<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to 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] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
FIRST COASTAL CORPORATION
36 THOMAS DRIVE
WESTBROOK, MAINE 04092
(207) 774-5000
April 19, 1999
Dear Stockholder:
We cordially invite you to attend the 1999 annual meeting of stockholders
(the "Annual Meeting") of First Coastal Corporation (the "Company"), which will
be held on Tuesday, May 18, 1999 at 10:00 a.m. at the Portland Marriott, 200
Sable Oaks Drive, South Portland, Maine 04106. A copy of the Company's 1998
Annual Report to Stockholders, Notice of Annual Meeting, the Proxy Statement for
the Annual Meeting of Stockholders and Proxy Card are enclosed.
At the Annual Meeting, you are being asked to (i) elect two directors to
the Board of Directors (the "Board") for three-year terms, (ii) consider and
vote upon proposed amendments to the First Coastal Corporation 1996 Stock Option
and Equity Incentive Plan, and (iii) ratify the Board's appointment of
PricewaterhouseCoopers LLP as the Company's independent accountants for the year
ending December 31, 1999.
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 MAY 18, 1999
---------------------------------------
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders (the "Annual
Meeting") of First Coastal Corporation (the "Company") will be held on Tuesday,
May 18, 1999 at 10:00 a.m. at the Portland Marriott, 200 Sable Oaks Drive, South
Portland, Maine 04106, for the following purposes:
1. Election of Directors. To elect two directors for three-year terms
(Proposal One);
2. Amendment No. 1 to First Coastal Corporation 1996 Stock Option and
Equity Incentive Plan. To consider and vote upon proposed amendments to
the First Coastal Corporation 1996 Stock Option and Equity Incentive
Plan to (i) increase the number of shares of Common Stock available for
issuance pursuant to Incentive Awards granted under the plan by 130,000;
(ii) increase the number of shares of Common Stock subject to options
that are granted to each non-employee director as of each annual meeting
date from 500 shares of Common Stock to 1,000 shares of Common Stock;
and (iii) extend the term of the plan to April 2, 2009 (Proposal Two);
3. Ratification of Appointment of Accountants. To ratify the appointment by
the Board of Directors of the firm of PricewaterhouseCoopers LLP as
independent accountants of the Company for the year ending December 31,
1999 (Proposal Three); and
4. 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 April 15, 1999 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
April 19, 1999
- --------------------------------------------------------------------------------
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 MAY 18, 1999
------------------------------------
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, May 18, 1999 at
10:00 a.m. at the Portland Marriott, 200 Sable Oaks Drive, South Portland, Maine
04106, 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 April 23, 1999.
At the Annual Meeting, stockholders will be asked to (i) elect two members
of the Board of Directors for three-year terms, (ii) consider and vote upon
proposed amendments to the First Coastal Corporation 1996 Stock Option and
Equity Incentive Plan, (iii) ratify the appointment by the Board of the firm of
PricewaterhouseCoopers LLP as independent accountants of the Company for the
fiscal year ending December 31, 1999, and (iv) 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
TWO NOMINEES OF THE BOARD OF DIRECTORS AS DIRECTORS FOR THREE-YEAR TERMS, (II)
FOR PROPOSAL TWO TO APPROVE AND ADOPT AMENDMENT NO. 1 TO FIRST COASTAL
CORPORATION 1996 STOCK OPTION AND EQUITY INCENTIVE PLAN, AND (III) FOR PROPOSAL
THREE TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
ACCOUNTANTS OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1999. Except for
procedural matters incident to the conduct of the Annual Meeting, the Company
does not know of any matters other than those described in the Notice of Annual
Meeting of Stockholders that are to come before the Annual Meeting. If any
other matters are properly brought before the Annual Meeting, the persons named
in the accompanying proxy will vote the shares represented by such proxies on
such matters as determined by a majority of the Board of Directors.
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
<PAGE>
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
ChaseMellon Shareholder Services, LLC, 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 April 15, 1999 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 April
15, 1999, there were approximately 1,432 holders of record of the 1,360,527
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,
(i) 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, (ii) 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 Amendment No. 1 to
First Coastal Corporation 1996 Stock Option and Equity Incentive Plan, and (iii)
the affirmative vote of a majority of the votes cast is required to ratify the
appointment of the Company's independent accountants. 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 counted for
purposes of determining a quorum but will not be treated as a vote cast.
Accordingly, abstentions with respect to shares represented at the Annual
Meeting will not affect Proposal One or Proposal Three. An abstention will have
the same effect as a negative vote with respect to the approval of Amendment No.
1 to First Coastal Corporation 1996 Stock Option and Equity Incentive Plan.
Broker non-votes will not affect any of the proposals.
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1998 accompanies this Proxy Statement. THE COMPANY IS REQUIRED TO
FILE AN ANNUAL REPORT ON FORM 10-K FOR ITS 1998 FISCAL YEAR WITH THE SECURITIES
AND EXCHANGE COMMISSION (THE "SEC"). STOCKHOLDERS MAY OBTAIN, FREE OF CHARGE, A
COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K BY WRITING TO OR TELEPHONING
INVESTOR RELATIONS, FIRST COASTAL CORPORATION, 36 THOMAS DRIVE, WESTBROOK, MAINE
04092; (207) 774-5000.
ELECTION OF DIRECTORS
(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.
At the Annual Meeting, two directors will be elected for three-year terms.
