SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. N/A )
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box: |_|Confidential, for Use of
|_| Preliminary proxy statement the Commission Only (a
|X| Definitive proxy statement permitted by Rule 14a-6(e)(2)
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FLAG FINANCIAL CORPORATION
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than 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)
(1) and 0-11.
(1)Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2)Aggregate number of securities to which transactions 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):
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(4)Proposed maximum aggregate value of transaction:
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(5)Total fee paid:
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|_| Fee paid previously with preliminary materials.
- -------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the form or schedule and the
date of its filing.
(1)Amount previously paid:
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(2)Form, Schedule or Registration Statement no.:
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(3)Filing Party:
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(4)Date Filed:
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<PAGE>
[FLAG FINANCIAL CORPORATION LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 21, 1999
To the Shareholders of FLAG Financial Corporation:
The 1999 Annual Meeting of Shareholders of FLAG Financial Corporation
(the "Company") will be held at the Company's headquarters, located at 101 North
Greenwood Street, LaGrange, Georgia, on Wednesday, April 21, 1999 at 2:00 p.m.,
for the purposes of:
(1) Electing four directors of the Company;
(2) Amending the Company's 1994 Employees Stock Incentive Plan, as
described in Proposal 2;
(3) Ratifying the appointment of Porter Keadle Moore, LLP as
independent accountants of the Company for the fiscal year
ending December 31, 1999; and
(4) Transacting such other business as properly may come before
the Annual Meeting or any adjournments thereof.
February 26, 1999 is the record date for the determination of the
shareholders entitled to notice of and to vote at the meeting.
I hope that you will be able to attend the Annual Meeting. If you plan
to attend, please mark the appropriate box at the bottom of your proxy card so
that we can make proper arrangements for the anticipated number of guests.
Whether or not you plan to attend the Annual Meeting, please mark, date, sign
and return the enclosed form of proxy as soon as possible. If you attend the
Annual Meeting and wish to vote your shares in person, you may do so at any time
before the vote takes place.
By Order of the Board of Directors,
/s/John S. Holle
----------------
John S. Holle
Chairman of the Board
LaGrange, Georgia
March 29, 1999
Please read the attached proxy statement and then promptly complete,
execute and return the enclosed proxy card in the accompanying postage-paid
envelope. You can spare your company the expense of further proxy solicitation
by returning your proxy card promptly.
<PAGE>
FLAG FINANCIAL CORPORATION
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 21, 1999
The Company's Board of Directors is furnishing this Proxy Statement to
solicit proxies for use at the 1999 Annual Meeting of Shareholders of the
Company and at any adjournments or postponements of the Annual Meeting (the
"Annual Meeting"). The Annual Meeting will be held on Wednesday, April 21, 1999
at 2:00 p.m. local time at the Company's headquarters, located at 101 North
Greenwood Street, LaGrange, Georgia. The approximate date on which this Proxy
Statement and the accompanying proxy card are first being sent or given to
shareholders is March 29, 1999.
VOTING
General
The record date for determining the holders of common stock who are
entitled to notice of and to vote at the Annual Meeting is February 26, 1999
(the "Record Date"). Each share of Company common stock entitles its owner to
one vote on each matter submitted to the shareholders. On the Record Date,
6,561,879 shares of common stock were outstanding and eligible to be voted at
the Annual Meeting.
Requirements for Shareholder Approval
The presence, in person or by proxy, of a majority of the outstanding
shares of common stock is necessary to constitute a quorum at the Annual
Meeting. In counting the votes to determine whether a quorum exists at the
Annual Meeting, the Company will use the proposal receiving the greatest number
of all votes cast "for" or "against," as well as any abstentions (including
instructions to withhold authority to vote).
In accordance with Georgia law and the Company's Bylaws, the vote
required to elect directors (Proposal 1) is a plurality of the votes cast by the
holders of shares entitled to vote, provided a quorum is present. If you
withhold your vote as to one or more directors, it will have no effect on the
outcome of the election unless you cast that vote for a competing nominee. The
proposal to amend the Company's 1994 Employees Stock Incentive Plan (Proposal 2)
and the proposal to ratify the Board of Directors' appointment of independent
accountants for the Company (Proposal 3), will be approved if the votes cast
favoring each proposal exceed the votes cast opposing such proposals, provided a
quorum is present. As a result, abstentions and "broker non-votes" will have no
effect since they are treated as true abstentions and not as negative votes.
<PAGE>
Proxies
The accompanying proxy card is for use at the Annual Meeting if a
shareholder is unable to attend in person or is able to attend but does not wish
to vote in person. Shareholders should specify their choices with regard to the
three proposals on the accompanying proxy card. All properly executed and dated
proxy cards delivered by shareholders to the Company in time to be voted at the
Annual Meeting and not revoked will be voted at the Annual Meeting in accordance
with the instructions given. If no specific instructions are given, the shares
represented by a signed and dated proxy card will be voted "FOR" the election of
the four director nominees named in Proposal 1, "FOR" the amendment of the
Company's 1994 Employees Stock Incentive Plan as described in Proposal 2 and
"FOR" the ratification of the Board's selection of independent accountants as
described in Proposal 3. If any other matters properly come before the Annual
Meeting, the persons named as proxies will vote upon such matters according to
their judgment. The Board of Directors is not aware of any other business to be
presented to a vote of the shareholders at the Annual Meeting.
The giving of a proxy does not affect the right to vote in person
should the shareholder attend the Annual Meeting. Any shareholder who has given
a proxy has the power to revoke it at any time before it is voted by giving
written notice of revocation to Ellison C. Rudd, Secretary of the Company, at
101 North Greenwood Street, LaGrange, Georgia 30240; by executing and delivering
to Mr. Rudd a proxy card bearing a later date; or by voting in person at the
Annual Meeting.
In addition to soliciting proxies directly, the Company has requested
brokerage firms, nominees, custodians and fiduciaries to forward proxy materials
to the beneficial owners of shares held of record by them. The Company also may
solicit proxies through its directors, officers and employees in person and by
telephone and facsimile, without payment of additional compensation to such
persons. All expenses incurred in connection with the solicitation of proxies
will be borne by the Company.
PROPOSAL 1 - ELECTION OF DIRECTORS
Nominees
The Bylaws of the Company provide that the Board of Directors of the
Company shall consist of not less than ten and not more than twenty-five
members. The precise number of directors is fixed by the Board of Directors. The
directors are divided into three classes as nearly equal in number as possible.
The directors in each class are elected by the shareholders for a term of three
years or until their successors are elected and qualified. The term of office of
one of the classes of directors expires each year at the Annual Meeting of
Shareholders, and a new class of either four or five directors is elected by the
shareholders each year at that time.
At the Annual Meeting, the terms of Patti S. Davis, Fred A. Durand,
III, James W. Johnson and J. Preston Martin will expire. The Board of Directors
has nominated each of these four individuals to stand for re-election as
2
<PAGE>
directors at the Annual Meeting. If elected by the shareholders, each of the
nominees will serve a three-year term that will expire at the 2002 Annual
Meeting of Shareholders. If any of the nominees should be unavailable to serve
for any reason (which is not anticipated), the Board of Directors may designate
a substitute nominee or nominees (in which case the persons named as proxies on
the enclosed proxy card will vote the shares represented by all valid proxy
cards for the election of such substitute nominee or nominees), allow the
vacancy or vacancies to remain open until a suitable candidate or candidates are
located, or by resolution provide for a lesser number of directors.
The Board of Directors unanimously recommends that shareholders vote
FOR the proposal to re-elect Patti S. Davis, Fred A. Durand, III, James W.
Johnson and J. Preston Martin as directors of the Company for a three-year term
expiring at the 2002 Annual Meeting of Shareholders or until their successors
have been duly elected and qualified.
Information Regarding Nominees and Continuing Directors
The following table shows certain information regarding the four
nominees to serve as directors, as well as the nine incumbent directors whose
terms as directors will continue following the Annual Meeting. Except as
otherwise indicated, each of the named persons has been engaged in his or her
present principal occupation for more than five years.
3
<PAGE>
<TABLE>
<CAPTION>
PERSONS NOMINATED FOR ELECTION TO SERVE AS DIRECTORS
UNTIL THE 2002 ANNUAL MEETING OF SHAREHOLDERS
Name Age Business Information
<S> <C> <C>
Patti S. Davis 42 Ms. Davis served as Executive Vice President and Chief Financial Officer of
Middle Georgia Bankshares, Inc. from 1994 until March 31, 1998 when Middle
Georgia Bankshares, Inc. merged with the Company. Ms. Davis has been
Senior Vice President and Chief Financial Officer of Citizens Bank since
1990. Ms. Davis currently serves as Chief Financial Officer, Senior Vice
President, Assistant Secretary and as a director of the Company.
Fred A. Durand, III 57 Mr. Durand is President, Chief Executive Officer and a director of
Durand-Wayland, Inc., a manufacturer of produce sorting and spray equipment
in LaGrange, Georgia. He has been a director of First Flag Bank since 1990
and a director of the Company since 1994.
