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:
[ ] Preliminary proxy statement
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CAVALRY BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
CAVALRY BANCORP, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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[ ] 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:
N/A
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(2) Form, schedule or registration statement no.:
N/A
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(3) Filing party:
N/A
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(4) Date filed:
N/A
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March 15, 1999
Dear Stockholder:
You are cordially invited to attend the First Annual Meeting of
Stockholders of Cavalry Bancorp, Inc., the holding company for Cavalry
Banking. The meeting will be held at the Bank's main office located at 114
West College Street, Murfreesboro, Tennessee, on Thursday, April 22, 1999 at
10:00 a.m., local time.
The Notice of First Annual Meeting of Stockholders and Proxy Statement
appearing on the following pages describe the formal business to be transacted
at the meeting. During the meeting, we will also report on the operations of
the Company. Directors and officers of the Company, as well as a
representative of Rayburn, Betts & Bates, P.C., the Company's independent
auditors, will be present to respond to appropriate questions of stockholders.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To make sure your shares are represented, we urge you to complete
and mail the enclosed proxy card. If you attend the meeting, you may vote in
person even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/Ed C. Loughry, Jr.
Ed C. Loughry, Jr.
President and Chief Executive Officer
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Cavalry Bancorp, Inc.
114 West College Street
Murfreesboro, Tennessee 37130
(615) 893-1234
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NOTICE OF FIRST ANNUAL MEETING OF STOCKHOLDERS
To Be Held On April 22, 1999
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NOTICE IS HEREBY GIVEN that the First Annual Meeting of Stockholders of
Cavalry Bancorp, Inc. ("Company") will be held at the main office of Cavalry
Banking located at 114 West College Street, Murfreesboro, Tennessee, on
Thursday, April 22, 1999, at 10:00 a.m., local time, for the following
purposes:
(1) To elect nine directors of the Company;
(2) To consider and vote upon a proposal to adopt the Cavalry
Bancorp, Inc. 1999 Stock Option Plan;
(3) To consider and vote upon a proposal to adopt the Cavalry
Bancorp, Inc. 1999 Management Recognition Plan; and
(4) To consider and act upon such other matters as may properly come
before the meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Any action may be taken on the foregoing proposals at the meeting on the
date specified above or on any date or dates to which, by original or later
adjournment, the meeting may be adjourned. Stockholders of record at the
close of business on March 1, 1999 are entitled to notice of and to vote at
the meeting and any adjournments or postponements thereof.
You are requested to complete and sign the enclosed form of proxy, which
is solicited by the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend the meeting and
vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/IRA B. LEWIS, JR.
IRA B. LEWIS, JR.
CORPORATE SECRETARY
Murfreesboro, Tennessee
March 15, 1999
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
IN HE UNITED STATES.
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PROXY STATEMENT
OF
CAVALRY BANCORP, INC.
114 WEST COLLEGE STREET
MURFREESBORO, TENNESSEE 37130
(615) 893-1234
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FIRST ANNUAL MEETING OF STOCKHOLDERS
April 22, 1999
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Cavalry Bancorp, Inc. ("Company") to be
used at the First Annual Meeting of Stockholders of the Company ("Meeting").
The Company is the holding company for Cavalry Banking ("Bank"). The Meeting
will be held at the main office of the Bank located at 114 West College
Street, Murfreesboro, Tennessee, on Thursday, April 22, 1999, at 10:00 a.m.,
local time. This Proxy Statement and the enclosed proxy card are being first
mailed to stockholders on or about March 15, 1999.
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VOTING AND PROXY PROCEDURE
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Stockholders Entitled to Vote. Stockholders of record as of the close of
business on March 1, 1999 ("Voting Record Date") are entitled to one vote for
each share of common stock ("Common Stock") of the Company then held. At the
close of business on the Voting Record Date the Company had 7,161,337shares of
Common Stock issued and outstanding.
Quorum. The presence, in person or by proxy, of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum at the Meeting. Abstentions and broker
non-votes will be counted as shares present and entitled to vote at the
Meeting for purposes of determining the existence of a quorum.
Voting. The Board of Directors solicits proxies so that each stockholder
has the opportunity to vote on the proposals to be considered at the Meeting.
When a proxy card is returned properly signed and dated, the shares
represented thereby will be voted in accordance with the instructions on the
proxy card. Where no instructions are indicated, proxies will be voted FOR
the nominees for directors set forth below, FOR ratification of the adoption
of the Cavalry Bancorp, Inc. 1999 Stock Option Plan and FOR ratification of
the adoption of the Cavalry Bancorp, Inc. 1999 Management Recognition Plan.
If a stockholder attends the Meeting, he or she may vote by ballot.
If a stockholder is a participant in the Cavalry Banking Employee Stock
Ownership Plan ("ESOP"), the proxy card represents a voting instruction to the
trustees of the ESOP as to the number of shares in the participant's plan
account. Each participant may direct the trustees as to the manner in which
shares of Common Stock allocated to the participant's plan account are to be
voted. Unallocated shares of Common Stock held by the ESOP, and allocated
shares for which no voting instructions are received from participants, will
be voted by the trustees in the same proportion as shares for which the
trustees have received voting instructions.
The directors to be elected at the Meeting will be elected by a plurality
of the votes cast by stockholders present in person or by proxy and entitled
to vote. Pursuant to the Company's Charter, stockholders are not permitted to
cumulate their votes for the election of directors. Votes may be cast for or
withheld from each nominee. Votes that are withheld and broker non-votes will
have no effect on the outcome of the election because directors will be
elected by a plurality of the votes cast.
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With respect to the other proposals to be voted upon at the Meeting,
stockholders may vote for or against a proposal or may abstain from voting.
Adoption of the 1999 Stock Option Plan and the 1999 Management Recognition
Plan will each require the affirmative vote of a majority of the outstanding
shares of Common Stock present in person or by proxy at the Meeting and
entitled to vote. Abstentions and broker non-votes, therefore, will have no
effect on the outcome of each of these proposals.
Revocation of a Proxy. Stockholders who execute proxies retain the right
to revoke them at any time. Proxies may be revoked by written notice
delivered in person or mailed to the Secretary of the Company or by filing a
later proxy prior to a vote being taken on a particular proposal at the
Meeting. Attendance at the Meeting will not automatically revoke a proxy, but
a stockholder in attendance may request a ballot and vote in person, thereby
revoking a prior granted proxy.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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Persons and groups who beneficially own in excess of 5% of the Company's
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC"), and provide a copy to the Company, disclosing
such ownership pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act"). Based on such reports, the following table sets forth, at
the close of business on the Voting Record Date, certain information as to
those persons who were beneficial owners of more than 5% of the outstanding
shares of Common Stock. Management knows of no persons other than those set
forth below who beneficially owned more than 5% of the outstanding shares of
Common Stock at the close of business on the Voting Record Date. The table
also sets forth, as of the close of business on the Voting Record Date,
certain information as to shares of Common Stock beneficially owned by the
Company's directors and "named executive officers" and all directors and
executive officers as a group.
