandy has met its
requirements as of the most recent anniversary date and the term of the
agreement was extended accordingly. Mr. Tandy's base salary under the employment
agreement is $110,000. Mr. Tandy is also eligible to receive bonuses of 7% of
the Bank's quarterly net profits. His agreement is terminable by us for "just
cause" as defined in the agreement. If we terminate Mr. Tandy without just cause
or if Mr. Tandy terminates his employment for "good reason," he will be entitled
to a continuation of his salary from the date of termination through the
remaining term of the agreement, plus an additional 12 months. If Mr. Tandy
shall become disabled during the term of his agreement, he shall continue to
receive payment of 100% of the base salary for a period of up to 180 days. Such
payments shall not be reduced by any other benefit payments made under other
disability program in effect for our employees. If Mr. Tandy's employment
terminates for a reason other than just cause, he will be entitled to purchase
from us family medical insurance through any group health plan maintained by us.
Mr. Tandy's agreement also contains a provision stating that in the event of the
termination of employment in connection with any change in control of the
Company or us, Mr. Tandy will be paid a lump sum amount equal to 2.99 times his
five-year average annual taxable cash compensation. If such payment had been
made under the agreement as of December 31, 2004, such payment would have
equaled approximately $343,000.
7
- --------------------------------------------------------------------------------
PROPOSAL II - APPROVAL OF COMMUNITY FIRST BANK
2005 RESTRICTED STOCK PLAN
- --------------------------------------------------------------------------------
General. The Board of Directors has adopted the Community First Bank
2005 Restricted Stock Plan (the "RSP") as a method of providing directors,
officers, and employees of the Bank with a proprietary interest in the Company
in a manner designed to encourage such persons to remain in the employment or
service of the Bank. The 2005 Restricted Stock Plan is substantially similar to
the 2004 Restricted Stock Plan that was presented to stockholders at the 2004
Annual Meeting. Although the 2004 RSP was approved by more than a majority of
the votes cast, it did not receive more than a majority of the shares
outstanding as required by OTS regulations for stock benefit plans adopted
within one year after a mutual-to-stock conversion. Because the RSP received
more than a majority of the votes cast and the Board of Directors continues to
believe that the RSP will be in the best interests of the Company and its
stockholders, the Board of Directors is again submitting it to stockholders for
approval.
The Bank will contribute sufficient funds to the RSP to purchase Common
Stock representing up to 8,331 shares of Common Stock. The RSP may purchase such
shares in the open market or from the Company from authorized but unissued
shares of Common Stock or treasury shares. 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 A.
Awards Under the Restricted Stock Plan. Benefits under the RSP ("Plan
Share Awards") may be granted at the sole discretion of a committee comprised of
not less than two directors who are not employees of the Bank (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 and who
have the responsibility to invest all funds contributed by the Bank to the trust
created for the RSP (the "RSP Trust"). Unless the terms of the RSP or the RSP
Committee specifies otherwise, awards under the RSP will be in the form of
restricted stock payable as the Plan Share Awards shall be earned and non-
forfeitable. Twenty percent (20%) of such awards shall be earned and
non-forfeitable on the one year anniversary of the date of grant of such awards,
and 20% annually thereafter, provided that the recipient of the award remains an
employee, director or director emeritus during such period. A recipient of such
restricted stock will not be entitled to voting rights associated with such
shares prior to the applicable date such shares are earned. Dividends paid on
Plan Share Awards shall be held in arrears and distributed upon the date the
Plan Share Awards are earned. Any shares held by the RSP Trust which are not yet
earned shall be voted by the RSP Trustees, as directed by the RSP Committee. If
a recipient of such restricted stock terminates employment or service for
reasons other than death, disability or a Change in Control of the Company or
the Bank, the recipient forfeits all rights to the awards under restriction. If
the recipient's termination of employment or service is caused by death,
disability or a Change in Control of the Company or the Bank, all restrictions
expire and all shares allocated shall become unrestricted. Plan Share Awards to
directors shall be immediately non-forfeitable in the event of the death,
disability or a Change in Control of the Company or the Bank, of such director
and distributed as soon as practicable thereafter. The Board of Directors can
terminate the RSP at any time, and if it does so, any shares not allocated will
revert to the Bank.
