<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
American Financial Holdings, Inc.
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(Name of Registrant as Specified In Its Charter)
American Financial Holdings, Inc.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transaction applies:
N/A
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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(5) Total fee paid:
N/A
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
N/A
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(2) Form, Schedule or Registration Statement No.:
N/A
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(3) Filing Party: N/A
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(4) Date Filed:
N/A
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[Letterhead of American Financial Holdings, Inc.]
April 24, 2000
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
American Financial Holdings, Inc. The meeting will be held at the Hartford
Marriott Farmington, 15 Farm Springs Road, Farmington, Connecticut, on Monday,
June 5, 2000, at 10:00 a.m., local time.
The notice of annual meeting and proxy statement appearing on the following
pages describe the formal business to be transacted at the meeting. During the
meeting, we will also report on the operations of the Company. Directors and
officers of the Company, as well as a representative of KPMG LLP, the Company's
independent auditors, will be present to respond to appropriate questions of
stockholders.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To make sure your shares are represented, we urge you to complete and
mail the enclosed proxy card promptly. If you attend the meeting, you may vote
in person even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Robert T. Kenney
Robert T. Kenney
Chairman of the Board,
President and Chief Executive Officer
<PAGE>
AMERICAN FINANCIAL HOLDINGS, INC.
102 West Main Street
New Britain, Connecticut 06051
(860) 832-4000
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 5, 2000
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NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of American
Financial Holdings, Inc. (the "Company") will be held at the Hartford Marriott
Farmington, 15 Farm Springs Road, Farmington, Connecticut, on Monday, June 5,
2000, at 10:00 a.m., local time, for the following purposes:
1. To elect three directors to serve for a term of three years;
2. To adopt the American Financial Holdings, Inc. 2000 Stock-Based
Incentive Plan;
3. To ratify the appointment of KPMG LLP as independent auditors for the
Company for the fiscal year ending December 31, 2000; and
4. To transact any other business that may properly come before the
meeting.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Only stockholders of record at the close of business on April 14, 2000 are
entitled to receive notice of the meeting and to vote at the meeting and any
adjournment or postponement of the meeting.
Please complete and sign the enclosed form of proxy, which is solicited by
the Board of Directors, and 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/ Richard J. Moore
Richard J. Moore
Corporate Secretary
New Britain, Connecticut
April 24, 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
AMERICAN FINANCIAL HOLDINGS, INC.
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ANNUAL MEETING OF STOCKHOLDERS
June 5, 2000
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This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of American Financial Holdings, Inc. (the
"Company") to be used at the annual meeting of stockholders of the Company. The
Company is the holding company for American Savings Bank ("American Savings" or
the "Bank"). The annual meeting will be held at the Hartford Marriott
Farmington, 15 Farm Springs Road, Farmington, Connecticut, on Monday, June 5,
2000, at 10:00 a.m., local time. This proxy statement and the enclosed proxy
card are being mailed to stockholders on or about April 24, 2000.
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VOTING AND PROXY PROCEDURE
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Who Can Vote at the Meeting
You are entitled to vote your Company common stock if the records of the
Company show that you held your shares as of the close of business on April 14,
2000. If your shares are held in a stock brokerage account or by a bank or other
nominee, you are considered the beneficial owner of shares held in "street
name," and these proxy materials are being forwarded to you by your broker or
nominee. As the beneficial owner, you have the right to direct your broker on
how to vote and are also invited to attend the meeting. Your broker or nominee
has enclosed a voting instruction card for you to use in directing the broker or
nominee on how to vote your shares.
As of the close of business on April 14, 2000, a total of 28,871,100 shares
of Company common stock was outstanding. Each share of common stock has one
vote. As provided in the Company's Certificate of Incorporation, no record owner
of the Company's common stock which is beneficially owned, either directly or
indirectly, by a person who beneficially owns in excess of 10% of the Company's
outstanding shares, is entitled to any vote in respect of the shares held in
excess of the 10% limit. In addition, the Company's Certificate of Incorporation
provides that no record owner of the Company's common stock which is
beneficially owned, either directly or indirectly, by a person who beneficially
owns in excess of 5% of the Company's outstanding shares, is entitled to any
vote in respect of the shares held in excess of the 5% limit, unless the
beneficial owner owns, holds or controls such shares in the ordinary course of
business and not with the purpose or effect of changing or influencing the
control of the Company.
Attending the Meeting
If you hold your shares in street name, you will need proof of ownership to
be admitted to the meeting. A recent brokerage statement or letter from a bank
or broker are examples of proof of ownership. If you want to vote your shares of
Company common stock held in street name in person at the meeting, you will have
to get a written proxy in your name from the broker, bank or other nominee who
holds your shares.
1
<PAGE>
Vote Required
A majority of the outstanding shares of common stock entitled to vote is
required to be represented at the meeting in order to constitute a quorum for
the transaction of business. If you return valid proxy instructions or attend
the meeting in person, your shares will be counted for purposes of determining
whether there is a quorum, even if you abstain from voting. Broker non-votes
also will be counted for purposes of determining the existence of a quorum. A
broker non-vote occurs when a broker, bank or other nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received voting instructions from the beneficial owner.
In voting on the election of directors, you may vote in favor of all
nominees, withhold votes as to all nominees, or withhold votes as to specific
nominees. Directors are elected by a plurality of the votes cast. This means
that the nominees receiving the greatest number of votes will be elected. Votes
that are withheld and broker non-votes will have no effect on the outcome of the
election.
In voting on the American Financial Holdings, Inc. 2000 Stock-Based
Incentive Plan (the "Incentive Plan") and the ratification of the appointment of
KPMG LLP as independent auditors, you may vote in favor of the proposal, vote
against the proposal or abstain from voting. The adoption of the Incentive Plan
requires the affirmative vote of a majority of the votes eligible to be cast.
Broker non-votes and abstentions will have the effect of a vote against this
proposal. The ratification of KPMG LLP as independent auditors will be decided
by the affirmative vote of a majority of the votes cast. Broker non-votes and
abstentions will not be counted as votes cast and will have no effect on the
voting on this proposal.
Voting by Proxy
The Company's Board of Directors is sending you this proxy statement for
the purpose of requesting that you allow your shares of Company common stock to
be represented at the annual meeting by the persons named in the enclosed proxy
card. All shares of Company common stock represented at the meeting by properly
executed and dated proxies will be voted according to the instructions indicated
on the proxy card. If you sign, date and return a proxy card without giving
voting instructions, your shares will be voted as recommended by the Company's
Board of Directors. The Board of Directors recommends a vote "FOR" each of the
nominees, "FOR" the Incentive Plan and "FOR" ratification of KPMG LLP as
independent auditors.
If any matters not described in this proxy statement are properly presented
at the annual meeting, the persons named in the proxy card will use their own
judgment to determine how to vote your shares. This includes a motion to adjourn
or postpone the meeting in order to solicit additional proxies. If the annual
meeting is postponed or adjourned, your Company common stock may be voted by the
persons named in the proxy card on the new meeting date as well, unless you have
revoked your proxy. The Company does not know of any other matters to be
presented at the meeting.
You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy you must either advise the Corporate Secretary of
the Company in writing before your common stock has been voted at the annual
meeting, deliver a later dated proxy, or attend the meeting and vote your shares
in person. Attendance at the annual meeting will not in itself constitute
revocation of your proxy.
If your Company common stock is held in street name, you will receive
instructions from your broker, bank or other nominee that you must follow in
order to have your shares voted. Your broker or bank may allow you to deliver
your voting instructions via the telephone or the Internet. Please see the
instruction form that is provided by your broker, bank or other nominee and
which accompanies this proxy statement.
The cost of solicitation of proxies on behalf of the Board will be borne by
the Company. In addition to the solicitation of proxies by mail, Georgeson
Shareholder Communications, Inc., a proxy solicitation firm, will assist the
Company in soliciting proxies for the annual meeting. The Company will pay a fee
of $6,500, plus out-of-pocket expenses for these services. Proxies may also be
solicited personally or by
2
<PAGE>
telephone by directors, officers and other employees of the Company and the Bank
without any additional compensation. The Company will also request persons,
firms and corporations holding shares in their names, or in the name of their
nominees, which are beneficially owned by others, to send proxy materials to,
and obtain proxies from, the beneficial owners, and will reimburse those record
holders for their reasonable expenses in doing so.
Participants in American Savings' ESOP and 401(k) Plan
If you are a participant in the American Savings Bank Employee Stock
Ownership Plan (the "ESOP") or if you hold shares of Company common stock
through the Bank's 401(k) Plan, you will be receiving voting instructions under
separate cover. Through such voting instructions, you will be able to direct the
trustees for the plans as to the manner in which shares of Company common stock
allocated to your plan accounts are to be voted.
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STOCK OWNERSHIP
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The following table provides information as of April 14, 2000, with respect
to persons known by the Company to be the beneficial owners of more than 5% of
the Company's outstanding common stock. A person may be considered to own any
shares of common stock over which he or she has, directly or indirectly, sole or
shared voting or investing power.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Name and Address Number of Percent of
Shares Common
Owned Stock Outstanding
<S> <C> <C>
American Savings Bank Employee Stock Ownership Plan 2,309,688(1) 8.0%
and Trust
102 West Main Street
New Britain, Connecticut 06051
American Savings Charitable Foundation (the "Foundation") 2,138,600(2) 7.4%
102 West Main Street
New Britain, Connecticut 06051
Wellington Management Company, LLP 2,077,300(3) 7.2%
75 State Street
Boston, Massachusetts 02109
</TABLE>
(1) Under the terms of the ESOP, the ESOP trustee will vote shares allocated to
participants' accounts in the manner directed by the participants. The ESOP
Trustee, subject to its fiduciary responsibilities, will vote unallocated
shares and allocated shares for which no timely voting instructions are
received in the same proportion as shares for which the trustee has
received proper voting instructions from participants. As of April 14,
2000, 57,678 shares have been allocated to participants' accounts and
2,252,010 shares remain unallocated under the ESOP.
(2) The Foundation was established and funded in connection with the Bank's
conversion to stock form on November 30, 1999. As mandated by the Federal
Deposit Insurance Corporation, the terms of the gift instrument require
that all shares of common stock held by the Foundation must be voted in the
same ratio as all other shares of Company common stock on all proposals
considered by stockholders of the Company.
(3) Based on information filed in a Schedule 13G with the U.S. Securities and
Exchange Commission on February 11, 2000, Wellington Management Company,
LLP may be deemed to be the beneficial owner of 2,077,300 shares.
3
<PAGE>
The following table provides information about the shares of Company common
stock that may be considered to be owned by each director or nominee for
director of the Company, by the executive officers named in the Summary
Compensation Table and by all directors and executive officers of the Company as
a group as of April 14, 2000. A person may be considered to own any shares of
common stock over which he or she has, directly or indirectly, sole or shared
voting or investment power. Unless otherwise indicated, each of the named
individuals has sole voting and investment power with respect to the shares
shown.
