[FIRST COLORADO BANCORP LETTERHEAD]
June 10, 1996
To Our Stockholders:
We are pleased to invite you to attend a Special Meeting of Stockholders
(the "Meeting") of First Colorado Bancorp, Inc. (the "Company") to be held at
the Denver Marriott West, 1717 Denver West Marriott Boulevard, Golden, Colorado,
on Wednesday, July 24, 1996, at 3:00 p.m.
The enclosed Notice of Special Meeting and Proxy Statement describe the
formal business to be transacted at the Meeting. The Board of Directors of the
Company has determined that the matters to be considered at the Meeting are in
the best interest of the Company and its stockholders. For the reasons set forth
in the Proxy Statement, the Board of Directors unanimously recommends a vote
"FOR" each matter to be considered.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID
ENVELOPE AS PROMPTLY AS POSSIBLE. This will not prevent you from attending the
meeting and voting in person but will assure that your vote is counted if you
are unable to attend the Meeting. YOUR VOTE IS VERY IMPORTANT.
Sincerely,
/s/ Malcolm E. Collier, Jr.
Malcolm E. Collier, Jr.
Chairman
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FIRST COLORADO BANCORP, INC.
215 SOUTH WADSWORTH BOULEVARD
LAKEWOOD, COLORADO 80226
(303) 232-2121
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 24, 1996
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NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the
"Meeting") of First Colorado Bancorp, Inc. (the "Company") will be held at the
Denver Marriott West, 1717 Denver West Marriott Boulevard, Golden, Colorado, on
Wednesday, July 24, 1996, at 3:00 p.m. The Meeting is for the purpose of
considering and acting upon:
1. The approval of the First Colorado Bancorp, Inc. 1996 Stock Option Plan
(the "1996 Stock Option Plan"); and
2. The approval of the First Federal Bank of Colorado Management Stock Bonus
Plan (the "Management Stock Bonus Plan" or "MSBP").
The transaction of such other business as may properly come before the
Meeting or any adjournments thereof will be considered and acted upon. If
necessary, the Meeting will be adjourned to solicit additional proxies with
respect to approval of the 1996 Stock Option Plan and the MSBP. The Board of
Directors is not aware of any other business to come before the Meeting.
Any action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Pursuant to the
Bylaws, the Board of Directors has fixed the close of business on May 31, 1996,
as the record date for determination of the stockholders entitled to vote at the
Meeting and any adjournments thereof.
EACH STOCKHOLDER, WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE MEETING, IS
REQUESTED TO COMPLETE, SIGN, DATE, AND PROMPTLY RETURN THE ENCLOSED PROXY CARD
IN THE ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A
DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING
MAY REVOKE HIS OR HER PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT BEFORE THE
MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN
YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO
VOTE IN PERSON AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Elaine M. Samuelson
ELAINE M. SAMUELSON
SECRETARY
Lakewood, Colorado
June 10, 1996
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING.
PLEASE COMPLETE, DATE, SIGN, AND RETURN PROMPTLY THE ENCLOSED PROXY. AN
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
FIRST COLORADO BANCORP, INC.
215 SOUTH WADSWORTH BOULEVARD
LAKEWOOD, COLORADO 80226
(303) 232-2121
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SPECIAL MEETING OF STOCKHOLDERS
JULY 24, 1996
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GENERAL
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This Proxy Statement is furnished to holders of common stock, $0.10 par
value per share ("Common Stock"), of First Colorado Bancorp, Inc. (the
"Company") which acquired all of the outstanding common stock of First Federal
Bank of Colorado (the "Bank") issued in connection with the conversion from the
mutual to stock form of organization of First Savings Capital, M.H.C. (the
"Mutual Holding Company"), the former mutual holding company parent of the Bank
(the "Conversion"), and the reorganization of the Bank into the stock holding
company form of organization (the "Reorganization"). In connection with the
Conversion and the Reorganization, the Bank changed its name from First Federal
Savings Bank of Colorado to First Federal Bank of Colorado and each share of
common stock of the Bank ("Bank Common Stock") outstanding on December 29, 1995
(other than the Bank Common Stock held by the Mutual Holding Company) was
exchanged for 3.0310 shares (the "Exchange Ratio") of Common Stock (the
"Exchange"). Proxies are being solicited by the Board of Directors of the
Company to be used at a Special Meeting of Stockholders of the Company (the
"Meeting"), which will be held at the Denver Marriott West, 1717 Denver West
Marriott Boulevard, Golden, Colorado, on Wednesday, July 24, 1996, at 3:00 p.m.
The accompanying Notice of Special Meeting of Stockholders and this Proxy
Statement are being first mailed to stockholders on or about June 10, 1996.
At the Meeting, stockholders will consider and vote upon (i) the approval
of the First Colorado Bancorp, Inc. 1996 Stock Option Plan (the "1996 Stock
Option Plan") and (ii) the approval of the First Federal Bank of Colorado
Management Stock Bonus Plan (the "Management Stock Bonus Plan" or "MSBP"). The
Board of Directors knows of no additional matters that will be presented for
consideration at the Meeting. Execution of a proxy, however, confers on the
designated proxyholder the discretionary authority to vote the shares
represented by such proxy in accordance with their best judgment on such other
business, if any, that may properly come before the Meeting or any adjournment
thereof.
"Proposal I - Approval of the 1996 Stock Option Plan" provides for
authorizing the issuance of an additional 1,340,379 shares of Common Stock of
the Company upon the exercise of stock options to be awarded to officers,
directors, key employees, and other persons from time to time. "Proposal II --
Approval of the Management Stock Bonus Plan" provides for authorization to issue
up to an additional 268,075 shares of Common Stock upon awards to officers,
directors, and key employees of the Bank and of the Company from time to time.
At the present time, the Company intends to acquire the Common Stock necessary
to fund the MSBP through open-market purchases. Approval of Proposal I and
Proposal II may be deemed to have certain anti-takeover effects with regard to
the Company. See "Proposal I -- Approval of the 1996 Stock Option Plan - Effect
of Merger and Other Adjustments," and "Possible Dilutive Effects of the 1996
Stock Option Plan" and "Proposal II -- Approval of the Management Stock Bonus
Plan - Possible Dilutive Effects of MSBP."
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VOTING AND REVOCABILITY OF PROXIES
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Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by signed proxies will be voted
at the Meeting and all adjournments thereof. Proxies may be revoked by written
notice delivered in person or mailed to the Secretary of the Company at the
address of the Company shown above or by the filing of a later-dated proxy prior
to a vote being taken on a particular proposal at the Meeting. A proxy will not
be voted if a stockholder attends the Meeting and votes in person. Proxies
solicited by the Board of Directors will be voted in accordance with the
directions given therein. Where no instructions are indicated, signed proxies
will be voted "FOR" Proposal I and Proposal II set forth in this Proxy Statement
at the Meeting or any adjournment thereof.
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INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
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Employees, officers, and directors of the Company have an interest in
certain matters being presented for stockholder approval. Upon stockholder
approval, key employees, officers, and directors of the Company may be granted
stock options and restricted stock awards pursuant to the 1996 Stock Option Plan
and the MSBP. The approval of the 1996 Stock Option Plan and the MSBP are being
presented as Proposal I and Proposal II, respectively. See "Voting Securities
and Principal Holders Thereof" for information regarding the voting control of
shares of Common Stock held by executive officers and directors.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on May 31, 1996 (the
"Voting Record Date") are entitled to one vote for each share then held. As of
the Voting Record Date, the Company had 20,134,256 shares of Common Stock issued
and outstanding.
As provided in the Articles of Incorporation of the Company (the
"Articles") for a period of five years from the date of the Conversion and the
Reorganization, which was consummated on December 29, 1995, no person may
directly or indirectly offer to acquire or acquire beneficial ownership of any
class of equity securities of the Company in excess of 10% of the outstanding
shares of the class (the "Limit"). Furthermore, as provided in the Articles, any
person or entity who directly or indirectly beneficially owns Common Stock in
excess of the Limit will not be entitled or permitted to any vote with respect
to such shares of Common Stock held in excess of the Limit, and in certain
circumstances, voting rights may be reduced below the Limit. A person or entity
is deemed to beneficially own shares owned by an affiliate of, as well as Shares
owned by persons acting in concert with such person or entity, but does not
include shares beneficially owned by any employee stock ownership or similar
plan of the Company or any subsidiary.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit, if any, pursuant to the Articles) is
necessary to constitute a quorum at the Meeting. In the event there are not
sufficient votes for a quorum or to approve any proposals at the time of the
Meeting, the Meeting may be adjourned in order to permit further solicitation of
proxies.
2
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As to matters being proposed for stockholder action as set forth in
Proposal I and Proposal II, the proxy being provided by the Board of Directors
enables a stockholder to check the appropriate box on the proxy to (i) vote
"FOR" the item, (ii) vote "AGAINST" the item, or (iii) vote to "ABSTAIN" on the
item. An affirmative vote of the holders of a majority of the total votes
eligible to be cast at the Meeting, in person or by proxy, is required to
constitute stockholder approval for each of the Proposals I and II. Broker
Non-Votes, shares as to which the "ABSTAIN" box is selected on the proxy, and
shares for which no vote is cast will have the effect of a vote against the
matter.
As to all other matters that may properly come before the Meeting, unless
otherwise required by law, the Articles, or the Bylaws, a majority of the votes
cast by stockholders shall be sufficient to pass on the matter.
Persons and groups owning in excess of 5% of the Common Stock are required
to file certain reports regarding such ownership pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"). Other than as noted below,
management knows of no person or entity, including any "group" as that term is
used in ss.13(d)(3) of the 1934 Act, who or which is the beneficial owner of
more than 5% of the outstanding shares of Common Stock on the Voting Record
Date. Information concerning the security ownership of management is included
under "Proposal I - Election of Directors."
Name and Address Amount and Nature of Percent of Shares of
of Beneficial Owner Beneficial Ownership Common Stock Outstanding
- ------------------------------ -------------------- ------------------------
First Federal Bank of Colorado 1,757,178 (1) 8.73%
Employee Stock Ownership Plan
215 South Wadsworth Boulevard
Lakewood, Colorado 80226
- ---------------------
(1) The ESOP purchased such shares for the exclusive benefit of plan
participants. These shares are held in a suspense account and will be
allocated among ESOP participants annually on the basis of compensation.
As of the Voting Record Date, 416,799 shares have been previously
allocated under the ESOP to participant accounts. See "Director and
Executive Officer Compensation -- Other Compensation -- Employee Stock
Ownership Plan."
3
<PAGE>
The following table sets forth the amount of Common Stock beneficially
owned by each director, each of the named executive officers of the Company, and
all directors and executive officers of the Company as a group as of the Voting
Record Date. Each director of the Company is also a director of the Bank.
<TABLE>
<CAPTION>
SHARES OF COMMON PERCENT
STOCK BENEFICIALLY OF
NAME Position with Company OWNED(1)(2)(3) CLASS
- ---- --------------------- ------------------ -------
<S> <C> <C> <C>
Polly B. Baca Director 12,774 0.06%
Stephen A. Burkholder Director 34,823(4) 0.17%
Malcolm E. Collier, Jr. President, Chairman of the 445,161(5) 2.21%
Board, and Chief Executive
Officer
E. William Foerster, Jr. Director 4,646 0.02%
Leeon E. Hayden Director 131,099(4)(6) 0.65%
John R. Newman, Jr. Director 123,254(7) 0.61%
John J. Nicholl Director 9,155(4)(8) 0.05%
Robert T. Person, Jr. Director 7,995 0.04%
James R. Wexels Director 5,046 0.03%
All Executive Officers and 1,015,996(9) 5.05%
Directors as a Group (15
persons)
</TABLE>
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(1) As of the Voting Record Date
(2) Unless otherwise noted, all shares are owned directly by the named
individual or by their spouses and minor children, over which shares the
named individuals effectively exercise sole voting and investment power.
(3) Includes shares of Common Stock that have been awarded under the First
Federal Bank of Colorado Management Recognition Plan and Trust which are
subject to forfeiture under certain circumstances. Also includes shares
held by the Bank's Employee Stock Ownership Plan ("ESOP") allocated to
such individual's account. Excludes proposed stock options to purchase
shares of Common Stock pursuant to the 1996 Stock Option Plan, the
granting of which is subject to stockholder approval of the 1996 Stock
Option Plan and that are not exercisable within 60 days of the Voting
Record Date. See "Proposal I -- Approval of the 1996 Stock Option Plan."
Excludes shares of Common Stock proposed to be awarded under the MSBP, the
granting of which is subject to stockholder approval of the MSBP. See
"Proposal II -- Approval of the Management Stock Bonus Plan."
(4) Excludes shares held by the ESOP for which directors Hayden, Nicholl, and
Burkholder serve as Plan Trustees. The Plan Trustees may vote unallocated
shares (presently 1,340,379) and up to 416,799 allocated shares, if no
timely voting direction is received from plan participants, within their
fiduciary capacity.
(5) Includes 61,201 stock options that are exercisable within 60 days of the
Voting Record Date. Includes 37,961 shares of Common Stock owned by the
spouse of Mr. Collier and 13,916 shares of Common Stock owned by the
children of Mr. Collier for which Mr. Collier disclaims beneficial
ownership, but may be deemed to beneficially own.
(6) Includes 5,000 shares of Common Stock owned by the spouse of Mr. Hayden
for which Mr. Hayden disclaims beneficial ownership, but may be deemed to
beneficially own.
(7) Includes 12,626 shares of Common Stock owned by the spouse of Mr. Newman
for which Mr. Newman disclaims beneficial ownership, but may be deemed to
beneficially own.
(8) Includes 3,146 shares of Common Stock owned by the spouse of Mr. Nicholl
for which Mr. Nicholl disclaims beneficial ownership, but may be deemed to
beneficially own.
(Footnotes continued on next page)
4
<PAGE>
(Footnotes continued from previous page)
(9) Includes 100,048 options to purchase Common Stock under the 1992 Stock
Option Plan that are exercisable within 60 days of the Voting Record Date.
See "Director and Executive Officer Compensation -- Other Compensation --
1992 Stock Option Plan." Excludes 1,340,379 shares of unallocated Common
Stock held by the ESOP. See "Director and Executive Officer Compensation
-- Other Compensation -- Employee Stock Ownership Plan." Includes 82,018
shares of Common Stock owned by the spouses or children of the executive
officers and directors for which the executive officers and directors
disclaim beneficial ownership, but may be deemed to beneficially own.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Director Compensation
The Company does not presently compensate its directors. Each director of
the Company is also a director of the Bank and receives fees accordingly.
Non-officer members of the Board of Directors of Bank received fees of
$750 per month during the fiscal year December 31, 1995. Non-officer members of
the Board of Directors of the Bank also received a fee of $100 for each special
meeting of the Board of Directors during the fiscal year December 31, 1995.
Because of her position in the Federal government, Director Polly Baca serves on
the Board of the Bank without compensation. Members of the Board's Audit
Committee were paid $100 for each meeting attended during fiscal 1995. Members
of the Board who are not officers of the Bank are paid $100 per meeting for
other committees and for meetings of the Boards of Directors of subsidiary
companies. In addition, Director Hayden received $250 per month for his
performance as Secretary to the Board of Directors. The Bank paid a total of
$69,400 in directors' and committee fees for the fiscal year ended December 31,
1995.
Future Stock Awards. The Company anticipates that Directors will receive
awards of stock options and restricted stock under the 1996 Stock Option Plan
and the MSBP upon stockholder approval of these plans. See "Proposal I --
Approval of the 1996 Stock Option Plan" and "Proposal II -- Approval of the
Management Stock Bonus Plan" herein.
