SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
HOMESTEAD BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
<PAGE>
HOMESTEAD BANCORP, INC.
195 North Sixth Street
Ponchatoula, Louisiana 70454
(504) 386-3379
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 21, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Homestead Bancorp, Inc. (the "Company") will be held at the
Company's office located at 195 North Sixth Street, Ponchatoula, Louisiana 70454
on Wednesday, April 21, 1999 at 10:00 a.m., Central Time, for the following
purposes, all of which are more completely set forth in the accompanying Proxy
Statement:
(1) To elect two directors for terms of three years or until their
successors have been elected and qualified;
(2) To adopt the 1999 Stock Option Plan;
(3) To adopt the 1999 Recognition and Retention Plan and Trust
Agreement;
(4) To ratify the appointment of Hannis T. Bourgeois, L.L.P. as
the Company's independent auditors for the year ending
December 31, 1999;
(5) To transact such other business as may properly come before
the meeting or any adjournment thereof. Except with respect to
procedural matters incident to the conduct of the meeting,
management is not aware of any other such business.
Stockholders of record of the Company as of the close of business on
March 3, 1999 are entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Lawrence C. Caldwell, Jr.,
-----------------------------
Lawrence C. Caldwell, Jr.,
President and Chief Executive Officer
Ponchatoula, Louisiana
March 19, 1999
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YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
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<PAGE>
HOMESTEAD BANCORP, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
April 21, 1999
This Proxy Statement is being furnished to the holders of common stock,
par value $.01 per share ("Common Stock"), of Homestead Bancorp, Inc. (the
"Company"), which acquired all of the common stock of Ponchatoula Homestead
Savings, F.A. (the "Association") in connection with the reorganization of the
Association from the mutual holding company structure to the stock holding
company structure in July 1998 (the "Conversion").
Proxies are being solicited on behalf of the Board of Directors of the
Company to be used at the Annual Meeting of Stockholders ("Annual Meeting") to
be held at the Company's office located at 195 North Sixth Street, Ponchatoula,
Louisiana 70454 on Wednesday, April 21, 1999 at 10:00 a.m., Central Time, and at
any adjournment thereof for the purposes set forth in the Notice of Annual
Meeting of Stockholders. This Proxy Statement is first being mailed to
stockholders on or about March 19, 1999.
Each proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for each of the matters described herein and, upon
the transaction of such other business as may properly come before the meeting,
in accordance with the best judgment of the persons appointed as proxies.
Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of the Company written
notice thereof (Barbara B. Theriot, Secretary, Homestead Bancorp, Inc., 195
North Sixth Street, Ponchatoula, Louisiana 70454); (ii) submitting a duly
executed proxy bearing a later date; or (iii) appearing at the Annual Meeting
and giving the Secretary notice of his or her intention to vote in person.
Proxies solicited hereby may be exercised only at the Annual Meeting and any
adjournment thereof and will not be used for any other meeting.
VOTING AND REQUIRED VOTES
Only stockholders of record at the close of business on March 3, 1999
(the "Voting Record Date"") will be entitled to vote at the Annual Meeting. On
the Voting Record Date, there were 1,377,870 shares of Common Stock issued and
outstanding, and the Company had no other class of equity securities
outstanding. Each share of Common Stock outstanding is entitled to one vote at
the Annual Meeting on each matter properly presented at the Annual Meeting.
Directors are elected by a plurality of the votes cast with a quorum
present. A quorum consists of stockholders representing, either in person or by
proxy, a majority of the outstanding Common Stock entitled to vote at the
meeting. Abstentions are considered in determining the presence of a quorum but
will not
1
<PAGE>
affect the plurality vote required for the election of directors. The
affirmative vote of the holders of a majority of the total votes present in
person or by proxy is required to ratify the appointment of the independent
auditors. Under rules applicable to broker-dealers, the election of directors
and the ratification of the auditors are considered "discretionary" items upon
which brokerage firms may vote in their discretion on behalf of their clients if
such clients have not furnished voting instructions and for which there will not
be "broker non-votes."
The proposals to approve the 1999 Stock Option Plan (the "Option Plan")
and the 1999 Recognition and Retention Plan and Trust Agreement (the
"Recognition Plan") require the affirmative vote of the holders of a majority of
the total votes eligible to be cast in person or by proxy at the meeting for
approval. These two proposals are "non-discretionary" items upon which brokerage
firms may not vote unless their clients have furnished voting instructions on
such proposals. As a result, there may be "broker non-votes" at the meeting.
Because of the required votes, abstentions and broker non-votes will have the
same effect as a vote against the proposals to approve the Option Plan and the
Recognition Plan.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR, DIRECTORS
WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
Election of Directors
The Bylaws of the Company presently provide that the Board of Directors
shall consist of seven members, and the Articles of Incorporation and Bylaws of
the Company presently provide that the Board of Directors shall be divided into
three classes as nearly equal in number as possible. The members of each class
are to be elected for a term of three years or until their successors are
elected and qualified. One class of directors is to be elected annually. There
are no arrangements or understandings between the Company and any person
pursuant to which such person has been elected or nominated as a director, and
no director or nominee for director is related to any other director, nominee
for director or executive officer of the Company by blood, marriage or adoption.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director listed
below. If any person named as a nominee should be unable or unwilling to stand
for election at the time of the Annual Meeting, the proxies will nominate and
vote for any replacement nominee or nominees recommended by the Board of
Directors. At this time, the Board of Directors knows of no reason why any of
the nominees listed below may not be able to serve as a director if elected.
2
<PAGE>
<TABLE>
<CAPTION>
Position with the Company and the
Association and Principal Occupation Director
Name Age(1) During the Past Five Years Since(2)
- ---- ------ -------------------------- --------
Nominees for Term Expiring in 2002
<S> <C> <C> <C>
Robert H. Gabriel 43 Director, President of Gabriel Bldg. Supply 1996
Co., Inc., Ponchatoula, Louisiana, since
1982.
Barbara B. Theriot 54 Director; Secretary and Treasurer of the 1994
Company since February 1998 and of the
Association since 1984.
</TABLE>
The Board of Directors recommends that you vote FOR the election of the above
nominees for director.
<TABLE>
<CAPTION>
Directors Whose Terms Expire in 2000
<S> <C> <C> <C>
Lawrence C. Caldwell, Jr. 51 Director, President and Chief Executive 1984
Officer of the Company since February 1998
and of the Association since January 1994.
From 1984 until January 1994, served as
Executive Vice President and Chief
Executive Office of the Association. Present
Chairman of Louisiana League of Savings
Institutions and Commissioner on the
Louisiana Housing Finance Agency.
Dennis E. James 39 Director, Audit Partner with Durnin & 1996
James, CPA, Ponchatoula,
Louisiana, since 1987.
Allen B. Pierson, Jr. 62 Director, Attorney and, from 1991 to May 1989(3)
1996, a Partner with the law firm of
Matheny and Pierson, Ponchatoula,
Louisiana.
(Footnotes on next page)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Position with the Company and the
Association and Principal Occupation Director
Name Age(1) During the Past Five Years Since(2)
- ---- ------ -------------------------- --------
<S> <C> <C> <C>
Directors Whose Terms Expire in 2001
John C. Bohning 57 Director, President and manager of 1974
Bohning's Supermarket, Ponchatoula,
Louisiana, since 1961
Milton J. Schanzbach 72 Chairman of the Board; Retired optometrist. 1978
</TABLE>
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(1) As of December 31, 1998.
(2) Includes service as a director of the Association.
(3) In addition, Mr. Pierson served as a director of the Association from 1969
to 1983.
Stockholder Nominations
Article 6.F of the Company's Articles of Incorporation governs
nominations for election to the Board of Directors and requires all such
nominations, other than those made by the Board, to be made at a meeting of
stockholders called for the election of directors, and only by a stockholder who
has complied with the notice provisions in that section. Stockholder nominations
must be made pursuant to timely notice in writing to the Secretary of the
Company. To be timely, a stockholder's notice must be delivered to, or mailed
and received at, the principal executive offices of the Company not later than
120 days prior to the anniversary date of the initial mailing of proxy materials
by the Company in connection with the immediately preceding annual meeting,
except that stockholder nominations with respect to the 1999 Annual Meeting were
required to be received by January 4, 1999. Article 6.F also requires the notice
of stockholder nominations to provide certain information.
Board Meetings and Committees
The Board of Directors of the Company met 12 times during the year ended
December 31, 1998. Directors of the Company receive no fees from the Company for
attending Board of Directors meetings or committee meetings. The Board of
Directors has an audit committee as described below. The Board of Directors of
the Company does not have any separate executive, compensation or nominating
committees. No director of the Company attended fewer than 75% in the aggregate
of the meetings of the Board of Directors held during 1998 and the total number
of meetings held by all committees of the Board on which he served during the
year.
The Audit Committee reviews the scope and results of the audit performed
by the Company's independent auditors and reviews with management and such
independent auditors the Company's system of internal control and audit. The
Audit Committee also reviews all examination and other reports by federal
banking regulators. The members of the Audit Committee for both the Company and
the Association are Messrs. Schanzbach (Chairman), Bohning, Gabriel, James and
Pierson. The Audit Committee is the same for the Company and the Association and
met once in 1998.
4
<PAGE>
The full Board of Directors of the Company serves as the Nominating
Committee and met once during 1998 in such capacity. Although the Board of
Directors will consider nominees recommended by stockholders, it has not
actively solicited recommendations from stockholders of the Company. Article 6.F
of the Company's Articles of Incorporation provides certain procedures which
stockholders must follow in making director nominations.
Regular meetings of the Board of Directors of the Association are held
once a month and special meetings of the Board of Directors are held from
time-to-time as needed. There were 12 meetings of the Board of Directors of the
Association held during 1998. No director attended fewer than 75% of the total
number of meetings of the Board of Directors of the Association during 1998 and
the total number of meetings held by all committees of the Board on which the
director served during such year.
The Board of Directors of the Association has established an Executive
Committee, which is authorized to act with the same authority as the Board of
Directors between meetings of the Board. Currently, the entire Board of
Directors serves as members of this Committee. The Executive Committee met 38
times during 1998.
The Board of Directors has established a Compensation Committee to
administer employee benefit plans and to review existing compensation. The
Compensation Committee consists of the five non-employee directors of the
Association and met once during 1998.
The entire Board of Directors performs the functions of an audit
committee and of a nominating committee. Article II, Section 14 of the Bylaws of
Ponchatoula provides that the Board of Directors shall act as a nominating
committee for selecting the nominees for election as directors. The Board of
Directors, acting in its capacity as the nominating committee, met once during
1998.
Directors' Compensation
Each director of the Association receives $400 per month (paid
semi-annually) for service on the Board of Directors and $450 per month (paid
semi-annually) for service on the Association's Executive Committee. Mr.
Schanzbach receives an additional $300 per month (paid monthly) as Chairman of
the Board of Directors of the Association.
Executive Officers Who Are Not Directors
The only executive officer of the Company who is not a director is Kelly
Morse, who has been the Comptroller and Chief Financial Officer of the Company
since February 1998 and Comptroller of the Association since November 1993. Mr.
Morse is 31 years old at December 31, 1998. There are no arrangements or
understandings between the Company and Mr. Morse pursuant to which he was
elected an executive officer of the Company, and he is not related to any
director or officer of the Company by blood, marriage or adoption.
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table includes, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by (i) each person or
entity, including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended ("1934 Act"), who or which was known
to the
5
<PAGE>
Company to be the beneficial owner of more than 5% of the issued and outstanding
Common Stock, (ii) the directors of the Company, and (iii) all directors and
executive officers of the Company and the Association as a group.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned as of
March 3, 1999(1)(2)(3)
------------------------
Name of Beneficial Owner Amount %
------------------------ ------ ----
<S> <C> <C>
Homestead Bancorp, Inc.
Employee Stock Ownership Plan Trust
195 North Sixth Street
Ponchatoula, Louisiana 70454 89,563(4) 6.5%
David M. Knott
485 Underhill Boulevard, Suite 205
Syosset, New York 11791 104,000(5) 7.5%
Directors:
John C. Bohning 9,326 .7%
Lawrence C. Caldwell, Jr. 43,244(6) 3.1%
Robert H. Gabriel 6,749(7) .5%
Dennis E. James 4,931(8) .4%
Allen B. Pierson, Jr. 32,007 2.3%
Milton J. Schanzbach 9,999(9) .7%
Barbara B. Theriot 27,192(10) 2.0%
All directors and executive officers of the Company
and the Association as a group (eight persons) 135,823 9.8%
</TABLE>
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(1) Based upon information furnished by the respective persons. Pursuant to
rules promulgated under the 1934 Act, a person is deemed to beneficially
own shares of Common Stock if he or she directly or indirectly has or
shares (i) voting power, which includes the power to vote or to direct
the voting of the shares; or (ii) investment power, which includes the
power to dispose or direct the disposition of the shares. Unless
otherwise indicated, the named beneficial owner has sole voting power and
sole investment power with respect to the indicated shares.
(2) Under applicable regulations, a person is deemed to have beneficial
ownership of any shares of Common Stock which may be acquired within 60
days of the date shown pursuant to the exercise of outstanding stock
options. Shares of Common Stock which are subject to stock options are
deemed to be outstanding for the purpose of computing the percentage of
outstanding Common Stock owned by such person or group but not deemed
outstanding for the purpose of computing the percentage of Common Stock
owned by any other person or group. The amounts set forth in the table
include shares which may be received upon the exercise of stock options
pursuant to the 1996 Stock Incentive Plan within 60 days of the date
shown as follows: for Mrs. Theriot, 2,024 shares; for Mr. Caldwell, 3,540
shares; and for all directors and executive officers as a group, 5,794
shares.
(Footnotes continued on next page)
6
<PAGE>
(3) Includes unvested restricted shares granted pursuant to the Company's
Management Recognition Plans adopted in 1996 ("MRPs") as follows: for
each of Messrs. Bohning, Schanzbach, James and Pierson, 338 shares; for
Mr. Gabriel, 91 shares; for Mrs. Theriot, 1,219 shares; for Mr. Caldwell,
2,130 shares; and for all directors and executive officers as a group,
5,308 shares. While these restricted shares have not yet vested or been
distributed to the recipient of the grant, the grant recipients are
entitled to vote the restricted shares.
(4) The Homestead Bancorp, Inc. Employee Stock Ownership Plan Trust ("Trust")
was established pursuant to the Homestead Bancorp, Inc. Employee Stock
Ownership Plan ("ESOP") by an agreement between the Company and Messrs.
Caldwell, James and Kelly Morse, who act as trustees of the plan
("Trustees"). As of the Voting Record Date, 85,085 shares of Common Stock
held in the Trust were unallocated and 4,478 shares had been allocated to
the accounts of participating employees. Under the terms of the ESOP, the
Trustees will generally vote the allocated shares held in the ESOP in
accordance with the instructions of the participating employees and will
generally vote unallocated shares held in the ESOP in the same proportion
for and against proposals to stockholders as the ESOP participants and
beneficiaries actually vote shares of Common Stock allocated to their
individual accounts, subject in each case to the fiduciary duties of the
ESOP trustees and applicable law. Any allocated shares which either
abstain on the proposal or are not voted will be disregarded in
determining the percentage of stock voted for and against each proposal
by the participants and beneficiaries. The amount of Common Stock
beneficially owned by each individual trustee or all directors and
executive officers as a group does not include the unallocated shares
held by the Trust. The total for all directors and executive officers as
a group includes 1,231 shares allocated to the ESOP accounts of the three
executive officers.
(5) In his Schedule 13G, Mr. Knott claimed sole voting and dispositive power
over 57,700 shares and shared voting and dispositive power with
unspecified persons over the remaining 46,300 shares.
(6) Includes 3,522 shares which are owned jointly with Mr. Caldwell's spouse,
2,000 shares owned by his spouse and 30,073 shares held by the
Association's Profit Sharing Plan for the account of Mr. Caldwell.
(7) Includes 500 shares held for Mr. Gabriel's children.
(8) Includes 739 shares which are owned jointly with Mr. James' spouse.
(9) Includes 8,044 shares which are owned jointly with Mr. Schanzbach's
spouse.
(10) Includes 6,696 shares which are owned jointly with Mrs. Theriot's spouse
and 16,039 shares held by the Association's Profit Sharing Plan for the
account of Mrs. Theriot.
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the 1934 Act, the Company's directors, officers
and any persons holding more than 10% of the Common Stock are required to report
their ownership of the Common Stock and any changes in that ownership to the
Securities and Exchange Commission ("Commission") and the National Association
of Securities Dealers, Inc. ("NASD") by specific dates. Based on representations
of its directors and officers and copies of the reports that they have filed
with the Commission and the NASD, the Company believes that all of these filing
requirements were satisfied by the Company's directors and officers in the year
ended December 31, 1998.
