SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Independence Community Bank Corp.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
<PAGE>
[Independence Community Bank Corp.]
August 14, 1998
Dear Stockholder:
You are cordially invited to attend the first Annual Meeting of
Stockholders of Independence Community Bank Corp. The meeting will be held at
the Klitgord Auditorium, New York City Technical College, located at 285 Jay
Street, Brooklyn, New York, on Friday, September 25, 1998 at 9:30 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 your shares be voted at the Annual Meeting
regardless of the number 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.
For the reasons set forth in the Proxy Statement, the Board recommends
that you vote "FOR" each matter to be considered at the Annual Meeting.
Your continued support of and interest in Independence Community Bank
Corp. is sincerely appreciated.
Sincerely,
/s/Charles J. Hamm
-------------------
Charles J. Hamm
Chairman of the Board, President and
Chief Executive Officer
<PAGE>
INDEPENDENCE COMMUNITY BANK CORP.
195 Montague Street
Brooklyn, New York 11201
(718) 722-5300
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on September 25, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of Independence Community Bank Corp. (the "Company") will be held at
the Klitgord Auditorium, New York City Technical College, located at 285 Jay
Street, Brooklyn, New York, on Friday, September 25, 1998 at 9:30 a.m., Eastern
Time, for the following purposes, all of which are more completely set forth in
the accompanying Proxy Statement:
(1) To elect five directors for a three-year term or until their
successors are elected and qualified;
(2) To consider and approve the adoption of the 1998 Stock Option
Plan;
(3) To consider and approve the adoption of the 1998 Recognition
and Retention Plan and Trust Agreement;
(4) To ratify the appointment of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending
March 31, 1999; and
(5) 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 August 4, 1998 as the voting record
date for the determination of stockholders entitled to notice of and to vote at
the Special 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/John K. Schnock
-------------------
John K. Schnock
Corporate Secretary
Brooklyn, New York
August 14, 1998
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>
INDEPENDENCE COMMUNITY BANK CORP.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 25, 1998
This Proxy Statement is furnished to holders of common stock, $.01 par
value per share ("Common Stock"), of Independence Community Bank Corp. (the
"Company"), a Delaware-chartered thrift holding company for Independence Savings
Bank (the "Bank"). The Company acquired all of the Bank's common stock issued in
connection with the reorganization of the Bank and its mutual holding company
parent from the mutual to stock form in March 1998 (the "Conversion"). 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
Klitgord Auditorium, New York City Technical College, located at 285 Jay Street,
Brooklyn, New York, on Friday, September 25, 1998 at 9:30 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 August 14, 1998.
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 for the matters described below and, 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
(John K. Schnock, Esq., Senior Vice President, Secretary and Counsel,
Independence Community Bank Corp., 195 Montague Street, Brooklyn, New York
11201); (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 of the Company at the close of business on
August 4, 1998 (the "Voting Record Date") are entitled to notice of and to vote
at the Annual Meeting and at any adjournment thereof. On the Voting Record Date,
there were 76,043,750 shares of Common Stock issued and outstanding and the
Company had no other class of equity securities outstanding. Each share of
Common Stock is entitled to one vote at the Special Meeting on all matters
properly presented at the meeting.
The presence in person or by proxy of at least a majority of the issued
and outstanding shares of Common Stock entitled to vote is necessary to
constitute a quorum at the Annual Meeting. The five persons who receive the
greatest number of votes of the holders of Common Stock represented in person or
by proxy at the Annual Meeting will be elected directors of the Company. The
affirmative vote of the holders of a majority of the total votes present in
person or by proxy is required to ratify the appointment of Ernst & Young LLP as
the Company's independent auditors. Absentions will not be counted as votes cast
and accordingly will have no effect on the voting of this proposal. The
affirmative vote of the holders of a majority of the total votes eligible to be
cast in person or by proxy at the Annual Meeting is required for approval of the
proposals to approve the 1998 Stock Option Plan (the "Option Plan") and the 1998
Recognition and Retention Plan and Trust Agreement (the "Recognition Plan").
Under rules applicable to broker-dealers, the proposals to approve the Option
Plan and the Recognition Plan are considered "non-discretionary" items upon
which brokerage firms may not vote in their discretion on behalf of their
clients if such clients have not furnished voting instructions and for which
there may be "broker non-votes" at the meeting. Because of the required votes,
abstentions and broker non-votes will have the same effect as a vote against the
proposals to approve the Option Plan and the Recognition Plan.
1
<PAGE>
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
Election of Directors
The Bylaws of the Company presently authorize 13 directors. The
Certificate 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
not permitted to cumulate their votes for the election of directors.
No director or executive officer of the Company is related to any other
director or executive officer of the Company 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 the person or persons named as nominee should be unable or unwilling
to stand for election at the time of the Annual Meeting, the proxies will
nominate and vote for one or more replacement 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.
<TABLE>
<CAPTION>
Nominees for Director for Three-Year Term Expiring in 2001
Principal Occupation During Director
Name Age(1) the Past Five Years Since(2)
---- ------ ------------------- --------
<S> <C> <C> <C>
Robert B. Catell 61 Director; President and Chief Executive Officer of Market 1984
Span Corporation since July 1998 and President and Chief
Operating Officer of Market Span Corporation from May
1998 to July 1998; Chairman, President and Chief
Executive Officer of Keyspan Energy Corporation,
Brooklyn, New York, since October 1997; Chairman and
Chief Executive Officer of Brooklyn Union, Brooklyn, New
York. Director of the Houston Exploration Company and
Taylor Gas.
Rohit M. Desai 59 Director; Chairman and President of Desai Capital 1992
Management. Director of the Rouse Company, Sunglass
Hut and Finlay Fine Jewelry.
Robert W. Gelfman 66 Director; Partner with the law firm of Battle Fowler LLP, 1988
New York, New York.
Charles J. Hamm 61 Chairman of the Board, President and Chief Executive 1975
Officer.
Scott M. Hand 56 Director; President and Director of Inco Limited, a mining 1987
company headquartered in Ontario, Canada. Director of
P.T. International Nickel Indonesia
</TABLE>
The Board of Directors recommends that you vote FOR the election of the
above nominees for director.
3
<PAGE>
<TABLE>
<CAPTION>
Members of the Board of Directors Continuing in Office
Directors Whose Terms Expire in 1999
Principal Occupation During Director
Name Age(1) the Past Five Years Since(2)
---- ------ ------------------- --------
<S> <C> <C> <C>
Willard N. Archie 54 Director; certified public accountant and Chief Executive 1994
Officer and Managing Partner of Mitchell & Titus, LLP, an
accounting and management consulting firm in New York
City.
Donald H. Elliott 65 Director; member of the law firm of Hollyer Brady Smith 1973
Troxell Rockett Hines & Mone LLP since September 1995;
previously partner with Mudge Rose Guthrie Alexander &
Ferdon LLP. Director of Market Span and Brooklyn Union.
Janine Luke 59 Director; Director of Windrove Service Corporation, an 1976
investment advisory firm in New York City, since 1996;
previously President of Breecom Corp., an investment
advisory firm.
Malcolm MacKay 57 Director; Managing Director of Russell Reynolds Associates, 1977
Inc., an executive placement firm in New York City.
Director of Empire Fidelity Life Insurance Company, Inc.,
a subsidiary of Fidelity Investment Co.
<CAPTION>
Directors Whose Terms Expire in 2000
Principal Occupation During Director
Name Age(1) the Past Five Years Since(2)
---- ------ ------------------- --------
<S> <C> <C> <C>
Chaim Y. Edelstein 55 Director; Chairman of the Board of Directors of Hills Stores, 1991
Inc. since 1995; Chairman and Chief Executive Officer of
Abraham & Strauss, Brooklyn, New York from 1984 until
February 1994. Director of Leslie Fay Corp.
Donald E. Kolowsky 65 Director; retired. 1989
Joseph S. Morgano 66 Director; Executive Vice President and Mortgage Officer; 1996
served in various capacities in the mortgage area since
joining the Bank in 1972.
Wesley D. Ratcliff 55 Director; President and Chief Executive Officer of Advanced 1994
Technological Solutions, Inc., an electronics service provider
located in Brooklyn, New York since October 1993;
previously served as plant manager of IBM Corporation.
</TABLE>
- - --------------------
(1) As of June 1, 1998.
(2) Includes service as director of the Bank.
4
<PAGE>
Stockholder Nominations
Article IV, Section 4.15 of the Company's Bylaws ("Bylaws") governs
nominations for election to the Board of Directors and requires all such
nominations, other than those made by the Board of Directors or a committee
appointed 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. Generally, to be
timely, a stockholder's notice must be delivered to, or mailed, postage prepaid,
to the principal executive offices of the Company not later than 120 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. Each written notice of a stockholder nomination is required to set
forth certain information specified in by Bylaws. Because this is the first
Annual Meeting, any such nomination by a stockholder must have been delivered or
received no later than the close of business on March 26, 1998. No such
nominations by stockholders were received.
Board of Directors Meetings and Committees of the Company and the Bank
Regular meetings of the Board of Directors of the Company are held as
necessary. Since its organization in June 1997 and through the year ended March
31, 1998, the Board of Directors of the Company met eight times. No director
attended fewer than 75% of the total number of Board meetings or committee
meetings on which he or she served that were held during this period. The
completion of the reorganization and conversion of the Bank was not completed
until mid-March 1998. As a result, committees of the Company were not
established until April 1998 and there were no committee meetings held during
fiscal 1998. The Company has established various committees including an
Executive Committee, an Examining Committee and a Compensation Committee.
In accordance with the Company's Bylaws, the Board of Directors acts as
the Nominating Committee. The Board did not meet in such capacity in fiscal 1998
but met subsequent to March 31, 1998 to nominate the persons listed herein as
the Board's nominees.
The Board of Directors of the Bank meets on a monthly basis and may
have additional special meetings. During the year ended March 31, 1998, the
Board of Directors of the Bank met 13 times. The Board of Directors of the Bank
has established ten committees, including an Executive Committee, Organization
Committee, Investment Committee and an Examining Committee. No director attended
fewer than 75% of the total number of Board meetings or committee meetings on
which he served that were held during this period.
Executive Officers Who Are Not Directors
Set forth below is information with respect to the principal
occupations during the last five years for the five senior executive officers of
the Company and the Bank who do not serve as directors of the Company. No
executive officer is related to any director or other executive officer of the
Company by blood, marriage or adoption, and there are no arrangements or
understandings between a director of the Company and any other person pursuant
to which such person was elected an executive officer.
Terence J. Mitchell. Age 46 years. Mr. Mitchell served as Executive
Vice President-Director of Marketing and Retail Banking of the Bank from
February 1995 to May 1998 and has served as Executive Vice President - Retail
Banking since May 1998. Previously, Mr. Mitchell served as a Senior Vice
President for Marketing and Retail Banking.
John B. Zurell. Age 56 years. Mr. Zurell, a certified public
accountant, served as Executive Vice President-Financial Systems and Director of
Commercial and Consumer Lending from February 1994 until July 1997. In July
1997, he was appointed Chief Financial Officer. Prior to February 1994, he
served as a Senior Vice President of the Bank.
5
<PAGE>
Thomas J. Brady. Age 64 years. Mr. Brady has been Senior Vice President
of the Bank since March 1993 and Treasurer of the Bank since September 1991.
Previously, Mr. Brady served in various positions since joining the Bank in
1971.
John K. Schnock. Age 54 years. Mr. Schnock has been Senior Vice
President, Secretary and Counsel of the Bank since February 1996. Previously,
Mr. Schnock served as a Vice President and then First Vice President since
joining the Bank's Secretary and Counsel department in June 1992. Prior thereto,
Mr. Schnock was an attorney with the law firm of Bleakley Platt Remsen Millham &
Curran, New York, from April 1990 to June 1992 and served in various capacities
with the Bank from 1972 to 1990.
Frank S. Muzio. Age 45 years. Mr. Muzio, a certified public accountant,
has been Senior Vice President and Controller since April 1998. Previously, Mr.
Muzio served as Senior Vice President, Planning and Analysis, of Dime Bancorp.,
Inc. since its merger with Anchor Bancorp., Inc., in January 1995 and earlier
served as Senior Vice President and Controller of Anchor Bancorp., Inc., since
1993.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"), requires the Company's officers and 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
("SEC") and the Nasdaq Stock Market. Officers, directors and greater than 10%
stockholders are required by regulation to furnish the Company with copies of
all Section 16(a) forms they file. The Company knows of no person who
beneficially owns 10% or more of the Company's Common Stock.
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 with respect to the year ended March 31, 1998, the Company's
officers and directors satisfied the reporting requirements promulgated under
Section 16(a) of the 1934 Act except that one report, covering one transaction,
and another report, covering two transactions, were filed late by Messrs.
Edelstein and Brady, respectively.
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Stock as of the Voting Record Date, and certain other information with respect
to (i) each person or entity, including any "group" as that term is used in
Section 13(d)(3) of the Exchange Act, who or which was known to the Company to
be beneficial owner of more than 5% of the issued and outstanding Common Stock,
(ii) each director of the Company, (iii) each executive officer of the Company
and (iv) all directors and executive officers of the Company as a group.
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group August 4, 1998(1) Common Stock
---------------- ----------------- ------------
Independence Community Bank Corp.
Employee Stock Ownership Plan
195 Montague Street
Brooklyn, New York 11201 5,632,870(2) 7.4%
6
<PAGE>
Amount and Nature
Name of Beneficial of Beneficial
Owner or Number of Ownership as of Percent of
Persons in Group August 4, 1998(1) Common Stock
---------------- ----------------- ------------
Independence Community Foundation
195 Montague Street
Brooklyn, New York 11201 5,607,870(3) 7.4%
Directors:
Willard N. Archie 1,042(4) *
Robert B. Catell 5,000 *
Rohit Desai 1,000 0
Chaim Y. Edelstein 3,000(5) *
Donald H. Elliott 1,469(4) *
Robert W. Gelfman 1,288(6) *
Charles J. Hamm 6,947(7) *
Scott M. Hand 1,000 *
Donald E. Kolowsky 5,034(4) *
Janine Luke 1,500 *
Malcolm MacKay 300 *
Joseph S. Morgano 15,191(7) *
Wesley D. Ratcliff 1,052(4) *
Other Senior Executive Officers:
Thomas J. Brady 11,831(8) *
Terence J. Mitchell 694(7) *
Frank S. Muzio 500 *
John K. Schnock 3,389(7) *
John B. Zurell 1,763(7) *
All directors and executive officers as a
group (18 persons) 62,000 *
7
<PAGE>
- - ----------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) Based upon filings made pursuant to the Exchange Act and information
furnished by the respective individuals. Under regulations promulgated
pursuant to the Exchange Act, shares of Common Stock are deemed to
beneficially owned by a person 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 to direct the disposition of the
shares. Unless otherwise indicated, the named beneficial owner has sole
voting and dispositive power with respect to the shares.
(2) Independence Community Bank Corp. Employee Stock Ownership Plan
("ESOP") was established by an agreement between the Company and
Messrs. Catell, Desai and Gelfman as well as Marine Midland Bank, who
act as trustees of the plan ("Trustees"). As of the Voting Record Date,
none of the shares held by the ESOP had been allocated to the accounts
of participating employees. Under the terms of the ESOP, the Trustees
will generally vote the allocated shares held in the ESOP in accordance
with the instructions of the participating employees. Unallocated
shares held in the ESOP will generally be voted in the same ratio on
any matter as those allocated shares for which instructions are given,
subject in each case to the fiduciary duties of the ESOP trustees and
applicable law. Any allocated shares which either abstain on the
proposal or are not voted will be disregarded in determining the
percentage of stock voted for and against each proposal by the
participants and beneficiaries. The amount of Common Stock beneficially
owned by all directors and executive officers as a group does not
include the unallocated shares held by the ESOP.
