<PAGE>
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:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
GREAT FALLS BANCORP
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(Name of Registrant as Specified In Its Charter)
GREAT FALLS BANCORP
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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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3)
[ ] 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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction pursuant to
Exchange Act Rule 0-11: (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
GREAT FALLS BANCORP
55 UNION BOULEVARD
TOTOWA, NEW JERSEY 07512
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 30, 1996
- --------------------------------------------------------------------------------
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Stockholders (the "Annual
Meeting") of Great Falls Bancorp (the "Corporation") will be held at the
Corporation's headquarters located at 55 Union Boulevard, Totowa, New Jersey, at
4:00 p.m. on Tuesday, April 30, 1996, to consider and act upon the following
matters:
1. The election of five directors to serve for the respective terms described
in the accompanying Proxy Statement.
2. Amending the Certificate of Incorporation to change the Corporation's
corporate name to Greater Community Bancorp.
3. Amending the Certificate of Incorporation to increase the authorized Common
Stock from 4 million shares to 10 million shares.
4. The approval of the proposed Great Falls Bancorp 1996 Employee Stock Option
Plan.
5. The approval of the proposed Great Falls Bancorp 1996 Stock Option Plan for
Nonemployee Directors.
6. The transaction of such other business as may properly come before the
Annual Meeting or any adjournments thereof. The Board of Directors is not
aware of any other business to come before the Annual Meeting.
Action may be taken on any one of the foregoing proposals at the Annual
Meeting on the date specified above or on any date or dates to which, by
original or later adjournment, the Annual Meeting may be adjourned. Only
stockholders of record at the close of business on March 1, 1996, are entitled
to notice of and to vote at the Annual Meeting and any adjournments thereof.
A Proxy Card and a Proxy Statement relating to the Annual Meeting are
enclosed. You are requested to fill in and sign the enclosed Proxy Card which
is solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. Stockholders are cordially invited to attend the meeting in person.
If you attend the Annual Meeting and vote in person, the enclosed Proxy Card
will not be used.
By order of the Board of Directors,
Edith A. Leonhard, Secretary
Totowa, New Jersey
April 1, 1996
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR CORPORATION THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
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<PAGE>
PROXY STATEMENT OF
GREAT FALLS BANCORP
55 UNION BOULEVARD
TOTOWA, NEW JERSEY 07512
201-942-1111
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1996 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 30, 1996
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Great Falls Bancorp (the "Corporation") to
be used at the 1996 Annual Meeting of Stockholders of the Corporation (the
"Annual Meeting") to be held at the Corporation's headquarters located at 55
Union Boulevard, Totowa, New Jersey on Tuesday, April 30, 1996 at 4:00 p.m. The
accompanying Notice of Annual Meeting and form of Proxy and this Proxy Statement
are being first mailed to stockholders on or about April 1, 1996.
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PURPOSES OF ANNUAL MEETING; VOTING AND REVOCABILITY OF PROXIES
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PURPOSES OF THE ANNUAL MEETING
Five matters will be presented at the Annual Meeting to be considered and voted
upon. These are (1) the election of directors (see "PROPOSAL ONE--ELECTION OF
DIRECTORS"), (2) approval of an amendment to the Corporation's Certificate of
Incorporation changing its corporate name (see "PROPOSAL TWO--APPROVAL OF
AMENDMENT TO CERTIFICATE OF INCORPORATION CHANGING THE CORPORATION'S CORPORATE
NAME TO GREATER COMMUNITY BANCORP"), (3) approval of a second amendment to the
Certificate of Incorporation increasing the number of shares of authorized
Common Stock (see "PROPOSAL THREE--APPROVAL OF AMENDMENT TO CERTIFICATE OF
INCORPORATION INCREASING AUTHORIZED COMMON STOCK"), (4) approval of a proposed
new stock option plan for employees (see "PROPOSAL FOUR--APPROVAL OF GREAT FALLS
BANCORP 1996 EMPLOYEE STOCK OPTION PLAN"), and (5) approval of a proposed new
stock option plan for nonemployee directors (see "PROPOSAL FIVE--APPROVAL OF
GREAT FALLS BANCORP 1996 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS").
Except for those five matters, the Board of Directors does not know of any
other matter to be presented for consideration at the Annual Meeting. Should
any other matter come before the Annual Meeting, however, the persons named in
the accompanying Proxy will have the discretionary authority to vote all Proxies
with respect to any such other matter in accordance with their judgment.
QUORUM; VOTES REQUIRED
The presence at the Annual Meeting, in person or by proxy, of shares entitled
to cast a majority of the votes constitutes a quorum. Each share of Common
Stock is entitled to one vote on each matter to come before the Annual Meeting.
Directors shall be elected by a plurality of the votes cast, in person or by
proxy, by the holders of shares entitled to vote at the Annual Meeting.
Approval of the other matters to come before the Annual Meeting will require the
affirmative vote of a majority of the votes cast, in person or by proxy, by the
holders of Common Stock entitled to vote at the Annual Meeting.
VOTING OF PROXY
Proxies solicited by the Board of Directors will be voted in accordance with
the directions given therein. WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL
BE VOTED FOR THE NOMINEES FOR DIRECTORS SET FORTH BELOW, FOR APPROVAL OF THE TWO
PROPOSED AMENDMENTS TO THE CERTIFICATE OF INCORPORATION, AND FOR APPROVAL OF THE
TWO PROPOSED STOCK OPTION PLANS. The proxy confers discretionary authority on
the persons named therein to vote with respect to the election of any person as
director where the nominee is unable to serve or for good cause will not serve,
and with respect to matters incident to the conduct of the Annual Meeting. If
any other business is presented at the Annual Meeting, proxies will be voted by
those named therein in their discretion. Proxies marked as abstentions will not
be counted as votes cast. In addition, shares held in street name which have
been
<PAGE>
designated by brokers on proxy cards as not voted will not be counted as votes
cast. Proxies marked as abstentions or as broker no votes will, however, be
treated as shares present for purposes of determining whether a quorum is
present.
REVOCABILITY OF PROXY
Stockholders who execute proxies retain the right to revoke them at any time
prior to the voting thereof. Unless so revoked, the shares represented by
properly executed proxies will be voted at the Annual Meeting and all
adjournments thereof. Proxies may be revoked by written notice to the
Corporation's Secretary at the above address or by the filing of a later dated
proxy prior to a vote being taken on a particular proposal at the Annual
Meeting. A proxy will not be voted if a stockholder attends the Annual Meeting
and votes in person. A stockholder's mere presence at the Annual Meeting will
not revoke such stockholder's proxy.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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The securities entitled to vote at the Annual Meeting consist of the
Corporation's common stock, $1.00 par value per share (the "Common Stock"). As
of the close of business on March 1, 1996 (the "Record Date"), 1,709,451 shares
of Common Stock were issued and outstanding. Only stockholders of record of
Common Stock on the Record Date are entitled to notice of and to vote at the
Annual Meeting or any adjournments thereof.
At March 1, 1996 the Corporation knew of no individual or group which
beneficially owned more than 5% of the Common Stock, other than John L.
Soldoveri and Alfred R. Urbano, both of whom are directors of the Corporation.
Details of their stock ownership are set forth below (see "PROPOSAL ONE--
ELECTION OF DIRECTORS--Security Ownership of Management").
PROPOSAL ONE
ELECTION OF DIRECTORS
Under the Corporation's Certificate of Incorporation, directors are divided
into three classes and elected for terms of three years and until their
successors are elected and qualified. Each class of directors is to consist, as
nearly as may be, of one-third of the number of directors then constituting the
whole Board. The Corporation's Board of Directors is currently comprised of ten
members, three of whom became directors effective at the end of 1995 in
connection with the consummation of the Corporation's acquisition of Bergen
Commercial Bank. The terms of office of those three members and two previously
elected directors will end at the time of the election of their successors at
the Annual Meeting. The terms of the other five directors will continue beyond
the Annual Meeting.
For the coming year the Board of Directors has fixed the total number of
directors at ten. Five persons are to be elected at the Annual Meeting for
terms of either two years or three years as described below. Under New Jersey
law, directors are elected by a plurality of the votes present in person or
represented by proxy at the Annual Meeting and entitled to vote on the election
of directors.
The Board of Directors, which has no nominating committee, has nominated
Anthony M. Bruno, Jr., C. Mark Campbell, Joseph A. Lobosco, John L. Soldoveri,
and Charles J. Volpe, each of whom is a member of the current Board whose term
expires in 1996, for reelection. Mr. Bruno has been nominated to serve for a
two-year term expiring in 1998, and Messrs. Campbell, Lobosco, Soldoveri and
Volpe have been nominated to serve for three-year terms expiring in 1999. All
of such terms will continue until the years in which their terms expire and
their respective successors are elected and have qualified.
Other nominations may be made pursuant to the Corporation's Bylaws, which
require, among other things, that advance written notice of any such nomination
be delivered or mailed to the Chairman of the Board of the Corporation. Any
such written nomination shall be delivered or mailed not less than 14 days prior
to the Annual Meeting, that is, on or before April 2, 1996, provided, that if
less than 21 days' notice of the Annual Meeting is given to stockholders, then
such nomination shall be mailed or delivered to the Chairman of the Board not
later than the close of business on the seventh day following the day on which
the Notice of Annual Meeting was mailed.
2
<PAGE>
The Corporation's Bylaws permit the Board of Directors to increase the number
of directors by not more than two members, and to fill the vacancies created by
such increase, between Annual Meetings of Stockholders. In the event of any
such increase in the number of directors by the Board, the terms of the
directors filling such vacancies shall be fixed by the Board in such manner as
to result in each class consisting, as nearly as may be, of one-third of the
number of directors then constituting the whole Board as so increased. A
director elected by the Board to fill a vacancy created in such manner will
serve only until the next Annual Meeting of Stockholders, at which time the
stockholders will elect such director's successor for the succeeding term, or if
applicable, for the remaining portion of the full term previously fixed by the
Board. The Board of Directors has no plans at the present time to make any such
increase and fill vacancies prior to the Annual Meeting.
Information with respect to the five nominees for directors, as well as the
other directors and executive officers of the Corporation, is provided below.
It is intended that the persons named as proxies in the Proxy Cards solicited
by the Board of Directors will vote for the election of the named nominees. If
any nominee is unable to serve, the shares represented by all properly executed
proxies which have not been revoked will be voted for the election of such
substitute as the Board of Directors may recommend or the size of the Board may
be reduced to eliminate the vacancy. At this time the Board knows of no reason
why any nominee might be unable to serve.
The following table sets forth, for each nominee and each continuing director,
his name, age as of the Record Date and the year he first became a director of
the Corporation. The table also sets forth the names, ages and positions of the
Corporation's current executive officers and the year each was first elected to
his current position. Each director of the Corporation is also a member of the
Board of Directors of either Great Falls Bank (GF) or Bergen Commercial Bank
(BC), as indicated on the table.
BOARD NOMINEE FOR TWO-YEAR TERM EXPIRING AT ANNUAL MEETING IN 1998
First year as a
Name Director of Corporation
---- -----------------------
Anthony M. Bruno, Jr. 1995/1/
/1/ Mr. Bruno was one of the original directors of both Great Falls Bancorp and
Great Falls Bank in 1985, but resigned in 1987 in connection with the
formation of Bergen Commercial Bank.
BOARD NOMINEES FOR THREE-YEAR TERMS EXPIRING AT ANNUAL MEETING IN 1999
First year as a
Name Director of Corporation
---- -----------------------
C. Mark Campbell 1995
Joseph A. Lobosco 1990
John L. Soldoveri 1985
Charles J. Volpe 1995
DIRECTORS CONTINUING IN OFFICE
First year as a Year of Expiration
Name Director of Corporation of Term as a Director
---- ----------------------- ---------------------
M.A. Bramante 1985 1997
Robert J. Conklin 1985 1997
William T. Ferguson 1985 1997
George E. Irwin 1987 1998
Alfred R. Urbano 1986 1998
3
<PAGE>
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Age as of the Year First Elected
Name Office Record Date to Current Office
---- ------ ------------- ------------------
<S> <C> <C> <C>
John L. Soldoveri Chairman and Chief 72 1985
Executive Officer
Anthony M. Bruno, Jr. Vice Chairman 41 1995
George E. Irwin President and 51 1995
Chief Operating
Officer
C. Mark Campbell Executive Vice 45 1995
President
Naqi A. Naqvi Treasurer 39 1987
</TABLE>
Presented below is certain additional information concerning the directors and
executive officers of the Corporation.
Marino A. Bramante, an orthodontist, has been the President of M.A. Bramante,
D.D.S., P.A. since 1960. He has served as a founding director of both the
Corporation and Great Falls Bank since 1985.
Anthony M. Bruno, Jr. was appointed as a director and Vice Chairman of the
Board of Directors of the Corporation at the end of 1995 in connection with the
Corporation's acquisition of Bergen Commercial Bank. Mr. Bruno has been
Chairman of the Board of Bergen Commercial Bank since 1987. Prior thereto Mr.
Bruno was a founding director of the Corporation and the Bank in 1985, positions
from which he resigned in 1987 when Bergen Commercial Bank was formed. Mr.
Bruno is a senior partner of Bruno, DiBello & Co., L.L.C., Certified Public
Accountants. Mr. Bruno is a minority partner in Anjo Realty, which invests in
real estate. Mr. Bruno is a nephew of Mr. Soldoveri and is Mr. Campbell's
brother-in-law.
C. Mark Campbell was appointed as a director and Executive Vice President of
the Corporation at the end of 1995 in connection with the Corporation's
acquisition of Bergen Commercial Bank. He has acted as President and Chief
Executive Officer and a director of Bergen Commercial Bank since 1987. Mr.
Campbell is Mr. Bruno's brother-in-law.
Robert J. Conklin has been the President of The Conklin Corporation, which is
engaged in construction and engineering, since 1960. He is also President of an
electronics firm, Crystal Accel. He has been a founding director of both the
Corporation and Great Falls Bank since 1985.
William T. Ferguson has been the Vice President of Ted Car Inc., an auto
wholesaler, since 1977. He has served as a founding director of both the
Corporation and Great Falls Bank since 1985.
George E. Irwin was appointed as the President and Chief Operating Officer of
the Corporation at the end of 1995. Prior thereto Mr. Irwin had served since
1987 as the Corporation's Vice President. He has been the President and Chief
Executive Officer of Great Falls Bank since 1987. During 1986 Mr. Irwin was the
Bank's Executive Vice President, Treasurer, and Senior Loan Officer. He has
been a director of both the Corporation and Great Falls Bank since 1987.
Joseph A. Lobosco retired at the end of 1994 as the Senior Partner of Joseph
Lobosco & Sons, an insurance agency, of which he had been a partner since 1961.
He has served as a director of both the Corporation and Great Falls Bank since
1990.
4
<PAGE>
John L. Soldoveri is the Chairman of the Board of Directors and Chief Executive
Officer of the Corporation. He was appointed to the latter position at the end
of 1995, having acted as the Corporation's President from 1985 until the end of
1995. Mr. Soldoveri has been a founding director of both the Corporation and
Great Falls Bank since 1985. Mr. Soldoveri was President of Soldoveri Agency
and Rhodes Agency Inc., real estate brokerage and insurance agency firms, for
many years until 1991. He has served as Vice President of both companies since
1991. Mr. Soldoveri has been the controlling partner in Anjo Realty since 1980
and is an active investor in real estate, directly and through various entities.
Mr. Soldoveri is Mr. Bruno's uncle.
Alfred R. Urbano has been the President of Rubicon Realty Corp., a real estate
investment firm, since 1980. He is active in the real estate business as an
investor and a manager, directly and through various entities. Mr. Urbano has
served as a director of both the Corporation and Great Falls Bank since 1986.
Charles J. Volpe was appointed as a director and Executive Vice President of
the Corporation at the end of 1995 in connection with the Corporation's
acquisition of Bergen Commercial Bank. Mr. Volpe is the chief executive officer
and principal of J.P. Patti Company (roofing). He has been a director of Bergen
Commercial Bank since 1987.
Naqi A. Naqvi has been the Corporation's Treasurer since 1988, and Vice
President and Treasurer of Great Falls Bank since 1987.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
The Corporation's Board of Directors conducts its business through meetings of
the Board of Directors and its committees. The Board meets monthly on a regular
basis and may also have special meetings. During the year ended December 31,
1995, the Corporation's full Board held fourteen meetings. No director attended
fewer than 75% in the aggregate of the total number of Board meetings held
during 1995 and the total number of meetings held by committees on which he
served during such year.
The Board has a standing Audit Committee, consisting of Messrs. Bramante
(Chairman), Soldoveri and Urbano. Such Committee met twice during 1995. The
Audit Committee performs the following customary functions: (i) recommending to
the Board of Directors the appointment of the Corporation's independent
auditors; (ii) reviewing and approving in advance for each year the audit and
non-audit services and fees of such auditors; (iii) meeting separately and
privately with the independent auditors and the Corporation's internal auditors,
if any, to insure that the scope of their activities has not been restricted,
and to consider other matters generally pertaining to their examinations; (iv)
reviewing the adequacy of internal financial and accounting controls and the
results of the auditors' examinations thereof; (v) reviewing matters relating to
corporate financial reporting and accounting policies and procedures; and (vi)
reporting its findings on any of the above to the Board of Directors, as
appropriate.
The Board also has a standing Stock Option Committee. During 1995 this
committee was comprised of Messrs. Bramante, Conklin, and Soldoveri. The Stock
Option Committee makes recommendations to the Board concerning options to be
granted under the Corporation's stock option plans and generally to administer
such Plans. Such Committee did not meet during 1995.
Except for the Audit and Stock Option Committees, there were no nominating,
compensation, or other committees of the Corporation's Board of Directors in
existence during 1995. The full Board thus in effect acted as such committees.
In addition, seven of the Corporation's directors serve as directors of Great
Falls Bank, and in that capacity various Board members also serve on committees
of Great Falls Bank's Board of Directors and through these committees coordinate
the functions of the Corporation and Great Falls Bank. During 1995, committees
of Great Falls Bank's Board included the Audit Committee, the Executive
Committee, the Loan Committee, the Personnel Committee, the Business Development
and Marketing Committee, the Investment Committee, and the Security and
Insurance Committee.
5
<PAGE>
Similarly, three of the Corporation's directors serve as directors of Bergen
Commercial Bank, and in that capacity they served on committees of Bergen
Commercial Bank's Board of Directors. During 1995, committees of Bergen
Commercial Bank's Board included the Audit/Examining Committee, the Executive
Committee, the Investment/Financial Committee, the Loan Committee, the
Personnel/Compensation Committee, and the Marketing Committee.
Effective with the Corporation's acquisition of Bergen Commercial Bank at the
end of 1995, the Board of Directors of the Corporation established two
additional standing committees, the Executive Committee and the Management
Coordinating Committee. The members of the Executive Committee are Messrs.
Bramante, Bruno, Conklin, Irwin, Soldoveri and Urbano. Its duties will be to
carry out the responsibilities of the Corporation's Board of Directors between
meetings of the full Board. The members of the Management Coordinating
Committee are Messrs. Campbell, Irwin, and Bruno. Its duties will be to
coordinate the policies and operations of Great Falls Bank and Bergen Commercial
Bank. The first meetings of these two new committees were during 1996.
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EXECUTIVE COMPENSATION AND OTHER BENEFITS
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SUMMARY COMPENSATION TABLE
The following table summarizes compensation earned or awarded during the years
ended December 31, 1995, 1994 and 1993 to the Corporation's Chief Executive
Officer and its other executive officers whose total salary and bonus in 1995
exceeded $100,000. Although all of Mr. Campbell's compensation was earned prior
to the Corporation's acquisition of Bergen Commercial Bank, it is included in
the following table because that acquisition was consummated immediately prior
to the end of 1995 and is being accounted for on a pooling of interests basis.
<TABLE>
<CAPTION>
=========================================================================================
Long Term
Annual Compensation Compensation
- -----------------------------------------------------------------------------------------
Name and Principal Salary Bonus Other Annual Stock Options
Position in 1995 Year ($) ($) Compensation ($) Awarded (#)/(1)/
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JOHN L. SOLDOVERI 1995 0 0 19,100 /(2)/ 3,300
President and Chief 1994 0 0 20,238 /(2)/ 0
Executive Officer of 1993 0 0 13,638 /(2)/ 2,662
the Corporation
GEORGE E. IRWIN 1995 135,035 10,000 39,557 /(3)/ 0
President of Great 1994 127,530 0 42,036 /(3)/ 12,870
Falls Bank 1993 118,535 0 34,566 /(3)/ 0
C. MARK CAMPBELL 1995 139,812 12,000/(4)/ 10,518/(4)/ 0
President of Bergen 1994 124,635 12,500/(4)/ 0 0
Commercial Bank 1993 110,115 10,000/(4)/ 0 0
=========================================================================================
</TABLE>
/(1)/ The numbers of shares underlying stock options awarded in 1995, 1994 and
1993 have been adjusted to reflect increases in such shares resulting from
the Corporation's payment of stock dividends after the award.