Executive Compensation
Summary Compensation Table. The following table sets forth for the fiscal
years ended December 31, 1995, 1994, and 1993, certain information as to the
total remuneration received by the chief executive officer of the Company or any
subsidiary who served in these capacities during such period and received total
cash compensation in excess of $100,000 for the year ended December 31, 1995.
5
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<TABLE>
<CAPTION>
Annual Compensation(1) Long Term Compensation
- ---------------------------------------------------------------- ----------------------
Awards
Securities
Restricted Underlying
Name and Principal Other Annual Stock Options/ All Other
Position(2) Year Salary Bonus Compensation(3)(4) Award(s)(5) SARs(#) Compensation(6)
- ------------------ ---- --------- ------- ------------------ ----------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Malcolm E. Collier, Jr. 1995 $ 251,000 $ 9,422 $ 9,091 $ -- -- $ 30,002
President, Chairman, 1994 232,340 10,636 10,784 -- -- 28,934
and CEO 1993 223,400 11,116 10,690 -- -- 29,837
</TABLE>
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(1) All compensation was paid by the Bank. Compensation deferred at election of
executive is includable in category and year earned.
(2) No executive officer other than Mr. Collier had a salary and bonus that
exceeded $100,000 for the year ended December 31, 1995.
(3) For the listed individual, for the year ended December 31, 1995, there were
no (a) perquisites and other benefits for which the aggregate value
exceeded the lesser of $50,000 or 10% of total salary and bonus; (b)
payments of above-market preferential earnings on deferred compensation;
(c) payments of earnings with respect to long-term incentive plans prior to
settlement or maturation; (d) tax payment reimbursements; or (e)
preferential discounts on stock.
(4) Excludes compensation applicable to the vesting of awards of Common Stock
and receipt of income attributable to dividends paid on such awards under
the Management Recognition Plan as of December 31, 1995, 1994 and 1993 of
$79,986, $77,173, and $57,418, respectively, for Mr. Collier. Such awards
were made in 1992.
(5) At December 31, 1995, Mr. Collier held shares of restricted Common Stock
with a fair market value of $201,000 (calculated prior to giving effect to
the exchange by multiplying 6,000 shares, the number of shares that
remained restricted, by $33.50 per share, the average of the bid and ask
price of the Bank's unrestricted stock on December 29, 1995).
(6) Includes cost of shares of Common Stock awarded under the Bank's Employee
Stock Ownership Plan as of December 31, 1995, 1994, and 1993 of $10,305,
$6,434, and $7,029, respectively, to Mr. Collier and contributions to the
Bank's Profit- Sharing Plan on behalf of such individual for plan years
ended December 31, 1995, 1994, and 1993 of $19,697, $22,500, and $22,808,
respectively.
Change in Control Severance Agreements
The Bank entered into severance agreements with Malcolm E. Collier, Jr.,
Chairman of the Board and certain other key executive officers (a total of seven
persons). The severance agreements are each for terms of three years. The
agreements are terminable by the Bank for "just cause" as defined in the
agreements. If the Bank terminates the employee without just cause, the employee
will be entitled to a continuation of his salary from the date of termination
through the remaining term of the agreement. Such agreements contain a provision
stating that in the event of the termination of employment in connection with
any change in control of the Bank or the Company, the employee will be paid in a
lump sum an amount equal to 2.99 times the average of the employee's most recent
five years annual cash compensation. If such payments were to be made under the
agreement as of December 31, 1995, such payments would equal up to approximately
$1.6 million, of which $670,000 would be allocated to Mr. Collier. The aggregate
payments that would be made to such individuals would be an expense to the
Company, thereby reducing net income and the Company's capital by that amount.
The agreements may be renewed annually by the Board of Directors upon a
determination of satisfactory performance and that such agreements should be
renewed.
Compensation Committee Interlocks and Insider Participation
Effective May 1, 1996, directors Burkholder, Foerster, Person, Wexels and
Baca were appointed as the Compensation Committee for the Bank. Prior to that
date, the entire Board of Directors served as the Compensation Committee for
executive officers of the Bank. Mr. Collier, President, Chairman, and Chief
Executive Officer of the Company and the Bank, was previously a member of this
committee, but did not vote in regard to his own compensation.
6
<PAGE>
Other Compensation
Long Term Incentive Plans. The Company made no awards or payouts to Mr.
Collier under a long term incentive plan during the fiscal year ended December
31, 1995.
Insurance. Full-time employees of the Bank are provided, at minimal
contribution or expense to them, with group plan insurance that covers
hospitalization, major medical, dental, and long-term disability, accidental
death, and life insurance. This insurance is available generally and on the same
basis to all full-time employees. Long-term disability and dental insurance are
available after completion of a minimum of one year of service, while the other
benefits are available immediately. Part-time employees become eligible for
life, health, and dental insurance (50% paid by the Bank) after one year of
service.
Employee Stock Ownership Plan. The Bank maintains an employee stock
ownership plan (the "ESOP") for the exclusive benefit of participating
employees, which became effective upon the completion of the conversion of the
Bank from mutual to stock form and the formation of the Mutual Holding Company
(the "MHC Reorganization"). Participating employees are employees who have
completed one year of service with the Company or its subsidiaries.
Contributions to the ESOP and shares released from the ESOP suspense account
will be allocated among participants on the basis of total compensation,
excluding bonuses. All participants must be employed at least 1,000 hours in a
plan year in order to receive an allocation. Participant benefits become vested
in accordance with the following schedule: three years service -- 30% vested;
four years -- 40% vested; five years -- 60% vested; six years -- 80% vested; and
seven years of service or greater -- 100% vested. Years of employment prior to
the adoption of the ESOP are counted toward vesting. Vesting will be accelerated
upon retirement, death, disability, or termination of the ESOP. Benefits may be
payable in the form of a lump sum upon retirement, death, disability, or
separation from service. The Bank's contributions to the ESOP are discretionary
and may cause a reduction in other forms of compensation.
Directors Hayden, Nicholl, and Burkholder serve as the members of the ESOP
Committee and as the ESOP Trustees. The ESOP Committee, as administrators of the
ESOP, may instruct the ESOP Trustees regarding investments of funds contributed
to the ESOP. The ESOP Trustees must vote all allocated shares held in the ESOP
in accordance with the instructions of the participating employees. Unallocated
shares and allocated shares for which no timely direction is received will be
voted by the ESOP Trustees as directed by the ESOP Committee. Total
contributions to the ESOP for the fiscal year ended December 31, 1995, were
$358,900. The ESOP is funded by contributions made by the Bank in cash. In June,
1992, the ESOP borrowed funds with which to acquire 145,803 shares of the common
stock of the Bank ("Bank Common Stock") issued in the MHC Reorganization from an
unrelated third party lender. In connection with the Conversion and the
Reorganization, the 145,803 shares of Bank Common Stock were exchanged for
441,927 shares of Common Stock pursuant to the Exchange Ratio. This loan was
fully repaid as of December 31, 1995. The ESOP Trust purchased an additional
amount of Common Stock equal to 10% of the Common Stock sold in the Conversion
and the Reorganization with $13.4 million of funds borrowed from the Company.
This loan is secured by the shares purchased and the earnings of ESOP assets.
Common Stock purchased with such loan proceeds will be held in a suspense
account for allocation to participants as the loan is repaid. This loan is
expected to be fully repaid in approximately 10 years. The Bank anticipates
contributing approximately $2.2 million in 1996 to the ESOP to meet principal
obligations under the ESOP loan, plus applicable interest payments.
Profit Sharing Plan. The Bank sponsors a tax-qualified defined
contribution profit sharing plan, the Employees' Profit Sharing Plan and Trust
of First Federal Bank of Colorado ("Profit Sharing Plan"), for the benefit of
its employees. Employees become eligible to participate under the Profit Sharing
Plan
7
<PAGE>
after completing one year of service. Benefits under the Profit Sharing Plan are
determined based upon annual discretionary contributions to the Profit Sharing
Plan; such benefits are allocated to participant accounts as a percentage of
total compensation of such participant to the compensation of all participants.
At the end of each year, the Board of Directors of the Bank determines whether
to make a contribution and the amount of the contribution to the Profit Sharing
Plan, based upon a number of factors, such as the Bank's retained earnings,
profits, regulatory capital, and employee performance. It is intended that the
Profit Sharing Plan operate in compliance with the provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and the
requirements of Section 401(a) of the Code. Total contributions to the Profit
Sharing Plan for all employees for the fiscal years ended December 31, 1995 and
1994, were $817,350 and $756,441, respectively. Future contributions to the
Profit Sharing Plan may be reduced as a result of anticipated increases in
contributions to the ESOP.
1992 Stock Option Plan. In connection with the MHC Reorganization, the
Bank's Board of Directors adopted the 1992 Option Plan, which was approved by
the Bank's stockholders at the 1993 Annual Meeting of Stockholders on April 30,
1993. Pursuant to the 1992 Option Plan, a number of shares equal to 10% of the
Bank Common Stock issued to persons other than the Mutual Holding Company in
connection with the MHC Reorganization (208,290 shares of Bank Common Stock, as
adjusted for a three-for-two stock split on October 20, 1993) were reserved for
issuance by the Bank upon exercise of stock options to be granted to officers,
directors, and employees of the Bank and its subsidiaries from time to time
under the 1992 Option Plan. In connection with the Conversion and the
Reorganization, options to purchase 208,290 shares of Common Stock were adjusted
to options to purchase 631,325 shares. The purpose of the 1992 Option Plan is to
provide additional incentive to certain officers, directors, and key employees
by facilitating their purchase of a stock interest in the Bank. The 1992 Option
Plan became effective with the MHC Reorganization and provides for a term of ten
years, after which no awards may be made, unless earlier terminated by the Board
of Directors.
The 1992 Option Plan is administered by a committee composed of Directors
Hayden, Nicholl, and Burkholder. Such members of the Option Committee are deemed
"disinterested" within the meaning of Rule 16b-3 pursuant to the 1934 Act. The
Option Committee selects the employees to whom options are to be granted and the
number of shares to be granted based upon the employee's position at the Bank,
years of service and performance. Options become immediately vested in the event
of death, disability, or a "change-in-control" of the Bank or its successors.
Officers, directors, and employees are eligible to receive, at no cost to
them, options under the 1992 Option Plan. The Bank receives no monetary
consideration for the granting of stock options under the 1992 Option Plan. The
Bank receives no monetary consideration other than the option exercise price per
share upon exercise of those options.
No options were granted under the 1992 Option Plan to officers, directors,
and employees during the fiscal year ended December 31, 1995. As of December 29,
1995, the date of the consummation of the Conversion and the Reorganization,
100% of the options under the 1992 Option Plan had been awarded; of these
awards, 101,165 options had been exercised and 107,125 options were still
available for exercise. The 107,125 options for Bank Common Stock that were
outstanding as of the consummation of the Conversion and the Reorganization were
adjusted to 324,704 options at an adjusted exercise price of $2.20 per share
pursuant to the Exchange Ratio. Of such options, 110,919 options had been
exercised between December 29, 1996 and the Voting Record Date.
8
<PAGE>
The following tables set forth for the fiscal year ended December 31,
1995, the exercise of stock options pursuant to 1992 Option Plan to the person
named in the Summary Compensation Table and the year end value of such
outstanding options.
<TABLE>
<CAPTION>
OPTION/SAR EXERCISES AND YEAR END VALUE TABLE (1)
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR Value
--------------------------------------------------------------------------------
Number of
Securities Underlying Value of Unexercised
Unexercised Options In-The-Money Options
at FY-End (#)(2)(3) at FY-End ($)(2)(4)
Shares Acquired Value
Name on Exercise (#) Realized($)(4) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- --------------- -------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Malcolm E. Collier, Jr. 6,000 $160,980 26,790/0 $718,776/$0
President, Chairman,
and CEO
</TABLE>
- ------------------
(1) All amounts presented as of the date of the consummation of the Conversion
and the Reorganization and do not reflect the Exchange. From December 29,
1995 to December 31, 1995, no additional options were granted or exercised.
(2) No Stock Appreciation Rights ("SARs") have been awarded under the 1992
Option Plan.
(3) Includes options that are exercisable within 60 days of the Voting Record
Date.
(4) Based upon an exercise price of $6.67 and the average bid and ask price of
$33.50 as of December 29, 1995.
1996 Stock Option Plan. The Board of Directors of the Company has adopted
the 1996 Stock Option Plan for the benefit of its directors, officers, and key
employees. The 1996 Stock Option Plan is subject to stockholder approval. See
"Proposal I -- Approval of 1996 Stock Option Plan" for a summary of the 1996
Stock Option Plan. See Exhibit A for a copy of the 1996 Stock Option Plan.
1992 Management Recognition Plan. In 1992, the Board of Directors of the
Bank adopted the 1992 Management Recognition Plan ("1992 MRP") as a method of
providing officers, directors, and key employees of the Bank with a proprietary
interest in the Bank in a manner designed to encourage such persons to remain
with the Bank. The Bank contributed sufficient funds to the 1992 MRP Trust to
enable the 1992 MRP Trust to purchase 3% of the Bank Common Stock issued in the
MHC Reorganization to parties other than the Mutual Holding Company (i.e.,
60,115 shares of Bank Common Stock, as adjusted for the three-for-two stock
split). Awards under the 1992 MRP were made in recognition of prior and expected
future services to the Bank of its officers and employees responsible for
implementation of the policies adopted by the Board of Directors, the profitable
operation of the Bank, and as a means of providing a further retention incentive
and direct link between compensation and the profitability of the Bank.
Benefits under the plan may be granted in the sole discretion of a
committee composed of three directors who are not also employees of the Bank or
its subsidiary (the "1992 MRP Committee") appointed by the Board of Directors of
the Bank. The 1992 MRP is managed by trustees (the "1992 MRP Trustees") who are
non-employee directors of the Bank and who have the responsibility to invest all
funds contributed by the Bank to the trust created for the 1992 MRP (the "1992
MRP Trust"). Awards under the MRP become immediately vested in the event of
death, disability, or a "change in control" of the Bank or its successors.
All of the Bank Common Stock purchased by the 1992 MRP was purchased at
the original issuance price of $6.67 (as adjusted for the three-for-two stock
split) per share. Officers, directors, and employees of the Bank were awarded a
total of 51,300 shares of restricted Bank Common Stock pursuant to the 1992 MRP
at the close of the MHC Reorganization on July 14, 1992. Awards of 3,000 and
2,340
9
<PAGE>
shares of restricted Bank Common Stock pursuant to the 1992 MRP were granted
during the fiscal years ended December 31, 1993 and 1994, respectively. A total
of 1,200 shares previously awarded were forfeited in 1994. Of the total 60,115
shares of Bank Common Stock purchased by the 1992 MRP, 92.2% have been awarded.
At the completion of the Conversion and the Reorganization, the 27,355 shares of
Bank Common Stock held by the 1992 MRP which have not yet been earned were
converted into 82,912 shares of the Common Stock pursuant to the Exchange Ratio,
of which 14,151 shares are unallocated.
Management Stock Bonus Plan. The Board of Directors of the Company has
adopted a restricted stock program for the benefit of directors, officers, and
key employees of the Bank. The MSBP is subject to stockholder approval. See
"Proposal II -- Approval of the Management Stock Bonus Plan" for a summary of
the MSBP. See Exhibit B for a copy of the MSBP.
