FIRST FEDERAL BANCORP, INC.
505 Market Street
Zanesville, Ohio 43701
(614) 453-0606
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the 1997 Annual Meeting of Shareholders of
First Federal Bancorp, Inc. ("Bancorp"), will be held at the Holiday Inn, 4645
East Pike, Zanesville, Ohio, on February 19, 1997, at 2:00 p.m., Eastern
Standard Time (the "Annual Meeting"), for the following purposes, all of which
are more completely set forth in the accompanying Proxy Statement:
1. To re-elect Ward D. Coffman, III, Robert D. Goodrich, II, Patrick L.
Hennessey and Connie Ayres LaPlante as directors of Bancorp for
terms expiring in 1999;
2. To approve the First Federal Bancorp, Inc., 1997 Performance Stock
Option Plan for Senior Executive Officers and Outside Directors; and
3. To ratify the selection of Crowe, Chizek and Company as the auditors
of Bancorp for the current fiscal year;
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only shareholders of Bancorp of record at the close of business on
December 24, 1996, will be entitled to receive notice of and to vote at the
Annual Meeting. Whether or not you expect to attend the Annual Meeting, we urge
you to consider the accompanying Proxy Statement carefully and to SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES MAY BE VOTED IN
ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF A QUORUM MAY BE ASSURED. The
giving of a Proxy does not affect your right to vote in person in the event you
attend the Annual Meeting.
Zanesville, Ohio J. William Plummer, President and
January 10, 1997 Chief Executive Officer
Ward D. Coffman, III, Secretary
FIRST FEDERAL BANCORP, INC.
505 Market Street
Zanesville, Ohio 43701
(614) 453-0606
PROXY STATEMENT
PROXIES
The enclosed Proxy is being solicited by the Board of Directors of First
Federal Bancorp, Inc. ("Bancorp"), for use at the 1997 Annual Meeting of
Shareholders of Bancorp to be held at the Holiday Inn, 4645 East Pike,
Zanesville, Ohio, on February 19, 1997, at 2:00 p.m., Eastern Standard Time, and
at any adjournments thereof (the "Annual Meeting"). Without affecting any vote
previously taken, the Proxy may be revoked by a shareholder before exercise by
giving notice of revocation to Bancorp in writing or in open meeting. Attendance
at the Annual Meeting will not, of itself, revoke a Proxy.
Each properly executed Proxy received prior to the Annual Meeting and not
revoked will be voted as specified thereon or, in the absence of specific
instructions to the contrary, will be voted:
FOR the re-election of Ward D. Coffman, III, Robert D. Goodrich, II,
Patrick L. Hennessey and Connie Ayres LaPlante as directors of Bancorp for
terms expiring in 1999;
FOR the approval of the First Federal Bancorp, Inc., 1997 Performance
Stock Option Plan for Senior Executive Officers and Outside Directors (the
"Performance Plan"); and
FOR the ratification of the selection of Crowe, Chizek and Company ("Crowe
Chizek") as the auditors of Bancorp for the current fiscal year.
Proxies may be solicited by the directors, officers and other employees of
Bancorp in person or by telephone, telegraph or mail, only for use at the Annual
Meeting and will not be used for any other meeting. The cost of soliciting
Proxies will be borne by Bancorp.
Only shareholders of record as of the close of business on December 24,
1996 (the "Voting Record Date"), are eligible to vote at the Annual Meeting.
Bancorp's records disclose that, as of the Voting Record Date, there were
1,571,716 common shares of Bancorp (the "Shares") outstanding. All numbers of
Shares contained in this Proxy Statement reflect a stock dividend in the nature
of a 2-for-1 stock split that was effective in November 1996. On all matters,
shareholders are entitled to one vote for each Share held.
This Proxy Statement is first being mailed to the shareholders of Bancorp
on or about January 10, 1997.
VOTE REQUIRED
Election of Directors
Under Ohio law and Bancorp's Code of Regulations (the "Regulations"), the
four nominees receiving the greatest number of votes will be elected as
directors. Shares as to which the authority to vote is withheld are not counted
toward the election of directors or toward the election of the individual
nominees specified on the Proxy.
Approval of the Performance Stock Option Plan
The affirmative vote of the holders of at least a majority of the Common
Shares represented in person or by proxy at the Annual Meeting is necessary to
approve the Performance Plan. Generally, shares that are held by a nominee for a
beneficial owner and that are represented in person or by proxy at the Annual
Meeting but not voted with respect to such proposal ("Non-votes") will have the
same effect as a vote against the approval of the Performance Plan. If, however,
a shareholder has signed and dated a proxy in the form of the enclosed Proxy,
but has not voted on the approval of the Performance Plan by marking the
appropriate box on the Proxy, such person's Shares will be voted FOR the
approval of the Performance Plan and will not be considered Non-votes.
Ratification of Selection of Auditors
The affirmative vote of the holders of a majority of the Shares
represented in person or by proxy at the Annual Meeting is necessary to ratify
the selection of Crowe Chizek as the auditors of Bancorp for the current fiscal
year. The effect of an abstention is the same as an "against" vote. If, however,
a shareholder has signed and dated a proxy in the form of the enclosed Proxy,
but has not voted on the ratification of the selection of Crowe Chizek as the
auditors by marking the appropriate box on the Proxy, such person's Shares will
be voted FOR the ratification of the selection of Crowe Chizek as the auditors.
VOTING SECURITIES AND OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
only persons known to Bancorp to own beneficially more than five percent (5%) of
the outstanding Shares as of December 15, 1996:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address (1) Beneficial Ownership (2) Shares Outstanding
- - -------------------- ------------------------ ------------------
<S> <C> <C>
Ward D. Coffman, III 92,160 (3) 5.81%
Connie Ayres LaPlante 104,244 (4) 6.50
J. William Plummer 108,960 (5) 6.79
<FN>
- - --------------------
<F1> Each of the individuals listed in this table may be contacted at the
address of Bancorp, 505 Market Street, Zanesville, Ohio 43701.
<F2> All Shares are held with sole voting and dispositive power unless
otherwise indicated.
<F3> Includes 16,740 Shares subject to currently exercisable options granted
under the First Federal Bancorp, Inc., 1992 Stock Option Plan for
Non-Employee Directors (the "1992 Non-qualified Plan") and the First
Federal Bancorp, Inc., 1994 Stock Option Plan for Non-Employee Directors
(the "1994 Non-qualified Plan"); and 7,000 Shares held by the First
Federal Savings Bank of Eastern Ohio Defined Benefit Pension Plan (the
"Pension Plan"), with respect to which Mr. Coffman shares voting and
dispositive power as a co-trustee.
<F4> Consists of 70,024 Shares held jointly with Mrs. LaPlante's husband and
34,220 Shares subject to currently exercisable options granted under the
First Federal Bancorp, Inc., 1992 Incentive Stock Option Plan for Officers
and Key Employees (the "1992 ISO Plan") and the First Federal Bancorp,
Inc., 1994 Stock Option Plan for Officers and Key Employees (the "1994 ISO
Plan").
<F5> Includes 34,220 Shares subject to currently exercisable options granted
under the 1992 ISO Plan and the 1994 ISO Plan; and 7,000 Shares held by
the Pension Plan, with respect to which Mr. Plummer shares voting and
dispositive power as a co-trustee.
