<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
(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
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Subsection 240.14a-11(c)
or Subsection 240.14a-12
FIRST FEDERAL BANCORPORATION
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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:
Common Stock, $.01 par value per share
________________________________________________________________
2. Aggregate number of securities to which transaction
applies:
________________________________________________________________
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11:
________________________________________________________________
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>
<PAGE>
[LETTERHEAD]
December 22, 1998
Dear Stockholder:
We invite you to attend the annual meeting of stockholders
of First Federal Bancorporation to be held at the main office of
First Federal Bank, 214 5th Street, Bemidji, Minnesota on
Tuesday, January 19, 1999 at 2:30 p.m.
The accompanying notice and proxy statement describe the
formal business to be transacted at the meeting. During the
meeting, we will also report on the operations of the Company's
subsidiary, First Federal Bank. Directors and officers of the
Company will be present to respond to any questions the
stockholders may have.
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO SIGN,
DATE AND RETURN THE ACCOMPANYING FORM OF PROXY AS SOON AS
POSSIBLE EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL
MEETING. Your vote is important, regardless of the number of
shares you own. This will not prevent you from voting in person
but will assure that your vote is counted if you are unable to
attend the meeting.
Sincerely,
/s/ William R. Belford
William R. Belford
President<PAGE>
<PAGE>
________________________________________________________________
FIRST FEDERAL BANCORPORATION
214 5th Street
Bemidji, Minnesota 56601
(218) 751-5120
________________________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on January 19, 1999
________________________________________________________________
NOTICE IS HEREBY GIVEN that the annual meeting of
stockholders (the "Annual Meeting") of First Federal
Bancorporation (the "Company") will be held at the main office
of First Federal Bank, 214 5th Street, Bemidji, Minnesota on
Tuesday, January 19, 1999 at 2:30 p.m.
A Proxy Statement and form of proxy for the Annual Meeting
accompany this notice.
The Annual Meeting is for the purpose of considering and
acting upon:
1. The election of two directors of the Company;
2. Approval of the First Federal Bancorporation
1998 Stock Option Plan; and
3. The transaction of such other matters as may
properly come before the Annual Meeting or any
adjournments thereof.
The Board of Directors is not aware of any other business
to come before the Annual Meeting.
Any action may be taken on any one of the foregoing pro-
posals at the Annual Meeting on the date specified above or on
any date or dates to which, by original or later adjournment,
the Annual Meeting may be adjourned. Stockholders of record at
the close of business on December 4, 1998 are the stockholders
entitled to vote at the Annual Meeting and any adjournments
thereof.
You are requested to fill in and sign the accompanying
form of proxy which is solicited by the Board of Directors and
to mail it promptly in the accompanying envelope. The proxy
will not be used if you attend and vote at the Annual Meeting in
person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Karen Jacobson
KAREN JACOBSON
SECRETARY
Bemidji, Minnesota
December 22, 1998
________________________________________________________________
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE
COMPANY THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO
ENSURE A QUORUM. THE ACCOMPANYING FORM OF PROXY IS ACCOMPANIED
BY A SELF-ADDRESSED ENVELOPE FOR YOUR CONVENIENCE. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
________________________________________________________________
<PAGE>
<PAGE>
________________________________________________________________
PROXY STATEMENT
OF
FIRST FEDERAL BANCORPORATION
214 5TH STREET
BEMIDJI, MINNESOTA 56619
________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 19, 1999
________________________________________________________________
________________________________________________________________
GENERAL
________________________________________________________________
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of First
Federal Bancorporation (the "Company") to be used at the annual
meeting of stockholders (the "Annual Meeting") which will be
held at the main office of First Federal Bank (the "Bank"), 214
5th Street, Bemidji, Minnesota on Tuesday, January 19, 1999 at
2:30 p.m. This proxy statement and the accompanying notice and
form of proxy are being first mailed to stockholders on or about
December 22, 1998.
________________________________________________________________
VOTING AND REVOCABILITY OF PROXIES
________________________________________________________________
Stockholders who execute proxies retain the right to
revoke them at any time. Unless so revoked, the shares
represented by properly executed proxies will be voted at the
Annual Meeting and all adjournments thereof. Proxies may be
revoked by written notice to Karen Jacobson, Secretary of the
Company, at the address shown above, by filing a later dated
proxy prior to a vote being taken on a particular proposal at
the Annual Meeting or by attending the Annual Meeting and voting
in person. The presence of a stockholder at the Annual Meeting
will not revoke such stockholder's proxy.
Proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein.
WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED FOR
THE NOMINEES FOR DIRECTORS SET FORTH BELOW AND IN FAVOR OF EACH
OF THE OTHER PROPOSALS SET FORTH IN THIS PROXY STATEMENT FOR
CONSIDERATION AT THE ANNUAL MEETING. The proxy confers
discretionary authority on the persons named therein to vote
with respect to the election of any person as a director where
the nominee is unable to serve or for good cause will not serve,
and matters incident to the conduct of the Annual Meeting. If
any other business is presented at the Annual Meeting, proxies
will be voted by those named therein in accordance with the
determination of a majority of the Board of Directors. Proxies
marked as abstentions will not be counted as votes cast. In
addition, shares held in street name which have been designated
by brokers on proxies as not voted will not be counted as votes
cast. Proxies marked as abstentions or as broker non-votes,
however, will be treated as shares present for purposes of
determining whether a quorum is present.
________________________________________________________________
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
________________________________________________________________
The securities entitled to vote at the Annual Meeting
consist of the Company's common stock, $.01 par value per share
(the "Common Stock"). Stockholders of record as of the close of
business on December 4, 1998 (the "Record Date") are entitled to
one vote for each share of Common Stock then held. At the
Record Date, the Company had 993,275 shares of Common Stock
issued and outstanding. The presence, in person or by proxy, of
at least a majority of the total number of shares of Common
Stock outstanding and entitled to vote will be necessary to
constitute a quorum at the Annual Meeting.
<PAGE>
Persons and groups beneficially owning in excess of 5% of
the Common Stock are required to file certain reports regarding
such ownership pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). The following table sets forth,
as of the Record Date, certain information as to the Common
Stock believed by management to be beneficially owned by persons
owning in excess of 5% of the Common Stock and by all directors
and executive officers of the Company as a group.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent of Shares of
of Beneficial Owner Beneficial Ownership (1) Common Stock Outstanding
- ------------------- ------------------------ ------------------------
<S> <C> <C>
William R. Belford
3309 Jackson Avenue, SW
Bemidji, Minnesota 56601 85,912 (2) 8.65%
First Federal Bancorporation
Employee Stock Ownership
Plan ("ESOP")
214 5th Street
Bemidji, Minnesota 56601 102,382 (3) 10.31%
First Federal Bancorporation
Stock Option and Incentive Plan Trust
214 5th Street
Bemidji, Minnesota 56601 129,117 (4) 13.00%
John Hancock Advisors, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199 84,000 8.46%
All directors and executive
officers as a group (10 persons) 332,501 (5) 33.40%
<FN>
_____________
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to be
the beneficial owner, for purposes of this table, of any shares of Common Stock
if he or she has or shares voting or investment power with respect to such
Common Stock or has a right to acquire beneficial ownership at any time within
60 days from the Record Date. As used herein, "voting power" is the power to
vote or direct the voting of shares and "investment power" is the power to
dispose or direct the disposition of shares. Except as otherwise noted,
ownership is direct, and the named individuals and group exercise sole voting
and investment power over the shares of the Common Stock.
(2) Includes 19,407 shares which may be received pursuant to the exercise of stock
options which are exercisable within 60 days of the Record Date, 8,027 shares
of Common Stock held in the ESOP and allocated to Mr. Belford and 7,950 shares
of Common Stock held for the benefit of Mr. Belford in the Employee's
Retirement Plan. Also includes 12,938 shares held in the Option Plan Trust and
5,175 shares held in the MRP Trust, in which Mr. Belford together with other
Option Plan and MRP Plan participants shares in the voting of allocated shares,
and 23,903 shares held in the Grantor Trust, as to which Mr. Belford has shared
voting power with the other Directors.
(3) These shares are held in a suspense account for future allocation among
participating employees as the loan used to purchase the shares is repaid. The
ESOP trustees, currently Directors Smith, Sathre, Fankhanel and Sharp, vote all
allocated shares in accordance with instructions of the participants.
Unallocated shares and shares for which no instructions have been received are
voted by the ESOP trustees in the same ratio as participants direct the voting
of allocated shares or, in the absence of such direction, the Company's Board
of Directors shall direct the voting of such stock, or in the absence of such
direction from the Company's Board of Directors, the trustees shall direct the
voting of such stock in their discretion. As of the Record Date, 41,400 shares
had been allocated, and 60,982 were unallocated.