/(2)/ Primarily represents fees paid for attendance at meetings of the Board of
Directors of Great Falls Bank and committees of that Board. The 1995 and
1994 amounts also include monthly stipends totalling $9,000 and $8,500
during those years. The 1995, 1994 and 1993 amounts include compensation
of $6,808, $2,563 and $1,188, respectively, realized upon Mr. Soldoveri's
exercise of options to purchase Common Stock during those years.
/(3)/ These amounts include employer contributions on behalf of Mr. Irwin to the
Corporation's 401K Plan ($20,370 for 1995, $16,324 for 1994, and $14,612
for 1993). The amounts for 1994 and 1993 also include compensation of
$16,712 and $10,954 realized by Mr. Irwin, respectively, upon his exercise
of stock options during those two years. Finally, these amounts also
include an auto allowance of $750 per month, or $9,000 per year, for each
of the three years indicated and $1,187 for term life insurance.
6
<PAGE>
/(4)/ Mr. Campbell's Other Annual Compensation for 1995 is comprised of $6,673
realized upon his exercise of options to purchase Common Stock during
1995, $2,062 auto expense reimbursement, and $1,783 for group term life
insurance.
OPTION GRANTS DURING 1995
The Corporation currently maintains three stock option plans. The 1988
Nonstatutory Stock Option Plan ("1988 Plan") permits the grant of stock options
to employees of the Corporation and its subsidiaries on conditions stated in
that plan. The 1993 Stock Option Plan ("1993 Plan") and the 1995 Stock Option
Plan ("1995 Plan") both provide for the grant of options to nonemployee
directors of Great Falls Bank.
No options were granted under either the 1988 Plan or the 1993 Plan during
1995.
In April, 1995, following approval of the 1995 Plan by the Corporation's
Stockholders at the 1995 Annual Meeting, the Board of Directors granted options
to purchase 3,300 shares at an exercise price of $11.36 per share to each of the
nine nonemployee directors of Great Falls Bank at that time (the number of
shares and the option exercise price are adjusted for 1995 stock dividend). The
option price was equal to the mean between the bid and asked prices for the
Common Stock on February 28, 1995, the valuation date provided in the 1995 Plan.
The following table contains information concerning the grant of stock options
during 1995 to the named executive officer of the Corporation.
<TABLE>
<CAPTION>
=========================================================================================
Individual Grants
- -----------------------------------------------------------------------------------------
Number of
Securities % of Total Options Exercise or
Underlying Options Granted to Employee Base Price Expiration
Name Granted (#) in Fiscal Year ($/share) Date
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John L. Soldoveri 3,300 /(1)/ n/a /(2)/ $11.36 12/31/02
=========================================================================================
</TABLE>
/(1)/ Mr. Soldoveri's options become exercisable at the rate of 1/3 each in
October, 1995, January, 1996 and January, 1997. All such options will
lapse on December 31, 1997, subject to an earlier lapse in the event of a
termination of his status as a director.
/(2)/ Mr. Soldoveri is not an employee of the Corporation. The options granted
to Mr. Soldoveri under the 1995 Plan were 11.1% of the total options
granted under that Plan during 1995.
7
<PAGE>
OPTION EXERCISES AND YEAR-END OPTION VALUE
The following table sets forth information with respect to the named executive
officers of the Corporation concerning their exercise of options during 1995 and
unexercised options held on December 31, 1995.
<TABLE>
<CAPTION>
=========================================================================================
Number of Shares Dollar Value of
Underlying Unexercised
Unexercised Options at In-the-Money
Fiscal Year End Options at Fiscal
Year End /(1)/
- -----------------------------------------------------------------------------------------
Exercisable Exercisable
# of Shares Value (E)/ (E)/
Acquired on Realized Unexercisable Unexercisable
Name Exercise ($) (U) (U)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John L. Soldoveri 665 $6,808 1,766 (E) $13,849 (E)
2,200 (U) $14,058 (U)
- -----------------------------------------------------------------------------------------
George E. Irwin 0 n/a 998 (E) $ 10,220 (E)
17,196 (U) /(2)/ $126,538 (U)
=========================================================================================
</TABLE>
/(1)/ All unexercised options held by the named individuals were "in-the-money"
at the end of 1995. The year-end values of such options have been
calculated as the difference between (a) $17.75, the value of shares
subject to such options using the mean between the bid and asked prices
per share of the Common Stock at the close of business on December 29,
1995, the last business day of 1995, as quoted by Ryan, Beck & Co., a
principal market maker in the Common Stock, and (b) the aggregate price
payable to the Corporation upon exercise of such options.
/(2)/ 17,196 options held by Mr. Irwin were unexercisable at December 31, 1995
because the earliest permitted exercise dates are after that date. The
exercisability of 12,870 of such options is subject to the further
condition that the Corporation achieve certain annual performance
standards. See "--Certain Agreements".
CERTAIN AGREEMENTS
In December, 1987, the Corporation entered into an agreement to continue Mr.
Irwin's employment as Vice President of the Corporation and President and Chief
Executive Officer of Great Falls Bank. The agreement was for an initial period
of one year commencing January 1, 1988, subject to provisions for earlier
termination and for annual extensions. The agreement has been extended for 1996
at an annual salary of $150,000, plus an auto allowance of $750 per month and
certain other benefits.
DIRECTORS' COMPENSATION
During 1995 the Corporation's directors were compensated for services rendered
in that capacity at the rate of $200 per meeting attended. The Corporation paid
a total of $12,800 to its directors for 1995 in that capacity.
During 1995 Great Falls Bank's directors were compensated $250 for each meeting
of the Board of Great Falls Bank attended, $150 for each Executive Committee
attended, $100 for each Loan Committee meeting attended, and $75 for each
meeting attended of each other committee of Great Falls Bank's Board. Great
Falls Bank paid a total of $56,700 in directors fees during 1995 to all
directors of Great Falls Bank for acting in those capacities, of which $39,050
was paid to those Bank directors who are also directors of the Corporation.
During 1995 Bergen Commercial Bank's directors who attended at least 75% of all
scheduled meetings were compensated $300 for each Board meeting attended.
Bergen Commercial Bank's directors were also compensated $50 for each committee
meeting which they attended. Bergen Commercial Bank paid a total of $49,300 in
directors fees during 1995 to all directors of Bergen Commercial Bank for acting
in those capacities.
As of January 1, 1996 the fees to the Corporation's Directors were increased to
$350 for each regular Board Meeting attended and $150 for each Executive
Committee Meeting attended. There will be no fees paid to the
8
<PAGE>
newly formed Management Coordinating Committee. The fees for the directors of
both Great Falls Bank and Bergen Commercial Bank were also increased as of
January 1, 1996 to $350 for each regular Board Meeting attended, $100 for each
Loan Committee meeting attended, and $75 for each meeting of all other
Committees attended.
In addition, during 1995 each of the Corporation's nonemployee directors
realized value upon the exercise of options to purchase shares of Common Stock.
Dr. Bramante realized $6,560 and Mr. Urbano realized $13,130 upon the exercise
during November, 1995 of options to purchase 665 shares and 1,331 shares,
respectively, granted under the 1993 Plan. Mr. Lobosco realized $20,651 upon
the exercise during December, 1995 of options to purchase 2,431 shares granted
under the 1993 Plan and the 1995 Plan. At the end of December, 1995, Messrs.
Conklin, Ferguson, and Soldoveri each exercised options under the 1993 Plan to
purchase 665 shares, each of them thereby realizing a value of $6,808.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The building in which the Corporation's offices and Great Falls Bank's main
branch are situated is owned by Anjo Realty, a partnership in which Mr.
Soldoveri, Chairman of the Board and President of the Corporation, has a 51%
interest, and Mr. Bruno, Vice Chairman of the Corporation, has a 14% interest.
The leased premises during 1995 consisted of 10,354 square feet at an annual
rental of $146,490. As a result of the continued expansion of both the
Corporation and Great Falls Bank, effective January 1, 1996 the leased premises
increased to 13,973 square feet, with the rent increasing by $46,140 to an
annual rental of $192,630. Management believes the rental paid to Anjo Realty
is at or below the fair rental value of comparable office space.
The Corporation provides a liability insurance policy for all of its officers
and directors and the officers and directors of the two bank subsidiaries.
Coverage is provided by a policy with a major insurance company in the aggregate
amount of $1,500,000, with a standard deductible amount per claim. The policy
also insures the Corporation against amounts paid by it to indemnify directors
and officers. The policy covering the Corporation and Great Falls Bank ran for
a period of one year from January 1, 1995 to January 1, 1996 at a cost to the
Corporation of $13,731. During 1995 Bergen Commercial Bank maintained a similar
policy for its directors and officers at a cost of $17,113. For 1996 the
Corporation's policy has been expanded to cover Bergen Commercial Bank's
officers and directors and to increase the coverage to the aggregate amount of
$3,000,000 at a cost of $24,656.
Directors and officers of the Corporation and their associates were customers
of and had transactions with both Great Falls Bank and Bergen Commercial Bank
during 1995, and it is expected that they will continue to have such
transactions in the future. All deposit accounts, loans and commitments
comprising such transactions were made in the ordinary course of business of the
respective banks on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and in the opinion of management did not involve more than normal
risks of collectibility or present other unfavorable features. At December 31,
1995, the total amount of loans outstanding from Great Falls Bank and Bergen
Commercial Bank in the aggregate to the executive officers and directors of the
Corporation was $4,530,648 which represented 23% of the Corporation's
consolidated stockholders' equity on that date. At that date, Great Falls Bank
and Bergen Commercial Bank in the aggregate also had commitments to extend
credit under revolving lines of credit totalling $1,444,850 at various rates, to
the Corporation's directors, executive officers and their affiliates.
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- --------------------------------------------------------------------------------
SECURITY OWNERSHIP OF MANAGEMENT
- --------------------------------------------------------------------------------
The following table sets forth information concerning beneficial ownership of
Common Stock on January 31, 1996 by each director and executive officer of the
Corporation and by all directors and executive officers of the Corporation as a
group. All directors and executive officers have an address c/o Great Falls
Bancorp, 55 Union Boulevard, Totowa, New Jersey 07512. All shares of a named
person are deemed to be subject to that person's sole voting power and sole
investment power unless otherwise indicated.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Name of Amount and Nature of
Beneficial Owner Beneficial Ownership(*) Percent of Class(**)
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Marino A. Bramante 63,386 (a) 3.65%
Anthony M. Bruno, Jr. 38,070 (b) 2.23%
C. Mark Campbell 28,155 (c) 1.65%
Robert J. Conklin 57,487 (d) 3.31%
William T. Ferguson 18,984 (e) 1.11%
George E. Irwin 37,879 (f) 2.21%
Joseph A. Lobosco 25,176 (g) 1.46%
John L. Soldoveri 179,199 (h) 10.27%
Alfred R. Urbano 105,614 (i) 6.13%
Charles J. Volpe 25,804 (j) 1.51%
Naqi A. Naqvi 3,019 (k) 0.18%
All directors and executive officers
as a group (11 in number) 582,773 (a)-(l) 31.90%
</TABLE>
/(*)/ Unless otherwise noted, all shares are owned of record and beneficially
by the named person. Beneficially owned shares include shares over which
the named person exercises either sole or shared voting power or sole or
shared investment power. It also includes shares (i) owned by a spouse,
minor children or by relatives sharing the same home, (ii) owned by
entities owned or controlled by the named person, and (iii) with respect
to which the named person has the right to acquire such shares within 60
days by the exercise of any right or option. Such options include the
right to purchase shares pursuant to Cancellable Mandatory Stock Purchase
Contracts due November 1, 1997 ("Equity Contracts"). In accordance with
the Securities and Exchange Commission's rules relating to the
computation of beneficial ownership, the percentage of common stock
beneficially owned by a person or group assumes the exercise of options
held by such person or group but the nonexercise of options held by all
other persons.
/(**)/ Based upon 1,709,451 shares issued and outstanding on January 31, 1996.
(a) Includes 10,474 shares held by Dr. Bramante's wife, 24,335 shares held by
Dr. Bramante's employer's retirement trust (the "Bramante Trust"), and
1,244 shares held indirectly by a corporation. Also includes 25,398
shares which Dr. Bramante has the right to acquire pursuant to Equity
Contracts owned by the Bramante Trust and his wife (22,532 shares) and
stock options held by Dr. Bramante (2,866 shares).
(b) Includes 17,576 shares held by Mr. Bruno's wife and 9,469 shares held in
his self-directed IRA.
(c) Includes 6,483 shares held in a 401K Plan, 1,295 held by Mr. Campbell as
custodian for his minor children, 1,089 shares held by a trust of which
Mr. Campbell is a trustee, and 1,659 shares subject to stock options.
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<PAGE>
(d) Includes 20,210 shares held by a corporation owned by Mr. Conklin and his
wife and 460 shares owned by his wife. Also includes 25,211 shares which
Mr. Conklin has the right to acquire pursuant to stock options (2,866
shares) and Equity Contracts (22,345 shares, of which 3,724 shares are
held by his wife alone) .
(e) Includes 2,866 shares subject to stock options, 1,857 shares owned by Mr.
Ferguson's children, and 1,857 shares owned by a corporation of which Mr.
Ferguson is a shareholder. Mr. Ferguson disclaims beneficial ownership of
the shares held by such corporation except his pro rata interest therein,
consisting of 929 shares.
(f) Includes 1,298 shares owned by a corporation controlled by Mr. Irwin, 182
shares owned by his children, and the right to acquire 3,069 shares
pursuant to stock options.
(g) Includes 2,417 shares owned by Mr. Lobosco's wife. Also includes Mr.
Lobosco's right to acquire beneficial ownership of a total of 10,299
shares, pursuant to Equity Contracts (8,099 shares) and stock options
(2,200 shares).
(h) Includes 27,013 shares owned by Mr. Soldoveri's wife. Also includes
34,998 shares which Mr. Soldoveri has the right to acquire pursuant to
Equity Contracts (29,795 shares for Mr. Soldoveri and 2,327 shares for
his wife) and stock options (2,866 shares).
(i) Includes Mr. Urbano's right to acquire beneficial ownership of a total of
12,157 shares, pursuant to Equity Contracts (as to 9,957 shares) and
stock options (2,200 shares).
(j) Includes 1,662 shares held by Mr. Volpe's wife.
(k) Includes Mr. Naqvi's right to acquire 1,504 shares pursuant to stock
options.
(l) The total for all directors and executive officers includes the right to
acquire 117,151 shares pursuant to Equity Contracts and stock options.
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PROPOSAL TWO
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
CHANGING THE CORPORATION'S CORPORATE NAME TO
GREATER COMMUNITY BANCORP
AMENDMENT REGARDING CHANGE OF CORPORATE NAME
The Corporation's Board of Directors has adopted an amendment to the
Corporation's Certificate of Incorporation changing the Corporation's corporate
name to "Greater Community Bancorp" (the "Name Change Amendment").
REASON FOR THE NAME CHANGE AMENDMENT
As a result of the Corporation's acquisition of all of the stock of Bergen
Commercial Bank at the end of 1995, the Corporation became the owner of two
separate bank subsidiaries, Great Falls Bank and Bergen Commercial Bank. These
two bank subsidiaries are independently managed by their separate Boards of
Directors (subject to oversight by the Corporation's own Board of Directors and
coordination of their policies and operations by the Board's Management
Coordinating Committee), and they operate in the separate communities which
define their respective geographical market areas.
The Corporation's Board of Directors is actively considering the possibility of
acquiring other community banks in New Jersey. Consistent with the Board's
philosophy with respect to the manner in which Bergen Commercial Bank conducts
its business, the Board's present philosophy would be to permit other acquired
banks, if any, to continue as separate community banks independently managed by
their separate Boards of Directors and operating in their own geographical
market areas.
The Board therefore selected a new corporate name for the Corporation which the
Board believes reflects the Corporation's current business structure and
philosophy more accurately than the present corporate name.
The change of the Corporation's corporate name will not affect the names of
either Great Falls Bank or Bergen Commercial Bank, both of which will continue
to operate as community banks under their existing names.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION CHANGING THE CORPORATE NAME TO
GREATER COMMUNITY BANCORP.
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PROPOSAL THREE
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
INCREASING AUTHORIZED COMMON STOCK
AMENDMENT REGARDING INCREASE
The Board of Directors has unanimously adopted a second amendment to the
Certificate of Incorporation to increase the Corporation's authorized Common
Stock from 4,000,000 to 10,000,000 shares (the "Capital Increase Amendment").
In order to become effective, the Capital Increase Amendment requires
shareholder approval by the affirmative vote of a majority of the votes cast by
holders of the Common Stock at a meeting of shareholders.
The Corporation is presently authorized to issue a total of 5,000,000 shares of
capital stock, consisting of 4,000,000 shares of common stock, $1.00 par value
per share ("Common Stock"), and 1,000,000 shares of preferred stock without par
value and otherwise with presently unspecified rights ("Preferred Stock").
Common Stock does not have preemptive rights.
As of January 31, 1996, 1,709,451 shares of Common Stock were issued and
outstanding. Of the remaining authorized but unissued shares, 151,896 shares
are reserved for issuance under the Corporation's stock option plans and an
additional 800,000 shares are reserved for issuance pursuant to the
Corporation's outstanding Cancellable Mandatory Stock Purchase Contracts
("Equity Contracts"), which presently require the purchase not later than
November 1, 1997 of approximately 465,549 shares of Common Stock at a price of
$10.74/share (as adjusted for stock dividends). The Board of Directors
therefore presently has authority only to issue up to 1,338,653 shares of Common
Stock without restriction.
The Capital Increase Amendment increases the Corporation's total authorized
stock to 11,000,000 shares, consisting of 10,000,000 shares of Common Stock
(increasing presently authorized Common Stock from 4,000,000 shares), and
1,000,000 shares of the Preferred Stock (no change in authorized Preferred Stock
will be made under the Capital Increase Amendment). The increased shares of
authorized Common Stock under the Capital Increase Amendment would have all of
the same characteristics as the presently authorized Common Stock.
No shares of Preferred Stock have been issued. Under the terms of the
Corporation's Certificate of Incorporation, as amended, the Corporation's Board
of Directors may determine, without further shareholder approval, the relative
rights, preferences and limitations of the Preferred Stock including, without
limitation, stated value, dividend rights, rights to convert such shares into
shares of another class or series (such as Common Stock or another class or
series of Preferred Stock), voting rights, liquidation preferences, redemption
rights, division into classes and into series within any class or classes,
sinking fund provisions and similar matters, and generally to determine all the
characteristics of the Preferred Stock other than the total number of such
shares which the Board has authority to issue. The availability of authorized
but unissued Preferred Stock with unspecified voting rights and possibly other
rights, such as a required approval of mergers or other extraordinary corporate
transactions, could be used by the Corporation's management to create voting
impediments or to frustrate persons seeking to effect a merger or otherwise to
gain control of the Corporation (for another provision which could also have an
"anti-takeover" effect, see "--Existing 'Anti-Takeover' Provisions" below).
REASONS FOR THE CAPITAL INCREASE AMENDMENT
The last increase in the Corporation's authorized stock was approved by the
shareholders in 1993. At that time the Board of Directors had authority to
issue 2,000,000 million shares of Common Stock, of which 656,865 shares were
issued and outstanding and 163,057 shares were reserved for issuance pursuant to
stock option plans. At the 1993 Annual Meeting the shareholders approved an
increase in authorized stock to the present 4,000,000 shares of Common Stock and
1,000,000 shares of Preferred Stock. In the past three years the number of
shares of Common Stock outstanding has increased to 1,709,451 shares as a result
of (i) three consecutive 10% stock dividends during 1993, 1994 and 1995, (ii)
the acquisitions during 1995 of Family First Federal Savings Bank and Bergen
Commercial Bank, and (iii) exercises of stock options. In addition, the number
of shares of Common Stock reserved for issuance has increased to 951,896,
primarily as a result of the issuance of Equity Contracts at the end of 1993 as
well as the adjustment effect of stock dividends upon the number of shares
needed for issuance pursuant to both Equity Contracts and stock options.
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<PAGE>
Because the Board of Directors has authority to issue only 1,338,653 shares of
Common Stock without restriction, the Board recommends that the Capital Increase
Amendment be approved to assist in further business combinations, to facilitate
expansion of the Corporation's capital base, to permit continued payment of
stock dividends, and to facilitate the issuance of shares pursuant to
outstanding Equity Contracts as well as both existing and proposed stock option
plans, as discussed below.