</FN>
</TABLE>
The following table sets forth certain information with respect to the
number of Shares beneficially owned by each director of Bancorp and by all
directors and executive officers of Bancorp as a group as of December 15, 1996:
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name and Address(1) Beneficial Ownership (2) Shares Outstanding
- - ------------------- ------------------------ ------------------
<S> <C> <C>
Ward D. Coffman, III 92,160 (3) 5.81%
Robert D. Goodrich, II 36,940 (4) 2.33
Patrick L. Hennessey 69,740 (5) 4.39
Connie Ayres LaPlante 104,244 (6) 6.50
John C. Matesich, III 44,365 (7) 2.80
Don R. Parkhill 24,725 (8) 1.56
J. William Plummer 108,960 (9) 6.79
All directors and executive officers
of Bancorp as a group (7 people) 460,134 26.72%
<FN>
- - --------------------
<F1> Each of the individuals listed in this table may be contacted at the
address of Bancorp, 505 Market Street, Zanesville, Ohio 43701.
<F2> All Shares are held with sole voting and dispositive power unless
otherwise indicated.
<F3> See footnote 3 to the preceding table for a description of Mr. Coffman's
beneficial ownership.
<F4> Includes 400 Shares held of record by Mr. Goodrich as custodian for his
daughter; 2,400 Shares held of record by Mr. Goodrich as custodian for his
minor son; and 16,740 Shares subject to currently exercisable options
granted under the 1992 Non-qualified Plan and the 1994 Non-qualified Plan.
<F5> Includes 16,740 Shares subject to currently exercisable options granted
under the 1992 Non-qualified Plan and the 1994 Non-qualified Plan and
7,000 Shares held by the Pension Plan, with respect to which Mr. Hennessey
shares voting and dispositive power as a co-trustee.
<F6> See footnote 4 to the preceding table for a description of Ms. LaPlante's
beneficial ownership.
<F7> Includes 625 Shares held by Mr. Matesich's daughter; 16,740 Shares subject
to currently exercisable options granted under the 1992 Non-qualified Plan
and the 1994 Non-qualified Plan; and 7,000 Shares held by the Pension
Plan, with respect to which Mr. Matesich shares voting and dispositive
power as a co-trustee.
<F8> Includes 1,500 Shares held by Mr. Parkhill's wife and 16,740 Shares
subject to currently exercisable options granted under the 1992
Non-qualified Plan and the 1994 Non-qualified Plan.
<F9> See footnote 5 to the preceding table for a description of Mr. Plummer's
beneficial ownership.
</FN>
</TABLE>
PROPOSAL ONE: ELECTION OF DIRECTORS
In accordance with Article Two of the Code of Regulations of Bancorp (the
"Regulations"), four directors are to be elected at the Annual Meeting, each for
a term of two years and until their successors are elected. Each holder of
Shares is entitled to one vote for each director position for each Share held.
No shareholder may cumulate votes in the election of directors.
In accordance with Section 2.03 of the Regulations, nominees for election
as a director may be proposed only by the directors or by a shareholder entitled
to vote for directors. The directors will consider shareholder nominations in
selecting nominees. A shareholder who wishes to make a nomination must follow
the procedures set forth in the Regulations. Such procedures require the
submission of a written nomination by the shareholder to the Secretary of
Bancorp by the later of the November 15th immediately preceding the annual
meeting of shareholders or the sixtieth day before the first anniversary of the
most recent annual meeting of shareholders held for the election of directors.
Each such written nomination must state the name, age, business or residence
address of the nominee, the principal occupation or employment of the nominee,
the number of Shares owned either beneficially or of record by each such nominee
and the length of time such Shares have been so owned.
Unless otherwise directed, Proxies received pursuant to this solicitation
will be voted for the nominees listed below, each of whom has been designated by
the directors. In the event that any nominee listed below fails to stand for
election at the Annual Meeting, Proxies will be voted for such other person as
may be designated by the directors. Management does not anticipate that any of
the nominees listed below will fail to stand for election at the Annual Meeting.
The Board of Directors proposes the re-election of the following persons
to terms which will expire in 1999:
<TABLE>
<CAPTION>
Director
Name (1) Age (2) Position(s) Held Since (3)
- - -------- ------- ---------------- ---------
<S> <C> <S> <C>
Ward D. Coffman, III 43 Secretary and Director 1992
Robert D. Goodrich, II 50 Director 1992
Patrick L. Hennessey 46 Director 1992
Connie Ayres LaPlante 40 Treasurer and Director 1992
<FN>
- - --------------------
<F1> There are no family relationships among the directors or executive
officers of Bancorp.
<F2> As of December 15, 1996.
<F3> Each director nominee became a director of Bancorp in connection with the
1992 conversion of First Federal Savings Bank of Eastern Ohio, Inc.
("First Federal"), from mutual to stock form (the "Conversion") and the
formation of Bancorp as the holding company of First Federal. Each
director nominee also serves as a director of First Federal.
</FN>
</TABLE>
The following directors will continue to serve after the Annual Meeting
for the terms indicated:
<TABLE>
<CAPTION>
Term
Name (1) Age (2) Position(s) Held Director Since (3) Expires
- - -------- ------- ---------------- ----------------- -------
<S> <C> <S> <C> <C>
John C. Matesich, III 53 Chairman and Director 1992 1998
Don R. Parkhill 38 Director 1995 1998
J. William Plummer 51 President, Chief Executive 1992 1998
Officer and Director
<FN>
- - --------------------
<F1> There are no family relationships among the directors or executive
officers of Bancorp.
<F2> As of December 15, 1996.
<F3> Each director, except Mr. Parkhill, became a director of Bancorp in
connection with the Conversion and the formation of Bancorp as the holding
company of First Federal. Each director also serves as a director of First
Federal.
</FN>
</TABLE>
Ward D. Coffman, III, is an attorney who has been engaged in private
practice in the Zanesville area for more than five years.
Robert D. Goodrich, II, is the Chairman of the Board and Chief Executive
Officer of Wendy's Management Group, Inc., a position he has held since 1986.
Patrick L. Hennessey is currently the President of P & D Transportation.
Mr. Hennessey has been employed by P & D Transportation since 1985.
Connie Ayres LaPlante is a Senior Vice President and the Treasurer of
First Federal. Ms. LaPlante commenced employment with First Federal in 1978.
John C. Matesich, III, is the President of Matesich Distributing Co., a
beer and wine distributor in Southeastern Ohio. Mr. Matesich has been the
President of Matesich Distributing Co. since 1990 and has been employed by
Matesich Distributing Co. for more than five years.
Don R. Parkhill was appointed to the Board of Directors effective October
1, 1995, to fill the vacancy created by the death of D. Bruce Huffman. Mr.
Parkhill has been the President of Blackson-Parkhill Agency, Inc., doing
business as Parkhill Sedanko Insurance Agency, Inc., in Coshocton, Ohio, since
1987. Mr. Parkhill is also the owner of Parkhill Business and Estate Planning,
which has sold life insurance and assisted with other financial planning needs
since 1987.
J. William Plummer is currently the President and Chief Executive Officer
of First Federal. Mr. Plummer has been employed by First Federal since 1970 and
has served as the President and the Chief Executive Officer since 1979.
Meetings of Directors
The Board of Directors of Bancorp met 14 times for regularly scheduled and
special meetings during the fiscal year ended September 30, 1996. Each director
attended at least 75% of the aggregate of such meetings and all meetings of the
committees of the Board of Directors of which such director is a member.