<TABLE>
<CAPTION>
Number of Percent of
Name Shares Common Stock
Owned Outstanding(1)
----------- ------------
<S> <C> <C>
Charles J. Boulier III 25,631(2) *
Adolf G. Carlson 5,373(3) *
Marie S. Gustin 10,266(4) *
Fred M. Hollfelder 10,073(3) *
Mark E. Karp 40,019(5) *
Robert T. Kenney 42,552(6) *
Steven T. Martin 39,500(7) *
Harry N. Mazadoorian 15,538(8) *
Richard J. Moore 11,155(9) *
Sheri C. Pasqualoni 11,422(10) *
Peter N. Perugini 16,309(11) *
Jeffrey T. Witherwax 50,000 *
All Executive Officers and Directors of the Company and 370,345 1.3%
American Savings as a Group (19 persons)
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</TABLE>
* Less than 1% of shares outstanding
(1) Based on 28,871,100 shares of Company common stock outstanding and
entitled to vote as of April 14, 2000.
(2) Includes 7,679 shares held in trust as part of the American Savings Bank
Stock-Based Deferred Compensation Plan and 283 shares held in trust as
part of the American Savings Bank Supplemental Executive Retirement Plan
over which the beneficial owner has shared voting power.
(3) Includes 5,373 shares held in trust as part of the American Savings Bank
Stock-Based Deferred Compensation Plan over which the beneficial owner
has shared voting power.
(4) Includes 3,766 shares held in trust as part of the American Savings Bank
Stock-Based Deferred Compensation Plan over which the beneficial owner
has shared voting power.
(5) Includes 14,019 shares held in trust as part of the American Savings Bank
Stock-Based Deferred Compensation Plan over which the beneficial owner
has shared voting power.
(6) Includes 23,951 shares held in trust as part of the American Savings Bank
Stock-Based Deferred Compensation Plan and 2,215 shares held in trust as
part of the American Savings Bank Supplemental Executive Retirement Plan
over which the beneficial owner has shared voting power.
(7) Includes 5,000 shares held by Mr. Martin's spouse.
(8) Includes 8,021 shares held in trust as part of the American Savings Bank
Stock-Based Deferred Compensation Plan over which the beneficial owner
has shared voting power, 4,287 shares held in a separate trust in which
Solomon, Smith, Barney serves as trustee and 2,730 shares held by Mr.
Mazadoorian's spouse's individual retirement account.
(9) Includes 3,780 shares held in trust as part of the American Savings Bank
Stock-Based Deferred Compensation Plan over which the beneficial owner
has shared voting power.
(10) Includes 3,568 shares held in trust as part of the American Savings Bank
Stock-Based Deferred Compensation Plan over which the beneficial owner
has shared voting power.
(11) Includes 13,032 shares held in trust as part of the American Savings Bank
Stock-Based Deferred Compensation Plan over which the beneficial owner
has shared voting power.
4
<PAGE>
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INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
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The three nominees proposed by the Board of Directors for election as
director were unanimously chosen by the Nominating Committee of the Board of
Directors. None of the nominees are being proposed according to an agreement or
understanding between any of them and the Company.
After obtaining stockholder approval, the Company will consider
granting stock awards and options to directors, officers and employees of the
Company and the Bank under the Incentive Plan being presented for approval in
Proposal 2.
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PROPOSAL 1-- ELECTION OF DIRECTORS
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The Company's Board of Directors consists of eight members. Seven
directors are independent and one director is a member of management. The Board
is divided into three classes with three-year staggered terms, with
approximately one-third of the directors elected each year. The nominees for
election this year are Fred M. Hollfelder, Harry N. Mazadoorian and Jeffrey T.
Witherwax, each of whom is a director of the Company and the Bank.
It is intended that the proxies solicited by the Board of Directors
will be voted for the election of the nominees named above. If any nominee is
unable to serve, the persons named in the proxy card would vote your shares to
approve the election of any substitute proposed by the Board of Directors.
Alternatively, the Board of Directors may adopt a resolution to reduce the size
of the Board. At this time, the Board of Directors knows of no reason why any
nominee might be unable to serve.
The Board of Directors recommends a vote "FOR" the election of all of
the nominees.
The following table sets forth certain information regarding the
nominees for election at the meeting, as well as information regarding those
directors continuing in office after the meeting.
<TABLE>
<CAPTION>
Year First
Elected Term to
Age(1) Director(2) Expire
------------------------------------------------------------
<S> <C> <C> <C>
DIRECTOR NOMINEES
Fred M. Hollfelder 65 1981 2003
Harry N. Mazadoorian 61 1993 2003
Jeffrey T. Witherwax 54 1996 2003
DIRECTORS CONTINUING IN OFFICE
Adolf G. Carlson 69 1972 2002
Marie S. Gustin. 65 1996 2002
Mark E. Karp.... 53 1995 2002
Robert T. Kenney 57 1991 2001
Steven T. Martin 59 1979 2001
</TABLE>
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(1) As of April 14, 2000.
(2) Includes prior service on the Board of Directors of the Bank. Each member
of the Board of Directors also serves as a director of the Bank.
5
<PAGE>
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:
Director Nominees
Fred M. Hollfelder retired in 1990 as President of Corbin and Russwin
Architectural Hardware located in Berlin, Connecticut.
Harry N. Mazadoorian has been a distinguished professor of dispute
resolution law from practice at Quinnipiac University in Hamden, Connecticut
since January 2000. Mr. Mazadoorian also serves as an arbitrator and a mediator.
Prior to holding these positions, Mr. Mazadoorian served as assistant general
counsel for CIGNA Corporation, a leading provider of employee benefits, health
care insurance and financial services, located in Bloomfield, Connecticut.
Jeffrey T. Witherwax is President of The Naugatuck Glass Company in
Naugatuck, Connecticut.
Directors Continuing in Office
Adolf G. Carlson was President of Adolf Carlson Insurance agency before
its merger with Sinclair Insurance Group in December 1992. Following the merger,
Mr. Carlson served as a consultant until his retirement in December 1998.
Marie S. Gustin, Ph.D. was the superintendent of schools in New Britain,
Connecticut before her retirement in 1993.
Mark E. Karp was President and Chief Executive Officer of Moore Medical
Corp., a pharmaceutical company, located in New Britain, Connecticut, before his
retirement in 1998.
Robert T. Kenney joined American Savings in August 1991 as President,
Treasurer and Chief Operating Officer. In August 1992, he was appointed Chief
Executive Officer while maintaining his positions of President and Treasurer.
Mr. Kenney was named Chairman of the Board of Directors in July 1995. Mr. Kenney
also serves as a director of Mutual Investment Fund of Connecticut, Inc. located
in Hartford, Connecticut, a director and Chairman of Savings Bank Life Insurance
Company in Connecticut and a director of the Federal Home Loan Bank of Boston.
Steven T. Martin has served as Executive Vice President of Ingersoll Rand
Co., an international diversified industrial company located in Woodcliff Lake,
New Jersey, since 1998. Between 1995 and 1998, Mr. Martin was President of the
Production Equipment Group of Ingersoll Rand. Before his involvement with
Ingersoll Rand, Mr. Martin was Vice President of Torrington Company and a
General Manager of Fafnir Bearing, both industrial companies, located in New
Britain, Connecticut.
Meetings and Committees of the Board of Directors
The Board of Directors of the Company and the Board of Directors of the
Bank conduct business through meetings of the Board of Directors and through
activities of their committees. The Board of Directors of the Company meets at
least quarterly and may have additional meetings as needed. The Board of
Directors of the Bank generally meets monthly and may have additional meetings
as needed. During 1999, the Board of Directors of the Company held six meetings.
The Board of Directors of the Bank held 18 meetings during 1999. All of the
current directors of the Company and the Bank attended at least 75% of the total
number of the Company's and the Bank's board meetings held and committee
meetings on which
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<PAGE>
such directors served during 1999. The Board of Directors of the Company
maintains the following committees:
Audit Committee. The Audit Committee of the Company consists of Messrs.
Carlson, Martin and Witherwax. The primary role of the Audit Committee is to
assist the Board of Directors in its oversight of the integrity of the Company's
processes and systems of internal control concerning accounting and financial
reporting and to review compliance with applicable laws and regulations. The
Committee is also responsible for engaging the Company's independent auditors
and its internal auditor and monitoring their conduct and independence. Due to
the timing of the Conversion, the Audit Committee did not meet in 1999.
Compensation Committee. The Compensation Committee during 1999 consisted of
Messrs. Hollfelder and Karp and Ms. Gustin. This Committee is responsible for
making recommendations to the full Board of Directors on all matters regarding
compensation and fringe benefits. The Compensation Committee met once in 1999.
Nominating Committee. The Company's Nominating Committee for the 2000
Annual Meeting consisted of Messrs. Kenney and Martin and Ms. Gustin. The
Nominating Committee considers and recommends the nominees for director to stand
for election at the Company's Annual Meeting of Stockholders. The Company's
Bylaws provide for shareholder nominations of directors. These provisions
require such nominations to be made pursuant to timely written notice to the
Secretary of the Company. The shareholders' notice of nominations must contain
all information relating to the nominee which is required to be disclosed by the
Company's Bylaws and by the Securities Exchange Act of 1934. See "Stockholder
Proposals." The Nominating Committee met on November 22, 1999.
Directors' Compensation
Fees. Directors of American Savings each currently receive an annual
retainer of $12,000 and $700 for each board meeting attended. Additionally, each
director receives an annual retainer of $2,000 for their membership on a
committee, except that each committee chairman receives an annual retainer of
$3,500, and each director receives $500 for each committee meeting attended. The
Company does not pay separate fees for service on its Board of Directors.
Directors' Retirement Plan. American Savings maintains a retirement program
for incumbent non-employee directors to provide a retirement income supplement
for directors with long service. Current directors will receive an annual
benefit of approximately $12,000 at the normal retirement age of 75. Upon a
retired director's death, the director's surviving spouse will receive a benefit
equal to 50% of the retirement benefit.
Incentive Plan. The Company is presenting the Incentive Plan to
stockholders for approval, under which all directors of the Company and the Bank
are eligible to receive awards. See Proposal 2 for a summary of the material
terms of the Incentive Plan.
7
<PAGE>
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EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
Summary Compensation Table
The following information is furnished for the Chief Executive Officer
and the four other highest paid executive officers of American Savings who
received salary and bonus of $100,000 or more during the year ended December 31,
1999.
<TABLE>
<CAPTION>
Name and Position Annual Compensation Other Annual All Other
Year(1) Salary Bonus(2) Compensation(3) Compensation(4)
<S> <C> <C> <C> <C> <C>
Robert T. Kenney.. 1999 $379,231 $187,500 $-- $45,018
Chairman of the Board, President and 1998 365,000 182,500 -- 20,000
Chief Executive Officer
Charles J. Boulier III 1999 $163,031 $64,480 $-- $20,745
Executive Vice President and 1998 155,000 62,000 -- 12,221
Chief Financial Officer
Peter N. Perugini. 1999 $122,308 $36,450 $-- $15,796
Senior Vice President and 1998 117,000 35,100 -- 9,225
Chief Lending Officer
Sheri C. Pasqualoni 1999 $109,308 $32,400 $-- $15,478
Senior Vice President-Marketing, 1998 100,000 30,000 -- 7,885
Trust & Investment Management
Richard J. Moore(5) 1999 $109,308 $32,400 $-- $11,155
Senior Vice President-Human 1998 64,000 11,700 -- --
Resources and Corporate Secretary
</TABLE>
- ---------------------------------------
(1) Compensation information for the year ended December 31, 1997 has been
omitted as American Savings was neither a public company nor a subsidiary
of a public company at that time.
(2) Represents a bonus paid in 2000 earned in 1999.