8
Plan Share Awards under the RSP will be determined by the RSP
Committee. In no event shall any employee receive Plan Share Awards in excess of
25% of the aggregate Common Stock authorized under the RSP ("Plan Share
Reserve"). Plan Share Awards may be granted to newly elected or appointed
non-employee directors subsequent to the effective date of the RSP, provided
that the Plan Share Awards made to non-employee directors shall not exceed 30%
of the Plan Share Reserve in the aggregate or 5% of the total Plan Share Reserve
to any individual non-employee director.
The aggregate number of Plan Shares available for issuance pursuant to
the Plan Share Awards and the number of shares to which any Plan Share Award
relates shall be proportionately adjusted for any increase or decrease in the
total number of outstanding shares of Common Stock issued subsequent to the
effective date 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.
The following table presents information related to the anticipated
award of Common Stock under the RSP as authorized pursuant to the terms of the
RSP or the anticipated actions of the RSP Committee. No Plan Share Awards are
expected to be granted to any associates of executive officers, directors or
nominees. No other person is expected to receive 5% or more of the Plan Share
Awards authorized under the RSP.
Number of Shares
to be
Name and Position Granted (1)
- ----------------- -----------
William M. Tandy, President and Chief Executive Officer 2,082
Michael D. Wortham, Chief Financial Officer, Treasurer and Secretary 833 (2)
Steven E. Carson, Director 354
J. Craig Riddle, Director 416
Ralph T. Teague, Director 416 (2)
Charles G. Ramsey, Director 206 (2)
Paul W. Arison, Director 305
Charlotte E. Baldwin, Director 354
C. Barry Vaughn, Director 231
All executive officers as a group (3 persons) 2,915
All current directors who are not executive officers as a group (7 persons) 2,282
All employees, including all current officers who are not executive officers, --
as a group (24 persons)
- ----------------
(1) All Plan Share Awards presented herein shall be earned at the rate of
20% one year after the date of grant and 20% annually thereafter. All
awards shall become immediately 100% vested upon death or disability or
termination of service following a change in control of the Company or
the Bank (as defined in the RSP). Plan Share Awards shall continue to
vest during periods of service as an employee, director, or director
emeritus.
(2) Nominee for re-election.
Amendment and Termination of the Restricted Stock Plan. The Board may
amend or terminate the RSP at any time. However, no action of the Board may
increase the maximum number of Plan 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
9
requirements for eligibility for participation in the RSP unless such action of
the Board shall be subject to approval by the stockholders of the Company.
The RSP contains certain restrictions and limitations, including among
others, provisions requiring the vesting of awards granted to occur no more
rapidly than ratably over a five-year period and the resultant prohibition
against accelerated vesting of award grants upon the occurrence of an event
other than the death or disability of the Plan Share Award recipient or upon a
Change in Control of the Company or the Bank. The Company does not have any
present intention to engage in any transaction that would result in the
accelerated vesting of Plan Share Awards as permitted by the RSP, however, the
Board has determined that the implementation of such plan provisions is in the
best interests of the stockholders of the Company, as well as the officers,
directors and employees of the Company.
Possible Dilutive Effects of the Restricted Stock Plan. 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 Plan Share Awards,
the interests of current stockholders may be diluted. If all Plan Share Awards
(i.e., 8,331 shares of Common Stock) are funded with newly issued shares, the
dilutive effect to existing stockholders would be approximately 2.9%.
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 30 days of the date of the transfer of such
Plan Share Award to elect to include in gross income for the current taxable
year the Fair Market Value of such award. Such election must be filed with the
Internal Revenue Service within 30 days of the date of the transfer of the stock
award. The 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 Plan Share Awards at the time the recipient recognizes taxable
ordinary income. A recipient of a Plan Share Award may elect to have a portion
of such award withheld by the RSP Trust in order to meet any necessary tax
withholding obligations.
Accounting Treatment. For accounting purposes, the Bank will recognize
compensation expense for Common Stock subject to Plan Share Awards over the
vesting period at the fair market value of the shares on the date they are
awarded.
