<PAGE>
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. __________)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only
/X/ Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Gateway Bancorp, Inc.
- - -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Gateway Bancorp, Inc.
- - -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box): (previously paid by wire
transfer)
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2), or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:_______
(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):___________
(4) Proposed maximum aggregate value of transaction:_____________________
(5) Total fee paid:______________________________________________________
Fee paid previously with preliminary materials.
______________________________________________________________________________
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount previously paid:______________________________________________
(2) Form, schedule or registration statement no.:________________________
(3) Filing party:_______________________________________________________
(4) Date filed:_________________________________________________________
<PAGE>
GATEWAY BANCORP, INC.
2717 Louisa Street
Catlettsburg, Kentucky 41129
(606) 739-4126
April 15, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Gateway Bancorp, Inc. The meeting will be held at the FIVCO Community Room
located at 3000 Louisa Street, Catlettsburg, Kentucky 41129 on Thursday, May
15, 1997 at 11:00 a.m., Eastern Time. The matters to be considered by
stockholders at the Annual Meeting are described in the accompanying
materials.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend
the meeting in person. We urge you to mark, sign, and date your proxy card
today and return it in the envelope provided, even if you plan to attend the
Annual Meeting. This will not prevent you from voting in person, but will
ensure that your vote is counted if you are unable to attend.
Your continued support of and interest in Gateway Bancorp, Inc. are
sincerely appreciated.
SINCERELY,
/s/ Rebecca R. Jackson
----------------------
Rebecca R. Jackson
President and Chief Executive Officer
<PAGE>
GATEWAY BANCORP, INC.
2717 Louisa Street
Catlettsburg, Kentucky 41129
(606) 739-4126
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 15, 1997
--------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Gateway Bancorp, Inc. (the "Company") will be held at the FIVCO
Community Room located at 3000 Louisa Street, Catlettsburg, Kentucky on
Thursday, May 15, 1997 at 11:00 a.m., Eastern Time, for the following
purposes, all of which are more completely set forth in the accompanying
Proxy Statement:
(1) To elect two (2) directors for a three-year term or until their
successors are elected and qualified;
(2) To ratify the appointment by the Board of Directors of Kelley,
Galloway & Company, PSC as the Company's independent auditors for the fiscal
year ending December 31, 1997; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof. Management is not aware of any other such
business.
The Board of Directors has fixed April 3, 1997 as the voting record date
for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting and at any adjournment thereof. Only those stockholders of
record as of the close of business on that date will be entitled to vote at
the Annual Meeting or at any such adjournment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Hunter E. Clark
-------------------
Hunter E. Clark
Secretary
Catlettsburg, Kentucky
April 15, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU
PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING,
YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY
YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
<PAGE>
GATEWAY BANCORP, INC.
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
May 15, 1997
This Proxy Statement is furnished to holders of common stock, $.01 par
value per share ("Common Stock"), of Gateway Bancorp, Inc. (the "Company"),
the holding company of Catlettsburg Federal Savings Bank (the "Bank"). The
Company acquired all of the Bank's common stock issued in connection with the
conversion (the "Conversion") of Catlettsburg Federal Savings and Loan
Association from a federally chartered mutual savings and loan association to
a federally chartered stock savings bank in January 1995. Proxies are being
solicited on behalf of the Board of Directors of the Company to be used at
the Annual Meeting of Stockholders ("Annual Meeting") to be held at the FIVCO
Community Room located at 3000 Louisa Street, Catlettsburg, Kentucky on
Thursday, May 15, 1997 at 11:00 a.m., Eastern Time, and at any adjournment
thereof for the purposes set forth in the Notice of Annual Meeting of
Stockholders. This Proxy Statement is first being mailed to stockholders on
or about April 15, 1997.
The proxy solicited hereby, if properly signed and returned to the
Company and not revoked prior to its use, will be voted in accordance with
the instructions contained therein. If no contrary instructions are given,
each proxy received will be voted (i) FOR the nominees for director (as
described herein), (ii) FOR ratification of the Board of Directors'
appointment of Kelley, Galloway & Company, PSC, as the Company's independent
auditors for the fiscal year ended December 31, 1997; and (iii) upon the
transaction of such other business as may properly come before the meeting,
in accordance with the best judgment of the persons appointed as proxies. Any
stockholder giving a proxy has the power to revoke it at any time before it
is exercised by (i) filing with the Secretary of the Company written notice
thereof (Hunter E. Clark, Secretary, Gateway Bancorp, Inc.); (ii) submitting
a duly-executed proxy bearing a later date; or (iii) appearing at the Annual
Meeting and giving the Secretary notice of his or her intention to vote in
person. Proxies solicited hereby may be exercised only at the Annual Meeting
and any adjournment thereof and will not be used for any other meeting.