Number of Shares Percent of Shares
Name Beneficially Owned (1) Outstanding
- ---- ---------------------- ------------------
Beneficial Owners of More Than 5%
Cavalry Banking Employee Stock
Ownership Plan Trust 603,060 8.4%
Directors
William H. Huddleston, III(2) 70,689 1.0
William H. Huddleston, IV(2) 36,136 0.5
Gary Brown 91,104 1.3
Frank E. Crosslin, Jr. 65,845 0.9
Tim J. Durham 77,829 1.1
Ed Elam 31,497 0.4
James C. Cope 35,749 0.5
Terry G. Haynes 91,249 1.3
Named Executive Officers(3)
Ed C. Loughry, Jr.(4) 42,355 0.6
Ronald F. Knight(4) 44,495 0.6
William S. Jones 49,250 0.7
Hillard C. Gardner 7,778 0.1
R. Dale Floyd 26,271 0.4
All Executive Officers and 797,104 11.1
Directors as a Group (17 persons)
(footnotes on following page)
2
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(1) In accordance with Rule 13d-3 under the Exchange Act, a person is
deemed to be the beneficial owner, for purposes of this table, of any
shares of Common Stock if he or she has voting and/or investment power
with respect to such security. The table includes shares owned by
spouses, other immediate family members in trust, shares held in
retirement accounts or funds for the benefit of the named individuals,
and other forms of ownership, over which shares the persons named in
the table may possess voting and/or investment power.
(2) William H. Huddleston, III, will retire at the Meeting and the Board
of Directors has nominated his son, William H. Huddleston, IV, to
succeed him. See "PROPOSAL I -- ELECTION OF DIRECTORS."
(3) SEC regulations define the term "named executive officers" to include
all individuals serving as chief executive officer during the most
recently completed fiscal year, regardless of compensation level, and
the four most highly compensated executive officers, other than the
chief executive officer, whose total annual salary and bonus for the
last completed fiscal year exceeded $100,000. Messrs. Loughry,
Knight, Jones, Gardner and Floyd were the Company's only "named
executive officers" for the fiscal year ended December 31, 1998.
(4) Messrs. Loughry and Knight are also directors of the Company.
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PROPOSAL I -- ELECTION OF DIRECTORS
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The Company's Board of Directors consists of nine members. In
accordance with the Company's Charter, the Board is divided into three classes
with three-year staggered terms, with approximately one-third of the directors
elected each year. Mr. William H. Huddleston, III, the Chairman of the Board,
has announced that he intends to retire at the Meeting when his successor is
duly elected and qualified. The Board of Directors has nominated William H.
Huddleston, IV, the son of Mr. Huddleston, III, for election to the Company's
Board of Directors at the Meeting. Nine directors, whose names appear in the
following table, will be elected at the Meeting to serve for the respective
terms set forth in the table, or until their respective successors have been
elected and qualified.
It is intended that the proxies solicited by the Board of Directors will
be voted for the election of the nominees named in the table below. If any
nominee is unable to serve, the shares represented by all valid proxies will
be voted for the election of such substitute as the Board of Directors may
recommend or the Board of Directors may adopt a resolution to amend the Bylaws
and reduce the size of the Board. At this time the Board of Directors knows
of no reason why any nominee might be unavailable to serve.
The Board of Directors recommends a vote "FOR" the election of all
nominees named in the table below.
The following table sets forth certain information regarding the nominees
for election at the Meeting.
Year First Elected or Term to
Name Age(1) Appointed Director(2) Expire(3)
Ronald F. Knight 48 1990 2000
Tim J. Durham 45 1986 2000
Ed Elam 58 1977 2000
Ed C. Loughry, Jr. 56 1982 2001
Frank E. Crosslin, Jr. 62 1985 2001
James C. Cope 49 1992 2001
Terry G. Haynes 41 1997 2002
William H. Huddleston, IV 35 1999 2002
Gary Brown 56 1984 2002
(footnotes on following page)
3
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(1) As of December 31, 1998.
(2) Includes prior service on the Board of Directors of the Bank.
(3) Assuming the individual is elected.
The present principal occupation and other business experience during the
last five years of each nominee for election and each director continuing in
office is set forth below:
Ronald F. Knight joined the Bank in 1972 and has served as Executive Vice
President and Chief Operating Officer since 1982. Mr. Knight serves as the
Chairman of the Rutherford County Chamber of Commerce, serves on the Board of
the Tennessee Housing Development Agency, is a committee member of the United
Way and is co-founder of a local charity, "Christmas For The Children." Mr.
Knight has also served as a director of the Tennessee Bankers Association.
Tim J. Durham is the owner of Durham Realty & Auction, Inc., a real
estate and auction service company, Murfreesboro, Tennessee. Mr. Durham is
also a partner in D&H Development Co., commercial and residential developers.
He is a member of the Murfreesboro Water and Sewer Board. He served on the
Murfreesboro Planning Commission for eight years and is a former member of the
Board of Zoning Appeals. Mr. Durham is past President and Director of the
Rutherford County Board of Realtors.
Ed Elam is the Rutherford County Clerk, Murfreesboro, Tennessee, a
position he has held since 1973. Mr. Elam is a member of the Christy/Houston
Foundation Board and the Evergreen Cemetery Board.
Ed C. Loughry, Jr. joined the Bank in 1968 and has served as President
and Chief Executive Officer of the Bank since 1982. Mr. Loughry has served on
the Boards of Directors of the Rutherford County Chamber of Commerce, United
Way, Heart Fund, and the FHLB of Cincinnati. He currently serves on
Rutherford County 20/20 and the Murfreesboro Conference Center Authority, and
is a Director of the Tennessee Bankers Association. He was selected Business
Person of the Year in 1993 by the Chamber of Commerce.
Frank E. Crosslin, Jr. is President and Chairman of the Board of Crosslin
Supply Company, Inc., a building supply company, Smyrna, Tennessee. Mr.
Crosslin is a member of the Rutherford County Industrial Bond Board and the
Smyrna Economic Development Board. Mr. Crosslin is also a past director of
the Tennessee Housing Development Agency and the Public Building Authority of
Rutherford County.
James C. Cope is a partner in the law firm, Murfree, Cope, Hudson &
Scarlett, Murfreesboro, Tennessee. Mr. Cope serves as attorney for Rutherford
County, Tennessee, Middle Tennessee Electric Membership Corporation, the
Murfreesboro Housing Authority, the Smyrna/Rutherford County Airport Authority
and otherwise engages in a general civil practice of law. He was past
President of the Middle Tennessee State University Foundation and the
Murfreesboro Rotary Club.
Terry G. Haynes is the Chief Executive Officer, General Manager and Chief
Operating Officer of Haynes Bros. Lumber Co., a retail building supply dealer
located in Murfreesboro, Tennessee. Mr. Haynes is a past Chairman of the
Rutherford County Chamber of Commerce.
William H. Huddleston, IV, a professional engineer and registered land
surveyor licensed in the State of Tennessee, is the President of
Huddleston-Steele Engineering, Inc. in Murfreesboro, Tennessee.
Gary Brown is the owner and manager of Roscoe Brown, Inc., a heating and
air conditioning company, Murfreesboro, Tennessee. Mr. Brown is a member of
the Murfreesboro Water Sewer Department Board, the Electrical Examining Board
and the Middle Tennessee State University Foundation Board.
4
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Boards of Directors of the Company and the Bank conduct their
business through meetings of the Boards and through their committees. During
the fiscal year ended December 31, 1998, the Board of Directors of the Company
held one meeting in connection with its initial organization and nine
subsequent meetings, and the Board of Directors of the Bank held 12 meetings.
No director of the Company or the Bank attended fewer than 75% of the total
meetings of the Boards and committees on which such person served during this
period.