7
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The Company has not yet paid separate compensation directly to its
officers. The following table sets forth a summary of certain information
concerning the compensation paid by the Association for services rendered in all
capacities during the year ended December 31, 1998 to the President and Chief
Executive Officer of the Company and the Association. No executive officer of
the Association received total compensation in excess of $100,000 during 1998.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Awards Payouts
------------------------------------ ---------------------------- -------
Other Securities
Name and Fiscal Annual Restricted Underlying LTIP All Other
Principal Position Year Salary(1) Bonus Compensation(2) Stock Award(3) Options(4) Payouts Compensation(5)
------------------ ---- --------- ----- --------------- -------------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lawrence C. Caldwell, Jr. 1998 $88,410 $5,358 -- $ -- -- -- $ 11,784
President and Chief 1997 82,200 5,016 -- -- -- -- 10,764
Executive Officer 1996 81,000 3,540 -- 15,090 8,862 -- 10,624
</TABLE>
- --------------
(1) Includes Board fees of $10,200 in each of 1998, 1997 and 1996. See "-
Directors' Compensation."
(2) Does not include amounts attributable to miscellaneous benefits received
by the named executive officer. In the opinion of management of the
Company, the costs to the Company of providing such benefits to the named
executive officer during the year ended December 31, 1998 did not exceed
the lesser of $50,000 or 10% of the total of annual salary and bonus
reported for such individual.
(3) Represents the grant of 3,543 shares of restricted Common Stock pursuant
to the 1996 Management Recognition Plan for Officers, which shares were
deemed to have had the indicated value at the date of grant. The
remaining unvested shares of restricted stock had a fair market value of
$17,306 at December 31, 1998, based on the $8.125 per share closing
market price on such date. The award vests at the rate of 20% a year over
a five-year period commencing on the first anniversary of the date of
grant, and dividends are paid on the restricted shares.
(4) Consists of stock options granted pursuant to the 1996 Stock Incentive
Plan, which options vest and are exercisable at the rate of 20% a year
over a five-year period commencing on the first anniversary of the date
of grant.
(5) Consists of amounts allocated, accrued or paid by Ponchatoula on behalf
of Mr. Caldwell pursuant to the Association's Profit Sharing Plan and, in
1998, $4,609 of Common Stock allocated to Mr.
Caldwell's ESOP account.
8
<PAGE>
Employment Agreements
In connection with the Conversion, the Company and the Association (the
"Employers") entered into employment agreements with each of Mr. Caldwell and
Ms. Theriot. The Employers have agreed to employ the executives for a term of
three years commencing July 17, 1998, in each case in their current respective
positions. The agreements provide that Mr. Caldwell and Ms. Theriot will
initially be paid their current salary levels of $79,560 and $57,120,
respectively. The executives' compensation and expenses shall be paid by the
Company and the Association in the same proportion as the time and services
actually expended by the executives on behalf of each respective Employer. The
employment agreements will be reviewed annually, and the term of the executives'
employment agreements shall be extended each year for a successive additional
one-year period upon the approval of the Employers' Boards of Directors, unless
either party elects, not less than 30 days prior to the annual anniversary date,
not to extend the employment term.
Each of the employment agreements are terminable with or without cause by
the Employers. The executives have no right to compensation or other benefits
pursuant to the employment agreements for any period after voluntary termination
or after termination by the Employers for cause, disability or retirement. The
agreements provide for certain benefits in the event of the executive's death.
In the event that (i) either executive terminates his or her employment because
of failure to comply with any material provision of the employment agreement or
the Employers change the executive's title or duties or (ii) the employment
agreement is terminated by the Employers other than for cause, disability,
retirement or death or by the executive as a result of certain adverse actions
which are taken with respect to the executive's employment following a change in
control of the Company, as defined, then the executives will be entitled to a
cash severance amount equal to three times his or her average annual
compensation for the last five calendar years, plus the continuation of certain
miscellaneous fringe benefits, subject to reduction pursuant to Section 280G of
the Code as set forth below in the event of a change in control.
A change in control is generally defined in the employment agreements to
include any change in control of the Company required to be reported under the
federal securities laws, as well as (i) the acquisition by any person of 20% or
more of the Company's outstanding voting securities and (ii) a change in a
majority of the directors of the Company during any three-year period without
the approval of at least two-thirds of the persons who were directors of the
Company at the beginning of such period.
Each employment agreement provides that, in the event that any of the
payments to be made thereunder or otherwise upon termination of employment are
deemed to constitute "parachute payments" within the meaning of Section 280G of
the Code, then such payments and benefits received thereunder shall be reduced
by the amount which is the minimum necessary to result in the payments not
exceeding three times the recipient's average annual compensation from the
employer which was includable in the recipient's gross income during the most
recent five taxable years (the "Section 280G Limit"). As a result, none of the
severance payments will be subject to a 20% excise tax, and the Employers will
be able to deduct such payments as compensation expense for federal income tax
purposes. If a change in control was to occur in 1999, the Section 280G Limit
for Mr. Caldwell and Ms. Theriot would be approximately $261,000 and $185,000,
respectively.
<PAGE>
Although the above-described employment agreements could increase the
cost of any acquisition of control of the Company, management of the Company
does not believe that the terms thereof would have a significant anti-takeover
effect. The Company and/or the Association may determine to enter into similar
employment agreements with other officers in the future.
9
<PAGE>
Existing Stock Options
No stock options were granted in 1998, and no options were exercised by
executive officers during 1998. Each non-employee director of the Company
exercised his stock options during 1998, resulting in options for a total of
5,626 shares being exercised. The following table sets forth, with respect to
the executive officer named in the Summary Compensation Table, information with
respect to the number of shares of Common Stock covered by options held at the
end of the fiscal year and the value with respect thereto.
<TABLE>
<CAPTION>
Number of Value of Unexercised
Shares Unexercised Options in the Money Options
Acquired at Fiscal Year End at Fiscal Year End(1)
on Value -------------------------------- ---------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------- ----------- ---------- ------------- ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Lawrence C. Caldwell, Jr. -- -- 3,540 5,322 $13,682 $20,570
</TABLE>
- -------------------------
(1) Based on a per share market price of the Ponchatoula Common Stock of
$8.125 at December 31, 1998, minus the applicable exercise price per
share.
Profit Sharing Plan
The Association maintains an Employee Profit Sharing Trust (the "Profit
Sharing Plan"), which is a tax-qualified defined contribution plan. Full-time
employees who have been credited with at least six consecutive months of service
and who have attained age 20 are eligible to participate in the Profit Sharing
Plan. Under the Profit Sharing Plan, a separate account is established for each
participating employee, and the Association may make discretionary contributions
to the Profit Sharing Plan which are allocated to the participants' accounts.
Distributions from the Profit Sharing Plan are made upon termination of service
either in a lump sum or in installments over a period not to exceed the greater
of the life expectancy of the participant or the joint survivor life expectancy
of the participant and his or her designated beneficiary, or upon application in
case of specified financial hardship.
The Profit Sharing Plan was amended in 1994 to permit each participant to
direct the trustee of the plan with respect to the investment of his or her
vested account balances within the plan into four alternative investment funds,
including a Fixed Income Fund; the Vanguard Wellington Fund; an Employer Stock
Fund; and the Vanguard Windsor II Fund. The Profit Sharing Plan purchased shares
of Common Stock on August 31, 1994 in connection with the initial formation of
Homestead Mutual Holding Company and on July 17, 1998 in connection with the
Conversion. Such shares were purchased in accordance with instructions from
participants who authorized their vested account balances to be used to purchase
Common Stock. As of the Voting Record Date, the Profit Sharing Plan held
81,951shares of Common Stock. Each participant has the right to direct the
trustee as to the manner in which whole and partial shares of Common Stock
allocated to his or her account are to be voted. The trustee shall vote
allocated shares of Common Stock for which it has not received directions from a
participant, and any unallocated shares, in the same proportion for and against
10
<PAGE>
proposals to stockholders of the Company as participants and their beneficiaries
actually vote shares of Common Stock which have been allocated to their
individual participant's accounts.
Prior to April 1, 1998, participants were not permitted to make
contributions to their accounts within the Profit Sharing Plan. The plan was
amended effective April 1, 1998 to incorporate a 401(k) feature, pursuant to
which employees are permitted to contribute a portion of their annual base
salary (excluding incentive bonuses, stock benefit plans and any other form of
compensation), with the annual contribution not to exceed $10,000 in 1999. The
Association will make matching contributions equal to 100% of each employee's
contribution up to 7.5% of the employee's annual base salary. As of April 1,
1998, the investment alternatives available to participants were expanded to
include nine different mutual funds (equity funds, bond funds and money market
funds), the Common Stock, deposit accounts and whole life insurance.
An independent third party administrator administers the amended plan.
Employee Stock Ownership Plan
The Company has established the ESOP for employees of the Company and the
Association to become effective upon the Conversion. Full-time employees of the
Company and the Association who have been credited with at least 1,000 hours of
service during a twelve-month period are eligible to participate in the ESOP.
The ESOP borrowed $895,630 from the Company in order to fund the purchase
of 8% of the Common Stock sold in the subscription offering in the Conversion.
The amount of the loan equaled 100% of the aggregate purchase price of the
Common Stock acquired by the ESOP. The loan to the ESOP is being repaid
principally from the Company's and the Association's contributions to the ESOP
over a period of 10 years, and the collateral for the loan is the Common Stock
purchased by the ESOP. The interest rate for the ESOP loan is a fixed rate of
8.5%. The Company may, in any plan year, make additional discretionary
contributions for the benefit of plan participants in either cash or shares of
Common Stock, which may be acquired through the purchase of outstanding shares
in the market or from individual stockholders, upon the original issuance of
additional shares by the Company or upon the sale of treasury shares by the
Company. Such purchases, if made, would be funded through additional borrowings
by the ESOP or additional contributions from the Company. The timing, amount and
manner of future contributions to the ESOP will be affected by various factors,
including prevailing regulatory policies, the requirements of applicable laws
and regulations and market conditions.
Shares purchased by the ESOP with the proceeds of the loan are held in a
suspense account and released to participants on a pro rata basis as debt
service payments are made. Shares released from the ESOP are allocated to each
eligible participant's ESOP account based on the ratio of each such
participant's base compensation to the total base compensation of all eligible
ESOP participants. Forfeitures will be reallocated among remaining participating
employees and may reduce any amount the Company might otherwise have contributed
to the ESOP. Upon the completion of three years of service, the account balances
of participants within the ESOP will become 20% vested and will continue to vest
at the rate of 20% for each additional year of service completed by the
participant, such that a participant will become 100% vested upon the completion
of seven years of service. Credit is given for years of service with the
Association prior to adoption of the ESOP. In the case of a "change in control,"
as defined, however, participants will become immediately fully vested in their
account balances. Benefits may be payable upon retirement or separation
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<PAGE>
from service. The Company's contributions to the ESOP are not fixed, so benefits
payable under the ESOP cannot be estimated.
Messrs. Caldwell, James and Morse serve as trustees of the ESOP. Under
the ESOP, the trustees must generally vote all allocated shares held in the ESOP
in accordance with the instructions of the participating employees, and
unallocated shares will generally be voted in the same ratio on any matter as
those allocated shares for which instructions are given, in each case subject to
the requirements of applicable law and the fiduciary duties of the trustees.
Generally accepted accounting principles require that any third party
borrowing by the ESOP be reflected as a liability on the Company's statement of
financial condition. Since the ESOP's loan is from the Company, the loan is not
treated as a liability, but rather the amount of the loan is deducted from
stockholders' equity. If the ESOP purchases newly issued shares from the
Company, total stockholders' equity would neither increase nor decrease, but per
share stockholders' equity and per share net earnings would decrease as the
newly issued shares are allocated to the ESOP participants.
The ESOP is subject to the requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and the regulations of the Internal
Revenue Service and the Department of Labor thereunder.
Indebtedness of Management
The Association offers mortgage loans to its directors, officers and
full-time employees for the financing of their primary residences and certain
other loans in accordance with applicable federal laws and regulations. Since
August 1989, all loans made by the Association to its executive officers,
directors and, to the extent otherwise permitted, principal stockholder(s), or
any related interest of the foregoing, must be (i) on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions by the savings institution with non-affiliated
parties, and (ii) not involve more than the normal risk of repayment or present
other unfavorable features.
The table on the following page sets forth information as to all
directors and executive officers, including members of their immediate families
and affiliated entities, who had loans with the Association aggregating $60,000
or more during the year ended December 31, 1998. These loans generally were made
on substantially the same terms as those prevailing at the time for comparable
transactions with non-affiliated persons. It is the belief by management that
these loans neither involve more than the normal risk of collectibility nor
present other unfavorable features.
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<TABLE>
<CAPTION>
Highest
Principal
Year Balance from Principal Interest
Name and Position Nature of Loan 1/1/98 to Balance at Rate as of
or Relationship Indebtedness Made 12/31/98 12/31/98 12/31/98
--------------- ------------ ---- -------- -------- --------
<S> <C> <C> <C> <C> <C>
John C. Bohning, Second mortgage 1986 $64,503 $57,905 8.000%
Director Signature Loan 1998 50,000 50,000 8.500
Lawrence C. Caldwell, Jr., First mortgage(1) 1986 67,182 62,065 8.125
President and First mortgage 1996 73,147 -- 8.000
Chief Executive Officer First mortgage 1998 95,000 93,279 6.950
Signature loan 1997 6,000 -- 8.500
Allen B. Pierson, Jr., First mortgage(2) 1985 39,672 35,974 7.750
Director First mortgage(2) 1986 28,380 26,115 8.250
First mortgage 1997 28,647 28,647 8.750
</TABLE>
- ----------------------
(1) The mortgage was assumed by another borrower, but Mr. Caldwell has
secondary liability on the mortgage.
(2) The mortgage is secured by rental property.
Certain Transactions
Allen B. Pierson, Jr., a director of the Company and the Association, is
an attorney and receives a retainer from the Association of $350 per month. In
addition, during the year ended December 31, 1998, the fees paid by the
Association to Mr. Pierson (exclusive of the above described retainer) amounted
to approximately $11,794 in connection with loan closings.
PROPOSAL TO ADOPT THE 1999 STOCK OPTION PLAN
General
The Board of Directors has adopted the Option Plan which is designed to
attract and retain qualified personnel in key positions, provide directors,
officers and key employees with a proprietary interest in the Company and as an
incentive to contribute to the success of the Company, and reward key employees
for outstanding performance. The Option Plan provides for the grant of incentive
stock options intended to comply with the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended ("Code")
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<PAGE>
("incentive stock options"), non-qualified or compensatory stock options and
stock appreciation rights (collectively "Awards"). Awards will be available for
grant to directors and key employees of the Company and any of its subsidiaries,
except that non-employee directors will be eligible to receive only awards of
non-qualified stock options. If stockholder approval is obtained, options to
acquire shares of Common Stock will be awarded to officers, key employees and
directors of the Company and the Association with an exercise price equal to the
fair market value of the Common Stock on the date of grant.
Description of the Option Plan
The following description of the Option Plan is a summary of its terms
and is qualified in its entirety by reference to the Option Plan, a copy of
which is attached hereto as Appendix A.
Administration. The Option Plan will be administered and interpreted by a
committee of the Board of Directors ("Committee") that is comprised solely of
two or more non-employee directors. The members of the Committee will initially
consist of each of the non-employee directors.
Stock Options. Under the Option Plan, the Board of Directors or the
Committee will determine which officers, key employees and non-employee
directors will be granted options, whether such options will be incentive or
compensatory options (in the case of options granted to employees), the number
of shares subject to each option, the exercise price of each option and whether
such options may be exercised by delivering other shares of Common Stock. The
per share exercise price of both an incentive stock and a compensatory option
shall at least equal the fair market value of a share of Common Stock on the
date the option is granted (or 110% of fair market value in the case of
incentive stock options granted to employees who are 5% stockholders).
All options granted to participants under the Option Plan shall become
vested and exercisable at the rate of 20% per year on each annual anniversary of
the date the options were granted, and the right to exercise shall be
cumulative. Notwithstanding the foregoing, no vesting shall occur on or after a
participant's employment or service with the Company is terminated for any
reason other than his death or disability. Unless the Committee or Board of
Directors shall specifically state otherwise at the time an option is granted,
all options granted to participants shall become vested and exercisable in full
on the date an optionee terminates his employment or service with the Company or
a subsidiary company because of his death or disability. In addition, all stock
options will become vested and exercisable in full on the date an optionee
terminates his employment or service with the Company or a subsidiary company
due to retirement or as the result of a change in control of the Company if, as
of such date of retirement or change in control of the Company: (i) such
treatment is either authorized or is not prohibited by applicable laws and
regulations, or (ii) an amendment to the Option Plan providing for such
treatment has been approved by the stockholders of the Company at a meeting of
stockholders held more than one year after the consummation of the Conversion.