VOTING
Only stockholders of record at the close of business on April 3, 1997
("Voting Record Date") will be entitled to vote at the Annual Meeting. On the
Voting Record Date, there were 1,075,754 shares of Common Stock issued and
outstanding and the Company had no other class of equity securities
outstanding.
<PAGE>
With respect to the election of directors, stockholders have cumulative
voting rights. Stockholders have the right to vote, in person or by proxy,
the number of shares they own for as many persons as there are directors to
be elected (2) and for whose election they have the right to vote.
Stockholders also have the right to cumulate their votes and to cast the
number of votes equal to the number of shares they own, multiplied by the
number of directors to be elected (2), for any candidate in any allotment.
Any stockholder wishing to cumulate his or her votes with respect to the
election of directors must give notice of this intent to the Secretary at or
prior to the Annual Meeting and obtain a ballot or proxy from the Secretary
for such purpose. With respect to all matters properly presented at the
Annual Meeting other than the election of directors, each share of Common
Stock is entitled to one vote at the Annual Meeting.
Directors are elected by a plurality of the votes cast with a quorum
present. Abstentions are considered in determining the presence of a quorum
and will not affect the plurality vote required for the election of
directors. With respect to the proposal to ratify the appointment of the
independent auditors, a majority of the total votes present in person or by
proxy is required to approve such matter. Under rules of the New York Stock
Exchange, the proposal for ratification of the auditors is considered a
"discretionary" item upon which brokerage firms may vote in their discretion
on behalf of their clients if such clients have not furnished voting
instructions and for which there will not be "broker non-votes."
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Bylaws of the Company presently authorize five directors. The
Articles of Incorporation of the Company provides that the Board of Directors
of the Company shall be divided into three classes as nearly equal in number
as possible, with one class to be elected annually. Stockholders of the
Company are permitted to cumulate their votes for the election of directors
as discussed above.
No director or executive officer of the Company is related to any other
director or executive officer of the Company or the Bank by blood, marriage or
adoption, and each of the nominees currently serve as a director of the Company.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director
listed below. If any person named as a nominee should be unable or unwilling
to stand for election at the time of the Annual Meeting, the proxies will
nominate and vote for any replacement nominee or nominees recommended by the
Board of Directors. At this time, the Board of Directors knows of no reason
why the nominees listed below may not be able to serve as directors if
elected.
-2-
<PAGE>
The following tables present information concerning the nominees for
director of the Company and each director whose term continues.
Nominees for Director for a Three-Year Term Expiring in 2000
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND THE
BANK AND PRINCIPAL OCCUPATION DIRECTOR
NAME AGE(1) DURING THE PAST FIVE YEARS SINCE(2)
- - ------------------------------- ----------- ----------------------------------------------- -----------
<S> <C> <C> <C>
John H. Fugeman 82 Chairman of the Board of the Company and the 1972
Bank since April 1995 and October 1994,
respectively. Prior thereto, President of the
Bank from August 1975 to October 1994. Chief
Executive Officer of the Bank from January 1971
to December 1990. Various other positions with
the Bank since 1971.
Harold Freedman 77 Vice President of the Company and the Bank 1969
since April 1995 and January 1994,
respectively. President of Freedman's Inc., a
department store located in Catlettsburg,
Kentucky.
</TABLE>
The Board of Directors recommends that you vote FOR the election of the
above nominees for director.
-3-
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Director Whose Term Expires in 1998
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND
THE
BANK AND PRINCIPAL OCCUPATION DIRECTOR
NAME AGE(1) DURING THE PAST FIVE YEARS SINCE(2)
- - ------------------------------------------ ----------- -------------------------------- -----------
<S> <C> <C> <C>
Hunter E. Clark 78 Director; Secretary/ 1980
Treasurer of the Company
and the Bank since
October 1994 and January
1994, respectively.
Prior to June 1989,
President of Ross
Furniture, Catlettsburg,
Kentucky.