(3) Shares of Common Stock owned by the Independence Community Foundation
are required to be voted in the same ratio as all other shares of
Common Stock on all proposals presented to stockholders for
consideration.
(4) Includes with respect to Messrs. Archie, Elliott, Kolowsky and
Ratcliff, 542, 1,469, 34 and 52 shares, respectively, held by the
Directors Fee Deferral Plan. Messrs. Archie, Elliott, Kolowsky and
Ratcliff each disclaims beneficial ownership of such shares except to
the extent of their personal pecuniary interest therein.
(5) Includes 1,000 shares owned by Mr. Edelstein's minor child.
(6) Includes 288 shares owned by Mr. Gelfman's spouse.
(7) All shares are held in the Independence Savings Bank 401(k) Savings
Plan in RSI Retirement Trust ("401(k) Plan").
(8) Includes 750 shares owned by Mr. Brady's spouse, 2,266 shares owned by
Mr. Brady's minor children and 7,976 shares held by the Bank's 401(k)
Plan.
8
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth a summary of certain information
concerning the compensation paid by the Bank (including amounts deferred to
future periods by the officers) for services rendered in all capacities during
the two fiscal years ended March 31, 1998 and 1997 to the President and Chief
Executive Officer of the Bank and the four other most highly compensated
officers of the Bank. Said officers, who also serve as executive officers of the
Company, do not receive any separate compensation from the Company.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------- ---------------------------------------
Awards Payouts
-------------------------- ----------
Other Securities
Name and Fiscal Annual Restricted Underlying LTIP All Other
Principal Position Year Salary(1) Bonus Compensation(2) Stock Options Payouts Compensation
------------------ ---- --------- ----- --------------- ----- ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Charles J. Hamm
Chairman, President and 1998 $517,316 $103,000 - - - - - - - - $3,000(3)
Chief Executive Officer 1997 488,463 139,195 - - - - - - 145,070(4) 4,700(5)
Joseph S. Morgano
Executive Vice
President and 1998 250,999 50,000 - - - - - - 3,000(3)
Mortgage Officer 1997 238,500 66,278 - - - - - - 42,946(4) 4,700(5)
Terence J. Mitchell 1998 166,923 33,000 - - - - - - - - 3,257(3)
Executive Vice 1997 152,327 38,214 - - - - - - 23,242(4) 5,117(5)
President-Director of
Marketing and Retail
Banking
John B. Zurell 1998 195,154 29,100 - - - - - - - - 3,000(3)
Executive Vice 1997 193,646 46,746 - - - - - - 33,656(4) 4,868(5)
President and Chief
Financial Officer
Thomas J. Brady 1998 118,846 23,500 - - - - - - - - 2,957(3)
Senior Vice President 1997 111,308 30,010 - - - - - - 19,159(4) 4,841(5)
and Treasurer
</TABLE>
- - ----------
<PAGE>
(1) Does not include amounts deferred by an officer in prior years and
received by such officer in the current fiscal year.
(2) 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 year ended March 31, 1998 did not
exceed the lesser of $50,000 or 10% of the total of annual salary and
bonus reported for the individual.
(3) Consists of contributions to the Bank's 401(k) profit sharing plan.
(4) Amount reflects one-third of an award received in April 1997 pursuant
to the Bank's Executive Long-Term Incentive Plan ("ELTIP"), which plan
was established in 1994 and provided for awards based upon the
attainment of certain pre-established performance goals and criteria
during the period from January 1, 1994 through December 31, 1996. In
April 1997 the Board of Directors determined to exclude the effect of
the one-time special SAIF assessment for the purposes of the ELTIP.
(5) Consists of contributions to the Bank's 401(k) profit sharing plan, the
receipt of $1,000 face amount of 8% junior preferred stock of the
Independence Community Realty Corp., a wholly owned subsidiary of the
Bank, and reimbursement of certain tax payments made by the named
executive officers.
9
<PAGE>
Change in Control Agreements
The Company and the Bank (collectively the "Employers") intend to enter
into Change in Control Agreements with Messrs. Hamm, Morgano, Mitchell, Zurell,
Brady and Schnock (the "Executives"). The Change in Control Agreements have
terms of three years, which term shall be extended each year for a successive
additional one-year period upon approval by the Board of Directors unless either
the Board of Directors or Executive elects, not less than 30 days prior to the
annual anniversary date, not to extend the term.
The Change in Control Agreements provide that if certain adverse
actions are taken with respect to the Executive's employment following a change
in control, as defined, of the Company or the Bank, the Executive will be
entitled to a cash severance amount equal to three times the Executive's annual
compensation. In addition, the Executive will be entitled to a continuation of
benefits similar to those he is receiving at the time of such termination for
the remaining term of the agreement or until he obtains full-time employment
with another employer.
A change in control is generally defined in the Change in Control
Agreements to include any change in control of the Company or the Bank required
to be reported under the federal securities laws, as well as (i) the acquisition
by any person of 20% 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.
Each Change in Control Agreement with the Employers provides that if
the payments and benefits to be provided thereunder or otherwise upon
termination of employment are deemed to constitute a "parachute payment" within
the meaning of Section 280G of the Code, then the Executive would be reimbursed
for any excise tax liability pursuant to Sections 280G and 4999 of the Code and
for any additional income taxes imposed as a result of such reimbursement.
Because the amount of the payments and benefits that could constitute a
parachute payment is dependent upon the timing, price and structure of any
change in control that may occur in the future, it is not possible at this time
to quantify the severance benefits payable to an Executive under the employment
agreements.
Although the above-described Change in Control Agreements, 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.
The Company is considering implementing a severance plan which would
cover certain officers who are not otherwise covered by Change in Control
Agreements. Such plan would provide certain severance benefits to participants
whose employment is terminated or whose job responsibilities are substantially
reduced in connection with or subsequent to a change in control of the Company.
Directors' Compensation
Members of the Bank's Board of Directors, except for Messrs. Hamm and
Morgano, receive $1,500 per meeting attended of the Board and $850 per committee
meeting attended. Board fees are subject to periodic adjustment by the Board of
Directors. In addition, members of the Board receive an annual retainer of
$10,000. Effective with the fiscal year beginning on April 1, 1998, the annual
retainer was increased to $20,000. In addition to fees paid to directors for
Board and committee meetings, the Bank's directors are expected to participate
in the Stock Option Plan and the Recognition Plan being presented at this Annual
Meeting for approval by stockholders. See "Proposal to Adopt the 1998 Stock
Option Plan" and "Proposal to Adopt Recognition and Retention Plan and Trust
Agreement."
Benefits
Retirement Plan. The Company maintains a non-contributory,
tax-qualified defined benefit pension plan (the "Retirement Plan") for eligible
employees. All salaried employees at least age 21 who have completed at least
one of year of service are eligible to participate in the Retirement Plan. The
Retirement Plan provides for a benefit for each participant including executive
officers named in the Summary Compensation Table above, equal to 2% of the
participant's final average compensation (average W-2 compensation during the
highest 60 months of employment) multiplied by the participant's years (and any
fraction thereof) of eligible employment (up to a maximum of 30 years). A
participant is fully vested in his or her benefit under the Retirement Plan
after five years of service. The Retirement Plan is funded by the Bank on an
actuarial basis and all assets are held in trust by the Retirement Plan trustee.
10
<PAGE>
The following table illustrates the annual benefit payable upon
retirement at age 65 (in single life annuity amounts with no offset for Social
Security benefits) at various levels of compensation and years of service under
the Retirement Plan and the Supplemental Executive Retirement Plan ("SERP")
maintained by the Bank.
<TABLE>
<CAPTION>
Years of Service(1)(2)
-------------------------------------------------------------------------
Remuneration (3)(4) 15 20 25 30 35
-------------------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
$125,000 $ 37,500 $ 50,000 $ 62,500 $ 75,000 $ 75,000
150,000 45,000 60,000 75,000 90,000 90,000
175,000 52,500 70,000 87,500 105,000 105,000
200,000 60,000 80,000 100,000 120,000 120,000
225,000 67,500 90,000 112,500 135,000 135,000
250,000 75,000 100,000 125,000 150,000 150,000
300,000 90,000 120,000 150,000 180,000 180,000
400,000 120,000 160,000 200,000 240,000 240,000
450,000 135,000 180,000 225,000 270,000 270,000
500,000 150,000 200,000 250,000 300,000 300,000
600,000 180,000 240,000 300,000 360,000 360,000
</TABLE>
- - --------------
(1) The annual retirement benefits shown in the table do not reflect a
deduction for Social Security benefits and there are no other offsets
to benefits.
(2) The maximum years of service credited for benefit purposes is 30 years.
(3) For the fiscal year of the Retirement Plan beginning on January 1,
1997, the average final compensation for computing benefits under the
Retirement Plan cannot exceed $160,000 (as adjusted for subsequent
years pursuant to Code provisions). Benefits in excess of the
limitation are provided through SERP.
(4) For the fiscal year of the Retirement Plan beginning on January 1,
1997, the maximum annual benefit payable under the Retirement Plan
cannot exceed $125,000 (as adjusted for subsequent years pursuant to
Code provisions).
The following table sets forth the years of credited service and the
average annual earnings (as defined above) determined as of March 31, 1998, for
each of the individuals named in the Executive Compensation Table.
Years of Credited Average Annual
Service Earnings
----------------- --------------
Charles J. Hamm................. 13 years $615,882
Joseph S. Morgano............... 25 years 290,424
Terence J. Mitchell............. 23 years 170,990
John B. Zurell.................. 25 years 218,149
Thomas J. Brady................. 27 years 133,683
11
<PAGE>
Supplemental Executive Retirement Plan. The Bank has adopted the SERP
to provide for eligible employees benefits that would be due under its
Retirement Plan if such benefits were not limited under the Code. SERP benefits
provided with respect to the Retirement Plan are reflected in the pension table.
The Board of Directors of the Bank intends to adopt an amendment to the SERP to
provide eligible employees with benefits that would be due under the ESOP if
such benefits were not limited under the Code.
Compensation Committee Interlocks and Insider Participation
In fiscal 1998, the Organization Committee of the Board of Directors of
the Company and the Bank determined the salaries and bonuses of the Company's
and the Bank's executive officers. Mr. Hamm, Chairman, President and Chief
Executive Officer of the Company and the Bank is a member of the Organization
Committee. The Committee also reviews and approves the salaries and bonuses for
the Company's and the Bank's other officers and employees. The Organization
Committee of the Bank met three times during fiscal 1998. The report of the
Organization Committee with respect to compensation for the Chief Executive
Officer and all other executive officers of the Company and the Bank and
employees for the year ended March 31, 1998 is set forth below. The standing
Organization Committee consists of Messrs. Archie, Desai, Edelstein, Elliott,
Hamm, Hand, Ratcliff and Mrs. Luke. Four other Directors (Messrs. Catell,
Gelfman, Kolowsky and MacKay) serve on a rotating basis.
Report of Organization Committee
Under the rules of the SEC, the Company is required to provide certain
data and information in regard to the compensation and benefits provided to the
Company's President and Chief Executive Officer and certain other executive
officers of the Company for the year ended March 31, 1998. Because the Company
did not have any significant assets until March 13, 1998 (the completion of the
Bank's and its mutual holding company's reorganization and conversion), the
following discussion addresses compensation information relating to the
President and Chief Executive Officer and executive officers of the Bank for
fiscal 1998 and sets forth the report of the Organization Committee (the
"Committee") of the Board of Directors of the Bank. Effective April 1, 1998, the
Bank's Organization Committee has been redesignated the Compensation Committee.
In addition, the Company has also established a Compensation Committee.
Compensation Philosophy. The Committee is responsible for administering
the compensation of all executive officers. The Committee annually reviews and
evaluates the base salary and incentive compensation for all executive officers,
including the President and Chief Executive Officer, and in conducting such
reviews of the Bank's executive officers other than the President and Chief
Executive Officer places primary consideration upon the recommendations of the
President and Chief Executive Officer, along with the rationale for such
recommendations. The President and Chief Executive Officer does not participate
in the Committee's review of his compensation package. The Committee considers
the objectives and performance of the Bank, individual performance and surveys
of compensation practices at comparable financial institutions in establishing
executive compensation. While the Committee does not use strict numerical
formulas to determine changes in the compensation of the President and Chief
Executive Officer and the other executive officers of the Bank and while it
weighs a variety of different factors in its deliberations, it emphasizes
earnings, profitability, capital position and income levels as factors in
setting the compensation of the Bank's executive officers, in particular the
President and Chief Executive Officer. It also takes into account
non-quantitative factors including such factors as the level of responsibility
and general management oversight. While the various quantitative factors
approved by the Committee were considered in evaluating individual officer
performance, such factors were not assigned a specific weight in evaluating the
performance of the President and Chief Executive Officer or the other executive
officers.
The purposes of the Bank's executive compensation policies are to
attract and retain qualified individuals; reward high performance by the Bank
and the executive; and maintain compensation levels that are competitive with
other financial institutions, particularly those in the New York metropolitan
area. The compensation structure is designed to support the achievement of the
Bank's performance and strategic objectives and to ensure that the executive
officers' interests are aligned with the success of the Bank. The Committee
makes use of compensation surveys and has on occasion retained independent
consultants to assist in the design of the Bank's executive compensation
package. In light of the status of the Holding Company as a public company, it
is intended that the compensation policies of the Holding Company and the Bank
will incorporate the consolidated financial results of the Holding Company and
other factors related to the Holding Company's common stock.
Incentive Compensation. An important component of the Company's and the
Bank's executive compensation package is an incentive compensation plan which
provides for cash payments to executive officers based on the
12
<PAGE>
performance of the Bank in relation to a set of performance goals and targets.
The institutional goals are recommended by management each year and approved by
the Committee and the Board of Directors. All officers of the Bank are eligible
to participate in the program. The incentive compensation of executive officers
is more closely linked to Bank performance, while the incentive compensation of
junior officers is more closely linked to personal performance.
Chief Executive Officer. The Committee recommended and the Board of
Directors awarded the Bank's President and Chief Executive Officer a salary
increase of 6.2%, or $30,000, for a new annual salary of $515,000 effective
February 1997. The decision to increase the Chief Executive Officer's salary was
based on normal cost of living adjustments, an analysis of the salaries of the
Chief Executive Officers of peer group financial institutions in the New York
metropolitan area and the significant contributions of the Chief Executive
Officer to the successful operations of the Bank. No specific formula was used
by the Committee to establish the President and Chief Executive Officer's salary
for fiscal 1998 nor did the Committee set specified salary levels based on the
achievement of particular quantitative financial measures of performance
targets. The Committee again reviewed the salary of the Bank's President and
Chief Executive Officer in February 1998, and using the same methodology as used
the prior year, awarded a salary increase of 5.83% or $30,000, for a new annual
salary of $545,000, effective March 1998.
The Organization Committee of the Bank
Willard N. Archie Robert B. Catell
Rohit M. Desai Chaim Y. Edelstein
Donald H. Elliott Robert W. Gelfman
Charles J. Hamm Scott M. Hand
Donald E. Kolowsky Janine Luke
Malcolm MacKay Wesley D. Ratfliff
Performance Graph
Pursuant to the rules and regulations of the SEC, the graph below
compares the performance of the Company's Common Stock with that of the Nasdaq
Composite Index (U.S. Companies) and the Nasdaq Bank Composite Index (banks and
bank holding companies, over 99% of which are based in the United States) from
March 17, 1998, the date the Company's common stock began trading on the Nasdaq
National Market, through March 31, 1998. The graph is based on the investment of
$100 in the Company's Common Stock at its closing price on March 17, 1998.