Employee Stock Purchase Plan. The Bank maintains the First Federal Bank of
Colorado Employee Stock Purchase Plan (the "Stock Purchase Plan"). As of the
consummation of the Conversion and the Reorganization, 5,648 shares of Bank
Common Stock had been purchased by employees under the Stock Purchase Plan.
These shares were exchanged for 17,119 shares of Common Stock pursuant to the
Exchange Ratio. The Stock Purchase Plan allows employees of the Bank to make
purchases of the Common Stock in the open market through regular payroll
deductions of no less than $10 nor more than $500 for each payroll period. The
amounts withheld from all participants' payroll deductions are pooled and
forwarded to Norwest Bank Denver, N.A., the administrator of the Stock Purchase
Plan (the "Administrator") to purchase shares of Common Stock in the open market
for the accounts of all participants under the Stock Purchase Plan on a monthly
basis. The Bank pays expenses associated with such purchases, including
brokerage commissions and any service charges levied by the Administrator.
Participants have the authority to direct the Administrator in the manner of
voting the number of whole shares of Common Stock held in their accounts and may
withdraw from the Stock Purchase Plan at any time. Participation under the Stock
Purchase Plan is open to all full-time employees of the Bank on an equal basis.
Participation under the Stock Purchase Plan and an individual's level of payroll
savings for the purchase of Common Stock is completely voluntary. There are no
discounts in the purchase price of the Common Stock, therefore, it is impossible
to estimate the value of any benefit to be awarded under the Stock Purchase
Plan.
- -------------------------------------------------------------------------------
Certain Relationships and Related Transactions
- -------------------------------------------------------------------------------
The Bank had no "interlocking" relationships existing on or after January
1, 1995 in which (i) any executive officer is a member of the Board of
Directors/Trustees of another entity, one of whose executive officers is a
member of the Board of Directors of the Bank, or where (ii) any executive
officer is a member of the compensation committee of another entity, one of
whose executive officers is a member of Board of Directors of the Bank.
Director Leeon E. Hayden, Jr., is an attorney with the firm of Leeon
Hayden, P.C., Lakewood, Colorado, and does legal work for the Bank, consisting
mainly of foreclosure on real property. During the fiscal year ended December
31, 1995, Mr. Hayden's firm collected fees of approximately $4,000 in connection
with such loan foreclosures.
The Bank, like many financial institutions, has followed a policy of
offering residential mortgage loans for the financing of personal residences,
share loans, consumer loans, and overdraft protection to its officers,
directors, and employees. The loans are made in the ordinary course of business
and are made on substantially the same terms and conditions, including interest
rate and collateral, as those of
10
<PAGE>
comparable transactions prevailing at the time with other persons, and do not
include more than the normal risk of collectibility or present other unfavorable
features. At December 31, 1995, loans to executive officers and directors of the
Company and the Bank, and their immediate family members, amounted to $1,198,031
or 0.5% of the Company's stockholders' equity.
- -------------------------------------------------------------------------------
PROPOSAL I -- APPROVAL OF 1996 THE STOCK OPTION PLAN
- -------------------------------------------------------------------------------
General
The Company's Board of Directors has adopted the 1996 Stock Option Plan.
The 1996 Stock Option Plan is subject to approval by the Company's stockholders
and any necessary regulatory approvals. Pursuant to the 1996 Stock Option Plan,
up to 1,340,379 shares of Common Stock equal to up to 10% of the total Common
Stock sold in the Conversion and the Reorganization are to be reserved from the
Company's authorized but unissued Common Stock for issuance by the Company upon
the exercise of stock options to be granted to officers, directors, key
employees and other persons from time to time. The purpose of the 1996 Stock
Option Plan is to attract and retain qualified personnel for positions of
substantial responsibility and to provide additional incentive to certain
officers, directors, key employees and other persons to promote the success of
the Company's and the Bank's business. The 1996 Stock Option Plan, which shall
become effective upon stockholder approval (the "Effective Date"), provides for
a term of ten years, after which time no awards may be made. The following
summary of the material features of the 1996 Stock Option Plan is qualified in
its entirety by reference to the complete provisions of the 1996 Stock Option
Plan, attached hereto as Exhibit A.
The 1996 Stock Option Plan will be administered by a committee of at least
three non-employee directors appointed by the Company's Board of Directors and
serving at the pleasure of the Board (the "1996 Option Committee"). Members of
the 1996 Option Committee will be deemed "disinterested" within the meaning of
Rule 16b-3 pursuant to the 1934 Act. The 1996 Option Committee may, from time to
time, select the officers and employees to whom options are to be granted and
the number of options to be granted based upon the individual's position at the
Company or the Bank, years of service, and performance. A majority of the
members of the 1996 Option Committee shall constitute a quorum and the action of
a majority of the members present at any meeting at which a quorum is present
shall be deemed the action of the 1996 Option Committee. In no event may the
1996 Option Committee revoke outstanding options without the consent of the
holder of such option ("Optionee").
Officers, directors, key employees, and other persons who are designated
by the 1996 Option Committee will be eligible to receive, at no cost to them,
options under the 1996 Stock Option Plan. Each option granted pursuant to the
1996 Stock Option Plan shall be evidenced by an instrument in such form as the
1996 Option Committee shall from time to time approve. It is anticipated that
options granted under the 1996 Stock Option Plan will constitute either
Incentive Stock Options (options that afford favorable tax treatment to
recipients upon compliance with certain restrictions pursuant to Section 422 of
the Internal Revenue Code ("Code") and that do not normally result in tax
deductions to the Company) or Non-Incentive Stock Options (options that do not
afford recipients favorable tax treatment under Code Section 422). Option shares
may be paid for in cash, shares of Common Stock, or a combination of both. The
Company will receive no monetary consideration for the granting of stock options
under the 1996 Stock Option Plan. Further, the Company will receive no
consideration other than the option exercise price per share upon exercise of
those options.
11
<PAGE>
Options to be awarded to employees, officers, and directors shall be
conditioned upon receipt of stockholder approval of the 1996 Stock Option Plan.
Options awarded to employees, officers, and directors become first exercisable
at a rate of 20% annually commencing on the one year anniversary of the date of
grant, except upon the death or disability of the Optionee, or a change in
control of the Company. In the event of the death or disability of an Optionee,
or a change in control (as such term is described in the 1996 Stock Option
Plan), the options granted to such Optionee shall become immediately exercisable
without regard to any vesting schedule.
Shares issuable under the 1996 Stock Option Plan may be either authorized
but unissued shares, shares held by the Company in its treasury, or shares
purchased in the market. Any Common Stock subject to an option which expires or
is terminated unexercised will again be available for issuance under the 1996
Stock Option Plan. No option or any right or interest therein is assignable or
transferable except by will or the laws of descent and distribution. The 1996
Stock Option Plan shall continue in effect for a term of ten years from the
Effective Date, unless sooner terminated in accordance with the 1996 Stock
Option Plan.
The average of the closing bid and ask price of the Common Stock as quoted
on the Nasdaq National Market as of the Voting Record Date was $13.3125 per
share.
Stock Options
The 1996 Option Committee may grant either Incentive Stock Options or
Non-Incentive Stock Options. In general, if an Optionee ceases to serve as an
employee of the Company for any reason other than disability or death, an
exercisable Incentive Stock Option may continue to be exercisable for three
months but in no event after the expiration date of the option, except as may
otherwise be determined by the 1996 Option Committee at the time of the award.
In the event of the disability or death of an Optionee during employment, an
exercisable Incentive Stock Option will continue to be exercisable for one year
and two years, respectively, to the extent exercisable by the Optionee
immediately prior to the Optionee's disability or death but only if, and to the
extent that, the Optionee was entitled to exercise the Incentive Stock Options
on the date of disability or death. The terms and conditions of Non-Incentive
Stock Options relating to the effect of an Optionee's termination of employment
or service, disability, or death shall be such terms as the 1996 Option
Committee, in its sole discretion, shall determine at the time of termination of
service, disability, or death, unless specifically determined at the time of
grant of such options.
The exercise price for the purchase of Common Stock subject to an Option
may not be less than one hundred percent (100%) of the fair market value of the
Common Stock covered by the Option on the date of grant of such option ("Fair
Market Value"). For purposes of determining the Fair Market Value of the Common
Stock, if the Common Stock is traded otherwise than on a national securities
exchange at the time of the granting of an Option, then the exercise price per
share of the Option shall be not less than the mean between the closing bid and
ask price on the date the Option is granted or, if there is no bid and ask price
on said date, then on the immediately prior business day on which there was a
bid and ask price. If no such bid and ask price is available, then the exercise
price per share shall be determined in good faith by the 1996 Option Committee.
If the Common Stock is listed on a national securities exchange at the time of
the granting of an Option, then the exercise price per share of Common Stock
shall be not less than the average of the highest and lowest selling price on
such exchange on the date such Option is granted or, if there were no sales on
said date, then the exercise price shall be not less than the mean between the
closing bid and ask price on such date. If an officer or employee owns Common
Stock representing more than ten percent of the outstanding Common Stock at the
time an Option is granted, then the exercise price shall not be less than one
hundred and ten percent (110%) of
12
<PAGE>
the fair market value of the Common Stock at the time the Incentive Stock Option
is granted. No more than $100,000 of Incentive Stock Options can become
exercisable for the first time in any one year for any one person. The 1996
Option Committee may impose additional conditions upon the right of an Optionee
to exercise any Option granted hereunder which are not inconsistent with the
terms of the 1996 Stock Option Plan or the requirements for qualification as an
Incentive Stock Option, if such Option is intended to qualify as an incentive
stock option.
No shares of Common Stock shall be issued upon the exercise of an Option
until full payment therefor has been received by the Company, and no Optionee
shall have any of the rights of a stockholder of the Company until shares of
Common Stock are issued to the Optionee. Upon the exercise of an Option, the
Committee, in its sole discretion, may make a cash payment to the Optionee, in
whole or in part, in lieu of the delivery of shares of Common Stock. This cash
payment will equal the difference between the fair market value of a share of
Common Stock on the date of the exercise of the Option and the exercise price
per share of the Option. This cash payment will be in exchange for the
cancellation of the Option. A cash payment will not be made if the payment would
result in liability to the Optionee or the Company under Section 16(b) of the
1934 Act, or the rules promulgated thereunder.
The 1996 Stock Option Plan provides that the Board of Directors of the
Company may authorize the 1996 Option Committee to direct the execution of an
instrument providing for the modification, extension or renewal of any
outstanding option, provided that no such modification, extension or renewal
shall confer on the Optionee any rights or benefits which could not be conferred
by the grant of a new option at such time, and shall not materially decrease the
Optionee's benefits under the option without the Optionee's consent, except as
otherwise provided under the 1996 Stock Option Plan. The 1996 Option Committee,
in its sole discretion, may give the Company a repurchase right with respect to
shares acquired upon the exercise of an option granted under the 1996 Stock
Option Plan. The 1996 Option Committee has no present intention to grant options
subject to a repurchase right.
Awards Under the 1996 Stock Option Plan
The Committee shall from time to time determine the officers, Directors,
key employees and other persons who shall be granted Awards under the Plan, the
number of Awards to be granted to each such officer, Director, key employee and
other persons under the Plan, and whether Awards granted to each such
Participant under the Plan shall be Incentive Stock Options and/or Non-Incentive
Stock Options. In selecting Participants and in determining the number of Shares
of Common Stock subject to Options to be granted to each such Participant, the
Committee may consider the nature of the services rendered by each such
Participant, each such Participant's current and potential contribution to the
Company and such other factors as the Committee may, in its sole discretion,
deem relevant. Participants who have been granted an Award may, if otherwise
eligible, be granted additional Awards. In no event shall Shares subject to
Options granted to non-employee Directors in the aggregate under this Plan
exceed more than 30% of the total number of Shares authorized for delivery under
this Plan and no more than 5% of total Plan Shares may be awarded to any
individual non-employee Director. In no event shall Shares subject to Options
granted to any Employee exceed more than 25% of the total number of Shares
authorized for delivery under the Plan.
Pursuant to the terms of the Option Plan, Non-Incentive Stock Options to
purchase 12,000 shares of Common Stock will be granted to each non-employee
Director of the Company (excluding Director Polly Baca who serves as a director
without remuneration), as of the Effective Date at an exercise price equal to
the Fair Market Value of the Common Stock on such date of grant. Options may be
granted to newly appointed or elected non-employee Directors within the sole
discretion of the Option Committee, but in no event at an exercise price less
than the Fair Market Value of such Common Stock on the date of grant.
13
<PAGE>
The table below presents information related to stock option awards
anticipated to be awarded upon stockholder approval of the 1996 Stock Option
Plan, subject to OTS non-objection, if applicable.
NEW PLAN BENEFITS
1996 STOCK OPTION PLAN
----------------------
Number of Options
Name and Position Dollar Value(1) to be Granted
- ----------------- --------------- -----------------
Malcolm E. Collier, Jr.
Chairman of the Board, President and CEO N/A 90,000(2)(3)
of the Company......................
Robert W. Richards
President of the Bank............... N/A 70,000(2)(3)
Executive Officer Group (7 persons)... N/A 395,000(2)(3)
Non-Executive Officer Director Group
(8 persons)......................... N/A 84,000(3)(4)
Non-Executive Officer Employee Group
(43 persons)........................ N/A 795,000(2)(3)
Reserved.............................. N/A 66,379(5)
(1) The exercise price of such Options shall be equal to the Fair Market Value
of the Common Stock on the date of stockholder approval of the 1996 Stock
Option Plan. Accordingly, the dollar value of the options is not
determinable. On the Voting Record Date, the average of the closing bid and
ask price of the Common Stock as quoted on the Nasdaq National Market was
$13.3125.
(2) Options awarded to officers and employees are exercisable as follows:
Options awarded at the time of stockholder approval are first exercisable
at the rate of 20% one year from the date of grant and 20% annually
thereafter. Awards shall vest during periods of continued service as an
employee, director, or director emeritus. Upon vesting, awards shall remain
exercisable for ten years from the date of grant during periods of
continued service as an employee, director, or director emeritus.
(3) Awards shall vest immediately upon the death or disability of the
Participant or upon a change in control of the Company or the Bank.
(4) Options awarded to directors are first exercisable at a rate of 20% on the
one year anniversary of stockholder approval of the 1996 Stock Option Plan
and 20% annually thereafter, during such period of service as a director or
director emeritus and shall remain exercisable for ten years from the date
of grant without regard to continued service as a director or director
emeritus.
(5) Available reserve of options may be awarded to directors, employees, and
other persons in the future.
Effect of Merger, Change in Control, and Other Adjustments
The number of shares of Common Stock represented by each outstanding stock
option will be proportionately adjusted for any increase or decrease in the
number of outstanding shares of Common Stock resulting from a subdivision or
consolidation of shares or the payment of a stock dividend or any other increase
or decrease in such outstanding Common Stock without the receipt of
consideration by the Company. In the event of any change in control,
recapitalization, merger, consolidation, exchange of shares, spin-off,
reorganization, tender offer, partial or complete liquidation, or other
extraordinary corporate action, the 1996 Option Committee, in its sole
discretion, shall have the power, prior to or subsequent to such action or
events, to (i) appropriately adjust the number of shares of Common Stock subject
to each option, the exercise price per share of Common Stock, and the
consideration to be given or received by the Company upon the exercise of any
outstanding options; (ii) cancel any or all
14
<PAGE>
previously granted options, provided that appropriate consideration is paid to
the Optionee in connection therewith; and/or (iii) make such other adjustments
in connection with the 1996 Stock Option Plan as the 1996 Option Committee deems
necessary, desirable, appropriate, or advisable. However, no action may be taken
by the 1996 Option Committee that would cause Incentive Stock Options granted
pursuant to the 1996 Stock Option Plan to fail to meet the requirements of
Section 422 of the Code without the consent of the Optionee. In the event of the
payment of a special or non-recurring cash dividend that has the effect of a
return of capital to the stockholders, the Option exercise price per share shall
be adjusted proportionately. No such special or non-recurring cash dividend is
presently contemplated by the Company.