Committees of the Company's Board. The Company's Board of Directors has
established Audit, Compensation and Nominating Committees.
The Audit Committee of the Company also serves as the Audit Committee of
the Bank and consists of Directors Durham (Chairman), Elam, Crosslin and
Haynes. The Committee receives and reviews all reports prepared by the
Company and Bank's external and internal auditor. The Committee meets
semi-annually in April and October to review the reports issued by the
internal auditor and the external auditor. The Committee also oversees the
Company's and the Bank's Y2K compliance. The Audit Committee met five times
during the year ended December 31, 1998.
The Compensation Committee of the Company also serves as the Compensation
Committee of the Bank and consists of Directors Brown (Chairman), Durham, and
Cope. The Compensation Committee makes recommendations to the full Board of
Directors concerning employee compensation. The Compensation Committee met
four times during the fiscal year ended December 31, 1998.
The full Board of Directors acts as a Nominating Committee for the annual
selection of management's nominees for election as directors of the Company.
The full Board of Directors met in January 1999 to nominate candidates for
election as directors at the Meeting.
Committees of the Bank's Board. The Bank's Board of Directors has
established Executive, Audit and Compensation Committees, among others.
The Executive Committee, consisting of Directors Huddleston (Chairman),
Elam, Brown, Loughry and Knight, has the authority to act on behalf of the
Board of Directors in the event of an emergency. The Executive Committee did
not meet during the year ended December 31, 1998.
The Bank's Audit Committee, as indicated above, also serves as the
Company's Audit Committee, consists of the same members, and performs the
audit function at the Bank level. The Audit Committee met five times during
the year ended December 31, 1998.
The Bank's Compensation Committee, as indicated above, also serves as the
Company's Compensation Committee, consisting of the same members, and makes
recommendations to the full Board of Directors concerning employee
compensation. The Compensation Committee met four times during the fiscal
year ended December 31, 1998.
The Bank also maintains standing Loan, Investment, Asset Classification,
Asset/Liability Management, Trust and Compliance Committees.
5
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DIRECTORS' COMPENSATION
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Fees
All outside directors, other than the Chairman of the Board and the
Vice-Chairman of the Board, receive a monthly fee of $1,000. The Chairman of
the Board receives a monthly fee of $1,200 and the Vice-Chairman of the Board
receives a monthly fee of $1,050. Outside directors receive an additional fee
of $200 per Executive Committee, Audit Committee, Compensation Committee and
Trust Committee meeting attended. Directors' fees totalled $103,600 for the
year ended December 31, 1998. All Directors of the Company receive a monthly
fee of $500.
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EXECUTIVE COMPENSATION
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Summary Compensation Table
The following information is provided for Messrs. Loughry, Knight, Jones,
Gardner and Floyd.
Annual Compensation
------------------------------------
Other Annual All Other
Name and Compen- Compen-
Position Year Salary Bonus sation(1) sation(2)
- -------- ---- ------ ----- --------- ---------
Ed C. Loughry, Jr. 1998 $168,000 $56,112 -- $35,052
President and Chief Executive 1997 162,000 45,360 -- 29,143
Officer of the Company and 1996 140,000 43,120 -- 18,432
the Bank
Ronald F. Knight 1998 140,000 46,760 -- 33,652
Executive Vice President and 1997 135,000 37,800 -- 25,143
Chief Operating Officer of 1996 120,000 36,960 -- 16,332
the Company and the Bank
William S. Jones 1998 86,333 14,418 -- 21,715
Senior Vice President and 1997 70,000 9,800 -- 10,675
Chief Administrative Officer 1996 62,500 9,625 -- 9,805
of the Company and the Bank
Hillard C. Gardner 1998 85,500 19,279 -- 21,671
Senior Vice President and 1997 82,500 11,550 -- 12,128
Chief Financial Officer of 1996 79,000 14,666 -- 11,720
the Company and the Bank
R. Dale Floyd 1998 84,000 19,028 -- 21,350
Senior Vice President of the 1997 81,500 11,410 -- 11,992
1996 78,000 17,012 -- 11,604
_______________
(1) The aggregate amount of perquisites and other personal benefits was
less than 10% of the total annual salary and bonus reported.
(2) For fiscal 1998, includes employer paid medical, dental, group term
life and disability insurance premiums and employer 401(k) and ESOP
contributions.
6
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Employment Agreements. The Company and the Bank (collectively, the
"Employers") have entered into three-year employment agreements ("Employment
Agreements") with Messrs. Loughry and Knight (individually, the "Executive").
Under the Employment Agreements, the current salary levels for Messrs. Loughry
and Knight are $168,000 and $140,000, respectively, which amounts are paid by
the Bank and may be increased at the discretion of the Board of Directors or
an authorized committee of the Board. On each anniversary of the commencement
date of the Employment Agreements, the term of each agreement may be extended
for an additional year at the discretion of the Board of Directors. The
agreements are terminable by the Employers at any time, by the Executive if
the Executive is assigned duties inconsistent with his initial position,
duties, responsibilities and status, or upon the occurrence of certain events
specified by federal regulations. In the event that an Executive's employment
is terminated without cause or upon the Executive's voluntary termination
following the occurrence of an event described in the preceding sentence, the
Bank would be required to honor the terms of the agreement through the
expiration of the current term, including payment of current cash compensation
and continuation of employee benefits.
The Employment Agreements provide for severance payments and other
benefits in the event of involuntary termination of employment in connection
with any change in control of the Employers. Severance payments also will be
provided on a similar basis in connection with a voluntary termination of
employment where, subsequent to a change in control, the Executive is assigned
duties inconsistent with his position, duties, responsibilities and status
immediately prior to such change in control. The term "change in control" is
defined in the agreement as having occurred when, among other things, (a) a
person other than the Company purchases shares of Common Stock pursuant to a
tender or exchange offer for such shares, (b) any person (as such term is used
in Sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities, (c) the membership of the Board of Directors changes
as the result of a contested election, or (d) stockholders of the Company
approve a merger, consolidation, sale or disposition of all or substantially
all of the Company's assets, or a plan of partial or complete liquidation.
The maximum value of the severance benefits under the Employment
Agreements is 2.99 times the Executive's average annual compensation during
the five-year period preceding the effective date of the change in control
(the "base amount"). Such amounts will be paid in a lump sum within ten
business days following the termination of employment. Had a change in
control of the Employers occurred in 1998, Messrs. Loughry and Knight would be
entitled to payments of approximately $595,371and $510,416, respectively.
Section 280G of the Internal Revenue Code of 1986, as amended ("Code"),
provides that severance payments that equal or exceed three times the
individual's base amount are deemed to be "excess parachute payments" if they
are contingent upon a change in control. Individuals receiving excess
parachute payments are subject to a 20% excise tax on the amount of such
excess payments, and the Employers would not be entitled to deduct the amount
of such excess payments.
The Employment Agreements restrict each Executive's right to compete
against the Employers for a period of one year from the date of termination of
the agreement if an Executive voluntarily terminates employment, except in the
event of a change in control.
Severance Agreements. The Company and the Bank (collectively, the
"Employers") have entered into two-year severance agreements ("Severance
Agreements") with Messrs. Jones, Gardner and Floyd ("Executives"). On each
anniversary of the commencement date of the Severance Agreements, the term of
each agreement may be extended for an additional year at the discretion of the
Board.
