CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
The Bryan-College Station Financial Holding Company
(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: common
stock, par value $.01 per share, of [Name of Corporation] ("[Name of
Corporation] Common Stock").
(2) Aggregate number of securities to which transaction applies: 389,436
shares of The Bryan-College Station Financial Holding Company Common
Stock.
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: $35.00 (average of high and low
prices per share of [Name of Corporation] Common Stock as reported on
the Nasdaq Stock Market on July 13, 1998).
(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>
[LETTERHEAD OF THE BRYAN-COLLEGE STATION FINANCIAL HOLDING COMPANY]
January 4, 1999
Dear Stockholder of the Company:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of The Bryan-College Station Financial Holding Company (the "Company"). The
meeting will be held at the principal offices of the institution located at 2900
Texas Avenue, Bryan, Texas on February 18, 1999 at 3:00 P.M., Bryan, Texas,
time. In addition to the annual stockholder vote on corporate business items,
the meeting will include management's report to you on the Company's 1998
financial and operating performance.
An important aspect of the annual meeting process is the annual stockholder
vote on corporate business items. I urge you to exercise your rights as a
stockholder to vote and participate in this process. This year, stockholders are
being asked to consider and vote upon, in addition to the election of directors
and ratification of the appointment of auditors, on the ratification of the
adoption of the Company's 1998 Stock Option and Incentive Plan. The Board of
Directors believes that the approval of the stock option plan will enhance the
ability of the Company to recruit and retain quality directors and management.
Stockholders are also being asked to consider and vote upon the approval of
amendments to the Company's Certificate of Incorporation. The first amendment
would place voting limitations on persons owning in excess of 10% of the
outstanding shares of the Company's common stock and require that any further
amendment to this clause, if approved, be subject to an affirmative vote of at
least 80% of the shares entitled to vote. The Board of Directors believes that
this amendment will make the Company a less attractive target for acquisition by
an outsider who does not have the support of the Company's directors and who
desires to obtain control by purchasing a majority, but not all of the
outstanding voting shares. The second amendment would decrease the number of
shares of authorized common stock from 3,000,000 shares to 1,500,000 shares so
that the Company could save a substantial amount in Delaware franchise taxes.
The Board of Directors recommends the adoption of these two amendments to be in
the best interests of the Company.
We encourage you to attend the meeting in person. Whether or not you attend
the meeting, we hope that you will read the enclosed proxy statement and then
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN it in the postage
prepaid envelope provided. This will save the Company additional expenses in
soliciting proxies and will ensure that your shares are represented. Please note
that you may vote in person at the meeting even if you have previously returned
the proxy card.
Thank you for your attention to these important matters.
Sincerely,
Richard L. Peacock
Chairman of the Board
J. Stanley Stephen
President/Chief Executive Officer
<PAGE>
THE BRYAN-COLLEGE STATION FINANCIAL HOLDING COMPANY
2900 TEXAS AVENUE
BRYAN, TEXAS 77802
(409) 779-2900
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on February 18, 1999
Notice is hereby given that the Annual Meeting of common stockholders (the
"Meeting") of The Bryan-College Station Financial Holding Company (the
"Company") will be held at 2900 Texas Avenue, Bryan, Texas, at 3:00 P.M. Bryan,
Texas time, on February 18, 1999.
A proxy card and a proxy statement for the Meeting are enclosed. The
Meeting is for the purpose of considering and acting upon:
1. The election of 12 Directors of the Company;
2. The ratification of the adoption of the Company's 1998 Stock Option
and Incentive Plan;
3. The approval of an amendment to the Fourth Article of the Company's
Certificate of Incorporation that would amend clause A by decreasing
the number of shares of authorized common stock, par value $.01 per
share from 3,000,000 to 1,500,000;
4. The approval of an amendment to the Fourth Article of the Company's
Certificate of Incorporation adding clause D that would limit the
voting rights of any stockholder who beneficially owns in excess of
10% of the then-outstanding shares of Company common stock (the
"Limit") from voting any shares held in excess of the Limit;
5. The approval of an amendment to the Thirteenth Article of the
Company's Certificate of Incorporation requiring the affirmative vote
of at least 80% of the shares entitled to vote must approve an
amendment to clause D of the Fourth Article, provided that proposal 4
is approved;
6. The ratification of the appointment of Crowe, Chizek & Company LLP as
auditors for the Company for the fiscal year ending September 30,
1999;
and such other matters as may properly come before the Meeting, or any
adjournments thereof. The Board of Directors is not aware at this time of any
other business to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on the
date specified above, or on any date or dates to which the Meeting may be
adjourned. Common stockholders of record at the close of business on December
21, 1998, are the stockholders entitled to vote at the Meeting, and any
adjournments thereof.
You are requested to complete and sign the enclosed form of proxy which is
solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend and vote at the
Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
Richard L. Peacock
Chairman of the Board
J. Stanley Stephen
President and Chief Executive Officer
Bryan, Texas
January 4, 1999
- --------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
THE BRYAN-COLLEGE STATION FINANCIAL HOLDING COMPANY
2900 Texas Avenue
Bryan, Texas 77802
(409) 779-2900
ANNUAL MEETING OF STOCKHOLDERS
February 18, 1999
This proxy statement is furnished in connection with the solicitation on
behalf of the Board of Directors of The Bryan-College Station Financial Holding
Company (the "Company"), the parent company for First Federal Savings Bank
("First Federal" or the "Bank") of proxies to be used at the Annual Meeting of
Stockholders of the Company (the "Meeting") which will be held at 2900 Texas
Avenue, Bryan, Texas, on February 18, 1999, at 3:00 P.M., Bryan, Texas time, and
all adjournments of the Meeting. The accompanying notice of meeting, proxy and
this proxy statement are first being mailed to common stockholders on or about
January 4, 1999.
At the Meeting, common stockholders of the Company are being asked to
consider and vote upon the election of 12 directors of the Company; the
ratification of the adoption of the Company's 1998 Stock Option and Incentive
Plan; the approval of an amendment to the Fourth Article of the Company's
Certificate of Incorporation that would amend clause A by decreasing the number
of shares of authorized common stock, par value $.01 per share from 3,000,000 to
1,500,000; the approval of an amendment to the Fourth Article of the Company's
Certificate of Incorporation adding clause D that would limit the voting rights
of any stockholder who beneficially owns in excess of 10% of the then
outstanding shares of Company common stock (the "Limit") from voting any shares
held in excess of the Limit; the approval of an amendment to the Thirteenth
Article of the Company's Certificate of Incorporation requiring that the
affirmative vote of at least 80% of the shares entitled to vote must approve an
amendment to clause D of the Fourth Article if proposal 4 is approved; and the
ratification of the appointment of Crowe, Chizek & Company LLP as auditors for
the Company for the fiscal year ending September 30, 1999.
VOTE REQUIRED AND PROXY INFORMATION
All shares of the Company's common stock ("Common Stock") represented at
the Meeting by properly executed proxies received prior to or at the Meeting,
and not revoked, will be voted at the Meeting in accordance with the
instructions thereon. If no instructions are indicated, properly executed
proxies will be voted for the nominees and the adoption of the proposals set
forth in this proxy statement. The Company does not know of any matters, other
than as described in the notice of meeting, that are to come before the Meeting.
If any other matters are properly presented at the Meeting for action, the
persons named in the enclosed form of proxy and acting thereunder will have the
discretion to vote on such matters in accordance with their best judgment.
Directors shall be elected by a plurality of votes present in person or
represented by proxy at the Meeting and entitled to vote on the election of
Directors. The ratification of the adoption of the 1998 Stock Option and
Incentive Plan; the approval of the amendments to the Fourth Article of the
Company's Certificate of Incorporation, and appointment of the independent
auditors require the affirmative vote of a majority of shares present in person
or represented by proxy at the Meeting and entitled to vote on the matter. The
approval of the amendment to the Thirteenth Article of the Company's Certificate
of Incorporation requires the affirmative vote of the holders of at least 80% of
the outstanding shares of Common Stock. Proxies marked to abstain with respect
to a proposal have the same effect as votes against the proposal. Broker
non-votes have no effect on the vote.
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company's Board of Directors at or before the Meeting a written notice of
revocation bearing a later date than the proxy; (ii) duly executing a subsequent
proxy relating to the same shares and delivering it to the Secretary of the
Company's Board of Directors at or before the Meeting; or (iii) attending the
Meeting and voting in person (although attendance at the Meeting will not in and
of itself constitute revocation of a proxy). Any written notice revoking a proxy
should be delivered to Charles Neelley, Secretary of the Board of Directors, at
the above stated address.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record as of the close of business on December 21, 1998,
will be entitled to one vote for each share of Common Stock then held. As of
that date, the Company had 389,436 shares of Common Stock issued and
outstanding. The following table sets forth information regarding share
ownership of those persons or entities known by management to beneficially own
more than five percent of the Common Stock and all directors and executive
officers of the Company and the Bank as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
BENEFICIAL OWNER AT 12/21/98 PERCENT OF CLASS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Jean Stephen(1) 29,800 7.65
Directors and executive officers
of the Company and the Bank as a group 97,413 25.01
(13 persons)(2)
</TABLE>
- ----------
(1) Wife of President J. Stanley Stephen.