James W. Johnson 57 Mr. Johnson is owner and President of McCranie Motor and Tractor Company,
Inc., a retail seller of tractors and implement equipment in Unadilla,
Georgia. He is the former Chairman of the Board of Middle Georgia
Bankshares, Inc. and currently serves as a director of Taylor Regional
Hospital in Hawkinsville, Georgia and Rock Tenn Corporation in Norcross,
Georgia. Mr. Johnson has served as a director of the Company since 1998.
J. Preston Martin 45 Mr. Martin served as President of Three Rivers Bancshares, Inc. from 1986
until May 8, 1998 when Three Rivers Bancshares, Inc. merged with the
Company. Mr. Martin served as the President and Chief Executive Officer of
Bank of Milan, which was a wholly-owned subsidiary of Three Rivers
Bancshares, Inc., from 1985 until Bank of Milan merged with Citizens Bank
on January 1, 1999. Mr. Martin currently serves as Senior Vice President
of the Company and as a director of the Company and Citizens Bank.
Mr. Martin is President of the Bank of Milan division of Citizens Bank.
Mr. Martin also owns 50% of Wheeler County Finance, a small loan company in
Alamo, Georgia.
</TABLE>
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<TABLE>
<CAPTION>
DIRECTORS TO SERVE UNTIL THE
2001 ANNUAL MEETING OF SHAREHOLDERS
Name Age Business Information
<S> <C> <C>
Dr. A. Glenn Bailey 64 Dr. Bailey is a physician and surgeon in LaGrange, Georgia. He is a
director and served as President of Clark-Holder Clinic, a medical clinic in
LaGrange, Georgia. He has been a director of First Flag Bank since 1982 and
a director of the Company since 1994.
Leonard H. Bateman 50 Mr. Bateman served as President and Chief Executive Officer of Empire Bank
Corp. from 1986 until December 11, 1998 when Empire Bank Corp. merged with
the Company. Mr. Bateman served as President and Chief Executive Officer of
Empire Banking Company, which was a wholly-owned subsidiary of Empire Bank
Corp., from 1986 until January 1, 1999 when Empire Banking Company merged
with Citizens Bank. Mr. Bateman currently serves as Senior Vice President
of the Company and as a director of the Company and Citizens Bank. He is
President of the Empire Banking Company division of Citizens Bank.
Kelly R. Linch 56 Mr. Linch is owner of Linch's, Inc., a retail appliance and electronics
store in LaGrange, Georgia. He has been a director of First Flag Bank since
1986 and a director of the Company since 1994.
J. Daniel Speight, Jr. 42 Mr. Speight served as Chief Executive Officer and as a director of Middle
Georgia Bankshares, Inc. from 1989 until March 31, 1998 when Middle Georgia
Bankshares, Inc. merged with the Company. Mr. Speight currently is
President and Chief Executive Officer of the Company. He has been
President, Chief Executive Officer and a director of Citizens Bank since
1984. He is a director of the Company, First Flag Bank and Citizens Bank.
Mr. Speight is also a director of The Bankers Bank in Atlanta, Georgia and
Towne Services, Inc. in Norcross, Georgia.
</TABLE>
5
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<TABLE>
<CAPTION>
DIRECTORS TO SERVE UNTIL THE 2000 ANNUAL MEETING
OF SHAREHOLDERS
Name Age Business Information
<S> <C> <C>
Dennis D. Allen 42 Mr. Allen served as President and Chief Executive Officer of The Brown
Bank from 1991 until December 31, 1998 when The Brown Bank merged with
Citizens Bank. Mr. Allen currently serves as Senior Vice President of
the Company and as a director of the Company and Citizens Bank. He is
President of The Brown Bank division of Citizens Bank.
H. Speer Burdette, III 46 Mr. Burdette is an owner, director, Vice President and Treasurer of J.K.
Boatwright & Co., P.C., an accounting firm in LaGrange, Georgia. He has
been a director of First Flag Bank since 1993 and a director of the
Company since 1994.
John S. Holle 48 Mr. Holle currently serves as Chairman of the Board of the Company.
Mr. Holle served as Chairman, President and Chief Executive Officer of
the Company from 1993 until March 31, 1998 when Middle Georgia
Bankshares, Inc. merged with the Company. Mr. Holle has been President,
Chief Executive Officer and a director of First Flag Bank since 1985 and
Chairman of the Board of First Flag Bank since 1990. He is also a
director of Citizens Bank. Mr. Holle serves on the Georgia Board of
Directors of the Federal Home Loan Bank of Atlanta in Atlanta, Georgia.
John W. Stewart, Jr. 64 Mr. Stewart is an owner, Chairman of the Board and President of Stewart
Wholesale Hardware Company, a wholesale grocery and hardware business in
LaGrange, Georgia. He has been a director of First Flag Bank since 1982
and a director of the Company since 1994.
Robert W. Walters 66 Mr. Walters retired in March 1996 as owner and director of The Mill
Store, Inc., a retail and contract floor covering business in LaGrange,
Georgia. He has been a director of First Flag Bank since 1982 and a
director of the Company since 1994.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS WHO ARE NOT ALSO
NOMINEES OR DIRECTORS
Name Age Business Information
<S> <C> <C>
Charlie O. Hinely 51 Mr. Hinely serves as Executive Vice President and Chief Operating Officer
of the Company. Mr. Hinely joined the Company in December 1997. Prior to
joining the Company, Mr. Hinely was employed by The Citizens and Southern
National Bank in Atlanta, Georgia and was a principal of Bank Management
Resources, Inc. in Atlanta, Georgia and LSI Partners, Inc. in Atlanta,
Georgia.
Ellison C. Rudd 54 Mr. Rudd serves as Senior Vice President, Treasurer and Secretary of the
Company. He served as Chief Financial Officer and Treasurer of the Company
from 1994 until March 31, 1998 when Middle Georgia Bankshares, Inc. merged
with the Company. Mr. Rudd has been Executive Vice President of First Flag
Bank since 1993 and Chief Financial Officer and Treasurer of First Flag
Bank since 1989. Mr. Rudd also serves as Senior Vice President and
Treasurer of Citizens Bank.
</TABLE>
J. Daniel Speight, Jr. and Patti S. Davis are first cousins.
Management Stock Ownership
The following table lists the number and percentage ownership of shares
of common stock beneficially owned by each director of the Company, each
executive officer and all executive officers and directors as a group as of the
Record Date. Information relating to beneficial ownership of Company common
stock is based upon "beneficial owner" concepts set forth in rules under the
Securities and Exchange Act of 1934, as amended. Under such rules, a person is
deemed to be a "beneficial owner" of a security if that person has or shares
"voting power," which includes the power to vote or to direct the voting of such
security, or "investment power," which includes the power to dispose or to
direct the disposition of such security. Under the rules, more than one person
may be deemed to be a beneficial owner of the same securities.
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<PAGE>
Amount and
Nature of Beneficial Percent
Name Ownership of Total (%)
---- --------- ------------
(a) Directors
Dennis D. Allen 22,510 (1) 0.34
Dr. A. Glenn Bailey 92,577 (2) 1.41
Leonard H. Bateman 10,625 (3) 0.16
H. Speer Burdette, III 24,727 (4) 0.37
Patti S. Davis 145,868 (5) 2.21
Fred A. Durand, III 32,728 (6) 0.50
John S. Holle 88,246.862 (7) 1.34
James W. Johnson 150,103 (8) 2.29
Kelly R. Linch 58,677 (9) 0.89
J. Preston Martin 287,000 (10) 4.37
J. Daniel Speight, Jr. 261,088 (11) 3.94
John W. Stewart, Jr. 29,941.459 (12) 0.45
Robert W. Walters 140,871.063 (13) 2.14
(b) Executive Officers
Charles O. Hinely 10 (14) 0.00
Ellison C. Rudd 34,766.368 (15) 0.53
(c) All Directors and Executive
Officers as a group
(15 persons) 1,379,738.752 21.03
- -------------------
(1) Consists of 22,510 shares held by Mr. Allen.
(2) Consists of (i) 36,555 shares held by Dr. Bailey, (ii) 35,055 shares
held by Dr. Bailey's spouse as to which beneficial ownership is shared,
(iii) 975 shares held by Chattahoochee Land Investment as to which
beneficial ownership is shared, (iv) 1,125 shares held by a broker for
the benefit or Chattahoochee Land Investment as to which beneficial
ownership is shared, and (v) 18,867 shares subject to immediately
exercisable options.
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(3) Consists of (i) 5,525 shares held by Mr. Bateman and (ii) 5,100 shares
held by Mr. Bateman's spouse as to which beneficial ownership is
shared.
(4) Consists of (i) 1,330 shares held by brokers for the benefit of Mr.
Burdette, (ii) 4,530 shares held in Individual Retirement Accounts for
the benefit of Mr. Burdette, and (iii) 18,867 shares subject to
immediately exercisable options.
(5) Consists of (i) 108,439 shares held by Ms. Davis, (ii) 4,063 shares
held in an Individual Retirement Account for the benefit of Ms. Davis,
(iii) 7,866 shares held by Speight Futures, Inc. as to which beneficial
ownership is shared and (iv) 25,500 shares subject to immediately
exercisable options. Ms. Davis is also an executive officer of the
Company.
(6) Consists of (i) 13,696 shares held by a broker for the benefit of Mr.
Durand, (ii) 165 shares held by a broker for the benefit of Mr.
Durand's spouse as to which beneficial ownership is shared, and (iii)
18,867 shares subject to immediately exercisable options.