BUSINESS COMBINATIONS. Although the Board does not presently contemplate any
specific business combination, the Board of Directors is continuously seeking
business combination opportunities for the Corporation. The Board believes it
is desirable for it to be able to take advantage of various acquisition
opportunities sought by the Corporation or which otherwise present themselves.
An increase in authority to issue Common Stock, coupled with existing authority
to issue Preferred Stock, will increase the Board's flexibility to negotiate and
consummate business combination transactions which the Board views favorably.
EXPANSION OF CAPITAL BASE. Although the Board presently has no specific plans
to raise additional capital, the Board believes it is advantageous generally for
it to have the maximum flexibility to be able to raise capital in the most
beneficial way if and when the need arises. The Capital Increase Amendment's
additional authority to issue Common Stock, either for cash or in connection
with combinations with other businesses (see "Business Combinations" above),
coupled with the existing authority to issue Preferred Stock, should enhance
that flexibility for the foreseeable future.
STOCK DIVIDENDS. The Corporation has paid stock dividends for many years.
Stock issued to fund stock dividends has been provided from authorized but
unissued shares. Although there can be no assurance that the Corporation will
continue to pay stock dividends in the future, such payments are possible and
the proposed increase in authorized stock will facilitate such payments.
EQUITY CONTRACTS AND STOCK OPTION PLANS. The Corporation's outstanding Equity
Contracts require the issuance of Common Stock not later than November 1, 1997.
At the present price, as adjusted for stock dividends, 465,549 shares of Common
Stock will be required. In addition, the Corporation maintains three stock
option plans (see "PROPOSAL ONE--ELECTION OF DIRECTORS--Option Grants") and the
Board of Directors has adopted two additional stock option plans, subject to
approval by the shareholders at the Annual Meeting (see "PROPOSAL FOUR--APPROVAL
OF GREAT FALLS BANCORP 1996 EMPLOYEE STOCK OPTION PLAN" and "PROPOSAL FIVE--
APPROVAL OF GREAT FALLS BANCORP 1996 STOCK OPTION PLAN FOR NONEMPLOYEE
DIRECTORS"). The number of shares needed to fund the Equity Contracts and stock
options will increase further in the event future stock dividends are paid.
EFFECT OF PROPOSED INCREASE IN AUTHORIZED COMMON STOCK
The principal effect of the Capital Increase Amendment is to increase the
authority of the Board of Directors, in its discretion and acting alone without
further approval by the shareholders, to issue more shares of Common Stock than
it presently has authority to issue. Such shares may be issued for the purposes
discussed above.
Another possible effect of the Capital Increase Amendment could be to render
the accomplishment of a tender offer or other takeover attempt ("takeover") more
difficult. Although the Board did not adopt the Capital Increase Amendment for
such a reason, the Capital Increase Amendment could have that effect by enabling
the Board to issue Common Stock to one or more persons other than takeover
bidders. The Board believes approval of the Capital Increase Amendment could
thus encourage potential takeover bidders to seek approval of the Board through
negotiation with the Board rather than, or at least prior to, attempting a
"hostile" takeover. Because negotiation at an early stage would thus be
encouraged, the Board would have a better opportunity to analyze any prospective
offers, negotiate more favorable terms, if appropriate, and make a considered
recommendation to shareholders as to the benefits and detriments of the offer.
Since approval of the Capital Increase Amendment could render more difficult an
attempt to gain voting control of the Corporation, it arguably could also tend
to perpetuate incumbent management.
EXISTING "ANTI-TAKEOVER" PROVISIONS
The Corporation's Certificate of Incorporation provides for a staggered Board
of Directors consisting of three classes, each of which is elected for a three-
year term (see "PROPOSAL ONE--ELECTION OF DIRECTORS"). Such a provision could
be said to have an "anti-takeover" effect by preventing a change of control of
the Board at
14
<PAGE>
one annual meeting of shareholders. In addition, the Corporation's Bylaw
relating to nominations of candidates to be elected as directors, and the Bylaw
enabling the Board to increase the number of directors by two members and to
fill the vacancies so created (see "PROPOSAL ONE--ELECTION OF DIRECTORS"), could
be viewed as having an anti-takeover effect. Except for such provisions, the
Corporation's Certificate of Incorporation or Bylaws do not contain other
provisions having an anti-takeover effect.
The Capital Increase Amendment is not a part of a present plan by management to
adopt a series of anti-takeover measures and the Board of Directors does not
presently know of any other specific measures having an anti-takeover effect
which it will propose in future proxy solicitations. On the other hand, the
Board may in the future propose additional measures which do have such an effect
if the Board deems such measures to be in the best interests of the Corporation
and its shareholders.
Cumulative voting for directors is not provided for in the Corporation's
Certificate of Incorporation or Bylaws, nor is such voting required by New
Jersey law unless the Certificate of Incorporation so provides.
BOARD RECOMMENDATION
Shareholders should carefully consider the advantages and disadvantages of the
Capital Increase Amendment in deciding whether to vote for its approval. The
Board has unanimously concluded that the potential benefits of the Capital
Increase Amendment far outweigh potential disadvantages because such amendment
provides the Board with flexibility it believes it needs for possible use in
connection with funding business combinations, future financing, stock dividends
and Equity Contracts and stock options. With respect to possible takeover
situations, although this is not one of the Board's reasons for adopting the
Capital Increase Amendment, the Capital Increase Amendment does have the
potential effect of enhancing the Board's discretion to protect the Corporation
and its shareholders from certain undesirable takeover attempts and
strengthening the Board's ability to negotiate business combinations which the
Board views as being consistent with its long-term goals for the Corporation.
All members of the Board of Directors intend to vote their shares of Common
Stock in favor of approval of the Capital Increase Amendment (see table of
beneficial ownership above under "PROPOSAL ONE--ELECTION OF DIRECTORS--Security
Ownership of Management"). Since approval of the Capital Increase Amendment
could arguably be used to perpetuate incumbent management, the Board arguably
has a conflict of interest in recommending its approval. However, the Board
believes this is inherently the case with any proposal which enhances the
Board's discretion. The Board therefore believes this is basically a question
of the degree of confidence which shareholders have in the directors to exercise
their judgment in any particular case and to discharge their duty to use any
such discretion in a way which is in the best interests of the Corporation and
its shareholders.
The foregoing description of potential consequences of the Capital Increase
Amendment are based upon the beliefs of the Board of Directors. Consequences of
approval of the Capital Increase Amendment may be affected by subsequent events
and particular factual circumstances so that the actual consequences may differ
from those described above.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL OF THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION AUTHORIZING
ADDITIONAL COMMON STOCK OF THE CORPORATION.
15
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PROPOSAL FOUR
APPROVAL OF GREAT FALLS BANCORP
1996 EMPLOYEE STOCK OPTION PLAN
GENERAL
On February 20, 1996, the Corporation's Board of Directors unanimously adopted
the Great Falls Bancorp 1996 Employee Stock Option Plan (the "Employee Plan"),
subject to the approval of the Corporation's shareholders. The Employee Plan
provides for the granting of incentive stock options (ISOs), nonqualified stock
options (NQSOs) and stock appreciation rights (SARs) to employees (including
officers who are employees) of the Corporation and its subsidiaries. A Stock
Appreciation Right (SAR) is a contractual right to receive, either in cash or
stock, the appreciation in the value of a certain number of shares of stock over
a specified period of time. The economic value of an exercisable SAR is
measurable by the difference between the option price and the fair market value
of the number of shares of Common Stock subject to the SAR. To facilitate a
Participant's financial ability to exercise stock options and, in the case of an
NQSO, to pay income taxes attributable to the exercise of an option, SARs may be
granted in tandem with stock options (Tandem SARs) or separately from stock
options (Non-Tandem SARs). The Plan also provides discretionary authority for
loans to Participants in connection with their exercise of options. The maximum
number of shares of Common Stock and Non-Tandem SARs that may be made subject to
options granted pursuant to the Employee Plan is 200,000.
Adoption of the Employee Plan is subject to approval by affirmative vote of the
holders of a majority of the outstanding shares of Common Stock present or
represented, and entitled to vote, at a meeting of the Corporation's
shareholders duly held in accordance with New Jersey laws. A copy of the
Employee Plan is attached to this Proxy Statement as Appendix A and the
following description is qualified in its entirety by reference to the Employee
Plan.
PURPOSES
The purposes of the Employee Plan are to attract and retain highly-qualified
employees, to align employee and stockholder long-term interests by creating a
direct link between employee compensation and stockholder return, to enable
employees of the Corporation and its subsidiaries to develop and maintain stock
ownership positions in the Corporation, and to provide incentives to such
employees to contribute to the Corporation's success.
ADMINISTRATION
The Employee Plan will be administered by a committee (the "Committee") of the
Board of Directors which shall consist of all members of the Board who qualify
as both "disinterested persons" for purposes of the rules promulgated under
Section 16(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and
"outside directors" within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended. Directors who are eligible to be granted options
under the Employee Plan are not eligible to serve on the Committee. The
following members of the Board of Directors serve on the Committee: M.A.
Bramante, Robert J. Conklin, William T. Ferguson, Joseph A. Lobosco, Alfred R.
Urbano, and Charles J. Volpe.
Subject to the provisions of the Employee Plan, the Committee is authorized (i)
to determine which eligible employees of the Corporation or its subsidiaries
shall be granted options and/or SARs, (ii) to grant options and/or SARs, (iii)
to determine the times when options and/or SARs may be granted and the number of
shares that may be purchased pursuant to such options and/or the number of
shares associated with SARs, (iv) to determine the exercise price of the shares
subject to each option, (v) to determine the time or times when each option
and/or SAR becomes exercisable, the duration of the exercise period, and any
other restrictions on exercise, (vi) to prescribe the form or forms of
agreements relating to options or SARs, (vii) to determine the circumstances
under which the time for exercising options and/or SARs should be accelerated
and to accelerate the time for exercising outstanding options and/or SARs,
(viii) to determine the duration and purposes of leaves of absence which may be
granted to a participant without constituting a termination of service for
purposes of the plan, (ix) to adopt, amend and rescind rules and regulations for
the administration of the plan, and (x) to construe and interpret the plan, the
rules and regulations and option and SAR agreements under the plan, and to make
all other determinations deemed necessary or advisable in the administration of
the plan.
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The Committee may delegate to any person or persons (a "Subcommittee") all or
any part of its authority with respect to eligible employees of the Corporation
or its subsidiaries who are not "officers" of the Corporation within the meaning
of Section 16(b) of the Exchange Act.
ELIGIBILITY FOR AWARD OF OPTIONS
All employees of the Corporation and its subsidiaries (presently, approximately
130 persons), including officers, are eligible to receive options and/or SARs
under the Employee Plan. Nonemployee directors are not eligible to participate
in the Employee Plan.
GRANT OF OPTIONS
The Committee may in its sole discretion grant options and/or SARs to such
employees of the Corporation and its subsidiaries as it determines appropriate.
The Committee has granted to each of Mr. Campbell and Mr. Irwin NQSOs to
purchase 40,000 shares under the Employee Plan, subject to shareholder approval
of the Employee Plan. See "--Proposed Employee Plan Benefits."
CONSIDERATION
No consideration is to be paid to the Corporation by a Participant in the
Employee Plan in exchange for the grant of an option and/or SAR to such
employee.
UNDERLYING SECURITIES; MARKET VALUE
The Employee Plan provides for the issuance of options to purchase shares of
Common Stock and/or SARs. The maximum number of shares that may be made subject
to options and Non-Tandem SARs granted pursuant to the Employee Plan is 200,000,
which represents approximately 11.7% of the Corporation's Common Stock
outstanding on the date of this Proxy Statement (unadjusted for approximately
465,000 shares stock issuable upon exercise of the Equity Contracts and other
shares issuable upon exercise of outstanding stock options). Based upon the
mean between the closing bid and asked prices of the Common Stock on February
20, 1996, in the amount of $16.875 per share, as quoted by Ryan, Beck & Co.,
Inc., the total value of the stock called for by the total number of options and
Non-Tandem SARs eligible to be granted under the Employee Plan is $3,375,000.
TERMS AND CONDITIONS OF EMPLOYEE OPTIONS AND SARS
The Committee is authorized to establish the terms which will govern each
option and/or SAR granted under the Employee Plan, provided that such terms are
consistent with the terms and conditions of the Employee Plan. Options and/or
SARs shall be evidenced by option and/or SAR agreements in such forms as the
Committee may from time to time approve. There is no obligation to grant any
two options and/or SARs on the same terms.
Minimum Exercise Price. The exercise price per share for options and/or SARs
-----------------------
granted under the Employee Plan shall be not less than the fair market value of
a share of Common Stock on the date of grant. If, as is currently the case, on
the date of grant the Common Stock is not admitted to quotation on any
securities exchange or the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") or other comparable quotation system, fair market
value on the date of grant is defined as the mean between the closing bid and
asked prices for the Common Stock, as quoted by Ryan, Beck & Co., Inc., a
principal market maker for transactions in the Common Stock on the over-the-
counter market, or other market maker designated by the Committee or the Board
of Directors.
Exercisability and Terms of Options. No option and/or SAR may be exercisable
-----------------------------------
within six months of the date it is granted, other than in the event of
acceleration due to death, disability or a "Change in Control" (see "Terms and
Conditions of Employee Options and SARs--Accelerated Vesting and Exercise"
below). ISOs shall not have a term of more than ten years from the date of
grant. Upon the termination of a Participant's service due to voluntary
resignation, involuntary dismissal without "cause" or retirement, options and/or
SARs that have not become exercisable before the date the Participant terminates
service shall be forfeited and terminated immediately. A participant may
exercise an option and/or SAR to the extent it was exercisable on the date
immediately preceding such termination within the lesser of (i) one month from
the date of termination (six months from the date of
17
<PAGE>
termination in the case of retirement), or (ii) the balance of the stated term
of the option and/or SAR. If a participant's employment is terminated for
"cause," all options and/or SARs granted to such participant that have not been
exercised prior to such termination for cause shall, whether or not exercisable,
be forfeited immediately upon such termination. "Cause" means (i) conviction of
a felony, (ii) indictment for embezzlement or misappropriation of funds of, or
any act of dishonesty towards, the Corporation, (iii) written confession of
embezzlement or misappropriation of funds of, or any act of dishonesty towards,
the Corporation, or (iv) willful or gross neglect of duties, all as the
Committee may determine in its discretion.
Accelerated Vesting and Exercise. If a participant's employment terminates due
--------------------------------
to death or disability, all options and/or SARs granted to such participant that
have not become exercisable on or before the date of such termination shall
immediately become fully vested and exercisable. All options and/or SARs held
by such participant may be exercised by the participant, his estate or
beneficiary, or his representative, as the case may be, for a period of one year
from the date of such termination, or until the expiration of the stated term of
such option, whichever period is shorter.
Any option granted under the Employee Plan to a participant which has not
become exercisable as of the date of a Change in Control of the Corporation
shall become fully exercisable as of that date. A "Change in Control" means the
occurrence of one or more of the following events: (i) the Corporation acquires
actual knowledge that any person (other than the Corporation or a subsidiary) is
or becomes the beneficial owner of securities representing more than 25% of the
combined voting power of the Corporation's then outstanding securities; (ii) the
first purchase of Common Stock pursuant to a tender or exchange offer (other
than an offer by the Corporation or a subsidiary); (iii) approval by the
Corporation's shareholders of (x) a merger or consolidation of the Corporation
with or into another corporation (unless the Corporation is the surviving
corporation and the merger or consolidation does not result in any
reclassification or reorganization of the outstanding Common Stock of the
Corporation and does not result in a change in the Corporation's directors other
than the addition of up to three directors), (y) a disposition of all or
substantially all of the Corporation's assets, or (z) a plan of liquidation or
dissolution; (iv) a turnover of at least 1/3 of the directors during any period
of 2 consecutive calendar years unless the election or nomination of each new
director was approved by a vote of at least 2/3 of the directors then still in
office who were directors at the beginning of such 2-year period; or (v) a sale
of Common Stock if after such sale any person (other than the Corporation or a
subsidiary) owns a majority of the Common Stock or a sale of all or
substantially all of the Corporation's assets.
Nontransferability. No option or SAR shall be transferable except by will or
------------------
the laws of descent and distribution. During the lifetime of the Participant,
options and/or SARs shall be exercisable only by the Participant. However, the
Board may allow for transfers to family members of NQSOs, Non-Tandem SARs, and
Tandem SARs issued in connection with NQSOs, subject to such conditions or
limitations as it may establish to ensure compliance with Securities and
Exchange Commission Rule 16b-3 or for other purposes.
Special Provisions Applicable to ISOs. To the extent the aggregate fair market
-------------------------------------
value (determined as of the time the option is granted) of the stock with
respect to which any options which are intended to be ISOs may be exercisable
for the first time by the Participant in any calendar year exceeds $100,000,
such options shall not be considered ISOs.
No ISO may be granted to an individual who, at the time the Option is granted,
owns directly or indirectly stock possessing more than 10% of the total combined
voting power of all classes of stock of the Corporation, unless such option (i)
has an exercise price of at least 110% of the fair market value of the Common
Stock on the date of the grant of such option, and (ii) cannot be exercised more
than 5 years after the date of grant.
Each participant who receives an ISO must agree to notify the Corporation in
writing immediately after the participant makes a "disqualifying disposition" of
any Common Stock acquired pursuant to the exercise of an ISO. A disqualifying
disposition is any disposition (including any sale) of such Common Stock before
the later of (i) 2 years after the date the optionee was granted the ISO or (ii)
1 year after the date the participant acquired Common Stock by exercising the
ISO.
Any other provision of the Employee Plan to the contrary notwithstanding, no
ISO or Tandem SAR granted in conjunction with an ISO shall be granted after the
date which is 10 years from the date the Plan was adopted by the Board of
Directors of the Corporation (February 20, 1996).
EXERCISE OF OPTIONS
18
<PAGE>
Options which have become exercisable may be exercised in whole or in part,
provided that each partial exercise must be for whole shares only. Options may
only be exercised by delivery to the Secretary or his office of written notice
of exercise signed by the Participant (or other person then entitled to exercise
such option), full payment for the purchased shares, representations and
warranties as necessary or advisable to comply with all applicable securities
laws, and full payment of all amounts legally required to be withheld upon
exercise of the option. If the option is being exercised by a person other than
the participant, appropriate proof that such person has the right to exercise
the option must also be furnished.
PAYMENT FOR SHARES
Payment for shares purchased by exercising options under the Employee Plan
shall be made by (i) certified or bank cashier's check or, unless prohibited by
the terms of the applicable option agreement, (ii) unrestricted shares
previously owned by the participant based on the fair market value of such
Common Stock on the date the option is exercised, (iii) a combination of
certified or bank cashier's check and previously owned shares, or (iv) any other
means acceptable to the Corporation. To the extent the exercise price is paid
by delivery of previously owned shares, (i) shares received by the participant
upon exercise of ISOs may only be used if the participant has held such shares
for at least the greater of 2 years from the date the ISOs were granted or 1
year from the date the shares were transferred to the participant, and (ii)
shares received by the participant upon exercise of NQSOs may only be used if
such shares have been held by the Participant for at least 6 months.
The Corporation may make loans to such participants as the Committee, in its
discretion, may determine in connection with the exercise of options granted
under the Employee Plan.
The proceeds received by the Corporation from the sale of Common Stock pursuant
to the Employee Plan shall be used for general corporate purposes.
EXERCISE OF SARs
As noted above, a Stock Appreciation Right (SAR) is a right to receive cash or
Common Stock measurable by the difference between the option price and the fair
market value of the number of shares of Common Stock subject to the SAR. Upon
exercise of the SAR, that difference may be paid to the holder of the SAR in
cash, in Common Stock (valued at its fair market value at the time of the SAR is
exercised), or a combination of cash and Common Stock, as set forth in the
agreement describing the SAR granted to a particular participant.
Tandem SARs may only be exercised to the extent a related option is
exercisable. Upon exercise of a Tandem SAR, the number of shares subject to the
related option is reduced.
ADJUSTMENTS FOR RECAPITALIZATIONS, ETC.
The aggregate number of shares of Common Stock which may be purchased pursuant
to options or SARs under the Employee Plan, the number of shares covered by
outstanding options or SARs, and the price per share of outstanding options or
SARs, shall each be appropriately adjusted for (i) any increase or decrease in
the number of outstanding shares of Common Stock resulting from a stock split or
other subdivision or consolidation of such shares, (ii) other capital
adjustments, stock dividends or stock distributions, (iii) other
increases or decreases in outstanding shares effected without receipt of
consideration by the Corporation, or (iv) a reorganization, merger or
consolidation, or other similar change affecting the Common Stock (collectively
referred to herein as "Recapitalizations"). Options and SARs shall be adjusted
so that the total price applicable to the unexercised portion of the option or
SAR shall be unchanged (except for changes resulting from rounding). No
fractional shares shall be issued as a result of such adjustment.