(2) Includes shares held directly as well as jointly with family members, and
shares held in retirement accounts in a fiduciary capacity or by certain
family members, with respect to which shares the listed individuals or
group members may be deemed to have sole voting and investment power.
PROPOSAL I-ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors currently consists of 12 members, each of
whom is also a director of the Bank. Directors of the Company are elected
annually and serve their one year term or until their respective successors
shall have been elected and shall qualify.
The table below sets forth certain information regarding the composition of
the Company's Board of Directors. The Board of Directors, acting as the
nominating committee, has recommended and approved the nominees identified in
the following table. It is intended that the proxies solicited on behalf of the
Board of Directors (other than proxies in which the vote is withheld as to a
nominee) will be voted at the Meeting "FOR" the election of the nominees
identified below. If a nominee is unable to serve, the shares represented by all
valid proxies will be voted for the election of such substitute nominee as the
Board of Directors may recommend. At this time, the Board of Directors knows of
no reason why any nominee may be unable to serve, if elected. Except as
disclosed herein, there are no arrangements or understandings between the
nominee and any other person pursuant to which the nominee was selected.
2
<PAGE>
<TABLE>
<CAPTION>
Shares of
Stock
Director Term to Beneficially Percent
Name Age(1) Position(s) Held Since(2) Expire Owned(3) of Class
- --------------------------------------------------------------------------------------------------------------------------------
NOMINEES
<S> <C> <C> <C> <C> <C>
Robert H. Conaway 45 Director 1995 1999 5,290 1.36%
Arthur Davila 69 Director 1998 1999 11,987 3.08
Ken L. Hayes 59 Director 1993 1999 570 (4)
George Koenig 54 Director/Executive Vice 1996 1999 240 (4)
President
Joseph W. Krolczyk 59 Director 1998 1999 3,000 (4)
Jack W. Lester, Jr. 58 Director, Assistant 1992 1999 10,650 2.73
Secretary/Treasurer
Charles Neelley 69 Director, Secretary/Treasurer 1993 1999 10,905 2.80
Richard L. Peacock 80 Chairman of the Board 1965 1999 5,787 1.49
Roland Ruffino 48 Director 1995 1999 12,500 3.21
Gary A. Snoe 41 Director 1998 1999 10,000 2.57
J. Stanley Stephen 65 Director, President/Chief 1991 1999 29,800 7.65
Executive Officer
Ernest A. Wentrcek 70 Vice Chairman of the Board 1965 1999 6,299 1.62
</TABLE>
- ----------
(1) At September 30, 1998.
(2) Includes service as a director of the Bank.
(3) Amounts include shares held directly and jointly with family members as
well as shares which are held in retirement accounts, or held by certain
members of the named individuals' families, or held by trusts of which the
named individual is a trustee or substantial beneficiary, with respect to
which shares the respective directors may be deemed to have sole or shared
voting and/or investment power.
(4) Less than one percent.
The principal occupation of each director is set forth below. All directors
have held their present position for at least five years unless otherwise
indicated.
ROBERT H. CONAWAY. Mr. Conaway is the founder and President of Progress
Supply located in Bryan, Texas, a distributor of wholesale supply plumbing
fixtures.
ARTHUR DAVILA . Mr. Davila is retired from Texas A&M University, where he
worked as an air-conditioning specialist. Mr. Davila has been active in several
civic organizations, including serving as a trustee on the Bryan Independence
School District for 14 years, First Vice President of the Brazos County
Community Action Committee and is a former President of the Brazos Valley
Community Action Program.
KEN L. HAYES. Mr. Hayes is the owner of Aggieland Travel, located in
College Station, a full-service travel agency.
GEORGE KOENIG. Mr. Koenig is currently serving as Executive Vice President
of the Bank. Mr. Koenig was previously employed as an operating officer with a
local financial institution located in Bryan, Texas.
JOSEPH W. KROLCZYK. Mr. Krolczyk has served as the owner and President of
KESCO Supply Inc., a stocking food service equipment and supply outlet located
in Bryan, Texas for over 20 years.
JACK W. LESTER, JR. Mr. Lester is currently retired. Prior to his
retirement, he was the owner and operator of a leading women's apparel store
located in Bryan, Texas. In November 1995, Mr. Lester was elected Assistant
Secretary/Treasurer of the Board.
CHARLES NEELLEY. Mr. Neelley is retired from Texas A&M University and the
travel agency business. In November 1995, Mr. Neelley was elected
Secretary/Treasurer of the Board.
3
<PAGE>
RICHARD L. PEACOCK. Mr. Peacock has been retired since 1983 from a
privately owned retail office supply and furniture business located in Bryan,
Texas. In November 1995, Mr. Peacock was elected Chairman of the Board.
ROLAND RUFFINO. Mr. Ruffino is a partner of Readfield Meats, Inc., a
long-time leading wholesale and retail meat distributor located in Bryan, Texas.
GARY A. SNOE. Mr. Snoe is the owner and President of Snoe Inc., a machining
and welding plant located in the Bryan, Texas trade area, and previously the
owner of a machine and welding plant for over 19 years.
J. STANLEY STEPHEN. Mr. Stephen was appointed President and Chief Executive
Officer in February 1991. From 1965 until 1986, Mr. Stephen worked with First
Bank and Trust, Bryan, Texas and served as Executive Vice President, President,
Chairman and Chief Executive Officer and Senior Chairman until he retired in
1986. From June 1986 until February 1990, Mr. Stephen was President and Chief
Executive Officer of University National Bank, College Station, Texas. Mr.
Stephen was a financial institutions consultant from March until October 1990.
In the past five years, Mr. Stephen has been involved in several lawsuits,
most of which were commenced by him in the early 1980's against financial
institutions outside the Bryan-College Station area. The lawsuits sought
compensatory damages against those lenders for failure to honor loan commitments
and other related claims with respect to several real estate partnerships of
which Mr. Stephen was a partner but not a managing partner. Those financial
institutions filed counter-claims against the real estate partnerships and their
individual partners for amounts previously advanced.
Subsequent to the commencement of litigation by Mr. Stephen, certain of
those financial institutions were taken over by their respective Federal
regulatory agencies, including the Federal Deposit Insurance Corporation (the
"FDIC").
In addition, the FDIC filed suit against the officers and directors of
certain failed institutions, including those with which Mr. Stephen was
previously associated with, alleging various civil causes of action arising from
their activities as directors and/or officers -- which Mr. Stephen and his
fellow directors and officers disputed. Mr. Stephen has never been accused of
any criminal wrongdoing by any regulatory agency. Currently, all lawsuits in
which Mr. Stephen was a party have either been successfully dismissed or
settled. In addition, in June of 1994, Mr. Stephen successfully completed a
personal plan of reorganization under the federal bankruptcy laws. The OTS has
never objected to Mr. Stephen serving as President of First Federal since 1991.
ERNEST A. WENTRCEK. Mr. Wentrcek was the Secretary and/or Treasurer of
First Federal's Board of Directors until 1995 when he was elected Vice Chairman
of the Board of Directors. Mr. Wentrcek is the President and owner of W&W
Builders/Realtors, a real estate sales, rental and property management company
located in Bryan, Texas. In September 1988, he retired as the Associate Director
for Business Affairs of the Texas Engineering Extension Service, Texas A&M
University System, a vocational education organization. He is a member of the
Finance Committee of the Supreme Lodge of the Slavonic Benevolent Order of the
State of Texas (SPJST). Mr. Wentrcek is a licensed Real Estate Broker and a
member of the Bryan-College Station Board of Realtors and the Multiple Listing
Service. He is also a member of the American Legion Post 159-Bryan.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Meetings of the Company's Board of Directors are generally held on a
monthly basis, with Special Meetings held on an as needed basis. The Board of
Directors met 15 times during the fiscal year ended September 30, 1998. No
incumbent director of the Company attended fewer than 75% of the total number of
board meetings held by the Board of Directors and the total number of meetings
held by the committees of the Board of Directors on which he served during
fiscal year 1998.
The Board of Directors of the Company has standing Executive, Audit and
Personnel Committees.
The Executive Committee is currently composed of Directors Stephen
(Chairman), Wentrcek, Peacock, Neelley and Lester. This Committee meets as
needed and handles major policy questions between regularly scheduled board
meetings. The Committee met five times during fiscal 1998.
