SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.__ )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
COMMUNITY SAVINGS BANKSHARES, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[COMMUNITY SAVINGS BANKSHARES, INC. LETTERHEAD]
November 10, 1999
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders
of Community Savings Bankshares, Inc. (the "Company"). The meeting will be held
at The Embassy Suites PGA, 4350 PGA Boulevard, Palm Beach Gardens, Florida, on
Tuesday, December 21, 1999, at 1:30 p.m. Eastern Time.
The enclosed Notice of Special Meeting and Proxy Statement describe the
formal business to be transacted. Directors and officers of the Company will be
present to respond to any questions that shareholders may have.
The formal business to be conducted at the Special Meeting consists of
the consideration and approval of amendments to the 1999 Stock Option Plan, the
1999 Recognition and Retention Plan and Trust Agreement, the 1995 Stock Option
Plan and the 1995 Recognition and Retention Plan for Employees and Outside
Directors.
The Board of Directors of the Company has determined that the matter to
be considered at the Special Meeting is in the best interest of the Company and
its shareholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" proposed amendments to the stock
benefit plans.
It is very important that your shares be represented and voted at the
Special Meeting regardless of the number you own or whether you are able to
attend the meeting in person. You may vote your shares either by telephone using
the instructions on the enclosed proxy card (if these options are available to
you), OR by marking, signing, dating and promptly returning your proxy card in
the postage-paid envelope provided for that purpose. Any proxy may be revoked in
the manner described in the accompanying Proxy Statement at any time prior to
its exercise at the Special Meeting.
Your continued support of and interest in the Company is sincerely
appreciated.
Sincerely,
/s/ JAMES B. PITTARD, JR.
-----------------------------------------
James B. Pittard, Jr.
President and Chief Executive Officer
<PAGE>
COMMUNITY SAVINGS BANKSHARES, INC.
660 U.S. HIGHWAY ONE
NORTH PALM BEACH, FLORIDA 33408
(561) 881-2212
----------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 21, 1999
----------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Special Meeting") of Community Savings Bankshares, Inc. (the "Company") will be
held at The Embassy Suites PGA, 4350 PGA Boulevard, Palm Beach Gardens, Florida,
on Tuesday, December 21, 1999, at 1:30 p.m., Eastern Time, for the following
purposes, all of which are more completely set forth in the accompanying Proxy
Statement:
(1) To amend the Company's 1999 Stock Option Plan, 1999
Recognition and Retention Plan and Trust, 1995 Stock Option
Plan and 1995 Recognition and Retention Plan for Employees and
Outside Directors; and
(2) To transact such other business as may properly come before
the meeting or any adjournment thereof. Management is not
aware of any other such business.
The Board of Directors has fixed October 29, 1999 as the voting record
date for the determination of shareholders entitled to notice of and to vote at
the Special Meeting and at any adjournment thereof. Only those shareholders of
record as of the close of business on that date will be entitled to vote at the
Special Meeting or at any such adjournment.
By Order of the Board of Directors
/s/ DEBORAH M. ROUSSEAU
--------------------------------
Deborah M. Rousseau
Vice President and Secretary
North Palm Beach, Florida
November 10, 1999
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YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL 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. YOU MAY ALSO VOTE BY TELEPHONE FOLLOWING THE
INSTRUCTIONS PROVIDED TO YOU. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF. HOWEVER, IF YOU ARE A
SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED
ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER TO VOTE IN PERSON AT
THE SPECIAL MEETING.
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<PAGE>
COMMUNITY SAVINGS BANKSHARES, INC.
---------------------------
PROXY STATEMENT
---------------------------
SPECIAL MEETING OF SHAREHOLDERS
DECEMBER 21, 1999
This Proxy Statement is furnished to holders of common stock, $1.00 par
value per share ("Common Stock"), of Community Savings Bankshares, Inc., a
Delaware corporation (the "Company"), which is the sole shareholder of Community
Savings, F. A. (the "Association"), a federally chartered savings and loan
association. At Special Meetings of Members and Shareholders held in December
1998, the Association's members and the shareholders of Community Savings
Bankshares, Inc., a federal corporation (the "Mid-Tier Holding Company"),
approved an Agreement and Plan of Reorganization whereby the Association became
the wholly owned subsidiary of the Company (the "1998 Reorganization"). The 1998
Reorganization was consummated as of December 15, 1998. Proxies are being
solicited on behalf of the Board of Directors of the Company to be used at the
Special Meeting of Shareholders ("Special Meeting") to be held at The Embassy
Suites PGA, 4350 PGA Boulevard, Palm Beach Gardens, Florida, on Tuesday,
December 21, 1999, at 1:30 p.m., Eastern Time, and at any adjournment thereof
for the purposes set forth in the Notice of Special Meeting of Shareholders.
This Proxy Statement is first being mailed to shareholders on or about November
10, 1999.
Your vote is important. Because many shareholders cannot attend the
Special Meeting in person, it is necessary that a large number be represented by
proxy. Most shareholders have a choice of voting by using a toll-free telephone
number or by completing a proxy card and mailing it in the postage-paid envelope
provided. Check your proxy card or the information forwarded by your broker or
other holder of record to see which options are available to you. The telephone
voting facilities will close at 5:00 p.m. on December 20, 1999.
Any shareholder 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 (mailed to the attention of Deborah M. Rousseau, Vice President
and Secretary, Community Savings Bankshares, Inc., 660 U.S. Highway One, North
Palm Beach, Florida 33408); (ii) submitting a duly-executed proxy bearing a
later date; or (iii) appearing at the Special Meeting and giving the Secretary
notice of his or her intention to vote in person. Proxies solicited hereby may
be exercised only at the Special Meeting and any adjournment thereof and will
not be used for any other meeting.
The telephone voting procedure is designed to authenticate shareholders
by use of a control number and to allow shareholders to confirm that their
instructions have been properly recorded.
The method by which you vote will in no way limit your right to vote at
the Special Meeting if you later decide to attend in person. If your shares are
held in the name of a broker or other holder of record, you must obtain a proxy,
executed in your favor, from the holder of record, to be able to vote at the
Special Meeting.
VOTING
Only shareholders of record of the Company at the close of business on
October 29, 1999 (the "Voting Record Date") are entitled to notice of and to
vote at the Special Meeting and at any adjournment thereof. On the Voting Record
Date, there were 10,051,873 shares of Common Stock of the Company issued and
outstanding, and the Company had no other class of equity securities
outstanding. Each share of Common Stock is entitled to one vote at the Special
Meeting on all matters properly presented at the Special Meeting.
<PAGE>
The presence in person or by proxy of at least a majority of the issued
and outstanding shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Special Meeting. The affirmative vote of the holders
of a majority of the total votes present in person or by proxy at the Special
Meeting and entitled to vote is required to approve the amendments to the stock
benefit plans. Shares represented by a proxy card or telephonic vote which are
voted as abstaining on the proposal will be treated as shares present and
entitled to vote that were not cast in favor of the proposal to amend the stock
benefit plans, and thus will be counted as votes against the matter. Under the
rules of the New York Stock Exchange, the proposal to amend the stock benefit
plans is considered to be a "discretionary" item 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."
PROPOSAL TO AMEND THE 1999 STOCK OPTION PLAN, THE
1999 RECOGNITION AND RETENTION PLAN AND TRUST AGREEMENT,
THE 1995 STOCK OPTION PLAN AND THE 1995 RECOGNITION
AND RETENTION PLAN FOR EMPLOYEES AND OUTSIDE DIRECTORS
The Board of Directors of the Company adopted the 1999 Stock Option
Plan ("Option Plan") and the 1999 Recognition and Retention Plan and Trust
Agreement ("Recognition Plan")(together, the "1999 Plans"), both of which were
approved by shareholders of the Company at its annual meeting of shareholders
held on June 18, 1999 (the "Annual Meeting"). The Company completed the 1998
Reorganization on December 15, 1998. Under applicable regulations of the Office
of Thrift Supervision (the "OTS"), stock benefit plans, such as the 1999 Plans,
established or implemented within one year following the completion of a mutual
to stock conversion (which includes the 1998 Reorganization) are required to
contain certain restrictions and limitations. Specifically, the OTS regulations
provide, among other provisions, that awards granted pursuant to such plans
begin vesting no earlier than one year from the date the plans are approved by
shareholders, 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 unless
then authorized by regulation or not otherwise prohibited by law or regulations.
The 1999 Plans provide that in the event of a change in control of the Company
or retirement of the recipient (as defined) vesting of awards would accelerate
if, as of such date, such treatment is either authorized or is not prohibited by
applicable law and regulations. The OTS has authorized the elimination of these
provisions more than one year after a conversion, provided that shareholder
approval of such amendments to the 1999 Plans is obtained.
The Board of Directors of the Company has adopted amendments to the
1999 Plans, subject to approval by the shareholders, in order to remove the
restrictions described above and to provide that new awards shall vest at the
rate determined by the Board or the Stock Benefits Committee (the committee of
the Board administering the 1999 Plans (the "Committee")) and that both existing
and new awards shall accelerate and vest upon a change in control of the Company
or upon retirement, as defined in the 1999 Plans. The 1999 Plans were also
amended for conforming changes. These amendments are consistent with the
Company's intentions when it originally adopted these 1999 Plans and such
intentions were fully disclosed in the proxy materials for the Annual Meeting
held in June 1999. OTS policy requires that these amendments be presented to
shareholders more than one year after a mutual to stock conversion. The
amendments do not increase the number of shares reserved for issuance under the
1999 Plans or change the vesting schedule or terms of outstanding awards under
the 1999 Plans other than to accelerate the vesting upon a change in control or
retirement. In the event that these amendments to the 1999 Plans are not
approved by shareholders, the vesting of existing awards will not accelerate in
the event of a change in control or retirement (unless authorized at such time
or not prohibited by applicable laws or regulations), but the other provisions
of the 1999 Plans will remain in effect as originally adopted. The Company is
not in discussions with respect to any transaction that would result in a change
in control of the Company, and there are no proposals, arrangements or
understandings known to the Company that would result in a change in control.
In connection with the Association's mutual holding company formation
in October 1994, the Association adopted the 1995 Stock Option Plan (the "1995
Option Plan") and the 1995 Recognition and Retention Plan for
2
<PAGE>
Employees and Outside Directors (the "1995 Recognition Plan") ("collectively,
the "1995 Plans" and with the 1999 Plans, the "Stock Plans"). Under applicable
regulations of the OTS in effect at such time, the 1995 Plans were not permitted
to include provisions that provided for accelerated vesting upon retirement. In
addition, the 1995 Plans provided that the grants under the 1995 Plans would
vest at a rate of 20% per year. Accordingly, to maintain consistency with the
1999 Plans, the Board has adopted amendments to the 1995 Plans to provide that
existing and new awards (if any) will vest upon retirement as defined in the
1995 Plans, as amended. In addition, any new awards will vest at the rate
determined by the Committee (which also administers the 1995 Plans). Certain
other conforming amendments have also been made to the 1995 Plans primarily to
reflect the occurrence of the 1998 Reorganization. The 1995 Plans were assumed
by the Company in connection with the 1998 Reorganization. The 1995 Plans, as
adopted by the Association and approved by shareholders in January 1995,
included provisions providing for accelerated vesting of options and restricted
stock awards in the event of a change in control.
The Stock Plans were adopted by the Company to attract and retain
qualified personnel in key positions, provide officers and employees with a
proprietary interest in the Company as an incentive to contribute to the success
of the Company and reward key employees for outstanding performance. The Stock
Plans are also designed to retain qualified directors for the Company. The 1999
and the 1995 Option Plans provide for the grant of incentive stock options
intended to comply with the requirements of Section 422 of the Code ("incentive
stock options"), non-incentive or compensatory stock options and stock
appreciation rights. Awards are available for grant to non-employee directors
and key employees of the Company and any subsidiaries, except that non-employee
directors are eligible to receive only awards of non-incentive stock options.
Officers, key employees and non-employee directors of the Company and its
subsidiaries who are selected by the Board of Directors of the Company or
members of the Committee appointed by the Board are eligible to receive
restricted stock awards under the 1999 and the 1995 Recognition Plans.
The Stock Plans are administered and interpreted by the Committee which
is comprised solely of two or more non-employee directors. The members of the
Committee consist of Messrs. Harold I. Stevenson (Chairman), Forest C. Beaty,
Jr., Robert F. Cromwell, Karl D. Griffin and Frederick A. Teed.
Under the 1999 and the 1995 Option Plans, the Board of Directors or the
Committee determines which officers, key employees and non-employee directors
(with respect to the 1999 Option Plan only) will be granted options and stock
appreciation rights, 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, whether such options
may be exercised by delivering other shares of Common Stock and when such
options become exercisable. The per share exercise price of a stock option shall
be at least equal to the fair market value of a share of Common Stock when the
option is granted. Under the 1999 and 1995 Recognition Plans, the Board of
Directors or the Committee determines which officers, key employees and
non-employee directors (with respect to the 1999 Recognition Plan only) will be
granted plan share awards, the number of shares subject to each award and the
vesting schedule of such awards. Under the terms of the 1995 Plans, each
non-employee director was granted a specific number of options and restricted
stock awards as set forth in the 1995 Plans.
As of October 29, 1999, options to purchase 547,065 shares and 425,328
shares of Common Stock have been granted and are outstanding under the 1999
Option Plan and the 1995 Option Plan (such number reflecting the effect of the
1998 Reorganization), respectively, and 502 shares remain available for future
grant under the 1995 Option Plan. No shares remain available for future grant
under the 1999 Option Plan. Included in the grants under the 1999 Option Plan
were Options covering 56,782 to James B. Pittard, Jr. President and Chief
Executive Officer, 29,391 shares to Larry J. Baker, Senior Vice President and
Chief Financial Officer, 23,812 shares to Cecil F. Howard, Jr., Senior Vice
President and Chief Lending Officer, and 27,353 shares to each non-employee
director (five persons). Included in the grants under the 1995 Option Plan were
grants made in 1999 covering 35,513 shares including 4,915, 2,544 and 2,061
shares granted to Messrs. Pittard, Baker and Howard, respectively. No additional
grants were made to non-employee directors under the 1995 Option Plan.
