Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
EVERTRUST FINANCIAL GROUP, INC.
------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
EVERTRUST FINANCIAL GROUP, INC.
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
-----------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
N/A
-----------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
-----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
-----------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11 (a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
N/A
-----------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
N/A
-----------------------------------------------------------------------------
(3) Filing party:
N/A
-----------------------------------------------------------------------------
(4) Date filed:
N/A
-----------------------------------------------------------------------------
<PAGE>
EVERTRUST FINANCIAL GROUP, INC.
2707 Colby Avenue
Everett, Washington 98201
June 19, 2000
Dear Fellow Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
EverTrust Financial Group, Inc. ("Company"). The meeting will be held at the
Everett Golf & Country Club located at 1500 52nd Street in Everett,
Washington, on Tuesday, July 25, 2000 at 7:00 p.m., local time. This will be
the first annual meeting of stockholders since the Company became a public
company on September 30, 1999 in connection with its conversion from mutual to
stock form.
The Notice of First Annual Meeting of Stockholders and Proxy Statement
appearing on the following pages describes the formal business to be
transacted at the meeting. Please take a moment to read this material. When
you have finished, please mark, sign, date and return your proxy card in the
enclosed envelope.
Because EverTrust Financial Group, Inc. may be the first stock investment
for many of you, I would like to extend an invitation to contact our director
of investor relations, Brad Ogura (425/258-0380 or E-mail
[email protected]). He is available to answer questions you may
have about what to expect at the annual meeting, or about the Company in
general.
Your vote is important. Whether or not you attend this meeting in
person, and regardless of the number of shares you own, it is important that
your shares are represented at this meeting. To make sure your shares are
represented, please mark, sign, date and return your proxy card as soon as
possible. This will allow us to avoid the expense of a follow-up mailing. If
you attend the meeting, you may vote in person even if you have previously
mailed a proxy card.
On behalf of the board of directors and officers of EverTrust Financial
Group, Inc., we look forward to seeing you at our annual meeting and providing
you with an update on our operations.
Sincerely,
/s/Michael B. Hansen
Michael B. Hansen
President and Chief Executive Officer
<PAGE>
EVERTRUST FINANCIAL GROUP, INC.
2707 COLBY AVENUE
EVERETT, WASHINGTON 98201
(425) 258-3645
------------------------------------------------------------------------------
NOTICE OF FIRST ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 25, 2000
------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN that the First Annual Meeting of Stockholders of
EverTrust Financial Group, Inc. ("Company") will be held at the Everett Golf &
Country Club located at 1500 52nd Street in Everett, Washington, on Tuesday,
July 25, 2000, at 7:00 p.m., local time, for the following purposes:
(1) To elect nine directors of the Company;
(2) To approve the appointment of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending March 31,
2001;
(3) To consider and vote upon a proposal to adopt the EverTrust
Financial Group, Inc. 2000 Stock Option Plan;
(4) To consider and vote upon a proposal to adopt the EverTrust
Financial Group, Inc. 2000 Management Recognition Plan; and
(5) To consider and act upon such other matters as may properly come
before the meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Any action may be taken on the foregoing proposals at the meeting on the
date specified above or on any date or dates to which, by original or later
adjournment, the meeting may be adjourned. Stockholders of record at the
close of business on June 1, 2000 are entitled to notice of and to vote at the
meeting and any adjournments or postponements thereof.
You are requested to complete and sign the enclosed form of proxy, which
is solicited by the Board of Directors, and to mail it promptly in the
enclosed envelope. The proxy will not be used if you attend the meeting and
vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/LORELEI CHRISTENSON
LORELEI CHRISTENSON
CORPORATE SECRETARY
Everett, Washington
June 19, 2000
------------------------------------------------------------------------------
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
------------------------------------------------------------------------------
<PAGE>
------------------------------------------------------------------------------
PROXY STATEMENT
OF
EVERTRUST FINANCIAL GROUP, INC.
2707 COLBY AVENUE
EVERETT, WASHINGTON 98201
(425) 258-3645
------------------------------------------------------------------------------
FIRST ANNUAL MEETING OF STOCKHOLDERS
JULY 25, 2000
------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of EverTrust Financial Group, Inc.
("Company") to be used at the First Annual Meeting of Stockholders of the
Company ("Meeting"). The Company is the holding company for Everett Mutual
Bank and Commercial Bank of Everett ("CBE"). Everett Mutual Bank and CBE are
referred to collectively herein as the "Banks." The Meeting will be held at
the Everett Golf & Country Club located at 1500 52nd Street in Everett,
Washington, on Tuesday, July 25, 2000, at 7:00 p.m., local time. This Proxy
Statement and the enclosed proxy card are being first mailed to stockholders
on or about June 19, 2000.
------------------------------------------------------------------------------
VOTING AND PROXY PROCEDURE
------------------------------------------------------------------------------
Stockholders Entitled to Vote. Stockholders of record as of the close of
business on June 1, 2000 ("Voting Record Date") are entitled to one vote for
each share of common stock ("Common Stock") of the Company then held. At the
close of the Voting Record Date the Company had 8,103,637 shares of Common
Stock issued and outstanding.
Quorum. The presence, in person or by proxy, of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum at the Meeting. Abstentions and broker
non-votes will be counted as shares present and entitled to vote at the
Meeting for purposes of determining the existence of a quorum.
Voting. The Board of Directors solicits proxies so that each stockholder
has the opportunity to vote on the proposal to be considered at the Meeting.
When a proxy card is returned properly signed and dated, the shares
represented thereby will be voted in accordance with the instructions on the
proxy card. Where no instructions are indicated, proxies will be voted FOR
the nominees for directors set forth below, FOR the approval of the
appointment of independent auditors, FOR ratification of the adoption of the
EverTrust Financial Group, Inc. 2000 Stock Option Plan and FOR ratification of
the adoption of the EverTrust Financial Group, Inc. 2000 Management
Recognition Plan. If a stockholder of record attends the Meeting, he or she
may vote by ballot.
The directors to be elected at the Meeting will be elected by a plurality
of the votes cast by stockholders present in person or by proxy and entitled
to vote. Pursuant to the Company's Articles of Incorporation, stockholders
are not permitted to cumulate their votes for the election of directors.
Votes may be cast for or withheld from each nominee. Votes that are withheld
and broker non-votes will have no effect on the outcome of the election
because directors will be elected by a plurality of the votes cast.
With respect to the other proposals to be voted upon at the Meeting,
stockholders may vote for or against a proposal or may abstain from voting.
Approval of the appointment of independent auditors, and ratification of the
adoption of the 2000 Stock Option Plan and the 2000 Management Recognition
Plan will each require the affirmative vote of a majority of the outstanding
shares of Common Stock present in person or by proxy at the Meeting and
entitled to vote. Abstentions will be counted and will have the same effect
as a vote against each of the proposals; broker non-votes will be disregarded
and will have no effect on the outcome of each of these proposals.
<PAGE>
Revocation of a Proxy. Stockholders who execute proxies retain the right
to revoke them at any time. Proxies may be revoked by written notice
delivered in person or mailed to the Corporate Secretary of the Company or by
filing a later dated and signed proxy prior to a vote being taken on a
proposal at the Meeting. Attendance at the Meeting will not automatically
revoke a proxy, but a stockholder in attendance may request a ballot and vote
in person, thereby revoking a prior granted proxy.
Participants in the EverTrust Financial Group, Inc. ESOP. If a
stockholder is a participant in the EverTrust Financial Group, Inc. Employee
Stock Ownership Plan ("ESOP"), the proxy card represents a voting instruction
to the trustees of the ESOP as to the number of shares in the participant's
plan account. Each participant in the ESOP may direct the trustees as to the
manner in which shares of Common Stock allocated to the participant's plan
account are to be voted. Unallocated shares of Common Stock held by the ESOP
and allocated shares for which no voting instructions are received will be
voted by the trustees in the same proportion as shares for which the trustees
have received voting instructions.
------------------------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------------
Persons and groups who beneficially own in excess of 5% of the Company's
Common Stock are required to file certain reports with the Securities and
Exchange Commission ("SEC"), and provide a copy to the Company, disclosing
such ownership pursuant to the Securities Exchange Act of 1934, as amended
("Exchange Act"). Based on such reports, the following table sets forth, at
the close of business on the Voting Record Date, certain information as to
those persons who were beneficial owners of more than 5% of the outstanding
shares of Common Stock. Based on such reports, management knows of no persons
other than those set forth below who beneficially owned more than 5% of the
outstanding shares of Common Stock at the close of business on the Voting
Record Date. The table also sets forth, as of the close of business on the
Voting Record Date, certain information as to shares of Common Stock
beneficially owned by the Company's directors and "named executive officers"
and by all directors and executive officers as a group.
Number of Shares Percent of Shares
Name Beneficially Owned (1) Outstanding
---- ---------------------- -----------
Beneficial Owners of More Than 5%
Wellington Management Co. LLP
75 State Street, 19th Floor
Boston, Massachusetts 02109 641,000 7.9%
Directors
Margaret B. Bavasi 11,693 *
Thomas R. Collins 20,000 *
Thomas J. Gaffney 20,000 *
R. Michael Kight 10,000 *
Robert A. Leach, Jr. 18,136 *
George S. Newland 10,000 *
William J. Rucker 22,000 *
(table continued on following page)
2
<PAGE>
Number of Shares Percent of Shares
Name Beneficially Owned (1) Outstanding
---- ---------------------- -----------
Named Executive Officers(2)
Michael B. Hansen(3)(4) 28,100 *
Michael R. Deller (3) 10,000 *
Jeffrey R. Mitchell 9,667 *
Lorelei Christenson(5) 12,600 *
All Executive Officers and
Directors as a Group (11 persons) 176,117(6) 2.2%
--------------
* Less than one percent of shares outstanding.
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has voting and/or investment power with
respect to such security. The table includes shares owned by spouses,
other immediate family members in trust, shares held in retirement
accounts or funds for the benefit of the named individuals, and other
forms of ownership, over which shares the persons named in the table may
possess voting and/or investment power. Shares held in accounts under
the Company's ESOP, as to which the holders have voting power but not
investment power, are included as follows: Mr. Hansen, 2,137 shares;
Mr. Deller, 1,440 shares; Mr. Mitchell, 1,037 shares; and Ms.
Christenson, 1,037 shares; all executive officers and directors as a
group, 5,651 shares.