The Audit Committee is currently composed of Directors Wentrcek (Chairman),
Peacock, Neelley, Lester and Hayes. The Committee currently meets as necessary
on matters concerning annual audits and internal audit findings. This Committee
met five times during fiscal 1998.
4
<PAGE>
The Personnel Committee is currently composed of Directors Peacock
(Chairman), Stephen, Neelley, Wentrcek, Hayes, and Senior Vice President Hegar.
This Committee met five times during fiscal 1998.
The entire Board of Directors acts as a nominating committee for selecting
nominees for the election of directors. While the Board of Directors of the
Company will consider nominees recommended by stockholders, the Board has not
actively solicited such nominations.
DIRECTOR COMPENSATION
Outside directors received $225.00 for each board meeting attended and
$75.00 for each committee meeting attended.
EXECUTIVE COMPENSATION
The Company has not paid any compensation to its executive officers since
its formation. The following table sets forth information concerning the
compensation paid or granted to the Bank's Chief Executive Officer for services
rendered by him. No other executive officer of the Company has aggregate
compensation (salary plus bonus) in excess of $100,000 in fiscal 1998.
5
<PAGE>
<TABLE>
<CAPTION>
================================== ============ ======================== ======================= ========== =================
SUMMARY COMPENSATION TABLE
Long Term Compensation
---------------------------------
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------ ---------------------- ----------
RESTRICTED
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
Name and Salary Bonus COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- ---------------------------------- ------------ ------------------------ ----------------------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Stanley Stephen 1998 $ 74,000 $--- $--- $--- --- --- $40,000(1)
President and Chief 1997 102,000 --- --- --- --- ---
Executive Officer 1996 89,875 --- --- --- --- --- ---
================================== ============ ======================== ======================= ========== =================
</TABLE>
(1) Represents a contribution to Mr. Stephen's Supplemental Executive
Retirement Plan.
EMPLOYMENT AGREEMENTS
The Bank has entered into employment agreements with President J. Stanley
Stephen, Executive Vice President George Koenig, Chief Financial Officer and
Senior Vice President Mary L. Hegar, Senior Vice President Sam Urso, Senior Vice
President Tommy Nierdicek, Vice President Mike Johnson, and Vice President Kay
Watson. The employment agreements are designed to assist the Bank in maintaining
a stable and competent management team. The continued success of the Bank to a
significant degree relies on the skills and competence of its officers.
The Bank's employment agreement with Mr. Stephen, which became effective
July 1, 1997, provides for an initial term of three years and a base salary not
less than his current based salary, provided that the amount actually paid as
salary shall be reduced during the first five years of the agreement by one-half
of the cost to the Bank of his supplemental retirement benefit. The agreement
gives Mr. Stephen the right to elect to cease serving as President and Chief
Executive Officer and to commence serving as a consultant to the Bank at a fee
of $58,200 per year. In addition, the agreement provides a supplemental
retirement benefit for Mr. Stephen in an amount such that when added to his
benefit under the qualified retirement plan, he will receive up to 70% of the
average of his annual salary and bonus during the three years out of the prior
ten years in which he received the highest salary and bonus. Mr. Stephen's right
to the supplemental retirement benefit vests at 20% per year, which commenced
July 1, 1997, and will continue to vest completely if he discontinues his
employment due to disability. The agreement further provides that if the Bank
terminates Mr. Stephen's employment other than for cause, without his consent,
it shall pay him his salary for the then- remaining term of the agreement and
consulting fees until June 30, 2002.
The employment agreements with Mr. Koenig, Ms. Hegar, Mr. Urso, Mr.
Nierdicek, Mr. Johnson and Ms. Watson provide for annual base salary in an
amount not less than the officer's salary as of that date. These agreements
provide for an initial term of one year and for termination upon death,
termination of employment for cause or certain events specified by the Office of
Thrift Supervision (the "OTS") regulations. The agreements also provide that in
the event the employee is involuntarily terminated without cause, he or she
shall receive one year's base salary and continued health benefits for one year.
In the event that such termination of employment occurs in connection with or
within 12 months after a change in control of the Bank, he or she shall receive
instead a lump sum equal to 200% of his or her "base amount" and continued
health benefits for the remainder of the term of the agreement, provided that
such benefits are subject to reduction to prevent any amount from becoming
non-deductible by the Bank pursuant to Section 280G of the Internal Revenue Code
of 1986, as amended (the "Code"). For purposes of the employment agreements, a
"change in control" is defined as an event that would require the filing of an
application or notice under 12 C.F.R. Part 574 or certain other events which
generally occur upon the acquisition of control of 10% or more of the Company's
voting stock.
Based on their current salaries, if Mr. Stephen, Mr. Koenig, Ms. Hegar, Mr.
Urso, Mr. Nierdicek, Mr. Johnson, or Ms. Watson were terminated as of December
31, 1998, under circumstances entitling him or her to severance pay as described
above, he or she would have been entitled to receive a lump sum cash payment of
approximately $148,000, $105,000, $100,000, $140,000, $110,000, $69,200 and
$77,000 respectively.
6
<PAGE>
CERTAIN TRANSACTIONS
The Bank, like many financial institutions, has followed a policy of
granting to officers, directors and employees, loans secured by the borrower's
residence, along with certain consumer loans and business loans, if the borrower
is credit-worthy. All loans to the Bank's officers and directors are made in the
ordinary course of business and on the same terms, including interest rate and
collateral, and conditions as those of comparable transactions prevailing at the
time, and do not involve more than the normal risk of collectibility or present
other unfavorable features.
All loans by the Bank to its directors and executive officers are subject
to the OTS regulations restricting loans and other transactions with affiliated
persons of the Bank. Federal law currently requires that all loans to directors
and executive officers generally be made on terms and conditions comparable to
those for similar transactions with non-affiliates. Loans to all directors and
executive officers and their associates totaled $649,411 at September 30, 1998,
which was 12.35% of the Bank's equity capital at that date. All loans to
directors and executive officers were performing in accordance with their terms
at September 30, 1998.
PROPOSAL II - RATIFICATION OF THE 1998 STOCK OPTION AND INCENTIVE PLAN
GENERAL
Establishment and implementation of the 1998 Stock Option and Incentive
Plan is subject to ratification by stockholders. Although the 1998 Stock Option
and Incentive Plan is in compliance with OTS regulations, the OTS has not
endorsed or approved the 1998 Stock Option and Incentive Plan and no written or
oral representation to the contrary is made hereby.
The 1998 Stock Option and Incentive Plan (the "Stock Option Plan") has been
adopted by the Board of Directors of the Company, subject to ratification by
stockholders at the Meeting. Pursuant to the Stock Option Plan, the Company will
reserve for issuance thereunder either from authorized but unissued shares or
from issued shares reacquired and held as treasury shares, 40,000 shares of the
Common Stock. Management may, to the extent practicable and feasible, fund the
Stock Option Plan from issued shares reacquired by the Company in the open
market. To the extent the Company utilizes authorized but unissued Common Stock
to fund the Stock Option Plan, the exercise of stock options will have the
effect of diluting the holdings of persons who own the Common Stock. Assuming
all options under the Stock Option Plan are awarded and exercised through the
use of authorized but unissued Common Stock, current stockholders would be
diluted by approximately 10%.
The Board of Directors believes that it is appropriate for the Company to
adopt a flexible and comprehensive Stock Option Plan which permits the granting
of a variety of long-term incentive awards to directors, officers and employees
as a means of enhancing and encouraging the recruitment and retention of those
individuals on whom the continued success of the Company most depends. However,
because the awards are granted only to persons affiliated with the Company, the
adoption of the Stock Option Plan could make it more difficult for a third party
to acquire control of the Company and therefore could discourage offers for the
Company's stock that may be viewed by the Company's stockholders to be in their
best interest. In addition, certain provisions included in the Company's
Certificate of Incorporation and bylaws may discourage potential takeover
attempts, particularly those that have not been negotiated directly with the
Board of Directors of the Company. Included among these provisions are (i)
requiring a supermajority vote of stockholders for approval of certain business
combinations, (ii) permitting special meetings of stockholders to be called only
by the Board of Directors and (iii) authorizing a class of preferred stock with
terms to be established by the Board of Directors. These provisions could
prevent the sale or merger of the Company even where a majority of the
stockholders approve of such transaction.
In addition, Federal regulations prohibit the beneficial ownership of more
than 10% of the stock of a converted savings institution or its holding company
without prior approval of the OTS. Federal law and regulations also require OTS
approval prior to the acquisition of "control" (as defined in the OTS
regulations) of an insured institution, including a holding company thereof.
These regulations could have the effect of discouraging takeover attempts of the
Company.
Attached as Exhibit A to this proxy statement is the complete text of the
Stock Option Plan. The principal features of the Stock Option Plan are
summarized below.