The Board of Directors of First Federal met 24 times for regularly
scheduled and special meetings during the fiscal year ended September 30, 1996.
Committees of Directors
The Board of Directors of Bancorp has a Stock Option Committee formed to
administer the 1992 ISO Plan, the 1994 ISO Plan, the 1992 Non-qualified Plan and
the 1994 Non-qualified Plan. The Stock Option Committee is comprised of Messrs.
Coffman, Hennessey and Matesich. The Stock Option Committee met one time during
the fiscal year ended September 30, 1996.
The Board of Directors of Bancorp does not have a Nominating Committee.
Nominations for election to the Board of Directors of Bancorp are determined by
the entire Board of Directors of Bancorp. In addition, the Regulations provide a
procedure for shareholders to nominate persons for election to the Board of
Directors of Bancorp. See "Election of Directors."
The Audit Committee and the Compensation Committee of the Board of
Directors of Bancorp meet in conjunction with the Audit Committee and the
Compensation Committee of the Board of Directors of First Federal. The Audit
Committee is comprised of Messrs. Coffman, Hennessey and Goodrich. The function
of the Audit Committee is to recommend the retention of outside auditors for
Bancorp and First Federal and to meet with such outside auditors to review the
results of their audit of Bancorp and First Federal. The Audit Committee met
once during the fiscal year ended September 30, 1996.
Messrs. Coffman, Goodrich and Matesich are the members of the Compensation
Committee. The Compensation Committee reviews and recommends to the full Board
of Directors salary levels and benefits for the executive officers of First
Federal and, in conjunction with management, for the other employees of First
Federal. The Compensation Committee met four times during the fiscal year ended
September 30, 1996.
The Board of Directors of First Federal also has a Loan Committee. The
function of the Loan Committee is to approve loans for amounts greater than
$200,000. Messrs. Plummer, Coffman and Hennessey are the members of the Loan
Committee. The Loan Committee met 15 times by telephone during the fiscal year
ended September 30, 1996.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Executive Compensation
The following Summary Compensation Table sets forth certain information
with respect to the compensation paid by First Federal to the chief executive
officer of Bancorp and the only other officer of Bancorp to receive cash
compensation in excess of $100,000 during fiscal year 1996:
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
----------------------- -------------------------------
Awards
-------------------------------
Name and Principal Restricted
Position Year Salary($) Bonus ($) Stock ($) Options/ SARs(#)
- - ---------------------- ---- ----------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
J. William Plummer 1996 $123,876 $50,660 $ - $ -
President and Chief 1995 113,758(1) 42,493 - 16,000(2)
Executive Officer 1994 113,396(1) 31,500 - -
Connie Ayres LaPlante 1996 80,393(3) 28,254 - -
Treasurer
<FN>
- - -------------------
<F1> Includes directors' fees in the amount of $4,200 and $13,300 in fiscal
years 1995 and 1994, respectively. Does not include amounts attributable
to other miscellaneous benefits, the cost of which was less than 10% of
Mr. Plummer's cash compensation.
<F2> Represents the number of Shares underlying options granted to Mr. Plummer
under the 1994 ISO Plan. Bancorp does not have a stock benefit plan which
provides for the grant of "SARs," an abbreviation for "Stock Appreciation
Rights."
<F3> Does not include amounts attributable to other miscellaneous benefits, the
cost of which was less than 10% of Ms. LaPlante's cash compensation.
</FN>
</TABLE>
Employment Agreements
In November 1996, First Federal entered into employment agreements with
Mr. Plummer and Ms. LaPlante, each with a term of three years. The agreements
provide for a salary review by the Board of Directors not less often than
annually and the inclusion of the employee in any formally established employee
benefit, bonus pension and profit-sharing plans for which senior management
personnel are eligible. Each employment agreement may be terminated by First
Federal at any time. In the event of termination for "just cause," as defined in
the employment agreement, the employee will have no right to receive any
compensation or other benefits for any period after such termination. In the
event of termination within one year of any change in "control" (as defined
below) of First Federal or Bancorp, each employee will be entitled to receive
(a) a payment in an amount equal to the sum of (i) the amount of compensation to
which the employee is entitled for the remainder of the term of the agreement,
plus (ii) the difference between (x) the product of three multiplied by the
total compensation paid to the employee for the immediately preceding calendar
year less (y) the amount paid to the employee pursuant to (i); and (b) continued
health, life and disability insurance and other benefits substantially equal to
those which the employee was receiving at the time the agreement was terminated
until the earliest to occur of the end of the term of the agreement, or the date
the employee becomes employed by another employer. "Control," as defined in the
employment agreements, generally refers to the acquisition by any person or
entity of the ownership or power to vote ten percent (10%) or more of the Shares
of either First Federal or Bancorp, the control of the election of a majority of
the directors of either First Federal or Bancorp or the exercise of a
controlling influence over the management or policies of either First Federal or
Bancorp.
In the event of termination other than for "just cause" (as defined in the
employment agreement) or in connection with a change of control, the employee
will be entitled to a continuation of salary payments for a period of time equal
to the term of the employment agreement, as well as a continuation of benefits
substantially equal to those being provided at the date of termination of
employment until the earlier to occur of the end of the employment agreement
term or the date the employee becomes employed full-time by another employer.
Compensation of Directors
Each non-employee director of Bancorp receives a fee of $250 per month and
$50 for each meeting of the Board of Directors attended, with payment for two
excused absences per year. Each non-employee director of First Federal receives
a fee of $500 per month and $200 for each meeting of the Board of Directors
attended, with payment for four excused absences per year. In addition to
regular fees paid to the directors of First Federal, members of the Compensation
Committee and members of the Benefits Committee who are not employees receive
$150 for each meeting attended. Members of the Loan Committee, other than the
executive officers, receive $50 for each meeting attended in person, although no
fees were paid during the fiscal year ended September 30, 1996, because only
telephonic meetings were held during the year. No committee fees are paid to
members of the Audit Committee.
Certain Transactions with First Federal
First Federal makes loans to executive officers and directors of First
Federal and Bancorp in the ordinary course of business and on the same terms and
conditions, including interest rates and collateral, as those of comparable
loans to other persons. All outstanding loans to executive officers and
directors were made pursuant to such policy, do not involve more than the normal
risk of collectibility or present other unfavorable features and are current in
their payments.
During the fiscal year ended September 30, 1996, First Federal retained
the services of Ward D. Coffman, III, an attorney engaged in private practice in
the Zanesville area. Mr. Coffman is the secretary and a director of Bancorp and
serves as general counsel to First Federal. From time to time, Mr. Coffman will
serve as general counsel to First Federal during the fiscal year beginning
October 1, 1996.
Stock Option Plans
The shareholders of Bancorp approved stock option plans for employees (the
"ISO Plans") and non-employee directors (the "Non-qualified Plans") in 1993 and
in 1995. The purposes of the ISO Plans and the Non-qualified Plans include
attracting and retaining the best available personnel as officers, employees and
directors of Bancorp and First Federal and providing incentives to the officers,
employees and directors of Bancorp and First Federal by facilitating their
purchases of an ownership interest in Bancorp.