3
<PAGE>
As of October 29, 1999, restricted stock awards for 218,826 shares and
194,624 shares, respectively, have been granted under the 1999 Recognition Plan
and the 1995 Recognition Plan (such number reflecting the effect of the 1998
Reorganization). No shares remain available for restricted stock awards under
the 1999 Recognition Plan or the 1995 Recognition Plan. Included in the
restricted stock awards under the 1999 Recognition Plan were awards for 22,713,
11,756 and 9,525 shares to Messrs. Pittard, Baker and Howard, respectively, and
10,941 shares to each non-employee director. Included in the restricted stock
awards under the 1995 Recognition Plan were awards made in 1999 totaling 21,393
shares including awards for 2,961, 1,532 and 1,242 shares to Messrs. Pittard,
Baker and Howard, respectively. No additional restricted stock awards were made
to non-employee directors under the 1995 Recognition Plan.
Previously granted awards under the Stock Plans will vest at the rate
of 20% per year over five years. THE PROPOSED AMENDMENTS TO THE STOCK PLANS WILL
NOT AFFECT THE NUMBER OF SHARES PREVIOUSLY GRANTED NOR CHANGE THE VESTING
SCHEDULE OF OUTSTANDING AWARDS UNDER THE STOCK PLANS BUT WILL PROVIDE THAT
OUTSTANDING AWARDS, AS WELL AS NEWLY GRANTED AWARDS, WILL ACCELERATE IN CERTAIN
CIRCUMSTANCES AS DESCRIBED ABOVE.
A copy of the Amended and Restated 1999 Stock Option Plan is attached
hereto as Appendix A, a copy of the Amended and Restated 1999 Recognition and
Retention Plan and Trust Agreement is attached hereto as Appendix B, the Amended
and Restated 1995 Stock Option Plan is attached hereto as Appendix C and the
Amended and Restated 1995 Recognition and Retention Plan for Employees and
Outside Directors is attached hereto as Appendix D.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR ADOPTION
OF THE AMENDMENTS TO THE 1999 STOCK OPTION PLAN, THE 1999 RECOGNITION AND
RETENTION PLAN AND TRUST AGREEMENT, THE 1995 STOCK OPTION PLAN AND THE 1995
RECOGNITION AND RETENTION PLAN FOR EMPLOYEES AND OUTSIDE DIRECTORS TO PROVIDE
THAT ANY FUTURE AWARDS GRANTED MAY VEST AT THE RATE DETERMINED BY THE BOARD OF
DIRECTORS OR THE COMMITTEE AND THAT BOTH EXISTING AND FUTURE AWARDS GRANTED
UNDER THE STOCK PLANS WILL ACCELERATE UNDER CERTAIN CIRCUMSTANCES.
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Stock as of the Voting Record Date, and certain other information with respect
to (i) the only persons or entities, including any "group" as that term is used
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), who or which was known to the Company to be the beneficial
owner of more than 5% of the issued and outstanding Common Stock on the Voting
Record Date, (ii) each director of the Company, (iii) certain executive officers
of the Company and (iv) all directors and executive officers of the Company as a
group.
4
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Beneficial
Name of Beneficial Owner or Ownership as of Percent of
Number of Persons in Group October 29, 1999 (1)(2)(3)(4)(5) Common Stock
- - ---------------------------------------------------------------------------------------------
<S> <C> <C>
Community Savings, F. A 777,041(6) 7.7%
Employee Stock Ownership Plan
660 U.S. Highway One
North Palm Beach, Florida 33408
Capital Guardian Trust Company 1,037,300(7) 10.3%
Capital International, Inc.
11100 Santa Monica Boulevard
Los Angeles, California 90025-3384
Josiah T. Austin (8) 769,589(8) 7.7%
El Coronado Holdings, L.L.C
Star Route 395
Pearce, Arizona 85625
John Sheldon Clark (9) 532,268(9) 5.3%
430 Park Avenue
Suite 1800
New York, New York 10022
DIRECTORS:
Frederick A. Teed 55,343 *
James B. Pittard, Jr 68,308(10) *
Forest C. Beaty, Jr 56,499(11) *
Robert F. Cromwell 60,432 *
Karl D. Griffin 56,137(12) *
Harold I. Stevenson, CPA 50,765(13) *
EXECUTIVE OFFICERS:
Larry J. Baker, CPA 52,826(14) *
Cecil F. Howard, Jr 30,799(15) *
Feriel G. Hughes 716(16) *
Mary L. Kaminske 41,773(17) *
Michael E. Reinhardt 44,938(18) *
All directors and executive officers as a 518,496(19) 5.1%
group (11 persons)
</TABLE>
- - -------------------------------
* Represents less than 1% of the outstanding Common Stock.
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals and entities. Under regulations
promulgated pursuant to the Exchange Act, shares of Common Stock are
deemed to be beneficially owned by a person if he or she directly or
indirectly has or shares (i) voting power, which includes the power to
vote or to direct the voting of the shares, or (ii) investment power,
which includes the power to dispose or to direct the disposition of the
shares. Unless otherwise indicated, the named beneficial owner has sole
voting and dispositive power with respect to the shares.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
5
<PAGE>
- - -------------------------------
(2) For shares, grants and options owned or made, as the case may be, prior
to December 15, 1998, the data presented reflects an adjustment made in
order to account for the share exchange ratio applied in connection
with the 1998 Reorganization. In connection with the consummation of
the 1998 Reorganization, as of December 15, 1998, the Mid-Tier Holding
Company's common stock was exchanged for the Company's Common Stock
pursuant to a ratio of 2.0445 shares of the Company's Common Stock for
each one (1) share of the Mid-Tier Holding Company's common stock (the
"Exchange Ratio") (except for the Mid-Tier Holding Company common stock
owned by the MHC, which was canceled).
(3) 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 Voting Record Date 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.
(4) Includes amounts totaling 20,651, 34,749, 20,651, 20,651,
20,651,18,709, 21,669, 12,807, 26,020 and 28,637 shares awarded
pursuant to the 1999 and/or the 1995 Recognition Plans granted to
Messrs. Teed, Pittard, Beaty, Cromwell, Griffin, Stevenson, Baker,
Howard and Reinhardt and Ms. Kaminske, respectively. Such shares may be
voted by such persons although not all of such shares have vested and
been distributed. The awards currently outstanding vest at the rate of
20% per year from the date of grant.
(5) Includes shares totaling 19,381, 23,226, 19,381, 19,381, 19,381,
19,381, 16,356, 6,132, 7,429 and 12,429 which may be acquired upon the
exercise of options exercisable within 60 days of the Voting Record
Date granted to Messrs. Teed, Pittard, Beaty, Cromwell, Griffin,
Stevenson, Baker, Howard, Reinhardt and Ms. Kaminske, respectively,
pursuant to the 1995 Option Plan.
(6) Does not include 22,941 shares allocated to or deemed beneficially
owned pursuant to the Employee Stock Ownership Plan ("ESOP") by the
executive officers, or such officers' spouses, as the case may be,
listed below, which shares are reflected in such individuals'
beneficial ownership.
(7) Reflects shares held by Capital Guardian Trust Company (729,160) and
Capital International, Inc. (308,140) (collectively, "Capital").
Capital Guardian Trust Company is a Bank (as defined under Section
3(a)6 of the Exchange Act) and is wholly owned by The Capital Group
Companies, Inc. Capital International Research and Management, Inc.,
dba Capital International, Inc., is an Investment Advisor registered
under Section 203 of the Investment Advisor Act of 1940 and is a wholly
owned subsidiary of Capital Group International, Inc., which is wholly
owned by The Capital Group Companies, Inc. Neither Capital Guardian
Trust Company nor Capital International, Inc. owns shares for its own
account. The shares are deemed to be beneficially owned by them in
their capacities as investment manager and investment advisor,
respectively, for various investment companies and/or institutional
accounts, as the case may be. The percentage of Common Stock owned by
Capital reflects the effect of the Company's repurchase program.
(8) Reflects 717,700 shares held by El Cornado Holdings, L.L.C. of which
Mr. Austin is the sole managing member. Also includes 35,000 shares
owned by Mr. Austin as well as 3,200 shares owned by the Christina C.
Lowery Trust, 3,200 shares owned by the Matthew Austin Lowery Trust,
2,100 shares owned by the Valerie A. Gordon Trust and 8,389 shares
owned by the Austin-Clark Insurance Trust. Mr. Austin serves as trustee
of each of the four trusts.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
6
<PAGE>
- - ---------------------------
(9) Reflects 288,317 shares owned by Mr. Clark and 75,044 shares owned by
his spouse. Also includes 101,928 shares held by three trusts entitled
"Trust under the Will of Charles M. Clark, Jr." of which Mr. Clark is
trustee. In addition, includes 66,979 shares owned by the Clark Family
Foundation of which Mr. Clark is President.
(10) Includes 1,118 shares allocated to Mr. Pittard's wife, a former
employee of the Association, pursuant to the Association's ESOP, 118
shares owned by Mr. Pittard's children, 3,740 shares allocated to Mr.
Pittard pursuant to the ESOP and 11,407 shares owned jointly with Mr.
Pittard's wife (of which 6,050 of such shares are included in the
shares granted to Mr. Pittard pursuant to the 1995 Recognition Plan as
noted above).
(11) Includes 9,322 shares owned jointly with Mr. Beaty's wife and 1,500
shares owned by Mr. Beaty's wife.
(12) Includes 7,155 shares owned jointly with Mr. Griffin's wife and 4,475
shares owned by Mr. Griffin's wife.
(13) Includes 5,111 shares owned by Mr. Stevenson's wife and 5,826 shares
held jointly with Mr. Stevenson's wife, (all of such 5,826 shares are
included in the shares granted to Mr. Stevenson pursuant to the 1995
Recognition Plan as noted above).
(14) Includes 4,377 shares allocated to Mr. Baker pursuant to the ESOP.
(15) Includes 6,049 shares allocated to Mr. Howard pursuant to the ESOP and
196 shares owned by Mr. Howard's wife through her IRA.
(16) Includes 616 shares allocated to Ms. Hughes pursuant to the ESOP.
(17) Includes 11,404 shares owned jointly with Ms. Kaminske's husband and
3,338 shares allocated to her pursuant to the ESOP.
(18) Includes 12,028 shares owned jointly with Mr. Reinhardt's wife (of
which 9,404 of such shares are included in the shares granted to Mr.
Reinhardt pursuant to the 1995 RRP as noted above) and 3,703 shares
allocated to Mr. Reinhardt pursuant to the ESOP.
(19) Includes 194,880 shares held by the 1999 and 1995 Recognition Plans,
which may be voted by directors and executive officers pending vesting
and distribution, 22,941 shares allocated to executive officers and
their spouses, as the case may be, pursuant to the ESOP and 162,639
shares which may be acquired by directors and executive officers upon
the exercise of stock options exercisable within 60 days of the Voting
Record Date.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information
concerning the compensation awarded to or paid by the Association for services
rendered in all capacities during the past three years to the Chief Executive
Officer and the two other officers of the Association and its subsidiaries whose
compensation (salary and bonus) during the fiscal year ended December 31, 1998
exceeded $100,000. The Association changed its fiscal year from September 30 to
December 31 subsequent to September 30, 1996. Accordingly, amounts for fiscal
1996 have been restated to be consistent with fiscal 1998. Said officers, who
also serve as executive officers of the Company, do not receive separate
compensation from the Company.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
----------------------------------- -------------------------
Awards
Other -------------------------
Name and Fiscal Annual All Other
Principal Position Year Salary Bonus Compensation(1) Stock Grants(2) Options(2) Compensation(3)
- - --------------------------------- ------ -------- -------- --------------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
James B. Pittard, Jr 1998 $228,053 $ -- $ 10,500 $ -- $ -- $ 16,496
President and Chief 1997 205,754 -- 10,500 -- -- 30,238
Executive Officer 1996 194,334 -- 10,500 -- -- 22,345
Larry J. Baker 1998 $116,337 $ -- $ -- $ -- $ -- $ 11,466
Senior Vice President, 1997 100,596 -- -- -- -- 18,487
Chief Financial Officer and 1996 94,860 -- -- -- -- 13,583
Treasurer and Director of
the Association's Finance
Division
Cecil F. Howard, Jr 1998 $152,189 $ -- $ -- $ -- $ -- $ 15,097
Senior Vice President and 1997 144,131 -- -- 2,040 18,972 26,543
Chief Lending Officer and 1996 133,579 -- -- -- -- 19,552
Director of the Association's
Lending Division
</TABLE>
- - ----------------------
(1) Includes director fees paid for attendance at Board meetings of the
Company and its subsidiaries. Does not include amounts attributable to
miscellaneous benefits received by executive officers. In the opinion
of management of the Association, the costs to the Association of
providing such benefits to any individual
(FOOTNOTES CONTINUED ON NEXT PAGE)
8
<PAGE>
- - ----------------------
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 the individual.
(2) For shares, restricted stock grants and options owned or made, as the
case may be, prior to December 15, 1998, the data presented reflects an
adjustment made in order to account for the Exchange Ratio resulting
from the 1998 Reorganization.
(3) Represents amounts allocated during the years ended December 31, 1998,
1997 and 1996 on behalf of Messrs. Pittard, Baker and Howard pursuant
to the ESOP.
DIRECTOR COMPENSATION
BOARD FEES. During the year ended December 31, 1998, each member of the
Board of Directors of the Company and its subsidiaries received a monthly
meeting fee of $1,750, except Mr. Pittard who received $875 per monthly meeting.
As of February 1999, the Chairman of the Company and its subsidiaries receives
$3,000 per month, each outside director receives $2,000 per month and Mr.
Pittard receives $1,000 per month.
STOCK OPTIONS. Pursuant to the 1995 Option Plan each non-employee
director of the Association was granted in January 1995 a compensatory stock
option to purchase 11,850 shares of Common Stock. Pursuant to the Exchange Ratio
utilized in the 1998 Reorganization each director (who is also a director of the
Company) now has an option to purchase 24,227 shares of Common Stock. In June
1999, subsequent to the 1999 Annual Meeting, each non-employee director of the
Company received a compensatory stock option to purchase 27,353 shares of Common
Stock pursuant to the 1999 Option Plan. All options granted to date to
non-employee directors under both the 1999 and the 1995 Option Plans vest at the
rate of 20% per year from the date of grant.