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PRINCIPAL FEATURES OF THE STOCK OPTION PLAN
The Stock Option Plan provides for awards in the form of stock options and
stock appreciation rights ("SARs"). Each award shall be on such terms and
conditions, consistent with the Stock Option Plan, as the committee
administering the Stock Option Plan may determine.
Shares awarded pursuant to the Stock Option Plan may be either authorized
but unissued shares or reacquired shares held by the Company in its treasury.
Any shares subject to an award which expires or is terminated unexercised will
again be available for issuance under the Stock Option Plan or any other plan of
the Company or its subsidiaries. Generally, no award or any right or interest
therein is assignable or transferable except under certain limited exceptions
set forth in the Stock Option Plan.
The Stock Option Plan will be administered by the Stock Option Committee of
the Board of Directors of the Company (the "Stock Option Committee"), which is
comprised of non-employee directors of the Company. Directors Peacock, Wentrcek
and Neelley have been appointed as the present members of the Stock Option
Committee. Pursuant to the terms of the Stock Option Plan, any director, officer
or employee of the Company or its affiliates is eligible to participate in the
Stock Option Plan, which eligibility currently includes approximately 67 persons
who are eligible to participate in the Stock Option Plan. In granting awards
under the Stock Option Plan, the Stock Option Committee will consider, among
other things, position and years of service, value of the participant's services
to the Company and the Bank and the added responsibilities of such individuals
as employees, directors and officers of a public company.
STOCK OPTIONS
The term of stock options may not exceed ten years from the date of grant.
The Stock Option Committee may grant either "incentive stock options" as defined
under Section 422 of the Code or stock options not intended to qualify as such
("non-qualified stock options").
In general, stock options will not be exercisable after the expiration of
their terms. Unless otherwise determined by the Stock Option Committee, in the
event a participant ceases to maintain continuous service (as defined in the
Stock Option Plan) with the Company or one of its affiliates, for any reason
(excluding death, disability and termination for cause), an exercisable stock
option will continue to be exercisable for three months thereafter but in no
event after the expiration date of the option. Unless otherwise provided by the
Stock Option Committee, in the event of a disability of a participant during
such service, all options not then exercisable shall become exercisable in full
and remain exercisable for a period of three months from the date of such a
disability. Unless otherwise provided by the Stock Option Committee, in the
event of the death of a participant, all options not then exercisable shall
become exercisable in full. Unless otherwise provided by the Stock Option
Committee, in the event of the death of a participant during such service or
within the three-month period described above, following termination of service
described above, an exercisable option will continue to be exercisable for one
year, to the extent exercisable by the participant upon his death, but in no
event later than ten years after the grant. Following the death of any
participant, the Stock Option Committee may, as an alternative means of
settlement of an option, elect to pay to the holder thereof an amount of cash
equal to the amount by which the market value of the shares covered by the
option on the date of exercise exceeds the exercise price. A stock option will
automatically terminate and will no longer be exercisable as of the date a
participant is notified of termination for cause.
The exercise price for the purchase of shares subject to a stock option at
the date of the grant may not be less than 100% of the market value of the
shares covered by the option on that date. The exercise price must be paid in
full in cash or, if permitted by the Stock Option Committee, shares of Common
Stock, or a combination of both.
STOCK APPRECIATION RIGHTS
The Stock Option Committee may grant SARs at any time, whether or not the
participant then holds stock options, granting the right to receive the excess
of the market value of the shares represented by the SARs on the date exercised
over the exercise price. SARs generally will be subject to the same terms and
conditions and exercisable to the same extent as stock options, as described
above. Upon the exercise of a SAR, the participant will receive the amount due
in cash or shares, or a combination of both, as determined by the Stock Option
Committee. SARs may be related to stock options ("tandem SARs"), in which case
the exercise of one will reduce to that extent the number of shares represented
by the other.
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SARs will require an expense accrual by the Company each year for the
appreciation on the SARs which the Company anticipates will be exercised. The
amount of the accrual is dependent upon whether and the extent to which the SARs
are granted and the amount, if any, by which the market value of the SARs
exceeds the exercise price.
EFFECT OF MERGER AND OTHER ADJUSTMENTS
Shares as to which awards may be granted under the Stock Option Plan, and
shares then subject to awards, will be adjusted appropriately by the Stock
Option Committee in the event of any merger, consolidation, reorganization,
recapitalization (including a return of capital), combination or exchange of
shares, stock dividend, stock split or other change in the corporate structure
or Common Stock of the Company.
In the event of any merger, consolidation or combination of the Company
with or into another company or other entity, whereby either the Company is not
the continuing entity or its outstanding shares of Common Stock are converted
into or exchanged for different securities, cash or property, or any combination
thereof, pursuant to a plan or agreement, the terms of which are binding upon
all stockholders, any participant to whom a stock option or SAR has been granted
at least six months prior to such event will have the right upon exercise of the
option or SAR (subject to the terms of the Stock Option Plan and any other
limitation or vesting period applicable to such option or SAR) to an amount
equal to the excess of fair market value on the date of exercise of the
consideration receivable in the merger, consolidation or combination with
respect to the shares covered or represented by the stock option or SAR over the
exercise price of the option or SAR multiplied by the number of shares with
respect to which the option or SAR has been exercised.
AMENDMENT AND TERMINATION
The Board of Directors of the Company may at any time amend, suspend or
terminate the Stock Option Plan or any portion thereof, subject to compliance
with OTS regulations, but may not, without the prior ratification of the
stockholders, make any amendment which shall (i) increase the aggregate number
of securities which may be issued under the Stock Option Plan (except as
specifically set forth under the Stock Option Plan), (ii) materially change the
requirements as to eligibility for participation in the Stock Option Plan or
(iii) change the class of persons eligible to participate in the Stock Option
Plan, provided however, that no such amendment, suspension or termination shall
impair the rights of any participant, without his consent, in any award made
pursuant to the Stock Option Plan. Unless previously terminated, the Stock
Option Plan shall continue in effect for a term of ten years, after which no
further awards may be granted under the Stock Option Plan.
FEDERAL INCOME TAX CONSEQUENCES
Under present federal income tax laws, awards under the Stock Option Plan
will have the following consequences:
(1) The grant of an award will by itself neither result in the recognition of
taxable income to the participant nor entitle the Company to a deduction at
the time of such grant.
(2) In order to qualify as an "Incentive Stock Option," a stock option awarded
under the Stock Option Plan must meet the conditions contained in Section
422 of the Code, including the requirement that the shares acquired upon
the exercise of the stock option be held for one year after the date of
exercise and two years after the grant of the option. The exercise of an
Incentive Stock Option will generally not, by itself, result in the
recognition of taxable income to the participant nor entitle the Company to
a deduction at the time of such exercise. However, the difference between
the exercise price and the fair market value of the option shares on the
date of exercise is an item of tax preference which may, in certain
situations, trigger the alternative minimum tax. The alternative minimum
tax is incurred only when it exceeds the regular income tax. The
alternative minimum tax will be payable at the rate of 26% on the first
$175,000 of "minimum taxable income" above the exemption amount ($33,750
single person or $45,000 married person filing jointly). This tax applies
at a flat rate of 28% of so much of the taxable excess as exceeds $175,000
and 28% on minimum taxable income more than $175,000 above the applicable
exemption amounts. If a taxpayer has alternative minimum taxable income in
excess of $150,000 (married persons filing jointly) or $112,500 (single
person), the $45,000 or $33,750 exemptions are reduced by an amount equal
to 25% of the amount by which the alternative minimum taxable income of the
taxpayer exceeds $150,000 or $112,500, respectively. Provided the
applicable holding periods
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described above are satisfied, the participant will recognize long term
capital gain or loss upon the resale of the shares received upon such
exercise.
(3) The exercise of a stock option which is a non-qualified stock option will
result in the recognition of ordinary income by the participant on the date
of exercise in an amount equal to the difference between the exercise price
and the fair market value on the date of exercise of the shares acquired
pursuant to the stock option.
(4) The exercise of a SAR will result in the recognition of ordinary income by
the participant on the date of exercise in an amount equal to the cash
received pursuant to the exercise.
(5) The Company will be allowed a deduction at the time, and in the amount of
any ordinary income recognized by the participant under the various
circumstances described above, provided that the Company meets its federal
reporting obligations.
PROPOSAL III-AMENDMENT TO THE FOURTH ARTICLE OF THE COMPANY'S
CERTIFICATE OF INCORPORATION THAT WOULD DECREASE THE SHARES OF
AUTHORIZED COMMON STOCK
GENERAL
The Board of Directors has proposed an amendment to the Fourth Article of
the Company's Certificate of Incorporation which would amend the Company's
Certificate of Incorporation by decreasing the number of authorized shares of
the Common Stock, par value $.01 per share, from 3,000,000 to 1,500,000 shares.