(4) These shares are held in a trust account for future issuance to option holders
upon their exercise of stock options for Company Common Stock under the First
Federal Bancorporation Stock Option and Incentive Plan (the "Option Plan").
The trustees for this trust are the same as the ESOP trustees. The shares held
in the Option Plan trust are voted in the same way that unallocated ESOP shares
are voted.
(5) Includes 39,470 shares held by the First Federal Banking & Savings, FSB Grantor
Trust (the "Grantor Trust"), the beneficiaries of which are certain directors
and executive officers. The beneficiaries have neither voting nor dispositive
power with respect to these shares. Does not include the unallocated shares
held by the ESOP trust or the shares held by the Option Plan Trust. For more
information, see Footnote (2).
</FN>
</TABLE>
-2-
<PAGE>
<PAGE>
________________________________________________________________
PROPOSAL I -- ELECTION OF DIRECTORS
________________________________________________________________
GENERAL
The Company's Board of Directors consists of six members.
The Company's Articles of Incorporation require that directors
be divided into three classes, as nearly equal in number as
possible, with approximately one-third of the directors elected
each year. At the Annual Meeting, two directors will be elected
for a term expiring at the 2002 Annual Meeting. The Board of
Directors has nominated Martin R. Sathre and Dean J. Thompson to
serve as directors for a three-year period. All nominees are
currently members of the Board. Under Minnesota law and the
Company's Articles of Incorporation, directors are elected by a
majority of the votes cast at a meeting at which a quorum is
present.
It is intended that the persons named in the proxies
solicited by the Board of Directors will vote for the election
of the named nominees. If any nominee is unable to serve, the
shares represented by all valid proxies will be voted for the
election of such substitute as the Board of Directors may
recommend or the size of the Board may be reduced to eliminate
the vacancy. At this time, the Board knows of no reason why any
nominee might be unavailable to serve.
The following table sets forth, for each nominee for
director and continuing director of the Company, his age, the
year he first became a director of the Bank, which is the
Company's principal operating subsidiary, and the expiration of
his term as a director. All such persons were appointed as
directors in 1994 in connection with the incorporation and
organization of the Company. Each director of the Company also
is a member of the Board of Directors of the Bank.
<TABLE>
<CAPTION>
YEAR FIRST
AGE AT ELECTED CURRENT
SEPTEMBER 30, AS DIRECTOR TERM
NAME 1998 OF THE BANK TO EXPIRE
- ---- ------------ ----------- ---------
<S> <C> <C> <C>
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2002
Martin R. Sathre 73 1962 1999
Dean J. Thompson 42 1994 1999
DIRECTORS CONTINUING IN OFFICE
Walter R. Fankhanel 61 1975 2000
James R. Sharp 63 1980 2000
Ralph T. Smith 65 1966 2001
William R. Belford 50 1987 2001
</TABLE>
Set forth below is information concerning the Company's
directors for at least the past five years, unless otherwise
stated.
-3-<PAGE>
<PAGE>
MARTIN R. SATHRE is a retired Abstracter and Title
Insurance Agent for Sathre Abstracters Incorporated of Bemidji,
Minnesota. Mr. Sathre is Secretary of Bemidji Development
Corporation, a non-profit corporation that owns and operates a
local industrial park, and was past President of the Rotary Club
of Bemidji.
DEAN J. THOMPSON is an owner of Ken K. Thompson Jewelry, a
retail jeweler located in Bemidji, Minnesota. Mr. Thompson was
previously on the Board of Directors of the Bemidji Area Chamber
of Commerce, former Chairman of the Downtown Bemidji Business
and Professional Association, and is a member of the Bemidji
Jaycees, Headwaters Chapter/Ducks Unlimited, Bemidji Elks Lodge
#1052, the Bemidji State University President's Club and the
Bemidji Downtown Development Authority.
WALTER R. FANKHANEL has served as General Manager of Dave
Walters, Inc., a dealer of automobiles, manufactured housing and
a developer of multi-family housing since 1957.
JAMES R. SHARP retired in 1993 after 34 years as a High
School Teacher, Counselor and Administrator in Bemidji,
Minnesota. Mr. Sharp has served as President of the Headwaters
Shrine Club, is a member of the Bemidji Town & Country Club, the
Bemidji Curling Club, the AAD Temple Shrine, the Scottish Rite,
the Masonic Lodge, the Eagles Club and the American Legion Club.
RALPH T. SMITH is a life long resident of Bemidji and has
been associated with Smith Law Firm P.A. of Bemidji for over 40
years. He has been a Director of First Federal since 1966 and
the Chair of its Board of Directors since 1987.
WILLIAM R. BELFORD has been President and Chief Executive
Officer of the Bank since 1987. Mr. Belford has served as
chairman of the Board of Directors and as Campaign Chairman of
the United Way of Bemidji, as President and board member for the
Joint Economic Development Commission, as Chairman and Secretary
of the Savings League of Minnesota, on the Board of Directors of
the Chamber of Commerce, as Treasurer and on the Board of the
Visitors and Convention Bureau. Most recently, he has served as
past Chairman of the Minnesota League of Savings and Community
Bankers.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth information regarding the
executive officers of the Company who do not serve on the Board
of Directors.
<TABLE>
<CAPTION>
AGE AT
SEPTEMBER 30,
NAME 1998 TITLE
---- ------------ -----
<S> <C> <C>
Dennis M. Vorgert 51 Treasurer
Karen Jacobson 56 Secretary
</TABLE>
The principal occupation of each executive officer of the
Company for the last five years, unless otherwise stated, is set
forth below.
-4-<PAGE>
<PAGE>
DENNIS M. VORGERT has served as Treasurer of the Company
since its incorporation in 1994 and of the Bank since 1978. He
is a member of the Bemidji Curling Club, the Bemidji Rotary
Club, the Knights of Columbus, as well as Past Secretary of
Church Council.
KAREN JACOBSON has served as Secretary of the Company
since its incorporation in 1994, and of the Bank since 1990.
Ms. Jacobson is Treasurer of the local American Heart
Association.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company holds regular
monthly meetings and holds special meetings as needed. During
the year ended September 30, 1998, the Board met 14 times. No
director attended fewer than 75% in the aggregate of the total
number of Board meetings held while he was a member during the
year ended September 30, 1998 and the total number of meetings
held by committees on which he served during such fiscal year.
The Board of Directors has standing Audit, Loan and Investment
Committees. The full Board of Directors serves as the
Compensation Committee.
The Audit Committee consists of Directors Smith
(Chairman), Sathre and Thompson. The Audit Committee met one
time during fiscal year 1998 to examine and approve the
independent audit report prepared by the independent auditors,
to review and recommend the independent auditors to be engaged
by the Company and to review the internal audit function and
internal audit controls.
The Company does not have a standing Nominating Committee.
Under the Company's current Bylaws, the full Board acts as a
Nominating Committee for selecting the management nominees for
election as directors. The Nominating Committee met one time
during fiscal 1998.
EXECUTIVE COMPENSATION
The following table sets forth cash and noncash
compensation for the fiscal year ended September 30, 1998
awarded to or earned by the Company's Chief Executive Officer
for services rendered in all capacities to the Company and its
subsidiaries during fiscal 1998.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION (1)
- ----------------- ---- ------ ----- -----------------
<S> <C> <C> <C> <C>
William R. Belford 1998 $118,000 $35,601 $18,581
Chief Executive Officer 1997 115,000 47,101 18,466
1996 112,500 37,380 20,150
<FN>
___________
(1) For 1998, includes a car allowance of $776, life insurance policy
payments of $895, a profit sharing contribution of $7,310, and a
supplemental executive retirement plan payment of $9,600; for 1997,
includes a car allowance of $831 life insurance policy payments of $895,
a profit sharing contribution of $7,140, and a supplemental executive
retirement plan payment of $9,600; and for 1996, includes a car allowance
of $770, life insurance policy payments of $895, a profit sharing
contribution of $8,885, and a supplemental executive retirement plan
payment of $9,600.
</FN>
</TABLE>
Employment Agreements. The Company and the Bank,
effective April 3, 1995, entered into separate employment
agreements (the "Employment Agreements") with Mr. William R.
Belford (the "Executive"), President and Chief Executive Officer
of the Bank and of the Company. In such capacities, the
Executive is responsible for overseeing all operations of the
Bank and the Company, and for implementing the policies adopted
by the Boards of Directors. Such Boards believe that the
Employment Agreements assure fair treatment of the Executive in
relation to his career with the Company and the Bank by assuring
him of some financial security.
