<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[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 ss. 240.14a-11(c) or ss. 240.14a-12
First Coastal Corporation
_______________________________________________________________________
(Name of Registrant as Specified In Its Charter)
_______________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(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:
N/A
---
2) Aggregate number of securities to which transaction
applies: N/A
---
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): N/A
---
4) Proposed maximum aggregate value of transaction: N/A
---
5) Total fee paid: N/A
---
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount previously paid: N/A
_____________________________________________
2) Form, Schedule or Registration Statement No.: N/A
______________________
3) Filing Party: N/A
_________________________________________________________
4) Date Filed: N/A
___________________________________________________________
<PAGE>
FIRST COASTAL CORPORATION
36 Thomas Drive
Westbrook, Maine 04092
(207) 774-5000
May __, 1996
Dear Stockholder:
We cordially invite you to attend the 1996 annual meeting of
stockholders (the "Annual Meeting") of First Coastal Corporation (the
"Company"), which will be held on Tuesday, June 4, 1996 at 10:00 a.m. at the
Embassy Suites Hotel, 1050 Westbrook Street, Portland, Maine 04102. A copy of
the Company's Annual Report on Form 10-K for the year ended December 31, 1995,
Notice of Annual Meeting of Stockholders, the Proxy Statement for Annual Meeting
of Stockholders and Proxy Card are enclosed.
At the Annual Meeting, you are being asked (i) to elect one
director to the Board of Directors (the "Board") for a three-year term, (ii) to
approve and adopt the First Coastal Corporation 1996 Stock Option and Equity
Incentive Plan, (iii) to consider and vote upon a proposed amendment to the
Restated Certificate of Incorporation of the Company to provide for a three-year
restriction on certain acquisitions and offers to acquire voting stock of the
Company in order to reduce the likelihood that there will be a reduction in the
amount of the Company's net operating loss carryforward for federal tax purposes
by reason of an "ownership change" (as defined in Section 382 of the Internal
Revenue Code of 1986, as amended), (iv) to ratify the Board's appointment of
Coopers & Lybrand, L.L.P. as the Company's independent accountants for the year
ending December 31, 1996, and (v) to consider and vote upon a proposal to
adjourn the Annual Meeting to permit the solicitation of additional proxies in
the event that sufficient votes are not present in person and by proxy to vote
in favor of the First Coastal Corporation 1996 Stock Option and Equity Incentive
Plan and the proposed amendment to the Restated Certificate of Incorporation of
the Company.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Annual
Meeting in person, please complete, date and sign the enclosed Proxy Card and
return it promptly in the envelope provided.
Thank you for your cooperation and continuing support.
Sincerely,
Gregory T. Caswell
President and Chief Executive Officer
<PAGE>
FIRST COASTAL CORPORATION
36 Thomas Drive
Westbrook, Maine 04092
(207) 774-5000
_________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 4, 1996
_________________________________
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the
"Annual Meeting") of First Coastal Corporation (the "Company") will be held on
Tuesday, June 4, 1996 at 10:00 a.m. at the Embassy Suites Hotel, 1050 Westbrook
Street, Portland, Maine 04102, for the following purposes:
1. Election of Director. To elect one director for a three-year
term (Proposal One);
2. Adoption of First Coastal Corporation 1996 Stock Option and
Equity Incentive Plan. To approve and adopt the First Coastal
Corporation 1996 Stock Option and Equity Incentive Plan
(Proposal Two);
3. Amendment of Restated Certificate of Incorporation. To
consider and vote upon a proposed amendment to the Restated
Certificate of Incorporation of the Company to provide for a
three-year restriction on certain acquisitions and offers to
acquire voting stock of the Company in order to reduce the
likelihood that there will be a reduction in the amount of the
Company's net operating loss carryforward for federal tax
purposes by reason of an "ownership change" (as defined in
Section 382 of the Internal Revenue Code of 1986, as amended)
(Proposal Three);
4. Ratification of Appointment of Accountants. To ratify the
appointment by the Board of Directors of the firm of Coopers &
Lybrand, L.L.P. as independent accountants of the Company for
the year ending December 31, 1996 (Proposal Four);
5. Adjournment of Annual Meeting. In the event that sufficient
votes are not present in person and by proxy to vote in favor
of the matters summarized in Paragraphs 2 and 3 hereof, to
consider and vote upon a proposal to adjourn the meeting to
permit the solicitation of additional proxies (Proposal Five);
and
6. Other Business. To transact such other business as may
properly come before the Annual Meeting or any adjournments or
postponements thereof.
Pursuant to the Company's Amended and Restated Bylaws, the Board of
Directors has fixed the close of business on May 2, 1996 as the record date for
the determination of stockholders entitled to notice of and to vote at the
Annual Meeting. Only stockholders of record at the close of business on that
date will be entitled to notice of and to vote at the Annual Meeting or any
adjournments or postponements thereof.
By Order of the Board of Directors
Gregory T. Caswell
President and Chief Executive Officer
Westbrook, Maine
May __, 1996
<PAGE>
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT YOU
PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
FIRST COASTAL CORPORATION
36 Thomas Drive
Westbrook, Maine 04092
(207) 774-5000
________________________________
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 4, 1996
_________________________________
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement is being furnished to the stockholders of First
Coastal Corporation (the "Company") in connection with the solicitation by the
Board of Directors of the Company (the "Board of Directors" or the "Board") of
proxies from holders of the outstanding shares of the Company's common stock,
par value $1.00 per share (the "Common Stock"), for use at the annual meeting of
stockholders (the "Annual Meeting"), to be held on Tuesday, June 4, 1996 at
10:00 a.m. at the Embassy Suites Hotel, 1050 Westbrook Street, Portland, Maine
04102, and any adjournments or postponements thereof. This Proxy Statement,
together with the enclosed form of proxy, is first being mailed to stockholders
of the Company on or about May __, 1996.
At the Annual Meeting, stockholders will be asked (i) to elect one
member of the Board of Directors for a three-year term, (ii) to approve and
adopt the First Coastal Corporation 1996 Stock Option and Equity Incentive Plan,
(iii) to consider and vote upon a proposed amendment to the Restated Certificate
of Incorporation of the Company to provide for a three-year restriction on
certain acquisitions and offers to acquire voting stock of the Company in order
to reduce the likelihood that there will be a reduction in the amount of the
Company's net operating loss carryforward for federal tax purposes by reason of
an "ownership change" (as defined in Section 382 of the Internal Revenue Code of
1986, as amended (the "Code")), (iv) to ratify the appointment by the Board of
the firm of Coopers & Lybrand, L.L.P. as independent accountants of the Company
for the fiscal year ending December 31, 1996, and (v) to consider and vote upon
a proposal to adjourn the Annual Meeting to permit the solicitation of
additional proxies in the event that sufficient votes are not present in person
and by proxy to vote in favor of the First Coastal Corporation 1996 Stock Option
and Equity Incentive Plan and the proposed amendment to the Restated Certificate
of Incorporation of the Company, and to transact such other business as may
properly come before the meeting or any adjournments or postponements thereof.
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
Executed but unmarked proxies will be voted (i) FOR Proposal One to elect the
nominee of the Board of Directors as a director for a three-year term, (ii) FOR
Proposal Two to approve and adopt the First Coastal Corporation 1996 Stock
Option and Equity Incentive Plan, (iii) FOR Proposal Three to adopt the proposed
amendment to the Restated Certificate of Incorporation of the Company, (iv) FOR
Proposal Four to ratify the appointment of Coopers & Lybrand, L.L.P. as
independent accountants of the Company for the year ending December 31, 1996,
and (v) FOR Proposal Five to adjourn the Annual Meeting to permit the
solicitation of additional proxies in the event that sufficient votes are not
present in person and by proxy to vote in favor of the First Coastal Corporation
1996 Stock Option and Equity Incentive Plan and the proposed amendment to the
Restated Certificate of Incorporation. Except for procedural matters incident to
the conduct of the Annual Meeting, the Company does not know of any matters
other than those described in the Notice of Annual Meeting of Stockholders that
are to come before the Annual Meeting. If any other matters are properly brought
before the Annual Meeting, the persons named in the accompanying proxy will vote
the shares represented by such proxies on such matters as determined by a
majority of the Board of Directors.
<PAGE>
The presence of a stockholder at the Annual Meeting will not
automatically revoke such stockholder's proxy. A stockholder may, however,
revoke a proxy at any time prior to its exercise by filing a written notice of
revocation with, or by delivering a duly executed proxy bearing a later date to,
First Coastal Corporation, Attention: Secretary, 36 Thomas Drive, Westbrook,
Maine 04092, or by attending the Annual Meeting and voting in person.
The cost of soliciting proxies for the Annual Meeting will be borne by
the Company. In addition to the solicitation of proxies by mail, the Company,
through its directors, officers and employees, may also solicit proxies
personally or by telephone or telecopy. The Company will also request persons,
firms and corporations holding shares in their names or in the name of their
nominees, which are beneficially owned by others, to send proxy materials to and
obtain proxies from such beneficial owners and will reimburse such holders for
their reasonable expenses in doing so. The Company also has retained Chemical
Mellon Shareholder Services L.L.C., a proxy soliciting firm, to assist in the
solicitation of proxies at a fee of $6,500, plus reimbursement of certain out of
pocket expenses.
The securities which can be voted at the Annual Meeting consist of
shares of Common Stock of the Company. Each share entitles its owner to one vote
on all matters properly presented at the Annual Meeting. There is no cumulative
voting of shares. The close of business on May 2, 1996 has been fixed by the
Board as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting. At the close of business on May 2,
1996, there were approximately _____ holders of record of the 600,361 shares of
Common Stock then outstanding. The presence, in person or by proxy, of at least
one-third of the total number of outstanding shares of Common Stock entitled to
vote at the Annual Meeting is necessary to constitute a quorum at the Annual
Meeting. Assuming the presence of a quorum at the Annual Meeting, directors are
elected by a plurality of the votes of the holders of shares of Common Stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting; the affirmative vote of the holders of a majority of the shares of
Common Stock present in person or represented by proxy and entitled to vote at
the Annual Meeting is required to approve the First Coastal Corporation 1996
Stock Option and Equity Incentive Plan; the affirmative vote of the holders of
two-thirds of the shares of Common Stock entitled to vote at the Annual Meeting
is required to approve and adopt the proposed amendment to the Restated
Certificate of Incorporation; and the affirmative vote of a majority of the
votes cast is required to ratify the appointment of the Company's independent
accountants and to approve the adjournment of the Annual Meeting to permit the
solicitation of additional proxies. Stockholders' votes will be tabulated by the
persons appointed by the Board of Directors to act as inspectors of election for
the Annual Meeting. Abstentions will be treated as shares that are present or
represented and entitled to vote but will not be counted as a vote cast. An
abstention will have the same effect as a negative vote with respect to the
approval and adoption of the First Coastal Corporation 1996 Stock Option and
Equity Incentive Plan and the approval and adoption of the proposed amendment to
the Restated Certificate of Incorporation.
A copy of the Company's annual report on Form 10-K for the year ended
December 31, 1995 (excluding exhibits) accompanies this Proxy Statement. The
Company is required to file an annual report on Form 10-K for its 1995 fiscal
year with the Securities and Exchange Commission (the "SEC"). Stockholders may
obtain, upon payment of a reasonable fee, a copy of any of the exhibits to the
Company's annual report on Form 10-K by writing to or telephoning Dennis D.
Byrd, Treasurer, First Coastal Corporation, 36 Thomas Drive, Westbrook, Maine
04092; (207) 774-5000.
-2-
<PAGE>
ELECTION OF DIRECTOR
(Proposal One)
General
Pursuant to the Company's Restated Certificate of Incorporation, the
directors are divided into three classes, as nearly equal in number as possible,
with the number of directors as specified in the Company's Amended and Restated
Bylaws. The term of office of only one class of directors expires in each year,
and their successors are elected for terms of three years and until their
successors are elected and qualified. Under the Amended and Restated Bylaws, the
directors are divided into three classes, two of which are composed of one
director and one of which is composed of two directors.
At the Annual Meeting, one director will be elected for a three-year
term. The Board's nominee for election as a director for a three-year term is
Roger E. Klein. Mr. Klein has been a member of the Board of Directors of the
Company since 1990.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF THE BOARD'S NOMINEE FOR ELECTION AS A DIRECTOR OF THE COMPANY.
Information as to Director Nominee and Continuing Directors
The following table sets forth the names of the Board of Directors'
nominee for election as a director and each continuing director. Each director
of the Company also serves as a director of Coastal Savings Bank, a wholly owned
subsidiary of the Company (the "Bank"). Also set forth is certain other
information with respect to each such person's principal occupation or
employment during the past five years, the person's age at December 31, 1995 and
the periods during which such person has served as a director of the Company. It
is the intention of the persons named in the proxy to vote the shares
represented by each properly executed proxy for the election as a director of
the nominee listed below for a term of three years, unless otherwise directed by
stockholders. The Board of Directors believes that the nominee set forth below
will stand for election and will serve if elected as a director. If the nominee
of the Board of Directors fails to stand for election or is unable to accept
election, the proxies will be voted for the election of such other person as the
Board of Directors may recommend.
<TABLE>
<CAPTION>
Age at Member of Term to
Director Nominee: December 31, 1995 Board Since Expire
---------------- ----------------- ----------- ------
<S> <C> <C> <C>
Roger E. Klein 53 1990 1999
Age at Member of Term
Continuing Directors: December 31, 1995 Board Since Expires
-------------------- ----------------- ----------- -------
Normand E. Simard (a) 54 1987 1997
Edward K. Simensky 54 1994 1997
Charles A. Stewart III 61 1995 1998
______________
(a) Mr. Simard serves as Chairman of the Board of Directors of the Company and
the Bank.
Director Nominee
- ----------------
Roger E. Klein is President and owner of the Interest Rate Futures
Research Corporation of Princeton, New Jersey, a firm established in 1980 to
manage money in the financial futures markets. In 1982, Mr. Klein established
two affiliated companies, Futures Strategies Corporation and Timing
-3-
<PAGE>
Strategies, through which Mr. Klein manages funds and provides investment advice
to institutions, individuals and corporations. In September 1989, Mr. Klein
became the Chief Investment Officer, Executive Vice President and part owner of
Quantum American, Inc., a minority owned investment management company located
in New Orleans.