Each stock option or portion thereof shall be exercisable at any time on
or after it vests and is exercisable until the earlier of ten years after its
date of grant or six months after the date on which the optionee's employment
terminates (three years after termination of service in the case of non-employee
directors), unless extended by the Committee or the Board of Directors to a
period not to exceed five years
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<PAGE>
from such termination. Unless stated otherwise at the time an option is granted,
(i) if an optionee terminates his employment or service with the Company as a
result of disability or retirement without having fully exercised his options,
the optionee shall have three years following his termination due to disability
or retirement to exercise such options, and (ii) if an optionee terminates his
employment or service with the Company following a change in control of the
Company without having fully exercised his options, the optionee shall have the
right to exercise such options during the remainder of the original ten year
term of the option. However, failure to exercise incentive stock options within
three months after the date on which the optionee's employment terminates may
result in adverse tax consequences to the optionee. If an optionee dies while
serving as an employee or a non-employee director or terminates employment or
service as a result of disability or retirement and dies without having fully
exercised his options, the optionee's executors, administrators, legatees or
distributees of his estate shall have the right to exercise such options during
the one-year period following his death. In no event shall any option be
exercisable more than ten years from the date it was granted.
Stock options are generally non-transferable except by will or the laws
of descent and distribution, and during an optionee's lifetime, shall be
exercisable only by such optionee or his guardian or legal representative.
Notwithstanding the foregoing, an optionee who holds non-qualified options may
transfer such options to his or her spouse, lineal ascendants, lineal
descendants, or to a duly established trust for the benefit of one or more of
these individuals. Options so transferred may thereafter be transferred only to
the optionee who originally received the grant or to an individual or trust to
whom the optionee could have initially transferred the option. Options which are
so transferred shall be exercisable by the transferee according to the same
terms and conditions as applied to the optionee.
Payment for shares purchased upon the exercise of options may be made (i)
in cash or by check, (ii) by delivery of a properly executed exercise notice,
together with irrevocable instructions to a broker to sell the shares and then
to properly deliver to the Company the amount of sale proceeds to pay the
exercise price, all in accordance with applicable laws and regulations, or (iii)
if permitted by the Committee or the Board, by delivering shares of Common Stock
(including shares acquired pursuant to the exercise of an option) with a fair
market value equal to the total option price of the shares being acquired
pursuant to the option, by withholding some of the shares of Common Stock which
are being purchased upon exercise of an option, or any combination of the
foregoing. With respect to subclause (iii) in the preceding sentence, the shares
of Common Stock delivered to pay the purchase price must have either been (a)
purchased in open market transactions or (b) issued by the Company pursuant to a
plan thereof, in each case more than six months prior to the exercise date of
the option.
If the fair market value of a share of Common Stock at the time of
exercise is greater than the exercise price per share, this feature would enable
the optionee to acquire a number of shares of Common Stock upon exercise of the
Option which is greater than the number of shares delivered as payment for the
exercise price. In addition, an optionee can exercise his or her option in whole
or in part and then deliver the shares acquired upon such exercise (if permitted
by the Committee or the Board) as payment for the exercise price of all or part
of his options. Again, if the fair market value of a share of Common Stock at
the time of exercise is greater than the exercise price per share, this feature
would enable the optionee to either (i) reduce the amount of cash required to
receive a fixed number of shares upon exercise of the option or (ii) receive a
greater number of shares upon exercise of the option for the same amount of cash
that would have otherwise
15
<PAGE>
been used. Because options may be exercised in part from time to time, the
ability to deliver Common Stock as payment of the exercise price could enable
the optionee to turn a relatively small number of shares into a large number of
shares. In addition, an optionee can elect, with the Committee's concurrence, to
defer the recognition of ordinary income resulting from the exercise of any
compensatory option not transferred under the terms of the Option Plan. Such
deferral must comply with the provisions of the Option Plan and other rules and
regulations as may be established by the Committee.
Stock Appreciation Rights. Under the Option Plan, the Board of Directors
or the Committee is authorized to grant rights to optionees ("stock appreciation
rights") under which an optionee may surrender any exercisable incentive stock
option or compensatory stock option or part thereof in return for payment by the
Company to the optionee of cash or Common Stock, or a combination thereof, in an
amount equal to the excess of the fair market value of the shares of Common
Stock subject to the option over the option price of such shares. Stock
appreciation rights may be granted concurrently with the stock options to which
they relate or, with respect to compensatory options, at any time thereafter
which is prior to the exercise or expiration of such options. The proceeds of
the exercise of a stock appreciation right may also be deferred as provided by
the provisions of the Option Plan.
Number of Shares Covered by the Option Plan. A total of 111,954 shares of
Common Stock, which is equal to 10% of the Common Stock sold in the subscription
offering in the Conversion, has been reserved for future issuance pursuant to
the Option Plan. The Option Plan provides that grants to each employee and
non-employee director shall not exceed 25% and 5% of the shares of Common Stock
available under the Option Plan, respectively. Awards made to non-employee
directors in the aggregate may not exceed 30% of the number of shares available
under the Option Plan. In the event of a stock split, subdivision, stock
dividend or any other capital adjustment, then (a) the number of shares of
Common Stock under the Option Plan, (b) the number of shares to which any Award
relates, (c) the maximum number of shares that can be covered by Awards to each
employee, each non-employee director and all non-employee directors as a group,
and (d) the exercise price per share under any option or stock appreciation
right shall each be adjusted to reflect such increase or decrease in the total
number of shares of Common Stock outstanding or such capital adjustment.
Awards to be Granted. The Board of Directors of the Company adopted the
Option Plan and the Committee established thereunder intends to grant options to
executive officers, employees and non-employee directors of the Company and the
Association. It is currently anticipated that each of the five non-employee
directors will be granted a compensatory stock option for 5,597 shares, or an
aggregate of 27,985 shares. This is the maximum that each non-employee director
can be granted. It is also anticipated that each executive officer will be
granted stock options, although the amounts have not yet been determined. No
executive officer can receive options for more than 27,988 shares under the
Option Plan. Other than as set forth above, the timing of any such grants, the
individual recipients and the specific amounts of such grants have not been
determined.
The Company and the Association have a total of 21 employees and five
non-employee directors who may be entitled to receive Awards under the Option
Plan. The closing price for the Common Stock was $8.375 on March 2, 1999.
16
<PAGE>
Amendment and Termination of the Option Plan. The Board of Directors may
at any time terminate or amend the Option Plan with respect to any shares of
Common Stock as to which Awards have not been granted, subject to any required
stockholder approval or any stockholder approval which the Board may deem to be
advisable. The Board of Directors may not, without the consent of the holder of
an Award, alter or impair any Award previously granted or awarded under the
Option Plan except as specifically authorized by the Option Plan.
The Company currently intends to amend the Option Plan after the one-year
anniversary of the consummation of the Conversion to, among other things,
provide for accelerated vesting in the event of a change in control. This
amendment would be subject to stockholder approval at a later meeting.
Unless sooner terminated, the Option Plan shall continue in effect for a
period of ten years from February 10, 1999, the date the Option Plan was adopted
by the Board of Directors. Termination of the Option Plan shall not affect any
previously granted Awards.
Federal Income Tax Consequences
Under current provisions of the Code, the federal income tax treatment of
incentive stock options and compensatory stock options is different. With
respect to incentive stock options, an optionee who meets certain holding period
requirements will not recognize income at the time the option is granted or at
the time the option is exercised, and a federal income tax deduction generally
will not be available to the Company at any time as a result of such grant or
exercise. With respect to compensatory stock options, the difference between the
fair market value on the date of exercise and the option exercise price
generally will be treated as compensation income upon exercise, and the Company
will be entitled to a deduction in the amount of income so recognized by the
optionee. Upon the exercise of a stock appreciation right, the holder will
realize income for federal income tax purposes equal to the amount received by
him, whether in cash, shares of stock or both, and the Company will be entitled
to a deduction for federal income tax purposes in the same amount.
Section 162(m) of the Code generally limits the deduction for certain
compensation in excess of $1.0 million per year paid by a publicly traded
corporation to its chief executive officer and the four other most highly
compensated executive officers ("covered executives"). Certain types of
compensation, including compensation based on performance goals, are excluded
from the $1.0 million deduction limitation. In order for compensation to qualify
for this exception: (i) it must be paid solely on account of the attainment of
one or more pre-established, objective performance goals; (ii) the performance
goal must be established by a compensation committee consisting solely of two or
more outside directors, as defined; (iii) the material terms under which the
compensation is to be paid, including performance goals, must be disclosed to,
and approved by, stockholders in a separate vote prior to payment; and (iv)
prior to payment, the compensation committee must certify that the performance
goals and any other material terms were in fact satisfied (the "Certification
Requirement").
Treasury regulations provide that compensation attributable to a stock
option or stock appreciation right is deemed to satisfy the requirement that
compensation be paid solely on account of the attainment of one or more
performance goals if: (i) the grant is made by a compensation committee
consisting solely of two
17
<PAGE>
or more outside directors, as defined; (ii) the plan under which the option or
stock appreciation right is granted states the maximum number of shares with
respect to which options or stock appreciation rights may be granted during a
specified period to any employee; and (iii) under the terms of the option or
stock appreciation right, the amount of compensation the employee could receive
is based solely on an increase in the value of the stock after the date of grant
or award. The Certification Requirement is not necessary if these other
requirements are satisfied.
The Option Plan has been designed to meet the requirements of Section
162(m) of the Code and, as a result, the Company believes that compensation
attributable to stock options and stock appreciation rights granted under the
Option Plan in accordance with the foregoing requirements will be fully
deductible under Section 162(m) of the Code. The Company also does not expect
the compensation for its covered executives to exceed the $1.0 million
threshold. If the non-excluded compensation of a covered executive exceeded $1.0
million, however, compensation attributable to other awards, such as restricted
stock, may not be fully deductible unless the grant or vesting of the award is
contingent on the attainment of a performance goal determined by a compensation
committee meeting specified requirements and disclosed to and approved by the
stockholders of the Company. The Board of Directors believes that the likelihood
of any impact on the Company from the deduction limitation contained in Section
162(m) of the Code is remote at this time.
The above description of tax consequences under federal law is
necessarily general in nature and does not purport to be complete. Moreover,
statutory provisions are subject to change, as are their interpretations, and
their application may vary in individual circumstances. Finally, the
consequences under applicable state and local income tax laws may not be the
same as under the federal income tax laws.
Accounting Treatment
Stock appreciation rights will, in most cases, require a charge against
the earnings of the Company each year representing appreciation in the value of
such rights over periods in which they become exercisable. Such charge is based
on the difference between the exercise price specified in the related option and
the current market price of the Common Stock. In the event of a decline in the
market price of the Common Stock subsequent to a charge against earnings related
to the estimated costs of stock appreciation rights, a reversal of prior charges
is made in the amount of such decline (but not to exceed aggregate prior
charges).
Neither the grant nor the exercise of an incentive stock option or a
non-qualified stock option under the Option Plan currently requires any charge
against earnings under generally accepted accounting principles. In October
1995, the Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," which is effective for transactions entered into after December
15, 1995. This Statement establishes financial accounting and reporting
standards for stock-based employee compensation plans. This Statement defines a
fair value method of accounting for an employee stock option or similar equity
instrument and encourages all entities to adopt that method of accounting for
all of their employee stock compensation plans. However, it also allows an
entity to continue to measure compensation cost for those plans using the
intrinsic value method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees." Under the fair value method,
compensation cost is measured at the grant date based on the value of the award
and is recognized over the service period, which is usually the vesting period.
Under the intrinsic value
18
<PAGE>
method, compensation cost is the excess, if any, of the quoted market price of
the stock at the grant date or other measurement date over the amount an
employee must pay to acquire the stock. The Company anticipates that it will use
the intrinsic value method, in which event pro forma disclosure will be included
in the footnotes to the Company's financial statements to show what net income
and earnings per share would have been if the fair value method had been
utilized. If the Company elects to utilize the fair value method, its net income
and earnings per share may be adversely affected.
Stockholder Approval
No Awards will be granted under the Option Plan unless the Option Plan is
approved by stockholders. Stockholder approval of the Option Plan will also
satisfy the requirements of the Nasdaq Stock Market, the Code, and the Office of
Thrift Supervision ("OTS").
Regulatory Requirements
The Option Plan and the Recognition Plan (the "Plans") comply with
applicable OTS regulations and are required to be submitted to the OTS after
approval by stockholders. No assurance can be given as to whether the OTS will
raise any objections to the Plans as presented to stockholders or whether the
OTS may require modifications to be made to the Plans. A vote for approval of
the Plans shall be deemed to be a vote for approval of the Plans as the same may
be required to be modified by the OTS, provided that the change is not material
as determined by the Company. The Company will not make any modification to the
Plans which would increase the level of benefits from that presented.
Non-objection to the Plans by the OTS shall not constitute approval or
endorsement of the Plans by the OTS.
Under OTS regulations, certain stock benefit plans established or
implemented within one year following the completion of a mutual to stock
conversion are required to contain certain restrictions and limitations, which
are contained in the Plans. Specifically, the OTS regulations provide, among
other provisions, that awards begin vesting no earlier than one year from the
date the plans are approved by stockholders, shall not vest at a rate in excess
of 20% per year and shall not provide for accelerated vesting except in the case
of disability or death. Recently, the OTS has authorized the elimination of
these provisions more than one year after a conversion, provided that
stockholder approval of such amendments to the plans is obtained. The Plans
provide that in the event of termination of service following a change in
control of the Company or retirement, vesting of awards would accelerate if, as
of such date: (i) such treatment is either authorized or is not prohibited by
applicable law and regulations, or (ii) amendments to the Plans providing for
such treatment have been approved by the stockholders of the Company at a
meeting of stockholders held more than one year after the consummation of the
Conversion. The Company currently plans to submit amendments to the Plans to
stockholders at its first meeting of stockholders held one year after the
Conversion in order to remove these restrictions and to provide that new awards
granted after such stockholder approval shall vest at the rate determined by the
Board or the Committee at the time of grant and that both existing and new
awards shall accelerate and vest upon termination of service to the Company upon
retirement or following a change in control of the Company.
The Board of Directors recommends that stockholders vote FOR adoption of
the 1999 Stock Option Plan.
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<PAGE>
PROPOSAL TO ADOPT THE 1999 RECOGNITION
AND RETENTION PLAN AND TRUST AGREEMENT
General
The Board of Directors of the Company has adopted the Recognition Plan,
the objective of which is to enable the Company to provide officers, key
employees and directors with a proprietary interest in the Company and as an
incentive to contribute to its success. Officers, key employees and directors of
the Company and the Association who are selected by the Board of Directors of
the Company or members of a committee appointed by the Board will be eligible to
receive benefits under the Recognition Plan. If stockholder approval is
obtained, shares will be granted to officers, key employees and directors as
determined by the Committee or the Board of Directors.
Description of the Recognition Plan
The following description of the Recognition Plan is a summary of its
terms and is qualified in its entirety by reference to the Recognition Plan, a
copy of which is attached hereto as Appendix B.
Administration. A committee of the Board of Directors of the Company will
administer the Recognition Plan, which shall consist of two or more members of
the Board, each of whom shall be a non-employee director of the Company. The
members of the Committee will initially consist of each of the non-employee
directors, who will also serve as trustees of the trust established pursuant to
the Recognition Plan ("Trust"). The trustees will have the responsibility to
invest all funds contributed by the Company to the Trust.
Upon stockholder approval of the Recognition Plan, the Company will
contribute sufficient funds to the Trust so that the Trust can purchase a number
of shares of Common Stock equal to 4% of the Common Stock sold in the
subscription offering in the Conversion, or 44,781 shares. It is currently
anticipated that these shares will be acquired through open market purchases to
the extent available, although the Company reserves the right to issue
previously unissued shares or treasury shares to the Recognition Plan. The
issuance of new shares by the Company would be dilutive to the voting rights of
existing stockholders and to the Company's book value per share and earnings per
share.
Grants. Shares of Common Stock granted pursuant to the Recognition Plan
will be in the form of restricted stock payable over a five-year period at a
rate of 20% per year, beginning one year from the anniversary date of the grant.