The Employment Agreements provide for a term of three
years, with an annual base salary of $115,000 from the Bank, and
with the Company guaranteeing the Bank's obligations. On each
anniversary date from the date of commencement of the Employment
Agreements, the Executive's term of employment will be extended
for an additional
-5-<PAGE>
<PAGE>
one-year period beyond the then effective expiration date, upon
a determination by the Boards of Directors that the performance
of the Executive has met the required performance standards and
that such Employment Agreements should be extended. The
Employment Agreements provide the Executive with a salary review
by the Boards of Directors not less often than annually, as well
as with inclusion in any discretionary bonus plans, retirement
and medical plans, customary fringe benefits and vacation and
sick leave. The Employment Agreements will terminate upon the
Executive's death and may terminate due to the Executive's
disability. The Employment Agreements are also terminable for
"just cause" as defined in the Employment Agreements. In the
event of termination for just cause, no severance benefits are
available. If the Company or the Bank terminates the Executive
without just cause, the Executive will be entitled to a
continuation of his salary and benefits from the date of
termination through the remaining term of the Employment
Agreements, plus an additional 12-month period. Severance
benefits payable to the Executive will be paid in a lump sum, or
in installments, as he elects. If either Employment Agreement
is terminated due to the Executive's "disability" (as defined in
the Employment Agreements), the Executive will not be entitled
to a continuation of his salary and benefits. In the event of
the Executive's death during the term of either Employment
Agreement, his estate will be entitled to receive the
Executive's salary through the last day of the calendar month in
which his death occurred. The Executive is able to voluntarily
terminate his employment by providing 60 days' written notice to
the Boards of Directors of the Bank and the Company, in which
case the Executive is entitled to receive only his compensation,
vested rights and benefits up to the date of termination.
The Employment Agreements contain provisions stating that
in the event of the Executive's involuntary termination of
employment in connection with, or within one year after, any
change in control of the Bank or the Company, other than for
"just cause," the Executive will be paid within 10 days of such
termination an amount equal to the difference between (i) 2.99
times his "base amount," as defined in Section 280G(b)(3) of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii)
the sum of any other parachute payments, as defined under
Section 280G(b)(2) of the Code, that the Executive receives on
account of the change in control (including but not limited to
parachute payments the Employee receives pursuant to his
employment agreement with the Company). "Control" generally
refers to the acquisition, by any person or entity, of the
ownership or power to vote more than 25% of the Bank's or
Company's voting stock, the control of the election of a
majority of the Bank's or the Company's directors, or the
exercise of a controlling influence over the management or
policies of the Bank or the Company. In addition, under the
Employment Agreements, a change in control occurs when, during
any consecutive two-year period, directors of the Company or the
Bank at the beginning of such period cease to constitute two-
thirds of the Board of Directors of the Company or the Bank,
unless the election of replacement directors was approved by a
two-thirds vote of the initial directors then in office. The
Employment Agreement with the Bank provides that within five
business days of a change in control, the Bank shall fund, or
cause to be funded, a trust in the amount of 2.99 times the
Executive's base amount, that will be used to pay the Executive
amounts owed to him upon termination, other than for just cause,
within one year of the change in control. The amount to be paid
to the Executive from this trust upon his termination is
determined according to the procedures outlined in the
Employment Agreement with the Bank, and any money not paid to
the Executive is returned to the Bank. The Employment Agreement
also provides for a similar lump sum payment to be made in the
event of the Executive's voluntary termination of employment
within one year following a change in control, upon the
occurrence, or within 90 days thereafter, of certain specified
events following the change in control, which have not been
consented to in writing by the Executive, including (i) the
requirement that the Executive move his personal residence or
perform his principal executive functions more than 35 miles
from the Bank's current primary office, (ii) a material
reduction in the Executive's base compensation as in effect on
the date of the change in control, (iii) the failure of the
Company or the Bank to maintain existing or substantially
similar employee benefit plans, including material vacation,
fringe benefits, stock option and retirement plans, (iv) the
assignment to the Executive of duties and responsibilities which
are materially different from those normally associated with his
position with the Bank, (v) a material reduction in the
Executive's authority and responsibility, and (vi) the failure
to re-elect the Executive to the Company's or the Bank's Board
of Directors. The aggregate payments that would be made to Mr.
Belford, assuming his termination of employment under the
foregoing circumstances and based on Mr. Belford's salary
through the year ended September 30, 1998, would have been
approximately $424,794. In the event that the Executive
prevails over the Company or the Bank in a legal dispute as to
the Employment Agreements, he will be reimbursed for his legal
and other expenses.
-6-<PAGE>
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-
END OPTION VALUES
The following table sets forth the 1998 fiscal year-end
value of unexercised in-the-money options held by the Company's
Chief Executive Officer. No new options were granted in fiscal
1998.
<TABLE>
<CAPTION>
VALUE OF SECURITIES
SHARES NUMBER OF SECURITIES UNDERLYING UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED IN-THE MONEY
EXERCISE REALIZED OPTIONS AT FY-END (1) OPTIONS AT FY-END (1)
------------------------- -------------------------
(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
William R. Belford -- $ -- 19,406 12,938 $114,010 $76,011
<FN>
______________
(1) Consists of options granted under the Option Plan. Option grant was effective as of
October 17, 1995, upon stockholder approval of the Option Plan. Exercise price is the
market price of the Common Stock of $9.125 as of the date of the grant. At September 30,
1998, the fair market value of the Common Stock was $15 per share.
</FN>
</TABLE>
DIRECTOR COMPENSATION
The Company's directors receive fees of $1,000 per monthly
meeting attended. This fee includes any Executive Committee
meetings. During fiscal 1998, the Company's directors' fees
totaled $72,000.
Director Retirement Plan. The Bank's Board of Directors
has adopted the First Federal Banking & Savings, FSB Retirement
Plan for Non-Employee Directors (the "Directors' Plan"),
effective October 1, 1993, for its directors (i) who are members
of the Bank's Board of Directors on or after October 1, 1993,
and (ii) who are not employees on the date of being both
nominated and elected (or re-elected) to the Board. A
participant in the Directors' Plan will receive, on each of the
three annual anniversary dates of his retirement, an amount
equal to one-third of the product of his"Benefit Percentage,"
times his"Vested Percentage," times $6,000. A participant's
"Benefit Percentage" is based on his overall years of service on
the Board of Directors of the Bank, and increases in increments
of 33-1/3% from 0% for less than six years of service, to 33-
1/3% for six to eleven years of service, to 66-2/3% for twelve
to seventeen years of service, to 100% for eighteen or more
years of service. A participant's "Vested Percentage" equals
33-1/3% if the participant serves on the Board as a non-employee
director for one or fewer years of service after the effective
date of the Directors' Plan, increases to 66-2/3% if the
participant completes two years of service following the plan's
effective date, and becomes 100% if the participant completes
three or more years of service following the plan's effective
date. However, in the event a participant terminates service on
the Board at or after his attainment of age 70, or due to
"disability", or in the event of a "change in control" (as such
terms are defined in the Directors' Plan), the participant's
Vested Percentage becomes 100% regardless of his years of
service. A participant's "Vested Percentage" will also
accelerate to 100% upon such participant's termination of
service on the Board due to his death. This provision may have
the effect of deferring a hostile change in control by
increasing the costs of acquiring control. If a participant
dies before collecting any retirement benefits, his surviving
beneficiary (or, if no surviving beneficiary, the participant's
estate) will receive a lump sum payment having a present value
equal to 100% of the benefits that would have been paid to the
participant under the Directors' Plan if the participant had
(i) terminated service on the Board on the date of his death,
(ii) survived to collect the full benefits payable for
retirement or disability, and (iii) a Vested Percentage equal to
100%. In the event that a participant dies after beginning to
receive retirement benefits, the Bank shall pay to the
participant's surviving beneficiary (or, if none, to the
participant's estate) a lump sum payment having a present value
equal to 100% of the aggregate remaining payments that the
participant would have received had he survived to collect all
retirement benefits payable under the Directors' Plan. Trust
assets will be subject to the claims of the Bank's general
creditors.
-7-<PAGE>
<PAGE>
TRANSACTIONS WITH MANAGEMENT
The Bank offers loans to its directors, officers, and
employees. These loans currently are made in the ordinary
course of business with the same collateral, interest rates and
underwriting criteria as those of comparable transactions
prevailing at the time and to not involve more than the normal
risk of collectibility or present other unfavorable features.
Under current law, the Bank's loans to directors and executive
officers are required to be made on substantially the same
terms, including interest rates, as those prevailing for
comparable transactions and must not involve more than the
normal risk of repayment or present other unfavorable features.
Furthermore, loans above the greater of $25,000 or 5% of the
Bank's capital and surplus (i.e., up to $654,122) to such
persons must be approved in advance by a disinterested majority
of the Board of Directors. At September 30, 1998, the Bank's
loans to directors and executive officers totaled $1,160,194, or
16.41% of the Bank's retained earnings at that date.