The Severance Agreements provide for severance payments and continuation
of insured employee welfare benefits in the event of involuntary termination
of employment in connection with any change in control of the Employers in the
same manner as provided for in the Employment Agreements. Severance payments
and benefits also will be provided on a similar basis in connection with a
voluntary termination of employment where, subsequent to a change in control,
an officer is assigned duties inconsistent with his position, duties,
responsibilities and status immediately prior to such change in control. The
term "change in control" is defined in the Severance Agreements as having
occurred when, among other things, (a) a person other than the Company
purchases shares of Common Stock
7
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pursuant to a tender or exchange offer for such shares, (b) any person (as
such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of the Company's
then outstanding securities, (c) the membership of the Board of Directors
changes as the result of a contested election, or (d) shareholders of the
Company approve a merger, consolidation, sale or disposition of all or
substantially all of the Company's assets, or a plan of partial or complete
liquidation.
Assuming that a change in control of the Employers had occurred in 1998,
Messrs. Jones, Gardner and Floyd would be entitled to payments of
approximately $100,750, $149,164 and $103,028, respectively.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or
the Exchange Act that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following Report of the Compensation
Committee and Performance Graph shall not be incorporated by reference into
any such filings.
Report of the Compensation Committee. Under rules established by the
SEC, the Company is required to provide certain data and information in regard
to the compensation and benefits provided to the Company's and the Bank's
Chief Executive Officer and named executive officers. Insofar as no separate
compensation is currently paid by the Company, the Personnel/Compensation
Committee of the Bank (the "Committee"), at the direction of the Board of
Directors of the Company, has prepared the following report for inclusion in
this proxy statement.
The Personnel/Compensation Committee of the Board of Directors is
responsible for establishing and implementing all compensation policies of the
Bank and its subsidiaries. The Committee is also responsible for evaluating
the performance of the Chief Executive Officer of the Company and the Bank and
approving an appropriate compensation level. The Chief Executive Officer
evaluates the performance of the Executive Vice President and certain Senior
Vice Presidents of the Company and the Bank and recommends to the Committee
individual compensation levels for approval by the Committee.
The Committee believes that a compensation plan for executive officers
should take into account management skills, long-term performance results and
shareholders returns. The principals underlying compensation policies are:
(1) to attract and retain key executives who are highly qualified and are
vital to the long-term success of the Bank and its subsidiaries; (2) to
provide levels of compensation competitive with those offered throughout the
banking industry; (3) to motivate executives to enhance long-term shareholder
value by helping them build their ownership in the Company; and (4) to
integrate the compensation program with the Bank's long-term strategic
planning and management process.
The Bank's current compensation plan involves a combination of salary and
bonuses to reward short-term performance, and, in the future, will include
grants of stock options to encourage long-term performance. The salary levels
of executive officers are designed to be competitive within the banking and
financial services industries. Independent compensation consultants, such as
Burris and Associates, Murfreesboro, Tennessee, are periodically engaged to
review the compensation levels of management as compared with peers with
comparable responsibilities in other financial institutions. The Committee
also considers compensation surveys prepared by The SNL Executive Compensation
Review, and the Ben S. Cole Financial Survey of Executive Salaries and
Benefits.
The Annual Incentive Plan is based on annual performance of the Bank.
The Plan is designed to provide for bonuses at multiples of return on assets
as a percentage of salary for corporate officers. The multiple for President
Loughry and Executive Vice President Knight is 20 and the multiple for Messrs.
Jones, Gardner, Floyd, and all other corporate officers is 10. In addition,
the Committee will sometimes award an additional cash bonus to individuals who
provided exemplary service that was beneficial to the long-term goals of the
Bank.
8
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During the fiscal year ended December 31, 1998, the base salary of Ed C.
Loughry, President and Chief Executive Officer of the Company and the Bank,
was $168,000, which represented a 3.7% increase from the previous fiscal year,
plus an incentive bonus of $56,112. The Committee believes the current
compensation is appropriate based on competitive salary surveys and the
performance of the Company and the Bank.
During the fiscal year ended December 31, 1998, the base salary of Ronald
F. Knight, Executive Vice President and Chief Operating Officer of the Company
and the Bank, was $140,000, which represented a 3.7% increase from the
previous fiscal year, plus an incentive bonus of $46,760. The Committee
believes the current compensation is appropriate based on competitive salary
surveys and the performance of the Company and the Bank.
During the fiscal year ended December 31, 1998, the base salary of
William S. Jones, Senior Vice President and Chief Administrative Officer of
the Company and the Bank, was $86,333, which represented a 23.3% increase from
the previous fiscal year, plus an incentive bonus of $14,418. The Committee
believes the current compensation is appropriate based on competitive salary
surveys and the performance of the Company and the Bank.
During the fiscal year ended December 31, 1998, the base salary of
Hillard C. Gardner, Senior Vice President and Chief Financial Officer of the
Company and the Bank, was $85,500, which represented a 3.6% increase from the
previous fiscal year, plus an incentive bonus of $19,278. The Committee
believes the current compensation is appropriate based on competitive salary
surveys and the performance of the Company and the Bank.
During the fiscal year ended December 31, 1998, the base salary of R.
Dale Floyd, Senior Vice President of the Bank, was $84,000, which represented
a 3.1% increase from the previous fiscal year, plus an incentive bonus of
$19,028. The Committee believes the current compensation is appropriate based
on competitive salary surveys and the performance of the Company and the Bank.
The Committee also recommends to the Board of Directors the amount of
fees paid for service on the Board. The Committee did not recommend a change
in Board fees during the fiscal year ended December 31, 1998.
Personnel/Compensation Committee
/s/Gary Brown, Chairman
/s/Tim J. Durham
/s/James C. Cope
Compensation Committee Interlocks and Insider Participation. No
executive officer of the Company or the Bank has served as a member of the
compensation committee of another entity, one of whose executive officers
served on the Personnel Committee. No executive officer of the Company or the
Bank has served as a director of another entity, one of whose executive
officers served on the Personnel Committee. No executive officer of the
Company or the Bank has served as a member of the compensation committee of
another entity, one of whose executive officers served as a director of the
Company or the Bank.
9
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Performance Graph. The following graph compares the cumulative total
shareholder return on the Company's Common Stock with the cumulative total
return on the Nasdaq Index (U.S. Companies) and with the SNL Thrift Index.
[graph appears here]
Period Ending
------------------------------------------------------
Index 3/17/98 4/30/98 6/30/98 8/31/98 10/31/98 12/31/98
- ----------------------------------------------------------------------------
Cavalry Bancorp, Inc. 100.00 116.71 106.01 90.17 95.30 104.10
Nasdaq - Total U.S. 100.00 105.13 106.36 84.61 100.23 124.19
SNL Thrift Index 100.00 102.71 97.24 70.05 79.28 82.91
10
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<PAGE>
- ------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
- ------------------------------------------------------------------------------
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than 10% of any registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the SEC. Executive officers, directors and greater
than 10% stockholders are required by regulation 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 it has received
and written representations provided to the Company by the above referenced
persons, the Company believes that during the fiscal year ended December 31,
1998 all filing requirements applicable to its reporting officers, directors
and greater than 10% stockholders were properly and timely complied with,
except that Director Frank E. Crosslin inadvertently failed to report in a
timely manner a purchase of shares of Common Stock that he made during
December 1998.