(7) Consists of (i) 15,000 shares held by Mr. Holle, (ii) 382.162 shares
issued to Mr. Holle pursuant to the Company's dividend reinvestment
plan, (iii) 27,864.699 shares issued pursuant to the Company's Profit
Sharing Plan, and (iv) 45,000 shares subject to immediately exercisable
options. Mr. Holle is also an executive officer of the Company.
(8) Consists of (i) 58,377 shares held by Mr. Johnson, (ii) 2,716 shares
held by Mr. Johnson's spouse as to which beneficial ownership is
shared, (iii) 84,010 held by McCranie Motor and Tractor Company, Inc.
Profit Sharing Plan for the benefit of Mr. Johnson, and (iv) 5,000
shares subject to immediately exercisable options.
(9) Consists of (i) 33,750 shares held by Mr. Linch, (ii) 6,060 shares held
by a broker for the benefit of Mr. Linch, and (iii) 18,867 shares
subject to immediately exercisable options.
(10) Consists of 287,000 shares held by a broker for the benefit of Mr.
Martin. Mr. Martin is also an executive officer of the Company.
(11) Consists of (i) 99,997 shares held by Mr. Speight, (ii) 49,498 shares
held by a broker for the benefit of Mr. Speight, (iii) 2,362 shares
held by Mr. Speight as trustee for Patricia Ruth Davis, (iv) 589 shares
held by Mr. Speight as trustee for Anna Davis, (v) 1,677 shares held by
a broker for the benefit of Mr. Speight as custodian for Alex Speight,
(vi) 1,677 shares held by a broker for the benefit of Mr. Speight as
custodian for J. Daniel Speight, III, (vii) 7,371 shares held in an
Individual Retirement Account for the benefit of Mr. Speight, (viii)
34,917 shares held by Sp8Co., Inc. as to which beneficial ownership is
shared, and (ix) 63,000 shares subject to immediately exercisable
options. Mr. Speight is also an executive officer of the Company.
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(12) Consists of (i) 9,486 shares held by Mr. Stewart, (ii) 15 shares held
by Mr. Stewart as custodian for Tristain Daugherty, (iii) 1,573.268
shares issued to Mr. Stewart pursuant to the Company's dividend
reinvestment plan, (iv) 0.191 shares issued to Mr. Stewart as custodian
for Tristain Daugherty pursuant to the Company's dividend reinvestment
plan, and (v) 18,867 shares subject to immediately exercisable options.
(13) Consists of (i) 37,875 shares held by Mr. Walters, (ii) 41,700 shares
held jointly by Mr. Walters and his spouse, (iii) 42,000 shares held by
Mr. Walters' spouse as to which beneficial ownership is shared, (iv)
375 shares held by Mr. Walters as custodian for Myles D. Oliver, (v)
54.063 shares issued to Mr. Walters as custodian for Myles D. Oliver
pursuant to the Company's dividend reinvestment plan, and (vi) 18,867
shares subject to immediately exercisable options.
(14) Consists of 10 shares held by Mr. Hinely.
(15) Consists of (i) 10,000 shares held by Mr. Rudd, (ii) 4,000 shares held
by a broker for the benefit of Mr. Rudd, (iii) 15,141.3681 shares
issued pursuant to the Company's Profit Sharing Plan, and (iv) 5,625
shares subject to immediately exercisable options.
Meetings and Committees of the Board of Directors
The Board of Directors of the Company conducts its business through
meetings of the full Board and through joint committees of the Boards of
Directors of the Company and its subsidiary banks. The Company's committees
include an Audit and Exam Committee, a Benefits and Compensation Committee, and
an Executive Committee. During 1998, the Board of Directors held nine meetings,
the Audit and Exam Committee held five meetings, the Benefits and Compensation
Committee held five meetings, and the Executive Committee held ten meetings.
Each director attended at least 75% of all meetings of the full Board of
Directors and of each committee of the Board of which he or she is a member.
The Audit and Exam Committee is responsible for reviewing with the
Company's independent accountants their audit plan, the scope and results of
their audit engagement and the accompanying management letter, if any; reviewing
the scope and results of the Company's internal auditing procedures; consulting
with the independent accountants and management with regard to the Company's
accounting methods and the adequacy of the Company's internal accounting
controls; approving professional services provided by the independent
accountants; reviewing the independence of the independent accountants; and
reviewing the range of the independent accountants' audit and non-audit fees.
The Audit and Exam Committee members are H. Speer Burdette, III, Patti S. Davis,
Fred A. Durand, III, John S. Holle, Kelly R. Linch, Michael S. Moyer, Ellison C.
Rudd and J. Daniel Speight, Jr.
The Benefits and Compensation Committee is responsible for setting the
compensation and benefits of the executive officers and other employees of the
Company and its subsidiaries. The Benefits and Compensation Committee members
are Dr. A. Glenn Bailey, Fred A. Durand, III and James W. Johnson
10
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The Executive Committee is authorized, within certain limitations, to
exercise all of the authority of the Board of Directors between Board meetings.
Among other functions, the Executive Committee reviews, on a monthly basis, the
reports of the loans made and savings activities during the preceding month. The
Executive Committee also reviews and ratifies any investments made by the
Company. The Executive Committee consists of H. Speer Burdette, III, John S.
Holle, J. Daniel Speight, Jr. and John W. Stewart, Jr.
The Board of Directors as a whole functions as a nominating committee
to select management's nominees for election as directors of the Company. The
Board of Directors will consider nominees recommended by shareholders if
submitted to the Company in accordance with the procedures set forth in Section
2.14 of the Bylaws of the Company. See "Shareholders' Proposals for 2000 Annual
Meeting" below.
Director Compensation
The payment of Board fees was changed after first quarter 1998 as a
result of the merger with Middle Georgia Bankshares, Inc. The seven non-employee
members receive $3,000 per quarter, which includes all board meetings and
assigned committee meetings for the Company and any subsidiary bank board. Two
directors serving on the Executive Committee who are not also employees of the
Company receive an additional $750 per quarter. The Company paid a total of
$67,500 in directors' fees in 1998. Directors who are employees of the Company
or its subsidiaries receive no directors' fees.
Previously, directors who were not employees of the Company or its
subsidiary banks received a fee of $500 per Board meeting if in attendance.
Members of the Executive Committee who were not employees received a fee of $200
per committee meeting attended, and members of other Board committees who were
not employees received a fee of $100 per committee meeting attended.
Additionally, Loan Committee meetings are held weekly among loan origination
personnel, with one director in attendance at each such meeting. Directors who
were not employees received a fee of $50 per Loan Committee meeting which they
attend.
Pursuant to the Company's 1994 Directors Stock Incentive Plan (the
"Directors Stock Plan"), the Company granted options in March 1994 for the
purchase of 5,000 shares of common stock to each of the eight directors who were
not employees of the Company or any of its subsidiaries on the date of grant.
Similarly, the Directors Stock Plan provides that each person who thereafter
becomes a director of the Company and who is not an employee of the Company or
any of its subsidiaries will be granted an option for the purchase of 5,000
shares of common stock upon the commencement of his or her service as a
director. Additionally, the Directors Stock Plan provides that as of each March
1st, starting at March 1, 1995 and ending on March 1, 2004, the non-employee
directors as a group on each such date will be entitled to receive options for
the purchase of 6,000 shares of common stock which shall be divided equally
among them, but only if the Company's book value as of the December 31st
immediately preceding such March 1st equals or exceeds 106% of the Company's
book value as of the prior December 31st. Since a change of control of the
Company (as defined in the Directors Stock Plan) occurred on March 31, 1998 when
Middle Georgia Bankshares, Inc. merged with the Company, all of the options that
remained under the Directors Stock Plan at that time (48,624 shares) were
granted to and divided equally among all of the non-employee directors as of
March 30, 1998. In December 1998, the Company added 15,000 shares to be issued
under the Directors Stock Plan. In accordance with the Directors Stock Plan,
options for the purchase of 857 shares were granted to each of the seven
non-employee directors as of March 1, 1999. All options were granted at an
exercise price equal to the fair market value of a share of common stock on the
date of grant. The options vested when they were granted and have a term of ten
years.
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Effective as of February 3, 1995, First Flag Bank established a
Director Indexed Fee Continuation Program (the "First Flag Bank Director
Program") to provide retirement benefits to the directors of First Flag Bank (as
well as a similar plan for certain executive officers of First Flag Bank). The
index used by the First Flag Bank Director Program is the earnings on life
insurance policies purchased on the directors' lives. First Flag Bank retains
the tax-free build-up of cash surrender value in the policies up to the
after-tax opportunity costs for premiums paid on the policies. Any remaining
earnings from the policies are accrued to deferred compensation liability
accounts for the directors. The earnings in a director's account are payable in
ten annual installments commencing 30 days following the director's retirement
as a director. As of December 31, 1998, First Flag Bank accrued $61,401 for the
benefit of directors and executive officers and expensed $47,714.
Effective February 13, 1995, Citizens Bank established a Director
Indexed Fee Continuation Program (the "Citizens Bank Director Program") to
provide retirement benefits to the directors of Citizens Bank (as well as a
similar plan for certain executive officers of Citizens Bank). The Citizens Bank
Director Program is substantially the same as the First Flag Bank Director
Program. As of December 31, 1998, Citizens Bank accrued $13,989 for the benefit
of Citizens Bank directors and executive officers and expensed $11,260.