A recipient will be entitled to all voting and other stockholder rights with
respect to shares which have been earned and allocated under the Recognition
Plan. In addition, recipients of shares of restricted stock that have been
granted pursuant to the Recognition Plan that have not yet been earned and
distributed (other than shares granted pursuant to Performance Share Awards (as
defined below)) are entitled to direct the trustees of the Trust as to the
voting of such shares on the recipients behalf. However, until such shares have
been earned and allocated, they may not be sold, assigned, pledged or otherwise
disposed of and are required to be held in the Trust. In addition, any cash
dividends, stock dividends or returns of capital declared in respect of unvested
share awards will be held by the Trust for the
20
<PAGE>
benefit of the recipients and such dividends, including any interest thereon,
will be paid out proportionately by the Trust to the recipients thereof as soon
as practicable after the share awards become earned.
If a recipient terminates employment or service with the Company for
reasons other than death or disability, the recipient will forfeit all rights to
the allocated shares under restriction. All shares subject to an award held by a
recipient whose employment or service with the Company or any subsidiary
terminates due to death or disability shall be deemed earned as of the
recipient's last day of employment or service with the Company or any subsidiary
and shall be distributed as soon as practicable thereafter. In addition, if a
recipient's employment or service with the Company or any subsidiary terminates
due to retirement or following a change in control of the Company, then all
shares subject to an award held by a recipient shall be deemed earned as of the
recipient's last day of employment with or service to the Company or any
subsidiary and shall be distributed as soon as practicable thereafter, provided
that as of the date of such retirement or change in control: (i) such treatment
is either authorized or is not prohibited by applicable laws and regulations, or
(ii) an amendment to the Recognition Plan providing for such treatment has been
approved by the stockholders of the Company at a meeting of stockholders held
more than one year after the consummation of the Offering.
Performance Share Awards. The Recognition Plan provides the Committee
with the ability to condition or restrict the vesting or exercisability of any
Recognition Plan award upon the achievement of performance targets or goals as
set forth under the Recognition Plan. Any Recognition Plan award subject to such
conditions or restrictions is considered to be a "Performance Share Award."
Subject to the express provisions of the Recognition Plan and as discussed in
this paragraph, the Committee has discretion to determine the terms of any
Performance Share Award, including the amount of the award, or a formula for
determining such, the performance criteria and level of achievement related to
these criteria which determine the amount of the award granted, issued,
retainable and/or vested, the period as to which performance shall be measured
for determining achievement of performance (a "performance period"), the timing
of delivery of any awards earned, forfeiture provisions, the effect of
termination of employment for various reasons, and such further terms and
conditions, in each case not inconsistent with the Recognition Plan, as may be
determined from time to time by the Committee. Each Performance Share Award
shall be granted and administered to comply with the requirements of Section
162(m) of the Code. Accordingly, the performance criteria upon which Performance
Share Awards are granted, issued, retained and/or vested shall be a measure
based on one or more Performance Goals (as defined below). Notwithstanding
satisfaction of any Performance Goals, the number of shares granted, issued,
retainable and/or vested under a Performance Share Award may be reduced or
eliminated, but not increased, by the Committee on the basis of such further
considerations as the Committee in its sole discretion shall determine.
Subject to stockholder approval of the Plan, the Performance Goals for
any Performance Share Award shall be based upon any one or more of the following
performance criteria, either individually, alternatively or any combination,
applied to either the Company as a whole or to a business unit or subsidiary,
either individually, alternatively or in any combination, and measured either on
an absolute basis or relative to a pre-established target, to previous years'
results or to a designated comparison group, in each case as pre-established by
the Committee under the terms of the Performance Share Award: net income, as
adjusted for non-recurring items; cash earnings; earnings per share; cash
earnings per share; return on average equity;
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return on average assets; asset quality; stock price; total stockholder return;
capital; net interest income; market share; cost control or efficiency ratio;
and asset growth.
Shares to be Granted. The Board of Directors of the Company adopted the
Recognition Plan and the Committee established thereunder intends to grant
shares to executive officers, key employees and non-employee directors of the
Company and the Association. The Recognition Plan provides that grants to each
employee and each non-employee director shall not exceed 25% and 5% of the
shares of Common Stock available under the Recognition Plan, respectively.
Awards made to non-employee directors in the aggregate may not exceed 30% of the
number of shares available under the Recognition Plan.
It is currently anticipated that each of the five non-employee directors
will be granted restricted stock awards for 2,239 shares, or an aggregate of
11,195 shares. This is the maximum that each non-employee director can be
granted. It is also anticipated that each executive officer will be granted
restricted stock awards, although the amounts have not yet been determined. No
executive officer can receive restricted stock awards for more than 11,195
shares under the Recognition Plan. Other than as set forth above, the timing of
any such grants, the individual recipients and the specific amounts of such
grants have not been determined.
The Company and the Association have a total of 21 employees and five
non-employee directors who may be entitled to receive awards under the
Recognition Plan. The closing price for the Common Stock was $8.375 on March 2,
1999.
Amendment and Termination of the Recognition Plan. The Board of Directors
may at any time terminate or amend the Recognition Plan, subject to any required
stockholder approval or any stockholder approval which the Board may deem to be
advisable. The Board of Directors may not, without the consent of the holder of
an award, alter or impair any award previously granted under the Recognition
Plan except as specifically authorized by the Recognition Plan.
The Company currently intends to amend the Recognition Plan after the
one-year anniversary of the consummation of the Conversion to, among other
things, provide for accelerated vesting in the event of a change in control.
This amendment would be subject to stockholder approval at a later meeting.
Any termination of the Recognition Plan would not affect awards
previously granted, and such awards would remain valid and in effect until they
(a) have been fully earned, (b) are surrendered, or (c) expire or are forfeited
in accordance with their terms.
Federal Income Tax Consequences
Pursuant to Section 83 of the Code, recipients of Recognition Plan awards
will recognize ordinary income in an amount equal to the fair market value of
the shares of Common Stock granted to them at the time that the shares vest and
become transferable. A recipient of a Recognition Plan award may elect, with the
Committee's concurrence, to defer the receipt of shares subject to restricted
stock awards, other than shares subject to Performance Share Awards. Such
deferral must comply with the provisions of the Recognition Plan and other rules
and regulations as may be established by the Committee. A recipient may
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also elect, however, to accelerate the recognition of income with respect to his
or her grant to the time when shares of Common Stock are first transferred to
him or her, notwithstanding the vesting schedule of such awards. The Company
will be entitled to deduct as a compensation expense for tax purposes the same
amounts recognized as income by recipients of Recognition Plan awards in the
year in which such amounts are included in income.
Section 162(m) of the Code generally limits the deduction for certain
compensation in excess of $1.0 million per year paid by a publicly traded
corporation to its covered executives. Certain types of compensation, including
compensation based on performance goals, are excluded from the $1.0 million
deduction limitation. In order for compensation to qualify for this exception:
(i) it must be paid solely on account of the attainment of one or more
pre-established, objective performance goals; (ii) the performance goal must be
established by a compensation committee consisting solely of two or more outside
directors, as defined; (iii) the material terms under which the compensation is
to be paid, including performance goals, must be disclosed to and approved by
stockholders in a separate vote prior to payment; and (iv) prior to payment, the
compensation committee must certify that the performance goals and any other
material terms were in fact satisfied.
The Recognition Plan has been designed to meet the requirements of
Section 162(m) of the Code and, as a result, the Company believes that
compensation attributable to Performance Share Awards granted under the
Recognition Plan in accordance with the foregoing requirements will be fully
deductible under Section 162(m) of the Code. The Board of Directors believes
that the likelihood of any impact on the Company from the deduction limitation
contained in Section 162(m) of the Code is remote at this time.
The above description of tax consequences under federal law is
necessarily general in nature and does not purport to be complete. Moreover,
statutory provisions are subject to change, as are their interpretations, and
their application may vary in individual circumstances. Finally, the
consequences under applicable state and local income tax laws may not be the
same as under the federal income tax laws.
Accounting Treatment
For a discussion of SFAS No. 123, see "Proposal to Adopt the 1999 Stock
Option Plan - Accounting Treatment." Under the intrinsic value method, the
Company will also recognize a compensation expense as shares of Common Stock
granted pursuant to the Recognition Plan vest. The amount of compensation
expense recognized for accounting purposes is based upon the fair market value
of the Common Stock at the date of grant to recipients, rather than the fair
market value at the time of vesting for tax purposes. The vesting of plan share
awards will have the effect of increasing the Company's compensation expense.
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Stockholder Approval
No shares will be granted under the Recognition Plan unless the
Recognition Plan is approved by stockholders. Stockholder approval of the
Recognition Plan will satisfy the requirements of the Nasdaq Stock Market and
the OTS.
Regulatory Requirements
For a discussion of OTS requirements related to the Recognition Plan, see
"Proposal to Adopt the 1999 Stock Option Plan - Regulatory Requirements."
The Board of Directors recommends that stockholders vote FOR adoption of
the 1999 Recognition and Retention Plan and Trust Agreement.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Hannis T. Bourgeois,
L.L.P., independent certified public accountants, to perform the audit of the
Company's consolidated financial statements for the year ending December 31,
1999, and has further directed that the selection of auditors be submitted for
ratification by the stockholders at the Annual Meeting.
The Company has been advised by Hannis T. Bourgeois, L.L.P. that neither
that firm nor any of its associates has any relationship with the Company or its
subsidiaries other than the usual relationship that exists between independent
certified public accountants and clients. Hannis T. Bourgeois, L.L.P. will have
one or more representatives at the Annual Meeting who will have an opportunity
to make a statement, if they so desire, and who will be available to respond to
appropriate questions.
The Board of Directors recommends that you vote FOR the ratification of
the appointment of Hannis T. Bourgeois, L.L.P. as independent auditors for the
year ending December 31, 1999.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which is scheduled to be held in April 2000, must be received at
the principal executive offices of the Company, 195 North Sixth Street,
Ponchatoula, Louisiana 70454, Attention: Barbara B. Theriot, Secretary, no later
than November 22, 1999. If such proposal is in compliance with all of the
requirements of Rule 14a-8 under the 1934 Act, it will be included in the proxy
statement and set forth on the form of proxy issued for such annual meeting of
stockholders. It is urged that any such proposals be sent by certified mail,
return receipt requested.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the 1934 Act may be
brought before an annual meeting provided that the requirements
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set forth in Article 9.D of the Company's Articles of Incorporation are
satisfied in a timely manner. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive offices of the
Company not less than 120 days prior to the anniversary date of the initial
mailing of proxy materials by the Company in connection with the Company's
immediately preceding annual stockholders' meeting, except that stockholder
proposals with respect to the 1999 Annual Meeting were required to be received
by January 4, 1999.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1998 accompanies this Proxy Statement. Such annual report is not
part of the proxy solicitation materials.
Upon receipt of a written request, the Company will furnish to any
stockholder without charge a copy of the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1998 and a list of the exhibits thereto required
to be filed with the Securities and Exchange Commission under the 1934 Act. Such
written request should be directed to Barbara B. Theriot, Secretary, Homestead
Bancorp, Inc., 195 North Sixth Street, Ponchatoula, Louisiana 70454. The Form
10-KSB is not part of the proxy solicitation materials.
OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of the Company to vote the proxy with respect to the approval
of the minutes of the last meeting of stockholders, the election of any person
as a director if the nominee is unable to serve or for good cause will not
serve, matters incident to the conduct of the meeting, and upon such other
matters as may properly come before the Annual Meeting. Management is not aware
of any business that may properly come before the Annual Meeting other than
those matters described above in this Proxy Statement. However, if any other
matters should properly come before the Annual Meeting, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the persons voting the proxies.
The Company has engaged Regan & Associates, Inc., a professional proxy
soliciting firm, to assist in the solicitation of proxies. The Company will pay
Regan & Associates a fee of $3,500 for its services, plus expenses not to exceed
$1,750. The Company may solicit proxies by mail, advertisement, telephone,
facsimile, telegraph and personal solicitation. Directors and executive officers
of the Company and the Association may solicit proxies personally or by
telephone without additional compensation. The Company will reimburse banks,
brokerage firms and other custodians, nominees and fiduciaries for reasonable
expenses incurred by them in sending proxy solicitation materials to the
beneficial owners of the Company's Common Stock.
YOUR VOTE IS IMPORTANT! WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY
CARD AND RETURN IT TODAY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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Appendix A
HOMESTEAD BANCORP, INC.
1999 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Homestead Bancorp, Inc. (the "Corporation") hereby establishes this
1999 Stock Option Plan (the "Plan") upon the terms and conditions hereinafter
stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of this Plan is to improve the growth and profitability of
the Corporation and its Subsidiary Companies by providing Employees and
Non-Employee Directors with a proprietary interest in the Corporation as an
incentive to contribute to the success of the Corporation and its Subsidiary
Companies, and rewarding Employees and Non-Employee Directors for outstanding
performance. All Incentive Stock Options issued under this Plan are intended to
comply with the requirements of Section 422 of the Code, and the regulations
thereunder, and all provisions hereunder shall be read, interpreted and applied
with that purpose in mind. Each recipient of an Award hereunder is advised to
consult with his or her personal tax advisor with respect to the tax
consequences under federal, state, local and other tax laws of the receipt
and/or exercise of an Award hereunder.
ARTICLE III
DEFINITIONS
3.01 "Association" means Ponchatoula Homestead Savings, F.A., a wholly
owned subsidiary of the Corporation.
3.02 "Award" means an Option or Stock Appreciation Right granted
pursuant to the terms of this Plan.
3.03 "Board" means the Board of Directors of the Corporation.
3.04 "Change in Control of the Corporation" shall mean the occurrence
of any of the following: (i) the acquisition of control of the Corporation as
defined in 12 C.F.R. ss.574.4, unless a presumption of control is successfully
rebutted or unless the transaction is exempted by 12 C.F.R. ss.574.3(c)(vii), or
any successor to such sections; (ii) an event that would be required to be
reported in response to Item 1(a) of Form 8-K or Item 6(e) of Schedule 14A of
Regulation 14A pursuant to the Exchange Act, or any successor thereto, whether
or not any class of securities of the Corporation is registered under the
Exchange Act; (iii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power of the
Corporation's then outstanding securities; (iv) during any period of thirty-six
consecutive months during the term of an Award, individuals who at the beginning
of such period constitute the Board of Directors of the Corporation, and any
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new director whose election by the Board of Directors or nomination for election
by the Corporation's stockholders was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the beginning
of the three-year period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
of the Board of Directors; (v) the stockholders of the Corporation approve a
merger or consolidation of the Corporation with any other corporation, other
than a merger or consolidation that would result in the voting securities of the
Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting power of the voting
securities of the surviving corporation outstanding immediately after such
merger or consolidation; or (vi) the stockholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets. If any of the events enumerated in clauses (i) through (iv) occur, the
Board shall determine the effective date of the Change in Control resulting
therefrom for purposes of the Plan.
3.05 "Code" means the Internal Revenue Code of 1986, as amended.
3.06 "Committee" means a committee of two or more directors appointed
by the Board pursuant to Article IV hereof, each of whom shall be a Non-Employee
Director as defined in Rule 16b-3(b)(3)(i) of the Exchange Act or any successor
thereto and within the meaning of Section 162(m) of the Code and the regulations
promulgated thereunder.
3.07 "Common Stock" means shares of common stock, par value $.01 per
share, of the Corporation.
3.08 "Disability" means any physical or mental impairment which
qualifies an individual for disability benefits under the applicable long-term
disability plan maintained by the Corporation or a Subsidiary Company, or, if no
such plan applies, which would qualify such individual for disability benefits
under the Federal Social Security System.
3.09 "Effective Date" means the day upon which the Board approves this
Plan.
3.10 "Employee" means any person who is employed by the Corporation,
the Association or any Subsidiary Company, or is an Officer of the Corporation,
the Association or any Subsidiary Company, but not including directors who are
not also Officers of or otherwise employed by the Corporation, the Association
or any Subsidiary Company.
3.11 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
3.12 "Fair Market Value" shall be equal to the fair market value per
share of the Corporation's Common Stock on the date an Award is granted. For
purposes hereof, the Fair Market Value of a share of Common Stock shall be the
closing sale price of a share of Common Stock on the date in question (or, if
such day is not a trading day in the U.S. markets, on the nearest preceding
trading day), as reported with respect to the principal market (or the composite
of the markets, if more than one) or national quotation system in which such
shares are then traded, or if no such closing prices are reported, the mean
between the high bid and low asked prices that day on the principal market or
national quotation system then in use, or if no such quotations are available,
the price furnished by a professional securities dealer making a market in such
shares selected by the Committee.
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3.13 "Incentive Stock Option" means any Option granted under this Plan
which the Board intends (at the time it is granted) to be an incentive stock
option within the meaning of Section 422 of the Code or any successor thereto.
