SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
FIRST FEDERAL OF OLATHE BANCORP, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No Fee Required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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|_| 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 number, or
the Form or Schedule and the date of its filing.
1. Amount previously paid:
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March 26, 2001
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of First Federal of
Olathe Bancorp, Inc. (the "Company"), I cordially invite you to attend the 2001
Annual Meeting of Stockholders. The meeting will be held at 3:00 p.m., local
time on April 25, 2001 at the Company's main office located at 100 East Park
Street, Olathe, Kansas.
The enclosed Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted. During the meeting we will also report on the
Company's fiscal 2000 financial and operating performance.
An important aspect of the meeting process is the stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder to
vote and participate in this process. Stockholders are being asked to consider
and vote upon the proposals to elect one director of the Company, to ratify the
appointment of independent auditors of the Company for the fiscal year ending
December 31, 2001 and to ratify and approve the First Federal of Olathe Bancorp,
Inc. 2001 Stock Option Plan and the 2001 Recognition and Retention Plan. The
Board has carefully considered these proposals and believes that their approval
is in the best interests of the Company and its stockholders. Accordingly, your
Board of Directors unanimously recommends that you vote for each of these
proposals.
I encourage you to attend the meeting in person. Whether or not you
attend the meeting, I hope that you will read the enclosed Proxy Statement and
then complete, sign and date the enclosed proxy card and return it in the
postage prepaid envelope provided. Returning a properly executed and dated proxy
card will save the Company additional expense in soliciting proxies and will
ensure that your shares are represented. Please note that you may vote in person
at the meeting even if you have previously returned the proxy.
Thank you for your attention to this important matter.
Sincerely,
/s/ Mitch Ashlock
------------------------------------
Mitch Ashlock
PRESIDENT AND CHIEF EXECUTIVE OFFICER
FIRST FEDERAL OF OLATHE BANCORP, INC.
100 East Park Street
Olathe, Kansas, 66061
(913) 782-0026
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on April 25, 2001
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of First Federal of Olathe Bancorp, Inc. will be held at the
Company's main office located at 100 East Park Street, Olathe, Kansas at 3:00
p.m., local time, on April 25, 2001.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of one director of the Company for a three year
term;
2. The ratification of the appointment of Baird, Kurtz & Dobson
as the auditors of the Company for the fiscal year ending
December 31, 2001;
3. The ratification and approval of the First Federal of Olathe
Bancorp, Inc. 2001 Stock Option Plan;
4. The ratification and approval of the First Federal of Olathe
Bancorp, Inc. 2001 Recognition and Retention Plan;
and such other matters as may properly come before the Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on March 15, 2001
(the "Record Date") are the stockholders entitled to vote at the Meeting and any
adjournments thereof.
You are requested to complete and sign the enclosed form of proxy,
which is solicited on behalf of the Board of Directors, and to mail it promptly
in the enclosed envelope. The proxy will not be used if you attend and vote at
the Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Kenda Camp
Kenda Camp
SECRETARY
Olathe, Kansas
March 26, 2001
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED WITHIN THE UNITED STATES.
PROXY STATEMENT
FIRST FEDERAL OF OLATHE BANCORP, INC.
100 East Park Street
Olathe, Kansas, 66061
(913) 782-0026
ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 25, 2001
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of First Federal of Olathe Bancorp, Inc.
(the "Company"), the parent company of First Federal Savings and Loan
Association of Olathe (the "Association" or "First Federal Savings"), of proxies
to be used at the Annual Meeting of Stockholders of the Company (the "Meeting")
which will be held at the Company's main office located at 100 East Park Street,
Olathe, Kansas on April 25, 2001 at 3:00 p.m., local time, and all adjournments
of the Meeting. The accompanying Notice of Annual Meeting and this Proxy
Statement are first being mailed to stockholders on or about March 26, 2001.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon the proposals to elect one director of the Company, to ratify the
appointment of Baird, Kurtz & Dobson as auditors of the Company for the fiscal
year ending December 31, 2001, to ratify and approve the Company's 2001 Stock
Option Plan, and to ratify and approve the Company's 2001 Recognition and
Retention Plan.
VOTE REQUIRED AND PROXY INFORMATION
All shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the proposals set forth
in this Proxy Statement. The Company does not know of any matters, other than as
described in the Notice of Annual Meeting, that are to come before the Meeting.
If any other matters are properly presented at the Meeting for action, the
persons named in the enclosed form of proxy and acting thereunder will have the
discretion to vote on such matters in accordance with their best judgment.
The holders of a majority of all of the shares of the Company's Common
Stock entitled to vote at the Meeting, present in person or by proxy, shall
constitute a quorum for all purposes. Abstentions and broker non-votes are
counted for purposes of determining a quorum.
As to the election of directors, the proxy card being provided by the
Board of Directors enables a stockholder to vote FOR the election of the nominee
proposed by the Board, or to WITHHOLD AUTHORITY to vote for the nominee being
proposed. Under Kansas law and the Company's Articles of Incorporation and
Bylaws, directors are elected by a plurality of votes cast, without regard to
either broker non-votes or proxies as to which authority to vote for the
nominees being proposed is withheld.
As to the ratification of the appointment of Baird, Kurtz & Dobson as
independent auditor of the Company, by checking the appropriate box, a
stockholder may: (i) vote FOR the item; (ii) vote AGAINST the item; or (iii)
ABSTAIN from voting on the item. Under Kansas law and the Company's Articles of
Incorporation and Bylaws, the ratification of this matter shall be determined by
a majority of the votes cast without regard to broker non-votes or proxies
marked ABSTAIN.
As to the approval of each of the Company's 2001 Stock Option Plan and
the 2001 Recognition and Retention Plan, by checking the appropriate box, a
stockholder may: (i) vote FOR the item; (ii) vote AGAINST the item; or (iii)
ABSTAIN from voting on such item. Under applicable law, the approval of each of
these matters shall be determined by a majority of the total votes cast at the
Meeting without regard to broker non-votes or proxies marked ABSTAIN.
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting, or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a Proxy should be delivered to Kenda Camp,
Secretary, First Federal of Olathe Bancorp, Inc., 100 East Park Street, Olathe,
Kansas, 66061.
In accordance with the provisions of the Company's Articles of
Incorporation, record holders of Common Stock who beneficially own in excess of
10% of the outstanding shares of Common Stock (the "Limit") are not entitled to
any vote with respect to the shares held in excess of the Limit. The Company's
Articles of Incorporation authorizes the Board of Directors (i) to make all
determinations necessary or desirable to implement the Limit, including
determining whether persons or entities are acting in concert, and (ii) to
demand that any person who is reasonably believed to beneficially own stock in
excess of the Limit supply information to the Company to enable the Board of
Directors to implement and apply the Limit.
VOTING SECURITIES AND CERTAIN HOLDERS THEREOF
Stockholders of record as of the close of business on March 15, 2001
will be entitled to one vote for each share of Common Stock then held. As of
that date, the Company had 556,328 shares of Common Stock issued and
outstanding. The following table sets forth information as of March 15, 2001
regarding share ownership of those persons or entities known by management to
own beneficially more than five percent of the Common Stock and of all directors
and executive officers of the Company and the Association as a group. This
information is based solely upon information supplied to the Company and the
filings required pursuant to the Securities Exchange Act of 1934.
SHARES
BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED OF CLASS
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First Federal Savings and Loan Association 44,506 8.0%
of Olathe Employee Stock Ownership Plan (1)
100 East Park Street
Olathe, Kansas 66061
Directors and executive officers of the Company 41,500(2) 7.46%
and the Association as a group (5 persons)
(1) The amount reported represents shares held by the Employee Stock
Ownership Plan ("ESOP"), no shares of which have been allocated to
accounts of participants. First Bankers Trust Company, N.A. of Quincy,
Illinois, the trustee of the ESOP, may be deemed to beneficially own
the shares held by the ESOP which have not been allocated to accounts
of participants. Participants in the ESOP are entitled to instruct the
trustee as to the voting of shares allocated to their accounts under
the ESOP. Unallocated shares held in the ESOP's suspense account are
voted by the trustee in the same proportion as allocated shares voted
by participants.
(2) Amount includes shares held directly, as well as shares held jointly
with family members, shares held in retirement accounts, shares held in
a fiduciary capacity or by certain family members, with respect to
which shares the group members may be deemed to have sole or shared
voting and/or investment power. The amount above excludes options and
awards which may be granted under the 2001 Stock Option Plan and the
2001 Recognition and Retention Plan.
PROPOSAL I - ELECTION OF DIRECTORS
The Company's Board of Directors is presently composed of five members,
each of whom is also a director of the Association. The Directors are divided
into three classes. Directors of the Company are generally elected to serve for
a three-year term which is staggered to provide for the election of
approximately one-third of the directors each year.
The following table sets forth certain information regarding the
Company's Board of Directors, including their terms of office and nominees for
election as directors. It is intended that the proxies solicited on behalf of
the
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Board of Directors (other than proxies in which the vote is withheld as to the
nominee) will be voted at the Meeting for the election of the nominees
identified in the following table. If any nominee is unable to serve, the shares
represented by all such proxies will be voted for the election of such
substitute as the Board of Directors may recommend. At this time, the Board of
Directors knows of no reason why the nominee might be unable to serve, if
elected. Except as described herein, there are no arrangements or understandings
between any director or nominee and any other person pursuant to which such
director or nominee was selected.
SHARES OF COMMON
AGE AT TERM STOCK BENEFICIALLY PERCENT
DECEMBER 31, DIRECTOR TO OWNED AT OF
NAME(1) 2000 POSITION(S) HELD SINCE(2) EXPIRE MARCH 15, 2001(3) CLASS
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NOMINEES FOR TERMS TO EXPIRE IN 2004
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Mitch Ashlock 43 President, Chief Executive 1995 2004 10,000(4) 1.80%
Officer and Director
DIRECTORS CONTINUING IN OFFICE
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Donald K. Ashlock 74 Chairman of the Board 1952 2002 10,000 1.80
Marvin Eugene Wollen 68 Director 1986 2002 1,500 .26
John M. Bowen 68 Director 1973 2003 10,000 1.80
Carl R. Palmer 64 Director 1982 2003 10,000 1.80
(1) The mailing address for each person listed is 100 East Park Street,
Olathe, Kansas 66061.
(2) Includes service as a director of the Association.
(3) Includes all shares of Common Stock held directly as well as by
spouses and minor children, in trust and other indirect ownership,
over which shares the executive officers and directors effectively
exercise sole or shared voting and investment power.
(4) Excludes 5,000 shares held jointly with Donald K. Ashlock, which are
included in the 10,000 shares reported by Donald K. Ashlock.
The business experience of each director and director nominee is set
forth below. All directors have held their present positions for at least the
past five years, except as otherwise indicated.
BOARD OF DIRECTORS
MITCH ASHLOCK. Mr. Ashlock has been employed by First Federal Savings
since 1992. He served as Vice President from 1992 to 1995, and was appointed
President and Chief Executive Officer in 1995. Mr. Ashlock is the son of Donald
K. Ashlock.
DONALD K. ASHLOCK. Mr. Ashlock served as President and Chief Executive
Officer of First Federal Savings from 1982 until his retirement in 1995. He
originally joined First Federal Savings in 1952.
MARVIN EUGENE WOLLEN. Mr. Wollen is an optometrist practicing in
Olathe, Kansas.
JOHN M. BOWEN. Mr. Bowen is the owner and managing officer of John M.
Bowen & Associates, a court reporting company, located in Olathe, Kansas and
Kansas City, Missouri.
CARL R. PALMER. Mr. Palmer is the owner of Carl Palmer Realty, a real
estate sales firm located in Olathe, Kansas.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met four times during the fiscal year ended
December 31, 2000. During fiscal 2000, no incumbent director of the Company
attended fewer than 75% of the aggregate of the total number of Board meetings
and the total number of meetings held by the committees of the Board of
Directors on which he served.
The Board of Directors of the Company has standing Audit, Nominating
and Compensation Committees.
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The Company's Audit Committee is responsible for the review of the
Company's annual audit report prepared by the Company's independent auditors.
The review includes a detailed discussion with the independent auditors and
recommendation to the full Board concerning any action to be taken regarding the
audit. A majority of the members of the Audit Committee is "independent" as
defined in the listing standards of the National Association of Securities
Dealers. The Board of Directors has adopted a written charter for the Audit
Committee which is attached to this proxy statement as Appendix C. The current
members of the Audit Committee are Directors Donald K. Ashlock, Carl R. Palmer
and Marvin Eugene Wollen. The Company's Audit Committee met one time during
fiscal 2000.
The Compensation Committee is currently composed of Directors Donald K.
Ashlock, John M. Bowen and Carl R. Palmer. This Committee is responsible for
evaluating the performance of the Company's principal officers and employees to
determine the compensation and benefits to be paid to such persons, and will
also be responsible for administering the Company's 2001 Stock Option Plan and
2001 Retention and Recognition Plan. This Committee met one time during fiscal
2000.
The Nominating Committee meets annually in order to nominate candidates
for membership on the Board of Directors. This committee is comprised of the
board members who are not up for election. The Nominating Committee met one time
during fiscal 2000.