________________________________________________________________
SECURITY OWNERSHIP OF MANAGEMENT
________________________________________________________________
The following table sets forth, as of the Record Date, the
beneficial ownership of the Common Stock of each of the
Company's directors and nominees, the sole executive officer
named in the Summary Compensation Table and by all directors and
executive officers as a group.
<TABLE>
<CAPTION>
Percent of Shares
Total Beneficial of Common Stock
Ownership (1) Outstanding
---------------- -----------------
<S> <C> <C>
William R. Belford(2). . . . . . . . . 85,912 8.64%
Ralph T. Smith(3). . . . . . . . . . . 52,854 5.32
Martin R. Sathre(4). . . . . . . . . . 30,599 3.08
Walter R. Fankhanel(5) . . . . . . . . 53,417 5.37
James R. Sharp(5). . . . . . . . . . . 34,368 3.46
Dean J. Thompson(6). . . . . . . . . . 28,273 2.85
All Executive Officers and Directors
as a Group (10 persons) (7). . . . . 332,503 33.48%
<FN>
______________
(1) For the definition of beneficial ownership, see Footnote (1) to the table
in "Voting Securities and Principal Holders Thereof." Does not include
the unallocated shares held by the ESOP Trust or the Grantor Trust. For
more information, see "Voting Securities and Principal Holders Thereof --
Footnotes (2) and (3)."
(2) For Mr. Belford, includes 19,407 shares which may be received pursuant to
the exercise of stock options which are exercisable within 60 days of the
Record Date, 8,027 shares of Common Stock held in the ESOP and allocated
to Mr. Belford and 7,950 shares of Common Stock held for the benefit of
Mr. Belford in the Employee's Retirement Plan. Also includes 12,938
shares held in the Option Plan Trust and 5,175 shares held in the MRP
Trust, in which Mr. Belford together with other Option Plan and MRP Plan
participants shares in the voting of allocated shares, and 23,903 shares
held in the Grantor Trust, as to which Mr. Belford has shared voting power
with the other Directors.
(3) For Mr. Smith includes 1,500 shares held in family trusts, 2,472 shares
held in his grantor trust account, 3,882 shares pursuant to vested options
exercisable within 60 days of the Record Date, and 9,450 shares held in
Mr. Smith's IRA.
(4) For Mr. Sathre, includes 7,075 shares held in his grantor trust account
and 3,882 shares pursuant to vested options exercisable within 60 days of
the Record Date.
(5) For each of Messrs. Fankhanel and Sharp, includes 12,800 shares held in
their respective grantor trust accounts and 3,881 shares pursuant to
vested options exercisable within 60 days of the Record Date. Mr. Sharp's
total also includes 3,708 shares held in his IRA.
(6) For Mr. Thompson, includes 3,234 shares held in his grantor trust account
and 3,882 shares pursuant to vested options exercisable within 60 days of
the Record Date.
(7) For "All Executive Officers and Directors as a Group" includes, 19,458
shares and 39,471 shares held in 401(k) plan and grantor trust accounts,
respectively, 18,649 shares held in ESOP accounts, 129,117 shares pursuant
to options exercisable within 60 days of the Record Date and 1,500 shares
held in family trusts.
</FN>
</TABLE>
-8-<PAGE>
<PAGE>
________________________________________________________________
PROPOSAL II -- APPROVAL OF THE FIRST FEDERAL BANCORPORATION
1998 STOCK OPTION PLAN
________________________________________________________________
GENERAL
The Board of Directors of the Company is seeking
stockholder approval of the First Federal Bancorporation 1998
Stock Option Plan (the "Option Plan"). The Option Plan is
attached hereto as Exhibit A and should be consulted for
additional information. All statements made herein regarding
the Option Plan, which are only intended to summarize the Option
Plan, are qualified in their entirety by reference to the Option
Plan.
PURPOSE OF THE OPTION PLAN
The purpose of the Option Plan is to advance the interests
of the Company by providing selected directors and employees of
the Company and its affiliates, including the Bank, with the
opportunity to acquire shares of Common Stock. By encouraging
such stock ownership, the Company seeks to attract, retain, and
motivate the best available personnel for positions of
substantial responsibility and to provide additional incentive
to directors and employees of the Company and its affiliates to
promote the success of the business of the Company.
DESCRIPTION OF THE OPTION PLAN
Effective Date. The Option Plan is expected to be
formally adopted by the Board of Directors and thereby become
effective on November 24, 1998 (the "Effective Date"), although
the Option Plan's effectiveness will be contingent on its
approval by the Company's stockholders.
Administration. The Option Plan will be administered by
a committee (the "Committee"), appointed by the Board of
Directors, consisting of at least two directors of the Company
who are "non-employee directors" within the meaning of the
federal securities laws. The Committee will have discretionary
authority to select participants and grant options, to determine
the form and content of any options granted under the Option
Plan, to interpret the Option Plan, to prescribe, amend and
rescind rules and regulations relating to the Option Plan and to
make other decisions necessary or advisable in connection with
administering the Option Plan. All decisions, determinations
and interpretations of the Committee will be final and
conclusive on all persons affected thereby. Members of the
Committee will be indemnified to the full extent permissible
under the Company's governing instruments in connection with any
claims or other actions relating to any action taken under the
Option Plan. It is expected that the Committee will initially
consist of Directors Fankhanel, Sathre, Sharp and Smith.
Eligible Persons. Under the Option Plan, the Committee will
have discretionary authority to grant stock options ("Options")
to such employees and directors (including members of the
Committee) as the Committee shall designate. In addition, the
Option Plan specifies the automatic grants described below (see
"-- Automatic Grants" below). As of the Record Date, the
Company and its subsidiaries had 16 employees and five
non-employee directors who were eligible to participate in the
Option Plan.
Shares Available for Grants. The Option Plan reserves
100,000 shares of Common Stock for issuance upon the exercise of
Options. Such shares may be (i) authorized by unissued shares,
(ii) shares held in treasury, or (iii) shares held in a grantor
trust. In the event of any merger, consolidation,
recapitalization, reorganization, reclassification, stock
dividend, split-up, combination of shares, or similar event in
which the number or kind of shares is changed without receipt or
payment of consideration by the Company, the Committee will
adjust the number and kind of shares reserved for issuance
under the Option Plan and the exercise prices of such Options.
If Options expire, become unexercisable or are forfeited for any
reason without having been exercised, the shares of Common Stock
subject to such Options shall, unless the Option Plan shall have
been terminated, be available for the grant of additional
Options under the Option Plan.
-9-<PAGE>
<PAGE>
Options; Exercise Price. Options may be either incentive
stock options ("ISOs") as defined in Section 422 of the Internal
Revenue Code, or options that are not ISOs ("Non-ISOs"). The
exercise price as to any Option may not be less than the fair
market value (determined under the Option Plan) of the optioned
shares on the date of grant. In the case of a participant who
owns more than 10% of the outstanding Common Stock on the date
of grant, such exercise price may not be less than 110% of fair
market value of the shares. As required by federal tax laws, to
the extent that the aggregate fair market value (determined when
an ISO is granted) of the Common Stock with respect to which
ISOs are exercisable by an optionee for the first time during
any calendar year (under all plans of the Company and of any
subsidiary) exceeds $100,000, the Options granted in excess of
$100,000 will be treated as Non-ISOs, and not as ISOs. The
exercise price of shares subject to any outstanding Option will
be proportionately adjusted upon the payment of a special large
and nonrecurring dividend that has the effect of a return of
capital to the stockholders, provided that the Committee did not
elect to pay the amount of such nonrecurring dividend to the
optionee upon exercise of the Option.
Automatic Grants. On the Effective Date, certain employees
and non-employee directors of the Company and the Bank are
expected to receive one-time grants of Options to purchase
shares of Common Stock at an exercise price per share equal to
its fair market value on that date (see " -- Proposed Stock
Option Grants" and "New Plan Benefits" below).
Exercise of Options. The exercise of Options will be
subject to such terms and conditions as are established by the
Committee in a written agreement between the Committee and the
optionee. Unless the Committee specifically eliminates any
vesting requirement or imposes a different vesting schedule in
an agreement granting an Option, each Option grant shall
be vested and exercisable with respect to 50% of the shares
subject to the Option on the date of grant and shall become
vested and exercisable with respect to the remaining 50% of the
shares subject to the Option on the optionee's completion of one
year of service; provided that no vesting shall occur prior to
stockholder approval of the Option Plan, and further provided
that no vesting shall occur on a particular date in the event of
the termination or interruption of the optionee's continuous
service as a director or employee of the Company or an affiliate
prior thereto. In the absence of Committee action to the
contrary, an otherwise unexpired Option shall cease to be
exercisable upon (i) an optionee's termination of employment for
"just cause" (as defined in the Option Plan), (ii) the date
that is one year after an optionee terminates service for a
reason other than just cause or death, or (iii) the date that is
two years after an optionee's death. Options granted to
non-employee directors will expire one year after a director
terminates continuous service as a director for any reason other
than death, but in no event later than the date on which such
Options would otherwise expire. In the event of a director's
death during the term of his or her directorship, the Options
shall become immediately exercisable and will expire two years
after his or her death. In the event of such director's
disability during his or her directorship, the director's Option
shall become immediately exercisable, and such Option may be
exercised within two years of the termination of directorship
due to disability, but not later than the date that the Option
would otherwise expire.