Bancorp currently has reserved 322,082 common shares for issuance under
the ISO Plans and the Non-Qualified Plans, of which 236,980 are currently
subject to outstanding options. Pursuant to the ISO Plans, options to purchase
157,880 Shares have been granted. Of such options, an option to purchase 2,000
Shares has terminated without being exercised and options to purchase 2,600
Shares have been exercised as of December 24, 1996. Such options are intended to
qualify as "incentive stock options" ("ISOs") under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), which, if certain conditions are
met, permits the optionees to delay the recognition of federal taxable income on
the Shares received upon the exercise of options. All of the ISOs already
granted are currently exercisable in full.
The Stock Option Committee of the Board of Directors may grant options
under the ISO Plans at such times as it deems most beneficial to Bancorp and
First Federal on the basis of the nature of the services rendered by the
employee, each employee's current and potential contribution to Bancorp and
First Federal and such other factors as the Stock Option Committee may, in its
sole discretion, deem relevant.
The option exercise price for ISOs is determined by the Stock Option
Committee at the time of option grant. The exercise price must not be less than
100% of the fair market value of the Shares on the date of the grant. Moreover,
for an employee who owns more than 10% of Bancorp's outstanding Shares, the
exercise price of the ISO may not be less than 110% of the fair market value of
the Shares on the date of the grant, and the ISO shall not be exercisable after
the expiration of five years from the date it is granted. No ISO will be
exercisable after the expiration of ten years from the date of grant.
The ISO Plans provide that in the event of a "change of control," as
defined in the ISO Plans, all ISOs then outstanding shall become immediately
exercisable. A "change of control" includes execution of an agreement for a
merger or acquisition or the acquisition of the beneficial ownership of 25% or
more of the voting shares of Bancorp by any person or entity.
Pursuant to the Non-qualified Plans, options to purchase 100,440 Shares of
Bancorp have been granted, and of such options, an option to purchase 16,740
Shares has terminated without being exercised. The Non-qualified Plans provide
for the grant of options that are not intended to qualify as "incentive stock
options" under Section 422 of the Code ("Non-qualified Options"). Grants of
Non-qualified Options are made automatically to each non-employee director at
the time the Non-qualified Plans became effective or upon a new director's
election. Non-qualified Options granted under the 1994 Non-qualified Plan are
immediately exercisable upon grant. Non-qualified Options granted under the 1992
Non-qualified Plan are first exercisable one year after the date of grant.
The exercise price for Non-qualified Options is the fair market value of
the Shares on the date of the grant, except that the exercise price of a
Non-qualified Option granted to a non-employee director who owns more than 10%
of Bancorp's outstanding Shares shall be 110% of the fair market value of the
Shares on the date of the grant. The term of each Non-qualified Option will be
ten years from the date each such Non-qualified Option is granted, except that
in the case of a Non-qualified Option granted to an optionee who owns a number
of Shares representing more than 10% of the Shares outstanding at the time the
Non-qualified Option is granted, the term of the Non-qualified Option shall be
five years. Termination or removal of an Option recipient for cause, as defined
in the ISO Plans and the Non-qualified Plans, will result in the annulment of
any outstanding Options. An Option recipient cannot transfer or assign an Option
other than by will or in accordance with the laws of descent and distribution.
Without further approval of the shareholders, the Board of Directors of
Bancorp may at any time alter, suspend or discontinue the ISO Plans or the
Non-qualified Plans, except that the Board of Directors may not, without
approval of the shareholders, increase the number of Shares which may be issued
under the ISO Plans or the Non-qualified Plans (except for adjustments to
reflect certain changes in the capitalization of Bancorp), materially increase
the benefits accruing to participants under the ISO Plans or the Non-qualified
Plans or materially modify the requirements for eligibility for participation in
the ISO Plans or the Non-qualified Plans. Notwithstanding the foregoing, the
Board of Directors may amend the ISO Plans or the Non-qualified Plans to take
into account changes in applicable securities, federal income tax and other
applicable laws.
The following table sets forth information regarding the number and value
of unexercised options awarded under the ISO Plans held by the person listed in
the Summary Compensation Table:
Aggregated Option/SAR Exercises In Last Fiscal Year and
9/30/96 Option/SAR Values
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at 9/30/96(#) at 9/30/96(1)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized Unexercisable Unexercisable
- - ------------------ --------------- -------------- ------------- -------------
<S> <S> <S> <C> <C>
J. William Plummer N/A N/A 34,220/0 $316,975/0
<FN>
- - -------------------
<F1> An option is "in-the-money" if the fair market value of the underlying
Shares exceeds the exercise price of the option. The figure represents the
value of such unexercised options, determined by multiplying the number of
Shares subject to unexercised options by the difference between the
exercise prices of such options and the closing sale price for the Shares
on September 30, 1996, as adjusted to reflect the November 1996 stock
dividend.
</FN>
</TABLE>
PROPOSAL TWO: APPROVAL OF THE PERFORMANCE PLAN
The Board of Directors of Bancorp proposes the adoption of the Performance
Plan. The Performance Plan must be approved by the holders of a majority of the
Common Shares represented in person or by proxy at the Annual Meeting. The Board
of Directors recommends that the shareholders of Bancorp approve the Performance
Plan.
The following is a summary of the terms of the Performance Plan and is
qualified in its entirety by reference to the full text of the Performance Plan,
a copy of which is attached hereto as Exhibit A.
Purpose and Eligibility
The purpose of the Performance Plan is to provide incentive to the four
senior executive officers and the five non-employee directors of Bancorp and
First Federal to maintain and improve the financial performance of Bancorp. The
following four senior executive officers and five non-employee directors are
eligible to participate in the Performance Plan (collectively, the
"Participants").
<TABLE>
<CAPTION>
Senior Executive Officers Non-Employee Directors
- - ---------------------------------------------------------------- ----------------------
Name Office
---- ------
<S> <S> <S>
J. William Plummer President of Bancorp and First Federal John Matesich, III
Connie Ayres LaPlante Treasurer of Bancorp, Senior Vice Ward D. Coffman, III
President, Treasurer of First Federal Robert D. Goodrich, II
Thomas N. Sulens Senior Vice President of First Federal Patrick H. Hennessey
Larry W. Snode Senior Vice President of First Federal Don R. Parkhill
</TABLE>
The Performance Plan has been designed specifically to provide incentive
to the Participants to continue the comparatively strong financial performance
of Bancorp during the past five years. In order for any one of the Participants
to obtain any economic benefit from the Performance Plan, two events must occur.
First, the return on equity ("ROE") of Bancorp must be maintained at or above a
five-year average. Second, following the grant of options under the Performance
Plan, the market value of the shares must appreciate. If the ROE is maintained,
for example, but the fair market value of the shares underlying the options
never increases, then no economic benefit will be obtained by any of the
Participants.
Bancorp currently has reserved 322,082 common shares for issuance under
the ISO Plans and the Non-qualified Plans, of which 236,980 are subject to
currently outstanding options. Such options were granted (i) to employees on a
discretionary basis following a subjective evaluation of the performance of each
optionee by the Stock Option Committee and (ii) to non-employee directors on an
automatic basis after adoption of each such plan by the shareholders. See
"COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS - Stock Option Plans."
Unlike the ISO Plans and the Non-qualified Plans, the Performance Plan
provides for the grant of options if, and only if, the ROE for any fiscal year
during the five-year term of the Performance Plan equals or exceeds the average
of the returns on equity for the five fiscal years preceding any such fiscal
year (the "Average"). In order to determine whether the Participants are
eligible for an option grant, the ROE for each of the five fiscal years of the
Performance Plan will be determined as of September 30 of each such year; will
be calculated in accordance with generally accepted accounting principles; and
will be reported in the Annual Report to Shareholders for each such year.