(2) SEC regulations define the term "named executive officers" to include
all individuals serving as chief executive officer during the most
recently completed fiscal year, regardless of compensation level, and
the four most highly compensated executive officers, other than the
chief executive officer, whose total annual salary and bonus for the
last completed fiscal year exceeded $100,000. Messrs. Hansen, Deller,
Mitchell, and Ms. Christenson were the Company's "named executive
officers" for the fiscal year ended March 31, 2000.
(3) Messrs. Hansen and Deller are also directors of the Company.
(4) Includes 3,100 shares owned by Mr. Hansen's spouse's individual
retirement account ("IRA").
(5) Includes 5,000 shares owned by Ms. Christenson's spouse's IRA.
(6) Includes an approximation of the number of shares in the participant's
ESOP account.
------------------------------------------------------------------------------
PROPOSAL I -- ELECTION OF DIRECTORS
------------------------------------------------------------------------------
The Company's Board of Directors consists of nine members. The nine
members of the Board are the initial directors of the Company, each of whose
term as initial director expires at the Meeting in accordance with Washington
law. In accordance with the Company's Articles of Incorporation, the Board is
divided into three classes with three-year staggered terms, with approximately
one-third of the directors elected each year. Nine directors, whose names
appear in the following table, will be elected at the Meeting to serve for the
respective terms set forth in the table, or until their respective successors
have been elected and qualified. Each director of the Company is also a
director of Everett Mutual Bank.
It is intended that the proxies solicited by the Board of Directors will
be voted for the election of the nominees named in the following table. If
any nominee is unable to serve, the shares represented by all valid proxies
will be voted for the election of such substitute as the Board of Directors
may recommend or the Board of Directors may adopt a resolution to amend the
Bylaws and reduce the size of the Board. At this time the Board of Directors
knows of no reason why any nominee might be unavailable to serve.
The Board of Directors recommends a vote "FOR" the election of all
nominees named in the following table.
3
<PAGE>
The following table sets forth certain information regarding the nominees
for election at the Meeting.
Year First Elected or Term to
Name Age(1) Appointed Director(2) Expire(3)
---- ------ --------------------- ---------
BOARD NOMINEES
Michael B. Hansen 58 1981 2001
George S. Newland 60 1985 2001
William J. Rucker 60 1976 2001
Michael R. Deller 49 1999 2002
Robert A. Leach, Jr. 50 1997 2002
Thomas R. Collins 57 1994 2002
Margaret B. Bavasi 45 1996 2003
R. Michael Kight 61 1974 2003
Thomas J. Gaffney 52 1984 2003
-------------
(1) As of March 31, 2000.
(2) Includes prior service on the Board of Directors of Everett Mutual Bank
and the Company's predecessor, Mutual Bancshares.
(3) Assuming the individual is elected.
The present principal occupation and other business experience during the
last five years of each nominee for election and each director continuing in
office is set forth below:
Michael B. Hansen is Chairman of the Board, President and Chief Executive
Officer of the Company and Chief Executive Officer of Everett Mutual Bank and
CBE. Mr. Hansen has been employed by Everett Mutual Bank for 21 years.
George S. Newland is the President and owner of Newland Construction Co.,
Inc., a general contracting company specializing in commercial, industrial and
institutional projects in the greater Northwest area. Mr. Newland has over 38
years of experience in the construction area.
William J. Rucker is the Chief Executive Officer and owner of H&L
Sporting Goods and Soccer West, retail and institutional sporting goods
businesses.
Michael R. Deller is Executive Vice President of the Company and
President and Chief Operating Officer of Everett Mutual Bank and is
responsible for branch administration, marketing and sales. Prior to his
appointment as President of Everett Mutual Bank in April 2000, he had served
as Executive Vice President and Chief Operating Officer since 1997. From 1994
to 1997, Mr. Deller was the Executive Director of the Port of Everett. Mr.
Deller is the brother-in-law of Thomas R. Collins.
Robert A. Leach, Jr. is an investment executive and senior vice president
and branch manager of Ragen Mackenzie, Inc., a financial services company.
Mr. Leach has worked in the financial services industry for 18 years.
Thomas R. Collins is an attorney and a Partner in the Anderson Hunter Law
Firm, P.S., which firm he has been associated with for 31 years. Mr. Collins
is the brother-in-law of Michael R. Deller, the President and Chief Operating
Officer of Everett Mutual Bank.
Margaret B. Bavasi is the former co-owner of the Everett AquaSox Baseball
Club, a minor league baseball club. She served as the Club's Vice President
from 1984 to 1999.
4
<PAGE>
R. Michael Kight is an attorney and a Partner in the law firm of Newton-
Kight, L.L.P., which he joined 33 years ago. The firm serves as general
counsel to Everett Mutual Bank and CBE.
Thomas J. Gaffney is a Partner of the Everett office of Moss Adams LLP, a
certified public accounting firm, with which he has been associated for 31
years.
------------------------------------------------------------------------------
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
------------------------------------------------------------------------------
Committees of the Company
The Board of Directors of the Company conducts its business through
meetings of the Board and through its committees. During the fiscal year
ended March 31, 2000, the Board of Directors of the Company held 15 meetings.
No director of the Company attended fewer than 75% of the total meetings of
the Board and committees on which such person served during this period.
The Company's Board of Directors has established Audit, Nominating and
Compensation Committees.
The Audit Committee, consisting of Directors Leach, Gaffney and Rucker,
receives and reviews all reports prepared by the Company's external and
internal auditor. The Audit Committee met six times during the fiscal year
ended March 31, 2000.
The Nominating Committee, consisting of Directors Leach, Hansen, Gaffney
and Rucker, makes recommendations to the Board for the annual selection of
management's nominees for election as directors of the Company. The
Nominating Committee met once during the fiscal year ended March 31, 2000.
The Compensation Committee, consisting of Directors Leach, Bavasi and
Rucker, makes recommendations to the full Board of Directors concerning
employee compensation. The Compensation Committee meets as needed and met
once during the fiscal year ended March 31, 2000.
Committees of Everett Mutual Bank
Everett Mutual Bank's Board of Directors meets monthly and has special
meetings as needed. During the year ended March 31, 2000, the Board of
Directors met 20 times. No director attended fewer than 75% of the total
meetings of the board and committees on which such board members served during
this period.
The Executive Committee of Everett Mutual Bank, comprised of Directors
Bavasi, Rucker and Leach, sets board policies and reviews the performance and
salary of Everett Mutual Bank's Chief Executive Officer. In fiscal 2000, this
Committee met once.
The Loan Review Committee of Everett Mutual Bank, comprised of Directors
Bavasi, Collins, Kight and Newland, meets at least monthly. This Committee
monitors Everett Mutual Bank's lending practices and policies. In fiscal
2000, this Committee met 17 times.
The Audit and Budget Committee of Everett Mutual Bank, comprised of
Directors Leach, Gaffney and Rucker, meets monthly. This Committee reviews
internal auditing functions and establishes policies to assure full disclosure
of Everett Mutual Bank's financial condition. This Committee also oversees the
audit prepared by an external audit firm and the results of the examinations
of the Federal Deposit Insurance Corporation and the Washington Division of
Banks. In fiscal 2000, this Committee met 12 times.
5
<PAGE>
The Investment Committee of Everett Mutual Bank, comprised of Directors
Kight, Leach, Rucker and Newland, meets quarterly. This Committee reviews the
liquidity investments of Everett Mutual Bank. In fiscal 2000, this Committee
met four times.
The Nominating Committee of Everett Mutual Bank, comprised of Directors
Rucker, Gaffney, Hansen and Leach, meets as necessary. This Committee reviews
and investigates potential board members when there is a vacancy on the board.
In fiscal 2000, this Committee met once.
The entire board of directors of Everett Mutual Bank determines the
salaries to be paid to officers of Everett Mutual Bank, based on
recommendations of the Chief Executive Officer. The board of directors met
once during fiscal 2000 to discuss such salary matters.
Committees of Commercial Bank of Everett
CBE held 16 meetings of its board of directors during the year ended
March 31, 2000. CBE has audit, investment and loan committees. All committee
meetings are held with regular board meetings, with all board members in
attendance.
------------------------------------------------------------------------------
DIRECTORS' COMPENSATION
------------------------------------------------------------------------------
All non-officer directors receive an annual retainer of $10,000 paid
quarterly in increments of $2,500. Also, all non-officer directors, other than
the Vice Chairman of the Board, receive a fee of $550 per board meeting
attended and $220 per committee meeting attended. The Vice Chairman of the
Board receives a fee of $660 per board meeting attended and the chairman of
each committee receives $275 per committee meeting attended. Total fees paid
to directors during the year ended March 31, 2000 were $231,175.
Directors participate in a Company sponsored voluntary deferred
compensation program that is also available to a select group of management
and/or highly compensated employees. Under the plan, a director is permitted
to defer all or a specified portion of the compensation paid to them.
Deferral amounts are credited to a director's Deferred Compensation Account
and credited with earnings as of the last day of each calendar quarter in
accordance with such benchmark investment measures selected by the director as
specified in the plan. During the year ended March 31, 2000, $99,247 of
directors compensation was deferred (net of distributions) under the plan.
------------------------------------------------------------------------------
EXECUTIVE COMPENSATION
------------------------------------------------------------------------------
Summary Compensation Table
The following table shows the compensation, including amounts deferred to
future periods by the officers, paid to the Company's Chief Executive Officer
and executive officers, whose salary and bonus exceeded $100,000, during the
fiscal year ended March 31, 2000.
6
<PAGE>
Annual Compensation(1)
---------------------------------------
Other All
Annual Other
Name and Compen- Compen-
Position Year Salary Bonus sation(3)(4) sation(5)
-------- ---- ------ ----- ------------ ---------
Michael B. Hansen 2000 $200,000 $52,000(2) $ 80 $38,000
Chairman of the Board, 1999 185,000 72,000 15,625 7,949
President and Chief
Executive Officer of the
Company; Chief Executive
Officer of Everett Mutual
Bank and CBE
Michael R. Deller 2000 $135,000 $31,000(2) $ -- $25,094
Executive Vice President 1999 120,000 51,000 217 4,723
of the Company and
President and Chief
Operating Officer of
Everett Mutual Bank
Jeffrey R. Mitchell 2000 $ 97,000 $21,300(2) $ -- $17,822
Senior Vice President and 1999 90,000 36,000 347 3,912
Chief Financial Officer
of the Company, Everett
Mutual Bank, CBE, I-Pro,
Inc. and Mutual Bancshares
Capital, Inc.
