<PAGE> 1
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
/X/ DEFINITIVE PROXY STATEMENT (AS PERMITTED BY RULE 14a-6(e)(2))
/ / DEFINITIVE ADDITIONAL MATERIALS
/ / SOLICITING MATERIAL PURSUANT TO RULE 14a-11(c) OR RULE 14a-12
PITTSBURGH HOME FINANCIAL CORP.
- --------------------------------------------------------------------------------
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ NO FEE REQUIRED.
/ / FEE COMPUTED ON TABLE BELOW PER EXCHANGE ACT RULES 14a-6(I)(1) AND 0-11.
(1) TITLE OF EACH CLASS OF SECURITIES TO WHICH TRANSACTION
APPLIES: _______________________
(2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
__________________________
(3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION
COMPUTED PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FORTH THE
AMOUNT ON WHICH THE FILING FEE IS CALCULATED AND STATE HOW IT
WAS DETERMINED): ______________________________________
(4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION: _____________
(5) TOTAL FEE PAID: ______________________________________________
/ / FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
/ / CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT
RULE 0-11(a)(2) AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE
WAS PAID PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRATION
STATEMENT NUMBER, OR THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
(1) AMOUNT PREVIOUSLY PAID: ______________________________________
(2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.: ________________
(3) FILING PARTY: ________________________________________________
(4) DATE FILED: __________________________________________________
<PAGE> 2
December 27, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Pittsburgh Home Financial Corp. The meeting will be held at The Library
Center, GRW Theatre, Second Level, 414 Wood Street, Pittsburgh, Pennsylvania, on
Thursday, January 27, 2000 at 11:00 a.m., Eastern Time. The matters to be
considered by stockholders at the Annual Meeting are described in the
accompanying materials.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend the
meeting in person. We urge you to mark, sign, and date your proxy card today and
return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are unable to attend.
Your continued support of and interest in Pittsburgh Home Financial
Corp. are sincerely appreciated.
Sincerely,
/s/ J. Ardie Dillen
J. Ardie Dillen
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
PITTSBURGH HOME FINANCIAL CORP.
225 ROSS STREET
PITTSBURGH, PENNSYLVANIA 15219
(412) 227-1945
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 27, 2000
------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Pittsburgh Home Financial Corp. (the "Company") will be held at The
Library Center, GRW Theatre, Second Level, 414 Wood Street, Pittsburgh,
Pennsylvania, on Thursday, January 27, 2000 at 11:00 a.m., Eastern Time, for the
following purposes, all of which are more completely set forth in the
accompanying Proxy Statement:
(1) To elect two (2) directors for a three-year term or until
their successors are elected and qualified;
(2) To approve the adoption of the 2000 Stock Option Plan;
(3) To amend the Company's Amended and Restated Articles of
Incorporation to change the corporate name to Pittsburgh
Financial Corp.;
(4) To ratify the appointment by the Board of Directors of Ernst &
Young LLP as the Company's independent auditors for the fiscal
year ending September 30, 2000;
(5) If necessary, to adjourn the Annual Meeting to solicit
additional proxies; and
(6) To transact such other business as may properly come before
the meeting or any adjournment thereof. Management is not
aware of any other such business.
The Board of Directors has fixed December 17, 1999 as the voting record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting and at any adjournment thereof. Only those stockholders of
record as of the close of business on that date will be entitled to vote at the
Annual Meeting or at any such adjournment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gregory G. Maxcy
Gregory G. Maxcy
Secretary
Pittsburgh, Pennsylvania
December 27, 1999
- --------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
- --------------------------------------------------------------------------------
<PAGE> 4
PITTSBURGH HOME FINANCIAL CORP.
-----------
PROXY STATEMENT
-----------
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 27, 2000
This Proxy Statement is furnished to holders of common stock, $0.01 par
value per share ("Common Stock"), of Pittsburgh Home Financial Corp. (the
"Company"), a Pennsylvania corporation and registered bank holding company for
Pittsburgh Home Savings Bank (the "Savings Bank"). Proxies are being solicited
on behalf of the Board of Directors of the Company to be used at the Annual
Meeting of Stockholders ("Annual Meeting") to be held at The Library Center, GRW
Theatre, Second Level, 414 Wood Street, Pittsburgh, Pennsylvania, on Thursday,
January 27, 2000 at 11:00 a.m., Eastern Time, and at any adjournment thereof for
the purposes set forth in the Notice of Annual Meeting of Stockholders. This
Proxy Statement is first being mailed to stockholders on or about December 27,
1999.
The proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted (i) FOR the nominees for director described herein;
(ii) FOR adoption of the 2000 Stock Option Plan; (iii) FOR approval of the
proposed amendment ("Amendment") to the Company's Amended and Restated Articles
of Incorporation to change the corporate name to Pittsburgh Financial Corp.;
(iv) FOR ratification of the appointment of Ernst & Young LLP for fiscal 2000;
(v) FOR adjournment as to any matter, if required; and (vi) upon the transaction
of such other business as may properly come before the meeting in accordance
with the best judgment of the persons appointed as proxies. Any stockholder
giving a proxy has the power to revoke it at any time before it is exercised by
(i) filing with the Secretary of the Company written notice thereof (Secretary,
Pittsburgh Home Financial Corp., 225 Ross Street, Pittsburgh, Pennsylvania
15219); (ii) submitting a duly-executed proxy bearing a later date; or (iii)
appearing at the Annual Meeting and giving the Secretary notice of his or her
intention to vote in person. Proxies solicited hereby may be exercised only at
the Annual Meeting and any adjournment thereof and will not be used for any
other meeting.
VOTING
Only stockholders of record at the close of business on December 17,
1999 ("Voting Record Date") will be entitled to vote at the Annual Meeting and
at any adjournment thereof. On the Voting Record Date, there were 1,770,848
shares of Common Stock outstanding and the Company had no
<PAGE> 5
other class of equity securities outstanding. Each share of Common Stock is
entitled to one vote at the Annual Meeting on all matters properly presented at
the meeting. Directors are elected by a plurality of the votes cast with a
quorum present. The two persons who receive the greatest number of votes of the
holders of Common Stock represented in person or by proxy at the Annual Meeting
will be elected directors of the Company. Abstentions are considered in
determining the presence of a quorum and will not affect the vote required for
the election of directors. The affirmative vote of the holders of a majority of
the total votes eligible to be cast at the Annual Meeting is required for
approval of the proposals to approve the 2000 Stock Option Plan and the
Amendment. Abstentions will have the same effect as a vote against these
proposals. The affirmative vote of the holders of a majority of the total votes
present in person or by proxy is required to ratify the appointment of the
independent auditors. Abstentions will not be counted as votes cast, and
accordingly will have no effect on the voting of this proposal. A majority of
the total votes present in person and by proxy will be required to adjourn the
Annual Meeting, if such action is required to be voted on. Under rules of the
New York Stock Exchange, all of the proposals for consideration at the Annual
Meeting are considered "discretionary" items upon which brokerage firms may vote
in their discretion on behalf of their clients if such clients have not
furnished voting instructions. Thus, there are no proposals to be considered at
the Annual Meeting which are considered "non-discretionary" and for which there
will be "broker non-votes."
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, each of which
contains approximately one-third of the Board. The directors are elected by the
stockholders of the Company for staggered three year terms, or until their
successors are elected and qualified. Stockholders of the Company are not
permitted to cumulate their votes for the election of directors.
No director, executive officer or nominee for director of the Company
is related to any other director or executive officer of the Company by blood,
marriage or adoption. All of the nominees currently serve as a director of the
Company.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted FOR the election of the nominees for director listed
below. If the person or persons named as nominee should be unable or unwilling
to stand for election at the time of the Annual Meeting, the proxies will
nominate and vote for one or more replacement nominees recommended by the Board
of Directors. At this time, the Board of Directors knows of no reason why the
nominees listed below may not be able to serve as directors if elected.
- 2 -
<PAGE> 6
The following tables present information concerning the nominees for
director of the Company and each director whose term continues.
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2003
<TABLE>
<CAPTION>
Director
Name Age(1) Since(2)
---- ------ --------
<S> <C> <C>
J. Ardie Dillen 41 1992
Kenneth R. Rieger 54 1997
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
ABOVE NOMINEES FOR DIRECTOR.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
DIRECTORS WHOSE TERMS EXPIRE IN 2001
<TABLE>
<CAPTION>
Director
Name Age(1) Since(2)
---- ------ --------
<S> <C> <C>
Gregory G. Maxcy 45 1986
Richard F. Lerach 59 1990
James M. Droney, Jr. 47 1997
</TABLE>
DIRECTORS WHOSE TERMS EXPIRE IN 2002
<TABLE>
<CAPTION>
Director
Name Age(1) Since(2)
---- ------ --------
<S> <C> <C>
Stephen Spolar 78 1986
Charles A. Topnick 72 1990
Joseph G. Lang 74 1986
</TABLE>
- ----------
(1) As of December 17, 1999.
(2) Includes service as a director of the Savings Bank.
- 3 -
<PAGE> 7
Information concerning the principal position with the Company and the
Savings Bank and principal occupation of each nominee for director and members
of the Board continuing in office during the past five years is set forth below.
J. Ardie Dillen. Mr. Dillen was named Chairman of the Board of the
Company and the Savings Bank in November 1996 and August 1997, respectively. Mr.
Dillen is President and Chief Executive Officer of the Savings Bank and has held
the same position with the Company since its inception in September 1995. Mr.
Dillen has been President and Chief Executive Officer of the Savings Bank since
1992 and was Senior Vice President of Finance and Administration of the Savings
Bank from 1986 to 1992. Prior to joining the Savings Bank, Mr. Dillen was an
auditor with Main Hurdman, Pittsburgh, Pennsylvania, a certified public
accounting firm, from 1980 to 1986. Mr. Dillen is a certified public accountant.
Joseph G. Lang. Mr. Lang has been retired since 1991. Prior thereto,
from 1961 to 1991, Mr. Lang was an associate architect with W.D. Slowik &
Associates, Pittsburgh, Pennsylvania, an architectural firm, and also was
employed by its predecessor firms.
Richard F. Lerach. Mr. Lerach has been Assistant General Counsel with
U.S. Steel Group, a unit of USX Corporation, Pittsburgh, Pennsylvania, since
1985 and has been an attorney with such corporation since 1968.
Gregory G. Maxcy. Mr. Maxcy has been Executive Vice President of the
Company and the Savings Bank since January 1998 and Secretary of the Company and
the Savings Bank since July 1997 and January 1999, respectively. Mr. Maxcy
served as Senior Vice President of the Company and Senior Vice President of the
Savings Bank from May 1997 to January 1998. Mr. Maxcy was President of Maxcy,
Gmys & Company, PC, Pittsburgh, Pennsylvania, a certified public accounting
firm, from 1992 to May 1997. Mr. Maxcy also was employed by Resource Capital,
Inc., Pittsburgh, Pennsylvania, an investment management services and financial
planning company, from 1988 to 1994. Mr. Maxcy is a certified public accountant
and a certified financial planner. Mr. Maxcy is the son of Kenneth F. Maxcy, Jr.
Stephen Spolar. Mr. Spolar has been retired since 1992. Mr. Spolar was
President and Chief Executive Officer of the Savings Bank from 1986 to 1992. Mr.
Spolar has been a director of the Savings Bank since 1986 and served as an
officer of the Savings Bank from 1961 to 1986.
Charles A. Topnick. Mr. Topnick has been retired since 1992. Mr.
Topnick served as Senior Vice President of the Savings Bank from 1991 to 1992.
From 1983 to 1991, Mr. Topnick was President of Columbia Savings and Loan
Association, Pittsburgh, Pennsylvania.
James M. Droney, Jr. Mr. Droney has been the President and Chief
Executive Officer of Mt. Lebanon Office Equipment Co. Inc., Pittsburgh,
Pennsylvania, an office equipment retailer, since 1976.
- 4 -
<PAGE> 8
Kenneth R. Rieger. Mr. Rieger has been Vice President and co-founder of
G&R Investment Consultants, Inc., Pittsburgh, Pennsylvania, an investment
advisory firm, since January 1980.
DIRECTOR EMERITI
Effective December 1998, Messrs. Jess B. Mellor and Kenneth F. Maxcy,
Jr. became Director Emeriti of the Savings Bank. Mr. Mellor was Secretary of the
Savings Bank from 1955 to December 1998. Mr. Mellor served as Secretary of the
Company from its inception in September 1995 to June 1997. Mr. Mellor is retired
and was formerly Vice President of the Savings Bank from 1954 to 1986. Mr.
Mellor was with the Savings Bank from its inception in 1942 to 1998 and was a
director of the Savings Bank from 1954 to 1998. Mr. Maxcy has been retired since
1985. Mr. Maxcy was Assistant to the Chairman of Wheeling Pittsburgh Steel
Corporation, Pittsburgh, Pennsylvania from 1975 to 1985. Mr. Maxcy is the father
of Gregory G. Maxcy.