AUDIT COMMITTEE REPORT
In accordance with rules recently established by the SEC, the Audit
Committee has prepared the following report for inclusion in this proxy
statement:
As part of its ongoing activities, the Audit Committee has:
o Reviewed and discussed with management the Company's audited
consolidated financial statements for the fiscal year ended
December 31, 2000;
o Discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61,
COMMUNICATIONS WITH AUDIT COMMITTEES, as amended; and
o Received the written disclosures and the letter from the
independent auditors required by Independence Standards Board
Standard No. 1, INDEPENDENCE DISCUSSIONS WITH AUDIT
COMMITTEES, and has discussed with the independent auditors
their independence.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in the Company's Annual Report on Form 10- K
for the fiscal year ended December 31, 2000.
This report shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
This report has been provided by the Audit Committee:
Donald K. Ashlock
Carl R. Palmer
Marvin Eugene Wollen
OWNERSHIP REPORTS BY OFFICERS AND DIRECTORS
The Common Stock of the Company is registered pursuant to Section 12(g)
of the Securities Exchange Act of 1934 ("Exchange Act"). The officers and
directors of the Company and beneficial owners of greater than 10% of the
Company's Common Stock ("10% beneficial owners") are required to file reports on
Forms 3, 4 and 5 with the Securities and Exchange Commission (the "SEC")
disclosing changes in beneficial ownership of the Common Stock. SEC rules
require disclosure in the Company's Proxy Statement of the failure of an
officer, director or 10%
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beneficial owner of the Company's Common Stock to file a Form 3, 4 or 5 on a
timely basis. Based on the Company's review of such ownership reports, no
officer, director or 10% beneficial owner of the Company failed to file such
ownership reports on a timely basis for the fiscal year ended December 31, 2000.
DIRECTORS' COMPENSATION
During fiscal 2000, the Company paid directors a fee of $400 per month.
Additionally, during fiscal 2000, each director of the Association received a
fee of $300 per meeting attended. The Chairman of the Board of the Association,
Donald K. Ashlock, received a fee of $740 per month plus $300 per meeting
attended.
STOCK BENEFIT PLANS. Subject to stockholder approval of the stock
benefit plans at this Annual Meeting, each member of the Board of Directors will
be eligible for awards pursuant to the 2001 Stock Option Plan and the 2001
Retention and Recognition Plan. For additional information regarding the stock
benefit plans, see Proposals III and IV hereinafter discussed.
EXECUTIVE COMPENSATION
The Company has not paid any compensation to its executive officers
since its formation. However, the Company does reimburse the Association for
services performed on behalf of the Company by its officers. The Company does
not presently anticipate paying any compensation to such persons until it
becomes actively involved in the operation or acquisition of businesses other
than the Association.
The following table sets forth the compensation paid or accrued by the
Association for services rendered by Mitch Ashlock, the Chief Executive Officer
of the Association, during fiscal 2000, 1999, and 1998. Except for Mr. Ashlock,
no executive officer earned in excess of $100,000 during fiscal 2000, 1999 or
1998.
SUMMARY COMPENSATION TABLE
--------------------------
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ----------------------
OTHER
ANNUAL RESTRICTED STOCK OPTIONS/ ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARD(S) SARS COMPENSATION
POSITION YEAR ($) ($) ($)(1) ($) (#) ($)
===========================================================================================================================
Mitch Ashlock 2000 $65,700 $27,500 $7,200 $-- -- $--
Chief Executive Officer 1999 $63,500 $26,500 $4,250 $-- -- $--
1998 $61,000 $20,000 $2,400 $-- -- $--
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(1) Consists of $7,200 of Board fees in fiscal 2000, $4,250 of Board fees in
fiscal 1999 and $2,400 of Board fees in fiscal 1998. Does not include the
aggregate amount of other personal benefits, which did not exceed 10% of
the total salary and bonus reported.
BENEFIT PLANS
GENERAL. First Federal Savings currently provides health care benefits,
including medical, prescription and dental, subject to certain deductibles and
copayments by employees, and group life insurance to its full time employees.
EMPLOYMENT AGREEMENT. In connection with the consumation of the
conversion, First Federal Savings entered into an employment agreement with Mr.
Ashlock which provides for a term of 36 months. On each anniversary date, the
agreement may be extended for an additional 12 months, so that the remaining
term shall be 36 months. If the agreement is not renewed, the agreement will
expire 36 months following the anniversary date. The current annual base salary
for Mr. Ashlock is $75,000. The base salary may be increased but not decreased.
In addition to the base salary, the agreement provides for, among other things,
participation in other employee and fringe benefits applicable to executive
personnel. The agreement provides for termination by First Federal Savings for
cause at any time. In the event First Federal Savings terminates the executive's
employment for reasons other than for cause, or in the event of the executive's
resignation from First Federal Savings upon (1) failure to re-elect
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the executive to his current offices, (2) a material change in the executive's
functions, duties or responsibilities, or relocation of his principal place of
employment by more than 30 miles, (3) liquidation or dissolution of First
Federal Savings, or (4) a breach of the agreement by First Federal Savings
during the term of the agreement (whether before, coincident with or following a
change in control of the Company or the Association), the executive, or in the
event of death, his beneficiary would be entitled to severance pay in an amount
equal to approximately $248,000 if termination occurred at December 31, 2000.
First Federal Savings would also continue the executive's life, health, dental
and disability coverage for 36 months from the date of executive's termination.
In the event the payments to the executive would include an "excess parachute
payment" as defined in the Internal Revenue Code, the payments would be reduced
in order to avoid having an excess parachute payment.
The executive's employment may be terminated upon his attainment of age
65 or such later age as may be required by law or consented to by the board of
directors. Upon Mr. Ashlock's retirement, he will be entitled to all benefits
available to him under any retirement or other benefit plan maintained by First
Federal Savings. In the event of the executive's disability for a period of six
months, First Federal Savings may terminate the agreement provided that First
Federal Savings will be obligated to pay the executive his base salary for the
remaining term of the agreement or one year, whichever is longer, reduced by any
benefits paid to the executive pursuant to any disability insurance policy or
similar arrangement maintained by First Federal Savings. In the event of the
executive's death, First Federal Savings will pay his base salary to his named
beneficiaries for one year following his death, and will also continue medical,
dental, and other benefits to his family for one year.
The employment agreement provides that, following termination of
employment, the executive will not compete with First Federal Savings for a
period of one year, provided, however, that in the event of a termination in
connection with a change in control within the meaning of certain federal laws,
the noncompete provisions will not apply.
DEFINED BENEFIT PENSION PLAN. First Federal Savings maintains the
Financial Institutions Retirement Fund, which is a qualified, tax-exempt defined
benefit plan ("Retirement Plan"). All employees age 21 or older who have worked
at First Federal Savings for a period of one year are eligible for membership in
the Retirement Plan; however, only employees that have been credited with 1,000
or more hours of service with First Federal Savings during the year are eligible
to accrue benefits under the Retirement Plan. First Federal Savings annually
contributes an amount to the Retirement Plan, if necessary, to satisfy the
actuarially determined minimum funding requirements in accordance with the
Employee Retirement Income Security Act.
The regular form of all retirement benefits is guaranteed for the life
of the retiree. An optional form of benefit may be selected. These optional
forms include various joint and survivor annuity form. Benefits payable upon
death may be made in a lump sum, installments, or a lifetime annuity. For a
married participant, the normal form of benefit is a joint and survivor annuity
where, upon the participant's death, the participant's spouse is entitled to
receive a benefit equal to 50% of that paid during the participant's lifetime.
The normal retirement benefit payable at age 65 is an amount equal to
3% of a participant's high 3-year average salary, defined as income reportable
on Form W-2, multiplied by each year of credited service under the Retirement
Plan. A reduced benefit may be payable at or after age 45 and before normal
retirement age after completion of five years of service. If an employee
continues in employment after age 65 or defers commencement of his or her
retirement benefit, his or her retirement benefit will be increased by .8% for
each month of deferment, or 9.6% per year with a maximum increase of 48%. In
addition to the retirement benefit, a retiree will receive an annual retirement
allowance at the end of the calendar year in which he or she attains age 66, and
at the end of each succeeding year equal to 2% times the annual retirement
benefit multiplied by the number of years after retirement. For the plan year
ended June 30, 2000, First Federal Savings was not required to make a
contribution to the Retirement Plan.
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The following table indicates the annual retirement benefit that would
be payable under the Retirement Plan upon retirement at age 65 in calendar year
2000, expressed in the form of a single life annuity for the average salary and
benefit service classifications specified below.
HIGHEST THREE-YEAR YEARS OF SERVICE AND BENEFIT PAYABLE AT RETIREMENT
AVERAGE ------------------------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40
------------ -------- -------- -------- -------- --------- ---------
$ 50,000 $22,500 $30,000 $ 37,500 $ 45,000 $ 50,000 $ 50,000
75,000 33,750 45,000 56,250 67,500 75,000 75,000
100,000 45,000 60,000 75,000 90,000 100,000 100,000
125,000 56,250 75,000 93,750 112,500 125,000 125,000
150,000 67,500 90,000 112,500 135,000(1) 135,000(1) 135,000(1)
170,000 76,500 102,000 127,500 135,000(1) 135,000(1) 135,000(1)
- ------------------------
(1) Benefits are limited by tax laws which limit, in 2000, the maximum
annual benefit payable under a defined benefit pension plan to the
lesser of (i) $135,000, or (ii) 100% of the participant's average
compensation for his high 3 years.
As of December 31, 2000, Mr. Mitch Ashlock had 7 years of credited
service under the Retirement Plan.
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST. First Federal Savings
implemented the ESOP in connection with the conversion. Employees with at least
one year of employment with First Federal Savings and who have attained age 21
are eligible to participate. As part of the conversion, the ESOP borrowed funds
from First Federal of Olathe Bancorp and used those funds to purchase a number
of shares equal to 8.0% of the common stock issued in the conversion. Collateral
for the loan will be the common stock purchased by the ESOP. The loan will be
repaid principally from First Federal Savings' discretionary contributions to
the ESOP over a period of not less than 20 years provided, however, that the
loan documents will permit repayment over a period of up to 30 years but provide
no penalty for prepayments. The loan will bear interest at the fixed rate of
8.5% per year. Shares purchased by the ESOP will be held in a suspense account
for allocation among participants as the loan is repaid.
Contributions to the ESOP and shares released from the suspense account
in an amount proportional to the repayment of the ESOP loan will be allocated
among ESOP participants on the basis of compensation in the year of allocation.
Participants in the ESOP will receive credit for up to two years of service
prior to the effective date of the ESOP. A participant vests in his ESOP benefit
at the rate of 20% per year of service so that a participant is 100% vested in
his benefits after five years or upon normal retirement as defined in the ESOP,
early retirement, disability or death of the participant. A participant who
terminates employment for reasons other than death, retirement, or disability
prior to five years of credited service will forfeit his benefits under the
ESOP. Benefits will also vest fully in the event of a change in control of First
Federal Savings. Benefits will be payable in the form of common stock and/or
cash upon death, retirement, early retirement, disability or separation from
service. First Federal Savings' contributions to the ESOP are discretionary,
subject to the loan terms and tax law limits, and, therefore, benefits payable
under the ESOP cannot be estimated. Pursuant to SOP 93-6, First Federal Savings
is required to record compensation expense in an amount equal to the fair market
value of the shares released from the suspense account.
In connection with the establishment of the ESOP, First Federal Savings
established a committee of nonemployee directors to administer the ESOP. First
Federal Savings has appointed an independent financial institution to serve as
trustee of the ESOP. The ESOP trustee, subject to its fiduciary duty, must vote
all allocated shares held in the ESOP in accordance with the instructions of
participating employees. Under the ESOP, nondirected shares, and shares held in
the suspense account, will be voted in a manner calculated to most accurately
reflect the instructions it has received from participants regarding the
allocated stock so long as such vote is in accordance with the provisions of
ERISA.
INDEBTEDNESS OF MANAGEMENT
In the ordinary course of business, First Federal Savings makes loans
available to its directors, officers and employees. Such loans are made in the
ordinary course of business on the same terms, including interest rates and
collateral, as comparable loans to other borrowers. It is the belief of
management that these loans neither involve more than the normal risk of
collectibility nor present other unfavorable features. At December 31, 2000,
First Federal Savings had 14 loans outstanding to directors and executive
officers of First Federal Savings, or members
7
of their immediate families. These loans totaled approximately $489,000, or
1.35% of the Company's total equity at December 31, 2000.
PROPOSAL II - RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December
31, 2000 were Baird, Kurtz & Dobson. The Company's Board of Directors has
reappointed Baird, Kurtz & Dobson to continue as independent auditors for the
Company for the fiscal year ending December 31, 2001, subject to ratification of
such appointment by the stockholders. Representatives of Baird, Kurtz & Dobson
are expected to attend the Meeting. They will be given the opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions from stockholders present at the Meeting.