In the event of a transaction involving the Corporation's liquidation or
dissolution, a merger or consolidation in which the Corporation is not the
surviving corporation, or the sale or disposition of all or substantially all of
the Corporation's assets, provision shall be made in connection with such
transaction for the assumption of options and SARs previously granted under the
Employee Plan or the substitution of new options and SARs of the successor
corporation (with appropriate adjustments), or, in the discretion of the
Committee, the Employee Plan and any options and SARs granted thereunder shall
terminate on the effective date of such transaction if appropriate provision is
made for payment to Participants of the difference between the market value of
the shares covered by their outstanding options and SARs and the exercise price
for such options and SARs. However, the Committee
19
<PAGE>
shall do nothing which would prevent any such merger, acquisition or sale of
assets from being treated as a pooling of interests.
REGISTRATION OF SHARES
The Corporation intends to register the Common Stock to be issued upon exercise
of options or SARs granted pursuant to the Employee Plan under applicable
federal and state securities laws, but shall have no obligation to so register
such shares or to maintain in effect any such registration. Unless a
registration statement under the Securities Act of 1933 is then in effect, the
Corporation shall require that the offer and sale of shares covered by such
options and SARs shall be exempt from registration; in furtherance of the
foregoing, if a registration statement is not then in effect, the Corporation
may require as a condition precedent to the exercise of any option or SAR that
the optionholder make certain representations and undertakings to the
Corporation, and the Corporation shall place an appropriate legend on
certificates representing any shares issued upon exercise of such options or
SARs regarding restrictions on disposition of such shares. The Corporation
shall not be required to issue or deliver any certificates for such shares prior
to the completion of any required registration or other qualification of such
shares and receipt of any approval or other clearance from any governmental
agency which may be necessary or advisable.
EFFECTIVE DATE AND EXPIRATION DATE
The Employee Plan shall be effective as of the date it is approved by the
affirmative vote of the holders of a majority of the Shares present, in person
or by proxy, and entitled to vote at a meeting of the Corporation's
shareholders. No ISO or Tandem SAR granted in tandem with an ISO may be granted
under the Employee Plan more than ten years after the Plan was adopted by the
Board of Directors, and no ISO or Tandem SAR granted in tandem with an ISO may
have a term which is more than ten years after it has been granted. There is no
limit upon either the time within which the Committee must grant, or the term
of, NQSOs, Tandem SARs granted in tandem with NQSOs, or Non-Tandem SARs.
AMENDMENTS AND TERMINATION
Subject to the limitations described below, the Board of Directors may amend or
terminate the Employee Plan. No such action shall adversely affect options
and/or SARs which are then outstanding without the consent of the option/SAR
holder. The Board may not, without approval of the shareholders, (i) materially
increase the total number of shares which may be purchased or acquired pursuant
to options and SARs granted under the Employee Plan (except for adjustments to
reflect recapitalizations, stock splits, stock dividends, etc.), (ii) expand the
class of employees eligible to receive options and SARs, (iii) decrease the
minimum option exercise price, (iv) extend the maximum term of options and/or
SARs granted under the plan, (v) extend the term of the plan, or (vi) take any
other action requiring shareholder approval under Rule 16b-3 under the
Securities Exchange Act of 1934.
COMPLIANCE WITH SEC RULE 16b-3
The Employee Plan is intended to comply with Rule 16b-3 under the Securities
Exchange Act of 1934. Any provisions inconsistent with such Rule shall be
inoperative.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain federal income tax consequences to
Participants in the Employee Plan and the Corporation based on federal income
tax laws in effect on January 1, 1996. This summary is not intended to be
complete and does not describe any state, local or foreign tax consequences.
NNQSOs. A Participant who is granted a NQSO under the Employee Plan will not
------
realize income upon the grant of the option. A Participant will normally
realize ordinary income at the time of exercise equal to the excess of the fair
market value at such time of the shares purchased over the exercise price for
such shares (the "Spread"). The time of realization of income could, however,
be deferred for up to six months if the option holder could be subject to suit
under Section 16(b) of the 1934 Act. The Corporation will be entitled to a
corresponding income tax deduction for federal income tax purposes equal to the
Spread during the taxable year in which the Participant realizes income,
provided applicable withholding and/or tax reporting requirements are met. Upon
the sale of stock received pursuant to the exercise of a NQSO, the Participant
will realize either gain or loss measured by the
20
<PAGE>
difference between the amount realized from the sale and the Participant's basis
in the shares for income tax purposes. Such basis generally will equal the fair
market value of the shares at the date of exercise.
If the Participant uses previously-owned stock to exercise a NQSO, a number of
shares received equal to the number of shares delivered to exercise the NQSO
will have the same basis as the shares delivered. The Participant will realize
ordinary income equal to the fair market value of shares received in excess of
the number of shares used to exercise the NQSO. Gain or loss from the sale of
such stock will be considered gain or loss from the sale of a capital asset if
the shares are held for investment purposes. Losses from sales of capital
assets may be subject to limitations based upon the amount and nature of the
Participant's other income, deductions, gains and losses.
ISOs. A Participant generally will not realize income at the time of either
----
grant or exercise of an ISO. However, as explained below, a Participant may
incur alternative minimum tax (AMT) consequences upon the exercise of an ISO.
Upon the sale of stock received pursuant to the exercise of an ISO, other than a
sale of stock which is a "disqualifying disposition," as defined below, the
Participant will recognize either a gain or loss measured by the difference
between the amount realized from the sale and the Participant's basis in the
shares. The basis in shares received upon exercise of an ISO will generally be
the exercise price of those shares. However, if the Participant uses previously
owned stock to exercise an ISO, the number of shares received which equal the
number of shares delivered to exercise the ISO will have the same basis as the
shares delivered; shares received in excess of the number of shares used to
exercise the option will have a basis equal to any cash paid on exercise.
Gain or loss from the sale of stock received upon exercise of an ISO, other
than a sale of stock which is a "disqualifying disposition," as defined below,
will be considered gain or loss from the sale of a capital asset if the shares
are held for investment purposes. Losses from sales of capital assets may be
subject to limitations based upon the amount and nature of the Participant's
other income, deductions, gains and losses.
A "disqualifying disposition" of shares received pursuant to the exercise of an
ISO occurs if the Participant disposes of such shares within two years from the
date of the grant of the option or within one year after the transfer of the
shares to the Participant, unless such disposition is (i) a transfer from a
decedent to an estate or a transfer by bequest or inheritance, (ii) an exchange
to which Section 354, Section 355, Section 356 or Section 1036 (or so much of
Section 1031 as relates to Section 1036) of the Internal Revenue Code applies,
or (iii) a mere pledge or hypothecation. In the event of a "disqualifying
disposition," the Participant generally will realize ordinary income in the year
of the "disqualifying disposition" in an amount equal to the difference between
the fair market value of the shares on the date of exercise and the exercise
price. If the amount realized on the disqualifying disposition is less than the
fair market value of the shares on the date of exercise, the amount realized as
ordinary income is limited to the amount by which the amount realized on the
sale of the shares in the "disqualifying disposition" exceeds the exercise
price. If the amount realized from the disqualifying disposition exceeds the
fair market value of the shares on the date of exercise, the excess amount
realized will be treated as additional gain taxed under the rules described in
the preceding paragraph.
The Corporation does not realize any Federal income tax consequences on the
issuance or exercise of ISOs. If the Participant makes a "disqualifying
disposition," however, the Corporation may deduct an amount equal to the amount
included in the Participant's ordinary income, in the year in which the
Participant realizes such income.
If the stock received upon exercise of an ISO is freely transferable or not
subject to a substantial risk of forfeiture, then the excess, if any, of the
fair market value of such stock (determined without regard to any restriction
other than a restriction which by its term will never lapse) over the amount
paid for such stock is included in the determination of the Participant's
alternative minimum taxable income (AMTI) in the year of exercise. If the stock
received pursuant to the exercise of an ISO is not freely transferable and is
subject to a substantial risk of forfeiture, then the excess, if any, of the
fair market value of such stock (determined as above) at the time such stock
becomes freely transferable or no longer is subject to a substantial risk of
forfeiture, whichever of said two events occurs first, over the amount paid for
such stock is included in the determination of the Participant's AMTI in the
year in which such stock becomes freely transferable or is no longer subject to
a substantial risk of forfeiture, whichever of said two events occurs first.
Special rules apply for purposes of determining whether stock received pursuant
to the exercise of an ISO is freely transferable or subject to a substantial
risk of forfeiture.
For purposes of computing the AMT in the year of sale, the basis in the shares
sold is increased by the amount included in the determination of AMTI in the
year the option was exercised. If stock received pursuant to the exercise of an
ISO is sold in the same taxable year in which the option was exercised, then the
amount
21
<PAGE>
includible in the determination of the Participant's AMTI cannot exceed the
excess (if any) of the amount realized on the sale less the Participant's
adjusted basis in such stock.
SARs. No taxable event occurs upon the grant of an SAR. A Participant is
----
taxable on the "Spread" upon exercise of an SAR, and the Corporation is entitled
to a deduction in the same amount during the year of exercise. The time of
realization of income could, however, be deferred for up to six months if the
option holder could be subject to suit under Section 16(b) of the 1934 Act. The
Spread is treated as "wages" for employment tax and wage withholding purposes.
These tax results are the same whether the Participant elects to receive the
benefit of the Spread in cash or Common Stock.
PROPOSED EMPLOYEE PLAN BENEFITS
On February 20, 1996, the Committee granted options under the Employee Plan to
the two employees identified in the following table. Such option grants are
subject to approval of the Employee Plan by the Corporation's shareholders at
the Annual Meeting.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------
Name and Positions Number of Options
- -----------------------------------------------------------------------
<S> <C>
George E. Irwin 40,000
President and Chief Executive Officer of
Great Falls Bank; President and Chief
Operating Officer of Great Falls Bancorp
C. Mark Campbell 40,000
President and Chief Executive Officer of
Bergen Commercial Bank; Executive Vice
President of Great Falls Bancorp
All current executive officers of the Corporation 80,000
as a group
All current directors of the Corporation who are 0
not executive officers as a group
All other employees as a group 0
</TABLE>
The indicated options are all NQSOs, and no SARs were granted. The above
options are exercisable at a price of $16.875 per share, which was the mean
between the bid and asked prices for the Common Stock on the date of grant, as
quoted by Ryan, Beck & Co.
The options described above will become "vested" at the rate of 20% per year,
or 8,000 shares, for each of the above optionees commencing on date of grant
(February 20, 1996) and each January 1 thereafter (commencing with January 1,
1997) provided the optionee remains employed by the Corporation or an affiliate
of the Corporation, and each group of vested options will thereafter become
exercisable at the rate of 20% per year commencing January 1st after each
vesting date (the first 20% of the first group of options which vested on
February 20, 1996 thereby becoming exercisable to the extent of 20% on January
1, 1997). All such options will lapse on December 31, 2006, subject to earlier
lapsing in the event of a termination of the optionee's employment (except in
certain circumstances), and subject to possible deferral of exercisability if
needed in certain circumstances to preserve the Corporation's income tax
deduction for the compensation element realized upon exercise. Such options
will also generally lapse when an option holder is no longer employed by the
Corporation or an affiliate of the Corporation.
The exercisability of such options will be accelerated in the event of the
death or disability of the optionee, or in the event of a "Change in Control" as
defined in the Employee Plan. (See "--Terms and Conditions of Employee Options
and SARs--Accelerated Vesting and Exercise.") The option price may be paid in
cash, in previously owned Common Stock (valued at the fair market value of the
stock at the time of exercise), or in a combination of cash and Common Stock.
At the request of an optionee, the Corporation may make loans to such employees
in connection with their exercise of the options on such terms and conditions as
the Committee may determine at the time of exercise,
22
<PAGE>
provided that any such loan will be secured by Common Stock and/or other
collateral having a value at least equal to the amount of the loan, the interest
rate and other terms of repayment cannot be below market rates or otherwise more
favorable to the optionee than comparable loans by the Corporation's bank
subsidiaries to unrelated customers, and other terms of the Employee Plan and
applicable law must be complied with.
EFFECT OF ADOPTION OF 1996 EMPLOYEE PLAN ON 1988 PLAN
Approval of the 1966 Employee Plan will result in a termination of the 1998
Plan, with the result that no further options may be granted to employees under
the 1988 Plan and shares previously reserved for issuance pursuant to the
exercise of options not yet granted under the 1988 Plan shall no longer be
reserved. However, the termination of the 1988 Plan will not terminate or
otherwise affect the validity or enforceability of presently outstanding options
previously granted to employees under the 1988 Plan or shares reserved for
issuance upon the exercise of such outstanding options under the 1988 Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL OF THE GREAT FALLS BANCORP 1996 EMPLOYEE STOCK OPTION PLAN.
23
<PAGE>
PROPOSAL FIVE
APPROVAL OF GREAT FALLS BANCORP
1996 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
GENERAL
On February 20, 1996, the Corporation's Board of Directors unanimously adopted
the Great Falls Bancorp 1996 Stock Option Plan for Nonemployee Directors (the
"Director Plan"), subject to approval by the Corporation's shareholders.
The Director Plan provides for the granting of nonqualified stock options to
nonemployee directors of the Corporation's bank subsidiaries, Great Falls Bank
and Bergen Commercial Bank (the "Banks"), to purchase a maximum of 95,000 shares
of the Corporation's Common Stock.
Adoption of the Director Plan is subject to approval by affirmative vote of the
holders of a majority of the outstanding shares of Common Stock of the
Corporation present, in person or by proxy, and entitled to vote, at a meeting
of the Corporation's shareholders duly held in accordance with New Jersey laws.
A copy of the Director Plan is attached to this Proxy Statement as Appendix B
and the following description is qualified in its entirety by reference to the
Director Plan.
PURPOSES
The purposes of the Director Plan are to attract and retain highly-qualified
nonemployee directors of the Corporation's bank subsidiaries, to align such
nonemployee directors' and stockholders' long-term interests by creating a
direct link between compensation and shareholder return, to enable such
nonemployee directors to develop and maintain stock ownership positions in the
Corporation, and to provide incentives to such nonemployee directors to
contribute to the Corporation's success.
The Banks pay their directors fees for attending meetings of the Banks' Boards
and Board committees, and many (but not all) of the nonemployee directors of
Great Falls Bank were granted options to purchase Common Stock under the
Corporation's 1993 and 1995 Stock Option Plans, which were previously approved
by the Corporation's shareholders (see above, "Executive Compensation and Other
Benefits--Directors' Compensation"). However, all of the options originally
authorized under the 1993 and 1995 Plans were granted during 1993 and 1995, and
the nonemployee directors of the Banks are excluded from eligibility to
participate in the Corporation's other existing stock option plans, namely, the
1988 Nonstatutory Stock Option Plan and the proposed Employee Plan (see
"PROPOSAL FOUR--APPROVAL OF GREAT FALLS BANCORP 1996 EMPLOYEE STOCK OPTION
PLAN"). The proposed Director Plan is thus intended to complement the stock
option plans for employees.
ADMINISTRATION
The Director Plan will be administered by the Corporation's Board of Directors.
Subject to the provisions of the Director Plan, the Board is authorized to grant
options under the Plan on the terms specified below, establish rules and
regulations under the Plan, and construe and interpret the Plan.
ELIGIBILITY FOR AWARD OF OPTIONS
Those eligible to be granted options under the Director Plan ("Participants")
are the sixteen individuals who were the nonemployee directors of the Banks on
February 20, 1996. Ten were directors of Great Falls Bank and six were
directors of Bergen Commercial Bank. All of the Corporation's present directors
other than Messrs. Campbell and Irwin are included in this group of
Participants, which includes four of the nominees for reelection at the Annual
Meeting as directors, namely, Messrs. Bruno, Lobosco, Soldoveri and Volpe. For
information about the Corporation's directors, see "PROPOSAL ONE--ELECTION OF
DIRECTORS".
GRANT OF OPTIONS
Following adoption of the Director Plan on February 20, 1996, the Board of
Directors granted options to purchase all of the 95,000 shares covered by the
Director Plan to the nonemployee directors of Great Falls Bank
24
<PAGE>
and Bergen Commercial Bank. Such options will not be effective unless and until
the Corporation's shareholders approve the Director Plan at the Annual Meeting.
See "--Proposed Director Plan Benefits."
CONSIDERATION
No consideration is to be paid to the Corporation by a Participant in the
Director Plan in exchange for the grant of an option to such Participant.
UNDERLYING SECURITIES; MARKET VALUE
The aggregate number of shares which may be issued pursuant to the exercise of
options granted under the Director Plan is 95,000 shares, which represents
approximately 5.6% of the Corporation's Common Stock outstanding on the date of
this Proxy Statement (unadjusted for approximately 465,000 shares stock issuable
upon exercise of the Equity Contracts and other shares issuable upon exercise of
outstanding stock options). Based upon the mean between the closing bid and
asked prices of the Common Stock on February 20, 1996, in the amount of $16.875
per share, as quoted by Ryan, Beck & Co., the total value of the stock called
for by the total number of options eligible to be granted under the Director
Plan is $1,603,125.
TERMS AND CONDITIONS OF DIRECTOR OPTIONS
The Director Plan provides for the grant of options to purchase a total of
3,000 shares to each eligible participant other than Anthony M. Bruno, Jr., and
for the grant of options to purchase a total of 50,000 shares to Mr. Bruno. All
options granted under the Director Plan will become "vested" at the rate of 20%
per year (600 shares for each of the nonemployee directors other than Mr. Bruno;
10,000 shares for Mr. Bruno) commencing on the date of grant and each January 1
thereafter provided the optionee remains a director of or employed by the
Corporation or an affiliate of the Corporation, and each group of vested options
will thereafter become exercisable at the rate of 20% per year commencing
January 1st after each vesting date. All such options will lapse on December
31, 2006, subject to possible deferral of exercisability if needed in certain
circumstances to preserve the Corporation's income tax deduction for the
compensation element realized upon exercise. Such options will also generally
lapse when an option holder is no longer a director or employee of the
Corporation or an affiliate of the Corporation. However, in the event of an
option holder's death or permanent disability, the Director Plan provides that
the period of exercisability may be extended for up to one year, but not later
than December 31, 2006. An option holder may not transfer an option other than
by Will or the laws of descent and distribution.
EXERCISE OF OPTIONS
Options which have become exercisable under the Director Plan may be exercised
in whole or in part. Fractional shares will not be issued. Options shall be
exercised by delivery to the Secretary or his office of written notice of
exercise signed by the Participant (or other person then entitled to exercise
such option), full payment for the purchased shares, representations and
warranties as necessary or advisable to comply with all applicable securities
laws, and full payment of any amounts legally required to be withheld upon
exercise of the option. If the option is being exercised by a person other than
the Participant, appropriate proof that such person has the right to exercise
the option must also be furnished.
Any option granted under the Director Plan to a participant which has not
become exercisable as of the date of a Change in Control of the Corporation
shall become fully exercisable as of that date. "Change in Control" has the
same meaning in the Director Plan as in the Employee Plan. See "PROPOSAL FOUR--
APPROVAL OF GREAT FALLS BANCORP 1996 EMPLOYEE STOCK OPTION PLAN--Terms and
Conditions of Employee Options and SARs--Accelerated Vesting and Exercise".
PAYMENT FOR SHARES
Common Stock purchased by exercising options under the Director Plan may be
paid for only by cash or check. The purchase price is payable in full at the
time of exercise.
ADJUSTMENTS FOR RECAPITALIZATIONS, ETC.
The aggregate number of shares of Common Stock subject to, and the option price
of, unexercised options granted under the Director Plan shall be proportionately
adjusted under the same circumstances as under the
25
<PAGE>
Employee Plan. See "PROPOSAL FOUR--APPROVAL OF GREAT FALLS BANCORP 1996 EMPLOYEE
STOCK OPTION PLAN--Adjustments for Recapitalizations, Etc."
REGISTRATION OF SHARES
The Corporation intends to register the Common Stock to be issued upon exercise
of options granted pursuant to the Director Plan under applicable federal and
state securities laws, but shall have no obligation to so register such shares
or to maintain in effect any such registration. If the shares are not so
registered, the Corporation will take precautions to comply with applicable
securities laws relating to the unregistered issuance of shares which are
similar to those under the Employee Plan. See "PROPOSAL FOUR--APPROVAL OF GREAT
FALLS BANCORP 1996 EMPLOYEE STOCK OPTION PLAN--Registration of Shares".