STOCKHOLDER NOMINATIONS
Article 7.F. of the Company's Amended and Restated Articles of
Incorporation ("Articles") governs nominations for election to the Board of
Directors and requires all such nominations, other than those made by or at the
direction of the Board, to be made at a meeting of stockholders called for the
election of directors, and only by a stockholder who has complied with the
notice provisions in that section. Stockholder nominations must be made pursuant
to timely notice in writing to the Secretary of the Company. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the Company not later than 90 days prior to the
anniversary date of the mailing of proxy materials by the Company in connection
with the immediately preceding annual meeting of stockholders of the Company. No
such proposals were received. Each written notice of a stockholder nomination is
required to set forth certain information specified in the Articles.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES OF THE COMPANY AND THE SAVINGS BANK
Regular meetings and special meetings of the Board of Directors of the
Company are held as necessary. During the fiscal year ended September 30, 1999,
the Board of Directors met nine times. No director attended fewer than 75% of
the total number of Board meetings or committee meetings on which he served that
were held during this period. The entire Board of Directors of the Company acts
as a Nominating Committee. The Board of Directors of the Company has established
the following committees:
Executive Committee. The Executive Committee of the Company has the
authority to act on general Company matters between Board meetings. The members
of the Executive Committee were Messrs. Spolar (Chairman), Dillen, Gregory G.
Maxcy, Rieger and Topnick. The Executive Committee did not meet during fiscal
1999.
- 5 -
<PAGE> 9
Audit Committee. The Audit Committee of the Company recommends
independent auditors to the Board annually and reviews the Company's financial
statements and the scope and results of the audit performed by the Company's
independent auditors and the Company's system of internal control with
management and such independent auditors and reviews regulatory examination
reports. The Audit Committee, which was comprised of Messrs. Lerach (Chairman),
Droney, Spolar and Topnick, met four times during fiscal 1999.
The Compensation Committee of the Savings Bank's Board of Directors
reviews the compensation for the Savings Bank's officers, along with employee
benefits, and recommends to the Board adjustments in such compensation. See
"Management Compensation - Compensation Committee Interlocks and Insider
Participation." The members of the Compensation Committee were Messrs. Charles
A. Topnick (Chairman), Lang, Rieger and Spolar. Messrs. Spolar and Topnick
formerly served as officers of the Savings Bank. The Compensation Committee met
once during fiscal 1999.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is information concerning the executive officers of the
Company and the Savings Bank who do not serve on the Board of Directors of the
Company. All executive officers are elected by the Board of Directors and serve
until their successors are elected and qualified. No executive officer is
related to any director or other executive officer of the Company by blood,
marriage or adoption, and there are no arrangements or understandings between a
director of the Company and any other person pursuant to which such person was
elected an executive officer.
Michael J. Kirk. Mr. Kirk has been Executive Vice President since
January 1998 and Chief Financial Officer of the Company and the Savings Bank
since January 1996. Mr. Kirk served as Senior Vice President of the Company and
the Savings Bank from January 1996 to January 1998. Mr. Kirk became Vice
President and Chief Financial Officer of the Savings Bank in 1992 and was Vice
President and Chief Financial Officer of the Company from its inception in
September 1995 through January 1996. Mr. Kirk served as an Analyst and
Controller of Community Savings Association, Monroeville, Pennsylvania from 1988
to 1992 and as an auditor with Ernst & Whitney, the predecessor to Ernst &
Young, LLP, from 1985 to 1988. Mr. Kirk is a certified public accountant.
Joseph E. Archer. Mr. Archer has been Senior Vice President of Lending
of the Savings Bank since 1988. Mr. Archer served as Vice President of the
Savings Bank from 1986 to 1988 and Assistant Vice President from 1970 to 1986.
Mr. Archer joined the Savings Bank in 1962.
Albert L. Winters. Mr. Winters has been Senior Vice President of
Operations of the Savings Bank since 1994. Mr. Winters served as Vice President
of the Savings Bank from 1991 to 1993 and Assistant Vice President of the
Savings Bank from 1989 to 1990. Mr. Winters joined the Savings Bank in 1970.
- 6 -
<PAGE> 10
Patricia J. Nesbit. Ms. Nesbit has been Senior Vice President of Retail
Banking of the Savings Bank since January 1998. Ms. Nesbit served as Vice
President of Retail Banking of the Savings Bank from January 1996 to January
1998. Ms. Nesbit served as a Branch Manager of the Savings Bank from 1994 to
1995. Prior to 1994, Ms. Nesbit was employed by Integra Bank, Pittsburgh,
Pennsylvania and certain predecessor institutions from 1969 to 1994 as a Branch
Manager and in other related capacities.
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table on the following page sets forth, as of the Voting Record
Date, certain information as to the Common Stock beneficially owned by (i) each
person or entity, including any "group" as that term is used in Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended ("Exchange Act"), who or
which was known to the Company to be the beneficial owner of more than 5% of the
issued and outstanding Common Stock, (ii) the directors and nominees of the
Company, (iii) those executive officers of the Company whose salary and bonus
exceeded $100,000 in fiscal 1999, and (iv) all directors and executive officers
of the Company and the Savings Bank as a group.
- 7 -
<PAGE> 11
<TABLE>
<CAPTION>
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group December 17, 1999(1) Common Stock
------------------ -------------------- ------------
<S> <C> <C>
Pittsburgh Home Financial Corp. 191,493(2) 10.8%
Employee Stock Ownership Plan Trust
225 Ross Street
Pittsburgh, Pennsylvania 15219
John Hancock Mutual Life Insurance 160,000(3) 9.0
Company
John Hancock Subsidiaries, Inc.
John Hancock Place
P.O. Box 111
Boston, Massachusetts 02117
The Berkeley Financial Group, Inc.
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Jeffrey W. Tott 138,655(4) 7.8
Barberry Farm, Barberry Road
Sewickley, Pennsylvania 15143
J. Ardie Dillen 62,733(5)(6) 3.5
James M. Droney, Jr. 1,814(7) *
Michael J. Kirk 34,018(8) 1.9
Joseph G. Lang 8,402(9) *
Richard F. Lerach 46,578(10) 2.6
Gregory G. Maxcy 29,962(11) 1.7
Kenneth R. Rieger 6,655(12) *
Stephen Spolar 15,594(6)(10) *
Charles A. Topnick 13,378(6)(10) *
All directors and executive officers
of the Company and the Savings Bank
as a group (12 persons) 281,399(13) 15.1%
</TABLE>
(Footnotes on following page)
- 8 -
<PAGE> 12
- ----------
* Represents less than 1% of the outstanding Common Stock.
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange Act, shares of Common Stock are deemed to be
beneficially owned by a person if he or she directly or indirectly has
or shares (i) voting power, which includes the power to vote or to
direct the voting of the shares, or (ii) investment power, which
includes the power to dispose or to direct the disposition of the
shares. Unless otherwise indicated, the named beneficial owner has sole
voting and dispositive power with respect to the shares. Shares which
are subject to stock options and which may be exercised within 60 days
of December 17, 1999 are deemed to be outstanding for the purpose of
computing the percentage of Common Stock beneficially owned by such
person.
(2) The Pittsburgh Home Financial Corp. Employee Stock Ownership Plan Trust
("Trust") was established pursuant to the Pittsburgh Home Financial
Corp. Employee Stock Ownership Plan ("ESOP"). Messrs. J. Ardie Dillen,
Stephen Spolar and Charles A. Topnick act as trustees of the plan
("Trustees"). As of the Voting Record Date, 49,320 shares held in the
Trust had been allocated to the accounts of participating employees.
Under the terms of the ESOP, the Trustees will generally vote the
allocated shares held in the ESOP in accordance with the instructions
of the participating employees. Unallocated shares held in the ESOP
will generally be voted in the same ratio on any matter as those
allocated shares for which instructions are given, subject in each case
to the fiduciary duties of the ESOP trustees and applicable law. Any
allocated shares which either abstain on a proposal or are not voted
will be disregarded in determining the percentage of stock voted for
and against each proposal by the participants and beneficiaries. The
amount of Common Stock beneficially owned by directors who serve as
Trustees of the ESOP and by all directors and executive officers as a
group does not include the unallocated shares held by the Trust.
(3) Based on Amendment No. 1 to a Schedule 13G joint filing on February 1,
1999 made on behalf of John Hancock Mutual Life Insurance Company
("JHMLICO"), JHMLICO's direct, wholly-owned subsidiary, John Hancock
Subsidiaries, Inc. ("JHSI"), JHSI's direct, wholly-owned subsidiary,
The Berkeley Financial Group, Inc. ("TBFG") and TBFG's wholly-owned
subsidiary, John Hancock Advisers, Inc. ("JHA"). Pursuant to advisory
agreements dated July 21, 1994 and July 1, 1996, JHA has sole voting
and dispositive power as to 160,000 shares of Common Stock. Through
their parent-subsidiary relationship to JHA, JHMLICO, JHSI, and TBFG
have indirect, beneficial ownership of these same shares. 70,000 shares
are held by the John Hancock Regional Bank Fund and 90,000 shares are
held by the John Hancock Bank and Thrift Opportunity Fund.
(Footnotes continued on following page)
- 9 -
<PAGE> 13
- ----------
(4) Based on Amendment No. 2 to a Schedule 13D filing on November 30, 1999
by Mr. Tott.
(5) Includes 1,500 shares held by Mr. Dillen's spouse in her Individual
Retirement Account, 600 shares held by Mr. Dillen as custodian for his
children, 4,855 shares which are held by the ESOP which have been
allocated to the account of Mr. Dillen, and 24,148 shares which may be
acquired by Mr. Dillen upon the exercise of stock options.
(6) Excludes the shares held by the ESOP, of which the named director is
one of three trustees.
(7) Includes 1,100 shares which may be acquired by Mr. Droney, Jr. upon the
exercise of stock options.
(8) Includes 2,881 shares which are held by the ESOP which have been
allocated to the account of Mr. Kirk, and 13,074 shares which may be
acquired by Mr. Kirk upon the exercise of stock options.
(9) Includes 200 shares held by Mr. Lang's son and 4,109 shares which may
be acquired by Mr. Lang upon the exercise of stock options.
(10) Includes 4,909 shares which may be acquired by the named director upon
the exercise of stock options.
(11) Includes 1,872 shares which are held by the ESOP which have been
allocated to the account of Mr. Gregory G. Maxcy, and 9,582 shares
which may be acquired by Mr. Gregory G. Maxcy upon the exercise of
stock options.
(12) Includes 550 shares which may be acquired by Mr. Rieger upon the
exercise of stock options.
(13) Includes 93,878 shares which may be acquired by all directors and
executive officers of the Company and the Savings Bank as a group upon
the exercise of stock options. Also includes 16,150 shares which are
held by the Company's ESOP which have been allocated to the accounts of
executive officers.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers,
directors and persons who own more than 10% of the Company's Common Stock to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("Commission") and the National Association of Securities
Dealers, Inc. Officers, directors and greater than 10% stockholders are required
by regulation to furnish the Company with copies of all forms they file pursuant
to Section
- 10 -
<PAGE> 14
16(a) of the Exchange Act. The Company knows of no person, other than the
Company's ESOP, who owns more than 10% of the Company's Common Stock.
Based solely on review of the copies of such forms furnished to the
Company, or written representations from its officers and directors, the Company
believes that during, and with respect to, fiscal 1999, the Company's officers
and directors complied in all respects with the reporting requirements
promulgated under Section 16(a) of the Exchange Act.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The Company does not pay separate compensation to its officers. The
following table includes individual compensation information with respect to the
executive officers whose total compensation paid by the Savings Bank exceeded
$100,000 for services rendered in all capacities during the fiscal year ended
September 30, 1999.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------- -------------------
Restricted Number of All Other
Name and Principal Position Fiscal Year Salary (1) Bonus(2) Stock Awards Options Compensation
--------------------------- ----------- ---------- -------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
J. Ardie Dillen 1999 $150,000 $35,000 -- 6,000(3) $23,314(4)
Chairman, President and 1998 128,750 35,000 $ 27,750(5) 5,000(6) 20,481(4)
Chief Executive Officer 1997 106,875 20,000 182,640(7) 34,913(8) 29,063(4)
Gregory G. Maxcy 1999 $101,250 $22,500 -- 6,000(3) $15,736(9)
Executive Vice President 1998 86,250 10,000 $27,750(5) 3,500(6) 11,806(9)
1997 28,125(10) -- 141,759(11) 17,456(12) --
Michael J. Kirk 1999 $ 91,250 $22,500 -- 6,000(3) $14,183(13)
Executive Vice President and 1998 76,500 25,000 $55,500(5) 3,500(6) 12,163(13)
Chief Financial Officer 1997 63,500 12,000 91,314(7) 17,456(8) 17,262(13)
</TABLE>
- ----------
(1) Does not include amounts attributable to miscellaneous benefits
received by the named executive officers. In the opinion of management
of the Savings Bank, the costs to the Savings Bank of providing such
benefits to the named executive officers during the indicated period
did not exceed the lesser of $50,000 or 10% of the total of annual
salary and bonus reported.