</TABLE>
Directors Whose Terms Expire in 1999
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND THE
BANK AND PRINCIPAL OCCUPATION DIRECTOR
NAME AGE(1) DURING THE PAST FIVE YEARS SINCE(2)
- - ------------------------------------------ ----------- ----------------------------------------------- -----------
<S> <C> <C> <C>
Rebecca R. Jackson 54 Director; President and Chief Executive Officer 1994
of the Company and the Bank since October 1994.
Executive Vice President and Chief Executive
Officer of the Bank from January 1991 to
October 1994. Vice President of Administration
of the Bank from January 1983 to December 1990.
Assistant Secretary/ Treasurer and various
other positions with the Bank since 1963.
Charles M. Hedrick 60 Director; Assistant Treasurer-Cash Management 1980
of Ashland Oil, Inc., Russell, Kentucky
</TABLE>
- - ------------------------
(1) As of April 3, 1997.
(2) Includes service as a director of the Bank.
-4-
<PAGE>
STOCKHOLDER NOMINATIONS
Article VII.D. of the Company's Articles of Incorporation governs
nominations for election to the Board of Directors and requires all such
nominations, other than those made by the Board, to be made at a meeting of
stockholders called for the election of directors, and only by a stockholder
who has complied with the notice provisions in that section. Stockholder
nominations must be made pursuant to timely notice in writing to the
Secretary of the Company. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive offices of
the Company not later than 60 days prior to the anniversary date of the
immediately preceding annual meeting. The Articles of Incorporation set forth
specific requirements with respect to stockholder nominations.
COMMITTEES AND MEETINGS OF THE BOARD OF THE COMPANY AND THE BANK
During the fiscal year ended December 31, 1996, the Board of Directors of
the Company met 13 times. No director attended fewer than 75% of the total
number of Board meetings that were held during this period. The Board of
Directors of the Company has established the following committees:
EXAMINATION AND AUDIT COMMITTEE. The Examination and Audit Committee
consists of Messrs. Freedman, Clark and Hedrick. The Examination and Audit
Committee recommends independent auditors to the Board annually and reviews
the Company's financial statements, the scope and results of the audit
performed by the Company's independent auditors and the Company's system of
internal control with management and such independent auditors, and reviews
regulatory examination reports. The Examination and Audit Committee met once
during 1996.
COMPENSATION REVIEW COMMITTEE. The Compensation Review Committee
consists of Messrs. Freedman, Clark and Hedrick. The Compensation Review
Committee reviews and recommends compensation and benefits for the Company's
employees and administers the stock benefit plans of the Company. The
Compensation Review Committee met once during 1996.
The Board of Directors of the Bank meets on a monthly basis and may have
additional special meetings. During the fiscal year ended December 31, 1996,
the Board of Directors of the Bank met 13 times. No director attended fewer
than 75% of the total number of Board meetings that were held during this
period. Although any three directors may formally act on behalf of the Bank
as an Executive Committee, no such meetings were held during the year ended
December 31, 1996.
-5-
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table includes, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by (i) each person or
entity, including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended ("1934 Act"), who or which was
known by the Company to be the beneficial owner of more than 5% of the
Company's issued and outstanding Common Stock, (ii) the directors of the
Company, and (iii) all directors and executive officers of the Company and
the Bank as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED AS
OF
APRIL 3, 1997(1)
---------------------
NAME OF BENEFICIAL OWNER NO. %
- - ------------------------------------------------------------------ ---------- ------
<S> <C> <C>
Barclays Global Investors, N.A. 64,018(2) 6.0%
45 Fremont Street
San Francisco, California 94105
Directors:
John H. Fugeman 28,337(3) 2.6%
Rebecca R. Jackson 16,722(4) 1.6
Harold Freedman 12,568(5) 1.2
Hunter E. Clark 21,925(6) 2.0
Charles M. Hedrick 7,698(7) *
All directors and executive officers of the 87,250(8) 8.1%
Company and the Bank as a group (5 persons)
</TABLE>
- - ------------------------
* Represents less than 1% of the outstanding Common Stock.