[GRAPHIC-GRAPH PLOTTED TO POINTS LISTED ON FOLLOWING PAGE]
13
<PAGE>
Period Ended
----------------------------
Index 3/17/98 3/31/98
- - --------------------------------- ------- -------
Independence Community Bank Corp. $100.0 $103.6
Nasdaq - Total U.S. $100.0 $103.4
Nasdaq - Banks $100.0 $101.7
Certain Relationship and Related Transactions
In accordance with applicable laws and regulations, the Bank offers
mortgage loans to its directors, officers and employees as well as members of
their immediate families for the financing of their primary residences and
certain other loans. These loans are generally made on substantially the same
terms as those prevailing at the time for comparable transactions with
non-affiliated persons. It is the belief of management that these loans neither
involve more than the normal risk of collectibility nor present other
unfavorable features. All such loans to directors and executive officers were
current as of March 31, 1998.
Section 22(h) of the Federal Reserve Act generally provides that any
credit extended by a savings institution, such as the Bank, to its executive
officers, directors and, to the extent otherwise permitted, principal
stockholder(s), or any related interest of the foregoing, must be on
substantially the same terms, including interest rate and collateral , as those
prevailing at the time for comparable transactions by the savings institution
with non-affiliated parties, unless the loans are made pursuant to a benefit or
compensation program that (i) is widely available to employees of the
institution and (ii) does not give preference to any director, executive officer
or principal stockholder, or certain affiliated interests of either, over other
employees of the savings institution, and must not involve more than the normal
risk of repayment or present other unfavorable features.
PROPOSAL TO ADOPT THE 1998 STOCK OPTION PLAN
General
The Board of Directors has adopted the Option Plan which is designed to
attract and retain qualified personnel in key positions, provide officers and
key employees with a proprietary interest in the Company and as an incentive to
contribute to the success of the Company and reward key employees for
outstanding performance. The Option Plan is also designed to attract and retain
qualified directors for the Company. The Option Plan provides for the grant of
incentive stock options intended to comply with the requirements of Section 422
of the Code ("incentive stock options"), non-incentive or compensatory stock
options and stock appreciation rights (collectively "Awards"). Awards will be
available for grant to officers, key employees and directors of the Company and
any subsidiaries, except that non-employee directors will be eligible to receive
only awards of non-incentive stock options. If stockholder approval is obtained,
options to acquire shares of Common Stock will be awarded to officers, key
employees and directors of the Company and the Bank with an exercise price equal
to the fair market value of the Common Stock on the date of grant.
Description of the Option Plan
The following description of the Option Plan is a summary of its terms
and is qualified in its entirety by reference to the Option Plan, a copy of
which is attached hereto as Appendix A.
Administration. The Option Plan will be administered and interpreted by
a committee of the Board of Directors ("Committee") that is comprised solely of
two or more non-employee directors. The members of the Committee will initially
consist of Messrs. Rohit M. Desai, Chaim Y. Edelstein, Donald H. Elliott and
Robert W. Gelfman.
14
<PAGE>
Stock Options. Under the Option Plan, the Board of Directors or the
Committee will determine which officers, key employees and non-employee
directors will be granted options, whether such options will be incentive or
compensatory options (in the case of options granted to employees), the number
of shares subject to each option, the exercise price of 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 both an
incentive stock and a compensatory option shall at least equal the fair market
value of a share of Common Stock on the date the option is granted.
Options granted to participants prior to March 14, 1999 will become
vested and exercisable at the rate of 20% per year on each annual anniversary of
the date of grant. Options granted after such date under the Option Plan shall
become vested and exercisable in the manner specified by the Committee.
Notwithstanding the foregoing, no vesting shall occur on or after a
participant's employment or service with the Company is terminated for any
reason other than his death, disability, or retirement. Unless the Committee or
Board of Directors shall specifically state otherwise at the time an option is
granted, all options granted to participants shall become vested and exercisable
in full on the date an optionee terminates his employment or service with the
Company or a subsidiary company because of his death, disability, or retirement
(except with respect to optionees who at the time of retirement are non-employee
directors or officers with the title Vice President or above ("Officers")). With
respect to non-employee directors and Officers, the Committee shall determine,
on its discretion, whether options held by such persons shall become fully
vested as of the date of retirement. In addition, all stock options will become
vested and exercisable in full on the effective date of a change in control of
the Company.
Each stock option or portion thereof shall be exercisable at any time
on or after it vests and is exercisable until the earlier of ten years after its
date of grant or six months after the date on which the optionee's employment
terminates (three years after termination of service in the case of non-employee
directors), unless extended by the Committee or the Board of Directors to a
period not to exceed five years from such termination. Unless stated otherwise
at the time an option is granted (i) if an optionee terminates his employment or
service with the Company as a result of disability or retirement without having
fully exercised his options, the optionee shall have three years following his
termination due to disability or retirement to exercise such options, and (ii)
if an optionee terminates his employment or service with the Company following a
change in control of the Company without having fully exercised his options, the
optionee shall have the right to exercise such options during the remainder of
the original ten year term of the option. However, failure to exercise incentive
stock options within three months after the date on which the optionee's
employment terminates may result in adverse tax consequences to the optionee. If
an optionee dies while serving as an employee or a non-employee director or
terminates employment or service as a result of disability and dies without
having fully exercised his options, the optionee's executors, administrators,
legatees or distributees of his estate shall have the right to exercise such
options during the one-year period following his death, provided no option will
be exercisable more than ten years from the date it was granted.
Stock options are non-transferable except by will or the laws of
descent and distribution. Notwithstanding the foregoing, an optionee who holds
non-qualified options may transfer such options 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 optionee who originally received the grant or to an
individual or trust to whom the optionee could have initially transferred the
option. Options which are so transferred shall be exercisable by the transferee
according to the same terms and conditions as applied to the optionee.
Payment for shares purchased upon the exercise of options may be made
either in cash, by certified or cashier's check or if permitted by the Committee
or the Board, by delivering shares of Common Stock (including shares acquired
pursuant to the exercise of an option) with a fair market value equal to the
total option price, by withholding some of the shares of Common Stock which are
being purchased upon exercise of an option, or any combination of the foregoing.
To the extent an optionee already owns shares of Common Stock prior to the
exercise of his or her option, such shares could be used (if permitted by
Committee or the Board) as payment for the exercise price of the option. If the
fair market value of a share of Common Stock at the time of exercise is greater
than the exercise price per share, this feature would enable the optionee to
acquire a number of shares of Common Stock upon exercise of the Option, which is
greater than the number of shares delivered as payment for the exercise price.
In addition, an optionee can exercise his or her option in whole or in part and
then deliver the shares acquired upon such exercise (if permitted by the
Committee or the Board) as-payment for the exercise price of all or part of his
options. Again, if the fair market value of a share of Common Stock at the time
of exercise is greater than the exercise price per share, this feature would
enable the optionee to either (1) reduce the amount of cash required to receive
a fixed number of shares upon exercise of the option or (2) receive a greater
number of shares upon exercise of the option for the same amount of cash that
would have otherwise been used.
15
<PAGE>
Because options may be exercised in part from time to time, the ability to
deliver Common Stock as payment of the exercise price could enable the optionee
to turn a relatively small number of shares into a large number of shares. In
addition, an optionee can elect, with the Committee's concurrence, to defer the
delivery of the proceeds of any compensatory option not transferred under the
terms of the Option Plan. Such deferral must comply with the provisions of the
Option Plan and other rules and regulations as may be established by the
Committee.
Stock Appreciation Rights. Under the Option Plan, the Board of
Directors or the Committee is authorized to grant rights to optionees ("stock
appreciation rights") under which an optionee may surrender any exercisable
incentive stock option or compensatory stock option or part thereof in return
for payment by the Company to the optionee of cash or Common Stock in an amount
equal to the excess of the fair market value of the shares of Common Stock
subject to option at the time over the option price of such shares, or a
combination of cash and Common Stock. Stock Appreciation Rights may be granted
concurrently with the stock options to which they relate or at any time
thereafter which is prior to the exercise or expiration of such options. The
proceeds of the exercise of a stock appreciation right may also be deferred as
provided by the provisions of the Option Plan.
Number of Shares Covered by the Option Plan. A total of 7,041,088
shares of Common Stock, which is equal to 10% of the Common Stock sold in the
Conversion (exclusive of shares of Common Stock issued to the Independence
Community Foundation), has been reserved for future issuance pursuant to the
Option Plan. In the event of a stock split, reverse stock split, subdivision,
stock dividend or any other capital adjustment, the number of shares of Common
Stock under the Option Plan, the number of shares to which any Award relates and
the exercise price per share under any option or stock appreciation right shall
be adjusted to reflect such increase or decrease in the total number of shares
of Common Stock outstanding or such capital adjustment. The Option Plan provides
that grants to each employee and non-employee director shall not exceed 25% and
5% of the shares of Common Stock available under the Option Plan, respectively.
Awards made to non-employee directors in the aggregate may not exceed 30% of the
number of shares available under the Option Plan.
Amendment and Termination of the Option Plan. Unless sooner terminated,
the Option Plan shall continue in effect for a period of ten years from July 30,
1998, the date the Option Plan was adopted by the Board of Directors.
Termination of the Option Plan shall not affect any previously granted Awards.
Federal Income Tax Consequences. Under current provisions of the Code,
the federal income tax treatment of incentive stock options and compensatory
stock options is different. As regards incentive stock options, an optionee who
meets certain holding period requirements will not recognize income at the time
the option is granted or at the time the option is exercised, and a federal
income tax deduction generally will not be available to the Company at any time
as a result of such grant or exercise. With respect to compensatory stock
options, the difference between the fair market value on the date of exercise
and the option exercise price generally will be treated as compensation income
upon exercise, and the Company will be entitled to a deduction in the amount of
income so recognized by the optionee. Upon the exercise of a stock appreciation
right, the holder will realize income for federal income tax purposes equal to
the amount received by him, whether in cash, shares of stock or both, and the
Company will be entitled to a deduction for federal income tax purposes in the
same amount.
Section 162(m) of the Code generally limits the deduction for certain
compensation in excess of $1.0 million per year paid by a publicly-traded
corporation to its chief executive officer and the four other most highly
compensated executive officers ("covered executives"). Certain types of
compensation, including compensation based on performance goals, are excluded
from the $1.0 million deduction limitation. In order for compensation to qualify
for this exception: (i) it must be paid solely on account of the attainment of
one or more preestablished, objective performance goals; (ii) the performance
goal must be established by a compensation committee consisting solely of two or
more outside directors, as defined; (iii) the material terms under which the
compensation is to be paid, including performance goals, must be disclosed to
and approved by stockholders in a separate vote prior to payment; and (iv) prior
to payment, the compensation committee must certify that the performance goals
and any other material terms were in fact satisfied (the "Certification
Requirement").
Final Treasury regulations issued in July 1996 provide that
compensation attributable to a stock option or stock appreciation right is
deemed to satisfy the requirement that compensation be paid solely on account of
the attainment of one or more performance goals if: (i) the grant is made by a
compensation committee consisting solely of two or more outside directors, as
defined; (ii) the plan under which the option or stock appreciation right is
granted states the maximum number of shares with respect to which options or
stock appreciation rights may be granted during a specified period to any
employee; and (iii) under the terms of the option or stock appreciation right,
the amount of compensation
16
<PAGE>
the employee could receive is based solely on an increase in the value of the
stock after the date of grant or award. The Certification Requirement is not
necessary if these other requirements are satisfied.
The Option Plan has been designed to meet the requirements of Section
162(m) of the Code and, as a result, the Company believes that compensation
attributable to stock options and stock appreciation rights granted under the
Option Plan in accordance with the foregoing requirements will be fully
deductible under Section 162(m) of the Code. If the non-excluded compensation of
a covered executive exceeded $1.0 million, however, compensation attributable to
other awards, such as restricted stock, may not be fully deductible unless the
grant or vesting of the award is contingent on the attainment of a performance
goal determined by a compensation committee meeting specified requirements and
disclosed to and approved by the stockholders of the Company. The Board of
Directors believes that the likelihood of any impact on the Company from the
deduction limitation contained in Section 162(m) of the Code is remote at this
time.
The above description of tax consequences under federal law is
necessarily general in nature and does not purport to be complete. Moreover,
statutory provisions are subject to change, as are their interpretations, and
their application may vary in individual circumstances. Finally, the
consequences under applicable state and local income tax laws may not be the
same as under the federal income tax laws.
Accounting Treatment. Stock appreciation rights will, in most cases,
require a charge against the earnings of the Company each year representing
appreciation in the value of such rights over periods in which they become
exercisable. Such charge is based on the difference between the exercise price
specified in the related option and the current market price of the Common
Stock. In the event of a decline in the market price of the Common Stock
subsequent to a charge against earnings related to the estimated costs of stock
appreciation rights, a reversal of prior charges is made in the amount of such
decline (but not to exceed aggregate prior charges).
Neither the grant nor the exercise of an incentive stock option or a
non-qualified stock option under the Option Plan currently requires any charge
against earnings under generally accepted accounting principles. In October
1995, the Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," which is effective for transactions entered into after December
15, 1995. This Statement establishes financial accounting and reporting
standards for stock-based employee compensation plans. This Statement defines a
fair value method of accounting for an employee stock option or similar equity
instrument and encourages all entities to adopt that method of accounting for
all of their employee stock compensation plans. However, it also allows an
entity to continue to measure compensation cost for those plans using the
intrinsic value method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees." Under the fair value method,
compensation cost is measured at the grant date based on the value of the award
and is recognized over the service period, which is usually the vesting period.
Under the intrinsic value method, compensation cost is the excess, if any, of
the quoted market price of the stock at grant date or other measurement date
over the amount an employee must pay to acquire the stock. The Company
anticipates that it will use the intrinsic value method, in which event pro
forma disclosure will be included in the footnotes to the Company's financial
statements to show what net income and earnings per share would have been if the
fair value method had been utilized. If the Company elects to utilize the fair
value method, its net income and earnings per share may be adversely affected.
Stockholder Approval. No Awards will be granted under the Option Plan
unless the Option Plan is approved by stockholders. Stockholder ratification of
the Option Plan will also satisfy Nasdaq Stock Market ("Nasdaq Stock Market")
listing, federal tax, and New York State Banking Department ("Department") and
Federal Deposit Insurance Corporation ("FDIC") requirements.
17
<PAGE>
Awards to be Granted. The Board of Directors of the Company adopted the
Option Plan and the Committee established thereunder intends to grant options to
executive officers, employees and non-employee directors of the Company and the
Bank. The initial grants shall be effective upon stockholder approval of the
Option Plan with a per share exercise price equal to the fair market value of a
share of Common Stock on such date. The following table sets forth certain
information with respect to such grants.
<TABLE>
<CAPTION>
Number of Shares
Name of Individual or Subject to
Number of Persons in Group Title Stock Options
- - -------------------------- ----- -------------
<S> <C> <C>
Charles J. Hamm Chairman, President and Chief Executive 1,408,218
Officer
Joseph S. Morgano Executive Vice President 704,109
John B. Zurell Executive Vice President - Chief Financial 352,054
Officer
Terence J. Mitchell Executive Vice President 352,054
Thomas J. Brady Senior Vice President and Treasurer 176,027
All executive officers as 3,188,489
a group (seven persons)
All non-employee directors 2,112,319(1)
as a group (11 persons)
</TABLE>
- - -----------------
(1) Each director will receive an option covering 192,029 shares
The terms of the initial options granted to all recipients shall
provide that they will be vested and exercisable 20% per year over a five-year
period commencing on the first anniversary of the date of grant.