3.14 "Non-Employee Director" means a member of the Board of the
Corporation or Board of Directors of the Association or any successor thereto,
including an advisory director or a director emeritus of the Boards of the
Corporation and/or the Association, who is not an Officer or Employee of the
Corporation or any Subsidiary Company.
3.15 "Non-Qualified Option" means any Option granted under this Plan
which is not an Incentive Stock Option.
3.16 "Offering" means the subscription and community offering of Common
Stock to the public (but not the exchange offer to former stockholders of the
Association) in connection with the reorganization of the Association from the
mutual holding company structure to the stock holding company structure.
3.17 "Officer" means an Employee whose position in the Corporation or a
Subsidiary Company is that of a corporate officer, as determined by the Board.
3.18 "Option" means a right granted under this Plan to purchase Common
Stock.
3.19 "Optionee" means an Employee or Non-Employee Director or former
Employee or Non-Employee Director to whom an Option is granted under the Plan.
3.20 "Retirement" means a termination of employment which constitutes a
"retirement" under any applicable qualified pension benefit plan maintained by
the Corporation or a Subsidiary Corporation, or, if no such plan is applicable,
which would constitute "retirement" under the Corporation's pension benefit
plan, if such individual were a participant in that plan. With respect to
Non-Employee Directors, retirement means retirement from service on the Board of
Directors of the Corporation or the Association or any successor thereto
(including service as a director emeritus) after attaining the age of 70.
3.21 "Stock Appreciation Right" means a right to surrender an Option in
consideration for a payment by the Corporation in cash and/or Common Stock, as
provided in the discretion of the Board or the Committee in accordance with
Section 8.10.
3.22 "Subsidiary Companies" means those subsidiaries of the
Corporation, including the Association, which meet the definition of "subsidiary
corporations" set forth in Section 424(f) of the Code, at the time of granting
of the Option in question.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Duties of the Committee. The Plan shall be administered and
interpreted by the Committee, as appointed from time to time by the Board
pursuant to Section 4.02. The Committee shall have the authority to adopt, amend
and rescind such rules, regulations and procedures as, in its opinion, may be
advisable in the administration of the Plan, including, without limitation,
rules, regulations and procedures which (i) deal with satisfaction of an
Optionee's tax withholding obligation pursuant to Section 12.01 hereof,
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(ii) include arrangements to facilitate the Optionee's ability to borrow funds
for payment of the exercise or purchase price of an Award, if applicable, from
securities brokers and dealers, (iii) establish the method and arrangements by
which an optionee may defer the recognition of income upon the exercise of a
Non-Qualified Option or Stock Appreciation Right pursuant to Article XIII
hereof, and (iv) include arrangements which provide for the payment of some or
all of such exercise or purchase price by delivery of previously-owned shares of
Common Stock or other property and/or by withholding some of the shares of
Common Stock which are being acquired. The interpretation and construction by
the Committee of any provisions of the Plan, any rule, regulation or procedure
adopted by it pursuant thereto or of any Award shall be final and binding in the
absence of action by the Board.
4.02 Appointment and Operation of the Committee. The members of the
Committee shall be appointed by, and will serve at the pleasure of, the Board.
The Board from time to time may remove members from, or add members to, the
Committee, provided the Committee shall continue to consist of two or more
members of the Board, each of whom shall be a Non-Employee Director, as defined
in Rule 16b-3(b)(3)(i) of the Exchange Act or any successor thereto. In
addition, each member of the Committee shall be an "outside director" within the
meaning of Section 162(m) of the Code and regulations thereunder at such times
as is required under such regulations. The Committee shall act by vote or
written consent of a majority of its members. Subject to the express provisions
and limitations of the Plan, the Committee may adopt such rules, regulations and
procedures as it deems appropriate for the conduct of its affairs. It may
appoint one of its members to be chairman and any person, whether or not a
member, to be its secretary or agent. The Committee shall report its actions and
decisions to the Board at appropriate times but in no event less than one time
per calendar year.
4.03 Revocation for Misconduct. The Board or the Committee may by
resolution immediately revoke, rescind and terminate any Option, or portion
thereof, to the extent not yet vested, or any Stock Appreciation Right, to the
extent not yet exercised, previously granted or awarded under this Plan to an
Employee who is discharged from the employ of the Corporation or a Subsidiary
Company for cause, which, for purposes hereof, shall mean termination because of
the Employee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order. Options granted
to a Non-Employee Director who is removed for cause pursuant to the
Corporation's Articles of Incorporation and Bylaws or the Association's Charter
and Bylaws shall terminate as of the effective date of such removal.
4.04 Limitation on Liability. Neither the members of the Board nor any
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan, any rule, regulation or procedure adopted
pursuant thereto or any Awards granted hereunder. If a member of the Board or
the Committee is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of anything done or not done by him
in such capacity under or with respect to the Plan, the Corporation shall,
subject to the requirements of applicable laws and regulations, indemnify such
member against all liabilities and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of the
Corporation and its Subsidiary Companies and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
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4.05 Compliance with Law and Regulations. All Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
The Corporation shall not be required to issue or deliver any certificates for
shares of Common Stock prior to the completion of any registration or
qualification of or obtaining of consents or approvals with respect to such
shares under any federal or state law or any rule or regulation of any
government body, which the Corporation shall, in its sole discretion, determine
to be necessary or advisable. Moreover, no Option or Stock Appreciation Right
may be exercised if such exercise would be contrary to applicable laws and
regulations.
4.06 Restrictions on Transfer. The Corporation may place a legend upon
any certificate representing shares acquired pursuant to an Award granted
hereunder noting that the transfer of such shares may be restricted by
applicable laws and regulations.
ARTICLE V
ELIGIBILITY
Awards may be granted to such Employees and Non-Employee Directors of
the Corporation and its Subsidiary Companies as may be designated from time to
time by the Board or the Committee. Awards may not be granted to individuals who
are not Employees or Non-Employee Directors of either the Corporation or its
Subsidiary Companies. Non-Employee Directors shall be eligible to receive only
Awards of Non-Qualified Options pursuant to this Plan.
ARTICLE VI
COMMON STOCK COVERED BY THE PLAN
6.01 Option Shares. The aggregate number of shares of Common Stock
which may be issued pursuant to this Plan, subject to adjustment as provided in
Article IX, shall be 111,954, which is equal to 10% of the shares of Common
Stock issued in the Offering. None of such shares shall be the subject of more
than one Award at any time (provided that Stock Appreciation Rights and the
related Options shall be deemed to be a single Award), but if an Option as to
any shares is surrendered before exercise, or expires or terminates for any
reason without having been exercised in full, or for any other reason ceases to
be exercisable, the number of shares covered thereby shall again become
available for grant under the Plan as if no Awards had been previously granted
with respect to such shares. Notwithstanding the foregoing, if an Option is
surrendered in connection with the exercise of a Stock Appreciation Right, the
number of shares covered thereby shall not be available for grant under the
Plan. During the time this Plan remains in effect, grants to each Employee and
each Non-Employee Director shall not exceed 25% and 5% of the shares of Common
Stock available under the Plan, respectively, and Awards made to Non-Employee
Directors in the aggregate may not exceed 30% of the number of shares available
under this Plan, in each case subject to adjustment as provided in Article IX.
6.02 Source of Shares. The shares of Common Stock issued under the Plan
may be authorized but unissued shares, treasury shares or shares purchased by
the Corporation on the open market or from private sources for use under the
Plan.
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ARTICLE VII
DETERMINATION OF
AWARDS, NUMBER OF SHARES, ETC.
The Board or the Committee shall, in its discretion, determine from
time to time which Employees and Non-Employee Directors will be granted Awards
under the Plan, the number of shares of Common Stock subject to each Award,
whether each Option will be an Incentive Stock Option or a Non-Qualified Stock
Option (in the case of Employees) and the exercise price of an Option. In making
all such determinations there shall be taken into account the duties,
responsibilities and performance of each respective Employee and Non-Employee
Director, his present and potential contributions to the growth and success of
the Corporation, his salary and such other factors deemed relevant to
accomplishing the purposes of the Plan.
ARTICLE VIII
OPTIONS AND STOCK APPRECIATION RIGHTS
Each Option granted hereunder shall be on the following terms and
conditions:
8.01 Stock Option Agreement. The proper Officers on behalf of the
Corporation and each Optionee shall execute a Stock Option Agreement which shall
set forth the total number of shares of Common Stock to which it pertains, the
exercise price, whether it is a Non-Qualified Option or an Incentive Stock
Option, and such other terms, conditions, restrictions and privileges as the
Board or the Committee in each instance shall deem appropriate, provided they
are not inconsistent with the terms, conditions and provisions of this Plan.
Each Optionee shall receive a copy of his executed Stock Option Agreement.
8.02 Option Exercise Price.
(a) Incentive Stock Options. The per share price at which the
subject Common Stock may be purchased upon exercise of an Incentive Stock Option
shall be no less than one hundred percent (100%) of the Fair Market Value of a
share of Common Stock at the time such Incentive Stock Option is granted, except
as provided in Section 8.09(b), and subject to any applicable adjustment
pursuant to Article IX hereof.
(b) Non-Qualified Options. The per share price at which the
subject Common Stock may be purchased upon exercise of a Non-Qualified Option
shall be established by the Committee at the time of grant, but in no event
shall be less than one hundred percent (100%) of the Fair Market Value of a
share of Common Stock at the time such Non-Qualified Option is granted, subject
to any applicable adjustment pursuant to Article IX hereof.
8.03 Vesting and Exercise of Options.
(a) General Rules. Incentive Stock Options and Non-Qualified
Options granted hereunder shall become vested and exercisable at the rate of 20%
per year over five years, commencing one year from the date of grant with an
additional 20% vesting on each successive annual anniversary of the date the
Option was granted, and the right to exercise shall be cumulative.
Notwithstanding the foregoing, except as provided in Sections 8.03(b) and
8.03(c) hereof, no Option granted to an Employee or a Non-Employee Director
shall continue to vest on or after the date the Employee's employment or the
Non-Employee Director's service with the Corporation and all Subsidiary
Companies (or any successor companies) is
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terminated for any reason other than his death or Disability. In determining the
number of shares of Common Stock with respect to which Options are vested and/or
exercisable, fractional shares shall be rounded down to the nearest whole
number, provided that such fractional Shares shall be aggregated and deemed
vested on the fifth annual anniversary of the date of grant.
(b) Accelerated Vesting. Unless the Board or the Committee
shall specifically state otherwise at the time an Option is granted, all Options
granted under this Plan shall become vested and exercisable in full on the date
an Optionee terminates his employment with the Corporation or a Subsidiary
Company or service as a Non-Employee Director because of his death or
Disability. All Options hereunder shall become immediately vested and
exercisable in full on the date an Optionee terminates his employment with the
Corporation or a Subsidiary Corporation due to Retirement if as of the date of
such Retirement (i) such treatment is either authorized or is not prohibited by
applicable laws and regulations, or (ii) an amendment to the Plan providing for
such treatment has been approved by the stockholders of the Corporation at a
meeting of stockholders held more than one year after the consummation of the
Offering. In addition, all Options hereunder shall become immediately vested and
exercisable in full as of the effective date of a Change in Control of the
Corporation if as of the date of such Change in Control of the Corporation (i)
such treatment is either authorized or is not prohibited by applicable laws and
regulations or (ii) an amendment to the Plan providing for such treatment has
been approved by the stockholders of the Corporation at a meeting of
stockholders held more than one year after consummation of the Offering.
(c) Continued Vesting After a Change in Control. If a Change
in Control of the Corporation occurs and the vesting of outstanding Options is
not accelerated pursuant to Section 8.03(b) hereof, the outstanding Options
shall continue to vest in accordance with their terms for as long as the
Optionee remains either an Employee or a Non-Employee Director of the
Corporation or any Subsidiary Company (or any successor companies), including
Options initially granted to an Employee who subsequently becomes a director,
advisory director or director emeritus of the Corporation or any Subsidiary
Company (or any successor companies).
8.04 Duration of Options.
(a) General Rule. Except as provided in Sections 8.04(b) and
8.09, each Option or portion thereof granted to an Employee shall be exercisable
at any time on or after it vests and remain exercisable until the earlier of (i)
ten (10) years after its date of grant or (ii) six (6) months after the date on
which the Employee ceases to be employed by the Corporation and all Subsidiary
Companies, unless the Board or the Committee in its discretion decides at the
time of grant or thereafter to extend such period of exercise upon termination
of employment to a period not exceeding five (5) years.
Except as provided in Section 8.04(b), each Option or portion thereof
granted to a Non-Employee Director shall be exercisable at any time on or after
it vests and remain exercisable until the earlier of (i) ten (10) years after
its date of grant or (ii) three (3) years after the date on which the
Non-Employee Director ceases to serve as a director of the Corporation and all
Subsidiary Companies, unless the Board or the Committee in its discretion
decides at the time of grant or thereafter to extend such period of exercise
upon termination of service to a period not exceeding five (5) years.
(b) Exceptions. Unless the Board or the Committee shall
specifically state otherwise at the time an Option is granted: (i) if an
Employee terminates his employment with the Corporation or a Subsidiary Company
as a result of Disability or Retirement without having fully exercised his
Options, the Employee shall have the right, during the three (3) year period
following his termination due to Disability
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or Retirement, to exercise such Options, and (ii) if a Non-Employee Director
terminates his service as a director with the Corporation or a Subsidiary
Company as a result of Disability or Retirement without having fully exercised
his Options, the Non-Employee Director shall have the right, during the three
(3) year period following his termination due to Disability or Retirement, to
exercise such Options.
Unless the Board or the Committee shall specifically state otherwise at
the time an Option is granted, if an Employee or Non-Employee Director
terminates his employment or service with the Corporation or a Subsidiary
Company following a Change in Control of the Corporation without having fully
exercised his Options, the Optionee shall have the right to exercise such
Options during the remainder of the original ten (10) year term of the Option
from the date of grant.
If an Optionee dies while in the employ or service of the Corporation
or a Subsidiary Company or terminates employment or service with the Corporation
or a Subsidiary Company as a result of Disability or Retirement and dies without
having fully exercised his Options, the executors, administrators, legatees or
distributees of his estate shall have the right, during the one (1) year period
following his death, to exercise such Options.
In no event, however, shall any Option be exercisable more than ten
(10) years from the date it was granted.
8.05 Nonassignability. Options shall not be transferable by an Optionee
except by will or the laws of descent or distribution, and during an Optionee's
lifetime shall be exercisable only by such Optionee or the Optionee's guardian
or legal representative. Notwithstanding the foregoing, or any other provision
of this Plan, an Optionee who holds vested Non-Qualified Options may transfer
such Options to his or her spouse, lineal ascendants, lineal descendants, or to
a duly established trust for the benefit of one or more of these individuals.
Options so transferred may thereafter be transferred only to the Optionee who
originally received the grant or to an individual or trust to whom the Optionee
could have initially transferred the Option pursuant to this Section 8.05.
Options which are transferred pursuant to this Section 8.05 shall be exercisable
by the transferee according to the same terms and conditions as applied to the
Optionee.
8.06 Manner of Exercise. Options may be exercised in part or in whole
and at one time or from time to time. The procedures for exercise shall be set
forth in the written Stock Option Agreement provided for in Section 8.01 above.
8.07 Payment for Shares. Payment in full of the purchase price for
shares of Common Stock purchased pursuant to the exercise of such Option shall
be made to the Corporation upon exercise of such Option. All shares sold under
the Plan shall be fully paid and nonassessable. Payment for shares may be made
by the Optionee (i) in cash or by check, (ii) by delivery of a properly executed
exercise notice, together with irrevocable instructions to a broker to sell the
shares and then to properly deliver to the Corporation the amount of sale
proceeds to pay the exercise price, all in accordance with applicable laws and
regulations, (iii) at the discretion of the Board or the Committee, by
delivering shares of Common Stock (including shares acquired pursuant to the
exercise of an Option) equal in Fair Market Value to the purchase price of the
shares to be acquired pursuant to the Option, (iv) at the discretion of the
Board or the Committee, by withholding some of the shares of Common Stock which
are being purchased upon exercise of an Option, or (v) any combination of the
foregoing. With respect to subclause (iii) hereof, the shares of Common Stock
delivered to pay the purchase price must have either been (x) purchased in open
market transactions or (y) issued by the Corporation pursuant to a plan thereof,
in each case more than six months prior to the exercise date of the Option.
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8.08 Voting and Dividend Rights. No Optionee shall have any voting or
dividend rights or other rights of a stockholder in respect of any shares of
Common Stock covered by an Option prior to the time that his name is recorded on
the Corporation's stockholder ledger as the holder of record of such shares
acquired pursuant to an exercise of an Option.
