[PROXY STATEMENT]
[Letterhead of Falmouth Bancorp, Inc.]
FALMOUTH BANCORP, INC.
20 DAVIS STRAITS, FALMOUTH, MASSACHUSETTS 02540
508-548-3500
December 23, 1997
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of
Stockholders of Falmouth Bancorp, Inc.("Falmouth Bancorp" or the "Company"),
the holding company for Falmouth Co-operative Bank (the "Bank") which will
be held on January 20, 1998 at 3:00 p.m. Eastern Standard time at the
Quality Inn, 921 Jones Road, Falmouth, Massachusetts 02540 (the "Annual
Meeting").
At the Annual Meeting, you will be asked to consider and vote upon:
(1) the election of four directors to serve for a three-year term expiring
in 2001; and (2) the ratification of the appointment of Shatswell MacLeod &
Co., P.C. as independent auditors for the Company for the fiscal year ending
September 30, 1998. In addition, management will report on the operations
and activities of the Company and the Bank and there will be an opportunity
for you to ask questions.
It is very important that your shares be represented at the Annual
Meeting, regardless of whether or not you plan to attend in person. I urge
you to execute, date and return the enclosed proxy card in the postage-paid
envelope provided as soon as possible to ensure that your shares will be
voted at the Annual Meeting.
YOUR VOTE IS IMPORTANT WHETHER OR NOT YOU PLAN
TO ATTEND THE ANNUAL MEETING IN PERSON
The Board of Directors of the Company has determined that the matters
to be considered at the Annual Meeting are in the best interests of the
Company and its stockholders. For the reasons set forth in the Proxy
Statement, the Board unanimously recommends a vote FOR each matter to be
considered.
On behalf of the Board of Directors and the employees of Falmouth
Bancorp, Inc. and Falmouth Co-operative Bank, we thank you for your
continued support.
Sincerely yours,
/s/ Santo P. Pasqualucci
Santo P. Pasqualucci
President and Chief Executive Officer
FALMOUTH BANCORP, INC.
20 DAVIS STRAITS
FALMOUTH, MASSACHUSETTS 02540
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on January 20, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders of
Falmouth Bancorp, Inc. ("Falmouth Bancorp" or the "Company") will be held on
January 20, 1998 at 3:00 p.m. Eastern Standard time at the Quality Inn, 921
Jones Road, Falmouth, Massachusetts 02540 (the "Annual Meeting"). The
Annual Meeting has been called for the following purposes:
1. To elect four directors to serve for a three-year term expiring
at the 2001 annual meeting and until their respective successors
have been duly elected and qualified;
2. To ratify the appointment of Shatswell MacLeod & Co., P.C. as
independent auditors for the Company for the fiscal year ending
September 30, 1998; and
3. To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
Pursuant to the Bylaws of Falmouth Bancorp, the Board of Directors has
fixed December 8, 1997 as the record date for the determination of
stockholders entitled to notice of and to vote at the Annual Meeting and at
any adjournment or postponement thereof. Only holders of the Company's
common stock as of the close of business on the record date will be entitled
to vote at the Annual Meeting or any adjournment or postponement thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR APPROVAL OF EACH PROPOSAL TO BE CONSIDERED AT THE ANNUAL MEETING.
WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE IN THE
MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT. ANY STOCKHOLDER PRESENT
AT THE ANNUAL MEETING, INCLUDING ANY ADJOURNMENT OR POSTPONEMENT THEREOF,
MAY REVOKE SUCH HOLDER'S PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT
BEFORE THE ANNUAL MEETING.
By Order of the Board of Directors
/s/ Jeanne E. Alves
Jeanne E. Alves
Secretary
Falmouth, Massachusetts
December 23, 1997
GENERAL INFORMATION
General
This Proxy Statement and accompanying proxy card are being furnished
to stockholders of Falmouth Bancorp, Inc. ("Falmouth Bancorp" or the
"Company"), in connection with the solicitation of proxies by the Company's
Board of Directors from holders of the shares of the Company's issued and
outstanding common stock, par value $.01 per share (the "Common Stock"), as
of the close of business on December 8, 1997 for use at the 1998 Annual
Meeting of Stockholders to be held on January 20, 1998, at 3:00 p.m. Eastern
Standard time at the Quality Inn, 921 Jones Road, Falmouth, Massachusetts,
and at any adjournment or postponement thereof.
On October 14, 1997, the Company became the holding company for the
Bank pursuant to the Agreement and Plan of Reorganization by and between
Falmouth Co-operative Bank and Falmouth Bancorp, Inc., dated November 25,
1996 (the "Reorganization") and approved by the stockholders on January 21,
1997 at the Bank's 1997 Annual Meeting of Stockholders. The Company, a
Delaware corporation, operates as a bank holding company for its wholly-
owned subsidiary, the Bank.
Holders of Company Common Stock are requested promptly to sign, date
and return the accompanying proxy card to Falmouth Bancorp in the enclosed
postage-paid, addressed envelope.
The Board of Directors of the Company has fixed the close of business
on December 8, 1997 as the Record Date for the determination of the holders
of Company Common Stock entitled to receive notice of and to vote at the
Annual Meeting. Only holders of record of Company Common Stock at the close
of business on that date will be entitled to vote at the Annual Meeting and
at any adjournment or postponement thereof. At the close of business on the
Record Date, there were 1,454,750 shares of Company Common Stock
outstanding.
Each holder of outstanding shares of Company Common Stock on the
Record Date will be entitled to one vote for each share held of record upon
each matter properly submitted at the Annual Meeting and at any adjournment
or postponement thereof. The presence, in person or by proxy, of the
holders of at least a majority of the total number of votes eligible to be
cast in the election of directors generally by the holders of the
outstanding shares of common stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. If a quorum is not obtained, or
if fewer shares of Company Common Stock are voted in favor of Proposal 2
than the number required for approval, it is expected that the Annual
Meeting will be postponed or adjourned for the purpose of allowing
additional time for obtaining additional proxies or votes. At any
subsequent reconvening of the Annual Meeting, all proxies will be voted in
the same manner as such proxies would have been voted at the original
convening of the Annual Meeting (except for any proxies which have
theretofore effectively been revoked or withdrawn).
The Certificate of Incorporation of the Company provides that if any
person beneficially owns, directly or indirectly, shares of Common Stock in
excess of 10% of the then outstanding shares of Common Stock, all such
shares beneficially owned by such person in excess of the 10% threshold
shall be automatically converted into shares of Excess Common Stock. Shares
of Excess Common Stock are identical to shares of Common Stock except that
they are permitted only one one-hundredth (1/100) of a vote per share.
Beneficial ownership of shares includes shares beneficially owned by such
person or any of his or her affiliates, shares which such person or his or
her affiliates have the right to acquire upon the exercise of conversion
rights or options and shares as to which such person and his or her
affiliates have or share investment or voting power, but shall not include
shares beneficially owned by the Company's Employee Stock Ownership Plan
(the "ESOP") or shares that are subject to a revocable proxy and that are
not otherwise beneficially owned or deemed by the Company to be beneficially
owned by such person and his or her affiliates. The Company's Certificate
of Incorporation authorizes and imposes a duty on the Board of Directors, by
action of a majority, to interpret all of the terms and provisions of the
Certificate of Incorporation governing Excess Common Stock and to determine
on the basis of information known to them after reasonable inquiry all facts
necessary to ascertain compliance with the Certificate of Incorporation.