EFFECTIVE DATE
The Director Plan and the options granted thereunder by the Board prior to
approval of the Director Plan by the Corporation's shareholders will become
effective only upon the Director Plan's approval by the affirmative vote, either
in person or by proxy, of the holders of a majority of the shares of Stock
entitled to vote and voting thereon at a meeting of the holders thereof at which
a quorum is present, in person or by proxy.
AMENDMENTS AND TERMINATION
The Corporation's Board of Directors may at any time amend the Director Plan,
except that shareholder approval is also required for any action which would
increase the maximum number of shares for which options may be granted (other
than as an adjustment due to a recapitalization, stock dividend, etc.), expand
the class of persons eligible to participate in the Director Plan, decrease the
minimum stock option price, extend the maximum terms of options granted
thereunder, or take any action requiring shareholder approval under Rule 16b-3
under the 1934 Act. The Board also has the right to suspend or terminate the
Director Plan at any time. However, no action amending or terminating the
Director Plan may adversely affect a Participant's rights under an outstanding
option without that Participant's consent.
COMPLIANCE WITH SEC RULE 16B-3
The Director Plan is intended to comply with Rule 16b-3 under the Securities
Exchange Act of 1934. Any provisions inconsistent with such Rule shall be
inoperative.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain federal income tax consequences of
the Director Plan to Participants and the Corporation based on federal income
tax laws in effect on January 1, 1996. This summary is not intended to be
complete and does not describe any state, local or foreign tax consequences.
Options granted under the Director Plan are nonqualified stock options (NQSOs).
A Participant will not recognize income upon the grant of an option under the
Director Plan. A Participant will normally recognize ordinary income at the time
of exercise equal to the excess of the fair market value at such time of the
shares purchased over the option price (the "Spread"). The time of realization
of income could, however, be deferred for up to six months if the option holder
could be subject to suit under Section 16(b) of the 1934 Act.
The Banks (and thus the Corporation, assuming a continuation of its prior
practice of filing a consolidated federal income tax return) will be entitled to
a corresponding income tax deduction for federal income tax purposes for the
Spread at the same time the Participant's income is recognized, provided any
applicable withholding and/or tax reporting requirements and any other
applicable requirements are met.
PROPOSED DIRECTOR PLAN BENEFITS
On February 20, 1996 the Board of Directors granted options under the Director
Plan to purchase a total of 95,000 shares to the nonemployee directors of the
Banks as indicated on the following table. Such option grants are subject to
approval of the Director Plan by the Corporation's shareholders at the Annual
Meeting. The indicated options are exercisable at a price of $16.875 per share,
which was the mean between the bid and asked prices for the Common Stock on the
date of grant, as quoted by Ryan, Beck & Co. Options granted to nonemployee
directors
26
<PAGE>
of the Banks who are executive officers of the Corporation consisted
of options to purchase 50,000 shares granted to Anthony M. Bruno, Jr., Vice
Chairman of the Corporation, and options to purchase 3,000 shares granted to
John L. Soldoveri, the Corporation's Chairman and Chief Executive Officer. Each
of the remaining optionees was granted an option to purchase 3,000 shares. All
options were granted on the terms and conditions described in the Director Plan.
See "--Terms and Conditions of Director Options."
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Directors of Great Falls Bank Directors of Bergen Commercial Bank
- ---------------------------------------------------------------------------------
<S> <C>
Annemarie Appleton Anthony M. Bruno, Jr.
Marino A. Bramante Stefano A. Masi
Robert J. Conklin Barry G. Novin
David M. Corry Michael R. Petriella
Robert B. Coyle Ralph W. Sifford
William T. Ferguson Charles J. Volpe
Joseph A. Lobosco
John L. Soldoveri
Richard Steuerwald
Alfred R. Urbano
All current director-executive officers 53,000
of the Corporation as a group
All current directors of the Corporation 42,000
who are not executive officers as a group
All other employees as a group 0
</TABLE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL OF THE GREAT FALLS BANCORP 1996 STOCK OPTION PLAN FOR NONEMPLOYEE
DIRECTORS.
- --------------------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
- --------------------------------------------------------------------------------
Based upon a review of copies of Forms 3 and 4 filed with the Corporation
during 1995, Mr. William T. Ferguson was the only person subject to reporting
requirements of Section 16 of the 1934 Act during 1995 (relating to changes in
beneficial ownership of the Corporation's Common Stock) who failed to file on a
timely basis all reports which he was required to file with respect to
transactions in Common Stock during 1995. Mr. Ferguson's Forms 4 for December,
1994 and April, 1995 were each filed eight days later than applicable SEC
regulations require.
27
<PAGE>
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
Any proposal of a stockholder which is intended to be presented at the 1997
Annual Meeting of Stockholders must be received by the Corporation for inclusion
in next year's Proxy Statement on or before December 17, 1996.
- --------------------------------------------------------------------------------
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
The principal accountant for the Corporation and its subsidiaries for 1995 was
Arthur Andersen LLP, Roseland, New Jersey. Arthur Andersen LLP has served in
that capacity since 1985. The Corporation has not yet appointed a principal
accountant for 1996 since the current engagement for 1995 has not yet expired.
It is expected that a representative of Arthur Andersen LLP will be present at
the Annual Meeting with the opportunity to make a statement, if such
representative desires to do so, and will be available to respond to appropriate
questions.
- --------------------------------------------------------------------------------
COSTS OF SOLICITATION; FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Corporation will bear the costs of soliciting proxies for the Annual
Meeting. The Corporation 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
solicitations by mail, directors, officers and regular employees of the
Corporation may solicit proxies personally or by telegraph, telephone or fax
(without compensation other than their regular compensation).
The Corporation's Annual Report to Stockholders for the year ended December 31,
1995, including financial statements, has been mailed to all stockholders of
record as of the close of business on the Record Date. Any stockholder who has
not received a copy of such Annual Report may obtain a copy by writing to the
Secretary of the Corporation. Such Annual Report is not to be treated as a part
of the proxy soliciting material or as having been incorporated herein by
reference.
GREAT FALLS BANCORP
Edith A. Leonhard, Secretary
Totowa, New Jersey
April 1, 1996
- --------------------------------------------------------------------------------
ANNUAL REPORT ON FORM 10-KSB
- --------------------------------------------------------------------------------
ON WRITTEN REQUEST OF ANY STOCKHOLDER OF RECORD OR A BENEFICIAL OWNER OF THE
CORPORATION'S COMMON STOCK ON MARCH 1, 1996, THE CORPORATION WILL FURNISH
WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED
DECEMBER 31, 1995 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. ANY
SUCH WRITTEN REQUEST SHOULD BE DIRECTED TO NAQI A. NAQVI, TREASURER, GREAT FALLS
BANCORP, 55 UNION BLVD., TOTOWA, NJ 07512.
- --------------------------------------------------------------------------------
28
<PAGE>
APPENDIX A
----------
GREAT FALLS BANCORP
1996 EMPLOYEE STOCK OPTION PLAN
ARTICLE I. PURPOSES
--------
The purposes of the Great Falls Bancorp 1996 Employee Stock Option Plan are to
(i) attract and retain highly qualified employees, (ii) align employee and
stockholder long-term interests by creating a direct link between employee
compensation and stockholder return, (iii) enable employees of Great Falls
Bancorp (the "Corporation") and its Subsidiaries to develop and maintain stock
ownership positions in the Corporation, and (iv) provide incentives to such
employees to contribute to the Corporation's success. To achieve these
objectives, the Plan provides for the granting of "incentive stock options"
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, "nonqualified stock options" and "stock appreciation rights."
ARTICLE II. DEFINITIONS
-----------
Whenever the following terms are used in this Plan, they shall have the
meanings specified below:
(a) "AFFILIATE" shall mean the Corporation or a Subsidiary.
(b) "BOARD" shall mean the Board of Directors of the Corporation.
(c) "CAUSE" shall mean (i) the conviction of the Participant of a felony by a
court of competent jurisdiction, (ii) the indictment of the Participant by a
State or Federal grand jury of competent jurisdiction for embezzlement or
misappropriation of funds of an Affiliate or for any act of dishonesty or lack
of fidelity towards an Affiliate, (iii) the written confession by the
Participant of any act of dishonesty towards an Affiliate or any embezzlement or
misappropriation of an Affiliate's funds, or (iv) willful or gross neglect of
the duties for which the Participant was responsible, all as the Board of
Directors of the Corporation, in its sole discretion, may determine.
(d) "CHANGE IN CONTROL" shall mean the occurrence of one or more of the
following events: (i) the Corporation acquires actual knowledge that any person
(as such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act)
other than an Affiliate is or becomes the beneficial owner (as defined in Rule
13d-3 of the Exchange Act), directly or indirectly, of securities of the
Corporation representing more than 25% of the combined voting power of the
Corporation's then outstanding securities; (ii) the first purchase of Common
Stock pursuant to a tender or exchange offer (other than a tender or exchange
offer made by an Affiliate); (iii) the approval by the Corporation's
stockholders of (a) a merger or consolidation of the Corporation with or into
another corporation (other than a merger or consolidation in which the
Corporation is the surviving corporation and which does not result in any
reclassification or reorganization of the Corporation's then outstanding shares
of Common Stock or a change in the Corporation's directors, other than the
addition of not more than three directors), (b) a sale or disposition of all or
substantially all of the Corporation's assets, or (c) a plan of liquidation or
dissolution of the Corporation; (iv) during any period of two consecutive
calendar years, individuals who at the beginning of such period constitute the
Board of Directors of the Corporation cease for any reason to constitute at
least two-thirds thereof, unless the election or nomination for the election by
the Corporation's stockholders of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period; or (v) a sale of (a) Common Stock of the Corporation if
after such sale any person (as defined above) other than an Affiliate owns a
majority of the Common Stock or (b) all or substantially all of the
Corporation's assets (other than in the ordinary course of business).
(e) "CODE" shall mean the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. (All citations to sections of the Code are to such sections
as they may from time to time be amended or renumbered.)
(f) "COMMITTEE" shall mean the committee consisting of at least three (3)
directors of the Corporation appointed by the Board to administer the Plan
pursuant to the provisions of Article III of the Plan.
(g) "COMMON STOCK" shall mean the common stock of the Corporation, par value
$1.00 per share.
A-1
<PAGE>
(h) "CORPORATION" shall mean Great Falls Bancorp, a New Jersey business
corporation.
(i) "DISABILITY" shall mean permanent and total disability as defined by the
Corporation's employee welfare benefit plan offering a long-term disability
benefit, or, if no such benefit is offered, as defined by Section 105(d)(4) of
the Code (prior to the repeal of such Section). "Disability" shall also exist
if documented by a signed written opinion of a currently licensed medical doctor
reasonably satisfactory to the Board, which written opinion shall set forth,
without limitation, a medical opinion that the Participant is permanently
disabled, the reasons for such disability, and the date of commencement of such
disability.
(j) "EMPLOYEE" shall mean a common law employee (as defined in accordance with
the regulations and Revenue Rulings then applicable under Section 3401(c) of the
Code) of an Affiliate.
(k) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as now in
effect or as hereafter amended.
(l) "FAIR MARKET VALUE OF STOCK" shall mean for all purposes of the Plan as
follows: (A) if the Shares are admitted to quotation on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or other
comparable quotation system and have been designated as a National Market System
("NMS") security, fair market value on any date shall be the last sale price
reported for the Shares on such system on such date or on the last day preceding
such date on which a sale was reported; (B) if the Shares are admitted to
quotation on NASDAQ and have not been designated an NMS security, fair market
value on any date shall be the average of the highest bid and lowest asked
prices of the Shares on such system on such date; (C) if the Shares are admitted
to trading on a national securities exchange, fair market value on any date
shall be the last sale price reported for the Shares on such exchange on such
date or on the last date preceding such date on which a sale was reported; or
(D) if neither (A), (B) nor (C) applies to the Shares, fair market value on any
date shall be a price equal to the mean between the closing bid and asked prices
for Shares, as quoted in writing to the Corporation by Ryan, Beck & Co., Inc., a
principal market maker for transactions in the Corporation's Common Stock on the
over-the-counter market, or other market maker designated by the Committee or
the Board of Directors.
(m) "INCENTIVE STOCK OPTION" shall mean a Stock Option whose terms satisfy the
requirements imposed by Section 422 of the Code and which is intended by the
Committee to be treated as an Incentive Stock Option.
(n) "NONQUALIFIED STOCK OPTION" shall mean either (i) any Stock Option which,
when granted, is not an Incentive Stock Option, or (ii) an Incentive Stock
Option which, subsequent to its grant, ceases to qualify as an Incentive Stock
Option because of a failure to satisfy the requirements of Section 422(b) of the
Code.
(o) "NON-TANDEM STOCK APPRECIATION RIGHT" shall mean a Stock Appreciation Right
not awarded in connection with a Stock Option.
(p) "PARTICIPANT" shall mean an Employee who has been granted a Stock Option
and/or Stock Appreciation Right under the Plan.
(q) "PLAN" shall mean the Great Falls Bancorp 1996 Employee Stock Option Plan,
as may be amended from time to time.
(r) "RETIREMENT" shall mean any normal or early retirement by a Participant
pursuant to the terms of any pension, profit sharing or 401(k) plan, or policy
of the Corporation or any Subsidiary which is applicable to such Participant at
the time of his Termination of Service.
(s) "SECRETARY" shall mean the corporate secretary of the Corporation.
(t) "SECURITIES ACT" shall mean the Securities Act of 1933, as now in effect or
as hereafter amended.
(u) "SHARES" shall mean shares of Common Stock.
(v) "STOCK APPRECIATION RIGHT" shall mean a right to receive cash or Common
Stock in exchange for a Stock Appreciation Right which is awarded in accordance
with the terms of the Plan.
A-2
<PAGE>
(w) "STOCK OPTION" shall mean a right to purchase Common Stock which is awarded
in accordance with the terms of this Plan.
(x) "SUBSIDIARY(IES)" shall mean any corporation or other legal entity,
domestic or foreign, more than 50% of the voting power of which is owned or
controlled, directly or indirectly by the Corporation.
(y) "TANDEM STOCK APPRECIATION RIGHT" shall mean a Stock Appreciation Right
awarded in connection with any Stock Option granted under the Plan, either at
the time the Stock Option is granted or thereafter at any time prior to the
exercise, termination or expiration of the related Stock Option.
(z) "TERMINATE (TERMINATION OF) SERVICE (OR TERMINATION)" shall mean the time
at which the Participant ceases to provide services to an Affiliate as an
Employee, but shall not include a lapse in providing services which the
Committee determines to be a temporary leave of absence.
ARTICLE III. ADMINISTRATION
--------------
The Plan shall be administered by a committee (the "Committee") of the Board,
which shall consist of all members of the Board who qualify as both: (i) a
"disinterested person" within the meaning of the rules promulgated under Section
16(b) of the Exchange Act and (ii) an "outside director" within the meaning of
Section 162(m) of the Code. The Committee shall hold meetings at such times as
may be necessary for the proper administration of the Plan and shall keep
minutes of its meetings. A majority of the Committee shall constitute a quorum
and a majority of the quorum present at any meeting of the Committee may
authorize any action. No member of the Committee shall be personally liable for
any action, determination or interpretation made in good faith with respect to
the Plan or any Stock Option and/or Stock Appreciation Right granted pursuant
thereto. All members of the Committee shall be indemnified by the Corporation
with respect to any such action, determination or interpretation to the fullest
extent permitted by law.
Subject to the provisions of the Plan, the Committee shall have sole authority,
in its absolute discretion: (i) to determine which eligible Employees shall be
granted Stock Options and/or Stock Appreciation Rights; (ii) to grant Stock
Options and/or Stock Appreciation Rights; (iii) to determine the times when
Stock Options and/or Stock Appreciation Rights may be granted and the number of
Shares that may be purchased pursuant to such Stock Options and/or the number of
Shares associated with Stock Appreciation Rights; (iv) to determine the exercise
price of the Shares subject to each Stock Option, which price shall be not less
than the minimum specified in Section 6.1; (v) to determine the time or times
when each Stock Option and/or Stock Appreciation Right becomes exercisable, the
duration of the exercise period, and any other restrictions on the exercise of
Stock Options and/or Stock Appreciation Rights issued hereunder; (vi) to
prescribe the form or forms of the Stock Option and/or Stock Appreciation Rights
agreements under the Plan; (vii) to determine the circumstances under which the
time for exercising Stock Options and/or Stock Appreciation Rights should be
accelerated and to accelerate the time for exercising outstanding Stock Options
and/or Stock Appreciation Rights; (viii) to determine the duration and purposes
for leaves of absence which may be granted to a Participant without constituting
a Termination of Service for purposes of the Plan; (ix) to adopt, amend and
rescind such rules and regulations as, in its opinion, may be advisable in the
administration of the Plan; and (x) to construe and interpret the Plan, the
rules and regulations and the Stock Option and Stock Appreciation Rights
agreements under the Plan, and to make all other determinations deemed necessary
or advisable for the administration of the Plan; provided, however, that with
respect to those eligible Employees who are not "officers" of the Corporation,
within the meaning of Section 16(b) of the Exchange Act, the Committee may
delegate to any person or persons ("Subcommittee") all or any part of its
authority as set forth in (i) through (x) above. All references in the Plan to
the powers of a Subcommittee to act for the Committee shall be applicable only
to the extent consistent with the foregoing provision and only to the extent
consistent with the powers which have actually been delegated to it. All
decisions, determinations and interpretations of the Committee, or Subcommittee,
to the extent consistent with such delegation, shall be final and binding.
The provisions of this Article III shall survive any termination of the Plan.
ARTICLE IV. SHARES SUBJECT TO PLAN
----------------------
The aggregate maximum number of Shares that may be made subject to Stock
Options and Non-Tandem Stock Appreciation Rights granted pursuant to the Plan is
Two Hundred Thousand (200,000) (or the number and
A-3
<PAGE>
kind of Shares or other securities which are substituted for those Shares or to
which those Shares are adjusted pursuant to the provisions of Article X of the
Plan). The Corporation shall reserve such number of Shares for the purposes of
the Plan out of its authorized but unissued shares, or out of Shares held in the
Corporation's treasury, or partly out of each, as shall be determined by the
Board. No fractional Shares shall be issued with respect to Stock Options or
Stock Appreciation Rights granted under the Plan.
In the event that any outstanding Stock Option or Stock Appreciation Right
under the Plan for any reason expires, is terminated, forfeited or is canceled
prior to the expiration date of the Plan, the Shares called for by the
unexercised portion of such Stock Option or Stock Appreciation Right may, to the
extent permitted by Rule 16b-3 under the Exchange Act, again be subject to a
Stock Option or Stock Appreciation Right under the Plan.
ARTICLE V. ELIGIBILITY FOR AWARD OF STOCK OPTIONS
--------------------------------------
AND/OR STOCK APPRECIATION RIGHTS
--------------------------------
All officers who are Employees and other Employees of one or more of the
Affiliates shall be eligible to receive Stock Options and/or Stock Appreciation
Rights under the Plan. Non-Employee directors shall not be eligible to
participate in the Plan. However, a person who otherwise is an eligible officer
or Employee shall not be disqualified from participation in the Plan by virtue
of being a director of the Corporation or any Subsidiary.
ARTICLE VI. GRANT OF STOCK OPTIONS AND/OR
-----------------------------
STOCK APPRECIATION RIGHTS
-------------------------
The Committee or Subcommittee may in its sole discretion grant Stock Options
and/or Stock Appreciation Rights to such Employees as it determines appropriate
consistent with Article V. Stock Options and/or Stock Appreciation Rights shall
be evidenced by Stock Option and/or Stock Appreciation Rights agreements (which
need not be identical) in such forms as the Committee may from time to time
approve.
Stock Option and/or Stock Appreciation Right agreements shall conform to the
terms and conditions of the Plan. Such agreements may provide that the grant of
any Stock Option and/or Stock Appreciation Right under the Plan, or that Stock
acquired pursuant to the exercise of any Stock Option and/or Stock Appreciation
Right, shall be subject to such other conditions (whether or not applicable to
the Stock Option and/or Stock Appreciation Right, or Stock received by any other
Participant), as the Committee determines appropriate, including, without
limitation, provisions conditioning exercise upon the occurrence of certain
events or performance or the passage of time, provisions to assist the
participant in financing the purchase of Stock through the exercise of Stock
Options, provisions for forfeiture, or restrictions on resale or other
disposition, of Shares acquired under the Plan, provisions giving the
Corporation the right to repurchase Shares acquired under the Plan in the event
the Participant elects to dispose of such Shares, and provisions to comply with
Federal and State securities laws and Federal and State income tax and other
payroll tax withholding requirements. Stock Options granted under this Plan
which are intended to qualify as Incentive Stock Options shall be specifically
designated as such in the Stock Option agreement.