(Footnotes continued on following page)
- 11 -
<PAGE> 15
- ----------
(2) Incentive bonuses were paid in January for goals achieved in the prior
fiscal year.
(3) Consists of stock options granted pursuant to the Company's Stock
Option Plan ("Stock Option Plan") which are exercisable at the rate of
20% each year beginning December 17, 1999.
(4) Represents $18,814, $16,618 and $25,857, the allocation on behalf of
Mr. Dillen under the Company's ESOP, and $4,500, $3,863 and $3,206 in
contributions pursuant to the Savings Bank's Thrift Plan, in each case
in fiscal 1999, 1998 and 1997, respectively. See "Benefits - Thrift
Plan."
(5) Represents the grant of 1,500 shares, 1,500 shares and 3,000 shares of
restricted Common Stock to Messrs. Dillen, Gregory G. Maxcy and Kirk,
respectively, pursuant to the Company's Recognition Plan, which were
deemed to have had the indicated value at the date of grant. The
restricted Common Stock awarded to Messrs. Dillen, Gregory G. Maxcy and
Kirk had a fair market value of $18,188, $18,188 and $36,375 at
September 30, 1999, respectively, based on the $12.125 per share
closing market price on September 30, 1999. The awards vest 20% each
year beginning December 18, 1998, and dividends are paid on restricted
shares.
(6) Consists of stock options granted pursuant to the Company's Stock
Option Plan which are exercisable at the rate of 20% each year
beginning December 18, 1998.
(7) Represents the grant of 15,711 shares and 7,855 shares of restricted
Common Stock to Messrs. Dillen and Kirk, respectively, pursuant to the
Company's Recognition Plan, which were deemed to have had the indicated
value at the date of grant. The restricted Common Stock awarded to
Messrs. Dillen and Kirk had a fair market value of $190,496 and $95,242
at September 30, 1999, respectively, based on the $12.125 per share
closing market price on September 30, 1999. The awards vest 20% each
year beginning October 15, 1997, and dividends are paid on restricted
shares.
(8) Consists of stock options granted pursuant to the Company's Stock
Option Plan which are exercisable at the rate of 20% each year
beginning October 15, 1997.
(9) Represents $12,698, and $11,131, the allocation on behalf of Mr.
Gregory G. Maxcy under the Company's ESOP, and $3,038 and $675 in
contributions pursuant to the Savings Bank's Thrift Plan, in each case
in fiscal 1999 and 1998, respectively. See "Benefits-Thrift Plan."
(10) Mr. Gregory G. Maxcy joined the Savings Bank as Senior Vice President
on May 19, 1997.
(Footnotes continued on following page)
- 12 -
<PAGE> 16
- ----------
(11) Represents the grant of 9,530 shares of restricted Common Stock to Mr.
Gregory G. Maxcy pursuant to the Company's Recognition Plan, which was
deemed to have had the indicated value at the date of grant. The
restricted Common Stock awarded to Mr. Gregory G. Maxcy had a fair
market value of $115,551 at September 30, 1999, based on the $12.125
per share closing market price on September 30, 1999. The awards vest
20% each year beginning May 19, 1998, and dividends are paid on
restricted shares.
(12) Consists of stock options granted pursuant to the Company's Stock
Option Plan which are exercisable at the rate of 20% each year
beginning May 19, 1998.
(13) Represents $11,445, $9,868 and $15,357, the allocation on behalf of Mr.
Kirk under the Company's ESOP, and $2,738, $2,295 and $1,905 in
contributions pursuant to the Savings Bank's Thrift Plan, in each case
in fiscal 1999, 1998 and 1997, respectively. See "Benefits - Thrift
Plan."
The following table discloses the total options granted to the
executive officers named in the Summary Compensation Table during the year ended
September 30, 1999:
<TABLE>
<CAPTION>
Number of % of Total Options
Options Granted To Exercise Grant Date
Name Granted Employees(1) Price(2) Expiration Date Present Value(3)
---- ------- ------------ -------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
J. Ardie Dillen 6,000 24.3% $14.625 December 17, 2008 $23,460
Gregory G. Maxcy 6,000 24.3 14.625 December 17, 2008 23,460
Michael J. Kirk 6,000 24.3 14.625 December 17, 2008 23,460
</TABLE>
- ----------
(1) Percentage of options granted to all employees during fiscal 1999.
(2) The exercise price was based on the closing market price of a share of
the Company's Common Stock on the date of grant.
(3) Present Value of the grant at the date of grant under the Black-Scholes
option pricing model.
The following table sets forth, with respect to the executive officers
named in the Summary Compensation Table, information with respect to the
aggregate amount of options exercised during the last fiscal year, any value
realized thereon, the number of unexercised options at the end of the fiscal
year (exercisable and unexercisable) and the value with respect thereto under
specified assumptions.
- 13 -
<PAGE> 17
<TABLE>
<CAPTION>
Shares Value of Unexercised
Acquired on Value Number of Unexercised in the Money Options at
Name Exercise Realized Options at Fiscal Year End(1) September 30, 1999(2)
---- -------- -------- ------------------------------ -------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Ardie Dillen -- -- 14,965 30,948 $24,439 $36,659
Gregory G. Maxcy -- -- 7,682 19,274 0 0
Michael J. Kirk -- -- 7,682 19,274 12,219 18,329
</TABLE>
- ----------
(1) Shares are exercisable at the rate of 20% per year on each annual
anniversary of the date the options were granted.
(2) Based on a per share market price of $12.125 at September 30, 1999.
COMPENSATION OF DIRECTORS
The Company pays non-employee directors a quarterly retainer of $500.
The monthly Savings Bank Board retainer is $500 and the fee per meeting attended
is $600. Members of committees of the Board of the Company (excluding the
President) and the Savings Bank (excluding inside directors) are paid $250 ($350
for committee chairmen) for each committee meeting attended. Mr. Dillen and Mr.
Gregory G. Maxcy receive no additional compensation as Chairman of the Board and
Secretary of the Company and the Savings Bank, respectively.
EMPLOYMENT AGREEMENTS
The Company and the Savings Bank (collectively, the "Employers") have
entered into employment agreements with each of Messrs. Dillen, Gregory G. Maxcy
and Kirk, and the Savings Bank has entered into employment agreements with
Messrs. Archer and Winters (the "Executives"). Messrs. Dillen, Gregory G. Maxcy
and Kirk are the Chairman, President and Chief Executive Officer, the Executive
Vice President and Secretary, and the Executive Vice President and Chief
Financial Officer of the Company and the Savings Bank, respectively. Messrs.
Archer and Winters are Senior Vice Presidents of the Savings Bank. The Employers
have agreed to employ Messrs. Dillen, Gregory G. Maxcy and Kirk for a term of
three years and each of the other Executives for a term of two years in their
current respective positions at their current salary levels. The employment
agreements will be reviewed annually by the Boards of Directors of the
Employers, and the term of employment agreements shall be extended each year for
a successive additional one-year period upon approval of the Employers' Board of
Directors, unless either party elects, not less than 30 days prior to the annual
anniversary date, not to extend the employment term.
Each of the employment agreements are terminable with or without cause
by the Employers. The Executives shall have no right to compensation or other
benefits pursuant to the employment agreements for any period after voluntary
termination or termination by the Employers for cause. The agreements provide
for certain benefits in the event of an Executives' death, disability or
- 14 -
<PAGE> 18
retirement. In the event that (i) the Executive terminates his employment (a)
because of failure of the Employers to comply with any material provision of the
agreement or (b) as a result of certain adverse actions which are taken with
respect to the officer's employment following a Change in Control of the
Company, as defined, or (ii) the employment agreement is terminated by the
Employers other than for cause, disability, retirement or death, the Executive
will be entitled to a cash severance amount equal to three times the officer's
base salary, as defined, in the case of Messrs. Dillen, Gregory G. Maxcy and
Kirk, and two times base salary for the other Executives payable in installments
over three years (in the case of Messrs. Dillen, Gregory G. Maxcy and Kirk) or
two years (in the case of the other Executives). Based upon compensation levels
at September 30, 1999, in the event of a termination of employment following a
Change in Control, Messrs. Dillen, Gregory G. Maxcy and Kirk would receive
$465,000, $315,000 and $285,000, respectively, in cash severance and each of the
other two Executives would receive $150,000 and $126,000. Mr. Dillen's agreement
also provides for a severance payment in the event of a termination of the
agreement resulting from a change by the Employers to his title or duties.
Severance payments are generally reduced by 50% of the compensation paid by
another employer during the payment period. In certain cases of voluntary
resignation, the reduction would not apply.
A Change in Control is generally defined in the employment agreement to
include any change in control of the Company required to be reported under the
federal securities laws, as well as (i) the acquisition by any person of 25% or
more of the Company's outstanding voting securities and (ii) a change in a
majority of the directors of the Company during any two-year period without the
approval of at least two-thirds of the persons who were directors of the Company
at the beginning of such period.
Each employment agreement provides that in the event that any of the
payments to be made thereunder or otherwise upon termination of employment are
deemed to constitute "excess parachute payments" within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"), then such
payments and benefits received thereunder shall be reduced, in the manner
determined by the officer, by the amount, if any, which is the minimum necessary
to result in no portion of the payments and benefits being non-deductible by the
Employers for federal income tax purposes. Excess parachute payments generally
are payments contingent on a change of control with a present value equal to or
in excess of three times the base amount, which is defined to mean the
recipient's average annual compensation from the employer includable in the
recipient's gross income during the most recent five taxable years ending before
the date on which a change in control of the employer occurred. Recipients of
excess parachute payments are subject to a 20% excise tax on the amount by which
such payments exceed the base amount, in addition to regular income taxes, and
payments in excess of the base amount are generally not deductible by the
employer as compensation expense for federal income tax purposes.
Although the above-described employment agreements could increase the
cost of any acquisition of control of the Company, management of the Company
does not believe that the terms thereof would have a significant anti-takeover
effect.
- 15 -
<PAGE> 19
BENEFITS
Employee Stock Ownership Plan. The Company has established the ESOP for
employees of the Company and the Savings Bank. Employees of the Company and the
Savings Bank who have been credited with at least 1,000 hours of service during
a twelve month period and who have attained age 21 are eligible to participate
in the ESOP.
The ESOP borrowed funds from the Company to purchase 174,570 shares of
Common Stock in the Savings Bank's conversion from mutual to stock form. The
Company utilized the funds received from its return of capital distribution in
December 1997 with respect to the unallocated ESOP shares to purchase an
additional 20,848 shares. The loan to the ESOP will be repaid from the Company's
contributions to the ESOP over a period of 10 years, and the collateral for the
loan is the Common Stock purchased by the ESOP. The Company may, in any plan
year, make additional discretionary contributions for the benefit of plan
participants in either cash or shares of Common Stock, which may be acquired
through the purchase of outstanding shares in the market or from individual
stockholders, upon the original issuance of additional shares by the Company or
upon the sale of treasury shares by the Company. Such purchases, if made, would
be funded through additional borrowing by the ESOP or additional contributions
from the Company. The timing, amount and manner of future contributions to the
ESOP will be affected by various factors, including prevailing regulatory
policies, the requirements of applicable laws and regulations and market
conditions.
Shares purchased by the ESOP with the proceeds of the loan are held in
a suspense account and will be released on a pro rata basis as debt service
payments are made. Discretionary contributions to the ESOP and shares released
from the suspense account will be allocated among participants on the basis of
compensation. Forfeitures will be reallocated among remaining participating
employees and may reduce any amount the Company might otherwise have contributed
to the ESOP. Participants will be 100% vested in their rights to receive their
account balances within the ESOP after completing five years of service. Credit
is given for years of service with the Savings Bank prior to adoption of the
ESOP. In the case of a "change in control," as defined, however, participants
will become immediately fully vested in their account balances, subject to
certain tax considerations. Benefits may be payable upon retirement or
separation from service. The Company's contributions to the ESOP are not fixed,
so benefits payable under the ESOP cannot be estimated.
The ESOP is subject to the requirements of the Employment Retirement
Income Securities Act of 1974, as amended, and the regulations of the IRS and
the Department of Labor thereunder.