If the enclosed proxy card is properly executed and received by
Falmouth Bancorp in time to be voted at the Annual Meeting, the shares
represented thereby will be voted in accordance with the instructions marked
on the proxy card. Executed proxy cards without voting instructions will be
voted FOR each of the proposals set forth in the accompanying Notice of
Annual Meeting of Stockholders.
Management is not aware of any matters other than those set forth in
the Notice of Annual Meeting of Stockholders that may be brought before the
Annual Meeting. If any other matters properly come before the Annual
Meeting, including, among other things, a motion to adjourn or postpone the
Annual Meeting to another time or place or both for the purpose of
soliciting additional proxies or otherwise, the persons named in the
accompanying proxy will vote the shares represented by all properly executed
proxies on such matters in such manner as shall be determined by a majority
of the Board of Directors of Falmouth Bancorp.
Revocability of Proxies
The presence of a stockholder at the Annual Meeting will not
automatically revoke such stockholder's proxy. However, a stockholder may
revoke a proxy at any time prior to its exercise by (i) delivering to the
Secretary of the Company a written notice of revocation prior to the Annual
Meeting, (ii) delivering to the Secretary of the Company prior to the Annual
Meeting a duly executed proxy bearing a later date or (iii) attending the
Annual Meeting, filing a written notice of revocation with the Secretary of
the Company, and voting in person.
If you are a stockholder whose shares are not registered in your own
name, you will need appropriate documentation from your stockholder of
record to vote personally at the Annual Meeting. Examples of such
documentation would include a broker's statement, letter or other document
that will confirm your ownership of shares of the Company.
Solicitation of Proxies
In addition to solicitation by mail, directors, officers and employees
of Falmouth Bancorp may solicit proxies for the Annual Meeting personally
or by telephone. Falmouth Bancorp will also provide persons, firms, banks
and corporations holding shares in their names or in the names of nominees,
which in either case are beneficially owned by others, proxy material for
transmittal to such beneficial owners and will reimburse such record owners
for their expenses in doing so. The cost of solicitation of proxies for the
Annual Meeting will be borne by Falmouth Bancorp.
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of November 1, 1997, certain
information as to Common Stock beneficially owned by persons owning in
excess of 5% of the outstanding shares of Common Stock. Management knows of
no person, except as listed below, who beneficially owned more than 5% of
the Company's outstanding shares of Common Stock as of November 1, 1997.
Except as otherwise indicated, the information provided in the following
table was obtained from filings with the applicable regulatory authorities
and with the Company pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Addresses provided are those listed in the
filings as the address of the person authorized to receive notices and
communications. For purposes of the table below and the table set forth
under "Stock Ownership of Management," in accordance with Rule 13d-3 under
the Exchange Act, a person is deemed to be the beneficial owner of any
shares of Common Stock (1) over which such person has or shares, directly or
indirectly, voting or investment power, or (2) of which such person has the
right to acquire beneficial ownership at any time within 60 days after
November 1, 1997. As used herein, "voting power" is the power to vote or
direct the voting of shares, and "investment power" includes the power to
dispose or direct the disposition of such shares.
<TABLE>
<CAPTION>
Percent of
Amount of Shares of
Name and Address Beneficial Common Stock
Title of Class of Beneficial Owner Ownership Outstanding (1)
- -------------- ------------------- ---------- ---------------
<S> <C> <C> <C>
Common Stock Falmouth Bancorp, Inc. 74,193(2) 5.0%
Employee Stock Ownership
Plan (the "ESOP")
20 Davis Straits
Falmouth, Massachusetts 02540
Common Stock The Cape Cod Five Cents 131,800(3) 9.1%
Savings Bank
P.O. Box 10
19 West Road
Orleans, Massachusetts 02653
Common Stock Jeffrey L. Gendell 82,000(4) 5.6%
200 Park Avenue, Suite 3900
New York, New York 10166
<FN>
- --------------------
<F1> The total number of shares of Company Common Stock outstanding on
November 1, 1997 was 1,454,750 shares.
<F2> The Employee Stock Ownership Plan ("ESOP") is administered by a
committee of the Company's Board of Directors (the "ESOP Committee").
The ESOP's assets are held in a trust (the "ESOP Trust"), for which
directors Gardner L. Lewis, John L. Lynch, Jr. and Armand Ortins serve
as trustees (the "ESOP Trustee"). The ESOP Trust purchased these
shares with borrowed funds in connection with the conversion of the
Bank to stock ownership form. In connection with the Reorganization,
the Company will assume the ESOP loan. The shares purchased by the
ESOP Trust are held in a suspense account for release and allocation
to the participant's accounts in annual installments. As of September
30, 1997, 13,092 shares held by the ESOP Trust were allocated. The
terms of the ESOP provide that, subject to the ESOP Trustee's
fiduciary responsibilities under the Employee Retirement Income
Security Act of 1974, ("ERISA") as amended, the ESOP Trustee will
vote, tender or exchange shares of Company Common Stock held in the
ESOP Trust in accordance with instructions received from the
participants. The ESOP Trustee will vote allocated shares as to which
no instructions are received and any shares that have not been
allocated to participants' accounts in the same proportion as
allocated shares with respect to which the ESOP Trustee receives
instructions are voted. Except as described above, the ESOP Committee
has sole investment power, except in limited circumstances, but no
voting power over all Company Common Stock held in the ESOP Trust.
<F3> Based on information in a Schedule F-11A filed with the Federal
Deposit Insurance Corporation ("FDIC"), dated January 9, 1997, The
Cape Cod Five Cents Savings Bank is deemed to be the beneficial owner
of these shares.
<F4> Based on information filed in a Schedule 13D with the FDIC, dated July
31, 1997, Mr. Gendell has the sole power to vote and to dispose or
direct the disposition of 34,500 shares and is deemed to be the
beneficial owner of these shares. Totine Financial Partners, L.P.
("Totine") a private investment limited partnership which invests
primarily in financial institutions directly owns 47,500 shares. Mr.
Gendell is the Managing Member of Totine Management, L.L.C. ("TM"),
the general partner of Totine, and therefore may be deemed to have
beneficial ownership of the common stock beneficially owned or deemed
to be beneficially owned by Totine or TM.
</FN>
</TABLE>
Stock Ownership of Management
The following table sets forth information as of December 16, 1997 as
to shares of Company Common Stock beneficially owned by each director of the
Company, the Named Executive Officer of the Company identified in the
Compensation Table appearing in this Proxy Statement and all directors and
executive officers as a group. Ownership information is based upon
information furnished by the respective individuals. Except as otherwise
indicated, each person and each group shown in the table has sole voting and
investment power with respect to the shares of Common Stock indicated.