The Board's nominees for election as directors for three-year terms are Dennis
D. Byrd and Roger E. Klein. Messrs. Byrd and Klein have been members of the
Board of Directors of the Company since 1997 and 1990, respectively.
2
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF THE BOARD'S NOMINEES FOR ELECTION AS DIRECTORS OF THE COMPANY.
INFORMATION AS TO DIRECTOR NOMINEES AND CONTINUING DIRECTORS
The following table sets forth the names of the Board of Directors'
nominees for election as directors and each continuing director. Each director
of the Company also serves as a director of Coastal 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, 1998 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 directors of the
nominees listed below for terms of three years, unless otherwise directed by
stockholders. The Board of Directors believes that the nominees set forth below
will stand for election and will serve if elected as directors. If any person
nominated by 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
or persons as the Board of Directors may recommend.
<TABLE>
<CAPTION>
MEMBER OF
AGE AT COMPANY TERM TO
DIRECTOR NOMINEES: DECEMBER 31, 1998 BOARD SINCE EXPIRE
- ------------------ ----------------- ----------- -------
<S> <C> <C> <C>
Dennis D. Byrd /(a)/ 36 1997 2002
Roger E. Klein 56 1990 2002
</TABLE>
<TABLE>
<CAPTION>
MEMBER OF
AGE AT COMPANY TERM
CONTINUING DIRECTORS: DECEMBER 31, 1998 BOARD SINCE EXPIRES
- --------------------- ----------------- ----------- -------
<S> <C> <C> <C>
MaryEllen FitzGerald 44 1998 2000
Normand E. Simard 57 1987 2000
Edward K. Simensky 57 1994 2000
Gregory T. Caswell /(b)/ 43 1997 2001
David B. Hawkes, Sr. /(c)/ 54 1996 2001
Charles A. Stewart III 64 1995 2001
</TABLE>
_________________
/(a)/ Mr. Byrd serves as Vice President and Treasurer of the Company and
Executive Vice President, Chief Financial Officer and Treasurer of the
Bank.
/(b)/ Mr. Caswell serves as President and Chief Executive Officer of the Company
and the Bank.
/(c)/ Mr. Hawkes serves as Chairman of the Board of Directors of the Company and
the Bank.
DIRECTOR NOMINEES
- -----------------
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, and was 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. In 1994, Mr. Byrd was promoted to Executive Vice President, Chief
Financial Officer and Treasurer of the Bank and effective March 1995, Mr. Byrd
was elected to the Board of Directors of the Bank. Mr. Byrd became a director
of the Company in March 1997 and was also elected a Vice President of the
Company in December 1998.
3
<PAGE>
ROGER E. KLEIN is President and owner of 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 Timing
Strategies Corp., 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. Mr. Klein has been a trustee of the Eden Institute,
Princeton, New Jersey, a non-profit institute for autistic individuals, since
1995. Mr. Klein has been a director of the Bank since 1994.
CONTINUING DIRECTORS
- --------------------
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. In 1994, Mr. Caswell
was promoted to Executive Vice President -- Lending Division of the Bank.
Effective March 1995, Mr. Caswell was elected President and Chief Executive
Officer of the Company and the Bank and a director of the Bank, and in March
1997, Mr. Caswell became a director of the Company. Mr. Caswell is a director
of Greater Portland Big Brothers/Big Sisters, Inc. and a member of the Executive
Committee of the Maine Association of Community Banks.
MARYELLEN FITZGERALD is President and owner of Critical Insights, Inc.,
Portland, Maine, a strategic market research and public opinion polling
firm established in 1992. Ms. FitzGerald also is a trustee of the Susan Curtis
Foundation and Waynflete School, both of Portland, Maine, and a director of the
Maine Summer Drama Institute. Ms. FitzGerald was elected to the Boards of
Directors of the Company and the Bank in January 1998.
DAVID B. HAWKES, SR. is part owner of, and a consultant and business
advisor with, Cloudhawk Management Consultants, LLC, a consulting firm located
in Portland, Maine established in 1993. Mr. Hawkes also is a part owner of New
England Internet Services, Inc., a commercial internet consulting business
established in 1995. Mr. Hawkes is a director of AAA Northern New England,
American Skiing Company, Bancroft & Martin, Inc., Dion Industries, Inc.,
Northland Health Group, Pride Manufacturing Company, Seven Islands Land Co. and
Shawnee Peak, Inc. Mr. Hawkes served as special consultant to Runyon, Kersteen
& Oullettee, certified public accountants, Portland, Maine, from 1995 to 1996.
Mr. Hawkes was elected to the Boards of Directors of the Company and the Bank in
September 1996 and became Chairman of the Boards of Directors of the Company and
the Bank in January 1999.
NORMAND E. SIMARD is the President of York County Biscuit Company,
previously a food distributor in Biddeford, Maine, and currently a real estate
holding company. Mr. Simard is also a partner of Simard Enterprises, a family-
owned real estate holding company established in 1996. Mr. Simard has been a
director of the Bank since 1981.
EDWARD K. SIMENSKY has been President of Simensky & Thomson, certified
public accountants, in Saco, Maine, since 1978. Mr. Simensky was a member of
the advisory board of EastGuard Insurance Company, Saco, Maine ("EastGuard")
from 1995 until 1996 when the advisory board was eliminated. Mr. Simensky was a
director of Mutual Fire Insurance Company, Saco, Maine, from 1987 until its
acquisition by EastGuard in 1995. Mr. Simensky has been a trustee of the Sam L.