6.1 OPTION PRICE OF STOCK OPTIONS. The exercise price for each Stock Option
granted under the Plan shall be determined by the Committee or Subcommittee;
provided, however, that it shall not be less than the Fair Market Value of the
Stock on the date of grant.
6.2 EXERCISABILITY AND TERMS OF STOCK OPTIONS AND/OR STOCK APPRECIATION RIGHTS.
The Committee or Subcommittee shall, subject to the terms of the Plan, determine
the dates after which Stock Options and/or Stock Appreciation Rights may be
exercised, in whole or in part, and may establish a vesting schedule that must
be satisfied before Stock Options and/or Stock Appreciation Rights may be
exercised; provided, however, that no Stock Option and/or Stock Appreciation
Right may be exercisable within six months of the date it is granted, other than
in the event of an acceleration as provided in Section 6.3. A Stock Option
and/or Stock Appreciation Right may provide that if it is exercisable in
installments, installments which are exercisable and not exercised shall remain
exercisable during the term of the Stock Option and/or the Stock Appreciation
Right.
All Incentive Stock Options shall have a term of no more than ten years from
the date of grant. Upon the Termination of Service of a Participant due to (i)
voluntary resignation or involuntary dismissal without Cause, or (ii)
Retirement, all Stock Options and/or Stock Appreciation Rights that have not
become exercisable before the date the Participant Terminates Service shall be
forfeited and terminated immediately. The Participant may exercise a Stock
Option and/or Stock Appreciation Right to the extent it was exercisable by him
on the date immediately
A-4
<PAGE>
preceding such Termination within the lesser of (i) one month from the date of
Termination (six months from the date of Termination in the case of Retirement),
or (ii) the balance of the stated term of the Stock Option and/or Stock
Appreciation Right. If a Participant's employment shall be terminated with
Cause, all Stock Options and/or Stock Appreciation Rights granted to such
Participant that have not been exercised prior to such Termination for Cause
shall, whether or not exercisable, be forfeited immediately upon such
Termination.
6.3 ACCELERATED VESTING AND EXERCISABILITY OF STOCK OPTIONS AND STOCK
APPRECIATION RIGHTS. If a Participant shall Terminate Service by reason of his
death or Disability, all Stock Options and/or Stock Appreciation Rights granted
to such Participant that have not become exercisable on or before the date of
such Termination shall immediately become both "vested" and fully exercisable.
All Stock Options and/or Stock Appreciation Rights held by such Participant may
be exercised by the Participant, his estate or beneficiary, or his
representative, as the case may be, for a period of one year from the date of
such Termination, or until the expiration of the stated term of such Stock
Options and/or Stock Appreciation Rights, whichever period is shorter.
Notwithstanding the provisions of Section 6.2, in the event of a Change in
Control, any Stock Option and/or Stock Appreciation Right granted under the Plan
to a Participant which has not, as of the date of the Change in Control, become
exercisable shall immediately become both "vested" and fully exercisable.
6.4 NONTRANSFERABILITY OF STOCK OPTIONS AND/OR STOCK APPRECIATION RIGHTS. No
Stock Option or Stock Appreciation Right shall be transferable except by will or
the laws of descent and distribution. During the lifetime of the Participant,
the Stock Option and/or Stock Appreciation Right shall be exercisable only by
him or, in the event of the Participant's incapacity or death, by the
Participant's guardian or legal representative. More specifically, without
limitation, no Stock Option and/or Stock Appreciation Right may be assigned,
transferred (except as specifically permitted by the Plan or the terms of the
specific Stock Option or Stock Appreciation Right agreement consistent with the
Plan), pledged or hypothecated in any way, nor shall it be assignable by
operation of law or subject to execution, attachment, garnishment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of a Stock Option and/or Stock Appreciation Right contrary to the
provisions hereof, and the levy of any execution, attachment, garnishment or
similar process upon the Stock Option and/or Stock Appreciation Right, shall be
null and void, and without force or effect. The Committee may, however, in its
sole discretion, allow for transfers of Nonqualified Stock Options, Non-Tandem
Stock Appreciation Rights, and Tandem Stock Appreciation Rights issued in
connection with Non-Qualified Stock Options to family members, subject to such
conditions or limitations as the Board may establish to ensure compliance with
Rule 16b-3 promulgated pursuant to the Exchange Act, or for other purposes.
6.5 NO OBLIGATION TO EXERCISE STOCK OPTIONS AND/OR STOCK APPRECIATION RIGHTS.
The grant of a Stock Option and/or Stock Appreciation Right shall impose no
obligation on the Participant to exercise such Stock Option and/or Stock
Appreciation Right.
6.6 CANCELLATION OF STOCK OPTIONS AND/OR STOCK APPRECIATION RIGHTS. The
Committee, or Subcommittee, in its discretion, may, with the consent of any
Participant, cancel any outstanding Stock Option and/or Stock Appreciation
Right.
6.7 NO RIGHTS AS A STOCKHOLDER. A Participant or a transferee of a Stock
Option and/or Stock Appreciation Right shall have no rights as a stockholder
with respect to any Share covered by his Stock Option and/or Stock Appreciation
Right until he shall have become the holder of record of such Share, and he
shall not be entitled to any dividends or distributions or other rights in
respect of such Share for which the record date is prior to the date on which he
shall have become the holder of record thereof.
6.8 SPECIAL PROVISIONS APPLICABLE TO INCENTIVE STOCK OPTIONS. To the extent
the aggregate Fair Market Value (determined as of the time the Stock Option is
granted) of the Stock with respect to which any Stock Options granted hereunder
which are intended to be Incentive Stock Options may be exercisable for the
first time by the Participant in any calendar year (under this Plan or any other
stock option plan of the Corporation or any parent or Subsidiary thereof)
exceeds $100,000, such Stock Options shall not be considered Incentive Stock
Options.
No Incentive Stock Option may be granted to an individual who, at the time the
Stock Option is granted, owns directly, or indirectly within the meaning of
Section 424(d)of the Code, stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Corporation or of any
parent or Subsidiary thereof, unless
A-5
<PAGE>
such Stock Option (i) has an exercise price of at least 110 percent of the Fair
Market Value of the Stock on the date of the grant of such Stock Option, and
(ii) cannot be exercised more than five years after the date it is granted.
Each participant who receives an Incentive Stock Option must agree to notify
the Corporation in writing immediately after the Participant makes a
disqualifying disposition of any Stock acquired pursuant to the exercise of an
Incentive Stock Option. A disqualifying disposition is any disposition
(including any sale) of such Stock before the later of (i) two years after the
date the Participant was granted the Incentive Stock Option or (ii) one year
after the date the Participant acquired Stock by exercising the Incentive Stock
Option. Any transfer of ownership to a broker or nominee shall be deemed to be
a disposition unless the Participant provides proof satisfactory to the
Committee of his continued beneficial ownership of the Stock.
Any other provision of the Plan to the contrary notwithstanding, no Incentive
Stock Option shall be granted after the date which is ten years from the date
this Plan is adopted, or the date the Plan is approved by the stockholders of
the Corporation, whichever is earlier.
6.9 DEFERRED EXERCISE OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. If a
Participant's timely exercise of a Nonqualified Stock Option and/or Stock
Appreciation Right during a given taxable year, together with other compensation
paid to the Participant for such year, would result in a disallowance for
Federal income tax purposes, pursuant to Section 402(m) of the Code, of a
deduction to the Corporation of all or part of the Participant's income to be
recognized during such taxable year for Federal income tax purposes upon such
exercise, then such Participant's exercise of such Nonqualified Stock Option
and/or Stock Appreciation Right shall be ineffective and such exercise shall be
automatically deferred (except to the extent specifically permitted by the
Committee) beyond the end of such taxable year of the Corporation to the extent
necessary to avoid such disallowance of a deduction to the Corporation. The
deferral of exercise of a Nonqualified Stock Option and/or Stock Appreciation
Right provided by this Section 6.9 shall be until the next succeeding taxable
year in which the Corporation is not denied a tax deduction related to such
exercise. The deferral of exercise is for the Corporation's benefit and
therefore supersedes any other limitation on exercisability which may be set
forth in any other provision of this Plan or any Stock Option or Stock
Appreciation Right agreement.
ARTICLE VII. EXERCISE OF STOCK OPTIONS
-------------------------
Any Stock Option may be exercised in whole or in part at any time subsequent to
such Stock Option's becoming exercisable during the term of such Stock Option;
provided, however, that each partial exercise shall be for whole Shares only.
Each Stock Option, or any exercisable portion thereof, may only be exercised by
delivery to the Secretary or his office of (i) notice in writing signed by the
Participant (or other person then entitled to exercise such Stock Option) that
such Stock Option, or a specified portion thereof, is being exercised; (ii)
payment in full for the purchased Shares (as specified in Section 7.2 below);
(iii) such representations and documents as are necessary or advisable to effect
compliance with all applicable provisions of Federal or State securities laws or
regulations; (iv) in the event that the Stock Option or portion thereof shall be
exercised pursuant to Section 6.3 or 6.4 by any person or persons other than the
Participant, appropriate proof of the right of such person or persons to
exercise the Stock Option or portion thereof; and (v) full payment to the
Corporation of all amounts which, under Federal or State law, it is required to
withhold upon exercise of the Stock Option (as specified in Section 7.3 below).
7.1 SHARE CERTIFICATES. Upon receiving notice and payment, the Corporation
will cause to be delivered to the Participant, as soon as practicable, a
certificate in the Participant's name for the Shares purchased. The Shares
issuable and deliverable upon the exercise of a Stock Option shall be fully paid
and nonassessable. The Corporation shall not be required to issue or deliver
any certificate or certificates for Shares purchased upon the complete or
partial exercise of the Stock Option prior to fulfillment of (i) the completion
of any registration or other qualification of such Shares under any Federal or
State law or under rulings or regulations of the Securities and Exchange
Commission or of any other governmental regulatory body which may be necessary
or advisable; and (ii) the obtaining of any approval or other clearance from any
Federal or State governmental agency which may be necessary or advisable.
7.2 PAYMENT FOR SHARES. Payment for Shares purchased under a Stock Option
granted hereunder shall be made in full upon exercise of the Stock Option, by
certified or bank cashier's check payable to the order of the Corporation or,
unless otherwise prohibited by the terms of a Stock Option agreement, by one or
more of the following: (i) in the form of Shares already owned by the
Participant based in any such instance on the Fair Market Value of the Stock on
the date the Stock Option is exercised; provided, however, that, in the case of
an Incentive
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Stock Option, the right to make a payment in the form of already owned Shares
may be authorized only at the time the Stock Option is granted; (ii) by a
combination thereof, in each case in the manner provided in the Stock Option
agreement; or (iii) by any other means acceptable to the Corporation. To the
extent the Stock Option exercise price may be paid in Shares as provided above,
Shares delivered by the Participant may be (i) Shares which were received by the
Participant upon exercise of one or more Incentive Stock Options, but only if
such Shares have been held by the Participant until the later of (a) two years
from the date the Incentive Stock Options were granted or (b) one year after the
transfer of Shares to the Participant, or (ii) Shares which were received by the
Participant upon exercise of one or more Nonqualified Stock Options and/or Stock
Appreciation Rights, but only if such Shares have been held by the Participant
for at least six months.
7.3 SHARE WITHHOLDING. The Committee shall require that a Participant pay to
the Corporation, at the time of exercise of a Nonqualified Stock Option and/or
Stock Appreciation Right, such amount as the Committee deems necessary to
satisfy the Corporation's obligation to withhold Federal or State income or
other taxes incurred by reason of the exercise or the transfer of Shares
thereupon. A Participant may satisfy such withholding requirements by having
the Corporation withhold from the number of Shares otherwise issuable upon
exercise of the Stock Option and/or Stock Appreciation Right that number of
shares having an aggregate fair market value on the date of exercise equal to
the minimum amount required by law to be withheld; provided, however, that in
the case of an exercise by a Participant who is subject to Section 16(b) of the
Exchange Act, such Participant must (i) exercise the Stock Option and/or the
Stock Appreciation Right during the period beginning on the third business day
following the date of release to the press of the quarterly or annual summary of
earnings for the Corporation, and ending on the twelfth business day following
such date, or (ii) irrevocably elect to utilize Share withholding at least six
months prior to the date of exercise.
7.4 LOANS. The Corporation may make loans to such Participants as the
Committee, in its discretion, may determine in connection with the exercise of
Stock Options granted under the Plan; provided, however, that the Committee
shall not authorize the making of any loan where the possession of such
discretion or the making of such loan would either result in a "modification"
(as defined in Section 424 of the Code) of any Incentive Stock Option or
disqualify such Stock Option from otherwise qualifying as an Incentive Stock
Option. Such loans may be subject to the following terms and conditions and
such other terms and conditions as the Committee shall determine not
inconsistent with the Plan. Such loans may bear interest at such rates as the
Committee shall determine from time to time, which rates may be below then
current market rates. In no event may any such loan exceed the exercise price,
at the date of exercise, of the Shares covered by the Stock Option or portion
thereof exercised by the Participant. When a loan shall have been made, the
Committee may require that Shares of Common Stock and/or other collateral having
a fair market value at least equal to the principal amount of the loan shall be
pledged by the Participant to the Corporation as security for payment of the
unpaid balance of the loan. Every loan shall also comply with all applicable
laws, regulations and rules of the Board of Governors of the Federal Reserve
System and any other governmental agency having jurisdiction thereof.
ARTICLE VIII. EXERCISE OF TANDEM STOCK APPRECIATION RIGHT
-------------------------------------------
A Tandem Stock Appreciation Right shall be exercisable only to the extent that
the related Stock Option is exercisable. Each Tandem Stock Appreciation Right,
or any exercisable portion thereof, may only be exercised by delivery to the
Secretary or his office of (i) notice in writing signed by the Participant (or
other person then entitled to exercise such Tandem Stock Appreciation Right)
that such Tandem Stock Appreciation Right, or a specified portion thereof, is
being exercised; (ii) such representations and documents as are necessary or
advisable to effect compliance with all applicable provisions of Federal or
State securities laws or regulations; (iii) in the event that the Tandem Stock
Appreciation Right or portion thereof shall be exercised pursuant to Section 6.3
or 6.4 by any person or persons other than the Participant, appropriate proof of
the right of such person or persons to exercise the Tandem Stock Appreciation
Right or portion thereof; and (iv) full payment to the Corporation of all
amounts which, under Federal or State law, it is required to withhold upon
exercise of the Stock Appreciation Right (as specified in Section 7.3).
On exercise of a Tandem Stock Appreciation Right, the Participant shall
surrender unexercised, the related Stock Option (or such portion or portions
thereof which the Participant from time to time determines to surrender for this
purpose) and shall receive in exchange, subject to the rules and regulations as
from time to time may be established by the Committee, a payment having an
aggregate value equal to (A) the excess of (i) the Fair Market Value of the
Stock on the exercise date per share over (ii) the Option Price of the related
Stock Option per share, times (B) the number of Shares called for by the related
Stock Option or portion thereof which is surrendered.
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The payment due the Participant upon the exercise of a Tandem Stock
Appreciation Right shall be made (i) in cash, (ii) in Common Stock (valued with
reference to the Fair Market Value of Stock as of the date of exercise), or
(iii) partly in cash and partly in Common Stock (valued with reference to the
Fair Market Value of Stock as the date of exercise), as set forth by the Tandem
Stock Appreciation Right agreement, and by the Committee, in its sole
discretion. If the payment is to be made in Common Stock, no fractional shares
of Common Stock shall be issued and cash payment shall be made in lieu of
fractional shares. Notwithstanding any provision in this Plan to the contrary,
in the case of an exercise of a Tandem Stock Appreciation Right by a Participant
who is subject to Section 16(b) of the Exchange Act, such Participant may
exercise the Tandem Stock Appreciation Right only during the period beginning on
the third business day following the date of release to the press of the
quarterly or annual summary of earnings for the Corporation, and ending on the
twelfth business day following such date.
Any Shares issuable and deliverable upon the exercise of a Tandem Stock
Appreciation Right shall be fully paid and nonassessable. The Corporation shall
not be required to issue or deliver any certificate or certificates upon the
complete or partial exercise of a Tandem Stock Appreciation Right prior to
fulfillment of (i) the completion of any registration or other qualification of
such Shares under any Federal or State law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body which the Corporation may deem necessary or advisable; and (ii) the
obtaining of any approval or other clearance from any Federal or State
governmental agency which the Corporation may deem necessary or advisable.
No payment shall be required from the Participant upon the exercise of a Tandem
Stock Appreciation Right, except that any amount necessary to satisfy applicable
Federal, state or local tax requirements shall be withheld or paid prior to or
concurrently with delivery of cash or Shares.
Upon the exercise of a Tandem Stock Appreciation Right, the number of Shares
subject to exercise under the related Stock Option shall automatically be
reduced by the number of Shares represented by the Stock Option or portion
thereof surrendered. Shares subject to Stock Options or portions thereof
surrendered upon the exercise of a Tandem Stock Appreciation Right shall not be
available for subsequent awards under this Plan.
Notwithstanding any provision in this Plan to the contrary, a Tandem Stock
Appreciation Right shall be issued in connection with an Incentive Stock Option
only if the Tandem Stock Appreciation Right meets the following requirements:
(a) The Tandem Stock Appreciation Right will expire no later than the
expiration of the underlying Incentive Stock Option;
(b) The Tandem Stock Appreciation Right provides for a payment to the
Participant not in excess of the difference between the exercise price of the
underlying Incentive Stock Option and the Fair Market Value of Stock subject to
the underlying Incentive Stock Option at the time the Tandem Stock Appreciation
Right is exercised;
(c) The Tandem Stock Appreciation Right is transferable only when the
underlying Incentive Stock Option is transferable, and under the same
conditions;
(d) The Tandem Stock Appreciation Right may be exercised only when the
underlying Stock Option is eligible to be exercised; and
(e) The Tandem Stock Appreciation Right may be exercised only when the Fair
Market Value of Stock subject to the Incentive Stock Option exceeds the exercise
price of the Incentive Stock Option.
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ARTICLE IX. EXERCISE OF NON-TANDEM STOCK APPRECIATION RIGHT
-----------------------------------------------
Each Non-Tandem Stock Appreciation Right, or any exercisable portion thereof,
may only be exercised by delivery to the Secretary or his office of (i) notice
in writing signed by the Participant (or other person then entitled to exercise
such Non-Tandem Stock Appreciation Right) that such Non-Tandem Stock
Appreciation Right, or a specified portion thereof, is being exercised; (ii)
such representations and documents as are necessary or advisable to effect
compliance with all applicable provisions of Federal or State securities laws or
regulations; (iii) in the event that the Non-Tandem Stock Appreciation Right or
portion thereof shall be exercised pursuant to Section 6.3 or 6.4 by any person
or persons other than the Participant, appropriate proof of the right of such
person or persons to exercise the Non-Tandem Stock Appreciation Right or portion
thereof; and (iv) full payment to the Corporation of all amounts which, under
Federal or State law, it is required to withhold upon exercise of the Stock
Appreciation Right (as specified in Section 7.3).
On exercise of a Non-Tandem Stock Appreciation Right, the Participant shall
receive, subject to the rules and regulations as from time to time may be
established by the Committee, a payment having an aggregate value equal to (A)
the excess of (i) the Fair Market Value of Stock on the exercise date over (ii)
the Fair Market Value of Stock on the date of grant, times (B) the number of
Shares which are subject to the Non-Tandem Stock Appreciation Right which is
being exercised.
The payment due the Participant upon the exercise of a Non- Tandem Stock
Appreciation Right shall be made (i) in cash, (ii) in Common Stock (valued with
reference to the Fair Market Value of Stock as of the date of exercise), or
(iii) partly in cash and partly in Common Stock (valued with reference to the
Fair Market Value of Stock as the date of exercise), as set forth by the Non-
Tandem Stock Appreciation Right agreement, and by the Committee, in its sole
discretion. If the payment is to be made in Common Stock, no fractional shares
of Common Stock shall be issued and cash payment shall be made in lieu of
fractional shares. Notwithstanding any provision in this Plan to the contrary,
in the case of an exercise of a Non-Tandem Stock Appreciation Right by a
Participant who is subject to Section 16(b) of the Exchange Act, such
Participant may exercise the Non-Tandem Stock Appreciation Right only during the
period beginning on the third business day following the date of release to the
press of the quarterly or annual summary of earnings for the Corporation, and
ending on the twelfth business day following such date.
Any Shares issuable and deliverable upon the exercise of a Non-Tandem Stock
Appreciation Right shall be fully paid and nonassessable. The Corporation shall
not be required to issue or deliver any certificate or certificates upon the
complete or partial exercise of a Non-Tandem Stock Appreciation Right prior to
fulfillment of (i) the completion of any registration or other qualification of
such Shares under any Federal or State law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body which the Corporation may deem necessary or advisable; and (ii) the
obtaining of any approval or other clearance from any Federal or State
governmental agency which the Corporation may deem necessary or advisable.