Lorelei Christenson 2000 $ 97,000 $21,300(2) $ 57 $18,571
Senior Vice President and 1999 90,000 29,000 9,276 3,893
Corporate Secretary of
the Company; Senior Vice
President, Chief Informa-
tion Officer and Corporate
Secretary of Everett
Mutual Bank, CBE, and
Mutual Bancshares Capital,
Inc.; President of I-Pro,
Inc.
------------------
(1) Compensation information for fiscal year ended March 31, 1998 has been
omitted as the Company was neither a public company nor a subsidiary
thereof at such time. Salary and bonus information does not exclude
amounts deferred under a nonqualified deferred compensation plan.
(2) Paid in April 2000 for fiscal year ending March 31, 2000.
(3) The aggregate amount of perquisites and other personal benefits was
less than 10% of the total annual salary and bonus reported.
(4) Amounts reported are earnings credited to the non-qualified deferred
compensation programs in excess of 120% of the applicable federal
rate.
(5) Includes amounts paid in connection with contributions made by the
Company on behalf of the officer to vested and unvested defined
contribution plans and the dollar value of any insurance premiums paid
by the Company on behalf of the officer with respect to term life
insurance.
Employment Agreements for Executive Officers. The Company and Everett
Mutual Bank (collectively, the "Employers") have entered into three-year
employment agreements ("Employment Agreements") with Messrs. Hansen, Deller
and Mitchell (individually, the "Executive"). Under the Employment
Agreements, the current salary levels for Messrs. Hansen and Mitchell are
$200,000 and $97,000, respectively, which amounts are paid by the Company, and
for Mr. Deller, $135,000, which is paid by Everett Mutual Bank, and which may
be increased at the discretion of the Board of Directors or an authorized
committee of the Board. On each anniversary of the initial date of the
Employment Agreements, the term of each agreement may be extended for an
additional year at the discretion of the Board. The agreements are terminable
by the Employers at any time, by the Executive if he is assigned duties
inconsistent with his initial position, duties, responsibilities and status,
or upon the occurrence of certain events
7
<PAGE>
specified by federal regulations. In the event that an Executive's employment
is terminated without cause or upon the Executive's voluntary termination
following the occurrence of an event described in the preceding sentence, the
Employers would be required to honor the terms of the agreement through the
expiration of the current term, including payment of then current cash
compensation and continuation of employee benefits.
The Employment Agreements provide for severance payments and other
benefits if the Executive is involuntarily terminated because of a change in
control of the Employers. The agreements authorize severance payments on a
similar basis if the Executive voluntarily terminates his employment following
a change in control because he is assigned duties inconsistent with his
position, duties, responsibilities and status immediately prior to such change
in control. The agreements define the term "change in control" as having
occurred when, among other things, a person other than the Company purchases
shares of Common Stock under a tender or exchange offer for the shares; any
person, as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act, is or becomes the beneficial owner, directly or indirectly, of securities
of the Company representing 25% or more of the combined voting power of the
Company's then outstanding securities; the membership of the Board of
Directors changes as the result of a contested election; or stockholders of
the Company approve a merger, consolidation, sale or disposition of all or
substantially all of the Company's assets, or a plan of partial or complete
liquidation.
The maximum value of the severance benefits under the Employment
Agreements is 2.99 times the Executive's average annual compensation during
the five-year period prior to the effective date of the change in control (the
"base amount"). The Employment Agreements provide that the value of the
maximum benefit may be distributed, at the Executive's election, in the form
of a lump sum cash payment equal to 2.99 times the Executive's base amount, or
a combination of a cash payment and continued coverage under the Employer's
health, life and disability programs for a 36-month period following the
change in control, the total value of which does not exceed 2.99 times the
Executive's base amount. Assuming that a change in control had occurred at
March 31, 2000 and that Messrs. Hansen, Deller and Mitchell each elected to
receive a lump sum cash payment, they would be entitled to a payment of
approximately $546,141, $426,967 and $255,432, respectively. Section 280G of
the Internal Revenue Code, as amended ("Code"), provides that severance
payments that equal or exceed three times the individual's base amount are
deemed to be "excess parachute payments" if they are conditioned upon a change
in control. Individuals receiving parachute payments in excess of 2.99 times
of their base amount are subject to a 20% excise tax on the amount of such
excess payments. If excess parachute payments are made, the Employers would
not be entitled to deduct the amount of such excess payments. The Employment
Agreements provide that severance and other payments that are subject to a
change in control will be reduced as much as necessary to ensure that no
amounts payable to the Executive will be considered excess parachute payments.
The Employment Agreements restrict each Executive's right to compete
against Everett Mutual Bank for a period of one year from the date of
termination of the agreement if the Executive voluntarily terminates
employment except in the event of a change in control.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or
the Exchange Act that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following Report of the Compensation
Committee and Performance Graph shall not be incorporated by reference into
any such filings.
Report of the Compensation Committee. Under rules established by the
SEC, the Company is required to provide certain data and information in regard
to the compensation and benefits provided to the Company's Chief Executive
Officer and other named executive officers. The disclosure requirements for
the Chief Executive Officer and named executive officers include the use of
tables and a report explaining the rationale and considerations that led to
the fundamental executive compensation decisions affecting those individuals.
The Compensation Committee of the Board of Directors of the Company is
responsible for establishing and monitoring compensation policies of the
Company and for reviewing and ratifying the actions of the Compensation
Committees of the Boards of Directors of
8
<PAGE>
Everett Mutual Bank and CBE. Performance is evaluated and salaries are set by
the Compensation Committees of the Banks.
General. The Banks' Compensation Committees' duties are to recommend and
administer policies that govern executive compensation. The Committees
evaluate individual executive performance, compensation policies and salaries.
The Committees are responsible for evaluating the performance of the Chief
Executive Officers of the Banks while the Chief Executive Officers of the
Banks evaluate the performance of other senior officers of the respective
Banks and make recommendations to the Committees regarding compensation
levels. The Committees have final authority to set compensation levels.
Compensation Policies. The executive compensation policies of the Banks
are designed to establish an appropriate relationship between executive pay
and the Company's and the Banks' annual performance, to reflect the attainment
of short- and long-term financial performance goals and to enhance the ability
of the Company and the Banks to attract and retain qualified executive
officers. The principles underlying the executive compensation policies
include the following:
. To attract and retain key executives who are vital to the long-
term success of the Company and the Banks and are of the highest
caliber;
. To provide levels of compensation competitive with those offered
throughout the financial industry and consistent with the
Company's and the Banks' level of performance;
. To motivate executives to enhance long-term stockholder value by
building their equity interest in the Company; and
. To integrate the compensation program with the Company's and the
Banks' annual and long-term strategic planning and performance
measurement processes.
The Committees consider a variety of subjective and objective factors in
determining the compensation package for individual executives including: (1)
the performance of the Company and the Banks as a whole with emphasis on
annual performance factors and long-term objectives; (2) the responsibilities
assigned to each executive; and (3) the performance of each executive of
assigned responsibilities as measured by the progress of the Company and the
Banks during the year.
Base Salary. The Company's current compensation plan involves a
combination of salary, cash bonuses to reward short-term performance and
voluntary participation in the deferred compensation plan. The salary levels
of executive officers are designed to be competitive within the banking and
financial services industries. In setting competitive salary levels, the
Compensation Committees continually evaluate current salary levels by
surveying similar institutions in Washington, Oregon and the United States.
The Committee's peer group analysis focuses on asset size, nature of
ownership, type of operation and other common factors. Specifically, the
Committees annually review the Northwest Financial Industry Salary Survey
prepared by Milliman & Robertson, Inc., Actuaries and Consultants, covering 93
institutions and combining the studies of the Washington Bankers Association,
Washington Savings League, Puget Sound Banking Industry and Seattle Mortgage
Banking Industry. Also reviewed are the America's Community Bankers'
Compensation Survey, covering 452 institutions, and the SNL Executive
Compensation Review.
Bonus Program. A short-term incentive bonus plan is in effect for the
officers of the Banks which is designed to compensate for performance. The
plan is designed to provide for bonuses of up to 50% of salary for the chief
executive officer, up to 40% of salary for executive vice presidents, up to
35% of salary for senior vice presidents and certain other officers. In
certain circumstances, bonuses may be payable at higher levels based on
exceptional performance in excess of established targets. The performance
bonus is based primarily on quantifiable data such as return on assets, return
on equity and level of operating expenses. Subjective evaluation of
performance is limited.
9
<PAGE>
Deferred Compensation. The Company sponsors a voluntary deferred
compensation plan for directors and a select group of management and/or highly
compensated employees. An eligible employee is permitted to defer all or a
specified portion of his compensation. Deferral amounts are credited to a
participant's Deferred Compensation Account on a payroll deduction basis and
credited with earnings on the last calendar day of each quarter in accordance
with the benchmark investment measures selected by the participant as
specified in the plan.
Compensation of the Chief Executive Officer. During the calendar year
ended March 31, 2000, the base salary of Michael B. Hansen, Chairman of the
Board, President and Chief Executive Officer of the Company, and Chief
Executive Officer of Everett Mutual Bank and CBE, was $200,000. In addition,
he was credited with $90,080 in other compensation (comprised of a bonus of
$52,000; retirement plan contributions of $9,514; ESOP contributions of
$27,910; term life insurance premiums of $576; and non-qualified deferred
compensation in excess of 120% of the applicable federal rate of $80). This
resulted in total compensation of $290,080, which represents a 3.39% increase
from the twelve month period ended March 31, 1999. The Committee believes
that Mr. Hansen's compensation is appropriate based on the Company's overall
compensation policy, on the basis of the Committee's consideration of peer
group data, and the financial performance of the Company during the fiscal
year. Mr. Hansen did not participate in the Committee's consideration of his
compensation level for the fiscal year.