RESTRICTED STOCK AWARDS. Pursuant to the 1995 Recognition Plan, each
non-employee director of the Association was granted 4,750 shares of restricted
stock, which grant now represents 9,711 shares (assuming that previously vested
shares have not been sold) after giving effect to the Exchange Ratio. In June
1999, subsequent to the 1999 Annual Meeting, each non-employee director of the
Company was granted 10,941 shares of restricted stock pursuant to the 1999
Recognition Plan. The restricted stock granted to date pursuant to both the 1995
and the 1999 Recognition Plans vests at the rate of 20% per year from the date
of grant.
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
The Company and the Association (the "Employers") have entered into an
employment agreement with James B. Pittard, Jr., President and Chief Executive
Officer of the Company and the Association, pursuant to which the Employers have
agreed to employ Mr. Pittard for a term of one year in his current position. The
agreement with Mr. Pittard initially is at his current salary level. The term of
the employment agreement remains for a one year period as it renews daily for
successive one-day periods unless the Company and the Association provide notice
not less than 60 days prior to such date not to extend the employment term. The
employment agreement will be reviewed annually by the Boards of Directors of the
Employers. In addition, under the employment agreement, Mr. Pittard agreed that
upon termination of the agreement (other than due to disability, retirement or
for cause) for a period of one year thereafter, he would not compete with the
Employers under certain circumstances.
The employment agreement is terminable with or without cause by the
Employers. Mr. Pittard shall have no right to compensation or other benefits
pursuant to the employment agreement for any period after voluntary termination
or termination by the Employers for cause, disability, retirement or death. In
the event that (i) Mr. Pittard terminates his employment because of the
Employer's failure to comply with any material provision of the employment
agreement or the Employers change Mr. Pittard's title or duties or (ii) the
employment agreement is terminated by the Employers other than
9
<PAGE>
for cause, disability, retirement or death, Mr. Pittard will be entitled to a
cash severance amount equal to his annual compensation, as defined in the
agreement.
The Employers have also entered into Change in Control Agreements with
seven officers, including five executive officers: Messrs. Pittard, Baker,
Howard and Reinhardt and Ms. Kaminske (the "Executives"). The Change in Control
Agreements have terms of three years, which term shall be extended each year for
a successive additional one-year period upon approval of the Boards of Directors
unless the Executive or the Employers elect, not less than 30 days (60 days with
respect to Mr. Pittard) prior to the annual anniversary date, not to extend the
term.
The Change in Control Agreements provide that if certain adverse
actions are taken with respect to the Executive's employment following a change
in control, as defined, of the Company or the Association, the Executive will be
entitled to a cash severance amount equal to the Executive's annual
compensation, as defined in the Change in Control Agreements (except Mr.
Pittard's agreement provides for payment equal to three times his annual
compensation). In addition, the Executive will be entitled to a continuation of
benefits similar to those he or she is receiving at the time of such termination
for a period of one year (or the remaining term of the agreement with respect to
Mr. Pittard) or until he or she obtains full-time employment with another
employer, whichever occurs first. The amount of severance benefits payable under
both Change in Control Agreements and the employment agreement are limited to
that amount which will not result in any position of such payment being deemed
an excess parachute payment under Section 280G of the Internal Revenue Code.
A change in control is generally defined in the Change in Control
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 25% or more of the Company's outstanding voting securities and
(ii) a change in two-thirds of the directors of the Company during any two-year
period without the approval of at least a majority of the persons who were
directors of the Company at the beginning of such period. If a change in control
of the Company had occurred as of December 31, 1998, Messrs. Pittard, Baker,
Howard and Reinhardt and Ms. Kaminske would be entitled to receive $723,000,
$127,000, $155,000, $86,000, and $91,000, respectively.
STOCK OPTIONS
The following table sets forth certain information concerning exercises
of stock options granted pursuant to the 1995 Option Plan by the named executive
officers during the fiscal year ended December 31, 1998 and options held at
December 31, 1998. No options were granted to the named executive officers
during fiscal 1998.
<TABLE>
<CAPTION>
Value of Unexercised in the
Number of Unexercised Money Options at Fiscal Year
Options at Year End(1) End(2)
----------------------------- ----------------------------
Shares
Acquired
on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- - --------------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James B. Pittard, Jr. 10,631 $117,000 23,225 29,114 $ 123,302 $ 154,566
Larry J. Baker 0 $ 0 12,267 8,178 $ 65,126 $ 43,417
Cecil F. Howard, Jr. 0 $ 0 3,066 12,267 $ 4,443 $ 17,775
</TABLE>
(1) Reflects application of the Exchange Ratio.
(2) Based on a per share market price of $10.75 at December 31, 1998 after
applying the Exchange Ratio.
10
<PAGE>
In May 1999, Messrs. Pittard, Baker and Howard were granted options
covering 4,915, 2,544 and 2,061 shares, respectively, at an exercise price of
$12.375 per share (the fair market value of the Common Stock on the trading day
immediately preceding the date of grant ) pursuant to the 1995 Option Plan. In
June 1999, subsequent to the 1999 Annual Meeting, Messrs. Pittard, Baker and
Howard were granted options covering 56,782, 29,391 and 23,812 shares,
respectively, at an exercise price of $12.188 per share (fair market value of
the Common Stock on the date of grant) pursuant to the 1999 Option Plan.
DEFINED BENEFIT PLAN
The Association maintains a noncontributory defined benefit plan (the
"Retirement Plan"). All employees age 21 or older who have worked at the
Association for a period of one year and been credited with at least 1,000 hours
of employment with the Association during the year can accrue benefits under the
Retirement Plan. The Association annually contributes an amount to the
Retirement Plan necessary to satisfy the actuarially determined minimum funding
requirements in accordance with the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
At the normal retirement age of 65 (or completion of 30 years of
service with the Association, if earlier), the plan is designed to provide a
life annuity. The retirement benefit provided is an amount equal to 1.75% of a
participant's average monthly compensation based on the average of the three
consecutive years during the last 10 calendar years of employment which provides
the highest monthly average compensation multiplied by the participant's years
of credited service (not to exceed 35 years) to the normal retirement date.
Retirement benefits are also payable upon retirement due to early and late
retirement. A reduced benefit is payable upon early retirement at or after age
55 and the completion of fifteen years of service with the Association. Benefits
are also paid from the Retirement Plan upon a Participant's disability or death.
Upon termination of employment other than as specified above, a participant who
was employed by the Association for a minimum of two years is eligible to
receive his or her accrued benefit reduced for early retirement or a deferred
retirement benefit commencing on such participant's normal retirement date.
Benefits are payable in various annuity forms as well as in the form of a single
lump sum payment. Participants whose vested benefit upon termination is less
than $3,500 will normally receive their benefit in a single lump sum payment.
The following table sets forth estimated annual benefits payable upon
retirement at age 65 to the named executive officers under the Association's
Retirement Plan based upon various levels of compensation and years of service.
Final Average
Compensation Years of Benefit Service at Retirement
- - ---------------------- -----------------------------------------------------
15 20 25 30 35
------- ------- ------- ------- -------
$ 25,000 $ 6,563 $ 8,750 $10,938 $13,125 $15,313
50,000 13,125 17,500 21,875 26,250 30,625
75,000 19,688 26,250 32,813 39,375 45,938
100,000 26,250 35,000 43,750 52,500 61,250
125,000 32,813 43,750 54,688 65,625 76,563
150,000 39,375 52,500 65,625 78,750 91,875
160,000 42,000 56,000 70,000 84,000 98,000
and above
The maximum annual compensation which may be taken into account under
the Internal Revenue Code (as adjusted from time to time by the Internal Revenue
Service ("IRS")) for calculating contributions under qualified defined benefit
plans after December 31, 1998 is $160,000 and the maximum annual benefit
permitted under such plans is $130,000.
11
<PAGE>
At December 31, 1998, Messrs. Pittard, Howard and Baker had 17, 11 and
16 years of credited service, respectively, under the Retirement Plan.
EMPLOYEE STOCK OWNERSHIP PLAN
The Association has established an ESOP for employees age 21 or older
who have at least one year of credited service with the Association. The ESOP is
funded by the Association's contributions made in cash (which primarily will be
invested in Common Stock) or Common Stock. Benefits may be paid either in shares
of Common Stock or, to the extent permitted, in cash.
In October 1994, the ESOP borrowed $2.8 million from an unaffiliated
lender to purchase 190,388 shares of Association common stock in the open market
(which was deemed exchanged for Mid-Tier Holding Company common stock as a
result of the Mid-Tier Reorganization). The Association makes scheduled
discretionary cash contributions to the ESOP sufficient to amortize the
principal and interest on the loan, which has a maturity of seven years. During
1998, the Mid-Tier Holding Company loaned sufficient funds to the ESOP to permit
the ESOP to repay the loan to the unaffiliated lender. The terms of the loan to
ESOP from the Company are similar to those of the loan from the unaffiliated
lender. In connection with the 1998 Reorganization, the ESOP borrowed funds from
the Company to purchase 437,652 shares of the Company's Common Stock. Collateral
for the loan is the Company's Common Stock purchased by the ESOP with the loan
proceeds. The two loans will be repaid principally from the Association's
contributions to the ESOP over a period of 3 and 15 years, respectively. The
loans bear fixed interest rates of 8.50% and 7.75%, respectively. Shares
purchased by the ESOP using the loan proceeds are held in a loan expense account
and released on a pro rata basis as debt service payments are made. The Mid-Tier
Holding Company common stock held by the ESOP prior to the 1998 Reorganization
was converted into Company Common Stock pursuant to the Exchange Ratio.
The Association 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 shareholders, 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 Association. 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 loans are held in
loan suspense accounts and released on a pro rata basis as debt service payments
are made. Discretionary contributions to the ESOP and shares released from the
suspense accounts will be allocated among participants on the basis of
compensation. Forfeitures will be reallocated among remaining participating
employees and may reduce any amount the Association might otherwise have
contributed to the ESOP. Benefits generally vest at the rate of 20% per year
beginning in the second year of participation until the participant becomes 100%
vested after six years of credited service. Benefits may be payable upon
retirement, early retirement, disability or separation from service. The
Association's contributions to the ESOP are not fixed, so benefits payable under
the ESOP cannot be estimated.
The Stock Benefits Committee of the Company's Board of Directors
administers the ESOP and an unaffiliated financial institution has been
appointed to act as trustee of the related trust. The Stock Benefits Committee
may instruct the trustee regarding investment of funds contributed to the ESOP.
Under the ESOP, the trustee must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees, and allocated
shares for which employees do not give instructions will be voted in the same
ratio on any matter as to those shares for which instructions are given.
Unallocated shares held in the ESOP will be voted by the ESOP trustee in the
same ratio on any matter as those allocated shares for which instructions are
given.
The ESOP is subject to the requirements of ERISA and the regulations of
the IRS and the Department of Labor thereunder.
12
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Association maintains a non-qualified supplemental executive
retirement plan ("SERP") for certain executives and former executives (including
Messrs. Teed, Pittard, Baker and Howard) of the Association to compensate those
executives participating in the Association's Retirement Plan whose benefits are
limited by Section 415 or Section 401(a)(17) of the Internal Revenue Code. As of
December 31, 1998, there were four executive officers participating in the SERP.
The SERP provides the designated executives with retirement benefits generally
equal to the difference between (i) seventy-five percent (75%) of the
executive's compensation and (ii) the sum of the executive's retirement benefit
under the Association's Retirement Plan and the executive's social security
benefits. Benefits under the SERP vest on normal retirement age (age 65). If an
executive remains employed with the Association after normal retirement age, the
executive will receive retirement benefits, actuarially adjusted to reflect the
executive's later retirement. Retirement benefits will be payable to the
executive in the form of a quarterly benefit for fifteen consecutive years.
Death benefits are payable to an executive's beneficiary only if the executive
survives to retirement from the Association. Benefits will be paid to the
beneficiary until the executive and the beneficiary have received a total of
sixty quarterly payments.
The SERP is considered an unfunded plan for tax and ERISA purposes. All
obligations arising under the SERP are payable from the general assets of the
Association. However, the Association has chosen to purchase life insurance
contracts to ensure that sufficient assets will be available to pay the benefits
under the SERP.
The benefits paid under the SERP supplement the benefits paid by the
Retirement Plan. The following table indicates the expected aggregate annual
retirement benefit payable from the SERP to SERP participants, expressed in the
form of a single-life annuity for the final average salary and years of service
specified below.
Final Average Years of Service and
Compensation Benefit Payable at Retirement
- - ---------------------- -------------------------------------------------------
15 20 25 30 35
-------- -------- -------- -------- --------
$100,000 $ 32,636 $ 23,886 $ 15,136 $ 6,386 $ --
125,000 44,824 33,886 22,949 12,011 1,074
150,000 57,011 43,886 30,761 17,636 4,522
175,000 73,136 59,136 45,136 31,136 17,136
200,000 91,886 77,886 63,888 49,886 35,886
225,000 110,636 96,636 82,636 68,636 54,636
250,000 129,588 115,588 101,588 87,588 73,588
275,000 148,338 134,338 120,338 106,338 92,338
300,000 167,088 153,088 139,088 125,088 111,088
At December 31, 1998, Messrs. Pittard, Howard and Baker had 17, 11 and
16 years, respectively, of credited service under the SERP. The Association's
pension cost attributable to the SERP was $76,000 for the year ended December
31, 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Executive compensation philosophy, policies, levels and programs are
the responsibility of the full Board of Directors. Mr. Pittard, who serves as
President and Chief Executive Officer, as well as a director of the Company and
the Association, does not participate in the Board's determination of
compensation for the President and Chief Executive Officer. In addition, Mr.
Teed, currently Chairman of the Board, served as President and Chief Executive
Officer of the Association from 1983 to 1993.