8.09 Additional Terms Applicable to Incentive Stock Options. All
Options issued under the Plan as Incentive Stock Options will be subject, in
addition to the terms detailed in Sections 8.01 to 8.08 above, to those
contained in this Section 8.09.
(a) Notwithstanding any contrary provisions contained
elsewhere in this Plan and as long as required by Section 422 of the Code, the
aggregate Fair Market Value, determined as of the time an Incentive Stock Option
is granted, of the Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
under this Plan, and stock options that satisfy the requirements of Section 422
of the Code under any other stock option plan or plans maintained by the
Corporation (or any parent or Subsidiary Company), shall not exceed $100,000.
(b) Limitation on Ten Percent Stockholders. The price at which
shares of Common Stock may be purchased upon exercise of an Incentive Stock
Option granted to an individual who, at the time such Incentive Stock Option is
granted, owns, directly or indirectly, more than ten percent (10%) of the total
combined voting power of all classes of stock issued to stockholders of the
Corporation or any Subsidiary Company, shall be no less than one hundred and ten
percent (110%) of the Fair Market Value of a share of the Common Stock of the
Corporation at the time of grant, and such Incentive Stock Option shall by its
terms not be exercisable after the earlier of the date determined under Section
8.03 or the expiration of five (5) years from the date such Incentive Stock
Option is granted.
(c) Notice of Disposition; Withholding; Escrow. An Optionee
shall immediately notify the Corporation in writing of any sale, transfer,
assignment or other disposition (or action constituting a disqualifying
disposition within the meaning of Section 421 of the Code) of any shares of
Common Stock acquired through exercise of an Incentive Stock Option, within two
(2) years after the grant of such Incentive Stock Option or within one (1) year
after the acquisition of such shares, setting forth the date and manner of
disposition, the number of shares disposed of and the price at which such shares
were disposed of. The Corporation shall be entitled to withhold from any
compensation or other payments then or thereafter due to the Optionee such
amounts as may be necessary to satisfy any withholding requirements of federal
or state law or regulation and, further, to collect from the Optionee any
additional amounts which may be required for such purpose. The Committee or the
Board may, in its discretion, require shares of Common Stock acquired by an
Optionee upon exercise of an Incentive Stock Option to be held in an escrow
arrangement for the purpose of enabling compliance with the provisions of this
Section 8.09(c).
8.10 Stock Appreciation Rights.
(a) General Terms and Conditions. The Board or the Committee
may, but shall not be obligated to, authorize the Corporation, on such terms and
conditions as it deems appropriate in each case, to grant rights to Optionees to
surrender an exercisable Option, or any portion thereof, in consideration for
the payment by the Corporation of an amount equal to the excess of the Fair
Market Value of the shares of Common Stock subject to the Option, or portion
thereof, surrendered over the exercise price of the Option with respect to such
shares (each such right being hereinafter referred to as a "Stock Appreciation
Right"). Such payment, at the discretion of the Board or the Committee, may be
made in shares of Common Stock
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valued at the then Fair Market Value thereof, or in cash, or partly in cash and
partly in shares of Common Stock.
The terms and conditions with respect to a Stock Appreciation Right may
include (without limitation), subject to other provisions of this Section 8.10
and the Plan: the period during which, date by which or event upon which the
Stock Appreciation Right may be exercised; the method for valuing shares of
Common Stock for purposes of this Section 8.10; a ceiling on the amount of
consideration which the Corporation may pay in connection with exercise and
cancellation of the Stock Appreciation Right; and arrangements for income tax
withholding. The Board or the Committee shall have complete discretion to
determine whether, when and to whom Stock Appreciation Rights may be granted.
(b) Time Limitations. If a holder of a Stock Appreciation
Right terminates service with the Corporation as an Officer or Employee, the
Stock Appreciation Right may be exercised only within the period, if any, within
which the Option to which it relates may be exercised.
(c) Effects of Exercise of Stock Appreciation Rights or
Options. Upon the exercise of a Stock Appreciation Right, the number of shares
of Common Stock available under the Option to which it relates shall decrease by
a number equal to the number of shares for which the Stock Appreciation Right
was exercised. Upon the exercise of an Option, any related Stock Appreciation
Right shall terminate as to any number of shares of Common Stock subject to the
Stock Appreciation Right that exceeds the total number of shares for which the
Option remains unexercised.
(d) Time of Grant. A Stock Appreciation Right granted in
connection with an Incentive Stock Option must be granted concurrently with the
Option to which it relates, while a Stock Appreciation Right granted in
connection with a Non-Qualified Option may be granted concurrently with the
Option to which it relates or at any time thereafter prior to the exercise or
expiration of such Option.
(e) Non-Transferable. The holder of a Stock Appreciation Right
may not transfer or assign the Stock Appreciation Right otherwise than by will
or in accordance with the laws of descent and distribution, and during a
holder's lifetime a Stock Appreciation Right may be exercisable only by the
holder.
ARTICLE IX
ADJUSTMENTS FOR CAPITAL CHANGES
The aggregate number of shares of Common Stock available for issuance
under this Plan, the number of shares to which any outstanding Award relates,
the maximum number of shares that can be covered by Awards to each Employee,
each Non-Employee Director and all Non-Employee Directors as a group, and the
exercise price per share of Common Stock under any outstanding Option shall be
proportionately adjusted for any increase or decrease in the total number of
outstanding shares of Common Stock issued subsequent to the effective date of
this Plan resulting from a split, subdivision or consolidation of shares or any
other capital adjustment, the payment of a stock dividend, or other increase or
decrease in such shares effected without receipt or payment of consideration by
the Corporation. If, upon a merger, consolidation, reorganization, liquidation,
recapitalization or the like of the Corporation, the shares of the Corporation's
Common Stock shall be exchanged for other securities of the Corporation or of
another corporation, each recipient of an Award shall be entitled, subject to
the conditions herein stated, to purchase or acquire such number of shares of
Common Stock or amount of other securities of the Corporation or such other
corporation as were exchangeable for the number of shares of Common Stock of the
Corporation which such
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optionees would have been entitled to purchase or acquire except for such
action, and appropriate adjustments shall be made to the per share exercise
price of outstanding Options. Notwithstanding any provision to the contrary
herein and to the extent permitted by applicable laws and regulations and
interpretations thereof, the exercise price of shares subject to outstanding
Awards shall be proportionately adjusted upon the payment by the Corporation of
a special cash dividend or return of capital in an amount per share which
exceeds 10% of the Fair Market Value of a share of Common Stock as of the date
of declaration, provided that the adjustment to the per share exercise price
shall satisfy the criteria set forth in Emerging Issues Task Force 90-9 (or any
successor thereto) so that the adjustments do not result in compensation
expense, and provided further that if such adjustment with respect to Incentive
Stock Options would be treated as a modification of the outstanding incentive
stock options with the effect that, for purposes of Sections 422 and 425(h) of
the Code, and the rules and regulations promulgated thereunder, new Incentive
Stock Options would be deemed to be granted hereunder, then no adjustment to the
per share exercise price of outstanding Incentive Stock Options shall be made.
ARTICLE X
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the Plan
with respect to any shares of Common Stock as to which Awards have not been
granted, subject to any required stockholder approval or any stockholder
approval which the Board may deem to be advisable for any reason, such as for
the purpose of obtaining or retaining any statutory or regulatory benefits under
tax, securities or other laws or satisfying any applicable stock exchange
listing requirements. The Board may not, without the consent of the holder of an
Award, alter or impair any Award previously granted or awarded under this Plan
except as specifically authorized herein.
ARTICLE XI
EMPLOYMENT AND SERVICE RIGHTS
Neither the Plan nor the grant of any Awards hereunder nor any action
taken by the Committee or the Board in connection with the Plan shall create any
right on the part of any Employee or Non-Employee Director to continue in such
capacity.
ARTICLE XII
WITHHOLDING
12.01 Tax Withholding. The Corporation may withhold from any cash
payment made under this Plan sufficient amounts to cover any applicable
withholding and employment taxes, and if the amount of such cash payment is
insufficient, the Corporation may require the Optionee to pay to the Corporation
the amount required to be withheld as a condition to delivering the shares
acquired pursuant to an Award. The Corporation also may withhold or collect
amounts with respect to a disqualifying disposition of shares of Common Stock
acquired pursuant to exercise of an Incentive Stock Option, as provided in
Section 8.09(c).
12.02 Methods of Tax Withholding. The Board or the Committee is
authorized to adopt rules, regulations or procedures which provide for the
satisfaction of an Optionee's tax withholding obligation by
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the retention of shares of Common Stock to which the Employee would otherwise be
entitled pursuant to an Award and/or by the Optionee's delivery of previously
owned shares of Common Stock or other property.
ARTICLE XIII
DEFERRED PAYMENTS
13.01 Deferral of Options and Stock Appreciation Rights.
Notwithstanding any other provision of this Plan, any Optionee may elect, with
the concurrence of the Committee and consistent with any rules and regulations
established by the Committee, to defer the recognition of ordinary income
resulting from the exercise of any Non-Qualified Option not transferred under
the provisions of Section 8.05 hereof and of any Stock Appreciation Rights.
13.02 Timing of Election. The election to defer the recognition of
ordinary income resulting from the exercise of any eligible Non-Qualified Option
or Stock Appreciation Right must be made at least six (6) months prior to the
date such Option or Stock Appreciation Right is exercised or at such other time
as the Committee may specify. Deferrals of eligible Non-Qualified Options or
Stock Appreciation Rights shall only be allowed for exercises of Options and
Stock Appreciation Rights that occur while the Participant is in active service
with the Corporation or one of its Subsidiary Companies. Any election to defer
the ordinary income resulting from the exercise of an eligible Non-Qualified
Option or Stock Appreciation Right shall be irrevocable as long as the Optionee
remains an Employee or a Non-Employee Director of the Corporation or one of its
Subsidiary Companies.
13.03 Stock Option Deferral. The deferral of the ordinary income
resulting from the exercise of Non-Qualified Options may be elected by an
Optionee subject to the rules and regulations established by the Committee. The
income resulting from such an exercise shall be credited to a deferred stock
option account established for the Optionee (which may be part of an existing
deferred compensation trust account). The income shall be credited to the
deferred stock option account as a number of deferred shares or share units
equivalent in value to such income. Deferred share units shall be valued at the
Fair Market Value on the date of exercise. Subsequent to exercise, the deferred
shares or share units shall be valued at the Fair Market Value of Common Stock.
Deferred share units shall accrue dividends at the rate paid upon the Common
Stock credited in the form of additional deferred share units. Deferred shares
or share units shall be distributed in shares of Common Stock or cash, at the
discretion of the Committee, upon the Optionee's termination of employment or
service as a director or at such other date(s), as may be approved by the
Committee, over a period of no more than ten (10) years.
13.04 Stock Appreciation Right Deferral. The deferral of the ordinary
income resulting from the exercise of Stock Appreciation Rights may be made by
an Optionee subject to the rules and regulations established by the Committee.
Upon exercise, the Committee will credit the Optionee's deferred stock option
account with a number of deferred shares or share units equivalent in value to
the difference between the Fair Market Value of a share of Common Stock on the
exercise date and the Exercise Price of the Stock Appreciation Right multiplied
by the number of shares exercised. Deferred shares or share units shall be
valued at the Fair Market Value on the date of exercise. Subsequent to exercise,
the deferred shares or share units shall be valued at the Fair Market Value of
Common Stock. Deferred shares or share units shall accrue dividends at the rate
paid upon the Common Stock credited in the form of additional deferred shares or
share units. Deferred shares or share units shall be distributed in shares of
Common Stock or cash, at the discretion of the Committee, upon the Participant's
termination of employment or service as a director or at such other date(s), as
may be approved by the Committee, over a period of no more than ten (10) years.
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13.05 Accelerated Distributions. The Committee may, at its sole
discretion, allow for the early payment of an Optionee's deferred stock option
account in the event of an "unforeseeable emergency" or in the event of the
death or Disability of the Optionee. An "unforeseeable emergency" means an
unanticipated emergency caused by an event beyond the control of the Optionee
that would result in severe financial hardship if the distribution were not
permitted. Such distributions shall be limited to the amount necessary to
sufficiently address the financial hardship. Any distributions under this
provision shall be consistent with the Code and the regulations promulgated
thereunder. Additionally, the Committee may use its discretion to cause stock
option deferral accounts to be distributed when continuing the program is no
longer in the best interest of the Corporation or one of its Subsidiary
Companies.
13.06 Assignability. No rights to deferred stock option accounts may be
assigned or subject to any encumbrance, pledge or charge of any nature except
that an Optionee may designate a beneficiary pursuant to any rules established
by the Committee.
13.07 Unfunded Status. No Optionee or other person shall have any
interest in any fund or in any specific asset of the Corporation or one of its
Subsidiary Companies by reason of any amount credited pursuant to the provisions
hereof. Any amounts payable pursuant to the provisions hereof shall be paid from
the general assets of the Corporation or one of its Subsidiary Companies and no
Optionee or other person shall have any rights to such assets beyond the rights
afforded general creditors of the Corporation or one of its Subsidiary
Companies. However, the Corporation or one of its Subsidiary Companies shall
have the right to establish a reserve, trust or make any investment for the
purpose of satisfying the obligations created under this Article XIII of the
Plan; provided, however, that no Optionee or other person shall have any
interest in such reserve, trust or investment.
ARTICLE XIV
EFFECTIVE DATE OF THE PLAN; TERM
14.01 Effective Date of the Plan. This Plan shall become effective on
the Effective Date, and Awards may be granted hereunder no earlier than the date
that this Plan is approved by stockholders of the Corporation and no later than
the termination of the Plan, provided that this Plan is approved by stockholders
of the Corporation pursuant to Article XV hereof.
14.02 Term of the Plan. Unless sooner terminated, this Plan shall
remain in effect for a period of ten (10) years ending on the tenth anniversary
of the Effective Date. Termination of the Plan shall not affect any Awards
previously granted and such Awards shall remain valid and in effect until they
have been fully exercised or earned, are surrendered or by their terms expire or
are forfeited.
ARTICLE XV
STOCKHOLDER APPROVAL
The Corporation shall submit this Plan to stockholders for approval at
a meeting of stockholders of the Corporation held within twelve (12) months
following the Effective Date in order to meet the requirements of (i) Section
422 of the Code and regulations thereunder, (ii) Section 162(m) of the Code and
regulations thereunder, (iii) the Nasdaq Stock Market for continued quotation of
the Common Stock on the Nasdaq Stock Market, and (iv) the regulations of the
Office of Thrift Supervision.
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ARTICLE XVI
MISCELLANEOUS
16.01 Governing Law. To the extent not governed by federal law, this
Plan shall be construed under the laws of the State of Louisiana.
16.02 Pronouns. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun, and the singular shall include the plural.
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Appendix B
HOMESTEAD BANCORP, INC.
1999 RECOGNITION AND RETENTION PLAN AND TRUST AGREEMENT
ARTICLE I
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 Homestead Bancorp, Inc. (the "Corporation") hereby establishes the
1999 Recognition and Retention Plan (the "Plan") and Trust (the "Trust") upon
the terms and conditions hereinafter stated in this 1999 Recognition and
Retention Plan and Trust Agreement (the "Agreement").
1.02 The Trustee hereby accepts this Trust and agrees to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of the Plan is to retain personnel of experience and
ability in key positions by providing Employees and Non-Employee Directors with
a proprietary interest in the Corporation and its Subsidiary Companies as
compensation for their contributions to the Corporation and its Subsidiary
Companies and as an incentive to make such contributions in the future. Each
Recipient of a Plan Share Award hereunder is advised to consult with his or her
personal tax advisor with respect to the tax consequences under federal, state,
local and other tax laws of the receipt of a Plan Share Award hereunder.
ARTICLE III
DEFINITIONS
The following words and phrases when used in this Agreement with an
initial capital letter, unless the context clearly indicates otherwise, shall
have the meanings set forth below. Wherever appropriate, the masculine pronouns
shall include the feminine pronouns and the singular shall include the plural.
3.01 "Association" means Ponchatoula Homestead Savings, F.A., a wholly
owned subsidiary of the Corporation.
3.02 "Beneficiary" means the person or persons designated by a
Recipient to receive any benefits payable under the Plan in the event of such
Recipient's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.
3.03 "Board" means the Board of Directors of the Corporation.