Benefits AND COMPENSATION Committee Reports
on Executive Compensation
The Benefits and Compensation Committee (the "Committee") of the Board of
Directors of the Company consists of three non-employee directors, Dr. A. Glenn
Bailey, Fred A. Durand, III, and James W. Johnson. Mr. Durand serves as
Chairman.
The Committee generally is responsible for the compensation and benefit
plans for all employees and is directly accountable for reviewing and monitoring
compensation and benefit plans, and payment and awards under those plans, for
the Company's senior executives, including the Chairman, President and Chief
Executive Officer, and the other named executive officers. In carrying out these
responsibilities, the Committee reviews the design of all compensation and
benefit plans applicable to executive officers, determines base salaries,
reviews incentive plan performance measures, establishes incentive targets,
approves cash incentive awards based on performance, grants stock options and
other long-term incentives, and monitors the administration of the various
plans. In all of these matters, the Committee's decisions are reviewed and
approved or ratified by the Board of Directors.
12
<PAGE>
Base Salaries
The salaries of the Chairman and President and Chief Executive Officer
are evaluated solely by the Committee. Salaries for the other named executive
officers generally are recommended by the Chairman and President and Chief
Executive Officer and reviewed by the Committee. The named executive officers
and their salaries are listed in the Summary Compensation Table. In each case,
salaries are based principally on a subjective review of the executive's
individual performance and degree of experience and are also designed to be
competitive with salaries paid to executives in similar positions in financial
institutions of comparable asset size.
Annual Incentives
One of the Committee's objectives in managing executive compensation is
to link directly a significant portion of executive pay to Company performance.
Messrs. Holle and Speight and the other named executives are therefore eligible
to receive bonuses based upon the Company's achievement of annual earnings and
goal targets established by the Committee.
Long-term Incentives
Another major objective of the Committee in managing executive
compensation is to reward executives for increasing the value of the Company to
its shareholders. The FLAG Financial Corporation 1994 Employees Stock Incentive
Plan (the "Plan") was adopted by the Board of Directors on February 17, 1994 and
approved by shareholders as of April 20, 1994. The Plan accomplishes this
objective by providing executives with opportunities to earn and acquire a
meaningful ownership interest in the Company. The Committee is authorized to
make awards of stock options and other stock-based incentives and has the sole
authority to select the officers and other key employees to whom awards may be
made under the Plan. Because the value of stock options and other stock awards
is determined by the price of the common stock, the Committee believes these
awards benefit stockholders by linking a potentially significant portion of
executive pay to the performance of the common stock. In addition, the Plan
assists the Company in attracting and retaining key employees and providing a
competitive compensation opportunity. Awards made under the Plan for 1998 are
disclosed in the "Summary Compensation Table" and "Option Grants in Last Fiscal
Year."
Benefits
In general, the benefit plans provided to key employees, such as health
care, life insurance, profit sharing and 401(k), are intended to provide an
adequate retirement income as well as financial protection against illness,
disability or death. Benefits offered to the named executive officers and other
executives are substantially the same as those provided to all employees, with
some variation.
13
<PAGE>
Executive Compensation
In determining the compensation of the Chairman and the President and
Chief Executive Officer, the Committee is guided by the Company's compensation
philosophy as described in this report, the Company's performance and
competitive practices. In 1998, Mr. Holle received an increase in base salary of
approximately 21%. Mr. Speight's base salary for 1998 was established prior to
the merger of Middle Georgia Bankshares, Inc.
with the Company.
Summary
The Company's executive compensation program encourages executives to
manage the Company's profitability and to increase the value of the business to
the shareholders. The increasing emphasis on annual and long-term incentives is
consistent with the Committee's policy of linking pay to performance and
increasing shareholder value. The Committee believes this approach provides
competitive compensation and is in the best interest of the stockholders. The
Committee will continue to monitor the effectiveness of the executive
compensation program and will initiate changes as it deems appropriate.
Submitted by the Benefits and Compensation Committee of the Board of
Directors of FLAG Financial Corporation.
Fred A. Durand, III, Chairman
Dr. A. Glenn Bailey
James W. Johnson
14
<PAGE>
PERFORMANCE GRAPH
The following Performance Graph compares the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock against
the cumulative total return on the Naadaq Stock Market (U.S.) Index and the
Nasdaq Bank Stock Index from December 31, 1993 to December 31, 1998. The
Performance Graph assumes reinvestment of dividends, where applicable.
<TABLE>
<CAPTION>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
FLAG Financial Corporation Nasdaq Stock Market (U.S. Companies) Nasdaq Bank Stocks
<S> <C> <C> <C>
December 31, 1993 $100.0 $100.0 $100.0
December 31, 1994 $ 99.0 $ 97.8 $ 99.6
December 31, 1995 $166.3 $138.3 $148.4
December 31, 1996 $130.2 $170.0 $195.9
December 31, 1997 $266.4 $208.3 $328.0
December 31, 1998 $217.4 $293.5 $325.4
</TABLE>
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
FLAG Financial Corporation.............. $100.0 $ 99.0 $166.3 $130.2 $266.4 $217.4
Nasdaq Stock Market (U.S. Companies).... $100.0 $ 97.8 $138.3 $170.0 $208.3 $293.5
Nasdaq Bank Stocks...................... $100.0 $ 99.6 $148.4 $195.9 $328.0 $325.4
</TABLE>
15
<PAGE>
EXECUTIVE COMPENSATION
Summary of Compensation
The following table shows certain information for the fiscal years
indicated concerning compensation paid or accrued by the Company and its
subsidiaries to or on behalf of the Company's Chief Executive Officer and the
four other most highly compensated executive officers who earned over $100,000
in salary and bonus during 1998 (the "Named Executive Officers").
John S. Holle served as Chairman of the Board, President and Chief
Executive Officer of the Company until March 31, 1998. Upon completion of the
merger of Middle Georgia Bankshares, Inc. with the Company on March 31, 1998,
Mr. Holle became Chairman of the Company and J. Daniel Speight, Jr. became
President and Chief Executive Officer of the Company. Mr. Speight and Patti S.
Davis were not executive officers of the Company prior to the merger of Middle
Georgia Bankshares Inc. with the Company. J. Preston Martin became an executive
officer of the Company on May 8, 1998 when Three Rivers Bancshares, Inc. merged
with the Company.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation(1) Compensation Awards
---------------------- -------------------
Securities
Name and Underlying Options All Other
Principal Position Year Salary ($) Bonus ($) (# of shares Compensation
- ------------------ ---- ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
J. Daniel Speight, Jr., 1998 $215,000 $29,025 81,750 $5,963 (2)
- -----------------------
President and Chief Executive
Officer of the Company, President
and Chief Executive Officer of
Citizens Bank
John S. Holle, 1998 $175,000 $20,200 62,250 $17,461 (3)
- -------------- 1997 144,200 8,750 7,500 $16,348
Chairman of the Board of the 1996 140,000 0 0 $15,902
Company, Chairman, President and
Chief Executive Officer of First
Flag Bank
J. Preston Martin, 1998 $158,000 $36,000 (4) 24,000 $ 325 (5)
- ------------------
Senior Vice President of the
Company
Patti S. Davis, 1998 $125,000 $21,625 28,500 $3,732 (6)
- ----------------
Senior Vice President, Chief
Financial Officer and Assistant
Secretary of the Company and
Senior Vice President and Chief
Financial Officer of Citizens Bank
16
<PAGE>
Ellison C. Rudd, 1998 $125,000 $12,350 13,500 $12,517 (7)
- ---------------- 1997 103,000 6,250 5,625 12,275
Senior Vice President, Secretary 1996 100,000 0 0 11,692
and Treasurer of the Company;
Executive Vice President, Chief
Financial Officer and Treasurer of
First Flag Bank and Senior Vice
President and Treasurer of
Citizens Bank
- -------------------
</TABLE>
(1) We have omitted information on "perks" and other personal benefits
because the aggregate value of these items does not meet the minimum
amount required for disclosure under the Securities and Exchange
Commission regulations.
(2) Consists of contributions of $5,000 to the Company's Profit Sharing
Plan and 401(k) Plan and $963 for insurance premiums for term and other
life insurance.
(3) For 1998, 1997 and 1996, consists of contributions of $14,633, $13,734
and $13,809, respectively, to the Company's Profit Sharing Plan and
401(k) Plan and $2,828, $2,614 and $2,093, respectively, for insurance
premiums for term and other life insurance.
(4) The bonus for Mr. Martin was accrued in 1998 and payable in 1999.
(5) Consists of contribution of $325 for life insurance premiums for term
life insurance.
(6) Consists of contributions of $3,478 to the Company Profit Sharing Plan
and 401(k) Plan and $259 for life insurance premiums for term and other
life insurance.
(7) For 1998, 1997 and 1996, consists of contributions of $11,346, $11,389
and $13,434, respectively, to the Company's Profit Sharing Plan and
401(k) Plan and $1,171, $886, $477, respectively, for life insurance
premiums for term and other life insurance.
17
<PAGE>
Option Grants in Last Fiscal Year
The following table provides details regarding stock options granted to
the Named Executive Officers in 1998.