13
<PAGE>
SHAREHOLDER PROPOSALS
Any proposal which a shareholder wishes to have included in the proxy
material of the Company relating to the annual meeting of shareholders of the
Company to be held in 2000 must be received at the principal executive offices
of the Company, 660 U.S. Highway One, North Palm Beach, Florida 33408,
Attention: Deborah M. Rousseau, Vice President and Secretary, no later than
December 30, 1999. If such proposal is in compliance with all applicable
requirements, it will be included in the proxy statement and set forth on the
form of proxy issued for such annual meeting of shareholders. It is urged that
any such proposals be sent certified mail, return receipt requested.
OTHER MATTERS
Management is not aware of any business to come before the Special
Meeting other than the matter described above in this Proxy Statement. However,
if any other matters should properly come before the meeting, it is intended
that the proxies solicited hereby will be voted with respect to those other
matters in accordance with the judgment of the persons voting the proxies.
The cost of the solicitation of proxies will be borne by the Company.
The Company has retained Morrow & Co., Inc., a professional proxy solicitation
firm to assist in the solicitation of proxies. Such firm will be paid a fee of
$4,000 plus reimbursement for reasonable out-of-pocket expenses. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending the proxy materials to the
beneficial owners of the Company's Common Stock. In addition to solicitations by
mail, directors, officers and employees of the Company may solicit proxies
personally or by telephone without additional compensation.
By Order of the Board of Directors
/s/ DEBORAH M. ROUSSEAU
--------------------------------
Deborah M. Rousseau
Vice President and Secretary
14
<PAGE>
APPENDIX A
COMMUNITY SAVINGS BANKSHARES, INC.
AMENDED AND RESTATED
1999 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Community Savings Bankshares, 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 Community 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 25% or more of the combined voting power of the
Corporation's then outstanding securities; or (iv) during any period three
consecutive years during the term of an Award, individuals who at the beginning
of such period constitute the Board of Directors of the Corporation cease for
any reason to constitute at least two-thirds thereof of unless the election, or
the nomination for election by shareholders, of each new director was approved
by a vote of at least majority of the directors then still in office who were
directors at the beginning of the period. 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.
A-1
<PAGE>
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 $1.00 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.
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 Directors
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 or any successor thereto, 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 shareholders of
the Association) in connection with the reorganization of the Association from
the mid-tier 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.
A-2
<PAGE>
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 or an advisory director) after
attaining the age of 65.
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, (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 Certificate of Incorporation and Bylaws or the Association's
Charter and Bylaws shall terminate as of the effective date of such removal.
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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.
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 547,065, 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 25% 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, to
the extent and subject to such limitations as may be specified by the Board or
the Committee. 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 terminated for any reason other than
his death, Disability or Retirement. In determining the number of shares of
Common Stock with respect to which Options are vested and/or exercisable, if
applicable, fractional shares shall be rounded down to the nearest whole number,
provided that such fractional Shares shall be aggregated and deemed vested on
the final date of vesting.
(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
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Director because of his death, Disability or Retirement. 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.
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 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 or any successor thereto
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 (or any successor thereto) 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.
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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.
8.08 Voting and Dividend Rights. No Optionee shall have any voting or
dividend rights or other rights of a shareholder 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 shareholder 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 Shareholders. 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 shareholders 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).
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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 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
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of other securities of the Corporation or such other corporation as were
exchangeable for the number of shares of Common Stock of the Corporation which
such optionees would have been entitled to purchase or acquire except for such
action, and appropriate adjustments shall be made to the per share exercise
price of outstanding Options. 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 shareholder approval or any shareholder
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 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
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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.
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
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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 shareholders of the Corporation and no later than
the termination of the Plan, provided that this Plan is approved by shareholders
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
SHAREHOLDER APPROVAL
The Corporation shall submit this Plan to shareholders for approval at
a meeting of shareholders 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.
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 Delaware.
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
COMMUNITY SAVINGS BANKSHARES, INC.
1999 RECOGNITION AND RETENTION PLAN AND TRUST AGREEMENT
ARTICLE I
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 Community Savings Bankshares, 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 Community 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 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 25% or more of the combined voting power of the
Corporation's then outstanding securities; or (iv) during any period of three
consecutive years during the term of a Plan Share Award, individuals who at the
beginning of such period constitute the Board of Directors of the Corporation
cease for any reason to constitute at least two-
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thirds thereof unless the election, or the nomination for election by
shareholders, of each new director was approved by a vote of at least majority
of the directors then still in office who were directors at the beginning of the
period. 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 $1.00 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.
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 shareholders of
the Association) in connection with the reorganization of the Association from
the mid-tier 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;
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(v) return on average equity;
(vi) return on average assets;
(vii) asset quality;
(viii) stock price;
(ix) total shareholder 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.
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 Association or any successor thereto
(including service as a director emeritus or advisory director) after attaining
the age of 65.
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
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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 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 218,826 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 shareholders 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 25% 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 determined by the
Board or the Committee pursuant to the provisions of Article VI hereof. If the
employment of an Employee or service as a Non-Employee Director is terminated
prior to the date such Plan Share Awards are fully vested 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
vesting date, if applicable, fractional shares shall be rounded down to the
nearest whole number, provided that such fractional Shares shall be aggregated
and distributed on the final date of vesting of the 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, Disability or 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
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.
(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.
(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 Certificate of
Incorporation and Bylaws or the Association's Charter and Bylaws shall terminate
as of the effective date of such removal.
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7.02 Distribution of Dividends. Any cash dividends, stock dividends or
returns of capital declared in respect of each Plan Share (excluding Performance
Share Awards) (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. Any cash dividends, stock dividends or returns
of capital declared in respect of each unvested Performance Share Award will be
held by the Trust for the benefit of the Recipient on whose behalf such
Performance Share Award is then held by the Trust (whether declared before or
after the applicable Performance Share 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 Performance Share Awards become earned.
7.03 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Subject to the
provisions of Sections 7.03(b) and 7.05 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.
(b) Timing: Exception for 10% Shareholders. 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 reorganization
from the mid-tier mutual holding company structure to the stock holding company
structure 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
reorganization from the mid-tier mutual holding company structure to the stock
holding company structure 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.
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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
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 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.
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(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.
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. 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.
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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 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.
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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 shareholder approval or any shareholder 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. Notwithstanding any other provision of this Plan, this Plan may not be
terminated until such time as all Plan Shares held by the Trust have been
awarded to Plan Recipients and shall be deemed to be earned prior to the time of
termination.
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 shareholder in respect of any Plan Shares
covered by a Plan Share Award or Performance 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 Delaware.
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 shareholders 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 shareholders.
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.
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IN WITNESS WHEREOF, the Corporation has caused this Amended and
Restated Agreement to be executed by its duly authorized officers and its
corporate seal to be affixed and duly attested, and the Trustees of the Trust
established pursuant hereto have duly and validly executed this Agreement, all
on this 30th day of September 1999.
COMMUNITY SAVINGS BANKSHARES, INC.
BY: /s/ JAMES B. PITTARD, JR.
-----------------------------------------
James B. Pittard, Jr.,
President and Chief Executive Officer
ATTEST: TRUSTEES:
/s/ DEBORAH M. ROUSSEAU /s/ FREDERICK A. TEED
- - ----------------------- ---------------------------------------------
Deborah M. Rousseau Frederick A. Teed
Secretary
/s/ FOREST C. BEATY, JR.
-----------------------------------------
Forest C. Beaty, Jr.
/s/ ROBERT F. CROMWELL
-----------------------------------------
Robert F. Cromwell
/s/ KARL D. GRIFFIN
-----------------------------------------
Karl D. Griffin
/s/ HAROLD I. STEVENSON
-----------------------------------------
Harold I. Stevenson
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APPENDIX C
COMMUNITY SAVINGS, F. A.
AMENDED AND RESTATED
1995 STOCK OPTION PLAN
1. PURPOSE
The purpose of the Community Savings, F. A. 1995 Stock Option Plan (the
"Plan") is to advance the interests of Community Savings, F. A. (the
"Association") and its shareholders by providing Employees of the Association
and its affiliates, including ComFed, M. H. C., the mutual holding company of
the Association (the "Company"), and the Stock Holding Company upon whose
judgment, initiative and efforts the successful conduct of the business of the
Association and its affiliates largely depends, with an additional incentive to
perform in a superior manner as well as to attract people of experience and
ability.
2. DEFINITIONS
"AFFILIATE" means any "parent corporation" or "subsidiary corporation"
of the Association, as such terms are defined in Section 424(e) or 424(f),
respectively, of the Internal Revenue Code of 1986, as amended.
"AWARD" means an Award of Nonstatutory Stock Options, Incentive Stock
Options, and/or Limited Rights granted under the provisions of the Plan.
"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.
"BOARD OF DIRECTORS" means the Board of Directors of the Association,
or in the event of a Conversion Transaction, the Stock Holding Company.
"CHANGE IN CONTROL" means:
(1) a reorganization, merger, merger conversion, consolidation or sale
of all or substantially all of the assets of the Association, the Company or the
Stock Holding Company, or a similar transaction in which the Association, the
Company or the Stock Holding Company is not the resulting entity;
(2) individuals who constitute the Incumbent Board of the Association,
the Company, or the Stock Holding Company cease for any reason to constitute a
majority thereof; or
(3) a change in control within the meaning of 12 C.F.R. Section 574.4,
as determined by the board of directors of the Association, the Company or the
Stock Holding Company;
(4) In the event that the Company converts to the Stock Holding Company
on a stand-alone basis, a "change in control" of the Association or the Stock
Holding Company (a) shall mean an event of a nature that would be required to be
reported in response to Item 1a of the current report on Form 8-K, as in effect
on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (the "Exchange Act"), or results in a Change in Control of the
Association or the Stock Holding Company within the meaning of the Home Owners'
Loan Act of 1933 and the Rules and Regulations promulgated by the Office of
Thrift
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Supervision (or its predecessor agency), as in effect on the date hereof, (b)
without limitation shall be deemed to have occurred at such time as (i) any
"person" (as the term is used in Section 13(d) and 14(d) of the Exchange Act)
other than the Stock Holding Company is or becomes a "beneficial owner" (as
defined in Rule 13-d under the Exchange Act) directly or indirectly, of
securities of the Association or the Stock Holding Company representing 25% or
more of the Association's or the Stock Holding Company's outstanding securities
ordinarily having the right to vote at the election of directors except for any
securities of the Association received by the Stock Holding Company in
connection with the Reorganization or a Conversion Transaction and any
securities purchased by the Association's employee stock ownership plan and
trust shall not be counted in determining whether such plan is the beneficial
owner of more than 25% of the Association's or the Stock Holding Company's
securities, (ii) a proxy statement soliciting proxies from shareholders of the
Association or the Stock Holding Company, by someone other than the current
management of the Association or the Stock Holding Company, seeking shareholder
approval of a plan of reorganization, merger or consolidation of the Stock
Holding Company or the Association or similar transaction with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to the plan or transaction are exchanged or converted
into cash or property or securities not issued by the Association or the Stock
Holding Company, or (iii) a tender offer is made for 25% or more of the voting
securities of the Association or the Stock Holding Company and the shareholders
owning beneficially or of record 25% or more of the outstanding securities of
the Association or the Stock Holding Company have tendered or offered to sell
their shares pursuant to such tender offer and such tendered shares have been
accepted by the tender offeror.
Notwithstanding the foregoing, a "Change in Control" of the Association
or the Company shall not be deemed to have occurred if the Company ceases to own
at least 51% of all outstanding shares of stock of the Association in connection
with a conversion of the Company from mutual to stock form.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Stock Benefits Committee of the Board of
Directors consisting of at least three Outside Directors of the Association, the
Stock Holding Company or the Company, and all of whom are and must be
"disinterested directors" as that term is defined under Rule 16b-3 under the
Securities Exchange Act of 1934, as amended.
"COMMON STOCK" means the common stock of the Association, par value
$1.00 per share, or, in the event of a Conversion Transaction, the Stock Holding
Company.
"CONVERSION TRANSACTION" means the conversion of the Company from the
mutual to stock form of organization either on a stand-alone basis or in the
context of a merger conversion, as contemplated by regulations of the OTS or any
successor thereof.
"DATE OF GRANT" means the actual date on which an Award is granted by
the Committee.
"DIRECTOR" means a member of the Board of Directors.
"DISABILITY" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an employee to perform the work
customarily assigned to him. Additionally, a medical doctor selected or approved
by the Board of Directors must advise the Committee that it is either not
possible to determine when such Disability will terminate or that it appears
probable that such Disability will be permanent during the remainder of such
employee's lifetime.
"EMPLOYEE" means any person who is currently employed by the
Association or an Affiliate, including officers.
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"FAIR MARKET VALUE" means, when used in connection with the Common
Stock on a certain date, the reported closing price of the Common Stock as
reported by the National Association of Securities Dealers Automated Quotation
("Nasdaq") National Market (as published by the Wall Street Journal, if
published) on the day prior to such date, or if the Common Stock was not traded
on such date, on the next preceding day on which the Common Stock was traded
thereon; provided, however, that if the Common Stock is not reported on the
Nasdaq National Market, Fair Market Value shall mean the average sale price of
all shares of Common Stock sold during the 30-day period immediately preceding
the date on which such stock option was granted, and if no shares of stock have
been sold within such 30-day period, the average sale price of the last three
sales of Common Stock sold during the 90-day period immediately preceding the
date on which such stock option was granted. In the event Fair Market Value
cannot be determined in the manner described above, then Fair Market Value shall
be determined by the Committee. The Committee shall be authorized to obtain an
independent appraisal to determine the Fair Market Value of the Common Stock.
"INCENTIVE STOCK OPTION" means an Option granted by the Committee to a
Participant, which Option is designated as an Incentive Stock Option pursuant to
Section 8.
"INCUMBENT BOARD" means, in the case of (i) the Company or the Stock
Holding Company, or (ii) the Association, the Board of Directors of the Company,
the Stock Holding Company or the Association, respectively, on the date hereof,
provided that any person becoming a director subsequent to the date hereof whose
election was approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board, or whose nomination for election by members or
shareholders was approved by the same nominating committee serving under an
Incumbent Board, shall be considered as though he were a member of the Incumbent
Board.