Continuing Directors
- --------------------
Normand E. Simard has been President of York County Biscuit Company, a
food distributor in Biddeford, Maine, since July 1993, and prior thereto, served
as Vice President since 1967. Mr. Simard was originally nominated as a director
of the Company in 1987 in accordance with the provisions of the Merger Agreement
by and among the Company, Suffield Bank, Coastal Bancorp and the Bank.
Edward K. Simensky has been President of Simensky & Thomson, certified
public accountants, in Saco, Maine, since 1978 and a director of Mutual Fire
Insurance Company, Saco, Maine, since 1987. Mr. Simensky was a director of
Suffield Bank, a subsidiary of the Company, from 1989 until September 1991 when
the Banking Commissioner for the State of Connecticut deemed Suffield Bank
insolvent and appointed the Federal Deposit Insurance Corporation as receiver.
Charles A. Stewart III was the President of A.L. Stewart & Sons, a food
processing company located in Cherryfield, Maine, from 1958 until 1982 when the
company was sold. Mr. Stewart also was the owner of Tennis of Maine, Inc., an
indoor tennis club located in Falmouth, Maine, from 1982 until 1985 when the
company was sold. Mr. Stewart is currently the Treasurer of M.C.S. Enterprises,
Inc., a real estate investment company based in Freeport, Maine. Mr. Stewart has
been a director of the Bank since 1986. Mr. Stewart has been a director of the
Boys & Girls Club of Greater Portland since 1987 and became chairman of the
organization's planned giving committee in 1994. In addition, in 1994, Mr.
Stewart became a director of the Maine Tennis Foundation.
Corporate Governance and Other Matters
The Board of Directors acts as a nominating committee for selecting
nominees for election as directors. The Company's Amended and Restated Bylaws
also permit stockholders eligible to vote at the Annual Meeting to make
nominations for directors but only if such nominations are made pursuant to
timely notice in writing to the Secretary of the Company. To be timely, notice
must be delivered to, or mailed to and received at, the principal executive
offices of the Company not less than 30 days nor more than 90 days prior to the
date of the meeting, provided that at least 45 days' notice or prior public
disclosure of the date of the meeting is given or made to the stockholders. If
less than 45 days' notice or prior disclosure of the date of the meeting is
given or made to stockholders, notice by the stockholder to be timely must be
received not later than the close of business on the 15th day following the day
on which such notice of the date of the meeting was mailed or such public
disclosure was made. A stockholder's notice of nomination must also set forth
certain information specified in Article III, Section 13 of the Company's
Amended and Restated Bylaws concerning each person the stockholder proposes to
nominate for election and the nominating stockholder. The Company's Amended and
Restated Bylaws provide that no person may be elected as a director unless
nominated in accordance with the procedures set forth in the Amended and
Restated Bylaws.
The Board of Directors has appointed a standing Audit Committee of the
Board, which committee may consist only of non-employee directors of the Company
and its subsidiaries. The Audit Committee receives and reviews the audit and
examination reports of the Company's independent accountants and, when
applicable, federal examiners. It also reviews the adequacy of internal controls
established by the Company's management, the independent accountant's letter to
management concerning the effectiveness of such controls and management's
response to that letter. In addition, the Audit Committee reviews and recommends
to the Board of Directors the firm to be engaged as the Company's independent
accountants. The members of the Audit Committee currently are Messrs. Klein,
Simard, Simensky and Stewart.
-4-
<PAGE>
The Company and the Bank do not have a separate Compensation Committee
of the Board of Directors.
During the year ended December 31, 1995, the Board of Directors held 17
meetings and the Audit Committee held one meeting. No incumbent director during
the year ended December 31, 1995 attended fewer than 75% of the total number of
meetings of the Board of Directors and the total number of meetings held by all
committees of the Board of Directors on which he served during the period of his
directorship.
EXECUTIVE OFFICERS
The following table sets forth the names of the executive officers of
the Company and the Bank. Also set forth is certain other information with
respect to each such person's principal occupation or employment during the past
five years, the person's age at December 31, 1995 and the positions currently
held with the Company and the Bank. Each executive officer has entered into an
employment protection agreement with the Bank.
On February 24, 1995, the Company announced that James H. Whittaker had
informed the boards of directors of the Company and the Bank of his intention to
resign as Chairman, President and Chief Executive Officer of each of the Company
and the Bank to pursue another employment opportunity. On March 8, 1995, the
boards of directors of the Company and the Bank accepted Mr. Whittaker's
resignation as Chairman of the Board and elected Normand E. Simard as Chairman
of the Board of each of the Company and the Bank. On March 31, 1995, the boards
of directors of the Company and the Bank accepted Mr. Whittaker's resignation as
President and Chief Executive Officer of the Company and the Bank and elected
Mr. Caswell to such positions. In addition, on March 31, 1995, the board of
directors of the Bank accepted the resignation of Mr. Whittaker as a director of
the Bank and increased the size of the board of directors from five to six
directors. Messrs. Byrd and Caswell were elected to fill the vacancies resulting
from the resignation of Mr. Whittaker and the increase in the size of the board.
On March 31, 1995, the Board of Directors of the Company also accepted the
resignation of Mr. Whittaker as a director of the Company and reduced the size
of the Board from five to four directors.
</TABLE>
<TABLE>
<CAPTION>
Age at
Name December 31, 1995 Positions Held
---- ----------------- --------------
<S> <C> <C>
Gregory T. Caswell 40 President and Chief Executive Officer of the Company and the
Bank and a director of the Bank
Dennis D. Byrd 33 Treasurer of the Company and Executive Vice President, Chief
Financial Officer and Treasurer and a director of the Bank
Gregory T. Caswell joined the Bank in December 1991 as Senior Vice
President and Senior Loan Officer responsible for managing the lending, loan
workout and credit administration functions of the Bank. From 1985 to 1991, he
was with First NH Banks initially as Vice President -- Commercial Lending, then
as Vice President in the bank's special assets group. In 1994, Mr. Caswell was
promoted to Executive Vice President -- Lending Division of the Bank. Effective
March 31, 1995 upon the resignation of Mr. Whittaker, Mr. Caswell was elected
President and Chief Executive Officer of the Company and the Bank and a director
of the Bank.
Dennis D. Byrd joined the Bank in October 1985 as Deposit Operations
Technician. From 1987 to 1992, Mr. Byrd was responsible for financial operations
of the Bank, promoted to Assistant Treasurer/Controller in 1989 and Assistant
Vice President in 1990. In 1993, Mr. Byrd was promoted to Vice
President/Controller and Treasurer of the Bank, and Treasurer of the Company and
Coastal
-5-
<PAGE>
Bancorp. In 1994, Mr. Byrd was promoted to Executive Vice President, Chief
Financial Officer and Treasurer of the Bank and on March 31, 1995, Mr. Byrd was
elected to the board of directors of the Bank.
See "Executive Compensation -- Employment Agreements" for a discussion
of the employment protection agreements of each of Messrs. Caswell and Byrd with
the Bank.
EXECUTIVE COMPENSATION
Cash Compensation
Upon the resignation of James H. Whittaker and effective March 31,
1995, Gregory T. Caswell was elected President and Chief Executive Officer of
the Company and the Bank. The following table sets forth the compensation paid
by the Company and its subsidiary during 1995, 1994 and 1993 to each of Messrs.
Caswell and Whittaker and to Dennis D. Byrd, who was the only other executive
officer whose compensation exceeded $100,000 for services rendered in all
capacities to the Company and its subsidiary during the year ended December 31,
1995 (the "named executive officers").
</TABLE>
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
-----------------------------------------------------
Other Annual
Principal Positions Year Salary Bonus Compensation
- ------------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Gregory T. Caswell 1995 $111,827 $34,000 __
President and Chief Executive 1994 76,416 3,000 __
Officer 1993 70,000 5,000 __
James H. Whittaker 1995 56,250 10,000 $2,454(a)
Chairman, President and 1994 180,000 52,500 7,133
Chief Executive 1993 143,520 30,000 2,129
Officer (former) (b)
Dennis D. Byrd 1995 81,154 21,500 __
Treasurer 1994 53,510 3,000 __
1993 41,554 5,000 __
_____________________
<FN>
(a) Reimbursement for federal and state taxes on compensation for living
expenses paid by the Company in 1995.
(b) Mr. Whittaker resigned as President and Chief Executive Officer of the
Company and the Bank effective March 31, 1995.
</FN>
</TABLE>
Option Grants
No options were granted during the fiscal year ended December 31, 1995.
-6-
<PAGE>
Option Holdings
The following table sets forth information with respect to the number
of securities underlying unexercised options held by each of the named executive
officers at December 31, 1995.
Fiscal Year-End Options
Number of Securities
Underlying Unexercised
Options at FY-End (a)(b)
Name Exercisable/Unexercisable
---- -------------------------
Gregory T. Caswell 0 / 0
James H. Whittaker (c) 0 / 0
Dennis D. Byrd 10 / 0
___________________
(a) The fair market value of the underlying shares of Common Stock at December
31, 1995 was less than the exercise price of all such options previously
granted.
(b) Adjusted to reflect the one for ten reverse stock split effective May 31,
1995.
(c) Mr. Whittaker resigned as President and Chief Executive Officer of the
Company and the Bank effective March 31, 1995.
Pension Plan
The Bank maintains a qualified noncontributory pension plan (the
"Pension Plan") for its officers and other employees through RSI Retirement
Trust, created to provide retirement benefits for the employees of savings banks
and their allied organizations. The Pension Plan is jointly administered by the
plan administrator and a pension committee appointed by the Bank and RSI
Retirement Trust. All employees are eligible to participate in the Pension Plan
if they have reached age 21 and have completed one year's service of 1,000 or
more hours. Vesting occurs after a participant completes five years of service
of 1,000 or more hours per plan year. The Pension Plan is subject to the
requirements of the Employee Retirement Income Security Act of 1974, as amended
(ERISA).
The Pension Plan provides for monthly benefits to or on behalf of each
covered employee at age 65 and has provisions for death benefits, early
retirement after attainment of age 55 and 10 years of service, and disability
benefits. The annual retirement benefit is 2% of the average annual earnings
during the highest paid consecutive three years of the five years immediately
preceding retirement multiplied by years of service (maximum 30 years), reduced
by 1-2/3% of the primary social security benefits multiplied by years of service
(maximum 30 years). In addition, a participant will receive an annuity based
upon the actuarial value of any accumulated voluntary contributions. Annual
earnings for purposes of determining benefits under the Pension Plan consist of
the annual base compensation excluding overtime, bonus payments or any other
special payments.
-7-
<PAGE>
The following table illustrates annual pension benefits for retirement
as of December 31, 1995 at age 65 for various levels of compensation and years
of service under the Pension Plan.
<TABLE>
<CAPTION>
Pension Plan Table
Years of Service(a)
Annual ------------------------------------------------------------------------------
Compensation 15 20 25 30 35
------------ --------- --------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
$ 75,000 $22,500 $ 30,000 $ 37,500 $ 45,000 $ 45,000
100,000 30,000 40,000 50,000 60,000 60,000
125,000 37,500 50,000 62,500 75,000 75,000
150,000 45,000 60,000 75,000 90,000 90,000
175,000 45,000 60,000 75,000 90,000 90,000
200,000 45,000 60,000 75,000 90,000 90,000
225,000 45,000 60,000 75,000 90,000 90,000
250,000 45,000 60,000 75,000 90,000 90,000
_________________
<FN>
(a) Benefits represent annual amounts under a five year and life benefit
payment option. A portion of the participant's primary social security
benefit will reduce the amount shown in this table. Pension benefits are
currently subject to a statutory maximum of $120,000, subject to
cost-of-living adjustments. The maximum annual compensation on which
retirement benefits may be calculated is limited to $150,000.
</FN>
</TABLE>
Mr. Whittaker had 3.5 years of credited service under the Pension Plan
as of March 31, 1995. Mr. Whittaker's termination of employment on March 31,
1995 was prior to his completion of five years of service required for the
vesting of benefits. Messrs. Caswell and Byrd have 4.25 and 10.25 years,
respectively, of credited service under the Pension Plan as of December 31,
1995. Messrs. Caswell's and Byrd's annual accrued benefit payable at age 65
under the Pension Plan is $5,937 and $8,492, respectively, determined as of
December 31, 1995. The compensation of Messrs. Caswell and Byrd covered by the
Pension Plan for 1995 consists of their respective base salary as set forth in
the Summary Compensation Table. See "Executive Compensation -- Cash
Compensation."
Compensation of Directors
During 1995, there were no fees or other forms of compensation earned
by or paid to directors of the Company for any service provided as a director of
the Company. The Company has not made and does not anticipate making any such
payments to directors for 1996. During 1995, each non-employee director of the
Bank received a quarterly retainer of $1,250 and a monthly aggregate meeting fee
of $250 provided that at least one meeting of the board of directors of the Bank
was held during the month. No amounts were paid to non-employee directors of the
Bank for meetings of committees on which such directors served. Employee
directors of the Bank receive no additional compensation for serving as
directors or committee members of the Bank.
A deferred compensation plan (the "Deferred Compensation Plan") was
established in 1987 for members of the Board of Directors of the Company and
non-employee directors of the boards of subsidiaries of the Company. Under the
Deferred Compensation Plan, each participant has the right to elect to defer a
portion of his or her annual directors' fees, with amounts deferred credited
monthly with interest at an annual rate which is determined prior to the
beginning of each calendar year. For 1995, the interest rate was 5.60% and for
1996, is 7.23%. Payment of amounts credited is available to participants by a
lump sum or a designated number of monthly installments, which number may not be
less than 12 nor more than 120. For 1995, no director of the Bank elected to
defer any portion of his director fees.