The Committee is also considering awarding options to certain
non-executive officers and key employees of the Bank.
On August 4, 1998, the closing price of a share of Common Stock on the
Nasdaq Stock Market was $14.6875.
Regulatory Requirements. The Option Plan and the Recognition Plan
discussed hereinafter (collectively the "Plans") comply with applicable
Department and FDIC regulations. However, neither the Department nor the FDIC
has endorsed or approved the Plans.
Under Department regulations, certain stock benefit plans established
or implemented within one year following the completion of a mutual to stock
conversion are required to contain certain restrictions and limitations, which
are contained in the Plans. Specifically, the Department and FDIC regulations
provide that the Option Plan and the Recognition Plan may not be implemented
during the first year after the Conversion unless approved by a majority of the
Company's stockholders at a duly called meeting of stockholders to be held no
sooner than six months after the completion after the Conversion. In addition,
under such regulations, grants of options or stock awards to each employee and
each non-employee director may not exceed 25% and 5%, respectively, of the
shares of Common Stock available under the Option Plan and Recognition Plan.
Furthermore, awards to non-employee directors in the aggregate may not exceed
30% of the number of shares of Common Stock available under the Option Plan and
the Recognition Plan.
The Board of Directors recommends that stockholders vote FOR adoption
of the 1998 Stock Option Plan.
18
<PAGE>
PROPOSAL TO ADOPT THE 1998 RECOGNITION
AND RETENTION PLAN AND TRUST AGREEMENT
General
The Board of Directors of the Company has adopted the Recognition Plan,
the objective of which is to enable the Company to provide officers, key
employees and directors with a proprietary interest in the Company and as an
incentive to contribute to its success. Officers, key employees and directors of
the Company and the Savings Bank who are selected by the Board of Directors of
the Company or members of a committee appointed by the Board will be eligible to
receive benefits under the Recognition Plan. If stockholder approval is
obtained, shares will be granted to officers, key employees and directors as
determined by the Committee or the Board of Directors.
Description of the Recognition Plan
The following description of the Recognition Plan is a summary of its
terms and is qualified in its entirety by reference to the Recognition Plan, a
copy of which is attached hereto as Appendix B.
Administration. A committee of the Board of Directors of the Company
will administer the Recognition Plan, which shall consist of at least two
non-employee directors of the Company. The members of the Committee will
initially consist of Messrs. Desai, Edelstein, Elliott and Gelfman, who will
also serve as trustees of the trust established pursuant to the Recognition Plan
("Trust"). The trustees will have the responsibility to invest all funds
contributed by the Company to the Trust.
Upon stockholder approval of the Recognition Plan, the Company will
acquire 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
sold in the Conversion, or 2,816,435 shares. It is currently anticipated that
these shares will be acquired through open market purchases to the extent
available, although the Company reserves the right to issue previously unissued
shares or treasury shares to the Recognition Plan. The issuance of new shares by
the Company would be dilutive to the voting rights of existing stockholders and
to the Company's book value per share and earnings per share.
Grants. Shares of Common Stock granted pursuant to the Recognition Plan
prior to March 14, 1999 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. Shares granted after March 13, 1999 shall vest
upon such terms and conditions as established by the Committee. 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 Trust. In addition, any
cash dividends or stock dividends declared in respect of unvested share awards
will be held by the Trust for the benefit of the recipients and such dividends,
including any interest thereon, will be paid out proportionately by the Trust to
the recipients thereof as soon as practicable after the share awards become
earned.
If a recipient terminates employment or service with the Company for
reasons other than death, disability or retirement, the recipient will forfeit
all rights to the allocated shares under restriction. All shares subject to an
award held by a recipient whose employment or service with the Company or any
subsidiary terminates due to death, disability or retirement (other than
recipients who are non-employee directors or Officers) shall be deemed earned as
of the recipient's last day of employment or service with the Company or any
subsidiary and shall be distributed as soon as practicable thereafter. With
respect to non-employee directors and Officers, the Committee, in its
discretion, will determine whether such persons' grants shall be deemed fully
earned as of their retirement. In addition, following a change in control of the
Company all shares subject to an award held by a recipient shall be deemed
earned as of the effective time of such change of control and shall be
distributed as soon as practicable thereafter. Under the terms of the
Recognition Plan, recipients can, with the concurrence of the Committee and
subject to any rules and regulations established thereby and the provisions of
the Recognition Plan, defer receipt of the shares subject to an award after the
lapsing of the restrictions on vesting related thereto.
Performance Share Awards. The Recognition Plan provides the Committee
with the ability to condition or restrict the vesting or exercisability of any
Recognition Plan award upon the achievement of performance targets or goals as
set forth under the Recognition Plan. Any Recognition Plan award subject to such
conditions or restrictions is considered to be a "Performance Recognition Plan
Award." Subject to the express provisions of the Recognition Plan and as
discussed in this paragraph, the Committee has discretion to determine the terms
of any Performance Recognition
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Award, including the amount of the award, or a formula for determining such, the
performance criteria and level of achievement related to these criteria which
determine the amount of the award granted, issued, retainable and/or vested, the
period as to which performance shall be measured for determining achievement of
performance (a "performance period"), the timing of delivery of any awards
earned, forfeiture provisions, the effect of termination of timing of delivery
of any awards earned, forfeiture provisions, the effect of termination of
employment for various reasons, and such further terms and conditions, in each
case not inconsistent with the Recognition Plan, as may be determined from time
to time by the Committee. The performance criteria upon which Performance Share
Awards are granted, issued, retained and/or vested may be based on financial
performance and/or personal evaluations, except that for any Performance Share
Award that is intended by the Committee to satisfy the requirements for
"performance based compensation" under Code Section 162(m), the performance
criteria shall be a measure based on one or more Qualifying Performance Criteria
(as defined below). Notwithstanding satisfaction of any performance goals, the
number of shares granted, issued, retainable and/or vested under a Performance
Share Award may be adjusted by the Committee on the basis of such further
considerations as the Committee in its sole discretion shall determine. However,
the Committee may not increase the amount earned upon satisfaction of any
performance goal by any participant in the Recognition Plan who is a "covered
employee" within the meaning of Section 162(m) of the Code.
Subject to stockholder approval of the Plan, the performance criteria
for any Performance Share Award that is intended to satisfy the requirements for
"performance based compensation" under the code Section 162(m) shall be based
upon any one or more of the following performance criteria, either individually,
alternatively or any combination, applied to either the Company as a whole or to
a business unit or subsidiary, either individually, alternatively or in any
combination, and measured either on an absolute basis or relative to a
pre-established target, to previous years' results or to a designated comparison
group, in each case as preestablished by the Committee under the terms of the
Award: net income, as adjusted for non-recurring items; cash earnings; earnings
per share; cash earnings per share; return on average equity; return on average
assets; assets; stock price; total stockholder return; capital; net interest
income; market share; cost control or efficiency ratio; and asset growth. It is
expected that a substantial portion of the awards proposed to be granted to
Messrs. Hamm and Morgano as well as potentially other senior officers will be
performance based. In that regard, the Committee will engage outside
compensation consultants to assist it in establishing such performance-based
targets.
Federal Income Tax Consequences. Pursuant to Section 83 of the Code,
recipients of Recognition Plan awards will recognize ordinary income in an
amount equal to the fair market value of the shares of Common Stock granted to
them at the time that the shares vest and become transferable. A recipient of a
Recognition Plan award may also elect, however, to accelerate the recognition of
income with respect to his or her grant to the time when shares of Common Stock
are first transferred to him or her, notwithstanding the vesting schedule of
such awards. The Company will be entitled to deduct as a compensation expense
for tax purposes the same amounts recognized as income by recipients of
Recognition Plan awards in the year in which such amounts are included in
income.
Section 162(m) of the Code generally limits the deduction for certain
compensation in excess of $1.0 million per year paid by a publicly-traded
corporation to its covered executives. Certain types of compensation, including
compensation based on performance goals, are excluded from the $1.0 million
deduction limitation. In order for compensation to qualify for this exception:
(i) it must be paid solely on account of the attainment of one or more
preestablished, objective performance goals; (ii) the performance goal must be
established by a compensation committee consisting solely of two or more outside
directors, as defined; (iii) the material terms under which the compensation is
to be paid, including performance goals, must be disclosed to and approved by
stockholders in a separate vote prior to payment; and (iv) prior to payment, the
compensation committee must certify that the performance goals and any other
material terms were in fact satisfied.
The Recognition Plan has been designed to meet the requirements of
Section 162(m) of the Code and, as a result, the Company believes that
compensation attributable to Performance Share Awards granted under the
Recognition Plan in accordance with the foregoing requirements will be fully
deductible under Section 162(m) of the Code. The Board of Directors believes
that the likelihood of any impact on the Company from the deduction limitation
contained in Section 162(m) of the Code is remote at this time.
The above description of tax consequences under federal law is
necessarily general in nature and does not purport to be complete. Moreover,
statutory provisions are subject to change, as are their interpretations, and
their
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application may vary in individual circumstances. Finally, the consequences
under applicable state and local income tax laws may not be the same as under
the federal income tax laws.
Accounting Treatment. For a discussion of SFAS No. 123, see "Proposal
to Adopt the 1998 Stock Option Plan Description of Option Plan - Accounting
Treatment." Under the intrinsic value method, the Company will also recognize a
compensation expense as shares of Common Stock granted pursuant to the
Recognition Plan vest. The amount of compensation expense recognized for
accounting purposes is based upon the fair market value of the Common Stock at
the date of grant to recipients, rather than the fair market value at the time
of vesting for tax purposes. The vesting of plan share awards will have the
effect of increasing the Company's compensation expense.
Stockholder Approval. No shares will be granted under the Recognition
Plan unless the Recognition Plan is approved by stockholders.
Shares to be Granted. The Board of Directors of the Company adopted the
Recognition Plan and the Committee established thereunder intends to grant
shares to executive officers, key employees and non-employee directors of the
Company and the Bank. The Recognition Plan provides that grants to each employee
and each non-employee director shall not exceed 25% and 5% of the shares of
Common Stock available under the Recognition Plan, respectively. Awards made to
non-employee directors in the aggregate may not exceed 30% of the number of
shares available under the Recognition Plan. The initial grants shall be
effective upon stockholder approval of the Recognition Plan. The following table
sets forth certain information with respect to such grants.
<TABLE>
<CAPTION>
Number of Shares
Name of Individual or Subject to
Number of Persons in Group Title Stock Options
- - -------------------------- ----- -------------
<S> <C> <C>
Charles J. Hamm Chairman, President and Chief 563,287
Executive Officer
Joseph S. Morgano Executive Vice President 281,644
John B. Zurell Executive Vice President - 140,822
Chief Financial Officer
Terence J. Mitchell Executive Vice President 140,822
Thomas J. Brady Senior Vice President and Treasurer 70,411
All executive officers as a group 1,277,397
(seven persons)
All non-employee directors as 844,932(1)
a group (11 persons)
</TABLE>
- - ------------
(1) Each director will receive a grant of 76,812 shares.
The Committee is also considering making grants to certain
non-executive officers and key employees of the Bank.
The terms of the stock awards initially granted to all recipients shall
provide that they will be vested and exercisable 20% per year (subject with
respect to Performance Share Awards, to the satisfaction of the performance
target(s)) over a five-year period commencing on the first anniversary of the
date of grant.
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Regulatory Requirements. For a discussion of the Department and FDIC
requirements related to the Recognition Plan see "Proposal to Adopt the 1998
Stock Option Plan - Description of the Option Plan - Regulatory Requirements."
The Board of Directors recommends that stockholders vote FOR adoption
of the 1998 Recognition and Retention Plan and Trust Agreement.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Ernst & Young LLP,
independent certified public accountants, to perform the audit of the Company's
financial statements for the year ending March 31, 1999, 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 Ernst & Young LLP 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. Ernst & Young LLP will have one or
more representatives at the Annual Meeting who will have an opportunity to make
a statement, if they so desire, and who will be available to respond to
appropriate questions.
The Board of Directors recommends that you vote FOR the ratification of
the appointment of Ernst & Young LLP as independent auditors for the fiscal year
ending March 31, 1999.
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 July 1999, must be
received at the principal executive offices of the Company, 195 Montague Street,
Brooklyn, New York 11201, Attention: John K. Schnock, Senior Vice President,
Secretary and Counsel, no later than March 1, 1999.
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 Section 2.14 of the Company's
Bylaws, 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 120 days prior to the mailing of proxy materials with
respect to the immediately preceding annual meeting of stockholders of the
Company except with respect to the first Annual Meeting notice of which must
have been delivered by March 26, 1998. No such proposals were received by such
date. 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 Bylaws.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year
ended March 31, 1998 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-K
for fiscal 1998 required to be filed under the Exchange Act. Such written
request should be directed to John K. Schnock, Senior Vice President, Secretary
and Counsel, Independence Community Bank Corp. 195 Montague Street, Brooklyn,
New York 11201. The Form 10-K is not part of the proxy solicitation materials.
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<PAGE>
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 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. 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 has retained Corporate Investor Communications, Inc., a professional
proxy solicitation firm, to assist in the solicitation of proxies. Such firm
will be paid a fee of $4,000, plus reimbursement for out-of-pocket expenses and
a fee for each stockholder contacted. 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 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.
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<PAGE>
APPENDIX A
INDEPENDENCE COMMUNITY BANK CORP.
1998 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Independence Community Bank Corp. (the "Corporation") hereby
establishes this 1998 Stock Option Plan (the "Plan") upon the terms and
conditions hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of this Plan is to improve the growth and profitability of
the Corporation and its Subsidiary Companies by providing Employees and
Non-Employee Directors with a proprietary interest in the Corporation as an
incentive to contribute to the success of the Corporation and its Subsidiary
Companies, and rewarding Employees and Non-Employee Directors for outstanding
performance. All Incentive Stock Options issued under this Plan are intended to
comply with the requirements of Section 422 of the Code, and the regulations
thereunder, and all provisions hereunder shall be read, interpreted and applied
with that purpose in mind. Each recipient of an Award hereunder is advised to
consult with his or her personal tax advisor with respect to the tax
consequences under federal, state, local and other tax laws of the receipt
and/or exercise of an Award hereunder.
ARTICLE III
DEFINITIONS
3.01 "Award" means an Option or Stock Appreciation Right granted
pursuant to the terms of this Plan.
3.02 "Bank" means Independence Savings Bank, the wholly owned
subsidiary of the Corporation.
3.03 "Board" means the Board of Directors of the Corporation.
3.04 "Change in Control of the Corporation" shall mean the occurrence
of any of the following: (i) the acquisition of control of the Corporation as
defined in 12 C.F.R. ss.574.4, unless a presumption of control is successfully
rebutted or unless the transaction is exempted by 12 C.F.R. ss.574.3(c)(vii), or
any successor to such sections; (ii) an event that would be required to be
reported in response to Item 1(a)of Form 8-K or Item 6(e) of Schedule 14A of
Regulation 14A pursuant to the Exchange Act, or any successor thereto, whether
or not any class of securities of the Corporation is registered under the
Exchange Act; (iii) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power of the
Corporation's then outstanding securities except for any securities purchased by
the Corporation or the Bank; or (iv) during any period of thirty-six consecutive
months during the term of an Option, individuals who at the beginning of such
period constitute the Board of Directors of the Corporation cease for any reason
to constitute at least a majority thereof unless the election, or the nomination
for election by stockholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period.
3.05 "Code" means the Internal Revenue Code of 1986, as amended.
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3.06 "Committee" means a committee of two or more directors appointed
by the Board pursuant to Article IV hereof each of whom shall be a Non-Employee
Director as defined in Rule 16b-3(b)(3)(i) of the Exchange Act or any successor
thereto.