Compensation of Named Executive Officers. During the calendar year ended
March 31, 2000, the base salary of Michael R. Deller, Executive Vice President
of the Company and President and Chief Operating Officer of Everett Mutual
Bank was $135,000. In addition, he was credited with $56,094 in other
compensation (comprised of a bonus of $31,000; retirement plan contributions
of $5,714; ESOP contributions of $18,805; and term life insurance premiums of
$575). This resulted in total compensation of $191,049, which represents an
8.61% increase from the twelve month period ended March 31, 1999. The
Committee believes that Mr. Deller's compensation is appropriate based on the
Company's overall compensation policy, on the basis of the Committee's
consideration of peer group data, and the financial performance of the Company
during the fiscal year. Mr. Deller did not participate in the Committee's
consideration of his compensation level for the fiscal year.
During the calendar year ended March 31, 2000, the base salary of Jeffrey
R. Mitchell, Senior Vice President and Chief Financial Officer of the Company,
Everett Mutual Bank, CBE, I-Pro, Inc. and Mutual Bancshares Capital, Inc. was
$97,000. In addition, he was credited with $39,122 in other compensation
(comprised of a bonus of $21,300; retirement plan contributions of $3,865;
ESOP contributions of $13,538; and term life insurance premiums of $419).
This resulted in total compensation of $136,122, which represents a 4.50%
increase from the twelve month period ended March 31, 1999. The Committee
believes that Mr. Mitchell's compensation is appropriate based on the
Company's overall compensation policy, on the basis of the Committee's
consideration of peer group data, and the financial performance of the Company
during the fiscal year. Mr. Mitchell did not participate in the Committee's
consideration of his compensation level for the fiscal year.
During the calendar year ended March 31, 2000, the base salary of Lorelei
Christenson, Senior Vice President, Chief Information Officer and Corporate
Secretary of the Company, Everett Mutual Bank, CBE, I-Pro, Inc. and Mutual
Bancshares Capital, Inc. was $97,000. In addition, she was credited with
$39,928 in other compensation (comprised of a bonus of $21,300; retirement
plan contributions of $4,614; ESOP contributions of $13,538; term life
insurance premiums of $419; and non-qualified deferred compensation in excess
of 120% of the applicable federal rate of $57). This resulted in total
compensation of $136,928, which represents a 3.60% increase from the twelve
month period ended March 31, 1999. The Committee believes that Ms.
Christenson's compensation is appropriate based on the Company's overall
compensation policy, on the basis of the Committee's consideration of peer
group data, and the financial performance of the Company during the fiscal
year. Ms. Christenson did not participate in the Committee's consideration of
her compensation level for the fiscal year.
Compensation Committee:
Robert A. Leach, Jr., Chairman
Margaret B. Bavasi
William J. Rucker
10
<PAGE>
Compensation Committee Interlocks and Insider Participation. Mr. Hansen,
Chairman of the Board, President and Chief Executive Officer of the Company,
and Chief Executive Officer of Everett Mutual Bank and CBE, serves as a
member of the Compensation Committee of the Company and the Banks. Although
Mr. Hansen recommends compensation to be paid to the named executive officers,
the entire Board of Directors of the Company, Everett Mutual Bank and CBE
reviews such recommendations and sets the compensation for Mr. Hansen.
Performance Graph. The following graph compares the cumulative total
return on the Company's Common Stock with the cumulative total return on the
Russell 2000 Index, Nasdaq Combined Bank Index, and the SNL Thrift Index, a
peer group index. The graph assumes that the value of the investment was 100
on October 4, 1999, the initial day of trading, and that all dividends were
reinvested. The closing price of the Company's Common Stock on the initial
day of trading was $10.938 per share and the initial offering price for the
Company's Common Stock was $10.00 per share.
[graph appears here]
<TABLE>
[graph data:]
Period Ending
10-04-99 11-05-99 12-03-99 01-07-00 02/04/00 03-03-00 03-31-00
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
EverTrust Financial Group, Inc. 100.00 91.00 89.00 84.00 86.00 83.00 90.00
Russell 2000 Index 100.00 104.00 109.00 115.00 124.00 141.00 127.00
Nasdaq Combined Bank Index 100.00 108.00 105.00 94.00 93.00 83.00 91.00
SNL Thrift Index 100.00 109.00 99.00 87.00 85.00 80.00 88.00
</TABLE>
11
<PAGE>
------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
------------------------------------------------------------------------------
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than 10% of any registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership with the SEC. Executive officers, directors and greater
than 10% stockholders are required by regulation to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms it has received
and written representations provided to the Company by the above referenced
persons, the Company believes that during the fiscal year ended March 31, 2000
all filing requirements applicable to its reporting officers, directors and
greater than 10% stockholders were properly and timely complied with, except
for a purchase by John E. Thoresen, the President of Mutual Bancshares
Capital, Inc., a subsidiary of the Company. Mr. Thoresen inadvertently
failed to file a Form 4, Statement of Change in Beneficial Ownership of
Securities, for purchases during the month of October 1999, which was
subsequently filed on December 6, 1999.
------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
------------------------------------------------------------------------------
Current law requires that all loans or extensions of credit to executive
officers and directors must be made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons (unless the loan or extension of credit is
made under a benefit program generally available to all other employees and
does not give preference to any insider over any other employee) and does not
involve more than the normal risk of repayment or present other unfavorable
features. Loans to all directors and executive officers and their associates
totaled approximately $1.2 million at March 31, 2000. Such loans (i) were
made in the ordinary course of business, (ii) were made on substantially the
same terms and conditions, including interest rates and collateral, as those
prevailing at the time for comparable transactions with the Banks' other
customers, and (iii) did not involve more than the normal risk of
collectibility or present other unfavorable features when made.
R. Michael Kight is a partner in the law firm of Newton-Kight, L.L.P.,
which firm is general counsel to Everett Mutual Bank and CBE. Services
provided by Newton-Kight, L.L.P. to Everett Mutual Bank and CBE are provided
on terms comparable to those which are available to unaffiliated parties.
George S. Newland is the president and owner of Newland Construction Co.,
Inc., a general contracting company. During fiscal 2000, the Company and
Everett Mutual Bank paid Newland Construction Co., Inc. approximately $285,405
in fees for construction and periodic maintenance of their offices. Services
provided by Newland Construction Co., Inc. to the Company, Everett Mutual Bank
and CBE are provided on terms comparable to those which are available to
unaffiliated parties.
------------------------------------------------------------------------------
PROPOSAL II -- APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
------------------------------------------------------------------------------
Deloitte & Touche LLP served as the Company's independent auditors for
the calendar year ended March 31, 2000. The Board of Directors has appointed
Deloitte & Touche LLP as independent auditors for the fiscal year ending March
31, 2001, subject to approval by stockholders. A representative of Deloitte &
Touche LLP will be present at the Meeting to respond to stockholders'
questions and will have the opportunity to make a statement if he or she so
desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS
OF THE COMPANY FOR THE FISCAL YEAR ENDING MARCH 31, 2001.
12
<PAGE>
------------------------------------------------------------------------------
PROPOSAL III -- RATIFICATION OF 2000 STOCK OPTION PLAN
------------------------------------------------------------------------------
General
The Company's Board of Directors adopted the EverTrust Financial Group,
Inc. 2000 Stock Option Plan ("Plan") on March 20, 2000, subject to approval by
the Company's stockholders. The objective of the Plan is to reward
performance and build the participant's equity interest in the Company by
providing long-term incentives and rewards to officers, key employees and
other persons who provide services to the Company and its subsidiaries and who
contribute to the success of the Company by their innovation, ability,
industry, loyalty and exceptional service.
The following summary is a brief description of the material features of
the Plan. This summary is qualified in its entirety by reference to the Plan,
a copy of which is attached as Exhibit A.
Summary of the Plan
Type of Stock Option Grants. The Plan provides for the grant of
incentive stock options ("ISOs"), within the meaning of Section 422(b) of the
Code, Non-Qualified Stock Options ("NQSOs"), which do not satisfy the
requirements for ISO treatment, and stock appreciation rights ("SARs").
Administration. The Plan is administered by a Compensation Committee.
Subject to the terms of the Plan and resolutions of the Board, the
Compensation Committee interprets the Plan and is authorized to make all
determinations and decisions thereunder. The Compensation Committee also
determines the individuals to whom stock options and other awards will be
granted, the type and amount of awards that will be granted, and the terms and
conditions applicable to such grants.
Participants. All officers, directors, directors emeriti and employees
of the Company and its subsidiaries are eligible to participate in the Plan,
except that only employees may be granted ISOs.
Number of Shares of Common Stock Available. The Company has reserved
898,625 shares of Common Stock for issuance under the Plan in connection with
the exercise of awards. Shares of Common Stock to be issued under the Plan
will be authorized but unissued shares. To the extent the Company utilizes
authorized but unissued shares to fund the Plan, the interests of current
stockholders will be diluted. Since all options are granted through the use
of authorized but unissued Common Stock, current stockholders would be diluted
by approximately 9.98% based on the number of shares outstanding on June 1,
2000. Any shares subject to an award which expires or is terminated
unexercised will again be available for issuance under the Plan.
Adjustments Upon Changes in Capitalization. Shares awarded under the
Plan will be adjusted by the Compensation Committee in the event of a
reorganization, recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation or other change in corporate
structure or the Common Stock of the Company.
Stock Option Grants. The exercise price of each ISO or NQSO will be at
least equal to the fair market value of a share of Common Stock on the date of
grant. The exercise price of an option may be paid in cash, Common Stock or
other property, by the surrender of all or part of the option being exercised,
by the immediate sale through a broker of the number of shares being acquired
sufficient to pay the purchase price, or by a combination of these methods, as
and to the extent permitted by the Compensation Committee.
Under the Plan, no ISO is transferable other than by will or the laws of
descent and distribution. Any other option shall be transferable by will, the
laws of descent and distribution, a "domestic relations order," as defined in
the Code, or a gift to any member of the participant's immediate family or to
a trust for the benefit of one or more of such
13
<PAGE>
immediate family members. Options may become exercisable in full at the time
of grant or at such other times and in such installments as the Compensation
Committee determines or as may be specified in the Plan. It is anticipated
that initial option grants under the Plan will become exercisable in equal
installments over a five-year period following the date of grant. Options may
be exercised during periods before and after the participant terminates
employment, as the case may be, to the extent authorized by the Compensation
Committee or specified in the Plan. However, no ISO may be exercised after
the tenth anniversary of the date the option was granted.