-8-
<PAGE>
On April __, 1996, the Board of Directors of the Company adopted the
First Coastal Corporation 1996 Stock Option and Equity Incentive Plan (the
"Plan") for the benefit of directors and employees of the Company and employees
of any subsidiary of the Company, subject to approval by stockholders at the
Annual Meeting. Under the terms of the Plan, each of the four current
non-employee directors of the Company will be granted a non-qualifying option
with a 10 year term for 1,000 shares of Common Stock (representing an aggregate
of options exercisable for 4,000 shares of Common Stock) on the date of the
first public offering of shares of Common Stock that occurs after the date of
adoption of the Plan, subject to stockholder approval, but such grants will not
be made if no such offering occurs before December 31, 1996. The exercise price
of such options will be equal to the offering price of the Company's Common
Stock in connection with such public offering. The Company intends to file a
registration statement on Form S-2 with the SEC with respect to a proposed
public offering of 750,000 shares of Common Stock (the "Offering") and expects
to consummate the Offering in the third quarter of 1996. The Offering will be
made only by means of a prospectus. The Plan further provides that, subject to
the availability of shares, as of each annual meeting of stockholders of the
Company after December 31, 1996, each non-employee director of the Company who
is elected by the stockholders at, or whose term of office continues after, such
meeting will be granted a non-qualifying option with a 10-year term for 500
shares upon the date of such election at a per share exercise price equal to the
market value of a share of Common Stock on the date of grant. See "Adoption of
First Coastal Corporation 1996 Stock Option and Equity Incentive Plan (Proposal
Two)."
Employment Agreements
In December 1994, the Bank entered into employment protection
agreements (each an "Employment Protection Agreement" and together, the
"Employment Protection Agreements") with each of Messrs. Caswell and Byrd, which
superseded the employment protection agreements entered into with each of such
executive officers in December 1993. The Employment Protection Agreements were
amended in April 1995 to reflect the new titles of Messrs. Caswell and Byrd. The
initial term of the Employment Protection Agreements expires December 31, 1996
and may be renewed only by the written agreement of the Bank and the executive
officer. In the event of a termination of the executive officer's employment
during the term of the Employment Protection Agreement by the Bank without
"cause" or by the executive officer for "good reason" (in each case as defined
therein), the executive officer is entitled to receive a lump sum cash payment
equal to one year's "current compensation," plus $12,000 reduced by the
aggregate amount of any "performance bonuses" that have been paid to the
executive officer as of the date of such termination. "Current compensation" is
equal to (i) the executive officer's salary at the annual rate in effect at the
time of his termination, but not less than the amount paid to the officer during
the 12-month period preceding his termination, (ii) any bonuses (other than
performance bonuses) paid to the officer during the 12-month period prior to his
termination and (iii) any deferred compensation credited to his account as of
December 31 of the year preceding his termination. "Performance bonuses" means
$3,000 payable on December 31, 1994, $3,000 payable on April 30, 1995, $3,000
payable on August 31, 1995 and $3,000 payable on December 31, 1995, provided
that the executive officer continues to be employed by the Bank on the
applicable date. The Employment Protection Agreements provide that the executive
officer is required to give the Bank at least 90 days written notice before he
voluntarily terminates his employment with the Bank (other than for "good
reason").
In December 1994, the Bank entered into an employment agreement (the
"Whittaker Employment Agreement") with Mr. Whittaker, which superseded the
employment agreement entered into with Mr. Whittaker in December 1993. The
Whittaker Employment Agreement terminated effective upon the resignation of Mr.
Whittaker on March 31, 1995. Pursuant to the Whittaker Employment Agreement and
during the term thereof, Mr. Whittaker's annual salary was $225,000, and he was
entitled to receive certain "performance bonuses" totaling up to $60,000. Such
performance bonuses were paid or were payable as follows: (i) $12,500 upon the
execution of the Whittaker Employment Agreement, (ii) $10,000 on January 31,
1995, (iii) $12,500 on April 30, 1995, (iv) $12,500 on August 31, 1995 and (v)
$12,500 on December 31, 1995, provided that Mr. Whittaker continued to be
employed by the Bank on the applicable date. The Bank agreed to pay or reimburse
-9-
<PAGE>
Mr. Whittaker for rental of a furnished apartment within 50 miles of the Bank's
operations center in Westbrook and for travel expenses from his residence in
Connecticut to Maine, as well as reimbursement of certain taxes.
Certain Transactions
During the 1995 fiscal year, the Bank paid Futures Strategies
Corporation ("FSC"), which is owned by Mr. Klein and of which he is President,
$1,500 per month for general investment services. There is no written contract
between the Bank and FSC with respect to the payment of such fees to, and the
provision of such services by, FSC.
Section 16(a) Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
its Common Stock, to file with the SEC initial reports of ownership of the
Company's equity securities and to file subsequent reports when there are
changes in such ownership. Based on a review of reports submitted to the
Company, the Company believes that, during the fiscal year ended December 31,
1995, all Section 16(a) filing requirements applicable to the Company's
officers, directors and more than 10% owners were complied with on a timely
basis, except that initial reports on behalf of Edward K. Simensky and Charles
A. Stewart III in connection with their election as directors of the Company
were not filed until after the required filing date.
-10-
<PAGE>
STOCK OWNED BY MANAGEMENT
The following table sets forth information as of May 2, 1996 with
respect to the amount of Common Stock beneficially owned by each director of the
Company, the nominee for election as director, by each of the named executive
officers, and by all directors and executive officers of the Company as a group.
This information is based on information furnished to the Company by such
persons.
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Beneficial Common Stock
Name Ownership(a)(b) Outstanding
- ---- --------------- -----------
<S> <C> <C>
Gregory T. Caswell
President and Chief Executive Officer......... __ __
Dennis D. Byrd
Treasurer..................................... 10(c) *
Roger E. Klein
Director ..................................... 102 *
Normand E. Simard
Chairman of the Board......................... 822 *
Edward K. Simensky
Director ..................................... 205 *
Charles A. Stewart III
Director...................................... 308(c) *
James H. Whittaker
President and Chief Executive
Officer (former) (d)........................ 3,376(e) *
All directors and executive
officers as a group (6 persons).................. 1,447(f) *
________________
* Less than 1% of shares outstanding.
<FN>
(a) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, a
person is considered to "beneficially own" shares (i) over which he or she
has or shares voting or investment power or (ii) of which he or she has
the right to acquire beneficial ownership at any time within 60 days of
May 2, 1996. As used herein, "voting power" is the power to vote or direct
the voting of shares and "investment power" is the power to dispose or
direct the disposition of shares.
(b) Adjusted to reflect the one for ten reverse stock split effective May 31,
1995.
(c) Consists of options which are presently exercisable.
(d) Mr. Whittaker resigned as President and Chief Executive Officer of the
Company and the Bank effective March 31, 1995.
(e) Includes 2,900 shares held jointly by Mr. Whittaker and his wife and a
total of 49 shares held by Mr. Whittaker on behalf of certain of his
children. Does not include a total of 49 shares held by Mr. Whittaker's
father on behalf of certain of his grandchildren.
(f) Includes a total of 318 options which are presently exercisable.
</FN>
</TABLE>
-11-
<PAGE>
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth information as of May 2, 1996 with
respect to the ownership of Common Stock by each person believed by management
to be the beneficial owner of more than 5% of the outstanding Common Stock. The
historical information set forth below is based on the most recent Schedule 13D
filed on behalf of each such person with the SEC.
<TABLE>
<CAPTION>
Amount and Percent of
Name and Address of Nature of Beneficial Common Stock
Beneficial Owner Ownership(a)(b) Outstanding
---------------- --------------- -----------
<S> <C> <C>
Angelina J. McGillivray.......................... 56,416(c) 9.4%
195 Ethan Drive
Windsor, Connecticut 06095
Jonathan Googel.................................. 31,050(d) 5.2
Ben Sisti
65 Kane Street
West Hartford, Connecticut 06119
______________
<FN>
(a) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, a
person is considered to "beneficially own" shares (i) over which he or she
has or shares voting or investment power or (ii) of which he or she has
the right to acquire beneficial ownership at any time within 60 days of
May 2, 1996. As used herein, "voting power" is the power to vote or direct
the voting of shares and "investment power" is the power to dispose or
direct the disposition of shares.
(b) Adjusted to reflect the one for ten reverse stock split effective May 31,
1995.
(c) A Schedule 13D dated May 15, 1992 states that Ms. McGillivray has sole
voting and dispositive power over such shares.
(d) An Amendment No. 5 to Schedule 13D filed on February 5, 1988 ("Amendment
No. 5") states that Messrs. Googel and Sisti have shared voting power and
shared dispositive power over 31,050 shares. Amendment No. 5 further
states that Mr. Googel has sole voting and sole dispositive power over an
additional 3,000 shares. Amendment No. 5 also states that Mr. Sisti has
sole voting and sole dispositive power over an additional 1,300 shares.
</FN>
</TABLE>
ADOPTION OF FIRST COASTAL CORPORATION 1996 STOCK OPTION
AND EQUITY INCENTIVE PLAN
(Proposal Two)
The First Coastal Corporation 1996 Stock Option and Equity Incentive
Plan was adopted by the Board of Directors of the Company on April ___, 1996,
subject to stockholder approval at the Annual Meeting, to provide for the grant
of options to purchase shares of Common Stock of the Company ("options" or
"stock options") to directors and employees of the Company and to employees of
any subsidiary of the Company and to permit the award to employees of the
Company and of any subsidiary of the Company of shares of Common Stock as a
bonus, which shares may be subject to restrictions based on continued service or
performance ("restricted stock"). As of May 2, 1996, there were approximately
_____ employees of the Company and the Bank and four non-employee directors of
the Company who were eligible to participate in the Plan.
The principal provisions of the Plan are summarized below. Such summary
does not, however, purport to be complete and is qualified in its entirety by
the terms of the Plan. A copy of the Plan is attached hereto as Exhibit A and is
incorporated herein by reference.
-12-
<PAGE>
Reasons for the Plan
The Board of Directors of the Company believes that stock options and
restricted stock are important to attract and to encourage the continued
employment of officers and other key employees by facilitating their acquisition
of a stock interest in the Company and that stock options are important to
attract and retain the services of outside directors for the same reason. The
acquisition and holding of an equity interest in the Company by officers, key
employees and directors is in the best interest of the Company because equity
ownership will even more closely align the interests of those individuals with
the interests of the Company's stockholders.
The Board of Directors has concluded that it is advisable to have the
incentive of stock options available as a means of attracting and retaining
directors, officers and key employees and to permit the award of restricted
stock to officers and key employees.
The adoption of the Plan is subject to stockholder approval at the
Annual Meeting. The Company is submitting the Plan for stockholder approval at
the Annual Meeting to permit the grant of options qualifying as incentive stock
options for tax purposes ("incentive options"), to qualify grants and awards
under the Plan for an exemption under the existing provisions of Rule 16b-3
under the Securities Exchange Act of 1934 and to allow the Company to obtain a
deduction for the full amount allowable with respect to the exercise of options
granted under the Plan. See "-- Federal Income Tax Consequences of the Plan."
Description of the Plan
The Plan provides for the grant of options that are intended to qualify
as "incentive options" (under Section 422 of the Code) to full time employees,
as well as the grant of non-qualifying options to employees of the Company and
any subsidiary of the Company and to non-employee directors of the Company. A
total of 65,000 shares of Common Stock of the Company will be reserved for
issuance to employees and directors under the Plan, representing approximately
10.8% of the outstanding shares of Common Stock on May 2, 1996. Based on the
book value per share of Common Stock of $6.66 at December 31, 1995, the
aggregate value of the 65,000 shares reserved for issuance under the Plan is
$432,900.
The Plan is administered by the Company's Board of Directors, which
consists of four outside directors. The Board selects the employees of the
Company and its subsidiary to whom incentive and non-qualifying options will be
granted and restricted stock will be awarded. Options covering not more than
10,000 shares of Common Stock may be granted to any employee during any calendar
year. Under the terms of the Plan, each of the four current non-employee
directors of the Company will be granted a non-qualifying option with a 10 year
term for 1,000 shares of Common Stock (representing an aggregate of options
exercisable for 4,000 shares of Common Stock) on the date of the first public
offering of shares of Common Stock that occurs after the date of adoption of the
Plan, subject to stockholder approval, but such grants will not be made if no
such offering occurs before December 31, 1996. The exercise price of such
options will be equal to the offering price of the Company's Common Stock in
connection with such public offering. The Company intends to file a registration
statement on Form S-2 with the SEC with respect to a proposed public offering of
750,000 shares of Common Stock and expects to consummate the Offering in the
third quarter of 1996. The Offering will be made only by means of a prospectus.
The Plan further provides that, subject to the availability of shares, as of
each annual meeting of stockholders of the Company after December 31, 1996, each
non-employee director of the Company who is elected by the stockholders at, or
whose term of office continues after, such meeting will be granted a
non-qualifying option with a 10-year term for 500 shares upon the date of such
election at a per share exercise price equal to the market value of a share of
Common Stock on the date of grant.
The option exercise price under the Plan may not be less than 100% of
the fair market value of the Common Stock on the date of grant of the option (or
110% in the case of an incentive stock option granted to an optionee
beneficially owning more than 10% of the outstanding Common Stock).
-13-
<PAGE>
The maximum option term is 10 years (or five years in the case of an incentive
stock option granted to an optionee beneficially owning more than 10% of the
outstanding Common Stock). Options may be exercised at any time after grant,
except as otherwise provided in the particular option agreement. There also is a
$100,000 limit on the value of stock (determined at the time of grant) covered
by incentive stock options that first become exercisable by an optionee in any
calendar year. No option may be granted more than 10 years after the effective
date of the Plan. Options are non-transferable.
Payment for shares purchased under options granted pursuant to the Plan
may be made either in cash or by exchanging shares of Common Stock of the
Company with a fair market value of up to the total option exercise price and
cash for any difference. Options may be exercised by directing that certificates
for the shares purchased be delivered to a licensed broker as agent for the
optionee, provided that the broker tenders to the Company cash or cash
equivalents equal to the option exercise price plus the amount of any taxes that
the Company may be required to withhold in connection with the exercise of the
option.
If an employee's employment with the Company or any subsidiary of the
Company terminates by reason of death or permanent and total disability, his or
her options, whether or not then exercisable, may be exercised within one year
after such death or disability, unless otherwise provided in the particular
option agreement (but not later than the date the option would otherwise
expire). If the employee's employment terminates for any reason other than death
or disability, options held by such optionee terminate three months after the
date of such termination, unless otherwise provided in the particular option
agreement (but not later than the date the option would otherwise expire). An
option granted to a non-employee director will not terminate until the
expiration of the 10 year term of the option regardless of whether the
non-employee director continues to serve as a director.