No payment shall be required from the Participant upon the exercise of a Non-
Tandem Stock Appreciation Right, except that any amount necessary to satisfy
applicable Federal, state or local tax requirements shall be withheld or paid
prior to or concurrently with delivery of cash or Shares.
ARTICLE X. ADJUSTMENT FOR RECAPITALIZATION, ETC.
-------------------------------------
The aggregate number of Shares which may be purchased under the Plan pursuant
to Stock Options or issued pursuant to Stock Appreciation Rights, the number of
Shares covered by each outstanding Stock Option and Stock Appreciation Right,
and the exercise price of each Stock Option and the Fair Market Value of Stock
on the date of grant of a Non-Tandem Stock Appreciation Right shall be
appropriately adjusted for any increase or decrease in the number of outstanding
Shares resulting from a stock split or other subdivision or consolidation of
Shares or for other capital adjustments or payments of stock dividends or
distributions, other increases or decreases in the outstanding Shares effected
without receipt of consideration by the Corporation, or reorganization, merger
or consolidation, or other similar change affecting the Shares.
Such adjustment to a Stock Option or Stock Appreciation Right shall be made
without a change to the total exercise price applicable to the unexercised
portion of the Stock Option or total value applicable to the unexercised portion
of a Stock Appreciation Right (except for any change in the aggregate price
resulting from rounding-off of Share quantities or prices). Any such adjustment
made by the Committee shall be final and binding upon all
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Participants, the Corporation, their representatives, and all other interested
persons. No fractional Shares shall be issued as a result of such adjustment.
In the event of a transaction involving (i) the liquidation or dissolution of
the Corporation, (ii) a merger or consolidation in which the Corporation is not
the surviving corporation or (iii) the sale or disposition of all or
substantially all of the Corporation's assets, provision shall be made in
connection with such transaction for the assumption of Stock Options and/or
Stock Appreciation Rights theretofore granted under the Plan, or the
substitution for such Stock Options and/or Stock Appreciation Rights of new
Stock Options and/or Stock Appreciation Rights of the successor corporation,
with appropriate adjustment as to the number and kind of Shares and the purchase
price for Shares thereunder, or, in the discretion of the Committee, the Plan
and the Stock Options and/or Stock Appreciation Rights issued hereunder shall
terminate on the effective date of such transaction if appropriate provision is
made for payment to the Participant of an amount in cash equal to the fair
market value of a Share multiplied by the number of Shares subject to the Stock
Options or Stock Appreciation Rights (to the extent such Stock Options or Stock
Appreciation Rights have not been exercised) less the exercise price for such
Stock Options (to the extent such Stock Options have not been exercised) or the
Fair Market Value of the Stock on the date of grant of such Stock Appreciation
Rights (to the extent such Stock Appreciation Rights have not been exercised);
provided, however, that in no event shall the Committee take any action or make
any determination under this Article X which would prevent a transaction
described in clause (ii) or (iii) above from being treated as a pooling of
interests under generally accepted accounting principles.
ARTICLE XI. GOVERNMENT REGULATIONS AND REGISTRATION OF SHARES
-------------------------------------------------
The Plan, and the grant and exercise of Stock Options and/or Stock Appreciation
Rights thereunder, and the Corporation's obligation to sell, deliver stock, and
make payments under such Stock Options and/or Stock Appreciation Rights, shall
be subject to all applicable Federal and State laws, rules and regulations and
to such approvals by any regulatory or governmental agency as may be required.
Each Stock Option and/or Stock Appreciation Right is subject to the requirement
that if, at any time, the Committee determines, in its absolute discretion, that
the listing, registration or qualification of Shares issuable pursuant to the
Plan is required by any securities exchange or NASDAQ or under any State or
Federal law, or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the issuance of
Shares, no Shares shall be issued, in whole or in part, unless such listing,
registration, qualification, consent or approval has been effected or obtained,
free of any conditions not acceptable to the Committee. The Corporation shall
not be deemed, by reason of the granting of any Stock Option and/or Stock
Appreciation Right, to have any obligation to register the Shares subject to
such Stock Option and/or Stock Appreciation Right under the Securities Act or to
maintain in effect any registration of such Shares which may be made at any time
under the Securities Act.
Unless a registration statement under the Securities Act and the applicable
rules and regulations thereunder is then in effect with respect to Shares issued
upon exercise of any Stock Option and/or Stock Appreciation Right (which
registration shall not be required), the Corporation shall require that the
offer and sale of such Shares be exempt from the registration provisions of said
Act. In furtherance of such exemption, the Corporation may require, as a
condition precedent to the exercise of any Stock Option and/or Stock
Appreciation Right, that the person exercising the Stock Option and/or Stock
Appreciation Right give to the Corporation written representation and
undertaking, satisfactory in form and substance to the Corporation, that he is
acquiring the Shares for his own account for investment and not with a view to
the distribution or resale thereof and otherwise establish to the Corporation's
satisfaction that the offer or sale of the Shares issuable upon exercise of the
Stock Option and/or Stock Appreciation Right will not constitute or result in
any breach or violation of the Securities Act or any similar State act or
statute or any rules or regulations thereunder. In the event a Registration
Statement under the Securities Act is not then in effect with respect to the
Shares issued upon exercise of a Stock Option and/or Stock Appreciation Right,
the Corporation shall place upon any stock certificate an appropriate legend
referring to the restrictions on disposition under the Securities Act.
The Corporation is relieved from any liability for the nonissuance or
nontransfer or any delay in issuance or transfer of any Shares subject to Stock
Options and/or Stock Appreciation Rights under the Plan which results from the
inability of the Corporation to obtain, or in any delay in obtaining, from any
regulatory body having jurisdiction, all requisite authority to issue or
transfer Shares upon exercise of the Stock Options and/or Stock Appreciation
Rights under the Plan if counsel for the Corporation deems such authority
necessary for lawful issuance or transfer of any
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such Shares. Appropriate legends may be placed on the stock certificates
evidencing Shares issued upon exercise of Stock Options and/or Stock
Appreciation Rights to reflect such transfer restrictions.
ARTICLE XII. OTHER PROVISIONS
----------------
The validity, interpretation and administration of the Plan and any rules,
regulations, determinations or decisions made thereunder, and the rights of any
and all persons having or claiming to have any interest therein or thereunder,
shall be determined exclusively in accordance with the laws of the State of New
Jersey.
As used herein, the masculine gender shall include the feminine gender.
The headings in the Plan are for reference purposes only and shall not affect
the meaning or interpretation of the Plan.
All notices or other communications made or given pursuant to this Plan shall
be in writing and shall be sufficiently made or given if hand-delivered or
mailed by certified mail, addressed to any Participant at the address contained
in the records of the Corporation or to the Corporation at its principal office.
The proceeds received from the sale of Shares pursuant to the Plan shall be
used for general corporate purposes.
Nothing in the Plan or in any Stock Option and/or Stock Appreciation Right
granted hereunder shall confer on any Participant or eligible Employee any right
to continue in the employ of the Corporation or any of its Subsidiaries, or to
interfere in any way with the right of the Corporation or any of its
Subsidiaries to terminate such Participant's or Employee's employment at any
time.
The Plan is intended to comply with Rule 16b-3 promulgated under the Exchange
Act and the Committee shall interpret and administer the provisions of the Plan
or any Stock Option and/or Stock Appreciation Right in a manner consistent
therewith. Any provisions inconsistent with such Rule shall be inoperative and
shall not affect the validity of the Plan.
All expenses and costs incurred in connection with the operation of the Plan
shall be borne by the Corporation.
The adoption of this Plan shall not affect any other compensation or incentive
plans in effect for the Affiliates, or any of them. Nothing in this Plan shall
be construed to limit the right of any Affiliate (i) to establish, alter or
terminate any other forms of incentives, benefits or compensation for Employees,
including, without limitation, conditioning the right to receive other
incentives, benefits or compensation on an Employee's not participating in this
Plan; or (ii) to grant or assume options otherwise than under this Plan in
connection with any proper corporate purpose, including, without limitation, the
grant or assumption of stock options in connection with the acquisition by
purchase, lease, merger, consolidation or otherwise, of the business, stock, or
assets of any corporation, firm or association.
Participants shall have no rights as shareholders unless and until certificates
for Shares are registered in their names in satisfaction of a properly exercised
Stock Option and/or Stock Appreciation Right.
If the Committee or Subcommittee shall find that any person to whom any benefit
is due or payable under the Plan is unable to care for his affairs because of
illness or accident, or is a minor, or has died, then any payment due to such
person or his estate (unless a prior claim therefor has been made by a duly
appointed legal representative), may, if the Committee or Subcommittee so
directs the Corporation, be paid to his spouse, child, relative, an institution
maintaining or having custody of such person, or any other person deemed by the
Committee to be a proper recipient on behalf of such person otherwise entitled
to payment. Any such payment shall be a complete discharge of the liability of
the Committee and the Corporation therefor.
ARTICLE XIII. EFFECTIVE DATE AND EXPIRATION DATE OF PLAN
------------------------------------------
The Plan is effective as of such date as it is approved by the stockholders of
the Corporation in a manner which complies with Rule 16b-3 under the Exchange
Act and Section 422 of the Code and applicable State law.
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ARTICLE XIV. AMENDMENT OR DISCONTINUANCE OF PLAN
-----------------------------------
The Board may, without the consent of the Corporation's stockholders or
Participants under the Plan, at any time terminate the Plan entirely, and at any
time or from time to time amend or modify the Plan, provided that no such action
shall adversely affect Stock Options and/or Stock Appreciation Rights
theretofore granted hereunder without the Participant's consent, and provided
further that no such action by the Board, without approval of the stockholders,
may (i) materially increase the total number of Shares which may be purchased or
acquired pursuant to Stock Options and/or Stock Appreciation Rights granted
under the Plan, either in the aggregate or for any Participant or eligible
Employee, except as contemplated in Article X; (ii) expand the class of
employees eligible to receive Stock Options and/or Stock Appreciation Rights
under the Plan; (iii) decrease the minimum Stock Option exercise price; (iv)
extend the maximum term of Stock Options and/or Stock Appreciation Rights
granted hereunder; (v) extend the term of the Plan; or (vi) take any other
action requiring stockholder approval under Rule 16b-3 under the Exchange Act.
No amendment or modification may become effective if it would cause the Plan to
fail to meet the applicable requirements of Rule 16b-3.
ARTICLE XV. SHAREHOLDER APPROVAL
--------------------
Anything in the Plan to the contrary notwithstanding, the grant of Stock
Options and/or Stock Appreciation Rights hereunder shall be of no force or
effect, and no Stock Option and/or Stock Appreciation Right granted hereunder
shall vest or become exercisable in any respect, unless and until the Plan is
approved by the affirmative vote of the holders of a majority of the Shares
present, in person or by proxy, and entitled to vote at a meeting of the
shareholders of the Corporation duly held in accordance with the laws of New
Jersey.
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APPENDIX B
----------
GREAT FALLS BANCORP
1996 STOCK OPTION PLAN
FOR NONEMPLOYEE DIRECTORS
ARTICLE I. PURPOSES
--------
The purposes of the Great Falls Bancorp 1996 Stock Option Plan for Nonemployee
Directors (the "Plan") are to (i) attract and retain highly qualified
nonemployee directors of Great Falls Bank and Bergen Commercial Bank (the "Bank
Subsidiaries"), which are the bank subsidiaries of Great Falls Bancorp (the
"Corporation"), (ii) align the long-term interests of nonemployee directors of
the Bank Subsidiaries and the Corporation's stockholders by creating a direct
link between compensation of nonemployee directors and stockholder return, (iii)
enable nonemployee directors of the Bank Subsidiaries to develop and maintain
stock ownership positions in the Corporation, and (iv) provide incentives to
such nonemployee directors to contribute to the Corporation's success. To
achieve these objectives, the Plan provides for the granting of "nonqualified
stock options" to the nonemployee directors of the Bank Subsidiaries.
ARTICLE II. DEFINITIONS
-----------
Whenever the following terms are used in this Plan, they shall have the
meanings specified below:
(aa) "AFFILIATE" shall mean the Corporation or a Subsidiary.
(bb) "BANK SUBSIDIARIES" means Great Falls Bank and Bergen Commercial Bank,
both of which are banking corporations of the State of New Jersey and
Subsidiaries of the Corporation. "BANK SUBSIDIARY" means either Great Falls Bank
or Bergen Commercial Bank, as the context may require.
(cc) "BOARD" shall mean the Board of Directors of the Corporation.
(dd) "CAUSE" shall mean (i) the conviction of the Participant of a felony by a
court of competent jurisdiction, (ii) the indictment of the Participant by a
State or Federal grand jury of competent jurisdiction for embezzlement or
misappropriation of funds of an Affiliate or for any act of dishonesty or lack
of fidelity towards an Affiliate, (iii) the written confession by the
Participant of any act of dishonesty towards an Affiliate or any embezzlement or
misappropriation of an Affiliate's funds, or (iv) willful or gross neglect of
the duties for which the Participant was responsible, all as the Board, in its
sole discretion, may determine.
(ee) "CHANGE IN CONTROL" shall mean the occurrence of one or more of the
following events: (i) the Corporation acquires actual knowledge that any person
(as such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act)
other than an Affiliate is or becomes the beneficial owner (as defined in Rule
13d-3 of the Exchange Act), directly or indirectly, of securities of the
Corporation representing more than 25% of the combined voting power of the
Corporation's then outstanding securities; (ii) the first purchase of Common
Stock pursuant to a tender or exchange offer (other than a tender or exchange
offer made by an Affiliate); (iii) the approval by the Corporation's
stockholders of (a) a merger or consolidation of the Corporation with or into
another corporation (other than a merger or consolidation in which the
Corporation is the surviving corporation and which does not result in any
reclassification or reorganization of the Corporation's then outstanding shares
of Common Stock or a change in the Corporation's directors, other than the
addition of not more than three directors), (b) a sale or disposition of all or
substantially all of the Corporation's assets, or (c) a plan of liquidation or
dissolution of the Corporation; (iv) during any period of two consecutive
calendar years, individuals who at the beginning of such period constitute the
Board cease for any reason to constitute at least two-thirds thereof, unless the
election or nomination for the election by the Corporation's stockholders of
each new director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period; or (v) a
sale of (a) Common Stock of the Corporation if after such sale any person (as
defined above) other than an Affiliate owns a majority of the Common Stock or
(b) all or substantially all of the Corporation's assets (other than in the
ordinary course of business).
B-1
<PAGE>
(ff) "CODE" shall mean the Internal Revenue Code of 1986, as now in effect or
as hereafter amended. (All citations to sections of the Code are to such
sections as they may from time to time be amended or renumbered.)
(gg) "COMMON STOCK" shall mean the common stock of the Corporation, par value
$1.00 per share.
(hh) "CORPORATION" shall mean Great Falls Bancorp, a New Jersey business
corporation.
(ii) "DISABILITY" shall mean permanent and total disability as defined by the
Corporation's employee welfare benefit plan offering a long-term disability
benefit, or, if no such benefit is offered, as defined by Section 105(d)(4) of
the Code (prior to the repeal of such Section). "Disability" shall also exist
if documented by a signed written opinion of a currently licensed medical doctor
reasonably satisfactory to the Board, which written opinion shall set forth,
without limitation, a medical opinion that the Participant is permanently
disabled, the reasons for such disability, and the date of commencement of such
disability.
(jj) "EMPLOYEE" shall mean a common law employee (as defined in accordance with
the regulations and Revenue Rulings then applicable under Section 3401(c) of the
Code) of an Affiliate.
(kk) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as now in
effect or as hereafter amended.
(ll) "FAIR MARKET VALUE OF STOCK" shall mean for all purposes of the Plan as
follows: (A) if the Shares are admitted to quotation on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or other
comparable quotation system and have been designated as a National Market System
("NMS") security, fair market value on any date shall be the last sale price
reported for the Shares on such system on such date or on the last day preceding
such date on which a sale was reported; (B) if the Shares are admitted to
quotation on NASDAQ and have not been designated an NMS security, fair market
value on any date shall be the average of the highest bid and lowest asked
prices of the Shares on such system on such date; (C) if the Shares are admitted
to trading on a national securities exchange, fair market value on any date
shall be the last sale price reported for the Shares on such exchange on such
date or on the last date preceding such date on which a sale was reported; or
(D) if neither (A), (B) nor (C) applies to the Shares, fair market value on any
date shall be a price equal to the mean between the closing bid and asked prices
for Shares, as quoted in writing to the Corporation by Ryan, Beck & Co., Inc., a
principal market maker for transactions in the Corporation's Common Stock on the
over-the-counter market, or other market maker designated by the Board.
(mm) "PARTICIPANT" shall mean any one of the individuals who was a member of
the Board of Directors of either of the Bank Subsidiaries on February 20, 1996
provided such individual was not also an Employee on such date.
(nn) "PLAN" shall mean the Great Falls Bancorp 1996 Stock Option Plan for
Nonemployee Directors, as may be amended from time to time.
(oo) "SECRETARY" shall mean the corporate secretary of the Corporation.
(pp) "SECURITIES ACT" shall mean the Securities Act of 1933, as now in effect
or as hereafter amended.
(qq) "SHARES" shall mean shares of Common Stock.
(rr) "STOCK OPTION" shall mean a right to purchase Common Stock which is
awarded in accordance with the terms of this Plan.
(ss) "SUBSIDIARY(IES)" shall mean any corporation or other legal entity,
domestic or foreign, more than 50% of the voting power of which is owned or
controlled, directly or indirectly by the Corporation.
(tt) "TERMINATE (TERMINATION OF) SERVICE (OR TERMINATION)" shall mean the time
at which the Participant ceases to provide services to an Affiliate as a
director or an Employee, but shall not include a lapse in providing services
which the Board determines to be a temporary leave of absence.
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<PAGE>
ARTICLE III. ADMINISTRATION
--------------
The Plan shall be administered by the Board. No member of the Board shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or any Stock Option granted pursuant thereto.
All members of the Board shall be indemnified by the Corporation with respect to
any such action, determination or interpretation to the fullest extent permitted
by law.
The Board is authorized, subject to the provisions of the Plan, to: (i) grant
Stock Options to the respective Participants to purchase the respective numbers
of Shares indicated in Article VI of this Plan, either following approval of the
adoption of the Plan by the Corporation's shareholders or prior to shareholder
approval but subject to subsequent approval of the Plan by the Corporation's
shareholders; (ii) determine the exercise price of the Shares subject to each
Stock Option, which price shall be not less than the minimum specified in
Section 6.1; (iii) determine who is a "nonemployee director" of a Bank
Subsidiary eligible to be a Participant; (iv) establish such rules and
regulations as it deems necessary for the proper administration of the Plan; and
(v) make whatever determinations and interpretations in connection with the Plan
as it deems necessary or advisable. All determinations and interpretations made
by the Board shall be binding and conclusive on all Participants and on their
legal representatives and beneficiaries.
The provisions of this Article III shall survive any termination of the Plan.
ARTICLE IV. SHARES SUBJECT TO PLAN
----------------------
The aggregate maximum number of Shares that may be made subject to Stock
Options granted pursuant to the Plan is Ninety-Five Thousand (95,000) (or the
number and kind of Shares or other securities which are substituted for those
Shares or to which those Shares are adjusted pursuant to the provisions of
Article VIII of the Plan). The Corporation shall reserve such number of Shares
for the purposes of the Plan out of its authorized but unissued shares, or out
of Shares held in the Corporation's treasury, or partly out of each, as shall be
determined by the Board. No fractional Shares shall be issued with respect to
Stock Options granted under the Plan.
In the event that any outstanding Stock Option under the Plan for any reason
expires, is terminated, forfeited or is canceled at any time, the shares subject
to such Options will be unavailable for future grants under the Plan.
ARTICLE V. ELIGIBILITY FOR AWARD OF STOCK OPTIONS
--------------------------------------
Only a Participant (as defined in paragraph (m) of Article II) shall be
eligible to be granted Stock Options; provided, however, that a Participant
shall not be eligible unless such Participant is still a nonemployee director of
one of the Bank Subsidiaries on the date Stock Options are granted by the Board
under the Plan.
ARTICLE VI. GRANT OF STOCK OPTIONS
----------------------
Each Participant other than Anthony M. Bruno, Jr. shall be eligible to be
granted Stock Options to purchase Three Thousand (3,000) Shares on the terms and
conditions set forth in this Article VI. Anthony M. Bruno, Jr. shall be
eligible to be granted Stock Options to purchase Fifty Thousand (50,000) Shares
on the terms and conditions set forth in this Article VI. Stock Options shall
be evidenced by Stock Option agreements in such form as the Board approves.