An optionee may exercise Options, subject to provisions
relative to their termination and limitations on their exercise,
only by (i) written notice of intent to exercise the Option with
respect to a specified number of shares of Common Stock, and
(ii) payment to the Company (contemporaneously with delivery of
such notice) in cash, in Common Stock, or a combination of
cash and Common Stock, of the amount of the exercise price for
the number of shares with respect to which the Option is then
being exercised. Common Stock utilized in full or partial
payment of the exercise price for Options shall be valued at its
market value at the date of exercise, and may consist
of shares subject to the Option being exercised. Upon an
optionee's exercise of an Option, the Company may, in the
discretion of the Committee, pay the optionee a cash amount of
up to the amount of any dividends declared on the underlying
shares between the date of grant and the date of exercise of the
Option.
Conditions on Issuance of Shares. The Committee will have
the discretionary authority to impose, in agreements, such
restrictions on shares of Common Stock issued pursuant to the
Option Plan as it may deem appropriate or desirable, including
but not limited to the authority to impose a right of
first refusal or to establish repurchase rights or to pay an
optionee the in-the-money value of his Option in consideration
for its cancellation. In addition, the Committee may not issue
shares unless the issuance complies with applicable securities
laws, and to that end may require that a participant make
certain representations or warranties.
-10-<PAGE>
<PAGE>
Change in Control. The Option Plan provides that upon the
earlier of a "Change in Control" or the execution of an
agreement to effect a Change in Control, all Options shall
become fully exercisable, notwithstanding any other provision of
the Option Plan or any agreement with an optionee. For
purposes of the Option Plan, Change in Control means any one of
the following events: (1) the acquisition of ownership, holding
or power to vote more than 25% of the Bank's or the Company's
voting stock, (2) the acquisition of the ability to control the
election of a majority of the Bank's or the Company's
directors, (3) the acquisition of a controlling influence over
the management or policies of the Bank or the Company by any
person or by persons acting as a "group" (within the meaning of
Section 13(d) of the Securities Exchange Act of 1934), (except
in the case of (1), (2), and (3) hereof, ownership or
control of the Bank by the Company itself shall not constitute a
"Change in Control"), or (4) during any period of two
consecutive years, individuals (the "Continuing Directors") who
at the beginning of such period constitute the Board of
Directors of the Company or the Bank (the "Existing Board")
cease for any reason to constitute at least two-thirds thereof,
provided that any individual whose election or nomination for
election as a member of the Existing Board was approved by a
vote of at least two-thirds of the Continuing Directors then in
office shall be considered a Continuing Director. For purposes
of this subparagraph only, the term "person" refers
to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of
entity not specifically listed herein. The decision of the
Committee as to whether a change in control has occurred shall
be conclusive and binding.
Although these provisions are included in the Option Plan
primarily for the protection of an employee-optionee in the
event of a Change in Control of the Company, they may be
regarded as having a takeover defensive effect, which may reduce
the Company's vulnerability to hostile takeover attempts and
certain other transactions which have not been negotiated with
and approved by the Board of Directors.
Nontransferability. Optionees may transfer their Options to
family members or trusts under specified circumstances. Options
may not otherwise be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or
by the laws of descent and distribution. In addition, Common
Stock that is purchased upon the exercise of an Option may
not be sold within the six-month period following the grant date
of that Option, except in the event of the optionee's death or
disability, or such other event as the Board of Directors may
specifically deem appropriate.
Effect of Dissolution and Related Transactions. In the
event of (i) the liquidation or dissolution of the Company, (ii)
a merger or consolidation in which the Company is not the
surviving entity, or (iii) the sale or disposition of all or
substantially all of the Company's assets (any of the foregoing
to be referred to herein as a "Transaction"), all outstanding
Options, together with the exercise prices thereof, will be
equitably adjusted for any change or exchange of shares for a
different number or kind of shares or other securities which
results from the Transaction. However, any such adjustment will
be made in such a manner as to not constitute a modification,
within the meaning of Section 424(h) of the Internal Revenue
Code, of outstanding ISOs.
Duration of the Option Plan and Grants. The Option Plan has
a term of 10 years from the Effective Date, after which date no
Options may be granted. The maximum term for an Option is 10
years from the date of grant, except that the maximum term of an
ISO may not exceed five years if the optionee owns more than 10%
of the Common Stock on the date of grant. The expiration
of the Option Plan, or its termination by the Committee, will
not affect any Option then outstanding.
Amendment and Termination of the Option Plan. The Board of
Directors of the Company may from time to time amend the terms
of the Option Plan and, with respect to any shares at the time
not subject to Options, suspend or terminate the Option Plan.
No amendment, suspension, or termination of the Option Plan
will, without the consent of any affected optionee, alter or
impair any rights or obligations under any Option previously
granted.
Financial Effects of Options. The Company will receive no
monetary consideration for the granting of Options under the
Option Plan. It will receive no monetary consideration other
than the exercise price for shares of Common Stock issued to
optionees upon the exercise of their Options. Under
applicable a0ccounting standards, recognition of compensation
expense is not required when Options are granted at an exercise
price equal to or exceeding the fair
-11-<PAGE>
<PAGE>
market value of the Common Stock on the date the Option is
granted, but disclosure may be required in financial statement
footnotes regarding pro forma effects on earnings and earnings
per share of recognizing as a compensation expense an estimate
of the fair value of such stock-based awards.
FEDERAL INCOME TAX CONSEQUENCES
ISOs. An optionee recognizes no taxable income upon the
grant of ISOs. If the optionee holds the shares purchased upon
exercise of an ISO for at least two years from the date the ISO
is granted, and for at least one year from the date the ISO is
exercised, any gain realized on the sale of the shares received
upon exercise of the ISO is taxed as long-term capital gain.
However, the difference between the fair market value of the
Common Stock on the date of exercise and the exercise price of
the ISO will be treated by the optionee as an item of tax
preference in the year of exercise for purposes of
the alternative minimum tax. If an optionee disposes of the
shares before the expiration of either of the two special
holding periods noted above, the disposition is a "disqualifying
disposition." In this event, the optionee will be required, at
the time of the disposition of the Common Stock, to treat the
lesser of the gain realized or the difference between the
exercise price and the fair market value of the Common Stock at
the date of exercise as ordinary income and the excess, if any,
as capital gain.
The Company will not be entitled to any deduction for
federal income tax purposes as the result of the grant or
exercise of an ISO, regardless of whether or not the exercise of
the ISO results in liability to the optionee for alternative
minimum tax. However, if an optionee has ordinary income
taxable as compensation as a result of a disqualifying
disposition, the Company will be entitled to deduct an
equivalent amount.
Non-ISOs. In the case of a Non-ISO, an optionee will
recognize ordinary income upon the exercise of the Non-ISO in an
amount equal to the difference between the fair market value of
the shares on the date of exercise and the option price (or, if
the optionee is subject to certain restrictions imposed by the
federal securities laws, upon the lapse of those restrictions
unless the optionee makes a special tax election within 30 days
after the date of exercise to have the general rule apply).
Upon a subsequent disposition of such shares, any amount
received by the optionee in excess of the fair market value of
the shares as of the exercise will be taxed as capital gain.
The Company will be entitled to a deduction for federal income
tax purposes at the same time and in the same amount as the
ordinary income recognized by the optionee in connection with
the exercise of a Non-ISO.
PROPOSED STOCK OPTION GRANTS
- ----------------------------
Set forth below is certain information as of the Record
Date relating to Options expected to be granted to the
specified individuals and groups of individuals on the Effective
Date of the Option Plan. All such Options (i) will be subject
to the terms and conditions described above, (ii) will be
contingent on, and not exercisable until, the Option Plan
receives stockholder approval and (iii) will automatically
expire ten years after the date of their grant. The exercise
price for these Options will be the fair market value of the
Common Stock on the date of grant.