"LIMITED RIGHT" means the right to receive an amount of cash based upon
the terms set forth in Section 9.
"NONSTATUTORY STOCK OPTION" means an Option granted by the Committee
to (i) an Outside Director or (ii) to any other Participant and such option is
either (A) not designated by the Committee as an Incentive Stock Option, or (B)
fails to satisfy the requirements of an Incentive Stock Option as set forth in
Section 422 of the Code and the regulations thereunder.
"OFFERING" means the initial public offering of the Common Stock of the
Association.
"OPTION" means Award granted under Section 7 or Section 8.
"OUTSIDE DIRECTOR" means a Director who is not also an employee.
"PARTICIPANT" means an Outside Director or an Employee of the
Association or its Affiliates chosen by the Committee to participate in the
Plan.
"REORGANIZATION" means the reorganization of Community Savings, F. A.
as a stock savings association and the establishment of the Company as its
mutual holding company parent.
"RETIREMENT" means a termination of employment which constitutes a
"retirement" under any applicable qualified pension benefit plan maintained by
the Company, the Association or the Stock Holding Company, or, if no such plan
is applicable, which would constitute "retirement" under the Association's
pension benefit plan, if such individual were a participant in that plan. With
respect to Outside Directors, retirement means retirement from service on the
Board of Directors of the Company, the Association or the Stock Holding Company
or any successor thereto (including service as a director emeritus or an
advisory director) after attaining the age of 65.
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"STOCK HOLDING COMPANY" means the holding company resulting from a
stock conversion of the Company in a Conversion Transaction.
"TERMINATION FOR CAUSE" means the termination of employment caused by
the individual's personal dishonesty, willful misconduct, any breach of a
fiduciary duty involving personal profit or intentional failure to perform
stated duties, or willful violation of any law, rule or regulation (other than
traffic violations or similar offenses) or final cease-and-desist order, any of
which results in material loss to the Association, the Company, or one of its
Affiliates.
3. ADMINISTRATION
The Plan shall be administered by the Committee. The Committee is
authorized, subject to the provisions of the Plan, to establish such rules and
regulations as it deems necessary for the proper administration of the Plan and
to make whatever determinations and interpretations in connection with the Plan
it deems necessary or advisable. All determinations and interpretations made by
the Committee shall be binding and conclusive on all Participants in the Plan
and on their legal representatives and beneficiaries.
The Awards of Nonstatutory Options to Outside Directors under Section 7
of the Plan are intended to comply with Rule 16b-3 under the Securities Exchange
Act of 1934. Notwithstanding any term to the contrary appearing herein, unless
permitted by Rule 16b-3(c)(2)(ii), neither the Committee nor the Board shall
have the authority to determine the amount and price of securities to be awarded
and/or timing of awards under Section 7 of the Plan to designated directors or
categories of directors, which terms shall be set forth herein. To the extent
any provision of the Plan or action by Plan administrators fails to comply with
this subsection 3, such provision or action shall be deemed null and void to the
extent permitted by law and deemed advisable by the Board.
4. TYPES OF AWARDS
Awards under the Plan may be granted in any one or a combination of (a)
Incentive Stock Options as defined in Section 7; (b) Non-Statutory Stock Options
as defined in Section 8; and (c) Limited Rights as defined herein in Section 9.
5. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 14, the maximum number of
shares reserved for issuance under the Plan is ten percent (10%) of the shares
of Common Stock of the Association sold in connection with the Stock Offering
(or 237,986 shares). The maximum number of shares reserved for issuance to
Employees is seven and one-half percent (7.5%) of the shares of Common Stock
issued in connection with the Offering. The maximum number of shares reserved
for issuance to Outside Directors is two and one-half percent (2.5%) of the
shares of Common Stock issued in connection with the Offering.
The shares of Common Stock represented by such options may be either
authorized but unissued shares or shares previously issued and reacquired by the
Association, the Stock Holding Company or the Company. To the extent that
options or rights granted under the Plan are exercised, the shares covered will
be unavailable for future grants under the Plan; to the extent that options
together with any related rights granted under the Plan terminate, expire or are
cancelled without having been exercised or, in the case of Limited Rights
exercised for cash, new Awards may be made with respect to these shares.
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6. ELIGIBILITY
Officers and other employees of the Association or its Affiliates shall
be eligible to receive Incentive Stock Options, Non-Statutory Stock Options
and/or Limited Rights under the Plan. Directors who are not employees or
officers of the Association or its affiliates shall not be eligible to receive
Incentive Stock Options under the Plan. Outside Directors shall be eligible to
receive only Nonstatutory Stock Options.
7. NON-STATUTORY STOCK OPTIONS
7.1 GRANT OF NON-STATUTORY STOCK OPTIONS
(a) GRANTS TO OUTSIDE DIRECTORS. Each Outside Director who is serving
in such capacity on the date of the Association's Offering and at the Effective
Date of the Stock Option Plan, shall be granted Options to purchase 11,850 of
Common Stock of the Association, subject to adjustment pursuant to Section 14.
Each person who becomes an Outside Director subsequent to the Effective Date of
the Stock Option Plan, shall be granted Nonstatutory Stock Options to purchase
200 shares of the Common Stock, subject to adjustment pursuant to Section 14, to
the extent shares remain available under this Stock Option Plan. Nonstatutory
Stock Options granted under this Plan are subject to the terms and conditions
set forth in this Section 7.
(b) GRANTS TO EMPLOYEES. The Committee may, from time to time, grant
Nonstatutory Stock Options to eligible Employees and, upon such terms and
conditions as the Committee may determine, grant Nonstatutory Stock Options in
exchange for and upon surrender of previously granted Awards under the Plan.
Nonstatutory Stock Options granted under this Plan are subject to the terms and
conditions set forth in this Section 7.
(c) OPTION AGREEMENT. Each Option shall be evidenced by a written
option agreement between the Association and the employee specifying the number
of shares of Common Stock that may be acquired through its exercise and
containing such other terms and conditions that are not inconsistent with the
terms of this grant. The maximum number of shares subject to a Nonstatutory
Option that may be awarded under the Plan to any Employee shall be 40,000.
(d) PRICE. The purchase price per share of Common Stock deliverable
upon the exercise of each Non-Statutory Stock Option shall be determined by the
Committee on the date the Option is granted. Except as provided below, such
purchase price shall not be less than 100% of the Fair Market Value of the
Association's or the Stock Holding Company's Common Stock on the date the Option
is granted. The purchase price per share of Common Stock deliverable upon the
exercise of each Non-Statutory Stock Option granted in exchange for and upon
surrender of previously granted awards shall be not less than 100% of the Fair
Market Value of the Association's or the Stock Holding Company's Common Stock on
the date the Option is granted, but in no event may the purchase price of any
Non-Statutory Stock Option be less than the par value of the Common Stock.
Shares may be purchased only upon full payment of the purchase price. Payment of
the purchase price may be made, in whole or in part, through the surrender of
shares of the Common Stock of the Association or the Stock Holding Company at
the Fair Market Value of such shares determined in the manner described in
Section 2.
(e) MANNER OF EXERCISE. Nonstatutory Stock Options granted under the
Stock Option Plan shall vest to a Participant at the rate, to the extent and
subject to such limitations as may be specified by the Committee. The vested
Options may be exercised from time to time, in whole or in part, by delivering a
written notice of exercise to the President and Chief Executive Officer or the
Secretary of the Association. Such notice is irrevocable and must be accompanied
by full payment of the purchase price in cash or shares of previously acquired
Common Stock of the Association or the Stock Holding Company at the Fair Market
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Value of such shares determined on the exercise date by the manner described in
Section 2 hereof. If previously acquired shares of Common Stock are tendered in
payment of all or part of the exercise price, the value of such shares shall be
determined as of the date of such exercise.
(f) TERMS OF OPTIONS. The term during which each Non-Statutory Stock
Option may be exercised shall be determined by the Committee, but in no event
shall a Non-Statutory Stock Option be exercisable in whole or in part more than
10 years and one day from the Date of Grant. The Nonstatutory Options shall be
exercisable in installments, as determined by the Committee. The Committee shall
determine the date on which each installment shall become exercisable. The
shares comprising each installment may be purchased in whole or in part at any
time after such installment becomes exercisable. The Committee, in its sole
discretion, may accelerate the time at which any Non-Statutory Stock Option may
be exercised in whole or in part. Notwithstanding the above, (i) in the event of
a Change in Control of the Association, the Company or the Stock Holding
Company, all Non-Statutory Stock Options shall become immediately vested and
exercisable in full and (ii) all Non-Statutory Stock Options shall become
immediately vested and exercisable in full on the date an Employee terminates
his employment with the Company, the Association or the Stock Holding Company or
an Outside Director terminates his service as an Outside Director as a result of
his Retirement.
(g) TERMINATION OF EMPLOYMENT OR SERVICE. Upon the termination of an
Employee's employment or upon termination of an Outside Director's service for
any reason other than Disability, death, Termination for Cause, Change in
Control or Retirement, the Employee's or Outside Director's Non-Statutory Stock
Options shall be exercisable only as to those shares that were immediately
purchasable by the Employee or Outside Directors at the date of termination and
only for a period of one year following termination. In the event of Termination
for Cause, all rights under his Non-Statutory Stock Options shall expire upon
termination. In the event of the death or Disability of any Employee or Outside
Director, all Non-Statutory Stock Options held by such Employee or Outside
Director, whether or not exercisable at such time, shall be exercisable by such
person or his legal representatives or beneficiaries for one year following the
date of his death or cessation of employment or service due to Disability,
provided that in no event shall the period extend beyond the expiration of the
Non-Statutory Stock Option term. Notwithstanding the above, all Non-Statutory
Options held by a Participant whose employment as an Employee or service as an
Outside Director terminates following a Change in Control of the Association,
the Stock Holding Company or the Company shall be exercisable for one year
following such termination of employment or service.
8. INCENTIVE STOCK OPTIONS
8.1 GRANT OF INCENTIVE STOCK OPTIONS
The Committee, from time to time, may grant Incentive Stock Options to
eligible Employees. Incentive Stock Options granted pursuant to the Plan shall
be subject to the following terms and conditions:
(a) OPTION AGREEMENT. Each Option shall be evidenced by a written
option agreement between the Association and the Employee specifying the number
of shares of Common Stock that may be acquired through its exercise and
containing such other terms and conditions that are not inconsistent with the
terms of this grant.
(b) PRICE. The purchase price per share of Common Stock deliverable
upon the exercise of each Incentive Stock Option shall be not less than 100% of
the Fair Market Value of the Association's or the Stock Holding Company's Common
Stock on the date the Incentive Stock Option is granted. However, if an Employee
owns stock possessing more than 10% of the total combined voting power of all
classes of Common Stock of the Association or the Stock Holding Company (or
under Section 424(d) of the Code, is deemed to own stock representing more than
10% of the total combined voting power of all classes of stock of the
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Association or its Affiliates by reason of the ownership of such classes of
common stock directly or indirectly, by or for any brother, sister, spouse,
ancestor or lineal descendant of such Employee or by or for any corporation,
partnership, estate or trust of which such employee is a shareholder, partner or
beneficiary), the purchase price per share of Common Stock deliverable upon the
exercise of each Incentive Stock Option shall not be less than 110% of the Fair
Market Value of the Association's or the Stock Holding Company's Common Stock on
the date the Incentive Stock Option is granted. Shares may be purchased only
upon payment of the full purchase price. Payment of the purchase price may be
made, in whole or in part, through the surrender of shares of the Common Stock
of the Association or the Stock Holding Company. If previously acquired shares
of common stock are tendered in payment of all or part of the exercise price,
the value of such shares shall be determined as of the date of exercise of the
Incentive Stock Option.
(c) MANNER OF EXERCISE. Incentive Stock Options granted under the Stock
Option Plan shall vest to a Participant at the rate, to the extent and subject
to such limitations as may be specified by the Committee. The vested Options may
be exercised from time to time, in whole or in part, by delivering a written
notice of exercise to the President and Chief Executive Officer or the Secretary
of the Association, provided, however, that no Options shall be exercisable
prior to approval of the Plan by shareholders. Such notice is irrevocable and
must be accompanied by full payment of the purchase price in cash or shares of
previously acquired Common Stock of the Association. If previously acquired
shares of Common Stock are tendered in payment of all or part of the exercise
price, the value of such shares shall be determined as of the date of such
exercise of the Incentive Stock Option.
(d) AMOUNT OF OPTIONS. Incentive Stock Options may be granted to any
eligible Employee in such amounts as determined by the Committee; provided that
the amount granted is consistent with the terms of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). Notwithstanding the above, the
maximum number of shares that may be subject to an Incentive Stock Option
awarded under the Plan to any Employee shall be 40,000. In granting Incentive
Stock Options the Committee shall consider the position and responsibilities of
the eligible Employee, the length and value of his or her service to the
Association, the compensation paid to the Employee and the Committee's
evaluation of the performance of the Association according to measurements that
include, among others, key financial ratios, levels of classified assets, and
independent audit findings. In the case of an option intended to qualify as an
Incentive Stock Option, the aggregate Fair Market Value (determined as of the
time the option is granted) of the Common Stock with respect to which Incentive
Stock Options granted are exercisable for the first time by the Participant
during any calendar year (under all plans of the Participant's employer
corporation and its parent and subsidiary corporations) shall not exceed
$100,000. The provisions of this Section 8.1(d) shall be construed and applied
in accordance with Section 422(d) of the Code and the regulations, if any,
promulgated thereunder.
(e) TERM OF OPTIONS. The term during which each Incentive Stock Option
may be exercised shall be determined by the Committee, but in no event shall an
Incentive Stock Option be exercisable in whole or in part more than 10 years
from the Date of Grant. If any Employee, at the time an Incentive Stock Option
is granted to him, owns Common Stock representing more than 10% of the total
combined voting power of the Association or its Affiliates (or, under Section
424(d) of the Code, is deemed to own Common Stock representing more than 10% of
the total combined voting power of all such classes of Common Stock, by reason
of the ownership of such classes of Common Stock, directly or indirectly, by or
for any brother, sister, spouse, ancestor or lineal descendent of such Employee,
or by or for any corporation, partnership, estate or trust of which such
employee is a shareholder, partner or beneficiary), the Incentive Stock Option
granted to him shall not be exercisable after the expiration of five years from
the Date of Grant. No Incentive Stock Option granted under this Plan is
transferable except by will or the laws of descent and distribution and is
exercisable during his lifetime only by the Employee to which it is granted.