When the ROE during any year of the five-year term equals or exceeds the
Average, then an option to purchase 2,000 common shares will be granted to each
of the Participants on December 1 of such year. However, the maximum number of
common shares which may be subject to options granted to any Participant under
the Performance Plan is 6,000. As a result, options under the Performance Plan
may only be granted in three of the five years of the term.
Exercise Price
If the Performance Plan is approved by the shareholders, 54,000 Shares
(approximately 3.44% of the Common Shares outstanding on December 24, 1996) will
be reserved for issuance by Bancorp upon the exercise of options granted to
senior executive officers and non-employee directors of Bancorp under the
Performance Plan.
Options will be granted under the Performance Plan with an exercise price
equal to the fair market value of the Shares on the date of the grant. Fair
market value is defined by the Performance Plan as the mean between the closing
high bid and low asked quotations for a Share of Bancorp on The Nasdaq Stock
Market. Notwithstanding the foregoing, in the event a participant owns Shares
representing more than 10% of the outstanding Shares at the time the option is
granted, the exercise price shall not be less than 110% of the Fair Market Value
on the date of grant.
Administration and Amendment
The Performance Plan will be administered by the Stock Option Committee.
Without further approval of the shareholders, the Board of Directors of Bancorp
may at any time alter, suspend or discontinue the Performance Plan, except that
the Board of Directors may not, without approval of the shareholders, increase
the number of Common Shares which may be issued under the Performance Plan
(except for adjustments to reflect certain changes in the capitalization of
Bancorp), materially increase the benefits accruing to participants under the
Performance Plan or materially modify the requirements for eligibility for
participation in the Performance Plan. Notwithstanding the foregoing, the Board
of Directors may amend the Performance Plan to take into account changes in
applicable securities, federal income tax and other applicable laws.
Term
The term of each option granted pursuant to the Performance Plan will be
10 years from the date of grant. However, in the case of a Senior Executive
Officer who owns a number of Shares representing more than ten percent (10%) of
the Shares outstanding at the time the option is granted, the term of the option
will be 5 years. Each option will terminate before the end of the term, one year
after termination of service due to disability, six months after death (unless
extended to one year by the Stock Option Committee) or three months after
termination of service for any reason other than termination for "cause," as
defined in the Performance Plan. Any option granted pursuant to the Performance
Plan will, unless otherwise specified by the Stock Option Committee at the time
of grant, be exercisable immediately after the date of grant of such option,
provided that the optionee shall have been a senior executive officer or
non-employee director of Bancorp or First Federal at all times during the period
beginning with the date of grant of any such option and ending on the date which
is 3 months before the date of exercise of any such option. Any options granted
pursuant to the Performance Plan will not be transferable other than by will or
by the laws of descent and distribution. All options granted pursuant to the
Performance Plan will become immediately exercisable in the event of a Change of
Control, as defined herein at "COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
- - - Stock Option Plans."
Tax Treatment of ISOs
An optionee who is granted an ISO will not recognize taxable income either
on the date of grant or on the date of exercise, although the alternative
minimum tax may apply. Upon disposition of Shares acquired from the exercise of
an ISO, long-term capital gain or loss is generally recognized in an amount
equal to the difference between the amount realized on the sale or disposition
and the exercise price. If the optionee disposes of the Shares within two years
of the date of grant or within one year from the date of the transfer of the
Shares to the optionee (a "Disqualifying Disposition"), however, then the
optionee will recognize ordinary income, as opposed to capital gain, at the time
of disposition in an amount generally equal to the lesser of (i) the amount of
gain realized on the disposition, or (ii) the difference between the fair market
value of the Shares received on the date of exercise and the exercise price. Any
remaining gain or loss is treated as a short-term or long-term capital gain or
loss, depending upon the period of time the Shares have been held.
Bancorp is not entitled to a tax deduction upon either the exercise of an
ISO or the disposition of Shares acquired pursuant to such exercise, except to
the extent that the optionee recognizes ordinary income in a Disqualifying
Disposition. Ordinary income from a Disqualifying Disposition will constitute
compensation but will not be subject to tax withholding, nor will it be
considered wages for payroll tax purposes.
If the holder of an ISO pays the exercise price, in whole or in part, with
previously acquired Shares, the exchange should not affect the ISO tax treatment
of the exercise. Upon such exchange, and except as otherwise described herein,
no gain or loss is recognized by the optionee upon delivering previously
acquired Shares to Bancorp, and Shares received by the optionee equal in number
to previously acquired Shares exchanged therefor will have the same basis and
holding period for long-term capital gain purposes as the previously acquired
Shares. (The optionee, however, will not be able to utilize the prior holding
period for the purpose of satisfying the ISO statutory holding period
requirements for avoidance of a Disqualifying Disposition.) Shares received by
the optionee in excess of the number of shares previously acquired will have a
basis for federal income tax purposes of zero and a holding period which
commences as of the date the shares are transferred to the optionee upon
exercise of the ISO. If the exercise of an ISO is effected using Shares
previously acquired through the exercise of an ISO, the exchange of such
previously acquired Shares will be considered a disposition of such Shares for
the purpose of determining whether a Disqualifying Disposition has occurred.
Tax Treatment of Non-qualified Options
An optionee receiving a Non-qualified Option does not recognize taxable
income on the date of grant of the option, provided that the option does not
have a readily ascertainable fair market value at the time it is granted. The
optionee must recognize ordinary income generally at the time of exercise of a
Non-qualified Option in the amount of the difference between the fair market
value of the shares on the date of exercise and the option price. The ordinary
income received will constitute compensation for which tax withholding by
Bancorp generally will be required. The amount of ordinary income recognized by
an optionee will be deductible by Bancorp in the year that the optionee
recognizes the income if Bancorp complies with the applicable withholding
requirement.
If, at the time of exercise, the sale of the Shares could subject the
optionee to short-swing profit liability under Section 16(b) of the Securities
Exchange Act of 1934, such person generally will not recognize ordinary income
until the date that the optionee is no longer subject to such Section 16(b)
liability. Upon such date, the optionee will recognize ordinary income in an
amount equal to the fair market value of the Shares on such date less the option
exercise price. Nevertheless, the optionee may elect under Section 83(b) of the
Code within 30 days of the date of exercise to recognize ordinary income as of
the date of exercise, without regard to the restriction of Section 16(b).
Shares acquired upon the exercise of a Non-qualified Option will have a
tax basis equal to their fair market value on the exercise date or other
relevant date on which ordinary income is recognized, and the holding period for
the Shares generally will begin on the date of exercise or such other relevant
date. Upon subsequent disposition of the Shares, the optionee will recognize
long-term capital gain or loss if the optionee has held the Shares for more than
one year prior to disposition, or short-term capital gain or loss if the
optionee has held the Shares for one year or less.
If a holder of a Non-qualified Option pays the exercise price, in whole or
in part, with previously acquired Shares, the optionee will recognize ordinary
income in the amount by which the fair market value of the Shares received
exceeds the exercise price. The optionee will not recognize gain or loss with
respect to the previously acquired Shares upon delivering such previously
acquired Shares to Bancorp unless such delivery constitutes a Disqualifying
Disposition of Shares acquired through the exercise of an ISO. Shares received
by an optionee equal in number to the previously acquired Shares exchanged
therefor will have the same basis and holding period as such previously acquired
Shares. Shares received by an optionee in excess of the number of such
previously acquired Shares will have a basis equal to the fair market value of
such additional Shares as of the date ordinary income is recognized. The holding
period for such additional Shares will commence as of the date of exercise or
such other relevant date.