- ------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
- ------------------------------------------------------------------------------
Federal regulations require that all loans or extensions of credit to
executive officers and directors of insured financial institutions must be
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other
persons, except for loans made pursuant to programs generally available to all
employees, and must not involve more than the normal risk of repayment or
present other unfavorable features. The Company's subsidiary financial
institution is therefore prohibited from making any new loans or extensions of
credit to executive officers and directors at different rates or terms than
those offered to the general public, except for loans made pursuant to
programs generally available to all employees, and has adopted a policy to
this effect. In addition, loans made to a director or executive officer in an
amount that, when aggregated with the amount of all other loans to such person
and his or her related interests, are in excess of the greater of $25,000 or
5% of the institution's capital and surplus (up to a maximum of $500,000) must
be approved in advance by a majority of the disinterested members of the Board
of Directors. At December 31, 1998, loans to directors and executive officers
totalled approximately $1.6 million.
President and Chief Executive Officer Ed C. Loughry, Jr.'s wife is a
principal partner in an insurance agency from which the Bank purchases some of
its insurance coverage. Mr. Loughry has no ownership interest in the
insurance agency and does not participate in its business affairs. Mrs.
Loughry is not paid any direct commissions on sales to the Bank. Premiums
paid to the insurance agency by the Bank amounted to approximately $127,305
for the year ended December 31, 1998.
- ------------------------------------------------------------------------------
PROPOSAL II -- RATIFICATION OF 1999 STOCK OPTION PLAN
- ------------------------------------------------------------------------------
General
The Company's Board of Directors adopted the Cavalry Bancorp, Inc. 1999
Stock Option Plan ("Plan") on January 14, 1999, subject to approval by the
Company's stockholders. The objective of the Plan is to reward performance
and build the participant's equity interest in the Company by providing
long-term incentives and rewards to officers, key employees and other persons
who provide services to the Company and its subsidiaries and who contribute to
the success of the Company by their innovation, ability, industry, loyalty and
exceptional service.
The following summary is a brief description of the material features of
the Plan. This summary is qualified in its entirety by reference to the Plan,
a copy of which is attached as Exhibit A.
11
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<PAGE>
Summary of the Plan
Type of Stock Option Grants. The Plan provides for the grant of
incentive stock options ("ISOs"), within the meaning of Section 422(b) of the
Code, Non-Qualified Stock Options ("NQSOs"), which do not satisfy the
requirements for ISO treatment, and stock appreciation rights ("SARs").
Administration. The Plan is administered by the Compensation Committee.
Subject to the terms of the Plan and resolutions of the Board, the
Compensation Committee interprets the Plan and is authorized to make all
determinations and decisions thereunder. The Compensation Committee also
determines the individuals to whom stock options and other awards will be
granted, the type and amount of awards that will be granted, and the terms and
conditions applicable to such grants.
Participants. All officers, directors, directors emeriti and employees
of the Company and its subsidiaries are eligible to participate in the Plan.
Number of Shares of Common Stock Available. The Company has reserved
753,825 shares of Common Stock for issuance under the Plan in connection with
the exercise of awards. Shares of Common Stock to be issued under the Plan
will be authorized but unissued shares. To the extent the Company utilizes
authorized but unissued shares to fund the Plan, the interests of current
stockholders will be diluted. Since all options are granted through the use
of authorized but unissued Common Stock, current stockholders would be diluted
by approximately 9.6%. Any shares subject to an award which expires or is
terminated unexercised will again be available for issuance under the Plan.
Adjustments Upon Changes in Capitalization. Shares awarded under the
Plan will be adjusted by the Compensation Committee in the event of a
reorganization, recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation or other change in corporate
structure or the Common Stock of the Company.
Stock Option Grants. The exercise price of each ISO or NQSO will be at
least equal to the fair market value of a share of Common Stock on the date of
grant. The exercise price of an option may be paid in cash, Common Stock or
other property, by the surrender of all or part of the option being exercised,
by the immediate sale through a broker of the number of shares being acquired
sufficient to pay the purchase price, or by a combination of these methods, as
and to the extent permitted by the Compensation Committee.
Under the Plan, no ISO is transferable other than by will or the laws of
descent and distribution. Any other option shall be transferable by will, the
laws of descent and distribution, a "domestic relations order," as defined in
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.
Options may become exercisable in full at the time of grant or at such other
times and in such installments as the Compensation Committee determines or as
may be specified in the Plan. It is anticipated that initial option grants
under the Plan will become exercisable in equal installments over a five-year
period following the date of grant. Options may be exercised during periods
before and after the participant terminates employment, as the case may be, to
the extent authorized by the Compensation Committee or specified in the Plan.
However, no ISO may be exercised after the tenth anniversary of the date the
option was granted.
Effect of a Change in Control. In the event of a tender offer, exchange
offer for shares, or a change in control (as defined in the Plan) of the
Company, each outstanding stock option grant will become fully vested and
immediately exercisable for a period of sixty days following the date of such
change in control, after which any unexercised portion of the option shall
revert to being vested as though no change in control had occurred. In
addition, in the event of a merger or other corporate event in which the
Company is not the surviving entity, the Plan provides that the participant
may elect to receive the excess of the fair market value of the Common Stock
underlying the option over the option's exercise price in cash or property, as
determined in the Compensation Committee's direction.
12
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<PAGE>
Term of the Plan. The Plan will be effective upon stockholder approval.
Since the effective date of the Plan will be after the one year anniversary of
the effective date of the Bank's mutual to stock conversion, options granted
under the Plan will not be subject to certain restrictions (including a
limitation on the acceleration of vesting in the event of a change in control)
otherwise applicable to stock compensation plans implemented prior to the
first anniversary of the Bank's mutual-to-stock conversion. The Plan will
expire on the tenth anniversary of the effective date, unless terminated
sooner by the Board.
Amendment of the Plan. The Plan allows the Board to amend, suspend or
terminate the Plan without stockholder approval unless such approval is
required to comply with a tax law or regulatory requirement.
Certain Federal Income Tax Consequences. The following brief description
of the tax consequences of stock option grants under the Plan is based on
federal income tax laws currently in effect and does not purport to be a
complete description of such federal income tax consequences.
There are no federal income tax consequences either to the optionee or to
the Company upon the grant of an ISO or an NQSO. On the exercise of an ISO
during employment or within three months thereafter, the optionee will not
recognize any income and the Company will not be entitled to a deduction,
although the excess of the fair market value of the shares on the date of
exercise over the option price is includible in the optionee's alternative
minimum taxable income, which may give rise to alternative minimum tax
liability for the optionee. Generally, if the optionee disposes of shares
acquired upon exercise of an ISO within two years of the date of grant or one
year of the date of exercise, the optionee will recognize ordinary income, and
the Company will be entitled to a deduction, equal to the excess of the fair
market value of the shares on the date of exercise over the option price
(limited generally to the gain on the sale). The balance of any gain or loss
will be treated as a capital gain or loss to the optionee. If the shares are
disposed of after the two year and one year periods mentioned above, the
Company will not be entitled to any deduction, and the entire gain or loss for
the optionee will be treated as a long-term capital gain or loss.
On exercise of an NQSO, the excess of the date-of-exercise fair market
value of the shares acquired over the option price will generally be taxable
to the optionee as ordinary income and deductible by the Company, provided the
Company properly reports the income in respect of the exercise. The
disposition of shares acquired upon the exercise of a NQSO will generally
result in a capital gain or loss for the optionee, but will have no tax
consequences for the Company.