Employees of the Company or any subsidiary also may receive restricted
stock awards pursuant to the Plan. The granting of restricted stock gives the
recipient thereof the right to a specified number of shares of Common Stock of
the Company, contingent upon the achievement of specific performance objectives
or upon completion of a specified period of employment after the date of the
award. Alternatively, such shares may be awarded as a bonus or in lieu of a cash
bonus, in which case the grantee will be fully vested in the award immediately.
The holder of a restricted stock award shall generally have the rights and
privileges of a stockholder of the Company, including the right to vote and to
receive dividends, except that the holder generally may not sell, transfer,
assign, pledge or otherwise encumber or dispose of the shares covered by an
award until such shares have become vested or otherwise free of restrictions.
In the agreement relating to an option grant or restricted stock award,
the Board may impose additional restrictions and limitations on the transfer of
shares of Common Stock acquired thereby, including subjecting such shares to a
right of first refusal and a repurchase right on the part of the Company.
If the outstanding shares of Common Stock are increased or decreased or
changed into or exchanged for a different number or kind of shares or securities
of the Company, by reason of merger, consolidation, reorganization,
recapitalization, reclassification, stock split-up, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease in such shares without receipt of
consideration by the Company, an appropriate and proportionate adjustment will
be made in the number and kinds of shares subject to the Plan, and in the
number, kinds and per share exercise price of shares subject to the unexercised
portion of options granted prior to any such change. Any such adjustment in an
outstanding option, however, will be made without a change in the total price
applicable to the unexercised portion of the option, but with a corresponding
adjustment in the per share option price.
Upon any dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation in which the Company is not the
surviving corporation, or upon the sale of all or
-14-
<PAGE>
substantially all of the assets of the Company to another corporation, or upon
any transaction approved by the Board of Directors which results in any person
or entity owning 80% or more of the total combined voting power of all classes
of stock of the Company, the Plan and the options issued thereunder will
terminate, unless provision is made in connection with such transaction for the
continuation of the Plan and/or the assumption of the options or for the
substitution for such options of new options covering the stock of a successor
corporation or a parent or subsidiary thereof, with appropriate adjustments as
to the number and kinds of shares and the per share exercise price. In the event
of such termination, all outstanding options shall be exercisable in full during
such period immediately prior to the occurrence of such termination as the Board
of Directors in its discretion shall determine.
The Board of Directors may amend the Plan with respect to shares of the
Common Stock as to which options and awards of restricted stock have not been
granted. However, the Company's stockholders must approve any amendment that
would (i) change the requirements as to eligibility to receive options; (ii)
increase the maximum number of shares in the aggregate for which options and
restricted stock awards may be granted (except for adjustments upon changes in
capitalization); or (iii) materially increase the benefits accruing to eligible
individuals under the Plan.
The Board of Directors at any time may terminate or suspend the Plan.
Unless previously terminated, the Plan will terminate automatically on April __,
2006, the tenth anniversary of the date of adoption of the Plan by the Board of
Directors. No termination, suspension or amendment of the Plan may, without the
consent of the person to whom an option or restricted stock award has been
granted, adversely affect the rights of the holder of the option or restricted
stock.
-15-
<PAGE>
Plan Benefits
The table below provides certain information as of the date of this
Proxy Statement regarding stock options to be granted or expected to be granted
under the Plan (all of which are subject to stockholder approval of the Plan) to
(i) the named executive officers, (ii) the nominee for election as director,
(iii) all executive officers of the Company as a group, (iv) all non-employee
directors as a group and (v) all employees of the Company as a group (including
all officers who are not executive officers). No awards of restricted stock have
been made or are contemplated as of the date of this Proxy Statement under the
Plan.
<TABLE>
<CAPTION>
Plan Benefits
Name and Position Number of Options Exercise Price
- ----------------- ----------------- --------------
<S> <C> <C>
Dennis D. Byrd
Treasurer....................................... _______ (a) (a)
Gregory T. Caswell
President and Chief Executive
Officer..................................... _______ (a) (a)
Roger E. Klein
Director Nominee................................ _______ (b)
James H. Whittaker
President and Chief Executive
Officer (former) (c)....................... __ __
Executive Officer Group (___ persons)............. _______ (a) (a)
Non-employee Director Group (four
persons)........................................ _______ (b)
Non-executive Officer Employee Group
(___ persons)................................... _______ (a) (a)
________________
<FN>
(a) The Board expects to grant such options in connection with the completion
of the Offering. The exercise price is to be equal to the offering price
of the Company's Common Stock in the Offering.
(b) Such options will be granted under the terms of the Plan in connection
with the completion of the Offering. The exercise price is to be equal to
the offering price of the Company's Common Stock in the Offering. In the
event the Offering is not completed by December 31, 1996, such options
would not be granted.
(c) Mr. Whittaker resigned as President and Chief Executive Officer of the
Company and the Bank effective March 31, 1995.
</FN>
</TABLE>
Federal Income Tax Consequences of the Plan
The grant of an option is not a taxable event for the optionee or the
Company.
With respect to "incentive options," an optionee will not recognize
taxable income upon exercise of an incentive option, and any gain realized upon
a disposition of shares received pursuant to the exercise of an incentive option
will be taxed as long-term capital gain if the optionee holds the shares for at
least two years after the date of grant and for one year after the date of
exercise of the option. However, the excess of the fair market value of the
shares subject to an incentive option on
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<PAGE>
the exercise date over the option exercise price will be included in the
optionee's alternative minimum taxable income in the year of exercise (except
that, if the optionee is subject to certain securities law restrictions, the
determination of the amount included in alternative minimum taxable income may
be delayed, unless the optionee elects within 30 days following exercise to have
income determined without regard to such restrictions) for purposes of the
alternative minimum tax. An optionee may be entitled to a credit against regular
tax liability in future years for minimum taxes paid with respect to the
exercise of incentive options. The Company and its subsidiary will not be
entitled to any business expense deduction with respect to the grant or exercise
of an incentive option, except as discussed below.
For the exercise of an incentive option to qualify for the foregoing
tax treatment, the optionee generally must be an employee of the Company or its
subsidiary from the date the option is granted through a date within three
months before the date of exercise. In the case of an optionee who is disabled,
this three-month period is extended to one year. In the case of an employee who
dies, the three-month period and the holding period for shares received pursuant
to the exercise of the option are waived.
If all of the foregoing requirements for incentive option treatment are
met except for the special holding period rules set forth above, the optionee
will recognize ordinary income upon the disposition of the shares in an amount
equal to the excess of the fair market value of the shares at the time the
option was exercised over the option exercise price. However, if the optionee
was subject to certain restrictions under the securities laws at the time the
option was exercised, the measurement date may be delayed, unless the optionee
has made a special tax election within 30 days after the date of exercise to
have taxable income determined without regard to such restrictions. The balance
of the realized gain, if any, will be long- or short-term capital gain,
depending upon whether or not the shares were sold more than one year after the
option was exercised. If the optionee sells the shares prior to the satisfaction
of the holding period rules but at a price below the fair market value of the
shares at the time the option was exercised (or other applicable measurement
date), the amount of ordinary income (and the amount included in alternative
minimum taxable income, if the sale occurs during the same year as the option
was exercised) will be limited to the excess of the amount realized on the sale
over the option exercise price. If the Company complies with applicable (if any)
reporting requirements, it will be allowed a business expense deduction to the
extent the optionee recognizes ordinary income.
If an optionee exercises an incentive option by tendering shares of
Common Stock with a fair market value equal to part or all of the option
exercise price, the exchange of shares generally will be treated as a nontaxable
exchange (except that this treatment would not apply if the optionee had
acquired the shares being transferred pursuant to the exercise of an incentive
option and had not satisfied the special holding period requirements summarized
above). If the exercise is treated as a tax free exchange, the optionee would
have no taxable income from the exchange and exercise (other than minimum
taxable income as discussed above) and the tax basis of the shares exchanged
would be treated as the substituted basis for the shares received. If the
optionee used shares received pursuant to the exercise of an incentive option
(or another statutory option) as to which the optionee had not satisfied the
applicable holding period requirement, the exchange would be treated as a
taxable disqualifying disposition of the exchanged shares, with the result that
the excess of the fair market value of the shares tendered over the optionee's
basis in the shares would be taxable.
Upon exercising a non-qualifying option, an optionee will recognize
ordinary income in an amount equal to the difference between the exercise price
and the fair market value of the Common Stock on the date of exercise (except
that, if the optionee is subject to certain restrictions imposed by the
securities laws, the measurement date may be delayed, unless the optionee makes
a special tax election within 30 days after exercise to have income determined
without regard to the restrictions). If the Company complies with applicable
reporting requirements, it will be entitled to a business expense deduction in
the same amount. Non-qualifying options under the Plan are intended to satisfy
the requirements applicable to "qualified performance-related compensation"
under the Code, so that the Company should be entitled to deduct the full amount
of such compensation income
-17-
<PAGE>
without regard to the $1,000,000 limitation imposed on the deduction of annual
compensation paid to each of the chief executive officer and the four other most
highly compensated officers of a publicly held corporation. Upon a taxable
disposition of shares acquired pursuant to the exercise of a non-incentive
option, the optionee will have taxable gain or loss, measured by the difference
between the amount realized on the disposition and the tax basis of the shares
(generally, the amount paid for the shares plus the amount treated as ordinary
income at the time the option was exercised).
If the optionee surrenders shares of Common Stock in payment of part or
all of the exercise price for non-qualifying options, no gain or loss will be
recognized with respect to the shares surrendered and the optionee will be
treated as receiving an equivalent number of shares pursuant to the exercise of
the option in a non-taxable exchange. The basis of the shares surrendered will
be treated as the substituted tax basis for an equivalent number of option
shares received. However, the fair market value of any shares received in excess
of the number of shares surrendered will be taxed as ordinary income.
No federal income tax consequences will be incurred by the Company or
an employee at the time a restricted stock award is made if such grant is
subject to restrictions that constitute a "substantial risk of forfeiture" for
federal income tax purposes, except that the employee may make a special tax
election within 30 days after the date of the award to report the value of the
restricted stock at the time of the award as ordinary income for income tax
purposes (and the Company generally will be entitled to a corresponding
deduction in the same amount if the election is made). If no such election is
made, at the time applicable vesting or performance requirements are met (or at
the award date, if no such requirements are imposed), the employee will realize
ordinary income equal to the fair market value of the stock at that time and the
Company generally will be entitled to a corresponding deduction (subject to the
$1,000,000 annual limitation in the case of the chief executive officer and the
other four most highly compensated officers). If an employee makes the special
tax election and subsequently forfeits the restricted stock because of failure
to satisfy the vesting or performance requirements, the employee will not be
entitled to a deduction or other tax benefit for the amount reported as income
with respect to the award.
The foregoing is a brief summary of some of the principal federal
income tax consequences of stock option grants and restricted stock awards under
the Plan and recipients of grants and awards under the Plan should consult with
their personal tax advisors with respect to such grants and awards and
transactions in stock acquired pursuant to the Plan.
Required Vote
Assuming the presence of a quorum at the Annual Meeting, the
affirmative vote of the holders of a majority of the shares of Common Stock
present in person or represented by proxy and entitled to vote at the Annual
Meeting is required to approve the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL
OF THE PLAN.
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AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION
(Proposal Three)
The Board of Directors, having declared its advisability, has
unanimously approved and recommends the adoption by stockholders of an amendment
to the Restated Certificate of Incorporation of the Company to provide for a
three-year restriction on certain acquisitions and offers to acquire voting
stock of the Company. Set forth below is a description of the proposed
amendment. Such description does not, however, purport to be complete and is
qualified in its entirety by the text of the proposed amendment. A copy of the
proposed amendment is attached hereto as Exhibit B and is incorporated herein by
reference.
Description of the Proposed Amendment
The proposed amendment deletes Subsection 1 of Article 10 currently
appearing in the Restated Certificate of Incorporation which provides that
"[f]or a period of three years from the date of consummation of the conversion
of the Bank [Suffield Bank] to a Connecticut capital stock savings bank, no
Person shall acquire Control of the Corporation, or make any Offer to acquire
Control of the Corporation, unless such acquisition or Offer has received the
prior approval of both the Banking Commissioner of the State of Connecticut and
the Board of Directors of the Corporation." Since the conversion of Suffield
Bank to a Connecticut capital stock savings bank was consummated in 1984, or
approximately 12 years ago, Subsection 1 of Article 10 currently appearing in
the Restated Certificate of Incorporation is of no effect. Accordingly, the
proposed amendment will be substituted in its place. The proposed amendment also
changes the current caption of Article 10 which provides "Approval for
Acquisitions of Control and Offers to Acquire Control" to read "Approval for
Certain Stock Acquisitions and Offers to Acquire Stock and Acquisitions of
Control and Offers to Acquire Control."
The proposed amendment, in the form of a new Subsection 1 of Article 10
of the Restated Certificate of Incorporation, provides that unless otherwise
approved by the Company's Board of Directors, no person shall become or make an
offer to become the beneficial owner of five percent or more of the Company's
voting stock (a "prohibited 5% owner") for three years from the effective date
of the proposed amendment. A person who is the beneficial owner of five percent
or more of the Company's outstanding voting stock on the effective date of the
proposed amendment (an "existing 5% owner") will not be deemed in violation of
the provision; provided, however, that if after the effective date, any existing
5% owner shall become or make an offer to become the beneficial owner of any
additional shares of the Company's voting stock, then such person will be deemed
to be a prohibited 5% owner if, following the acquisition of such additional
shares, such existing 5% owner is or will be the beneficial owner of five
percent or more of the Company's voting stock. Such proposed amendment further
provides that no person will become a prohibited 5% owner as a result of an
acquisition of shares of voting stock by the Company which, by reducing the
number of shares of the Company's voting stock outstanding, increases the
proportionate number of shares of voting stock beneficially owned by such person
to five percent or more of the shares of the Company's voting stock then
outstanding; provided, however, that if a person becomes a beneficial owner of
five percent or more of the Company's voting stock then outstanding by reason of
share purchases by the Company and shall, after such share purchases by the
Company, become the beneficial owner of any additional shares of the Company's
voting stock, then such person will be deemed to be a prohibited 5% owner if
such person is then the beneficial owner of five percent or more of the voting
stock then outstanding. The effective date of the amendment will be the date on
which the amendment is filed with the Secretary of State of Delaware, assuming
the amendment is approved by the Company's stockholders.