Effect of a Change in Control. In the event of a tender offer, exchange
offer for shares, or a change in control (as defined in the Plan) of the
Company, each outstanding stock option grant will become fully vested and
immediately exercisable for a period of 60 days following the date of such
change in control, after which any unexercised portion of the option shall
revert to being vested as though no change in control had occurred. In
addition, in the event of a merger or other corporate event in which the
Company is not the surviving entity, the Plan provides that the participant
may elect to receive the excess of the fair market value of the Common Stock
underlying the option over the option's exercise price in cash or property, as
determined in the Compensation Committee's discretion.
Term of the Plan. Assuming stockholder approval, the Plan will be
effective on October 1, 2000. By postponing the effective date, the Plan will
not be subject to certain regulatory restrictions otherwise applicable to
stock compensation plans implemented prior to the first anniversary of
Company's mutual-to-stock conversion. The Plan will expire on the tenth
anniversary of the effective date, unless terminated sooner by the Board.
Amendment of the Plan. The Plan allows the Board to amend, suspend or
terminate the Plan without stockholder approval unless such approval is
required to comply with a tax law or regulatory requirement.
Certain Federal Income Tax Consequences. The following brief description
of the tax consequences of stock option grants under the Plan is based on
federal income tax laws currently in effect and does not purport to be a
complete description of such federal income tax consequences.
There are no federal income tax consequences either to the optionee or to
the Company upon the grant of an ISO or an NQSO. On the exercise of an ISO
during employment or within three months thereafter, the optionee will not
recognize any income and the Company will not be entitled to a deduction,
although the excess of the fair market value of the shares on the date of
exercise over the option price is includible in the optionee's alternative
minimum taxable income, which may give rise to alternative minimum tax
liability for the optionee. Generally, if the optionee disposes of shares
acquired upon exercise of an ISO within two years of the date of grant or one
year of the date of exercise, the optionee will recognize ordinary income, and
the Company will be entitled to a deduction, equal to the excess of the fair
market value of the shares on the date of exercise over the option price
(limited generally to the gain on the sale). The balance of any gain or loss
will be treated as a capital gain or loss to the optionee. If the shares are
disposed of after the two year and one year periods mentioned above, the
Company will not be entitled to any deduction, and the entire gain or loss for
the optionee will be treated as a long-term capital gain or loss.
On exercise of an NQSO, the excess of the date-of-exercise fair market
value of the shares acquired over the option price will generally be taxable
to the optionee as ordinary income and deductible by the Company, provided the
Company properly reports the income in respect of the exercise. The
disposition of shares acquired upon the exercise of an NQSO will generally
result in a capital gain or loss for the optionee, but will have no tax
consequences for the Company.
New Plan Benefits
The following table sets forth information regarding the number of
options anticipated to be granted under the Plan following the effective date
of the Plan.
14
<PAGE>
Anticipated
Name and Position Stock Option Grant
----------------- ------------------
Michael B. Hansen 179,725
Chairman of the Board, President and Chief Executive
Officer of the Company and Chief Executive Officer
of Everett Mutual Bank and CBE
Michael R. Deller 89,863
Executive Vice President of the Company and President
and Chief Operating Officer of Everett Mutual Bank
Jeffrey R. Mitchell 62,904
Senior Vice President and Chief Financial Officer
of the Company and the Banks
Lorelei Christenson 44,931
Senior Vice President and Corporate Secretary of
the Company, and Senior Vice President, Chief Information
Officer and Corporate Secretary of the Banks
All executive officers as a group (nine persons, including 473,998
Messrs. Hansen, Deller, Mitchell, and Ms. Christenson)
All non-employee directors as a group (seven persons) 224,566
The balance of the options, if any, that may be granted under the Plan
are expected to be allocated in the future to current and prospective
non-employee directors, officers and employees.
Board of Directors Recommendation
The Board of Directors recommends a vote "FOR" the adoption of the Plan
attached as Exhibit A.
------------------------------------------------------------------------------
PROPOSAL IV -- RATIFICATION OF THE
2000 MANAGEMENT RECOGNITION PLAN
------------------------------------------------------------------------------
General
Subject to approval by the Company's stockholders, the Board of Directors
of the Company adopted the EverTrust Financial Group, Inc. 2000 Management
Recognition Plan ("MRP") on March 20, 2000 for the benefit of officers,
employees and non-employee directors of the Company and its subsidiaries. The
objective of the MRP is to reward performance and build the participant's
equity interest in the Company by providing long-term incentives and rewards
to officers, key employees and other persons who provide services to the
Company and its subsidiaries and who contribute to the success of the Company
by their innovation, ability, industry, loyalty and exceptional service. In
addition, the Company believes that the MRP will provide an important
retention incentive for key personnel.
The following summary is a brief description of the material features of
the MRP. This summary is qualified in its entirety by reference to the MRP, a
copy of which is attached as Exhibit B.
15
<PAGE>
Summary of the MRP
Type of Stock Awards. The MRP provides for the award of Common Stock in
the form of restricted stock awards which are subject to the restrictions
specified in the MRP or as determined by a committee of the Company's Board of
Directors.
Administration. The MRP is administered by the Compensation Committee.
Subject to the terms of the MRP and resolutions of the Board, the Compensation
Committee interprets the MRP and is authorized to make all determinations and
decisions thereunder. The Compensation Committee also determines the
individuals to whom restricted stock awards will be made, the number of shares
of Common Stock covered by each award and the terms and conditions applicable
to such award.
Participants. All officers, employees, directors and directors emeriti
of the Company and its subsidiaries are eligible to participate in the MRP.
Number of Shares of Common Stock Available. The Company has reserved
359,450 shares of Common Stock for issuance under the MRP in the form of
restricted stock. The plan will acquire shares on the open market, if
available, with funds contributed by the Company to a trust which the Company
may establish in conjunction with the plan, or from authorized but unissued
shares of the Company. In the event that the shares are not available on the
open market and all MRP shares are awarded through the use of authorized but
unissued Common Stock, current stockholders would be diluted by approximately
4.25% based on the number of shares outstanding on June 1, 2000. Any shares
subject to an award which is forfeited or is terminated will again be
available for issuance under the MRP.
Adjustments Upon Changes in Capitalization. Shares awarded under the MRP
will be adjusted by the Compensation Committee in the event of a
reorganization, recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation or other change in corporate
structure or the Common Stock of the Company.
Restricted Stock Awards. Awards under the MRP will be made in the form
of restricted shares of Common Stock that are subject to restrictions on
transfer of ownership. It is anticipated that the initial awards under the
MRP will vest in equal installments over a five-year period beginning on the
first anniversary of the date of grant. Compensation expense in the amount of
the fair market value of the Common Stock at the date of the grant to the
recipient will be recognized during the period over which the shares vest. If
a recipient terminates service with the Company or its subsidiaries for
reasons other than death or disability, or normal retirement after attainment
of age 65, the recipient forfeits all rights to shares under restriction. If
such termination is caused by death, disability, or normal retirement after
attainment of age 65, all restrictions expire and all shares allocated become
unrestricted. A recipient will be entitled to voting, dividends and other
stockholder rights with respect to the shares while restricted.
Effect of a Change in Control. In the event of a tender offer, exchange
offer for shares, or a change in control (as defined in the MRP) of the
Company, each outstanding award under the MRP will become fully vested at the
election of the participant that is made within 60 days following such event.
If the participant does not make such election within the 60 day period, the
restricted shares will continue to vest as though no such event had occurred.
Term of the MRP. Assuming stockholder approval, the MRP will be
effective on October 1, 2000. By postponing the effective date, the MRP will
not be subject to certain regulatory restrictions otherwise applicable to
stock compensation plans implemented prior to the first anniversary of the
Company's mutual-to-stock conversion. The MRP will expire on the tenth
anniversary after the effective date, unless sooner terminated by the Board.
Amendment of the MRP. The MRP allows the Board to amend, alter, suspend,
or terminate the MRP without stockholder approval unless such approval is
required to comply with a tax law or regulatory requirement, provided,
however, that no such amendment, suspension or termination shall impair the
rights of any participant, without his or her consent, in any award
theretofore made pursuant to the MRP. The MRP also allows the Compensation
16
<PAGE>
Committee to waive any terms or conditions the Company has with respect to any
award. Any other amendment, change or termination requires the affected
participant's consent.
Certain Federal Income Tax Consequences. The following brief description
of the tax consequences of awards of restricted stock under the MRP is based
on federal income tax laws currently in effect and does not purport to be a
complete description of such federal income tax consequences.
A participant who has been awarded restricted stock under the MRP and
does not make an election under Section 83(b) of the Code will not recognize
taxable income at the time of the award. At the time any transfer or
forfeiture restrictions applicable to the restricted stock award lapse, the
recipient will recognize ordinary income and the Company will be entitled to a
corresponding deduction equal to the excess of the fair market value of such
stock at such time over the amount (if any) paid therefor.
A recipient of a restricted stock award who makes an election under
Section 83(b) of the Code will recognize ordinary income at the time of the
award and the Company will be entitled to a corresponding deduction equal to
the fair market value of such stock at such time over the amount (if any) paid
therefor. Any dividends subsequently paid to the recipient on the restricted
stock will be dividend income to the recipient and not deductible by the
Company. If the recipient makes a Section 83(b) election, there are no federal
income tax consequences either to the recipient or the Company at the time any
transfer or forfeiture restrictions applicable to the restricted stock award
lapse.
New Plan Benefits
The following table sets forth information regarding the number of
restricted shares anticipated to be granted under the MRP following its
effective date.
Anticipated
Name and Position Restricted Stock Grant
----------------- ----------------------
Michael B. Hansen 82,674
Chairman of the Board, President and Chief Executive
Officer of the Company and Chief Executive Officer
of Everett Mutual Bank and CBE
Michael R. Deller 35,945
Executive Vice President of the Company and President
and Chief Operating Officer of Everett Mutual Bank
Jeffrey R. Mitchell 35,945
Senior Vice President and Chief Financial Officer
of the Company and the Banks
Lorelei Christenson 46,729
Senior Vice President and Corporate Secretary of
the Company, and Senior Vice President, Chief Information
Officer and Corporate Secretary of the Banks
All executive officers as a group (nine persons, including 251,615
Messrs. Hansen, Deller, Mitchell, and Ms. Christenson)
All non-employee directors as a group (seven persons) 104,312
17
<PAGE>
The balance of the shares, if any, that may be issued pursuant to the MRP
is expected to be allocated in the future to current and prospective
non-employee directors, officers and employees.
Recommendation of the Board of Directors
The Board of Directors recommends a vote "FOR" the ratification of the
adoption of the MRP attached as Exhibit B.