The 1996 Option Committee will at all times have the power to accelerate
the exercise date of all Options granted under the 1996 Stock Option Plan. In
the case of a change in control of the Company as determined by the 1996 Option
Committee, all outstanding options shall become immediately exercisable
(provided such accelerated vesting is not inconsistent with applicable
regulations of the OTS or other appropriate banking regulator at the time of the
change in control). A change in control is defined to include (i) the execution
of an agreement for the sale of all, or a material portion, of the assets of the
Company; (ii) the execution of an agreement for a merger or recapitalization of
the Company or any merger or recapitalization whereby the Company is not the
surviving entity; (iii) a change in control of the Company as otherwise defined
or determined by the OTS or its regulations; or (iv) the acquisition, directly
or indirectly, of the beneficial ownership (within the meaning of Section 13(d)
of the 1934 Act and rules and regulations promulgated thereunder) of 25% or more
of the outstanding voting securities of the Company by any person, trust,
entity, or group.
The power of the 1996 Option Committee to accelerate the exercise of
options and the immediate exercisability of options in the case of a change in
control of the Company could have an anti-takeover effect by making it more
costly for a potential acquiror to obtain control of the Company due to the
higher number of shares outstanding following the exercise of options. The power
of the 1996 Option Committee to make adjustments in connection with the 1996
Stock Option Plan, including adjusting the number of shares subject to options
and canceling options, prior to or after the occurrence of an extraordinary
corporate action, allows the 1996 Option Committee to adapt the 1996 Stock
Option Plan to operate in changed circumstances, to adjust the 1996 Stock Option
Plan to fit a smaller or larger company, and to permit the issuance of options
to new management following an extraordinary corporate action. However, the
power of the 1996 Option Committee also has an anti-takeover effect by allowing
the 1996 Option Committee to adjust the 1996 Stock Option Plan in a manner to
allow the present management of the Company to exercise more options and hold
more shares of the Common Stock, and to possibly decrease the number of options
available to new management of the Company.
Although the 1996 Stock Option Plan may have an anti-takeover effect, the
Company's Board of Directors did not adopt the 1996 Stock Option Plan
specifically for anti-takeover purposes. The 1996 Stock Option Plan could render
it more difficult to obtain support for stockholder proposals opposed by the
Company's Board and management in that recipients of options could choose to
exercise options and thereby increase the number of shares for which they hold
voting power. Also, the exercise of options could make it easier for the Board
and management to block the approval of certain transactions requiring the
voting approval of 80% of the Common Stock in accordance with the Articles. In
addition, the exercise of options could increase the cost of an acquisition by a
potential acquiror.
15
<PAGE>
Amendment and Termination of the 1996 Stock Option Plan
The Board of Directors may alter, suspend, or discontinue the 1996 Stock
Option Plan, except that no action of the Board shall increase the maximum
number of shares of Common Stock issuable under the 1996 Stock Option Plan,
except for such adjustments that effect all outstanding Common Stock pro rata,
materially increase the benefits accruing to Optionees under the 1996 Stock
Option Plan, or materially modify the requirements for eligibility for
participation in the 1996 Stock Option Plan unless the action of the Board is
approved or ratified by the stockholders of the Company.
Possible Dilutive Effects of the 1996 Stock Option Plan
The Common Stock to be issued upon the exercise of options awarded under
the 1996 Stock Option Plan may either be authorized but unissued shares of
Common Stock, treasury shares, or shares purchased in the open market. In that
the stockholders of the Company do not have preemptive rights, to the extent
that the Company funds the 1996 Stock Option Plan, in whole or in part, with
authorized but unissued shares, the interests of current stockholders will be
diluted. If upon the exercise of all of the options, the Company delivers newly
issued shares of Common Stock (i.e., 1,340,379 shares of Common Stock), then the
dilutive effect to current stockholders would be approximately 6.24%.
Federal Income Tax Consequences
Under present federal tax laws, awards under the 1996 Stock Option Plan
will have the following consequences:
1. The grant of an option will not by itself result in the recognition of
taxable income to an Optionee nor entitle the Company to a deduction at the
time of such grant.
2. The exercise of an option that is an "Incentive Stock Option" within the
meaning of Section 422 of the Code generally will not, by itself, result in
the recognition of taxable income to an Optionee nor entitle the Company to
a deduction at the time of exercise. However, the difference between the
exercise price and the fair market value of the Common Stock on the date of
Option exercise is an item of tax preference that may, in certain
situations, trigger the alternative minimum tax for an Optionee. An
Optionee will recognize capital gain or loss upon resale of the shares of
Common Stock received pursuant to the exercise of Incentive Stock Options,
provided that such shares are held for at least one year after transfer of
the shares or two years after the grant of the option, whichever is later.
Generally, if the shares are not held for that period, the Optionee will
recognize ordinary income upon disposition in an amount equal to the
difference between the Option exercise price and the fair market value of
the Common Stock on the date of exercise, or, if less, the sales proceeds
of the shares acquired pursuant to the option.
3. The exercise of a Non-Incentive Stock Option will result in the recognition
of ordinary income by the Optionee on the date of exercise in an amount
equal to the difference between the Option exercise price and the fair
market value of the Common Stock acquired pursuant to the option.
4. The Company will be allowed a tax deduction for federal tax purposes equal
to the amount of ordinary income recognized by an Optionee at the time the
Optionee recognizes the ordinary income.
16
<PAGE>
Accounting Treatment
Neither the grant nor the exercise of an Option under the Option Plan
currently requires any charge against earnings under generally accepted
accounting principles. In certain circumstances, Common Stock issuable pursuant
to outstanding Options under the Option Plan might be considered outstanding for
purposes of calculating earnings per share.
Stockholder Approval
Stockholder approval of the 1996 Stock Option Plan is being sought in
accordance with regulations of the OTS. Additional purposes of requesting
stockholder approval of the 1996 Stock Option Plan are to qualify the 1996 Stock
Option Plan for the granting of Incentive Stock Options in accordance with the
Code, to enable Optionees to qualify for certain exemptive treatment from the
short-swing profit recapture provisions of Section 16(b) of the 1934 Act, and to
meet the requirements for continued listing of the Common Stock on the Nasdaq
National Market. An affirmative vote of the holders of a majority of the total
votes eligible to be cast at the Meeting is required to constitute stockholder
approval of this Proposal I.
THE OTS IN NO WAY ENDORSES OR APPROVES THE 1996 STOCK OPTION PLAN.
A VOTE IN FAVOR OF THE 1996 STOCK OPTION PLAN ALSO AUTHORIZES THE BOARD OF
DIRECTORS TO AMEND THE 1996 STOCK OPTION PLAN TO COMPLY WITH ANY FUTURE OTS
INTERPRETATIONS UNDER APPLICABLE OTS REGULATIONS, PROVIDED SUCH AMENDMENTS DO
NOT HAVE A MATERIAL ADVERSE EFFECT ON THE COMPANY'S STOCKHOLDERS AS A GROUP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 1996
STOCK OPTION PLAN, ATTACHED HERETO AS EXHIBIT A.
- -------------------------------------------------------------------------------
PROPOSAL II -- APPROVAL OF THE MANAGEMENT STOCK BONUS PLAN
- -------------------------------------------------------------------------------
General
The Board of Directors of the Company has adopted the MSBP as a method of
providing directors, officers, and key employees of the Bank with a proprietary
interest in the Company in a manner designed to encourage these persons to
remain in the employment or service of the Bank. The Bank will contribute
sufficient funds to the MSBP to purchase Common Stock representing up to 2% of
the aggregate number of shares sold in the Conversion and the Reorganization
(i.e., 268,075 shares of Common Stock) in the open market, or alternatively, the
MSBP may purchase authorized but unissued shares of Common Stock from the
Company. Awards under the MSBP will be made in recognition of expected future
services to the Bank by its directors, officers, and key employees responsible
for implementation of the policies adopted by the Bank's Board of Directors and
as a means of providing a further retention incentive. The following is a
summary of the material features of the MSBP which is qualified in its entirety
by reference to the complete provisions of the MSBP, which is attached hereto as
Exhibit B.
17
<PAGE>
Awards Under the MSBP
Benefits under the MSBP ("Plan Share Awards") may be granted at the sole
discretion of a committee comprised of not less than three directors who are not
employees of the Bank or the Company (the "MSBP Committee") appointed by the
Bank's Board of Directors. The MSBP is managed by trustees (the "MSBP Trustees")
who are non-employee directors of the Bank or the Company and who have the
responsibility to invest all funds contributed by the Bank to the trust created
for the MSBP (the "MSBP Trust"). Unless the terms set forth by the MSBP or the
MSBP Committee specify otherwise, the shares granted will be in the form of
restricted stock payable as the recipients' interests in the Plan Share Awards
shall be earned and non-forfeitable. Twenty percent (20%) of Plan Share Awards
will be earned and non-forfeitable on the one year anniversary of the date of
grant of the awards, and 20% annually thereafter. A recipient of Plan Share
Awards will not be entitled to voting rights associated with the shares prior to
the applicable date the shares are earned. Dividends paid on Plan Share Awards
will be held in arrears and distributed upon the date applicable Plan Share
Awards are earned. Any shares not yet earned will be voted by the MSBP Trustees,
as directed by the MSBP Committee. If a recipient of Plan Share Awards
terminates employment or service for reasons other than death, disability, or a
change in control of the Company or the Bank, the recipient forfeits all rights
to the allocated shares under restriction. If the recipient's termination of
employment or service is caused by death, disability, or a change in control of
the Company or the Bank (provided that such accelerated vesting is not
inconsistent with applicable regulations of the OTS or other appropriate banking
regulator at the time of such change in control), all restrictions expire and
all shares allocated shall become unrestricted. Awards of restricted stock to
directors shall be immediately non-forfeitable in the event of the death or
disability of the director, or a change in control of the Company or the Bank.
The Board of Directors can terminate the MSBP at any time, and if it does so,
any shares not allocated will revert to the Company.
Plan Share Awards under the MSBP will be determined by the MSBP Committee.
The MSBP Committee shall consider such factors as the job position and
responsibilities of the employees, the length and value of their services to the
Bank or its subsidiaries, and the compensation paid to employees in determining
awards. In no event shall any individual employee receive Plan Share Awards in
excess of 25% of the shares of Common Stock authorized under the MSBP. Plan
Share Awards granted to non-employee directors of the Bank in the aggregate
shall not exceed 30% of the total shares of Common Stock authorized under the
MSBP, and Plan Share Awards granted to any individual non-employee director
shall not exceed 5% of the total shares of Common Stock authorized under the
MSBP.
The following table presents information related to the anticipated award
of Common Stock under the MSBP as authorized pursuant to the terms of the MSBP
or the anticipated actions of the MSBP Committee. All of the Common Stock to be
purchased by the MSBP will be purchased at the fair market value of the Common
Stock on the date of purchase.
18
<PAGE>
NEW PLAN BENEFITS
MANAGEMENT STOCK BONUS PLAN
Number of Shares
Name and Position Dollar Value(1) to be Granted(2)(3)
- ----------------- --------------- -------------------
Malcolm E. Collier, Jr.
Chairman of the Board, President and CEO
of the Company...................... $ 266,250 20,000
Robert W. Richards
President of the Bank............... 199,687 15,000
Executive Officer Group (7 persons)... 1,184,812 89,000
Non-Executive Officer Director Group
(8 persons)......................... 93,187 7,000(4)
Non-Executive Officer Employee Group
(43 persons)........................ 2,130,000 160,000
Reserved.............................. 160,748 12,075(5)
- -------------------
(1) Based on the average of the closing bid and ask price for the Common Stock
as quoted on the Nasdaq National Market on the Voting Record Date, which
was $13.3125 per share. The exact dollar value of the Common Stock granted
will equal the market price of the Common Stock on the date of vesting of
such awards. Accordingly, the exact dollar value is not presently
determinable.
(2) All Plan Share Awards presented herein shall be earned at the rate of 20%
on the one year anniversary of stockholder approval of the MSBP and 20%
annually thereafter. All awards become immediately 100% vested upon death,
disability, or termination of service following a change in control (as
defined in the MSBP).
(3) Plan Share Awards shall continue to vest during periods of service as an
employee, director, or director emeritus.
(4) Each of seven non-employee directors of the Bank shall be awarded 1,000
shares upon the date of stockholder approval. Director Baca serves without
remuneration and will not receive an award under the Plan.
(5) Available reserve of shares of Common Stock may be awarded to directors and
employees in the future.
Amendment and Termination of the MSBP
The Board of Directors may amend or terminate the MSBP. However, no action
of the Board may increase the maximum number of shares of Common Stock
authorized for issuance pursuant to the MSBP, except for adjustments made pro
rata to all outstanding shares of Common Stock, materially increase the benefits
accruing to Participants under the MSBP, or materially modify the requirements
for eligibility for participation in the MSBP, unless the action of the Board is
approved by the stockholders of the Company.
Possible Dilutive Effects of MSBP
The MSBP provides that Common Stock to be awarded may be acquired by the
MSBP through open-market purchases or from authorized, but unissued shares of
Common Stock from the Company. In that stockholders do not have preemptive
rights, to the extent that the Company utilizes authorized but unissued shares
to fund MSBP awards, the interests of current stockholders will be diluted. If
all Plan Share Awards are funded with newly issued shares, the dilutive effect
to existing stockholders would be approximately 1.3%. It is the Company's
present intention to fund the MSBP through open-market purchases of Common
Stock.
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<PAGE>
Federal Income Tax Consequences
Common Stock awarded under the MSBP is generally taxable to the recipient
at the time that the awards become earned and non-forfeitable, based upon the
fair market value of the stock at the time of vesting. Alternatively, a
recipient may make an election pursuant to Section 83(b) of the Code within 30
days of the date of the award to elect to include in gross income for the
current taxable year the fair market value of the stock as of the date of the
award. This election must be filed with the Internal Revenue Service within 30
days of the date of the granting of the Plan Share Award. The Company will be
allowed a tax deduction for federal tax purposes as a compensation expense equal
to the amount of ordinary income recognized by a recipient of Plan Share Awards
at the time the recipient recognizes ordinary income. A recipient of a Plan
Share Award may elect to have a portion of the award withheld by the MSBP in
order to meet any necessary tax withholding obligations.
Accounting Treatment
For accounting purposes, the Company will recognize a compensation expense
in the amount of the fair market value of the Common Stock subject to the Plan
Share Awards at the date of the award pro rata over the period of years during
which the awards are earned.
Stockholder Approval
The Company is submitting the MSBP to stockholders for approval in
accordance with regulations of the OTS. The MSBP and awards made thereunder will
not be effective until receipt of stockholder approval of Proposal II. The other
purposes of requesting stockholder approval of the MSBP are to enable recipients
of Plan Share Awards to qualify for certain exemptive treatment from the
short-swing profit recapture provisions of Section 16(b) of the 1934 Act and to
meet the requirements for continued listing of the Common Stock on the Nasdaq
National Market. The affirmative vote of holders of a majority of the total
votes eligible to be cast at the Meeting is required to constitute stockholder
approval of this Proposal II.