(1) For purposes of this table, pursuant to rules promulgated under the 1934
Act, an individual is considered to beneficially own shares of Common Stock
if he or she directly or indirectly has or shares (i) voting power, which
includes the power to vote or to direct the voting of the shares; or (ii)
investment power, which includes the power to dispose or direct the
disposition of the shares. Unless otherwise indicated, an individual has
sole voting power and sole investment power with respect to the indicated
shares. Shares which are subject to stock options and which may be exercised
within 60 days of April 3, 1997 are deemed to be outstanding for the purpose
of computing the percentage of Common Stock beneficially owned by such
person.
(Footnotes continued on following page)
-6-
<PAGE>
- - -----------------
(2) Based on a Schedule 13G filed pursuant to the 1934 Act on February 14, 1997.
(3) Includes 22,115 shares held jointly with Mr. Fugeman's son and 6,222
shares which may be acquired by Mr. Fugeman upon the exercise of stock
options.
(4) Includes 6,687 shares held jointly with Ms. Jackson's spouse, 1,779 shares
held by Ms. Jackson's Individual Retirement Account ("IRA"), 2,149 shares
held by Ms. Jackson's spouse's IRA, 3,618 shares held by the Company's
Employee Stock Ownership Plan ("ESOP") for the account of Ms. Jackson, and
2,489 shares which may be acquired by Ms. Jackson upon the exercise of stock
options.
(5) Includes 10,448 shares held jointly with Mr. Freedman's son and daughter,
1,000 shares held as custodian for Mr. Freedman's grandchildren, and 1,120
shares which may be acquired by Mr. Freedman upon the exercise of stock
options.
(6) Includes 20,730 shares held jointly with Mr. Clark's spouse, 25 shares held
jointly with Mr. Clark's grandson, 25 shares held jointly with Mr. Clark's
daughter and grandson in-law, 25 shares held jointly with Mr. Clark's
daughter and son in-law, and 1,120 shares which may be acquired by Mr. Clark
upon the exercise of stock options.
(7) Includes 5,568 shares held jointly with Mr. Hedrick's spouse, 710 shares
held by Mr. Hedrick's IRA, 300 shares held by Mr. Hedrick's son, and 1,120
shares which may be acquired by Mr. Hedrick upon the exercise of stock
options.
(8) Includes 12,071 shares which may be acquired by all directors and officers
of the Company as a group upon the exercise of stock options. Also includes
3,618 shares which are held by the ESOP, which have been allocated to
the account of Ms. Jackson and consequently, will be voted at the Annual
Meeting by Ms. Jackson.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires the Company's officers, directors
and persons who own more than 10% of the Company's Common Stock to file
reports of ownership and changes in ownership with the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
Officers, directors and greater than 10% stockholders are required by
regulation to furnish the Company with copies of all forms they file pursuant
to Section 16(a) of the 1934 Act. The Company knows of no person who owns 10%
or more of the Company's Common Stock.
-7-
<PAGE>
Based solely on review of the copies of such forms furnished to the
Company, or written representations from its officers and directors, the
Company believes that during, and with respect to, fiscal 1996, the Company's
officers and directors complied in all respects with the reporting
requirements promulgated under Section 16(a) of the 1934 Act.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Company has not yet paid separate compensation to its officers. The
following table sets forth a summary of certain information concerning the
compensation paid by the Bank for services rendered in all capacities during
the three fiscal years ended December 31, 1996 to the President and Chief
Executive Officer of the Bank. No other officer of the Bank had total annual
compensation in excess of $100,000 during fiscal 1996.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
----------------------------------------------------------------------------------------
Awards Payouts
Other -------------------------------------------
Name and Annual All Other
Principal Position Year Salary Bonus Compensation Restricted Securities LTIP Compensation
(1) Stock(2) Underlying Payouts (4)
Options(3)
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rebecca R. Jackson 1996 $66,000 $2,750 --- $ --- --- --- $28,564
President and Chief 1995 68,212 2,550 --- 142,803 12,445 --- 23,181
Executive Officer 1994 31,103(5) 2,375 --- --- --- --- ---
</TABLE>
- - ------------------------
(1) Does not include amounts attributable to miscellaneous benefits received by
the named executive officer. In the opinion of management of the Bank, the
costs to the Bank of providing such benefits to the named executive officer
during the indicated period did not exceed the lesser of $50,000 or 10% of
the total of annual salary and bonus reported for the individual.
(2) Represents the grant of 10,578 shares of restricted Common Stock to Ms.