Cohen Charitable Foundation since 1994. Mr. Simensky has been a director of the
Bank since 1984.
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
4
<PAGE>
company based in Freeport, Maine. Mr. Stewart is a director of the Boys & Girls
Club of Greater Portland and the Community Dispute Resolution Center, a
nonprofit mediation organization based in Portland, Maine. In 1998, Mr. Stewart
became a trustee of White Mountain School, Bethlehem, New Hampshire. Mr. Stewart
also served as a director of the Maine Tennis Foundation from 1994 until January
1999. Mr. Stewart has been a director of the Bank since 1986.
CORPORATE GOVERNANCE AND OTHER MATTERS
The Board of Directors acts as a nominating committee for selecting
nominees for election as directors. The Company's Amended and Restated Bylaws
also permit stockholders eligible to vote at the Annual Meeting to make
nominations for directors, but only if such nominations are made pursuant to
timely notice in writing to the Secretary of the Company. To be timely, notice
must be delivered to, or mailed to and received at, the principal executive
offices of the Company not less than 30 days nor more than 90 days prior to the
date of the meeting, provided that at least 45 days' notice or prior public
disclosure of the date of the meeting is given or made to the stockholders. If
less than 45 days' notice or prior disclosure of the date of the meeting is
given or made to stockholders, notice by the stockholder to be timely must be
received not later than the close of business on the 15th day following the day
on which such notice of the date of the meeting was mailed or such public
disclosure was made. Public disclosure of the date of the Annual Meeting was
made by the issuance of a press release on March 25, 1999 and by filing a
Current Report on Form 8-K under the Securities Exchange Act of 1934 with the
SEC on March 26, 1999. 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. As of the date of this Proxy Statement, no
stockholder nominations have been received.
The Board of Directors has appointed an Audit Committee of the Board, which
committee may consist only of non-employee directors of the Company and the
Bank. 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. Hawkes and Simensky.
The Board of Directors has appointed a Compensation Committee of the Board,
which committee may consist only of non-employee directors of the Company and
the Bank. The Compensation Committee reviews executive officer compensation on
an annual basis and makes recommendations to the full Board regarding changes in
compensation. The members of the Compensation Committee currently are Messrs.
Hawkes and Simard and Ms. FitzGerald.
During the year ended December 31, 1998, the Board of Directors held 16
meetings, the Audit Committee held two meetings and the Compensation Committee
held two meetings. No incumbent director during the year ended December 31,
1998 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 or she served during the period of his or her
directorship.
5
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth the names of the executive officers of the
Company and the Bank. For information regarding each such officer's principal
occupation or employment during the past five years, the officer's age at
December 31, 1998 and the positions currently held with the Company and the
Bank, see "Election of Directors -- Information as to Director Nominees and
Continuing Directors."
<TABLE>
<CAPTION>
Age at
Name December 31, 1998 Positions Held
---- ----------------- --------------
<S> <C> <C>
Gregory T. Caswell 43 President, Chief Executive Officer
and a director of the Company and
the Bank
Dennis D. Byrd 36 Vice President, Treasurer and a
director of the Company and
Executive Vice President, Chief
Financial Officer and Treasurer
and a director of the Bank
</TABLE>
Each executive officer has entered into an employment agreement with the
Company and the Bank. Such employment agreements provide for an initial term
ending December 31, 1999, with automatic one-year renewals on December 31, 1998
and each subsequent December 31, unless the Company and the Bank, or the
executive officer, gives written notice to the contrary no later than October 31
before any such renewal date. For more information regarding the employment
agreements of Messrs. Caswell and Byrd, see "Executive Compensation --
Employment Agreements."
EXECUTIVE COMPENSATION
CASH COMPENSATION
The following table sets forth the compensation paid by the Company and the
Bank during 1998, 1997 and 1996 to Gregory T. Caswell, President and Chief
Executive Officer, and Dennis D. Byrd, Vice President and Treasurer, who was the
only other executive officer whose total annual salary and bonus exceeded
$100,000 for services rendered in all capacities to the Company and the Bank
during the year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION AWARDS
-----------------------------
NUMBER OF
ANNUAL COMPENSATION SECURITIES
------------------- RESTRICTED UNDERLYING ALL OTHER
PRINCIPAL POSITIONS YEAR SALARY BONUS STOCK AWARDS /(A)/ OPTIONS COMPENSATION /(B)/
- ------------------- ---- ------ ----- ------------------ ------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Gregory T. Caswell 1998 $136,282 $15,000 - 10,000 $8,177
President and Chief 1997 129,792 15,000 - 10,000 4,193
Executive Officer 1996 124,800 15,000 $25,000 25,000 -
Dennis D. Byrd 1998 96,533 10,000 - 5,000 5,792
Vice President 1997 91,936 7,500 - 5,000 2,784
and Treasurer 1996 88,400 7,500 12,500 12,500 -
</TABLE>
______________________
/(a)/ The value of the restricted stock award is based on the closing market
price of the Company's Common Stock on the date of grant multiplied by the
number of shares awarded. During 1996, Messrs. Caswell and Byrd were
awarded 5,000 and 2,500 shares of restricted stock, respectively, which
shares vest ratably over a three-year period
6
<PAGE>
(from May 2, 1996). At December 31, 1998, Messrs. Caswell and Byrd held
5,000 and 2,500 shares of restricted stock, respectively, which shares had
a value of $51,250 and $25,625, respectively, based on the closing market
price of the Company's Common Stock at such date. Under the Company's 1996
Stock Option and Equity Incentive Plan, holders of restricted stock awards
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 dispose of the shares covered by an award until
such shares have become vested.