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Common
Beneficial Stock
Name Title(1) Ownership(2)(3) Outstanding
---- -------- --------------- -----------
<S> <C> <C> <C>
John W. Holland, Jr.(4) Director 4,358 0.3%
James A. Keefe(5) Director 19,527 1.3%
Gardner L. Lewis(6) Director 9,047 0.6%
John J. Lynch, Jr.(7) Director 26,858 1.8%
Ronald L. McLane Director 3,358 0.2%
Eileen C. Miskell(8) Director 6,858 0.5%
Robert H. Moore(9) Director 4,858 0.3%
Walter A. Murphy(10) Chairman of the Board 13,712 0.9%
William E. Newton(11) Director 11,858 0.8%
Armand Ortins Director 4,858 0.3%
Santo P. Pasqualucci(12) President, Chief Executive
Officer and Director 27,473 1.9%
-------
All directors and executive
officers as a group 223,662 15.3%
(15 persons)(13) =======
<FN>
- --------------------
<F1> Titles are for both the Company and the Bank.
<F2> Includes restricted stock awards of 1,064 shares of Common Stock made
to each of the outside directors, with the exception of Mr. Murphy who
was awarded 2,124 shares, under the 1997 Recognition and Retention
Plan for Outside Directors, Officers and Employees of Falmouth
Bancorp, Inc. ("RRP"). Each recipient of an RRP restricted share
award has sole voting power, but no investment power, over the shares
of Common Stock covered by the award.
<F3> The figures above include stock options granted with respect to 794
shares of Common Stock to each of the outside directors under the 1997
Stock Option Plan for Outside Directors, Officers and Employees of
Falmouth Bancorp, Inc. ("SOP"), which options are scheduled to vest on
January 21, 1998. The figures above also include stock options
granted with respect to 1,588 shares to Mr. Murphy which are scheduled
to vest on January 21, 1998.
<F4> Includes 500 shares held jointly with spouse and 2,000 shares held
solely by spouse.
<F5> Includes 2,669 shares held in an Individual Retirement Account
("IRA").
<F6> Includes 2,489 shares held in spouse's IRA, 4,000 shares held in Mr.
Lewis's IRA, 250 shares held individually by spouse, and 350 shares
held by his son, for which Mr. Lewis disclaims beneficial ownership.
<F7> Includes 20,000 shares held in an IRA and 5,000 shares owned by the
corporation of which Mr. Lynch serves as president.
<F8> Includes 1,000 shares held in an IRA, 1,500 shares held solely by
spouse and 2,500 shares owned by a corporation of which Ms. Miskell
serves as treasurer.
<F9> Includes 3,000 shares held in an IRA.
<F10> Includes 10,000 held in an IRA.
<F11> Includes 2,000 shares held by Mr. Newton as trustee for a Profit
Sharing Trust, 2,500 shares held in an IRA, and 2,500 shares held by
Mr. Newton for a corporation of which Mr. Newton is a principal.
<F12> Includes the total of 2,036 shares that have been allocated to Mr.
Pasqualucci under the ESOP as of September 30, 1997, as to which he
has sole voting power, but no investment power, except in limited
circumstances, 18,000 shares held in IRA's in Mr. Pasqualucci's name,
and 6,027 shares held in three trusts for the benefit of Mr.
Pasqualucci's three minor children.
<F13> Includes 3,604 shares held by the ESOP Trust that have been allocated
as of September 30, 1997 to the individual accounts of the executive
officers under the ESOP (excluding Mr. Pasqualucci) as to which such
executive officers have sole voting power, but no investment power,
except in limited circumstances. Also includes 74,193 unallocated
shares held by the ESOP Trust as to which the ESOP Trustee may be
deemed to share voting and investment power.
</FN>
</TABLE>
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
--------------------
PROPOSAL 1
ELECTION OF DIRECTORS
--------------------
General
The Certificate of Incorporation of the Company provides that the
Board of Directors shall be divided into three classes, as nearly equal in
number as possible. The directors of each class serve for a term of three
years, with one class elected each year. In all cases, directors serve
until their successors are elected and qualified.
The Falmouth Bancorp Board of Directors currently consists of eleven
members. The terms of four directors expire at the Annual Meeting. Each of
the four incumbent directors, John J. Lynch, Jr., Walter A. Murphy, William
E. Newton and Santo P. Pasqualucci, has been nominated by the Board of
Directors to serve for a three-year term expiring at the annual meeting of
stockholders to be held in 2001, or until their successors are otherwise
duly elected and qualified. Each nominee has consented to being named in
this Proxy Statement and to serve if elected.
If any nominee is unable to serve, the shares represented by all
properly executed proxies which have not been revoked will be voted for the
election of a substitute as the Board of Directors may recommend, or the
size of the Board of Directors may be reduced to eliminate the vacancy. At
this time, the Board knows of no reason why any nominee might be unavailable
to serve.
Vote Required
Directors are elected by a plurality of the votes cast in person or by
proxy at the Annual Meeting. The holders of Company Common Stock may not
vote their shares cumulatively for the election of directors. Shares
underlying broker non-votes will not be counted as having been voted in
person or by proxy and will have no effect on the election of directors.
Information with Respect to Nominees and Continuing Directors
The following table sets forth certain information with respect to
each nominee for election as a director and each director whose term does
not expire at the Annual Meeting ("Continuing Director"). There are no
arrangements or understandings between the Company and any director or
nominee pursuant to which such person was elected or nominated to be a
director of the Company.
<TABLE>
<CAPTION>
Position(s)
Held with Director
Age(1) Term Expires the Company Since(2)
------ ------------ ----------- --------
Nominees
- --------
<S> <C> <C> <C> <C>
John J. Lynch, Jr. 69 2001 Director 1970
Walter A. Murphy 70 2001 Chairman of the Board 1969
William E. Newton 58 2001 Director 1975
Santo P. Pasqualucci 58 2001 President, Chief Executive 1993
Officer and Director
Continuing Directors
John W. Holland, Jr. 72 1999 Director 1966
James A. Keefe 71 2000 Director 1973
Gardner L. Lewis 60 1999 Director 1993
Ronald L. McLane 80 2000 Director 1970
Eileen C. Miskell 39 1999 Director 1994
Robert H. Moore 64 2000 Director 1976
Armand Ortins 78 1999 Director 1966
<FN>
- --------------------
<F1> As of November 1, 1997.
<F2> Includes service as director of the Bank prior to the formation of the
Company in 1996. All directors of the Bank have served as directors
of the Company since its formation in 1996.
</FN>
</TABLE>
The principal occupation and business experience of each nominee for
election as director and each Continuing Director is set forth below.
Nominees
John J. Lynch, Jr. has served as President of Paul Peters Agency,
Inc., a general insurance agency located in Falmouth, since 1957.
Walter A. Murphy served as President of the Bank from 1968 to 1992 and
continues to serve as the Chairman of the Board of Falmouth Bancorp, Inc..
William E. Newton has worked as a contractor and has been a principal
of C. H. Newton Builders, Inc. in West Falmouth since 1965.
Santo P. Pasqualucci has served as President of the Bank since
December, 1992 and as President and Chief Executive Officer of the Company
since its formation 1996. Prior to that time, he served as the President of
a savings bank for six years. He has served the banking community of
Massachusetts for 30 years.
Continuing Directors
John W. Holland, Jr. is an attorney in the private practice of law in
West Falmouth, Massachusetts. Mr. Holland has provided legal services to
the Bank at its request from time to time.
James A. Keefe has been a principal of Falmouth Ford, an automobile
dealership, since October of 1966.