Jackson pursuant to the Company's Recognition and Retention Plan and Trust
("Recognition Plan"), which were deemed to have had the indicated value at
the date of grant. The restricted Common Stock awarded to Ms. Jackson had a
fair market value of $150,737 at December 31, 1996 based on the $14.25 per
share closing market price on such last date in 1996 on which shares of the
Common Stock were traded. The awards vest 20% each year beginning June 29,
1996, and dividends are paid on restricted shares.
(Footnotes continued on following page)
-8-
<PAGE>
- - ------------------------
(3) Consists of stock options granted pursuant to the Company's 1995 Stock
Option Plan ("Option Plan") which are exercisable at the rate of 20% each
year beginning June 29, 1996.
(4) Represents the allocation on behalf of Ms. Jackson under the Company's ESOP.
(5) Due to a change in the Company's fiscal year end, the fiscal year ended
December 31, 1994 only covers a six-month period. For the twelve months
ended December 31, 1994, salary and bonus was $59,603 and $2,375,
respectively.
No options were granted to the Chief Executive Officer during the year
ended December 31, 1996.
The following table discloses certain information regarding the options held
at December 31, 1996 by the Chief Executive Officer. No options were exercised
during the year ended December 31, 1996.
<TABLE>
<CAPTION>
Number of Options at Value of Options at
December 31, 1996 December 31, 1996(1)
------------------------------ --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- - ---------------------------------------------------------- ------------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Rebecca R. Jackson 2,489 9,956 $ 1,867 $ 7,467
</TABLE>
- - ------------------------
(1) Based on a per share market price of $14.25 at December 31, 1996, the last
date in 1996 on which shares of the Common Stock were traded.
DIRECTORS' COMPENSATION
During the year ended December 31, 1996, members of the Board of
Directors of the Company and the Bank, other than Ms. Jackson, received total
fees of $500 per month, regardless of attendance at meetings.
EMPLOYMENT AGREEMENTS
The Company and the Bank (collectively the "Employers") have entered into
an employment agreement with Ms. Jackson. The Employers have agreed to employ
Ms. Jackson for a term of two years in her current position and at her
present salary. The term of such employment agreement shall be extended each
year for a successive additional one-
-9-
<PAGE>
year period unless the Employers or the officer elects, not less than 30 days
prior to the annual anniversary date, not to extend the employment term.
The employment agreement is terminable with or without cause by the
Employers. The officer shall have no right to compensation or other benefits
pursuant to the employment agreement for any period after voluntary
termination or termination by the Employers for cause, disability, retirement
or death, provided, however, that (i) in the event that the officer
terminates her employment because of failure of the Employers to comply with
any material provision of the employment agreement or (ii) the employment
agreement is terminated by the Employers other than for cause, disability,
retirement or death or by the officer as a result of certain adverse actions
which are taken with respect to the officer's employment following a Change
in Control of the Company, as defined, Ms. Jackson will be entitled to a cash
severance amount equal to two times her base salary. In addition, Ms. Jackson
will be entitled to a continuation of benefits similar to those she is
receiving at the time of such termination for the remaining term of the
agreement or until she obtains full-time employment with another employer.
A Change in Control is generally defined in the employment agreement to
include any change in control required to be reported under the federal
securities laws, as well as (i) the acquisition by any person of 25% or more
of the Company's outstanding voting securities and (ii) a change in a
majority of the directors of the Company during any two-year period without
the approval of at least two-thirds of the persons who were directors of the
Company at the beginning of such period.
The employment agreement provides that in the event that any of the
payments to be made thereunder or otherwise upon termination of employment
are deemed to constitute "excess parachute payments" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended ("Code"), then
such payments and benefits received thereunder shall be reduced, in the
manner determined by the employee, by the amount, if any, which is the
minimum necessary to result in no portion of the payments and benefits being
non-deductible by the Employers for federal income tax purposes. Excess
parachute payments generally are payments in excess of three times the base
amount, which is defined to mean the recipient's average annual compensation
from the employer includable in the recipient's gross income during the most
recent five taxable years ending before the date on which a change in control
of the employer occurred. Recipients of excess parachute payments are subject
to a 20% excise tax on the amount by which such payments exceed the base
amount, in addition to regular income taxes, and payments in excess of the
base amount are not deductible by the employer as compensation expense for
federal income tax purposes.
Although the above-described employment agreement could increase the cost
of any acquisition of control of the Company, management of the Company does
not believe that the terms thereof would have a significant anti-takeover
effect.