THE OTS IN NO WAY ENDORSES OR APPROVES THE MSBP.
A VOTE IN FAVOR OF THE MSBP ALSO AUTHORIZES THE BOARD OF DIRECTORS TO
AMEND THE MSBP TO COMPLY WITH ANY FUTURE OTS INTERPRETATIONS UNDER APPLICABLE
OTS REGULATIONS, PROVIDED SUCH AMENDMENTS DO NOT HAVE A MATERIAL ADVERSE EFFECT
ON THE COMPANY'S STOCKHOLDERS AS A GROUP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
MANAGEMENT STOCK BONUS PLAN. THE MSBP IS ATTACHED HERETO AS EXHIBIT B.
- -------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- -------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy materials for
next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's main office at 215
South Wadsworth Boulevard, Lakewood, Colorado 80226, no later than November 30,
1996. Any such proposals shall be subject to the requirements of Rule 14a-8
under the 1934 Act.
20
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- -------------------------------------------------------------------------------
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 matters should properly come before the Meeting, including
any adjournments thereof, it is intended that proxies in the accompanying form
will be voted in respect thereof in accordance with the judgment of the person
or persons voting the proxies.
- -------------------------------------------------------------------------------
MISCELLANEOUS
- -------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees, and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without payment of additional
compensation. The Company has retained Morrow & Co., Inc. to assist in the
solicitation of proxies at a cost which is not anticipated to exceed $4,000,
plus reimbursement of certain expenses incurred.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Elaine M. Samuelson
ELAINE M. SAMUELSON
SECRETARY
Lakewood, Colorado
June 10, 1996
21
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<PAGE>
ANNEX A Exhibit A
FIRST COLORADO BANCORP, INC.
1996 STOCK OPTION PLAN
1. Purpose of the Plan. The Plan shall be known as the First Colorado
Bancorp, Inc. ("Corporation") 1996 Stock Option Plan (the "Plan"). The purpose
of the Plan is to attract and to retain qualified personnel for positions of
substantial responsibility and to provide additional incentive to officers,
directors and key employees of the Corporation, or any present or future parent
or subsidiary of the Corporation to promote the success of the business. The
Plan is intended to provide for the grant of "Incentive Stock Options," within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") and Non-Incentive Stock Options, options that do not so qualify. Each
and every one of the provisions of the Plan relating to Incentive Stock Options
shall be interpreted to conform to the requirements of Section 422 of the Code.
2. Definitions. As used herein, the following definitions shall apply.
(a) "Award" means the grant by the Committee of an Incentive Stock Option
or a Non-Incentive Stock Option, or any combination thereof, as provided in the
Plan.
(b) "Board" shall mean the Board of Directors of the Corporation, or any
successor or parent corporation thereto.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
(d) "Committee" shall mean the Stock Option Committee appointed by the
Board in accordance with Section 5(a) of the Plan.
(e) "Common Stock" shall mean common stock, par value $.10 per share, of
the Corporation, or any successor or parent corporation thereto.
(f) "Continuous Employment" or "Continuous Status as an Employee" shall
mean the absence of any interruption or termination of employment with the
Corporation or any present or future Parent or Subsidiary of the Corporation.
Employment shall not be considered interrupted in the case of sick leave,
military leave or any other leave of absence approved by the Corporation or in
the case of transfers between payroll locations, of the Corporation or between
the Corporation, its Parent, its Subsidiaries or a successor.
(g) "Corporation" shall mean the First Colorado Bancorp, Inc., the parent
corporation of the Savings Bank, or any successor or Parent thereof.
(h) "Director" shall mean a member of the Board of the Corporation, or any
successor or parent corporation thereto.
(i) "Director Emeritus" shall mean a person serving as a director emeritus,
advisory director, consulting director or other similar position as may be
appointed by the Board of Directors of the Savings Bank or the Corporation from
time to time.
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(j) "Disability" means (a) with respect to Incentive Stock Options, the
"permanent and total disability" of the Employee as such term is defined at
Section 22(e)(3) of the Code; and (b) with respect to Non-Incentive Stock
Options, any physical or mental impairment which renders the Participant
incapable of continuing in the employment or service of the Savings Bank or the
Parent in his then current capacity as determined by the Committee.
(k) "Effective Date" shall mean the date specified in Section 15 hereof.
(l) "Employee" shall mean any person employed by the Corporation or any
present or future Parent or Subsidiary of the Corporation.
(m) "Incentive Stock Option" or "ISO" shall mean an option to purchase
Shares granted by the Committee pursuant to Section 8 hereof which is subject to
the limitations and restrictions of Section 8 hereof and is intended to qualify
as an incentive stock option under Section 422 of the Code.
(n) "Non-Incentive Stock Option" or "Non-ISO" shall mean an option to
purchase Shares granted pursuant to Section 9 hereof, which option is not
intended to qualify under Section 422 of the Code.
(o) "Option" shall mean an Incentive Stock Option or Non-Incentive Stock
Option granted pursuant to this Plan providing the holder of such Option with
the right to purchase Common Stock.
(p) "Optioned Stock" shall mean stock subject to an Option granted pursuant
to the Plan.
(q) "Optionee" shall mean any person who receives an Option or Award
pursuant to the Plan.
(r) "Parent" shall mean any present or future corporation which would be a
"parent corporation" as defined in Sections 424(e) and (g) of the Code.
(s) "Participant" means any director, officer or key employee of the
Corporation or any Parent or Subsidiary of the Corporation or any other person
providing a service to the Corporation who is selected by the Committee to
receive an Award, or who by the express terms of the Plan is granted an Award.
(t) "Plan" shall mean the First Colorado Bancorp, Inc. 1996 Stock Option
Plan.
(u) "Savings Bank" shall mean First Federal Bank of Colorado, or any
successor corporation thereto.
(v) "Share" shall mean one share of the Common Stock.
(w) "Subsidiary" shall mean any present or future corporation which
constitutes a "subsidiary corporation" as defined in Sections 424(f) and (g) of
the Code.
A-2
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3. Shares Subject to the Plan. Except as otherwise required by the
provisions of Section 13 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed 1,340,379. Such
Shares may either be from authorized but unissued shares, treasury shares or
shares purchased in the market for Plan purposes.
If an award should expire, become unexercisable or be forfeited for any
reason prior to its exercise, new Awards may be granted under the Plan with
respect to the number of Shares as to which such expiration has occurred.
4. Six Month Holding Period.
Subject to vesting requirements, if applicable, except in the event of
death or disability of the Optionee, a minimum of six months must elapse between
the date of the grant of an Option and the date of the sale of the Common Stock
received through the exercise of s uch Option.
5. Administration of the Plan.
(a) (i) Composition of the Committee. Except as indicated in Section
5(a)(ii) below, the Plan shall be administered by the
Committee which shall consist of at least three non-employee
Directors of the Corporation appointed by the Board and
serving at the pleasure of the Board. All persons designated
as members of the Committee shall be "disinterested persons"
within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934.
(ii) For the purpose of granting Awards to directors, the
selection of any Director to whom Awards may be granted, as
well as the number of Shares subject to Awards, must be
determined by a "disinterested committee", as defined in
Rule 16b-3 under the Securities Exchange Act of 1934.
(b) Powers of the Committee. The Committee is authorized (but only to
the extent not contrary to the express provisions of the Plan or
to resolutions adopted by the Board) to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to
the Plan, to determine the form and content of Awards to be
issued under the Plan and to make other determinations necessary
or advisable for the administration of the Plan, and shall have
and may exercise such other power and authority as may be
delegated to it by the Board from time to time. A majority of the
entire Committee shall constitute a quorum and the action of a
majority of the members present at any meeting at which a quorum
is present shall be deemed the action of the Committee. In no
event may the Committee revoke outstanding Awards without the
consent of the Participant.
The Chairman of the Corporation and such other officers as shall be
designated by the Committee are hereby authorized to execute written agreements
evidencing Awards on behalf of the Corporation and to cause them to be delivered
to the Participants. Such agreements shall set forth the Option exercise price,
the number of shares of Common Stock subject to such Option, the expiration date
of such Options, and such other terms and restrictions applicable to such Award
as are determined in accordance with the Plan or the actions of the Committee.
(c) Effect of Committee's Decision. All decisions, determinations and
interpretations of the Committee shall be final and conclusive on
all persons affected thereby.
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<PAGE>
6. Eligibility for Awards and Limitations.
(a) The Committee shall from time to time determine the officers,
Directors, key employees and other persons who shall be granted
Awards under the Plan, the number of Awards to be granted to each
such officer, Director, key employee and other persons under the
Plan, and whether Awards granted to each such Participant under
the Plan shall be Incentive and/or Non-Incentive Stock Options.
In selecting Participants and in determining the number of Shares
of Common Stock to be granted to each such Participant, the
Committee may consider the nature of the services rendered by
each such Participant, each such Participant's current and
potential contribution to the Corporation and such other factors
as the Committee may, in its sole discretion, deem relevant.
Participants who have been granted an Award may, if otherwise
eligible, be granted additional Awards.
(b) The aggregate fair market value (determined as of the date the
Option is granted) of the Shares with respect to which Incentive
Stock Options are exercisable for the first time by each Employee
during any calendar year (under all Incentive Stock Option plans,
as defined in Section 422 of the Code, of the Corporation or any
present or future Parent or Subsidiary of the Corporation) shall
not exceed $100,000. Notwithstanding the prior provisions of this
Section 6, the Committee may grant Options in excess of the
foregoing limitations, provided said Options shall be clearly and
specifically designated as not being Incentive Stock Options.
(c) In no event shall Shares subject to Options granted to
non-employee Directors in the aggregate under this Plan exceed
more than 30% of the total number of Shares authorized for
delivery under this Plan pursuant to Section 3 herein or more
than 5% to any individual non-employee Director. In no event
shall Shares subject to Options granted to any Employee exceed
more than 25% of the total number of Shares authorized for
delivery under the Plan.
7. Term of the Plan. The Plan shall continue in effect for a term of ten
(10) years from the Effective Date, unless sooner terminated pursuant to Section
18 hereof. No Option shall be granted under the Plan after ten (10) years from
the Effective Date.
8. Terms and Conditions of Incentive Stock Options. Incentive Stock Options
may be granted only to Participants who are Employees. Each Incentive Stock
Option granted pursuant to the Plan shall be evidenced by an instrument in such
form as the Committee shall from time to time approve. Each Incentive Stock
Option granted pursuant to the Plan shall comply with, and be subject to, the
following terms and conditions:
(a) Option Price.
(i) The price per Share at which each Incentive Stock Option
granted under the Plan may be exercised shall not, as to any
particular Incentive Stock Option, be less than the fair
market value of the Common Stock on the date that such
Incentive Stock Option is granted. For such purposes, if the
Common Stock is traded otherwise than on a national
securities exchange at the time of the granting of an
Option, then the exercise price per Share of the Optioned
Stock shall be not less than the mean between the last bid
and ask price on the date the Incentive Stock Option is
granted or, if there is no bid and ask price on said date,
then on the immediately prior business day on which there
was a bid and ask price. If no such bid and ask price is
available, then the exercise price per Share shall be
determined by the Committee in good faith. If the Common
Stock is listed on a national securities exchange at the
time of the granting of an Incentive Stock Option, then the
exercise price per Share shall be not less than the average
of the highest and lowest selling price on such exchange on
the
A-4
<PAGE>
date such Incentive Stock Option is granted or, if there
were no sales on said date, then the exercise price
shall be not less than the mean between the last bid
and ask price on such date.
(ii) In the case of an Employee who owns Common Stock
representing more than ten percent (10%) of the outstanding
Common Stock on the date that the Incentive Stock Option is
granted, the Incentive Stock Option exercise price shall not
be less than one hundred and ten percent (110%) of the fair
market value of the Common Stock on the date that the
Incentive Stock Option is granted.
(b) Payment. Full payment for each Share of Common Stock purchased
upon the exercise of any Incentive Stock Option granted under the
Plan shall be made at the time of exercise of each such Incentive
Stock Option and shall be paid in cash (in United States
Dollars), Common Stock or a combination of cash and Common Stock.
Common Stock utilized in full or partial payment of the exercise
price shall be valued at the fair market value at the date of
exercise. The Corporation shall accept full or partial payment in
Common Stock only to the extent permitted by applicable law. No
Shares of Common Stock shall be issued until full payment has
been received by the Corporation, and no Optionee shall have any
of the rights of a stockholder of the Corporation until Shares of
Common Stock are issued to the Optionee.
(c) Term of Incentive Stock Option. The term of exercisability of
each Incentive Stock Option granted pursuant to the Plan shall be
not more than ten (10) years from the date each such Incentive
Stock Option is granted, provided that in the case of an Employee
who owns stock representing more than ten percent (10%) of the
Common Stock outstanding at the time the Incentive Stock Option
is granted, the term of exercisability of the Incentive Stock
Option shall not exceed five (5) years.
(d) Exercise Generally. Except as otherwise provided in Section 10
hereof, no Incentive Stock Option may be exercised unless the
Optionee shall have been in the employ of the Corporation at all
times during the period beginning with the date of grant of any
such Incentive Stock Option and ending on the date three (3)
months prior to the date of exercise of any such Incentive Stock
Option. The Committee may impose additional conditions upon the
right of an Optionee to exercise any Incentive Stock Option
granted hereunder which are not inconsistent with the terms of
the Plan or the requirements for qualification as an Incentive
Stock Option. Except as otherwise provided by the terms of the
Plan or by action of the Committee at the time of the grant of
the Options, the Options will be first exercisable at the rate of
20% on the one year anniversary of the date of grant and 20%
annually thereafter during such periods of service as an
Employee, Director or Director Emeritus.
(e) Cashless Exercise. Subject to vesting requirements, if
applicable, an Optionee who has held an Incentive Stock Option
for at least six months may engage in the "cashless exercise" of
the Option. Upon a cashless exercise, an Optionee gives the
Corporation written notice of the exercise of the Option together
with an order to a registered broker-dealer or equivalent third
party, to sell part or all of the Optioned Stock and to deliver
enough of the proceeds to the Corporation to pay the Option
exercise price and any applicable withholding taxes. If the
Optionee does not sell the Optioned Stock through a registered
broker-dealer or equivalent third party, the Optionee can give
the Corporation written notice of the exercise of the Option and
the third party purchaser of the Optioned Stock shall pay the
Option exercise price plus any applicable withholding taxes to
the Corporation.
(f) Transferability. Any Incentive Stock Option granted pursuant to
the Plan shall be exercised during an Optionee's lifetime only by
the Optionee to whom it was granted and shall not be assignable
or transferable otherwise than by will or by the laws of descent
and distribution.
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<PAGE>
9. Terms and Conditions of Non-Incentive Stock Options. Each Non-Incentive
Stock Option granted pursuant to the Plan shall be evidenced by an instrument in
such form as the Committee shall from time to time approve. Each Non-Incentive
Stock Option granted pursuant to the Plan shall comply with and be subject to
the following terms and conditions.