New Plan Benefits
The following table sets forth information regarding the number of
options anticipated to be granted under the Plan following the effective date
of the Plan.
Anticipated
Name and Position Stock Option Grant
- ----------------- ------------------
Ed C. Loughry, Jr. 180,957
President and Chief Executive Officer
of the Company and the Bank
Ronald F. Knight 143,266
Executive Vice President and Chief
Operating Officer of the Company and the Bank
(table continued on following page)
13
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<PAGE>
Anticipated
Name and Position Stock Option Grant
William S. Jones 23,846
Senior Vice President and Chief
Administrative Officer of the Company
and the Bank
Hillard C. Gardner 23,846
Senior Vice President and Chief Financial
Officer of the Company and the Bank
R. Dale Floyd 18,846
Senior Vice President of the Bank
All executive officers as a group 471,145
(nine persons, including Messrs. Loughry,
Knight, Jones, Gardner and Floyd)
All non-employee directors as a group
(seven persons) 226,142
The balance of the options, if any, that may be granted under the Plan
are expected to be allocated in the future to current and prospective
non-employee directors, officers and employees.
Board of Directors Recommendation
The Board of Directors recommends a vote "FOR" the adoption of the Plan
attached as Exhibit A.
- ------------------------------------------------------------------------------
PROPOSAL III -- RATIFICATION OF THE
1999 MANAGEMENT RECOGNITION PLAN
- ------------------------------------------------------------------------------
General
Subject to approval by the Company's stockholders, the Board of Directors
of the Company adopted the Cavalry Bancorp, Inc. 1999 Management Recognition
Plan ("MRP") on January 14, 1999 for the benefit of officers, employees and
non-employee directors of the Company and its subsidiaries. The objective of
the MRP is to reward performance and build the participant's equity interest
in the Company by providing long-term incentives and rewards to officers, key
employees and other persons who provide services to the Company and its
subsidiaries and who contribute to the success of the Company by their
innovation, ability, industry, loyalty and exceptional service. In addition,
the company believes that the MRP will provide an important retention
incentive for key personnel.
The following summary is a brief description of the material features of
the MRP. This summary is qualified in its entirety by reference to the MRP, a
copy of which is attached as Exhibit B.
Summary of the MRP
Type of Stock Awards. The MRP provides for the award of Common Stock in
the form of restricted stock awards which are subject to the restrictions
specified in the MRP or as determined by a committee of the Company's Board of
Directors.
14
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<PAGE>
Administration. The MRP is administered by the Compensation Committee.
Subject to the terms of the MRP and resolutions of the Board, the Compensation
Committee interprets the MRP and is authorized to make all determinations and
decisions thereunder. The Compensation Committee also determines the
individuals to whom restricted stock awards will be made, the number of shares
of Common Stock covered by each award and the terms and conditions applicable
to such award.
Participants. All officers, employees, directors and directors emeriti
of the Company and its subsidiaries are eligible to participate in the MRP.
Number of Shares of Common Stock Available. The Company has reserved
301,530 shares of Common Stock for issuance under the MRP in the form of
restricted stock. Shares of Common Stock to be issued under the MRP will be
authorized but unissued shares. Since all MRP shares are awarded through the
use of authorized but unissued Common Stock, current stockholders would be
diluted by approximately 4.1%. Any shares subject to an award which is
forfeited or is terminated will again be available for issuance under the MRP.
Adjustments Upon Changes in Capitalization. Shares awarded under the MRP
will be adjusted by the Compensation Committee in the event of a
reorganization, recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation or other change in corporate
structure or the Common Stock of the Company.
Restricted Stock Awards. Awards under the MRP will be made in the form
of restricted shares of Common Stock that are subject to restrictions on
transfer of ownership. It is anticipated that the initial awards under the
MRP will vest in equal installments over a five-year period beginning on the
first anniversary of the date of grant. Compensation expense in the amount of
the fair market value of the Common Stock at the date of the grant to the
recipient will be recognized during the period over which the shares vest. If
a recipient terminates service with the Company or its subsidiaries for
reasons other than death or disability, or normal retirement after attainment
of age 65, the recipient forfeits all rights to shares under restriction. If
such termination is caused by death, disability, or normal retirement after
attainment of age 65, all restrictions expire and all shares allocated become
unrestricted. A recipient will be entitled to voting, dividends and other
stockholder rights with respect to the shares while restricted.
Effect of a Change in Control. In the event of a tender offer, exchange
offer for shares, or a change in control (as defined in the MRP) of the
Company, each outstanding award under the MRP will become fully vested at the
election of the participant that is made within 60 days following such event.
If the participant does not make such election within the 60 day period, the
restricted shares will continue to vest as though no such event had occurred.
Term of the MRP. The MRP will be effective upon stockholder approval.
Since the effective date of the MRP will be after the one year anniversary of
the effective date of the Bank's mutual to stock conversion, awards under the
MRP will not be subject to certain restrictions (including a limitation on the
acceleration of vesting in the event of a change in control) otherwise
applicable to stock compensation plans implemented prior to the first
anniversary of the Bank's mutual-to-stock conversion. The MRP will expire on
the tenth anniversary after the effective date, unless sooner terminated by
the Board.
Amendment of the MRP. The MRP allows the Board to amend, alter, suspend,
or terminate the MRP without stockholder approval unless such approval is
required to comply with a tax law or regulatory requirement, provided,
however, that no such amendment, suspension or termination shall impair the
rights of any participant, without his or her consent, in any award
theretofore made pursuant to the MRP.
Certain Federal Income Tax Consequences. The following brief description
of the tax consequences of awards of restricted stock under the MRP is based
on federal income tax laws currently in effect and does not purport to be a
complete description of such federal income tax consequences.
15
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<PAGE>
A participant who has been awarded restricted stock under the MRP and
does not make an election under Section 83(b) of the Code will not recognize
taxable income at the time of the award. At the time any transfer or
forfeiture restrictions applicable to the restricted stock award lapse, the
recipient will recognize ordinary income and the Company will be entitled to a
corresponding deduction equal to the excess of the fair market value of such
stock at such time over the amount (if any) paid therefor. Any dividend paid
to the recipient on the restricted stock at or prior to such time will be
ordinary income to the recipient and deductible as such by the Company.
A recipient of a restricted stock award who makes an election under
Section 83(b) of the Code will recognize ordinary income at the time of the
award and the Company will be entitled to a corresponding deduction equal to
the fair market value of such stock at such time over the amount (if any) paid
therefor. Any dividends subsequently paid to the recipient on the restricted
stock will be dividend income to the recipient and not deductible by the
Company. If the recipient makes a Section 83(b) election, there are no federal
income tax consequences either to the recipient or the Company at the time any
transfer or forfeiture restrictions applicable to the restricted stock award
lapse.
New Plan Benefits
The following table sets forth information regarding the number of
restricted shares anticipated to be granted under the MRP following its
effective date.