Stockholder Approval. The Board of Directors is submitting the RSP for
stockholder approval to enable recipients of Plan Share Awards to qualify for
certain exemptive treatment from the short-swing profit recapture provisions of
Section 16(b) of the Exchange Act. The RSP and awards made thereunder will not
be effective until receipt of stockholder approval of Proposal II. The
affirmative vote of holders of a majority of the total votes cast at the Annual
Meeting in person or by proxy including abstentions is required for stockholder
approval of this Proposal II. Abstentions will not be counted as votes for
Proposal II. Accordingly, an abstention will have the same effect as a vote
against Proposal II. Broker non-votes will not be counted as votes cast and will
therefore not affect the result.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE RESTRICTED STOCK PLAN.
10
- --------------------------------------------------------------------------------
NEW PLAN BENEFITS
- --------------------------------------------------------------------------------
The following table sets forth certain information regarding the
benefits expected to be received under the RSP.
RSP
--------------------------
Dollar Number
Name and Position Value (1) of Units
----------------- --------- --------
William M. Tandy $26,545 2,082
President and Chief
Executive Officer
Executive Group 49,572 3,888
Non-Executive Director Group 29,095 2,282
Non-Executive Officer -- --
Employee Group
- -------------
(1) Based on the last sale price of the Common Stock as reported on the OTC
Electronic Bulletin Board as of April 1, 2005 ($12.75 per share).
- -------------------------------------------------------------------------------------------------------------------
EQUITY COMPENSATION PLAN INFORMATION
- -------------------------------------------------------------------------------------------------------------------
(a) (b) (c)
Number of securities
Number of securities Weighted-average remaining available for
to be issued upon exercise price of future issuance under
exercise of outstanding equity compensation plans
outstanding options, options, warrants (excluding securities
warrants and rights and rights reflected in column (a))
------------------- ---------- ------------------------
Equity compensation plans
approved by security holders:
2004 Stock Option Plan............ 16,442 $16.00 11,333
Equity compensation plans
not approved by security
holders........................... na na na
------ ------ ------
TOTAL 16,442 $16.00 11,333
====== ====== ======
11
- --------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
- --------------------------------------------------------------------------------
From time to time, the Bank engages in banking transactions with its
directors, officers and their associates in the ordinary course of business. At
December 31, 2004, approximately $429,700 of such loans were outstanding. Loans
to directors and executive officers are only made in the ordinary course of
business of the Bank and on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons and do not involve more than the normal risk of
collectibility or present other unfavorable features. The Bank waives certain
loan document and other fees for full-time employees, including full-time
executive officers. The following table sets forth information on all loans
outstanding to executive officers during the last fiscal year where the
aggregate outstanding indebtedness exceeded $60,000 and fees were waived.
Highest
Outstanding Balance at
Name and Title Type of Loan Rate Balance 12/31/04
- -------------- ------------ ---- ------- --------
William M. Tandy Home Mortgage 5.25% $232,000 $231,331
President
Charlotte Sellers Home Mortgage 5.50% $ 52,760 $ 52,321
Senior Vice President Automobile 6.75% 9,863 9,569
Unsecured 12.00% 5,000 4,892
Michael D. Wortham Home Mortgage 6.00% $ 77,580 $ 75,855
Vice President
During the fiscal year ended December 31, 2004, the Bank paid $135,687
for office supplies and furniture purchased from Happy's, Inc., an office supply
store of which Director Vaughn is a co-owner.
- --------------------------------------------------------------------------------
RELATIONSHIP WITH INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
BKD, LLP served as the Company's independent public accountants for the
last fiscal year and the Board of Directors has appointed BKD, LLP to serve as
the Company's independent public accountants for the current fiscal year. The
engagement of BKD, LLP was approved in advance by the Audit Committee of the
Board of Directors. A representative of BKD, LLP is expected to attend the
Annual Meeting and will have an opportunity to make a statement and will be
available to respond to appropriate questions from stockholders.
Fees paid to the Company's principal accountant for each of the last
two fiscal years are set forth below:
Fiscal Audit Audit-Related Tax All Other
Year Fees Fees Fees Fees
- ---- ------ ------------- ------ ---------
2004 $17,010 $20,119 $2,625 --
2003 $23,900 $43,887 $2,950 --
12
Audit Fees include fees billed by the Company's independent auditors
for professional services rendered for the audit of the Company's annual
financial statements and reviews of the financial statements included in the
Company's Quarterly Reports on Form 10-QSB filed during the fiscal year ended
December 31, 2004.