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The Committee shall determine the date on which each Incentive Stock
Option shall become exercisable and may provide that an Incentive Stock Option
shall become exercisable in installments. The shares comprising each installment
may be purchased in whole or in part at any time after such installment becomes
purchasable, provided that the amount able to be first exercised in a given year
is consistent with the terms of Section 422 of the Code. To the extent required
by Section 422 of the Code, the aggregate fair market value (determined at the
time the Option is granted) of the Common Stock for which Incentive Stock
Options are exercisable for the first time by a Participant during any calendar
year (under all plans of the Association and its Affiliates) shall not exceed
$100,000. The Committee, in its sole discretion, may accelerate the time at
which any Incentive Stock Option may be exercised in whole or in part; provided
that it is consistent with the terms of Section 422 of the Code. Notwithstanding
the above, in the event of a Change in Control of the Association, the Stock
Holding Company or the Company, all Incentive Stock Options shall become
immediately vested and exercisable in full unless the fair market value of the
amount exercisable as a result of a Change in Control shall exceed $100,000
(determined as of the date of grant). In such event, the first $100,000 of
Incentive Stock Options (determined as of the date of grant) shall be
exercisable as Incentive Stock Options and any excess shall be exercisable as
Nonstatutory Stock Options. In addition, notwithstanding the foregoing, all
Incentive Stock Options shall become immediately vested and exercisable in full
on the date an Employee terminates his employment with the Company, the
Association or the Stock Holding Company as a result of his Retirement;
provided, however, if the fair market value of the additional amount of
Incentive Stock Options that will become immediately exercisable as a result of
such Retirement shall exceed $100,000 (determined as of the date of grant), that
amount of additional Incentive Stock Options that shall become exercisable that
exceeds $100,000 shall be exercisable as Non-Statutory Stock Options.
(f) TERMINATION OF EMPLOYMENT. Upon the termination of an Employee's
employment for any reason other than Disability, Change in Control, death,
Retirement, Change in Control or Termination for Cause, his Incentive Stock
Options shall be exercisable only as to those shares which were immediately
purchasable by him at the date of termination and only for a period of three
months following termination. In the event of Termination for Cause all rights
under his Incentive Stock Options shall expire upon termination.
In the event of death or Disability of any Employee, all Incentive
Stock Options held by such Employee, whether or not exercisable at such time,
shall be exercisable by such Employee or his legal representatives or
beneficiaries for one year following the date of his death or cessation of
employment due to Disability. Upon termination of an Employee's service
following a Change in Control, all Incentive Stock Options held by such Employee
shall be exercisable for a period of one year following the date of his
cessation of employment; provided, however, that such Option shall not be
eligible for treatment as an Incentive Stock Option in the event such Option is
exercised more than three months following the date of termination subsequent to
the Change in Control. In no event shall the exercise period extend beyond the
expiration of the Incentive Stock Option term.
(g) COMPLIANCE WITH CODE. The Options granted under this Section 8 of
the Plan are intended to qualify as Incentive Stock Options within the meaning
of Section 422 of the Code, but neither the Association nor the Stock Holding
Company makes any warranty as to the qualification of any Option as an incentive
stock option within the meaning of Section 422 of the Code. If an Option granted
hereunder fails for whatever reason to comply with the provisions of Section 422
of the Code and such failure is not or cannot be cured, such Option shall be a
Nonstatutory Stock Option.
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9. LIMITED RIGHTS
9.1 GRANT OF LIMITED RIGHTS
The Committee may grant a Limited Right simultaneously with the grant
of any Option to any Employee of the Association or an Affiliate, with respect
to all or some of the shares covered by such Option. Limited Rights granted
under this Plan are subject to the following terms and conditions:
(a) TERMS OF RIGHTS. In no event shall a Limited Right be exercisable
in whole or in part before the expiration of six months from the date of grant
of the Limited Right. A Limited Right may be exercised only in the event of a
Change in Control of the Association, the Company or the Stock Holding Company.
The Limited Right may be exercised only when the underlying Option is
eligible to be exercised, provided that the Fair Market Value of the underlying
shares on the day of exercise is greater than the exercise price of the related
Option.
Upon exercise of a Limited Right, the related Option shall cease to be
exercisable. Upon exercise or termination of an Option, any related Limited
Rights shall terminate. The Limited Rights may be for no more than 100% of the
difference between the exercise price and the Fair Market Value of the Common
Stock subject to the underlying Option. The Limited Right is transferable only
when the underlying Option is transferable and under the same conditions.
(b) PAYMENT. Upon exercise of a Limited Right, the holder shall
promptly receive from the Association an amount of cash equal to the difference
between the Fair Market Value on the Date of Grant of the related Option and the
Fair Market Value of the underlying shares on the date the Limited Right is
exercised, multiplied by the number of shares with respect to which such Limited
Right is being exercised. In the event of a Change of Control in which pooling
accounting treatment is a condition to the transaction, the Limited Right shall
be exercisable solely for shares of stock of the Association or the Stock
Holding Company, or in the event of a merger transaction, for shares of the
acquiring corporation, or its parent, as applicable. The number of shares to be
received on the exercise of such Limited Right shall be determined by dividing
the amount of cash that would have been available under the first sentence above
by the Fair Market Value at the time of exercise of the shares underlying the
Option subject to the Limited Right.
10. SURRENDER OF OPTION
In the event of a Participant's termination of employment or
termination of service as a result of death or Disability, the Participant (or
his personal representative(s), heir(s), or devisee(s)) may, in a form
acceptable to the Committee, make application to surrender all or part of the
Options held by such Participant in exchange for a cash payment from the
Association of an amount equal to the difference between the Fair Market Value
of the Common Stock on the date of termination of employment and the exercise
price per share of the Option on the Date of Grant. Whether the Association
accepts such application or determines to make payment, in whole or part, is
within its absolute and sole discretion, it being expressly understood that the
Association is under no obligation to any Participant whatsoever to make such
payments. In the event that the Association accepts such application and
determines to make payment, such payment shall be in lieu of the exercise of the
underlying Option and such Option shall cease to be exercisable.
11. RIGHTS OF A SHAREHOLDER; NON-TRANSFERABILITY
An optionee shall have no rights as a shareholder with respect to any
shares covered by a Non-Statutory and/or Incentive Stock Option until the date
of issuance of a stock certificate for such shares. Nothing in this Plan or in
any Award granted confers on any person any right to continue in the employ of
the Association or
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its Affiliates or to continue to perform services for the
Association or its Affiliates or interferes in any way with the right of the
Association or its Affiliates to terminate his services as an officer or other
employee at any time.
No Award under the Plan shall be transferable by the optionee other
than by will or the laws of descent and distribution and may only be exercised
during his lifetime by the optionee, or by a guardian or legal representative.
12. AGREEMENT WITH GRANTEES
Each Award of Options, and/or Limited Rights will be evidenced by a
written agreement, executed by the Participant and the Association or its
Affiliates that describes the conditions for receiving the Awards including the
date of Award, the purchase price if any, applicable periods, and any other
terms and conditions as may be required by the Board of Directors or applicable
securities law.
13. DESIGNATION OF BENEFICIARY
A Participant, with the consent of the Committee, may designate a
person or persons to receive, in the event of death, any Option or Limited
Rights Award to which he would then be entitled. Such designation will
be made upon forms supplied by and delivered to the Association and may be
revoked in writing. If a Participant fails effectively to designate a
Beneficiary, then his estate will be deemed to be the Beneficiary.
14. DILUTION AND OTHER ADJUSTMENTS
In the event of any change in the outstanding shares of Common Stock
of the Association by reason of any stock dividend or split, recapitalization,
merger, consolidation, spin-off, reorganization, combination or exchange of
shares, or other similar corporate change, including, but not limited to, the
conversion of the Company and the formation of the Stock Holding Company in
connection therewith as part of a Conversion Transaction or other increase or
decrease in such shares without receipt or payment of consideration by the
Association, the Committee will make such adjustments to previously granted
Awards, to prevent dilution or enlargement of the rights of the Participant,
including any or all of the following:
(a) adjustments in the aggregate number or kind of shares of Common
Stock which may be awarded under the Plan;
(b) adjustments in the aggregate number or kind of shares of Common
Stock covered by Awards already made under the Plan;
(c) subject to Section 8.1(b) hereof, adjustments in the purchase price
of outstanding Incentive and/or Non-Statutory Stock Options, or any Limited
Rights attached to such options.
No such adjustments, however, may change materially the value of
benefits available to a Participant under a previously granted Award.
15. LIMITATIONS UPON EXERCISE OF OPTIONS
Notwithstanding any other provision of the Plan, so long as the Company
remains in the mutual form of organization and so long as any applicable statute
or regulation requires the Company to own at least a majority of the outstanding
Common Stock of the Association, an Option granted under this Plan may not be
exercised if the exercise of such an Option would result in the Company owning
less than a majority of the Common Stock of the Association. Nothing herein
shall preclude the Association from issuing additional
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authorized but unissued shares of Common Stock to the Company to
allow for the exercise of options which would otherwise have resulted in the
Company owning less than a majority of the Common Stock of the Association.
16. TREATMENT OF OPTIONS IN THE EVENT OF A CONVERSION TRANSACTION
In the event that the Company converts to stock form in a Conversion
Transaction ("Stock Holding Company"), any Options outstanding shall, at the
option of the holder, (i) be convertible into Options for Common Stock of the
Stock Holding Company, or (ii) be exercised by the holder prior to the effective
date of the Conversion Transaction and the holder shall be entitled to exchange,
in the same manner as other minority shareholders of the Association, the shares
of Common Stock of the Association received upon such exercise for shares of
Common Stock of the Stock Holding Company. If for any reason such options are
not to be converted or such shares are not exchanged, the holders of Options
under this plan shall receive cash payment for the shares of stock represented
by the Options in an amount equal to the fair market value of the underlying
Options or the initial offering price of the Common Stock of the Stock Holding
Company for which the Common Stock underlying the Option would otherwise be
exchanged, less the original exercise price of such options and, with respect to
options that have been exercised, the Stock Holding Company shall redeem such
shares for cash in the same manner as such redemption would occur for other
minority shareholders of the Association. Any exchange, conversion of Options,
or cash payment for shares shall be subject to applicable federal and state
regulations and, if necessary, subject to the approval of the appropriate
regulatory authorities.
17. WITHHOLDING
There may be deducted from each distribution of cash and/or Common
Stock under the Plan the amount of tax required by any governmental authority to
be withheld.
18. AMENDMENT OF THE PLAN
The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect; provided, however, that if necessary to
continue to qualify the Plan under the Securities and Exchange Commission Rule
16b-3, the approval by a majority of the shares represented in person or by
proxy shall be required for any such modification or amendment that:
(a) increases the maximum number of shares for which options may be
granted under the Plan (SUBJECT, HOWEVER, to the provisions of
Section 14 hereof);
(b) reduces the exercise price at which Awards may be granted (SUBJECT,
HOWEVER, to the provisions of Sections 8.1(a) and 14 hereof):
(c) extends the period during which options may be granted or exercised
beyond the times originally prescribed (subject, however, to the
provisions of Section 8.1(a) hereof); or
(d) changes the persons eligible to participate in the Plan.
Failure to ratify or approve amendments or modifications to subsections
(a) through (d) of this Section 18 by shareholders shall be effective only as to
the specific amendment or modification requiring such ratification. Other
provisions, sections, and subsections of this Plan will remain in full force and
effect.
No such termination, modification or amendment may affect the rights of
a Participant under an outstanding Award.
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19. APPROVAL BY SHAREHOLDERS
The Plan shall be approved by shareholders of the Association within 12
months after the Plan has been adopted. No Options granted pursuant to the Plan
shall be exercisable prior to such shareholder approval.
20. EFFECTIVE DATE OF PLAN
The Plan shall become effective upon the date adopted by the Board of
Directors, following the approval of shareholders (the "Effective Date").
21. TERMINATION OF THE PLAN
The right to grant Awards under the Plan will terminate upon the
earlier of ten (10) years after the Effective Date of the issuance of Common
Stock or the date on which the exercise of Options or related rights equaling
the maximum number of shares reserved under the Plan occurs as set forth in
Section 5 hereof. The Board of Directors has the right to suspend or terminate
the Plan at any time; provided that no such action will, without the consent of
a Participant, affect adversely his rights under a previously granted Award.
22. APPLICABLE LAW
The Plan will be administered in accordance with the laws of the State
of Florida.
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APPENDIX D
COMMUNITY SAVINGS, F. A.
AMENDED AND RESTATED
1995 RECOGNITION AND RETENTION PLAN
FOR EMPLOYEES AND OUTSIDE DIRECTORS
1. ESTABLISHMENT OF THE PLAN
Community Savings, F. A. hereby establishes the Association 1995
Recognition and Retention Plan (the "Plan") upon the terms and conditions
hereinafter stated in this Recognition Plan.
2. PURPOSE OF THE PLAN
The purpose of the Plan is to retain Employees and Outside Directors of
experience and ability by providing such persons with a proprietary interest in
the Association as compensation for their contributions to the Association and
its Affiliates and as an incentive to make such contributions and to promote the
Association's growth and profitability in the future.
3. DEFINITIONS
The following words and phrases when used in this Plan with an initial
capital letter, unless the context clearly indicates otherwise, shall have the
meanings set forth below. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun and the singular shall include the plural:
"AFFILIATE" means any "parent corporation" or "subsidiary corporation"
of the Association, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"ASSOCIATION" means Community Savings, F. A.
"AWARD" means the grant by the Committee of Restricted Stock, as
provided in the Plan.
"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.
"BOARD" means the Board of Directors of the Association or the Stock
Holding Company in the event of a Conversion Transaction.