Individual Option Grants
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rate of Stock Price
Appreciation for Option
Individual Term (3)
------------------------------------------------------------------ ---------------------------
% of Total
Securities Options
Underlying Granted to
Options Employees Exercise or
Date of Granted in Fiscal Base Price Expiration
Name Grant (#)(1) Year (%) ($/Sh)(2) Date 5% 10%
---- ----- ------ -------- --------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
J. Daniel Speight, Jr. 04/01/98 63,000 17.33% (*) 13.2500 04/01/08 $524,084 $1,330,341
12/11/98 7,500 2.06% 12.1250 12/11/08 57,191 144,927
12/18/98 3,750 1.03% 12.6250 12/18/08 29,774 75,452
12/31/98 7,500 2.06% 11.5000 12/31/08 54,243 137,453
John S. Holle 04/01/98 37,500 10.32%(*) 13.2500 04/01/08 $312,485 $791,870
04/20/98 6,000 1.65% 13.3333 04/20/08 50,314 127,496
12/11/98 7,500 2.06% 12.1250 12/11/08 57,191 144,927
12/18/98 3,750 1.03% 12.6250 12/18/08 29,774 75,452
12/31/98 7,500 2.06% 11.5000 12/31/08 54,243 137,453
J. Preston Martin 05/13/98 6,000 1.65% 13.3333 05/13/08 $50,314 $127,496
12/11/98 7,500 2.06% 12.1250 12/11/08 57,191 144,927
12/18/98 3,000 0.83% 12.6250 12/18/08 23,820 60,363
12/31/98 7,500 2.06% 11.5000 12/31/08 54,243 137,453
Patti S. Davis 04/01/98 25,500 7.02%(*) 13.2500 04/01/08 $212,490 $538,471
12/18/98 3,000 0.83% 12.6250 12/18/08 23,820 60,363
Ellison C. Rudd 04/20/98 10,500 2.89% 13.3333 04/20/08 $88,049 $223,123
12/18/98 3,000 0.83% 12.6250 12/18/08 23,820 60,363
- ------------------------ ---------- ------------ ------------ ------------- --------------- -- ------------- ------------
</TABLE>
(1) All of the options were granted under the Company's 1994 Employees
Stock Incentive Plan. Options vest in 25% increments on anniversary of
grant. Options marked with an asterisk (*) are currently exercisable as
a result of the merger of Middle Georgia Bankshares, Inc. with the
Company.
(2) Option holders can pay the exercise price by delivery of already-owned
shares. Option holders can pay tax withholding obligations related to
exercise of the options by offset of the underlying shares, subject to
certain conditions.
(3) The dollar amounts under these columns are the result of calculations
at the 5% and 10% rates set by the Securities and Exchange Commission
and therefore are not intended to forecast future possible
appreciation, if any, of the price of the Company's common stock.
18
<PAGE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
The following table shows the number of shares underlying stock options
held by the Named Executive Officers as of December 31, 1998. Also reported are
the values for "in-the-money" options which represent the positive spread
between the exercise price of any such existing stock options and the year-end
price of the Company's common stock. No stock options were exercised by the
Named Executive Officers in 1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Money Options at
Shares Options at December 31, 1998 December 31, 1998(1)
Acquired on Value ----------------------------- --------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Daniel Speight, Jr. 0 $0 63,000 18,750 0 0
John S. Holle 0 $0 45,000 24,750 30,000 0
J. Preston Martin 0 $0 0 24,000 0 0
Patti S. Davis 0 $0 25,500 3,000 0 0
Ellison C. Rudd 0 $0 5,625 13,500 22,500 0
- -------------------
</TABLE>
(1) The closing price of the Company's common stock, as reported by The
Nasdaq Stock Market on December 31, 1998, was $11.50. The value is
calculated on the basis of the difference between the option per share
price and $11.50 per share, multiplied by the number of shares of
common stock underlying the option.
Employment Agreements
The Company entered into Employment Agreements with J. Daniel Speight,
Jr., John S. Holle, Patti S. Davis and Ellison C. Rudd, effective as of April 1,
1998. Each of the Employment Agreements provides for an initial term of three
years. The three-year term automatically renews each day after the effective
date so that the term remains a three-year term until either party notifies the
other that the automatic renewals should discontinue. The Employment Agreements
provide for an annual salary which is reviewed at least annually by the Board of
Directors of the Company. The Employment Agreements also provide for the
employees to participate in any bonus, stock option or other executive
compensation programs available to senior management of the Company. Information
regarding the annual salary and bonus paid to J. Daniel Speight, Jr., John S.
Holle, Patti S. Davis and Ellison C. Rudd for 1998 pursuant to the Employment
Agreements is set forth in the Summary Compensation Table above. The Employment
Agreements provide that the employee is entitled to the use of an automobile,
reimbursement of club fees and dues, and participation in all group employee
benefit plans.
19
<PAGE>
The Employment Agreements state that in the event the Company
terminates employment for any reason other than "cause" (as defined in the
Employment Agreements), the employee is entitled to receive a severance payment
in a lump sum amount equal to the employee's average monthly compensation
multiplied by the number of months remaining the term of the Employment
Agreement. If there are less than twelve months remaining in the term of the
Employment Agreement, the employee will receive a lump sum payment of his or her
average monthly compensation multiplied by twelve. The employees also are
entitled to receive certain benefits for at least twelve months or until the end
of the term of the Employment Agreement, whichever is greater.
Pursuant to the terms of the Employment Agreements, during the term of
the Employment Agreement and for twelve months following the termination of the
Employment Agreement, the employee agrees not to compete with the Company or
solicit any of its customers or employees. The agreement not to compete and not
to solicit customers or employees does not apply if (i) the Company terminates
the employee without "cause," (ii) the Company experiences a "change of control"
(as defined in the Employment Agreement) or (iii) the employee terminates the
Employment Agreement for "cause."
The Company entered into a Separation Agreement with J. Preston Martin
effective May 13, 1998. Pursuant to the Separation Agreement, Mr. Martin will
receive severance payments equal to his annual base salary and bonus paid over
the previous three fiscal years in the event that Mr. Martin is involuntarily
terminated as such term is defined in the Separation Agreement. In the
Separation Agreement, Mr. Martin covenants not to compete with the Company
during the term of the Separation Agreement and for a 12-month period following
the termination of the Separation Agreement or the termination of Mr. Martin's
status as an employee of the Company.
Pension Plan
The Company terminated its non-contributory defined benefit plan (the
"Pension Plan") effective May 1, 1998. As of December 31, 1998, the Company
distributed to each participant in the Pension Plan a cash payment in the amount
of the contribution the Company had made on behalf of that participant.
Participants in the Pension Plan had a choice of receiving cash, having the cash
placed in the Company's 401(k) savings plan or having the cash placed in an
individual retirement account. Mr. Holle received a payment in the amount of
$182,284.06 and Mr. Rudd received a payment in the amount of $60,608.52. The
Company purchased annuities for active retirees under the Pension Plan.
20
<PAGE>
Loans to Management
Directors, executive officers and principal shareholders of the Company
and the subsidiary banks of the Company (the "FLAG Banks") and their associates
have been customers of the FLAG Banks from time to time in the ordinary course
of business, and additional transactions may be expected to take place in the
future. In accordance with applicable federal laws and regulations, all loans by
the FLAG Banks to such persons are made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, do not involve more than the normal
risk of collectibility or embody other unfavorable features, and comply with
specified quantitative limits imposed by such federal laws and regulations. At
December 31, 1998, the aggregate amount of loans and extensions of credit
outstanding to such persons was approximately $728,698.13, which represented
1.5% of the total equity capital of the FLAG Banks as of such date.
None of the FLAG Banks' loans outstanding at any time during or
subsequent to 1998 to directors, executive officers or principal shareholders of
the Company or the FLAG Banks or their associates is or has been on past due or
non-accrual status, has been restructured, or is considered by the FLAG Banks to
be a problem loan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, and
regulations of the Securities and Exchange Commission thereunder, require the
Company's directors and executive officers and any persons who beneficially own
more than 10% of the Company's common stock, as well as certain affiliates of
such persons, to file initial reports of their ownership of common stock and
subsequent reports of changes in such ownership with the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc. Directors,
executive officers and persons beneficially owning more than 10% of such stock
are required by applicable regulations to furnish the Company with copies of all
Section 16(a) reports they filed. To the Company's knowledge, no person
beneficially owned more than 10% of the Company's common stock during 1998.
Based solely on its review of the copies of such reports received by it and
written representations that no other reports were required of those persons,
the Company believes that during 1998, all of its directors and executive
officers complied with applicable Section 16(a) filing requirements.
PROPOSAL 2 - APPROVAL OF PROPOSED
AMENDMENT TO THE 1994
EMPLOYEES STOCK INCENTIVE PLAN
The Board of Directors has adopted, subject to shareholder approval
at the Annual Meeting, an amendment to the FLAG Financial Corporation 1994
Employees Stock Incentive Plan (the "Employees Stock Plan"). If approved by the
shareholders, the proposed amendment to the Employees Stock Plan will be
effective as of March 15, 1999.