Stock Option Plan. The Company's stockholders approved the Stock Option
Plan at a special meeting held on October 15, 1996. The Stock Option Plan is
designed to attract and retain qualified personnel in key positions, provide
officers and key employees with a proprietary interest in the Company as an
incentive to contribute to the success of the Company and reward key employees
for outstanding performance. The Stock Option Plan is also designed to retain
qualified directors for
- 16 -
<PAGE> 20
the Company. The Stock Option Plan provides for the grant of incentive stock
options intended to comply with the requirements of Section 422 of the Code
("incentive stock options"), non-qualified or compensatory stock options and
stock appreciation rights (collectively "Awards"). Awards have been available
for grant to directors and key employees of the Company and any subsidiaries,
except that directors were not eligible to receive incentive stock options. A
total of 218,212 shares of Common Stock has been reserved for issuance pursuant
to the Stock Option Plan. The Stock Option Plan is administered and interpreted
by a committee of the Board of Directors ("Committee") that is composed solely
of two or more "Non-Employee Directors." Unless sooner terminated, the Stock
Option Plan shall continue in effect for a period of ten years from the adoption
by the Board of Directors.
Under the Stock Option Plan, the Board of Directors or the Committee
determines which officers and key employees will be granted options, whether
such options will be incentive or compensatory options, the number of shares
subject to each option, whether such options may be exercised by delivering
other shares of Common Stock and when such options become exercisable. The per
share exercise price of a stock option shall be equal to the fair market value
of a share of Common Stock on the date the option is granted. Subject to certain
exceptions, all options granted to participants under the Stock Option Plan
shall become vested and exercisable at the rate of 20% per year on each annual
anniversary of the date the options were granted, and the right to exercise
shall be cumulative.
At September 30, 1999, all available options had been granted under the
Stock Option Plan and the Company had outstanding stock options to directors and
officers of the Company and the Savings Bank to purchase an aggregate of 208,680
shares of Common Stock at exercise prices ranging from $10.375 per share to
$18.50 per share. THE BOARD OF DIRECTORS HAS ADOPTED THE 2000 STOCK OPTION PLAN
AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR ADOPTION OF THE 2000 STOCK OPTION
PLAN. FOR FURTHER INFORMATION, SEE "PROPOSAL TO ADOPT THE 2000 STOCK OPTION
PLAN."
Recognition and Retention Plan. The Company's stockholders also
approved the Recognition Plan at the special meeting held on October 15, 1996.
The objective of the Recognition Plan is to retain qualified personnel in key
positions, provide officers, key employees and directors with a proprietary
interest in the Company as an incentive to contribute to its success and reward
key employees for outstanding performance. Officers and key employees of the
Company who are selected by the Board of Directors of the Company or a committee
thereof, as well as non-employee directors of the Company, will be eligible to
receive benefits under the Recognition Plan. The Recognition Plan Trust acquired
87,285 shares of Common Stock on behalf of the Recognition Plan. These shares
were acquired through open market purchases. The Recognition Plan is
administered and interpreted by a committee of the Board of Directors that is
composed solely of two or more "Non-Employee Directors."
Shares of Common Stock granted pursuant to the Recognition Plan will be
in the form of restricted stock payable over a five-year period at a rate of 20%
per year, beginning one year from the anniversary date of the grant. A recipient
will be entitled to all voting and other stockholder
- 17 -
<PAGE> 21
rights with respect to shares which have been earned and allocated under the
Recognition Plan. However, until such shares have been earned and allocated,
they may not be sold, pledged or otherwise disposed of and are required to be
held in the Recognition Plan Trust. Under the terms of the Recognition Plan, all
shares which have not yet been earned and allocated are required to be voted by
the trustees in their sole discretion. In addition, any cash dividends or stock
dividends declared in respect of unvested share awards will be held by the
Recognition Plan Trust for the benefit of the recipients and such dividends,
including any interest thereon, will be paid out proportionately by the
Recognition Plan Trust to the recipients thereof as soon as practicable after
the share awards become earned. Any cash dividends or stock dividends declared
in respect of each vested share held by the Recognition Plan Trust will be paid
by the Recognition Plan Trust as soon as practicable after the Recognition Plan
Trust's receipt thereof to the recipient on whose behalf such share is then held
by the Recognition Plan Trust. At September 30, 1999, the Company had granted
all 87,285 shares to directors and executive officers of the Company and the
Savings Bank, including 17,211 shares, 11,030 shares and 10,855 shares to
Messrs. Dillen, Gregory G. Maxcy and Kirk, respectively.
Pension Plan. The Savings Bank participates in a multiple employer
defined benefit pension plan that covers all employees that have attained 21
years of age and have completed one full year of service (consisting of 1,000
hours worked during the year). In general, the pension plan provides for
benefits payable monthly at retirement or normal retirement age 65 in an amount
equal to a percentage of the participant's average annual salary for the five
consecutive years of highest salary during his service with the Savings Bank,
multiplied by the number of his years of service, with a reduced level of
benefits in the event of early retirement prior to having attained age 65.
Payment of benefits under the pension plan generally will be made in
the form of a life annuity to an unmarried participant or in the form of a
qualified joint and survivor annuity to a married participant, although
alternative forms of benefits are available. The pension plan provides a death
benefit payment, in the event of death prior to retirement.
For the years ended September 30, 1999, 1998 and 1997 pension expense
amounted to $0, $15,000 and $60,000, respectively. The amounts expended as
contributions to the pension plan for financial reporting purposes on behalf of
any particular individual or group of individuals participating in the pension
plan cannot be determined.
Thrift Plan. Effective October 1, 1996, the Bank began maintaining a
Thrift Plan for the benefit of employees who have been employed for at least one
year and who have attained the age of 21. The Thrift Plan is a contributory
defined contribution plan which is intended to qualify under Section 401(k) of
the Code. Participants may contribute to the Thrift Plan by salary reduction up
to 15% of annual compensation for the year. Such contributions defer the
employee's earnings up to a maximum of $9,500 in each plan year, indexed
annually. The Bank matches 50% of an employee's contribution to the Thrift Plan
up to 6% of an employee's compensation. An employee is immediately vested in his
or her contributions to the Thrift Plan and is vested in the Bank's matching
contributions after five years of service. All funds contributed to the Thrift
Plan are held
- 18 -
<PAGE> 22
in a trust fund, which are invested at the direction of the employee in five
separate funds: a short term government money market fund, a diversified equity
portfolio fund, a government bond fund, a fund that invests solely in companies
that make up the Standard & Poor's Stock Index, and a fund that invests solely
in companies that make up the Standard & Poor's MidCap Index.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
All loans or extensions of credit to executive officers and directors
must be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with the
general public, unless the loans are made pursuant to a benefit or compensation
program that (i) is widely available to employees of the institution and (ii)
does not give preference to any director, executive officer or principal
stockholder, or certain affiliated interests of either, over other employees of
the savings institution, and must not involve more than the normal risk of
repayment or present other unfavorable features.
The Savings Bank's policy provides that all loans made by the Savings
Bank to its directors and officers are made in the ordinary course of business,
are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than the normal risk of collectibility or
present other unfavorable features. As of September 30, 1999, mortgage and
consumer loans to executive officers and directors aggregated $67,227 or 0.22%
of the Savings Bank's equity as of such date. The Savings Bank believes that
such loans do not involve more than the normal risk of collectibility.
James M. Droney, Jr., a director of the Company, is the President and
Chief Executive Officer of Mt. Lebanon Office Equipment Co. Inc., Pittsburgh,
Pennsylvania, an office equipment retailer. The Company purchased approximately
$68,102 in furniture and office equipment from such retailer during the fiscal
year ended September 30, 1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Savings Bank's Board of Directors
reviews the compensation for the Savings Bank's officers, along with employee
benefits, and recommends to the Board adjustments in such compensation.
The report of the Compensation Committee with respect to compensation
for the Chairman, President and Chief Executive Officer and all other executive
officers for the fiscal year ended September 30, 1999 is set forth below:
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The purpose of the Committee is to provide oversight of the personnel
related policies of the Company and the Savings Bank, including the
establishment of an executive compensation philosophy for the organization and
the monitoring of compensation plans and strategies to
- 19 -
<PAGE> 23
determine conformity with the overall philosophy. The Committee also is
responsible for ensuring that the financial costs of current or proposed
compensation and benefit programs are reasonable and consistent with industry
standards, management performance and stockholders' interest. A competitive
comprehensive benefit program is essential to achieving the goal of retaining
and attracting highly qualified employees.
The Committee considers the following criteria when establishing its
recommendation to the Board of Directors regarding the compensation level of the
Chief Executive Officer and other executive officers of the Company and the
Savings Bank:
1. The overall competitive performance of the Company and the
Savings Bank during the fiscal year under consideration
including the level of, and/or increases in earnings per
share, return on equity and consideration of the individual,
as well as combined measures of progress of the Company and
the Savings Bank in different areas, including the overall
growth of the Savings Bank, the improvement in market share
and franchise value, the quality of the loan portfolio, the
level of non-performing assets, efficiency ratio levels as
compared to peer groups and other objectives as may be
established by the Board of Directors.
2. The Company's and the Savings Bank's regulatory ratings.
3. The compensation and benefit levels of comparable management
positions to peer group institutions of similar asset size and
operating characteristics, with a concentration on those
institutions operating within the Mid-Atlantic region and
specifically Pennsylvania.
4. The individual effectiveness of the Chief Executive Officer
relative to overall management efficiency and leadership and
his commitment to professional involvement, civic activities
and the maintenance of corporate stature enhancing the image
of the Company and the Savings Bank in its market place.
The compensation arrangements and recommendations of the Committee
include a base salary and a bonus component if the Executive's performance is
judged to warrant such a bonus. The officers of the Company are not specifically
compensated for their service in such capacity and are paid only for their
services as officers of the Savings Bank.
The base compensation of J. Ardie Dillen, Chairman, President and Chief
Executive Officer of the Company and the Bank, was established at $155,000 as of
January 1, 1999. This level of compensation represented a 14.8% increase over
the previous year's base compensation which had been established as of January
1, 1998. Mr. Dillen was awarded a bonus of $35,000 for his service during fiscal
1998 based on his overall performance. Mr. Dillen's compensation level,
determined with the aforementioned criteria, was based on an examination of the
peer group companies relative
- 20 -
<PAGE> 24
to salary and bonus compensation for Chief Executive Officers. Additionally, the
Committee recognized that Mr. Dillen serves as Chairman of the Company and the
Bank.
Following extensive review by the Committee, all issues pertaining to
executive compensation are submitted to the full Board of Directors for their
approval.
Charles A. Topnick, Chairman
Jess B. Mellor
Kenneth R. Rieger
Stephen Spolar
- 21 -
<PAGE> 25
PERFORMANCE GRAPH
The following graph compares the cumulative total returns for the
Common Stock of the Company, the SNL All Thrift Index and the Nasdaq Total
Return Index since the Company's initial public offering in April 1996. All of
these cumulative returns are computed assuming the reinvestment of dividends at
the frequency with which dividends were paid during the period.
PITTSBURGH HOME FINANCIAL CORP.
[Total Return Performance Graph]
<TABLE>
<CAPTION>
Period Ending
----------------------------------------------------------------------
Index 04/01/1996 09/30/1996 09/30/1997 09/30/1998 09/30/1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Pittsburgh Home Financial Corp. 100.00 108.48 177.67 144.05 131.98
NASDAQ - Total US 100.00 111.45 153.02 155.61 252.70
SNL Thrift Index 100.00 112.76 195.93 175.66 167.32
</TABLE>
The above graph represents $100 invested in the Company's initial
public offering of Common Stock on April 1, 1996 at $10.00 per share. The Common
Stock commenced trading on the Nasdaq Stock Market on April 1, 1996.
- 22 -
<PAGE> 26
PROPOSAL TO ADOPT THE 2000 STOCK OPTION PLAN
GENERAL
The Board of Directors has adopted the 2000 Stock Option Plan which is
designed to improve the growth and profitability of the Company and its
subsidiaries by providing employees and non-employee directors with a
proprietary interest in the Company as an incentive to contribute to the success
of the Company and its subsidiaries. The 2000 Stock Option Plan provides for the
grant of incentive stock options intended to comply with the requirements of
Section 422 of the Code ("Incentive Stock Options"), non-qualified stock options
and stock appreciation rights (collectively "Awards"). Awards will be available
for grant to employees and non-employee directors of the Company and its
subsidiaries. If stockholder approval is obtained, options to acquire shares of
Common Stock will be awarded to employees and non-employee directors of the
Company and the Savings Bank with an exercise price at least equal to the fair
market value of the Common Stock on the date of grant.
DESCRIPTION OF THE 2000 STOCK OPTION PLAN
The following description of the 2000 Stock Option Plan is a summary of
its terms and is qualified in its entirety by reference to the 2000 Stock Option
Plan, a copy of which is attached hereto as Appendix A. Unless otherwise
expressed, all capitalized terms shall be defined as set forth in the 2000 Stock
Option Plan.