Awards
The following table sets forth information with respect to awards which
will be made pursuant to the Performance Plan if approved by the shareholders
and if the ROE targets required by the Performance Plan are achieved:
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
Name and Position Number of Units
----------------- ---------------
<S> <C>
J. William Plummer 6,000
Connie Ayres LaPlante 6,000
Executive Group 12,000
Non-Employee Director Group 30,000
Non-Executive Officer Employee Group 12,000
</TABLE>
Because the options are contingent upon the specific performance targets
and will not be transferable and because the exercise price will be the fair
market value at the date of grant, no value can be determined at this time. The
fair market value of each Share outstanding at December 15, 1996, based on
Nasdaq's reported closing sale price, was $16.00.
PROPOSAL THREE: RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors of Bancorp has selected Crowe Chizek as the
auditors of Bancorp and its subsidiary for the current fiscal year and
recommends that the shareholders ratify such selection. Management expects that
a representative of Crowe Chizek will be present at the Annual Meeting, will
have the opportunity to make a statement if he or she so desires and will be
available to respond to appropriate questions.
PROPOSALS OF SECURITY HOLDERS AND OTHER MATTERS
Any proposals of security holders intended to be included in Bancorp's
Proxy Statement for the 1998 Annual Meeting of Shareholders should be sent to
Bancorp by certified mail and must be received by Bancorp not later than
September 12, 1997.
Management knows of no other business which may be brought before the
Annual Meeting, including matters incident to the conduct of the Annual Meeting.
If, however, other matters are brought before the Annual Meeting, the persons
named in the enclosed Proxy intend to vote such Proxy in accordance with their
best judgment.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO FILL IN, SIGN AND
RETURN THE PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
Zanesville, Ohio J. William Plummer, President and
January 10, 1997 Chief Executive Officer
Ward D. Coffman, III, Secretary
Exhibit A
FIRST FEDERAL BANCORP, INC.
1997 PERFORMANCE STOCK OPTION PLAN
FOR SENIOR EXECUTIVE OFFICERS AND OUTSIDE DIRECTORS
1. Purpose of this Plan. The purpose of the First Federal Bancorp, Inc.,
1997 Performance Stock Option Plan for Senior Executive Officers and Outside
Directors is to provide incentive to the senior executive officers and outside
directors of First Federal Bancorp, Inc., and First Federal Savings Bank of
Eastern Ohio to maintain and improve the financial performance of First Federal
Bancorp, Inc. This Plan is intended to authorize the grant of incentive stock
options, as defined in Section 422 of the Internal Revenue Code of 1986, as
amended, and options which do not qualify as incentive stock options under such
code.
2. Definitions. As used in this Plan, the following terms have the
corresponding meanings:
(a) "Board" means the Board of Directors of First Federal Bancorp, Inc.
("FFB"), or any successor corporation upon assumption of this Plan.
(b) "Cause" means failure to comply with the Human Resources Policies of
FFB or First Federal Savings Bank of Eastern Ohio ("FFS") or personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure or refusal to perform the duties and
responsibilities assigned to the Optionee in any employment agreement to which
the Optionee is a party, willful violation of any law, rule, regulation or final
cease-and desist order (other than traffic violations or similar offenses),
conviction of a felony or for fraud or embezzlement, or material breach of any
provision of any employment agreement to which the Optionee is a party.
(c) "Change of Control" means (i) the execution of an agreement for the
sale of all, or a material portion, of the assets of FFB or FFS as would require
a vote of shareholders under Ohio corporate law; (ii) the execution of an
agreement for a merger or recapitalization of FFB or FFS or any merger or
recapitalization whereby FFB is not the surviving entity; (iii) a change of
control of FFB or FFS, as defined or determined by the OTS; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of the term "beneficial ownership" as defined under Section 13(d) of the
Exchange Act and the rules promulgated thereunder) of twenty-five percent (25%)
or more of the outstanding voting securities of FFB or FFS by any person, trust,
entity or group.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Stock Option Committee appointed by the Board in
accordance with Section 4(a) hereof.
(f) "Continuous Service" means the absence of any interruption or
termination of service to FFB or FFS by a Senior Executive Officer or by an
Outside Director. Service shall not be considered interrupted in the case of
sick leave, military leave or any other leave of absence approved by the Board.
(g) "Effective Date" means the date on which this Plan is adopted by the
Board.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(i) "Fair Market Value" shall be determined as set forth in Section 8(a)
of this Plan.
(j) "FFB" means First Federal Bancorp, Inc., or any successor corporation
upon assumption of this Plan.
(k) "FFS" means First Federal Savings Bank of Eastern Ohio, the wholly
owned subsidiary of FFB.
(l) "ISO" means an incentive stock option, as defined in Section 422 of
the Code.
(m) "NQSO" means a stock option which does not qualify as an incentive
stock option, as defined in Section 422 of the Code.
(n) "OTS" means the Office of Thrift Supervision.
(o) "Option" means an ISO or NQSO granted in accordance with the terms and
subject to the conditions of this Plan.
(p) "Optionee" means a Senior Executive Officer or an Outside Director who
receives an Option pursuant to this Plan.
(q) "Outside Directors" means the five members of the Board who are not
employees of FFB or FFS and who are members of the Board on the Effective Date.
(r) "Plan" means the First Federal Bancorp, Inc., 1997 Performance Stock
Option Plan for Senior Executive Officers and Outside Directors.
(s) "ROE" means the return on equity of FFB for a fiscal year as
calculated in accordance with generally accepted accounting principles and as
reported in the Annual Report to Shareholders for such year.
(t) "Senior Executive Officers" means the President of FFB and FFS and the
three Senior Vice Presidents of FFS on the Effective Date.
(u) "Share" or "Shares" means one or more common shares, with no par
value, of FFB.
3. Shares Subject to this Plan.
(a) Shares Available. Subject to adjustment as provided in Section 3(b) of
this Plan, the aggregate number of Shares with respect to which Options may be
granted pursuant to this Plan shall be 54,000. In the event that (i) any Shares
subject to an Option granted under this Plan, or as to which such Option
relates, are forfeited or (ii) an Option otherwise terminates or is canceled
without the delivery of Shares, the Shares covered by such Option, or as to
which such Option relates, shall become Shares with respect to which Options may
be granted to the extent permissible under Rule 16b-3 promulgated under the
Exchange Act, or any successor rule or regulation thereto as in effect from time
to time. In the event that any Option is exercised through the delivery of
Shares, the number of Shares available for Options under this Plan shall be
increased by the number of Shares surrendered, to the extent permissible under
Rule 16b-3 promulgated under the Exchange Act, or any successor rule or
regulation thereto as in effect from time to time.