The adoption of the amendment would not effect any change in the Company's
outstanding Common Stock.
FINANCIAL STATEMENTS
The audited financial statements for the year ended September 30, 1998 and
1997 together with the related Management's Discussion and Analysis of Financial
Condition and Results of Operations, which are included in the Company's Annual
Report are incorporated by reference in this Proxy Statement.
DISCUSSION OF THE AMENDMENT
The Board of Directors believes that the reduced number of authorized
shares of Common Stock will provide the Company with sufficient shares of Common
Stock to satisfy its presently anticipated requirements for Common Stock. In the
event that the Board determines it appropriate to issue shares of Common Stock
in excess of the 1,500,000 authorized shares, it will seek stockholder approval
for such increase. In addition, the Board of Directors believes that the
reduction in authorized shares of Common Stock will provide the Company with
considerable savings in franchise taxes. The rights of the holders of Common
Stock will not be affected by the amendment.
Attached as Exhibit B to this proxy statement is the proposed amendment to
clause A of the Fourth Article of the Company's Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE PROPOSED
AMENDMENT TO THE FOURTH ARTICLE OF THE CERTIFICATE OF INCORPORATION THAT WOULD
DECREASE THE NUMBER OF SHARES OF AUTHORIZED COMMON STOCK.
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PROPOSAL IV-PROPOSAL TO AMEND THE FOURTH ARTICLE
OF THE COMPANY'S CERTIFICATE OF INCORPORATION
TO LIMIT VOTING RIGHTS
GENERAL
The proposed amendment to the Fourth Article of the Company's Certificate
of Incorporation provides that in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a person who beneficially owns in excess of 10% of the then-outstanding shares
of Common Stock (the "Limit") be entitled or permitted to any vote in respect of
the shares held in excess of the Limit. Beneficial ownership is to be determined
pursuant to Rule 13d-3 of the General Rules and Regulations of the Exchange Act
and, in any event, includes shares beneficially owned by any affiliate of such
person, shares which such person or his affiliates ( as defined in the
certificate of incorporation) have the right to acquire upon the exercise of
conversion rights or options and shares as to which such person and his
affiliates have or share investment or voting power but shall not include shares
beneficially owned by directors, officers and employees of the Bank or the
Company. This provision would also not affect the ability of management to
solicit revocable proxies and to vote the shares represented by such proxies.
This provision will be enforced by the Board of Directors to limit the voting
rights of persons beneficially owning more than 10% of the Common Stock.
PURPOSE OF THE PROPOSED AMENDMENT
The adoption of the proposed amendment is intended to reduce the Company's
vulnerability to unsolicited or hostile attempts to obtain control of the
Company and to increase the likelihood that stockholders will receive a fair
price for their shares in any such change of control transaction. The Board of
Directors does not know of any pending or contemplated attempt by any outsider
to acquire control of the Company.
The suddenness of a tender or exchange offer or other hostile attempt to
acquire control of a corporation may deprive the stockholders of an adequate
opportunity to evaluate the merits of the proposed transaction. Stockholders may
be compelled to act hastily without an adequate opportunity to consider
available alternatives that may maximize the value of their investments. Forming
a considered judgment with respect to such a proposal requires among other
things, an assessment of its fairness, an analysis of its implications for
stockholders and the corporation, a consideration of the impact of the
transaction on the corporation and its stockholders, and most importantly,
consideration of alternative transactions and/or courses of action which may be
available. Takeover attempts that have not been approved by the Board of
Directors may be timed to take advantage of temporarily depressed stock prices
or designed to foreclose or minimize the possibility of more favorable competing
bids. In addition, such bids may involve the acquisition of only a controlling
interest in the corporation's stock without affording all stockholders the
opportunity to sell on the same terms. If the buyer does not acquire all
outstanding shares through the initial transaction, the remaining stockholders
may find the value of their investment reduced by the election of directors
whose adoption of corporate polices and practices significantly different from
those upon which they based their investment decision.
Attempts to take over financial institutions and their holding company have
recently become increasingly common. Takeover attempts which have not been
negotiated with and approved by the Board of Directors present to stockholders
the risk of a takeover on terms on which all stockholders may not receive the
same amount of consideration and which may be less favorable than might
otherwise be available. A transaction which is negotiated and approved by the
Board of Directors, on the other hand, can be carefully planned and undertaken
at an opportune time in order to obtain maximum value for the Company and its
stockholders, with due consideration given to matters such as the management and
business of the acquiring corporation and maximum strategic development of the
Company's assets.
The Board of Directions believes that the proposed amendment will also
reduce the Company's vulnerability to takeover attempts through the purchase of
less than all the outstanding Common Stock of the Company. In the judgment of
the Board of Directors, the Company's Board will be in the best position to
determine the true value of the Company and to negotiate more effectively for
what may be in the best interests of its stockholders. Accordingly, the Board of
Directors believes that it is in the best interests of the Company and its
stockholders to encourage potential acquirers to negotiate directly with the
Board of Directors of the Company and that this proposed amendment will
encourage such negotiations and discourage hostile takeover attempts.
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The adoption of the amendment to the Company's Certificate of Incorporation
is not being proposed in response to any present attempt, known to the Board of
Directors, to acquire control of the Company or to take any other significant
corporate action. The Board believes that it is appropriate to adopt the
proposed amendment at a time when no such transaction is pending or known by the
Board to be contemplated, since approval may reduce the likelihood of an
unsolicited or hostile attempt to acquire control of the Company in an unfair or
inequitable manner and thus, may reduce the likelihood that the Company would be
required to incur significant expenses and be subject to substantial disruption
in connection with such an attempt.
The Board of Directors does not have any current plans to propose
amendments to, or make other changes in, the Company's charter documents that
may have "anti-takeover" implications, other than as described in this proxy
statement.
POSSIBLE DISADVANTAGES
To the extent the adoption of the proposed amendment to the Certificate of
Incorporation is effective in discouraging any unilateral takeover attempts, it
will be to the advantage of stockholders only to the extent that any enhanced
power of the Board of Directors is utilized wisely and for the benefit of all
stockholders. Also, approval of the proposed amendment could discourage or
frustrate future attempts to acquire control of the Company that are not
approved by a majority of the directors, but which the holders of a majority of
outstanding shares may believe to be in their best interests. The proposed
amendment could also delay or frustrate the assumption of control or other
proposal by a holder of a large block of the Company's shares in a proxy contest
or other solicitation, even if many stockholders consider such actions to be
beneficial. Furthermore, adoption of the proposed amendment will not necessarily
ensure or guarantee that stockholders will receive a price for their shares in
connection with an acquisition of control of the Company that reflects the value
of such shares, or that the price received will be fair or equitable, although
in the opinion of the Board of Directors the likelihood that the price will
reflect such value and be fair and equitable will be increased by adoption of
the proposed amendment to the Company's Certificate of Incorporation.
Attached as Exhibit C to this proxy statement is the complete text of the
proposed addition to Article Fourth of the Company's Certificate of
Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE PROPOSED AMENDMENT TO THE FOURTH ARTICLE OF THE COMPANY'S
CERTIFICATE OF INCORPORATION.
PROPOSAL V-AMENDMENT OF THE THIRTEENTH ARTICLE OF THE COMPANY'S
CERTIFICATE OF INCORPORATION
GENERAL
In order to prevent a simple majority of the shareholders from defeating
the purposes served by the proposed amendment to the Fourth Article contained in
proposal 4, an amendment to the Thirteenth Article of the Company's Certificate
of Incorporation provides that there shall be no amendment, repeal or adoption
of clause D of the Fourth Article unless approved by the holders of at least 80%
of the shares of the Company then entitled to vote in an election of directors.
A copy of the proposed new amendment to the Thirteenth Article is attached
to this proxy statement as Exhibit D.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE PROPOSED
AMENDMENT TO THE THIRTEENTH ARTICLE OF THE CERTIFICATE OF INCORPORATION.
PROPOSAL VI - RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Crowe, Chizek & Company
LLP ("Crowe Chizek") to be its auditors for the fiscal year ending September 30,
1999, subject to the ratification of the appointment by the
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Company's stockholders at the Meeting. A representative of Crowe, Chizek is
expected to attend the Meeting to respond to appropriate questions and will have
an opportunity to make a statement if he so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF CROWE, CHIZEK & COMPANY AS THE COMPANY'S
AUDITORS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1999.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
the next Annual Meeting of Stockholders, any stockholder proposal to take action
at such a meeting must be received at the Company's main office located at 2900
Texas Avenue, Bryan, Texas 77802, no later than December 19, 1999 (60 days prior
to next years anticipated annual meeting date). In the event that the date of
next year's annual meeting changes, either advances more than 20 days or delayed
by more than 60 days, notice by the stockholder to be timely must be so
delivered not later than the close of business on the later of the 60th day
prior to such annual meeting or the eighth day following the day on which notice
of the date of the annual meeting was mailed or public announcement of the date
of such meeting is first made. However, for nominations of persons for election
to the Board of Directors by a stockholder, in the event that less than 40 days'
notice of the date of the meeting is first given or made to stockholders, by
public announcement or mail, notice by the stockholder to be timely must be so
received not later than the close of business on the eighth day following the
day on which such notice of the date of the meeting was mailed or public
announcement was first made. All stockholder proposals must comply with the
Company's bylaws and Delaware law.