/(b)/ Consists of matching contributions made by the Bank pursuant to the Bank's
401(k) defined contribution plan.
OPTION GRANTS
The following table contains information with respect to grants of stock
options to each of the named executive officers of the Company during the year
ended December 31, 1998.
OPTION GRANTS DURING 1998
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED /(A)/ IN 1998 PRICE /(B)/ DATE
- -------------------- ------------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Gregory T. Caswell.. 10,000 53% $10.25 December 2008
Dennis D. Byrd...... 5,000 26 10.25 December 2008
</TABLE>
___________________
/(a)/ Options granted to Messrs. Caswell and Byrd vest ratably over a three-year
period, subject to acceleration under certain circumstances.
/(b)/ All option grants were made at 100% of the fair market value of the Common
Stock on the date of grant.
OPTION EXERCISES AND HOLDINGS
The following table contains information with respect to each of the named
executive officers of the Company concerning the exercise of stock options
during 1998 and the value of all unexercised options held by such individuals at
December 31, 1998.
AGGREGATED OPTION EXERCISES IN 1998 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SHARES SECURITIES UNDERLYING VALUE OF UNEXERCISED
ACQUIRED UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ON AT FISCAL YEAR-END AT FISCAL YEAR-END /(A)/
------------------- ------------------------
NAME EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------------- ----------- ------------------- ------------------------ --------------------
<S> <C> <C> <C> <C> <C> <C>
Gregory T. Caswell - - 25,000 20,000 $98,750 $10,000
Dennis D. Byrd - - 12,500 10,000 49,375 5,000
</TABLE>
__________________
/(a)/ Based on the closing price of the Company's Common Stock on December 31,
1998, less the exercise price.
7
<PAGE>
PENSION PLAN
The Bank maintained 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. Future benefit accruals under the Pension Plan were
eliminated as of July 31, 1997 and the plan was terminated as of September 30,
1997. As a result of the termination and final settlement of the Pension Plan
in December 1998, Messrs. Caswell and Byrd received a distribution of $29,962
and $30,697, respectively, which each individual transferred to his respective
account under the Bank's 401(k) defined contribution plan.
COMPENSATION OF DIRECTORS
During 1998, there were no fees earned 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 1999. During
1998, each non-employee director of the Bank received a quarterly retainer of
$2,500. No additional amounts were paid to non-employee directors of the Bank
for meetings of the Board of Directors or 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. Effective February 24,
1999, in addition to a quarterly retainer, each non-employee director of the
Bank serving on a committee receives $200 for each committee meeting attended.
The First Coastal Corporation 1996 Stock Option and Equity Incentive Plan
provides that, subject to the availability of shares, as of each annual meeting
of stockholders of the Company, 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 or meeting at a per share exercise price
equal to the market value of a share of Common Stock on the date of grant.
Pursuant to such plan, in May 1998 each of Messrs. Hawkes, Klein, Simard,
Simensky and Stewart and Ms. FitzGerald, the then-current non-employee directors
of the Company, was granted a non-qualifying option with a 10-year term for 500
shares of Common Stock (representing an aggregate of options exercisable for
3,000 shares of Common Stock) at an exercise price equal to $13.563 per share.
Stockholders of the Company are being asked to consider and vote upon proposed
amendments to the First Coastal Corporation 1996 Stock Option and Equity
Incentive Plan, which among other things would increase the number of shares of
Common Stock subject to options that are granted to each non-employee director
as of each annual meeting from 500 shares of Common Stock to 1,000 shares of
Common Stock. See "Amendment No. 1 to First Coastal Corporation 1996 Stock
Option and Equity Incentive Plan."
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 calender year. For 1998, the interest rate was 5.52%. 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 1998, no director of the Bank elected to defer any portion of his
or her director fees.
EMPLOYMENT AGREEMENTS
In September 1998, the Company and the Bank entered into employment
agreements (the "Employment Agreements") with Messrs. Caswell and Byrd, which
superseded the employment agreements entered into by the parties in July 1996.
Under the Employment Agreements, Messrs. Caswell and Byrd may receive annual
salary increases based on increases in the cost of living and based upon
performance or merit, as determined
8
<PAGE>
by the Boards of Directors of the Company and the Bank. Each executive officer's
salary may not be decreased during the term of his agreement. Each such
executive officer is also eligible (i) to receive discretionary bonuses as may
be authorized by the Board of Directors of the Company or the Bank, (ii) 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 employee benefits that the Company or the Bank has adopted or may
adopt for the benefit of its executive employees, and (iii) to participate in
any other fringe benefits which are or may be or become applicable to executive
employees of the Company or the Bank. In addition, Messrs. Caswell and Byrd are
authorized to incur reasonable business expenses in the performance of their
duties. The Employment Agreements provide for an initial term ending December
31, 1999, with automatic one-year renewals on December 31, 1998 and each
subsequent December 31, unless the Company and the Bank, or the executive
officer, gives written notice to the contrary not later than October 31 before
any such renewal date. The base salary for Mr. Caswell for the year ending
December 31, 1999 is $143,097, and for Mr. Byrd is $101,360, which salaries may
not be reduced under the Employment Agreements without written consent of the
respective individual.