(b) Adjustments and Corporate Acts. (i) In the event that any dividend or
other distribution (whether in the form of cash, Shares, other securities or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, exchange of Shares or other securities of FFB, issuance of warrants
or other rights to purchase Shares or other securities of FFB, or other similar
corporation transaction or event affects the Shares in a manner by which an
adjustment is necessary in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under this Plan,
the Committee shall proportionately adjust any or all (as necessary) of (I) the
number of Shares or other securities of FFB (or number and kind of other
securities or property) with respect to which Options may be granted; (II) the
number of Shares or other securities of FFB (or number and kind of other
securities or property) subject to outstanding Options; and (III) the grant or
exercise price with respect to any Options; provided, however, that no such
adjustment shall be authorized to the extent that such authority would cause
this Plan to violate Section 422(b)(1) of the Code, as from time to time
amended, or Rule 16b-3 promulgated under the Exchange Act, or any successor rule
or regulation thereto as in effect from time to time.
(ii) The existence of this Plan and the Options granted hereunder shall
not affect or restrict in any way the right or power of the Board or the
shareholders of FFB to make or authorize any adjustment, recapitalization,
reorganization or other change in FFB's capital structure or its business, any
merger, acquisition or consolidation of FFB, any issuance of bonds, debentures,
preferred or prior preference stocks ahead of or affecting FFB's capital stock
or the rights thereof, the dissolution or liquidation of FFB or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, including any merger or acquisition which would result in the
exchange of cash, stock of another company or options to purchase the stock of
another company for any Option outstanding at the time of such corporate
transaction or which would involve the termination of all Options outstanding at
the time of such corporate transaction.
4. Administration.
(a) Stock Option Committee. This Plan shall be administered by a Stock
Option Committee appointed by the Board. The Committee shall consist of at least
three members of the Board, one of whom shall be an employee of FFS, and may
consist of the entire Board.
(b) Powers of the Committee. The Committee is authorized to interpret this
Plan and to prescribe, amend and rescind rules and regulations relating to this
Plan; to determine the form and content of Options to be issued under this Plan;
and to make such other determinations necessary or advisable for the
administration of this Plan. The Committee shall have and may exercise such
other power and authority as may be delegated to it by the Board from time to
time. A majority of the entire Committee shall constitute a quorum and the
action of a majority of the members present at any meeting at which a quorum is
present shall be deemed the action of the Committee. In no event may the
Committee revoke outstanding Options without the consent of the Optionee. The
President of FFB and such other officers as shall be designated by the Committee
are hereby authorized to execute instruments evidencing Options approved by the
Committee on behalf of FFB and to cause them to be delivered to the Optionees.
The construction and the interpretation of the provisions of this Plan are
vested with the Committee, in its absolute discretion. All such decisions,
determinations and interpretations shall be final, conclusive and binding upon
all parties having an interest in this Plan.
5. Eligibility. Eligibility to participate in this Plan shall be limited
to the Senior Executive Officers and to the Outside Directors.
6. Term of Plan. This Plan shall continue in effect for a term of five (5)
years from the Effective Date, unless earlier terminated pursuant to Section 13
hereof. Unless otherwise expressly provided in this Plan or in an applicable
award agreement, the authority of the Board or the Committee to amend, alter,
adjust, suspend, discontinue or terminate any such award or to waive any
conditions or rights under any such award shall continue after the expiration of
such term.
7. Grant of Options.
(a) Automatic Performance Grant. In the event that the ROE for any one of
the fiscal years ended September 30, 1997, 1998, 1999, 2000 or 2001, equals or
exceeds the average ROE for the five fiscal years preceding any such fiscal
year, each one of the Senior Executive Officers and each one of the Outside
Directors shall automatically be granted on the immediately following December 1
an Option to purchase 2,000 Shares; provided, however, that the maximum
aggregate number of Shares subject to Options granted to any one Senior
Executive Officer or any one Outside Director under this Plan shall not exceed
6,000.
(b) Option Agreement. Each Option granted pursuant to this Plan shall be
evidenced by an instrument in a form approved by the Committee. Such instrument
shall contain terms and conditions which are consistent with this Plan. Any
option granted to a Senior Executive Officer shall be an ISO. Any option granted
to an Outside Director shall be a NQSO.
8. Terms and Conditions of Options. Each and every Option granted pursuant
to this Plan shall comply with, and be subject to, the following terms and
conditions:
(a) Option Price. (i) The price per Share at which each Option granted
under this Plan may be exercised shall be the Fair Market Value of the Shares on
the date such Option is granted, except as set forth in subsection (ii) of this
Section 8(a). The Fair Market Value shall equal the mean between the closing
high bid and low asked quotations with respect to a Share on such date on The
Nasdaq Stock Market.
(ii) The foregoing notwithstanding, in the event an Optionee owns Shares
representing more than ten percent (10%) of the outstanding Shares at the time
the Option is granted, the Option exercise price shall not be less than one
hundred and ten percent (110%) of the Fair Market Value of the Shares at the
time the Option is granted.
(b) Method of Exercise. An Option may be exercised, in whole or in part,
by giving written notice of exercise to FFB. Such notice shall specify the
number of Shares to be purchased. Full payment for each Share purchased upon the
exercise of any Option granted under this Plan shall be made at the time of
exercise of each such Option and shall be paid in cash or cash equivalents,
including personal checks, or, if permitted by the Committee, in Shares or a
combination of cash or cash equivalents and Shares. Shares utilized in full or
partial payment of the exercise price shall be valued at the Fair Market Value
at the date of exercise. FFB shall accept full or partial payment in Shares only
to the extent permitted by applicable law. No Shares shall be issued until full
payment therefor has been received by FFB. No Optionee shall have any of the
rights of a shareholder of FFB until Shares are issued to such Optionee.
(c) Term of Option. Subject to the right of FFB to provide for earlier
termination in the event of any merger, acquisition or consolidation involving
FFB, the term of each Option granted pursuant to this Plan shall be ten (10)
years from the date each such Option is granted; provided, however, that in the
case of a Senior Executive Officer who owns a number of Shares representing more
than ten percent (10%) of the Shares outstanding at the time the Option is
granted, the term of the Option shall be five (5) years.
(d) Exercise Generally. Any Option granted pursuant to this Plan shall,
unless otherwise specified by the Committee at the time of grant, be exercisable
immediately after the date of grant of such Option; provided, however, that
except as otherwise provided in Section 9 hereof, no Option may be exercised
unless the Optionee shall have been a Senior Executive Officer or an Outside
Director of FFB or FFS at all times during the period beginning with the date of
grant of any such Option and ending on the date which is three (3) months before
the date of exercise of any such Option. The Committee may impose additional
conditions upon the right of an Optionee to exercise any Option granted
hereunder as long as such conditions are not inconsistent with the terms of this
Plan.
(e) Transferability. Any Option granted pursuant to this Plan shall be
exercised during any Optionee's lifetime only by the Optionee to whom such
option is granted and shall not be assignable or transferable other than by will
or by the laws of descent and distribution.
(f) Limit on Grant. In no event shall an Optionee be granted Options to
purchase Shares in excess of twenty-five percent (25%) of the aggregate Shares
subject to this Plan as described in Section 3 hereof.
(g) Change of Control. Notwithstanding any provision set forth in the
instruments pursuant to which individual Options are granted, all outstanding
Options shall become immediately exercisable in the event of a Change of
Control.
9. Effect of Termination of Continuous Employment, Disability or Death on
Options.