Set forth below is certain information concerning aggregate fees billed
for professional services rendered by Baird, Kurtz & Dobson during 2000:
Audit Fees $ 14,468
Financial Information Systems $ --
Design and Implementation Fees
All Other Fees $ 1,315
The Audit Committee has considered whether the provision of non-audit
services (which relate to regulatory compliance consulting) is compatible with
maintaining Baird, Kurtz & Dobson's independence. The Audit Committee concluded
that performing such services does not affect Baird, Kurtz & Dobson's
independence in performing its function as auditor of the Company.
On August 28, 2000, the Board of Directors of the Company determined to
change their outside accounting firm to Baird, Kurtz & Dobson from Taylor, Perky
& Parker, L.L.C. During each of the prior two years, the opinion of Taylor,
Perky & Parker, L.L.C. did not contain any adverse opinion or a disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope or
principal. During the preceding two years and any subsequent interim period, the
Company had no disagreements with Taylor, Perky & Parker, L.L.C. on any matter
of accounting principles or practices, financial statement disclosure or
auditing scope or procedure. None of the events described at Item 304(a)(1)(iv)
of Regulation S-B took place within the preceding two years or any subsequent
interim period. Baird, Kurtz & Dobson's engagement was effective August 28,
2000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF BAIRD, KURTZ & DOBSON AS THE INDEPENDENT AUDITORS OF THE COMPANY
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2001.
PROPOSAL III--RATIFICATION AND APPROVAL OF THE
2001 STOCK OPTION PLAN
GENERAL
Pursuant to the First Federal of Olathe Bancorp, Inc. 2001 Stock Option
Plan (the "Stock Option Plan"), options to purchase up to 55,633 shares of
Common Stock may be granted to the Association's and the Company's employees and
directors. The Board of Directors of the Company believes that it is appropriate
to adopt a flexible and comprehensive stock option plan that permits the
granting of a variety of long-term incentive awards to directors and officers as
a means of enhancing and encouraging the recruitment and retention of those
individuals on whom the continued success of the Association and the Company
most depends. No awards have been determined as of the date of mailing of the
proxy statement and no awards are contemplated to be made before stockholder
approval of the Stock Option Plan has been obtained. Attached as Appendix A to
this Proxy Statement is the complete text of the form of Stock Option Plan. The
principal features of the Stock Option Plan are summarized below. The following
discussion is qualified in its entirety by reference to the Stock Option Plan.
8
PRINCIPAL FEATURES OF THE STOCK OPTION PLAN
The Stock Option Plan provides for awards in the form of stock options,
reload options, limited stock appreciation rights ("Limited Rights") and
dividend equivalent rights. Each award shall be on such terms and conditions,
consistent with the Stock Option Plan and applicable OTS regulations, as the
committee administering the Stock Option Plan may determine.
The term of stock options generally will not exceed ten years from the
date of grant. Stock options granted under the Stock Option Plan may be either
"Incentive Stock Options" as defined under Section 422 of the Code or stock
options not intended to qualify as such ("non-statutory stock options").
Shares issued upon the exercise of a stock option may be either
authorized-but-unissued shares, reacquired shares held by the Company in its
treasury, or shares purchased by the Stock Option Plan. Any shares subject to an
award that expires or is terminated unexercised will again be available for
issuance under the Stock Option Plan. Generally, in the discretion of the Board,
all or any non-statutory stock options granted under the Stock Option Plan may
be transferable by the participant but only to the persons or classes of persons
determined by the Board. No other award or any right or interest therein is
assignable or transferable except under certain limited exceptions set forth in
the Stock Option Plan.
The Stock Option Plan is administered by a committee (the "Committee")
consisting of either two or more "non-employee directors" (as defined in the
Stock Option Plan), or the entire Board of the Company. The members of the
Committee shall be appointed by the Board of the Company. Pursuant to the terms
of the Stock Option Plan, outside directors and key employees of the Association
or the Company or its affiliates are eligible to participate. The Committee will
determine to whom the awards will be granted, in what amounts, and the period
over which such awards will vest. In granting awards under the Stock Option
Plan, the Committee will consider, among other things, position and years of
service, and the value of the individual's services to the Company and the
Associaton. The exercise price will be at least 100% of the fair market value of
the underlying Common Stock at the time of the grant. The exercise price may be
paid in cash, Common Stock, or via a "cashless exercise" (as defined in the
Stock Option Plan).
STOCK OPTIONS. Incentive Stock Options can only be granted to key
employees of the Associaton, the Company or an "affiliate" (i.e., a parent or
subsidiary corporation of the Associaton or the Company). Outside directors will
be granted non-statutory stock options. No option granted to an officer in
connection with the Stock Option Plan will be exercisable as an Incentive Stock
Option subject to incentive tax treatment if exercised more than three months
after the date on which the optionee terminates employment with the Associaton
and/or the Company, except as set forth below. In the event a participant ceases
to maintain continuous service with the Company or an affiliate by reason of
death, disability, normal retirement or in connection with a change in control,
options still subject to restrictions will vest and be free of these
restrictions and can be exercised for up to five years after cessation of
service but in no event beyond the expiration of the options' original term. In
the event a participant ceases to maintain continuous service for any other
reason, the participant will forfeit all nonvested options. The participant's
vested options will remain exercisable for up to three months in the case of
Incentive Stock Options, and one year in the case of non-statutory stock
options. If an optionee terminates employment with the Associaton, the Company
or an affiliate, any Incentive Stock Options exercised more than three months
following the date the optionee terminates employment shall be treated as a
non-statutory stock option as described above; provided, however, that in the
event of death or disability, Incentive Stock Options may be exercised and
receive incentive tax treatment for up to at least one year following
termination of employment, subject to the requirements of the Code. In the event
a participant is terminated for cause, all rights under incentive stock options
and non-statutory stock options will expire upon termination.
In the event of death or disability of an optionee, the Company, if
requested by the optionee or beneficiary, may elect, in exchange for the option,
to pay the optionee or beneficiary the amount by which the fair market value of
the Common Stock exceeds the exercise price of the option on the date of the
optionee's termination of service for death or disability.
LIMITED STOCK APPRECIATION RIGHTS. The Committee may grant Limited
Rights to employees simultaneously with the grant of any option. A Limited Right
gives the option holder the right, upon a change in control of the Company or
the Associaton, to receive the excess of the market value of the shares
represented by the Limited Rights
9
on the date exercised over the exercise price. Limited Rights generally will be
subject to the same terms and conditions and exercisable to the same extent as
stock options, as described above. Payment upon exercise of a Limited Right will
be in cash, or in the event of a change in control in which pooling accounting
treatment is a condition to the transaction, for shares of stock of the Company,
or in the event of a merger transaction, for shares of the acquiring corporation
or its parent, as applicable.
Limited Rights may be granted at the time of, and must be related to,
the grant of a stock option. The exercise of one will reduce to that extent the
number of shares represented by the other. If a Limited Right is granted with
and related to an Incentive Stock Option, the Limited Right must satisfy all the
restrictions and limitations to which the related Incentive Stock Option is
subject.
DIVIDEND EQUIVALENT RIGHTS. Dividend equivalent rights may also be
granted at the time of the grant of a stock option. Dividend equivalent rights
entitle the option holder to receive an amount of cash at the time that certain
extraordinary dividends are declared equal to the amount of the extraordinary
dividend multiplied by the number of options that the person holds. For these
purposes, an extraordinary dividend is defined under the Stock Option Plan as
any dividend paid on shares of Common Stock where the rate of dividend exceeds
the Associaton's weighted average cost of funds on interest-bearing liabilities
for the current and preceding three quarters.
RELOAD OPTIONS. Reload options may also be granted at the time of the
grant of a stock option. Reload options entitle the option holder, who has
delivered shares that he or she owns as payment of the exercise price for option
stock, to a new option to acquire additional shares equal in amount to the
shares he or she has traded in. Reload options may also be granted to replace
option shares retained by the employer for payment of the option holder's
withholding tax. The option price at which additional shares of stock can be
purchased by the option holder through the exercise of a reload option is equal
to the market value of the previously owned stock at the time it was surrendered
to the employer. The option period during which the reload option may be
exercised expires at the same time as that of the original option that the
holder has exercised.
EFFECT OF ADJUSTMENTS. Shares as to which awards may be granted under
the Stock Option Plan, and shares then subject to awards, will be adjusted by
the Committee in the event of any merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, combination or exchange of shares
or other change in the corporate structure of the Company without receipt of
payment or consideration by the Company.
Generally, in the case of any merger, consolidation or combination of
the Company with or into another holding company or other entity, whereby
holders of Common Stock will receive a cash payment (the "Merger Price") for
each share of Common Stock exchanged in the transaction, any individual with
exercisable options will receive an amount equal to the difference between the
Merger Price times the number of shares of Common Stock subject to such options
and the aggregate exercise price of all surrendered options.
AMENDMENT AND TERMINATION. The Board may at any time, subject to OTS
regulations and policy, amend, suspend or terminate the Stock Option Plan or any
portion thereof, provided, however, that no such amendment, suspension or
termination shall impair the rights of any individual, without his consent, in
any award made pursuant to the plan. Unless previously terminated, the Stock
Option Plan shall continue in effect for a term of ten years, after which no
further awards may be granted under the Stock Option Plan.
FEDERAL INCOME TAX CONSEQUENCES. Under present federal income tax laws,
awards under the Stock Option Plan will have the following consequences:
(1) The grant of an award, by itself, will neither result in the
recognition of taxable income to the recipient nor entitle the Company
to a deduction at the time of such grant.
(2) The exercise of a stock option which is an "Incentive Stock Option"
within the meaning of Section 422 of the Code will generally not, by
itself, result in the recognition of taxable income to the individual
nor entitle the Company to a deduction at the time of such exercise.
However, the difference between the exercise price and the fair market
value of the option shares on the date of exercise is an item of tax
preference which may, in certain situations, trigger the alternative
minimum tax. The alternative minimum tax is incurred only when it
exceeds the regular income tax. The alternative minimum tax will be
payable at the rate of 26% to the first $175,000 of "ordinary income"
in excess of $33,750 (single person) or $45,000 (married person filing
10
jointly). This tax applies at a flat rate of 28% of so much of the
taxable ordinary income in excess of $175,000. The alternative minimum
tax will be payable at a maximum rate of 20% on net capital gain. If a
taxpayer has alternative minimum taxable income in excess of $150,000
(married persons filing jointly) or $112,500 (single person), the
$45,000 or $33,750 exemptions are reduced by an amount equal to 25% of
the amount by which the alternative minimum taxable income of the
taxpayer exceeds $150,000 or $112,500, respectively. The individual
will recognize long term capital gain or loss upon the resale of the
shares received upon such exercise, provided the individual holds the
shares for more than eighteen months from the date of exercise.
(3) The sale of an Incentive Stock Option share prior to the applicable
holding period, i.e., the longer of two years from the date of grant of
the Incentive Stock Option or one year from the date of exercise, will
cause any gain to be taxed at ordinary income tax rates, with respect
to the spread between the exercise price and the fair market value of
the share on the date of exercise and at short term capital gains rates
with respect to any post exercise appreciation in the value of the
share.
(4) The sale of an Incentive Stock Option share after one year from the
date of exercise, will generally result in long term capital gain or
loss.
(5) The exercise of a stock option which is not an Incentive Stock Option,
i.e., a non-statutory stock option, will result in the recognition of
ordinary income on the date of exercise in an amount equal to the
difference between the exercise price and the fair market value on the
date of exercise of the shares acquired pursuant to the stock option.
(6) The exercise of a Limited Right will result in the recognition of
ordinary income by the individual on the date of exercise in an amount
of cash, and/or the fair market value on that date of the shares,
acquired pursuant to the exercise.
(7) Reload options are of the same type (non-statutory or incentive stock
option) as the option that the option holder exercised. Therefore, the
tax consequences of the reload option are determined under the
applicable tax rules for non-statutory or incentive stock options.
(8) The receipt of a cash payment pursuant to a dividend equivalent right
will result in the recognition of compensation or self-employment
income by the recipient.
(9) The Company will be allowed a deduction at the time, and in the amount
of, any ordinary income recognized by the individual under the various
circumstances described above, provided that the Company meets its
federal withholding tax obligations.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE TOTAL VOTES PRESENT IN PERSON
OR BY PROXY AT THE MEETING AND ENTITLED TO VOTE IS REQUIRED FOR APPROVAL OF THE
STOCK OPTION PLAN. THE AFFIRMATIVE VOTE OF A MAJORITY OF SHARES REPRESENTED IN
PERSON OR BY PROXY IS REQUIRED FOR RECIPIENTS OF OPTIONS TO QUALIFY FOR CERTAIN
EXEMPTIVE TREATMENT FROM THE SHORT-SWING PROFIT RECAPTURE PROVISIONS OF SECTION
16(B) OF THE SECURITIES EXCHANGE ACT OF 1934.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY, IF THE PROXY IS SIGNED AND RETURNED, WILL BE VOTED FOR THE RATIFICATION
AND APPROVAL OF THE STOCK OPTION PLAN.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION AND
APPROVAL OF THE STOCK OPTION PLAN.