Number of Shares
Subject to Options
William R. Belford, President
and Chief Executive Officer 30,000
Ralph T. Smith, Chairman of the Board 10,000
Martin R. Sathre, Director 10,000
Walter R. Fankhanel, Director 10,000
James R. Sharp, Director 10,000
Dean J. Thompson, Director 10,000
All current executive officers
as a group (5 persons) 42,000
All current directors who are not
executive officers as a group
(5 persons) 50,000
All employees, including all current
officers who are not executive
officers, as a group (11 persons) 8,000
-12-<PAGE>
<PAGE>
RECOMMENDATION AND VOTE REQUIRED
The Board of Directors has determined that the Option Plan
is desirable, cost effective, and produces incentives which will
benefit the Company and its stockholders. The Board of
Directors is seeking stockholder approval of the Option Plan in
order to satisfy the requirements of the Internal Revenue Code
for favorable tax treatment of ISOs and to satisfy the
requirements of the National Association of Securities Dealers
for national market system securities.
Stockholder approval of the Option Plan requires the
affirmative vote of the holders of a majority of the votes cast
at the Special Meeting. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR" APPROVAL OF THE OPTION PLAN.
________________________________________________________________
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
________________________________________________________________
Pursuant to regulations promulgated under the Exchange
Act, the Company's officers and directors and all persons who
own more than ten percent of the Common Stock ("Reporting
Persons") are required to file reports detailing their ownership
and changes of ownership in the Common Stock and to furnish the
Company with copies of all such ownership reports that are
filed. Based solely on the Company's review of the copies of
such ownership reports which it has received in the past fiscal
year or with respect to the past fiscal year, or written
representations that no annual report of changes in beneficial
ownership were required, the Company believes that during fiscal
year 1998 and prior fiscal years all Reporting Persons have
complied with these reporting requirements.
________________________________________________________________
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
________________________________________________________________
McGladrey & Pullen LLP, was the Company's independent
certified public accounting firm for the 1998 fiscal year.
________________________________________________________________
OTHER MATTERS
________________________________________________________________
The Board of Directors is not aware of any business to
come before the Annual Meeting other than those matters
described above in this proxy statement and matters incident to
the conduct of the Annual Meeting. However, if any other
matters should properly come before the Annual Meeting, it is
intended that proxies in the accompanying form will be voted in
respect thereof in accordance with the determination of a
majority of the Board of Directors.
________________________________________________________________
MISCELLANEOUS
________________________________________________________________
The cost of soliciting 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 proxy materials to the beneficial
owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may
solicit proxies personally or by telegraph or telephone without
additional compensation.
The Company's 1998 Annual Report to Stockholders,
including financial statements, is being mailed to all
stockholders of record as of the close of business on the Record
Date. Any stockholder who has not received a copy of such
Annual Report may obtain a copy by writing to the Secretary of
the Company. Such Annual Report is not to be treated as a part
of the proxy solicitation material or as having been
incorporated herein by reference.
-13-<PAGE>
<PAGE>
________________________________________________________________
STOCKHOLDER PROPOSALS
________________________________________________________________
In order to be eligible for inclusion in the Company's
proxy materials for next year's Annual Meeting of Stockholders,
any stockholder proposal to take action at such meeting must be
received at the Company's main office at 214 5th Street,
Bemidji, Minnesota 56601, no later than August 13, 1999. Any
such proposal shall be subject to the requirements of the proxy
rules adopted under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Karen Jacobson
KAREN JACOBSON
SECRETARY
Bemidji, Minnesota
December 22, 1998
________________________________________________________________
ANNUAL REPORT ON FORM 10-KSB
________________________________________________________________
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB OR
THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 AS FILED WITH THE
SECURITIES EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT CHARGE
TO EACH STOCKHOLDER AS OF THE RECORD DATE UPON WRITTEN REQUEST
TO CORPORATE SECRETARY, FIRST FEDERAL BANCORPORATION, 214 5TH
STREET, BEMIDJI, MINNESOTA 56601.
________________________________________________________________
-14-
<PAGE>
<PAGE>
Exhibit A
FIRST FEDERAL BANCORPORATION
1998 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
The purpose of this Plan is to advance the interests of
the Company through providing select key Employees and Directors
of the Bank, the Company, and their Affiliates with the
opportunity to acquire Shares. By encouraging such stock
ownership, the Company seeks to attract, retain and motivate the
best available personnel for positions of substantial respon-
sibility and to provide additional incentives to Directors and
key Employees of the Company or any Affiliate to promote the
success of the business.
2. DEFINITIONS.
As used herein, the following definitions shall apply.
(a) "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Company, as such terms are
defined in Section 424(e) and (f), respectively, of the Code.
(b) "Agreement" shall mean a written agreement entered
into in accordance with Paragraph 5(c).
(c) "Bank" shall mean First Federal Banking and Savings,
FSB.
(d) "Board" shall mean the Board of Directors of the
Company.
(e) "Change in Control" shall mean any one of the
following events: (1) the acquisition of ownership, holding or
power to vote more than 25% of the Bank's or the Company's
voting stock, (2) the acquisition of the ability to control the
election of a majority of the Bank's or the Company's directors,
(3) the acquisition of a controlling influence over the
management or policies of the Bank or the Company by any person
or by persons acting as a "group" (within the meaning of Section
13(d) of the Securities Exchange Act of 1934), (except in the
case of (1), (2), and (3) hereof, ownership or control of the
Bank by the Company itself shall not constitute a "Change in
Control"), or (4) during any period of two consecutive years,
individuals (the "Continuing Directors") who at the beginning of
such period constitute the Board of Directors of the Company or
the Bank (the "Existing Board") cease for any reason to
constitute at least two-thirds thereof, provided that any in-
dividual whose election or nomination for election as a member
of the Existing Board was approved by a vote of at least two-
thirds of the Continuing Directors then in office shall be
considered a Continuing Director. For purposes of this
subparagraph only, the term "person" refers to an individual or
a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed
herein. The decision of the Committee as to whether a change in
control has occurred shall be conclusive and binding.
(f) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(g) "Committee" shall mean the Stock Option Committee
appointed by the Board in accordance with Paragraph 5(a) hereof.
(h) "Common Stock" shall mean the common stock of the
Company.
(i) "Company" shall mean First Federal Bancorporation.
A-1
<PAGE>
<PAGE>
(j) "Continuous Service" shall mean the absence of any
interruption or termination of service as an Employee or
Director of the Company or an Affiliate. Continuous Service
shall not be considered interrupted in the case of sick leave,
military leave or any other leave of absence approved by the
Company, in the case of transfers between payroll locations of
the Company or between the Company, an Affiliate or a successor,
or in the case of a Director's performance of services in an
emeritus or advisory capacity.
(k) "Director" shall mean any member of the Board, and
any member of the board of directors of any Affiliate that the
Board has by resolution designated as being eligible for
participation in this Plan.
(l) "Disability" shall mean a physical or mental
condition, which in the sole and absolute discretion of the
Committee, is reasonably expected to be of indefinite duration
and to substantially prevent a Participant from fulfilling his
or her duties or responsibilities to the Company or an
Affiliate.
(m) "Effective Date" shall mean the date specified in
Paragraph 12 hereof.
(n) "Employee" shall mean any person who receives
compensation, from the Company or an Affiliate, that is
reportable to the Internal Revenue Service on Form W-2 (or a
successor to that form).
(o) "Exercise Price" shall mean the price per Optioned
Share at which an Option may be exercised.
(p) "ISO" means an option to purchase Common Stock which
meets the requirements set forth in the Plan, and which is
intended to be and is identified as an "stock option" within the
meaning of Section 422 of the Code.
(q) "Market Value" shall mean the fair market value of
the Common Stock, as determined under Paragraph 7(b) hereof.
(r) "Non-Employee Director" shall have the meaning
provided in Rule 16b-3.
(s) "Non-ISO" means an option to purchase Common Stock
which meets the requirements set forth in the Plan but which is
not intended to be and is not identified as an ISO.
(t) "Option" means an ISO and/or a Non-ISO.
(u) "Optioned Shares" shall mean Shares subject to an
Option granted pursuant to this Plan.
(v) "Participant" shall mean any person who receives an
Option pursuant to the Plan.
(w) "Plan" shall mean this First Federal Bancorporation
1998 Stock Option Plan.
(x) "Rule 16b-3" shall mean Rule 16b-3 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended.
(y) "Share" shall mean one share of Common Stock.
(z) "Year of Service" shall mean a full twelve-month
period, measured from the grant date of an Option and each
annual anniversary of that date, during which a Participant has
not terminated Continuous Service for any reason.
3. TERM OF THE PLAN AND OPTIONS.
(a) Term of the Plan. The Plan shall continue in effect
for a term of ten years from the Effective Date, unless sooner
terminated pursuant to Paragraph 14 hereof. No Option shall be
granted under the Plan after ten years from the Effective Date.
A-2<PAGE>
<PAGE>
(b) Term of Options. The term of each Option granted
under the Plan shall be established by the Committee, but shall
not exceed 10 years; provided, however, that in the case of an
Employee who owns Shares representing more than 10% of the
outstanding Common Stock at the time an ISO is granted, the term
of such ISO shall not exceed five years.