Audit-Related Fees include fees billed by the Company's independent
auditors for services provided for the year ended December 31, 2004. The
services comprising these fees consisted of consultation concerning financial
accounting and reporting standards and services related to the various
registration statements filed with the Securities and Exchange Commission in
connection with the stock conversion of the Company.
Tax Fees primarily include fees associated with tax audits, tax
compliance, tax consulting, as well as tax planning. This category also includes
services related to tax disclosure and filing requirements.
The Audit Committee has pre-approved all audit and non-audit services
provided by the independent auditor and has not adopted pre-approval procedures
for this purpose. No portion of non-audit fees during the past two years were
approved pursuant to paragraph (c)(7)(i)(c) of Rule 2-01 of Regulation S-X.
- --------------------------------------------------------------------------------
AUDIT COMMITTEE REPORT
- --------------------------------------------------------------------------------
The Audit Committee has reviewed and discussed the audited financial
statements of the Company with management and has discussed with BKD, LLP, the
Company's independent auditors, the matters required to be discussed under
Statement of Auditing Standards No. 61 ("SAS 61"). In addition, the Audit
Committee received from BKD, LLP the written disclosures and the letter required
to be delivered by BKD, LLP under Independence Standards Board Standard No. 1
("ISB Standard No. 1") and has discussed with representatives of BKD, LLP their
independence.
The Audit Committee has reviewed the non-audit services currently
provided by the Company's independent auditor and has considered whether the
provision of such services is compatible with maintaining the independence of
the Company's independent auditors.
Based on its review of the financial statements, its discussion with
BKD, LLP regarding SAS 61, and the written materials provided by BKD, LLP under
ISB Standard No. 1 and the related discussion with BKD, LLP of their
independence, the Audit Committee has recommended that the audited financial
statements of the Company be included in its Annual Report on Form 10-KSB for
the year ended December 31, 2004, for filing with the Securities and Exchange
Commission.
AUDIT COMMITTEE
CHARLES G. RAMSEY J. CRAIG RIDDLE
PAUL W. ARISON RALPH T. TEAGUE
CHARLOTTE E. BALDWIN C. BARRY VAUGHN
STEVEN E. CARSON
13
- --------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Pursuant to regulations promulgated under the Exchange Act, the
Company's officers, directors and persons who own more than 10% of the
outstanding Common Stock are required to file reports detailing their ownership
and changes of ownership in such Common Stock, and to furnish the Company with
copies of all such reports. Based solely on its review of the copies of such
reports received during the past fiscal year or with respect to the last fiscal
year or written representations from such persons that no annual reports of
change in beneficial ownership were required, the Company believes that during
2004, all of its officers, directors and all of its stockholders owning in
excess of 10% of the outstanding Common Stock have complied with the reporting
requirements, except that Mr. Tandy was one day late filing a Form 4 and Ms.
Sellers was late filing her Form 3.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Annual Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Annual Meeting, it
is intended that proxies in the accompanying form will be voted in respect
thereof in accordance with the determination of the Board of Directors.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
The Company's 2004 Annual Report to Stockholders, including financial
statements, is being mailed to all stockholders of record as of the Record Date.
Any stockholder who has not received a copy of the Annual Report may obtain a
copy by writing to the Secretary of the Company. The Annual Report is not to be
treated as a part of the proxy solicitation materials or as having been
incorporated herein by reference. A copy of the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 2004 as filed with the Securities
and Exchange Commission will be furnished without charge to stockholders as of
the Record Date, upon written request to the Secretary, Community First Bancorp,
Inc., P.O. Box 736, Madisonville, Kentucky 42431.