3.04 "Change in Control of the Corporation" shall mean the occurrence
of any of the following: (i) the acquisition of control of the Corporation as
defined in 12 C.F.R. ss.574.4, unless a presumption of control is successfully
rebutted or unless the transaction is exempted by 12 C.F.R. ss.574.3(c)(vii), or
any
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successor to such sections; (ii) an event that would be required to be reported
in response to Item 1(a) of Form 8-K or Item 6(e) of Schedule 14A of Regulation
14A pursuant to the Exchange Act or any successor thereto, whether or not any
class of securities of the Corporation is registered under the Exchange Act;
(iii) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power of the
Corporation's then outstanding securities; (iv) during any period of thirty-six
consecutive months during the term of a Plan Share Award, individuals who at the
beginning of such period constitute the Board of Directors of the Corporation,
and any new director whose election by the Board of Directors or nomination for
election by the Corporation's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the three-year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at least
a majority of the Board of Directors; (v) the stockholders of the Corporation
approve a merger or consolidation of the Corporation with any other corporation,
other than a merger or consolidation that would result in the voting securities
of the Corporation outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 50% of the combined voting power of the voting
securities of the surviving corporation outstanding immediately after such
merger or consolidation; or (vi) the stockholders of the Corporation approve a
plan of complete liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the Corporation's
assets. If any of the events enumerated in clauses (i) through (iv) occur, the
Board shall determine the effective date of the Change in Control resulting
therefrom for purposes of the Plan.
3.05 "Code" means the Internal Revenue Code of 1986, as amended.
3.06 "Committee" means the committee appointed by the Board pursuant to
Article IV hereof.
3.07 "Common Stock" means shares of common stock, par value $.01 per
share, of the Corporation.
3.08 "Disability" means any physical or mental impairment which
qualifies an individual for disability benefits under the applicable long-term
disability plan maintained by the Corporation or a Subsidiary Company or, if no
such plan applies, which would qualify such individual for disability benefits
under the Federal Social Security System.
3.09 "Effective Date" means the day upon which the Board approves this
Plan.
3.10 "Employee" means any person who is employed by the Corporation,
the Association, or any Subsidiary Company, or is an Officer of the Corporation,
the Association, or any Subsidiary Company, but not including directors who are
not also Officers of or otherwise employed by the Corporation, the Association
or a Subsidiary Company.
3.11 "Employer Group" means the Corporation and any Subsidiary which,
with the consent of the Board, agrees to participate in the Plan.
3.12 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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3.13 "Non-Employee Director" means a member of the Board of the
Corporation or the Board of Directors of the Association or any successor
thereto, including an advisory director or a director emeritus of the Boards of
the Corporation and/or the Association (or any successor company), who is not an
Officer or Employee of the Corporation, the Association or any Subsidiary
Company.
3.14 "Offering" means the subscription and community offering of Common
Stock to the public (but not the exchange offer to former stockholders of the
Association) in connection with the reorganization of the Association from the
mutual holding company structure to the stock holding company structure.
3.15 "Officer" means an Employee whose position in the Corporation or a
Subsidiary Company is that of a corporate officer, as determined by the Board.
3.16 "Performance Share Award" means a Plan Share Award granted to a
Recipient pursuant to Section 7.05 of the Plan.
3.17 "Performance Goal" means an objective for the Corporation or any
Subsidiary Company or any unit thereof or any Employee with respect to any of
the foregoing that may be established by the Committee for a Performance Share
Award to become vested, earned or exercisable. The establishment of Performance
Goals are intended to make the applicable Performance Share Awards
"performance-based" compensation within the meaning of Section 162(m) of the
Code, and the Performance Goals shall be based on one or more of the following
criteria:
(i) net income, as adjusted for non-recurring items;
(ii) cash earnings;
(iii) earnings per share;
(iv) cash earnings per share;
(v) return on average equity;
(vi) return on average assets;
(vii) asset quality;
(viii) stock price;
(ix) total stockholder return;
(x) capital;
(xi) net interest income;
(xii) market share;
(xiii) cost control or efficiency ratio; and
(xiv) asset growth.
3.18 "Plan Shares" or "Shares" means shares of Common Stock held in the
Trust which may be distributed to a Recipient pursuant to the Plan.
3.19 "Plan Share Award" or "Award" means a right granted under this
Plan to receive a distribution of Plan Shares upon completion of the service
requirements described in Article VII, and includes Performance Share Awards.
3.20 "Recipient" means an Employee or Non-Employee Director who
receives a Plan Share Award or Performance Share Award under the Plan.
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3.21 "Retirement" means a termination of employment which constitutes a
"retirement" under any applicable qualified pension benefit plan maintained by
the Corporation or a Subsidiary Company, or, if no such plan is applicable,
which would constitute "retirement" under the Corporation's pension benefit
plan, if such individual were a participant in that plan. With respect to
Non-Employee Directors, retirement means retirement from service on the Board of
Directors of the Corporation or the Bank or any successor thereto (including
service as a director emeritus) after attaining the age of 70.
3.22 "Subsidiary Companies" means those subsidiaries of the
Corporation, including the Association, which meet the definition of "subsidiary
corporation" set forth in Section 424(f) of the Code, at the time of the
granting of the Plan Share Award in question.
3.23 "Trustee" means such firm, entity or persons approved by the Board
to hold legal title to the Plan and the Plan assets for the purposes set forth
herein.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Duties of the Committee. The Plan shall be administered and
interpreted by the Committee, which shall consist of two or more members of the
Board, each of whom shall be a Non-Employee Director, as defined in Rule
16b-3(b)(3)(i) of the Exchange Act. In addition, each member of the Committee
shall be an "outside director" within the meaning of Section 162(m) of the Code
and the regulations thereunder at such times as is required under such
regulations. The Committee shall have all of the powers allocated to it in this
and other sections of the Plan. The interpretation and construction by the
Committee of any provisions of the Plan or of any Plan Share Award granted
hereunder shall be final and binding in the absence of action by the Board. The
Committee shall act by vote or written consent of a majority of its members.
Subject to the express provisions and limitations of the Plan, the Committee may
adopt such rules, regulations and procedures as it deems appropriate for the
conduct of its affairs. The Committee shall report its actions and decisions
with respect to the Plan to the Board at appropriate times, but in no event less
than once per calendar year.
4.02 Role of the Board. The members of the Committee and the Trustee
shall be appointed or approved by, and will serve at the pleasure of, the Board.
The Board may in its discretion from time to time remove members from, or add
members to, the Committee, and may remove or replace the Trustee, provided that
any directors who are selected as members of the Committee shall be Non-Employee
Directors as defined in Rule 16b-3(b)(3)(i) of the Exchange Act.
4.03 Limitation on Liability. No member of the Board or the Committee
shall be liable for any determination made in good faith with respect to the
Plan or any Plan Shares or Plan Share Awards granted under it. If a member of
the Board or the Committee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Corporation
shall, subject to the requirements of applicable laws and regulations, indemnify
such member against all liabilities and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of
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the Corporation and any Subsidiaries and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
4.04 Compliance with Laws and Regulations. All Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency or stockholders as
may be required.
4.05 Restrictions on Transfer. The Corporation may place a legend upon
any certificate representing shares issued pursuant to a Plan Share Award noting
that such shares may be restricted by applicable laws and regulations.
ARTICLE V
CONTRIBUTIONS
5.01 Amount and Timing of Contributions. The Board shall determine the
amount (or the method of computing the amount) and timing of any contributions
by the Corporation and any Subsidiaries to the Trust established under this
Plan. Such amounts may be paid in cash or in shares of Common Stock and shall be
paid to the Trust at the designated time of contribution. No contributions by
Employees or Non-Employee Directors shall be permitted.
5.02 Investment of Trust Assets; Number of Plan Shares. Subject to
Section 8.02 hereof, the Trustee shall invest all of the Trust's assets
primarily in Common Stock. The aggregate number of Plan Shares available for
distribution pursuant to this Plan shall be 44,781 shares of Common Stock,
subject to adjustment as provided in Section 10.01 hereof, which shares shall be
purchased (from the Corporation and/or, if permitted by applicable regulations,
from stockholders thereof) by the Trust with funds contributed by the
Corporation. During the time this Plan remains in effect, Awards to each
Employee and each Non-Employee Director shall not exceed 25% and 5% of the
shares of Common Stock available under the Plan, respectively, and Plan Share
Awards to Non-Employee Directors in the aggregate shall not exceed 30% of the
number of shares available under this Plan, in each case subject to adjustment
as provided in Section 10.01 hereof.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 Awards. Plan Share Awards and Performance Share Awards may be made
to such Employees and Non-Employee Directors as may be selected by the Board or
the Committee. In selecting those Employees and Non-Employee Directors to whom
Plan Share Awards and/or Performance Share Awards may be granted and the number
of Shares covered by such Awards, the Board or the Committee shall consider the
duties, responsibilities and performance of each respective Employee and
Non-Employee Director, his present and potential contributions to the growth and
success of the Corporation, his salary and such other factors as deemed relevant
to accomplishing the purposes of the Plan. The Board or the Committee may but
shall not be required to request the written recommendation of the Chief
Executive Officer of the Corporation other than with respect to Plan Share
Awards and/or Performance Share Awards to be granted to him.
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6.02 Form of Allocation. As promptly as practicable after an allocation
pursuant to Section 6.01 that a Plan Share Award or a Performance Share Award is
to be issued, the Board or the Committee shall notify the Recipient in writing
of the grant of the Award, the number of Plan Shares covered by the Award, and
the terms upon which the Plan Shares subject to the Award shall be distributed
to the Recipient. The date on which the Board or the Committee makes such
determination with respect to an Award shall be considered the date of grant of
the Plan Share Award or the Performance Share Award. The Board or the Committee
shall maintain records as to all grants of Plan Share Awards or Performance
Share Awards under the Plan.
6.03 Allocations Not Required to any Specific Employee or Non-Employee
Director. No Employee or Non-Employee Director shall have any right or
entitlement to receive a Plan Share Award hereunder, as the granting of Awards
is subject to the total discretion of the Board or the Committee.
ARTICLE VII
EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earning Plan Shares; Forfeitures.
(a) General Rules. Subject to the terms hereof, Plan Share
Awards granted shall be earned by a Recipient at the rate of twenty percent
(20%) of the aggregate number of Shares covered by the Award as of each annual
anniversary of the date of grant of the Award, with the first 20% to vest on the
one-year anniversary of the date of grant. If the employment of an Employee or
service as a Non-Employee Director is terminated prior to the fifth (5th) annual
anniversary of the date of grant of a Plan Share Award for any reason (except as
specifically provided in subsections (b), (c) and (d) below), the Recipient
shall forfeit the right to any Shares subject to the Award which have not
theretofore been earned. In the event of a forfeiture of the right to any Shares
subject to an Award, such forfeited Shares shall become available for allocation
pursuant to Section 6.01 hereof as if no Award had been previously granted with
respect to such Shares. No fractional shares shall be distributed pursuant to
this Plan. In determining the number of Shares which are earned as of any annual
anniversary date, fractional shares shall be rounded down to the nearest whole
number, provided that such fractional Shares shall be aggregated and distributed
on the fifth annual anniversary of the date of grant.
(b) Exception for Terminations Due to Death, Disability or
Retirement. Notwithstanding the general rule contained in Section 7.01(a), all
Plan Shares subject to a Plan Share Award held by a Recipient whose employment
with the Corporation or any Subsidiary or service as a Non-Employee Director
terminates due to death or Disability shall be deemed earned as of the
Recipient's last day of employment with or service to the Corporation or any
Subsidiary Company (provided, however, no such accelerated vesting shall occur
in the event of Disability if a Recipient remains employed by at least one
member of the Employer Group) and shall be distributed as soon as practicable
thereafter. All Plan Shares subject to a Plan Share Award held by a Recipient
whose employment with the Corporation or any Subsidiary Company or service as a
Non-Employee Director terminates due to Retirement shall be deemed earned as of
the Recipient's last day of employment with or service to the Corporation or any
Subsidiary Company (provided, however, no such accelerated vesting shall occur
if a Recipient remains employed by at least one member of the Employer Group)
and shall be distributed as soon as practicable thereafter if as of the date of
such Retirement (i) such treatment is either authorized or is not prohibited by
applicable laws and regulations, or (ii) such provision has been approved by
stockholders of the
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Corporation at a meeting of stockholders held more than one (1) year after the
consummation of the Offering.
(c) Exception for a Change in Control of the Corporation.
Notwithstanding the general rule contained in Section 7.01(a), all Plan Shares
subject to a Plan Share Award held by a Recipient shall be deemed to be earned
as of the effective date of a Change in Control of the Corporation if, as of the
date of such Change in Control of the Corporation (i) such treatment is either
authorized or is not prohibited by applicable laws and regulations, or (ii) an
amendment to the Plan providing for such treatment has been approved by
stockholders of the Corporation at a meeting of stockholders held more than one
(1) year after the consummation of the Offering. If a Change in Control of the
Corporation occurs and the vesting of outstanding Awards is not accelerated
pursuant to the preceding sentence, the outstanding Awards shall continue to
vest in accordance with their terms for as long as the Recipient remains either
an Employee or a Non-Employee Director of the Corporation or any Subsidiary
Company (or any successor companies), including Awards initially granted to an
Employee who subsequently becomes a director, advisory director or director
emeritus of the Corporation or any Subsidiary Company (or any successor
companies).
(d) Revocation for Misconduct. Notwithstanding anything in
this Plan to the contrary, the Board may by resolution immediately revoke,
rescind and terminate any Plan Share Award or Performance Share Award or portion
thereof, previously awarded under this Plan, to the extent Plan Shares have not
been distributed hereunder to the Recipient, whether or not yet earned, in the
case of an Employee who is discharged from the employ of the Corporation or any
Subsidiary Company for cause (as hereinafter defined). Termination for cause
shall mean termination because of the Employee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule, or regulation (other than traffic violations or similar offenses) or
final cease-and-desist order. Plan Share Awards granted to a Non-Employee
Director who is removed for cause pursuant to the Corporation's Articles of
Incorporation and Bylaws or the Association's Charter and Bylaws shall terminate
as of the effective date of such removal.
7.02 Distribution of Dividends. Any cash dividends, stock dividends or
returns of capital declared in respect of each unvested Plan Share Award
(including a Performance Share Award) will be held by the Trust for the benefit
of the Recipient on whose behalf such Plan Share Award (including a Performance
Share Award) is then held by the Trust (whether declared before or after the
applicable Award was granted), and such dividends or returns of capital,
including any interest thereon, will be paid out proportionately by the Trust to
the Recipient thereof as soon as practicable after the Plan Share Awards become
earned. Any cash dividends, stock dividends or returns of capital declared in
respect of each vested Plan Share (whether declared before or after the
applicable Award was granted) held by the Trust will be paid by the Trust, as
soon as practicable after the Trust's receipt thereof, to the Recipient on whose
behalf such Plan Share is then held by the Trust.
7.03 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Subject to the
provisions of Section 7.03(b) hereof, Plan Shares shall be distributed to the
Recipient or his Beneficiary, as the case may be, as soon as practicable after
they have been earned.
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(b) Timing: Exception for 10% Stockholders. Notwithstanding
Section 7.03(a) above, no Plan Shares may be distributed prior to the date which
is five years from the date of consummation of the Association's conversion from
mutual to stock form to the extent the Recipient or Beneficiary, as the case may
be, would after receipt of such Shares own in excess of 10% of the issued and
outstanding shares of Common Stock, unless specifically approved by two-thirds
of the Board. Any Plan Shares remaining undistributed solely by reason of the
operation of this Section 7.03(b) shall be distributed to the Recipient or his
Beneficiary on the date which is five years from the date of consummation of the
Association's conversion from mutual to stock form.
(c) Form of Distributions. All Plan Shares, together with any
Shares representing stock dividends, shall be distributed in the form of Common
Stock. One share of Common Stock shall be given for each Plan Share earned and
distributable. Payments representing cash dividends or returns of capital shall
be made in cash.
(d) Withholding. The Trustee may withhold from any cash
payment or Common Stock distribution made under this Plan sufficient amounts to
cover any applicable withholding and employment taxes, and if the amount of a
cash payment is insufficient, the Trustee may require the Recipient or
Beneficiary to pay to the Trustee the amount required to be withheld as a
condition of delivering the Plan Shares. The Trustee shall pay over to the
Corporation or any Subsidiary Company which employs or employed such Recipient
any such amount withheld from or paid by the Recipient or Beneficiary.
(e) Restrictions on Selling of Plan Shares. Plan Share Awards
may not be sold, assigned, pledged or otherwise disposed of prior to the time
that they are earned and distributed pursuant to the terms of this Plan. Upon
distribution, the Board or the Committee may require the Recipient or his
Beneficiary, as the case may be, to agree not to sell or otherwise dispose of
his distributed Plan Shares except in accordance with all then applicable
federal and state securities laws, and the Board or the Committee may cause a
legend to be placed on the stock certificate(s) representing the distributed
Plan Shares in order to restrict the transfer of the distributed Plan Shares for
such period of time or under such circumstances as the Board or the Committee,
upon the advice of counsel, may deem appropriate.