The Boards of Directors of the Company and the Bank may terminate the
employment of Messrs. Caswell and Byrd at any time. The Employment Agreements
provide that if employment is terminated other than for cause (as defined) or
the executive officer terminates his employment with good reason (as defined),
he will be entitled, subject to certain limitations, (a) to be paid a lump sum
cash payment as liquidated damages, (b) to continue to participate in and accrue
benefits under all retirement, pension, profit-sharing, employee stock ownership
and other deferred compensation plans of the Company and the Bank for a
specified term, unless prohibited by law and except to the extent the plan
constitutes a "qualified plan," (c) to receive all other employee benefits,
including group life insurance, medical coverage, disability insurance,
education, and other fringe benefits for a specified term, and (d) to receive
certain insurance and indemnification benefits with respect to their 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.
The specified term for the foregoing benefits, and the amount of the lump
sum payment, vary according to whether the termination occurs in anticipation
of, in connection with, or within two years following a change in control of the
Company or the Bank. In the context of a change in control, the specified term
for benefits is equal to 36 months, and the lump sum payment is equal to three
times the sum of (a) the executive officer's annual base salary (at the greater
of the rate in effect at termination or the highest rate in effect at any time
within 12 months before the change in control) and (b) the bonus earned by the
executive officer during the fiscal year preceding the fiscal year in which (i)
the termination occurs, or (ii) the change in control occurs, whichever is
greater. Under the Employment Agreements, a change in control of the Company is
deemed to have taken place if: (A) any person becomes the beneficial owner of
25% or more of the voting shares of the Company, (B) any person receives
regulatory approval to acquire control of the Company, (C) any person (other
than the persons named as proxies solicited on behalf of the Board of Directors)
holds proxies as to election or removal of two or more Directors of the Company,
representing 25% or more of the total voting shares of the Company, (D) any
person has commenced a tender or exchange offer, or entered into an agreement or
received an option to acquire beneficial ownership of 25% or more of the total
voting shares of the Company, regardless of whether regulatory approval has been
received, and the Board determines that such action constitutes or will
constitute a change in control, or (E) if, as a result of a business
combination, sale of assets or contested election, or a combination of these
factors, the persons who were Directors of the Company before such transaction
cease to constitute at least two-thirds of the Board of Directors of the Company
or any successor institution. A change in control of the Bank, under the
Employment Agreements, is deemed to have taken place if the Company's beneficial
ownership of the voting shares of the Bank is reduced to less than 50%.
9
<PAGE>
In the event of a termination other than in connection with a change in
control, the specified term for continuation of benefits is the remaining term
of the respective Employment Agreement (but not in excess of 24 months), and the
lump sum payment is equal to the sum of (a) the executive officer's base salary
at the date of termination for the remaining term of the Employment Agreement
(but not in excess of 24 months), plus an amount equal to any bonuses paid
during the fiscal year preceding the fiscal year in which termination occurs.
The Employment Agreements provide that no payment is required to be made
that would constitute a "golden parachute payment" (as defined) pursuant to
certain rules and regulations of the Federal Deposit Insurance Corporation for
which no applicable exception exists thereunder at the time of such payment.
Also, payments and benefits under the agreements are limited to the maximum
amount that can be paid or provided without adverse tax consequences under the
"excess parachute payment" rules. If Messrs. Caswell or Byrd becomes disabled or
incapacitated to the extent that he is unable to perform his duties and
obligations under his Employment Agreement, he will be entitled to receive
disability benefits of the type provided for other executive employees of the
Company and the Bank, and the obligations of the Company and the Bank under the
Employment Agreement will be limited to providing such benefits for the period
of such disability.
CERTAIN TRANSACTIONS
Subject to regulatory limitations, from time to time the Bank makes
residential mortgage loans, home equity lines of credit, consumer loans fully
secured by cash or bank deposits, and overdraft lines of credit to employees of
the Company, other than its executive officers. It is the policy of the Bank not
to offer credit to executive officers, directors and their related interests, or
to members of their immediate family, other than interest-bearing overdraft
lines of credit in amounts not to exceed $1,500, or credit cards not to exceed
$15,000 under the same terms and conditions as those offered to the public.
Management believes that any such loans are made in the ordinary course of
business, are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and neither involve more than normal risks of collectibility nor
present other unfavorable features. Prior to Mr. Hawkes being nominated and
elected to the Boards of the Company and the Bank, the Bank made two commercial
loans to a partnership in which Mr. Hawkes is a general partner. The original
loans were made in 1986 and 1989 for $475,000 (the "1986 Loan") and $161,348
(the "1989 Loan"), respectively. Since January 1, 1998, the largest aggregate
amount of indebtedness outstanding under the 1986 Loan and the 1989 Loan was
$414,069 and $122,030, respectively. The 1989 Loan was paid off in full during
1998 and at December 31, 1998 the outstanding loan balance of the 1986 Loan was
$403,936. These loans, including any subsequent modifications to the terms of
these loans, were made in the ordinary course of business and were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and
neither involve more than normal risks of collectibility nor present other
unfavorable features. The 1986 Loan is current and is being paid in accordance
with the terms of the loan agreement.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING 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, 1998, 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 as follows: Ms.
FitzGerald was approximately three days late with respect to filing a Form 3 in
connection with her initial appointment to the Board in January 1998 and Mr.
Hawkes was approximately five days late with respect to filing a Form 4
reporting stock options granted and the purchase of shares of Common Stock of
the Company.