4. SHARES SUBJECT TO THE PLAN.
Except as otherwise required under Paragraph 9, the
aggregate number of Shares deliverable pursuant to Options shall
not exceed 100,000 Shares. Such Shares may either be authorized
but unissued Shares, Shares held in treasury, or Shares held in
a grantor trust created by the Company. If any Options should
expire, become unexercisable, or be forfeited for any reason
without having been exercised, the Optioned Shares shall, unless
the Plan shall have been terminated, be available for the grant
of additional Options under the Plan.
5. ADMINISTRATION OF THE PLAN.
(a) Composition of the Committee. The Plan shall be
administered by the Committee, which shall consist of at least
two Non-Employee Directors appointed by the Board. Members of
the Committee shall serve at the pleasure of the Board. In the
absence at any time of a duly appointed Committee, the Plan
shall be administered by those members of the Board who are Non-
Employee Directors.
(b) Powers of the Committee. Except as limited by the
express provisions of the Plan or by resolutions adopted by the
Board, the Committee shall have sole and complete authority and
discretion (i) to select Participants and grant Options, (ii) to
determine the form and content of Options to be issued in the
form of Agreements under the Plan, (iii) to interpret the Plan,
(iv) to prescribe, amend and rescind rules and regulations
relating to the Plan, and (v) to make other determinations
necessary or advisable for the administration of the Plan. The
Committee shall have and may exercise such other power and
authority as may be delegated to it by the Board from time to
time. A majority of the entire Committee shall constitute a
quorum and the action of a majority of the members present at
any meeting at which a quorum is present, or acts approved in
writing by a majority of the Committee without a meeting, shall
be deemed the action of the Committee.
(c) Agreement. Each Option shall be evidenced by a
written agreement containing such provisions as may be approved
by the Committee. Each such Agreement shall constitute a
binding contract between the Company and the Participant, and
every Participant, upon acceptance of such Agreement, shall be
bound by the terms and restrictions of the Plan and of such
Agreement. The terms of each such Agreement shall be in
accordance with the Plan, but each Agreement may include such
additional provisions and restrictions determined by the
Committee, in its discretion, provided that such additional
provisions and restrictions are not inconsistent with the terms
of the Plan. In particular, the Committee shall set forth in
each Agreement (i) the Exercise Price of an Option, (ii) the
number of Shares subject to, and the expiration date of, the
Option, (iii) the manner, time and rate (cumulative or
otherwise) of exercise or vesting of such Option, and (iv) the
restrictions, if any, to be placed upon such Option, or upon
Shares which may be issued upon exercise of such Option.
The Chairman of the Committee and such other Directors and
officers as shall be designated by the Committee are hereby
authorized to execute Agreements on behalf of the Company and to
cause them to be delivered to the recipients of Options.
(d) Effect of the Committee's Decisions. All decisions,
determinations and interpretations of the Committee shall be
final and conclusive on all persons affected thereby.
(e) Indemnification. In addition to such other rights
of indemnification as they may have, the members of the
Committee shall be indemnified by the Company in connection with
any claim, action, suit or proceeding relating to any action
taken or failure to act under or in connection with the Plan or
any Option, granted hereunder to the full extent provided for
under the Company's governing instruments with respect to the
indemnification of Directors.
A-3<PAGE>
<PAGE>
6. GRANT OF OPTIONS.
(a) General Rule. The Committee shall have the
discretion to make discretionary grants of Options to Employees
and Directors (including members of the Committee), provided
that the following Options shall automatically be granted on the
Effective Date:
Percentage of Shares Reserved
Optionee Under the Plan
-------- --------------
Belford 30.02%
Each non-employee Director 10.07%
Vorgert, Meissner, Sherwood,
Jacobson, Nielson 3.02%
Sutton, Kaiser, Funk, Kroeger,
Frenzel 1.51%
Lindgren, Collins, Sander, Roeder 0.76%
Options granted on the Effective Date shall have an
Exercise Price equal to the Market Value per share on the
Effective Date, shall have a term of ten years, and shall become
exercisable in accordance with the general rule set forth in
Paragraph 8 hereof.
(b) Reload Grants. In any Agreement or in a formal or
informal program, the Committee may establish terms and
conditions under which an Option will be granted upon the
exercise of an Option or stock option granted under another
Company plan; provided that the Exercise Price for the new
Option shall equal the Market Value of the underlying Shares on
that date.
7. EXERCISE PRICE FOR OPTIONS.
(a) Limits on Committee Discretion. The Exercise Price
as to any particular Option shall not be less than 100% of the
Market Value of the Optioned Shares on the date of grant. In
the case of an Employee who owns Shares representing more than
10% of the Company's outstanding Shares of Common Stock at the
time an ISO is granted, the Exercise Price shall not be less
than 110% of the Market Value of the Optioned Shares at the time
the ISO is granted.
(b) Standards for Determining Exercise Price. If the
Common Stock is listed on a national securities exchange
(including the NASDAQ National Market System) on the date in
question, then the Market Value per Share shall be the average
of the highest and lowest selling price on such exchange on such
date, or if there were no sales on such date, then the Exercise
Price shall be the mean between the bid and asked price on such
date. If the Common Stock is traded otherwise than on a
national securities exchange on the date in question, then the
Market Value per Share shall be the mean between the bid and
asked price on such date, or, if there is no bid and asked price
on such date, then on the next prior business day on which there
was a bid and asked price. If no such bid and asked price is
available, then the Market Value per Share shall be its fair
market value as determined by the Committee, in its sole and
absolute discretion.
8. EXERCISE OF OPTIONS.
(a) Generally. Unless the Committee specifically
eliminates any vesting requirement or imposes a different
vesting schedule in an Agreement granting an Option, each Option
grant shall be vested and exercisable with respect to 50% of the
Optioned Shares on the date of the grant, and shall become
vested and exercisable with respect to the remaining 50% on the
Optionee's completion of one Year of Service; provided that
vesting otherwise scheduled to occur prior to stockholder
approval of the Plan pursuant to Paragraph 12 hereof shall be
deferred until the date of such approval. An Option may not be
exercised for a fractional Share.
(b) Procedure for Exercise. A Participant may exercise
Options, subject to provisions relative to its termination and
limitations on its exercise, only by (1) written notice of
intent to exercise the Option with respect to a specified number
of Shares, and (2) payment to the Company (contemporaneously
with delivery of such notice) in cash, in Common Stock, or a
combination of cash and Common Stock, of the amount of the
Exercise Price for the number
A-4<PAGE>
<PAGE>
of Shares with respect to which the Option is then being
exercised. Each such notice (and payment where required) shall
be delivered, or mailed by prepaid registered or certified mail,
addressed to the Treasurer of the Company at its executive
offices. Common Stock utilized in full or partial payment of
the Exercise Price for Options shall be valued at its Market
Value at the date of exercise, and may consist of Shares subject
to the Option being exercised.
(c) Period of Exercisability. Except to the extent
otherwise provided in the terms of an Agreement, an Option may
be exercised by a Participant only while he is an Employee and
has maintained Continuous Service from the date of the grant of
the Option, or within one year after termination of such
Continuous Service (but not later than the date on which the
Option would otherwise expire), except if the Employee's
Continuous Service terminates by reason of -
(1) "Just Cause" which for purposes hereof shall
have the meaning set forth in any unexpired employment or
severance agreement between the Participant and the Bank
and/or the Company (and, in the absence of any such
agreement, shall mean termination because of the
Employee's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final
cease-and-desist order), then the Participant's rights to
exercise such Option shall expire on the date of such
termination;
(2) death, then to the extent that the Participant
would have been entitled to exercise the Option
immediately prior to his death, such Option of the
deceased Participant may be exercised within two years
from the date of his death (but not later than the date on
which the Option would otherwise expire) by the personal
representatives of his estate or person or persons to whom
his rights under such Option shall have passed by will or
by laws of descent and distribution.
(d) Effect of the Committee's Decisions. The
Committee's determination whether a Participant's Continuous
Service has ceased, and the effective date thereof, shall be
final and conclusive on all persons affected thereby.
(e) Mandatory Six-Month Holding Period. Notwithstanding
any other provision of this Plan to the contrary, Common Stock
that is purchased upon exercise of an Option may not be sold
within the six-month period following the grant date of that
Option, except in the event of the Participant's death or
disability, or such other event as the Board may specifically
deem appropriate.
9. CHANGE IN CONTROL; EFFECT OF CHANGES IN COMMON STOCK
SUBJECT TO THE PLAN.
(a) Change in Control. Upon the earlier of a Change in
Control or the execution of an agreement to effect a Change in
Control, all Options shall become fully exercisable,
notwithstanding any other provision of the Plan or any
Agreement.