7.04 Voting of Plan Shares. After a Plan Share Award (other than a
Performance Share Award) has been made, the Recipient shall be entitled to
direct the Trustee as to the voting of the Plan Shares which are covered by the
Plan Share Award and which have not yet been earned and distributed to him
pursuant to Section 7.03, subject to rules and procedures adopted by the
Committee for this purpose. All shares of Common Stock held by the Trust which
have not been awarded under a Plan Share Award, shares subject to Performance
Share Awards which have not yet vested and shares which have been awarded as to
which Recipients have not directed the voting shall be voted by the Trustee in
its discretion.
7.05 Performance Share Awards
(a) Designation of Performance Share Awards. The Committee may
determine to make any Plan Share Award a Performance Share Award by making such
Plan Share Award contingent upon the achievement of a Performance Goal or any
combination of Performance Goals. Each Performance Share Award shall be
evidenced by a written agreement ("Award Agreement"), which shall set forth the
Performance Goals applicable to the Performance Share Award, the maximum amounts
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payable and such other terms and conditions as are applicable to the Performance
Share Award. Each Performance Share Award shall be granted and administered to
comply with the requirements of Section 162(m) of the Code.
(b) Timing of Grants. Any Performance Share Award shall be
made not later than 90 days after the start of the period for which the
Performance Share Award relates and shall be made prior to the completion of 25%
of such period. All determinations regarding the achievement of any Performance
Goals will be made by the Committee. The Committee may not increase during a
year the amount of a Performance Share Award that would otherwise be payable
upon achievement of the Performance Goals but may reduce or eliminate the
payments as provided for in the Award Agreement.
(c) Restrictions on Grants. Nothing contained in this Plan
will be deemed in any way to limit or restrict the Committee from making any
Award or payment to any person under any other plan, arrangement or
understanding, whether now existing or hereafter in effect.
(d) Rights of Recipients. Notwithstanding anything to the
contrary herein, a Participant who receives a Performance Share Award payable in
Common Stock shall have no rights as a stockholder until the Common Stock is
issued pursuant to the terms of the Award Agreement.
(e) Transferability. A Participant's interest in a Performance
Share Award may not be sold, assigned, transferred, pledged, or otherwise
encumbered.
(f) Distribution. No Performance Share Award or portion
thereof that is subject to the attainment or satisfaction of a condition of a
Performance Goal shall be distributed or considered to be earned or vested until
the Committee certifies in writing that the conditions or Performance Goal to
which the distribution, earning or vesting of such Award is subject have been
achieved.
ARTICLE VIII
TRUST
8.01 Trust. The Trustee shall receive, hold, administer, invest and
make distributions and disbursements from the Trust in accordance with the
provisions of the Plan and Trust and the applicable directions, rules,
regulations, procedures and policies established by the Committee pursuant to
the Plan.
8.02 Management of Trust. It is the intent of this Plan and Trust that
the Trustee shall have complete authority and discretion with respect to the
arrangement, control and investment of the Trust, and that the Trustee shall
invest all assets of the Trust in Common Stock to the fullest extent
practicable, except to the extent that the Trustee determines that the holding
of monies in cash or cash equivalents is necessary to meet the obligations of
the Trust. In performing its duties, the Trustee shall have the power to do all
things and execute such instruments as may be deemed necessary or proper,
including the following powers:
(a) To invest up to one hundred percent (100%) of all Trust
assets in Common Stock without regard to any law now or hereafter in force
limiting investments for trustees or other fiduciaries. The investment
authorized herein may constitute the only investment of the Trust, and in making
such
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investment, the Trustee is authorized to purchase Common Stock from the
Corporation or from any other source, and such Common Stock so purchased may be
outstanding, newly issued or treasury shares.
(b) To invest any Trust assets not otherwise invested in
accordance with (a) above, in such deposit accounts, certificates of deposit,
obligations of the United States Government or its agencies or such other
investments as shall be considered the equivalent of cash.
(c) To sell, exchange or otherwise dispose of any property at
any time held or acquired by the Trust.
(d) To cause stocks, bonds or other securities to be
registered in the name of a nominee, without the addition of words indicating
that such security is an asset of the Trust (but accurate records shall be
maintained showing that such security is an asset of the Trust).
(e) To hold cash without interest in such amounts as may in
the opinion of the Trustee be reasonable for the proper operation of the Plan
and Trust.
(f) To employ brokers, agents, custodians, consultants and
accountants.
(g) To hire counsel to render advice with respect to its
rights, duties and obligations hereunder, and such other legal services or
representation as it may deem desirable.
(h) To hold funds and securities representing the amounts to
be distributed to a Recipient or his Beneficiary as a consequence of a dispute
as to the disposition thereof, whether in a segregated account or held in common
with other assets of the Trust.
Notwithstanding anything herein contained to the contrary, the Trustee
shall not be required to make any inventory, appraisal or settlement or report
to any court, or to secure any order of court for the exercise of any power
herein contained, or give bond.
8.03 Records and Accounts. The Trustee shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled person
or entity to the extent required by applicable law, or any other person
determined by the Board or the Committee.
8.04 Expenses. All costs and expenses incurred in the operation and
administration of this Plan shall be borne by the Corporation or, in the
discretion of the Corporation, the Trust.
8.05 Indemnification. Subject to the requirements of applicable laws
and regulations, the Corporation shall indemnify, defend and hold the Trustee
harmless against all claims, expenses and liabilities arising out of or related
to the exercise of the Trustee's powers and the discharge of its duties
hereunder, unless the same shall be due to the Trustee's gross negligence or
willful misconduct.
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ARTICLE IX
DEFERRED PAYMENTS
9.01 Deferral of Plan Shares. Notwithstanding any other provision of
this Plan, any Recipient may elect, with the concurrence of the Committee and
consistent with any rules and regulations established by the Committee, to defer
the receipt of Plan Shares subject to Awards granted hereunder.
9.02 Timing of Election. The election to defer the receipt of any Plan
Shares must be made no later than the last day of the calendar year preceding
the calendar year in which the Recipient would otherwise have an unrestricted
right to receive such Plan Shares, provided that a Recipient may not elect to
defer Shares subject to a Performance Share Award. Deferrals of eligible Plan
Shares shall only be allowed for those Plan Shares scheduled to vest while the
Recipient is in active service with the Corporation or one of its Subsidiary
Companies. Any election to defer the receipt of eligible Plan Shares shall be
irrevocable as long as the Recipient remains an Employee or a Non-Employee
Director of the Corporation or one of its Subsidiary Companies.
9.03 Plan Share Award Deferral. The deferral of Plan Shares may be
elected by a Recipient subject to the rules and regulations established by the
Committee. Upon the vesting of such Plan Shares, the Committee shall credit to a
deferred stock award account established for the Recipient (which may be part of
an existing deferred compensation trust account) a number of deferred shares or
share units equivalent in value to the number of deferred Plan Shares multiplied
by the Fair Market Value of the Common Stock. Deferred shares or share units
shall be valued at the Fair Market Value on the date the deferred Plan Shares
vest. Subsequent to the lapsing of all restrictions, the deferred shares or
share units shall be valued at the Fair Market Value of the Common Stock.
Deferred shares or share units shall accrue dividends at the rate paid upon the
Common Stock credited in the form of additional deferred share units. Deferred
share units shall be distributed in shares of Common Stock or cash, at the
discretion of the Committee, upon the Recipient's termination of employment or
service as a director or at such other date(s), as may be approved by the
Committee, over a period of no more than ten (10) years.
9.04 Accelerated Distributions. The Committee may, at its sole
discretion, allow for the early payment of an Recipient's deferred stock award
account in the event of an "unforeseeable emergency" or in the event of the
death or Disability of the Recipient. An "unforeseeable emergency" means an
unanticipated emergency caused by an event beyond the control of the Recipient
that would result in severe financial hardship if the distribution were not
permitted. Such distributions shall be limited to the amount necessary to
sufficiently address the financial hardship. Any distributions under this
provision shall be consistent with the Code and the regulations promulgated
thereunder. Additionally, the Committee may use its discretion to cause stock
award accounts to be distributed when continuing the program is no longer in the
best interest of the Corporation or one of its Subsidiary Companies.
9.05 Assignability. No rights to deferred stock award accounts may be
assigned or subject to any encumbrance, pledge or charge of any nature except
that a Recipient may designate a beneficiary pursuant to any rules established
by the Committee.
9.06 Unfunded Status. No Recipient or other person shall have any
interest in any fund or in any specific asset of the Corporation or one of its
Subsidiary Companies by reason of any amount credited pursuant to the provisions
hereof. Any amounts payable pursuant to the provisions hereof shall be paid from
the general assets of the Corporation or one of its Subsidiary Companies and no
Recipient or other
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person shall have any rights to such assets beyond the rights afforded general
creditors of the Corporation or one of its Subsidiary Companies. However, the
Corporation or one of its Subsidiary Companies shall have the right to establish
a reserve, trust or make any investment for the purpose of satisfying the
obligations created under this Article IX of the Plan; provided, however, that
no Recipient or other person shall have any interest in such reserve, trust or
investment.
ARTICLE X
MISCELLANEOUS
10.01 Adjustments for Capital Changes. The aggregate number of Plan
Shares available for distribution pursuant to the Plan Share Awards, the number
of Shares to which any unvested Plan Share Award relates and the maximum number
of Plan Shares which may be granted to any Employee, to any Non-Employee
Director or to all Non-Employee Directors as a group shall be proportionately
adjusted for any increase or decrease in the total number of outstanding shares
of Common Stock issued subsequent to the effective date of the Plan resulting
from any split, subdivision or consolidation of shares or other capital
adjustment, the payment of a stock dividend or other increase or decrease in
such shares effected without receipt or payment of consideration by the
Corporation. If, upon a merger, consolidation, reorganization, liquidation,
recapitalization or the like of the Corporation or of another corporation, each
recipient of a Plan Share Award shall be entitled, subject to the conditions
herein stated, to receive such number of shares of Common Stock or amount of
other securities of the Corporation or such other corporation as were
exchangeable for the number of shares of Common Stock of the Corporation which
such Recipients would have been entitled to receive except for such action.
10.02 Amendment and Termination of the Plan. The Board may, by
resolution, at any time amend or terminate the Plan and the Trust, subject to
any required stockholder approval or any stockholder approval which the Board
may deem to be advisable for any reason, such as for the purpose of obtaining or
retaining any statutory or regulatory benefits under tax, securities or other
laws or satisfying any applicable stock exchange listing requirements. The Board
may not, without the consent of the Recipient, alter or impair any Plan Share
Award previously granted under this Plan except as specifically authorized
herein. Termination of this Plan shall not affect Plan Share Awards previously
granted, and such Plan Share Awards shall remain valid and in effect until they
(a) have been fully earned, (b) are surrendered, or (c) expire or are forfeited
in accordance with their terms.
10.03 Nontransferable. Plan Share Awards and Performance Share Awards
and rights to Plan Shares shall not be transferable by a Recipient, and during
the lifetime of the Recipient, Plan Shares may only be earned by and paid to the
Recipient who was notified in writing of the Award pursuant to Section 6.02. No
Recipient or Beneficiary shall have any right in or claim to any assets of the
Plan or Trust, nor shall the Corporation or any Subsidiary be subject to any
claim for benefits hereunder.
10.04 Employment or Service Rights. Neither the Plan nor any grant of a
Plan Share Award, Performance Share Award or Plan Shares hereunder nor any
action taken by the Trustee, the Committee or the Board in connection with the
Plan shall create any right on the part of any Employee or Non-Employee Director
to continue in such capacity.
10.05 Voting and Dividend Rights. No Recipient shall have any voting or
dividend rights or other rights of a stockholder in respect of any Plan Shares
covered by a Plan Share Award or Performance
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Share Award, except as expressly provided in Sections 7.02, 7.04 and 7.05 above,
prior to the time said Plan Shares are actually earned and distributed to him.
10.06 Governing Law. To the extent not governed by federal law, the
Plan and Trust shall be governed by the laws of the State of Louisiana.
10.07 Effective Date. This Plan shall be effective as of the Effective
Date, and Awards may be granted hereunder no earlier than the date this Plan is
approved by the stockholders of the Corporation and no later than the
termination of the Plan. Notwithstanding the foregoing or anything to the
contrary in this Plan, the implementation of this Plan is subject to the
approval of the Corporation's stockholders.
10.08 Term of Plan. This Plan shall remain in effect until the earlier
of (1) ten (10) years from the Effective Date, (2) termination by the Board, or
(3) the distribution to Recipients and Beneficiaries of all the assets of the
Trust.
10.09 Tax Status of the Trust. It is intended that the trust
established hereby be treated as a Grantor Trust of the Corporation under the
provisions of Section 671 et seq. of the Code, as the same may be amended from
time to time.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officers and its corporate seal to be affixed
and duly attested, and the initial Trustees of the Trust established pursuant
hereto have duly and validly executed this Agreement, all on this 10th day of
February 1999.
HOMESTEAD BANCORP, INC.
By: /s/ Lawrence C. Caldwell, Jr.
--------------------------
Lawrence C. Caldwell, Jr.,
President and Chief Executive Officer
ATTEST: TRUSTEES:
/s/ Barbara B. Theriot /s/ John C. Bohning
- ---------------------- -------------------
Barbara B. Theriot John C. Bohning
Secretary
/s/ Robert H. Gabriel
---------------------
Robert H. Gabriel
/s/ Dennis E. James
-------------------
Dennis E. James
/s/ Allen B. Pierson, Jr.
-------------------------
Allen B. Pierson, Jr.
/s/ Milton J. Schanzbach
------------------------
Milton J. Schanzbach
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REVOCABLE PROXY
HOMESTEAD BANCORP, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HOMESTEAD
BANCORP, INC. FOR USE ONLY AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
APRIL 21, 1999 AND AT ANY ADJOURNMENT THEREOF.
The undersigned hereby appoints the Board of Directors of the Company, or
any successors thereto, as proxies, with full powers of substitution, to vote
the shares of the undersigned at the Annual Meeting of Stockholders of the
Company to be held at the Company's office located at 195 North Sixth Street,
Ponchatoula, Louisiana 70454, on April 21, 1999, at 10:00 a.m., Central Time, or
at any adjournment thereof, with all the powers that the undersigned would
possess if personally present, as follows:
1. Election of Directors
For All
[ ] For [ ] Withhold [ ] Except
Nominees for three-year term:
Robert H. Gabriel and Barbara B. Theriot
INSTRUCTION: To withhold authority to vote for one but not both of the nominees,
mark "For All Except" and write the name of the nominee in the space provided
below.
2. Proposal to adopt the 1999 Stock Option Plan.
[ ] For [ ] Against [ ] Abstain
3. Proposal to adopt the 1999 Recognition and Retention Plan and Trust
Agreement.
[ ] For [ ] Against [ ] Abstain
4. Proposal to ratify the appointment of Hannis T. Bourgeois, L.L.P. as the
Company's independent auditors for the year ending December 31, 1999.
[ ] For [ ] Against [ ] Abstain
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE ANNUAL MEETING. [ ]
The Board of Directors recommends that you vote FOR the Board of
Directors' nominees listed above and FOR Proposals 2, 3 and 4. Shares of common
stock of the Company will be voted as specified. If no specification is made,
shares will be voted for the election of the Board of Directors' nominees to the
Board of Directors, for Proposals 2, 3 and 4, and otherwise at the discretion of
the proxies. This proxy may not be voted for any person who is not a nominee of
the Board of Directors of the Company. This proxy may be revoked at any time
before it is exercised.
<PAGE>
Please be sure to sign and date
this Proxy in the box below.
_________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
HOMESTEAD BANCORP, INC.
In their discretion , the proxies are authorized to vote with respect to
approval of the minutes of the last meeting of stockholders, the election of any
person as a director if the nominee is unable to serve or for good cause will
not serve, matters incident to the conduct of the meeting, and upon such other
matters as may properly come before the meeting.
The above signed hereby acknowledges receipt of the Notice of Annual
Meeting of the Stockholders of Homestead Bancorp, Inc. called for April 21,
1999, a Proxy Statement for the Annual Meeting and the 1998 Annual Report to
Stockholders.
Please sign exactly as your name(s) appears on this Proxy. Only one
signature is required in the case of a joint account. When signing in a
representative capacity, please give title.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN
THIS PROXY CARD USING THE ENCLOSED ENVELOPE.