10
<PAGE>
STOCK OWNED BY MANAGEMENT
The following table sets forth information as of April 15, 1999 with
respect to the amount of Common Stock of the Company beneficially owned by each
director of the Company (including the nominees for election as directors), by
each of the named executive officers, and by all directors and executive
officers of the Company as a group. The information is based on information
furnished to the Company by each such person.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF BENEFICIAL COMMON STOCK
NAME OWNERSHIP /(A)/ OUTSTANDING
---- -------------------- -------------
<S> <C> <C>
Gregory T. Caswell
President and Chief Executive Officer and Director.. 40,500 /(b)/ 3.0%
Dennis D. Byrd
Vice President, Treasurer and Director.............. 16,800 /(c)/ 1.2
MaryEllen FitzGerald
Director............................................ 500 /(d)/ *
David B. Hawkes
Chairman of the Board............................... 2,500 /(e)/ *
Roger E. Klein
Director............................................ 3,682 /(f)/ *
Normand E. Simard
Director............................................ 7,063 /(g)/ *
Edward K. Simensky
Director............................................ 4,705 /(f)/ *
Charles A. Stewart III
Director............................................ 4,500 /(f)/ *
All directors and executive officers
as a group (8 persons)............................... 80,250 /(h)/ 5.7%
</TABLE>
______________________
* 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
April 15, 1999. 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)/ Consists of 10,500 shares held jointly by Mr. Caswell and his wife, 5,000
shares of restricted stock, which restricted stock vests over a three-year
period (from May 2, 1996), and options exercisable for 25,000 shares,
20,000 of which are presently exercisable and 5,000 of which vest within
60 days of April 15, 1999.
/(c)/ Consists of 1,800 shares held jointly by Mr. Byrd and his wife, 2,500
shares of restricted stock, which restricted stock vests over a three-year
period (from May 2, 1996), and options exercisable for 12,500 shares,
10,000 of which are presently exercisable and 2,500 of which vest within
60 days of April 15, 1999.
/(d)/ Consists of options exercisable for 500 shares, which options are
presently exercisable.
/(e)/ Includes options exercisable for 1,000 shares, which options are presently
exercisable.
/(f)/ Includes options exercisable for 2,500 shares, which options are presently
exercisable.
/(g)/ Includes options exercisable for 2,500 shares, which options are presently
exercisable and 1,098 shares held in a trust of which Mr. Simard is the
sole trustee.
/(h)/ Includes options exercisable for 49,000 shares and 7,500 shares of
restricted stock.
Based on information currently on file with the SEC, there are no
individuals believed by management to be the beneficial owner of more than 5% of
the Company's outstanding Common Stock as of April 15, 1999.
11
<PAGE>
AMENDMENT NO. 1 TO FIRST COASTAL CORPORATION
1996 STOCK OPTION AND EQUITY INCENTIVE PLAN
(PROPOSAL TWO)
The First Coastal Corporation 1996 Stock Option and Equity Incentive Plan
(the "1996 Plan") provides 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 April 15, 1999,
there were approximately 73 employees of the Company and the Bank and six non-
employee directors of the Company who were eligible to participate in the 1996
Plan.
DESCRIPTION OF THE 1996 PLAN
The 1996 Plan provides for the grant of options that are intended to
qualify as "incentive options" (under Section 422 of the Internal Revenue Code
of 1986, as amended) 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 were originally reserved for issuance to employees
and directors under the 1996 Plan. As of April 15, 1999, options (vested and un-
vested) exercisable for 90,500 shares of Common Stock of the Company were
outstanding and Incentive Awards for 29,334 shares of Common Stock remained
available for grant or award. Based on the closing market price per share of
Common Stock of $9.50 at April 15, 1999, the aggregate value of the 119,837
shares reserved for issuance under the 1996 Plan is $1.1 million.
The 1996 Plan is administered by the Company's Board of 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. Upon adoption of the 1996 Plan, each of
the non-employee directors of the Company was 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) upon completion of the
public offering of the Company's stock in 1996. Under the terms of the 1996
Plan, subject to availability of shares, as of each annual meeting of
stockholders of the Company after December 31, 1996, each non-employee director
of the Company elected by the stockholders at, or whose term of office continues
after, such meeting is granted a non-qualifying option with a 10-year term for
500 shares upon the date of such election at a per share exercise price equal to
the market value of a share of Common Stock on the date of grant.
The option exercise price under the 1996 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. Additionally, there 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 1996 Plan. Options are non-transferable other than at death.
Payment for shares purchased under options granted pursuant to the 1996
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
12
<PAGE>
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 1996 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. Alternately, 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 1996 Plan, and in the
number, kinds and per share exercise price of shares subject to the unexercised
portion of options granted prior to any such change. Any such adjustment in an
outstanding option, however, will be made without a change in the total price
applicable to the unexercised portion of the option, but with a corresponding
adjustment in the per share option price.
Upon any dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation in which the Company is not the
surviving corporation, or upon the sale of all or 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 1996 Plan and the options issued thereunder will terminate, unless provision
is made in connection with such transaction for the continuation of the 1996
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 1996 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
13
<PAGE>
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 1996 Plan.
The Board of Directors at any time may terminate or suspend the 1996 Plan.
Unless previously terminated, the 1996 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 1996 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.
PROPOSED AMENDMENTS
The Board of Directors has determined that it is in the best interests of
the Company to amend the 1996 Plan to (i) increase the number of shares of
Common Stock available for issuance pursuant to Incentive Awards granted under
the 1996 Plan by 130,000, (ii) increase the number of shares of Common Stock
subject to options that are granted to each non-employee director as of each
annual meeting date from 500 shares of Common Stock to 1,000 shares of Common
Stock, and (iii) extend the term of the 1996 Plan to 10 years after April 2,
1999.