21
<PAGE>
The Employees Stock Plan is intended to further the growth and
development of the Company by allowing certain employees of the Company (or any
parent or subsidiary companies) to obtain a proprietary interest in the Company
through the grant or purchase of common stock. The Company believes that the
Employees Stock Plan aids in attracting and retaining such individuals and in
stimulating the efforts of such individuals for the success of the Company.
The following is a summary of the Employees Stock Plan and the
proposed amendment that would increase from 525,000 to 914,000 (subject to
adjustment as described below) the number of shares of Company common stock
authorized to be issued upon exercise or grant of Stock Rights under the
Employees Stock Plan and to provide that the maximum number of shares of common
stock with respect to one or more options that may be granted during any one
calendar year under the Employees Stock Plan to any one participant is 100,000
shares.
The following is a summary of the principal features and effects of the
Employees Stock Plan and is subject to, and qualified in its entirety by
reference to, the text of the Employees Stock Plan. A copy of the full text of
the Employees Stock Plan, as proposed to be amended, will be furnished to any
shareholder upon written request made to the Secretary of the Company.
Types of Awards
Incentive stock options ("ISOs"), nonqualified stock options
("NQSOs"), and restricted stock awards may be granted under the Employees Stock
Plan (collectively, "Stock Rights").
Administration
The Employees Stock Plan is administered by a committee consisting of
two or more individuals appointed by the Board of Directors of the Company from
among its members (the "Employees Stock Plan Committee"). Each member of the
Employees Stock Plan Committee must be (i) an "outside director" as that term is
used in Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations promulgated thereunder, and (ii) a "non-employee
director" within the meaning of Rule 16b-3 of the Securities Exchange Act of
1934, or any successor provision. The Board from time to time may remove members
from, or add members to, the Employees Stock Plan Committee, and vacancies will
be filled by the Board.
The Employees Stock Plan Committee has authority (i) to determine the
individuals to whom Stock Rights will be granted from among those individuals
who are eligible, as well as the terms of Stock Rights and the number of shares
of common stock in connection with such Stock Rights, (ii) to determine whether
an option will constitute an ISO intended to qualify under Section 422 of the
Code or an NQSO, and (iii) to interpret the provisions of, and prescribe, amend
and rescind any rules and regulations relating to, the Employees Stock Plan.
Eligibility and Grants of Stock Rights
Under the terms of the Employees Stock Plan, all employees of the
Company (and any parent or subsidiary corporations), including such employees
who are also members of the Board (or of the board of directors of a parent or
subsidiary corporation) are eligible for consideration for the granting of Stock
Rights by the Employees Stock Plan Committee. As of March 15, 1999 there were
approximately 285 employees of the Company and the Banks, all of whom are
eligible to participate in the Employees Stock Plan.
22
<PAGE>
Shares Available
The maximum number of shares of common stock with respect to which
Stock Rights may be granted under the Employees Stock Plan currently is 525,000.
If the proposed amendment is approved by the shareholders at the Annual Meeting,
such number will be increased to 914,000 (subject to adjustment), and the
maximum number of shares of common stock with respect to one or more options
that may be granted during any one calendar year under the Employees Stock Plan
to any one participant will be 100,000 shares. If any Stock Right terminates or
is canceled for any reason without having been exercised or vested in full, the
shares of common stock not issued will then become available for additional
grants of Stock Rights under the Employees Stock Plan.
Terms of Options
Option Price. The purchase price of the common stock underlying each
option granted under the Employees Stock Plan will be the fair market value of
the common stock on the date the option is granted, unless otherwise determined
by the Employees Stock Plan Committee. However, the option price for ISOs may
not be less than 100% (110% for shares subject to an optionee who owns more than
10% of the total combined voting power of all classes of stock of either the
Company or any parent or subsidiary corporation of the Company) of the fair
market value of common stock on the date the ISO is granted.
Vesting. Each agreement evidencing an option granted under the
Employees Stock Plan must state the terms and conditions upon which the option
will vest and become exercisable, as determined by the Employees Stock Plan
Committee.
Term and Exercise of Options. Each option granted under the Employees
Stock Plan may be exercised on such dates, during such periods and for such
number of shares as determined by the Employees Stock Plan Committee and as
specified in each option agreement. The term of any option will be determined by
the Employees Stock Plan Committee, but the term may not exceed 10 years from
the date of grant (or 5 years in the case of ISOs granted to optionees who own
more than 10% of the total combined voting power of all classes of stock of
either the Company or any parent or subsidiary corporation of the Company). No
option may be granted under the Employees Stock Plan after March 16, 2004, 10
years after the Employees Stock Plan was originally adopted by the Board. An
option granted under the Employees Stock Plan may be exercised for less than the
full number of shares of common stock subject to such option, provided that no
option may be exercised for less than (i) 100 shares or (ii) the total remaining
shares subject to the option, if less than 100 shares. Upon exercise of an
option, an option holder must pay for the common stock subject to the exercise.
Payment may be made in cash, in property, in common stock (including the
retention by the Company of optional shares of common stock with a fair market
value equal to the exercise price), by performance of services (if acceptable to
the Employees Stock Plan Committee and allowed under applicable law), or by a
combination of the foregoing.
23
<PAGE>
Transfers. No option granted under the Employees Stock Plan is
assignable or transferable by the optionee except by will or the laws of descent
and distribution; provided, however, that the Employees Stock Plan Committee may
(but need not) permit other transfers where the Employees Stock Plan Committee
concludes that such transferability (i) does not result in accelerated taxation,
(ii) does not cause any option intended to be an ISO to fail to be described in
Code Section 422(b), and (iii) is otherwise appropriate and desirable, taking
into account any state or federal tax or securities laws applicable to
transferable options. During the lifetime of an optionee, the option shall be
exercisable only by the optionee or such permitted transferee (unless such
person is incapacitated and unable to exercise options). To the extent that an
option has not been distributed to the person acquiring the option after the
death of the optionee by bequest or inheritance, the option may be exercised by
the executor or administrator of the optionee's estate.
Termination of Employment. Vested ISOs must be exercised within the
earlier of: (i) three months after an employee optionee ceases to be in the
employ of the Company or any parent or subsidiary for any reason other than
death or disability; (ii) the expiration date of the option; (iii) immediately
upon termination of employment with the Company or a parent or subsidiary for
cause; (iv) one year after termination of employment with the Company or a
parent or subsidiary because of disability unless the optionee dies within this
one year period; or (v) one year after the death of an optionee who dies (a)
while in the employ of the Company or a parent or subsidiary, (b) within three
months after termination of employment with the Company or a parent or
subsidiary, or (c) within one year after employment with the Company or a parent
or subsidiary terminated due to disability. However, the Employees Stock Plan
Committee may provide different exercise expiration periods with respect to
NQSOs granted under the Employees Stock Plan.
Terms of Restricted Stock
Vesting. Restricted stock granted under the Employees Stock Plan shall
be subject to such restrictions as the Employees Stock Plan Committee shall
determine and shall be subject to forfeiture by the recipient until the earlier
of (i) the time such restrictions lapse or are satisfied, or (ii) the time such
shares are forfeited.
Transfers. The Employees Stock Plan does not permit a recipient to
sell, assign or otherwise transfer restricted stock prior to the time all
restrictions have lapsed or are satisfied except in the event of death (if death
does not result in forfeiture of the restricted stock). See "Termination of
Employment" below.
Termination of Employment. Generally, the termination of the
recipient's employment with the Company or any subsidiary for any reason (other
than a "change of control" of the Company or its affiliates, as defined in the
Employees Stock Plan) will result in forfeiture of any restricted stock for
which the restrictions have not lapsed, although the Employees Stock Plan
Committee may provide otherwise.
Custodian. Shares of restricted stock may be deposited with a custodian
until they become nonforfeitable.
24
<PAGE>
Amendment and Termination
The Board may amend or terminate the Employees Stock Plan at any time,
provided that (i) no amendment may be effected without the approval of the
option holders or restricted stock recipients if such amendment would affect in
any way the rights of such option holders or restricted stock recipients under
the Employees Stock Plan, and (ii) no amendment may be effected without the
approval of the shareholders of the Company if (1) the amendment would cause the
applicable portions of the Employees Stock Plan to fail to qualify as an
"incentive stock option plan" pursuant to Section 422 of the Code, (2) the
amendment would materially increase the benefits accruing to participants under
the Employees Stock Plan, (3) the amendment would materially increase the number
of securities which may be issued under the Employees Stock Plan, (4) the
amendment would materially modify the requirements as to eligibility for
participation in the Employees Stock Plan, or (5) the amendment would modify the
material terms of the Employees Stock Plan within the meaning of regulations
under Section 162(m) of the Code.
The Employees Stock Plan will terminate on the later of (i) the complete
exercise or lapse of the last outstanding Stock Right granted under the
Employees Stock Plan, or (ii) the last date upon which options may be granted
under the Employees Stock Plan (March 16, 2004), subject to its earlier
termination by the Board at any time.