(a) Options Granted to Directors. Subject to the limitations of
Section 6(c), Non-Incentive Stock Options to purchase 12,000
shares of Common Stock will be granted to each Director who is
not an Employee (excluding Director Polly Baca) as of the
Effective Date, at an exercise price equal to the fair market
value of the Common Stock on such date of grant. Options may be
granted to newly appointed or elected non-employee Directors
within the sole discretion of the Committee. The Options will be
first exercisable at the rate of 20% on the one year anniversary
of the Effective Date and 20% annually thereafter during such
periods of service as a Director or Director Emeritus. Upon the
death or Disability of the Director or Director Emeritus, or upon
a change in control of the Savings Bank or the Corporation as
provided at Section 13(b) herein, such Option shall be deemed
immediately 100% exercisable. The exercise price per Share of
such Options granted shall be equal to the fair market value of
the Common Stock at the time such Options are granted. For such
purposes, if the Common Stock is traded otherwise than on a
national securities exchange at the time of the granting of the
Options, then the exercise price per Share of the Optioned Stock
shall be not less than the mean between the last bid and ask
price on the date the Options are granted or, if there is no bid
and ask price on said date, then on the next prior business day
on which there was a bid and ask price. If no such bid and ask
price is available, then the exercise price per Share shall be
determined by the Committee in good faith. If the Common Stock is
listed on a national securities exchange at the time of the
granting of an Options, then the exercise price per Share shall
be not less than the average of the highest and lowest selling
price on such exchange on the date such Options are granted or,
if there were no sales on said date, then the exercise price
shall be not less than the mean between the last bid and ask
price on such date. Such Options shall continue to be exercisable
for a period of ten years following the date of grant without
regard to the continued services of such Directors as a Director
or Director Emeritus. In the event of the Optionee's death, such
Options may be exercised by the personal representative of his
estate or person or persons to whom his rights under such Option
shall have passed by will or by the laws of descent and
distribution. Unless otherwise inapplicable, or inconsistent with
the provisions of this paragraph, the Options to be granted to
Directors hereunder shall be subject to all other provisions of
this Plan.
(b) Option Price. The exercise price per Share of Common Stock for
each Non-Incentive Stock Option granted pursuant to the Plan,
other than Options granted pursuant to Section 9(a) herein, shall
be at such price as the Committee may determine in its sole
discretion, but in no event less than the fair market value of
such Common Stock on the date of grant as determined by the
Committee in good faith.
(c) Payment. Full payment for each Share of Common Stock purchased
upon the exercise of any Non-Incentive Stock Option granted under
the Plan shall be made at the time of exercise of each such
Non-Incentive Stock Option and shall be paid in cash (in United
States Dollars), Common Stock or a combination of cash and Common
Stock. Common Stock utilized in full or partial payment of the
exercise price shall be valued at its fair market value at the
date of exercise. The Corporation shall accept full or partial
payment in Common Stock only to the extent permitted by
applicable law. No Shares of Common Stock shall be issued until
full payment has been received by the Corporation and no Optionee
shall have any of the rights of a stockholder of the Corporation
until the Shares of Common Stock are issued to the Optionee.
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(d) Term. The term of exercisability of each Non-Incentive Stock
Option granted pursuant to the Plan shall be not more than ten
(10) years from the date each such Non-Incentive Stock Option is
granted.
(e) Exercise Generally. The Committee may impose additional
conditions upon the right of any Participant to exercise any
Non-Incentive Stock Option granted hereunder which is not
inconsistent with the terms of the Plan. Except as otherwise
provided by the terms of the Plan or by action of the Committee
at the time of the grant of the Options, the Options will be
first exercisable at the rate of 20% on the one year anniversary
of the date of grant and 20% annually thereafter during such
periods of service as an Employee, Director or Director Emeritus.
(f) Cashless Exercise. Subject to vesting requirements, if
applicable, an Optionee who has held a Non-Incentive Stock Option
for at least six months may engage in the "cashless exercise" of
the Option. Upon a cashless exercise, an Optionee gives the
Corporation written notice of the exercise of the Option together
with an order to a registered broker-dealer or equivalent third
party, to sell part or all of the Optioned Stock and to deliver
enough of the proceeds to the Corporation to pay the Option
exercise price and any applicable withholding taxes. If the
Optionee does not sell the Optioned Stock through a registered
broker-dealer or equivalent third party, the Optionee can give
the Corporation written notice of the exercise of the Option and
the third party purchaser of the Optioned Stock shall pay the
Option exercise price plus any applicable withholding taxes to
the Corporation.
(g) Transferability. Any Non-Incentive Stock Option granted pursuant
to the Plan shall be exercised during an Optionee's lifetime only
by the Optionee to whom it was granted and shall not be
assignable or transferable otherwise than by will or by the laws
of descent and distribution.
10. Effect of Termination of Employment, Disability or Death on Incentive
Stock Options.
(a) Termination of Employment. In the event that any Optionee's
employment with the Corporation shall terminate for any reason,
other than Permanent and Total Disability (as such term is
defined in Section 22(e)(3) of the Code) or death, all of any
such Optionee's Incentive Stock Options, and all of any such
Optionee's rights to purchase or receive Shares of Common Stock
pursuant thereto, shall automatically terminate on (A) the
earlier of (i) or (ii): (i) the respective expiration dates of
any such Incentive Stock Options, or (ii) the expiration of not
more than three (3) months after the date of such termination of
employment, or (B) at such later date as is determined by the
Committee at the time of the grant of such Award based upon the
Optionee's continuing status as a Director or Director Emeritus
of the Savings Bank or the Corporation, but only if, and to the
extent that, the Optionee was entitled to exercise any such
Incentive Stock Options at the date of such termination of
employment, and further that such Award shall thereafter be
deemed a Non-Incentive Stock Option. In the event that a
Subsidiary ceases to be a subsidiary of the Corporation, the
employment of all of its employees who are not immediately
thereafter employees of the Corporation shall be deemed to
terminate upon the date such subsidiary so ceases to be a
Subsidiary.
(b) Disability. In the event that any Optionee's employment with the
Corporation shall terminate as the result of the Permanent and
Total Disability of such Optionee, such Optionee may exercise any
Incentive Stock Options granted to the Optionee pursuant to the
Plan at any time prior to the earlier of (i) the respective
expiration dates of any such Incentive Stock Options or (ii) the
date which is one (1) year after the date of such termination of
employment, but only if, and to the extent that, the Optionee was
entitled to exercise any such Incentive Stock Options at the date
of such termination of employment.
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(c) Death. In the event of the death of an Optionee, any Incentive
Stock Options granted to such Optionee may be exercised by the
person or persons to whom the Optionee's rights under any such
Incentive Stock Options pass by will or by the laws of descent
and distribution (including the Optionee's estate during the
period of administration) at any time prior to the earlier of (i)
the respective expiration dates of any such Incentive Stock
Options or (ii) the date which is two (2) years after the date of
death of such Optionee but only if, and to the extent that, the
Optionee was entitled to exercise any such Incentive Stock
Options at the date of death. For purposes of this Section 10(c),
any Incentive Stock Option held by an Optionee shall be
considered exercisable at the date of his death if the only
unsatisfied condition precedent to the exercisability of such
Incentive Stock Option at the date of death is the passage of a
specified period of time. At the discretion of the Committee,
upon exercise of such Options the Optionee may receive Shares or
cash or a combination thereof. If cash shall be paid in lieu of
Shares, such cash shall be equal to the difference between the
fair market value of such Shares and the exercise price of such
Options on the exercise date.
(d) Incentive Stock Options Deemed Exercisable. For purposes of
Sections 10(a), 10(b) and 10(c) above, any Incentive Stock Option
held by any Optionee shall be considered exercisable at the date
of termination of employment if any such Incentive Stock Option
would have been exercisable at such date of termination of
employment without regard to the Permanent and Total Disability
or death of the Participant.
(e) Termination of Incentive Stock Options. Except as may be
specified by the Committee at the time of grant of an Option, to
the extent that any Incentive Stock Option granted under the Plan
to any Optionee whose employment with the Corporation terminates
shall not have been exercised within the applicable period set
forth in this Section 10, any such Incentive Stock Option, and
all rights to purchase or receive Shares of Common Stock pursuant
thereto, as the case may be, shall terminate on the last day of
the applicable period.
11. Effect of Termination of Employment, Disability or Death on
Non-Incentive Stock Options. The terms and conditions of Non-Incentive Stock
Options relating to the effect of the termination of an Optionee's employment or
service, disability of an Optionee or his death shall be such terms and
conditions as the Committee shall, in its sole discretion, determine at the time
of termination or service, unless specifically provided for by the terms of the
Agreement at the time of grant of the Award.
12. Right of Repurchase and Restrictions on Disposition. The Committee, in
its sole discretion, may include, as a term of any Incentive Stock Option or
Non-Incentive Stock Option, the right, but not the obligation for the
Corporation, to repurchase all or any amount of the Shares acquired by an
Optionee pursuant to the exercise of any such Options (the "Repurchase Right").
The intent of the Repurchase Right is to encourage the continued employment of
the Optionee. The Repurchase Right shall provide for, among other things, a
specified duration of the Repurchase Right, a specified price per Share to be
paid upon the exercise of the Repurchase Right and a restriction on the
disposition of the Shares by the Optionee during the period of the Repurchase
Right. The Repurchase Right may permit the Corporation to transfer or assign
such Repurchase Right to another party. The Corporation may exercise the
Repurchase Right only to the extent permitted by applicable law.
13. Recapitalization, Merger, Consolidation, Change in Control and Other
Transactions.
(a) Adjustment. Subject to any required action by the stockholders of
the Corporation, within the sole discretion of the Committee, the
aggregate number of Shares of Common Stock for which Options may
be granted hereunder, the number of Shares of Common Stock
covered by
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each outstanding Option, and the exercise price per Share of
Common Stock of each such Option, shall all be proportionately
adjusted for any increase or decrease in the number of issued and
outstanding Shares of Common Stock resulting from a subdivision
or consolidation of Shares (whether by reason of merger,
consolidation, recapitalization, reclassification, split-up,
combination of shares, or otherwise) or the payment of a stock
dividend (but only on the Common Stock) or any other increase or
decrease in the number of such Shares of Common Stock effected
without the receipt or payment of consideration by the
Corporation (other than Shares held by dissenting stockholders).
(b) Change in Control. All outstanding Awards shall become
immediately exercisable in the event of a change in control of
the Corporation, as determined by the Committee, provided that
such accelerated vesting is not inconsistent with applicable
regulations of the Office of Thrift Supervision or other
appropriate banking regulator at the time of such change in
control. The Optionee shall, at the discretion of the Committee,
be entitled to receive cash in an amount equal to the fair market
value of the Common Stock subject to any Option over the Option
exercise price of such Option, in exchange for the surrender of
such Options by the Optionee on the date of such change in
control of the Corporation. For purposes of this Section 13,
"change in control" shall mean: (i) the execution of an agreement
for the sale of all, or a material portion, of the assets of the
Corporation; (ii) the execution of an agreement for a merger or
recapitalization of the Corporation or any merger or
recapitalization whereby the Corporation is not the surviving
entity; (iii) a change in control of the Corporation, as
otherwise defined or determined by the Office of Thrift
Supervision or regulations promulgated by it; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership
(within the meaning of that term as it is used in Section 13(d)
of the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder) of twenty-five percent (25%)
or more of the outstanding voting securities of the Corporation
by any person, trust, entity or group. This limitation shall not
apply to the purchase of shares by underwriters in connection
with a public offering of Corporation stock, or the purchase of
shares of up to 25% of any class of securities of the Corporation
by a tax-qualified employee stock benefit plan which is exempt
from the approval requirements, set forth under 12 C.F.R.
ss.574.3(c)(1)(vi) as now in effect or as may hereafter be
amended. The term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization
or any other form of entity not specifically listed herein. The
decision of the Committee as to whether a change in control has
occurred shall be conclusive and binding.
(c) Extraordinary Corporate Action. Notwithstanding any provisions of
the Plan to the contrary, subject to any required action by the
stockholders of the Corporation, in the event of any change in
control, recapitalization, merger, consolidation, exchange of
Shares, spin-off, reorganization, tender offer, partial or
complete liquidation or other extraordinary corporate action or
event, the Committee, in its sole discretion, shall have the
power, prior or subsequent to such action or event to:
(i) appropriately adjust the number of Shares of Common Stock
subject to each Option, the Option exercise price per Share
of Common Stock, and the consideration to be given or
received by the Corporation upon the exercise of any
outstanding Option;
(ii) cancel any or all previously granted Options, provided that
appropriate consideration is paid to the Optionee in
connection therewith; and/or
(iii)make such other adjustments in connection with the Plan as
the Committee, in its sole discretion, deems necessary,
desirable, appropriate or advisable; provided, however, that
no action shall be taken by the Committee which would cause
Incentive Stock Options granted pursuant to the Plan to fail
to meet the requirements of Section 422 of the Code without
the consent of the Optionee.
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Except as expressly provided in Sections 13(a), 13(b) and 13(e) hereof, no
Optionee shall have any rights by reason of the occurrence of any of the events
described in this Section 13.
(d) Acceleration. The Committee shall at all times have the power to
accelerate the exercise date of Options previously granted under
the Plan; provided that such action is not contrary to
regulations of the OTS or other appropriate banking regulator
then in effect.
(e) Non-recurring Dividends. Upon the payment of a special or non-
recurring cash dividend that has the effect of a return of
capital to the stockholders, the Option exercise price per share
shall be adjusted proportionately.
14. Time of Granting Options. The date of grant of an Option under the Plan
shall, for all purposes, be the date on which the Committee makes the
determination of granting such Option. Notice of the grant of an Option shall be
given to each individual to whom an Option is so granted within a reasonable
time after the date of such grant in a form determined by the Committee.
15. Effective Date. The Plan shall become effective upon the date of
approval of the Plan by the stockholders of the Corporation, subject to approval
or non-objection by the Office of Thrift Supervision, if applicable. The
Committee may make a determination related to Awards prior to the Effective Date
with such Awards to be effective upon the date of stockholder approval of the
Plan.
16. Approval by Stockholders. The Plan shall be approved by stockholders of
the Corporation within twelve (12) months before or after the date the Plan is
approved by the Board.
17. Modification of Options. At any time and from time to time, the Board
may authorize the Committee to direct the execution of an instrument providing
for the modification of any outstanding Option, provided no such modification,
extension or renewal shall confer on the holder of said Option any right or
benefit which could not be conferred on the Optionee by the grant of a new
Option at such time, or shall not materially decrease the Optionee's benefits
under the Option without the consent of the holder of the Option, except as
otherwise permitted under Section 18 hereof.
18. Amendment and Termination of the Plan.
(a) Action by the Board. The Board may alter, suspend or discontinue
the Plan, except that no action of the Board may increase (other
than as provided in Section 13 hereof) the maximum number of
Shares permitted to be optioned under the Plan, materially
increase the benefits accruing to Participants under the Plan or
materially modify the requirements for eligibility for
participation in the Plan unless such action of the Board shall
be subject to approval or ratification by the stockholders of the
Corporation.
(b) Change in Applicable Law. Notwithstanding any other provision
contained in the Plan, in the event of a change in any federal or
state law, rule or regulation which would make the exercise of
all or part of any previously granted Option unlawful or subject
the Corporation to any penalty, the Committee may restrict any
such exercise without the consent of the Optionee or other holder
thereof in order to comply with any such law, rule or regulation
or to avoid any such penalty.
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19. Conditions Upon Issuance of Shares.
(a) Shares shall not be issued with respect to any Option granted
under the Plan unless the issuance and delivery of such Shares
shall comply with all relevant provisions of applicable law,
including, without limitation, the Securities Act of 1933, as
amended, the rules and regulations promulgated thereunder, any
applicable state securities laws and the requirements of any
stock exchange upon which the Shares may then be listed.
