Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the registrant [x]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[x] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
FIRST SAVINGS BANK OF WASHINGTON BANCORP, INC.
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(Name of Registrant as Specified in Its Charter)
FIRST SAVINGS BANK OF WASHINGTON BANCORP, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
N/A
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(2) Form, schedule or registration statement no.:
N/A
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(3) Filing party:
N/A
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(4) Date filed:
N/A
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June 10, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
First Savings Bank of Washington Bancorp, Inc. The meeting will be held at
the Elks Lodge at 351 E. Rose Street, Walla Walla, Washington, on Friday, July
24, 1998, at 10:00 a.m., local time.
The Notice of Annual Meeting of Shareholders and Proxy Statement
appearing on the following pages describe the formal business to be transacted
at the meeting. During the meeting, we will also report on the operations of
the Company. Directors and officers of the Company, as well as a
representative of Deloitte & Touche LLP, the Company's independent auditors,
will be present to respond to appropriate questions of shareholders.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To make sure your shares are represented, we urge you to complete
and mail the enclosed proxy card. If you attend the meeting, you may vote in
person even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
Gary Sirmon
President and Chief Executive Officer
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FIRST SAVINGS BANK OF WASHINGTON BANCORP, INC.
10 S. First Avenue
Walla Walla, Washington 99362
(509) 527-3636
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held On July 24, 1998
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NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders of
First Savings Bank of Washington Bancorp, Inc. ("Company") will be held at the
Elks Lodge at 351 E. Rose Street, Walla Walla, Washington, on Friday, July 24,
1998, at 10:00 a.m., local time, for the following purposes:
(1) To elect three directors to serve until the 2001 Annual Meeting of
Shareholders;
(2) To approve a proposal to change the Company's state of incorporation
from Delaware to Washington through a merger of the Company with a
newly formed, wholly owned Washington subsidiary and at the same time
change the name of the Company to First Washington Bancorp, Inc.; and
(3) To consider and act upon such other matters as may properly come
before the meeting or any adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the meeting.
Any action may be taken on the foregoing proposals at the meeting on the
date specified above or on any date or dates to which, by original or later
adjournment, the meeting may be adjourned. Shareholders of record at the
close of business on June 3, 1998 are entitled to notice of and to vote at the
meeting and any adjournments or postponements thereof.
Please complete and sign the enclosed form of proxy, which is solicited by
the Board of Directors, and mail it promptly in the enclosed envelope. The
proxy will not be used if you attend the meeting and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
D. ALLAN ROTH
SECRETARY
Walla Walla, Washington
June 10, 1998
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IMPORTANT: The prompt return of proxies will save your company the expense of
further requests for proxies in order to ensure a quorum. A self-addressed
envelope is enclosed for your convenience. No postage is required if mailed
in the United States.
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PROXY STATEMENT
OF
FIRST SAVINGS BANK OF WASHINGTON BANCORP, INC.
10 S. First Avenue
Walla Walla, Washington 99362
(509) 527-3636
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ANNUAL MEETING OF SHAREHOLDERS
July 24, 1998
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of First Savings Bank of Washington Bancorp,
Inc. ("Company") to be used at the 1998 Annual Meeting of Shareholders of the
Company. The Company is the holding company for First Savings Bank of
Washington ("First Savings"), Inland Empire Bank ("Inland Empire") and Towne
Bank. First Savings, Inland Empire and Towne Bank are referred to
collectively herein as the "Banks." The Annual Meeting will be held at the
Elks Lodge at 351 E. Rose Street, Walla Walla, Washington on Friday, July 24,
1998, at 10:00 a.m., local time. This Proxy Statement and the enclosed proxy
card are being first mailed to shareholders on or about June 10, 1998.
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VOTING AND PROXY PROCEDURE
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Shareholders Entitled to Vote. Shareholders of record as of the close of
business on June 3, 1998 are entitled to one vote for each share of common
stock ("Common Stock") of the Company then held. As of June 3, 1998, the
Company had [10,728,837] shares of Common Stock issued and outstanding.
Quorum. The presence, in person or by proxy, of at least a majority of the
total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum at the Annual Meeting. Abstentions will be
counted as shares present and entitled to vote at the Annual Meeting for
purposes of determining the existence of a quorum. Broker non-votes will be
considered shares present and will be included in determining whether a quorum
is present.
Voting. The Board of Directors solicits proxies so that each shareholder
has the opportunity to vote on the proposals to be considered at the Annual
Meeting. When a proxy card is returned properly signed and dated, the shares
represented thereby will be voted in accordance with the instructions on the
proxy card. Where no instructions are indicated, proxies will be voted in
accordance with the recommendations of the Board of Directors. The Board
recommends a vote FOR the election of the nominees for director and FOR the
amendment of the Company's Certificate of Incorporation. If a shareholder of
record attends the Annual Meeting, he or she may vote by ballot.
The affirmative vote of a plurality of the votes cast at the Annual Meeting
is required for the election of directors. Shareholders are not permitted to
cumulate their votes for the election of directors. Votes may be cast for or
withheld from each nominee. Votes that are withheld and broker non-votes will
have no effect on the outcome of the election because the nominees receiving
the greatest number of votes will be elected. The approval of the change in
the Company's state of incorporation from Delaware to Washington requires the
affirmative vote of a majority of the outstanding shares of the Company's
Common Stock. Abstentions and broker non-votes are not affirmative votes and,
therefore, will have the same effect as a vote against the proposal.