Under the 1996 Plan, the number of shares of Common Stock available for
issuance pursuant to options and other Incentive Awards granted under the plan
shall not exceed in the aggregate 130,000 shares. As of April 15, 1999, of the
130,000 shares of Common Stock originally authorized for issuance or award under
the 1996 Plan, options (vested and un-vested) exercisable for 90,500 shares of
Common Stock of the Company were outstanding and 29,334 shares remained
available for grant or award. If the Amendment No. 1 to First Coastal
Corporation 1996 Stock Option and Equity Incentive Plan is approved, Incentive
Awards for a total of 159,334 shares would be available for grant or award.
Based on the closing market price per share of Common Stock of $9.50 at April
15, 1999, the aggregate value of the 249,834 shares of Common Stock reserved for
issuance under the 1996 Plan (assuming the amendment is approved) would be $2.4
million. Under the proposed Amendment No. 1 to First Coastal Corporation 1996
Stock Option and Equity Incentive Plan, a copy of which is attached to this
Proxy Statement as Exhibit A and incorporated herein by reference, the second
---------
sentence of Section 3 is amended by substituting the number 260,000 for the
number 130,000.
The Board of Directors also proposes to increase the number of shares of
Common Stock subject to options that are granted to each non-employee director
as of each annual meeting date from 500 shares of Common Stock to 1,000 shares
of Common Stock. The Board of the Company believes an increase in annual options
granted to non-employee directors is more consistent with peer groups of the
Company and is a means of providing additional compensation in lieu of cash.
In conjunction with the proposal to increase the number of shares of Common
Stock available for issuance pursuant to Incentive Awards granted under the 1996
Plan by 130,000, the Board believes it also is advisable to extend the term of
the 1996 Plan to provide the maximum amount of flexibility with respect to the
implementation and effectiveness of the 1996 Plan. Accordingly, the Board of
Directors proposes to extend the term of the 1996 Plan from its current
expiration date of May 2, 2006 to 10 years after April 2, 1999, or a termination
date of April 2, 2009.
14
<PAGE>
REASONS FOR THE PROPOSED AMENDMENTS
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 also important as a means of enabling
the Company to attract and retain the services of qualified outside directors.
The Board believes that options represent an important component of overall
compensation. 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 more closely aligns the interests of these individuals
with the interests of the Company's stockholders.
In addition, options at this time represent a particularly useful form of
compensation as the Company is in the process of implementing its strategic plan
which is designed to have a long term, favorable impact on shareholder value.
The successful implementation of this plan will require significant effort by a
number of key employees, officers and directors over an extended period of time.
As of April 15, 1999, only 29,334 shares remain available for grant under the
1996 Plan. Approval of the amendment will allow the Board to continue to utilize
option grants and other Incentive Awards during this particularly important
period as a valuable incentive for recruiting, compensating and retaining key
employees, officers and directors. It is also the current intention of the Board
of Directors to increase the number of key employees that are participants in
the 1996 Plan as a means of providing additional incentive for these non-officer
employees who are particularly important to the success of the strategic plan.
At the same time, it is currently expected that the percentage of option grants
made to executive officers of the Company will be generally lower than has been
the case in the past.
The adoption of the proposed amendments to the 1996 Plan are subject to
stockholder approval at the Annual Meeting. The Company is submitting the
amendments for stockholder approval as required by the 1996 Plan to permit the
continued grant of options qualifying as incentive options for tax purposes and
to comply with the corporate governance requirements of The Nasdaq Stock Market.
15
<PAGE>
PLAN BENEFITS
The table below provides certain information as of April 15, 1999 regarding
stock options granted and awards of restricted stock made under the 1996 Plan to
(i) the named executive officers, (ii) the nominees for election as directors,
(iii) all executive officers of the Company as a group, (iv) all non-executive
officer directors as a group, and (v) all non-executive officer employees of the
Company as a group (including all officers who are not executive officers).
PLAN BENEFITS
<TABLE>
<CAPTION>
WEIGHTED NUMBER OF
AVERAGE SHARES OF
NUMBER EXERCISE RESTRICTED DOLLAR
NAME AND POSITION(S) OF OPTIONS PRICE STOCK VALUE /(A)/
-------------------- ------------ -------- ---------- -----------
<S> <C> <C> <C> <C>
Dennis D. Byrd
Vice President and Treasurer
Director Nominee............... 22,500 /(b)/ $8.94 2,500 $23,750
Gregory T. Caswell
President and Chief Executive
Officer....................... 45,000 /(c)/ 8.94 5,000 47,500
Roger E. Klein
Director Nominee............... 2,500 /(d)/ 7.64
Executive Officer Group
(two persons).................... 67,500 /(e)/ 8.94
Non-Executive Officer Director
Group (six persons)............. 11,500 /(f)/ 8.24
Non-Executive Officer Employee
Group (six persons)............ 17,500 /(g)/ 6.63
</TABLE>
(a) Based on closing price of the Company's Common Stock as of April 15, 1999.
(b) Consists of options for 7,500, 5,000, 5,000 and 5,000 shares with an
exercise price of $5.00, $7.25, $15.25 and $10.25, respectively.
(c) Consists of options for 15,000, 10,000, 10,000 and 10,000 shares with an
exercise price of $5.00, $7.25, $15.25 and $10.25, respectively.