"CAUSE" shall mean personal dishonesty, willful misconduct, any breach
of fiduciary duty involving personal profit, intentional failure to perform
stated duties, or the willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or a final cease-and-desist order,
any of which results in a material loss to the Association or an Affiliate.
"CHANGE IN CONTROL" means:
(1) a reorganization, merger, merger conversion, consolidation or sale
of all or substantially all of the assets of the Association, the Company or the
Stock Holding Company, or a similar transaction in which the Association, the
Company or the Stock Holding Company is not the resulting entity;
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(2) individuals who constitute the Incumbent Board of the Association,
the Company, or the Stock Holding Company cease for any reason to constitute a
majority thereof; or
(3) a change in control within the meaning of 12 C.F.R. Section 574.4,
as determined by the board of directors of the Association, the Stock Holding
Company or the Company;
(4) In the event that the Company converts to the Stock Holding Company
on a stand-alone basis, a "change in control" of the Association or the Stock
Holding Company (a) shall mean an event of a nature that would be required to be
reported in response to Item l (a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or l5(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"), or results in a Change in Control of
the Association or the Stock Holding Company within the meaning of the Home
Owners' Loan Act of 1933 and the Rules and Regulations promulgated by the Office
of Thrift Supervision (or its predecessor agency), as in effect on the date
hereof, (b) without limitation shall be deemed to have occurred at such time as
(i) any "person" (as the term is used in Section 13(d) and 14(d) of the Exchange
Act) other than the Stock Holding Company is or becomes a "beneficial owner" (as
defined in Rule 13-d under the Exchange Act) directly or indirectly, of
securities of the Association or the Stock Holding Company representing 25% or
more of the Association's or the Stock Holding Company's outstanding securities
ordinarily having the right to vote at the election of directors except for any
securities of the Association received by the Stock Holding Company in
connection with the Reorganization or the Conversion Transaction and any
securities purchased by the Association's employee stock ownership plan and
trust shall not be counted in determining whether such plan is the beneficial
owner of more than 25% of the Association's or the Stock Holding Company's
securities, (ii) a proxy statement soliciting proxies from shareholders of the
Association or the Stock Holding Company, by someone other than the current
management of the Association, seeking shareholder approval of a plan of
reorganization, merger or consolidation of the Stock Holding Company or the
Association or similar transaction with one or more corporations as a result of
which the outstanding shares of the class of securities then subject to the plan
or transaction are exchanged or converted into cash or property or securities
not issued by the Association or the Stock Holding Company, or (iii) a tender
offer is made for 25% or more of the voting securities of the Association or the
Stock Holding Company and the shareholders owning beneficially or of record 25%
or more of the outstanding securities of the Association or the Stock Holding
Company have tendered or offered to sell their shares pursuant to such tender
offer and such tendered shares have been accepted by the tender offeror.
Notwithstanding, the foregoing, a "Change in Control" of the
Association or the Company shall not be deemed to have occurred if the Company
ceases to own at least 51 % of all outstanding shares of stock of the
Association in connection with a conversion of the Company from mutual to stock
form.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMITTEE" means the Stock Benefits Committee of the Board which shall
consist of at least three Outside Directors of the Association, all of whom are
and must be "disinterested directors," as that term is defined under Rule 16b-3
of the Securities Exchange Act of 1934.
"COMPANY" means ComFed, M. H. C., the mutual holding company of the
Association.
"COMMON STOCK" means shares of the common stock, par value of $1.00 per
share, of the Association, or in the event of a Conversion Transaction, the
Stock Holding Company.
"CONTINUOUS SERVICE" means the absence of any interruption or
termination of service as an Employee of the Association. Service shall not be
considered interrupted in the case of sick leave, military leave or any other
leave of absence approved by the Association or in the case of transfers between
payroll locations of the Association or between the Association, its parent, its
subsidiaries or its successor.
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"CONVERSION TRANSACTION" means the conversion of the Company from the
mutual to stock form of organization either on a stand-alone basis or in the
context of a merger conversion, as provided by regulations of the Office of
Thrift Supervision ("OTS").
"DIRECTOR" means any director of the Association or an Affiliate.
"DISABILITY" means the permanent and total inability by reason of
mental or physical infirmity, or both, of an employee to perform the work
customarily assigned to him. Additionally, a medical doctor selected or approved
by the Board must advise the Committee that it is either not possible to
determine when such Disability will terminate or that it appears probable that
such Disability will be permanent during the remainder of said Participant's
lifetime.
"EFFECTIVE DATE" shall be the date of execution of this Plan.
"EMPLOYEE" means any person who is employed by the Association or its
Affiliates, including officers.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"INCUMBENT BOARD" means, in the case of (i) the Company or the Stock
Holding Company, or (ii) the Association, the Board of Directors of the Company,
the Stock Holding Company or the Association, respectively, on the date hereof,
provided that any person becoming a director subsequent to the date hereof whose
election was approved by a vote of at least three-quarters of the directors
comprising the Incumbent Board, or whose nomination for election by members or
shareholders was approved by the same nominating committee serving under an
Incumbent Board, shall be considered as though he were a member of the Incumbent
Board.
"OFFERING" means the initial public offering by the Association of up
to 49.9% of the number of shares of Common Stock that will be outstanding after
such Offering.
"OUTSIDE DIRECTOR" means any nonemployee director of the Association or
an Affiliate.
"PLAN" means the Community Savings, F. A. 1995 Recognition and
Retention Plan of the Association.
"RECIPIENT" means an Employee or Director of the Association who
receives a Restricted Stock Award under this Plan.
"REORGANIZATION" means the reorganization of Community Savings, F. A.
as a stock savings association and the establishment of the Company as its
mutual holding company parent.
"RESTRICTED PERIOD" means the period of time selected by the Committee
for the purpose of determining when restrictions are in effect under Section 6
hereof with respect to Restricted Stock awarded under the Plan.
"RESTRICTED STOCK" means shares which have been contingently awarded to
a Recipient by the Committee subject to the restrictions referred to in Section
6 hereof, so long as such restrictions are in effect.
"RETIREMENT" means a termination of employment which constitutes a
"retirement" under any applicable qualified pension benefit plan maintained by
the Company, the Association or the Stock Holding Company, or, if no such plan
is applicable, which would constitute "retirement" under the Association's
pension benefit plan, if such individual were a participant in that plan. With
respect to Outside Directors, retirement means retirement from service on the
Board of Directors of the Company, the Association or the
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Stock Holding Company or any successor thereto (including service as a director
emeritus or advisory director) after attaining the age of 65.
"STOCK HOLDING COMPANY" means the holding company resulting from a
stock conversion of the Company in a Conversion Transaction.
4. ADMINISTRATION OF THE PLAN.
4.01 ROLE OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee, which 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 Restricted Stock Award
granted hereunder shall be final and binding. 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 one time per calendar year.
4.02 ROLE OF THE BOARD. The members of the Committee 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. The Board shall have all of the powers allocated to
it in this and other Sections of the Plan, may take any action under or with
respect to the Plan which the Committee is authorized to take, and may reverse
or override any action taken or decision made by the Committee under or with
respect to the Plan, provided, however, that except as provided in Section 6.05,
the Board may not revoke any Restricted Stock Award except in the event of
Revocation for Cause, or with respect to unearned Restricted Stock Awards in the
event a Recipient of a Restricted Stock Award voluntarily terminates employment
with the Association.
4.03 PLAN ADMINISTRATION RESTRICTIONS. This Plan is intended to comply
with Rule 16b-3 under the Securities Exchange Act of 1934. Notwithstanding any
term to the contrary appearing in this Plan, unless permitted by Rule
16b-3(c)(2)(ii), subsequent to the establishment of the Plan, the Committee, and
the Board of Directors shall not have the authority to determine the amount and
price of securities to be awarded and/or timing of awards to Outside Directors
which terms shall be set forth in the Plan. To the extent any provision of the
Plan or action by Plan administrators fails to comply with this Section, such
provision or action shall be deemed null and void to the extent permitted by law
and deemed advisable by the Board of Directors.
4.04 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 Restricted Stock 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 Association
shall indemnify such member against expense (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
Association and its Affiliates and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful,
provided, however, that the provisions of 12 C.F.R. Section 545.121 shall apply
to any indemnification made pursuant to this Section and any such
indemnification shall be consistent therewith.
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5. ELIGIBILITY; AWARDS
5.01 ELIGIBILITY. Employees and Outside Directors of the Association
and its Affiliates are eligible to receive Restricted Stock Awards.
5.02 AWARDS TO EMPLOYEES. The Committee may determine which of the
Employees referenced in Section 5.01 will be granted Restricted Stock Awards and
the number of Shares covered by each Award; provided, however, that in no event
shall any Awards be made that will violate the Plan, the Charter, Bylaws or Plan
of Reorganization from Mutual Savings Association to Mutual Holding Company and
Stock Issuance Plan of the Association or any applicable federal or state law or
regulation. Shares of Restricted Stock which are awarded by the Committee shall,
on the date of the Award, be registered in the name of the Recipient and
transferred to the Recipient, in accordance with the terms and conditions
established under this Plan. In the event Restricted Stock is forfeited for any
reason, the Committee, from time to time, may determine which of the Employees
referenced in Section 5.01 will be granted additional Restricted Stock Awards to
be awarded from forfeited Restricted Stock. In selecting those Employees to whom
Restricted Stock Awards will be granted and the number of Restricted Stock
covered by such Awards, the Committee shall consider the position and
responsibilities of the eligible Employees, the length and value of their
services to the Association and its Affiliates, the compensation paid to the
Employees and any other factors the Committee may deem relevant, and the
Committee may request the written recommendation of the Chief Executive Officer
and other senior executive officers of the Association and its Affiliates. The
total number of shares that will be awarded or reserved for Employees under this
Plan shall be at least three percent (3%) of the shares issued in the Offering.
No Restricted Stock shall be earned unless the Employee maintains
Continuous Service with the Association or any Affiliate until the restrictions
lapse.
5.03 AWARDS TO OUTSIDE DIRECTORS. Each Outside Director serving on the
Board of Directors of the Association or its Affiliate on the Effective Date
shall be issued a Restricted Stock Award equal to 4,750 shares of Restricted
Stock. The total number of shares that will be awarded or reserved for Outside
Directors under this Plan shall not exceed one percent (1%) of the shares issued
in the Offering.
Any person who becomes an Outside Director of the Association
subsequent to the date of approval of this Plan by shareholders shall receive an
Award of Restricted Stock equal to 100 shares, subject to availability.
No Restricted Stock shall be earned by an Outside Director unless the
Outside Director maintains continuous service with the Association or Affiliates
until the restrictions lapse.
5.04 MANNER OF AWARD. As promptly as practicable after a determination
is made pursuant to Section 5.02 that a Restricted Stock Award has been granted,
the Committee shall notify the Recipient in writing of the grant of the Award,
the number of shares of Restricted Stock covered by the Award, and the terms
upon which the Restricted Stock subject to the Award may be earned. Upon
notification of an Award of Restricted Stock, the Recipient shall execute and
return to the Association or the Stock Holding Company, as the case may be, a
restricted stock agreement setting forth the terms and conditions under which
the Recipient shall earn the Restricted Stock (the "Restricted Stock
Agreement"), together with a stock power endorsed in blank. Thereafter, the
Recipient's Restricted Stock and stock power shall be deposited with an escrow
agent specified by the Association (the "Escrow Agents") who shall hold such
Restricted Stock under the terms and conditions set forth in the Restricted
Stock Agreement. Each certificate in respect of shares of Restricted Stock
Awarded under the Plan shall be registered in the name of the Recipient.
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5.05 TREATMENT OF FORFEITED SHARES. In the event shares of Restricted
Stock are forfeited by a Recipient hereunder, such shares shall be returned to
the Association or the Stock Holding Company and shall be held and accounted for
by the Association or the Stock Holding Company pursuant to the terms of the
Plan until such time as the Committee re-awards such shares to another
Recipient, in accordance with the terms of the Plan and the applicable state and
federal laws, rules and regulations.
6. TERMS AND CONDITIONS OF RESTRICTED STOCK
The Committee shall have full and complete authority, subject to the
limitations of the Plan, to grant awards of Restricted Stock and, in addition to
the terms and conditions contained in paragraphs 6.01 through 6.09 of this
Section 6, to provide such other terms and conditions (which need not be
identical among Recipients) in respect of such Awards, and the vesting thereof,
as the Committee shall determine.
6.01 GENERAL RULES. Restricted Stock shall be earned by an Employee at
the rate determined by the Committee. Restricted Stock Awards granted to Outside
Directors shall be earned by an Outside Director at the rate determined by the
Committee. Subject to any such other terms and conditions as the Committee shall
provide, shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered by the Recipient, except as hereinafter
provided, during the Restricted Period. The Committee shall have the authority,
in its discretion, to accelerate the time at which any or all of the
restrictions shall lapse with respect to shares issued to Employees, or to
remove any or all of such restrictions, whenever it may determine that such
action is appropriate by reason of changes in applicable tax or other laws or
other changes in circumstances occurring after the commencement of such
Restricted Period.
6.02 CONTINUOUS SERVICE; FORFEITURE. Except as provided in Section
6.04 hereof, if a Recipient ceases to maintain Continuous Service for any reason
(other than death, Disability or Retirement as provided in Section 6.03), unless
the Committee shall otherwise determine, all shares of Restricted Stock
theretofore awarded to such Recipient and which at the time of such termination
of Continuous Service are subject to the restrictions imposed by Section 6.01
shall upon such termination of Continuous Service be forfeited and returned to
Trust.
6.03 EXCEPTION FOR TERMINATION DUE TO DEATH, DISABILITY OR RETIREMENT.
Notwithstanding the general rule contained in Section 6.01, Restricted Stock
awarded to a Recipient whose employment with or service to the Association or an
Affiliate terminates due to death, Disability or Retirement, or any part thereof
that has not theretofore been earned, shall be deemed earned as of the
Recipient's last day of employment with the Association or an Affiliate.
6.04 EXCEPTION FOR A CHANGE IN CONTROL. Notwithstanding the general
rule contained in Section 6.01, all Restricted Stock subject to a Restricted
Stock Award held by a Recipient shall be deemed earned as of the effective date
of a Change in Control of the Association, the Company or the Stock Holding
Company.