11
PROPOSAL IV--RATIFICATION AND APPROVAL OF THE
2001 RECOGNITION AND RETENTION PLAN
GENERAL
Subject to stockholder approval at the Meeting, the Company has
established the First Federal of Olathe Bancorp, Inc. 2001 Recognition and
Retention Plan (the "2001 Recognition Plan") as a method of providing certain
key employees and outside directors of the Company with a proprietary interest
in the Company in a manner designed to encourage such persons to remain with the
Association and/or the Company, and to provide further incentives to achieve
corporate objectives. Up to 27,816 shares of common stock may be awarded under
the 2001 Recognition Plan. The 27,816 shares represents 5% of the shares sold in
the stock conversion. No awards have been determined as of the date of the
mailing of the proxy statement and no awards are contemplated to be made before
stockholder approval of the 2001 Recognition Plan has been obtained. The
following discussion is qualified in its entirety by reference to the 2001
Recognition Plan, the form of which is attached hereto as Appendix B.
PRINCIPAL FEATURES OF THE 2001 RECOGNITION PLAN
The 2001 Recognition Plan provides for the award of shares of Common
Stock ("2001 Recognition Plan Shares") subject to the restrictions described
below. Each award under the 2001 Recognition Plan will be made on terms and
conditions consistent with the 2001 Recognition Plan.
The 2001 Recognition Plan is administered by a committee (the
"Committee"), which shall be appointed by the Board of Directors of the Company
and shall consist of either (i) at least two "non-employee directors" (as
defined in the 2001 Recognition Plan) of the Company or (ii) the entire Board of
the Company. The Committee will select the recipients and terms of awards
pursuant to the 2001 Recognition Plan. Pursuant to the terms of the 2001
Recognition Plan, any director or key employee of the Association, the Company
or its affiliates may be selected by the Committee to participate in the 2001
Recognition Plan. In determining to whom and in what amount to grant awards, the
Committee will consider the position and responsibilities of eligible persons,
the value of their services to the Company and the Association and other factors
it deems relevant. As of December 31, 2000, there were four non-employee
directors and three employees eligible to participate in the 2001 Recognition
Plan.
The 2001 Recognition Plan Shares used to fund awards may be either
authorized but unissued shares, treasury shares or shares acquired in the open
market. To the extent that the Company utilizes authorized but unissued shares
to fund the 2001 Recognition Plan, the voting interests of current stockholders
will be diluted.
The 2001 Recognition Plan Shares to be awarded to directors, officers
and key employees will vest in such installments as the Committee shall
determine. The 2001 Recognition Plan Shares are subject to forfeiture if the
recipient fails to remain in continuous service (as defined in the 2001
Recognition Plan) as an employee, officer or director (or advisory director) of
the Company or the Association for the stipulated period.
In the event a recipient ceases to maintain continuous service with the
Company or the Association by reason of death or disability, following a change
in control, or normal retirement (as defined in the 2001 Recognition Plan), the
2001 Recognition Plan Shares still subject to restrictions will vest and be free
of these restrictions. In the event of termination for any other reason, all
nonvested shares will be forfeited and returned to the 2001 Recognition Plan.
Prior to vesting of the nonvested 2001 Recognition Plan shares, a recipient will
have the right to vote the nonvested 2001 Recognition Plan Shares which have
been awarded to the recipient and will receive any dividends declared on such
2001 Recognition Plan Shares.
EFFECT OF ADJUSTMENTS. Restricted stock awarded under the 2001
Recognition Plan will be adjusted by the Committee in the event of a
reorganization, recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation or other change in corporate
structure.
FEDERAL INCOME TAX CONSEQUENCES. Holders of restricted stock will
recognize ordinary income on the date that the shares of restricted stock are no
longer subject to a substantial risk of forfeiture, in an amount equal to the
fair market value of the shares on that date. In certain circumstances, a holder
may elect to recognize ordinary income and determine such fair market value on
the date of the grant of the restricted stock. Holders of restricted stock will
also recognize ordinary income equal to their dividend or dividend equivalent
payments when such payments
12
are received. Generally, the amount of income recognized by individuals will be
a deductible expense for tax purposes by the Company.
AMENDMENT TO THE 2001 RECOGNITION PLAN. The Board of Directors of the
Company may at any time, subject to applicable regulations and policy of the
OTS, amend, suspend or terminate the 2001 Recognition Plan or any portion
thereof, provided, however, that no such amendment, suspension or termination
shall impair the rights of any award recipient, without his consent, in any
award therefore made pursuant to the 2001 Recognition Plan.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE TOTAL VOTES PRESENT IN PERSON
OR BY PROXY AND ENTITLED TO VOTE AT THE MEETING IS REQUIRED TO APPROVE THE 2001
RECOGNITION PLAN. THE AFFIRMATIVE VOTE OF A MAJORITY OF SHARES REPRESENTED IN
PERSON OR BY PROXY IS REQUIRED TO ENABLE RECIPIENTS OF 2001 RECOGNITION PLAN
AWARDS TO QUALIFY FOR CERTAIN EXEMPTIVE TREATMENT FROM THE SHORT-SWING PROFIT
PROVISIONS OF SECTION 16(B) OF THE SECURITIES EXCHANGE ACT OF 1934.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY, IF THE PROXY IS SIGNED AND RETURNED, WILL BE VOTED FOR THE RATIFICATION
AND APPROVAL OF THE 2001 RECOGNITION PLAN.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION AND
APPROVAL OF THE 2001 RECOGNITION PLAN.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for the next annual meeting of stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's office located at 100
East Park Street, Olathe, Kansas 66061 no later than November 27, 2001. Any such
proposal shall be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934.
Under the Company's Bylaws, certain procedures are provided which a
stockholder must follow to nominate persons for election as directors or to
introduce an item of business at an annual meeting of stockholders. These
procedures provide, generally, that stockholders desiring to make nominations
for directors, or to bring a proper subject of business before the meeting, must
do so by a written notice timely received (generally not later than 90 days in
advance of such meeting, subject to certain exceptions) by the Secretary of the
Company. The notice must include certain information as specified in the
Company's bylaws.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company and the Association may
solicit proxies personally or by telegraph or telephone without additional
compensation.
13
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2000, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE
RECORD DATE UPON WRITTEN OR TELEPHONIC REQUEST TO KENDA CAMP, SECRETARY, FIRST
FEDERAL OF OLATHE BANCORP, INC., 100 EAST PARK STREET, OLATHE, KANSAS 66061 OR
CALL (913) 782-0026.
Olathe, Kansas
March 26, 2001
14
APPENDIX A
FIRST FEDERAL OF OLATHE BANCORP, INC.
2001 STOCK OPTION PLAN
1. Purpose
The purpose of the First Federal of Olathe Bancorp, Inc. 2001 Stock
Option Plan (the "Plan") is to advance the interests of the Company and its
stockholders by providing Key Employees and Outside Directors of First Federal
of Olathe Bancorp, Inc. (the "Company") and its Affiliates, including First
Federal Savings and Loan Association of Olathe, upon whose judgment, initiative
and efforts the successful conduct of the business of the Company and its
Affiliates largely depends, with an additional incentive to perform in a
superior manner as well as to attract people of experience and ability.
2. Definitions
"Affiliate" means any "parent corporation" or "subsidiary corporation"
of the Company or the Association, as such terms are defined in Section 424(e)
or 424(f), respectively, of the Code, or a successor to a parent corporation or
subsidiary corporation.
"Award" means an Award of Non-Statutory Stock Options, Incentive Stock
Options, Limited Rights, Reload Options and/or Dividend Equivalent Rights
granted under the provisions of the Plan.
"Association" means First Federal Savings and Loan Association of
Olathe, or a successor corporation.
"Beneficiary" means the person or persons designated by a 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, his estate.
"Board" or "Board of Directors" means the board of directors of the
Company or its Affiliate, as applicable.
"Cause" means personal dishonesty, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, or the willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or a final cease-and-desist order, any
of which results in a material loss to the Company or an Affiliate.
"Change in Control" of the Association or the Company means a change in
control of a nature that: (i) would be required to be reported in response to
Item 1(a) of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); or (ii) results in a Change in Control of the Association or
the Company within the meaning of the Home Owners Loan Act, as amended ("HOLA"),
and applicable rules and regulations promulgated thereunder, as in effect at the
time of the Change in Control; or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (a) any "person" (as
the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 25% or more of
the combined voting power of Company's outstanding securities except for any
securities purchased by the Association's employee stock ownership plan or
trust; or (b) individuals who constitute the Board
A-1
on the date hereof (the "Incumbent Board") cease for any reason to constitute at
least a majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election was approved by a vote of at least
three- fifths of the directors comprising the Incumbent Board, or whose
nomination for election by the Company's stockholders was approved by the same
Nominating Committee serving under an Incumbent Board, shall be, for purposes of
this clause (b), considered as though he were a member of the Incumbent Board;
or (c) a plan of reorganization, merger, consolidation, sale of all or
substantially all the assets of the Association or the Company or similar
transaction in which the Association or Company is not the surviving institution
occurs; or (d) a proxy statement soliciting proxies from stockholders of the
Company, by someone other than the current management of the Company, seeking
stockholder approval of a plan of reorganization, merger or consolidation of the
Company or similar transaction with one or more corporations as a result of
which the outstanding shares of the class of securities then subject to the Plan
are to be exchanged for or converted into cash or property or securities not
issued by the Company; or (e) a tender offer is made for 25% or more of the
voting securities of the Company and the shareholders owning beneficially or of
record 25% or more of the outstanding securities of the Company have tendered or
offered to sell their shares pursuant to such tender offer and such tendered
shares have been accepted by the tender offeror.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a Committee of the Board consisting of either (i) at
least two Non-Employee Directors of the Company, or (ii) the entire Board of the
Company.
"Common Stock" means shares of the common stock of the Company, par
value $0.01 per share.
"Company" means First Federal of Olathe Bancorp, Inc. or a successor
corporation.
"Continuous Service" means employment as a Key Employee and/or service
as an Outside Director without any interruption or termination of such
employment and/or service. Continuous Service shall also mean a continuation as
a member of the Board of Directors following a cessation of employment as a Key
Employee, and a continuation as an advisory director following cessation as a
member of the Board of Directors. In the case of a Key Employee, employment
shall not be considered interrupted in the case of sick leave, military leave or
any other leave of absence approved by the Association or in the case of
transfers between payroll locations of the Association or between the
Association, its parent, its subsidiaries or its successor.
"Date of Grant" means the actual date on which an Award is granted by
the Committee.
"Director" means a member of the Board.
"Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an employee to perform the work
customarily assigned to him, or of a Director to serve as such. Additionally, in
the case of an employee, a medical doctor selected or approved by the Board must
advise the Committee that it is either not possible to determine when such
Disability will terminate or that it appears probable that such Disability will
be permanent during the remainder of said employee's lifetime.
"Dividend Equivalent Rights" means the right to receive an amount of
cash based upon the terms set forth in Section 11 hereof.
"Effective Date" means the date of, or a date determined by the Board
of Directors following, approval of the Plan by the Company's stockholders.
"Fair Market Value" means, when used in connection with the Common
Stock on a certain date, the reported closing price of the Common Stock as
reported by the Nasdaq stock market (as published by the Wall Street Journal, if
published) on the day prior to such date, or if the Common Stock was not traded
on the day prior to such
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date, on the next preceding day on which the Common Stock was traded; provided,
however, that if the closing price of the Common Stock is not reported on the
Nasdaq stock market, Fair Market Value shall mean the mean between the closing
high bid and low asked quotations with respect to a share of Common Stock on
such date on the NASDAQ stock market, or, if no such quotations are available,
then Fair Market Value shall be determined by the Committee in its reasonable
judgement. The Committee is authorized, but is not required, to obtain an
independent appraisal to determine the Fair Market Value of the Common Stock.
"Incentive Stock Option" means an Option granted by the Committee to a
Participant, which Option is designated as an Incentive Stock Option pursuant to
Section 9.
"Key Employee" means any person who is currently employed by the
Company or an Affiliate who is chosen by the Committee to participate in the
Plan.
"Limited Right" means the right to receive an amount of cash based upon
the terms set forth in Section 10.
"Non-Statutory Stock Option" means an Option granted by the Committee
to (i) an Outside Director or (ii) to any other Participant and such Option is
either (A) not designated by the Committee as an Incentive Stock Option, or (B)
fails to satisfy the requirements of an Incentive Stock Option as set forth in
Section 422 of the Code and the regulations thereunder.
"Non-Employee Director" means, for purposes of the Plan, a Director who
(a) is not employed by the Company or an Affiliate; (b) does not receive
compensation directly or indirectly as a consultant (or in any other capacity
than as a Director) greater than $60,000; (c) does not have an interest in a
transaction requiring disclosure under Item 404(a) of Regulation S-K; or (d) is
not engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K.
"Normal Retirement" means for a Key Employee, retirement at the normal
or early retirement date set forth in the Association's Employee Stock Ownership
Plan, or any successor plan. Normal Retirement for an Outside Director means a
cessation of service on the Board of Directors for any reason other than removal
for Cause, after reaching 65 years of age and maintaining at least 10 years of
Continuous Service.