Gardner L. Lewis is currently retired. He owned and operated The
Pancake Man, a full-service restaurant located in Falmouth, from 1964 to
1993, when the restaurant was leased to a third party.
Ronald L. McLane has been retired for the past five years. Previously
Mr. McLane was a building contractor in the Falmouth area.
Eileen C. Miskell, CPA, is Treasurer of Wood Lumber Company in
Falmouth, Massachusetts. Previously, she was an accountant at the New
England Deaconess Hospital.
Robert H. Moore has worked as an agent with the Paul Peters Agency,
Inc., a general insurance agency located in Falmouth, since May of 1960.
Armand Ortins has been retired since 1984. Previously Mr. Ortins was
owner and operator of a local photo sales and service retail store.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" ALL OF THE NOMINEES FOR ELECTION AS DIRECTORS.
Board of Directors and Committee Meetings
The Board of Directors conducts its business through meetings of the
Board and its committees. Regular meetings of the Board of Directors are
held on a monthly basis. The Board of Directors held 13 regular meetings and
no special meetings during the fiscal year ended September 30, 1997. No
director attended fewer than 75% of the meetings of the Board of Directors
and committees on which such director served during this period.
The Board of Directors of the Company has established the following
committees:
The Executive Committee consists of Directors Keefe, Lewis, Lynch,
Newton, and Pasqualucci. The Executive Committee considers strategic,
planning and industry issues and is authorized to act as appropriate between
meetings of the Board of Directors. The Executive Committee met 12 times in
the 1997 fiscal year.
The Audit Committee consists of Directors Miskell, Lewis and Ortins.
The Audit Committee is responsible for review of the annual audit with the
Company's outside auditors and to report any substantive issues thereon to
the Board. The Audit Committee met once in the 1997 fiscal year.
The Security Committee consists of Directors Miskell, McLane, Moore
and Pasqualucci. The Security Committee reviews the loan collateral,
appraisal reports on real estate, and authorizes the funding of real estate
loans. In addition, the Committee authorizes the release of periodic draws
on construction loans. The Security Committee met 50 times in the 1997
fiscal year.
The Compensation Committee consists of Directors Murphy, Keefe and
Newton. The Compensation Committee is responsible for establishing
guidelines for management and employee compensation. The Compensation
Committee met once in the 1997 fiscal year.
The Board of Directors, acting as the nominating committee, met in
October, 1997 to select the nominees for election as directors at the Annual
Meeting. In accordance with the Bylaws of the Company, no nominations for
election as directors, except those made by the Board acting as nominating
committee, shall be voted upon at the Annual Meeting unless properly made by
a stockholder. To be timely, notice of a stockholder's nomination for an
annual meeting must be delivered to the Secretary of the Company no later
than sixty (60) days prior to the Annual Meeting.
Executive Officers
The following individuals are executive officers of the Company and
hold the offices set forth below opposite their names.
<TABLE>
<CAPTION>
Name Position Held with the Company
---- ------------------------------
<S> <C>
Santo P. Pasqualucci President and Chief Executive Officer
George E. Young, III Vice President and Chief Financial Officer
Jeanne E. Alves Secretary
</TABLE>
The following individuals are executive officers of the Bank and hold
the offices set forth below opposite their names.
<TABLE>
<CAPTION>
Name Position Held with the Bank
---- ---------------------------
<S> <C>
Santo P. Pasqualucci President and Chief Executive Officer
George E. Young, III Vice President and Treasurer
Ronald Garcia Vice President/Senior Loan Officer
Sharon L. Shoner Vice President/Residential Loans
Jeanne E. Alves Clerk/Assistant Treasurer
</TABLE>
The executive officers of the Company and the Bank are elected annually and
hold office until their respective successors have been elected and
qualified, or until death, resignation or removal by the Board of Directors.
The Company has entered into Employment Agreements with certain of its
executive officers which set forth the terms of their employment. See "--
Employment Agreements."
Biographical information of executive officers of the Company and the
Bank is set forth below.
Santo P. Pasqualucci, age 58, has served as President and Chief
Executive Officer of the Bank since December, 1992 and President and Chief
Executive Officer of the Company since 1996. Prior to that time, he served
as the President of a savings bank for six years. He has served the banking
community of Massachusetts for 30 years.
George E. Young, III, age 52, joined the Bank in 1991 as Assistant
Treasurer, was promoted to Treasurer in 1992 and since 1994 has served as
the Bank's Vice President and Treasurer. Mr. Young has also served as Vice
President and Chief Financial Officer of the Company since 1996. He was
Treasurer and Auditor/Compliance Officer from 1973 to 1991 with another
financial institution. Mr. Young has 27 years of banking experience.
Jeanne E. Alves, age 53, has served as the Secretary of the Company
and Clerk of the Bank since November 1997. Ms. Alves joined the Bank in
1984 and was promoted to Assistant Treasurer in 1992.
Ronald Garcia, age 47, has served as Vice President/Senior Loan
Officer of the Bank since April 1997. Prior thereto, he served as Vice
President/Commercial Lending of the Bank from 1994 through April 1997.
Prior thereto, he was a Vice President and Commercial Loan Officer for
Falmouth National Bank/Bank of Boston.
Sharon L. Shoner, age 47, has served with the Loan Department of the
Bank since 1977. She is currently Vice President/Residential Loans of the
Bank, overseeing production of the Residential Loans and new product
development.
Directors' Compensation
Director's Fees. Members of Falmouth Bancorp's Board of Directors,
other than Mr. Pasqualucci, receive fees of $400 per Board meeting and fees
ranging from $100 to $300 per committee meeting attended. The Chairman of
the Board receives $700 per Board meeting attended. Total directors' fees
for fiscal 1997 were $91,900, which includes $4,700 in bonuses paid to
directors during fiscal 1997. All directors fees for fiscal 1997 relate
solely to the Bank.
Compensation Table
The following table sets forth cash and noncash compensation for the
fiscal years ended September 30, 1997, 1996 and 1995 awarded to or earned by
the Company's President and Chief Executive Officer whose compensation
exceeded $100,000 for services rendered in all capacities to the Company and
the Bank during the fiscal year ended September 30, 1997. No other officers
of the Company or the Bank received total compensation in excess of $100,000
in fiscal 1997.
Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
------------------------------------------------
Annual Compensation(1) Awards Payouts
------------------------------------- --------------------- -------
Other Restricted
Annual Stock LTIP All Other
Name and Principal Compensation Awards Options Payouts Compensation
Positions Year Salary($) Bonus($) ($)(2) ($)(3) (#)(3) ($)(3) ($)(4)
------------------ ---- --------- -------- ------------ ---------- ------- ------- ------------
<S> <C> <C> <C> <S> <C>
Santo P. Pasqualucci 1997 $124,499 $5,628 $34,162
President and Chief Executive 1996 121,045 6,052 -- -- -- -- 14,391
Officer 1995 117,545 5,877 -- -- -- -- 7,175
<FN>
- --------------------
<F1> Under Annual Compensation, the column titled "Salary" includes base
salary, amounts deferred under the Company's 401(k) plan (but not
matching contributions from the Company) and payroll deductions for
health insurance under the Company's health insurance plan.