Administration. The 2000 Stock Option Plan will be administered and
interpreted by a committee appointed by the Board of Directors ("Committee")
that is comprised solely of two or more non-employee directors.
Stock Options. Under the 2000 Stock Option Plan, the Committee will
determine which employees and non-employee directors will be granted options,
whether such options will be Incentive Stock Options or non-qualified options,
the number of shares subject to each option, the exercise price of each option,
whether such options may be exercised by delivering other shares of Common Stock
and when such options become exercisable. The per share exercise price of both
an Incentive Stock Option and a non-qualified stock option shall at least equal
the Fair Market Value of a share of Common Stock on the date the option is
granted.
Options granted under the 2000 Stock Option Plan shall become vested
and exercisable in the manner specified by the Committee. Notwithstanding the
foregoing, no vesting shall occur after a participant's employment or service
with the Company is terminated for any reason other than his death, Disability,
or Retirement. Unless the Committee shall specifically state otherwise at the
time an option is granted, all options granted shall become vested and
exercisable in full on the date an optionee terminates his or her employment or
service with the Company or a subsidiary of the Company because of his death,
Disability, or Retirement. In addition, all stock options will become vested and
exercisable in full on the effective date of a Change in Control of the Company.
- 23 -
<PAGE> 27
With the exception for Incentive Stock Options granted to employees who
own more than ten percent of the total combined voting power of all classes of
stock of the Company, each stock option or portion thereof granted to employees
shall be exercisable at any time on or after it vests and is exercisable until
the earlier of ten years after its date of grant or three months after the date
on which the optionee's employment terminates, unless extended by the Committee
to a period not to exceed one year from such termination. Each stock option or
portion thereof granted to a non-employee director shall be exercisable at any
time on or after it vests and becomes exercisable until the earlier of ten years
after its date of grant or one year after the date on which the non-employee
director ceases to serve as a director of the Company and its subsidiaries,
unless the Committee in its discretion decides at the time of grant or
thereafter to extend such period of exercise upon termination of service to a
period not exceeding three years. Unless stated otherwise at the time an option
is granted (i) if an optionee terminates his or her employment or service with
the Company or a subsidiary as a result of death, Disability or Retirement
without having fully exercised his or her options, the optionee shall have
twelve months following his or her death or termination due to Disability or
Retirement to exercise such options. However, failure to exercise Incentive
Stock Options within three months (or twelve months for termination as a result
of death or Disability) after the date on which the optionee's employment
terminates may result in adverse tax consequences to the optionee. If an
optionee dies while serving as an employee without having fully exercised his
options, the optionee's executors, administrators, legatees or distributees of
his estate shall have the right to exercise such options during the twelve
months following his death, provided no option will be exercisable more than ten
years from the date it was granted.
Stock options are non-transferable except by will or the laws of
descent and distribution. Notwithstanding the foregoing, an optionee who holds
non-qualified options may transfer such options to his or her spouse, lineal
ascendants, lineal descendants, or to a duly established trust for the benefit
of one or more of these individuals. Options so transferred may thereafter be
transferred only to the optionee who originally received the grant or to an
individual or trust to whom the optionee could have initially transferred the
option. Options which are so transferred shall be exercisable by the transferee
according to the same terms and conditions as applied to the optionee.
Payment for shares purchased upon the exercise of options may be made
either in cash, by certified or cashier's check or if permitted by the
Committee, by delivering shares of Common Stock (including shares acquired
pursuant to the exercise of an option) with a Fair Market Value equal to the
total option exercise price, by withholding some of the shares of Common Stock
which are being purchased upon exercise of an option, or any combination of the
foregoing. With respect to delivering shares of Common Stock in lieu of cash,
such shares must have been either purchased in open market transactions or
issued by the Company pursuant to a similar incentive plan more than six months
prior to the exercise date of the Option. If the Fair Market Value of a share of
Common Stock at the time of exercise is greater than the option's exercise price
per share, this feature would enable the optionee to acquire a number of shares
of Common Stock upon exercise of the Option, which is greater than the number of
shares delivered as payment for the exercise price. In addition, an optionee can
exercise an option in whole or in part and then, six months hence, deliver the
shares acquired thereby (if permitted by the Committee) as payment for the
exercise price of all or part of
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<PAGE> 28
his or her options. Again, if the fair market value of a share of Common Stock
at the time of exercise is greater than the exercise price per share, this
feature would enable the optionee to either (1) reduce the amount of cash
required to receive a fixed number of shares upon exercise of the option or (2)
receive a greater number of shares upon exercise of the option for the same
amount of cash that would have otherwise been used. Because options may be
exercised in part from time to time, the ability to deliver Common Stock as
payment of the exercise price could enable the optionee to turn a relatively
small number of shares into a large number of shares. In addition, an optionee
can elect, with the Committee's concurrence, to defer the delivery of the
proceeds derived from the exercise of non-qualified options pursuant to the
terms of the 2000 Stock Option Plan. Such deferral must comply with the
provisions of the 2000 Stock Option Plan and other rules and regulations as may
be established by the Committee.
Stock Appreciation Rights. Under the 2000 Stock Option Plan, the Board
of Directors or the Committee is authorized to grant rights to optionees ("Stock
Appreciation Rights") under which an optionee may surrender any exercisable
Incentive Stock Option or non-qualified stock option or part thereof in return
for payment by the Company to the optionee of cash or Common Stock in an amount
equal to the excess of the Fair Market Value of the shares of Common Stock
subject to the option at the time over the option's exercise price of such
shares, or a combination of cash and Common Stock. Stock Appreciation Rights
granted in connection with an Incentive Stock Option must be granted
concurrently with the Option to which it relates and Stock Appreciation Rights
in connection with a non-qualified option may be granted concurrently with the
stock options to which they relate or at any time thereafter which is prior to
the exercise or expiration of such option. The proceeds of the exercise of a
Stock Appreciation Right may also be deferred as provided by the provisions of
the 2000 Stock Option Plan.
Number of Shares Covered by the 2000 Stock Option Plan. A total of
88,365 shares of Common Stock, which is equal to 4.99% of the outstanding Common
Stock of the Company, as of December 17, 1999, has been reserved for future
issuance pursuant to the 2000 Stock Option Plan. In the event of a stock split,
reverse stock split, subdivision, stock dividend or any other capital
adjustment, the number of shares of Common Stock under the 2000 Stock Option
Plan, the number of shares to which any Award relates and the exercise price per
share under any option or Stock Appreciation Right shall be adjusted to reflect
such increase or decrease in the total number of shares of Common Stock
outstanding or such capital adjustment.
Amendment and Termination of the 2000 Stock Option Plan. Unless sooner
terminated, the 2000 Stock Option Plan shall continue in effect for a period of
ten years from November 17, 1999, the date the 2000 Stock Option Plan was
adopted by the Board of Directors. Termination of the 2000 Stock Option Plan
shall not affect any previously granted Awards.
Federal Income Tax Consequences. Under current provisions of the Code,
the federal income tax treatment of Incentive Stock Options and non-qualified
stock options is different. As regards Incentive Stock Options, an optionee who
meets certain holding period requirements will not recognize taxable income at
the time the option is granted or at the time the option is exercised,
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<PAGE> 29
and a federal income tax deduction generally will not be available to the
Company as a result of such grant or exercise. With respect to non-qualified
stock options, the difference between the fair market value on the date of
exercise and the option exercise price generally will be treated as taxable
compensation income upon exercise, and the Company will be entitled to a
deduction in the amount of such taxable income recognized by the optionee. Upon
the exercise of a Stock Appreciation Right, the holder will realize taxable
income for federal income tax purposes equal to the Fair Market Value of the
amount received by him or her, whether in cash, shares of stock or both, and the
Company will be entitled to a federal tax deduction in the same amount.
The above description of tax consequences under federal law is
necessarily general in nature and does not purport to be complete. Moreover,
statutory provisions are subject to change, as are their interpretations, and
their application may vary in individual circumstances. Finally, the
consequences under applicable state and local income tax laws may not be the
same as under the federal income tax laws.
Accounting Treatment. Stock Appreciation Rights will, in most cases,
require a charge against the earnings of the Company each year representing
appreciation in the value of such rights over periods in which they become
exercisable. Such charge is based on the difference between the exercise price
specified in the related option and the current market price of the Common
Stock. In the event of a decline in the market price of the Common Stock
subsequent to a charge against earnings related to the estimated costs of Stock
Appreciation Rights, a reversal of prior charges is made in the amount of such
decline (but not to exceed aggregate prior charges).
Neither the grant nor the exercise of an Incentive Stock Option or a
non-qualified stock option under the 2000 Stock Option Plan currently requires
any charge against earnings under generally accepted accounting principles. In
October 1995, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," which is effective for transactions entered into after December
15, 1995. This Statement establishes financial accounting and reporting
standards for stock-based employee compensation plans. This Statement defines a
fair value method of accounting for an employee stock option or similar equity
instrument and encourages all entities to adopt that method of accounting for
all of their employee stock compensation plans. However, it also allows an
entity to continue to measure compensation cost for those plans using the
intrinsic value method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees." Under the fair value method,
compensation cost is measured at the grant date based on the value of the award
and is recognized over the service period, which is usually the vesting period.
Under the intrinsic value method, compensation cost is the excess, if any, of
the quoted market price of the stock at grant date or other measurement date
over the amount an employee must pay to acquire the stock. The Company
anticipates that it will use the intrinsic value method, in which event pro
forma disclosure will be included in the footnotes to the Company's financial
statements to show what net income and earnings per share would have been if the
fair value method had been utilized. If the Company elects to utilize the fair
value method, its net income and earnings per share may be adversely affected.
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Stockholder Approval. No Awards will be granted under the 2000 Stock
Option Plan unless the 2000 Stock Option Plan is approved by stockholders.
Stockholder ratification of the 2000 Stock Option Plan will also satisfy Nasdaq
Stock Market ("Nasdaq Stock Market") listing and federal tax requirements.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ADOPTION OF THE
2000 STOCK OPTION PLAN.
PROPOSAL TO AMEND THE COMPANY'S AMENDED AND RESTATED
ARTICLES OF INCORPORATION TO CHANGE THE CORPORATE NAME
TO PITTSBURGH FINANCIAL CORP.
The Board of Directors has unanimously adopted, subject to stockholder
approval, a proposal to amend Article 1 of the Company's Amended and Restated
Articles of Incorporation to change the corporate name to "Pittsburgh Financial
Corp."
The Board of Directors believes there are limitations in the name
"Pittsburgh Home Financial Corp.," and accordingly, recommends that the holding
company name be changed to "Pittsburgh Financial Corp." because of broader
appeal to the market which the Company and the Savings Bank now serve and intend
to serve in the future. Subject to stockholder approval, when effective, the
Common Stock of Pittsburgh Financial Corp. will continue to trade on the Nasdaq
National Market under the symbol "PHFC."
The description of the proposed Amendment is qualified in its entirety
by reference to the complete text of the Amendment which appears as Appendix B.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
PROPOSED AMENDMENT.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Ernst & Young LLP,
independent certified public accountants, to perform the audit of the Company's
financial statements for the year ending September 30, 2000, and further
directed that the selection of auditors be submitted for ratification by the
stockholders at the Annual Meeting.
The Company has been advised by Ernst & Young LLP that neither that
firm nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual relationship that exists between independent
certified public accountants and clients. Ernst & Young LLP will have one or
more representatives at the Annual Meeting who will have an opportunity to make
a statement, if they so desire, and who will be available to respond to
appropriate questions.
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<PAGE> 31
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR
ENDING SEPTEMBER 30, 2000.
ADJOURNMENT OF ANNUAL MEETING
Each proxy solicited hereby requests authority to vote for an
adjournment of the Annual Meeting, if an adjournment is deemed to be necessary.
The Company may seek an adjournment of the Annual Meeting for not more than 30
days in order to enable the Company to solicit additional votes in favor of the
proposal to adopt the 2000 Stock Option Plan in the event that the proposal has
not received the requisite vote of stockholders at the Annual Meeting and such
proposal has not received the negative votes of the holders of a majority of the
Company's Common Stock. If the Company desires to adjourn the meeting with
respect to the foregoing proposal, it will request a motion that the meeting be
adjourned for up to 30 days with respect to such proposal (and solely with
respect to such proposal, provided that a quorum is present at the Annual
Meeting), and no vote will be taken on such proposal at the originally scheduled
Annual Meeting. Each proxy solicited hereby, if properly signed and returned to
the Company and not revoked prior to its use, will be voted on any motion for
adjournment in accordance with the instructions contained therein. If no
contrary instructions are given, each proxy received will be voted in favor of
any motion to adjourn the meeting. Unless revoked prior to its use, any proxy
solicited for the Annual Meeting will continue to be valid for any adjournment
of the Annual Meeting, and will be voted in accordance with instructions
contained therein, and if no contrary instructions are given, for the proposal
in question.