Reload Options
All options granted under the Employees Stock Plan shall be accompanied
by a reload option. A reload option is an option that is granted to an optionee
who pays for exercise of all or part of an option with shares of common stock
and is for the same number of shares as is exchanged in payment for the exercise
of the option. The reload option is granted as of the date of the payment made
in shares of common stock and is subject to all of the same terms and conditions
as the original option which was exercised, except that the exercise price for
each share of common stock subject to the reload option shall be the fair market
value of such a share on the date the reload option is granted and the term of
any reload option shall not extend beyond the original term of the option with
respect to which such reload option was granted. An optionee who pays for the
exercise of a reload option with shares of common stock is entitled to a
successive reload option. For purposes of granting reload options, the retention
of optioned shares by the Company shall be treated as a payment for exercise
with shares of common stock.
25
<PAGE>
Adjustments
In the event of changes in the number of outstanding shares of common
stock by reason of stock dividends, splits, or combinations, or
recapitalizations or reclassifications, an appropriate and equitable adjustment
will be made by the Employees Stock Plan Committee to the number and kind of
shares subject to Stock Rights (and, as to options, to the option price), and to
the number and kind of shares remaining available for issuance pursuant to Stock
Rights granted under the Employees Stock Plan.
Additionally, in the event that the Company is involved in a
reorganization involving a merger, consolidation, transfer of stock or transfer
of the assets of the Company, the Employees Stock Plan Committee may, in its
discretion, declare that (i) outstanding options are nonforfeitable and
exercisable; (ii) outstanding options apply to the securities of the resulting
corporation; and/or (iii) outstanding options are nonforfeitable and are to be
terminated after giving at least 30 days' notice to the option holders. If the
Company is dissolved, all of the rights of all optionees will become immediately
nonforfeitable and exercisable through the date of dissolution.
Federal Income Tax Consequences
The Company intends that part of the Employees Stock Plan qualify as an
incentive stock option plan and that any option granted in accordance with such
portion of the Employees Stock Plan qualify as an ISO, all within the meaning of
Section 422 of the Code. The tax effects of any other stock option granted under
the Employees Stock Plan shall be determined under Section 83 of the Code. The
following is a brief description of the consequences under the Code of the
receipt or exercise of Stock Rights.
ISOs. An option holder has no tax consequences upon issuance or,
generally, upon exercise of an ISO. An option holder will recognize income when
he or she sells or exchanges the shares acquired upon exercise of an ISO. This
income will be taxed at the applicable capital gains rate if the sale or
exchange occurs after the expiration of the requisite holding periods.
Generally, the requisite holding periods expire two years after the date of
grant of the ISO and one year after the date of acquisition of the common stock
pursuant to the exercise of the ISO.
If an option holder disposes of the common stock acquired pursuant to
exercise of an ISO before the expiration of the requisite holding periods, the
option holder will recognize compensation income in an amount equal to the
difference between the option price and the lesser of (i) the fair market value
of the shares on the date of exercise and (ii) the price at which the shares are
sold, This amount will be taxed at ordinary income rates. If the sale price of
the shares is greater than the fair market value on the date of exercise, the
difference will be recognized as gain by the option holder and taxed at the
applicable capital gains rate. If the sale price of the shares is less than the
option price, the option holder will recognize a capital loss equal to the
excess of the option price over the sale price.
For these purposes, the use of shares acquired upon exercise of an ISO
to pay the option price of another option (whether or not it is an ISO) will be
considered a disposition of the shares. If this disposition occurs before the
expiration of the requisite holding periods, the option holder will have the
same tax consequences as are described in the immediately preceding paragraph.
If the option holder transfers any such shares after holding them for the
requisite holding periods or transfers shares acquired pursuant to exercise of
an NQSO or on the open market, he or she generally will not recognize any income
upon the exercise. Whether or not the transferred shares were acquired pursuant
to an ISO and regardless of how long the option holder has held such shares, the
basis of the new shares received pursuant to the exercise will be computed in
two steps. In the first step, a number of new shares equal to the number of
older shares tendered (in payment of the option's exercise) is considered
exchanged under Section 1036 of the Code and the rulings thereunder; these new
shares receive the same holding period and the same basis that the option holder
had in the old tendered shares, if any, plus the amount included in income from
the deemed sale of the old shares and the amount of cash or other nonstock
consideration paid for the new shares, if any. In the second step, the number of
new shares received by the option holder in excess of the old tendered shares
receives a basis of zero, and the option holder's holding period with respect to
such shares commences upon exercise.
26
<PAGE>
An option holder may have tax consequences upon exercise of an ISO if
the aggregate fair market value of shares of the common stock subject to ISOs
which first become exercisable by an option holder in any one calendar year
exceeds $100,000. If this occurs, the excess shares will be treated as though
they are subject to an NQSO instead of an ISO. Upon exercise of an option with
respect to these shares, the option holder will have the tax consequences
described below with respect to the exercise of NQSOs.
Finally, except to the extent that an option holder has recognized
income with respect to the exercise of an ISO (as described in the preceding
paragraphs), the amount by which the fair market value of a share of the common
stock at the time of exercise of the ISO exceeds the option price will be
included in determining an option holder's alternative minimum taxable income
and may cause the option holder to incur an alternative minimum tax liability in
the year of exercise.
There will be no tax consequences to the Company upon the issuance or,
generally, upon the exercise of an ISO. However, to the extent that an option
holder recognizes ordinary income upon exercise, as described above, the Company
will have a deduction in the same amount.
NQSOs. Neither the Company nor the option holder has income tax
consequences from the issuance of NQSOs. Generally, in the tax year when an
option holder exercises NQSOs, the option holder recognizes ordinary income in
the amount by which the fair market value of the shares at the time of exercise
exceeds the option price for such shares. The Company will have a deduction in
the same amount as the ordinary income recognized by the option holder in the
Company's tax year in which or with which the option holder's tax year (of
exercise) ends.
If an option holder exercises an NQSO by paying the option price with
previously acquired common stock, the option holder will recognize income
(relative to the new shares he is receiving) in two steps. In the first step, a
number of new shares equivalent to the number of older shares tendered (in
payment of the NQSO exercised) is considered to have been exchanged in
accordance with Section 1036 of the Code and the rulings thereunder, and no gain
or loss is recognized. In the second step, with respect to the number of new
shares acquired in excess of the number of old shares tendered, the option
holder will recognize income on those new shares equal to their fair market
value less any nonstock consideration tendered.
The new shares equal to the number of the older shares tendered will
receive the same basis the option holder had in the older shares, and the option
holder's holding period with respect to the tendered older shares will apply to
those new shares. The excess new shares received will have a basis equal to the
amount of income recognized by the option holder by exercise, increased by any
nonstock consideration tendered. Their holding period will commence upon the
exercise of the option.
27
<PAGE>
Restricted Stock. A holder of restricted stock will recognize income
upon its receipt, but generally only to the extent that it is not subject to a
substantial risk of forfeiture. If the restricted stock is subject to
restrictions that lapse in increments over a period of time, so that the holder
becomes vested in a portion of the shares as the restrictions lapse, the holder
will recognize income in any tax year only with respect to the shares that
become nonforfeitable during that year. The income recognized will be equal to
the fair market value of those shares, determined as of the time that the
restrictions on those shares lapse. That income generally will be taxable at
ordinary income tax rates. The Company generally will be entitled to a deduction
in an amount equal to the amount of ordinary income recognized by the holder of
the restricted stock.
A holder of restricted stock may elect instead to recognize ordinary
income for the taxable year in which he receives an award of restricted stock in
an amount equal to the fair market value of all shares of restricted stock
awarded to him (even if the shares are subject to forfeiture). That income will
be taxable at ordinary income tax rates. At the time of disposition of the
shares, a holder who has made such an election will recognize gain in an amount
equal to the difference between the sales price and the fair market value of the
shares at the time of the award. Such gain will be taxable at the applicable
capital gains rate. Any such election must be made within 30 days after the
transfer of the restricted stock to the holder. The Company will be entitled to
a deduction in an amount equal to the amount of ordinary income recognized by
the holder at the time of his election.
Limitation on Company Deductions. No federal income tax deduction is
allowed for compensation paid to a "covered employee" in any taxable year of the
Company, to the extent that such compensation exceeds $1,000,000. For this
purpose, "covered employees" are generally the chief executive officer of the
Company and the four highest compensated officers of the Company whose annual
salary and bonus exceeds $100,000, and the term "compensation" generally
includes amounts includable in gross income as a result of the exercise of NQSOs
or stock appreciation rights, or the receipt of restricted stock. This deduction
limitation does not apply to certain compensation that is performance-based.
Generally, compensation attributable to a NQSO or a stock appreciation
right will satisfy the limitation exception for performance-based compensation
if the grant or award is made by a "compensation committee" (a committee
composed of "outside" directors), the plan under which the option or right is
granted states the maximum number of shares with respect to which options or
rights may be granted during a specified period to any employee, and, under the
terms of the option or right, the amount of compensation the employee could
receive is based solely on an increase in the value of the stock after the date
of the grant or award. Non-discounted NQSOs granted under the Employees Stock
Plan are intended to satisfy these requirements for deductibility.
Withholding. Recipients of NQSOs and shares of restricted stock are
required to pay applicable income tax withholding obligations attributable to
these Stock Rights.
ERISA
The Employees Stock Plan is not, and is not intended to be, an employee
benefit plan or qualified retirement plan. The Employees Stock Plan is not,
therefore, subject to the Employee Retirement Income Security Act of 1974, as
amended, or Section 401 (a) of the Code.