In the event that any person becomes a prohibited 5% owner in violation
of the proposed amendment, such number of the shares of voting stock of which
such person is the beneficial owner, in excess of the number of shares of voting
stock of which such person might be the beneficial owner without becoming a
prohibited 5% owner, will be considered from and after the date such person
becomes a prohibited 5% owner to be "excess shares" for purposes of the proposed
amendment. Such
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excess shares will thereafter no longer (i) be entitled to vote on any matter,
(ii) be entitled to take other stockholder action, (iii) be entitled to be
counted in determining the total number of outstanding shares for purposes of
any matter involving stockholder action, or (iv) be transferable, except with
the approval of the Company's Board of Directors or by an independent trustee
appointed by the Company's Board of Directors for the purpose of having such
excess shares sold on the open market or otherwise. The proceeds from the sale
by the trustee of such excess shares shall be paid (i) first, to the trustee in
an amount equal to the trustee's reasonable fees and expenses, (ii) second, to
the beneficial owner of such excess shares in an amount up to such owner's
federal income tax basis in such excess shares, and (iii) third, to the Company
as to any remaining balance.
Finally, the proposed amendment provides that if the Company's Board of
Directors determines in good faith that a person who would otherwise be a
prohibited 5% owner has inadvertently become a prohibited 5% owner and such
person ceases to be the beneficial owner and disposes of a sufficient number of
shares of the Company's voting stock within the time fixed by the Company's
Board of Directors incident to the foregoing determination, so that such person
would no longer be a prohibited 5% owner, pending and upon such disposition of
shares of voting stock, such person will not be deemed a prohibited 5% owner for
purposes of the proposed amendment unless and until such person subsequently
becomes a prohibited 5% owner.
If the proposed amendment is approved by the requisite vote of the
Company's stockholders at the Annual Meeting, it will be effective prior to the
consummation of the Offering and will apply to purchases of shares of Common
Stock in the Offering. In connection with the approval of the proposed
amendment, the Board of Directors of the Company has approved the acquisition of
shares in the Offering by stockholders of the Company holding five percent or
more of the Company's voting stock on the effective date up to such number of
shares as would cause such stockholder to maintain his or her pre-Offering
percentage ownership interest in the Company following the Offering. The Company
does not anticipate accepting any purchases of five percent or more of the
Common Stock in the Offering, but reserves the right to do so. The effectiveness
of the proposed amendment is not conditioned upon the consummation of the
Offering and assuming the amendment is approved by the Company's stockholders,
the amendment will be filed with the Secretary of State of Delaware even if the
Company decides not to proceed with the Offering or the Offering is otherwise
not completed.
Reasons for and General Effect of the Proposed Amendment
At December 31, 1995, the Company had a net operating loss carryforward
for federal tax purposes of approximately $6.8 million, which will expire in the
years 1996 to 2010. In order to reduce the likelihood that there will be a
reduction in the amount of such carryforward by reason of an "ownership change"
(as defined below) with respect to the Company and the Bank, the Company's Board
of Directors has adopted, subject to stockholder approval, an amendment to the
Company's Restated Certificate of Incorporation.
An "ownership change" occurs if the percentage of the Company's stock
owned on a testing date by one or more five percent stockholders (or a group of
less than five percent stockholders who are aggregated together for such
purpose) has increased by more than 50 percentage points over the lowest
percentage owned by those stockholders at any time during the three-year testing
period ending on that date. Thus, on the date of any change in ownership by a
five percent stockholder (i.e., an "owner shift"), the Company must add up all
of the owner shifts by the five percent stockholders within the three-year
period ending on that date to determine if a more-than-50-percentage-point
ownership change has occurred during that period. For purposes of the preceding
sentence, any direct or indirect holder, taking into account certain attribution
rules, of five percent or more of the Company's stock is a five percent
stockholder, and all holders of less than five percent collectively generally
are treated as a single five percent stockholder.
Under certain segregation rules, when a five percent stockholder sells
part of its stock holdings to less-than-five percent stockholders during the
testing period, the acquiring less-than-five
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percent stockholders are segregated and treated as a separate public group,
which constitutes a single five percent stockholder (the "new public group").
Furthermore, stockholders who individually acquire and own less than five
percent of the Company's stock pursuant to an offering of such stock generally
are treated as a new public group which is separate and apart from the group of
less-than five percent stockholders that existed prior to the offering (the
"pre-issuance public group"). The increase in the percentage interest of a
segregated public group, from zero to the percentage interest it is deemed to
hold at the end of the testing period, is included as an owner shift.
In general, a member of the new public group is presumed not to have
owned any of the Company's stock prior to a public offering except to the extent
that the Company has actual knowledge that such person is also a member of the
pre-issuance public group. However, an exception to the segregation rules
creates a presumption that the pre-issuance public group purchased a significant
percentage of the stock being offered. Under this exception, when the Company
issues stock for cash, the Company may exclude from the segregation rules a
percentage of stock issued equal to one-half of the percentage of stock owned by
less-than-five-percent stockholders immediately before the issuance (the
percentage of a stock issuance eligible for the cash issuance exception is the
percentage of the Company stock held by public groups immediately before the
issuance multiplied by one-half). However, the amount of stock exempted under
this rule is limited to the total amount of stock issued less the amount of
stock acquired by five percent stockholders.
Options to purchase the stock of the Company also must be considered to
determine if an ownership change occurs. However, options to acquire shares of
stock of the Company only will be considered to have been exercised for the
purpose of determining whether there has been an ownership change if the options
had been issued for an abusive principal purpose (as defined in Section
1.382-4(d) of the Treasury Regulations).
If an ownership change occurs with respect to the Company and the Bank,
an annual limitation (the "section 382 limitation") would be imposed on the rate
at which their net operating losses could be deducted against taxable income.
The section 382 limitation is computed by multiplying the estimated value of the
Company immediately before the ownership change by the then-applicable long-term
tax exempt rate published by the Internal Revenue Service ("IRS") for this
purpose (the long-term tax exempt rate was 5.31% for the month of April 1996, as
set forth in the IRS tables). Thus, if the Company and the Bank were to undergo
an ownership change as a result of the proposed public offering of 750,000
shares of Common Stock of the Company, the Company's section 382 limitation
would be approximately $151,000 (assuming the Common Stock has a fair market
value of $4.75 per share).
In addition, to the extent the Company is determined to have a net
unrealized built-in loss (generally defined as the excess of the basis of a
corporation's assets over the fair market value of those assets) and such net
unrealized built-in loss is greater than the lesser of (i) 15 percent of the
fair market value of the Company's assets or (ii) $10.0 million, an ownership
change would limit the Company's ability to deduct certain losses which have not
yet been recognized for tax purposes but that may be utilized to offset taxable
income in the current, or a past or future year. Any net unrealized built-in
losses recognized in the five-year period beginning on the date of the ownership
change is subject to the section 382 limitation as if it were a pre-change net
operating loss. Thus, if the Company and the Bank experienced an ownership
change as a result of the Offering, the portion of these combined losses
(pre-change net operating loss plus net unrealized built-in losses recognized
during the five-year period following the ownership change) available for offset
against taxable income in a given taxable year could not exceed the Company's
section 382 limitation. If the recognized net unrealized built-in loss is
disallowed pursuant to the section 382 limitation, the disallowed portion may be
carried forward as if it were a net operating loss carryover, but may not be
carried back. As of December 31, 1995, the Company believes that its net
unrealized built-in loss was approximately $9.0 million, consisting primarily of
the FDIC Note which has not yet been recognized for tax purposes.
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Based on its review of the rules under Section 382 of the Code and the
facts relevant to a determination as to whether an ownership change has
occurred, including filings as of the date of this Proxy Statement with the SEC,
the Company believes that it has not experienced an ownership change. However,
because subsequent transactions in shares of the Company's stock could result in
an unanticipated increase in the ownership of Company stock by one or more five
percent stockholders and thus cause an ownership change, the Company has sought
to reduce the chance that an ownership change will occur by amending its
Restated Certificate of Incorporation as described under "-- Description of the
Proposed Amendment."
Anti-Takeover Effect of the Proposed Amendment
The proposed amendment would have the effect of discouraging an attempt
by any person or entity, through the acquisition of a substantial number of
shares of the Company's Common Stock, to acquire control of the Company with a
view to imposing a merger, sale of all or part of the Company's assets or a
similar transaction, because the person or entity would be required to obtain
the approval of the Company's Board of Directors. To the extent that potential
takeovers are thereby discouraged, stockholders may not have the opportunity to
dispose of all or a part of their stock at a price that may be higher than that
prevailing in the market.
The proposed amendment to the Company's Restated Certificate of
Incorporation is not part of a plan by the Company's Board of Directors to adopt
a series of anti-takeover measures. The Company's Board of Directors does not
presently intend to propose any additional measures designed to discourage any
unfair or unnegotiated takeovers apart from the amendment proposed in this Proxy
Statement and those measures that have previously been adopted (see "-- Certain
Charter and Statutory Provisions Having an Anti-Takeover Effect"), but reserves
the right to propose and adopt additional measures if the Company's Board of
Directors determines that such measures are in the best interests of the Company
and its stockholders.
Certain Charter and Statutory Provisions Having an Anti-Takeover Effect
Classified Board; Amendment of Charter and Bylaws. The Company's
Restated Certificate of Incorporation provides for the division of the Board of
Directors into three classes of directors, serving staggered three-year terms.
In addition, the Restated Certificate of Incorporation does not provide for
cumulative voting of shares of Common Stock for the election of directors. The
Company's Amended and Restated Bylaws permit stockholders to make nominations
for directors but only if such nominations are made pursuant to timely notice in
writing to the Company. The Restated Certificate of Incorporation further
provides that the approval of at least two-thirds of the entire Board of
Directors at a duly constituted meeting called for such purpose and the approval
of the holders of at least two-thirds of the shares entitled to vote thereon at
a duly called annual or special meeting of stockholders are necessary for the
amendment of certain sections of the Restated Certificate of Incorporation
relating to election and classification of the Board of Directors; limitation of
certain liabilities of directors; adoption, alteration, amendment or repeal of
the Amended and Restated Bylaws; limitation on calling of special meetings of
stockholders; approval of acquisitions of control and offers to acquire control;
criteria for evaluation of certain offers by the Board of Directors;
anti-greenmail; and stockholders' action by unanimous written consent. In
addition, the approval of the holders of at least 80% of the shares entitled to
vote thereon at a duly called annual or special meeting of stockholders is
necessary for the amendment of certain sections of the Restated Certificate of
Incorporation relating to the vote requirements for approval of certain business
combinations and to the vote requirements for amendment of the Restated
Certificate of Incorporation. The Amended and Restated Bylaws provide that the
approval of at least two-thirds of the entire Board of Directors at a duly
constituted meeting called for such purpose and the approval of the holders of
at least two-thirds of the shares entitled to vote thereon at a duly constituted
meeting of stockholders called for such purpose are necessary for the amendment
of the Amended and Restated Bylaws. These provisions may have the effect of
deterring hostile takeovers or delaying changes in control or management of the
Company.
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Business Combination Provisions. The Company is subject to the
provisions of Section 203 of the Delaware General Corporation Law. In general,
the statute prohibits a publicly held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an interested
stockholder, unless prior to the date the stockholder became an interested
stockholder the board approved either the business combination or the
transaction that resulted in the stockholder becoming an interested stockholder
or unless one of two exceptions to the prohibitions are satisfied: (i) upon
consummation of the transaction that resulted in such person becoming an
interested stockholder, the interested stockholder owned at least 85% of the
corporation's voting stock outstanding at the time the transaction commenced
(excluding, for purposes of determining the number of shares outstanding, shares
owned by certain directors or certain employee stock plans) or (ii) on or after
the date the stockholder became an interested stockholder, the business
combination is approved by the board of directors and authorized by the
affirmative vote (and not by written consent) of at least two-thirds of the
outstanding voting stock excluding that stock owned by the interested
stockholder. A "business combination" includes a merger, asset sale or other
transaction resulting in a financial benefit to the interested stockholder. An
"interested stockholder" is a person who (other than the corporation and any
direct or indirect majority owned subsidiary of the corporation), together with
affiliates and associates, owns (or, as an affiliate or associate, within three
years prior, did own) 15% or more of the corporation's outstanding voting stock.
In addition, the Restated Certificate of Incorporation provides that a
"business combination" with an "interested shareholder" must be approved by the
affirmative vote of at least 80% of the outstanding voting stock unless either
(a) the business combination is approved by a majority of the "continuing
directors" or (b) certain price and procedure requirements are satisfied. Except
for business combinations requiring such higher stockholder vote, any merger or
consolidation involving the Company must, as a condition to its effectiveness,
be approved by the affirmative vote of at least two-thirds of the issued and
outstanding shares of each class of capital stock of the Company. A "business
combination" includes a merger, asset sale or acquisition, reclassification of
securities, recapitalization or other transaction resulting in a financial
benefit to the interested shareholder. An "interested shareholder" is a person
who (other than the Company or any subsidiary of the Company), (i) together with
affiliates and associates, directly or indirectly beneficially owns 10% or more
of the Company's outstanding voting stock, or (ii) is an affiliate of the
Company and, together with affiliates and associates, within two years prior
directly or indirectly beneficially owned 10% or more of the Company's
outstanding voting stock. A "continuing director" is a member of the Board of
Directors of the Company who is unaffiliated with the interested shareholder and
was a member of the Board of Directors prior to the time that the interested
shareholder (including any affiliate or associate thereof) became an interested
shareholder, and any successor of a continuing director who is unaffiliated with
the interested shareholder and is recommended to succeed a continuing director
by a majority of continuing directors then on the Board of Directors.
The Restated Certificate of Incorporation requires the Board of
Directors, when evaluating a tender offer, merger or acquisition proposal, in
connection with the exercise of its judgment in determining the best interests
of the Company and its stockholders, to take into account all relevant factors,
including, without limitation, the economic effects of acceptance of such offer
on (i) depositors, borrowers and employees of the insured bank or institution
subsidiary or subsidiaries of the Company, and on the communities in which such
subsidiary or subsidiaries operate or are located, and (ii) the ability of such
subsidiary or subsidiaries to fulfill the objectives of an insured institution
under applicable federal and state statutes and regulations.