OTHER MATTERS
The Board of Directors is not aware at this time of any business to come
before the Meeting other than those matters described above in this proxy
statement. However, if any other matter should properly come before the Meeting,
it is intended that holders of the proxies will act in accordance with their
best judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company may solicit proxies
personally, by telegraph or telephone without additional compensation.
BY ORDER OF THE BOARD OF DIRECTORS
Richard L. Peacock
Chairman of Board
J. Stanley Stephen
President and Chief Executive Officer
Bryan, Texas
January 4, 1999
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EXHIBIT A
THE BRYAN-COLLEGE STATION FINANCIAL HOLDING COMPANY
1998 STOCK OPTION AND INCENTIVE PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, advisory directors, officers and employees
of the Corporation and its Affiliates.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" -- means any "parent corporation" or "subsidiary corporation"
of the Corporation, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Award" -- means the grant by the Committee of an Incentive Stock Option, a
Non-Qualified Stock Option, a Right, or any combination thereof, as provided in
the Plan.
"Award Agreement" -- means the agreement evidencing the grant of an Award
made under the Plan.
"Board" -- means the board of directors of the Corporation.
"Cause" -- means Termination of Service by reason of personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties or gross negligence.
"Code" -- means the Internal Revenue Code of 1986, as amended.
"Committee" -- means the Committee referred to in Section 3 hereof.
"Corporation" -- means The Bryan-College Station Financial Holding Company,
a Delaware corporation, and any successor thereto.
"Incentive Stock Option" -- means an option to purchase Shares granted by
the Committee which is intended to qualify as an incentive stock option under
Section 422(b) of the Code. Unless otherwise set forth in the Award Agreement,
any Option which does not qualify as an Incentive Stock Option for any reason
shall be deemed ab initio to be a Non-Qualified Stock Option.
"Market Value" -- means the average of the high and low quoted sales price
on the date in question (or, if there is no reported sale on such date, on the
last preceding date on which any reported sale occurred) of a Share on the
Composite Tape for New York Stock Exchange-Listed Stocks, or, if on such date
the Shares are not quoted on the Composite Tape, on the New York Stock Exchange,
or if the Shares are not listed or admitted to trading on such Exchange, on the
principal United States securities exchange registered under the Securities
Exchange Act of 1934 (the "Exchange Act") on which the Shares are listed or
admitted to trading, or, if the Shares are not listed or admitted to trading on
any such exchange, the mean between the closing high bid and low asked
quotations with respect to a Share on such date on the National Association of
Securities Dealers,
<PAGE>
Inc., Automated Quotations System, or any similar system then in use, or, if no
such quotations are available, the fair market value on such date of a Share as
the Committee shall determine.
"Non-Qualified Stock Option" -- means an option to purchase Shares granted
by the Committee which does not qualify, for any reason, as an Incentive Stock
Option.
"Option" -- means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" -- means any director, advisory director, officer or employee
of the Corporation or any Affiliate who is selected by the Committee to receive
an Award.
"Plan" -- means this The Bryan-College Station Financial Holding Company
1999 Stock Option and Incentive Plan.
"Related" -- means (i) in the case of a Right, a Right which is granted in
connection with, and to the extent exercisable, in whole or in part, in lieu of,
an Option or another Right and (ii) in the case of an Option, an Option with
respect to which and to the extent a Right is exercisable, in whole or in part,
in lieu thereof.
"Right" -- means a stock appreciation right with respect to Shares granted
by the Committee pursuant to the Plan.
"Shares" -- means the shares of common stock of the Corporation.
"Termination of Service" -- means cessation of service, for any reason,
whether voluntary or involuntary, so that the affected individual is not either
(i) an employee of the Corporation or any Affiliate for purposes of an Incentive
Stock Option, or (ii) a director, advisory director or employee of the
Corporation and any Affiliate for purposes of any other Award.
3. Administration. The Plan shall be administered by a Committee consisting
of two or more members of the Board, each of whom (i) shall be an "outside
director," as defined under Section 162(m) of the Code and the Treasury
regulations thereunder, and (ii) shall be a "non-employee director," as defined
under Rule 16(b) of the Securities Exchange Act of 1934 or any similar or
successor provision. The members of the Committee shall be appointed by the
Board. Except as limited by the express provisions of the Plan or by resolutions
adopted by the Board, the Committee shall have sole and complete authority and
discretion to (i) select Participants and grant Awards; (ii) determine the
number of Shares to be subject to types of Awards generally, as well as to
individual Awards granted under the Plan; (iii) determine the terms and
conditions upon which Awards shall be granted under the Plan; (iv) prescribe the
form and terms of Award Agreements; (v) establish from time to time regulations
for the administration of the Plan; and (vi) interpret the Plan and make all
determinations deemed necessary or advisable for the administration of the Plan.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by a majority of the Committee without a meeting, shall
be acts of the Committee.
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4. Shares Subject to Plan.
(a) Subject to adjustment by the operation of Section 6, the maximum
number of Shares with respect to which Awards may be made under the Plan is
40,000, plus (i) the number of Shares repurchased by the Corporation in the open
market or otherwise with an aggregate price no greater than the cash proceeds
received by the Corporation from the exercise of Options granted under the Plan,
plus (ii) any Shares surrendered to the Corporation in payment of the exercise
price of Options granted under the Plan. The Shares with respect to which Awards
may be made under the Plan may be either authorized and unissued Shares or
previously issued Shares reacquired and held as treasury Shares. Shares which
are subject to Related Rights and Related Options shall be counted only once in
determining whether the maximum number of Shares with respect to which Awards
may be granted under the Plan has been exceeded. An Award shall not be
considered to have been made under the Plan with respect to any Option or Right
which terminates, and new Awards may be granted under the Plan with respect to
the number of Shares as to which such termination has occurred.
(b) During any calendar year, no Participant may be granted Awards
under the Plan with respect to more than 10,000 Shares, subject to adjustment as
provided in Section 6.
5. Awards.
(a) Options. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan and the
requirements of applicable law as the Committee shall determine, including the
granting of Options in tandem with other Awards under the Plan:
(i) Exercise Price. The exercise price per Share for an Option
shall be determined by the Committee; provided, however, that such exercise
price shall not be less than 100% of the Market Value of a Share on the date of
grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by the
Committee, but shall be no greater than 10 years in the case of an Incentive
Stock Option or 15 years in the case of a Non-Qualified Stock Option.
(iii) Time and Method of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part and
the method or methods by which, and the form or forms (including, without
limitation, cash, Shares, other Awards or any combination thereof, having a fair
market value on the exercise date equal to the relevant exercise price) in
which, payment of the exercise price with respect thereto may be made or deemed
to have been made.
(iv) Incentive Stock Options. Incentive Stock Options may be
granted by the Committee only to officers and employees of the Corporation or
its Affiliates.
(v) Termination of Service. Unless otherwise determined by the
Committee and set forth in the Award Agreement evidencing the grant of the
Option, upon Termination of Service of the Participant for any reason other than
for Cause, all Options then currently exercisable shall remain exercisable for
the lesser of (A) three years following such Termination of Service or (B)
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until the expiration of the Option by its terms. Upon Termination of Service for
Cause, all Options not previously exercised shall immediately be forfeited.
(b) Rights. A Right shall, upon its exercise, entitle the Participant
to whom such Right was granted to receive a number of Shares or cash or
combination thereof, as the Committee in its discretion shall determine, the
aggregate value of which (i.e., the sum of the amount of cash and/or Market
Value of such Shares on date of exercise) shall equal (as nearly as possible, it
being understood that the Corporation shall not issue any fractional Shares) the
amount by which the Market Value per Share on the date of such exercise shall
exceed the exercise price of such Right, multiplied by the number of Shares with
respect to which such Right shall have been exercised. A Right may be Related to
an Option or may be granted independently of any Option as the Committee shall
from time to time in each case determine. In the case of a Related Option, such
Related Option shall cease to be exercisable to the extent of the Shares with
respect to which the Related Right was exercised. Upon the exercise or
termination of a Related Option, any Related Right shall terminate to the extent
of the Shares with respect to which the Related Option was exercised or
terminated.