------------------------------------------------------------------------------
OTHER MATTERS
------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect
thereof in accordance with the judgment of the person or persons voting the
proxies.
------------------------------------------------------------------------------
MISCELLANEOUS
------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy material
to the beneficial owners of the Company's Common Stock. In addition to
solicitations by mail, directors, officers and regular employees of the
Company may solicit proxies personally or by telephone without additional
compensation. The Company has retained MacKenzie Partners, Inc., to assist in
soliciting proxies for a fee not to exceed $4,000, including reimbursable
expenses.
The Company's Annual Report to Stockholders, which includes the
Company's Annual Report on Form 10-K as filed with the SEC, has been mailed to
stockholders as of the close of business on the Voting Record Date. Any
stockholder who has not received a copy of such Annual Report may obtain a
copy by writing to the Corporate Secretary of the Company. The Annual Report
is not to be treated as part of the proxy solicitation material or as having
been incorporated herein by reference.
------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
------------------------------------------------------------------------------
In order to be eligible for inclusion in the Company's proxy solicitation
materials for next year's Annual Meeting of Stockholders, any stockholder
proposal to take action at such meeting must be received at the Company's main
office at 2707 Colby Avenue, Suite 600, Everett, Washington, no later than
February 17, 2001. Any such proposals shall be subject to the requirements of
the proxy solicitation rules adopted under the Exchange Act.
The Company's Articles of Incorporation generally provide that
stockholders will have the opportunity to nominate directors of the Company if
such nominations are made in writing and are delivered to the Corporate
Secretary of the Company not less than 30 days nor more than 60 days before
the annual meeting of stockholders; provided, however, if less than 31 days'
notice is given, such notice shall be delivered to the Corporate Secretary of
the Company no later than the close of the tenth day following the date on
which notice of the meeting was mailed to stockholders. The notice must set
forth (i) the name, age, business address and, if known, residence address of
each nominee for election as a director, (ii) the principal occupation or
employment of each nominee, (iii) the number of shares of stock of the Company
which are beneficially owned by each such nominee, (iv) such other information
as would be required to be included in a proxy statement soliciting proxies
for the election of the proposed nominee pursuant to the Exchange Act,
including, without limitation, such person's written consent to being named in
the proxy statement as a nominee and to serving as a director, if elected, and
(v) as to the stockholder giving such notice (a) his
18
<PAGE>
or her name and address as they appear on the Company's books and (b) the
class and number of shares of the Company which are beneficially owned by such
stockholder.
BY ORDER OF THE BOARD OF DIRECTORS
/s/LORELEI CHRISTENSON
LORELEI CHRISTENSON
CORPORATE SECRETARY
Everett, Washington
June 19, 2000
19
<PAGE>
EXHIBIT A
EVERTRUST FINANCIAL GROUP, INC.
2000 STOCK OPTION PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, emeritus directors and employees of the
Corporation and its Affiliates.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" -- means any "parent corporation" or "subsidiary corporation"
of the Corporation, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Award" -- means the grant by the Committee of an Incentive Stock Option,
a Non-Qualified Stock Option, a Right, or any combination thereof, as provided
in the Plan.
"Award Agreement" -- means the agreement evidencing the grant of an Award
made under the Plan.
"Board" -- means the board of directors of the Corporation.
"Cause" -- means Termination of Service by reason of personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties or gross negligence.
"Code" -- means the Internal Revenue Code of 1986, as amended.
"Committee" -- means the Committee referred to in Section 3 hereof.
"Corporation" -- means EverTrust Financial Group, Inc., a Washington
corporation, and any successor thereto.
"Incentive Stock Option" -- means an option to purchase Shares granted by
the Committee which is intended to qualify as an incentive stock option under
Section 422(b) of the Code. Unless otherwise set forth in the Award
Agreement, any Option which does not qualify as an Incentive Stock Option for
any reason shall be deemed ab initio to be a Non-Qualified Stock Option.
"Market Value" -- means the average of the high and low quoted sales
price on the date in question (or, if there is no reported sale on such date,
on the last preceding date on which any reported sale occurred) of a Share on
the Composite Tape for New York Stock Exchange-Listed Stocks, or, if on such
date the Shares are not quoted on the Composite Tape, on the New York Stock
Exchange, or if the Shares are not listed or admitted to trading on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which the Shares are listed or admitted
to trading, or, if the Shares are not listed or admitted to trading on any
such exchange, the mean between the closing high bid and low asked quotations
with respect to a Share on such date on the Nasdaq Stock Market, or any
similar system then in use, or, if no such quotations are available, the fair
market value on such date of a Share as the Committee shall determine.
"Non-Qualified Stock Option" -- means an option to purchase Shares
granted by the Committee which does not qualify, for any reason, as an
Incentive Stock Option.
"Option" -- means an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" -- means any director, emeritus director or employee of the
Corporation or any Affiliate who is selected by the Committee to receive an
Award.
<PAGE>
"Plan" -- means this EverTrust Financial Group, Inc. 2000 Stock Option
Plan.
"Related" -- means (i) in the case of a Right, a Right which is granted
in connection with, and to the extent exercisable, in whole or in part, in
lieu of, an Option or another Right and (ii) in the case of an Option, an
Option with respect to which and to the extent a Right is exercisable, in
whole or in part, in lieu thereof.
"Right" -- means a stock appreciation right with respect to Shares
granted by the Committee pursuant to the Plan.
"Shares" -- means the shares of common stock of the Corporation.
"Termination of Service" -- means cessation of service, for any reason,
whether voluntary or involuntary, so that the affected individual is not
either (i) an employee of the Corporation or any Affiliate for purposes of an
Incentive Stock Option, or (ii) a director, emeritus director or employee of
the Corporation or any Affiliate for purposes of any other Award.
3. Administration. The Plan shall be administered by a Committee
consisting of two or more members of the Board, each of whom (i) shall be an
"outside director," as defined under Section 162(m) of the Code and the
Treasury regulations thereunder, and (ii) shall be a "non-employee director,"
as defined under Rule 16(b) of the Securities Exchange Act of 1934 or any
similar or successor provision. The members of the Committee shall be
appointed by the Board. Except as limited by the express provisions of the
Plan or by resolutions adopted by the Board, the Committee shall have sole and
complete authority and discretion to (i) select Participants and grant Awards;
(ii) determine the number of Shares to be subject to types of Awards
generally, as well as to individual Awards granted under the Plan; (iii)
determine the terms and conditions upon which Awards shall be granted under
the Plan; (iv) prescribe the form and terms of Award Agreements; (v) establish
from time to time regulations for the administration of the Plan; and (vi)
interpret the Plan and make all determinations deemed necessary or advisable
for the administration of the Plan.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present,
or acts approved in writing by a majority of the Committee without a meeting,
shall be acts of the Committee.
4. Shares Subject to Plan.
(a) Subject to adjustment by the operation of Section 6, the
maximum number of Shares with respect to which Awards may be made under the
Plan is 853,694 plus (i) the number of Shares repurchased by the Corporation
in the open market or otherwise with an aggregate price no greater than the
cash proceeds received by the Corporation from the exercise of Options granted
under the Plan; plus (ii) any Shares surrendered to the Corporation in payment
of the exercise price of Options granted under the Plan. The Shares with
respect to which Awards may be made under the Plan will be authorized and
unissued Shares. Shares which are subject to Related Rights and Related
Options shall be counted only once in determining whether the maximum number
of Shares with respect to which Awards may be granted under the Plan has been
exceeded. An Award shall not be considered to have been made under the Plan
with respect to any Option or Right which terminates, and new Awards may be
granted under the Plan with respect to the number of Shares as to which such
termination has occurred.
(b) During any calendar year, no Participant may be granted Awards
under the Plan with respect to more than 300,000 Shares, subject to adjustment
as provided in Section 6.
5. Awards.
(a) Options. The Committee is hereby authorized to grant Options
to Participants with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of the
Plan
A-2
<PAGE>
<PAGE>
and the requirements of applicable law as the Committee shall determine,
including the granting of Options in tandem with other Awards under the Plan:
(i) Exercise Price. The exercise price per Share for an
Option shall be determined by the Committee; provided, however, that such
exercise price shall not be less than 100% of the Market Value of a Share on
the date of grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by
the Committee, but shall be no greater than 10 years in the case of an
Incentive Stock Option or 15 years in the case of a Non-Qualified Stock
Option.
(iii) Time and Method of Exercise. The Committee shall
determine the time or times at which an Option may be exercised in whole or in
part and the method or methods by which, and the form or forms (including,
without limitation, cash, Shares, other Awards or any combination thereof,
having a fair market value on the exercise date equal to the relevant exercise
price) in which, payment of the exercise price with respect thereto may be
made or deemed to have been made.
(iv) Incentive Stock Options. Incentive Stock Options may be
granted by the Committee only to employees of the Corporation or its
Affiliates.
(v) Termination of Service. Unless otherwise determined by
the Committee and set forth in the Award Agreement evidencing the grant of the
Option, upon Termination of Service of the Participant for any reason other
than for Cause, all Options then currently exercisable shall remain
exercisable for the lesser of (A) two years following such Termination of
Service or (B) until the expiration of the Option by its terms. Upon
Termination of Service for Cause, all Options not previously exercised shall
immediately be forfeited.
(b) Rights. A Right shall, upon its exercise, entitle the
Participant to whom such Right was granted to receive a number of Shares or
cash or combination thereof, as the Committee in its discretion shall
determine, the aggregate value of which (i.e., the sum of the amount of cash
and/or Market Value of such Shares on date of exercise) shall equal (as nearly
as possible, it being understood that the Corporation shall not issue any
fractional Shares) the amount by which the Market Value per Share on the date
of such exercise shall exceed the exercise price of such Right, multiplied by
the number of Shares with respect to which such Right shall have been
exercised. A Right may be Related to an Option or may be granted
independently of any Option as the Committee shall from time to time in each
case determine. In the case of a Related Option, such Related Option shall
cease to be exercisable to the extent of the Shares with respect to which the
Related Right was exercised. Upon the exercise or termination of a Related
Option, any Related Right shall terminate to the extent of the Shares with
respect to which the Related Option was exercised or terminated.