Anticipated
Name and Position Restricted Stock Grant
- ----------------- ----------------------
Ed C. Loughry, Jr. 75,382
President and Chief Executive Officer
of the Company and the Bank
Ronald F. Knight 60,314
Executive Vice President and Chief
Operating Officer of the Company and
the Bank
William S. Jones 7,538
Senior Vice President and Chief
Administrative Officer of the Company
and the Bank
Hillard C. Gardner 7,538
Senior Vice President and Chief Financial
Officer of the Company and the Bank
R. Dale Floyd 7,538
Senior Vice President of the Bank
All executive officers as a group 188,462
(nine persons, including Messrs. Loughry,
Knight, Jones, Gardner and Floyd)
All non-employee directors as a group
(seven persons) 90,454
The balance of the shares, if any, that may be issued pursuant to the MRP
is expected to be allocated in the future to current and prospective
non-employee directors, officers and employees.
16
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Recommendation of the Board of Directors
The Board of Directors recommends a vote "FOR" the ratification of the
adoption of the MRP attached as Exhibit B.
- ------------------------------------------------------------------------------
AUDITORS
- ------------------------------------------------------------------------------
The Board of Directors has appointed Rayburn, Betts & Bates, P.C.,
independent public accountants, to serve as the Company's auditors for the
fiscal year ending December 31, 1999. A representative of Rayburn, Betts &
Bates, P.C. will be present at the Meeting to respond to appropriate questions
from stockholders and will have the opportunity to make a statement if he or
she so desires.
- ------------------------------------------------------------------------------
OTHER MATTERS
- ------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect
thereof in accordance with the judgment of the person or persons voting the
proxies.
- ------------------------------------------------------------------------------
MISCELLANEOUS
- ------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, directors, officers and regular employees
of the Company may solicit proxies personally or by telephone without
additional compensation. The Company has retained Corporate Communications,
Nashville, Tennessee, to assist in soliciting proxies for a fee of $2,500,
plus reimbursable expenses.
The Company's Annual Report to Stockholders has been mailed to
stockholders as of the close of business on the Record Date. Any stockholder
who has not received a copy of such Annual Report may obtain a copy by writing
to the Secretary of the Company. The Annual Report is not to be treated as
part of the proxy solicitation material or as having been incorporated herein
by reference.
- ------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- ------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy solicitation
materials for next year's Meeting of Stockholders, any stockholder proposal to
take action at such meeting must be received at the Company's main office at
114 West College Street, Murfreesboro, Tennessee, no later than November 15,
1999. Any such proposals shall be subject to the requirements of the proxy
solicitation rules adopted under the Exchange Act.
The Company's Charter generally provides that stockholders will have the
opportunity to nominate directors of the Company if such nominations are made
in writing and are delivered to the Secretary of the Company 120 calendar days
in advance of the month and day the Company's proxy statement to stockholders
was mailed to stockholders the preceding year; provided however, that if
notice is given fewer than 40 calendar days before the meeting, such written
notice shall be delivered to the secretary of the Company not later than the
close of the tenth calendar day following the day on which notice of the
meeting was mailed to stockholders. The notice must set forth (i) the name,
age, business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of each
nominee, (iii) the number of shares of stock of the Company which are
beneficially owned by each such nominee, (iv) such other information as would
be required to be included in a proxy statement soliciting proxies
17
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<PAGE>
for the election of the proposed nominee pursuant to the Exchange Act,
including, without limitation, such person's written consent to being named in
the proxy statement as a nominee and to serving as a director, if elected, and
(v) as to the stockholder giving such notice (a) his name and address as they
appear on the Company's books and (b) the class and number of shares of the
Company which are beneficially owned by such stockholder.
BY ORDER OF THE BOARD OF DIRECTORS
/s/IRA B. LEWIS, JR.
IRA B. LEWIS, JR.
SECRETARY
Murfreesboro, Tennessee
March 15, 1999
- ------------------------------------------------------------------------------
FORM 10-K
- ------------------------------------------------------------------------------
A copy of the Company's Form 10-K for the fiscal year ended December 31, 1998,
as filed with the SEC will be furnished without charge to persons who were
stockholders as of the close of business on the Voting Record Date upon
written request to Ira B. Lewis, Jr., Secretary, Cavalry Bancorp, Inc., 114
West College Street, Murfreesboro, Tennessee 37130.
- ------------------------------------------------------------------------------
18
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<PAGE>
Exhibit A
CAVALRY BANCORP, INC.
1999 STOCK OPTION 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, emeritus directors 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 Cavalry Bancorp, Inc., a Tennessee 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
Nasdaq Stock Market, 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.
A-1
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<PAGE>
"Participant" -- means any director, emeritus director or employee of the
Corporation or any Affiliate who is selected by the Committee to receive an
Award.
"Plan" -- means this Cavalry Bancorp, Inc. 1999 Stock Option 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, emeritus director or employee of
the Corporation or 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.
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 753,825 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 250,000 Shares, subject to adjustment
as provided in Section 6.
A-2
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<PAGE>
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 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) two years following such Termination of
Service or (B) 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, capital distribution, 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.
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<PAGE>
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 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, and except as otherwise
provided in an employment agreement or arrangement between the Corporation or
an Affiliate and the Participant, 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
A-4
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<PAGE>
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 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. The
Committee may not, however, 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 unless sooner terminated under Section 13 hereof.
* * * * *
A-5
<PAGE>
<PAGE>
Exhibit B
CAVALRY BANCORP, INC.
1999 MANAGEMENT RECOGNITION 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, emeritus directors 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 Restricted Stock, 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.
"Code" -- means the Internal Revenue Code of 1986, as amended.
"Committee" -- means the Committee referred to in Section 3 hereof.
"Corporation" -- means Cavalry Bancorp, Inc., a Tennessee corporation,
and any successor thereto.
"Participant" -- means any director, emeritus director or employee of the
Corporation or any Affiliate who is selected by the Committee to receive an
Award.
"Plan" -- means this Cavalry Bancorp, Inc. 1999 Management Recognition
Plan.
"Restricted Period" -- means the period of time selected by the Committee
for the purpose of determining when restrictions are in effect under Section 5
hereof with respect to Restricted Stock awarded under the Plan.
"Restricted Stock" -- means Shares awarded to a Participant by the
Committee pursuant to Section 5 hereof.
"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 a
director, emeritus director or employee of the Corporation or any Affiliate.
Service shall not be considered to have ceased in the case of sick leave,
military leave or any other leave of absence approved by the Corporation or
any Affiliate or in the case of transfers between payroll locations of the
Corporation or between the Corporation, its subsidiaries or its successor.
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,
B-1
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<PAGE>
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.
4. Shares Subject to Plan. 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 301,530 Shares. 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. An Award
shall not be considered to have been made under the Plan with respect to
Restricted Stock which is forfeited, and new Awards may be granted under the
Plan with respect to the number of Shares as to which such forfeiture has
occurred.
5. Terms and Conditions of Restricted Stock. The Committee is hereby
authorized to grant Awards of Restricted Stock to Participants with the
following terms and conditions and with such additional terms and conditions
as the Committee shall determine:
(a) At the time of an Award of Restricted Stock, the Committee
shall establish for each Participant a Restricted Period, during
which or at the expiration of which, as the Committee shall
determine and provide in the Award Agreement, the Shares awarded as
Restricted Stock shall no longer be subject to restriction.
Subject to any such other terms and conditions as the Committee
shall provide, Shares of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered by the
Participant, except as hereinafter provided, during the Restricted
Period. Except for such restrictions, and subject to paragraph (c)
of this Section 5 and Section 6 hereof, the Participant as owner of
such shares shall have all the rights of a stockholder, including
the right to vote the Restricted Stock and the right to receive
dividends with respect to the Restricted Stock.