6.05 REVOCATION FOR CAUSE. Notwithstanding anything hereinafter to the
contrary, the Board may by resolution immediately revoke, rescind and terminate
any Restricted Stock Award, or portion thereof, previously awarded under this
Plan, to the extent Restricted Stock has not been redelivered by the Escrow
Agent to the Recipient, whether or not yet earned, in the case of an Employee
whose employment is terminated by the Association or an Affiliate for Cause, or
who is discovered after termination of employment to have engaged in conduct
that would have justified termination for Cause.
6.06 RESTRICTED STOCK LEGEND. Each certificate in respect of shares of
Restricted Stock awarded under the Plan shall be registered in the name of the
Recipient and deposited by the Recipient,
D-6
<PAGE>
together with a stock power endorsed in blank, with the Escrow Agent and shall
bear the following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) contained in the 1995 Recognition and Retention Plan. Copies of such
Plan are on file in the offices of the Secretary of Community Savings, F. A.,
660 U.S. Highway One, North Palm Beach, Florida 33408-1808."
6.07 PAYMENT OF DIVIDENDS. After a Restricted Stock Award has been
granted but before such Award has been earned, the Recipient shall receive any
cash dividends or stock dividend paid with respect to such shares. Unless the
Recipient has made an election under Section 83(b) of the Code, any dividends so
paid on shares which have not yet been earned by the Recipient shall be treated
as compensation income to the Recipient when paid.
6.08 VOTING OF RESTRICTED SHARES. After a Restricted Stock Award has
been granted, the Recipient as owner of such shares shall have the right to vote
such shares.
6.09 DELIVERY OF EARNED SHARES. At the expiration of the restrictions
imposed by Section 6.01, the Escrow Agent shall redeliver to the Recipient (or
where the relevant provision of Section 6.02 applies in the case of a deceased
Recipient, to his Beneficiary, the certificate(s) and stock power deposited with
it pursuant to Section 6.04 and the shares represented by such certificate(s)
shall be free of the restrictions referred to Section 6.01.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the outstanding shares subsequent to the
effective date of the Plan by reason of any reorganization (other than the
Reorganization), recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation or any change in the corporate
structure, including, but not limited to, the conversion of the Company and the
formation of the Stock Holding Company in connection therewith as part of a
Conversion Transaction, or shares of the Association, the maximum aggregate
number and class of shares as to which Awards may be granted under the Plan and
the number of shares subject to unvested Awards shall be appropriately adjusted
by the Committee, whose determination shall be conclusive. Any shares of stock
or other securities received, as a result of any of the foregoing, by a
Recipient with respect to Restricted Stock shall be subject to the same
restrictions and the certificate(s) or other instruments representing or
evidencing such shares or securities shall be legended and deposited with the
Association in the manner provided in Section 6.06 hereof.
8. ASSIGNMENTS AND TRANSFERS
No Award nor any right or interest of a Recipient under the Plan in any
instrument evidencing any Award under the Plan may be assigned, encumbered or
transferred except, in the event of the death of a Recipient, by will or the
laws of descent and distribution.
9. EMPLOYEE RIGHTS UNDER THE PLAN
No Employee shall have a right to be selected as a Recipient nor,
having been so selected, to be selected again as a Recipient and no Employee or
other person shall have any claim or right to be granted an Award under the Plan
or under any other incentive or similar plan of the Association or any
Affiliate. Neither the Plan nor any action taken thereunder shall be construed
as giving any Employee any right to be retained in the employ of the Association
or any Affiliate.
D-7
<PAGE>
10. WITHHOLDING TAX
Upon the termination of the Restricted Period with respect to any
shares of Restricted Stock (or at any such earlier time, if any, that an
election is made by the Employee under Section 83(b) of the Code, or any
successor provision thereto, to include the value of such shares in taxable
income), the Association shall have the right to require the Employee or other
person receiving such shares to pay the Association the amount of any taxes
which the Association is required to withhold with respect to such shares, or,
in lieu thereof, to retain or sell without notice, a sufficient number of shares
held by it to cover the amount required to be withheld. The Association shall
have the right to deduct from all dividends paid with respect to shares of
Restricted Stock the amount of any taxes which the Association is required to
withhold with respect to such dividend payments.
11. TREATMENT OF RESTRICTED STOCK IN THE EVENT OF CONVERSION TRANSACTION
In the event that the Company converts to stock form in a Conversion
Transaction, any Restricted Stock shall be exchanged into shares of Common Stock
of the Stock Holding Company, provided, however, that if for any reason such
shares are not to be exchanged, the Stock Holding Company shall, simultaneously
with the closing of the Conversion Transaction, purchase Restricted Stock for
cash equal to the fair market value of such Restricted Stock or Shares. Any
exchange of shares or cash payment for shares shall be subject to applicable
federal and state regulations and, if necessary, subject to the approval of the
appropriate regulatory authorities.
12. AMENDMENT OR TERMINATION
The Board of Directors of the Association or the Stock Holding Company
may amend, suspend or terminate the Plan or any portion thereof at any time, but
(except as provided in Section 6 hereof) no amendment shall be made without
approval of the shareholders of the Association which shall (i) materially
increase the aggregate number of shares with respect to which Awards may be made
under the Plan, (ii) materially increase the aggregate number of shares which
may be subject to Awards to Recipients who are not Employees or (iii) change the
class of persons eligible to participate in the Plan; provided, however, that no
such amendment, suspension or termination shall impair the rights of any
Recipient, without his consent, in any Award theretofore made pursuant to the
Plan.
13. GOVERNING LAW
The Plan shall be governed by the laws of the State of Florida.
14. TERM OF PLAN
The Plan shall become effective upon its adoption by the Board of
Directors of the Association, following the approval of the Plan by
shareholders. It shall continue in effect for a term of fifteen years unless
sooner terminated under Section 12 hereof.
D-8
<PAGE>
[X] Please mark your vote as indicated in this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1
Proposal 1 - Approval of the Amended and Restated 1999 Stock Option Plan, the
Amended and Restated 1999 Recognition and Retention Plan and Trust, the Amended
and Restated 1995 Stock Option Plan and the Amended and Restated 1995
Recognition and Retention Plan for Employees and Outside Directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
This proxy will be voted as directed, but if no instruction is specified, this
Proxy will be voted FOR Proposal 1 and otherwise at the discretion of the proxy
holders.
The undersigned hereby acknowledges receipt of the Notice of the Special Meeting
of Shareholders of Community Savings Bankshares, Inc. called for December 21,
1999 and the accompanying Proxy Statement prior to the signing of this Proxy.
IF YOU VOTE BY TELEPHONE AS INSTRUCTED BELOW, THERE IS NO NEED TO MAIL BACK YOUR
PROXY.
SIGNATURE________________________ SIGNATURE_________________ DATE______________
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THE STOCK CERTIFICATE(S). WHERE
STOCK IS ISSUED IN TWO OR MORE NAMES, ONLY ONE NEED SIGN. IF SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, GIVE FULL TITLE AS SUCH.
A CORPORATION SHOULD SIGN BY AN AUTHORIZED OFFICER AND AFFIX ITS SEAL. A
PARTNERSHIP SHOULD SIGN IN THE PARTNERSHIP NAME BY AN AUTHORIZED PERSON.
<PAGE>
^ FOLD AND DETACH HERE ^
----------------------------------------------------------------
VOTE BY TELEPHONE
[GRAPHIC OMITTED] QUICK *** EASY *** IMMEDIATE [GRAPHIC OMITTED]
----------------------------------------------------------------
YOUR VOTE IS IMPORTANT! - YOU CAN VOTE IN ONE OF TWO WAYS:
1. TO VOTE BY PHONE: CALL TOLL-FREE 1-800-840-1208 ON A TOUCH TONE TELEPHONE
24 hours a day-7days a week
THERE IS NO CHARGE TO YOU FOR THIS CALL. - HAVE YOUR PROXY CARD IN HAND.
YOU WILL BE ASKED TO ENTER A CONTROL NUMBER, WHICH IS LOCATED IN THE BOX IN THE
LOWER RIGHT HAND CORNER OF THIS FORM
- - --------------------------------------------------------------------------------
TO VOTE AS THE BOARD OF DIRECTORS RECOMMENDS ON THE PROPOSAL, PRESS 1
- - --------------------------------------------------------------------------------
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
Proposal 1 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
OR
2. VOTE BY PROXY: Mark, sign and date your proxy card and return promptly in
the enclosed envelope.
NOTE: IF YOU VOTE BY TELEPHONE, THERE IS NO NEED TO MAIL BACK YOUR PROXY CARD.
THANK YOU FOR VOTING.
Dear Shareholder(s):
Enclosed are materials relative to the Special Meeting of Shareholders of
Community Savings Bankshares, Inc. The Notice of Special Meeting and Proxy
Statement describe the formal business to be transacted at the Special Meeting,
as summarized on the attached proxy card. Whether you expect to attend the
Special Meeting or not, please either complete and return the attached proxy
card in the enclosed, pre-paid envelope or follow the instructions for
telephonic voting set forth on the proxy card. Your prompt return of the proxy
card (or your telephonic vote) will save us the expense of sending further
requests for proxies.
As a shareholder, please remember that your vote is very important to us. We
look forward to hearing from you.
Sincerely,
/s/ JAMES B. PITTARD, JR.
- - -----------------------------------------
James B. Pittard, Jr.
President and Chief Executive Officer
P.S. To assist you in locating the Embassy Suites PGA, we've included a map on
the reverse side of this card.
<PAGE>
REVOCABLE PROXY
SPECIAL MEETING OF SHAREHOLDERS
COMMUNITY SAVINGS BANKSHARES, INC.
660 U.S. Highway One
NORTH PALM BEACH, FLORIDA 33408
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, being a shareholder of Community Savings Bankshares, Inc. (the
"Company") as of October 29, 1999, hereby authorizes the Board of Directors of
the Company, or any of their successors, as proxies, with full powers of
substitution, to represent the undersigned at the Special Meeting of
Shareholders to be held at The Embassy Suites PGA, 4350 PGA Boulevard, Palm
Beach Gardens, Florida, on Tuesday, December 21, 1999 at 1:30 p.m., Eastern
Time, and at any adjournment of said meeting, and thereat to act with respect to
all votes that the undersigned would be entitled to cast, if then personally
present, as set forth on the reverse hereof.
<PAGE>
^ FOLD AND DETACH HERE ^
EMBASSY SUITES [GRAPHIC OMITTED - MAP OF HOTEL]
4350 PGA Blvd.
Palm Beach Gardens, FL 33410
Telephone 561-622-1000
LOCATION
Conveniently located at Interstate 95 exit 57B PGA Blvd. west, just 1 mile from
the Florida Turnpike exit 109.
<PAGE>
[X] Please mark your vote as indicated in this example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1
Proposal 1 - Approval of the Amended and Restated 1999 Stock Option Plan, the
Amended and Restated 1999 Recognition and Retention Plan and Trust, the Amended
and Restated 1995 Stock Option Plan and the Amended and Restated 1995
Recognition and Retention Plan for Employees and Outside Directors.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
This proxy will be voted as directed, but if no instruction is specified, this
Proxy will be voted FOR Proposal 1 and otherwise at the discretion of the proxy
holders.
The undersigned hereby acknowledges receipt of the Notice of the Special Meeting
of Shareholders of Community Savings Bankshares, Inc. called for December 21,
1999 and the accompanying Proxy Statement prior to the signing of this Proxy.
SIGNATURE________________________ SIGNATURE_________________ DATE______________
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THE STOCK CERTIFICATE(S). WHERE
STOCK IS ISSUED IN TWO OR MORE NAMES, ONLY ONE NEED SIGN. IF SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, GIVE FULL TITLE AS SUCH.
A CORPORATION SHOULD SIGN BY AN AUTHORIZED OFFICER AND AFFIX ITS SEAL. A
PARTNERSHIP SHOULD SIGN IN THE PARTNERSHIP NAME BY AN AUTHORIZED PERSON.
<PAGE>
^ FOLD AND DETACH HERE ^
Dear Shareholder(s):
Enclosed are materials relative to the Special Meeting of Shareholders of
Community Sav i n g s Bankshares, Inc. The Notice of Special Meeting and Proxy
Statement describe the formal business to be transacted at the Special Meeting,
as summarized on the attached proxy card. Whether you expect to attend the
Special Meeting or not, please complete and return the attached proxy card in
the enclosed, pre-paid envelope. Your prompt return of the proxy card will save
us the expense of sending further requests for proxies.
As a shareholder, please remember that your vote is very important to us. We
look forward to hearing from you.
Sincerely,
/s/ JAMES B. PITTARD, JR.
- - -----------------------------------------
James B. Pittard, Jr.
President and Chief Executive Officer
P.S. To assist you in locating the Embassy Suites PGA, we've included a map on
the reverse side of this card.
<PAGE>
REVOCABLE PROXY
SPECIAL MEETING OF SHAREHOLDERS
COMMUNITY SAVINGS BANKSHARES, INC.
660 U.S. Highway One
NORTH PALM BEACH, FLORIDA 33408
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, being a shareholder of Community Savings Bankshares, Inc. (the
"Company") as of October 29, 1999, hereby authorizes the Board of Directors of
the Company, or any of their successors, as proxies, with full powers of
substitution, to represent the undersigned at the Special Meeting of
Shareholders to be held at The Embassy Suites PGA, 4350 PGA Boulevard, Palm
Beach Gardens, Florida, on Tuesday, December 21, 1999 at 1:30 p.m., Eastern
Time, and at any adjournment of said meeting, and thereat to act with respect to
all votes that the undersigned would be entitled to cast, if then personally
present, as set forth on the reverse hereof.
<PAGE>
^ FOLD AND DETACH HERE ^
EMBASSY SUITES [GRAPHIC OMITTED - MAP OF HOTEL]
4350 PGA Blvd.
Palm Beach Gardens, FL 33410
Telephone 561-622-1000
LOCATION
Conveniently located at Interstate 95 exit 57B PGA Blvd. west, just 1 mile from
the Florida Turnpike exit 109.