3.07 "Common Stock" means shares of the common stock, par value $.01
per share, of the Corporation.
3.08 "Disability" means any physical or mental impairment which
qualifies an individual for disability benefits under the applicable long-term
disability plan maintained by the Corporation or a Subsidiary Company, or, if no
such plan applies, which would qualify such individual for disability benefits
under the long-term disability plan maintained by the Corporation, if such
individual were covered by that plan.
3.09 "Effective Date" means the day upon which the Board approves this
Plan.
3.10 "Employee" means any person who is employed by the Corporation or
a Subsidiary Company, or is an Officer of the Corporation or a Subsidiary
Company, but not including directors who are not also Officers of or otherwise
employed by the Corporation or a Subsidiary Company.
3.11 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
3.12 "Fair Market Value" shall be equal to the fair market value per
share of the Corporation's Common Stock on the date an Award is granted. For
purposes hereof, the Fair Market Value of a share of Common Stock shall be the
closing sale price of a share of Common Stock on the date in question (or, if
such day is not a trading day in the U.S. markets, on the nearest preceding
trading day), as reported with respect to the principal market (or the composite
of the markets, if more than one) or national quotation system in which such
shares are then traded, or if no such closing prices are reported, the mean
between the high bid and low asked prices that day on the principal market or
national quotation system then in use, or if no such quotations are available,
the price furnished by a professional securities dealer making a market in such
shares selected by the Committee.
3.13 "Incentive Stock Option" means any Option granted under this Plan
which the Board intends (at the time it is granted) to be an incentive stock
option within the meaning of Section 422 of the Code or any successor thereto.
3.14 "Non-Employee Director" means a member of the Board of the
Corporation or Board of Directors of the Bank or any successor thereto who is
not an Officer or Employee of the Corporation or any Subsidiary Company.
3.15 "Non-Qualified Option" means any Option granted under this Plan
which is not an Incentive Stock Option.
3.16 "Offering" means the offering of Common Stock to the public in
connection with the reorganization of the Bank and its mutual holding company
parent to the stock holding company form of organization and the issuance of the
capital stock of the Bank to the Corporation.
3.17 "Officer" means an Employee whose position in the Corporation or
Subsidiary Company is that of a corporate officer, as determined by the Board.
3.18 "Option" means a right granted under this Plan to purchase Common
Stock.
3.19 "Optionee" means an Employee or Non-Employee Director or former
Employee or Non-Employee Director to whom an Option is granted under the Plan.
3.20 "Retirement" means a termination of employment which constitutes a
"retirement" under any applicable qualified pension benefit plan maintained by
the Corporation or a Subsidiary Corporation, or, if no such
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<PAGE>
plan is applicable, which would constitute "retirement" under the Corporation's
pension benefit plan, if such individual were a participant in that plan. With
respect to Non-Employee Directors, retirement means retirement from service on
the Board of Directors of the Corporation or the Bank or any successor thereto
(including service as an Director Emeritus) after attaining the age of 70.
3.21 "Stock Appreciation Right" means a right to surrender an Option in
consideration for a payment by the Corporation in cash and/or Common Stock, as
provided in the discretion of the Board or the Committee in accordance with
Section 8.10.
3.22 "Subsidiary Companies" means those subsidiaries of the
Corporation, including the Bank, which meet the definition of "subsidiary
corporations" set forth in Section 425(f) of the Code, at the time of granting
of the Option in question.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Duties of the Committee. The Plan shall be administered and
interpreted by the Committee, as appointed from time to time by the Board
pursuant to Section 4.02. The Committee shall have the authority to adopt, amend
and rescind such rules, regulations and procedures as, in its opinion, may be
advisable in the administration of the Plan, including, without limitation,
rules, regulations and procedures which (i) deal with satisfaction of an
Optionee's tax withholding obligation pursuant to Section 12.02 hereof, (ii)
include arrangements to facilitate the Optionee's ability to borrow funds for
payment of the exercise or purchase price of an Award, if applicable, from
securities brokers and dealers, and (iii) include arrangements which provide for
the payment of some or all of such exercise or purchase price by delivery of
previously-owned shares of Common Stock or other property and/or by withholding
some of the shares of Common Stock which are being acquired. The interpretation
and construction by the Committee of any provisions of the Plan, any rule,
regulation or procedure adopted by it pursuant thereto or of any Award shall be
final and binding in the absence of action by the Board.
4.02 Appointment and Operation of the Committee. The members of the
Committee shall be appointed by, and will serve at the pleasure of, the Board.
The Board from time to time may remove members from, or add members to, the
Committee, provided the Committee shall continue to consist of two or more
members of the Board, each of whom shall be a Non-Employee Director, as defined
in Rule 16b-3(b)(3)(i) of the Exchange Act or any successor thereto. In
addition, each member of the Committee shall be an "outside director" within the
meaning of Section 162(m) of the Code and regulations thereunder at such times
as is required under such regulations. The Committee shall act by vote or
written consent of a majority of its members. Subject to the express provisions
and limitations of the Plan, the Committee may adopt such rules, regulations and
procedures as it deems appropriate for the conduct of its affairs. It may
appoint one of its members to be chairman and any person, whether or not a
member, to be its secretary or agent. The Committee shall report its actions and
decisions to the Board at appropriate times but in no event less than one time
per calendar year.
4.03 Revocation for Misconduct. The Board or the Committee may by
resolution immediately revoke, rescind and terminate any Option, or portion
thereof, to the extent not yet vested, or any Stock Appreciation Right, to the
extent not yet exercised, previously granted or awarded under this Plan to an
Employee who is discharged from the employ of the Corporation or a Subsidiary
Company for cause, which, for purposes hereof, 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. Options granted
to a Non-Employee Director who is removed for cause pursuant to the
Corporation's Certificate of Incorporation and Bylaws or the Bank's Restated
Organization Certificate and Bylaws shall terminate as of the effective date of
such removal.
4.04 Limitation on Liability. Neither the members of the Board nor any
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan, any rule, regulation or procedure
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adopted by it pursuant thereto or any Awards granted under it. If a member of
the Board or the Committee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Corporation
shall, subject to the requirements of applicable laws and regulations, indemnify
such member against all liabilities and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of the
Corporation and its Subsidiary Companies and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
4.05 Compliance with Law and Regulations. All Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
The Corporation shall not be required to issue or deliver any certificates for
shares of Common Stock prior to the completion of any registration or
qualification of or obtaining of consents or approvals with respect to such
shares under any federal or state law or any rule or regulation of any
government body, which the Corporation shall, in its sole discretion, determine
to be necessary or advisable. Moreover, no Option or Stock Appreciation Right
may be exercised if such exercise would be contrary to applicable laws and
regulations.
4.06 Restrictions on Transfer. The Corporation may place a legend upon
any certificate representing shares acquired pursuant to an Award granted
hereunder noting that the transfer of such shares may be restricted by
applicable laws and regulations.
ARTICLE V
ELIGIBILITY
Awards may be granted to such Employees and Non-Employee Directors of
the Corporation and its Subsidiary Companies as may be designated from time to
time by the Board or the Committee. Awards may not be granted to individuals who
are not Employees or Non-Employee Directors of either the Corporation or its
Subsidiary Companies. Non-Employee Directors shall be eligible to receive only
Awards of Non-Qualified Options pursuant to this Plan.
ARTICLE VI
COMMON STOCK COVERED BY THE PLAN
6.01 Option Shares. The aggregate number of shares of Common Stock
which may be issued pursuant to this Plan, subject to adjustment as provided in
Article IX, shall be 7,041,088, which is equal to 10% of the shares of Common
Stock issued in the Offering. None of such shares shall be the subject of more
than one Award at any time, but if an Option as to any shares is surrendered
before exercise, or expires or terminates for any reason without having been
exercised in full, or for any other reason ceases to be exercisable, the number
of shares covered thereby shall again become available for grant under the Plan
as if no Awards had been previously granted with respect to such shares.
Notwithstanding the foregoing, if an Option is surrendered in connection with
the exercise of a Stock Appreciation Right, the number of shares covered thereby
shall not be available for grant under the Plan. During the time this Plan
remains in effect, grants to each Employee and each Non-Employee Director shall
not exceed 25% and 5% of the shares of Common Stock available under the Plan,
respectively. Awards made to Non-Employee Directors in the aggregate may not
exceed 30% of the number of shares available under this Plan.
6.02 Source of Shares. The shares of Common Stock issued under the Plan
may be authorized but unissued shares, treasury shares or shares purchased by
the Corporation on the open market or from private sources for use under the
Plan.
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ARTICLE VII
DETERMINATION OF
AWARDS, NUMBER OF SHARES, ETC.
The Board or the Committee shall, in its discretion, determine from
time to time which Employees and Non-Employee Directors will be granted Awards
under the Plan, the number of shares of Common Stock subject to each Award,
whether each Option will be an Incentive Stock Option or a Non-Qualified Stock
Option (in the case of Employees) and the exercise price of an Option. In making
all such determinations there shall be taken into account the duties,
responsibilities and performance of each respective Employee and Non-Employee
Director, his present and potential contributions to the growth and success of
the Corporation, his salary and such other factors deemed relevant to
accomplishing the purposes of the Plan.
ARTICLE VIII
OPTIONS AND STOCK APPRECIATION RIGHTS
Each Option granted hereunder shall be on the following terms and
conditions:
8.01 Stock Option Agreement. The proper Officers on behalf of the
Corporation and each Optionee shall execute a Stock Option Agreement which shall
set forth the total number of shares of Common Stock to which it pertains, the
exercise price, whether it is a Non-Qualified Option or an Incentive Stock
Option, and such other terms, conditions, restrictions and privileges as the
Board or the Committee in each instance shall deem appropriate, provided they
are not inconsistent with the terms, conditions and provisions of this Plan.
Each Optionee shall receive a copy of his executed Stock Option Agreement.
8.02 Option Exercise Price.
(a) Incentive Stock Options. The per share price at which the
subject Common Stock may be purchased upon exercise of an Incentive Stock Option
shall be no less than one hundred percent (100%) of the Fair Market Value of a
share of Common Stock at the time such Incentive Stock Option is granted, except
as provided in Section 8.09(b).
(b) Non-Qualified Options. The per share price at which the
subject Common Stock may be purchased upon exercise of a Non-Qualified Option
shall be established by the Committee at the time of grant, but in no event
shall be less than the one hundred percent (100%) of the Fair Market Value of a
share of Common Stock at the time such Non-Qualified Option is granted.
8.03 Vesting and Exercise of Options.
(a) General Rules. Incentive Stock Options and Non-Qualified
Options granted prior to March 14, 1999 shall become vested and exercisable at
the rate of 20% per year over five years, commencing one year from the date of
grant and an additional 20% shall vest on each successive anniversary of the
date the Option was granted, and the right to exercise shall be cumulative.
Incentive Stock Options and Non-Qualified Options granted subsequent to March
13, 1999 shall become vested and exercisable at the rate, to the extent and
subject to such limitations as may be specified by the Committee.
Notwithstanding the foregoing, except as provided in Section 8.03(b) hereof, no
vesting shall occur on or after an Employee's employment or service as a
Non-Employee Director with the Corporation and all Subsidiary Companies is
terminated for any reason other than his death, Disability, Retirement or in the
event of a Change in Control of the Corporation. In determining the number of
shares of Common Stock with respect to which Options are vested and/or
exercisable, fractional shares will be rounded up to the nearest whole number if
the fraction is 0.5 or higher, and down if it is less.
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(b) Accelerated Vesting. Unless the Board or the Committee shall
specifically state otherwise at the time an Option is granted, all Options
granted under this Plan shall become vested and exercisable in full on the date
an Optionee terminates his employment with the Corporation or a Subsidiary
Company or service as a Non-Employee Director because of his death or
Disability. All Options hereunder shall become immediately vested and
exercisable in full on the date an Optionee (who at the time of such termination
is not a Non-Employee Director or Officer of the Corporation or a Subsidiary
Corporation with the title of Vice President or higher) terminates his
employment with the Corporation or a Subsidiary Corporation due to Retirement.
With respect to an Optionee who is a Non-Employee Director or Officer of the
Corporation or a Subsidiary Corporation with the title of Vice President or
higher, the Committee may determine, in its discretion, that all unvested
Options shall become immediately vested and exercisable in full on the date such
Optionee terminates his employment or service due to Retirement. All outstanding
Options hereunder shall become immediately vested and exercisable in full as of
the effective date of a Change in Control of the Corporation.
8.04 Duration of Options.
(a) General Rule. Except as provided in Sections 8.04(b) and
8.09, each Option or portion thereof granted to an Employee shall be exercisable
at any time on or after it vests and becomes exercisable until the earlier of
(i) ten (10) years after its date of grant or (ii) six (6) months after the date
on which the Employee ceases to be employed by the Corporation and all
Subsidiary Companies, unless the Board or the Committee in its discretion
decides at the time of grant or thereafter to extend such period of exercise
upon termination of employment to a period not exceeding five (5) years.
Except as provided in Section 8.04(b), each Option or portion thereof
granted to a Non-Employee Director shall be exercisable at any time on or after
it vests and becomes exercisable until the earlier of (i) ten (10) years after
its date of grant or (ii) three (3) years after the date on which the
Non-Employee Director ceases to serve as a director of the Corporation and all
Subsidiary Companies, unless the Board or the Committee in its discretion
decides at the time of grant or thereafter to extend such period of exercise
upon termination of service to a period not exceeding five (5) years.
(b) Exceptions. Unless the Board or the Committee shall
specifically state otherwise at the time an Option is granted: (i) if an
Employee terminates his employment with the Corporation or a Subsidiary Company
as a result of Disability or Retirement without having fully exercised his
Options, the Employee shall have the right, during the three (3) year period
following his termination due to Disability or Retirement, to exercise such
Options, and (ii) if a Non-Employee Director terminates his service as a
director with the Corporation or a Subsidiary Company as a result of Disability
or Retirement without having fully exercised his Options, the Non-Employee
Director shall have the right, during the three (3) year period following his
termination due to Disability or Retirement, to exercise such Options.
Unless the Board or the Committee shall specifically state otherwise at
the time an Option is granted, if an Employee or Non-Employee Director
terminates his employment or service with the Corporation or a Subsidiary
Company following a Change in Control of the Corporation without having fully
exercised his Options, the Optionee shall have the right to exercise such
Options during the remainder of the original ten (10) year term of the Option
from the date of grant.
If an Optionee dies while in the employ or service of the Corporation
or a Subsidiary Company or terminates employment or service with the Corporation
or a Subsidiary Company as a result of Disability or Retirement and dies without
having fully exercised his Options, the executors, administrators, legatees or
distributees of his estate shall have the right, during the one (1) year period
following his death, to exercise such Options.
In no event, however, shall any Option be exercisable more than ten
(10) years from the date it was granted.
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8.05 Nonassignability. Options shall not be transferable by an Optionee
except by will or the laws of descent or distribution, and during an Optionee's
lifetime shall be exercisable only by such Optionee or the Optionee's guardian
or legal representative. Notwithstanding the foregoing, or any other provision
of this Plan, an Optionee who holds Non-Qualified Options may transfer such
Options 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 Optionee who
originally received the grant or to an individual or trust to whom the Optionee
could have initially transferred the Option pursuant to this Section 8.05.
Options which are transferred pursuant to this Section 8.05 shall be exercisable
by the transferee according to the same terms and conditions as applied to the
Optionee.
8.06 Manner of Exercise. Options may be exercised in part or in whole
and at one time or from time to time. The procedures for exercise shall be set
forth in the written Stock Option Agreement provided for in Section 8.01 above.