Approval for Certain Acquisitions of Control and Offers to Acquire
Control Provisions. The Restated Certificate of Incorporation of the Company
provides that if the Common Stock is then traded on a national securities
exchange or quoted on the NASD Automated Quotation System, no person shall make
any offer to acquire "control" of the Company unless such person has received
the prior approval to make such offer either (a) by obtaining approval of the
Board of Directors of the Company or (b) by obtaining all required federal and
state regulatory approvals and furnishing the Board of Directors of the Company
a complete copy of all notices and other documents filed by such
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person pursuant to applicable federal and state law and regulations. "Control"
means the sole or shared power to vote or to direct the voting of, or to dispose
or to direct the disposition of, 10% or more of the voting stock of the Company.
The Restated Certificate of Incorporation also provides that no person
shall acquire control of the Company at any time unless such acquisition of
control has been approved (a) either (i) by the affirmative vote of at least
two-thirds of the outstanding voting stock at a duly constituted meeting of
stockholders called for such purpose or (ii) by at least two-thirds of the
entire Board of Directors at a duly constituted meeting called for such purpose
and (b) by all regulatory authorities required under applicable federal and
state statutes and in the manner provided by all applicable regulations adopted
thereunder.
Anti-Greenmail Provisions. The Restated Certificate of Incorporation
prohibits the Company from purchasing any shares of the Company's voting stock
from any person that beneficially owns, directly or indirectly, five percent or
more of the Company's voting stock at a price exceeding the average closing
price or the mean of the bid and ask prices of a share of voting stock for the
20 trading days immediately preceding the date of execution of a definitive
agreement to purchase the voting stock, unless a majority of the Company's
disinterested stockholders approve the transaction. This restriction on
purchases by the Company does not apply to any offer to purchase shares of a
class of the Company's voting stock which is made on the same terms and
conditions to all holders of that class of voting stock or to any purchase of
stock owned by such a five-percent stockholder occurring more than two years
after such stockholder's last acquisition of the Company's stock.
Required Vote
Assuming the presence of a quorum at the Annual Meeting, the
affirmative vote of the holders of two-thirds of the shares of Common Stock
entitled to vote at the Annual Meeting is required to approve and adopt the
proposed amendment to the Restated Certificate of Incorporation of the Company.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL
OF THE PROPOSED AMENDMENT.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(Proposal Four)
The Board of Directors has appointed the firm of Coopers & Lybrand,
L.L.P. to continue as independent accountants for the Company for the year
ending December 31, 1996, subject to ratification of such appointment by the
stockholders. Coopers & Lybrand, L.L.P. has served as the Company's independent
accountants for each of the fiscal years ended December 31, 1995, 1994 and 1993.
Unless otherwise indicated, properly executed proxies will be voted in favor of
ratifying the appointment of Coopers & Lybrand, L.L.P., independent certified
public accountants, to audit the books and accounts of the Company for the year
ending December 31, 1996. No determination has been made as to what action the
Board of Directors would take if the stockholders do not ratify the appointment.
Assuming the presence of a quorum at the Annual Meeting, the
affirmative vote of a majority of the votes cast is required to ratify the
appointment of Coopers & Lybrand, L.L.P. as the Company's independent
accountants for the year ending December 31, 1996.
Representatives of Coopers & Lybrand, L.L.P. will be present at the
Annual Meeting. They will be given an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
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THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND, L.L.P. AS THE INDEPENDENT
AUDITORS OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1996.
ADJOURNMENT OF ANNUAL MEETING
(Proposal Five)
In the event that sufficient votes are not present in person
and by proxy to vote in favor of the First Coastal Corporation 1996 Stock Option
and Equity Incentive Plan (Proposal Two) and the proposed amendment to the
Restated Certificate of Incorporation of the Company (Proposal Three),
stockholders will be asked to consider and vote upon a proposal to adjourn the
Annual Meeting to permit the solicitation of additional proxies.
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder of the Company who intends to present a proposal for
action must file a copy thereof with the Secretary of the Company not less than
30 days nor more than 90 days prior to the date of the annual meeting, unless
notice or public disclosure of the meeting occurs less than 45 days prior to the
date of the meeting, in which event stockholders may deliver such notice not
later than the 15th day following the day on which notice of the meeting was
mailed or public disclosure thereof was made. If the proposal or proposals are
to be included in the Company's proxy statement and form of proxy relating to
the 1997 annual meeting, they must be received by the Secretary of the Company
at 36 Thomas Drive, Westbrook, Maine 04092 by January __, 1997 pursuant to the
proxy soliciting rules of the SEC. Nothing in this paragraph shall be deemed to
require the Company to include in its proxy statement and form of proxy relating
to the 1997 annual meeting any stockholder proposal which may be excluded under
SEC regulations in effect at the time such proposals are received.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
know of any other matters to be presented for action by the stockholders at the
Annual Meeting. If, however, any other matters not now known are properly
brought before the Annual Meeting, the persons named in the accompanying proxy
will vote such proxy on such matters as determined by a majority of the Board of
Directors.
By Order of the Board of Directors
Gregory T. Caswell
President and Chief Executive Officer
Westbrook, Maine
Dated: May __, 1996
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EXHIBIT A
_________
FIRST COASTAL CORPORATION
1996 STOCK OPTION AND EQUITY INCENTIVE PLAN
FIRST COASTAL CORPORATION (the "Corporation") sets forth herein the
terms of this 1996 Stock Option and Equity Incentive Plan (the "Plan") as
follows:
1. PURPOSE
The Plan is intended to advance the interests of the Corporation by
providing eligible individuals (as designated pursuant to Section 4 below) with
an opportunity to acquire or increase a proprietary interest in the Corporation,
which thereby will create a stronger incentive to expend maximum effort for the
growth and success of the Corporation and its subsidiaries, and will encourage
such eligible individuals to remain in the employ or service of the Corporation
or that of one or more of its subsidiaries. To this end, the Plan provides for
the grant of stock options and the issuance of shares of stock as a bonus,
including restricted stock, all as set out herein.
Each stock option granted under the Plan (an "Option") is intended to
be an "incentive stock option" within the meaning of section 422 of the Internal
Revenue Code of 1986, as amended from time to time, or the corresponding
provision of any subsequently enacted tax statute (the "Code"), except (i) to
the extent that any such Option would exceed the limitations set forth in
Section 7 below; (ii) for Options specifically designated at the time of grant
as not being "incentive stock options" and (iii) for Options granted to
directors of the Corporation who are not officers or other salaried employees of
the Corporation or any of its subsidiaries ("Non-Employee Directors"). Shares of
stock may also be issued to employees pursuant to the Plan as a bonus or in lieu
of a cash bonus and such shares may be subject to vesting and transfer
restrictions, in accordance with the provisions of Section 6 below. Such grants
and awards are referred to collectively as "Incentive Awards." Each Incentive
Award shall be evidenced by a written agreement between the Corporation and the
recipient employee setting out the terms and conditions of the grant (an
"Agreement").
2. ADMINISTRATION
(a) Board. The Plan shall be administered by the Board of Directors of
the Corporation (the "Board"), which shall have the full power and authority to
take all actions, and to make all determinations required or provided for under
the Plan or any Incentive Award granted or Agreement entered into hereunder and
all such other actions and determinations not inconsistent with the specific
terms and provisions of the Plan deemed by the Board to be necessary or
appropriate to the administration of the Plan or any Incentive Award granted or
Agreement entered into hereunder. All such actions and determinations shall be
by the affirmative vote of a majority of the members of the Board present at a
meeting at which any issue relating to the Plan is properly raised for
consideration or by unanimous consent of the Board executed in writing in
accordance with the Corporation's Certificate of Incorporation and By-Laws, and
with applicable law. The interpretation and construction by the Board of any
provision of the Plan or of any Incentive Award granted or Agreement entered
into hereunder shall be final and conclusive.
(b) Committee. The Board may from time to time appoint an Incentive
Compensation Committee (the "Committee") consisting of not less than three
members of the Board, none of whom shall be an officer or other salaried
employee of the Corporation or any of its subsidiaries, and each of whom shall
qualify in all respects as an "outside director" for purposes of Treasury
Regulations ss. 1.162-27(e)(3) and, to the extent required to satisfy the
requirements of Rule
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16b-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934 (the "Exchange Act"), as a "disinterested person". The Board, in its
sole discretion, may provide that the role of the Committee shall be limited to
making recommendations to the Board concerning any determinations to be made and
actions to be taken by the Board pursuant to or with respect to the Plan, or the
Board may delegate to the Committee such powers and authorities related to the
administration of the Plan, as set forth in Section 2(a) above, as the Board
shall determine, consistent with the Certificate of Incorporation and By-Laws of
the Corporation and applicable law. The Board may remove members, add members,
and fill vacancies on the Committee from time to time, all in accordance with
the Corporation's Certificate of Incorporation and By-Laws, and with applicable
law. The majority vote of the Committee, or acts reduced to or approved in
writing by a majority of the members of the Committee, shall be the valid acts
of the Committee.
(c) No Liability. No member of the Board or of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Incentive Award granted or Agreement entered into hereunder.
(d) Delegation to the Committee. In the event that the Plan or any
Incentive Award granted or Agreement entered into hereunder provides for any
action to be taken by or determination to be made by the Board, such action may
be taken by or such determination may be made by the Committee if the power and
authority to do so has been delegated to the Committee by the Board as provided
for in Section 2(b) above. Unless otherwise expressly determined by the Board,
any such action or determination by the Committee shall be final and conclusive.
(e) Action by the Board. Except as indicated below, the Board may act
under the Plan other than by, or in accordance with the recommendations of, the
Committee, constituted as set forth in Section 2(b) above with respect to
Incentive Awards granted to individuals who are subject to Section 16 of the
Exchange Act, only if a majority of the members of the Board are "disinterested
persons" as defined in Rule 16b-3 of the Securities and Exchange Commission
under the Exchange Act. This restriction on the Board's actions under the Plan,
however, shall not apply in the event the restriction ceases to be a requirement
for reliance upon the exemption provided by Rule 16b-3.
3. STOCK
The stock that may be issued pursuant to Incentive Awards granted under
the Plan shall be shares of Common Stock, par value $0.01 per share, of the
Corporation (the "Stock"), which shares may be treasury shares or authorized but
unissued shares. The number of shares of Stock that may be issued pursuant to
Incentive Awards granted under the Plan shall not exceed in the aggregate 65,000
shares, which number of shares is subject to adjustment as hereinafter provided
in Section 17 below. If any Incentive Award expires, terminates, or is
terminated or forfeited for any reason prior to exercise or vesting in full, the
shares of Stock that were subject to the unexercised or forfeited portion of
such Incentive Award shall be available for future Incentive Awards granted
under the Plan.
4. ELIGIBILITY
(a) Employees. Incentive Awards may be granted under the Plan to any
full-time employee of the Corporation or any "subsidiary corporation" thereof
within the meaning of Section 424(f) of the Code (a "Subsidiary") (including any
such employee who is an officer or director of the Corporation or any
Subsidiary) as the Board shall determine and designate from time to time prior
to expiration or termination of the Plan. The maximum number of shares of Stock
subject to Options that may be granted under the Plan to any officer or other
employee of the Corporation or any Subsidiary in any calendar year is 10,000
shares (subject to adjustment as provided in Section 17 hereof).
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(b) Non-Employee Directors. Subject to the availability of shares
issued under Section 3 of the Plan, (i) on the date of the first public offering
of the Corporation's Stock occurring after the effective date (as defined in
Section 5(a) below) an Option to purchase up to 1,000 shares of Stock, at the
price at which the Stock is offered to the public in such offering and upon the
other terms and conditions specified in the Plan, shall be granted under the
Plan to each individual who is serving as a Non-Employee Director on that date,
except that such Options shall not be granted if no such offering occurs before
December 31, 1996 and (ii) as of each annual meeting of stockholders of the
Company occurring after December 31, 1996, an Option to purchase up to 500
shares of Stock, at the price and upon the other terms and conditions specified
in the Plan, shall be granted under the Plan to each Non-Employee Director who
is elected to the Board of Directors of the Corporation by the stockholders at
such meeting or whose term of office continues after such meeting.
5. EFFECTIVE DATE AND TERM OF THE PLAN
(a) Effective Date. The Plan shall be effective as of the date of
adoption by the Board, subject to approval of the Plan within one year of such
effective date by a majority of the votes present and entitled to vote at a duly
held meeting of the stockholders at which a quorum representing one-third of all
the outstanding voting stock is present, either in person or by proxy; provided,
however, that upon approval of the Plan by the stockholders of the Corporation
as set forth above, all Incentive Awards granted under the Plan on or after the
effective date shall be fully effective as if the stockholders of the
Corporation had approved the Plan on the effective date. If the stockholders
fail to approve the Plan within one year of such effective date, any Incentive
Awards granted hereunder shall be null and void and of no effect.
(b) Term. The Plan shall terminate on the date ten years from the
effective date.
6. GRANT OF INCENTIVE AWARDS
(a) Options. Subject to the terms and conditions of the Plan, the Board
may, at any time and from time to time, prior to the date of termination of the
Plan, grant to such eligible individuals as the Board may determine
("Optionees"), Options to purchase such number of shares of the Stock on such
terms and conditions as the Board may determine, including any terms or
conditions which may be necessary to qualify such Options as "incentive stock
options" under Section 422 of the Code.
(b) Bonus and Restricted Stock Awards. Subject to the terms of the
Plan, the Board may, at any time and from time to time, prior to the date of
termination of the Plan, grant to such eligible individuals as the Board may
determine ("Holders"), shares of Stock, subject to the attainment of such
performance objectives, the completion of such service requirements (if any) and
the payment of such amount (if any) as the Board shall determine and specify as
a condition to making such grant. Each such grant shall be effected by the
execution of an Agreement setting out the terms and conditions applicable
thereto and by the issuance of shares of Stock or restricted Stock. Agreements
covering bonus or restricted Stock awards need not contain the same or similar
provisions, provided, that all such Agreements shall comply with the terms of
the Plan. Upon attainment of the specified objectives and requirements (or, to
the extent specified by the Board, partial attainment of such objectives and
requirements), the Holder shall be entitled to shares of Stock specified in the
grant (or the portion of such shares earned by partial attainment of the
objectives and requirements, as applicable) free of restrictions, except that
such shares of Stock shall continue to be subject to the restrictions set out in
Sections 10(d) and 15. Except as shall otherwise have been specified in the
Agreement at the time of grant or in any duly executed amendment thereto, the
shares of restricted Stock (or appropriate portion thereof) shall be forfeited
and shall again be available for regrant under the terms of the Plan upon (i)
the failure of the Holder to pay the price (if any) specified for the shares
within the time set by the Board at the time of the grant, (ii) upon the
expiration of the specified period for attaining performance objectives without
such
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objectives having been achieved or (iii) upon termination of the Holder's
employment without the Holder having satisfied the service requirement specified
at the time of grant. The Board may require that the certificates evidencing the
grant of shares of restricted Stock hereunder be held in escrow until such
restrictions have expired. The Board may also cause a legend to be placed on
such certificates making appropriate reference to the restrictions to which the
shares are subject.