(3) Does not include the aggregate amount of perquisites and other personal
benefits, which was less than $50,000 or 10% of the total annual salary
and bonus reported.
(4) Represents matching and discretionary contributions made under American
Savings' Savings and Profit Sharing Plan of $4,800, $4,800, $3,939, $5,000
and $1,784, and ESOP allocations with a market value of $12,390, $12,390,
$11,857, $10,478 and $9,371 for Messrs. Kenney, Boulier, Perugini, Ms.
Pasqualoni and Mr. Moore, respectively. Also includes share allocations
under American Savings' supplemental executive retirement plan with a
market value of $27,828 and $3,555 for Messrs. Kenney and Boulier,
respectively.
(5) Mr. Moore joined the Company in May 1998.
Employment Agreements. The Company and the Bank entered into employment
agreements with Messrs. Kenney, Boulier, Moore, Perugini and Ms. Pasqualoni
(individually, the "Executive"). The employment agreements are intended to
ensure that the Company and the Bank will be able to maintain a stable and
competent management base. The continued success of the Company and the Bank
depends to a significant degree on the skills and competence of the above
referenced officers.
The employment agreements provide for three-year terms. The term of the
Company employment agreements may be extended on a daily basis unless written
notice of non-renewal is given by the Board of
8
<PAGE>
Directors and the term of the American Savings employment agreements are
renewable on an annual basis. The employment agreements provide that the
Executive's base salary will be reviewed annually. The base salaries which are
currently effective for such employment agreements for Messrs. Kenney, Boulier,
Moore, Perugini and Ms. Pasqualoni, are $430,000, $185,000, $125,000, $132,000
and $125,000, respectively. In addition to the base salary, the employment
agreements provide for, among other things, participation in stock benefits
plans and other fringe benefits applicable to executive personnel. The
employment agreements provide for termination by the Company and the Bank for
cause, as defined in the employment agreements, at any time. If the Company or
the Bank chooses to terminate the Executive's employment for reasons other than
for cause, or if the Executive resigns from the Company or the Bank after
specified circumstances that would constitute constructive termination, the
Executive or, if the Executive dies, his/her beneficiary, would be entitled to
receive an amount equal to the remaining base salary payments due to the
Executive for the remaining term of the employment agreement and the
contributions that would have been made on the Executive's behalf to any
employee benefit plans of the Company and the Bank during the remaining term of
the employment agreement. The Company and the Bank would also continue and/or
pay for the Executive's life, health, dental and disability coverage for the
remaining term of the employment agreement. Upon termination of the Executive
for reasons other than a change in control, the Executive must comply with a one
year non-competition agreement.
Under the employment agreements, if voluntary or involuntary
termination follows a change in control of the Company or the Bank, the
Executive or, if the Executive dies, his/her beneficiary, would be entitled to a
severance payment equal to the greater of: (1) the payments due for the
remaining terms of the agreement; or (2) three times the average of the five
preceding taxable years' annual compensation. The Company and the Bank would
also continue the Executive's life, health, and disability coverage for
thirty-six months. Even though both the Company and the Bank employment
agreements provide for a severance payment if a change in control occurs, the
Executive would not receive duplicative payments or benefits under the
agreements. The Executive would also be entitled to receive an additional tax
indemnification payment if payments under the employment agreements or otherwise
triggered liability under the Internal Revenue Code for the excise tax
applicable to "excess parachute payments." Under applicable law, the excise tax
is triggered by change in control-related payments which equal or exceed three
times the Executive's average annual compensation over the five years preceding
the change in control. The excise tax equals 20% of the amount of the payment in
excess of one times the Executive's average compensation over the preceding
five-year period.
Payments to the Executive under the American Savings employment
agreement will be guaranteed by the Company if payments or benefits are not paid
by American Savings. Payment under the Company employment agreement would be
made by the Company. All reasonable costs and legal fees paid or incurred by the
Executive under any dispute or question of interpretation relating to the
employment agreements shall be paid by the Company or the Bank, respectively, if
the Executive is successful on the merits in a legal judgment, arbitration or
settlement. The employment agreements also provide that the Company and the Bank
shall indemnify the Executive to the fullest extent legally allowable.
Pension Plan. American Savings maintains a non-contributory pension
plan for its employees. Generally, employees of American Savings begin
participation in the pension plan once they reach age 21 and complete 1,000
hours of service in a consecutive 12-month period. A participant in the pension
plan becomes vested in his accrued benefit under the pension plan upon
completing five years of service. Participants also become 100% vested in their
accrued benefit upon attainment of their "normal retirement age" (as described
in the pension plan) and upon incurring a disability.
A participant's accrued benefit under the pension plan is determined by
multiplying 2% of the participant's final average pay (as described in the
pension plan) by the number of years of service the participant has with
American Savings and then subtracting from this total 2% of the participant's
annual social security benefit multiplied by the number of years of service the
participant has with American
9
<PAGE>
Savings. At December 31, 1999, Messrs. Kenney, Boulier, Moore, Perugini and Ms.
Pasqualoni had 8, 6, 1, 13 and 4 years of service with the Bank for purposes of
the Pension Plan. Participants receive their entire social security benefit in
addition to the pension plan benefit. However, pension benefits are reduced in
the event a participant retires before his or her "normal retirement age."
Participants in the pension plan may elect to receive their benefits in the form
of a 50% or 100% joint and survivor annuity or a life only payment option.
The following table indicates the annual retirement benefits that would
be payable under the pension plan and the related supplemental executive
retirement plan (see below) upon retirement at age 65 to a participant electing
to receive his pension benefit in the standard form of benefit, assuming various
specified levels of plan compensation and various specified years of credited
service. Under the Internal Revenue Code, maximum annual benefits under the
pension plan are limited to $135,000 per year and annual compensation for
calculation purposes is limited to $170,000 per year for the 2000 calendar year.
<TABLE>
<CAPTION>
Average Annual Years of Service
Compensation --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
5 10 15 20 25 30+
--------------- --------------- ------------- ------------ -------------- -------------- ------------
$75,000 $5,780 $11,561 $17,341 $23,122 $28,902 $34,682
100,000 8,280 16,561 24,841 33,122 41,402 49,682
125,000 10,780 21,561 32,341 43,122 53,902 64,682
150,000 13,280 26,561 39,841 53,122 66,402 79,682
175,000 15,780 31,561 47,341 63,122 78,902 94,682
200,000 18,280 36,561 54,841 73,122 91,402 109,682
250,000 23,280 46,561 69,841 93,122 116,402 139,682
300,000 28,280 56,561 84,841 113,122 141,402 169,682
350,000 33,280 66,561 99,841 133,122 166,402 199,682
400,000 38,280 76,561 114,841 153,122 191,402 229,682
450,000 43,280 86,561 129,841 173,122 216,402 259,682
</TABLE>
Supplemental Executive Retirement Plans. American Savings maintains a
non-tax-qualified, supplemental retirement plan to provide key executives with
pension benefits that cannot be provided directly through American Savings'
tax-qualified employee pension plan as result of Internal Revenue Code
limitations on the benefits available through a tax-qualified plan. Benefits
under the supplemental plan are based on the same formula as the employee
pension plan, but are determined without regard to the limitations on the amount
of salary that may be taken into account for benefits purposes under the pension
plan or the level of contributions permitted under the pension plan. The
benefits available under the supplemental plan are reduced by the benefits
actually payable under the pension plan. Supplemental plan benefits are payable
at the same times and in the same forms as benefits payable under the pension
plan. Currently, two officers and one retired officer of American Savings
participate in the supplemental plan.
In addition to the foregoing plans, Mr. Kenney has entered into a
separate supplemental retirement agreement that would provide him with an annual
benefit during his lifetime equal to a maximum benefit of 60% of his final
average compensation less benefits available to him under American Savings'
tax-qualified pension plan, the supplemental plan described above, and a similar
plan sponsored by his prior employer. Under the agreement, Mr. Kenney would be
eligible for benefits upon his retirement at or after attaining age 60. In
addition, the agreement would provide his surviving spouse with a survivor
benefit equal to 50% of the payment received by Mr. Kenney during his lifetime.
American Savings has accrued substantially all of the anticipated costs
associated with its obligation to Mr. Kenney under the agreement.
10
<PAGE>
American Savings has also implemented a program which provides for
supplemental benefits to designated individuals who retire, who terminate
employment in connection with a change in control, or whose participation in the
employee stock ownership plan ends due to termination of the employee stock
ownership plan (regardless of whether the individual terminates employment)
prior to the complete scheduled repayment of the employee stock ownership plan
loan. Generally, the supplemental executive retirement plan will provide the
individual with a benefit equal to what the individual would have received under
the employee stock ownership plan had he remained employed throughout the term
of the employee stock ownership plan loan or had the employee stock ownership
plan not been terminated prior to the scheduled repayment of the employee stock
ownership plan loan less the benefits actually provided under the employee stock
ownership plan on behalf of such individual. At December 31, 1999, Messrs.
Kenney, Boulier, Moore, Perugini and Ms. Pasqualoni participated in the program.
Executive Compensation
The report of the Compensation Committee and the stock performance
graph shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act or the Exchange Act, except as to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
Committee Report on Executive Compensation. Under rules established by
the Securities and Exchange Commission, 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 the other executive officers of the
Company. The disclosure requirements for these executive officers include the
use of a report explaining the rationale and considerations that led to
fundamental compensation decisions affecting those individuals. In fulfillment
of this requirement, the Compensation Committee has prepared the following
report for inclusion in this proxy statement. Since the Company has no employees
other than Bank employees who perform services to the Company without additional
compensation, the Bank's Human Resources Committee evaluates the performance of
each named executive officer and other senior officers of the Company and the
Bank and determines the compensation of all executives. While the President and
Chief Executive Officer is a member of the Human Resources Committee, he recuses
himself from any discussion or voting regarding his level of compensation.
Compensation Policies. The Company's executive compensation policies
are intended to attract and retain qualified executives, to recognize and reward
individual contributions and achievement and to offer a compensation package
that is competitive in the financial industry and motivational to each
individual executive. In furtherance of these objectives, the Company and the
Bank maintain a compensation program for executive officers which consists of a
base salary and a bonus. The salary levels are intended to be consistent and
competitive with the practices of other comparable financial institutions and
each executive's level of responsibility. In making its determinations, the
Human Resources Committee utilizes surveys of compensation paid to executive
officers performing similar duties for depository institutions and their holding
companies with particular focus on the level of compensation paid by
institutions of comparable size and characteristics primarily in the New England
region of the United States. Additionally, the Human Resources Committee
considered the recommendation of an independent compensation consultant when
arriving at salary levels. Although no specific formula is used for decision
making, salary increases are aimed at reflecting the overall performance of the
Company and the performance of the individual executive officer.
A bonus is also awarded based upon certain objective performance
factors, including profitability measurements and other financial measurements.
The bonus is also allocated based upon job position and individual performance.
11
<PAGE>
Long Term Incentive Compensation. The Company is placing the Incentive
Plan for stockholder approval, under which executive officers may receive grants
and awards of common stock and options to purchase common stock of the Company.
The Board believes that stock ownership is a significant incentive in building
stockholder value and in aligning the interests of employees with stockholders,
since the value of this component of compensation increases as the common stock
of the Company appreciates in value.
Compensation of the Chief Executive Officer. During the fiscal year
ended December 31, 1999, Mr. Kenney's base salary totaled $379,231. In addition,
he received a performance bonus of $187,500. Accordingly, Mr. Kenney received
cash compensation of $566,731, which represented a 3.5% increase from the
previous fiscal year. The Board of Directors believes that Mr. Kenney's
compensation is appropriate based upon the Bank's compensation policy, Mr.
Kenney's performance in managing the Company, the Company's performance during
the fiscal year and a comparison of peer institutions with specific
consideration given to the level of the Bank's operations in comparison to peer
institutions.
Compensation Committee
Marie S. Gustin
Fred M. Hollfelder
Mark E. Karp
Compensation Committee Interlocks and Insider Participation. No
executive officer of the Company or the Bank serves as a member of the
compensation committee of another entity, one of whose executive officers serves
on the Compensation Committee of the Company or the Bank. No executive officer
of the Company or the Bank served as a director of another entity, one of whose
executive officers serves on the Compensation Committee of the Company or the
Bank. No executive officer of the Company or the Bank served as a member of the
compensation committee of another entity, one of whose executive officers serves
as a director of the Company or the Bank. None of the members of the Company's
Compensation Committee is an officer or employee of the Company.
12
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on
the Company common stock with the cumulative total return on the Nasdaq Index
and with the SNL $1 Billion to $5 Billion Asset Thrift Index. The graph assumes
that $100 was invested at the close of business on November 30, 1999, the
initial day of trading of the Company's common stock. Total return assumes the
reinvestment of all dividends.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Period Ended
11/30/99 12/31/99 1/31/00 2/29/00 3/31/00
---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
American Financial Holdings, Inc..................... $100.00 $99.75 $98.76 $89.82 $95.78
The Nasdaq Index..................................... 100.00 121.98 118.11 140.78 137.07
SNL $1 Billion to $5 Billion Asset Thrift Index...... 100.00 93.72 85.99 83.87 85.83
</TABLE>
13
<PAGE>
- --------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 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) reports they file.
Based solely on its review of the copies of the reports it has received
and written representations provided to the Company from the individuals
required to file the reports, the Company believes that each of its executive
officers and directors has complied with applicable reporting requirements for
transactions in Company common stock during the fiscal year ended December 31,
1999.
- --------------------------------------------------------------------------------
TRANSACTIONS WITH MANAGEMENT
- --------------------------------------------------------------------------------
Federal regulations generally require 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 the general public and must not involve
more than the normal risk of repayment or present other unfavorable features. In
addition, loans made to a director or executive officer in excess of the greater
of $25,000 or 5% of the Bank's capital and surplus (up to a maximum of $500,000)
must be approved in advance by a majority of the disinterested members of the
Board of Directors.
The Bank currently makes loans to its executive officers and directors
on the same terms and conditions offered to the general public. The Bank's
policy provides that all loans made by the Bank to its executive officers and
directors be made in the ordinary course of business, on substantially the same
terms, including collateral, as those prevailing at the time for comparable
transactions with other persons and may not involve more than the normal risk of
collectibility or present other unfavorable features. At December 31, 1999, the
Bank had no outstanding loans to executive officers or directors.
The Company intends that all transactions in the future between the
Company and its executive officers, directors, holders of 10% or more of the
shares of any class of its common stock and affiliates thereof, will contain
terms no less favorable to the Company than could have been obtained by it in
arms length negotiations with unaffiliated persons and will be approved by a
majority of independent outside directors of the Company not having any interest
in the transaction.
- --------------------------------------------------------------------------------
PROPOSAL 2-- RATIFICATION OF THE AMERICAN FINANCIAL HOLDINGS, INC.
2000 STOCK-BASED INCENTIVE PLAN
- --------------------------------------------------------------------------------
The Board of Directors of the Company is presenting for stockholder
approval the American Financial Holdings, Inc. 2000 Stock-Based Incentive Plan,
in the form attached to this proxy statement as Appendix A. The purpose of the
plan is to attract and retain qualified personnel in key positions, provide
officers, employees and non-employee directors of the Company and the Bank, with
a proprietary interest
14
<PAGE>
in the Company as an incentive to contribute to the success of the Company,
promote the attention of management to other stockholder's concerns, and reward
employees for outstanding performance. The following is a summary of the
material terms of the plan which is qualified in its entirety by the complete
text of the plan, which is attached hereto as Appendix A.
General
The plan authorizes the granting of options to purchase common stock of
the Company and awards of restricted shares of common stock. Subject to certain
adjustments to prevent dilution of awards to participants, the number of shares
of common stock reserved for awards under the plan is 4,041,954 shares,
consisting of 2,887,110 shares reserved for options and 1,154,844 shares
reserved for restricted stock awards. All employees and non-employee directors
of the Company and its affiliates are eligible to receive awards under the plan.
The plan will be administered by a committee (the "Committee") consisting of
members of the Board of Directors who are not employees of the Company or its
affiliates. Authorized but unissued shares or shares previously issued and
reacquired by the Company may be used to satisfy awards under the plan. If
authorized but unissued shares are used to satisfy restricted stock awards and
the exercise of options granted under the plan, it will result in an increase in
the number of shares outstanding and will have a dilutive effect on the holdings
of existing stockholders. The Company may establish a trust under which the
trustee will purchase, with contributions from the Company or the Bank,
previously issued shares to fund the Company's obligation for restricted stock
awards. As of the date of this proxy statement, no awards have been granted
under the plan.
Types of Awards
General. The plan authorizes the grant of awards in the form of: (1)
options intended to qualify as incentive stock options under Section 422 of the
Internal Revenue Code (options which provide certain tax benefits to the
recipients upon compliance with applicable requirements, but which do not result
in tax deductions to the Company); (2) options that do not so qualify (options
which do not provide the same income tax benefits to recipients, but which may
provide tax deductions to the Company), referred to as "non-statutory stock
options"; and (3) grants of restricted shares of common stock. Each type of
award may be subject to certain vesting or service requirements or other
conditions imposed by the Committee.
Options. Subject to the terms of the plan, the Committee has the
authority to determine the amount of options granted to any individual and the
date or dates on which each option will become exercisable and any other
conditions applicable to an option. The exercise price of all options will be
determined by the Committee but will be at least 100% of the fair market value
of the underlying common stock at the time of grant. The exercise price of any
option may be paid in cash, common stock, or any other form permitted by the
Committee at its discretion. The term of options will be determined by the
Committee, but in no event will an option be exercisable more than ten years
from the date of grant (or five years from date of grant for a 10% owner with
respect to incentive stock options).
15
<PAGE>
All options granted under the plan to officers and employees may, at
the discretion of the Committee, qualify as incentive stock options to the
extent permitted under Section 422 of the Internal Revenue Code. Under certain
circumstances, incentive stock options may be converted into non-statutory stock
options. In order to qualify as incentive stock options under Section 422 of the
Internal Revenue Code, the option must generally be granted only to an employee,
must not be transferable (other than by will or the laws of descent and
distribution), the exercise price must not be less than 100% of the fair market
value of the common stock on the date of grant, the term of the option may not
exceed ten years from the date of grant, and no more than $100,000 of options
may become exercisable for the first time in any calendar year. Notwithstanding
the foregoing requirements, incentive stock options granted to any person who is
the beneficial owner of more than 10% of the outstanding voting stock of the
Company may be exercised only for a period of five years from the date of grant
and the exercise price must be at least equal to 110% of the fair market value
of the underlying common stock on the date of grant. Each non-employee director
of the Company or its affiliates, as well as employees, will be eligible to
receive non-statutory stock options.
Unless the Committee determines otherwise, upon termination of an
option holder's services for any reason other than death, disability,
retirement, change in control or termination for cause, all then exercisable
options will remain exercisable for three months following termination, or if
sooner, the expiration of the term of the option. If an option holder dies or
becomes disabled all unexercisable options will become exercisable and remain
exercisable for one year, or if sooner, the expiration of the term of the
option. Upon the occurrence of a change in control, all unexercisable options
held by the option holder will become fully exercisable and remain exercisable
for one year following the date of termination. In the event of termination for
cause, all exercisable and unexercisable options held by the option holder will
be canceled. If an option holder retires, all unexercisable options will be
canceled. However, the Committee may permit all unvested stock options to
continue to vest provided the option holder remains employed by the Company or
the Bank as a consultant or advisor or continues to serve the Company or the
Bank as a director, advisory director or director emeritus.
Under generally accepted accounting principles, compensation expense is
generally not recognized with respect to the award of stock options.
Restricted Stock Awards. Subject to the terms of the plan and
applicable regulation, the Committee has the authority to determine the amounts
of restricted stock awards granted to any individual and the dates on which
restricted stock awards granted will vest or any other conditions which must be
satisfied before vesting.
Stock award recipients may also receive amounts equal to accumulated
cash and stock dividends or other distributions (if any) with respect to shares
awarded in the form of restricted stock. In addition, before vesting, recipients
of restricted stock awards may also direct the voting of shares of common stock
granted to them.
Unless the Committee determines otherwise, upon termination of the
services of a holder of a stock award for any reason other than death,
disability or retirement, all the holder's rights in unvested restricted stock
awards will be canceled. If the holder of the stock award dies or becomes
disabled, all unvested restricted stock awards held by such individual will
become fully vested. If the holder of a stock award retires, all unvested
restricted stock awards held by such individual will be canceled. However, the
Committee may permit all unvested stock awards to continue to vest provided the
holder of a stock award remains employed by the Company or the Bank as a
consultant or advisor or continues to serve the Company or the Bank as a
director, advisory director or director emeritus.
16
<PAGE>
Federal Income Tax Treatment
Options. An option holder will generally not be deemed to have
recognized taxable income upon grant or exercise of any incentive stock option,
provided that shares transferred in connection with the exercise are not
disposed of by the optionee for at least one year after the date the shares are
transferred in connection with the exercise of the option and two years after
the date of grant of the option. If these holding periods are satisfied, upon
disposal of the shares, the aggregate difference between the per share option
exercise price and the fair market value of the common stock is recognized as
income taxable at capital gains rates. No compensation deduction may be taken by
the Company as a result of the grant or exercise of incentive stock options,
assuming these holding periods are met.
In the case of the exercise of a non-statutory stock option, an option
holder will be deemed to have received ordinary income upon exercise of the
option in an amount equal to the aggregate amount by which the fair market value
of the common stock exceeds the exercise price of the option. If shares received
through the exercise of an incentive stock option are disposed of before the
satisfaction of the holding periods (a "disqualifying disposition"), the
exercise of the option will essentially be treated as the exercise of a
non-statutory stock option, except that the option holder will recognize the
ordinary income for the year in which the disqualifying disposition occurs. The
amount of any ordinary income recognized by an optionee upon the exercise of a
non-statutory stock option or due to a disqualifying disposition will be a
deductible expense of the Company for federal income tax purposes.
Restricted Stock Awards. A participant who has been awarded restricted
stock under the plan and does not make an election under Section 83(b) of the
Internal Revenue 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 fair
market value of the stock at such time. Any dividend paid to the recipient on
the restricted stock at or prior to such time will be ordinary compensation
income to the recipient and deductible as such by the Company.
A recipient of a restricted stock award who makes an election under
Section 83(b) of the Code will recognize ordinary income at the time of the
award and the Company will be entitled to a corresponding deduction equal to the
fair market value of the stock at such time. 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.
Amendments
Subject to certain restrictions contained in the plan, the Board of
Directors or the Committee may amend the plan in any respect, at any time,
provided that no amendment may affect the rights of the holder of an award
without his or her permission and such amendment must comply with applicable law
and regulation.
Adjustments
If there is any change in the outstanding shares of common stock of the
Company by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, or other increase or decrease in such shares
without receipt or payment of consideration by the Company, or if an
extraordinary capital distribution is made, including the payment of an
extraordinary dividend, the Committee may make such adjustments to previously
granted awards, to prevent dilution, diminution or enlargement of the rights of
the holder. All awards under the plan will be binding upon any successors or
assigns of the Company.
17
<PAGE>
Nontransferability
Unless the Committee determines otherwise, awards under the plan will
not be transferable by the recipient other than by will or the laws of intestate
succession or pursuant to a domestic relations order. With the consent of the
Committee, a recipient may permit transferability or assignment for valid estate
planning purposes of a non-statutory stock option as permitted under the
Internal Revenue Code or federal securities laws and a participant may designate
a person or his or her estate as beneficiary of any award to which the recipient
would then be entitled, if the participant dies.
Stockholder Approval, Effective Date of Plan and Regulatory Compliance
The Incentive Plan shall become effective: (i) immediately upon the
affirmative vote of a majority of the votes eligible to be cast at the Company's
annual meeting; or (ii) on December 1, 2000 if the Incentive Plan is approved by
a majority of the votes cast at the annual meeting.
New Plan Benefits
The Company anticipates that, following the effective date of the
Incentive Plan, awards will be made to eligible directors, officers and
employees at levels consistent with peer institutions and prevailing industry
practices. However, as of the date of this proxy statement, no decisions have
been made regarding the granting of any options or stock awards under the plan.
The Board of Directors recommends that you vote "FOR" approval of the
American Financial Holdings, Inc. 2000 Stock-Based Incentive Plan.
18
<PAGE>
- --------------------------------------------------------------------------------
PROPOSAL 3-- RATIFICATION OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors has appointed KPMG LLP to be its auditors for
the 2000 fiscal year, subject to the ratification by stockholders. A
representative of KPMG LLP is expected to be present at the annual meeting to
respond to appropriate questions from stockholders and will have the opportunity
to make a statement should he or she desire to do so.
If the ratification of the appointment of the auditors is not approved
by a majority of the votes cast by stockholders at the annual meeting, other
independent public accountants may be considered by the Board of Directors. The
Board of Directors recommends that stockholders vote "FOR" the ratification of
the appointment of auditors.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The Company's Annual Report to Stockholders has been mailed to
stockholders of record as of the close of business on April 14, 2000. Any
stockholder who has not received a copy of the Annual Report may obtain a copy
by writing to the Secretary of the Company. The Annual Report is not to be
treated as part of the proxy solicitation material or as having been
incorporated in this proxy statement by reference.
A copy of the Company's Form 10-K for the fiscal year ended December
31, 1999, as filed with the SEC will be furnished without charge to stockholders
as of the close of business on April 14, 2000 upon written request to Richard J.
Moore, Corporate Secretary, American Financial Holdings, Inc., 102 West Main
Street, New Britain, Connecticut 06051.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
To be considered for inclusion in the Company's proxy statement and
form of proxy relating to the 2001 Annual Meeting of Stockholders, a stockholder
proposal must be received by the Secretary of the Company at the address set
forth on the Notice of Annual Meeting of Stockholders not later than December
25, 2000. If such Annual Meeting is held on a date more than 30 calendar days
from June 5, 2001, a stockholder proposal must be received by a reasonable time
before the proxy solicitation for such Annual Meeting is made. Any such proposal
will be subject to 17 C.F.R. ss. 240.14a-8 of the Rules and Regulations under
the Securities Exchange Act of 1934.
The Bylaws of the Company, a copy of which may be obtained from the
Company, set forth the procedures by which a stockholder may properly bring
business before a meeting of stockholders. Pursuant to the Bylaws, only business
brought by or at the direction of the Board of Directors may be conducted at a
special meeting. The Bylaws of the Company provide an advance notice procedure
for a stockholder to properly bring business before an annual meeting. The
stockholder must give written advance notice to the Secretary of the Company not
less than ninety (90) days before the date originally fixed for such meeting;
provided, however, that in the event that less than one hundred (100) days
notice or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the tenth day following the date on which the
Company's notice to stockholders of the annual meeting date was mailed or such
public disclosure was made. In order
19
<PAGE>
for a stockholder to bring business before the Company's 2001 Annual Meeting of
Stockholders, the Company would have to receive notice of such business no later
than January 26, 2001 assuming the 2001 Annual Meeting is held on April 26, 2001
and that the Company provides at least 100 days notice of the date of the
meeting by mailing or public disclosure. The advance notice by stockholders must
include the stockholder's name and address, as they appear on the Company's
record of stockholders, a brief description of the proposed business, the reason
for conducting such business at the annual meeting, the class and number of
shares of the Company's capital stock that are beneficially owned by such
stockholder and any material interest of such stockholder in the proposed
business. In the case of nominations to the Board of Directors, certain
information regarding the nominee must be provided. Nothing in this paragraph
shall be deemed to require the Company to include in its proxy statement or the
proxy relating to any Annual Meeting any stockholder proposal which does not
meet all of the requirements for inclusion established by the U.S. Securities
and Exchange Commission in effect at the time such proposal is received.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Richard J. Moore
Richard J. Moore
Corporate Secretary
New Britain, Connecticut
April 24, 2000
20
<PAGE>
APPENDIX A
AMERICAN FINANCIAL HOLDINGS, INC.
2000 STOCK-BASED INCENTIVE PLAN
1. DEFINITIONS
(a) "Affiliate" means any "parent corporation" or "subsidiary
corporation" of the Holding Company, as such terms are defined in Sections
424(e) and 424(f) of the Code.
(b) "Award" means, individually or collectively, a grant under the Plan
of Non-Statutory Stock Options, Incentive Stock Options and Stock Awards.
(c) "Award Agreement" means an agreement evidencing and setting
forth the terms of an Award.
(d) "Bank" means American Savings Bank, a Connecticut-chartered
savings bank.
(e) "Board of Directors" means the board of directors of the
Holding Company.
(f) "Change in Control" of the Bank or the Holding Company shall mean
an event of a nature that: (i) would be required to be reported in response to
Item 1(a) of the current report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"); or (ii) results in a Change in Control of the Bank or the
Holding Company within the meaning of the Change in Bank Control Act and the
Rules and Regulations promulgated by the Federal Deposit Insurance Corporation
("FDIC") at 12 C.F.R. ss. 303.4(a), with respect to the Bank, and the Rules and
Regulations promulgated by the Office of Thrift Supervision ("OTS") (or its
predecessor agency), with respect to the Holding Company, as in effect on the
date of this Agreement; or (iii) without limitation such a Change in Control
shall be deemed to have occurred at such time as (A) any "person" (as the term
is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of voting securities of the Bank or the Holding Company
representing 20% or more of the Bank's or the Holding Company's outstanding
voting securities or right to acquire such securities except for any voting
securities of the Bank purchased by the Holding Company and any voting
securities purchased by any employee benefit plan of the Holding Company or its
Subsidiaries, or (B) individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least three-quarters of the
directors comprising the Incumbent Board, or whose nomination for election by
the Holding Company's stockholders was approved by a Nominating Committee solely
composed of members which are Incumbent Board members, shall be, for purposes of
this clause (B), considered as though he were a member of the Incumbent Board,
or (C) a plan of reorganization, merger, consolidation, sale of all or
substantially all the assets of the Bank or the Holding Company or similar
transaction occurs or is effectuated in which the Bank or Holding Company is not
the resulting entity, or (D) a proxy statement has been distributed soliciting
proxies from stockholders of the Holding Company, by someone other than the
current management of the Holding Company, seeking stockholder approval of a
plan of reorganization, merger or consolidation of the Holding Company or Bank
with one or more corporations as a result of which the outstanding shares of the
class of securities then subject to such plan or transaction are exchanged for
or converted into cash or property or securities not issued by the Bank or the
Holding Company shall be distributed, or (E) a tender offer is made for 20% or
more of the voting securities of the Bank or Holding Company then outstanding.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
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(h) "Committee" means the committee designated by the Board of
Directors, pursuant to Section 2 of the Plan, to administer the Plan.
(i) "Common Stock" means the common stock of the Holding Company, par
value $.01 per share.
(j) "Date of Grant" means the effective date of an Award.
(k) "Disability" means any mental or physical condition with respect to
which the Participant qualifies for and receives benefits for under a long-term
disability plan of the Holding Company or an Affiliate, or in the absence of
such a long-term disability plan or coverage under such a plan, "Disability"
shall mean a physical or mental condition which, in the sole discretion of the
Committee, is reasonably expected to be of indefinite duration and to
substantially prevent the Participant from fulfilling his or her duties or
responsibilities to the Holding Company or an Affiliate.
(l) "Effective Date" means the earlier of the date that Plan is
approved by shareholders or December 1, 2000, provided the Plan is approved only
by a majority of the votes cast at the annual meeting.
(m) "Employee" means any person employed by the Holding Company or an
Affiliate. Directors who are employed by the Holding Company or an Affiliate
shall be considered Employees under the Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(o) "Exercise Price" means the price at which a Participant may
purchase a share of Common Stock pursuant to an Option.
(p) "Fair Market Value" means the market price of Common Stock,
determined by the Committee as follows:
(i) If the Common Stock was traded on the date in question on
The Nasdaq Stock Market, then the Fair Market Value shall
be equal to the closing price reported for such date;
(ii) If the Common Stock was traded on a stock exchange on the
date in question, then the Fair Market Value shall be
equal to the closing price reported by the applicable
composite transactions report for such date; and
(iii) If neither of the foregoing provisions is applicable, then
the Fair Market Value shall be determined by the Committee
in good faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value
by the Committee shall be based on the prices reported in
The Wall Street Journal. The Committee's determination of
Fair Market Value shall be conclusive and binding on all
persons.
(q) "Holding Company" means American Financial Holdings, Inc., a
Delaware corporation.
(r) "Incentive Stock Option" means a stock option granted to a
Participant, pursuant to Section 7 of the Plan, that is intended to meet the
requirements of Section 422 of the Code.
(s) "Non-Statutory Stock Option" means a stock option granted to a
Participant pursuant to the terms of the Plan but which is not intended to be
and is not identified as an Incentive Stock Option or a stock
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option granted under the Plan which is intended to be and is identified as an
Incentive Stock Option but which does not meet the requirements of Section 422
of the Code.
(t) "Option" means an Incentive Stock Option or Non-Statutory Stock
Option.
(u) "Outside Director" means a member of the board(s) of directors of
the Holding Company or an Affiliate who is not also an Employee of the Holding
Company or an Affiliate.
(v) "Participant" means any person who holds an outstanding Award.
(w) "Performance Award" means an Award granted to a Participant
pursuant to Section 9 of the Plan.
(x) "Plan" means this American Financial Holdings, Inc. 2000 Stock-
Based Incentive Plan.
(y) "Retirement" means retirement from employment with the Holding
Company or an Affiliate in accordance with the then current retirement policies
of the Holding Company or Affiliate, as applicable. "Retirement" with respect to
an Outside Director means the termination of service from the board(s) of
directors of the Holding Company and any Affiliate following written notice to
such board(s) of directors of the Outside Director's intention to retire.
(z) "Stock Award" means an Award granted to a Participant pursuant to
Section 8 of the Plan.
(aa) "Termination for Cause" means termination because of a
Participant's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or material breach of any provision of any
employment agreement between the Holding Company and/or any subsidiary of the
Holding Company and a Participant.
(bb) "Trust" means a trust established by the Board of Directors in
connection with this Plan to hold Common Stock or other property for the
purposes set forth in the Plan.
(cc) "Trustee" means any person or entity approved by the Board of
Directors or its designee(s) to hold any of the Trust
assets.
2. ADMINISTRATION
(a) The Committee shall administer the Plan. The Committee shall
consist of two or more disinterested directors of the Holding Company, who shall
be appointed by the Board of Directors. A member of the Board of Directors shall
be deemed to be "disinterested" only if he or she satisfies: (i) such
requirements as the Securities and Exchange Commission may establish for
non-employee directors administering plans intended to qualify for exemption
under Rule 16b-3 (or its successor) under the Exchange Act and (ii) such
requirements as the Internal Revenue Service may establish for outside directors
acting under plans intended to qualify for exemption under Section 162(m)(4)(C)
of the Code. The Board of Directors may also appoint one or more separate
committees of the Board of Directors, each composed of one or more directors of
the Holding Company or an Affiliate who need not be disinterested, that may
grant Awards and administer the Plan with respect to Employees, Outside
Directors, and other individuals who are not considered officers or directors of
the Holding Company under Section 16 of the Exchange Act or for whom Awards are
not intended to satisfy the provisions of Section 162(m) of the Code.
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(b) The Committee shall (i) select the Employees and Outside Directors
who are to receive Awards under the Plan, (ii) determine the type, number,
vesting requirements and other features and conditions of such Awards, (iii)
interpret the Plan and Award Agreements in all respects and (iv) make all other
decisions relating to the operation of the Plan. The Committee may adopt such
rules or guidelines as it deems appropriate to implement the Plan. The
Committee's determinations under the Plan shall be final and binding on all
persons.
(c) Each Award shall be evidenced by a written agreement ("Award
Agreement") containing such provisions as may be required by the Plan and
otherwise approved by the Committee. Each Award Agreement shall constitute a
binding contract between the Holding Company or an Affiliate and the
Participant, and every Participant, upon acceptance of an Award Agreement, shall
be bound by the terms and restrictions of the Plan and the Award Agreement. The
terms of each Award Agreement shall be in accordance with the Plan, but each
Award Agreement may include any additional provisions and restrictions
determined by the Committee, in its discretion, provided that such additional
provisions and restrictions are not inconsistent with the terms of the Plan. In
particular and at a minimum, the Committee shall set forth in each Award
Agreement: (i) the type of Award granted; (ii) the Exercise Price of any Option;
(iii) the number of shares subject to the Award; (iv) the expiration date of the
Award; (v) the manner, time, and rate (cumulative or otherwise) of exercise or
vesting of such Award; and (vi) the restrictions, if any, placed upon such
Award, or upon shares which may be issued upon exercise of such Award. The
Chairman of the Committee and such other directors and officers as shall be
designated by the Committee is hereby authorized to execute Award Agreements on
behalf of the Company or an Affiliate and to cause them to be delivered to the
recipients of Awards.
(d) The Committee may delegate all authority for: (i) the determination
of forms of payment to be made by or received by the Plan and (ii) the execution
of any Award Agreement. The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management of the
Holding Company or an Affiliate for determinations to be made pursuant to the
Plan, including the satisfaction of any conditions of a Performance Award.
However, only the Committee or a portion of the Committee may certify the
attainment of any conditions of a Performance Award intended to satisfy the
requirements of Section 162(m) of the Code.
3. TYPES OF AWARDS
The following Awards may be granted under the Plan:
(a) Non-Statutory Stock Options.
(b) Incentive Stock Options.
(c) Stock Awards.
4. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 13 of the Plan, the number
of shares reserved for Awards under the Plan is 4,041,954. Subject to adjustment
as provided in Section 13 of the Plan, the number of shares reserved hereby for
purchase pursuant to the exercise of Options granted under the Plan is
2,887,110. The number of the shares reserved for Stock Awards is 1,154,844. The
shares of Common Stock issued under the Plan may be either authorized but
unissued shares or authorized shares previously issued and acquired or
reacquired by the Trustee or the Holding Company, respectively. To the extent
that Options and Stock Awards are granted under the Plan, the shares underlying
such Awards will be unavailable for any other use including future grants under
the Plan except that, to the extent that Stock Awards or Options terminate,
expire or are forfeited without having vested or without having been exercised,
new Awards may be made with respect to these shares.
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5. ELIGIBILITY
Subject to the terms of the Plan, all Employees and Outside Directors
shall be eligible to receive Awards under the Plan. In addition, the Committee
may grant eligibility to consultants and advisors of the Holding Company or an
Affiliate, as it sees fit.
6. NON-STATUTORY STOCK OPTIONS
The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but not previously awarded under
the Plan, grant Non-Statutory Stock Options to eligible individuals upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:
(a) Exercise Price. The Committee shall determine the Exercise Price of
each Non-Statutory Stock Option. However, the Exercise Price shall not be less
than 100% of the Fair Market Value of the Common Stock on the Date of Grant.
(b) Terms of Non-Statutory Stock Options. The Committee shall determine
the term during which a Participant may exercise a Non-Statutory Stock Option,
but in no event may a Participant exercise a Non-Statutory Stock Option, in
whole or in part, more than ten (10) years from the Date of Grant. The Committee
shall also determine the date on which each Non-Statutory Stock Option, or any
part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Non-Statutory Stock Option.
The shares of Common Stock underlying each Non-Statutory Stock Option may be
purchased in whole or in part by the Participant at any time during the term of
such Non-Statutory Stock Option, or any portion thereof, once the Non-Statutory
Stock Option becomes exercisable.
(c) Non-Transferability. Unless otherwise determined by the Committee
in accordance with this Section 6(c), a Participant may not transfer, assign,
hypothecate, or dispose of in any manner, other than by will or the laws of
intestate succession, a Non-Statutory Stock Option. The Committee may, however,
in its sole discretion, permit transferability or assignment of a Non-Statutory
Stock Option if such transfer or assignment is, in its sole determination, for
valid estate planning purposes and such transfer or assignment is permitted
under the Code and Rule 16b-3 under the Exchange Act. For purposes of this
Section 6(c), a transfer for valid estate planning purposes includes, but is not
limited to: (i) a transfer to a revocable intervivos trust as to which the
Participant is both the settlor and trustee, or (ii) a transfer for no
consideration to: (a) any member of the Participant's Immediate Family; (b) any
trust solely for the benefit of members of the Participant's Immediate Family;
(c) any partnership whose only partners are members of the Participant's
Immediate Family; and (d) any limited liability corporation or corporate entity
whose only members or equity owners are members of the Participant's Immediate
Family; or (iii) a transfer to the American Savings Charitable Foundation. For
purposes of this Section 6(c), "Immediate Family" includes, but is not
necessarily limited to, a Participant's parents, grandparents, spouse, children,
grandchildren, siblings (including half bothers and sisters), and individuals
who are family members by adoption. Nothing contained in this Section 6(c) shall
be construed to require the Committee to give its approval to any transfer or
assignment of any Non-Statutory Stock Option or portion thereof, and approval to
transfer or assign any Non-Statutory Stock Option or portion thereof does not
mean that such approval will be given with respect to any other Non-Statutory
Stock Option or portion thereof. The transferee or assignee of any Non-Statutory
Stock Option shall be subject to all of the terms and conditions applicable to
such Non-Statutory Stock Option immediately prior to the transfer or assignment
and shall be subject to any other conditions prescribed by the Committee with
respect to such Non-Statutory Stock Option.
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(d) Termination of Employment or Service (General). Unless otherwise
determined by the Committee, upon the termination of a Participant's employment
or other service for any reason other than Retirement, Disability or death, a
Change in Control, or Termination for Cause, the Participant may exercise only
those Non-Statutory Stock Options that were immediately exercisable by the
Participant at the date of such termination and only for a period of three (3)
months following the date of such termination, or, if sooner, until the
expiration of the term of the Option.
(e) Termination of Employment or Service (Retirement). In the event of
a Participant's Retirement, the Participant may exercise only those
Non-Statutory Stock Options that were immediately exercisable by the Participant
at the date of Retirement and only for a period of one (1) year from the date of
Retirement or, if sooner, until the expiration of the term of the Option;
provided, however, that upon the Participant's Retirement, the Committee, in its
discretion, may determine that all unvested Options shall continue to vest in
accordance with the Award Agreement the Participant is immediately engaged by
the Holding Company or an Affiliate as a consultant or advisor or continues to
serve the Holding Company or an Affiliate as a director, advisory director or
director emeritus.
(f) Termination of Employment or Service (Disability or Death). Unless
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or other service due to Disability or death, all
Non-Statutory Stock Options held by such Participant shall immediately become
exercisable and remain exercisable for a period of one (1) year following the
date of such termination, or, if sooner, until the expiration of the term of the
Option.
(g) Termination of Employment or Service (Change in Control). Unless
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or service due to a Change in Control, whether such
termination is actual, constructive, or otherwise, the Participant may exercise
only those Non-Statutory Stock Options that were immediately exercisable by the
Participant at the date of such termination and only for a period of one (1)
year following the date of such termination.
(h) Termination of Employment or Service (Termination for Cause).
Unless otherwise determined by the Committee, in the event of a Participant's
Termination for Cause, all rights with respect to the Participant's
Non-Statutory Stock Options shall expire immediately upon the effective date of
such Termination for Cause.
(i) Payment. Payment due to a Participant upon the exercise of a Non-
Statutory Stock Option shall be made in the form of shares of Common Stock.
(j) Maximum Individual Award. No individual Employee shall be
granted an amount of Non-Statutory Stock Options which
exceeds 25% of all Options eligible to be granted under the Plan within any
60-month period.
7. INCENTIVE STOCK OPTIONS
The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Incentive Stock Options to an Employee upon such terms and conditions as
it may determine to the extent such terms and conditions are consistent with the
following provisions:
(a) Exercise Price. The Committee shall determine the Exercise Price of
each Incentive Stock Option. However, the Exercise Price shall not be less than
100% of the Fair Market Value of the Common Stock on the Date of Grant;
provided, however, that if at the time an Incentive Stock Option is granted, the
Employee owns or is treated as owning, for purposes of Section 422 of the Code,
Common Stock
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representing more than 10% of the total combined voting securities of the
Holding Company ("10% Owner"), the Exercise Price shall not be less than 110% of
the Fair Market Value of the Common Stock on the Date of Grant.
(b) Amounts of Incentive Stock Options. To the extent the aggregate
Fair Market Value of shares of Common Stock with respect to which Incentive
Stock Options that are exercisable for the first time by an Employee during any
calendar year under the Plan and any other stock option plan of the Holding
Company or an Affiliate exceeds $100,000, or such higher value as may be
permitted under Section 422 of the Code, such Options in excess of such limit
shall be treated as Non-Statutory Stock Options. Fair Market Value shall be
determined as of the Date of Grant with respect to each such Incentive Stock
Option.
(c) Terms of Incentive Stock Options. The Committee shall determine the
term during which a Participant may exercise an Incentive Stock Option, but in
no event may a Participant exercise an Incentive Stock Option, in whole or in
part, more than ten (10) years from the Date of Grant; provided, however, that
if at the time an Incentive Stock Option is granted to an Employee who is a 10%
Owner, the Incentive Stock Option granted to such Employee shall not be
exercisable after the expiration of five (5) years from the Date of Grant. The
Committee shall also determine the date on which each Incentive Stock Option, or
any part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Incentive Stock Option. The
shares of Common Stock underlying each Incentive Stock Option may be purchased
in whole or in part at any time during the term of such Incentive Stock Option
after such Option becomes exercisable.
(d) Non-Transferability. No Incentive Stock Option shall be
transferable except by will or the laws of descent and distribution and is
exercisable, during his or her lifetime, only by the Employee to whom the
Committee grants the Incentive Stock Option. The designation of a beneficiary
does not constitute a transfer of an Incentive Stock Option.
(e) Termination of Employment (General). Unless otherwise determined by
the Committee, upon the termination of a Participant's employment or other
service for any reason other than Retirement, Disability or death, a Change in
Control, or Termination for Cause, the Participant may exercise only those
Incentive Stock Options that were immediately exercisable by the Participant at
the date of such termination and only for a period of three (3) months following
the date of such termination, or, if sooner, until the expiration of the term of
the Option.
(f) Termination of Employment (Retirement). In the event of a
Participant's Retirement, the Participant may exercise only those Non-Statutory
Stock Options that were immediately exercisable by the Participant at the date
of Retirement and only for a period of one (1) year from the date of Retirement
or, if sooner, until the expiration of the term of the Option; provided,
however, that upon the Participant's Retirement, the Committee, in its
discretion, may determine that all unvested Options shall continue to vest in
accordance with the Award Agreement if the Participant is immediately engaged by
the Holding Company or an Affiliate as a consultant or advisor or continues to
serve the Holding Company or an Affiliate as a director, advisory director or
director emeritus. Any Option originally designated as an Incentive Stock Option
shall be treated as a Non-Statutory Stock Option to the extent the Option does
not otherwise qualify as an Incentive Stock Option pursuant to Section 422 of
the Code.
(g) Termination of Employment (Disability or Death). Unless otherwise
determined by the Committee, in the event of the termination of a Participant's
employment or other service due to Disability or death, all Incentive Stock
Options held by such Participant shall immediately become exercisable and remain
exercisable for a period of one (1) year following the date of such termination,
or, if sooner, until the expiration of the term of the Option.
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(h) Termination of Employment (Change in Control). Unless otherwise
determined by the Committee, in the event of the termination of a Participant's
employment or service due to a Change in Control, the Participant may exercise
only those Incentive Stock Options that were immediately exercisable by the
Participant at the date of such termination and only for a period of one (1)
year following the date of such termination.
(i) Termination of Employment (Termination for Cause). Unless otherwise
determined by the Committee, in the event of an Employee's Termination for
Cause, all rights under such Employee's Incentive Stock Options shall expire
immediately upon the effective date of such Termination for Cause.
(j) Payment. Payment due to a Participant upon the exercise of an
Incentive Stock Option shall be made in the form of shares of Common Stock.
(k) Disqualifying Dispositions. Each Award Agreement with respect to
an Incentive Stock Option shall require the Participant to notify the Committee
of any disposition of shares of Common Stock issued pursuant to the exercise of
such Option under the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions) within 10 days of such
disposition.
(l) Maximum Individual Award. No individual Employee shall be granted
an amount of Incentive Stock Options which exceeds 25% of all Options eligible
to be granted under the Plan within any 60-month period.
8. STOCK AWARDS
The Committee may make grants of Stock Awards, which shall consist of
the grant of some number of shares of Common Stock, to a Participant upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:
(a) Grants of the Stock Awards. Stock Awards may only be made in whole
shares of Common Stock. Stock Awards may only be granted from shares reserved
under the Plan and available for award at the time the Stock Award is made to
the Participant.
(b) Terms of the Stock Awards. The Committee shall determine the dates
on which Stock Awards granted to a Participant shall vest and any terms or
conditions which must be satisfied prior to the vesting of any Stock Award or
portion thereof. Any such terms or conditions shall be determined by the
Committee as of the Date of Grant.
(c) Termination of Employment or Service (General). Unless otherwise
determined by the Committee, upon the termination of a Participant's employment
or service for any reason other than Retirement, Disability or death, a Change
in Control, or Termination for Cause, any Stock Awards in which the Participant
has not become vested as of the date of such termination shall be forfeited and
any rights the Participant had to such Stock Awards shall become null and void.
(d) Termination of Employment or Service (Retirement). In the event of
a Participant's Retirement, any Stock Awards in which the Participant has not
become vested as of the date of Retirement shall be forfeited and any rights the
Participant had to such unvested Stock Awards shall become null and void;
provided, however, that upon the Participant's Retirement, the Committee, in its
discretion, may determine that all unvested Stock Awards shall continue to vest
in accordance with the Award Agreement if the Participant is immediately engaged
by the Holding Company or an Affiliate as a consultant or advisor or continues
to serve the Holding Company or an Affiliate as a director, advisory director,
or director emeritus.
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(e) Termination of Employment or Service (Disability or Death). Unless
otherwise determined by the Committee, in the event of a termination of the
Participant's service due to Disability or death, all unvested Stock Awards held
by such Participant shall immediately vest as of the date of such termination.
(f) Termination of Employment or Service (Change in Control). Unless
otherwise determined by the Committee, in the event of a termination of the
Participant's service due to a Change in Control, any Stock Awards in which the
Participant has not become vested as of the date of such termination shall be
forfeited and any rights the Participant had to such unvested Stock Awards shall
become null and void.
(g) Termination of Employment or Service (Termination for Cause).
Unless otherwise determined by the Committee, in the event of the Participant's
Termination for Cause, all Stock Awards in which the Participant had not become
vested as of the effective date of such Termination for Cause shall be forfeited
and any rights such Participant had to such unvested Stock Awards shall become
null and void.
(h) Maximum Individual Award. No individual Employee shall be granted
an amount of Stock Awards which exceeds 25% of all Stock Awards eligible to be
granted under the Plan within any 60-month period.
(i) Issuance of Certificates. Unless otherwise held in Trust and
registered in the name of the Trustee, reasonably promptly after the Date of
Grant with respect to shares of Common Stock pursuant to a Stock Award, the
Holding Company shall cause to be issued a stock certificate, registered in the
name of the Participant to whom such Stock Award was granted, evidencing such
shares; provided, that the Holding Company shall not cause such a stock
certificate to be issued unless it has received a stock power duly endorsed in
blank with respect to such shares. Each such stock certificate shall bear the
following legend:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the restrictions,
terms and conditions (including forfeiture provisions and
restrictions against transfer) contained in the American
Financial Holdings, Inc. 2000 Stock-Based Incentive Plan and
Award Agreement entered into between the registered owner of
such shares and American Financial Holdings, Inc. or its
Affiliates. A copy of the Plan and Award Agreement is on file
in the office of the Corporate Secretary of American Financial
Holdings, Inc. located at 102 West Main Street, New Britain,
Connecticut 06051."
Such legend shall not be removed until the Participant becomes vested in such
shares pursuant to the terms of the Plan and Award Agreement. Each certificate
issued pursuant to this Section 8(h), in connection with a Stock Award, shall be
held by the Holding Company or its Affiliates, unless the Committee determines
otherwise.
(j) Non-Transferability. Except to the extent permitted by the Code,
the rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules provided that:
(i) The recipient of a Stock Award shall not sell,
transfer, assign, pledge, or otherwise encumber
shares subject to the Stock Award until full vesting
of such shares has occurred. For purposes of this
section, the separation of beneficial ownership and
legal title through the use of any "swap" transaction
is deemed to be a prohibited encumbrance.
(ii) Unless determined otherwise by the Committee and
except in the event of the Participant's death or
pursuant to a domestic relations order, a Stock Award
is not transferable and may be earned in his or her
lifetime only by the Participant to
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whom it is granted. Upon the death of a Participant,
a Stock Award is transferable by will or the laws of
descent and distribution. The designation of a
beneficiary shall not constitute a transfer.
(iii) If a recipient of a Stock Award is subject to the
provisions of Section 16 of the Exchange Act, shares
of Common Stock subject to such Stock Award may not,
without the written consent of the Committee (which
consent may be given in the Award Agreement), be sold
or otherwise disposed of within six (6) months
following the date of grant of the Stock Award.
(k) Treatment of Dividends. Whenever shares of Common Stock underlying
a Stock Award are distributed to a Participant or beneficiary thereof under the
Plan (or at such other time as the Committee may determine with respect to a
Participant), such Participant or beneficiary shall also be entitled to receive,
with respect to each such share distributed, a payment equal to any cash
dividends or other distributions and the number of shares of Common Stock equal
to any stock dividends, declared and paid with respect to a share of the Common
Stock if the record date for determining shareholders entitled to receive such
dividends or other distributions falls between the date the relevant Stock Award
was granted and the date the relevant Stock Award or installment thereof is
issued. There shall also be distributed an appropriate amount of net earnings,
if any, of the Trust with respect to any dividends paid out on the shares
related to the Stock Award.
(l) Voting of Stock Awards. After a Stock Award has been granted but
for which the shares covered by such Stock Award have not yet been vested,
earned and distributed to the Participant pursuant to the Plan, the Participant
shall be entitled to vote or to direct the Trustee to vote, as the case may be,
such shares of Common Stock which the Stock Award covers subject to the rules
and procedures adopted by the Committee for this purpose and in a manner
consistent with the Trust agreement.
(m) Payment. Payment due to a Participant upon the redemption of a
Stock Award shall be made in the form of shares of Common Stock.
9. PERFORMANCE AWARDS
(a) The Committee may determine to make any Award under the Plan
contingent upon the satisfaction of any conditions related to the performance of
the Holding Company, an Affiliate of the Participant. Each Performance Award
shall be evidenced in the Award Agreement, which shall set forth the applicable
conditions, the maximum amounts payable and such other terms and conditions as
are applicable to the Performance Award. Unless otherwise determined by the
Committee, each Performance Award shall be granted and administered to comply
with the requirements of Section 162(m) of the Code and subject to the following
provisions:
(b) Any Performance Award shall be made not later than 90 days after
the start of the period for which the Performance Award relates and shall be
made prior to the completion of 25% of such period. All determinations regarding
the achievement of any applicable conditions will be made by the Committee. The
Committee may not increase during a year the amount of a Performance Award that
would otherwise be payable upon satisfaction of the conditions but may reduce or
eliminate the payments as provided for in the Award Agreement.
(c) Nothing contained in the Plan will be deemed in any way to limit or
restrict the Committee from making any Award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter in
effect.
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<PAGE>
(d) A Participant who receives a Performance Award payable in Common
Stock shall have no rights as a shareholder until the Company Stock is issued
pursuant to the terms of the Award Agreement. The Common Stock may be issued
without cash consideration.
(e) A Participant's interest in a Performance Award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.
(f) No Award or portion thereof that is subject to the satisfaction of
any condition shall be distributed or considered to be earned or vested until
the Committee certifies in writing that the conditions to which the
distribution, earning or vesting of such Award is subject have been achieved.
10. DEFERRED PAYMENTS
The Committee, in its discretion, may permit a Participant to elect to
defer receipt of all or any part of any payment under the Plan otherwise due
upon exercise of an Option. The Committee shall determine the terms and
conditions of any such deferral, including the period of deferral, the manner of
deferral, and the method for measuring appreciation on deferred amounts until
their payout.
11. METHOD OF EXERCISE OF OPTIONS
Subject to any applicable Award Agreement, any Option may be exercised
by the Participant in whole or in part at such time or times, and the
Participant may make payment of the Exercise Price in such form or forms
permitted by the Committee, including, without limitation, payment by delivery
of cash, Common Stock or other consideration (including, where permitted by law
and the Committee, Awards) having a Fair Market Value on the day immediately
preceding the exercise date equal to the total Exercise Price, or by any
combination of cash, shares of Common Stock and other consideration, including
exercise by means of a cashless exercise arrangement with a qualifying
broker-dealer, as the Committee may specify in the applicable Award Agreement.
12. RIGHTS OF PARTICIPANTS
No Participant shall have any rights as a shareholder with respect to
any shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such Common Stock. Nothing contained herein or in any
Award Agreement confers on any person any right to continue in the employ or
service of the Holding Company or an Affiliate or interferes in any way with the
right of the Holding Company or an Affiliate to terminate a Participant's
services.
13. DESIGNATION OF BENEFICIARY
A Participant may, with the consent of the Committee, designate a
person or persons to receive, in the event of death, any Award to which the
Participant would then be entitled. Such designation will be made upon forms
supplied by and delivered to the Holding Company and may be revoked in writing.
If a Participant fails effectively to designate a beneficiary, then the
Participant's estate will be deemed to be the beneficiary.
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<PAGE>
14. DILUTION AND OTHER ADJUSTMENTS
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Holding Company, or in the event an
extraordinary capital distribution is made, the Committee may make such
adjustments to previously granted Awards, to prevent dilution, diminution, or
enlargement of the rights of the Participant, including any or all of the
following:
(a) adjustments in the aggregate number or kind of shares of
Common Stock or other securities that may underlie future
Awards under the Plan;
(b) adjustments in the aggregate number or kind of shares of
Common Stock or other securities underlying Awards already
made under the Plan; and
(c) adjustments in the Exercise Price of outstanding Incentive
and/or Non-Statutory Stock Options.
No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award. All Awards under
this Plan shall be binding upon any successors or assigns of the Holding
Company.
15. TAXES
(a) Whenever under this Plan, cash or shares of Common Stock are to be
delivered upon exercise or payment of an Award or any other event with respect
to rights and benefits hereunder, the Committee shall be entitled to require as
a condition of delivery (i) that the Participant remit an amount sufficient to
satisfy all federal, state, and local withholding tax requirements related
thereto, (ii) that the withholding of such sums come from compensation otherwise
due to the Participant or from any shares of Common Stock due to the Participant
under this Plan or (iii) any combination of the foregoing; provided, however,
that no amount shall be withheld from any cash payment or shares of Common Stock
relating to an Award which was transferred by the Participant in accordance with
this Plan. Furthermore, Participants may direct the Committee to instruct the
Trustee to sell shares of Common Stock to be delivered upon the payment of an
Award to satisfy tax obligations.
(b) If any disqualifying disposition described in Section 7(k) is made
with respect to shares of Common Stock acquired under an Incentive Stock Option
granted pursuant to this Plan, or any transfer described in Section 6(c) is
made, or any election described in Section 14 is made, then the person making
such disqualifying disposition, transfer, or election shall remit to the Holding
Company or its Affiliates an amount sufficient to satisfy all federal, state,
and local withholding taxes thereby incurred; provided that, in lieu of or in
addition to the foregoing, the Holding Company or its Affiliates shall have the
right to withhold such sums from compensation otherwise due to the Participant,
or, except in the case of any transfer pursuant to Section 6(c), from any shares
of Common Stock due to the Participant under this Plan.
16. NOTIFICATION UNDER SECTION 83(b)
The Committee may, on the Date of Grant or any later date, prohibit a
Participant from making the election described below. If the Committee has not
prohibited such Participant from making such election, and the Participant
shall, in connection with the exercise of any Option, or the grant of any Stock
Award, make the election permitted under Section 83(b) of the Code, such
Participant shall notify the Committee of such election within 10 days of filing
notice of the election with the Internal Revenue Service, in addition
A-12
<PAGE>
to any filing and notification required pursuant to regulations issued under the
authority of Section 83(b) of the Code.
17. AMENDMENT OF THE PLAN AND AWARDS
(a) Except as provided in paragraph (c) of this Section 17, the Board
of Directors may at any time, and from time to time, modify or amend the Plan in
any respect, prospectively or retroactively; provided, however, that provisions
governing grants of Incentive Stock Options shall be submitted for shareholder
approval to the extent required by law, regulation or otherwise. Failure to
ratify or approve amendments or modifications by shareholders shall be effective
only as to the specific amendment or modification requiring such ratification or
approval. Other provisions of this Plan will remain in full force and effect. No
such termination, modification or amendment may adversely affect the rights of a
Participant under an outstanding Award without the written permission of such
Participant.
(b) Except as provided in paragraph (c) of this Section 17, the
Committee may amend any Award Agreement, prospectively or retroactively;
provided, however, that no such amendment shall adversely affect the rights of
any Participant under an outstanding Award without the written consent of such
Participant.
(c) In no event shall the Board of Directors amend the Plan or shall
the Committee amend an Award Agreement in any manner that has the effect of:
(i) Allowing any Option to be granted with an Exercise
Price below the Fair Market Value of the Common Stock
on the Date of Grant.
(ii) Allowing the Exercise Price of any Option previously
granted under the Plan to be reduced subsequent to
the Date of Award.
(d) Notwithstanding anything in this Plan or any Award Agreement to the
contrary, if any Award or right under this Plan would, in the opinion of the
Holding Company's accountants, cause a transaction to be ineligible for pooling
of interests accounting that would, but for such Award or right, be eligible for
such accounting treatment, the Committee, at its discretion, may modify, adjust,
eliminate or terminate the Award or right so that pooling of interests
accounting is available.
18. EFFECTIVE DATE OF THE PLAN
The Plan shall become effective: (i) immediately upon the affirmative
vote of a majority of the votes eligible to be cast at a meeting of stockholders
of the Holding Company; or (ii) on December 1, 2000 if the Plan is approved by
only a majority of the votes cast at such meeting of stockholders.
19. TERMINATION OF THE PLAN
The right to grant Awards under the Plan will terminate upon the
earlier of: (i) ten (10) years after the Effective Date; or (ii) the issuance of
a number of shares of Common Stock pursuant to the exercise of Options or the
distribution of Stock Awards is equivalent to the maximum number of shares
reserved under the Plan as set forth in Section 4 of this Plan. The Board of
Directors has the right to suspend or terminate the Plan at any time, provided
that no such action will, without the consent of a Participant, adversely affect
a Participant's vested rights under a previously granted Award.
A-13
<PAGE>
20. APPLICABLE LAW
The Plan will be administered in accordance with the laws of the State
of Delaware to the extent not pre-empted by applicable federal law.
21. TREATMENT OF UNVESTED, UNEXERCISED, OR NON-EXERCISABLE AWARDS
UPON A CHANGE IN CONTROL
In the event of a Change in Control where the Holding Company or the
Bank is not the surviving entity, the Board of Directors of the Holding Company
and/or the Bank, as applicable, shall require that the successor entity take one
of the following actions with respect to all Awards held by Participants at the
date of the Change in Control:
(a) Assume the Awards with the same terms and conditions as
granted to the Participant under this Plan; or
(b) Replace the Awards with comparable Awards, subject to the same or
more favorable terms and conditions as the Awards granted to the Participant
under this Plan, whereby the Participant will be granted common stock or the
option to purchase common stock of the successor entity; or
(c) Replace the Awards with an immediate cash payment of
equivalent value.
22. COMPLIANCE WITH CONVERSION REGULATIONS
Notwithstanding any other provision contained in this Plan:
(a) Unless the Plan is approved by a majority vote of the
outstanding shares of the Holding Company eligible to be cast
at a meeting of stockholders to consider the Plan, as
determined by Delaware law, the Plan and any Awards under the
Plan shall not become effective or implemented prior to
December 1, 2000;
(b) No Options or Stock Awards granted to any individual Employee
prior to the first anniversary of the Bank's conversion from
the mutual to stock form ("Conversion") or December 1, 2000,
may exceed 25% of the total amount of Options or Stock Awards,
as applicable, which may be granted under the Plan;
(c) No Options or Stock Awards granted to any individual Outside
Director prior to the first anniversary of the Bank's
Conversion or December 1, 2000, may exceed 5% of the total
amount of Options or Stock Awards, as applicable, which may be
granted under the Plan;
(d) The aggregate amount of Options or Stock Awards granted to all
Outside Directors prior to the first anniversary of the Bank's
Conversion or December 1, 2000, may not exceed 30% of the
total amount of Options or Stock Awards, as applicable, which
may be granted under the Plan; and
(e) No Option granted prior to the first anniversary of the Bank's
Conversion or December 1, 2000, may be granted with an
exercise price which is less than the Fair Market Value of the
Common Stock underlying the Option on the Date of Grant.
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<PAGE>
REVOCABLE PROXY
AMERICAN FINANCIAL HOLDINGS, INC.
ANNUAL MEETING OF STOCKHOLDERS
June 5, 2000
10:00 a.m. Local Time
-------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the official proxy committee of
American Financial Holdings, Inc. (the "Company"), consisting of Marie S.
Gustin, Mark E. Karp and Steven T. Martin, with full power of substitution, to
act as proxy for the undersigned, and to vote all shares of common stock of the
Company which the undersigned is entitled to vote only at the Annual Meeting of
Stockholders, to be held on June 5, 2000, at 10:00 a.m., Local Time, at the
Hartford Marriott Farmington, 15 Farm Springs Road, Farmington, Connecticut and
at any and all adjournments thereof, with all of the powers the undersigned
would possess if personally present at such meeting as follows:
<PAGE>
[x] Please mark your
votes as in this
example
1. The election as directors of all nominees listed (except as marked
to the contrary below):
Nominees: Fred M. Hollfelder, Harry N. Mazadoorian, Jeffrey T. Witherwax
FOR ALL WITHHOLD ALL
[-] [-]
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name on the line provided below.
FOR ALL
EXCEPT
[-]______________________________
2. The approval of the American Financial Holdings, Inc., 2000 Stock-
Based Incentive Plan
FOR AGAINST ABSTAIN
[-] [-] [-]
3. The ratification of the appointment of the KPMG LLP as independent
auditors of American Financial Holdings, Inc. for the fiscal year ending
FOR AGAINST ABSTAIN
[-] [-] [-]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy, properly signed and dated, will be voted
"FOR" each of the proposals listed. If any other business is presented at the
Annual Meeting, including whether or not to adjourn the meeting, this proxy will
be voted by the proxies in their best judgment. At the present time, the Board
of Directors knows of no other business to be presented at the Annual Meeting.
This proxy also confers discretionary authority on the Board of Directors to
vote with respect to the election of any person as director where the nominees
are unable to serve or for good cause will not serve and matters incident to the
conduct of the meeting.
The below signed acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, a Proxy
Statement dated April 24, 2000 and an Annual Report to Stockholders.
Dated:___________________________
_________________________________
SIGNATURE OF SHAREHOLDER
_________________________________
SIGNATURE OF CO-HOLDER (IF ANY)
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
-----------------------------
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
