<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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 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
---------
[X] 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 7, 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 11, 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 or represented by proxy to vote in favor of the
First Coastal Corporation 1996 Stock Option and Equity Incentive Plan and/or 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 11, 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 11, 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 or represented by proxy to vote in favor of the
matters summarized in Paragraphs 2 and/or 3 hereof, to consider and
vote upon a proposal to adjourn the Annual 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 7, 1996
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 11, 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 11, 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 9, 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
or represented by proxy to vote in favor of the First Coastal Corporation 1996
Stock Option and Equity Incentive Plan and/or 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 OR REPRESENTED BY PROXY TO VOTE IN FAVOR OF THE FIRST COASTAL
CORPORATION 1996 STOCK OPTION AND EQUITY INCENTIVE PLAN AND/OR THE PROPOSED
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION OF THE COMPANY. 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
<PAGE>
shares represented by such proxies on such matters as determined by a majority
of the Board of Directors.
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 1,600 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. In connection with the consummation of
the Offering (as described under "Executive Compensation -- Compensation of
Directors"), the Company may seek to increase the size of its Board of Directors
pursuant to an amendment to the Company's Amended and Restated Bylaws increasing
the authorized number of directors. Under the Company's Amended and Restated
Bylaws, newly created directorships resulting from any increase in the
authorized number of directors may be filled, for the unexpired term, by the
concurring vote of a majority of the directors then in office, whether or not a
quorum, and any director so chosen shall hold office for the remainder of the
full term of the class of directors in which the new directorship was created
and until such director's successor shall have been elected and qualified. As
of the date of this Proxy Statement, the Company has made no determination as to
whether it will seek to increase the size of its Board of Directors in
connection with the Offering or who the directors designated to fill any newly
created directorships would be. In addition, there can be no assurance that the
Offering will be consummated.
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.
-3-
<PAGE>
AGE AT MEMBER OF TERM TO
DIRECTOR NOMINEE: DECEMBER 31, 1995 BOARD SINCE EXPIRE
----------------- ----------------- ----------- -------
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 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 member of the advisory
board of EastGuard Insurance Company, Saco, Maine ("EastGuard"), since 1995.
Mr. Simensky was a director of Mutual Fire Insurance Company, Saco, Maine
("Mutual Fire"), from 1987 until the acquisition of Mutual Fire by EastGuard in
1995. 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
-4-
<PAGE>
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 only persons who are nominated in
accordance with the procedures set forth in the Amended and Restated Bylaws
shall be eligible for election as directors.
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.
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.
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.
-5-
<PAGE>
AGE AT
NAME DECEMBER 31, 1995 POSITIONS HELD
---- ----------------- --------------
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 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.
Each executive officer has entered into an employment protection agreement
with the Bank. In addition, the Boards of Directors of the Company and the Bank
have approved new employment agreements, subject to regulatory approval, which
would supersede such employment protection agreements with such executive
officers. See "Executive Compensation -- Employment Agreements."
-6-
<PAGE>
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").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
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 --
</TABLE>
- - -------------------------
(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.
OPTION GRANTS
No options were granted during the fiscal year ended December 31, 1995.
-7-
<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 (d) / 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.
(d) Such options expired March 18, 1996.
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.
-8-
<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.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
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
</TABLE>
- - -------------------------
(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.
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 "-- 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.
-9-
<PAGE>
On May 2, 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 1,500 shares of Common Stock (representing an aggregate of options
exercisable for 6,000 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 has filed 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." "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" of
$3,000 each were payable to Messrs. Caswell and Byrd on December 31, 1994, and
April 30, August 31, and December 31, 1995, respectively. 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").
The Boards of Directors of the Company and the Bank have proposed
employment agreements (each a "New Employment Agreement" and together, the "New
Employment Agreements") with each of Messrs. Caswell and Byrd, subject to
approval of the Federal Deposit Insurance Corporation. The New Employment
Agreements would supersede the Employment Protection Agreements.
Under their respective New Employment Agreements, each executive officer
may receive annual salary increases based on increases in the cost of living and
based upon performance or merit, as determined by the Boards of Directors of the
Company and the Bank. Each executive officer shall be eligible to receive
discretionary bonuses as may be authorized by the Boards of Directors of the
Company or the Bank and shall be eligible to participate in any plan of the
Company or the Bank relating to stock options, stock purchases, pension, thrift,
profit sharing, employee stock ownership, group life insurance, medical
coverage, disability insurance, education or other retirement or
-10-
<PAGE>
employee benefits that the Company or the Bank has adopted or may adopt for the
benefit of its executive employees. In addition, each executive officer is
authorized to incur reasonable business expenses in the performance of his
duties. The New Employment Agreements provide for initial terms ending
December 31, 1997 with renewals for one additional consecutive 12-month period
as of December 31, 1996 and each subsequent anniversary of December 31, unless
the Company and the Bank, or the executive officer, gives written notice to the
contrary at least two months prior to any such renewal date. The base salaries
through December 31, 1996 for Messrs. Caswell and Byrd are $124,800 and $88,400,
respectively, which salaries may not be reduced under the New Employment
Agreements without the consent of the executive officer.