(c) Date of Grant. The date on which the Board approves the grant of an
Incentive Award shall be considered the date on which such Incentive Award is
granted.
7. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option (other than an Option described in exception (ii) or (iii) of
Section 1) shall constitute an Incentive Stock Option to the extent that the
aggregate fair market value (determined at the time the option is granted) of
the Stock with respect to which Incentive Stock Options are exercisable for the
first time by any Optionee during any calendar year (under the Plan and all
other plans of the Optionee's employer corporation and its parent and subsidiary
corporations within the meaning of Section 422(d)(1) of the Code) does not
exceed $100,000.
8. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by written
agreements ("Option Agreements"), to be executed by the Corporation and by the
Optionee, in such form or forms as the Board shall from time to time determine.
Option Agreements covering Options granted from time to time or at the same time
need not contain similar provisions; provided, however, that all such Option
Agreements shall comply with all terms of the Plan.
9. OPTION PRICE
The purchase price of each share of the Stock subject to an Option (the
"Option Price") shall be fixed by the Board and stated in each Option Agreement,
and shall be not less than the greater of par value or one hundred percent of
the fair market value of a share of the Stock on the date the Option is granted
(as determined in good faith by the Board); provided, however, that in the event
the Optionee would otherwise be ineligible to receive an "incentive stock
option" by reason of the provisions of Sections 422(b)(6) and 424(d) of the Code
(relating to stock ownership of more than ten percent), the Option Price of an
Option which is intended to be an "incentive stock option" (within the meaning
of Section 422 of the Code) shall be not less than the greater of par value or
one hundred and ten percent of the fair market value of a share of Stock at the
time such Option is granted. In the event that the Stock is listed on an
established national or regional stock exchange, is admitted to quotation on the
National Association of Securities Dealers Automated Quotation System, or is
publicly traded in an established securities market, in determining the fair
market value of the Stock, the Board shall use the closing price of the Stock on
such exchange or System or in such market (the highest such closing price if
there is more than one such exchange or market) on the trading date immediately
before the Option is granted (or, if there is no such closing price, then the
Board shall use the mean between the highest bid and lowest asked prices or
between the high and low prices on such date), or, if no sale of the Stock has
been made on such day, on the next preceding day on which any such sale shall
have been made.
10. TERM AND EXERCISE OF OPTIONS
(a) Term. Each Option granted under the Plan shall terminate and all
rights to purchase shares thereunder shall cease upon the expiration of ten
years from the date such Option is granted, or, with respect to Options granted
to persons other than Non-Employee Directors, on such
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date prior thereto as may be fixed by the Board and stated in the Option
Agreement relating to such Option; provided, however, that in the event the
Optionee would otherwise be ineligible to receive an "incentive stock option" by
reason of the provisions of Sections 422(b)(6) and 424(d) of the Code (relating
to stock ownership of more than ten percent), an Option granted to such Optionee
which is intended to be an "incentive stock option" (within the meaning of
Section 422 of the Code) shall in no event be exercisable after the expiration
of five years from the date it is granted.
(b) Option Period and Limitations on Exercise. Each Option granted
under the Plan to persons other than Non-Employee Directors shall be
exercisable, in whole or in part, at any time and from time to time, over a
period commencing on or after the date of grant and ending upon the expiration
or termination of the Option, as the Board shall determine and set forth in the
Option Agreement relating to such Option. Without limiting the foregoing, the
Board, subject to the terms and conditions of the Plan, may in its sole
discretion provide that an Option may not be exercised in whole or in part for
any period or periods of time during which such Option is outstanding; provided,
however, that any such limitation on the exercise of an Option contained in any
Option Agreement may be rescinded, modified or waived by the Board, in its sole
discretion, at any time and from time to time after the date of grant of such
Option, so as to accelerate the time at which the Option may be exercised. Each
Option granted to a Non-Employee Director shall be exercisable, in whole or in
part, at any time and from time to time, over a period commencing on the date of
grant and ending upon the expiration of the Option. Notwithstanding any other
provisions of the Plan, no Option granted to an Optionee under the Plan shall be
exercisable in whole or in part prior to the date the Plan is approved by the
stockholders of the Corporation as provided in Section 5 above.
(c) Method of Exercise. An Option that is exercisable hereunder may be
exercised by delivery to the Corporation on any business day, at its principal
office, addressed to the attention of the Committee, of written notice of
exercise, which notice shall specify the number of shares with respect to which
the Option is being exercised, and shall be accompanied by payment in full of
the Option Price of the shares for which the Option is being exercised. The
minimum number of shares of Stock with respect to which an Option may be
exercised, in whole or in part, at any time shall be the lesser of 100 shares or
the maximum number of shares available for purchase under the Option at the time
of exercise. Payment of the Option Price for the shares of Stock purchased
pursuant to the exercise of an Option shall be made (i) in cash or in cash
equivalents; (ii) through the tender to the Corporation of shares of Stock,
which shares shall be valued, for purposes of determining the extent to which
the Option Price has been paid thereby, at their fair market value (determined
in the manner described in Section 9 above) on the date of exercise; or (iii) by
a combination of the methods described in (i) and (ii). Notwithstanding the
preceding sentence, payment in full of the Option Price need not accompany the
written notice of exercise provided the notice of exercise directs that the
Stock certificate or certificates for the shares for which the Option is
exercised be delivered to a licensed broker acceptable to the Corporation as the
agent for the individual exercising the Option and, at the time such Stock
certificate or certificates are delivered, the broker tenders to the Corporation
cash (or cash equivalents acceptable to the Corporation) equal to the Option
Price for the shares of Stock purchased pursuant to the exercise of the Option
plus the amount (if any) of federal and/or other taxes which the Corporation,
may, in its judgment, be required to withhold with respect to the exercise of
the Option. An attempt to exercise any Option granted hereunder other than as
set forth above shall be invalid and of no force and effect. Promptly after the
exercise of an Option and the payment in full of the Option Price of the shares
of Stock covered thereby, the individual exercising the Option shall be entitled
to the issuance of a Stock certificate or certificates evidencing his ownership
of such shares. A separate Stock certificate or certificates shall be issued for
any shares purchased pursuant to the exercise of an Option which is an
"incentive stock option" (within the meaning of Section 422 of the Code)
("Incentive Stock Option"), which certificate or certificates shall not include
any shares which were purchased pursuant to the exercise of an Option which is
not an Incentive Stock Option. An individual holding or exercising an Option
shall have none of the rights of a stockholder until the shares of Stock covered
thereby are fully paid and issued to him and, except as provided in Section 17
below, no adjustment shall be made for dividends or other rights for which the
record date is prior to the date of such issuance.
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(d) Restrictions on Transfer of Stock and Rights of Corporation to
Repurchase Shares. If an Option is exercised before the date that is six months
from the later of (i) the date of grant of the Option or (ii) the date of
stockholder approval of the Plan and the individual exercising the Option is a
reporting person under Section 16(a) of the Exchange Act, then such certificate
or certificates shall bear a legend, if necessary to qualify for an exemption
under Rule 16b-3 under the Exchange Act, restricting the transfer of the Stock
covered thereby until the expiration of six months from the later of the date
specified in clause (i) above or the date specified in clause (ii) above. The
Board may provide in the Agreement relating to an Incentive Award granted to an
employee or in a separate instrument for (a) restrictions and limitations on the
transferability of the shares of Stock issued or to be acquired upon exercise of
an Option granted as a part of such Incentive Award, (b) an agreement between
the Optionee and the Corporation for the sale of such shares by the Optionee and
their purchase by the Corporation upon the happening of such events, and at such
price and under such other terms and conditions as the Board shall determine and
(c) such other restrictions or limitations on such shares as it may deem
advisable, including restrictions pursuant to Section 15 hereof. All share
certificates issued to evidence shares of Stock issued hereunder (including
shares issued as a result of the exercise of an Option) shall bear such legends
and statements as the Board shall deem appropriate or advisable to reflect any
such restrictions, limitations or agreements.
11. TRANSFERABILITY OF OPTIONS
During the lifetime of an Optionee to whom an Option is granted, only
such Optionee (or, in the event of legal incapacity or incompetency, the
Optionee's guardian or conservator, committee or other legal representative) may
exercise the Option, except that such restriction shall apply in the case of an
Option that is not an Incentive Stock Option only if such restriction is
required to satisfy the requirements of Rule 16b-3 under the Exchange Act. No
Incentive Stock Option shall be assignable or transferable by the Optionee to
whom it is granted, other than by will or the laws of descent and distribution.
12. TERMINATION OF EMPLOYMENT OR SERVICE
(a) Employees. Upon the termination of the employment of an Optionee
with the Corporation or a Subsidiary, other than by reason of the death or
"permanent and total disability" (within the meaning of Section 22(e)(3) of the
Code) of such Optionee, any Option granted to an Optionee pursuant to the Plan
shall terminate three months after the date of such termination of employment,
unless earlier terminated pursuant to Section 10(a) above, and such Optionee
shall have no further right to purchase shares of Stock pursuant to such Option;
provided, however, that the Board may provide, by inclusion of appropriate
language in any Option Agreement, that an Optionee may (subject to the general
limitations on exercise set forth in Section 10(b)), in the event of termination
of employment of the Optionee with the Corporation or a Subsidiary, exercise an
Option, in whole or in part, at any time after such termination of employment
and before termination of the Option as provided in Section 10(a) above, either
subject to or without regard to any installment limitation on exercise imposed
pursuant to Section 10(b) above. Upon the termination of the employment of a
Holder with the Corporation or a Subsidiary, other than by reason of the death
or "permanent and total disability" (within the meaning of Section 22(e)(3) of
the Code) of such Holder, any shares of restricted Stock that have not become
vested shall be forfeited. Whether a leave of absence or leave on military or
government service shall constitute a termination of employment for purposes of
the Plan shall be determined by the Board, which determination shall be final
and conclusive. For purposes of the Plan, a termination of employment with the
Corporation or a Subsidiary shall not be deemed to occur if the Optionee or
Holder is immediately thereafter employed with the Corporation or any
Subsidiary.
(b) Non-Employee Directors. Any Option granted to a Non-Employee
Director shall not terminate until the expiration of the ten-year term of the
Option regardless of whether the
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Non-Employee Director continues to serve as a director of the Corporation or any
subsidiary of the Corporation, as applicable.
13. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
(a) Death of an Employee. If the Optionee dies while employed by the
Corporation or a Subsidiary or after termination of employment and during the
period in which an Option may be exercised hereunder, except as otherwise is
provided in the Option Agreement relating to such Option, the executors or
administrators or legatees or distributees of such Optionee's estate shall have
the right (subject to the general limitations on exercise set forth in Section
10(b) above), at any time within one year after the date of the Optionee's death
and prior to termination of the Option as provided in Section 10(a) above, to
exercise any Option held by such Optionee at the date of such Optionee's death,
whether or not such Option was exercisable immediately prior to such Optionee's
death; provided, however, that the Board may provide, by inclusion of
appropriate language in any Option Agreement, that in the event of the death of
the Optionee, the holder of an Option may (subject to the general limitations on
exercise set forth in Section 10(b)), exercise an Option, in whole or in part,
at any time after the Optionee's death and before termination of the Option as
provided in Section 10(a) above, either subject to or without regard to any
installment limitation on exercise imposed pursuant to Section 10(b) above. The
extent to which shares of restricted Stock shall become vested as a result of
the Holder's death while employed by the Corporation or a Subsidiary shall be
specified in the Agreement with respect to such Incentive Award.
(b) Disability of an Employee. If the Optionee terminates employment
with the Corporation or a Subsidiary by reason of the "permanent and total
disability" (within the meaning of Section 22(e)(3) of the Code) of such
Optionee, then such Optionee shall have the right (subject to the general
limitations on exercise set forth in Section 10(b) above), at any time within
one year after such termination of employment and prior to termination of the
Option as provided in Section 10(a) above, to exercise, in whole or in part, any
Option held by such Optionee at the date of such termination of employment,
whether or not such Option was exercisable immediately prior to such termination
of employment; provided, however, that the Board may provide, by inclusion of
appropriate language in the Option Agreement, that the Optionee may (subject to
the general limitations on exercise set forth in Section 10(b) above), in the
event of the termination of employment of the Optionee with the Corporation or a
Subsidiary by reason of the "permanent and total disability" (within the meaning
of Section 22(e)(3) of the Code) of such Optionee, exercise an Option, in whole
or in part, at any time after such termination of employment and before
termination of the Option as provided in Section 10(a) above, either subject to
or without regard to any installment limitation on exercise imposed pursuant to
Section 10(b) above. Whether a termination of employment is to be considered by
reason of "permanent and total disability" for purposes of this Plan shall be
determined by the Board, which determination shall be final and conclusive. The
extent to which shares of restricted Stock shall become vested as a result of
the Holder's disability while employed by the Corporation or a Subsidiary shall
be specified in the Agreement with respect to such Incentive Award.
(c) Death or Disability of a Non-Employee Director. Any Option granted
to a Non-Employee Director shall continue to be exercisable following the death
or disability of the Non-Employee Director until the expiration of the Option
under Section 10(a) above.
14. USE OF PROCEEDS
The proceeds received by the Corporation from the sale of Stock
pursuant to Incentive Awards granted under the Plan shall constitute general
funds of the Corporation.