<F2> For fiscal 1997, there were no: (a) perquisites with an aggregate
value for the named individual in excess of the lesser of $50,000 or
10% of the total of the individual's salary and bonus for the year;
(b) payments of above-market preferential earnings on deferred
compensation; (c) payments of earnings with respect to long-term
incentive plans prior to settlement or maturation; (d) tax payment
reimbursements; or (e) preferential discounts on stock.
<F3> During the fiscal year ended September 30, 1997, no restricted stock
awards, stock options or other awards under long-term incentive plans
were granted or awarded to any officers or employees of the Bank or
the Company. It is intended that restricted stock awards and stock
options, however, will be granted to eligible employees pending
approval from the Massachusetts Division of Banks.
<F4> Includes (i) the dollar value of premiums, if any, paid by the Company
with respect to term life insurance (other than group term insurance
coverage under a plan available to substantially all salaried
employees) for the benefit of the executive officer and (ii) the
Company's contributions on behalf of the executive officer to the
Company's 401(k) plan and 623 shares of common stock allocated to the
executive officer under the ESOP for fiscal 1996 and 1,413 shares
allocated to the executive officer for fiscal 1997. The value of the
shares were based on a price of $12.50 and $20.875 closing price on
September 30, 1996 and September 30, 1997, the allocation dates. See
"-- Certain Employee Benefit Plans and Employment Agreement --
Retirement Plans" and "-- Employee Stock Ownership Plan and Trust."
</FN>
</TABLE>
Certain Employee Benefit Plans and Employment Agreement
Employment Agreements. Effective March 28, 1996, the Bank entered into
employment agreements (the "Employment Agreements") with Messrs. Santo
Pasqualucci, the Bank's President and Chief Executive Officer, and George
Young, its Vice President and Treasurer (the "Executives" or when referring
to either one individually, the "Executive"). These Employment Agreements
set forth the duties and compensation of the Senior Executives and are
intended to ensure that the Bank and the Company will be able to maintain an
experienced and competent management pool. The Company assumed these
employment agreements upon consummation of the Reorganization.
The Employment Agreements provide for terms of four years, in the case
of Mr. Pasqualucci, and two years, in the case of Mr. Young; and each will
provide for an annual base salary equal to the Executives' existing base
salary rate in effect on March 28, 1996, the date the Bank converted to
stock form. On each anniversary date from the date of commencement of the
Employment Agreements, the term of employment will be extended for an
additional one-year period beyond the then effective expiration date, upon a
determination by the Board of Directors that the performance of the
Executive has met the required performance standards and that such
Employment Agreement should be extended. The Employment Agreements provide
the Executives with a salary review by the Board of Directors not less often
than annually, as well as with inclusion in any discretionary bonus plans,
retirement and medical plans, customary fringe benefits and vacation and
sick leave. The Employment Agreements will terminate upon the Executives'
death or disability, and are terminable by the Bank or the Company for
"cause" as defined in the Employment Agreements. In the event of termination
for cause, no severance benefits are available. If the Bank or the Company
terminates the Executive without cause, the Executive will be entitled to a
continuation of his salary and benefits from the date of termination through
the remaining term of the Employment Agreement. If an Employment Agreement
is terminated due to the Executive's "disability" (as defined in the
Employment Agreement), the Executive will be entitled to a continuation of
his salary at three-quarters level and benefits until the Executive becomes
employed again, reaches age 65 or dies. In the event of an Executive's death
during the term of the Employment Agreement, his estate will be entitled to
receive his salary through the end of the month of his death.
The Employment Agreements contain provisions stating that in the event
of an Executive's involuntary termination of employment in connection with,
or within one-year after, any "change in control" (as defined in the
Employment Agreement), the Executive will be paid within 10 days of such
termination an amount equal to 2.99 times his "base amount," as defined in
Section 280G(b)(3) of the Code, in the case of Mr. Pasqualucci, and 2 times
his base amount, in the case of Mr. Young. The Employment Agreements also
provide for a lump sum payment of the payments due to an Executive for the
remaining term of the Employment Agreement to be made in the event of the
Executive's voluntary termination of employment, upon the occurrence, or
within 60 days thereafter, of certain specified events which have not been
consented to in writing by an Executive, including (i) the requirement that
an Executive perform his principal executive functions more than 35 miles
from the Bank's or the Company's current primary office, (ii) a material
reduction in the Executive's authority and responsibility, (iii) liquidation
or dissolution of the Bank or the Company and (iv) a breach of the
Employment Agreement by the Bank or the Company.
Retirement Plans. The Bank is a participant in the retirement plans
sponsored by the Co-operative Bank Employees Retirement Association
("CBERA"). Two plans are provided: a defined contribution plan (the "401(k)
Plan"), under which employee contributions are matched by contributions from
the Company, and a Defined Benefit Plan that is funded solely by the
employer. Employees of the Bank are eligible for enrollment in these Plans
after attaining age 21 and completing one year of service (defined as a
12-month period commencing on the date of hire during which the employee has
worked at least 1,000 hours).
Under the 401(k) Plan, the Bank provides a 50% match of participating
employees' contributions up to a limit of 5% of salary. Under the Defined
Benefit Plan, upon reaching the age of 65, participants are entitled to
receive their vested account balances in a lump sum or periodically in the
form of an annuity. Annual retirement benefits under the Defined Benefit
Plan are determined according to the following formula: one percent of the
final average compensation paid over the employee's three consecutive
highest years, plus one-half percent of the amount by which the above
average exceeds the employee's average Social Security Wage Base for a
designated period, times all years of service since January 1, 1989.
The following table sets forth the estimated annual benefits that
would be payable under the Defined Benefit Plan in the form of a single life
annuity before reduction for the social security amount upon retirement at
the normal retirement date. The amounts are expressed at various levels of
compensation and years of service.
<TABLE>
<CAPTION>
Pension Plan Table
Years of Credited Service
Average ------------------------------------
Earnings 10 15 20 25
- -------------------------------------------------
<S> <C> <C> <C> <C>
$ 20,000 $ 2,000 $ 3,000 $ 4,000 $ 5,000
40,000 4,535 6,802 9,070 11,337
60,000 7,535 11,302 15,070 18,837
80,000 10,535 15,802 21,070 26,337
100,000 13,535 20,302 27,070 33,837
120,000 16,535 24,802 33,070 41,337
140,000 19,535 29,302 39,070 48,837
160,000 21,535 32,302 43,070 53,837
</TABLE>
For purposes of determining the estimated annual benefits that would
be payable under the Defined Benefit Plan to Santo P. Pasqualucci, the Named
Executive Officer listed in the Summary Compensation Table, Mr. Pasqualucci
had completed four years, ten months of service to the Bank as of September
30, 1997, and had final average compensation of $121,026.
Employee Stock Ownership Plan and Trust. The Company has established,
for the benefit of eligible employees, an ESOP and related trust which
became effective upon completion of the Conversion. Substantially all
employees of the Company who have attained age 21 and have completed six
months of service may be eligible to become participants in the ESOP. The
ESOP purchased 87,285 shares of Company Common Stock issued in the Bank's
conversion to stock form. In order to fund the ESOP's purchase of the
Company Common Stock, the Company borrowed funds equal to the aggregate
purchase price of the Company's Common Stock. Although contributions to the
ESOP are discretionary, the Company makes annual contributions to the ESOP
in an aggregate amount at least equal to the principal and interest
requirement on the debt. The ESOP loan is for a term of 10 years, bearing
interest at the rate of 8.15% per annum and calls for level annual payments
of principal and interest designed to amortize the loan over its term. The
loan also permits optional pre-payment. Pursuant to the Reorganization, the
Company will assume the ESOP loan and pay off the current third party
lender. The Company may make additional annual contributions to the ESOP to
the maximum extent deductible for federal income purposes.