The Boards of Directors of the Company and the Bank may terminate the
executive officer's employment at any time. Each agreement provides that if the
executive officer's employment is terminated other than for cause (as defined),
disability or incapacitation or the executive officer terminates employment with
good reason (as defined), the officer will be entitled (subject to certain
limitations) (a) to continue to participate in and accrue benefits under certain
benefit plans for the remaining term of the agreement, but not in excess of 24
months, (b) to receive certain insurance and indemnification benefits with
respect to all of such officer's acts or omissions while an officer or director
until the final expiration or running of all periods of limitation against
action which may be applicable to such acts or omissions, and (c) to be paid a
lump sum cash payment as liquidated damages in an amount equal to the amount
that would be payable over a period equal to the remaining term of the
agreement, but not in excess of 24 months.
In December 1994, the Bank entered into an employment agreement with Mr.
Whittaker (the "Whittaker Employment Agreement"), 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 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.
-11-
<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. See "Adoption of First Coastal Corporation 1996 Stock Option and
Equity Incentive Plan" with respect to stock options expected to be granted to
the Company's directors and executive officers and to awards of restricted stock
made to the Company's executive officers.
AMOUNT AND PERCENT OF
NATURE OF BENEFICIAL COMMON STOCK
NAME OWNERSHIP(a)(b) OUTSTANDING
- - ---- -------------------- ------------
Gregory T. Caswell
President and Chief Executive Officer. . . 5,000(c) *
Dennis D. Byrd
Treasurer. . . . . . . . . . . . . . . . . 2,500(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(d) *
James H. Whittaker
President and Chief Executive
Officer (former) (e) . . . . . . . . . . 3,376(f) *
All directors and executive
officers as a group (6 persons). . . . . . . 8,937(g) 1.5%
- - -------------------------
* Less than 1% of shares outstanding.
(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 a restricted stock award made under the Plan which vests over a
three-year period (from May 2, 1996) and is subject to stockholder approval
of the Plan and to completion of the Offering.
(d) Consists of options which are presently exercisable.
(e) Mr. Whittaker resigned as President and Chief Executive Officer of the
Company and the Bank effective March 31, 1995.
(f) 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.
(g) Includes 308 options which are presently exercisable and 7,500 shares of
restricted stock awarded under the Plan which vest over a three-year period
(from May 2, 1996) and are subject to stockholder approval of the Plan and
to completion of the Offering.
-12-
<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.
AMOUNT AND PERCENT OF
NAME AND ADDRESS OF NATURE OF BENEFICIAL COMMON STOCK
BENEFICIAL OWNER OWNERSHIP(a)(b) OUTSTANDING
------------------- -------------------- ------------
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
- - -------------------------
(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 sole 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.
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 May 2, 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 71 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.
-13-
<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 130,000 shares of Common Stock of the Company will be reserved for issuance
to employees and directors under the Plan, representing approximately 21.7% of
the outstanding shares of Common Stock on May 2, 1996 (and approximately 9.6% of
the outstanding shares of Common Stock assuming the consummation of the Offering
based on shares of Common Stock outstanding 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 130,000 shares reserved for issuance under the Plan is $865,800.
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
30,000 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 1,500 shares of Common Stock (representing an aggregate of options
exercisable for 6,000 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 has filed 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.
-14-
<PAGE>
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). 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.
-15-
<PAGE>
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 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 May 2,
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.
-16-
<PAGE>
PLAN BENEFITS
The table below provides certain information as of the date of this Proxy
Statement regarding stock options expected to be granted under the Plan and
awards of restricted stock made 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).
PLAN BENEFITS
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
NUMBER EXERCISE RESTRICTED DOLLAR
NAME AND POSITION OF OPTIONS PRICE STOCK VALUE
- - ----------------- ---------- -------- ---------- ------
<S> <C> <C> <C> <C>
Dennis D. Byrd
Treasurer. . . . . . . . . . . . . . . 7,500 (a) (a) 2,500 (b) $16,650 (c)
Gregory T. Caswell
President and Chief Executive
Officer. . . . . . . . . . . . . . . . 15,000 (a) (a) 5,000 (b) 33,300 (c)
Roger E. Klein
Director Nominee . . . . . . . . . . . 1,500 (d) -- --
James H. Whittaker
President and Chief Executive
Officer (former) (e) . . . . . . . . . -- -- -- --
Executive Officer Group
(two persons). . . . . . . . . . . . . 22,500 (a) (a) 7,500 (b) 49,950 (c)
Non-employee Director Group
(four persons) . . . . . . . . . . . . 6,000 (d) -- --
Non-executive Officer Employee
Group (two persons). . . . . . . . . . 8,000 (a) (a) -- --
</TABLE>
- - -------------------------
(a) The Board has approved grants of 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 restricted stock award is subject to completion of the Offering.