"Outside Director" means a Director of the Company or an Affiliate who
is not an employee of the Company or an Affiliate.
"Option" means an Award granted under Section 8 or Section 9.
"OTS" means the Office of Thrift Supervision.
"Participant" means a Key Employee or Outside Director of the Company
or its Affiliates who receives or has received an award under the Plan.
"Reload Option" means an option to acquire shares of Common Stock
equivalent to the shares (i) used by a Participant to pay for an Option, or (ii)
deducted from any distribution in order to satisfy income tax required to be
withheld, based upon the terms set forth in Section 20.
"Right" means a Limited Right or a Dividend Equivalent Right.
"Termination for Cause" means the termination of employment or
termination of service on the Board caused by the individual's personal
dishonesty, willful misconduct, any breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, or the willful violation
of any law, rule or regulation (other than
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traffic violations or similar offenses), or a final cease-and-desist order, any
of which results in material loss to the Company or one of its Affiliates.
3. Plan Administration Restrictions
The Plan shall be administered by the Committee. The Committee is
authorized, subject to the provisions of the Plan and OTS regulations and
policy, to establish such rules and regulations as it deems necessary for the
proper administration of the Plan and to make whatever determinations and
interpretations in connection with the Plan it deems necessary or advisable. All
determinations and interpretations made by the Committee shall be binding and
conclusive on all Participants in the Plan and on their legal representatives
and beneficiaries.
All transactions involving a grant, award or other acquisition from the
Company shall:
(a) be approved by the Company's full Board or by the Committee;
(b) be approved, or ratified, in compliance with Section 14 of the
Exchange Act, by either: the affirmative vote of the holders of a majority of
the securities present, or represented and entitled to vote at a meeting duly
held in accordance with the laws of the state in which the Company is
incorporated; or the written consent of the holders of a majority of the
securities of the issuer entitled to vote provided that such ratification occurs
no later than the date of the next annual meeting of shareholders; or
(c) result in the acquisition of an Option or Limited Right that
is held by the Participant for a period of six months following the date of such
acquisition.
4. Types of Awards
Awards under the Plan may be granted in any one or a combination of:
(a) Incentive Stock Options; (b) Non-Statutory Stock Options; (c) Limited
Rights; (d) Dividend Equivalent Rights; and (e) Reload Options.
5. Stock Subject to the Plan
Subject to adjustment as provided in Section 18, the maximum number of
shares reserved for issuance under the Plan is 55,632 shares. To the extent that
Options or Rights granted under the Plan are exercised, the shares covered will
be unavailable for future grants under the Plan; to the extent that Options
together with any related Rights granted under the Plan terminate, expire or are
canceled without having been exercised or, in the case of Limited Rights
exercised for cash, new Awards may be made with respect to these shares.
6. Eligibility
Key Employees of the Company and its Affiliates shall be eligible to
receive Incentive Stock Options, Non-Statutory Stock Options, Limited Rights,
Reload Options and/or Dividend Equivalent Rights under the Plan. Outside
Directors shall be eligible to receive Non-Statutory Stock Options, Dividend
Equivalent Rights and Reload Options under the Plan.
7. General Terms and Conditions of Options and Rights
The Committee shall have full and complete authority and discretion,
subject to OTS regulations and policy and except as expressly limited by the
Plan, to grant Options and/or Rights and to provide the terms and conditions
(which need not be identical among Participants) thereof. In particular, the
Committee shall prescribe the following terms and conditions: (i) the Exercise
Price of any Option or Right, which shall not be less than the Fair Market Value
per share on the Date of Grant, (ii) the number of shares of Common Stock
subject to, and the expiration date
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of, any Option or Right, which expiration date shall not exceed ten years from
the Date of Grant, (iii) the manner, time and rate (cumulative or otherwise) of
exercise of such Option or Right, and (iv) the restrictions, if any, to be
placed upon such Option or Right or upon shares of Common Stock which may be
issued upon exercise of such Option or Right.
8. Non-Statutory Stock Options
The Committee may, from time to time, grant Non-Statutory Stock Options
to eligible Key Employees and Outside Directors, and, upon such terms and
conditions as the Committee may determine, grant Non-Statutory Stock Options in
exchange for and upon surrender of previously granted Awards under the Plan.
Non-Statutory Stock Options granted under the Plan, including Non-Statutory
Stock Options granted in exchange for and upon surrender of previously granted
Awards, are subject to the terms and conditions set forth in this Section 8. The
maximum number of shares subject to a Non-Statutory Option that may be awarded
under the Plan to any Key Employee shall be 33,379.
(a) Option Agreement. Each Option shall be evidenced by a written
option agreement between the Company and the Participant specifying the number
of shares of Common Stock that may be acquired through its exercise and
containing such other terms and conditions that are not inconsistent with the
terms of the Plan.
(b) Price. The purchase price per share of Common Stock deliverable
upon the exercise of each Non-Statutory Stock Option shall be the Fair Market
Value of the Common Stock of the Company on the Date of Grant. Shares may be
purchased only upon full payment of the purchase price in one or more of the
manners set forth in Section 14 hereof, as determined by the Committee.
(c) Vesting. Unless the Committee shall specifically state to the
contrary at the time an Award is granted, Non-Statutory Stock Options awarded to
Key Employees and Outside Directors shall vest at the rate of 20% of the
initially awarded amount per year, commencing with the vesting of the first
installment on the Date of Grant, and succeeding installments on each
anniversary of the Date of Grant. No Options shall become vested by a
Participant unless the Participant maintains Continuous Service until the
vesting date of such Option, except as set forth herein. Notwithstanding any
other provision of this Plan, in the event of a Change in Control of the Company
or the Association, all Non-Statutory Stock Options that have been awarded shall
immediately vest.
(d) Exercise of Options. A vested Option may be exercised from time to
time, in whole or in part, by delivering a written notice of exercise to the
President or Chief Executive Officer of the Company, or his designee. Such
notice shall be irrevocable and must be accompanied by full payment of the
purchase price in cash or shares of Common Stock at the Fair Market Value of
such shares, determined on the exercise date in the manner described in Section
2 hereof. If previously acquired shares of Common Stock are tendered in payment
of all or part of the exercise price, the value of such shares shall be
determined as of the date of such exercise.
(e) Term of Options. The term during which each Non-Statutory Stock
Option may be exercised shall be determined by the Committee, but in no event
shall a Non-Statutory Stock Option be exercisable in whole or in part more than
10 years and one day from the Date of Grant. The Committee may, in its sole
discretion, accelerate the time during which any Non-Statutory Stock Option
vests in whole or in part to the Key Employees and/or Outside Directors.
(f) Amount of Awards. Non-Statutory Stock Options may be granted to any
Key Employee or Outside Director in such amounts as determined by the Committee
subject to the provisions of Section 8. In granting Non-Statutory Stock Options,
the Committee shall consider such factors as it deems relevant, which factors
may include, among others, the position and responsibility of the Key Employee
or Outside Director, the length and value of his service to the Association, the
Company or the Affiliate, the compensation paid to the Key Employee or Outside
Director, and the Committee's evaluation of the performance of the Association,
the Company or the Affiliate,
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according to measurements that may include, among others, key financial ratios,
level of classified assets and independent audit findings.
(g) Termination of Employment or Service. Upon the termination of a Key
Employee's employment or upon termination of an Outside Director's service for
any reason other than Normal Retirement, death, Disability, Change in Control or
Termination for Cause, the Participant's Non-Statutory Stock Options shall be
exercisable only as to those shares that were immediately purchasable on the
date of termination and only for one year following termination. In the event of
Termination for Cause, all rights under a Participant's Non-Statutory Stock
Options shall expire upon termination. In the event of the Participant's
termination of employment or service due to Normal Retirement, death or
Disability, or coincident with or following a Change in Control all
Non-Statutory Stock Options held by the Participant, whether or not vested at
such time, shall vest and become exercisable by the Participant or his legal
representative or beneficiaries for five years following the date of such
termination, death or cessation of employment or service, provided that in no
event shall the period extend beyond the expiration of the Non-Statutory Stock
Option term.
(h) Transferability. In the discretion of the Board, all or any
Non-Statutory Stock Option granted hereunder may be transferable by the
Participant once the Option has vested in the Participant, provided, however,
that the Board may limit the transferability of such Option or Options to a
designated class or classes of persons.
9. Incentive Stock Options
The Committee may, from time to time, grant Incentive Stock Options to
Key Employees. Incentive Stock Options granted pursuant to the Plan shall be
subject to the following terms and conditions:
(a) Option Agreement. Each Option shall be evidenced by a written
option agreement between the Company and the Key Employee specifying the number
of shares of Common Stock that may be acquired through its exercise and
containing such other terms and conditions that are not inconsistent with the
terms of the Plan.
(b) Price. Subject to Section 18 of the Plan and Section 422 of the
Code, the purchase price per share of Common Stock deliverable upon the exercise
of each Incentive Stock Option shall be not less than 100% of the Fair Market
Value of the Company's Common Stock on the date the Incentive Stock Option is
granted. However, if a Key Employee owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or its
Affiliates (or under Section 424(d) of the Code is deemed to own stock
representing more than 10% of the total combined voting power of all classes of
stock of the Company or its Affiliates by reason of the ownership of such
classes of stock, directly or indirectly, by or for any brother, sister, spouse,
ancestor or lineal descendent of such Key Employee, or by or for any
corporation, partnership, estate or trust of which such Key Employee is a
shareholder, partner or Beneficiary), the purchase price per share of Common
Stock deliverable upon the exercise of each Incentive Stock Option shall not be
less than 110% of the Fair Market Value of the Company's Common Stock on the
date the Incentive Stock Option is granted. Shares may be purchased only upon
payment of the full purchase price in one or more of the manners set forth in
Section 14 hereof, as determined by the Committee.
(c) Vesting. Incentive Stock Options granted under the Plan shall vest
in a Participant at the rate or rates determined by the Committee. Unless the
Committee shall specifically state to the contrary at the time an Award is
granted, Incentive Stock Options awarded to Key Employees shall vest at the rate
of 20% of the initially awarded amount per year commencing with the vesting of
the first installment on the Date of Grant, and succeeding installments on each
anniversary of the Date of Grant. Notwithstanding any other provisions of this
plan, in the event of a Change in Control of the Company or the Association, all
Incentive Stock Options that have been awarded shall immediately vest.
(d) Exercise of Options. Vested Options may be exercised from time to
time, in whole or in part, by delivering a written notice of exercise to the
President or Chief Executive Officer of the Company or his designee.
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Such notice is irrevocable and must be accompanied by full payment of the
exercise price in cash or shares of Common Stock at the Fair Market Value of
such shares determined on the exercise date by the manner described in Section
2.
The Option comprising each installment may be exercised in whole or in
part at any time after such installment becomes vested, provided that the amount
able to be first exercised in a given year is consistent with the terms of
Section 422 of the Code. To the extent required by Section 422 of the Code, the
aggregate Fair Market Value (determined at the time the Option is granted) of
the Common Stock for which Incentive Stock Options are exercisable for the first
time by a Participant during any calendar year (under all plans of the Company
and its Affiliates) shall not exceed $100,000.
The Committee may, in its sole discretion, accelerate the time at which
any Incentive Stock Option may be exercised in whole or in part, provided that
it is consistent with the terms of Section 422 of the Code. Notwithstanding the
above, in the event of a Change in Control of the Company, all Incentive Stock
Options that have been awarded shall become immediately exercisable, provided,
however, that if the aggregate Fair Market Value (determined at the time the
Option is granted) of Common Stock for which Options are exercisable as a result
of a Change in Control, together with the aggregate Fair Market Value
(determined at the time the Option is granted) of all other Common Stock for
which Incentive Stock Options become exercisable during such year, exceeds
$100,000, then the first $100,000 of Incentive Stock Options (determined as of
the Date of Grant) shall be exercisable as Incentive Stock Options and any
excess shall be exercisable as Non-Statutory Stock Options (but shall remain
subject to the provisions of this Section 9 to the extent permitted).
(e) Amount of Awards. Incentive Stock Options may be granted to any
eligible Key Employee in such amounts as determined by the Committee; provided
that the amount granted is consistent with OTS regulations and policy and with
the terms of Section 422 of the Code. Notwithstanding the above, the maximum
number of shares that may be subject to an Incentive Stock Option awarded under
the Plan to any Key Employee shall be 33,379. In granting Incentive Stock
Options, the Committee shall consider such factors as it deems relevant, which
factors may include, among others, the position and responsibilities of the Key
Employee, the length and value of his or her service to the Association, the
Company, or the Affiliate, the compensation paid to the Key Employee and the
Committee's evaluation of the performance of the Association, the Company, or
the Affiliate, according to measurements that may include, among others, key
financial ratios, levels of classified assets, and independent audit findings.