(d) Consists of options for 1,500, 500 and 500 shares with an exercise price of
$5.00, $9.625 and $13.563, respectively.
(e) Consists of options for 22,500, 15,000, 15,000 and 15,000 shares with an
exercise price of $5.00, $7.25, $15.25 and $10.25, respectively.
(f) Consists of options for 6,000, 2,500 and 3,000 shares with an exercise price
of $5.00, $9.625 and $13.563, respectively.
(g) Consists of options for 13,500 (of which 2,666 shares were exercised and
3,334 shares were forfeited upon the termination of employment of certain
optionees) and 4,000 shares with an exercise price of $5.00 and $12.125,
respectively.
FEDERAL INCOME TAX CONSEQUENCES
The grant of an option is not a taxable event for the optionee or the
Company.
With respect to "incentive options," an optionee will not recognize taxable
income upon exercise of an incentive option, and any gain realized upon a
disposition of shares received pursuant to the exercise of an incentive option
will be taxed as capital gain if the optionee holds the shares for at least two
years after the date
16
<PAGE>
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 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 capital gain, and the tax rate will depend upon whether or
not the shares were held for the applicable holding period 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 other 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, subject to the $1 million
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-
17
<PAGE>
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 1996 Plan and recipients of
option grants under the 1996 Plan should consult with their personal tax
advisors with respect to such grants and transactions in stock acquired pursuant
to the 1996 Plan.
REQUIRED VOTE
Assuming the presence of a quorum at the Annual Meeting, the approval of
Amendment No. 1 to First Coastal Corporation 1996 Stock Option and Equity
Incentive Plan requires 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL AND
ADOPTION OF AMENDMENT NO. 1 TO FIRST COASTAL CORPORATION 1996 STOCK OPTION AND
EQUITY INCENTIVE PLAN.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(PROPOSAL THREE)
The Board of Directors has appointed the firm of PricewaterhouseCoopers LLP
to continue as independent accountants for the Company for the year ending
December 31, 1999, subject to ratification of such appointment by the
stockholders. PricewaterhouseCoopers LLP has served as the Company's independent
accountants for each of the fiscal years ended 1993 through 1998. Unless
otherwise indicated, properly executed proxies will be voted in favor of
ratifying the appointment of PricewaterhouseCoopers LLP, independent certified
public accountants, to audit the books and accounts of the Company for the year
ending December 31, 1999. 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
PricewaterhouseCoopers LLP as the Company's independent accountants for the year
ending December 31, 1999.
Representatives of PricewaterhouseCoopers LLP 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 PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT ACCOUNTANTS
OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1999.
18
<PAGE>
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 2000
annual meeting, they must be received by the Secretary of the Company at 36
Thomas Drive, Westbrook, Maine 04092 by December 21, 1999 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 2000 annual meeting any stockholder proposal which may be excluded under
the SEC regulations in effect at the time such proposals are received.
In addition, for any proposal that is not submitted for inclusion in next
year's proxy statement, but is instead sought to be presented directly at the
2000 annual meeting, management will be able to vote proxies in its discretion
if the Company: (i) receives notice of the proposal before the close of business
on March 9, 2000, and advises stockholders in the 2000 proxy statement about the
nature of the matter and how management intends to vote on such matter; or (ii)
does not receive notice of the proposal prior to the close of business on March
9, 2000.
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: April 19, 1999
19
<PAGE>
EXHIBIT A
---------
AMENDMENT NO. 1
TO
FIRST COASTAL CORPORATION
1996 STOCK OPTION AND EQUITY INCENTIVE PLAN
The second sentence of Section 3 is amended by substituting the number "260,000"
for the number "130,000".
Section 4(b) is amended by (a) deleting the word "and" before "(ii)" and
substituting a comma in its place, (b) adding the words "and before January 1,
1999" after the words "after December 31, 1996" and (c) adding the following new
provision at the end of such section:
"and (iii) as of each annual meeting of stockholders of the Company
occurring after December 31, 1998, an Option to purchase up to 1,000 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."
Section 5(b) is amended by substituting April 2, 1999 for "the effective date."
<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
Portland Marriott, 200 Sable Oaks Drive, South Portland, Maine 04106 on Tuesday,
May 18, 1999 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 NOMINEES NAMED IN THE
PROXY STATEMENT AND ON THE REVERSE SIDE AS DIRECTORS OF THE COMPANY, (II) FOR
APPROVAL AND ADOPTION OF AMENDMENT NO. 1 TO FIRST COASTAL CORPORATION 1996 STOCK
OPTION AND EQUITY INCENTIVE PLAN, AND (III) FOR RATIFICATION OF THE APPOINTMENT
BY THE BOARD OF THE FIRM OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
ACCOUNTANTS OF THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 1999, 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 the following nominees as directors for a three-year term:
Dennis D. Byrd
Roger E. Klein
FOR ALL nominees listed above. WITHHOLD AUTHORITY to vote for all nominees
listed above.
[_] [_]
WITHHOLD AUTHORITY to vote for the following nominee only (write the name of the
nominee in the space below):
____________________________
2. Approval and adoption of Amendment No. 1 to First Coastal Corporation 1996
Stock Option and Equity Incentive Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Ratification of the appointment by the Board of the firm of
PricewaterhouseCoopers LLP as independent accountants of the Company for
the year ending December 31, 1999.
[CAPTION]
FOR AGAINST ABSTAIN
[_] [_] [_]
4. 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.