8.07 Payment for Shares. Payment in full of the purchase price for
shares of Common Stock purchased pursuant to the exercise of any Option shall be
made to the Corporation upon exercise of the Option. All shares sold under the
Plan shall be fully paid and nonassessable. Payment for shares may be made by
the Optionee (i) in cash or by check, (ii) by delivery of a properly executed
exercise notice, together with irrevocable instructions to a broker to sell the
shares and then to properly deliver to the Corporation the amount of sale
proceeds to pay the exercise price, all in accordance with applicable laws and
regulations, or (iii) at the discretion of the Committee, by delivering shares
of Common Stock (including shares acquired pursuant to the exercise of an
Option) equal in Fair Market Value to the purchase price of the shares to be
acquired pursuant to the Option, by withholding some of the shares of Common
Stock which are being purchased upon exercise of an Option, or any combination
of the foregoing. With respect to subclause (iii) hereof, the shares of Common
Stock delivered to pay the purchase price must have either been (x) purchased in
open market transactions or (y) issued by the Corporation pursuant to a plan
thereof more than six months prior to the exercise date of the Option.
8.08 Voting and Dividend Rights. No Optionee shall have any voting or
dividend rights or other rights of a stockholder in respect of any shares of
Common Stock covered by an Option prior to the time that his name is recorded on
the Corporation's stockholder ledger as the holder of record of such shares
acquired pursuant to an exercise of an Option.
8.09 Additional Terms Applicable to Incentive Stock Options. All
Options issued under the Plan as Incentive Stock Options will be subject, in
addition to the terms detailed in Sections 8.01 to 8.08 above, to those
contained in this Section 8.09.
(a) Notwithstanding any contrary provisions contained
elsewhere in this Plan and as long as required by Section 422 of the Code, the
aggregate Fair Market Value, determined as of the time an Incentive Stock Option
is granted, of the Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
under this Plan, and stock options that satisfy the requirements of Section 422
of the Code under any other stock option plan or plans maintained by the
Corporation (or any parent or Subsidiary Company), shall not exceed $100,000.
(b) Limitation on Ten Percent Stockholders. The price at which
shares of Common Stock may be purchased upon exercise of an Incentive Stock
Option granted to an individual who, at the time such Incentive Stock Option is
granted, owns, directly or indirectly, more than ten percent (10%) of the total
combined voting power of all classes of stock issued to stockholders of the
Corporation or any Subsidiary Company, shall be no less than one hundred and ten
percent (110%) of the Fair Market Value of a share of the Common Stock of the
Corporation at the time of grant, and such Incentive Stock Option shall by its
terms not be exercisable after the earlier of the date determined under Section
8.03 or the expiration of five (5) years from the date such Incentive Stock
Option is granted.
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(c) Notice of Disposition; Withholding; Escrow. An Optionee
shall immediately notify the Corporation in writing of any sale, transfer,
assignment or other disposition (or action constituting a disqualifying
disposition within the meaning of Section 421 of the Code) of any shares of
Common Stock acquired through exercise of an Incentive Stock Option, within two
(2) years after the grant of such Incentive Stock Option or within one (1) year
after the acquisition of such shares, setting forth the date and manner of
disposition, the number of shares disposed of and the price at which such shares
were disposed of. The Corporation shall be entitled to withhold from any
compensation or other payments then or thereafter due to the Optionee such
amounts as may be necessary to satisfy any withholding requirements of federal
or state law or regulation and, further, to collect from the Optionee any
additional amounts which may be required for such purpose. The Committee or the
Board may, in its discretion, require shares of Common Stock acquired by an
Optionee upon exercise of an Incentive Stock Option to be held in an escrow
arrangement for the purpose of enabling compliance with the provisions of this
Section 8.09(c).
8.10 Stock Appreciation Rights.
(a) General Terms and Conditions. The Board or the Committee
may, but shall not be obligated to, authorize the Corporation, on such terms and
conditions as it deems appropriate in each case, to grant rights to Optionees to
surrender an exercisable Option, or any portion thereof, in consideration for
the payment by the Corporation of an amount equal to the excess of the Fair
Market Value of the shares of Common Stock subject to the Option, or portion
thereof, surrendered over the exercise price of the Option with respect to such
shares (any such authorized surrender and payment being hereinafter referred to
as a "Stock Appreciation Right"). Such payment, at the discretion of the Board
or the Committee, may be made in shares of Common Stock valued at the then Fair
Market Value thereof, or in cash, or partly in cash and partly in shares of
Common Stock.
The terms and conditions with respect to a Stock Appreciation Right may
include (without limitation), subject to other provisions of this Section 8.10
and the Plan: the period during which, date by which or event upon which the
Stock Appreciation Right may be exercised; the method for valuing shares of
Common Stock for purposes of this Section 8.10; a ceiling on the amount of
consideration which the Corporation may pay in connection with exercise and
cancellation of the Stock Appreciation Right; and arrangements for income tax
withholding. The Board or the Committee shall have complete discretion to
determine whether, when and to whom Stock Appreciation Rights may be granted.
(b) Time Limitations. If a holder of a Stock Appreciation
Right terminates service with the Corporation as an Officer or Employee, the
Stock Appreciation Right may be exercised only within the period, if any, within
which the Option to which it relates may be exercised.
(c) Effects of Exercise of Stock Appreciation Rights or
Options. Upon the exercise of a Stock Appreciation Right, the number of shares
of Common Stock available under the Option to which it relates shall decrease by
a number equal to the number of shares for which the Stock Appreciation Right
was exercised. Upon the exercise of an Option, any related Stock Appreciation
Right shall terminate as to any number of shares of Common Stock subject to the
Stock Appreciation Right that exceeds the total number of shares for which the
Option remains unexercised.
(d) Time of Grant. A Stock Appreciation Right granted in
connection with an Incentive Stock Option must be granted concurrently with the
Option to which it relates, while a Stock Appreciation Right granted in
connection with a Non-Qualified Option may be granted concurrently with the
Option to which it relates or at any time thereafter prior to the exercise or
expiration of such Option.
(e) Non-Transferable. The holder of a Stock Appreciation Right
may not transfer or assign the Stock Appreciation Right otherwise than by will
or in accordance with the laws of descent and distribution, and during a
holder's lifetime a Stock Appreciation Right may be exercisable only by the
holder.
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ARTICLE IX
ADJUSTMENTS FOR CAPITAL CHANGES
The aggregate number of shares of Common Stock available for issuance
under this Plan, the number of shares to which any outstanding Award relates,
the maximum number of shares that can be covered by Award to each Employee and
each Non-Employee Director and the exercise price per share of Common Stock
under any outstanding Option shall be proportionately adjusted for any increase
or decrease in the total number of outstanding shares of Common Stock issued
subsequent to the effective date of this Plan resulting from a split,
subdivision or consolidation of shares or any other capital adjustment, the
payment of a stock dividend, or other increase or decrease in such shares
effected without receipt or payment of consideration by the Corporation. If,
upon a merger, consolidation, reorganization, liquidation, recapitalization or
the like of the Corporation, the shares of the Corporation's Common Stock shall
be exchanged for other securities of the Corporation or of another corporation,
each recipient of an Award shall be entitled, subject to the conditions herein
stated, to purchase or acquire such number of shares of Common Stock or amount
of other securities of the Corporation or such other corporation as were
exchangeable for the number of shares of Common Stock of the Corporation which
such optionees would have been entitled to purchase or acquire except for such
action, and appropriate adjustments shall be made to the per share exercise
price of outstanding Options. Notwithstanding any provision to the contrary, the
exercise price of shares subject to outstanding Awards may 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, providing that the
adjustment to the per share exercise price shall satisfy the criteria set forth
in Emerging Issues Task Force 90-9 (or any successor thereto) so that the
adjustments do not result in compensation expense, and provided further that if
such adjustment with respect to incentive stock options would be treated as a
modification of the outstanding incentive stock options with the effect that,
for purposes of Sections 422 and 425(h) of the Code, and the rules and
regulations promulgated thereunder, new incentive options would be deemed to be
granted, then no adjustment to the per share exercise price of outstanding stock
options shall be made.
ARTICLE X
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the Plan
with respect to any shares of Common Stock as to which Awards have not been
granted, subject to any required stockholder approval or any stockholder
approval which the Board may deem to be advisable for any reason, such as for
the purpose of obtaining or retaining any statutory or regulatory benefits under
tax, securities or other laws or satisfying any applicable stock exchange
listing requirements. The Board may not, without the consent of the holder of an
Award, alter or impair any Award previously granted or awarded under this Plan
as specifically authorized herein.
ARTICLE XI
EMPLOYMENT AND SERVICE RIGHTS
Neither the Plan nor the grant of any Awards hereunder nor any action
taken by the Committee or the Board in connection with the Plan shall create any
right on the part of any Employee or Non-Employee Director to continue in such
capacity.
ARTICLE XII
WITHHOLDING
12.01 Tax Withholding. The Corporation may withhold from any cash
payment made under this Plan sufficient amounts to cover any applicable
withholding and employment taxes, and if the amount of such cash payment is
insufficient, the Corporation may require the Optionee to pay to the Corporation
the amount required to be withheld as a condition to delivering the shares
acquired pursuant to an Award. The Corporation also may withhold or collect
amounts with respect to a disqualifying disposition of shares of Common Stock
acquired pursuant to exercise of an Incentive Stock Option, as provided in
Section 8.09(c).
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12.02 Methods of Tax Withholding. The Board or the Committee is
authorized to adopt rules, regulations or procedures which provide for the
satisfaction of an Optionee's tax withholding obligation by the retention of
shares of Common Stock to which the Employee would otherwise be entitled
pursuant to an Award and/or by the Optionee's delivery of previously-owned
shares of Common Stock or other property.
ARTICLE XIII
DEFERRED PAYMENTS
13.01 Deferral of Options and Stock Appreciation Rights.
Notwithstanding any other provision of this Plan, any Optionee may elect, with
the concurrence of the Committee and consistent with any rules and regulations
established by the Committee, to defer the delivery of the proceeds of the
exercise of any Non-Qualified Option not transferred under the provisions of
Section8.05 hereof and Stock Appreciation Rights.
13.02 Timing of Election. The election to defer the delivery of the
proceeds from any eligible NonQualified Option or Stock Appreciation Right must
be made at least six (6) months prior to the date such Option or Stock
Appreciation Right is exercised or at such other time as the Committee may
specify. Deferrals of eligible NonQualified Options or Stock Appreciation Rights
shall only be allowed for exercises of Options and Stock Appreciation Rights
that occur while the Participant is in active service with the Corporation or
one of its Subsidiary Companies. Any election to defer the proceeds from an
eligible Non-Qualified Option or Stock Appreciation Right shall be irrevocable
as long as the Optionee remains an Employee or an Non-Employee Director of the
Corporation or one of its Subsidiary Companies.
13.03 Stock Option Deferral. The deferral of the proceeds of
Non-Qualified Options may be elected by an Optionee subject to the rules and
regulations established by the Committee. The proceeds from such an exercise
shall be credited to a deferred stock option account established for the
Optionee (which may be part of an existing deferred compensation trust account).
The proceeds shall be credited to the deferred stock option account as a number
of deferred shares or share units equivalent in value to those proceeds.
Deferred share units shall be valued at the Fair Market Value on the date of
exercise. Subsequent to exercise, the deferred shares or share units shall be
valued at the Fair Market Value of Common Stock. Deferred share units shall
accrue dividends at the rate paid upon the Common Stock credited in the form of
additional deferred share units. Deferred shares or share units shall be
distributed in shares of Common Stock or cash, at the discretion of the
Committee, upon the Optionee's termination of employment or at such other date,
as may be approved by the Committee, over a period of no more than ten (10)
years.
13.04 Stock Appreciation Right Deferral. The deferral of the proceeds
of Stock Appreciation Rights may be made by an Optionee subject to the rules and
regulations established by the Committee. Upon exercise, the Committee will
credit the Optionee's deferred stock option account with a number of deferred
shares or share units equivalent in value to the difference between the Fair
Market Value of a share of Common Stock on the exercise date and the Exercise
Price of the Stock Appreciation Right multiplied by the number of shares
exercised. Deferred shares or share units shall be valued at the Fair Market
Value on the date of exercise. Subsequent to exercise, the deferred shares or
share units shall be valued at the Fair Market Value of Common Stock. Deferred
shares or share units shall accrue dividends at the rate paid upon the Common
Stock credited in the form of additional deferred shares or share units.
Deferred shares or share units shall be distributed in shares of Common Stock or
cash, at the discretion of the Committee, upon the Participant's termination of
service or at such other date, as may be approved by the Committee, over a
period of no more than ten (10) years.
13.05 Accelerated Distributions. The Committee may, at its sole
discretion, allow for the early payment of an Optionee's deferred stock option
account in the event of an "unforeseeable emergency" or in the event of the
death or Disability of the Optionee. An "unforeseeable emergency" means an
unanticipated emergency caused by an event beyond the control of the Optionee
that would result in severe financial hardship if the distribution were not
permitted. Such distributions shall be limited to the amount necessary to
sufficiently address the financial hardship. Any distributions under this
provision, shall be consistent with the Code and the regulations promulgated
thereunder.
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Additionally, the Committee may use its discretion to cause stock option
deferral accounts to be distributed when continuing the program is no longer in
the best interest of the Corporation or one of its Subsidiary Companies.
13.06 Assignability. No rights to deferred stock option accounts may be
assigned or subject to any encumbrance, pledge or charge of any nature except
that an Optionee may designate a beneficiary pursuant to any rules established
by the Committee.
13.07 Unfunded Status. No Optionee or other person shall have any
interest in any fund or in any specific asset of the Corporation or one of its
Subsidiary Companies by reason of any amount credited pursuant to the provisions
hereof. Any amounts payable pursuant to the provisions hereof shall be paid from
the general assets of the Corporation or one of its Subsidiary Companies and no
Optionee or other person shall have any rights to such assets beyond the rights
afforded general creditors of the Corporation or one of its Subsidiary
Companies. However, the Corporation or one of its Subsidiary Companies shall
have the right to establish a reserve, trust or make any investment for the
purpose of satisfying the obligations created under this Article XIII of the
Plan; provided, however, that no Optionee or other person shall have any
interest in such reserve, trust or investment.
ARTICLE XIV
EFFECTIVE DATE OF THE PLAN; TERM
14.01 Effective Date of the Plan. This Plan shall become effective on
the Effective Date, and Awards may be granted hereunder no earlier than the date
that this Plan is approved by stockholders of the Corporation and prior to the
termination of the Plan, provided that this Plan is approved by stockholders of
the Corporation pursuant to Article XV hereof.
14.02 Term of the Plan. Unless sooner terminated, this Plan shall
remain in effect for a period of ten (10) years ending on the tenth anniversary
of the Effective Date. Termination of the Plan shall not affect any Awards
previously granted and such Awards shall remain valid and in effect until they
have been fully exercised or earned, are surrendered or by their terms expire or
are forfeited.
ARTICLE XV
STOCKHOLDER APPROVAL
The Corporation shall submit this Plan to stockholders for approval at
a meeting of stockholders of the Corporation held within twelve (12) months
following the Effective Date in order to meet the requirements of (i) Section
422 of the Code and regulations thereunder, (ii) Section 162(m) of the Code and
regulations thereunder, (iii) the Nasdaq Stock Market for continued quotation of
the Common Stock on the Nasdaq National Market, (iv) regulations of the New York
State Banking Department and (v) the regulations of the Federal Deposit
Insurance Corporation.
ARTICLE XVI
MISCELLANEOUS
16.01 Governing Law. To the extent not governed by federal law, this
Plan shall be construed under the laws of the State of Delaware.