6. Adjustments Upon Changes in Capitalization. In the event of any
change in the outstanding Shares subsequent to the effective date of the Plan
by reason of any reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or any
change in the corporate structure or Shares of the Corporation, the maximum
aggregate number and class of shares and exercise price of the Award, if any,
as to which Awards may be granted under the Plan and the number and class of
shares and exercise price of the Award, if any, with respect to which Awards
have been granted under the Plan shall be appropriately adjusted by the
Committee, whose determination shall be conclusive. Except as otherwise
provided herein, any Award which is adjusted as a result of this Section 6
shall be subject to the same terms and conditions as the original Award.
7. Effect of Merger on Options or Rights. In the case of any merger,
consolidation or combination of the Corporation (other than a merger,
consolidation or combination in which the Corporation is the continuing
corporation and which does not result in the outstanding Shares being
converted into or exchanged for different securities, cash or other property,
or any combination thereof), any Participant to whom an Option or Right has
been granted shall have the additional right (subject to the provisions of the
Plan and any limitation applicable to such Option or Right), thereafter and
during the term of each such Option or Right, to receive upon exercise of any
such Option or Right an
A-3
<PAGE>
amount equal to the excess of the fair market value on the date of such
exercise of the securities, cash or other property, or combination thereof,
receivable upon such merger, consolidation or combination in respect of a
Share over the exercise price of such Right or Option, multiplied by the
number of Shares with respect to which such Option or Right shall have been
exercised. Such amount may be payable fully in cash, fully in one or more of
the kind or kinds of property payable in such merger, consolidation or
combination, or partly in cash and partly in one or more of such kind or kinds
of property, all in the discretion of the Committee.
8. Effect of Change in Control. Each of the events specified in the
following clauses (i) through (iii) of this Section 8 shall be deemed a
"change in control": (i) any third person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, shall become the
beneficial owner of shares of the Corporation with respect to which 25% or
more of the total number of votes for the election of the Board may be cast,
(ii) as a result of, or in connection with, any cash tender offer, merger or
other business combination, sale of assets or contested election, or
combination of the foregoing, the persons who were directors of the
Corporation shall cease to constitute a majority of the Board, or (iii) the
stockholders of the Corporation shall approve an agreement providing either
for a transaction in which the Corporation will cease to be an independent
publicly-owned corporation or for a sale or other disposition of all or
substantially all the assets of the Corporation. If a tender offer or
exchange offer for Shares (other than such an offer by the Corporation) is
commenced, or if a change in control shall occur, unless the Committee shall
have otherwise provided in the Award Agreement, all Options and Rights granted
and not fully exercisable shall become exercisable in full upon the happening
of such event and shall remain so exercisable for a period of 60 days
following such date, after which each such Option and Right shall revert to
being exercisable in accordance with the other provisions of such Option or
Right; provided, however, that no Option or Right which has previously been
exercised or otherwise terminated shall become exercisable.
9. Assignments and Transfers. No Incentive Stock Option granted under
the Plan shall be transferable other than by will or the laws of descent and
distribution. Any other Award shall be transferable by will, the laws of
descent and distribution, a "domestic relations order," as defined in Section
414(p)(1)(B) of the Code, or a gift to any member of the Participant's
immediate family or to a trust for the benefit of one or more of such
immediate family members. During the lifetime of an Award recipient, an Award
shall be exercisable only by the Award recipient unless it has been
transferred as permitted hereby, in which case it shall be exercisable only by
such transferee. For the purpose of this Section 9, a Participant's
"immediate family" shall mean the Participant's spouse, children and
grandchildren.
10. Employee Rights Under the Plan. No person shall have a right to be
selected as a Participant nor, having been so selected, to be selected again
as a Participant, and no employee or other person shall have any claim or
right to be granted an Award under the Plan or under any other incentive or
similar plan of the Corporation or any Affiliate. Neither the Plan nor any
action taken thereunder shall be construed as giving any employee any right to
be retained in the employ of the Corporation or any Affiliate.
11. Delivery and Registration of Stock. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests,
be conditioned upon the receipt of a representation as to the investment
intention of the Participant to whom such Shares are to be delivered, in such
form as the Committee shall determine to be necessary or advisable to comply
with the provisions of the Securities Act of 1933 or any other federal, state
or local securities legislation. It may be provided that any representation
requirement shall become inoperative upon a registration of the Shares or
other action eliminating the necessity of such representation under such
Securities Act or other securities legislation. The Corporation shall not be
required to deliver any Shares under the Plan prior to (i) the admission of
such Shares to listing on any stock exchange on which Shares may then be
listed and (ii) the completion of such registration or other qualification of
such Shares under any state or federal law, rule or regulation, as the
Committee shall determine to be necessary or advisable.
12. Withholding Tax. The Corporation shall have the right to deduct
from all amounts paid in cash with respect to the exercise of a Right under
the Plan any taxes required by law to be withheld with respect to such cash
payments. Where a Participant or other person is entitled to receive Shares
pursuant to the exercise of an Option or Right pursuant to the Plan, the
Corporation shall have the right to require the Participant or such other
person to pay
A-4
<PAGE>
the Corporation the amount of any taxes which the Corporation is required to
withhold with respect to such Shares, or, in lieu thereof, to retain, or sell
without notice, a number of such Shares sufficient to cover the amount
required to be withheld. All withholding decisions pursuant to this Section
12 shall be at the sole discretion of the Committee or the Corporation.
13. Amendment or Termination.
(a) The Board may amend, alter, suspend, discontinue, or
terminate the Plan without the consent of shareholders or Participants, except
that any such action will be subject to the approval of the Corporation's
shareholders if, when and to the extent such shareholder approval is necessary
or required for purposes of any applicable federal or state law or regulation
or the rules of any stock exchange or automated quotation system on which the
Shares may then be listed or quoted, or if the Board, in its discretion,
determines to seek such shareholder approval.
(b) The Committee may waive any conditions of or rights of the
Corporation or modify or amend the terms of any outstanding Award. The
Committee may not, however, amend, alter, suspend, discontinue or terminate
any outstanding Award without the consent of the Participant or holder
thereof, except as otherwise provided herein.
14. Effective Date and Term of Plan. The Plan shall become effective
upon the later of its adoption by the Board or its approval by the
shareholders of the Corporation. It shall continue in effect for a term of
ten years thereafter unless sooner terminated under Section 13 hereof.
* * * * *
A-5
<PAGE>
EXHIBIT B
EVERTRUST FINANCIAL GROUP, INC.
2000 MANAGEMENT RECOGNITION PLAN
1. Plan Purpose. The purpose of the Plan is to promote the long-term
interests of the Corporation and its stockholders by providing a means for
attracting and retaining directors, emeritus directors and employees of the
Corporation and its Affiliates.
2. Definitions. The following definitions are applicable to the Plan:
"Affiliate" -- means any "parent corporation" or "subsidiary corporation"
of the Corporation, as such terms are defined in Section 424(e) and (f),
respectively, of the Code.
"Award" -- means the grant by the Committee of Restricted Stock, as
provided in the Plan.
"Award Agreement" -- means the agreement evidencing the grant of an Award
made under the Plan.
"Board" -- means the board of directors of the Corporation.
"Code" -- means the Internal Revenue Code of 1986, as amended.
"Committee" -- means the Committee referred to in Section 3 hereof.
"Corporation" -- means EverTrust Financial Group, Inc., a Washington
corporation, and any successor thereto.
"Participant" -- means any director, emeritus director or employee of the
Corporation or any Affiliate who is selected by the Committee to receive an
Award.
"Plan" -- means this EverTrust Financial Group, Inc. 2000 Management
Recognition Plan.
"Restricted Period" -- means the period of time selected by the Committee
for the purpose of determining when restrictions are in effect under Section 5
hereof with respect to Restricted Stock awarded under the Plan.
"Restricted Stock" -- means Shares awarded to a Participant by the
Committee pursuant to Section 5 hereof.
"Shares" -- means the shares of common stock of the Corporation.
"Termination of Service" -- means cessation of service, for any reason,
whether voluntary or involuntary, so that the affected individual is not a
director, emeritus director or employee of the Corporation or any Affiliate.
Service shall not be considered to have ceased in the case of sick leave,
military leave or any other leave of absence approved by the Corporation or
any Affiliate or in the case of transfers between payroll locations of the
Corporation or between the Corporation, its subsidiaries or its successor.
3. Administration. The Plan shall be administered by a Committee
consisting of two or more members of the Board, each of whom (i) shall be an
"outside director," as defined under Section 162(m) of the Code and the
Treasury regulations thereunder, and (ii) shall be a "non-employee director,"
as defined under Rule 16(b) of the Securities Exchange Act of 1934 or any
similar or successor provision. The members of the Committee shall be
appointed by the Board. Except as limited by the express provisions of the
Plan or by resolutions adopted by the Board, the Committee shall have sole and
complete authority and discretion to (i) select Participants and grant Awards;
(ii) determine the number of Shares to be subject to types of Awards
generally, as well as to individual Awards granted under the Plan; (iii)
determine the terms and conditions upon which Awards shall be granted under
the Plan;
<PAGE>
(iv) prescribe the form and terms of Award Agreements; (v) establish from time
to time regulations for the administration of the Plan; and (vi) interpret the
Plan and make all determinations deemed necessary or advisable for the
administration of the Plan.
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present,
or acts approved in writing by a majority of the Committee without a meeting,
shall be acts of the Committee.
4. Shares Subject to Plan. Subject to adjustment by the operation of
Section 6, the maximum number of Shares with respect to which Awards may be
made under the Plan is 359,450 Shares. The Shares with respect to which
Awards may be made under the Plan may be either authorized and unissued Shares
or acquired on the open market, if available, with funds contributed by the
Corporation or its primary subsidiary, Everett Mutual Bank, to a trust which
the Corporation may establish in conjunction with the Plan. An Award shall
not be considered to have been made under the Plan with respect to Restricted
Stock which is forfeited, and new Awards may be granted under the Plan with
respect to the number of Shares as to which such forfeiture has occurred.
5. Terms and Conditions of Restricted Stock. The Committee is hereby
authorized to grant Awards of Restricted Stock to Participants with the
following terms and conditions and with such additional terms and conditions
as the Committee shall determine:
(a) At the time of an Award of Restricted Stock, the Committee
shall establish for each Participant a Restricted Period, during
which or at the expiration of which, as the Committee shall
determine and provide in the Award Agreement, the Shares awarded as
Restricted Stock shall no longer be subject to restriction. Subject
to any such other terms and conditions as the Committee shall
provide, Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered by the Participant,
except as hereinafter provided, during the Restricted Period.