Any adjournment will permit the Company to solicit additional proxies
and will permit a greater expression of the stockholders' views with respect to
such proposal. Such an adjournment would be disadvantageous to stockholders who
are against the proposal, because an adjournment will give the Company
additional time to solicit favorable votes and thus increase the chances of
passing such proposal.
If a quorum is not present at the Annual Meeting, no proposal will be
acted upon and the Board of Directors of the Company will adjourn the Annual
Meeting to a later date in order to solicit additional proxies on each of the
proposals being submitted to stockholders.
An adjournment for up to 30 days will not require either the setting of
a new record date or notice of the adjourned meeting as in the case of an
original meeting. The Company has no reason to believe that an adjournment of
the Annual Meeting will be necessary at this time.
BECAUSE THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
PROPOSAL TO ADOPT THE 2000 STOCK OPTION PLAN, AS DISCUSSED ABOVE, THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE POSSIBLE ADJOURNMENT OF THE ANNUAL
MEETING.
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<PAGE> 32
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which currently is scheduled to be held in January 2001, must be
received at the principal executive offices of the Company, 225 Ross Street,
Pittsburgh, Pennsylvania 15219, Attention: Gregory G. Maxcy, Secretary, no later
than August 29, 2000.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may be
brought before an annual meeting pursuant to Article 10.D. of the Company's
Articles, which provides that business at an annual meeting of stockholders must
be (a) properly brought before the meeting by or at the direction of the Board
of Directors, or (b) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an annual meeting by a
stockholder, the stockholder must have given timely notice thereof in writing to
the Secretary of the Company. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive offices of the
Company not later than 90 days prior to the anniversary date of the immediately
preceding annual meeting of stockholders of the Company, or not later than
October 29, 2000 in connection with the 2001 Annual Meeting of Stockholders of
the Company. Such stockholder's notice is required to set forth certain
information specified in the Articles. No such proposals were received in
connection with the Annual Meeting.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year
ended September 30, 1999 accompanies this Proxy Statement. Such annual report is
not part of the proxy solicitation materials.
Upon receipt of a written request, the Company will furnish to any
stockholder without charge a copy of the Company's Annual Report on Form 10-K
for fiscal 1999 required to be filed under the 1934 Act. Such written requests
should be directed to Michael J. Kirk, Executive Vice President and Chief
Financial Officer, Pittsburgh Home Financial Corp., 225 Ross Street, Pittsburgh,
Pennsylvania 15219. The Form 10-K is not part of the proxy solicitation
materials.
OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of the Company to vote the proxy with respect to the approval
of the minutes of the last meeting of stockholders, the election of any person
as a director if the nominee is unable to serve or for good cause will not
serve, matters incident to the conduct of the meeting, and upon such other
matters as may properly come before the Annual Meeting. Management is not aware
of any business that may
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<PAGE> 33
properly come before the Annual Meeting other than the matters described above
in this Proxy Statement. However, if any other matters should properly come
before the meeting, it is intended that the proxies solicited hereby will be
voted with respect to those other matters in accordance with the judgment of the
persons voting the proxies.
The cost of the 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 the proxy
materials to the beneficial owners of the Company's Common Stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
By Order of the Board of Directors
/s/ Gregory G. Maxcy
Gregory G. Maxcy
Secretary
December 27, 1999
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APPENDIX A
PITTSBURGH HOME FINANCIAL CORP.
2000 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Pittsburgh Home Financial Corp. (the "Corporation") hereby establishes
this 2000 Stock Option Plan (the "Plan") upon the terms and conditions
hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of this Plan is to improve the growth and profitability of
the Corporation and its Subsidiaries by providing Employees and Non-Employee
Directors with a proprietary interest in the Corporation as an incentive to
contribute to the success of the Corporation and its Subsidiaries. All Incentive
Stock Options issued under this Plan are intended to comply with the
requirements of Section 422 of the Code, and the regulations thereunder, and all
provisions hereunder shall be read, interpreted and applied with that purpose in
mind.
ARTICLE III
DEFINITIONS
3.01 "Award" means an Option or Stock Appreciation Right granted
pursuant to the terms of this Plan.
3.02 "Bank" means Pittsburgh Home Savings Bank, a wholly owned
subsidiary of the Corporation.
3.03 "Board" means the Board of Directors of the Corporation.
3.04 "Change in Control of the Corporation" means a change in control
of a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, or any
successor thereto, whether or not the Corporation in fact is required to comply
with Regulation 14A thereunder.
3.05 "Code" means the Internal Revenue Code of 1986, as amended.
3.06 "Committee" means a committee of two or more directors appointed
by the Board pursuant to Article IV hereof, each of whom shall be a Non-Employee
Director of the Corporation,
<PAGE> 35
and each of whom shall be a "disinterested person" within the meaning of Rule
16b-3 under the Exchange Act, or any successor thereto and within the meaning of
Section 162(m) of the Code and regulations thereunder.
3.07 "Common Stock" means shares of the common stock, par value $0.01
per share, of the Corporation.
3.08 "Disability" means any physical or mental impairment which
qualifies an Employee for disability benefits under the applicable long-term
disability plan maintained by the Corporation or a Subsidiary, or, if no such
plan applies, which would qualify such Employee for disability benefits under
the Federal Social Security System.
3.09 "Effective Date" means the day upon which the Board approves this
Plan.
3.10 "Employee" means any person who is employed by the Corporation or
a Subsidiary, including Officers of the Corporation or a Subsidiary, but not
including directors who are not also Officers of or otherwise employed by the
Corporation or a Subsidiary.
3.11 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
3.12 "Fair Market Value" shall be equal to the fair market value per
share of the Corporation's Common Stock on the date an Award is granted. For
purposes hereof, the Fair Market Value of a share of Common Stock shall be the
closing sale price of a share of Common Stock on the date in question (or, if
such day is not a trading day in the U.S. markets, on the nearest preceding
trading day), as reported with respect to the principal market (or the composite
of the markets, if more than one) or national quotation system in which such
shares are then traded, or if no such closing prices are reported, the mean
between the high bid and low asked prices that day on the principal market or
national quotation system then in use, or if no such quotations are available,
the price furnished by a professional securities dealer making a market in such
shares selected by the Committee, or if no such prices are available, the book
value of a share of Common Stock as determined under generally accepted
accounting principles as of the latest practicable date.
3.13 "Incentive Stock Option" means any Option granted under this Plan
which the Board intends (at the time it is granted) to be an incentive stock
option within the meaning of Section 422 of the Code or any successor thereto.
3.14 "Non-Employee Director" means a member of the Board of the
Corporation or its Subsidiaries.
3.15 "Non-Qualified Option" means any Option granted under this Plan
which is not an Incentive Stock Option.
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<PAGE> 36
3.16 "Officer" means an Employee whose position in the Corporation or
Subsidiary is that of a corporate officer, as determined by the Board.
3.17 "Option" means a right granted under this Plan to purchase Common
Stock.
3.18 "Optionee" means an Employee or Non-Employee Director to whom an
Option is granted under the Plan.
3.19 "Retirement" means a termination of employment upon or after
attainment of age sixty-five (65) or such earlier age as may be specified in any
applicable plans or policies maintained by the Corporation or a Subsidiary or,
if no such plan is applicable, which would constitute "retirement" under any
qualified pension benefit plan maintained by the Corporation or a Subsidiary, if
such individual were a participant in such plan.
3.20 "Stock Appreciation Right" means a right to surrender an Option in
consideration for a payment by the Corporation in cash and/or Common Stock, as
provided in the discretion of the Committee in accordance with Section 8.11.
3.21 "Subsidiaries" means those subsidiaries of the Corporation,
including the Bank, which meet the definition of "subsidiary corporations" set
forth in Section 424(f) of the Code, at the time of granting of the Option in
question, as designated by the Committee to participate in the Plan.
3.22 "Voting Record Date" means the date established as the record date
for the determination of stockholders entitled to receive notice of and to vote
at the stockholders' meeting at which the proposal to adopt the Plan is voted
upon.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 DUTIES OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee, as appointed from time to time by the Board
pursuant to Section 4.02. The Committee shall have the authority in its absolute
discretion to adopt, amend and rescind such rules, regulations and procedures
as, in its opinion, may be advisable in the administration of the Plan,
including, without limitation, rules, regulations and procedures which (i) deal
with satisfaction of an Optionee's tax withholding obligation pursuant to
Section 13.02 hereof, (ii) include arrangements to facilitate the Optionee's
ability to borrow funds for payment of the exercise or purchase price of an
Award, if applicable, from securities brokers and dealers, and (iii) include
arrangements which provide for the payment of some or all of such exercise or
purchase price by delivery of previously owned shares of Common Stock or other
property and/or by withholding some of the shares of Common Stock which are
being acquired. The interpretation and construction by the Committee of any
provisions of the Plan, any rule, regulation or procedure adopted by it pursuant
thereto or of any Award shall be final and binding.
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<PAGE> 37
4.02 APPOINTMENT AND OPERATION OF THE COMMITTEE. The members of the
Committee shall be appointed by, and will serve at the pleasure of, the Board.
The Board from time to time may remove members from, or add members to, the
Committee, provided that the Committee shall continue to consist of two or more
members of the Board, each of whom shall be a Non-Employee Director and each of
whom shall be a "disinterested person" within the meaning of Rule 16b-3 under
the Exchange Act. In addition, each member of the Committee shall be an "outside
director" within the meaning of Section 162(m) of the Code and regulations
thereunder at such times as is required under such regulations. The Committee
shall act by vote or written consent of a majority of its members. Subject to
the express provisions and limitations of the Plan, the Committee may adopt such
rules, regulations and procedures as it deems appropriate for the conduct of its
affairs. It may appoint one of its members to be chairman and any person,
whether or not a member, to be its secretary or agent. The Committee shall
report its actions and decisions to the Board at appropriate times but in no
event less than one time per calendar year.
4.03 REVOCATION FOR MISCONDUCT. The Committee may by resolution
immediately revoke, rescind and terminate any Option, or portion thereof, to the
extent not yet vested, or any Stock Appreciation Right, to the extent not yet
exercised, previously granted or awarded under this Plan to an Employee who is
discharged from the employ of the Corporation or a Subsidiary for cause, which,
for purposes hereof, shall mean termination because of the Employee's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful violation
of any law, rule or regulation (other than traffic violations or similar
offenses) or final cease-and-desist order or material breach of any employment
agreement. For purposes of this paragraph, no act or failure to act on the
Employee's part shall be considered "willful" unless done, or omitted to be
done, by the Employee not in good faith and without reasonable belief that the
Employee's action or omission was in the best interest of the Corporation and
its Subsidiaries. Options granted to a Non-Employee Director who is removed for
cause pursuant to the Corporation's Amended and Restated Articles of
Incorporation and Bylaws or the Bank's Charter and Bylaws shall terminate as of
the effective date of such removal.
4.04 LIMITATION ON LIABILITY. Neither the members of the Board nor any
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan, any rule, regulation or procedure adopted
by it pursuant thereto or for any Awards granted hereunder. If a member of the
Board or Committee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Corporation
shall, subject to the requirements of applicable laws and regulations, indemnify
such member against all liabilities and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of the
Corporation and its Subsidiaries and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
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<PAGE> 38
4.05 COMPLIANCE WITH LAW AND REGULATIONS. All Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
The Corporation shall not be required to issue or deliver any certificates for
shares of Common Stock prior to the completion of any registration or
qualification of or obtaining of consents or approvals with respect to such
shares under any federal or state law or any rule or regulation of any
government body, which the Corporation shall, in its sole discretion, determine
to be necessary or advisable. Moreover, no Option or Stock Appreciation Right
may be exercised if such exercise would be contrary to applicable laws and
regulations.
4.06 RESTRICTIONS ON TRANSFER. The Corporation may place a legend upon
any certificate representing shares acquired pursuant to an Award granted
hereunder noting that the transfer of such shares may be restricted by
applicable laws and regulations.
ARTICLE V
ELIGIBILITY
Awards may be granted to such Employees and Non-Employee Directors of
the Corporation and its Subsidiaries as may be designated from time to time by
the Committee. Awards may not be granted to individuals who are not Employees or
Non-Employee Directors of either the Corporation or its Subsidiaries.
ARTICLE VI
COMMON STOCK COVERED BY THE PLAN
6.01 OPTION SHARES. The aggregate number of shares of Common Stock
which may be issued pursuant to this Plan, subject to adjustment as provided in
Article IX, shall be an amount equal to 4.99% of the outstanding shares of
Common Stock of the Corporation as of the Voting Record Date. None of such
shares shall be the subject of more than one Award at any time (other than a
Stock Appreciation Right related to an Option), but if an Option as to any
shares is surrendered before exercise, or expires or terminates for any reason
without having been exercised in full, or for any other reason ceases to be
exercisable, the number of shares covered thereby shall again become available
for grant under the Plan as if no Awards had been previously granted with
respect to such shares. Notwithstanding the foregoing, if an Option is
surrendered in connection with the exercise of a Stock Appreciation Right, the
number of shares covered thereby shall not be available for grant under the
Plan.