6. Adjustments Upon Changes in Capitalization. In the event of any change
in the outstanding Shares subsequent to the effective date of the Plan by reason
of any reorganization, recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation or any change in the
corporate structure or Shares of the Corporation, the maximum aggregate number
and class of shares and exercise price of the Award, if any, as to which Awards
may be granted under the Plan and the number and class of shares and exercise
price of the Award, if any, with respect to which Awards have been granted under
the Plan shall be appropriately adjusted by the Committee, whose determination
shall be conclusive. Except as otherwise provided herein, any Award which is
adjusted as a result of this Section 6 shall be subject to the same terms and
conditions as the original Award.
7. Effect of Merger on Options or Rights. In the case of any merger,
consolidation or combination of the Corporation (other than a merger,
consolidation or combination in which the Corporation is the continuing
corporation and which does not result in the outstanding Shares being converted
into or exchanged for different securities, cash or other property, or any
combination thereof), any Participant to whom an Option or Right has been
granted shall have the additional right (subject to the provisions of the Plan
and any limitation applicable to such Option or Right), thereafter and during
the term of each such Option or Right, to receive upon exercise of any such
Option or Right an amount equal to the excess of the fair market value on the
date of such exercise of the securities, cash or other property, or combination
thereof, receivable upon such merger, consolidation or combination in respect of
a Share over the exercise price of such Right or Option, multiplied by the
number of Shares with respect to which such Option or Right shall have been
exercised. Such amount may be payable fully in cash, fully in one or more of the
kind or kinds of property payable in such merger, consolidation or combination,
or partly in cash and partly in one or more of such kind or kinds of property,
all in the discretion of the Committee.
8. Effect of Change in Control. Each of the events specified in the
following clauses (i) through (iii) of this Section 8 shall be deemed a "change
in control": (i) any third person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, shall become the beneficial
owner of shares of the Corporation with respect to which 25% or more of the
total number of votes for the election of the Board may be cast, (ii) as a
result of, or in connection with, any cash
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tender offer, merger or other business combination, sale of assets or contested
election, or combination of the foregoing, the persons who were directors of the
Corporation shall cease to constitute a majority of the Board, or (iii) the
stockholders of the Corporation shall approve an agreement providing either for
a transaction in which the Corporation will cease to be an independent
publicly-owned corporation or for a sale or other disposition of all or
substantially all the assets of the Corporation. If a tender offer or exchange
offer for Shares (other than such an offer by the Corporation) is commenced, or
if a change in control shall occur, unless the Committee shall have otherwise
provided in the Award Agreement, all Options and Rights granted and not fully
exercisable shall become exercisable in full upon the happening of such event
and shall remain so exercisable for a period of 60 days following such date,
after which each such Option and Right shall revert to being exercisable in
accordance with the other provisions of such Option or Right; provided, however,
that no Option or Right which has previously been exercised or otherwise
terminated shall become exercisable.
9. Assignments and Transfers. No Incentive Stock Option granted under the
Plan shall be transferable other than by will or the laws of descent and
distribution. Any other Award shall be transferable by will, the laws of descent
and distribution, a "domestic relations order," as defined in Section
414(p)(1)(B) of the Code, or a gift to any member of the Participant's immediate
family or to a trust for the benefit of one or more of such immediate family
members. During the lifetime of an Award recipient, an Award shall be
exercisable only by the Award recipient unless it has been transferred as
permitted hereby, in which case it shall be exercisable only by such transferee.
For the purpose of this Section 9, a Participant's "immediate family" shall mean
the Participant's spouse, children and grandchildren.
10. Employee Rights Under the Plan. No person shall have a right to be
selected as a Participant nor, having been so selected, to be selected again as
a Participant, and no employee or other person shall have any claim or right to
be granted an Award under the Plan or under any other incentive or similar plan
of the Corporation or any Affiliate. Neither the Plan nor any action taken
thereunder shall be construed as giving any employee any right to be retained in
the employ of the Corporation or any Affiliate.
11. Delivery and Registration of Stock. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests, be
conditioned upon the receipt of a representation as to the investment intention
of the Participant to whom such Shares are to be delivered, in such form as the
Committee shall determine to be necessary or advisable to comply with the
provisions of the Securities Act of 1933 or any other federal, state or local
securities legislation. It may be provided that any representation requirement
shall become inoperative upon a registration of the Shares or other action
eliminating the necessity of such representation under such Securities Act or
other securities legislation. The Corporation shall not be required to deliver
any Shares under the Plan prior to (i) the admission of such Shares to listing
on any stock exchange on which Shares may then be listed and (ii) the completion
of such registration or other qualification of such Shares under any state or
federal law, rule or regulation, as the Committee shall determine to be
necessary or advisable.
12. Withholding Tax. The Corporation shall have the right to deduct from
all amounts paid in cash with respect to the exercise of a Right under the Plan
any taxes required by law to be withheld with respect to such cash payments.
Where a Participant or other person is entitled to
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<PAGE>
receive Shares pursuant to the exercise of an Option or Right pursuant to the
Plan, the Corporation shall have the right to require the Participant or such
other person to pay the Corporation the amount of any taxes which the
Corporation is required to withhold with respect to such Shares, or, in lieu
thereof, to retain, or sell without notice, a number of such Shares sufficient
to cover the amount required to be withheld. All withholding decisions pursuant
to this Section 12 shall be at the sole discretion of the Committee or the
Corporation.
13. Amendment or Termination.
(a) The Board may amend, alter, suspend, discontinue, or terminate the
Plan without the consent of shareholders or Participants, except that any such
action will be subject to the approval of the Corporation's shareholders if,
when and to the extent such shareholder approval is necessary or required for
purposes of any applicable federal or state law or regulation or the rules of
any stock exchange or automated quotation system on which the Shares may then be
listed or quoted, or if the Board, in its discretion, determines to seek such
shareholder approval.
(b) The Committee may waive any conditions of or rights of the
Corporation, or modify or amend the terms of any outstanding Award, provided
however, that the Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award without the consent of the Participant or holder
thereof, except as otherwise provided herein.
14. Effective Date and Term of Plan. The Plan shall become effective upon
the later of its adoption by the Board or its approval by the shareholders of
the Corporation. It shall continue in effect for a term of ten years thereafter.
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<PAGE>
EXHIBIT B
PROPOSED AMENDMENT TO CLAUSE A OF THE FOURTH ARTICLE OF THE
COMPANY'S CERTIFICATE OF INCORPORATION
Italicized text reflects the proposed amendment to clause A.
FOURTH:
A. The total number of shares of all classes of stock which the Corporation
shall have the authority to issue is two million five hundred thousand
(2,500,000) consisting of:
1. One million (1,000,000) shares of preferred stock, par value one
cent ($.01) per share (the "Preferred Stock"); and
2. One million five hundred thousand (1,500,000) shares of common
stock, par value one cent ($.01) per share (the "Common Stock").
<PAGE>
EXHIBIT C
PROPOSED ADDITION OF CLAUSE D TO ARTICLE FOURTH OF THE COMPANY'S CERTIFICATE OF
INCORPORATION
"D. 1. Notwithstanding any other provision of this Certificate of
Incorporation, in no event shall any record owner of any outstanding Common
Stock which is beneficially owned, directly or indirectly, by a person who, as
of any record date for the determination of stockholders entitled to vote on any
matter, beneficially owns in excess of 10% of the then-outstanding shares of
Common Stock (the "Limit"), be entitled, or permitted to any vote in respect of
the shares held in excess of the Limit. The number of votes which may be cast by
any record owner by virtue of the provisions hereof in respect of Common Stock
beneficially owned by such person owning shares in excess of the Limit shall be
a number equal to the total number of votes which a single record owner of all
Common Stock owned by such person would be entitled to cast, multiplied by a
fraction, the numerator of which is the number of shares of such class or series
beneficially owned by such person and owned of record by such record owner and
the denominator of which is the total number of shares of Common Stock
beneficially owned by such person owning shares in excess of the Limit.
2. The following definitions shall apply to this Section E of this Article
FOURTH:
(a) An "affiliate" of a specified person shall mean a person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified.