Shares purchased by the ESOP are pledged as collateral for the loan,
and held in a suspense account until released for allocation among
participants in the ESOP as the loan is repaid. The pledged shares will be
released annually from the suspense account in an amount proportional to the
repayment of the ESOP loan for each plan year, and allocated among the
accounts of participants on the basis of the participant's compensation for
the year of allocation. Participants will be fully vested at all times as
to any shares that have been allocated to their account. Vested benefits
may be paid in a single sum or in the form of shares of Company Common Stock
and are payable upon death, retirement at age 65 or older, disability or
separation from service.
In connection with the establishment of the ESOP, a Committee of the
Company's Board of Directors was appointed to administer the ESOP (the "ESOP
Committee"). The trustees of the ESOP are directors Gardner Lewis, John J.
Lynch, Jr. and Armand Ortins. The ESOP Committee may instruct the trustees
regarding investment of funds contributed to the ESOP. The ESOP trustees,
subject to their fiduciary duty, must vote all allocated shares held in the
ESOP in accordance with the instructions of the participating employees.
Under the ESOP, unallocated shares will be voted in a manner calculated to
most accurately reflect the instructions it has received from participants
regarding the allocated stock as long as such vote is in accordance with the
provisions of ERISA.
The ESOP may purchase additional shares of Company Common Stock in the
future, in the open market or otherwise, and may do so either on a leveraged
basis with borrowed funds or with cash dividends, periodic employer
contributions or other cash flow. Whether such purchases will be made and
the terms and conditions of any such purchases will be determined by the
ESOP's fiduciaries taking into account such factors as they consider
relevant at the time, including their judgment as to the attractiveness of
the Company Common Stock as an investment, the price at which Company Common
Stock may be purchased and, in the case of leveraged purchases, the terms
and conditions on which borrowed funds are available and the willingness of
the Company to offer purchase money financing or guarantee purchase money
financing offered by third parties.
Stock Option Plan
The 1997 Stock Option Plan for Outside Directors, Officers and
Employees of Falmouth Co-operative Bank ("Stock Option Plan") was adopted by
the Board of Directors of the Bank and approved by its stockholders at the
1997 Annual Meeting. In accordance with the terms of the Company's Plan of
Reorganization, the Company assumed sponsorship of the Stock Option Plan and
changed its name to the "1997 Stock Option Plan for Outside Directors,
Officers and Employees of Falmouth Bancorp, Inc." The purpose of the Stock
Option Plan continues to be to promote the growth of the Company, the Bank
and other affiliates by linking the incentive compensation of officers, key
executives and directors with the profitability of the Company. The Stock
Option Plan is not subject to ERISA and is not a tax-qualified plan. The
Company has reserved an aggregate of 145,475 shares of Common Stock for
issuance upon the exercise of stock options granted under the Plan.
The Stock Option Plan is administered by the members of the Board's
Compensation Committee who are disinterested directors ("Option Committee").
In general, both "incentive stock options" and non-qualified stock options
to purchase Common Stock of the Company ("Options") may be granted to
eligible officers, employees and outside directors, subject to the
restrictions of the Internal Revenue Code. The Option Committee has
discretion under the Stock Option Plan to establish certain material terms
of the Options granted to officers and employees provided such grants are
made in accordance with the Plan's requirements. Although Options have not
been granted to any officers or employees as of November 15, 1997, the
Company expects to make stock option grants to eligible officers and
employees once the material terms and conditions of such grants have been
approved by the Massachusetts Division of Banks. All Options granted to
outside directors are by automatic formula grant and the Option Committee
has no discretion over the material terms of these grants. As of December
16, 1997, each outside director of the Bank has been granted a non-qualified
stock option to purchase an aggregate of 3,969 shares of Common Stock at an
exercise price of $13.375 per share and the Chairman has been granted a non-
qualified stock option to purchase an aggregate of 7,939 shares of Common
Stock, including 3,969 shares of Common Stock at an exercise price of
$13.375 and 3,970 shares of Common Stock at an exercise price of $19.825.
None of these Options are currently exercisable.
All stock options granted under the Plan generally vest in 20%
increments over a five year period subject to automatic full vesting upon
the optionee's death, disability or retirement or upon a change in control
of the Company. The Company believes the use of a vesting schedule will
encourage each Option recipient to remain in the service of the Company (or
an affiliate) and contribute to its profitability in order to enjoy the full
economic benefit of the Option. All costs of the Stock Option Plan are
borne by the Company. The Company has reserved the right to amend or
terminate the Plan, in whole or in part, subject to the requirements of all
applicable laws.
Recognition and Retention Plan
The 1997 Recognition and Retention Plan for Outside Directors,
Officers and Employees of Falmouth Co-operative Bank (the "RRP") was adopted
by the Board of Directors of the Bank and approved by its stockholders at
the 1997 Annual Meeting. In accordance with the Company's Plan of
Reorganization, the Company also assumed sponsorship of the RRP and changed
its name to the "1997 Recognition and Retention Plan For Outside Directors,
Officers and Employees of Falmouth Bancorp, Inc." Similar to the Stock
Option Plan, the RRP functions as a long-term incentive compensation program
for eligible officers, employees and outside directors of the Company, the
Bank and other affiliates. The RRP is administered by the members of the
Board's Compensation Committee who are disinterested directors ("RRP
Committee"). All costs and expenses of administering the RRP are paid by
the Company.
As required by the terms of the RRP, the Company has established a
trust ("Trust") and will contribute, or cause to be contributed, to the
Trust, from time to time, funds sufficient to purchase up to 58,190 shares
of Common Stock, the maximum number of restricted stock awards ("Restricted
Stock Awards") that may be granted under the RRP. Shares of Common Stock
subject to a Restricted Stock Award are held in the Trust until the Award
vests and which time the shares of Common Stock attributable to the portion
of the Award that have vested are distributed to the Award holder. An Award
recipient is entitled to exercise voting rights and receive cash dividends
with respect to the shares of Common Stock subject to his Award, whether or
not the underlying shares have vested.
Restricted Stock Awards are granted under the RRP on a discretionary
basis to eligible officers and executives selected by the RRP Committee and
are awarded to outside directors pursuant to the terms of the RRP. As of
November 15, 1997, no Restricted Stock Awards have been granted to any
officers or employees under the RRP. The Company does, however, expect to
grant Restricted Stock Awards to eligible officers and employees once
approval of the material terms of such Awards is obtained from the
Massachusetts Division of Banks. As of November 15, 1997, each outside
director has been granted a Restricted Stock Award with respect to 1,064
shares of Common Stock and the Chairman received a Restricted Stock Award
with respect to 2,124 shares of Common Stock. All outstanding Restricted
Stock Awards will vest and become distributable at the rate of 20% per year,
over a five year period, commencing on February 1, 1998, subject to
automatic full vesting on the date of the Award holder's death, disability
or retirement or upon a change in control of the Company.