The Committee shall have the authority, in its discretion, to
accelerate the time at which any or all of the restrictions shall
lapse with respect thereto, or to remove any or all of such
restrictions, whenever it may determine that such action is
appropriate by reason of changes in applicable tax or other laws or
other changes in circumstances occurring after the commencement of
such Restricted Period.
(b) If a Participant incurs a Termination of Service for any
reason (other than death, disability, or normal retirement after
attainment of age 65), all Shares of Restricted Stock awarded to
such Participant and which at the time of such Termination of
Service are subject to the restrictions imposed pursuant to
paragraph (a) of this Section 5 shall upon such Termination of
Service be forfeited and returned to the Corporation. If a
Participant incurs a Termination of Service by reason of death,
disability or normal retirement after attainment of age 65, the
Restricted Period with respect to the Participant's Restricted
Stock then still subject to restrictions shall thereupon lapse.
(c) Each certificate in respect of Shares of Restricted Stock
awarded under the Plan shall be registered in the name of the
Participant and deposited by the Participant, together with a stock
power endorsed in blank, with the Corporation and shall bear the
following (or a similar) legend:
The transferability of this certificate and the Shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) contained in the
B-2
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<PAGE>
Cavalry Bancorp, Inc. 1999 Management Recognition Plan.
Copies of such Plan are on file in the office of the Secretary
of Cavalry Bancorp, Inc., P.O. Box 188, Murfreesboro,
Tennessee 37133-0188.
(d) At the time of any Award, the Participant shall enter into
an Award Agreement with the Corporation in a form specified by the
Committee, agreeing to the terms and conditions of the Award and
such other matters as the Committee, in its sole discretion, shall
determine.
(e) Upon the lapse of the Restricted Period, the Corporation
shall redeliver to the Participant (or where the relevant provision
of paragraph (b) of this Section 5 applies in the case of a
deceased Participant, to his legal representative, beneficiary or
heir) the certificate(s) and stock power deposited with it pursuant
to paragraph (c) of this Section 5, and the Shares represented by
such certificate(s) shall be free of the restrictions imposed
pursuant to paragraph (a) of this Section 5.
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, capital distribution, 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 as to which
Awards may be granted under the Plan and the number and class of Shares with
respect to which Awards have been granted under the Plan shall be
appropriately adjusted by the Committee, whose determination shall be
conclusive. Any Award which is adjusted as a result of this Section 6 shall
be subject to the same restrictions as the original Award, and the
certificate[s] or other instruments representing or evidencing such Restricted
Stock shall be legended and deposited with the Corporation in the manner
provided in Section 5(c) hereof.
7. Effect of Change in Control. Each of the events specified in the
following clauses (i) through (iii) of this Section 7 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 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, and except as otherwise
provided in an employment agreement or arrangement between the Corporation or
an Affiliate and the Participant, at the election of a Participant that is
made within 60 days following such date, the Restricted Period with respect to
Restricted Stock theretofore awarded to such Participant shall lapse and all
Shares awarded hereunder as Restricted Stock shall become fully vested in the
Participant to whom such Shares were awarded. If the Participant does not
make such election within 60 days following such tender offer, exchange offer,
or change in control, such Shares shall continue to be vested in accordance
with the other provisions of such Award; provided, however, that no Award
which has previously been forfeited shall become vested.
8. Assignments and Transfers. During the Restricted Period, no Award
nor any right or interest of a Participant in any instrument evidencing an
Award may be assigned, encumbered or transferred other than by will, the laws
of descent and distribution or pursuant to a "domestic relations order," as
defined in Section 414(p)(1)(B) of the Code.
9. 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.
B-3
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<PAGE>
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.
10. 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.
11. Withholding Tax. Upon the termination of the Restricted Period
with respect to any Shares of Restricted Stock (or at any such earlier time,
if any, that an election is made by the Participant under Section 83(b) of the
Code, or any successor provision thereto, to include the value of such Shares
in taxable income), the Corporation shall have the right to require the
Participant or other person receiving such Shares 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
sufficient number of Shares held by it to cover the amount required to be
withheld. The Corporation shall have the right to deduct from all dividends
paid with respect to Shares of Restricted Stock the amount of any taxes which
the Corporation is required to withhold with respect to such dividend
payments.
12. 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. The
Committee may not, however, amend, alter, suspend, discontinue or terminate
any outstanding Award without the consent of the Participant or holder
thereof, except as otherwise provided herein.
13. 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 unless sooner terminated under Section 12 hereof.
* * * * *
B-4
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REVOCABLE PROXY
CAVALRY BANCORP, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FIRST ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 1999
The undersigned hereby appoints the official Proxy Committee of the Board
of Directors of Cavalry Bancorp, Inc. with full powers of substitution, as
attorneys and proxies for the undersigned, to vote all shares of common stock
of Cavalry Bancorp, Inc. ("Company") which the undersigned is entitled to vote
at the First Annual Meeting of Stockholders ("Meeting"), to be held at the
main office of Cavalry Banking located at 114 West College Street,
Murfreesboro, Tennessee, on Thursday, April 22, 1999, at 10:00 a.m., local
time, and at any and all adjournments thereof, as indicated.
Should the undersigned be present and elect to vote at the Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Meeting of the stockholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated and of no
further force and effect.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSITIONS 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.
(Continued on reverse side)
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^ FOLD AND DETACH HERE ^
<PAGE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
1. The election as director Nominees: FOR AGAINST ABSTAIN
of the nominees listed Ronald F. Knight 2. The ratification of the [ ] [ ] [ ]
below (except as marked (one-year term) adoption of the Cavalry
to the contrary below). Tim J. Durham Bancorp, Inc. 1999 Stock
(one-year term) Option Plan
FOR WITHHOLD AUTHORITY Ed Elam
all to vote for (one-year term) 3. The ratification of the [ ] [ ] [ ]
nominees all nominees Ed C. Loughry, Jr. adoption of the Cavalry
(two-year term) Bancorp, Inc. 1999 Manage-
[ ] [ ] Frank E. Crosslin, Jr. Ment Recognition Plan
(two-year term)
James C. Cope 4. In their discretion, upon
(two-year term) such other matters as may
Terry G. Haynes properly come before the
(three-year term) meeting
William H. Huddleston, IV
(three-year term)
Gary Brown
(three-year term)
</TABLE>
<TABLE>
<S> <C>
INSTRUCTION: To withhold your vote for any individual The undersigned acknowledges receipt from the
nominee, write that nominee's name on the line below: Company prior to the execution of this proxy
of this proxy of the Notice of First Annual
- ---------------------------------------------------- Meeting of Stockholders, a Proxy Statement
For the First Annual Meeting of Stockholders,
and the 1998 Annual Report to Stockholders.
Dated:
---------------------------------, 1999
---------------------------------------------
PRINT NAME OF STOCKHOLDER
---------------------------------------------
SIGNATURE OF STOCKHOLDER
---------------------------------------------
PRINT NAME OF STOCKHOLDER
---------------------------------------------
SIGNATURE OF STOCKHOLDER
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN
THE ENCLOSED POSTAGE-PREPAID ENVELOPE. Please sign exactly
as your name appears on the enclosed card. When signing as
attorney, executor, administrator, trustee or guardian, please
give your full title. If shares are held jointly, only one
signature is required, but each holder should sign, if possible.
- --------------------------------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
</TABLE>
<PAGE>