6.02 SOURCE OF SHARES. The shares of Common Stock issued under the Plan
may be authorized but unissued shares, treasury shares or shares purchased by
the Corporation on the open market or from private sources for use under the
Plan.
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<PAGE> 39
ARTICLE VII
DETERMINATION OF AWARDS, NUMBER OF SHARES, ETC.
The Committee shall, in its discretion, determine from time to time
which Employees or Non-Employee Directors will be granted Awards under the Plan,
the number of shares of Common Stock subject to each Award, whether each Option
will be an Incentive Stock Option or a Non-Qualified Stock Option and the
exercise price of an Option. In making all such determinations, there shall be
taken into account the duties, responsibilities and performance of each
respective Employee or Non-Employee Director, his past, present and potential
contributions to the growth and success of the Corporation and the Bank, his
salary and such other factors as the Committee shall deem relevant to
accomplishing the purposes of the Plan.
ARTICLE VIII
OPTIONS AND STOCK APPRECIATION RIGHTS
Each Option granted hereunder shall be on the following terms and
conditions:
8.01 STOCK OPTION AGREEMENT. The proper Officers on behalf of the
Corporation and each Optionee shall execute a Stock Option Agreement which shall
set forth the total number of shares of Common Stock to which it pertains, the
exercise price, whether it is a Non-Qualified Option or an Incentive Stock
Option, and such other terms, conditions, restrictions and privileges as the
Committee in each instance shall deem appropriate, provided they are not
inconsistent with the terms, conditions and provisions of this Plan. Each
Optionee shall receive a copy of his executed Stock Option Agreement.
8.02 AWARDS TO EMPLOYEES. Awards pursuant to Article VIII hereof may be
made to such Optionees as may be selected by the Committee and on such terms as
may be determined by the Committee. The Committee may but shall not be required
to request the written recommendation of the Chief Executive Officer of the
Corporation other than with respect to Awards to be granted to him.
Notwithstanding anything to the contrary contained herein, no Optionee shall
have any right or entitlement to receive an Award hereunder, such Awards being
at the total discretion of the Committee.
8.03 OPTION EXERCISE PRICE.
(a) INCENTIVE STOCK OPTIONS. The per share price at which the
subject Common Stock may be purchased upon exercise of an Incentive Stock Option
shall be no less than one hundred percent (100%) of the Fair Market Value of a
share of Common Stock at the time such Incentive Stock Option is granted, except
as provided in Section 8.10(b).
(b) NON-QUALIFIED OPTIONS. The per share price at which the
subject Common Stock may be purchased upon exercise of a Non-Qualified Option
shall be no less than one hundred
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percent (100%) of the Fair Market Value of a share of Common Stock at the time
such Non-Qualified Option is granted.
8.04 VESTING AND EXERCISE OF OPTIONS.
(a) GENERAL RULES. Incentive Stock Options and Non-Qualified
Options to Optionees granted hereunder shall become vested and exercisable at
the rate, to the extent and subject to such limitations as may be specified by
the Committee. Notwithstanding the foregoing, no vesting shall occur on or after
an Optionee's employment or service with the Corporation and all Subsidiaries is
terminated for any reason other than as set forth in subsection (b) below. In
determining the number of shares of Common Stock with respect to which Options
are vested and/or exercisable, fractional shares will be rounded up to the
nearest whole number if the fraction is 0.5 or higher, and down if it is less.
(b) ACCELERATED VESTING. Unless the Committee shall
specifically state otherwise at the time an Option is granted, all Options
granted under the Plan shall become vested and exercisable in full on the date
an Optionee terminates his employment with or service to the Corporation or a
Subsidiary because of his death, Disability or Retirement. In addition, all
options hereunder shall become immediately vested and exercisable in full on the
date an Optionee terminates his employment with or service to the Corporation or
a Subsidiary or as a result of a Change in Control of the Corporation.
8.05 DURATION OF OPTIONS.
(a) GENERAL RULE. Except as provided in Sections 8.05(b) and
8.10, each Option or portion thereof granted to Employees shall be exercisable
at any time on or after it vests and becomes exercisable until the earlier of
(i) ten (10) years after its date of grant or (ii) three (3) months after the
date on which the Optionee ceases to be employed by the Corporation and all
Subsidiaries, unless the Committee in its discretion decides at the time of
grant or thereafter to extend such period of exercise upon termination of
employment from three (3) months to a period not exceeding one (1) year.
Except as provided in Section 8.05(b), each Option or portion thereof
granted to a Non-Employee Director shall be exercisable at any time on or after
it vests and becomes exercisable until the earlier of (i) ten (10) years after
its date of grant or (ii) one (1) year after the date on which the Non-Employee
Director ceases to serve as a director of the Corporation and its Subsidiaries,
unless the Committee in its discretion decides at the time of grant or
thereafter to extend such period of exercise upon termination of service to a
period not exceeding three (3) years.
(b) EXCEPTIONS. If an Optionee dies while in the employ or
service of the Corporation or a Subsidiary or terminates employment or service
with the Corporation or a Subsidiary as a result of Disability or Retirement
without having fully exercised his Options, the Optionee or the executors,
administrators, legatees or distributees of his estate shall have the right,
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during the twelve-month period following the earlier of his death or termination
due to Disability or Retirement, to exercise such Options. In no event, however,
shall any Option be exercisable more than ten (10) years from the date it was
granted.
8.06 NONASSIGNABILITY. Options shall not be transferable by an Optionee
except by will or the laws of descent or distribution, and during an Optionee's
lifetime shall be exercisable only by such Optionee or the Optionee's guardian
or legal representative. Notwithstanding the foregoing, or any other provision
of this Plan, an Optionee who holds Non-Qualified Options may transfer such
Options to his or her spouse, lineal ascendants, lineal descendants, or to a
duly established trust for the benefit of one or more of these individuals.
Options so transferred may thereafter be transferred only to the Optionee who
originally received the grant or to an individual or trust to whom the Optionee
could have initially transferred the Option pursuant to this Section 8.06.
Options which are transferred pursuant to this Section 8.06 shall be exercisable
by the transferee according to the same terms and conditions as applied to the
Optionee.
8.07 MANNER OF EXERCISE. Options may be exercised in part or in whole
and at one time or from time to time. The procedures for exercise shall be set
forth in the written Stock Option Agreement provided pursuant to Section 8.01.
8.08 PAYMENT FOR SHARES. Payment in full of the purchase price for
shares of Common Stock purchased pursuant to the exercise of any Option shall be
made to the Corporation upon exercise of such Option. All shares sold under the
Plan shall be fully paid and nonassessable. Payment for shares may be made by
the Optionee (i) in cash or (ii) at the discretion of the Committee, by
delivering shares of Common Stock (including shares acquired pursuant to the
exercise of an Option) or other property equal in Fair Market Value to the
purchase price of the shares to be acquired pursuant to the Option, by
withholding some of the shares of Common Stock which are being purchased upon
exercise of an Option, or any combination of the foregoing. With respect to
subclause (ii) hereof, the Shares of Common Stock delivered to pay the purchase
price must have either been (x) purchased in open market transactions or (y)
issued by the Corporation pursuant to a plan thereof more than six months prior
to the exercise date of the Option.
8.09 VOTING AND DIVIDEND RIGHTS. No Optionee shall have any voting or
dividend rights or other rights of a stockholder in respect of any shares of
Common Stock covered by an Option prior to the time that the Option is exercised
and certificates representing the shares acquired pursuant to an exercise of
such Option have been issued and delivered.
8.10 ADDITIONAL TERMS APPLICABLE TO INCENTIVE STOCK OPTIONS. All
Options issued under the Plan as Incentive Stock Options will be subject, in
addition to the terms detailed in Sections 8.01 to 8.09 above, to those
contained in this Section 8.10.
(a) Notwithstanding any contrary provisions contained
elsewhere in this Plan and as long as required by Section 422 of the Code, the
aggregate Fair Market Value, determined as of the time an Incentive Stock Option
is granted, of the Common Stock with respect to which Incentive
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Stock Options are exercisable for the first time by the Optionee during any
calendar year under this Plan and stock options that satisfy the requirements of
Section 422 of the Code under any other stock option plan maintained by the
Corporation (or any parent or Subsidiary), shall not exceed $100,000.
(b) LIMITATION ON TEN PERCENT STOCKHOLDERS. The price at which
shares of Common Stock may be purchased upon exercise of an Incentive Stock
Option granted to an individual who, at the time such Incentive Stock Option is
granted, owns, directly or indirectly, more than ten percent (10%) of the total
combined voting power of all classes of stock issued to stockholders of the
Corporation or any Subsidiary, shall be no less than one hundred and ten percent
(110%) of the Fair Market Value of a share of Common Stock of the Corporation at
the time of grant, and such Incentive Stock Option shall by its terms not be
exercisable after the earlier of the date determined under Sections 8.04 and
8.05 or the expiration of five (5) years from the date such Incentive Stock
Option is granted.
(c) NOTICE OF DISPOSITION; WITHHOLDING; ESCROW. An Optionee
shall immediately notify the Corporation in writing of any sale, transfer,
assignment or other disposition (or action constituting a disqualifying
disposition within the meaning of Section 421 of the Code) of any shares of
Common Stock acquired through the exercise of an Incentive Stock Option and
disposed of within two (2) years after the grant of such Incentive Stock Option
or within one (1) year after the acquisition of such shares. Such notice shall
set forth the date and manner of disposition, the number of shares disposed of
and the price at which such shares were disposed of. The Corporation shall be
entitled to withhold from any compensation or other payments then or thereafter
due to the Optionee such amounts as may be necessary to satisfy any withholding
requirements of federal or state law or regulation and, further, to collect from
the Optionee any additional amounts which may be required for such purpose. The
Committee may, in its discretion, require shares of Common Stock acquired by an
Optionee upon exercise of an Incentive Stock Option to be held in an escrow
arrangement for the purpose of enabling compliance with the provisions of this
Section 8.10(c).
8.11 STOCK APPRECIATION RIGHTS.
(a) GENERAL TERMS AND CONDITIONS. The Committee may, but shall
not be obligated to, authorize the Corporation, on such terms and conditions as
it deems appropriate in each case, to grant rights to Optionees to surrender an
exercisable Option, or any portion thereof, in consideration for the payment by
the Corporation of an amount equal to the excess of the Fair Market Value of the
shares of Common Stock subject to the Option, or portion thereof, surrendered
over the exercise price of the Option with respect to such shares (any such
authorized surrender and payment being hereinafter referred to as a "Stock
Appreciation Right"). Such payment, at the discretion of the Committee, may be
made in shares of Common Stock valued at the then Fair Market Value thereof, or
in cash, or partly in cash and partly in shares of Common Stock.
The terms and conditions set with respect to a Stock Appreciation Right
may include (without limitation), subject to other provisions of this Section
8.11 and the Plan, the period during
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which, date by which or event upon which the Stock Appreciation Right may be
exercised; the method for valuing shares of Common Stock for purposes of this
Section 8.11; a ceiling on the amount of consideration which the Corporation may
pay in connection with exercise and cancellation of the Stock Appreciation
Right; and arrangements for income tax withholding. The Committee shall have
complete discretion to determine whether, when and to whom Stock Appreciation
Rights may be granted.
(b) TIME LIMITATIONS. If a holder of a Stock Appreciation
Right terminates service with the Corporation as an Officer or Employee, the
Stock Appreciation Right may be exercised only within the period, if any, within
which the Option to which it relates may be exercised.
(c) EFFECTS OF EXERCISE OF STOCK APPRECIATION RIGHTS OR
OPTIONS. Upon the exercise of a Stock Appreciation Right, the number of shares
of Common Stock available under the Option to which it relates shall decrease by
a number equal to the number of shares for which the Stock Appreciation Right
was exercised. Upon the exercise of an Option, any related Stock Appreciation
Right shall terminate as to any number of shares of Common Stock subject to the
Stock Appreciation Right that exceeds the total number of shares for which the
Option remains unexercised.
(d) TIME OF GRANT. A Stock Appreciation Right granted in
connection with an Incentive Stock Option must be granted concurrently with the
Option to which it relates, while a Stock Appreciation Right granted in
connection with a Non-Qualified Option may be granted concurrently with the
Option to which it relates or at any time thereafter prior to the exercise or
expiration of such Option.
(e) NON-TRANSFERABLE. The holder of a Stock Appreciation Right
may not transfer or assign the Stock Appreciation Right otherwise than by will
or in accordance with the laws of descent and distribution, and during a
holder's lifetime a Stock Appreciation Right may be exercisable only by the
holder.