The Company may amend or terminate the RRP, in whole or in part, at
any time, subject to the requirements of all applicable laws.
Transactions with Certain Related Persons
From time to time the Bank makes mortgage or other loans to its
directors. Prior to the enactment of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 ("FIRREA"), the Bank had a policy of
offering loans to directors, officers and employees on terms substantially
equivalent to those offered to the public.
Under FIRREA, loans to Falmouth Bancorp's directors are required to be
made on terms substantially the same as those offered in comparable
transactions to other persons. Furthermore, FIRREA generally prohibits loans
above the greater of $25,000 or 5.0% of the Bank's capital and surplus (up
to $500,000) to directors and officers and their affiliates, unless such
loans are approved in advance by a disinterested majority of the Board of
Directors. As a matter of policy, loans to directors of the Company, as well
as other affiliated persons or entities, currently are made in the ordinary
course of business and on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons, do not involve more than the normal risk of
collectability or present other unfavorable features, and are approved by
the Board of Directors.
In addition to these provisions of federal law, Massachusetts law
requires that loans by a co-operative bank to its officers and directors be
made on non-preferential terms and receive the prior approval of a
disinterested majority of the board of directors. Further, loans by a
co-operative bank to its own officers may not exceed $20,000 for general
purposes; $75,000 for educational purposes; and $275,000 for residential
home mortgage purposes. All loans by a co-operative bank to its officers and
directors must be reported annually to the Commissioner.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers, and any person holding more than ten percent of the
Company's Common Stock to file with the SEC reports of ownership changes.
Officers, directors and greater than ten percent stockholders are required
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that all filing requirements applicable to its executive officers, directors
and greater than ten percent beneficial owners were complied with.
--------------------
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
--------------------
General
The Board of Directors has appointed the firm of Shatswell MacLeod &
Co., P.C. as independent auditors for the Company for the fiscal year ending
September 30, 1998, subject to ratification of such appointment by the
stockholders. Representatives of Shatswell MacLeod & Co., P.C. are expected
to be present at the Annual Meeting to respond to questions and to make a
statement if they desire to do so.
Vote Required
The ratification of the appointment by the Board of Directors of
Shatswell MacLeod & Co., P.C. as the Company's independent auditors requires
the affirmative vote of the holders of a majority of the number of votes
eligible to be cast by the holders of the outstanding shares of Common Stock
of the Company present and entitled to vote at the Annual Meeting.
Accordingly, shares as to which the "ABSTAIN" box has been selected on the
Proxy Card will be counted as present and entitled to vote and will have the
effect of a vote against Proposal 2. Shares underlying broker non-votes
will not be counted as having been voted in person or by proxy and will have
no effect on the vote for Proposal 2.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF SHATSWELL MACLEOD & CO., P.C.
AS INDEPENDENT AUDITORS FOR THE COMPANY.
PROPOSALS FOR 1999 ANNUAL MEETING
Any stockholder wishing to have a proposal, including nominations to
the Board of Directors, considered for inclusion in the Company's proxy
statement and form of proxy relating to the 1999 Annual Meeting of
stockholders must, in addition to other applicable requirements, set forth
such proposal in writing and file it with the Corporate Secretary of
Falmouth Bancorp on or before August 25, 1998.
FINANCIAL STATEMENTS
A copy of the Annual Report containing financial statements for the
Bank at September 30, 1997 and September 30, 1996, prepared in conformity
with generally accepted accounting principles, accompanies this Proxy
Statement. The financial statements for the fiscal years ended September
30, 1997 and September 30, 1996 have been audited by Shatswell MacLeod & Co.
The reports the independent auditor thereon appear in this Proxy Statements
and in the Annual Report. An additional copy of the Annual Report will be
furnished without charge to stockholders upon request.
The Company is required to file an annual report on Form 10-KSB for
its fiscal year ended September 30, 1997 with the SEC. Stockholders may
obtain, free of charge, a copy of such annual report (excluding exhibits) by
writing to George E. Young, Falmouth Bancorp, Inc., 20 Davis Straits,
Falmouth, Massachusetts 02540.
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, PLEASE
SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE POSTAGE-
PAID ENVELOPE PROVIDED.
By Order of the Board of Directors
/s/ Jeanne E. Alves
Jeanne E. Alves
Secretary
Falmouth, Massachusetts
December 23, 1997
[INSTRUCTIONS]
FALMOUTH BANCORP, INC.
CONFIDENTIAL VOTING INSTRUCTION
SOLICITED BY THE COMPENSATION COMMITTEE
OF FALMOUTH BANCORP, INC.
FOR THE FALMOUTH BANCORP, INC.
EMPLOYEE STOCK OWNERSHIP PLAN*
The undersigned participant, former participant or beneficiary of a
deceased former participant of the Falmouth Bancorp, Inc. Employee Stock
Ownership Plan (the "ESOP") hereby provides the voting instructions
specified to the trustee ("Trustee") of the ESOP trust (the "ESOP Trust"),
which instructions shall be taken into account by the Trustee in voting,
in person, by limited or general power of attorney, or by proxy, the
shares and fractional shares of common stock of Falmouth Bancorp, Inc.
that are held by the Trustee, in its capacity as Trustee of the ESOP, as
of December 8, 1997, at the 1998 Annual Meeting of Stockholders of
Falmouth Bancorp, Inc. to be held on January 20, 1998, and at any
adjournment or postponement thereof.
As to the proposals listed on the reverse side, which are more
particularly described in the Proxy Statement dated December 23, 1997, the
Trustee will vote the common stock of Falmouth Bancorp, Inc. held by the
ESOP Trust to reflect the voting instructions on this Confidential Voting
Instruction, in the manner described in the accompanying letter from the
Compensation Committee dated December 23, 1997.
* Formerly, the Falmouth Co-operative Bank Employee Stock Ownership Plan
(Continued on reverse side. Please complete, sign and date on the
reverse side and promptly return in the enclosed postage-paid envelope.)
The Board of Directors of Falmouth Bancorp, Inc. recommends a vote
"FOR" all nominees in Proposal No. 1 and "FOR" Proposal No. 2. If this
Confidential Voting Instruction is signed but no direction is given, this
voting instruction card will be deemed to instruct votes "FOR" all
nominees in Proposal No. 1 and "FOR" Proposal No. 2. The directions, if
any, given in this Confidential Voting Instruction will be kept
confidential from all directors, officers and employees of Falmouth
Bancorp, Inc. or Falmouth Co-operative Bank.
Please mark your votes like this [X]
1. Election of four Directors for terms of three years each.
Nominees: John J. Lynch, Jr., Walter A. Murphy, William E. Newton, and
Santo P. Pasqualucci.
FOR all nominees (except as otherwise indicated) [ ]
WITHHOLD as to all nominees [ ]
To withhold authority to vote FOR any individual nominee, write that
nominee's name in the space provided:
-------------------------------------------------------------------------
2. Ratification of the appointment of Shatswell MacLeod & Co., P.C. as
independent auditors of Falmouth Bancorp, Inc. for the fiscal year ending
September 30, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
In its discretion, the Trustee is authorized to vote upon such other
business as may come before the Annual Meeting or any adjournment or
postponement thereof or to cause such matters to be voted upon in the
discretion of the individuals named in any proxies executed by the
Trustees.