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15. REQUIREMENTS OF LAW
(a) Violations of Law. The Corporation shall not be required to sell or
issue any shares of Stock under any Incentive Award if the sale or issuance of
such shares would constitute a violation by the individual receiving such shares
or exercising an Option or by the Corporation of any provisions of any law or
regulation of any governmental authority, including without limitation any
federal or state securities laws or regulations. Specifically in connection with
the Securities Act of 1933 (as now in effect or as hereafter amended), upon
exercise of any Option, unless a registration statement under such Act is in
effect with respect to the shares of Stock covered by such Option, the
Corporation shall not be required to sell or issue such shares unless the Board
has received evidence satisfactory to it that the holder of such Option may
acquire such shares pursuant to an exemption from registration under such Act.
Any determination in this connection by the Board shall be final, binding, and
conclusive. The Corporation may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Securities Act of 1933 (as now in
effect or as hereafter amended). The Corporation shall not be obligated to take
any affirmative action in order to cause the exercise of an Option or the
issuance of shares pursuant thereto to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable unless and until the shares
of Stock covered by such Option are registered or are subject to an available
exemption from registration, the exercise of such Option (under circumstances in
which the laws of such jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.
(b) Compliance with Rule 16b-3. The Plan is intended to comply with
Rule 16b-3 or its successor under the Exchange Act. With respect to persons
subject to Section 16 of the Exchange Act, any provision of the Plan or action
of the Plan administrators that is inconsistent with such Rule shall be deemed
null and void to the extent permitted by law and deemed advisable by the Plan
administrators.
16. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Incentive Awards have
not been granted; provided, however, that no amendment by the Board shall,
without approval by a majority of the votes present and entitled to vote at a
duly held meeting of stockholders at which a quorum representing one-third of
all the outstanding voting stock of the Corporation is present, either in person
or by proxy, (a) change the requirements as to eligibility to receive Incentive
Awards; (b) increase the maximum number of shares of Stock in the aggregate that
may be issued pursuant to Incentive Awards granted under the Plan (except as
permitted under Section 17 hereof); or (c) materially increase the benefits
accruing to eligible individuals under the Plan. Except as permitted under
Section 17 hereof, no amendment, suspension or termination of the Plan shall,
without the consent of the holder of the Incentive Award, alter or impair rights
or obligations under any Incentive Award theretofore granted under the Plan.
17. EFFECT OF CHANGES IN CAPITALIZATION
(a) Changes in Stock. If the outstanding shares of Stock are increased
or decreased or changed into or exchanged for a different number or kind of
shares or other securities of the Corporation by reason of any recapitalization,
reclassification, stock split-up, combination of shares, exchange of shares,
stock dividend or other distribution payable in capital stock, or other increase
or decrease in such shares effected without receipt of consideration by the
Corporation, occurring after the effective date of the Plan, the number and
kinds of shares for the issuance of which Incentive Awards may be granted under
the Plan shall be adjusted proportionately and appropriately by the Corporation.
In addition, the number and kind of shares for which Options are outstanding
shall be adjusted proportionately and appropriately so that the proportionate
interest of
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the holder of the Option immediately following such event shall, to the extent
practicable, be the same as immediately prior to such event. Any such adjustment
in outstanding Options shall not change the aggregate Option Price payable with
respect to shares subject to the unexercised portion of the Option outstanding
but shall include a corresponding proportionate adjustment in the Option Price
per share.
(b) Reorganization in Which the Corporation Is the Surviving
Corporation. Subject to Subsection (c) hereof, if the Corporation shall be the
surviving corporation in any reorganization, merger, or consolidation of the
Corporation with one or more other corporations, any Option theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option would have been
entitled immediately following such reorganization, merger, or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger, or consolidation.
(c) Reorganization in Which the Corporation Is Not the Surviving
Corporation or Sale of Assets or Stock. Upon the dissolution or liquidation of
the Corporation, or upon a merger, consolidation or reorganization of the
Corporation with one or more other corporations in which the Corporation is not
the surviving corporation, or upon a sale of all or substantially all of the
assets of the Corporation to another corporation, or upon any transaction
(including, without limitation, a merger or reorganization in which the
Corporation is the surviving corporation) approved by the Board which results in
any person or entity owning eighty percent or more of the combined voting power
of all classes of stock of the Corporation, the Plan and all Options outstanding
hereunder shall terminate, except to the extent provision is made in writing in
connection with such transaction for the continuation of the Plan and/or the
assumption of the Options theretofore granted, or for the substitution for such
Options of new options covering the stock of a successor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to the number and
kinds of shares and exercise prices, in which event the Plan and Options
theretofore granted shall continue in the manner and under the terms so
provided. Except as otherwise provided in the Option Agreement with respect to
an Option granted other than to a Non-Employee Director, in the event of any
such termination of the Plan, each individual holding an Option shall have the
right (subject to the general limitations on exercise set forth in Section 10(b)
above), immediately prior to the occurrence of such termination and during such
period occurring prior to such termination as the Board in its sole discretion
shall determine and designate, to exercise such Option in whole or in part,
whether or not such Option was otherwise exercisable at the time such
termination occurs and without regard to any installment limitation on exercise
imposed pursuant to Section 10(b) above. The Board shall send written notice of
an event that will result in such a termination to all individuals who hold
Options not later than the time at which the Corporation gives notice thereof to
its stockholders.
(d) Adjustments. Adjustments under this Section 17 related to Stock or
securities of the Corporation shall be made by the Board, whose determination in
that respect shall be final, binding, and conclusive. No fractional shares of
Stock or units of other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share or unit.
(e) No Limitations on Corporation. The grant of an Incentive Award
pursuant to the Plan shall not affect or limit in any way the right or power of
the Corporation to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge, consolidate, dissolve
or liquidate, or to sell or transfer all or any part of its business or assets.
18. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Incentive Award granted or Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the
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employ or service of the Corporation or any Subsidiary, or to interfere in any
way with the right and authority of the Corporation or any Subsidiary either to
increase or decrease the compensation of any individual at any time, or to
terminate any employment or other relationship between any individual and the
Corporation or any Subsidiary.
19. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Corporation for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan.
* * *
This Plan was duly adopted and approved by the Board of Directors of
the Corporation by resolution at a meeting held on the _____ day of
________________, 1996.
_____________________________________
Secretary of the Corporation
This Plan was duly approved by the stockholders of the Corporation at a
meeting held on the ______ day of ________________, 1996.
_____________________________________
Secretary of the Corporation
A-10
<PAGE>
EXHIBIT B
---------
Proposed Subsection 1 of Article 10 of the Restated Certificate of Incorporation
of the Company, which would replace the current Subsection 1 of Article 10 in
its entirety.
Article 10. Approval for Certain Stock Acquisitions and Offers to
Acquire Stock and Acquisitions of Control and Offers to
Acquire Control
Subsection 1. Three-Year Restriction on Certain
Acquisitions and Offers to Acquire Voting Stock
In addition to and not in limitation of the provisions of Subsections 2
through 6 of this Article 10 and except as otherwise provided by this Subsection
1, for a period of three years from the Effective Date of this Subsection 1, no
Person shall become, or make any Offer to become, a Beneficial Owner of 5% or
more of the Voting Stock of the Corporation (a "Prohibited 5% Owner") without
the prior approval of the Board of Directors of the Corporation. A Person who is
a Beneficial Owner of 5% or more of the Voting Stock of the Corporation on the
Effective Date (an "Existing 5% Owner") shall not be deemed to be a Prohibited
5% Owner in violation of this Subsection 1 solely as a result of such status;
provided, however, that if after the Effective Date, any Existing 5% Owner shall
become, or make any Offer to become, at any time the Beneficial Owner of any
additional shares of Voting Stock of the Corporation, then such Person shall be
deemed to be a Prohibited 5% Owner if, following the acquisition of such
additional shares, such Existing 5% Owner is or will be the Beneficial Owner of
5% or more of the Voting Stock of the Corporation.
No Person shall become a Prohibited 5% Owner as the result of an
acquisition of shares of Voting Stock by the Corporation which, by reducing the
number of shares of Voting Stock of the Corporation outstanding, increases the
proportionate number of shares of Voting Stock beneficially owned by such Person
to 5% or more of the shares of Voting Stock of the Corporation then outstanding;
provided, however, that if a Person shall become a Beneficial Owner of 5% or
more of the Voting Stock of the Corporation then outstanding by reason of share
purchases by the Corporation and shall, after such share purchases by the
Corporation, become the Beneficial Owner of any additional shares of Voting
Stock of the Corporation, then such Person shall be deemed to be a Prohibited 5%
Owner if such Person is then the Beneficial Owner of 5% or more of the Voting
Stock then outstanding.
In the event that any Person becomes a Prohibited 5% Owner in violation
of this Article 10, such number of the shares of Voting Stock of which such
Person is the Beneficial Owner, in excess of the number of shares of Voting
Stock of which such Person might be the Beneficial Owner without becoming a
Prohibited 5% Owner, shall be considered from and after the date such Person
becomes a Prohibited 5% Owner to be "excess shares" for purposes of this
Subsection 1 of Article 10. Such excess shares shall thereafter no longer (i) be
entitled to vote on any matter, (ii) be entitled to take other shareholder
action, (iii) be entitled to be counted in determining the total number of
outstanding shares for purposes of any matter involving shareholder action, or
(iv) be transferable, except with the approval of the Board of Directors or by
an independent trustee appointed by the Board of Directors for the purpose of
having such excess shares sold on the open market or otherwise. The proceeds
from the sale by the trustee of such excess shares shall be paid (i) first, to
the trustee in an amount equal to the trustee's reasonable fees and expenses,
(ii) second, to the Beneficial Owner of such excess shares in an amount up to
such owner's federal income tax basis in such excess shares, and (iii) third, to
the Corporation as to any remaining balance.
If the Board of Directors of the Corporation determines in good faith
that a Person who would otherwise be a Prohibited 5% Owner, as defined pursuant
to the foregoing provisions, has inadvertently become a Prohibited 5% Owner and
such Person ceases to be the Beneficial Owner and disposes of a sufficient
number of shares of Voting Stock within the time fixed by the Board of
B-1
<PAGE>
Directors incident to the foregoing determination, so that such Person would no
longer be a Prohibited 5% Owner, pending and upon such disposition of shares of
Voting Stock, such Person shall not be deemed a Prohibited 5% Owner for purposes
of this Subsection 1 unless and until such Person shall subsequently become a
Prohibited 5% Owner.
For purposes of this Subsection 1 of Article 10, the term "Effective
Date" shall mean ______________, 1996*, the terms "Offer" and "Voting Stock"
shall have the meanings ascribed to such terms in Subsection 5 of this Article
10, and the term "Beneficial Owner" shall have the meaning ascribed to such term
in Article 12, Subsection 3.C. hereof.
________________________
* Such date shall be the date on which the proposed amendment is filed with the
Secretary of State of the State of Delaware.
B-2
<PAGE>
REVOCABLE PROXY
FIRST COASTAL CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD
The undersigned stockholder of First Coastal Corporation (the
"Company") hereby authorizes Normand E. Simard, Edward K. Simensky, and each of
them, with full power of substitution, to vote and otherwise represent all the
shares of Common Stock of the Company held of record by the undersigned at the
Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be held
at the Embassy Suites Hotel, 1050 Westbrook Street, Portland, Maine 04102 on
Tuesday, June 4, 1996 at 10:00 a.m., and any adjournments or postponements
thereof.
This proxy, when properly completed, will be voted in the manner
directed herein by the undersigned stockholder. UNLESS CONTRARY DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED (i) FOR THE ELECTION OF THE BOARD'S NOMINEE
NAMED IN THE PROXY STATEMENT AND BELOW AS A DIRECTOR OF THE COMPANY, (ii) FOR
APPROVAL AND ADOPTION OF THE FIRST COASTAL CORPORATION 1996 STOCK OPTION AND
EQUITY INCENTIVE PLAN, (iii) FOR ADOPTION OF THE PROPOSED AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION OF THE COMPANY, (iv) FOR THE RATIFICATION
OF THE APPOINTMENT BY THE BOARD OF THE FIRM OF COOPERS & LYBRAND, L.L.P. AS
INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1996,
AND (v) FOR THE ADJOURNMENT OF THE ANNUAL MEETING TO PERMIT THE SOLICITATION OF
ADDITIONAL PROXIES IN THE EVENT THAT SUFFICIENT VOTES ARE NOT PRESENT IN PERSON
AND BY PROXY TO VOTE IN FAVOR OF THE FIRST COASTAL CORPORATION 1996 STOCK OPTION
AND EQUITY INCENTIVE PLAN AND THE PROPOSED AMENDMENT TO THE RESTATED CERTIFICATE
OF INCORPORATION, AND IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE
BOARD AS TO OTHER MATTERS.
1. Election of director.
For a three-year term: Roger E. Klein.
FOR the nominee listed above. WITHHOLD AUTHORITY to vote for the nominee
listed above.
[ ] [ ]
2. Adoption of First Coastal Corporation 1996 Stock Option and
Equity Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Amendment of Restated Certificate of Incorporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Ratification of the appointment by the Board of the firm of
Coopers & Lybrand, L.L.P. as independent accountants of the
Company for the year ending December 31, 1996.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
5. Adjournment of Annual Meeting to permit the solicitation of
additional proxies in the event that sufficient votes are not
present in person and by proxy to vote in favor of the First
Coastal Corporation 1996 Stock Option and Equity Incentive
Plan and the proposed amendment to the Restated Certificate of
Incorporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. Upon such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof,
as determined by a majority of the Company's Board.
(continued and to be dated and signed on the reverse side)
<PAGE>
(Continued from other side)
The undersigned stockholder may revoke this Proxy at any time before it
is voted by filing a written notice of revocation with the Secretary of the
Company prior to the Annual Meeting, by filing a duly executed proxy bearing a
later date with the Secretary of the Company prior to the Annual Meeting or by
attending the Annual Meeting and voting in person. The undersigned stockholder
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement and hereby revokes any proxy or proxies heretofore given.
_____________________________________
Signature(s) of Stockholder or
Authorized Representative
Date:________________________________
Please date and sign exactly as name
appears hereon. Each executor,
administrator, trustee, guardian,
attorney-in-fact and other fiduciary
should sign and indicate his or her
full title. When stock has been
issued in the name of two or more
persons, all should sign.
If you receive more than one proxy card, please sign and
return all cards in the accompanying envelope.
<PAGE>