14
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
To be eligible for inclusion in the Company's proxy materials for next
year's Annual Meeting of Stockholders, any stockholder proposal to take action
at such meeting must be received at the Company's main office at 2420 North Main
Street, P.O. Box 736, Madisonville, Kentucky 42431 no later than December 7,
2005. Any such proposals shall be subject to the requirements of the proxy rules
adopted under the Exchange Act. Stockholder proposals, other than those
submitted pursuant to the Exchange Act, to be considered at such Annual Meeting,
must be stated in writing, delivered or mailed to the Secretary of the Company,
not later than January 6, 2006.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Michael D. Wortham
MICHAEL D. WORTHAM
Secretary
Madisonville, Kentucky
April 5, 2005
15
APPENDIX A
Community First Bank
2005 Restricted Stock Plan
and Trust Agreement
Article I
---------
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 Community First Bank ("Bank") hereby establishes the Restricted
Stock Plan (the "Plan") and Trust (the "Trust") upon the terms and conditions
hereinafter stated in this 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 increased equity interest in the Community First Bancorp, Inc. ("Company"),
the parent corporation of the Bank, 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 Community First Bank, a federal stock savings bank.
"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 by
the Participant and addressed to the Bank or the Committee on forms provided for
this purpose by the Committee and delivered to the Bank and may be changed from
time to time by similar written notice to the Committee. A Participant=s last
will and testament or any codicil thereto shall not constitute written
designation of a Beneficiary. In the absence of such 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
A-1
violation of a final cease-and-desist order or any other action which results in
a substantial financial loss to the Company or its Subsidiaries.
"Change in Control" shall mean: (i) the sale of all, or a material
portion, of the assets of the Company or the Bank; (ii) the merger or
recapitalization of the Company or the Bank whereby the Company or the Bank is
not the surviving entity; (iii) a change in control of the Company or the 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 Company 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 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.
"Committee" means the Board of Directors of the Company or the
Restricted Stock Plan Committee appointed by the Board of Directors of the
Company pursuant to Article IV hereof.
"Common Stock" means shares of the common stock of the Company, or any
successor corporation or parent thereto.
"Company" means Community First Bancorp, Inc., and any successor
corporation thereto.
"Conversion" means the effective date of the stock charter of the Bank
and simultaneous acquisition of all of the outstanding stock of the Bank by the
Company.
"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 Company or the Bank 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
any Subsidiary in his current capacity as determined by the Committee.
"Effective Date" shall mean the date of stockholder approval of the
Plan by the Company's stockholders.
"Eligible Participant" means an Employee, Director or director of a
Subsidiary who may receive a Plan Share Award under the Plan.
"Employee" means any person who is employed by the Bank or a
Subsidiary.
"Participant" means an Employee or Director who receives a Plan Share
Award under the Plan.
A-2
"Plan Shares" means shares of Common Stock held in the Trust which are
awarded or issuable to a Participant pursuant to the Plan.
"Plan Share Award" or "Award" means a right granted to a Participant
under this Plan to earn or to receive Plan Shares.
"Plan Share Reserve" means the shares of Common Stock held by the Trust
pursuant to Sections 5.03 and 5.04.
"Subsidiary" means those subsidiaries of the Bank which, with the
consent of the Board, agree to participate in this Plan.
"Trustee" or "Trustee Committee" means that person(s) or entity
nominated by the Committee and approved by the Board pursuant to Sections 4.01
and 4.02 to hold legal title to the Plan assets for the purposes set forth
herein.
Article IV
----------
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 Company and the Bank shall indemnify such member against expenses
A-3
(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 Company, 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 C.F.R. 545.121, as may be amended from time to
time.
Article V
---------
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Board of
Directors of the Bank shall determine the amounts (or the method of computing
the amounts) to be contributed by the Bank to the Trust established under this
Plan. Such contribution 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 approval of the
Plan by stockholders of the Company and receipt of any other necessary
regulatory approvals, the Trust shall purchase Common Stock of the Company in an
amount equal to up to 100% of the Trust's cash assets, after providing for any
required withholding as needed for tax purposes, provided, however, that the
Trust shall not purchase more than 8,331 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 Company in an amount 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 Company, 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. Eligible Participants may receive Plan Share
Awards within the sole discretion of the Committee. Directors who are not
otherwise Employees shall receive Plan Share Awards pursuant to Section 6.05.
6.02 Allocations. The Committee will determine which of the
Eligible Participants 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 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,
A-4
determine which of the Eligible Participants will be granted Plan Share Awards
to be awarded from forfeited Shares. In selecting those Eligible Participants 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 such individuals, the value of their prior and
anticipated future services to the Bank and its Subsidiaries, and any other
factors the Committee may deem relevant. All actions by the Committee shall be
deemed final, except to the extent that such actions are revoked by the Board.