All proposals listed above in this Confidential Voting Instruction
were proposed by Falmouth Bancorp, Inc.
The undersigned hereby instructs the Trustee to vote in accordance
with the voting instruction indicated above and hereby acknowledges
receipt, prior to the execution of this Confidential Voting Instruction,
of a Voting Instruction Letter, a Notice of Annual Meeting of Stockholders
of Falmouth Bancorp, Inc., a Proxy Statement dated December 23, 1997 for
the 1998 Annual Meeting and a 1997 Annual Report to Stockholders.
Please sign and date below and return promptly in the enclosed
postage-paid envelope. Your Confidential Voting Instruction must be
received no later than January 12, 1998.
Date __________________________________
Signature _____________________________
Signature of participant, former
participant or designated beneficiary
of deceased former participant.
Please sign name exactly as it appears
herein. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title
as such.
[PROXY CARD]
Falmouth Bancorp, Inc. REVOCABLE PROXY
This Proxy is solicited on behalf of the Board of Directors of
Falmouth Bancorp, Inc.
for the Annual Meeting of Stockholders to be held on January 20, 1998.
The undersigned stockholder of Falmouth Bancorp, Inc. hereby
appoints Gardner L. Lewis and Robert H. Moore, and each of them, with full
powers of substitution, to represent and to vote as proxy, as designated,
all shares of common stock of Falmouth Bancorp, Inc. held of record by the
undersigned on December 8, 1997, at the 1998 Annual Meeting of
Stockholders (the "Annual Meeting") to be held at 3:00 p.m., Eastern
Standard Time, on January 20, 1998, or at any adjournment or postponement
thereof, upon the matters described in the accompanying Notice of the 1998
Annual Meeting of Stockholders and Proxy Statement, dated December 23,
1997, and upon such other matters as may properly come before the Annual
Meeting. The undersigned hereby revokes all prior proxies.
This Proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is given,
this Proxy will be voted FOR the election of all nominees listed in Item 1
and FOR the proposal listed in Item 2.
PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE SIDE
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
The Board of Directors unanimously recommends a vote "FOR" all of the
nominees named in Item 1 and a vote "FOR" the proposal in Item 2.
Please mark your vote as indicated in this example [X]
I will attend the Annual Meeting [ ]
1. Election of four Directors for terms of three years each.
Nominees: John J. Lynch, Jr., Walter A. Murphy, William E. Newton and
Santo P. Pasqualucci
FOR All nominees (except as otherwise indicated) [ ]
WITHHOLD for all nominees [ ]
Instruction: TO WITHHOLD AUTHORITY to vote for any individual nominee,
write that nominee's name in the space provided:
_________________________________________________________________________
2. Ratification of the appointment of Shatswell MacLeod & Co., P.C. as
independent auditors for the fiscal year ending September 30, 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
The undersigned hereby acknowledges
receipt of the Notice of the 1998
Annual Meeting of Stockholders and the
Proxy Statement, dated December 23,
1997 for the 1998 Annual Meeting.
_______________________________________
_______________________________________
Signature(s)
Dated:________________________ , 199__
Please sign exactly as your name appears
on this proxy. Joint owners should each
sign personally. If signing as attorney,
executor, administrator, trustee or
guardian, please include your full
title. Corporate or partnership proxies
should be signed by an authorized
officer.
[LETTER]
December 23, 1997
To: All Employee Stock Ownership Plan ("ESOP") Participants
Re: 1998 Annual Meeting of Stockholders to be held on January 20, 1998
Dear Participants:
As you know, upon the completion of its conversion to stock form,
Falmouth Co-operative Bank (the "Bank") introduced a new benefit plan -- an
Employee Stock Ownership Plan, or "ESOP," which purchased shares of the Bank
in the conversion. Falmouth Bancorp, Inc. (the "Company") assumed the ESOP
upon consummation of the reorganization whereby the Company became the holding
company for the Bank. These ESOP shares are held in a trust (the "ESOP Trust")
for which directors Gardner L. Lewis, John J. Lynch, Jr. and Armand Ortins
serve as trustees (the "Trustee"). The shares purchased by the ESOP Trust are
held in a suspense account for release and allocation to the participant's
accounts in annual installments. The ESOP allows participants to have certain
voting rights at the Company's stockholder meetings with respect to the shares
of common stock held by the Trustee.
In connection with the 1998 Annual Meeting of Stockholders of Falmouth
Bancorp, Inc. to be held on January 20, 1998, enclosed are the following
documents:
1. Confidential Voting Instruction sheet for the ESOP;
2. Proxy Statement, dated December 23, 1997, including a Notice of
Annual Meeting of Stockholder's; and
3. the Company's 1997 Annual Report to Stockholders.
As a participant in the ESOP, you have the right to direct the Trustee
how to vote the shares allocated to your account under the ESOP as of December
8, 1997, the record date for the Annual Meeting ("Record Date"), on the
proposals to be voted on by the Company's stockholders. Your rights as a
participant in the ESOP will vary depending on whether the matter being voted
on is an "Anticipated Proposal" or an "Unanticipated Proposal."
Anticipated Proposals.
ESOP Participants.
Each ESOP participant will have the right to specify how the Trustee, as
Trustee for the ESOP, should vote the shares in his or her ESOP account as of
the Record Date. The number of shares for which you may express a preference
are shown on the enclosed Confidential Voting Instruction sheet.
The Trustee's fiduciary duties require it to vote any shares for which
it receives no voting instructions, as well as any shares not yet given to
ESOP participants, in a manner determined to be prudent and solely in the
interest of the participants and beneficiaries. If you do not direct the
Trustee how to vote the shares, the Trustee will, to the extent consistent
with its fiduciary duties, vote your shares in a manner calculated to most
accurately reflect the instructions received from other participants in the
ESOP. The same is true of shares not yet placed in anyone's ESOP account and
not considered allocated for the purpose of this meeting.
Unanticipated Proposals.
It is possible, although very unlikely, that proposals other than those
specified on the Confidential Voting Instruction sheets will be presented for
stockholder action at the 1998 Annual Meeting of Stockholders. If this should
happen, the Trustee will vote upon such matters in its discretion, or cause
such matters to be voted upon in the discretion of the individuals named in
any proxies executed by it.
* * * * *
Your instruction is very important. You are encouraged to review the
enclosed materials carefully and to complete, sign and date the enclosed
Confidential Voting Instruction sheet or sheets to signify your direction
to the Trustee. You should then seal the completed sheet or sheets in the
enclosed envelope and return it directly to ChaseMellon Shareholder Services,
LLC using the postage-paid return envelope provided. The Confidential Voting
Instruction sheet or sheets must be received by ChaseMellon no later than
January 12, 1998.
Please note that the voting instructions of individual participants are
to be kept confidential by ChaseMellon Shareholder Services, LLC, who has been
instructed not to disclose them to anyone at the Company or the Bank. If you
have any questions regarding your voting rights or the terms of the ESOP,
please see Tim Young.
Very truly yours,
The Compensation Committee of
Falmouth Bancorp, Inc.
Enclosures