-10-
<PAGE>
BENEFITS
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST. The Company has established the
ESOP for employees of the Company and the Bank. Full-time employees of the
Company and the Bank who have been credited with at least 1,000 hours of
service during a twelve-month period and who have attained age 21 are
eligible to participate in the ESOP.
In connection with the mutual to stock conversion of the Bank, the ESOP
borrowed funds from the Company to purchase 50,000 shares of Common Stock
issued in the conversion. The loan to the ESOP is being repaid principally
from the Company's and the Bank's contributions to the ESOP over a period of
10 years, and the collateral for the loan is the Common Stock purchased by
the ESOP. The Company may, in any plan year, make additional discretionary
contributions for the benefit of plan participants in either cash or shares
of Common Stock, which may be acquired through the purchase of outstanding
shares in the market or from individual stockholders, upon the original
issuance of additional shares by the Company or upon the sale of treasury
shares by the Company. Such purchases, if made, would be funded through
additional borrowing by the ESOP or additional contributions from the
Company. The timing, amount and manner of future contributions to the ESOP
will be affected by various factors, including prevailing regulatory
policies, the requirements of applicable laws and regulations and market
conditions.
Shares purchased by the ESOP with the proceeds of the loan are held in a
suspense account and released on a pro rata basis as debt service payments
are made. Discretionary contributions to the ESOP and shares released from
the suspense account are allocated among participants on the basis of
compensation. Forfeitures will be reallocated among remaining participating
employees and may reduce any amount the Company might otherwise have
contributed to the ESOP. Participants will vest in their right to receive
their account balances within the ESOP upon the completion of five years of
service. In the case of a "change in control," as defined, of the Company,
however, participants will become immediately fully vested in their account
balances. Benefits may be payable upon retirement, early retirement,
disability or separation from service. The Company's contributions to the
ESOP are not fixed, so benefits payable under the ESOP cannot be estimated.
Ms. Jackson and Messrs. Fugeman and Hedrick serve as trustees of the
ESOP. Under the ESOP, the trustee must vote all allocated shares held in the
ESOP in accordance with the instructions of the participating employees, and
allocated shares for which employees do not give instructions, and
unallocated shares will be voted in the same ratio on any matter as to those
shares for which instructions are given.
Generally Accepted Accounting Principles ("GAAP") requires that any third
party borrowing by the ESOP be reflected as a liability on the Company's
statement of financial condition. Since the ESOP is borrowing from the
Company, such obligation is not treated as a liability, but will be excluded
from stockholders' equity. If the ESOP purchases newly-issued shares from the
Company, total stockholders' equity would neither increase nor
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<PAGE>
decrease, but per share stockholders' equity and per share net earnings would
decrease because of the increase in the number of outstanding shares.
The ESOP will be subject to the requirements of the Employee Retirement
Income Security Act of 1974, as amended, and the regulations of the Internal
Revenue Service and the Department of Labor thereunder.
STOCK OPTION PLAN. The 1995 Stock Option Plan ("Stock Option Plan") is
designed to attract and retain qualified personnel in key positions, provide
officers and key employees with a proprietary interest in the Company as an
incentive to contribute to the success of the Company and reward key
employees for outstanding performance. The Stock Option Plan is also designed
to retain qualified directors for the Company. The Stock Option Plan provides
for the grant of incentive stock options intended to comply with the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code") ("incentive stock options"), non-qualified or compensatory stock
options and stock appreciation rights (collectively "Awards"). Awards will be
available for grant to directors and key employees of the Company and any
subsidiaries, except that directors will not be eligible to receive incentive
stock options. A total of 124,457 shares of Common Stock has been reserved
for issuance pursuant to the Stock Option Plan, which is 10% of the Common
Stock issued in connection with the Bank's Conversion. The Stock Option Plan
is administered and interpreted by the Compensation Review Committee of the
Board of Directors ("Committee"). Unless sooner terminated, the Stock Option
Plan shall continue in effect for a period of ten years from the adoption by
the Board of Directors.
Under the Stock Option Plan, the Committee determines which officers and
key employees will be granted options, whether such options will be incentive
or compensatory options, the number of shares subject to each option, whether
such options may be exercised by delivering other shares of Common Stock and
when such options become exercisable. The per share exercise price of a stock
option shall be equal to the fair market value of a share of Common Stock on
the date the option is granted. Subject to certain exceptions, all options
granted to participants under the Stock Option Plan shall become vested and
exercisable at the rate of 20% per year on each annual anniversary of the
date the options were granted, and the right to exercise shall be cumulative.