(b) The inability of the Corporation to obtain any necessary
authorizations, approvals or letters of non-objection from any
regulatory body or authority deemed by the Corporation's counsel
to be necessary to the lawful issuance and sale of any Shares
issuable hereunder shall relieve the Corporation of any liability
with respect to the non-issuance or sale of such Shares.
(c) As a condition to the exercise of an Option, the Corporation may
require the person exercising the Option to make such
representations and warranties as may be necessary to assure the
availability of an exemption from the registration requirements
of federal or state securities law.
(d) Notwithstanding anything herein to the contrary, upon the
termination of employment or service of an Optionee by the
Corporation or its Subsidiaries for "cause" as defined at 12
C.F.R. 563.39(b)(1) as determined by the Board of Directors, all
Options held by such Participant shall cease to be exercisable as
of the date of such termination of employment or service.
(e) Upon the exercise of an Option by an Optionee (or the Optionee's
personal representative), the Committee, in its sole and absolute
discretion, may make a cash payment to the Optionee, in whole or
in part, in lieu of the delivery of shares of Common Stock. Such
cash payment to be paid in lieu of delivery of Common Stock shall
be equal to the difference between the Fair Market Value of the
Common Stock on the date of the Option exercise and the exercise
price per share of the Option. Such cash payment shall be in
exchange for the cancellation of such Option. Such cash payment
shall not be made in the event that such transaction would result
in liability to the Optionee or the Corporation under Section
16(b) of the Securities Exchange Act of 1934, as amended, and
regulations promulgated thereunder.
20. Reservation of Shares. During the term of the Plan, the Corporation
will reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
21. Unsecured Obligation. No Participant under the Plan shall have any
interest in any fund or special asset of the Corporation by reason of the Plan
or the grant of any Option under the Plan. No trust fund shall be created in
connection with the Plan or any grant of any Option hereunder and there shall be
no required funding of amounts which may become payable to any Participant.
22. Withholding Tax. The Corporation shall have the right to deduct from
all amounts paid in cash with respect to the cashless exercise of Options under
the Plan any taxes required by law to be withheld with respect to such cash
payments. Where a Participant or other person is entitled to receive Shares
pursuant to the exercise of an Option, the Corporation shall have the right to
require the Participant or such other person to pay the Corporation the amount
of any taxes which the Corporation is required to withhold with respect to such
Shares, or, in lieu thereof, to retain, or to sell without notice, a number of
such Shares sufficient to cover the amount required to be withheld.
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23. No Employment Rights. No Director, Employee, or other person shall have
a right to be selected as a Participant under the Plan. Neither the Plan nor any
action taken by the Board or the Committee in administration of the Plan shall
be construed as giving any person any rights of employment or retention as an
Employee, Director, or in any other capacity with the Corporation, the Savings
Bank or any other Subsidiary.
24. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Colorado, except to the extent that
federal law shall be deemed to apply.
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ANNEX B Exhibit B
First Federal Bank of Colorado
1996 Management Stock Bonus Plan
and Trust Agreement
Article I
---------
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 First Federal Bank of Colorado ("Savings Bank") hereby establishes
the 1996 Management Stock Bonus Plan (the "Plan") and Trust (the "Trust") upon
the terms and conditions hereinafter stated in this Management Stock Bonus Plan
and Trust Agreement (the "Agreement").
1.02 The Trustee hereby accepts this Trust and agrees to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions hereinafter stated.
Article II
----------
PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to reward and to retain personnel of
experience and ability in key positions of responsibility with the Savings Bank
and its subsidiaries, by providing such personnel of the Savings Bank and its
subsidiaries with an equity interest in the parent corporation of the Savings
Bank, First Colorado Bancorp, Inc. ("Parent"), as compensation for their future
professional contributions and service to the Savings Bank and its subsidiaries.
Article III
-----------
DEFINITIONS
The following words and phrases when used in this Plan with an initial
capital letter, unless the context clearly indicates otherwise, shall have the
meaning as set forth below. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun and the singular shall include the plural.
3.01 "Beneficiary" means the person or persons designated by the 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, Recipient's estate.
3.02 "Board" means the Board of Directors of the Savings Bank, or any
successor corporation thereto.
3.03 "Committee" means the Management Stock Bonus Plan Committee appointed
by the Board pursuant to Article IV hereof.
3.04 "Common Stock" means shares of the common stock, $.10 par value per
share, of the Savings Bank or any successor corporation or Parent thereto.
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3.05 "Director" means a member of the Board of the Savings Bank.
3.06 "Director Emeritus" means a person serving as a director emeritus,
advisory director, consulting director, or other similar position as may be
appointed by the Board of Directors of the Savings Bank or the Corporation from
time to time.
3.07 "Disability" means any physical or mental impairment which renders the
Participant incapable of continuing in the employment or service of the Savings
Bank or the Parent in his current capacity as determined by the Committee.
3.08 "Employee" means any person who is employed by the Savings Bank or a
Subsidiary.
3.09 "Effective Date" shall mean the date of stockholder approval of the
Plan by the Parent's stockholders.
3.10 "Parent" shall mean First Colorado Bancorp, Inc., the parent
corporation of the Savings Bank.
3.11 "Plan Shares" means shares of Common Stock held in the Trust which are
awarded or issuable to a Recipient pursuant to the Plan.
3.12 "Plan Share Award" or "Award" means a right granted to an Employee
under this Plan to receive Plan Shares.
3.13 "Plan Share Reserve" means the shares of Common Stock held by the
Trust pursuant to Sections 5.03 and 5.04.
3.14 "Recipient" means any person who receives a Plan Share Award under the
Plan.
3.15 "Savings Bank" means First Federal Bank of Colorado, and any successor
corporation thereto.
3.16 "Subsidiary" means those subsidiaries of the Savings Bank which, with
the consent of the Board, agree to participate in this Plan.
3.17 "Trustee" or "Trustee Committee" means that person(s) or entity
nominated by the Committee and approved by the Board pursuant to Sections 4.01
and 4.02 to hold legal title to the Plan assets for the purposes set forth
herein.
Article IV
----------
ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered and interpreted
by the Committee, which shall consist of not less than three non-employee
members of the Board, which shall have all of the powers allocated to it in this
and other sections of the Plan. All persons designated as members of the
Committee shall be "disinterested persons" within the meaning of Rule 16b-3
under the Securities Exchange Act of 1934, as amended ("1934 Act"). The
interpretation and construction by the Committee of any provisions of the Plan
or of any Plan Share Award granted hereunder shall be final and binding. The
Committee shall act by vote or written consent of a majority of its members.
Subject
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to the express provisions and limitations of the Plan, the Committee may adopt
such rules, regulations and procedures as it deems appropriate for the conduct
of its affairs. The Committee shall report its actions and decisions with
respect to the Plan to the Board at appropriate times, but in no event less than
one time per calendar year. The Committee shall recommend to the Board one or
more persons or entity to act as Trustee in accordance with the provision of
this Plan and Trust and the terms of Article VIII hereof.
4.02 Role of the Board. The members of the Committee and the Trustee shall
be appointed or approved by, and will serve at the pleasure of the Board. The
Board may in its discretion from time to time remove members from, or add
members to, the Committee, and may remove, replace or add Trustees. The Board
shall have all of the powers allocated to it in this and other sections of the
Plan, may take any action under or with respect to the Plan which the Committee
is authorized to take, and may reverse or override any action taken or decision
made by the Committee under or with respect to the Plan, provided, however, that
the Board may not revoke any Plan Share Award already made except as provided in
Section 7.01(b) herein. Members of the Board who are eligible for or who have
been granted Plan Share Awards by the Committee may not vote on any matters
affecting the administration of the Plan or the grant of Plan Shares or Plan
Share Awards (although such members may be counted in determining the existence
of a quorum at any meeting of the Board during which actions are taken).
Further, with respect to all actions taken by the Board in regard to the Plan,
such action shall be taken by a majority of the Board where such a majority of
the Directors acting in the matter are "disinterested persons" within the
meaning of Rule 16b-3 promulgated under the 1934 Act.
4.03 Limitation on Liability. No member of the Board, the Committee or the
Trustee shall be liable for any determination made in good faith with respect to
the Plan or any Plan Share Awards granted in accordance with the Plan. If a
member of the Board, the Committee or any Trustee is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by any
reason of anything done or not done by him in such capacity under or with
respect to the Plan, the Parent and the Savings Bank shall indemnify such member
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him or her in connection with
such action, suit or proceeding if he or she acted in good faith and in a manner
he or she reasonably believed to be in the best interests of the Parent and its
Subsidiaries and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Article V
---------
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Board of Directors of the
Savings Bank shall determine the amounts (or the method of computing the
amounts) to be contributed by the Savings Bank to the Trust established under
this Plan. Such amounts shall be paid to the Trustee at the time of
contribution. No contributions to the Trust by Recipients shall be permitted
except with respect to amounts necessary to meet tax withholding obligations.
5.02 Initial Investment. Any funds held by the Trust prior to investment in
the Common Stock shall be invested by the Trustee in such interest-bearing
account or accounts at the Savings Bank as the Trustee shall determine to be
appropriate.
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5.03 Investment of Trust Assets. Following approval of the Plan by
stockholders of the Parent and receipt of any other necessary regulatory
approvals, the Trust shall purchase Common Stock of the Parent in an amount
equal to up to 100% of the Trust's assets, after providing for any required
withholding as needed for tax purposes, provided, however, that the Trust shall
not purchase more than 268,075 shares of Common Stock, representing 2% of the
aggregate shares of Common Stock sold by the Parent in the Holding Company
reorganization of the Savings Bank ("Conversion"). The Trustee may purchase
shares of Common Stock in the open market or, in the alternative, may purchase
authorized but unissued shares of the Common Stock or treasury shares from the
Parent sufficient to fund the Plan Share Reserve.
5.04 Effect of Allocations, Returns and Forfeitures Upon Plan Share
Reserves. Upon the allocation of Plan Share Awards under Sections 6.02 and 6.05,
or the decision of the Committee to return Plan Shares to the Parent, the Plan
Share Reserve shall be reduced by the number of Shares subject to the Awards so
allocated or returned. Any Shares subject to an Award which are not be earned
because of forfeiture by the Recipient pursuant to Section 7.01 shall be added
to the Plan Share Reserve.
Article VI
----------
ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Employees are eligible to receive Plan Share Awards
within the sole discretion of the Committee. Directors shall be awarded Plan
Share Awards in accordance with Section 6.05.
6.02 Allocations. The Committee will determine which of the Employees will
be granted Plan Share Awards and the number of Shares covered by each Award,
provided, however, that in no event shall any Awards be made which will violate
the Charter or Bylaws of the Savings Bank or its Parent or Subsidiaries or any
applicable federal or state law or regulation. In the event Shares are forfeited
for any reason or additional Shares are purchased by the Trustee, the Committee
may, from time to time, determine which of the Employees will be granted Plan
Share Awards to be awarded from forfeited Shares. In selecting those Employees
to whom Plan Share Awards will be granted and the number of shares covered by
such Awards, the Committee shall consider the position duties and
responsibilities of the Employees, the value of their services to the Savings
Bank and its Subsidiaries, and any other factors the Committee may deem
relevant. All actions by the Committee shall be deemed final, except to the
extent that such actions are revoked by the Board. Notwithstanding anything
herein to the contrary, in no event shall any Employee receive Plan Share Awards
in excess of 25% of the aggregate Plan Shares authorized under the Plan.
6.03 Form of Allocation. As promptly as practicable after a determination
is made pursuant to Sections 6.02 and 6.05 that a Plan Share Award is to be
made, the Committee shall notify the Recipient in writing of the grant of the
Award, the number of Plan Shares covered by the Award, and the terms upon which
the Plan Shares subject to the award may be earned. The date on which the
Committee so notifies the Recipient shall be considered the date of grant of the
Plan Share Awards. The Committee shall maintain records as to all grants of Plan
Share Awards under the Plan.
6.04 Allocations Not Required. Notwithstanding anything to the contrary in
Sections 6.01, 6.02, and 6.05, no Employee shall have any right or entitlement
to receive a Plan Share Award hereunder, such Awards being at the total
discretion of the Committee and the Board, nor shall the Employees as a group
have such a right. The Committee may, with the approval of the Board (or, if so
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<PAGE>
directed by the Board) return all Common Stock in the Plan Share Reserve to the
Savings Bank at any time, and cease issuing Plan Share Awards.
6.05 Awards to Directors. Notwithstanding anything herein to the contrary,
upon the Effective Date, a Plan Share Award consisting of 1,000 Plan Shares
shall be awarded to each Director of the Savings Bank that is not otherwise an
Employee (excluding Director Polly Baca). Such Plan Share Award shall be earned
and non-forfeitable at the rate of one-fifth as of the one-year anniversary of
the Effective Date and an additional one-fifth following each of the next four
successive years during such periods of service as a Director or Director
Emeritus. Further, such Plan Share Award shall be immediately 100% earned and
non-forfeitable in the event of the death or Disability of such Director, or
upon a change in control of the Savings Bank or Parent as provided in Section
7.01(d); provided that such accelerated vesting is not inconsistent with
applicable regulations of the Office of Thrift Supervision ("OTS") or other
appropriate banking regulator at the time of such change in control. Subsequent
to the Effective Date, Plan Share Awards may be awarded to newly elected or
appointed Directors of the Savings Bank by the Committee, provided that total
Plan Share Awards granted to non-employee Directors of the Savings Bank shall
not exceed 30% of the total Plan Share Reserve in the aggregate under the Plan
or 5% of the total Plan Share Reserve to any individual non-employee Director.
Article VII
-----------
EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earnings Plan Shares; Forfeitures.
(a) General Rules. Unless the Committee shall specifically state to the
contrary at the time a Plan Share Award is granted, Plan Shares subject to an
Award shall be earned and non-forfeitable by a Recipient at the rate of
one-fifth of such Award following one year after the granting of such Award, and
an additional one-fifth following each of the next four successive years;
provided that such Recipient remains an Employee, Director or Director Emeritus
during such period. Notwithstanding anything herein to the contrary, in no event
shall a Plan Share Award granted hereunder be earned and non- forfeitable by a
Recipient more rapidly than at the rate of one-fifth of such Award as of the one
year anniversary of the date of grant and an additional one-fifth following each
of the next four successive years.
(b) Revocation for Misconduct. Notwithstanding anything herein to the
contrary, the Board may, by resolution, immediately revoke, rescind and
terminate any Plan Share Award, or portion thereof, previously awarded under
this Plan, to the extent Plan Shares have not been delivered thereunder to the
Recipient, whether or not yet earned, in the case of a Recipient who is
discharged from the employ or service of the Parent, Savings Bank or a
Subsidiary for Cause (as hereinafter defined), or who is discovered after
termination of employment or service to have engaged in conduct that would have
justified termination for cause. "Cause" is defined as personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profits, intentional failure to perform stated duties, willful violation of a
material provision of any law, rule or regulation (other than traffic violations
and similar offense), or a material violation of a final cease-and-desist order
or any other action which results in a substantial financial loss to the Parent,
Savings Bank or its Subsidiaries. A determination of "Cause" shall be made by
the Board within its sole discretion.
(c) Exception for Terminations Due to Death or Disability. Notwithstanding
the general rule contained in Section 7.01(a) above, all Plan Shares subject to
a Plan Share Award held by a Recipient whose employment or service with the
Parent, Savings Bank or a Subsidiary terminates due to
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<PAGE>
death or Disability, shall be deemed earned and nonforfeitable as of the
Recipient's last date of employment or service with the Parent, Savings Bank or
Subsidiary and shall be distributed as soon as practicable thereafter.