Notwithstanding anything herein to the contrary, in no event shall any
Participant receive Plan Share Awards in excess of 25% of the aggregate Plan
Shares authorized under the Plan.
6.03 Form of Allocation. As promptly as practicable after a
determination is made pursuant to Section 6.02 or Section 6.05 that a Plan Share
Award is to be made, the Committee shall notify the Participant in writing of
the grant of the Award, the number of Plan Shares covered by the Award, and the
terms upon which the Plan Shares subject to the award may be earned. The date on
which the Committee makes its award determination or the date the Committee so
notifies the Participant shall be considered the date of grant of the Plan Share
Awards as determined by the Committee. The Committee shall maintain records as
to all grants of Plan Share Awards under the Plan.
6.04 Allocations Not Required. Notwithstanding anything to the
contrary at Sections 6.01, 6.02 or 6.05, no Eligible Participants 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 Eligible
Participants 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 Company at any time, and cease issuing Plan Share
Awards.
6.05 Awards to Directors. Notwithstanding anything herein to
the contrary, as of the Effective Date, a Plan Share Award shall be awarded to
each Director of the Bank that is not otherwise an Employee as indicated below:
Non-Employee Director Number of Plan Shares
--------------------- ---------------------
Ralph T. Teague 416
J. Craig Riddle 416
Charlotte E. Baldwin 354
Steven E. Carson 354
Paul W. Arison 305
C. Barry Vaughn 231
Charles G. Ramsey 206
Such Plan Share Award shall be earned and non-forfeitable at the rate of
one-fifth as of the one-year anniversary of the Effective Date and an additional
one-fifth following each of the next four successive years provided that such
Director remains a Director or Director Emeritus during such period. Such Plan
Share Award shall be immediately 100% earned and non-forfeitable in the event of
the death or Disability of such Director or Director Emeritus. Such Plan Share
Award shall be immediately 100% earned and non-forfeitable upon a Change in
Control of the Company or the Bank. Subsequent to the Effective Date, Plan Share
Awards may be awarded to newly elected or appointed Directors of the Bank by the
A-5
Committee, provided that total Plan Share Awards granted to non-employee
Directors of the Bank shall not exceed 30% of the total Plan Share Reserve in
the aggregate under the Plan or 5% of the total Plan Share Reserve to any
individual non-employee director.
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 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 Company 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 Bank or a 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 Company or the Bank and shall be distributed as soon as practicable
thereafter.
7.02 Accrual and Payment of Dividends. A holder of a Plan Share Award,
whether or not earned, shall also be entitled to receive compensation in 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 compensation amounts shall be paid by the Trust and
distributed to the holder of Plan Share Awards within 30 days of the respective
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
A-6
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 Company shall be
acquired for cash, all Plan Shares associated with Plan Share Awards, together
with any shares representing stock dividends associated with such 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 Bank or a 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, unless such action is approved in advance by a majority vote of
disinterested directors of the Board of the Company. 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 Company by such vote, if any, as
may be required by applicable law and regulations.
7.04 Voting of Plan Shares. After a Plan Share Award has become earned
and non-forfeitable, the Participant shall be entitled to direct the Trustee as
to the voting of the Plan Shares which are associated with the Plan Share Award
and which have not yet been distributed pursuant to Section 7.03, subject to
rules and procedures adopted by the Committee for this purpose. All shares of
Common Stock held by the Trust as to which Participants 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.
A-7
Article VIII
------------
TRUST
8.01 Trust. The Trustee shall receive, hold, administer, invest and
make distributions and disbursements from the Trust in accordance with the
provisions of the Plan and Trust and the applicable directions, rules,
regulations, procedures and policies established by the Committee pursuant to
the Plan.
8.02 Management of Trust. It is the intention of this Plan and Trust
that the Trustee shall have complete authority and discretion with respect to
the management, control and investment of the Trust, and that the Trustee shall
invest all assets of the Trust, except those attributable to cash dividends paid
with respect to Plan Shares not held in the Plan Share Reserve, in Common Stock
to the fullest extent practicable, except to the extent that the Trustee
determines that the holding of monies in cash or cash equivalents is necessary
to meet the obligations of the Trust. In performing their duties, the Trustees
shall have the power to do all things and execute such instruments as may be
deemed necessary or proper, including the following powers:
(a) To invest up to one hundred percent (100%) of all Trust assets in
the Common Stock without regard to any law now or hereafter in force
limiting investments for Trustees or other fiduciaries. The investment
authorized herein may constitute the only investment of the Trust, and
in making such investment, the Trustee is authorized to purchase Common
Stock from the Company 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.
(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.
A-8
(i) As may be directed by the Committee or the Board from time to time,
the Trustee shall pay to the Bank the 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 Company 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 Company.
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 Company all or any part of the assets of the Trust, including shares of
Common Stock held in the Plan Share Reserve, as well as shares of Common Stock
and other assets subject to Plan Share Awards which have not yet been earned by
the Participants to whom they have been awarded. However, the termination of the
Trust shall not affect a Participant's right to earn Plan Share Awards and to
the distribution of Common Stock relating thereto, including earnings thereon,
in accordance with the terms of this Plan and the grant by the Committee or the
Board. Notwithstanding the
A-9
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 Company.
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 Company, the 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 Company, the 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 Kentucky, 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
approval of the Plan by a majority vote of the shares of Common Stock present in
person or by proxy and entitled to vote at a meeting of stockholders of the
Company.
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.
A-10
REVOCABLE PROXY
COMMUNITY FIRST BANCORP, INC.
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS WITH- FOR ALL
May 19, 2005 FOR HOLD EXCEPT
1. The election as director [ ] [ ] [ ]
The undersigned hereby appoints Paul Arison, Charlotte of the nominees listed
Baldwin and Barry Vaughn and each of them, with full (except as marked to the
powers of substitution in each, to act as proxies for the contrary below):
undersigned, to vote all shares of common stock of
Community First Bancorp, Inc. (the "Company") which the Michael D. Wortham
undersigned is entitled to vote at the annual meeting of Ralph T. Teague
stockholders (the "Annual Meeting"), to be held at the main Charles G. Ramsey
office of Community First Bank, 2420 North Main Street,
Madisonville, Kentucky on Thursday, May 19, 2005 at 8:00 INSTRUCTION: To withhold authority to vote for a listed
a.m., and at any and all adjournments thereof, as follows: nominee(s), mark "FOR ALL EXCEPT" and write the
nominee's name in the space provided below.
-------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of the [ ] [ ] [ ]
Community First Bank
2005 Restricted Stock Plan
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE LISTED NOMINEES AND THE ABOVE
PROPOSITION.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF
NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY
WILL BE VOTED FOR THE LISTED NOMINEES AND
FOR THE ABOVE PROPOSAL. IF ANY OTHER
BUSINESS IS PRESENTED AT THE ANNUAL MEETING,
THIS PROXY WILL BE VOTED BY THOSE NAMED IN
THIS PROXY IN ACCORDANCE WITH THE
DETERMINATION OF THE BOARD OF DIRECTORS.
AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED
AT THE ANNUAL MEETING. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY ON THE HOLDERS
THEREOF TO VOTE WITH RESPECT TO THE
ELECTION OF ANY PERSON AS DIRECTOR WHERE
THE NOMINEE IS UNABLE TO SERVE OR FOR GOOD
CAUSE WILL NOT SERVE AND MATTERS INCIDENT
TO THE CONDUCT OF THE ANNUAL MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS
----------------------------------------------
Please be sure to sign and date this Date
proxy in the box below
- ------------------------------------------------------------------------------------------
Stockholder sign above. Co-holder (if any) sign above.
- ------------------------------------------------------------------------------------------
Should the above stockholder be present and elect to vote at the Annual Meeting or at any adjournment thereof and after
notification to the Secretary of the Company at the Annual Meeting of the stockholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed terminated and of no further force and effect.
The above stockholder acknowledges receipt from the Company prior to the execution of this proxy of notice of the
Annual Meeting, a Proxy Statement therefor and the 2004 Annual Report to Stockholders. Please sign exactly as your name
appears on this proxy card. When signing as attorney, executor, administrator, trustee or guardian, please give
your full title. If shares are held jointly, each holder should sign.
PLEASE ACT PROMPTLY
SIGN, DATE AND MAIL YOUR PROXY CARD TODAY