On June 29, 1995, the Company granted stock options to directors and
executive officers of the Company and the Bank to purchase an aggregate of
65,959 shares (including 12,445 shares to Ms. Jackson) at $13.50 per share.
Each non-employee director will receive options to purchase 311 shares
annually for two years thereafter.
RECOGNITION AND RETENTION PLAN AND TRUST. The objective of the Company's
Recognition and Retention Plan and Trust ("Recognition Plan") is to provide
officers, key employees and directors with a proprietary interest in the
Company as an incentive to contribute to its success. Officers and key
employees of the Company who are selected by the Compensation Review
Committee of the Board of Directors, as well as non-employee directors of the
Company, are eligible to participate in the Recognition Plan. The Company
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has acquired through open market purchases Common Stock on behalf of the
Recognition Plan, in an amount necessary to purchase the number of shares of
Common Stock equal to 4% of the Common Stock issued in the Conversion, or
49,782 shares. The Recognition Plan is administered and interpreted by the
Compensation Review Committee of the Board of Directors.
Shares of Common Stock granted pursuant to the Recognition Plan will be
in the form of restricted stock payable over a five-year period at a rate of
20% per year, beginning one year from the anniversary date of the grant. A
recipient will be entitled to all voting and other stockholder rights with
respect to shares which have been earned and allocated under the Recognition
Plan. However, until such shares have been earned and allocated, they may not
be sold, pledged or otherwise disposed of and are required to be held in the
Recognition Plan Trust. Under the terms of the Recognition Plan, all shares
which have not yet been earned and allocated are required to be voted by the
trustees in their sole discretion. In addition, any cash dividends or stock
dividends declared in respect of unvested share awards will be held by the
Recognition Plan Trust for the benefit of the recipients and such dividends,
including any interest thereon, will be paid out proportionately by the
Recognition Plan Trust to the recipients thereof as soon as practicable after
the share awards become earned. Any cash dividends or stock dividends
declared in respect of each vested share held by the Recognition Plan Trust
will be paid by the Recognition Plan Trust as soon as practicable after the
Recognition Plan Trust's receipt thereof to the recipient on whose behalf
such share is then held by the Recognition Plan Trust. On June 29, 1995, the
Company granted an aggregate of 30,116 shares to directors and executive
officers of the Company and the Bank, including 10,578 shares to Ms. Jackson.
Each non-employee director will receive 124 shares annually for two years
thereafter.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
All loans or extensions of credit to executive officers and directors are
required to be made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions
with the general public and must not involve more than the normal risk of
repayment or present other unfavorable features.
The Bank's policy provides that all loans made by the Bank to its
directors and officers are made in the ordinary course of business, are made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons
and do not involve more than the normal risk of collectibility or present
other unfavorable features. As of December 31, 1996, none of the Bank's
directors and executive officers had aggregate loan balances in excess of
$60,000.
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RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Kelley, Galloway &
Company, PSC, independent certified public accountants, to perform the audit
of the Company's consolidated financial statements for the year ending
December 31, 1997, and further directed that the selection of auditors be
submitted for ratification by the stockholders at the Annual Meeting.
The Company has been advised by Kelley, Galloway & Company, PSC, that
neither that firm nor any of its associates has any relationship with the
Company or its subsidiaries other than the usual relationship that exists
between independent certified public accountants and clients. Kelley,
Galloway & Company, PSC will have one or more representatives at the Annual
Meeting who will have an opportunity to make a statement, if they so desire,
and will be available to respond to appropriate questions.