Stock Option agreements shall conform to the provisions of the Plan and shall be
identical for all Participants except as necessary solely to reflect differences
in the number of shares covered by the Stock Options.
6.1 OPTION PRICE OF STOCK OPTIONS. The exercise price for each Stock Option
granted under the Plan shall be equal to the Fair Market Value of the Stock on
the date of grant.
6.2 VESTING, EXERCISABILITY AND TERMS OF STOCK OPTIONS.
(a) Stock Options will become "vested" at the rate of 20% per year (10,000
Shares per year for Mr. Bruno and 600 Shares per year for each of the
Participants other than Mr. Bruno) commencing on the date of grant and
continuing on each January 1 thereafter on which the Participant remains a
director of a Bank Subsidiary and/or a director of an Affiliate and/or Employee
of an Affiliate.
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<PAGE>
(b) Each group of "vested" Stock Options will thereafter become exercisable at
the rate of 20% per year commencing on the later of (a) six (6) months and one
day after the date the Stock Options are granted or (b) January 1st after each
vesting date.
(c) All Stock Options will generally lapse on December 31, 2006 to the extent
not fully exercised prior thereto.
(d) Upon the Termination of Service of a Participant due to voluntary
resignation or involuntary removal without Cause, all Stock Options which have
not become exercisable before the date the Participant Terminates Service shall
be forfeited and terminated immediately. The Participant may exercise a Stock
Option to the extent it was exercisable by him on the date immediately preceding
such Termination within the lesser of (i) one month from the date of Termination
(six months from the date of Termination in the case of voluntary resignation),
or (ii) the balance of the stated term of the Stock Option. If a Participant
shall be removed as a director of an Affiliate for Cause, all Stock Options
granted to such Participant that have not been exercised prior to such
Termination for Cause shall, whether or not exercisable, be forfeited
immediately upon such Termination.
6.3 ACCELERATED VESTING AND EXERCISABILITY OF STOCK OPTIONS. If a Participant
shall Terminate Service by reason of his death or Disability, all Stock Options
granted to such Participant which have not become exercisable on or before the
date of such Termination shall immediately become both "vested" and fully
exercisable. All Stock Options held by such Participant may be exercised by the
Participant, his estate or beneficiary, or his representative, as the case may
be, for a period of one year from the date of such Termination, or until the
expiration of the stated term of such Stock Options, whichever period is
shorter.
Notwithstanding the provisions of Section 6.2, in the event of a Change in
Control, any Stock Option granted under the Plan to a Participant which has not,
as of the date of the Change in Control, become exercisable shall immediately
become both "vested" and fully exercisable.
6.4 NONTRANSFERABILITY OF STOCK OPTIONS. No Stock Option shall be transferable
except by will or the laws of descent and distribution. During the
Participant's lifetime, the Stock Option shall be exercisable only by him or, in
the event of the Participant's incapacity or death, by the Participant's
guardian or legal representative. More specifically, without limitation, no
Stock Option may be assigned, transferred (except as specifically permitted by
the Plan or the terms of the specific Stock Option agreement consistent with the
Plan), pledged or hypothecated in any way, nor shall it be assignable by
operation of law or subject to execution, attachment, garnishment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of a Stock Option contrary to the provisions hereof, and the levy of
any execution, attachment, garnishment or similar process upon the Stock Option,
shall be null and void, and without force or effect. The Board may, however, in
its sole discretion, allow for transfers of Stock Options to family members,
subject to such conditions or limitations as the Board may establish to ensure
compliance with Rule 16b-3 promulgated pursuant to the Exchange Act, or for
other purposes.
6.5 NO OBLIGATION TO EXERCISE STOCK OPTIONS. The grant of a Stock Option shall
impose no obligation on the Participant to exercise such Stock Option.
6.6 CANCELLATION OF STOCK OPTIONS. The Board in its discretion may, with the
consent of any Participant, cancel any outstanding Stock Option.
6.7 NO RIGHTS AS A STOCKHOLDER. A Participant or a transferee of a Stock
Option shall have no rights as a stockholder with respect to any Share covered
by his Stock Option until he shall have become the holder of record of such
Share, and he shall not be entitled to any dividends or distributions or other
rights in respect of such Share for which the record date is prior to the date
on which he shall have become the holder of record thereof.
6.8 DEFERRED EXERCISE OF STOCK OPTIONS. If a Participant's timely exercise of
a Stock Option during a given taxable year, together with any other compensation
paid to the Participant for such year, would result in a disallowance for
Federal income tax purposes, pursuant to Section 402(m) of the Code, of a
deduction to the Corporation of all or part of the Participant's income to be
recognized during such taxable year for Federal income tax purposes upon such
exercise, then such Participant's exercise of such Stock Option shall be
ineffective and such exercise shall be automatically deferred (except to the
extent specifically permitted by the Board) beyond the end of such taxable year
of the Corporation to the extent necessary to avoid such disallowance of a
deduction to the Corporation. The deferral of exercise of a Stock Option
provided by this Section 6.9 shall be until the next succeeding taxable year in
which the Corporation is not denied a tax deduction related to such exercise.
The
B-4
<PAGE>
deferral of exercise is for the Corporation's benefit and therefore supersedes
any other limitation on exercisability which may be set forth in any other
provision of this Plan or any Stock Option agreement.
ARTICLE VII. EXERCISE OF STOCK OPTIONS
-------------------------
Any Stock Option may be exercised in whole or in part at any time subsequent to
such Stock Option's becoming exercisable during the term of such Stock Option;
provided, however, that each partial exercise shall be for whole Shares only.
Each Stock Option, or any exercisable portion thereof, may only be exercised by
delivery to the Secretary or his office of (i) notice in writing signed by the
Participant (or other person then entitled to exercise such Stock Option) that
such Stock Option, or a specified portion thereof, is being exercised; (ii)
payment in full for the purchased Shares (as specified in Section 7.2 below);
(iii) such representations and documents as are necessary or advisable to effect
compliance with all applicable provisions of Federal or State securities laws or
regulations; (iv) in the event that the Stock Option or portion thereof shall be
exercised pursuant to Section 6.3 or 6.4 by any person or persons other than the
Participant, appropriate proof of the right of such person or persons to
exercise the Stock Option or portion thereof; and (v) full payment to the
Corporation of all amounts which, under Federal or State law, it is required to
withhold upon exercise of the Stock Option (as specified in Section 7.3 below).
7.1 SHARE CERTIFICATES. Upon receiving notice and payment, the Corporation
will cause to be delivered to the Participant, as soon as practicable, a
certificate in the Participant's name for the Shares purchased. The Shares
issuable and deliverable upon the exercise of a Stock Option shall be fully paid
and nonassessable. The Corporation shall not be required to issue or deliver
any certificate or certificates for Shares purchased upon the complete or
partial exercise of the Stock Option prior to fulfillment of (i) the completion
of any registration or other qualification of such Shares under any Federal or
State law or under rulings or regulations of the Securities and Exchange
Commission or of any other governmental regulatory body which may be necessary
or advisable; and (ii) the obtaining of any approval or other clearance from any
Federal or State governmental agency which may be necessary or advisable.
7.2 PAYMENT FOR SHARES. Payment for Shares purchased under a Stock Option
granted hereunder shall be made in full upon exercise of the Stock Option, (i)
by certified or bank cashier's check payable to the order of the Corporation,
(ii) in the form of Shares already owned by the Participant based in any such
instance on the Fair Market Value of the Stock on the date the Stock Option is
exercised, or (iii) by a combination of cash and Shares already owned. To the
extent the Stock Option exercise price is paid in Shares as provided above,
Shares delivered by the Participant may be Shares which were received by the
Participant upon exercise of one or more Stock Options, but only if such Shares
have been held by the Participant for at least six months.
7.3 SHARE WITHHOLDING. The Board shall require that a Participant pay to the
Corporation, at the time of exercise of a Stock Option, such amount as the Board
deems necessary to satisfy the Corporation's obligation, if any, to withhold
Federal or State income or other taxes incurred by reason of the exercise or the
transfer of Shares thereupon. A Participant may satisfy such withholding
requirements by having the Corporation withhold from the number of Shares
otherwise issuable upon exercise of the Stock Option that number of shares
having an aggregate fair market value on the date of exercise equal to the
minimum amount required by law to be withheld; provided, however, that in the
case of an exercise by a Participant who is subject to Section 16(b) of the
Exchange Act, such Participant must (i) exercise the Stock Option during the
period beginning on the third business day following the date of release to the
press of the quarterly or annual summary of earnings for the Corporation, and
ending on the twelfth business day following such date, or (ii) irrevocably
elect to utilize Share withholding at least six months prior to the date of
exercise.
7.4 LOANS. The Corporation may make loans to such Participants as the Board,
in its discretion, may determine in connection with the exercise of Stock
Options granted under the Plan. Such loans shall be subject to the following
terms and conditions and such other terms and conditions as the Board shall
determine not inconsistent with the Plan. Any such loan must bear interest at a
rate, and otherwise be on repayment terms, which are not more favorable to the
Participant than comparable loans by the Bank Subsidiaries to unrelated
customers at the time the loan is made. In no event may the principal amount of
any such loan exceed the exercise price, at the date of exercise, of the Shares
covered by the Stock Option or portion thereof exercised by the Participant.
When a loan shall have been made, the Board shall require that Shares of Common
Stock and/or other collateral having a value at least equal to the amount of the
loan having a fair market value at least equal to the principal amount of the
loan shall be pledged by the Participant to the Corporation as security for
payment of the unpaid balance of the loan.
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<PAGE>
Every such loan shall also comply with all applicable laws, regulations and
rules of the Board of Governors of the Federal Reserve System and any other
governmental agency having jurisdiction thereof.
ARTICLE VIII. ADJUSTMENT FOR RECAPITALIZATION, ETC.
-------------------------------------
The aggregate number of Shares which may be purchased under the Plan pursuant
to Stock Options, the number of Shares covered by each outstanding Stock Option,
and the exercise price of each Stock Option shall be appropriately adjusted for
any increase or decrease in the number of outstanding Shares resulting from a
stock split or other subdivision or consolidation of Shares or for other capital
adjustments or payments of stock dividends or distributions, other increases or
decreases in the outstanding Shares effected without receipt of consideration by
the Corporation, or reorganization, merger or consolidation, or other similar
change affecting the Shares.
Such adjustment to a Stock Option shall be made without a change to the total
exercise price applicable to the unexercised portion of the Stock Option (except
for any change in the aggregate price resulting from rounding-off of Share
quantities or prices). Any such adjustment made by the Board shall be final and
binding upon all Participants, the Corporation, their representatives, and all
other interested persons. No fractional Shares shall be issued as a result of
such adjustment.
In the event of a transaction involving (i) the liquidation or dissolution of
the Corporation, (ii) a merger or consolidation in which the Corporation is not
the surviving corporation or (iii) the sale or disposition of all or
substantially all of the Corporation's assets, provision shall be made in
connection with such transaction for the assumption of Stock Options theretofore
granted under the Plan, or the substitution for such Stock Options of new Stock
Options of the successor corporation, with appropriate adjustment as to the
number and kind of Shares and the purchase price for Shares thereunder, or, in
the discretion of the Board, the Plan and the Stock Options issued hereunder
shall terminate on the effective date of such transaction if appropriate
provision is made for payment to the Participant of an amount in cash equal to
the fair market value of a Share multiplied by the number of Shares subject to
the Stock Options (to the extent such Stock Options have not been exercised)
less the exercise price for such Stock Options (to the extent such Stock Options
have not been exercised); provided, however, that in no event shall the Board
take any action or make any determination under this Article VIII which would
prevent a transaction described in clause (ii) or (iii) above from being treated
as a pooling of interests under generally accepted accounting principles.
ARTICLE IX. GOVERNMENT REGULATIONS AND REGISTRATION OF SHARES
-------------------------------------------------
The Plan, and the grant and exercise of Stock Options thereunder, and the
Corporation's obligation to sell and deliver Shares, shall be subject to all
applicable Federal and State laws, rules and regulations and to such approvals
by any regulatory or governmental agency as may be required.
Each Stock Option is subject to the requirement that if, at any time, the Board
determines, in its absolute discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or NASDAQ or under any State or Federal law, or the consent
or approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the issuance of Shares, no Shares shall be
issued, in whole or in part, unless such listing, registration, qualification,
consent or approval has been effected or obtained, free of any conditions not
acceptable to the Board. The Corporation shall not be deemed, by reason of the
granting of any Stock Option, to have any obligation to register the Shares
subject to such Stock Option under the Securities Act or to maintain in effect
any registration of such Shares which may be made at any time under the
Securities Act.
Unless a registration statement under the Securities Act and the applicable
rules and regulations thereunder is then in effect with respect to Shares issued
upon exercise of any Stock Option (which registration shall not be required),
the Corporation shall require that the offer and sale of such Shares be exempt
from the registration provisions of said Act. In furtherance of such exemption,
the Corporation may require, as a condition precedent to the exercise of any
Stock Option, that the person exercising the Stock Option give to the
Corporation written representation and undertaking, satisfactory in form and
substance to the Corporation, that he is acquiring the Shares for his own
account for investment and not with a view to the distribution or resale thereof
and otherwise establish to the Corporation's satisfaction that the offer or sale
of the Shares issuable upon exercise of the Stock Option will not constitute or
result in any breach or violation of the Securities Act or any similar State act
or statute or any rules or regulations thereunder. In the event a Registration
Statement under the Securities Act is not then in
B-6
<PAGE>
effect with respect to the Shares issued upon exercise of a Stock Option, the
Corporation shall place upon any stock certificate an appropriate legend
referring to the restrictions on disposition under the Securities Act.
The Corporation is relieved from any liability for the nonissuance or
nontransfer or any delay in issuance or transfer of any Shares subject to Stock
Options under the Plan which results from the inability of the Corporation to
obtain, or in any delay in obtaining, from any regulatory body having
jurisdiction, all requisite authority to issue or transfer Shares upon exercise
of the Stock Options under the Plan if counsel for the Corporation deems such
authority necessary for lawful issuance or transfer of any such Shares.
Appropriate legends may be placed on the stock certificates evidencing Shares
issued upon exercise of Stock Options to reflect such transfer restrictions.
ARTICLE X. OTHER PROVISIONS
----------------
The validity, interpretation and administration of the Plan and any rules,
regulations, determinations or decisions made thereunder, and the rights of any
and all persons having or claiming to have any interest therein or thereunder,
shall be determined exclusively in accordance with the laws of the State of New
Jersey.
As used herein, the masculine gender shall include the feminine gender.
The headings in the Plan are for reference purposes only and shall not affect
the meaning or interpretation of the Plan.
All notices or other communications made or given pursuant to this Plan shall
be in writing and shall be sufficiently made or given if hand-delivered or
mailed by certified mail, addressed to any Participant at the address contained
in the records of the Corporation or to the Corporation at its principal office.
The proceeds received from the sale of Shares pursuant to the Plan shall be
used for general corporate purposes.
Nothing in the Plan or in any Stock Option granted hereunder shall confer on
any Participant any right to continue as, or to become, a director or Employee
of any Affiliate, or to interfere in any way with the right of the Corporation
or any of its Subsidiaries to terminate such Participant's status as an Employee
or as a director of any Subsidiary at any time, subject to the Participant's
contract rights, if any, and applicable law.
The Plan is intended to comply with Rule 16b-3 promulgated under the Exchange
Act and the Board shall interpret and administer the provisions of the Plan or
any Stock Option in a manner consistent therewith. Any provisions inconsistent
with such Rule shall be inoperative and shall not affect the validity of the
Plan.
All expenses and costs incurred in connection with the operation of the Plan
shall be borne by the Corporation.
The adoption of this Plan shall not affect any other compensation or incentive
plans in effect for the Affiliates, or any of them. Nothing in this Plan shall
be construed to limit the right of any Affiliate (i) to establish, alter or
terminate any other forms of incentives, benefits or compensation for directors
and/or Employees, including, without limitation, conditioning the right to
receive other incentives, benefits or compensation on an individual's not
participating in this Plan; or (ii) to grant or assume options otherwise than
under this Plan in connection with any proper corporate purpose, including,
without limitation, the grant or assumption of stock options in connection with
the acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock, or assets of any corporation, firm or association.
Participants shall have no rights as shareholders unless and until certificates
for Shares are registered in their names in satisfaction of a properly exercised
Stock Option.
If the Board shall find that any person to whom any benefit is due or payable
under the Plan is unable to care for his affairs because of illness or accident,
or is a minor, or has died, then any payment due to such person or his estate
(unless a prior claim therefor has been made by a duly appointed legal
representative), may, if the Board so determines, be paid to his spouse, child,
relative, an institution maintaining or having custody of such person, or any
other person deemed by the Board to be a proper recipient on behalf of such
person otherwise entitled to payment. Any such payment shall be a complete
discharge of the liability of the Board and the Corporation therefor.
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<PAGE>
ARTICLE XI. EFFECTIVE DATE AND EXPIRATION DATE OF PLAN
------------------------------------------
The Plan is effective as of such date as it is approved by the stockholders of
the Corporation in a manner which complies with Rule 16b-3 under the Exchange
Act and applicable State law.
ARTICLE XII. AMENDMENT OR DISCONTINUANCE OF PLAN
-----------------------------------
The Board may, without the consent of the Corporation's stockholders or
Participants under the Plan, at any time terminate the Plan entirely, and at any
time or from time to time amend or modify the Plan, provided that no such action
shall adversely affect Stock Options theretofore granted hereunder without the
Participant's consent, and provided further that no such action by the Board,
without approval of the stockholders, may (i) increase the total number of
Shares which may be purchased or acquired pursuant to Stock Options granted
under the Plan, either in the aggregate or for any Participant or eligible
nonemployee director, except as contemplated in Article VIII; (ii) expand the
class of individuals eligible to receive Stock Options under the Plan; (iii)
decrease the minimum Stock Option exercise price; (iv) extend the maximum term
of Stock Options granted hereunder; or (v) take any other action requiring
stockholder approval under Rule 16b-3 under the Exchange Act. No amendment or
modification may become effective if it would cause the Plan to fail to meet the
applicable requirements of Rule 16b-3.
ARTICLE XIII. SHAREHOLDER APPROVAL
--------------------
Anything in the Plan to the contrary notwithstanding, the grant of Stock
Options hereunder shall be of no force or effect, and no Stock Option granted
hereunder shall vest or become exercisable in any respect, unless and until the
Plan is approved by the affirmative vote of the holders of a majority of the
Shares present, in person or by proxy, and entitled to vote at a meeting of the
shareholders of the Corporation duly held in accordance with the laws of New
Jersey.
B-8
<PAGE>
X Please mark your votes as in this example 9406
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this Proxy will be
voted FOR Proposal 1, 2, 3, 4 and 5 and the Proxies will be authorized to vote
this Proxy in their discretion upon such other business as may properly come
before the meeting.
1. ELECTION OF DIRECTORS:
[ ] FOR [ ] WITHHELD
For, except vote withheld from following nominees(s): __________________
2. APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION CHANGING CORPORATE
NAME TO GREATER COMMUNITY BANCORP
-------------------------
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION INCREASING AUTHORIZED
COMMON STOCK TO 10 MILLION SHARES
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. APPROVAL OF PROPOSED 1996 EMPLOYEE STOCK OPTION PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. APPROVAL OF PROPOSED 1996 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
SIGNATURE(S) The signer hereby revokes all
proxies heretofore given by the
signer to vote at said meeting
or any adjournments thereof. The
signer hereby confers discretion
to the proxies to vote upon such
NOTE: PLEASE SIGN EXACTLY AS NAME APPREARS other natters as may properly
HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN come before the meeting.
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR,
TRUSTEEE OR GUARDIAN, PLEASE GIVE FULL TITLE
AS SUCH.
<PAGE>
GREAT FALLS BANCORP
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON APRIL 30, 1996
The undersigned hereby appoints Toby W. Giardiello, Naqi A. Naqvi and Robin A.
Peterson, and each of them, as the undersigned's true and lawful agents and
proxies with full power of substitution in each, to represent the undersigned at
the Annual Meeting of Stockholders of GREAT FALLS BANCORP to be held at the main
office of Great Falls Bank, 55 Union Boulevard, Totowa, New Jersey on Tuesday,
April 30, 1996 at 4:00 p.m., and at any adjournment thereof, on all matters
coming before such meeting.
Election of Directors, Nominees:
JOSEPH A. LOBOSCO, JOHN L. SOLDOVERI, C. MARK CAMPBELL AND CHARLES J. VOLPE
(three-year term)
ANTHONY M. BRUNO, JR. (two-year term)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE ABOVE PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