(f) Terms of Options. The term during which each Incentive Stock Option
may be exercised shall be determined by the Committee, but in no event shall an
Incentive Stock Option be exercisable in whole or in part more than 10 years
from the Date of Grant. If any Key Employee, at the time an Incentive Stock
Option is granted to him, owns stock representing more than 10% of the total
combined voting power of all classes of stock of the Company or its Affiliate
(or, under Section 424(d) of the Code, is deemed to own stock representing more
than 10% of the total combined voting power of all classes of stock, by reason
of the ownership of such classes of stock, directly or indirectly, by or for any
brother, sister, spouse, ancestor or lineal descendent of such Key Employee, or
by or for any corporation, partnership, estate or trust of which such Key
Employee is a shareholder, partner or Beneficiary), the Incentive Stock Option
granted to him shall not be exercisable after the expiration of five years from
the Date of Grant.
(g) Termination of Employment. Upon the termination of a Key Employee's
service for any reason other than Normal Retirement, death, Disability, a Change
in Control, or Termination for Cause, the Key Employee's Incentive Stock Options
shall be exercisable only as to those shares that were immediately purchasable
by such Key Employee at the date of termination for a period of one year
following termination, provided, however, that such Option shall not be eligible
for treatment as an Incentive Stock Option in the event such Option is exercised
more than three months following termination. In the event of Termination for
Cause all rights under the Incentive Stock Options shall expire upon
termination.
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Upon termination of a Key Employee's employment due to Normal
Retirement, death, Disability, or coincident to or following a Change in
Control, all Incentive Stock Options held by such Key Employee, whether or not
exercisable at such time, shall be exercisable for a period of five years
following the date of his cessation of employment, provided however, that any
such Option shall not be eligible for treatment as an Incentive Stock Option in
the event such Option is exercised more than three months following the date of
his Normal Retirement or termination of employment following a Change in
Control; and provided further, that no Option shall be eligible for treatment as
an Incentive Stock Option in the event such Option is exercised more than one
year following termination of employment due to Disability; and provided
further, in order to obtain Incentive Stock Option treatment for Options
exercised by heirs or devisees of an Optionee, the Optionee's death must have
occurred while employed or within three months of termination of employment. In
no event shall the exercise period extend beyond the expiration of the Incentive
Stock Option term.
(h) Transferability. No Incentive Stock Option granted under the Plan
is transferable except by will or the laws of descent and distribution and is
exercisable during his lifetime only by the Key Employee to which it is granted.
(i) Compliance with Code. The options granted under this Section 9 are
intended to qualify as Incentive Stock Options within the meaning of Section 422
of the Code, but the Company makes no warranty as to the qualification of any
Option as an Incentive Stock Option within the meaning of Section 422 of the
Code. If an Option granted hereunder fails for whatever reason to comply with
the provisions of Section 422 of the Code, and such failure is not or cannot be
cured, such Option shall be a Non-Statutory Stock Option.
10. Limited Rights
The Committee may grant a Limited Right simultaneously with the grant
of any Option to any Key Employee of the Association, with respect to all or
some of the shares covered by such Option. Limited Rights granted under the Plan
are subject to the following terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be exercisable
in whole or in part before the expiration of six months from the date of grant
of the Limited Right. A Limited Right may be exercised only in the event of a
Change in Control of the Company.
The Limited Right may be exercised only when the underlying Option is
eligible to be exercised, provided that the Fair Market Value of the underlying
shares on the day of exercise is greater than the exercise price of the related
Option.
Upon exercise of a Limited Right, the related Option shall cease to be
exercisable. Upon exercise or termination of an Option, any related Limited
Rights shall terminate. The Limited Rights may be for no more than 100% of the
difference between the exercise price and the Fair Market Value of the Common
Stock subject to the underlying Option. The Limited Right is transferable only
when the underlying Option is transferable and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall
promptly receive from the Company an amount of cash equal to the difference
between the Fair Market Value on the Date of Grant of the related Option and the
Fair Market Value of the underlying shares on the date the Limited Right is
exercised, multiplied by the number of shares with respect to which such Limited
Right is being exercised. In the event of a Change in Control in which pooling
of interest accounting treatment is a condition to the transaction, the Limited
Right shall be exercisable solely for shares of stock of the Company, or in the
event of a merger transaction, for shares of the acquiring corporation or its
parent, as applicable. The number of shares to be received on the exercise of
such Limited Right shall be determined by dividing the amount of cash that would
have been available under the first
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sentence above by the Fair Market Value at the time of exercise of the shares
underlying the Option subject to the Limited Right.
11. Dividend Equivalent Rights
Simultaneously with the grant of any Option to a Participant, the
Committee may grant a Dividend Equivalent Right with respect to all or some of
the shares covered by such Option. Dividend Equivalent Rights granted under this
Plan are subject to the following terms and conditions:
(a) Terms of Rights. The Dividend Equivalent Right provides the
Participant with a cash benefit per share for each share underlying the
unexercised portion of the related Option equal to the amount of any
extraordinary dividend (as defined in Section 11(c)) per share of Common Stock
declared by the Company. The terms and conditions of any Dividend Equivalent
Right shall be evidenced in the Option agreement entered into with the
Participant and shall be subject to the terms and conditions of the Plan. The
Dividend Equivalent Right is transferable only when the related Option is
transferable and under the same conditions.
(b) Payment. Upon the payment of an extraordinary dividend, the
Participant holding a Dividend Equivalent Right with respect to Options or
portions thereof which have vested shall promptly receive from the Company or
the Association the amount of cash equal to the amount of the extraordinary
dividend per share of Common Stock, multiplied by the number of shares of Common
Stock underlying the unexercised portion of the related Option. With respect to
Options or portions thereof which have not vested, the amount that would have
been received pursuant to the Dividend Equivalent Right with respect to the
shares underlying such unvested Option or portion thereof shall be paid to the
Participant holding such Dividend Equivalent Right together with earnings
thereon, on such date as the Option or portion thereof becomes vested. Payments
shall be decreased by the amount of any applicable tax withholding prior to
distribution to the Participant as set forth in Section 20.
(c) Extraordinary Dividend. For purposes of this Section 11, an
extraordinary dividend is any dividend paid on shares of Common Stock where the
rate of the dividend exceeds the Company's weighted average cost of funds on
interest-bearing liabilities for the current and preceding three quarters.
12. Reload Option
Simultaneously with the grant of any Option to a Participant, the
Committee may grant a Reload Option with respect to all or some of the shares
covered by such Option. A Reload Option may be granted to a Participant who
satisfies all or part of the exercise price of the Option with shares of Common
Stock (as described in Section 14(c) below). The Reload Option represents an
additional Option to acquire the same number of shares of Common Stock as is
used by the Participant to pay for the original Option. Reload Options may also
be granted to replace Common Stock withheld by the Company for payment of a
Participant's withholding tax under Section 20. A Reload Option is subject to
all of the same terms and conditions as the original Option except that (i) the
exercise price of the shares of Common Stock subject to the Reload Option will
be determined at the time the original Option is exercised and (ii) such Reload
Option will conform to all provisions of the Plan at the time the original
Option is exercised.
13. Surrender of Option
In the event of a Participant's termination of employment or
termination of service as a result of death or Disability, the Participant (or
his or her personal representative(s), heir(s), or devisee(s)) may, in a form
acceptable to the Committee make application to surrender all or part of the
Options held by such Participant in exchange for a cash payment from the Company
of an amount equal to the difference between the Fair Market Value of the Common
Stock on the date of termination of employment or the date of termination of
service on the Board and the exercise price per share of the Option. Whether the
Company accepts such application or determines to make payment, in whole or
part, is within its absolute and sole discretion, it being expressly understood
that the Company
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is under no obligation to any Participant whatsoever to make such payments. In
the event that the Company accepts such application and determines to make
payment, such payment shall be in lieu of the exercise of the underlying Option
and such Option shall cease to be exercisable.
14. Alternate Option Payment Mechanism
The Committee has sole discretion to determine what form of payment it
will accept for the exercise of an Option. The Committee may indicate acceptable
forms in the agreement with the Participant covering such Options or may reserve
its decision to the time of exercise. No Option is to be considered exercised
until payment in full is accepted by the Committee or its agent.
(a) Cash Payment. The exercise price may be paid in cash or by
certified check. To the extent permitted by law, the Committee may permit all or
a portion of the exercise price of an Option to be paid through borrowed funds.
(b) Cashless Exercise. Subject to vesting requirements, if applicable,
a Participant may engage in a "cashless exercise" of the Option. Upon a cashless
exercise, the Participant shall give 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 Common Stock subject to the Option and
to deliver enough of the proceeds to the Company to pay the Option exercise
price and any applicable withholding taxes. If the Participant does not sell the
Common Stock subject to the Option through a registered broker-dealer or
equivalent third party, the Participant can give the Company written notice of
the exercise of the Option and the third party purchaser of the Common Stock
subject to the Option shall pay the Option exercise price plus applicable
withholding taxes to the Company.
(c) Exchange of Common Stock. The Committee may permit payment of the
Option exercise price by the tendering of previously acquired shares of Common
Stock. All shares of Common Stock tendered in payment of the exercise price of
an Option shall be valued at the Fair Market Value of the Common Stock on the
date prior to the date of exercise. No tendered shares of Common Stock which
were acquired by the Participant upon the previous exercise of an Option or as
awards under a stock award plan (such as the Company's Recognition and Retention
Plan) shall be accepted for exchange unless the Participant has held such shares
(without restrictions imposed by said plan or award) for at least six months
prior to the exchange.
15. Rights of a Stockholder
A Participant shall have no rights as a stockholder with respect to any
shares covered by a Non-Statutory and/or Incentive Stock Option until the date
of issuance of a stock certificate for such shares. Nothing in the Plan or in
any Award granted confers on any person any right to continue in the employ of
the Company or its Affiliates or to continue to perform services for the Company
or its Affiliates or interferes in any way with the right of the Company or its
Affiliates to terminate his services as an officer, director or employee at any
time.
16. Agreement with Participants
Each Award of Options, Reload Options, Limited Rights and/or Dividend
Equivalent Rights will be evidenced by a written agreement, executed by the
Participant and the Company or its Affiliates that describes the conditions for
receiving the Awards, including the date of Award, the purchase price,
applicable periods, and any other terms and conditions as may be required by the
Board or applicable securities laws.
17. Designation of Beneficiary
A Participant may, with the consent of the Committee, designate a
person or persons to receive, in the event of death, any Option, Reload Options,
Limited Rights or Dividend Equivalent Rights to which he would then be
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entitled. Such designation will be made upon forms supplied by and delivered to
the Company and may be revoked in writing. If a Participant fails effectively to
designate a Beneficiary, then his estate will be deemed to be the Beneficiary.
18. Dilution and Other Adjustments
In the event of any change in the outstanding shares of Common Stock of
the Company by reason of any stock dividend or split, pro rata return of capital
to all shareholders, recapitalization, or any merger, consolidation, spin-off,
reorganization, combination or exchange of shares, or other similar corporate
change, or other increase or decrease in such shares without receipt or payment
of consideration by the Company, the Committee will make such adjustments to
previously granted Awards, to prevent dilution or enlargement of the rights of
the Participant, including any or all of the following:
(a) adjustments in the aggregate number or kind of shares of
Common Stock that may be awarded under the Plan;
(b) adjustments in the aggregate number or kind of shares of
Common Stock covered by Awards already made under the Plan; or
(c) adjustments in the purchase price of outstanding Incentive
and/or Non-Statutory Stock Options, or any Limited Rights
attached to such Options.
No such adjustments may, however, materially change the value of
benefits available to a Participant under a previously granted Award. With
respect to Incentive Stock Options, no such adjustment shall be made if it would
be deemed a "modification" of the Award under Section 424 of the Code.
19. Effect of a Change in Control on Option Awards
In the event of a Change in Control, the Committee and the Board of
Directors will take one or more of the following actions to be effective as of
the date of such Change in Control:
(a) 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
Participant will receive upon consummation of the Change in Control a cash
payment for each Option surrendered equal to the difference between the (1) Fair
Market Value of the consideration to be received for each share of Common Stock
in the Change in Control times the number of shares of Common Stock subject to
such surrendered Options, and (2) the aggregate exercise price of all such
surrendered Options; or
(b) in the event of a transaction under the terms of which the holders
of Common Stock will receive upon consummation thereof a cash payment (the
"Merger Price") for each share of Common Stock exchanged in the Change in
Control transaction, make or to provide for a cash payment to the Participants
equal to the difference between (1) the Merger Price times the number of shares
of Common Stock subject to such Options held by each Participant (to the extent
then exercisable at prices not in excess of the Merger Price) and (2) the
aggregate exercise price of all such surrendered Options.
20. Withholding
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There may be deducted from each distribution of cash and/or Common
Stock under the Plan the minimum amount of any federal or state taxes, including
payroll taxes, that are applicable to such supplemental taxable income and that
are required by any governmental authority to be withheld. Shares of Common
Stock will be withheld where required from any distribution of Common Stock.
21. Amendment of the Plan
The Board may at any time, and from time to time, modify or amend the
Plan in any respect, or modify or amend an Award received by Key Employees
and/or Outside Directors subject to OTS regulations; provided, however, that no
such termination, modification or amendment may affect the rights of a
Participant, without his consent, under an outstanding Award. Any amendment or
modification of the Plan or an outstanding Award under the Plan shall be
approved by the Committee or the full Board of the Company.