Revocation of a Proxy. Shareholders who execute proxies retain the right
to revoke them at any time before they are voted. Proxies may be revoked by
written notice delivered in person or mailed to the Secretary of the Company
or by filing a later proxy prior to a vote being taken on a particular
proposal at the Annual Meeting. Attendance at the Annual Meeting will not
automatically revoke a proxy, but a shareholder of record in attendance may
request a ballot and vote in person, thereby revoking a prior granted proxy.
1
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Participants in the First Savings ESOP. If a shareholder is a participant
in the First Savings Bank of Washington Employee Stock Ownership Plan (the
"ESOP"), the proxy card represents a voting instruction to the trustees of the
ESOP as to the number of shares in the participant's plan account. Each
participant in the ESOP may direct the trustees as to the manner in which
shares of Common Stock allocated to the participant's plan account are to be
voted. Unallocated shares of Common Stock held by the ESOP and allocated
shares for which no voting instructions are received will be voted by the
trustees in the same proportion as shares for which the trustees have received
voting instructions.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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Persons and groups who beneficially own in excess of 5% of the Company's
Common Stock are required to file certain reports disclosing such ownership
pursuant to the Securities Exchange Act of 1934, as amended ("Exchange Act").
Based on such reports, the following table sets forth, as of May 1, 1998,
certain information as to those persons who were beneficial owners of more
than 5% of the outstanding shares of Common Stock. To the Company's
knowledge, no other person or entity beneficially owned more than 5% of the
Company's outstanding Common Stock at May 1, 1998.
The following table also sets forth, as of May 1, 1998, information as to
the shares of Common Stock beneficially owned by (a) each director, (b) each
of the executive officers named in the Summary Compensation Table
found below (the "named executive officers") and (c) all executive officers
and directors of the Company as a group.
Number of Shares Percent of Shares
Name Beneficially Owned (1) Outstanding
- ---- ---------------------- -----------------
Beneficial Owners of More Than 5%
First Savings Bank of Washington 871,938 8.1%
Employee Stock Ownership Plan Trust
Westport Asset Management, Inc. 919,550 (2) 8.6
253 Riverside Avenue
Westport, Connecticut 06880
Directors
Robert D. Adams 43,396 (3) *
David Casper 53,022 (4) *
Morris Ganguet 47,268 *
S. Rick Meikle 28,465 *
Dean W. Mitchell 41,668 (5) *
Wilber Pribilsky 51,978 (6) *
R.R. "Pete" Reid 25,171 *
Marvin Sundquist 55,927 *
2
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Number of Shares Percent of Shares
Name Beneficially Owned (1) Outstanding
- ---- ---------------------- -----------------
Named Executive Officers
Gary Sirmon** 152,378 1.4
Jesse G. Foster** 17,609 *
D. Allan Roth 74,485 (7) *
Michael K. Larsen 74,383 (8) *
All Executive Officers and 673,858 6.3
Directors as a Group
(13 persons)
_______________
* Less than 1 percent of shares outstanding.
** Mr. Sirmon and Mr. Foster are also directors of the Company.
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has voting and/or investment power with respect
to such security. The table includes shares owned by spouses, other
immediate family members in trust, shares held in retirement accounts or
funds for the benefit of the named individuals, and other forms of
ownership, over which shares the persons named in the table may possess
voting and/or investment power. Shares held in accounts under First
Savings' ESOP and shares of restricted stock granted under the Company's
Management Recognition and Development Plan, as to which the holders have
voting power but not investment power, are included as follows: Mr.
Adams, 13,662 shares; Mr. Casper, 13,662 shares; Mr. Ganguet, 13,662
shares; Mr. Meikle, 0 shares; Mr. Mitchell, 13,662 shares; Mr. Pribilsky,
13,662 shares; Mr. Reid, 9,108 shares; Mr. Sundquist, 13,662 shares; Mr.
Sirmon, 65,745 shares; Mr. Foster, 0 shares; Mr. Roth, 35,325 shares; Mr.
Larsen, 35,305 shares; all executive officers and directors as a group,
231,209 shares. The amounts shown also include the following amounts of
Common Stock which the indicated individuals have the right to acquire
within 60 days of May 1, 1998 through the exercise of stock options
granted pursuant to the Company's stock option plan: Mr. Adams, 7,590;
Mr. Casper, 7,590; Mr. Ganguet, 7,590; Mr. Meikle, 24,540; Mr. Mitchell,
7,590; Mr. Pribilsky, 7,590; Mr. Reid, 7,590; Mr. Sundquist, 7,590; Mr.
Sirmon, 37,950; Mr. Foster, 16,603; Mr. Roth, 16,603; Mr. Larsen, 16,603;
and all executive officers and directors as a group, 167,429.
(2) Information concerning the shares owned by Westport Asset Management, Inc.
as of December 31, 1997 was obtained from a Schedule 13G dated February
19, 1998. According to this filing, Westport Asset Management, Inc.,
an investment advisor registered under the Investment Advisors Act of
1940, has sole voting and dispositive power with respect to 6,500 shares
and shared voting and dispositive power with respect to 913,050 shares.
(3) Includes 2,012 shares owned by Mr. Adams' wife.
(4) Includes 1,420 shares owned by a company controlled by Mr. Casper.
(5) Includes 1,000 shares owned by a company controlled by Mr. