<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c)
or ss.240.14a-12
First Franklin Corporation
------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction: (5) Total fee
paid:
------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------
(3) Filing Party:
----------------------------------------------------
(4) Date Filed:
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<PAGE> 2
FIRST FRANKLIN CORPORATION
4750 ASHWOOD DRIVE
CINCINNATI, OHIO 45241
(513) 469-5352
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on April 27, 1998
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of First Franklin Corporation (the "Company"), the holding company
for The Franklin Savings and Loan Company ("Franklin"), will be held at the
corporate office of the Company located at 4750 Ashwood Drive, Cincinnati, Ohio
45241 on April 27, 1998, at 3:00 p.m.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The reelection of two directors of the Company;
2. The amendment of The First Franklin Corporation 1997
Stock Option and Incentive Plan to permit all
employees to be eligible for stock option awards;
3. The ratification of the selection of Clark, Schaefer,
Hackett & Co. as the independent accountants of the
Company for the current fiscal year; and
4. Such other matters as may properly come before the
Meeting or any adjournments thereof.
The Board of Directors is not aware of any other business to come
before the Meeting. Any action may be taken on the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which the
Meeting may be adjourned.
Stockholders of record at the close of business on March 11, 1998, are
the stockholders entitled to vote at the Meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed form of Proxy, which is
solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The Proxy will not be used if you submit a later-dated proxy
or written revocation to the Company before the commencement of voting at the
Meeting or if you attend and vote at the Meeting in person by written ballot.
Cincinnati, Ohio
March 26, 1998 By Order of the Board of Directors
/s/ THOMAS H. SIEMERS
Thomas H. Siemers
President and Chief Executive Officer
================================================================================
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE
MEETING. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
================================================================================
<PAGE> 3
FIRST FRANKLIN CORPORATION
4750 ASHWOOD DRIVE
CINCINNATI, OHIO 45241
(513) 469-5352
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1998
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of First Franklin Corporation (the
"Company") of proxies to be used at the Annual Meeting of Stockholders of the
Company (the "Meeting"), which will be held at the corporate office of the
Company located at 4750 Ashwood Drive, Cincinnati, Ohio 45241, on April 27,
1998, at 3:00 p.m., and at all adjournments of the Meeting. The accompanying
Notice of Annual Meeting of Stockholders and this Proxy Statement are first
being mailed to stockholders on or about March 26, 1998.
Stockholders who execute proxies retain the right to revoke them at any
time prior to the votes being taken at the Meeting. Unless so revoked, the
shares represented by such proxies will be voted at the Meeting and all
adjournments thereof. Proxies may be revoked by the filing of a later-dated
proxy or written revocation prior to a vote being taken on a particular proposal
at the Meeting or by attending the Meeting and voting in person by written
ballot. Proxies solicited on behalf of the Board of Directors of the Company
will be voted in accordance with the directions given therein and, in the
absence of specific instructions to the contrary, will be voted:
FOR the reelection of James E. Hoff, S.J., and Thomas H. Siemers
--- as directors of the Company for terms expiring in 2001;
FOR the amendment of The First Franklin Corporation 1997 Stock
--- Option and Incentive Plan (the "1997 Option Plan"); and
FOR the ratification of the selection of Clark, Schaefer, Hackett
--- & Co. ("Clark Schaefer") as the independent accountants of the
Company for the current fiscal year.
A majority of the shares of the Company's issued and outstanding common
stock (the "Common Stock"), present in person or represented by proxy at the
Meeting, shall constitute a quorum for purposes of the Meeting. Abstentions and
broker Non-votes (defined below) are counted for purposes of determining a
quorum.
VOTE REQUIRED
Two directors shall be elected by a plurality of the shares present in
person or by proxy at the Meeting and validly voted in the election of
directors. Shares as to which the authority to vote is withheld and shares held
by a nominee for a beneficial owner which are present in person or by proxy but
are not voted with respect to the election of directors ("Non-votes") are not
counted toward the election of directors. If the enclosed Proxy is signed, dated
and returned by the stockholder but no vote is specified thereon, the shares
held by such stockholder will be voted FOR the reelection of the nominees named
thereon.
The affirmative vote of the holders of a majority of the shares present
in person or by proxy at the Meeting is necessary to amend the 1997 Option Plan.
The effect of an abstention or Non-vote is the same as a vote against the
amendment of the 1997 Option Plan. If the enclosed Proxy is signed, dated and
returned by the stockholder, but no vote is specified thereon, the shares held
by such stockholder will be voted FOR the approval of the amendment of the 1997
Option Plan.
The affirmative vote of the holders of a majority of the shares present
in person or by proxy at the Meeting is necessary to ratify the selection of
Clark Schaefer as the independent accountants of the Company for the current
fiscal year.
-1-
<PAGE> 4
The effect of an abstention or a Non-vote is the same as a vote against
ratification. If the enclosed Proxy is signed and dated by the stockholder, but
no vote is specified thereon, the shares held by such stockholder will be voted
FOR the ratification of the selection of Clark Schaefer as independent
accountants.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record as of the close of business on March 11, 1998,
will be entitled to one vote for each share then held. As of that date, the
Company had 1,192,029 shares of Common Stock issued and outstanding.
The following table sets forth, as of March 11, 1998, share ownership
information regarding (i) those persons or entities who were known by management
to own beneficially more than five percent of the outstanding shares of Common
Stock; and (ii) all directors and executive officers of the Company and its most
significant subsidiary, The Franklin Savings and Loan Company ("Franklin"), as a
group.
<TABLE>
<CAPTION>
Shares Beneficially Percent of
Name and Address of Beneficial Owner Owned Class
------------------------------------ ------------------- ----------
<S> <C> <C>
Thomas H. Siemers(1) 156,374 13.1%
First Franklin Corporation
4750 Ashwood Drive
Cincinnati, Ohio 45241
Jeffrey L. Gendell (2) 67,800 5.9
200 Park Avenue, Suite 3900
New York, New York 10166
All directors and executive officers of Franklin 297,299 24.9
and the Company as a group (10 persons)(3)
- -----------------------------
<FN>
(1) Mr. Siemers, the President and Chief Executive Officer of the Company, has sole voting and investment
power with respect to 70,811 shares and shared voting and investment power for 18,600 shares, which Mr.
Siemers holds jointly with his spouse. Mr. Siemers has sole voting and/or investment power with respect
to 24,488 shares allocated to his account in The Franklin Savings and Loan Company Employee Stock
Ownership Plan ("ESOP"). Finally, as the ESOP trustee, Mr. Siemers may be deemed to have voting power,
investment power or both with respect to another 42,475 shares of Common Stock held by the ESOP, which
have not been allocated to the accounts of individual participants or which have been allocated to the
accounts of individual participants and which may still be sold by the trustee.
(2) Mr. Gendell has sole voting and investment power with respect to 6,000 shares and shared voting and
investment power with respect to 61,800 shares, which are beneficially owned by Tontine Financial
Partners, L.P., for which Tontine Management, L.L.C., is the general partner. Mr. Gendell is the
Managing Member of Tontine Management, L.L.C., and in that capacity, directs its operations.
(3) Includes shares held directly, shares allocated to executive officers' accounts in the ESOP and shares
held by controlled corporations or certain family members, over which shares the specified individuals
or group effectively exercise sole or shared voting and investment power. Such amount also includes the
shares that may be deemed to be beneficially owned by Mr. Siemers, as trustee of the ESOP of Franklin.
Share information for each director of the Company is included under "Election of Directors."
</FN>
</TABLE>
-2-
<PAGE> 5
ELECTION OF DIRECTORS
The Board of Directors is currently composed of five members. Directors
are elected to serve for three-year terms or until their respective successors
are elected and qualified. Approximately one-third of the Board of Directors of
the Company is elected annually.
The full Board of Directors acts as a nominating committee for the
annual selection of its nominees as directors. While the nominating committee
and the Board of Directors will consider nominees recommended by others, it has
not actively solicited nominations or established any procedures for this
purpose.
The following table sets forth certain information regarding the
composition of the Company's Board of Directors, including terms of office. It
is intended that the proxies solicited on behalf of the Board of Directors
(other than proxies in which the vote is withheld as to a nominee) will be voted
at this Meeting for the reelection of the nominees indicated below. If either of
the nominees is unable to serve, the shares represented by all valid proxies
will be voted for the election of such substitute as the Board of Directors may
recommend. At this time, the Board of Directors knows of no reason why either of
the nominees might be unable to serve if elected. Except as disclosed herein,
there are no arrangements or understandings between either of the nominees and
any other person pursuant to which either of the nominees were selected.
<TABLE>
<CAPTION>
Positions held with Year first Shares
the Company elected director of Term to beneficially owned Percent
Name Age(1) and Franklin the Company/Franklin expire at March 11, 1998(2) of class
- ---- --- ------------ -------------------- ---------- ------------------ --------
<S> <C> <C> <C> <C> <C> <C>
NOMINEES
James E. Hoff, S.J. 65 Director 1993/1993 2001 - -
Thomas H. Siemers 64 President, Chief 1987/1953 2001 156,374(3) 13.1%
Executive Officer
and Director
DIRECTORS REMAINING IN OFFICE
John L. Nolting 65 Director 1987/1981 1999 1,000 0.1
James E. Cross 62 Director 1996/1978 2000 21,056 1.8
Richard H. Finan 63 Director 1987/1968 2000 51,616 (4) 4.3
- -------------------------------
<FN>
(1) As of March 11, 1998.
(2) Unless otherwise indicated by footnote, the individual has sole voting and investment power with respect to all
shares reported as owned.
(3) See footnote 1 to table under "VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF."
(4) Mr. Finan has shared voting and investment power over 50,000 shares of Common Stock.
</FN>
</TABLE>
-3-
<PAGE> 6
The business experience of each director during the last five years is
as follows:
JAMES E. HOFF, S.J., has been the President of Xavier University in
Cincinnati, Ohio, since 1991. Prior to his arrival at Xavier, Fr. Hoff was
President of the Creighton Foundation and Vice President of University Relations
at Creighton University.
THOMAS H. SIEMERS has been employed by Franklin since 1949, has been a
director of Franklin since 1953, and has served as President and Chief Executive
Officer since 1968. From 1978 to 1983, Mr. Siemers served as a director of the
Federal Home Loan Bank of Cincinnati. Mr. Siemers also served as the Chairman of
the Ohio Savings and Loan League in 1981 and 1982 and on the Executive Committee
of the U.S. League of Savings Institutions from 1982 to 1985.
JOHN L. NOLTING has been the President and Chief Executive Officer of
DataTech Services, Inc., a computer service company located in Cincinnati, since
1974. He also serves as the President and Chief Executive Officer of Queen City
Leasing, an automobile leasing company located in Cincinnati, and a Director and
the President of DirectTeller Systems, Inc.
JAMES E. CROSS is a partner in the Dayton, Ohio law firm of Allbery
Cross Fogarty and has practiced with that firm since 1985. He was a member of
the Board of Directors of Central Savings in Dayton, Ohio when it merged with
Franklin in 1978, and has served as a director of Franklin since then.
RICHARD H. FINAN is the President of the Ohio State Senate. He has been
a member of the State legislature since 1973 and has had a legal practice since
1959. Mr. Finan also serves as legal counsel for Madison Service Corporation,
Franklin's wholly-owned subsidiary, and DirectTeller Systems, Inc., a joint
venture between the Company and DataTech Services, Inc. Mr. Finan is also a
director of Carillon Funds, Inc., a company that has a class of securities
registered under Section 12 of the Securities Exchange Act of 1934 (the
"Exchange Act").
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
Regular meetings of the Company's Board of Directors are held
quarterly. During the year ended December 31, 1997, the Company's Board of
Directors held a total of five regular and special meetings. No incumbent
director of the Company attended fewer than 75% of the total meetings of the
Company's Board of Directors and meetings held by all committees of the
Company's Board of Directors on which such director served during this period.
The Company has an Audit Committee, which is composed of the four
outside directors. The Audit Committee met once during 1997. The Company has no
standing compensation or nominating committees. The full Board of Directors acts
as the nominating committee for the annual selection of its nominees for
election of directors. During 1997, the Board of Directors met once acting as a
nominating committee. While the Board of Directors will consider nominees
recommended by stockholders, it has not actively solicited nominations nor
established any procedures for this purpose.
The Board of Directors of Franklin, the principal subsidiary of the
Company, consists of the five directors of the Company, Donald E. Newberry, Sr.,
and Mary W. Sullivan. Regular meetings of Franklin's Board of Directors are
generally held on a monthly basis. Franklin's Board of Directors held a total of
13 regular and special meetings during 1997. No director attended fewer than 75%
of the total meetings of Franklin's Board of Directors and meetings held by all
committees of Franklin's Board of Directors on which such director served. The
Board of Directors of Franklin has standing Executive and Compensation
Committees.
The Executive Committee consists of the President and one member of
Franklin's Board of Directors who is selected weekly on an alternating basis
from the entire Board. This committee meets weekly (except during weeks when the
full Board meets) and exercises the power of Franklin's Board of Directors
between regular Board meetings. All actions of this committee are reviewed and
ratified by Franklin's full Board of Directors. This committee met 40 times
during 1997.
Franklin's Compensation Committee reviews and makes recommendations to
Franklin's Board of Directors with respect to executive compensation and other
benefit programs. The Compensation Committee is comprised of Messrs. Siemers,
Finan and Nolting. One meeting was held by this committee during 1997.
-4-
<PAGE> 7
COMPENSATION OF THE BOARD OF DIRECTORS
During 1997, each director of the Company received fees of $1,000 for
each meeting of the Board of Directors of the Company held during the year. Each
director of Franklin, except for Mr. Siemers, received fees of $1,000 for each
meeting of the Board of Directors of Franklin held during the year. No fees are
currently paid by the Company or Franklin for committee membership. Directors'
fees for the Company and Franklin have been increased to $1,250 for each meeting
during 1998.
EXECUTIVE OFFICERS
The following information as to the business experience during the past
five years is supplied with respect to executive officers of the Company and
Franklin who do not serve on the Company's Board of Directors. Each officer is
elected annually to serve until his or her successor shall have been elected and
qualified, or until he or she shall resign or be removed by the Board of
Directors. There are no arrangements or understandings between the persons named
and any other person pursuant to which such officers were selected.
JOSEPH F. HUTCHISON, age 56, joined the Company and Franklin in 1997 as
Senior Vice President of Corporate Development. Prior to joining the Company,
Mr. Hutchison served as President and Chief Executive Officer of Suburban
Federal Savings Bank and Suburban Bancorporation, Inc., of Cincinnati, Ohio. Mr.
Hutchison is currently a director of the Federal Home Loan Bank of Cincinnati
and a trustee of the Ohio League of Financial Institutions.
GRETCHEN J. SCHMIDT, age 41, has been the Corporate Secretary/Treasurer
of the Company since 1988. She also serves as Vice President of Operations of
Franklin. Ms. Schmidt has held a variety of part-time positions with Franklin
since 1971, and full-time positions since 1978. Currently, she is responsible
for branch operations and general corporate administration. Ms. Schmidt is the
daughter of President Siemers.
DANIEL T. VOELPEL, age 49, has been Vice President/Chief Financial
Officer of the Company since 1988. He also serves as Vice President/Chief
Financial Officer of Franklin and Treasurer of DirectTeller Systems, Inc., and
Franklin's subsidiary, Madison Service Corporation. He has been with Franklin
since 1983.
-5-
<PAGE> 8
EXECUTIVE COMPENSATION
The Company currently does not pay any compensation to its executive
officers. The following table shows the compensation paid or granted by Franklin
and its subsidiaries for services rendered during the periods indicated to each
executive officer whose annual compensation exceeded $100,000 during the fiscal
year.
Summary Compensation Table
--------------------------
<TABLE>
<CAPTION>
-------------------------------------------------------------
Annual Compensation Long Term Compensation
- ---------------------------------------------------------------------------------------------------------------------------
Awards
Name and Principal Year Salary ($) Bonus ($) Restricted Securities All Other Compensation
Position Stock Awards Underlying
($) Options/
SARs(#)(1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
THOMAS H. SIEMERS - 1997 $213,562 - - 6,500 $28,826(2)
President, Chief Executive 1996 208,512 - - - 28,454(3)
Officer and Director of the 1995 204,922 - - - 14,365(4)
Company, Franklin and Madison
Service Corporation; Chairman
of the Board of DirectTeller
Systems, Inc.
DANIEL T. VOELPEL - Vice 1997 $108,870 - - 3,000 $19,804(2)
President and Chief Financial 1996 105,120 $ 2,000 - - 20,277(3)
Officer of the Company and 1995 97,957 - - - 9,398(4)
Franklin and Treasurer of
Madison Service Corporation
and DirectTeller Systems, Inc.
- -----------------------------
<FN>
(1) Represents the number of shares of Common Stock underlying options granted to Mr. Siemers and Mr. Voelpel
pursuant to the 1997 Option Plan.
(2) Consists of contributions to the Company's defined contribution pension plan in the amount of $16,000 and
$10,992 on behalf of Messrs. Siemers and Voelpel, respectively, and the $12,826 and $8,812 value of the
allocations to the ESOP accounts of Messrs. Siemers and Voelpel, respectively.
(3) Consists of contributions to the Company's defined contribution pension plan in the amount of $15,000 and
$11,017 on behalf of Messrs. Siemers and Voelpel, respectively, and the $13,454 and $9,260 value of the
allocations to the ESOP accounts of Messrs. Siemers and Voelpel, respectively.
(4) Consists of the value of the allocations to the ESOP accounts of Messrs. Siemers and Voelpel, respectively.
</FN>
</TABLE>
STOCK OPTION PLAN
At the 1997 Annual Meeting of the Stockholders of the Company, the
stockholders approved the 1997 Option Plan. The Board of the Directors reserved
117,323 shares of common stock, which was equal to 10% of the then-outstanding
common shares, for issuance by the Company upon the exercise of options to be
granted to certain directors, officers and key employees of the Company and its
subsidiaries, including Franklin, from time to time under the 1997 Option Plan.
Options to purchase 46,100 shares of common stock of the Company have been
awarded pursuant to the 1997 Option Plan.
The 1997 Option Plan is administered by a committee of non-employee
directors of the Company (the "Stock Option Committee"), which may grant options
under the 1997 Option Plan at such times as it deems most beneficial to the
Company on
-6-
<PAGE> 9
the basis of the individual participant's position and duties, the value of the
individual's service and responsibilities to the Company and any other factor
the Stock Option Committee deems relevant. Options granted to the officers and
employees under the 1997 Option Plan may be "incentive stock options" ("ISOs")
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), which, if certain conditions are met, permits the
optionees to delay the recognition of federal taxable income on the shares
received upon the exercise of the options. Options granted under the 1997 Option
Plan to directors who are not employees of the Company or Franklin will not
qualify under the Code and thus will not be ISOs ("Non-qualified Stock
Options").
The option exercise price for ISOs and Non-qualified Stock Options is
determined by the Stock Option Committee at the time of option grant. The
exercise price for an ISO must not be less than 100% of the fair market value of
the shares on the date of the grant; provided, however, for an employee who owns
more than 10% of the Company's outstanding common shares, the exercise price of
an ISO may not be less than 110% of the fair market value of the shares on the
date of the grant, and the ISO shall not be exercisable after the expiration of
five years from the date it is granted. No stock option will be exercisable
after the expiration of ten years from the date of the grant. An option cannot
be transferred or assigned other than by will or in accordance with the laws of
descent and distribution. Termination for cause, as defined in the 1997 Option
Plan, will result in the annulment of any outstanding options.
The following table sets forth information regarding all grants of
options to purchase common shares of the Company made to the individuals named
in the Summary Compensation Table during 1997:
<TABLE>
<CAPTION>
Option/SAR Grants In Last Fiscal Year
Individual Grants
- --------------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Base Expiration
Name Granted (#) 1997 Fiscal Year Price ($/Share) Date
- ---- ------------- ---------------- ---------------- ----------
<S> <C> <C> <C> <C>
Thomas H. Siemers 6,500(1) 15.8% $29.70 December 19, 2002
Daniel T. Voelpel 3,000(1) 7.3% 27.00 December 19, 2007
- ------------------------
<FN>
(1) The option was granted on December 19, 1997, and is first exercisable with respect to one-third of the
shares subject to the option on each of January 20, 1999, January 20, 2000, and January 20, 2001, provided
that both the option recipient and the Company achieve specified performance goals in 1998. If the
recipient achieves his 1998 performance goals and the Company fails to achieve its 1998 performance goals,
the recipient may exercise only 50% of his allocated options. If the recipient fails to achieve his 1998
performance goals, no options will be exercisable. The options are intended to qualify as ISOs.
</FN>
</TABLE>
-7-
<PAGE> 10
The following table sets forth certain information concerning the
number and value of stock options at December 31, 1997, held by the individuals
named in the Summary Compensation Table.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
--------------------------------------------------------------------------------
Value Number of unexercised Value of unexercised in-the-money
Shares acquired realized options/SARs at FY-end (#) options/SARs at FY-end ($)(3)
-------------------------- --------------------------------
Name on exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas H. Siemers 13,972 $197,337 (1) - 6,500 - $10,075
Daniel T. Voelpel 12,200 134,200 (2) - 3,000 - 12,750
- ----------------------------------
<FN>
(1) Value is based upon the sales price of $18.50 and $19.75 per share of the Common Stock as reported on The
Nasdaq National Market on the dates closest in time to the exercise of the options by Mr. Siemers, less the
option exercise price of $5.00 per share.
(2) Value is based upon the sales price of $16.00 per share of the Common Stock as reported on The Nasdaq National
Market on the date closest in time to the exercise of the option by Mr. Voelpel, less the option exercise price
of $5.00 per share.
(3) Value is based upon the sales price of $31.25 per share of the Common Stock as reported on The Nasdaq National
Market on December 31, 1997, less the option exercise price of $27.00 per share for Mr. Voelpel and $29.70 per
share for Mr. Siemers.
</FN>
</TABLE>
EMPLOYMENT CONTRACT
On May 1, 1984, the Board of Directors of Franklin approved a five-year
employment agreement with Mr. Siemers. The contract provides for automatic
extensions of one year each upon the expiration of each year of the contract,
until either Franklin or Mr. Siemers gives written notice to the contrary. The
contract provides for termination: (1) upon the employee's death, (2) for cause,
(3) without cause and (4) upon certain events defined by federal regulations.
The employment agreement provides for a salary as determined by the
Board of Directors but not less than the employee's current annual salary.
Salary increases will be reviewed not less often than annually. The contract
provides, among other things, for participation in an equitable manner in
employee benefits applicable to executive personnel.
The contract provides for payment to the employee of an amount equal to
the present value of the employee's salary for the unexpired term of the
contract in the event there is a change in control of Franklin where employment
terminates involuntarily in connection with such change of control or within six
months thereafter. If Mr. Siemers' employment were terminated in connection with
a change in control while earning his current salary as of December 31, 1997, at
which date the unexpired term of the contract was 52 months, Mr. Siemers could
have received a cash payment of up to approximately $796,000 pursuant to his
contract. Such termination payments are provided on a similar basis in
connection with a voluntary termination of employment in connection with a
change in control which was at any time opposed by Franklin's Board of
Directors.
TRANSACTIONS WITH MANAGEMENT AND INDEBTEDNESS OF MANAGEMENT
Franklin, like many financial institutions, has followed a policy of
granting to its officers, directors and employees loans for the financing and
improvement of their personal residences and consumer loans for other purposes.
Except as set forth below, such loans are made in the ordinary course of
business and are made on substantially the same terms and collateral as those of
comparable transactions prevailing at the time and do not involve more than the
normal risk of collectibility or present other unfavorable features. Currently,
for loans to the employees, directors and officers of the Company or Franklin
and their family members, interest rates are generally set at 1% over Franklin's
cost of funds, subject to adjustment to market rates in the event that the
employment relationship is terminated. If the employment relationship is
-8-
<PAGE> 11
terminated, the rate will revert to the contract rate and the modification will
be canceled. Loan fees on mortgage loans are generally waived except to the
extent of direct loan origination expenses incurred by Franklin. Other loans are
reviewed on an individual basis and any preferential treatment given is based on
the employees length of service, work performance and past credit history.
Set forth below is certain information at December 31, 1997, as to all
loans made by Franklin to each of its or the Company's current directors or
executive officers which were granted at less than market rates and which for
any one individual resulted in an aggregate indebtedness to Franklin exceeding
$60,000 at any time since January 1, 1996:
<TABLE>
<CAPTION>
Largest amount Balance as of Market interest
Nature of outstanding since December 31, Current interest rate at the time
Name Date of loan indebtedness January 1, 1996 1997 rate of origination
---- ------------ ------------ ----------------- ------------- ---------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Richard H. Finan 6/15/84 First mortgage - $ 82,498 $73,766 6.625% 10.500%
personal residence
Gretchen J. 12/24/96 First mortgage - 146,700 144,856 5.875 7.875
Schmidt personal residence
2/7/97 Consumer loan 19,413 16,651 7.000 9.000
</TABLE>
The Company owns a 51% interest in DirectTeller Systems, Inc.
("DirectTeller"), an Ohio corporation that markets computer software developed
by DataTech Services, Inc. ("DataTech"), to financial institutions. Director
Nolting is the President and Chief Executive Officer of DataTech. When this
venture was approved by the Board of Directors of the Company in 1989, Director
Nolting abstained from voting on the matter. The Company initially contributed
$50,000 and DataTech contributed the software it developed to the initial
capitalization of DirectTeller. The Company is responsible for maintaining the
financial records of DirectTeller and DataTech is obligated to manage the day to
day operations of DirectTeller, including software maintenance and marketing.
DataTech does not receive a management fee for performing these services. The
Company's investment in Direct Teller was $50,000 at December 31, 1997.
Director Finan is an attorney at law who from time to time provides
legal services to Madison Service Corporation and DirectTeller. During the year
ended December 31, 1997, fees paid by the subsidiaries of Franklin and the
Company did not exceed five percent of Mr. Finan's gross revenues for the last
fiscal year.
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who own more than 10% of a registered class of
the Company's equity securities to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes of ownership in
the Company by the tenth day of the month following a change. Officers,
directors and greater than 10% stockholders are required by regulation to
furnish the Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company and written representations that no other reports were
required, during the fiscal year ended December 31, 1997, all Section 16(a)
filings required were timely filed.
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<PAGE> 12
AMENDMENT OF THE 1997 STOCK OPTION PLAN
GENERAL
On December 19, 1997, the Board of Directors of the Company adopted an
amendment (the "Amendment") to the 1997 Option Plan that would permit all
employees of the Company (or a corporation or entity in which the Company
controls more than 50% of all voting power), including part-time employees, to
be eligible for stock option awards. THE BOARD OF DIRECTORS OF THE COMPANY
RECOMMENDS THAT THE STOCKHOLDERS OF THE COMPANY APPROVE THE AMENDMENT TO THE
1997 OPTION PLAN.
PURPOSE
With the competition for employees that exists in the Company's market
areas, the attraction and retention of all levels of skilled employees has
become more difficult. Permitting all 59 employees to be eligible for awards of
stock options increases management's flexibility to provide competitive
compensation in a manner that is cost-effective for the Company. Such
flexibility is especially important for the attraction and retention of
part-time employees, who may not be eligible for other benefit plans.
In addition to helping to attract and retain skilled employees, stock
option awards strengthen the mutuality of interests between the individual
participants and the Company's stockholders. Such alignment of interests is
reinforced by basing the exercisability of awarded stock options contingent upon
the attainment of goals set for both the Company and the individual participant.
CHANGES TO THE 1997 OPTION PLAN
The Amendment changes three sections of the 1997 Option Plan. The
Amendment deletes the word "key" from the phrase "other key employees" contained
in Section 1, which, as amended, reads as follows:
PURPOSE. The Purpose of The First Franklin Corporation 1997
Stock Option and Incentive Plan (this "Plan") is to promote
the best interests of First Franklin Corporation (the
"Company") and its stockholders by enabling the Company to
attract, retain and reward directors, officers, managerial
and other employees of the Company and any Subsidiary
(hereinafter defined), and to strengthen the mutuality of
interest between such directors, officers and employees of
the Company and the Company's stockholders.
The Amendment adds the phrase "including part-time employment" to the
definition of "Employment" contained in Section 2(f), which, as amended, reads
as follows:
"Employment" means regular employment, including part-time
employment, with the Company or a Subsidiary and does not
include service as a director or officer only.
The Amendment also makes both of the above-described changes to Section
6, which, as amended, reads as follows:
ELIGIBILITY AND GRANTS. Persons eligible for Stock Options
under this Plan shall consist of directors, officers and
managerial and other employees of the Company or a
Subsidiary, including part-time employees, who hold
positions with significant responsibilities or whose
performance or potential contribution, in the judgment of
the Committee, will benefit the future success of the
Company or a Subsidiary. In selecting the directors,
officers and employees to whom Stock Options will be awarded
and the number of shares subject to such Stock Options, the
Committee shall consider the position, duties and
responsibilities of the eligible directors, officers and
employees, the value of their services to the Company and
the Subsidiaries and any other factors that the Committee
may deem relevant. No director, officer or employee shall
have any right or entitlement to receive a Stock Option.
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<PAGE> 13
EFFECT ON EXISTING STOCKHOLDERS
The Amendment does not affect the rights or ownership interests of
existing stockholders. The maximum number of shares of Common Stock reserved for
issuance to participants in the 1997 Option Plan remains at 117,323 shares of
Common Stock, the amount previously reserved by the Board of Directors. The 1997
Option Plan is still administered by the Stock Option Committee, which may still
grant options at such times as it deems most beneficial to the Company on the
basis of an individual participant's position, duties and responsibilities, the
value of the individual's services to the Company and any other factor the Stock
Option Committee deems relevant. The terms and tax treatment of the options and
the termination date of the 1997 Option Plan also remain unchanged.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE 1997 OPTION
PLAN.
SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors approved the selection of Clark Schaefer to
replace Coopers & Lybrand L.L.P. ("Coopers") as the Company's independent
accountants effective September 30, 1996. Coopers had served as the Company's
independent accountants for all fiscal years since its inception in 1987. This
change in accountants has resulted in a significant decrease in the amount of
accounting fees paid by the Company.
Coopers' reports on the consolidated financial statements of the
Company for the two years ended December 31, 1995, did not contain any adverse
opinion or disclaimer of opinion, nor were such reports qualified or modified as
to uncertainty, audit scope or accounting principles. There were no
disagreements between the Company and Coopers on any matter of accounting
principles or practices, consolidated financial statement disclosure or audit
scope or procedure during the two years ended December 31, 1995, and the
subsequent interim periods through September 27, 1996.
The Board of Directors' decision to engage Clark Schaefer as its
independent accountants was based on that firm's experience with community-based
financial institutions. Prior to selecting and engaging Clark Schaefer as its
independent accountants, the Company did not request or obtain any advice from
Clark Schaefer concerning any material accounting, auditing or financial
reporting issue regarding the application of accounting principles to a
specified transaction or the type of audit opinion that might be rendered on the
Company's consolidated financial statements.
Clark Schaefer conducted the independent audit of the Company for the
years ended December 31, 1996 and 1997 and the Board of Directors has selected
Clark Schaefer as the independent accountants of the Company for the fiscal year
ended December 31, 1998.
The Board of Directors is requesting and recommends that the
stockholders of the Company ratify the selection of Clark Schaefer as the
independent accountants of the Company for the current fiscal year. Management
of the Company expects that a representative of Clark Schaefer will be present
at the Annual Meeting, and that such representative will have an opportunity, if
desired, to make a statement and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION
OF CLARK SCHAEFER AS INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE CURRENT
FISCAL YEAR.
STOCKHOLDER PROPOSALS
To be eligible for inclusion in the Company's proxy materials for next
year's Annual Meeting of Stockholders, any stockholder proposal requesting
action at such meeting must be received at the Company's main office, 4750
Ashwood Drive, Cincinnati, Ohio 45241, no later than November 26, 1998. Any such
proposal shall be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934, as amended.
-11-
<PAGE> 14
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, as
provided for in the Bylaws of the Company, it is intended that holders of the
proxies will act in accordance with their best judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
The Company's Annual Report to Stockholders, including financial
statements, is also enclosed. Any stockholders who have not received a copy of
such Annual Report may obtain a copy by writing to the Company. Such Annual
Report is not to be treated as part of the proxy solicitation materials, nor as
having been incorporated herein by reference.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ THOMAS H. SIEMERS
Thomas H. Siemers
President and Chief Executive Officer
Cincinnati, Ohio
March 26, 1998
-12-
<PAGE> 15
REVOCABLE PROXY
FIRST FRANKLIN CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1998
The undersigned hereby appoints James E. Cross, Richard H. Finan and
John L. Nolting, or any one of them, with full powers of substitution, to act as
proxy or proxies for the undersigned to vote all shares of Common Stock of First
Franklin Corporation (the "Company") that the undersigned is entitled to vote at
the Annual Meeting of Stockholders (the "Meeting") to be held on April 27, 1998,
at the corporate office of the Company located at 4750 Ashwood Drive,
Cincinnati, Ohio, at 3:00 P.M., and at any and all adjournments thereof, as
follows:
I. The election of the following directors:
____ FOR all nominees listed ____ WITHHOLD authority to vote
below (except as otherwise for all nominees listed below
indicated)
JAMES E. HOFF, S.J.
THOMAS H. SIEMERS
Instruction: To withhold authority to vote for any individual nominee,
write the nominee's name in the space provided below.
--------------------------------------
FOR AGAINST ABSTAIN
II. The proposed amendment to The First
Franklin Corporation 1997 Stock Option
and Incentive Plan to permit all
employees to be eligible for stock option
awards. ---- ---- ----
FOR AGAINST ABSTAIN
III. The ratification of the appointment of
Clark, Schaefer, Hackett & Co. as the
independent accountants for the Company
for the fiscal year ended December 31,
1998. ---- ---- ----
In their discretion, the proxies are authorized to vote on any other business
that may properly come before the Meeting or any adjournment thereof.
The Board of Directors recommends a vote "FOR" the nominees listed, "FOR" the
amendment of The First Franklin Corporation 1997 Stock Option and Incentive Plan
and "FOR" the ratification of the appointment of the independent accountants.
<PAGE> 16
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE NOMINEES AND THE PROPOSITIONS LISTED. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED
IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
This proxy shall be deemed terminated and of no further force and effect if the
undersigned attends and votes in person at the Annual Meeting or submits a
later-dated proxy or written revocation to the Company prior to the commencement
of voting at the Annual Meeting.
The undersigned acknowledges receipt from the Company, prior to the execution of
this Proxy, of Notice of the Meeting, a Proxy Statement dated March 26, 1998,
and a copy of the 1997 Annual Report to Stockholders.
Dated: , 1998
-----------
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PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
- ------------------------------- --------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears above on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
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PLEASE PROMPTLY COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
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