22. Effective Date of Plan
The Plan shall become effective upon the date of, or a date determined
by the Board of Directors following, approval of the Plan by the Company's
stockholders.
23. Termination of the Plan
The right to grant Awards under the Plan will terminate upon the
earlier of (i) 10 years after the Effective Date, or (ii) the date on which the
exercise of Options or related rights equaling the maximum number of shares
reserved under the Plan occurs, as set forth in Section 5. The Board may suspend
or terminate the Plan at any time, provided that no such action will, without
the consent of a Participant, adversely affect his rights under a previously
granted Award.
24. Applicable Law
The Plan will be administered in accordance with the laws of the State
of Kansas.
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APPENDIX B
FIRST FEDERAL OF OLATHE BANCORP, INC.
2001 RECOGNITION AND RETENTION PLAN
1. Establishment of the Plan
First Federal of Olathe Bancorp, Inc. hereby establishes the First
Federal of Olathe Bancorp, Inc. 2001 Recognition and Retention Plan (the "Plan")
upon the terms and conditions hereinafter stated in the Plan.
2. Purpose of the Plan
The purpose of the Plan is to advance the interests of the Company and
its stockholders by providing Key Employees and Outside Directors of the Company
and its Affiliates, including First Federal Savings and Loan Association of
Olathe, upon whose judgment, initiative and efforts the successful conduct of
the business of the Company and its Affiliates largely depends, with
compensation for their contributions to the Company and its Affiliates and an
additional incentive to perform in a superior manner, as well as to attract
people of experience and ability.
3. 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
meanings set forth below. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun and the singular shall include the plural:
"Affiliate" means any "parent corporation" or "subsidiary corporation"
of the Company or the Association, as such terms are defined in Section 424(e)
and (f), respectively, of the Code, or a successor to a parent corporation or
subsidiary corporation.
"Award" means the grant by the Committee of Restricted Stock, as
provided in the Plan.
"Association" means First Federal Savings and Loan Association of
Olathe, or a successor corporation.
"Beneficiary" means the person or persons designated by a Recipient to
receive any benefits payable under the Plan in the event of such Recipient's
death. Such person or persons shall be designated in writing on forms provided
for this purpose by the Committee and may be changed from time to time by
similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.
"Board" or "Board of Directors" means the Board of Directors of the
Company or an Affiliate, as applicable. For purposes of Section 4 of the Plan,
"Board" shall refer solely to the Board of the Company.
"Cause" means personal dishonesty, willful misconduct, any breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, or the willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or a final cease-and-desist order, any
of which results in a material loss to the Company or an Affiliate.
"Change in Control" of the Association or the Company means a change in
control of a nature that: (i) would be required to be reported in response to
Item 1(a) of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); or (ii) results in a Change
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in Control of the Company within the meaning of the Home Owners Loan Act, as
amended ("HOLA"), and applicable rules and regulations promulgated thereunder,
as in effect at the time of the Change in Control; or (iii) without limitation
such a Change in Control shall be deemed to have occurred at such time as (a)
any "person" (as the term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
25% or more of the combined voting power of the Company's outstanding securities
except for any securities purchased by the Association's employee stock
ownership plan or trust; or (b) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
date hereof whose election was approved by a vote of at least three-fifths of
the directors comprising the Incumbent Board, or whose nomination for election
by the Company's stockholders was approved by the same Nominating Committee
serving under an Incumbent Board, shall be, for purposes of this clause (b),
considered as though he were a member of the Incumbent Board; or (c) a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Association or the Company or similar transaction in which the
Association or the Company is not the surviving institution occurs; or (d) a
proxy statement soliciting proxies from stockholders of the Company, by someone
other than the current management of the Company, seeking stockholder approval
of a plan of reorganization, merger or consolidation of the Company or similar
transaction with one or more corporations as a result of which the outstanding
shares of the class of securities then subject to the Plan are to be exchanged
for or converted into cash or property or securities not issued by the Company;
or (e) a tender offer is made for 25% or more of the voting securities of the
Company and the shareholders owning beneficially or of record 25% or more of the
outstanding securities of the Company have tendered or offered to sell their
shares pursuant to such tender offer and such tendered shares have been accepted
by the tender offeror.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a Committee of the Board consisting of either (i) at
least two Non-Employee Directors of the Company, or (ii) the entire Board of the
Company.
"Common Stock" means shares of the common stock of the Company, par
value $0.01 per share.
"Company" means First Federal of Olathe Bancorp, Inc., the stock
holding company of the Association, or a successor corporation.
"Continuous Service" means employment as a Key Employee and/or service
as an Outside Director without any interruption or termination of such
employment and/or service. Continuous Service shall also mean a continuation as
a member of the Board of Directors following a cessation of employment as a Key
Employee, and a continuation as an advisory director following cessation as a
member of the Board of Directors. In the case of a Key Employee, employment
shall not be considered interrupted in the case of sick leave, military leave or
any other leave of absence approved by the Association or in the case of
transfers between payroll locations of the Association or between the
Association, its parent, its subsidiaries or its successor.
"Director" means a member of the Board.
"Disability" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an employee to perform the work
customarily assigned to him, or of a Director to serve as such. Additionally, in
the case of an employee, a medical doctor selected or approved by the Board must
advise the Committee that it is either not possible to determine when such
Disability will terminate or that it appears probable that such Disability will
be permanent during the remainder of such employee's lifetime.
"Effective Date" means the date of, or a date determined by the Board
of Directors following, approval of the Plan by the Company's stockholders.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"Key Employee" means any person who is currently employed by the
Company or an Affiliate who is chosen by the Committee to participate in the
Plan.
"Non-Employee Director" means, for purposes of the Plan, a Director who
(a) is not employed by the Company or an Affiliate; (b) does not receive
compensation directly or indirectly as a consultant (or in any other capacity
than as a Director) greater than $60,000; (c) does not have an interest in a
transaction requiring disclosure under Item 404(a) of Regulation S-K; or (d) is
not engaged in a business relationship for which disclosure would be required
pursuant to Item 404(b) of Regulation S-K.
"Normal Retirement" means for a Key Employee, retirement at the normal
or early retirement date set forth in the Association's Employee Stock Ownership
Plan, or any successor plan. Normal Retirement for an Outside Director means a
cessation of service on the Board of Directors for any reason other than removal
for Cause, after reaching 65 years of age and maintaining at least 10 years of
Continuous Service.
"OTS" means the Office of Thrift Supervision.
"Outside Director" means a Director of the Company or an Affiliate who
is not an employee of the Company or an Affiliate.
"Recipient" means a Key Employee or Outside Director of the Company or
its Affiliates who receives or has received an Award under the Plan.
"Restricted Period" means the period of time selected by the Committee
for the purpose of determining when restrictions are in effect under Section 6
with respect to Restricted Stock awarded under the Plan.
"Restricted Stock" means shares of Common Stock that have been
contingently awarded to a Recipient by the Committee subject to the restrictions
referred to in Section 6, so long as such restrictions are in effect.
4. Administration of the Plan.
(a) Role of the Committee. The Plan shall be administered and
interpreted by the Committee, which shall have all of the powers allocated to it
in the Plan, subject to OTS regulations and policy. The interpretation and
construction by the Committee of any provisions of the Plan or of any 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 and subject to OTS regulations and policy, the
Committee may adopt such rules 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.
(b) Role of the Board. The members of the Committee 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. The Board shall have all of the powers allocated to it in the Plan,
may take any action under or with respect to the Plan that 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
except as provided in Section 6(b), the Board may not revoke any Award except in
the event of revocation for Cause or with respect to unearned Awards in the
event the Recipient of an Award voluntarily terminates employment with the
Association prior to Normal Retirement.
(c) Plan Administration Restrictions. All transactions involving a
grant, award or other acquisitions from the Company shall:
(i) be approved by the Company's full Board or by the Committee;
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(ii) be approved, or ratified, in compliance with Section 14 of the
Exchange Act, by either: the affirmative vote of the holders of a majority of
the shares present, or represented and entitled to vote at a meeting duly held
in accordance with the laws under which the Company is incorporated; or the
written consent of the holders of a majority of the securities of the issuer
entitled to vote provided that such ratification occurs no later than the date
of the next annual meeting of shareholders; or
(iii) result in the acquisition of Common Stock that is held by the
Recipient for a period of six months following the date of such acquisition.
(d) Limitation on Liability. No member of the Board or the Committee
shall be liable for any determination made in good faith with respect to the
Plan or any Awards granted under it. If a member of the Board or the Committee
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of anything done or not done by him in such capacity
under or with respect to the Plan, the Association or the Company shall
indemnify such member against expense (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in the best interests of the Association
and the Company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
5. Eligibility; Awards
(a) Eligibility. Key Employees and Outside Directors are eligible to
receive Awards.
(b) Awards to Key Employees and Outside Directors. The Committee may
determine which of the Key Employees and Outside Directors referenced in Section
5(a) will be granted Awards and the number of shares covered by each Award;
provided, however, that in no event shall any Awards be made that will violate
the Association's Charter and Bylaws, the Company's Articles of Incorporation
and Bylaws, or any applicable federal or state law or regulation. Shares of
Restricted Stock that are awarded by the Committee shall, on the date of the
Award, be registered in the name of the Recipient and transferred to the
Recipient, in accordance with the terms and conditions established under the
Plan. The aggregate number of shares that shall be issued under the Plan is
27,816.
In the event Restricted Stock is forfeited for any reason, the
Committee, from time to time, may determine which of the Key Employees and
Outside Directors will be granted additional Awards to be awarded from forfeited
Restricted Stock.
In selecting those Key Employees and Outside Directors to whom Awards
will be granted and the amount of Restricted Stock covered by such Awards, the
Committee shall consider such factors as it deems relevant, which factors may
include, among others, the position and responsibilities of the Key Employees
and Outside Directors, the length and value of their services to the Association
and its Affiliates, the compensation paid to the Key Employees or fees paid to
the Outside Directors, and the Committee may request the written recommendation
of the Chief Executive Officer and other senior executive officers of the
Association, the Company and its Affiliates or the recommendation of the full
Board. All allocations by the Committee shall be subject to review, and approval
or rejection, by the Board.
No Restricted Stock shall vest unless the Recipient maintains
Continuous Service with the Association or an Affiliate until the restrictions
lapse.
(c) Manner of Award. As promptly as practicable after a determination
is made pursuant to Section 5(b) to grant an Award, the Committee shall notify
the Recipient in writing of the grant of the Award, the number of shares of
Restricted Stock covered by the Award, and the terms upon which the Restricted
Stock subject to the Award may be earned. Upon notification of an Award of
Restricted Stock, the Recipient shall execute and return to the Company a
restricted stock agreement (the "Restricted Stock Agreement") setting forth the
terms and conditions under which the Recipient shall earn the Restricted Stock,
together with a stock power or stock powers endorsed in blank. Thereafter,
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the Recipient's Restricted Stock and stock power shall be deposited with an
escrow agent specified by the Company ("Escrow Agent") who shall hold such
Restricted Stock under the terms and conditions set forth in the Restricted
Stock Agreement. Each certificate in respect of shares of Restricted Stock
Awarded under the Plan shall be registered in the name of the Recipient.
(d) Treatment of Forfeited Shares. In the event shares of Restricted
Stock are forfeited by a Recipient, such shares shall be returned to the Company
and shall be held and accounted for pursuant to the terms of the Plan until such
time as the Restricted Stock is re-awarded to another Recipient, in accordance
with the terms of the Plan and the applicable state and federal laws, rules and
regulations.
6. Terms and Conditions of Restricted Stock
The Committee shall have full and complete authority, subject to the
limitations of the Plan, to grant awards of Restricted Stock to Key Employees
and Outside Directors and, in addition to the terms and conditions contained in
Sections 6(a) through 6(h), to provide such other terms and conditions (which
need not be identical among Recipients) in respect of such Awards, and the
vesting thereof, as the Committee shall determine.
(a) General Rules. Unless the Committee shall specifically state to the
contrary at the time an Award is granted, Restricted Stock shall vest and be
earned by a Recipient at the rate of 20% of the initially awarded amount per
year commencing with the first installment being earned on the Date of Grant and
succeeding installments being earned on the following anniversaries of the Date
of Grant, provided that such Recipient maintains Continuous Service. Subject to
any such other terms and conditions as the Committee shall provide with respect
to Awards, shares of Restricted Stock may not be sold, assigned, transferred
(within the meaning of Code Section 83), pledged or otherwise encumbered by the
Recipient, except as hereinafter provided, during the Restricted Period. The
Committee shall have the authority, in its discretion, to accelerate the time at
which any or all of the restrictions shall lapse with respect to a Restricted
Stock Award, or to remove any or all of such restrictions.
(b) Continuous Service; Forfeiture. Except as provided in Section 6(c),
if a Recipient ceases to maintain Continuous Service for any reason (other than
death, Disability, Change in Control or, in the case of a Key Employee, Normal
Retirement), unless the Committee shall otherwise determine, all shares of
Restricted Stock theretofore awarded to such Recipient and which at the time of
such termination of Continuous Service are subject to the restrictions imposed
by Section 6(a) shall upon such termination of Continuous Service be forfeited.