16.02 Pronouns. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun, and the singular shall include the plural.
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APPENDIX B
INDEPENDENCE COMMUNITY BANK CORP.
1998 RECOGNITION AND RETENTION PLAN AND TRUST AGREEMENT
ARTICLE I
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 Independence Community Bank Corp, Inc. (the "Corporation") hereby
establishes the 1998 Recognition and Retention Plan (the "Plan") and Trust (the
"Trust") upon the terms and conditions hereinafter stated in this 1998
Recognition and Retention Plan and Trust Agreement (the "Agreement").
1.02 The Trustee hereby accepts this Trust and agrees to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to retain personnel of experience and
ability in key positions by providing Employees and Non-Employee Directors of
the Corporation and Independence Savings Bank ("Bank") with a proprietary
interest in the Corporation as compensation for their contributions to the
Corporation, the Bank, and any other Subsidiaries and as an incentive to make
such contributions in the future. Each Recipient of a Plan Share Award hereunder
is advised to consult with his or her personal tax advisor with respect to the
tax consequences under federal, state, local and other tax laws of the receipt
of a Plan Share Award hereunder.
ARTICLE III
DEFINITIONS
The following words and phrases when used in this Agreement with an
initial capital letter, unless the context clearly indicates otherwise, shall
have the meanings set forth below. Wherever appropriate, the masculine pronouns
shall include the feminine pronouns and the singular shall include the plural.
3.01 "Bank" means Independence Savings Bank, the wholly-owned
subsidiary of the Corporation.
3.02 "Beneficiary" means the person or persons designated by a
Recipient to receive any benefits payable under the Plan in the event of such
Recipient's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.
3.03 "Board" means the Board of Directors of the Corporation.
3.04 "Change in Control of the Corporation" shall mean the occurrence
of any of the following: (i) the acquisition of control of the Corporation as
defined in 12 C.F.R. ss.574.4, unless a presumption of control is successfully
rebutted or unless the transaction is exempted by 12 C.F.R. ss.574.3(c)(vii), or
any successor to such sections; (ii) an event that would be required to be
reported in response to Item 1(a) of Form 8-K or Item 6(e) of Schedule 14A of
Regulation 14A pursuant to the Exchange Act or any successor thereto, whether or
not any class of securities of the Corporation is registered under the Exchange
Act; (iii) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the
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Exchange Act), directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the Corporation's then
outstanding securities except for any securities purchased by the Corporation or
the Bank; or (iv) during any period of thirty-six consecutive months during the
term of a Plan Share Award, individuals who at the beginning of such period
constitute the Board of Directors of the Corporation cease for any reason to
constitute at least a majority thereof unless the election, or the nomination
for election by stockholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period.
3.05 "Code" means the Internal Revenue Code of 1986, as amended.
3.06 "Committee" means the committee appointed by the Board pursuant to
Article IV hereof.
3.07 "Common Stock" means shares of the common stock, $.01 par value
per share, of the Corporation.
3.08 "Disability" means any physical or mental impairment which
qualifies an individual for disability benefits under the applicable long-term
disability plan maintained by the Corporation or any Subsidiary or, if no such
plan applies, which would qualify such individual for disability benefits under
the long-term disability plan maintained by the Corporation, if such individual
were covered by that plan.
3.09 "Effective Date" means the day upon which the Board approves this
Plan.
3.10 "Employee" means any person who is employed by the Corporation,
the Bank, or any Subsidiary, or is an Officer of the Corporation, the Bank, or
any Subsidiary, including Officers or other employees who may be directors of
the Corporation.
3.11 "Employer Group" means the Corporation and any Subsidiary which,
with the consent of the Board, agree to participate in the Plan.
3.12 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
3.13 "Non-Employee Director" means a member of the Board of the
Corporation or the Board of Directors of the Bank or any successor thereto who
is not an Employee.
3.14 "Offering" means the offering of Common Stock to the public in
connection with the reorganization of the Bank and its mutual holding company
parent to the stock holding company form of organization and the issuance of the
capital stock of the Bank to the Corporation.
3.15 "Officer" means an Employee whose position in the Corporation or a
Subsidiary is that of a corporate officer, as determined by the Board.
3.16 "Performance Share Award" means a Plan Share Award granted to a
Recipient pursuant to Section 7.05 of the Plan.
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3.17 "Performance Goal" means an objective for the Corporation or any
Subsidiary or any unit thereof or any Employee of the foregoing that may be
established by the Committee for a Performance Share Award to become vested,
earned or exercisable. The establishment of Performance Goals are intended to
make the applicable Performance Share Awards "performance-based" compensation
within the meaning of Section 162(m) of the Code, and the Performance Goals
shall be based on one or more of the following criteria:
(i) net income, as adjusted for non-recurring items;
(ii) cash earnings;
(iii) earnings per share;
(iv) cash earnings per share;
(v) return on average equity;
(vi) return on average assets;
(vii) assets;
(viii) stock price;
(ix) total stockholder return;
(x) capital;
(xi) net interest income;
(xii) market share;
(xiii) cost control or efficiency ratio; and
(xiv) asset growth.
3.18 "Plan Shares" or "Shares" means shares of Common Stock held in the
Trust which may be distributed to a Recipient pursuant to the Plan.
3.19 "Plan Share Award" or "Award" means a right granted under this
Plan to receive a distribution of Plan Shares upon completion of the service
requirements described in Article VII, and includes Performance Share Awards.
3.20 "Recipient" means an Employee or Non-Employee Director who
receives a Plan Share Award or Performance Share Award under the Plan.
3.21 "Retirement" means a termination of employment which constitutes a
"retirement" under any applicable qualified pension benefit plan maintained by
the Corporation or a Subsidiary Corporation, or, if no such plan is applicable,
which would constitute "retirement" under the Corporation's pension benefit
plan, if such individual were a participant in that plan. With respect to
Non-Employee Directors, retirement means retirement from service on the Board of
Directors of the Corporation or the Bank or any successor thereto (including
service as an Director Emeritus) after attaining the age of 70.
3.22 "Subsidiary" means the Bank and any other subsidiaries of the
Corporation or the Bank which, with the consent of the Board, agree to
participate in this Plan.
3.23 "Trustee" means such firm, entity or persons approved by the Board
to hold legal title to the Plan and the Plan assets for the purposes set forth
herein.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered and
interpreted by the Committee, which shall consist of two or more members of the
Board, each of whom shall be a Non-Employee Director, as defined in Rule
16b-3(b)(3)(i) of the Exchange Act. In addition, each member of the Committee
shall be an "outside director" within the meaning of Section 162(m) of the Code
and the regulations thereunder at such times as is required under
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such regulations. The Committee shall have all of the powers allocated to it in
this and other Sections of the Plan. The interpretation and construction by the
Committee of any provisions of the Plan or of any Plan Share Award granted
hereunder shall be final and binding in the absence of action by the Board. The
Committee shall act by vote or written consent of a majority of its members.
Subject to the express provisions and limitations of the Plan, the Committee may
adopt such rules, regulations and procedures as it deems appropriate for the
conduct of its affairs. The Committee shall report its actions and decisions
with respect to the Plan to the Board at appropriate times, but in no event less
than once per calendar year.
4.02 Role of the Board. The members of the Committee and the Trustee
shall be appointed or approved by, and will serve at the pleasure of, the Board.
The Board may in its discretion from time to time remove members from, or add
members to, the Committee, and may remove or replace the Trustee, provided that
any directors who are selected as members of the Committee shall be Non-Employee
Directors.
4.03 Limitation on Liability. No member of the Board or the Committee
shall be liable for any determination made in good faith with respect to the
Plan or any Plan Shares or Plan Share Awards granted under it. If a member of
the Board or the Committee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Corporation
shall, subject to the requirements of applicable laws and regulations, indemnify
such member against all liabilities and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in the best interests of the
Corporation and any Subsidiaries and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
4.04 Compliance with Laws and Regulations. All Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency or stockholders as
may be required.
ARTICLE V
CONTRIBUTIONS
5.01 Amount and Timing of Contributions. The Board shall determine the
amount (or the method of computing the amount) and timing of any contributions
by the Corporation and any Subsidiaries to the Trust established under this
Plan. Such amounts may be paid in cash or in shares of Common Stock and shall be
paid to the Trust at the designated time of contribution. No contributions by
Employees or Non-Employee Directors shall be permitted.
5.02 Investment of Trust Assets; Number of Plan Shares. Subject to
Section 8.02 hereof, the Trustee shall invest all of the Trust's assets
primarily in Common Stock. The aggregate number of Plan Shares available for
distribution pursuant to this Plan shall be 2,816,435 shares of Common Stock,
subject to adjustment as provided in Section 10.01 hereof, which shares shall be
purchased (from the Corporation and/or, if permitted by applicable regulations,
from stockholders thereof) by the Trust with funds contributed by the
Corporation. During the time this Plan remains in effect, Awards to each
Employee and each Non-Employee Director shall not exceed 25% and 5% of the
shares of Common Stock available under the Plan, respectively. Plan Share Awards
to Non-Employee Directors in the aggregate shall not exceed 30% of the number of
shares available under this Plan.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 Awards. Plan Share Awards and Performance Share Awards may be made
to such Employees and Non-Employee Directors as may be selected by the Board or
the Committee. In selecting those Employees to whom
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Plan Share Awards and/or Performance Share Awards may be granted and the number
of Shares covered by such Awards, the Board or the Committee shall consider the
duties, responsibilities and performance of each respective Employee and
Non-Employee Director, his present and potential contributions to the growth and
success of the Corporation, his salary and such other factors as deemed relevant
to accomplishing the purposes of the Plan. The Board or the Committee may but
shall not be required to request the written recommendation of the Chief
Executive Officer of the Corporation other than with respect to Plan Share
Awards and/or Performance Share Awards to be granted to him.
6.02 Form of Allocation. As promptly as practicable after an allocation
pursuant to Sections 6.01 that a Plan Share Award or a Performance Share Award
is to be issued, the Board or the Committee shall notify the Recipient in
writing of the grant of the Award, the number of Plan Shares covered by the
Award, and the terms upon which the Plan Shares subject to the Award shall be
distributed to the Recipient. The date on which the Board or the Committee so
notifies the Recipient shall be considered the date of grant of the Plan Share
Award or the Performance Share Award. The Board or the Committee shall maintain
records as to all grants of Plan Share Awards or Performance Share Awards under
the Plan.
6.03 Allocations Not Required to any Specific Employee or Non-Employee
Director. No Employee or Non-Employee Director shall have any right or
entitlement to receive a Plan Share Award hereunder, such Awards being at the
total discretion of the Board or the Committee.
ARTICLE VII
EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earning Plan Shares; Forfeitures.
(a) General Rules. Subject to the terms hereof, Plan Share
Awards granted prior to March 14, 1999 shall be earned by a Recipient at the
rate of twenty percent (20%) of the aggregate number of Shares covered by the
Award as of each annual anniversary of the date of grant of the Award. Plan
Share Awards granted subsequent to March 13, 1999 shall be earned at the rate
and to the extent as may be specified by the Committee at the date of grant
thereof. If the employment of an Employee or service as a Non-Employee Director
is terminated prior to the fifth (5th) annual anniversary of the date of grant
of a Plan Share Award (with respect to Plan Share Awards granted prior to March
14, 1999) or before the Plan share Award has been completely earned (for Plan
Share Awards granted after March 13, 1999) for any reason (except as
specifically provided in subsections (b), (c) and (d) below), the Recipient
shall forfeit the right to any Shares subject to the Award which have not
theretofore been earned. In the event of a forfeiture of the right to any Shares
subject to an Award, such forfeited Shares shall become available for allocation
pursuant to Section 6.01 hereof as if no Award had been previously granted with
respect to such Shares.
No fractional shares shall be distributed pursuant to this Plan.
(b) Exception for Terminations Due to Death, Disability or
Retirement. Notwithstanding the general rule contained in Section 7.01(a), all
Plan Shares subject to a Plan Share Award held by a Recipient whose employment
with the Corporation or any Subsidiary or service as a Non-Employee Director
terminates due to death or Disability shall be deemed earned as of the
Recipient's last day of employment with or service to the Corporation or any
Subsidiary (provided, however, no such accelerated vesting shall occur if a
Recipient remains employed by at least one member of the Employer Group) and
shall be distributed as soon as practicable thereafter. All Plan Shares subject
to a Plan Share Award held by a Recipient (who at the time of such termination
is not a Non-Employee Director or Officer of the Corporation or a Subsidiary
Corporation with the title of Vice President or higher) whose employment with
the Corporation or any Subsidiary or service as a Non-Employee Director
terminates due to Retirement shall be deemed earned as of the Recipient's last
day of employment with or service to the Corporation or any Subsidiary
(provided, however, no such accelerated vesting shall occur if a Recipient
remains employed by at least one member of the Employer Group) and shall be
distributed as soon as practicable thereafter. With respect to an Recipient who
is a Non-Employee Director or Officer of the Corporation or a Subsidiary
Corporation with the
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title of Vice President or higher, the Committee may determine, in its
discretion, that all unearned Plan Shares subject to a Plan Share Award shall be
deemed earned on the date such Recipient terminates his employment or service
due to Retirement, and if so determined, such Plan Shares shall be distributed
as soon as practicable thereafter.
(c) Exception for a Change in Control of the Corporation.
Notwithstanding the general rule contained in Section 7.01(a), all Plan Shares
subject to a Plan Share Award held by a Recipient shall be deemed to be earned
as of the effective date of a Change in Control of the Corporation.
(d) Revocation for Misconduct. Notwithstanding anything
hereinafter to the contrary, the Board may by resolution immediately revoke,
rescind and terminate any Plan Share Award or Performance Share Award or portion
thereof, previously awarded under this Plan, to the extent Plan Shares have not
been distributed hereunder to the Recipient, whether or not yet earned, in the
case of an Employee who is discharged from the employ of the Corporation or any
Subsidiary for cause (as hereinafter defined). Termination for cause 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. Plan Share Awards granted to a Non-Employee Director who
is removed for cause pursuant to the Corporation's Certificate of Incorporation
and Bylaws or the Bank's Restated Organization Certificate and Bylaws shall
terminate as of the effective date of such removal.
7.02 Distribution of Dividends. Any cash dividends (including special
large and nonrecurring dividends including any that has the effect of a return
of capital to the Corporation's stockholders) or stock dividends declared in
respect of each unvested Plan Share Award or Performance Share Award will be
held by the Trust for the benefit of the Recipient on whose behalf such Plan
Share Award or Performance Share Award is then held by the Trust and such
dividends, including any interest thereon, will be paid out proportionately by
the Trust to the Recipient thereof as soon as practicable after the Plan Share
Awards become earned. Any cash dividends or stock dividends declared in respect
of each vested Plan Share held by the Trust will be paid by the Trust, as soon
as practicable after the Trust's receipt thereof, to the Recipient on whose
behalf such Plan Share is then held by the Trust.
7.03 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Subject to the
provisions of Section 7.05 hereof, Plan Shares shall be distributed to the
Recipient or his Beneficiary, as the case may be, as soon as practicable after
they have been earned.
(b) Form of Distributions. All Plan Shares, together with any
Shares representing stock dividends, shall be distributed in the form of Common
Stock. One share of Common Stock shall be given for each Plan Share earned and
distributable. Payments representing cash dividends shall be made in cash.
(c) Withholding. The Trustee may withhold from any cash
payment or Common Stock distribution made under this Plan sufficient amounts to
cover any applicable withholding and employment taxes, and if the amount of a
cash payment is insufficient, the Trustee may require the Recipient or
Beneficiary to pay to the Trustee the amount required to be withheld as a
condition of delivering the Plan Shares. The Trustee shall pay over to the
Corporation or any Subsidiary which employs or employed such Recipient any such
amount withheld from or paid by the Recipient or Beneficiary.