(d) Exception for Termination after a Change in Control. Notwithstanding
the general rule contained in Section 7.01 above, all Plan Shares subject to a
Plan Share Award held by a Recipient shall be deemed to be immediately 100%
earned and non-forfeitable in the event of a "change in control" of the Parent
or Savings Bank and shall be distributed as soon as practicable thereafter;
provided that such accelerated vesting is not inconsistent with applicable
regulations of the OTS or other appropriate banking regulator at the time of
such change in control. For purposes of this Plan, "change in control" shall
mean: (i) the execution of an agreement for the sale of all, or a material
portion, of the assets of the Parent or Savings Bank; (ii) the execution of an
agreement for a merger or recapitalization of the Parent or Savings Bank or any
merger or recapitalization whereby the Parent or Savings Bank is not the
surviving entity; (iii) a change in control of the Parent or Savings Bank, as
otherwise defined or determined by the Office of Thrift Supervision or
regulations promulgated by it; or (iv) the acquisition, directly or indirectly,
of the beneficial ownership (within the meaning of that term as it is used in
Section 13(d) of the 1934 Act and the rules and regulations promulgated
thereunder) of twenty-five percent (25%) or more of the outstanding voting
securities of the Parent or Savings Bank by any person, trust, entity or group.
This limitation shall not apply to the purchase of shares of up to 25% of any
class of securities of the Parent or Savings Bank by a tax-qualified employee
stock benefit plan which is exempt from the approval requirements, set forth
under 12 C.F.R. ss.574.3(c)(1)(vi) as now in effect or as may hereafter be
amended. The term "person" refers to an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of entity not
specifically listed herein. The decision of the Committee as to whether a change
in control has occurred shall be conclusive and binding.
7.02 Accrual and Payment of Dividends. A holder of a Plan Share Award,
whether or not non-forfeitable, shall also be entitled to receive an amount
equal to any cash dividends declared and paid with respect to shares of Common
Stock represented by such Plan Share Award between the date the relevant Plan
Share Award was granted to such Recipient and the date the Plan Shares are
distributed. Such cash dividend amounts shall be held in arrears under the Trust
and distributed upon the earning of the applicable Plan Share Award. Such
payments shall also include an appropriate amount of earnings, if any, of the
Trust with respect to any cash dividends so distributed.
7.03 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Except as provided in
Subsections (d) and (e) below, Plan Shares shall be distributed to the Recipient
or his Beneficiary, as the case may be, as soon as practicable after they have
been earned. No fractional shares shall be distributed. Notwithstanding anything
herein to the contrary, at the discretion of the Committee, Plan Shares may be
distributed prior to such Shares being 100% earned, provided that such Plan
Shares shall contain a restrictive legend detailing the applicable limitations
of such shares with respect to transfer and forfeiture.
(b) Form of Distribution. All Plan Shares, together with any shares
representing stock dividends, shall be distributed in the form of Common Stock.
One share of Common Stock shall be given for each Plan Share earned. Payments
representing cash dividends (and earnings thereon) shall be made in cash.
Notwithstanding anything within the Plan to the contrary, upon a Change in
Control whereby substantially all of the Common Stock of the Company shall be
acquired for cash, all Plan Shares associated with Plan Share Awards, together
with any shares representing stock dividends associated with Plan Share Awards,
shall be, at the sole discretion of the Committee, distributed as of
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the effective date of such Change in Control, or as soon as administratively
feasible thereafter, in the form of cash equal to the consideration received in
exchange for such Common Stock represented by such Plan Shares.
(c) Withholding. The Trustee may withhold from any payment or distribution
made under this Plan sufficient amounts of cash or shares of Common Stock
necessary to cover any applicable withholding and employment taxes, and if the
amount of such payment or distribution is not sufficient, the Trustee may
require the Recipient or Beneficiary to pay to the Trustee the amount required
to be withheld in taxes as a condition of delivering the Plan Shares. The
Trustee shall pay over to the Parent, Savings Bank or Subsidiary which employs
or employed such recipient any such amount withheld from or paid by the
Recipient or Beneficiary.
(d) Timing: Exception for 10% Shareholders. Notwithstanding Subsection (a)
above, no Plan Shares may be distributed prior to the date which is five (5)
years from the effective date of the Savings Bank's Conversion to the extent the
Recipient or Beneficiary, as the case may be, would after receipt of such Shares
own in excess of ten percent (10%) of the issued and outstanding shares of
Common Stock held by parties other than Parent, unless such action is approved
in advance by a majority vote of disinterested directors of the Board of the
Parent. Any Plan Shares remaining undistributed solely by reason of the
operation of this Subsection (d) shall be distributed to the Recipient or his
Beneficiary on the date which is five years from the effective date of the
Savings Bank's Conversion.
(e) Regulatory Exceptions. No Plan Shares shall be distributed, however,
unless and until all of the requirements of all applicable law and regulation
shall have been fully complied with, including the receipt of approval of the
Plan by the stockholders of the Parent by such vote, if any, as may be required
by applicable law and regulations as determined by the Board.
7.04 Voting of Plan Shares. After a Plan Share Award has become earned and
non- forfeitable, the Recipient shall be entitled to direct the Trustee as to
the voting of the Plan Shares which are associated with the Plan Share Award and
which have not yet been distributed pursuant to Section 7.03, subject to rules
and procedures adopted by the Committee for this purpose. All shares of Common
Stock held by the Trust as to which Recipients are not entitled to direct, or
have not directed, the voting of such Shares, shall be voted by the Trustee as
directed by the Committee.
Article VIII
------------
TRUST
8.01 Trust. The Trustee shall receive, hold, administer, invest and make
distributions and disbursements from the Trust in accordance with the provisions
of the Plan and Trust and the applicable directions, rules, regulations,
procedures and policies established by the Committee pursuant to the Plan.
8.02 Management of Trust. It is the intention of this Plan and Trust that
the Trustee shall have complete authority and discretion with respect to the
management, control and investment of the Trust, and that the Trustee shall
invest all assets of the Trust, except those attributable to cash dividends paid
with respect to Plan Shares not held in the Plan Share Reserve, in Common Stock
to the fullest extent practicable, and except to the extent that the Trustee
determines that the holding of monies in cash or cash equivalents is necessary
to meet the obligations of the Trust. In performing their duties, the Trustees
shall have the power to do all things and execute such instruments as may be
deemed necessary or proper, including the following powers:
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(a) To invest up to one hundred percent (100%) of all Trust
assets in the Common Stock without regard to any law now or hereafter
in force limiting investments for Trustees or other fiduciaries. The
investment authorized herein may constitute the only investment of the
Trust, and in making such investment, the Trustee is authorized to
purchase Common Stock from the Parent or from any other source, and
such Common Stock so purchased may be outstanding, newly issued, or
treasury shares.
(b) To invest any Trust assets not otherwise invested in
accordance with (a) above in such deposit accounts, and certificates
of deposit (including those issued by the Savings Bank), obligations
of the United States government or its agencies or such other
investments as shall be considered the equivalent of cash.
(c) To sell, exchange or otherwise dispose of any property at any
time held or acquired by the Trust.
(d) To cause stocks, bonds or other securities to be registered
in the name of a nominee, without the addition of words indicating
that such security is an asset of the Trust (but accurate records
shall be maintained showing that such security is an asset of the
Trust).
(e) To hold cash without interest in such amounts as may be in
the opinion of the Trustee reasonable for the proper operation of the
Plan and Trust.
(f) To employ brokers, agents, custodians, consultants and
accountants.
(g) To hire counsel to render advice with respect to their
rights, duties and obligations hereunder, and such other legal
services or representation as they may deem desirable.
(h) To hold funds and securities representing the amounts to be
distributed to a Recipient or his Beneficiary as a consequence of a
dispute as to the disposition thereof, whether in a segregated account
or held in common with other assets.
Notwithstanding anything herein contained to the contrary, the Trustee
shall not be required to make any inventory, appraisal or settlement or report
to any court, or to secure any order of a court for the exercise of any power
herein contained, or to maintain bond.
8.03 Records and Accounts. The Trustee shall maintain accurate and detailed
records and accounts of all transactions of the Trust, which shall be available
at all reasonable times for inspection by any legally entitled person or entity
to the extent required by applicable law, or any other person determined by the
Committee.
8.04 Earnings. All earnings, gains and losses with respect to Trust assets
shall be allocated in accordance with a reasonable procedure adopted by the
Committee, to bookkeeping accounts for Recipients or to the general account of
the Trust, depending on the nature and allocation of the assets generating such
earnings, gains and losses. In particular, any earnings on cash dividends
received with respect to shares of Common Stock shall be allocated to accounts
for Recipients, except to the extent that such cash dividends are distributed to
Recipients, if such shares are the subject of outstanding Plan Share Awards, or,
otherwise to the Plan Share Reserve.
8.05 Expenses. All costs and expenses incurred in the operation and
administration of this Plan, including those incurred by the Trustee, shall be
paid by the Savings Bank.
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8.06 Indemnification. Subject to the requirements and limitations of
applicable laws and regulations, the Parent and the Savings Bank shall
indemnify, defend and hold the Trustee harmless against all claims, expenses and
liabilities arising out of or related to the exercise of the Trustee's powers
and the discharge of their duties hereunder, unless the same shall be due to
their gross negligence or willful misconduct.
Article IX
----------
MISCELLANEOUS
9.01 Adjustments for Capital Changes. The aggregate number of Plan Shares
available for issuance pursuant to the Plan Share Awards and the number of
Shares to which any Plan Share Award relates shall be proportionately adjusted
for any increase or decrease in the total number of outstanding shares of Common
Stock issued subsequent to the effective date of the Plan resulting from any
split, subdivision or consolidation of the Common Stock or other capital
adjustment, change or exchange of the Common Stock or other increase or decrease
in the number or kind of shares effected without receipt or payment of
consideration by the Parent.
9.02 Amendment and Termination of the Plan. The Board may, by resolution,
at any time, amend or terminate the Plan. The power to amend or terminate the
Plan shall include the power to direct the Trustee to return to the Parent all
or any part of the assets of the Trust, including shares of Common Stock held in
the Plan Share Reserve, as well as shares of Common Stock and other assets
subject to Plan Share Awards which have not yet been earned by the Recipients to
whom they have been awarded. However, the termination of the Trust shall not
affect a Recipient's right to earn Plan Share Awards and to the distribution of
Common Stock relating thereto, including earnings thereon, in accordance with
the terms of this Plan and the grant by the Committee or the Board.
Notwithstanding the foregoing, no action of the Board may increase (other than
as provided in Section 9.01 hereof) the maximum number of Plan Shares permitted
to be awarded under the Plan as specified at Section 5.03, materially increase
the benefits accruing to Recipients under the Plan or materially modify the
requirements for eligibility for participation in the Plan unless such action of
the Board shall be subject to ratification by the stockholders of the Parent.
9.03 Nontransferable. Plan Share Awards and rights to Plan Shares shall not
be transferable by a Recipient, and during the lifetime of the Recipient, Plan
Shares may only be earned by and paid to the Recipient who was notified in
writing of the Award by the Committee pursuant to Section 6.03. No Recipient or
Beneficiary shall have any right in or claim to any assets of the Plan or Trust,
nor shall the Parent, Savings Bank, or any Subsidiary be subject to any claim
for benefits hereunder.
9.04 No Employment Rights. Neither the Plan nor any grant of a Plan Share
Award or Plan Shares hereunder nor any action taken by the Trustee, the
Committee or the Board in connection with the Plan shall create any right,
either express or implied, on the part of any Recipient to continue in the
employ or service of the Parent, Savings Bank, or a Subsidiary thereof.
9.05 Voting and Dividend Rights. No Recipient shall have any voting or
dividend rights of a stockholder with respect to any Plan Shares covered by a
Plan Share Award, except as expressly provided in Sections 7.02 and 7.04 above,
prior to the time said Plan Shares are actually distributed to such Recipient.
9.06 Governing Law. The Plan and Trust shall be governed by and construed
under the laws of the State of Colorado, except to the extent that Federal Law
shall be deemed applicable.
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<PAGE>
9.07 Effective Date. The Plan shall be effective as of the date of approval
of the Plan by stockholders of the Parent, subject to the receipt of approval or
non-objection by the OTS or other applicable banking regulator, if applicable.
9.08 Term of Plan. This Plan shall remain in effect until the earlier of
(i) termination by the Board, (ii) the distribution of all assets of the Trust,
or (iii) 21 years from the Effective Date. Termination of the Plan shall not
effect any Plan Share Awards previously granted, and such Awards shall remain
valid and in effect until they have been earned and paid, or by their terms
expire or are forfeited.
9.09 Tax Status of Trust. It is intended that the Trust established hereby
shall be treated as a grantor trust of the Savings Bank under the provisions of
Section 671 et seq. of the Internal Revenue Code of 1986, as amended, as the
same may be amended from time to time.
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<PAGE>
ANNEX C
REVOCABLE PROXY
FIRST COLORADO BANCORP, INC.
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SPECIAL MEETING OF STOCKHOLDERS
JULY 24, 1996
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The undersigned hereby appoints the official proxy committee of the Board
of Directors of the First Colorado Bancorp, Inc. (the "Company") with full
powers of substitution to act, as attorneys and proxies for the undersigned, to
vote all shares of common stock of the Company that the undersigned is entitled
to vote at the Special Meeting of Stockholders (the "Meeting"), to be held at
the Denver Marriott West, 1717 Denver West Marriott Boulevard, Golden, Colorado,
on Wednesday, July 24, 1996, at 3:00 p.m. and at any and all adjournments
thereof, as follows:
FOR AGAINST ABSTAIN
--- ------- -------
1. The approval of the First Colorado
Bancorp, Inc. 1996 Stock Option Plan. |_| |_| |_|
2. The approval of the First Federal Bank
of Colorado Management Stock Bonus Plan. |_| |_| |_|
The Board of Directors recommends a vote "FOR" all of the listed
propositions.
- -------------------------------------------------------------------------------
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, A
SIGNED PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. 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. THIS PROXY ALSO
CONFERS DISCRETIONARY AUTHORITY ON THE OFFICIAL PROXY COMMITTEE TO VOTE WITH
RESPECT TO MATTERS INCIDENT TO THE CONDUCT OF THE MEETING.
- -------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elects to vote at the Meeting, or at
any adjournment thereof, and after notification to the Secretary of the Company
at the Meeting of the stockholder's decision to terminate this proxy, the power
of said attorneys and proxies shall be deemed terminated and of no further force
and effect. The undersigned may also revoke this proxy by filing a subsequently
dated proxy or by written notification to the Secretary of the Company of his or
her decision to terminate this proxy.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of Notice of the Meeting and a proxy statement dated
June 10, 1996.
Dated:_____________________ , 1996 |_| Please check here if you plan to attend
the Meeting.
- ------------------------- -------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
- ------------------------- -------------------------
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
Please sign exactly as your name appears on the enclosed card. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
- -------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.
- -------------------------------------------------------------------------------
<PAGE>
ANNEX D
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
First Colorado Bancorp, Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the filing
fee is calculated and state how it was determined.)
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total fee paid:
- -------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- -------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
- -------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- -------------------------------------------------------------------------------
(3) Filing Party:
- -------------------------------------------------------------------------------
(4) Date Filed:
- -------------------------------------------------------------------------------