Any stock dividends or declared but unpaid cash dividends attributable to such
shares of Restricted Stock shall also be forfeited.
(c) Exception for Termination Due to Death, Disability, Following a
Change in Control and in the Case of a Key Employee, Normal Retirement.
Notwithstanding the general rule contained in Section 6(a), Restricted Stock
awarded to a Recipient whose employment with the Company or an Affiliate or
service on the Board terminates due to death, Disability, following a Change in
Control, and in the case of a Key Employee, Normal Retirement, shall be deemed
earned as of the Recipient's last day of employment with the Company or an
Affiliate, or last day of service on the Board of the Company or an Affiliate;
provided that Restricted Stock awarded to a Key Employee who at any time also
serves as a Director, shall not be deemed earned until both employment and
service as a Director have been terminated.
(d) Revocation for Cause. Notwithstanding anything hereinafter to the
contrary, the Board may by resolution immediately revoke, rescind and terminate
any Award, or portion thereof, previously awarded under the Plan, to the extent
Restricted Stock has not been redelivered by the Escrow Agent to the Recipient,
whether or not yet vested, in the case of a Key Employee whose employment is
terminated by the Company or an Affiliate or an Outside Director whose service
is terminated by the Company or an Affiliate for Cause or who is discovered
after termination of employment or service on the Board to have engaged in
conduct that would have justified termination for Cause.
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(e) Restricted Stock Legend. Each certificate in respect of shares of
Restricted Stock awarded under the Plan shall be registered in the name of the
Recipient and deposited by the Recipient, together with a stock power endorsed
in blank, with the Escrow Agent and shall bear the following (or a similar)
legend:
"The transferability of this certificate and the
shares of stock represented hereby are subject to the terms
and conditions (including forfeiture) contained in the First
Federal of Olathe Bancorp, Inc. 2001 Recognition and Retention
Plan. Copies of such Plan are on file in the offices of the
Secretary of First Federal of Olathe Bancorp, Inc., 100 East
Park Street, Olathe, Kansas 66061."
(f) Payment of Dividends and Return of Capital. After an Award has been
granted but before such Award has vested, the Recipient shall receive any cash
dividends paid with respect to such shares, or shall share in any pro-rata
return of capital to all shareholders with respect to the Common Stock. Stock
dividends declared by the Company and paid on Awards that have not yet vested
shall be subject to the same restrictions as the Restricted Stock and the
certificate(s) or other instruments representing or evidencing such shares shall
be legended in the manner provided in Section 6(e) and shall be delivered to the
Escrow Agent for distribution to the Recipient when the Restricted Stock upon
which such dividends were paid are vested. Unless the Recipient has made an
election under Section 83(b) of the Code, cash dividends or other amounts so
paid on shares that have not yet vested shall be treated as compensation income
to the Recipient when paid. If dividends are paid with respect to shares of
Restricted Stock under the Plan that have been issued but not awarded, or that
have been forfeited and returned to the Company or to a trust established to
hold issued and unawarded or forfeited shares, the Committee can determine to
award such dividends to any Recipient or Recipients under the Plan, to any other
employee or director of the Company or the Association, or can return such
dividends to the Company.
(g) Voting of Restricted Shares. After an Award has been granted, the
Recipient as conditional owner of the Restricted Stock shall have the right to
vote such shares.
(h) Delivery of Earned Shares. At the expiration of the restrictions
imposed by Section 6(a), the Escrow Agent shall redeliver to the Recipient (or
where the relevant provision of Section 6(b) applies in the case of a deceased
Recipient, to his Beneficiary) the certificate(s) and any remaining stock power
deposited with it pursuant to Section 5(c) and the shares represented by such
certificate(s) shall be free of the restrictions referred to Section 6(a).
7. Adjustments upon Changes in Capitalization
In the event of any change in the outstanding shares subsequent to the
Effective Date by reason of any reorganization, recapitalization, stock split,
stock dividend, combination or exchange of shares, or any merger, consolidation
or any change in the corporate structure or shares of the Company, without
receipt or payment of consideration by the Company, the maximum aggregate number
and class of shares as to which Awards may be granted under the Plan shall be
appropriately adjusted by the Committee, whose determination shall be
conclusive. Any shares of stock or other securities received, as a result of any
of the foregoing, by a Recipient with respect to Restricted Stock shall be
subject to the same restrictions and the certificate(s) or other instruments
representing or evidencing such shares or securities shall be legended and
deposited with the Escrow Agent in the manner provided in Section 6(e).
8. Assignments and Transfers
No Award nor any right or interest of a Recipient under the Plan in any
instrument evidencing any Award under the Plan may be assigned, encumbered or
transferred (within the meaning of Code Section 83) except, in the event of the
death of a Recipient, by will or the laws of descent and distribution until such
Award is earned.
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9. Key Employee Rights under the Plan
No Key Employee shall have a right to be selected as a Recipient nor,
having been so selected, to be selected again as a Recipient and no Key Employee
or other person shall have any claim or right to be granted an Award under the
Plan or under any other incentive or similar plan of the Association or any
Affiliate. Neither the Plan nor any action taken thereunder shall be construed
as giving any Key Employee any right to be retained in the employ of the
Association or any Affiliate.
10. Outside Director Rights under the Plan
Neither the Plan nor any action taken thereunder shall be construed as
giving any Outside Director any right to be retained in the service of the
Association or any Affiliate.
11. Withholding Tax
Upon the termination of the Restricted Period with respect to any
shares of Restricted Stock (or at any such earlier time, if any, that an
election is made by the Recipient under Section 83(b) of the Code, or any
successor provision thereto, to include the value of such shares in taxable
income), the Association or the Company shall have the right to require the
Recipient or other person receiving such shares to pay the Association or the
Company the minimum amount of any federal or state taxes, including payroll
taxes, that are applicable to such supplemental income and that the Association
or the Company is required to withhold with respect to such shares, or, in lieu
thereof, to retain or sell without notice, a sufficient number of shares held by
it to cover the amount required to be withheld. The Association or the Company
shall have the right to deduct from all dividends paid with respect to shares of
Restricted Stock the amount of any taxes which the Association or the Company is
required to withhold with respect to such dividend payments.
12. Amendment or Termination
The Board of the Company may amend, suspend or terminate the Plan or
any portion thereof at any time, subject to OTS regulations and policy,
provided, however, that no such amendment, suspension or termination shall
impair the rights of any Recipient, without his consent, in any Award
theretofore made pursuant to the Plan. Any amendment or modification of the Plan
or an outstanding Award under the Plan shall be approved by the Committee, or
the full Board of the Company.
13. Governing Law
The Plan shall be governed by the laws of the State of Kansas.
14. Term of Plan
The Plan shall become effective on the date of, or a date determined by
the Board of Directors following, approval of the Plan by the Company's
stockholders. It shall continue in effect until the earlier of (i) ten years
from the Effective Date unless sooner terminated under Section 12 hereof, or
(ii) the date on which all shares of Common Stock available for award hereunder,
have vested in the Recipients of such Awards.
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APPENDIX C
FIRST FEDERAL OF OLATHE BANCORP, INC.
Audit Committee of the Board of Directors'
Charter
I. Purpose
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by First Federal
of Olathe Bancorp. Inc. ("the Company") to any government body or the
public: the Company's systems of internal controls regarding finance,
accounting and compliance that management and the Board have established;
and the Company's auditing, accounting and financial reporting processes
generally. Consistent with this function, the Audit Committee should
encourage continuous improvement of, and should foster adherence to, the
Company's policies, procedures and practices at all levels. The Audit
Committee's primary duties and responsibilities are to:
Serve as an independent and objective party to monitor the Company's
financial reporting process and internal control system.
Review and appraise the audit efforts of the Company's independent
accountant and internal auditing.
Provide an open avenue of communication among the independent
accountants, financial and senior management, internal auditing, and the
Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
I. Composition
The Audit Committee shall be comprised of three or more directors as
determined by the Board, a majority of whom shall be independent directors,
and free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a member
of the Committee. In order to be independent the member shall not:
1. Have been employed by the Company in the preceding three years.
2. Have received compensation in excess of $60,000 during the
previous year other than for director's fees or benefits under
tax-qualified retirement plan.
3. Be a partner or controlling shareholder of a for-profit
business to which the Company made or received significant
payments in the last three years. Payments arising from
dividends on the Company's stock are exempt. Significant
payments are defined as the higher of 5% of the Company's
revenues or $200,000.
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4. Serve as executive officer of another company where any Company
corporate executive serves on that company's compensation
committee.
5. Be an immediate family member of an executive officer who is
employed by or has been employed by the Company in the last
three years.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
I. Meetings
The Committee shall meet at least quarterly, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management, the internal
auditor and/or the independent accountants in separate executive sessions
to discuss any matters that the Committee or each of these groups believe
should be discussed privately.
II. Responsibilities and Duties
To fulfill its responsibilities and duties the Audit Committee shall:
DOCUMENTS/REPORTS REVIEW
1. Review and update this Charter periodically, at least quarterly, or as
conditions dictate.
2. Review the organization's annual financial statements and any reports or
other financial information submitted to any governmental body, or the
public, including any certifications, report, opinion, or review
rendered by the independent accountants.
3. Review the regular internal reports with senior management.
4. Review with financial management the quarterly earnings of the Company
prior to its filing or prior to the release of earnings. The Chair of
the Committee or the full Board may represent the Committee for the
purposes of this review.
INDEPENDENT ACCOUNTANTS
5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the
fees and other compensation to be paid to the independent accountants.
On an annual basis, the Committee should review and discuss with
accountants all significant relationships the accountants have with the
Company to determine the accountant's independence.
C-2
6. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
7. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and
accuracy of the organization's statements.
FINANCIAL REPORTING PROCESS
8. In consultation with the independent accountants and the internal
auditors, review the integrity of the organization's financial reporting
processes, both internal and external.
9. Consider the independent accountants' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
10. Consider and approve, if appropriate major changes to the Company's
auditing and accounting principles and practices as suggested by the
independent accountants, management, or the internal auditing
department.
PROCESS IMPROVEMENTS
11. Establish regular and separate systems of reporting to the Audit
Committee by each of management, the independent accountants and
internal auditing regarding any significant judgments made in
management's preparation of the financial statements and the view of
each as to appropriateness of such judgments.
12. Following completion of the annual audit, review separately with each of
management, the independent accountants and internal auditing any
significant difficulties encountered during the course of the audit,
including any restrictions on the scope of work or access to required
information.
13. Review any significant disagreement among management and the independent
accountants or internal auditing in connection with the preparation of
the financial statements.
14. Review with the independent accountants, internal auditing and
management the extent to which changes or improvements in financial or
accounting practices, as approved by the Audit Committee, have been
implemented. (This review should be conducted at an appropriate time
subsequent to implementation of changes or improvements, as decided by
the Committee.)
INTERNAL AUDIT AND COMPLIANCE
15. Review the internal audit function of the company including the
independence and authority of its reporting obligations, the proposed
audit plans for the coming year, and the coordination of such plans with
independent auditors.
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16. Receive prior to each meeting, a summary of findings from completed
internal audits and a progress report on the proposed internal audit
plan, with explanations for any deviations from the original plan.
17. Review, with the organization's counsel, any legal matter that could
have a significant impact on the organization's financial statements.
18. Perform any other activities consistent with this Charter, the Company's
By-laws and governing law, as the Committee or the Board deems necessary
or appropriate.
C-4
FIRST FEDERAL OF OLATHE BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 2001
The undersigned hereby appoints Marvin Eugene Wollen and Kenda Camp, with
full powers of substitution, to act as attorneys and proxies for the undersigned
to vote all shares of capital stock of First Federal of Olathe Bancorp, Inc.
(the "Company") which the undersigned is entitled to vote at the Annual Meeting
of Stockholders (the "Meeting") to be held at the Company's main office, located
at 100 East Park Street, Olathe, Kansas on April 25, 2001 at 3:00 p.m. and at
any and all adjournments and postponements thereof.
1. The election as directors of all nominees listed below (except as
marked to the contrary):
/ / FOR / / VOTE WITHHELD
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE IN THAT NOMINEE'S NAME BELOW.
MITCH ASHLOCK
2. The ratification of the appointment of Baird, Kurtz & Dobson as auditors
for the Company for the fiscal year ending December 31, 2001.
/ / FOR / / AGAINST / / ABSTAIN
3. The ratification and approval of the First Federal of Olathe
Bancorp, Inc. 2001 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. The ratification and approval of the First Federal of Olathe Bancorp,
Inc. 2001 Recognition and Retention Plan.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment or
postponement thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSALS AND EACH OF THE NOMINEES
LISTED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL
BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT
TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSALS AND THE
ELECTION OF THE NOMINEES LISTED ABOVE.
(Continued and to be SIGNED on Reverse Side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and choose to vote at the Meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the Meeting, a Proxy Statement and an
Annual Report to Stockholders.
Dated: , 2001 -------------------------------------------
------------------ Signature of Stockholder Please sign exactly
as your name(s) appear(s) to the left. 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-PAID ENVELOPE