Except for such restrictions, and subject to paragraph (c) of this
Section 5 and Section 6 hereof, the Participant as owner of such
shares shall have all the rights of a stockholder, including the
right to vote the Restricted Stock and the right to receive
dividends with respect to the Restricted Stock.
The Committee shall have the authority, in its discretion, to
accelerate the time at which any or all of the restrictions shall
lapse with respect thereto, or to remove any or all of such
restrictions, whenever it may determine that such action is
appropriate by reason of changes in applicable tax or other laws or
other changes in circumstances occurring after the commencement of
such Restricted Period.
(b) If a Participant incurs a Termination of Service for any
reason (other than death, disability, or normal retirement after
attainment of age 65), all Shares of Restricted Stock awarded to
such Participant and which at the time of such Termination of
Service are subject to the restrictions imposed pursuant to
paragraph (a) of this Section 5 shall upon such Termination of
Service be forfeited and returned to the Corporation. If a
Participant incurs a Termination of Service by reason of death,
disability or normal retirement after attainment of age 65, the
Restricted Period with respect to the Participant's Restricted Stock
then still subject to restrictions shall thereupon lapse.
(c) Each certificate in respect of Shares of Restricted Stock
awarded under the Plan shall be registered in the name of the
Participant and deposited by the Participant, together with a stock
power endorsed in blank, with the Corporation and shall bear the
following (or a similar) legend:
The transferability of this certificate and the
Shares of stock represented hereby are subject to the terms
and conditions (including forfeiture) contained in the
EverTrust Financial Group, Inc. 2000 Management Recognition
Plan. Copies of such Plan are on file in the office of
the Secretary of EverTrust Financial Group, Inc, P.O. Box
569, Everett, Washington 98206-0569.
B-2
<PAGE>
(d) At the time of any Award, the Participant shall enter into an
Award Agreement with the Corporation in a form specified by the
Committee, agreeing to the terms and conditions of the Award and
such other matters as the Committee, in its sole discretion, shall
determine.
(e) Upon the lapse of the Restricted Period, the Corporation
shall redeliver to the Participant (or where the relevant provision
of paragraph (b) of this Section 5 applies in the case of a deceased
Participant, to his legal representative, beneficiary or heir) the
certificate(s) and stock power deposited with it pursuant to
paragraph (c) of this Section 5, and the Shares represented by such
certificate(s) shall be free of the restrictions imposed pursuant to
paragraph (a) of this Section 5.
6. Adjustments Upon Changes in Capitalization. In the event of any
change in the outstanding Shares subsequent to the effective date of the Plan
by reason of any reorganization, recapitalization, stock split, stock
dividend, combination or exchange of shares, merger, consolidation or any
change in the corporate structure or Shares of the Corporation, the maximum
aggregate number and class of Shares as to which Awards may be granted under
the Plan and the number and class of Shares with respect to which Awards have
been granted under the Plan shall be appropriately adjusted by the Committee,
whose determination shall be conclusive. Any Award which is adjusted as a
result of this Section 6 shall be subject to the same restrictions as the
original Award, and the certificate[s] or other instruments representing or
evidencing such Restricted Stock shall be legended and deposited with the
Corporation in the manner provided in Section 5(c) hereof.
7. Effect of Change in Control. Each of the events specified in the
following clauses (i) through (iii) of this Section 7 shall be deemed a
"change in control": (i) any third person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, shall become the
beneficial owner of shares of the Corporation with respect to which 25% or
more of the total number of votes for the election of the Board may be cast,
(ii) as a result of, or in connection with, any cash tender offer, merger or
other business combination, sale of assets or contested election, or
combination of the foregoing, the persons who were directors of the
Corporation shall cease to constitute a majority of the Board, or (iii) the
stockholders of the Corporation shall approve an agreement providing either
for a transaction in which the Corporation will cease to be an independent
publicly-owned corporation or for a sale or other disposition of all or
substantially all the assets of the Corporation. If a tender offer or
exchange offer for Shares (other than such an offer by the Corporation) is
commenced, or if a change in control shall occur, unless the Committee shall
have otherwise provided in the Award Agreement, at the election of a
Participant that is made within 60 days following such date, the Restricted
Period with respect to Restricted Stock theretofore awarded to such
Participant shall lapse and all Shares awarded hereunder as Restricted Stock
shall become fully vested in the Participant to whom such Shares were awarded.
If the Participant does not make such election within 60 days following such
tender offer, exchange offer, or change in control, such Shares shall continue
to be vested in accordance with the other provisions of such Award; provided,
however, that no Award which has previously been forfeited shall become
vested.
8. Assignments and Transfers. During the Restricted Period, no Award
nor any right or interest of a Participant in any instrument evidencing an
Award may be assigned, encumbered or transferred other than by will, the laws
of descent and distribution or pursuant to a "domestic relations order," as
defined in Section 414(p)(1)(B) of the Code.
9. Employee Rights Under the Plan. No person shall have a right to be
selected as a Participant nor, having been so selected, to be selected again
as a Participant, and no employee or other person shall have any claim or
right to be granted an Award under the Plan or under any other incentive or
similar plan of the Corporation or any Affiliate. Neither the Plan nor any
action taken thereunder shall be construed as giving any employee any right to
be retained in the employ of the Corporation or any Affiliate.
10. Delivery and Registration of Stock. The Corporation's obligation to
deliver Shares with respect to an Award shall, if the Committee so requests,
be conditioned upon the receipt of a representation as to the investment
intention of the Participant to whom such Shares are to be delivered, in such
form as the Committee shall determine to be necessary or advisable to comply
with the provisions of the Securities Act of 1933 or any other federal, state
or
B-3
<PAGE>
local securities legislation. It may be provided that any representation
requirement shall become inoperative upon a registration of the Shares or
other action eliminating the necessity of such representation under such
Securities Act or other securities legislation. The Corporation shall not be
required to deliver any Shares under the Plan prior to (i) the admission of
such Shares to listing on any stock exchange on which Shares may then be
listed and (ii) the completion of such registration or other qualification of
such Shares under any state or federal law, rule or regulation, as the
Committee shall determine to be necessary or advisable.
11. Withholding Tax. Upon the termination of the Restricted Period with
respect to any Shares of Restricted Stock (or at any such earlier time, if
any, that an election is made by the Participant under Section 83(b) of the
Code, or any successor provision thereto, to include the value of such Shares
in taxable income), the Corporation shall have the right to require the
Participant or other person receiving such Shares to pay the Corporation the
amount of any taxes which the Corporation is required to withhold with respect
to such Shares, or, in lieu thereof, to retain or sell without notice, a
sufficient number of Shares held by it to cover the amount required to be
withheld. The Corporation shall have the right to deduct from all dividends
paid with respect to Shares of Restricted Stock the amount of any taxes which
the Corporation is required to withhold with respect to such dividend
payments.
12. Amendment or Termination.
(a) The Board may amend, alter, suspend, discontinue, or terminate
the Plan without the consent of shareholders or Participants, except that any
such action will be subject to the approval of the Corporation's shareholders
if, when and to the extent such shareholder approval is necessary or required
for purposes of any applicable federal or state law or regulation or the rules
of any stock exchange or automated quotation system on which the Shares may
then be listed or quoted, or if the Board, in its discretion, determines to
seek such shareholder approval.
(b) The Committee may waive any conditions of or rights of the
Corporation or modify or amend the terms of any outstanding Award. The
Committee may not, however, amend, alter, suspend, discontinue or terminate
any outstanding Award without the consent of the Participant or holder
thereof, except as otherwise provided herein.
13. Effective Date and Term of Plan. The Plan shall become effective
upon the later of its adoption by the Board or its approval by the
shareholders of the Corporation. It shall continue in effect for a term of
ten years thereafter unless sooner terminated under Section 12 hereof.
* * * * *
B-4
<PAGE>
REVOCABLE PROXY
EVERTRUST FINANCIAL GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
JULY 25, 2000
The undersigned hereby appoints the official Proxy Committee of the Board
of Directors of EverTrust Financial Group, Inc. ("Company") with full powers
of substitution, as attorneys and proxies for the undersigned, to vote all
shares of common stock of the Company which the undersigned is entitled to
vote at the Annual Meeting of Stockholders ("Meeting"), to be held at the
Everett Golf & Country Club located at 1500 52nd Street in Everett,
Washington, on Tuesday, July 25, 2000, at 7:00 p.m., local time, and at any
and all adjournments thereof, as indicated.
1. The election as director of the nominees [ ] FOR [ ] VOTE WITHHELD
listed below (except as marked to the
contrary below).
Michael B. Hansen (one-year term); George S. Newland (one-year term);
William J. Rucker (one-year term); Michael R. Deller (two-year term);
Robert A. Leach, Jr. (two-year term); Thomas R. Collins (two-year term);
Margaret B. Bavasi (three-year term); R. Michael Kight (three-year term);
Thomas J. Gaffney (three-year term)
INSTRUCTIONS: To withhold your vote for any individual nominee, write the
nominee's name on the line below.
------------------------------------------------------------------------------
2. The approval of the appointment of Deloitte & Touche LLP as independent
auditors for the fiscal year ending March 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The ratification of the adoption of the EverTrust Financial Group, Inc.
2000 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. The ratification of the adoption of the EverTrust Financial Group,, Inc.
2000 Management Recognition Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, upon such other matters as may properly come before
the Meeting.
The Board of Directors recommends a vote "FOR" the above proposals.
(To be signed on reverse side)
<PAGE>
(Continued from other side)
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting or at
any adjournment thereof and after notification to the Corporate Secretary of
the Company at the Meeting of the stockholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed terminated
and of no further force and effect.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of the Notice of First Annual Meeting of Stockholders,
a Proxy Statement for the Annual Meeting of Stockholders, and the Annual
Report on Form 10-K for the year ended March 31, 2000.
Dated: , 2000
------------------------
----------------------------------------
PRINT NAME OF STOCKHOLDER
----------------------------------------
SIGNATURE OF STOCKHOLDER
----------------------------------------
PRINT NAME OF STOCKHOLDER
----------------------------------------
SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears
on this proxy card. When signing as
attorney, executor, administrator,
trustee or guardian, please give your
full title. If shares are held jointly,
each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL
THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
<PAGE>