ARTICLE IX
ADJUSTMENTS FOR CAPITAL CHANGES
The aggregate number of shares of Common Stock available for issuance
under this Plan, the number of shares to which any Award relates, the exercise
price per share of Common Stock under any Option and the maximum number of
Awards which may be granted to any Employee or Non-Employee Director shall be
proportionately adjusted for any increase or decrease in the total number of
outstanding shares of Common Stock resulting from a split, subdivision or
consolidation of shares or any other capital adjustment, the payment of a stock
dividend, or other increase or decrease in such shares effected without receipt
or payment of consideration by the Corporation. If, upon a merger,
consolidation, reorganization, liquidation, recapitalization or the like of the
Corporation, the shares of the Corporation's Common Stock shall be exchanged for
other securities
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of the Corporation or of another corporation, each recipient of an Award shall
be entitled, subject to the conditions herein stated, to purchase or acquire
such number of shares of Common Stock or amount of other securities of the
Corporation or such other corporation as were exchangeable for the number of
shares of Common Stock of the Corporation which such optionees would have been
entitled to purchase or acquire except for such action, and appropriate
adjustments shall be made to the per share exercise price of outstanding
Options. In the event the Corporation declares a special cash dividend or return
of capital in an amount per share which exceeds 10% of the Fair Market Value of
a share of Common Stock as of the date of declaration, the per share exercise
price of all previously granted Options which remain unexercised as of the date
of such declaration shall be proportionately adjusted to give effect to such
special cash dividend or return of capital as of the date of payment of such
special cash dividend or return of capital; provided, however, that if such
adjustment with respect to Incentive Stock Options would be treated as a
modification of the outstanding Incentive Stock Options with the effect that,
for purposes of Sections 422 and 424(h) of the Code and the rules and
regulations thereunder, new Incentive Stock Options would be deemed to be
granted, then no adjustment to the per share exercise price of outstanding
Incentive Stock Options shall be made.
ARTICLE X
DEFERRED PAYMENTS
10.01 DEFERRAL OF OPTIONS AND STOCK APPRECIATION RIGHTS.
Notwithstanding any other provision of this Plan, any Optionee may elect, with
the concurrence of the Committee and consistent with any rules and regulations
established by the Committee, to defer the delivery of the proceeds of the
exercise of any Non-Qualified Option.
10.02 TIMING OF ELECTION. The election to defer the delivery of the
proceeds from any eligible Non-Qualified Option or Stock Appreciation Right must
be made at least six (6) months prior to the date such Option or Stock
Appreciation Right is exercised or at such other time as the Committee may
specify. Deferrals of eligible Non-Qualified Options or Stock Appreciation
Rights shall only be allowed for exercises of Options and Stock Appreciation
Rights that occur while the Optionee or holder of the Stock Appreciation Right,
as the case maybe, is in active employment with the Corporation or its
Subsidiaries. Any election to defer the proceeds from an eligible Non-Qualified
Option or Stock Appreciation Right shall be irrevocable.
10.03 STOCK OPTION DEFERRAL. The deferral of the proceeds of
Non-Qualified Options may be elected by an Optionee subject to the rules and
regulations established by the Committee. The proceeds from such an exercise
shall be credited to a deferred stock option account established for the
Optionee (which may be part of an existing deferred compensation trust account).
The proceeds shall be credited to the deferred stock option account as a number
of deferred shares or share units equivalent in value to those proceeds.
Deferred share units shall be valued at the Fair Market Value on the date of
exercise. Subsequent to exercise, the deferred shares or share units shall be
valued at the Fair Market Value of Common Stock. Deferred share units shall
accrue dividends at the rate
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paid upon the Common Stock credited in the form of additional deferred share
units. Deferred shares or share units shall be distributed in shares of Common
Stock or cash, at the discretion of the Committee, upon the Optionee's
termination of employment or service or at such other date, as may be approved
by the Committee, over a period of no more than ten (10) years.
10.04 STOCK APPRECIATION RIGHT DEFERRAL. The deferral of the proceeds
of Stock Appreciation Rights may be made by a holder of Stock Appreciation
Rights subject to the rules and regulations established by the Committee. Upon
exercise, the Committee will credit such Optionee's deferred stock option
account with a number of deferred shares or share units equivalent in value to
the difference between the Fair Market Value of a share of Common Stock on the
exercise date and the exercise Price of the Stock Appreciation Right multiplied
by the number of shares exercised. Deferred shares or share units shall be
valued at the Fair Market Value on the date of exercise. Subsequent to exercise,
the deferred shares or share units shall be valued at the Fair Market Value of
Common Stock. Deferred shares or share units shall accrue dividends at the rate
paid upon the Common Stock credited in the form of additional deferred shares or
share units. Deferred shares or share units shall be distributed in shares of
Common Stock or cash, at the discretion of the Committee, upon the Participant's
termination of service or at such other date, as may be approved by the
Committee, over a period of no more than ten (10) years.
10.05 ACCELERATED DISTRIBUTIONS. The Committee may, at its sole
discretion, allow for the early payment of an Optionee's deferred stock option
account in the event of an "unforeseeable emergency" or in the event of the
death or Disability of the Optionee. An "unforeseeable emergency" means an
unanticipated emergency caused by an event beyond the control of the Optionee
that would result in severe financial hardship if the distribution were not
permitted. Such distributions shall be limited to the amount necessary to
sufficiently address the financial hardship. Any distributions under this
provision, shall be consistent with the Code and the regulations promulgated
thereunder. Additionally, the Committee may use its discretion to cause stock
option deferral accounts to be distributed when continuing the program is no
longer in the best interest of the Corporation.
10.06 ASSIGNABILITY. No rights to deferred stock option accounts may be
assigned or subject to any encumbrance, pledge or charge of any nature except
that an Optionee may designate a beneficiary pursuant to any rules established
by the Committee.
10.07 UNFUNDED STATUS. No Employee or other person shall have any
interest in any fund or in any specific asset of the Corporation or its
Subsidiaries by reason of any amount credited pursuant to the provisions hereof.
Any amounts payable pursuant to the provisions hereof shall be paid from the
general assets of the Corporation or its Subsidiaries and no Employee,
Non-Employee Director or other person shall have any rights to such assets
beyond the rights afforded general creditors of the Corporation or its
Subsidiaries. However, the Corporation or its Subsidiaries shall have the right
to establish a reserve, trust or make any investment for the purpose of
satisfying the obligations created under this Article X of the Plan; provided,
however, that no Employee, Non-Employee Director or other person shall have any
interest in such reserve, trust or investment.
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ARTICLE XI
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the Plan
with respect to any shares of Common Stock as to which Awards have not been
granted, subject to any applicable regulatory requirements and any required
stockholder approval or any stockholder approval which the Board may deem to be
advisable for any reason, such as for the purpose of obtaining or retaining any
statutory or regulatory benefits under tax, securities or other laws or
satisfying any applicable stock exchange listing requirements. The Board may
not, without the consent of the holder of an Award, alter or impair any Award
previously granted or awarded under this Plan except as specifically authorized
herein.
ARTICLE XII
EMPLOYMENT RIGHTS
Neither the Plan nor the grant of any Awards hereunder nor any action
taken by the Committee or the Board in connection with the Plan shall create any
right on the part of any Employee or Non-Employee Director of the Corporation or
a Subsidiary to continue in such capacity.
ARTICLE XIII
WITHHOLDING
13.01 TAX WITHHOLDING. The Corporation may withhold from any cash
payment made under this Plan sufficient amounts to cover any applicable
withholding and employment taxes, and if the amount of such cash payment is
insufficient, the Corporation may require the Optionee to pay to the Corporation
the amount required to be withheld as a condition to delivering the shares
acquired pursuant to an Award. The Corporation also may withhold or collect
amounts with respect to a disqualifying disposition of shares of Common Stock
acquired pursuant to the exercise of an Incentive Stock Option, as provided in
Section 8.10(c), or with respect to the exercise of a Stock Appreciation Right.
13.02 METHODS OF TAX WITHHOLDING. The Committee is authorized to adopt
rules, regulations or procedures which provide for the satisfaction of an
Optionee's tax withholding obligation by the retention of shares of Common Stock
to which the Employee would otherwise be entitled pursuant to an Award and/or by
the Optionee's delivery of previously owned shares of Common Stock or other
property.
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ARTICLE XIV
EFFECTIVE DATE OF THE PLAN; TERM
14.01 EFFECTIVE DATE OF THE PLAN. This Plan shall become effective on
the Effective Date, and Awards may be granted hereunder as of or after the
Effective Date and prior to the termination of the Plan, provided that no
Incentive Stock Option issued pursuant to this Plan shall qualify as such unless
this Plan is approved by the requisite vote of the holders of the outstanding
voting shares of the Corporation at a meeting of stockholders of the Corporation
held within twelve (12) months of the Effective Date.
14.02 TERM OF PLAN. Unless sooner terminated, this Plan shall remain in
effect for a period of ten (10) years ending on the tenth anniversary of the
Effective Date. Termination of the Plan shall not affect any Awards previously
granted, and such Awards shall remain valid and in effect until they have been
fully exercised or earned, are surrendered or by their terms expire or are
forfeited.
ARTICLE XV
STOCKHOLDER APPROVAL
The Corporation shall submit the Plan to stockholders for approval at a
meeting of stockholders of the Corporation held within twelve (12) months
following the Effective Date in order to meet the requirements of (i) Section
422 of the Code and regulations thereunder and (ii) Section 162(m) of the Code
and regulations thereunder.
ARTICLE XIV
MISCELLANEOUS
16.01 GOVERNING LAW. To the extent not governed by federal law, this
Plan shall be construed under the laws of the State of Pennsylvania.
16.02 PRONOUNS. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun, and the singular shall include the plural.
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APPENDIX B
PROPOSED AMENDMENT TO THE AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF PITTSBURGH HOME FINANCIAL CORP.
Article 1 of the Amended and Restated Articles of Incorporation of
Pittsburgh Home Financial Corp. is proposed to be amended in the manner
described below. If the proposed amendment is adopted, the words contained
within the bracketed and bold-faced portions of Article 1 will be added, while
the words underlined and in bold-face will be deleted from Article 1.
ARTICLE 1. NAME. The name of the corporation is PITTSBURGH HOME
FINANCIAL CORP. [PITTSBURGH FINANCIAL CORP.] (hereinafter referred to as the
"Corporation").
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REVOCABLE PROXY
PITTSBURGH HOME FINANCIAL CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PITTSBURGH HOME FINANCIAL CORP. ("COMPANY") FOR USE AT THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON JANUARY 27, 2000 AND AT ANY ADJOURNMENT THEREOF.
The undersigned, being a stockholder of the Company as of December 17,
1999, hereby authorizes the Board of Directors of the Company or any successors
thereto as proxies with full powers of substitution, to represent the
undersigned at the Annual Meeting of Stockholders of the Company to be held at
The Library Center, GRW Theatre, Second Level, 414 Wood Street, Pittsburgh,
Pennsylvania, on Thursday, January 27, 2000 at 11:00 a.m., Eastern Time, and at
any adjournment of said meeting, and thereat to act with respect to all votes
that the undersigned would be entitled to cast, if then personally present, as
follows:
1. ELECTION OF DIRECTORS
Nominees for a three-year term: J. Ardie Dillen and Kenneth R. Rieger
/ / FOR / / WITHHOLD
AUTHORITY
NOTE: To withhold authority to vote for an individual nominee,
strike a line through that nominee's name. Unless
authority to vote for all of the foregoing nominees is
withheld, this Proxy will be deemed to confer authority
to vote for each nominee whose name is not struck.
2. PROPOSAL to adopt the 2000 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL to amend the Company's Amended and Restated Articles of
Incorporation to change the corporate name to Pittsburgh Financial Corp.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE> 50
4. PROPOSAL to ratify the appointment by the Board of Directors of Ernst
& Young LLP as the Company's independent auditors for the fiscal year
ending September 30, 2000.
/ / FOR / / AGAINST / / ABSTAIN
5. PROPOSAL, if necessary, to adjourn the Annual Meeting to solicit
additional proxies.
/ / FOR / / AGAINST / / ABSTAIN
6. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF
RETURNED BUT NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,
2, 3 AND 4 AND, IF NECESSARY, 5 AND OTHERWISE AT THE DISCRETION OF THE PROXIES.
YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED AT THE
ANNUAL MEETING.
Dated: _____________________________
____________________________________
Signature of Stockholder
____________________________________
Signature of Stockholder
NOTE: PLEASE SIGN THIS EXACTLY AS YOUR NAME(S)
APPEAR(S) ON THIS PROXY. WHEN SIGNING IN A
REPRESENTATIVE CAPACITY, PLEASE GIVE FULL
TITLE. WHEN SHARES ARE HELD JOINTLY, ONLY
ONE HOLDER NEED SIGN.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