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<PAGE>
Benefits to Named Executive Officers and Others
As of December 31, 1998, stock options had been granted under the
Employees Stock Plan to the persons and groups shown in the table below. No
grants of restricted stock are outstanding under the Employees Stock Plan. The
Employees Stock Plan Committee has not yet made any determination as to which
eligible participants will be granted Stock Rights under the Employees Stock
Plan in the future. Consequently, it is not presently possible to determine,
with respect to the persons and groups shown in the table below, the benefits or
amounts that will be received in the future by such persons or groups pursuant
to the Employees Stock Plan.
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------- ------------------------------------
1994 Employees Stock Incentive Plan
----------------- ------------------
Name and Position Dollar Value ($) Number of Options
- -------------------------------------------------- ----------------- -----------------
<S> <C> <C>
J. Daniel Speight, Jr. 1,059,281.25 81,750
President and Chief Executive Officer
- -------------------------------------------------- ----------------- -----------------
John S. Holle 857,656.25 69,750
Chairman of the Board
- -------------------------------------------------------------------- -----------------
J. Preston Martin 295,062.50 24,000
Senior Vice President
- -------------------------------------------------- ----------------- -----------------
Patti S. Davis 375,750.00 28,500
Senior Vice President,
Chief Financial Officer and
Assistant Secretary
- -------------------------------------------------- ----------------- -----------------
Ellison C. Rudd 220,062.50 19,125
Senior Vice President, Secretary and Treasurer
- -------------------------------------------------- ----------------- -----------------
All Executive Officers as a Group 3,051,937.50 242,125
- -------------------------------------------------- ----------------- -----------------
All Non-Executive Directors as a Group 0 0
- -------------------------------------------------- ----------------- -----------------
All Non-Executive Officer Employees as a Group 1,817,811.50 158,338
- -------------------------------------------------- ----------------- -----------------
</TABLE>
The Board of Directors recommends that shareholders vote FOR the
approval of the proposed amendment to the Company's 1994 Employees Stock
Incentive Plan.
29
<PAGE>
PROPOSAL 3 - RATIFICATION OF APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of Porter Keadle Moore,
LLP to serve as independent accountants of the Company for the fiscal year
ending December 31, 1999 and has directed that such appointment be submitted to
the shareholders for ratification at the Annual Meeting. Porter Keadle Moore,
LLP is being appointed as the Company's independent accountants for the third
year and is considered by management of the Company to be well qualified. If the
shareholders do not ratify the appointment of Porter Keadle Moore, LLP, the
Board of Directors will reconsider the appointment.
The firm of Robinson, Grimes & Company, P.C. served as independent
accountants of the Company from 1968 until 1996. On February 20, 1997, the
Company engaged Porter Keadle Moore, LLP as independent accountants to audit the
Company's financial statements for the fiscal year ending December 31, 1997 and
elected not to renew the engagement of Robinson, Grimes & Company, P.C. No
adverse opinions or disclaimers of opinion were given by Robinson, Grimes &
Company, P.C. during the fiscal years ended December 31, 1995 and 1996, nor were
any of their opinions qualified as to uncertainty, audit scope, or accounting
principle, during the time Robinson, Grimes & Company, P.C. was engaged. There
were no disagreements or reportable events of any nature between the Company and
Robinson, Grimes & Company, P.C. during the fiscal years ended December 31,
1995, 1996, and the subsequent interim period through February 20, 1997 as
described in Items 304(a) (1) (iv) and (v) of Regulation S-K. The decision was
approved by the Company's Audit Committee and Board of Directors.
Representatives of Porter Keadle Moore, LLP will be present at the
Annual Meeting. They will have an opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions from
shareholders.
The Board of Directors unanimously recommends that shareholders vote
FOR the proposal to ratify the appointment of Porter Keadle Moore, LLP as
independent accountants of the Company for the fiscal year ending December 31,
1999.
PRINCIPAL SHAREHOLDERS
There were no shareholders of record that directly or indirectly
owned, controlled, or held with power to vote 5% or more of the Company's commo
stock as of December 31, 1998.
SHAREHOLDERS' PROPOSALS FOR 2000 ANNUAL MEETING
Director nominations and other proposals of shareholders intended to be
presented at the 2000 Annual Meeting of Shareholders must be submitted to the
Company in accordance with the procedures set forth in the Company's Bylaws and
in accordance with applicable rules of the Securities and Exchange Commission.
The effect of these provisions is that shareholders must submit such nominations
and proposals, together with the related information specified in the
30
<PAGE>
above-referenced sections of the Bylaws, in writing to the Company on or before
December 15, 1999 in order for such matters to be included in the Company's
proxy materials for, and voted upon at, the 2000 Annual Meeting. All such
proposals, nominations and related information should be submitted on or before
December 15, 1999 by certified mail, return receipt requested, to Ellison C.
Rudd, Secretary of the Company, at 101 North Greenwood Street, LaGrange, Georgia
30240. A copy of the above-referenced sections of the Bylaws will be provided
upon request in writing to the Secretary of the Company at such address.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors of the Company knows of no matters other than
those referred to in the accompanying Notice of Annual Meeting of Shareholders
which may properly come before the Annual Meeting. However, if any other matter
should be properly presented for consideration and voting at the Annual Meeting
or any adjournments thereof, it is the intention of the persons named as proxies
on the enclosed form of proxy card to vote the shares represented by all valid
proxy cards in accordance with their judgment of what is in the best interest of
the Company.
By Order of the Board of Directors.
/s/Ellison C. Rudd
------------------
Ellison C. Rudd
Secretary
LaGrange, Georgia
March 29, 1999
-----------
The Company's 1998 Annual Report, which includes audited financial
statements, has been mailed to shareholders of the Company with these proxy
materials. The Annual Report does not form any part of the material for the
solicitation of proxies
31
<PAGE>
Revocable Proxy Common Stock
FLAG FINANCIAL CORPORATION
THIS PROXY IS SOLICITIED BY THE BOARD OF DIRECTORS FOR THE 1999 ANNUAL MEETING
OF SHAREHOLDERS
The undersigned hereby appoints, J. Daniel Speight, Jr. and John S. Holle,
and each of them, proxies, with full power of substitution, to act for and in
the name of the undersigned to vote all shares of Common Stock of FLAG Financial
Corporation (the "Company"), which the undersigned is entitled to vote at the
1999 Annual Meeting of Shareholders of the Company, to be held at the Compan's
headquarters, 101 North Greenwood Street, LaGrange, Georgia, on Wednesday, April
21, 1999, at 2;00 p.m., local time, and at any adjournments thereof, as
indicated below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED
PROPOSALS.
1. Election of Directors: Authority for the election of Patti S. Davis,
Fred A. Durand, III, James W. Johnson, and J. Preston Martin, as a class of
directors, each to serve until the Annual Meeting of Shareholders in 2002 or
until their successors are elected and qualified.
{ } FOR ALL NOMINEES listed above { } WITHHOLD AUTHORITY to vote for
(except as marked to the contrary below). Nominees listed below.
INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list below.
Patti S. Davis, Fred A. Durand, III, James W. Johnson and J. Preston Martin
2 . Amendment of Employees Stock Incentive Plan: Authority to approve an
amendment to the Company's 1994 Employees Stock Incentive Plan, as described
under Proposal 2.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3.. Ratification of Appointment of Independent Accountants: Authority to
ratify the appointment of Porter Keadle Moore, LLP as independent accountants of
the Company for the fiscal year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting and any adjournments
thereof.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS RPOXY CARD IN THE
ENCLOSED PREPAID ENVELOPE
(Continued, and to be signed and dated, on the reverse side)
<PAGE>
(Continued from other side)
PROXY-SOLICITED BY THE BOARD OF DIRECTORS
THIS PROXY CARD WILL BE VOTED AS DIRECTED. IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY CARD WILL BE BOTED IN THE DISCRETION OF THE PROXIES "FOR"
THE ELECTION OF THE FOUR NOMINEES IN PROPOSAL 1 AND "FOR" PROPOSALS 2 AND 3. If
any other business is presented to a vote of the shareholders at the Annual
Meeting, this proxy card will be voted by the proxies in their best judgement.
At the present time, the Board of Directors knows of no other business to be
presented to a vote of the shareholders at the Annual Meeting.
If the undersigned elects to withdraw this proxy card on or before the time
of the Annual Meeting or any adjournments thereof and notifies the Secretary of
the Company at or prior to the Annual Meeting of the decision of the undersigned
to withdraw this proxy card, then the power of said proxies shall be deemed
terminated and of no further force and effect. If the undersigned company
withdraws this proxy card in the manner described above and prior to the Annual
Meeting does not submit a duly executed and subsequently dated proxy card to the
Company, the undersigned may vote in person at the Annual Meeting all shares of
Common Stock of the Company owned by the undersigned as of the record date,
February 26, 1999.
Please mark, date and sign exactly as your name appears on this
Proxy card. When shares are hold jointly, both holders should
sign. When signing as an attorney, executor, administrator, trustee
or guardian, please give your full title If the holder is a
corporation or a partnership, the full corporate or partnership
name should be signed by a duly authorized officer.
Date: ______________________, 1999
__________________________________________
Signature
__________________________________________
Signature, if shares held jointly
Do you plan to attend the Annual Meeting? YES [ ] NO [ ]