(b) Recapitalizations; Stock Splits, Etc. The number
and kind of shares reserved for issuance under the Plan, and the
number and kind of shares subject to outstanding Options, and
the Exercise Price thereof, shall be proportionately adjusted
for any increase, decrease, change or exchange of Shares for a
different number or kind of shares or other securities of the
Company which results from a merger, consolidation, recapita-
lization, reorganization, reclassification, stock dividend,
split-up, combination of shares, or similar event in which the
number or kind of shares is changed without the receipt or
payment of consideration by the Company.
<PAGE>
(c) Transactions in which the Company is Not the
Surviving Entity. In the event of (i) the liquidation or
dissolution of the Company, (ii) a merger or consolidation in
which the Company is not the surviving entity, or (iii) the sale
or disposition of all or substantially all of the Company's
assets (any of the foregoing to be referred to herein as a
"Transaction"), all outstanding Options, together with the
Exercise Prices thereof, shall be equitably adjusted for any
change or exchange of Shares for a different number or kind of
shares or other securities which results from the Transaction.
A-5<PAGE>
<PAGE>
(e) Conditions and Restrictions on New, Additional, or
Different Shares or Securities. If, by reason of any adjustment
made pursuant to this Paragraph, a Participant becomes entitled
to new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the Shares pursuant to the
Option before the adjustment was made.
(f) Other Issuances. Except as expressly provided in
this Paragraph, the issuance by the Company or an Affiliate of
shares of stock of any class, or of securities convertible into
Shares or stock of another class, for cash or property or for
labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, shall not affect,
and no adjustment shall be made with respect to, the number,
class, or Exercise Price of Shares then subject to Options or
reserved for issuance under the Plan.
10. NON-TRANSFERABILITY OF OPTIONS.
Options may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or
by the laws of descent and distribution. Notwithstanding the
foregoing, or any other provision of this Plan, a Participant
who holds Options may transfer such Options (but not ISOs) to
his or her spouse, lineal ascendants, lineal descendants, or to
a duly established trust for the benefit of one or more of these
individuals. Options so transferred may thereafter be
transferred only to the Participant who originally received the
grant or to an individual or trust to whom the Participant could
have initially transferred the Options pursuant to this
Paragraph. Options which are transferred pursuant to this
Paragraph shall be exercisable by the transferee according to
the same terms and conditions as applied to the Participant.
11. TIME OF GRANTING OPTIONS.
The date of grant of an Option shall, for all purposes, be
the later of the date on which the Committee makes the deter-
mination of granting such Option, and the Effective Date.
Notice of the determination shall be given to each Participant
to whom an Option is so granted within a reasonable time after
the date of such grant.
12. EFFECTIVE DATE.
The Plan shall be effective November 24, 1998; provided
that (i) the effectiveness of the Plan and any Option shall be
absolutely contingent upon the Plan's approval by a favorable
vote of stockholders owning at least a majority of the total
votes cast at a duly called meeting of the Company's
stockholders held in accordance with applicable laws, and (ii)
no Options shall become exercisable prior to approval of the
Plan by the stockholders of the Company.
13. MODIFICATION OF OPTIONS.
At any time, and from time to time, the Board may autho-
rize the Committee to direct execution of an instrument
providing for the modification of any outstanding Option,
provided no such modification shall confer on the holder of said
Option any right or benefit which could not be conferred on him
by the grant of a new Option at such time, or impair the Option
without the consent of the holder of the Option.
14. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may from time to time amend the terms of this
Plan and, with respect to any Shares at the time not subject to
Options, suspend or terminate this Plan. No amendment,
suspension or termination of this Plan shall, without the
consent of any affected holders of an Option, alter or impair
any rights or obligations under any Option theretofore granted.
<PAGE>
15. CONDITIONS UPON ISSUANCE OF SHARES.
(a) Compliance with Securities Laws. Shares of Common
Stock shall not be issued with respect to any Option unless the
issuance and delivery of such Shares shall comply with all
relevant provisions of law, including,
A-6<PAGE>
<PAGE>
without limitation, the Securities Act of 1933, as amended, the
rules and regulations promulgated thereunder, any applicable
state securities law, and the requirements of any stock exchange
upon which the Shares may then be listed.
(b) Special Circumstances. The inability of the Company
to obtain approval from any regulatory body or authority deemed
by the Company's counsel to be necessary to the lawful issuance
and sale of any Shares hereunder shall relieve the Company of
any liability in respect of the non-issuance or sale of such
Shares. As a condition to the exercise of an Option, the
Company may require the person exercising the Option to make
such representations and warranties as may be necessary to
assure the availability of an exemption from the registration
requirements of federal or state securities law.
(c) Committee Discretion. The Committee shall have the
discretionary authority to impose in Agreements such
restrictions on Shares as it may deem appropriate or desirable,
including but not limited to the authority to impose a right of
first refusal, or to establish repurchase rights, or to pay an
Optionee the in-the-money value of his Option in consideration
for its cancellation, or all of these restrictions.
16. RESERVATION OF SHARES.
The Company, during the term of the Plan, will reserve and
keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
17. WITHHOLDING TAX.
The Company's obligation to deliver Shares upon exercise
of Options shall be subject to the Participant's satisfaction of
all applicable federal, state and local income and employment
tax withholding obligations. The Committee, in its discretion,
may permit the Participant to satisfy the obligation, in whole
or in part, by irrevocably electing to have the Company withhold
Shares, or to deliver to the Company Shares that he already
owns, having a value equal to the amount required to be
withheld. The value of the Shares to be withheld, or delivered
to the Company, shall be based on the Market Value of the Shares
on the date the amount of tax to be withheld is to be
determined. As an alternative, the Company may retain, or sell
without notice, a number of such Shares sufficient to cover the
amount required to be withheld.
18. NO EMPLOYMENT OR OTHER RIGHTS.
In no event shall an Employee's or Director's eligibility
to participate or participation in the Plan create or be deemed
to create any legal or equitable right of the Employee,
Director, or any other party to continue service with the
Company, the Bank, or any Affiliate of such corporations.
Except to the extent provided in Paragraphs 6(b) and 9(a), no
Employee or Director shall have a right to be granted an Option
or, having received an Option, the right to again be granted an
Option. However, an Employee or Director who has been granted
an Option may, if otherwise eligible, be granted an additional
Option or Options.
19. GOVERNING LAW.
The Plan shall be governed by and construed in accordance
with the laws of the State of Minnesota, except to the extent
that federal law shall be deemed to apply.
A-7
<PAGE>
<PAGE>
REVOCABLE PROXY
________________________________________________________________
FIRST FEDERAL BANCORPORATION
BEMIDJI, MINNESOTA
________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
JANUARY 19, 1999
The undersigned hereby appoints James R. Sharp with full
powers of substitution, to act as proxies for the undersigned,
to vote all shares of Common Stock of First Federal
Bancorporation (the "Company") which the undersigned is entitled
to vote at the Annual Meeting of Stockholders, to be held at the
main office of First Federal Bank, 214 5th Street, Bemidji,
Minnesota on Tuesday, January 19, 1999 at 2:30 p.m., and at any
and all adjournments thereof, as follows:
VOTE
FOR WITHHELD
--- --------
1.The election as directors of all
nominees listed below (except as
marked to the contrary below). [ ] [ ]
Martin R. Sathre
Dean J. Thompson
INSTRUCTION: TO WITHHOLD YOUR VOTE FOR ANY
INDIVIDUAL NOMINEE, INSERT THAT NOMINEE'S NAME ON
THE LINE PROVIDED BELOW.
_____________________________
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C> <C>
2. Approval of the First Federal
Bancorporation 1998 Stock Option
Plan [ ] [ ] [ ]
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ABOVE
LISTED PROPOSITIONS.
________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED.
IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS
PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN ACCORDANCE
WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS.
AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING. THIS PROXY
CONFERS DISCRETIONARY AUTHORITY ON THE HOLDERS THEREOF TO VOTE
WITH RESPECT TO THE ELECTION OF ANY PERSON AS DIRECTOR WHERE THE
NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE AND
MATTERS INCIDENT TO THE CONDUCT OF THE ANNUAL MEETING.
________________________________________________________________
<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Annual Meeting or at any adjournment thereof and after notifica-
tion to the Secretary of the Company at the Annual Meeting of
the stockholder's decision to terminate this proxy, then the
power of said attorneys and proxies shall be deemed terminated
and of no further force and effect.
The undersigned acknowledges receipt from the Company
prior to the execution of this proxy of notice of the annual
meeting, a Proxy Statement dated December 22, 1998 and an Annual
Report to Stockholders.
Dated: _______________________, 1999
__________________________ __________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
__________________________ __________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope
in which this form of proxy was mailed. When signing as
attorney, executor, administrator, trustee or guardian, please
give your full title. If shares are held jointly, each holder
should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ACCOMPANYING POSTAGE-PREPAID ENVELOPE.