(b) "Beneficial ownership" shall be determined pursuant to Rule 13d-3
of the General Rules and Regulations under the Securities Exchange Act of
1934 (or any successor rule or statutory provision), or, if said Rule 13d-3
shall be rescinded and there shall be no successor rule or statutory
provision thereto, pursuant to said Rule 13d-3 as in effect on December 31,
1998; provided, however, that a person shall, in any event, also be deemed
the "beneficial owner" of any Common Stock:
(1) which such person or any of its affiliates beneficially owns,
directly or indirectly; or
(2) which such person or any of its affiliates has (i) the right
to acquire (whether such right is exercisable immediately or only after the
passage of time), pursuant to any agreement, arrangement or understanding
(but shall not be deemed to be the beneficial owner of any voting shares
solely by reason of an agreement, contract, or other arrangement with this
Corporation to effect any transaction which is described in any one or more
of the clauses of Section A of Article EIGHTH) or upon the exercise of
conversion rights, exchange rights, warrants, or options or otherwise, or
(ii) sole or shared voting or investment power with respect thereto
pursuant to any agreement, arrangement, understanding, relationship or
otherwise (but shall not be deemed to be the beneficial owner of any voting
shares solely by reason of a revocable proxy granted for a particular
meeting of stockholders, pursuant to a public solicitation of proxies for
such meeting, with
<PAGE>
respect to shares of which neither such person nor any such affiliate is
otherwise deemed the beneficial owner); or
(3) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
affiliates acts as a partnership, limited partnership, syndicate or other
group pursuant to any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of capital
stock of this Corporation;
and provided further, however, that (1) no director or officer of this
Corporation (or any affiliate of any such director or officer) shall,
solely by reason of any or all of such directors or officers acting in
their capacities as such, be deemed, for any purposes hereof, to
beneficially own any Common Stock beneficially owned by any other such
director or officer (or any affiliate thereof), and (2) neither any
employee stock ownership or similar plan of this Corporation or any
subsidiary of this Corporation nor any trustee with respect thereto (or
any affiliate of such trustee) shall, solely by reason of such capacity
of such trustee, be deemed, for any purposes hereof, to beneficially own
any Common Stock held under any such plan. For purposes of computing the
percentage beneficial ownership of Common Stock of a person, the
outstanding Common Stock shall include shares deemed owned by such person
through application of this subsection but shall not include any other
Common Stock which may be issuable by this Corporation pursuant to any
agreement, or upon exercise of conversion rights, warrants or options, or
otherwise. For all other purposes, the outstanding Common Stock shall
include only Common Stock then outstanding and shall not include any
Common Stock which may be issuable by this Corporation pursuant to any
agreement, or upon the exercise of conversion rights, warrants or
options, or otherwise.
(c) A "person" shall mean any individual, firm, corporation, or other
entity.
(d) The Board of Directors shall have the power to construe and apply
the provisions of this section and to make all determinations necessary or
desirable to implement such provisions, including but not limited to
matters with respect to (1) the number of shares of Common Stock
beneficially owned by any person, (2) whether a person is an affiliate of
another, (3) whether a person has an agreement, arrangement, or
understanding with another as to the matters referred to in the definition
of beneficial ownership, (4) the application of any other definition or
operative provision of this Section to the given facts, or (5) any other
matter relating to the applicability or effect of this Section.
3. The Board of Directors shall have the right to demand that any person
who is reasonably believed to beneficially own Common Stock in excess of the
Limit (or holds of record Common Stock beneficially owned by any person in
excess of the Limit) (a "Holder in Excess") supply the Corporation with complete
information as to (a) the record owner(s) of all shares beneficially owned by
such Holder in Excess, and (b) any other factual matter relating to the
applicability or effect of this section as may reasonably be requested of such
Holder in Excess. The Board of Directors shall further have the right to receive
from any Holder in Excess
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<PAGE>
reimbursement for all expenses incurred by the Board in connection with its
investigation of any matters relating to the applicability or effect of this
section on such Holder in Excess, to the extent such investigation is deemed
appropriate by the Board of Directors as a result of the Holder in Excess
refusing to supply the Corporation with the information described in the
previous sentence.
4. Except as otherwise provided by law, expressly provided in this Section
D or the presence, in person or by proxy, of the holders of record of shares of
capital stock of the Corporation entitling the holders thereof to cast one-third
of the votes (after giving effect, if required, to the provisions of this
Section) entitled to be cast by the holders of shares of capital stock of the
Corporation entitled to vote shall constitute a quorum at all meetings of the
stockholders, and every reference in this Certificate of Incorporation to a
majority or other proportion of capital stock (or the holders thereof) for
purposes of determining any quorum requirement or any requirement for
stockholder consent or approval shall be deemed to refer to such majority or
other proportion of the votes (or the holders thereof) then entitled to be cast
in respect of such capital stock.
5. Any constructions, applications, or determinations made by the Board of
Directors, pursuant to this Section in good faith and on the basis of such
information and assistance as was then reasonably available for such purpose,
shall be conclusive and binding upon the Corporation and its stockholders.
6. In the event any provision (or portion thereof) of this Section E shall
be found to be invalid, prohibited or unenforceable for any reason, the
remaining provisions (or portions thereof) of this Section shall remain in full
force and effect, and shall be construed as if such invalid, prohibited or
unenforceable provision had been stricken herefrom or otherwise rendered
inapplicable, it being the intent of this Corporation and its stockholders that
each such remaining provision (or portion thereof) of this Section E remain, to
the fullest extent permitted by law, applicable and enforceable as to all
stockholders, including stockholders owning an amount of stock over the Limit,
notwithstanding any such finding."
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<PAGE>
EXHIBIT D
PROPOSED AMENDMENT TO THE THIRTEENTH ARTICLE OF THE COMPANY'S
CERTIFICATE OF INCORPORATION
Italicized text reflects the proposed amendment.
THIRTEENTH: The Corporation reserves the right to amend or repeal any provision
contained in this Certificate of Incorporation in the manner prescribed by the
laws of the State of Delaware and all rights conferred upon stockholders are
granted subject to this reservation; provided, however, that, notwithstanding
any other provision of this Certificate of Incorporation or any provision of law
which might otherwise permit a lesser vote or no vote, but in addition to any
vote of the holders of any class or series of the stock of this Corporation
required by law or by this Certificate of Incorporation, the affirmative vote of
the holders of at least 80% of the voting power of all of the then-outstanding
shares of the capital stock of the Corporation entitled to vote generally in the
election of directors , voting together as a single class, shall be required to
amend or repeal this Article THIRTEENTH, clauses B or D of Article FOURTH,
clauses C or D of Article FIFTH, Article SIXTH, Article SEVENTH, Article EIGHTH,
Article TENTH or Article ELEVENTH.
REVOCABLE PROXY
THE BRYAN-COLLEGE STATION FINANCIAL HOLDING COMPANY
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 18, 1999
The undersigned hereby appoints the Board of Directors of The Bryan-College
Station Financial Holding Company (the "Company"), and the survivor of them,
with full powers of substitution, to act as attorneys and proxies for the
undersigned to vote all shares of common stock of the Bank which the undersigned
is entitled to vote at the Annual Meeting of Stockholders (the "Meeting"), to be
held at 2900 Texas Avenue, Bryan, Texas, on February 18, 1999 at 3:00 P.M.,
Bryan, Texas time, and at any and all adjournments thereof, as follows:
I. The election of the nominated directors listed below for the terms
indicated.
[ ] FOR [ ] WITHHELD
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN
THE LIST BELOW.
Robert H. Conaway
Arthur Davila
Ken L. Hayes
George Koenig
Joseph W. Krolczyk
Jack W. Lester, Jr.
Charles Neelley
Richard L. Peacock
J. Roland Ruffino
Gary A. Snoe
J. Stanley Stephen
Ernest A. Wentrcek
II. The ratification of the adoption of the Company's 1998 Stock Option
and Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
III. The approval of an amendment to the Fourth Article of the Company's
Certificate of Incorporation that would amend clause A by decreasing
the number of shares of authorized common stock, par value $.01 per
share from 3,000,000 to 1,500,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IV. The approval of an amendment to the Fourth Article of the Company's
Certificate of Incorporation adding clause D that would limit the
voting rights of any stockholder who beneficially owns in excess of
10% of the then outstanding shares of the Company's common stock (the
"Limit") from voting any shares held in excess of the Limit.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
V. The approval of an amendment to the Thirteenth Article of the
Company's Certificate of Incorporation requiring the affirmative vote
of at least 80% of the shares entitled to vote must approve an
amendment to clause D of the Fourth Article if proposal IV is
approved.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
VI. The ratification of the appointment of Crowe, Chizek and Company LLP
as auditors of the Company for the fiscal year ending September 30,
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote on such other
matters as may properly come before the Meeting or any adjournment thereof.
<PAGE>
The Board of Directors recommends a vote "FOR" the listed proposals.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS PRESENTED
AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR
BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE MEETING.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys and proxies shall be
deemed terminated and of no further force and effect.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of a Notice of Annual Meeting, a Proxy Statement dated
January 4, 1999 and the Company's Annual Report to Stockholders for the fiscal
year ended September 30, 1998.
Dated:
---------------------------- ------------------------
SIGNATURE OF STOCKHOLDER
------------------------
SIGNATURE OF STOCKHOLDER
Please sign exactly as your name(s) appear(s) above on this card. When signing
as attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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