The Board of Directors recommends that you vote FOR the ratification of
the appointment of Kelley, Galloway & Company, PSC as independent auditors
for the fiscal year ending December 31, 1997.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders
of the Company, which currently is scheduled to be held in April 1998, must
be received at the principal executive offices of the Company, 2717 Louisa
Street, Catlettsburg, Kentucky 41129, Attention: Hunter E. Clark, Secretary,
no later than December 16, 1997. If such proposal is in compliance with all
of the requirements of Rule 14a-8 under the 1934 Act, it will be included in
the proxy statement and set forth on the form of proxy issued for such annual
meeting of stockholders. It is urged that any such proposals be sent
certified mail, return receipt requested.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the Exchange Act may
be brought before an annual meeting pursuant to Article IX.C. of the
Company's Articles of Incorporation, which provides that business at an
annual meeting of stockholders must be (a) properly brought before the
meeting by or at the direction of the Board of Directors, or (b) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Company. To be timely, a stockholder's notice must be delivered to, or mailed
and received at, the principal executive offices of the Company not later
than 60 days prior to the anniversary date of the mailing of proxy materials
by the Company in connection with the immediately preceding annual meeting of
stockholders of the Company. Notice by the stockholder was required to have
been
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delivered or received no later than the close of business on Tuesday,
February 4, 1997. No such proposals were received. Such stockholder's notice
is required to set forth as to each matter the stockholder proposes to bring
before an annual meeting certain information specified in the Articles of
Incorporation.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1996 accompanies this Proxy Statement. Such annual report is not
part of the proxy solicitation materials.
Upon receipt of a written request, the Company will furnish to any
stockholder without charge a copy of the Company's Annual Report on Form
10-KSB for fiscal 1996 required to be filed under the 1934 Act. Such written
requests should be directed to Hunter E. Clark, Secretary, Gateway Bancorp,
Inc., 2717 Louisa Street, Catlettsburg, Kentucky 41129. The Form 10-KSB is
not part of the proxy solicitation materials.
OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on the
Board of Directors of the Company to vote the proxy with respect to the
approval of the minutes of the last meeting of stockholders, the election of
any person as a director if the nominee is unable to serve or for good cause
will not serve, matters incident to the conduct of the meeting, and upon such
other matters as may properly come before the Annual Meeting. As of the date
hereof, management is not aware of any business that may properly come before
the Annual Meeting other than the matters described above in this Proxy
Statement. However, if any other matters should properly come before the
meeting, it is intended that the proxies solicited hereby will be voted with
respect to those other matters in accordance with the judgment of the persons
voting the proxies.
The cost of the solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending the proxy
materials to the beneficial owners of the Company's Common Stock. In addition
to solicitations by mail, directors, officers and employees of the Company
may solicit proxies personally or by telephone without additional
compensation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Hunter E. Clark
-------------------
Hunter E. Clark
Secretary
April 15, 1997
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REVOCABLE PROXY
GATEWAY BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF GATEWAY
BANCORP, INC. ("COMPANY") FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON MAY 15, 1997 AND AT ANY ADJOURNMENT THEREOF.
The undersigned, being a stockholder of the Company as of April 3, 1997,
hereby authorizes the Board of Directors of the Company or any successors
thereto as proxies with full powers of substitution, to represent the
undersigned at the Annual Meeting of Stockholders of the Company to be held at
the FIVCO Community Room located at 3000 Louisa Street, Catlettsburg, Kentucky
41129 on Thursday, May 15, 1997 at 11:00 a.m., Eastern Time, and at any
adjournment of said meeting, and thereat to act with respect to all votes that
the undersigned would be entitled to cast, if then personally present, as
follows:
1. ELECTION OF DIRECTORS
/ / / /
FOR all nominees listed WITHHOLD AUTHORITY
below (except as marked for all nominees listed
to the contrary below) below
Nominees for a three-year term: John H. Fugeman and Harold Freedman
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
the name of the nominee in the space provided below.)
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2. PROPOSAL to ratify the appointment by the Board of Directors of Kelley,
Galloway & Company, PSC as the Company's independent auditors for the fiscal
year ending December 31, 1997.
/ / / / / /
FOR AGAINST ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued and to be signed on other side)
<PAGE>
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF NOT
OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE BOARD OF
DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS, FOR RATIFICATION OF THE COMPANY'S
INDEPENDENT AUDITORS AND OTHERWISE AT THE DISCRETION OF THE PROXIES. IN THE
DISCRETION OF THE BOARD OF DIRECTORS, SHARES REPRESENTED BY THIS PROXY MAY BE
VOTED CUMULATIVELY WITH RESPECT TO THE ELECTION OF THE NOMINEES NAMED IN
PROPOSAL 1. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE TIME IT IS VOTED
AT THE ANNUAL MEETING.
Dated: , 1997
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Signature(s)
Please sign this exactly as your
name(s) appear(s) on this proxy.
When signing in a representative
capacity, please give title.
When shares are held jointly,
only one holder need sign.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