(c) Based on the book value per share of the Company's Common Stock of $6.66 at
December 31, 1995.
(d) The Board has approved grants of such options 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.
(e) Mr. Whittaker resigned as President and Chief Executive Officer of the
Company and the Bank effective March 31, 1995.
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
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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 (the "holding period
requirement"). However, the excess of the fair market value of the shares
subject to an incentive option on 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 makes a
special tax election within 30 days following exercise) 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 holding period requirement, 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. 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
requirement 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 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 holding period requirement). 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 following exercise). 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
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performance-related compensation" under the Code, so that the Company should be
entitled to deduct the full amount of such compensation income 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.
The foregoing is a brief summary of some of the principal federal income
tax consequences of stock option grants under the Plan and recipients of option
grants under the Plan should consult with their personal tax advisors with
respect to such grants 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 [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" and includes a cross-reference to definitions for
the terms "Person," "Control" and "Offer." 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
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becomes a prohibited 5% owner to be "excess shares" for purposes of the proposed
amendment. Such 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 any 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 other proposed purchases with
respect to 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.
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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 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 amount
of taxable income against which net operating losses may be deducted. 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 5.68% for the month of May 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 $162,000 (assuming the Common Stock has a fair market
value of $4.75 per share). In addition, assuming that the Company would have
been able to use its existing net operating loss carryforwards and the net
operating loss carryforward resulting from the payment of the $9.0 million note
issued to the Federal Deposit Insurance Corporation on January 31, 1995, the
effect of the imposition of the section 382 limitation on the utilization of net
operating loss carryforwards after 1996 would be that approximately $9.9 million
of the Company's net operating loss carryforwards would expire unused,
decreasing future income after taxes by approximately $3.4 million.
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
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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.
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." Assuming the consummation of the Offering and that there
are no acquisitions of Common Stock that would make the acquiror thereof a
prohibited 5% owner pursuant to the proposed amendment, the Company estimates
that it would be able to issue approximately an additional 1.5 million shares of
Common Stock pursuant to an offering or acquisition transaction or otherwise
without causing an ownership change under Section 382 of the Code. In addition,
under certain circumstances, the Board of Directors may determine that a waiver
of the restrictions imposed by the proposed amendment is in the best interests
of the Company and its stockholders, notwithstanding that such waiver may result
in an ownership change and the imposition of the section 382 limitation.
ANTI-TAKEOVER EFFECT OF THE PROPOSED AMENDMENT
During the three-year period that the proposed amendment would be
effective, it may 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
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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.
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.
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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 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.
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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.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR RATIFICATION
OF THE APPOINTMENT OF COOPERS & LYBRAND, L.L.P. AS THE INDEPENDENT ACCOUNTANTS
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 or represented
by proxy to vote in favor of the First Coastal Corporation 1996 Stock Option and
Equity Incentive Plan (Proposal Two) and/or 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 9, 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.
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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 7, 1996
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EXHIBIT A
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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 Section 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 $1.00 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
130,000 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
30,000 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 1,500 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, either in person or by
proxy, and entitled to vote at a duly held meeting of the stockholders at which
a quorum representing at least 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, either in person or by
proxy, and entitled to vote at a duly held meeting of stockholders at which a
quorum representing at least 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 2nd day of May, 1996.
/s/ Patricia Briand
---------------------------------------------
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
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EXHIBIT B
PROPOSED SUBSECTION 1 OF ARTICLE 10 OF THE RESTATED CERTIFICATE OF INCORPORATION
OF THE COMPANY, WHICH WOULD CHANGE THE CURRENT CAPTION OF ARTICLE 10 AND 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, 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.
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
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disposes of a sufficient number of shares of Voting Stock within the time fixed
by the 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 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, the term "Effective Date" shall mean
______________, 1996*, and the term "Beneficial Owner" shall have the meaning
ascribed to such term in Article 12, Subsection 3.C. hereof. For purposes of
this Article 10, the terms "Control," "Offer," "Person" and "Voting Stock" shall
have the meanings ascribed to such terms in Subsection 5 of this Article 10.
- - ---------------------------
* Such date shall be the date on which the proposed amendment is filed with the
Secretary of State of Delaware.
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<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 11, 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 ON THE REVERSE SIDE 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 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
OR REPRESENTED BY PROXY TO VOTE IN FAVOR OF THE FIRST COASTAL CORPORATION 1996
STOCK OPTION AND EQUITY INCENTIVE PLAN AND/OR 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.
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.
(Continued And To Be Dated And Signed On The Reverse Side)
<PAGE>
(CONTINUED FROM OTHER SIDE)
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
5. Adjournment of Annual Meeting to permit the solicitation of additional
proxies in the event that sufficient votes are not present in person
or represented by proxy to vote in favor of the First Coastal
Corporation 1996 Stock Option and Equity Incentive Plan and/or 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.
--------------------
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.