(d) Restrictions on Selling of Plan Shares. Plan Share Awards
may not be sold, assigned, pledged or otherwise disposed of prior to the time
that they are earned and distributed pursuant to the terms of this Plan. Upon
distribution, the Board or the Committee may require the Recipient or his
Beneficiary, as the case may be, to agree not to sell or otherwise dispose of
his distributed Plan Shares except in accordance with all then applicable
Federal and state securities laws, and the Board or the Committee may cause a
legend to be placed on the stock certificate(s) representing the distributed
Plan Shares in order to restrict the transfer of the distributed Plan Shares for
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such period of time or under such circumstances as the Board or the Committee,
upon the advice of counsel, may deem appropriate.
7.04 Voting of Plan Shares. After a Plan Share Award (other than a
Performance Share Award) has been made, the Recipient shall be entitled to
direct the Trustee as to the voting of the Plan Shares which are covered by the
Plan Share Award and which have not yet been earned and distributed to him
pursuant to Section 7.03, subject to rules and procedures adopted by the
Committee for this purpose. All shares of Common Stock held by the Trust which
have not been awarded under a Plan Share Award, shares subject to Performance
Share Awards which have not vested and shares which have been awarded as to
which Recipients have not directed the voting shall be voted by the Trustee in
its discretion.
7.05 Performance Awards
(a) Designation of Performance Share Awards. The Committee may
determine to make any Plan Share Award a Performance Share Award by making such
Plan Share Award contingent upon the achievement of a Performance Goal or any
combination of Performance Goals. Each Performance Share Award shall be
evidenced by a written agreement ("Award Agreement"), which shall set forth the
Performance Goals applicable to the Performance Share Award, the maximum amounts
payable and such other terms and conditions as are applicable to the Performance
Share Award. Each Performance Share Award shall be granted and administered to
comply with the requirements of Section 162(m) of the Code.
(b) Timing of Grants. Any Performance Share Award shall be
made not later than 90 days after the start of the period for which the
Performance Share Award relates and shall be made prior to the completion of 25%
of such period. All determinations regarding the achievement of any Performance
Goals will be made by the Committee. The Committee may not increase during a
year the amount of a Performance Share Award that would otherwise be payable
upon achievement of the Performance Goals but may reduce or eliminate the
payments as provided for in the Award Agreement.
(c) Restrictions on Grants. Nothing contained in the Plan will
be deemed in any way to limit or restrict the Committee from making any Award or
payment to any person under any other plan, arrangement or understanding,
whether now existing or hereafter in effect.
(d) Rights of Recipients. Notwithstanding anything to the
contrary herein, a Participant who receives a Performance Share Award payable in
Common Stock shall have no rights as a stockholder until the Common Stock is
issued pursuant to the terms of the Award Agreement.
(e) Transferability. A Participant's interest in a Performance
Share Award may not be sold, assigned, transferred, pledged, or otherwise
encumbered.
(f) Distribution. No Performance Share Award or portion
thereof that is subject to the attainment or satisfaction of a condition of a
Performance Goal shall be distributed or considered to be earned or vested until
the Committee certifies in writing that the conditions or Performance Goal to
which the distribution, earning or vesting of such Award is subject have been
achieved.
ARTICLE VIII
TRUST
8.01 Trust. The Trustee shall receive, hold, administer, invest and
make distributions and disbursements from the Trust in accordance with the
provisions of the Plan and Trust and the applicable directions, rules,
regulations, procedures and policies established by the Committee pursuant to
the Plan.
8.02 Management of Trust. It is the intent of this Plan and Trust that
the Trustee shall have complete authority and discretion with respect to the
arrangement, control and investment of the Trust, and that the Trustee shall
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invest all assets of the Trust in Common Stock to the fullest extent
practicable, except to the extent that the Trustee determines that the holding
of monies in cash or cash equivalents is necessary to meet the obligations of
the Trust. In performing their duties, the Trustee shall have the power to do
all things and execute such instruments as may be deemed necessary or proper,
including the following powers:
(a) To invest up to one hundred percent (100%) of all Trust
assets in Common Stock without regard to any law now or hereafter in force
limiting investments for trustees or other fiduciaries. The investment
authorized herein may constitute the only investment of the Trust, and in making
such investment, the Trustee are authorized to purchase Common Stock from the
Corporation or from any other source, and such Common Stock so purchased may be
outstanding, newly issued, or treasury shares.
(b) To invest any Trust assets not otherwise invested in
accordance with (a) above, in such deposit accounts, and certificates of
deposit, obligations of the United States Government or its agencies or such
other investments as shall be considered the equivalent of cash.
(c) To sell, exchange or otherwise dispose of any property at
any time held or acquired by the Trust.
(d) To cause stocks, bonds or other securities to be
registered in the name of a nominee, without the addition of words indicating
that such security is an asset of the Trust (but accurate records shall be
maintained showing that such security is an asset of the Trust).
(e) To hold cash without interest in such amounts as may in
the opinion of the Trustee be reasonable for the proper operation of the Plan
and Trust.
(f) To employ brokers, agents, custodians, consultants and
accountants.
(g) To hire counsel to render advice with respect to their
rights, duties and obligations hereunder, and such other legal services or
representation as they may deem desirable.
(h) To hold funds and securities representing the amounts to
be distributed to a Recipient or his Beneficiary as a consequence of a dispute
as to the disposition thereof, whether in a segregated account or held in common
with other assets of the Trust.
Notwithstanding anything herein contained to the contrary, the Trustee
shall not be required to make any inventory, appraisal or settlement or report
to any court, or to secure any order of court for the exercise of any power
herein contained, or give bond.
8.03 Records and Accounts. The Trustee shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled person
or entity to the extent required by applicable law, or any other person
determined by the Board or the Committee.
8.04 Expenses. All costs and expenses incurred in the operation and
administration of this Plan shall be borne by the Corporation or, in the
discretion of the Corporation, the Trust.
8.05 Indemnification. Subject to the requirements of applicable laws
and regulations, the Corporation shall indemnify, defend and hold the Trustee
harmless against all claims, expenses and liabilities arising out of or related
to the exercise of the Trustee's powers and the discharge of their duties
hereunder, unless the same shall be due to their gross negligence or willful
misconduct.
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ARTICLE IX
DEFERRED PAYMENTS
9.01 Deferral of Plan Share Award. Notwithstanding any other provision
of this Plan, any Recipient may elect, with the concurrence of the Committee and
consistent with any rules and regulations established by the Committee, to defer
Plan Share Awards granted hereunder.
9.02 Timing of Election. The election to defer the delivery of any Plan
Share Award must be made no later than the last day of the calendar year
preceding the calendar year in which the Recipient would otherwise have an
unrestricted right to receive such Award. Deferrals of eligible Plan Share
Awards shall only be allowed for Plan Share Awards for which all applicable
restrictions lapse while the Recipient is in active service with the Corporation
or one of its Subsidiary Companies. Any election to defer the proceeds from an
eligible Plan Share Award shall be irrevocable as long as the Recipient remains
an Employee or an Non-Employee Director of the Corporation or one of its
Subsidiary Companies.
9.03 Plan Share Award Deferral. The deferral of Plan Share Awards may
be elected by a Recipient subject to the rules and regulations established by
the Committee. Upon the lapsing of restrictions on such a Plan Share Award, the
Committee shall credit to a deferred stock award account established for the
Recipient (which may be part of an existing deferred compensation trust account)
a number of deferred shares or share units equivalent in value to the number of
deferred Plan Share Awards multiplied by the Fair Market Value of Common Stock.
Deferred shares or share units shall be valued at the Fair Market Value on the
date all restrictions on the Stock Award lapse or are waived. Subsequent to the
lapsing of all restrictions, the deferred shares or share units shall be valued
at the Fair Market Value of Common Stock. Deferred shares or share units shall
accrue dividends at the rate paid upon the Common Stock credited in the form of
additional deferred share units. Deferred share units shall be distributed in
shares of Common Stock or cash, at the discretion of the Committee, upon the
Recipient's termination of service or at such other date, as may be approved by
the Committee, over a period of no more than ten (10) years.
9.04 Accelerated Distributions. The Committee may, at its sole
discretion, allow for the early payment of an Recipient's deferred stock award
account in the event of an "unforeseeable emergency" or in the event of the
death or Disability of the Recipient. An "unforeseeable emergency" means an
unanticipated emergency caused by an event beyond the control of the Recipient
that would result in severe financial hardship if the distribution were not
permitted. Such distributions shall be limited to the amount necessary to
sufficiently address the financial hardship. Any distributions under this
provision, shall be consistent with the Code and the regulations promulgated
thereunder. Additionally, the Committee may use its discretion to cause stock
award accounts to be distributed when continuing the program is no longer in the
best interest of the Corporation or one of its Subsidiary Companies.
9.05 Assignability. No rights to deferred stock award accounts may be
assigned or subject to any encumbrance, pledge or charge of any nature except
that an Recipient may designate a beneficiary pursuant to any rules established
by the Committee.
9.06 Unfunded Status. No Recipient or other person shall have any
interest in any fund or in any specific asset of the Corporation or one of its
Subsidiary Companies by reason of any amount credited pursuant to the provisions
hereof. Any amounts payable pursuant to the provisions hereof shall be paid from
the general assets of the Corporation or one of its Subsidiary Companies and no
Recipient or other person shall have any rights to such assets beyond the rights
afforded general creditors of the Corporation or one of its Subsidiary
Companies. However, the Corporation or one of its Subsidiary Companies shall
have the right to establish a reserve, trust or make any investment for the
purpose of satisfying the obligations created under this Article IX of the Plan;
provided, however, that no Recipient or other person shall have any interest in
such reserve, trust or investment.
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ARTICLE X
MISCELLANEOUS
10.01 Adjustments for Capital Changes. The aggregate number of Plan
Shares available for distribution pursuant to the Plan Share Awards and the
number of Shares to which any Plan Share Award relates shall be proportionately
adjusted for any increase or decrease in the total number of outstanding shares
of Common Stock issued subsequent to the effective date of the Plan resulting
from any split, subdivision or consolidation of shares or other capital
adjustment, or other increase or decrease in such shares effected without
receipt or payment of consideration by the Corporation.
10.02 Amendment and Termination of Plan. The Board may, by resolution,
at any time amend or terminate the Plan, subject to any required stockholder
approval or any stockholder approval which the Board may deem to be advisable
for any reason, such as for the purpose of obtaining or retaining any statutory
or regulatory benefits under tax, securities or other laws or satisfying any
applicable stock exchange listing requirements. The Board may not, without the
consent of the Recipient, alter or impair his Plan Share Award except as
specifically authorized herein. Upon termination of the Plan, the Recipient's
Plan Share Awards shall be distributed to the Recipient regardless of whether or
not such Plan Share Award had otherwise been earned under the service
requirements set forth in Article VII.
10.03 Nontransferable. Plan Share Awards and Performance Share Awards
and rights to Plan Shares shall not be transferable by a Recipient, and during
the lifetime of the Recipient, Plan Shares may only be earned by and paid to a
Recipient who was notified in writing of an Award by the Committee pursuant to
Section 6.02. No Recipient or Beneficiary shall have any right in or claim to
any assets of the Plan or Trust, nor shall the Corporation or any Subsidiary be
subject to any claim for benefits hereunder.
10.04 Employment or Service Rights. Neither the Plan nor any grant of a
Plan Share Award, Performance Share Award or Plan Shares hereunder nor any
action taken by the Trustee, the Committee or the Board in connection with the
Plan shall create any right on the part of any Employee or Non-Employee Director
to continue in such capacity.
10.05 Voting and Dividend Rights. No Recipient shall have any voting or
dividend rights or other rights of a stockholder in respect of any Plan Shares
covered by a Plan Share Award or Performance Share Award, except as expressly
provided in Sections 7.02, 7.04 and 7.05 above, prior to the time said Plan
Shares are actually earned and distributed to him.
10.06 Governing Law. To the extent not governed by federal law, the
Plan and Trust shall be governed by the laws of the State of Delaware.
10.07 Effective Date. This Plan shall be effective as of the Effective
Date, and Awards may be granted hereunder no earlier than the date this Plan is
approved by the stockholders of the Corporation and prior to the termination of
the Plan. Notwithstanding the foregoing or anything to the contrary in this
Plan, the implementation of this Plan is subject to the approval of the
Corporation's stockholders.
10.08 Term of Plan. This Plan shall remain in effect until the earlier
of (1) ten (10) years from the Effective Date, (2) termination by the Board, or
(3) the distribution to Recipients and Beneficiaries of all the assets of the
Trust.
10.09 Tax Status of Trust. It is intended that the trust established
hereby be treated as a Grantor Trust of the Corporation under the provisions of
Section 671 et seq. of the Code, as the same may be amended from time to time.
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IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed by its duly authorized officers and the corporate seal to be affixed
and duly attested, and the initial Trustees of the Trust established pursuant
hereto have duly and validly executed this Agreement, all on this __th day of
_______, 1998.
INDEPENDENCE COMMUNITY BANK CORP.
By: /s/ Charles J. Hamm
Charles J. Hamm
Chairman of the Board, President and
Chief Executive Officer
ATTEST: TRUSTEES:
- - --------------- --------------
John K. Schnock Rohit M. Desai
Secretary
------------------
Chaim Y. Edelstein
---------------------------
Donald H. Elliott
---------------------------
Robert W. Gelfman
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REVOCABLE PROXY
INDEPENDENCE COMMUNITY BANK CORP.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
September 25, 1998
The undersigned, being a stockholder of Independence Community Bank
Corp. (the "Company") as of August 4, 1998, hereby authorizes the Board of
Directors 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 Klitgord Auditorium, New York City Technical College
located at 285 Jay Street, Brooklyn, New York, on Friday, September 25, 1998 at
9:30 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
Nominees for a three-year term:
Robert B. Catell, Rohit M. Desai, Robert W. Gelfman,
Charles J. Hamm and Scott M. Hand.
[ ] FOR [ ] WITHHOLD [ ] EXCEPT
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
Unless authority to vote for all of the foregoing nominees is withheld, this
Proxy will be deemed to confer authority to vote for each nominee whose name is
not written below.
2. PROPOSAL to adopt the 1998 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL to adopt the 1998 Recognition and Retention Plan and Trust
Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL to ratify the appointment by the Board of Directors of Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending March
31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
PLEASE CHECK BOX IF YOU PLAN TO
ATTEND THE MEETING [ ]
The Board of Directors recommends a vote in favor of Proposals 2 and 3.
<PAGE>
Detach above card, sign, date and mail in postage paid envelope provided.
INDEPENDENCE COMMUNITY BANK CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER
25, 1998 AND AT ANY ADJOURNMENT THEREOF.
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF
RETURNED, BUT NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF THE BOARD OF DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS, FOR THE PROPOSALS
TO ADOPT THE 1998 STOCK OPTION PLAN AND 1998 RECOGNITION AND RETENTION PLAN, FOR
RATIFICATION OF THE COMPANY'S INDEPENDENT AUDITORS, AND OTHERWISE AT THE
DISCRETION OF THE PROXIES. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE
TIME IT IS VOTED AT THE ANNUAL MEETING.
Please be sure to sign and date this Proxy in the box below.
_________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
PLEASE SIGN ABOVE EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS PROXY. WHEN
SIGNING IN A REPRESENTATIVE CAPACITY, PLEASE GIVE FULL TITLE. WHEN SHARES ARE
HELD JOINTLY, ONLY ONE HOLDER NEED SIGN.
PLEASE ACT PROMPTLY. SIGN, DATE AND MAIL YOUR PROXY CARD TODAY.