(a) Termination of Continuous Employment. In the event that any Optionee's
Continuous Service to FFB or FFS shall terminate for any reason, other than
permanent and total disability (as such term is defined in Section 22(e)(3) of
the Code, as from time to time amended), death or termination for Cause, all of
any such Optionee's Options and all of any such Optionee's rights to purchase or
receive Shares pursuant thereto shall automatically terminate on the earlier of
(i) the respective expiration dates of any such Options or (ii) the date which
is three (3) months after the date of such termination of Continuous Service.
(b) Disability. In the event that any Optionee's Continuous Service to FFB
or FFS shall terminate as the result of the permanent and total disability (as
such term is defined in Section 22(e)(3) of the Code, as from time to time
amended) of such Optionee and the Optionee was entitled to exercise Options at
the date of such termination of Continuous Service, such Optionee may exercise
any Options granted to him pursuant to this Plan at any time prior to the
earlier of (i) the respective expiration dates of any such Options or (ii) the
expiration of one (1) year after the date of such termination of Continuous
Service.
(c) Death. In the event of the death of any Optionee on a date on which
the Optionee was entitled to exercise any such Options, any Options granted to
any such Optionee may be exercised by the person or persons to whom the
Optionee's rights under any such Options pass by will or by the laws of descent
and distribution (including the Optionee's estate during the period of
administration) at any time prior to the earlier of (i) the respective
expiration dates of any such Options or (ii) the expiration of six (6) months
after the date of death of such Optionee (or such later period not to exceed one
(1) year which the Committee may permit, in its discretion).
(d) Termination for Cause. In the event an Optionee's service to FFB or
FFS is terminated for Cause, any Options granted to such Optionee which are
outstanding on the date of termination shall be forfeited.
(e) Termination of Options. To the extent that any Option granted under
this Plan to any Optionee whose Continuous Service to FFB or FFS terminates
shall not have been exercised within the applicable period set forth in this
Section 9, any such Option, and all rights to purchase or receive Shares
pursuant thereto, shall terminate on the last date of the applicable period.
10. Time of Granting Options. The date of grant of an Option under this
Plan shall be the applicable date under Section 7 of this Plan. Notice of the
grant shall be given to each Optionee to whom an Option is so granted within a
reasonable time after the date of such grant.
11. Effective Date. The Effective Date of this Plan shall be the date on
which this Plan is adopted by the Board.
12. Approval by Shareholders. This Plan shall be approved by the
shareholders of FFB within twelve (12) months before or after the Effective
Date.
13. Amendment and Termination of this Plan.
(a) Amendment and Termination of this Plan by the Board. The Board may
alter, suspend or discontinue this Plan, except that no action of the Board may
increase (other than as provided in Section 3(b) hereof) the maximum number of
Shares subject to Options granted under this Plan, materially increase the
benefits accruing to Optionees under this Plan or materially modify the
requirements for eligibility for participation in this Plan, unless such action
of the Board shall be approved or ratified by the shareholders of FFB.
(b) Change in Applicable Law. Notwithstanding any other provision
contained in this Plan, in the event of a change in any federal or state law,
rule or regulation which would make the exercise of all or part of any
previously granted Option unlawful or subject FFB to any penalty, the Committee
may restrict any such exercise without the consent of the Optionee or other
holder thereof in order to comply with any such law, rule or regulation or to
avoid any such penalty.
14. Conditions Upon Issuance of Shares. Shares shall not be issued with
respect to any Option granted under this Plan unless the issuance and delivery
of such Shares shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder, any applicable state securities law and the
requirements of any stock exchange or quotation system upon which the Shares may
then be listed or quoted. As a condition to the exercise of an Option, FFB may
require the person exercising the Option to make such representations and
warranties as may be necessary to assure the availability of an exemption from
the registration requirements of federal and state securities law.
15. Reservation of Shares. During the term of this Plan, FFB will reserve
and keep available a number of Shares sufficient to satisfy the requirements of
this Plan.
16. Unsecured Obligation. No Optionee under this Plan shall have any
interest in any fund or special asset of FFB by reason of this Plan or the grant
of any Option to such Optionee under this Plan. No trust fund shall be created
in connection with this Plan or any grant of any Option hereunder, and there
shall be no required funding of amounts which may become payable to any
Optionee.
17. Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the State of Ohio, except to the extent that federal
law shall be deemed to apply.
18. Compliance with Rule 16b-3. With respect to persons subject to Section
16 of the Exchange Act, transactions under this Plan are intended to comply with
all applicable conditions of Rule 16b-3 promulgated thereunder or any successor
rule or regulation thereto as in effect from time to time. To the extent any
provision of this Plan or action by the Committee fails to so comply, it shall
be deemed null and void, to the extent permitted by law and deemed advisable by
the Committee.
19. Tax Withholding. FFB shall have the right to deduct from any
settlement, including the delivery or vesting of Shares, made under this Plan
any federal, state or local taxes of any kind required by law to be withheld
with respect to such payments or to take such other action as may be necessary
in the opinion of FFB to satisfy all obligations for the payment of such taxes.
If Shares are used to satisfy tax withholding, such Shares shall be valued based
on the Fair Market Value when the tax withholding is required.
20. No Right to Employment. Neither the adoption of this Plan nor the
granting of any Option shall confer upon any employee of FFB or FFS any right to
continued employment with FFB or FFS, as the case may be, nor shall it interfere
in any way with the right of FFB or FFS to terminate the employment of any of
its employees at any time, with or without cause.
*** PROXY CARD ***
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF FIRST
FEDERAL BANCORP, INC.
THE FIRST FEDERAL BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 19, 1997
The undersigned shareholder of First Federal Bancorp, Inc. ("Bancorp")
hereby constitutes and appoints John C. Matesich III, Don R. Parkhill and Larry
W. Snode, or any one of them, the Proxy or Proxies of the undersigned with full
power of substitution and resubstitution, to vote at the Annual Meeting of
Shareholders of Bancorp to be held at the Holiday Inn, 4645 East Pike,
Zanesville, Ohio, on February 19, 1997, at 2:00 p.m. (the "Annual Meeting"), all
of the shares of Bancorp which the undersigned is entitled to vote at the Annual
Meeting, or at any adjournment thereof, on each of the following proposals, all
of which are described in the accompanying Proxy Statement:
1. To re-elect four directors of Bancorp for terms expiring in 1999;
[ ] FOR all nominees listed below [ ] WITHHOLD authority to vote for
(except as marked to the all nominees listed below:
contrary below):
Ward D. Coffman, III
Robert D. Goodrich, II
Patrick L. Hennessey
Connie Ayres LaPlante
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- - --------------------------------------------------------------------------------
2. To approve the First Federal Bancorp, Inc., 1997 Performance Stock Option
Plan for Senior Executive Officers and Outside Directors; and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the selection of Crowe, Chizek and Company as the auditors of
Bancorp for the current fiscal year; and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IMPORTANT: Please sign and date this Proxy on the reverse side.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. Unless otherwise specified, the shares will be
voted FOR proposals 1, 2 and 3.
All Proxies previously given by the undersigned are hereby revoked. Receipt of
the Notice of the Annual Meeting of Shareholders of Bancorp and of the
accompanying Proxy Statement is hereby acknowledged.
Please sign exactly as your name appears on your Stock Certificates(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should give
their full titles.
- - ------------------------------------ ------------------------------------
Signature Signature
- - ------------------------------------ ------------------------------------
Print or Type Name Print or Type Name
Date: ------------------------------ Date:-------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF BANCORP. PLEASE
DATE, SIGN AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS
REQUIRED FOR MAILING IN THE U.S.A.
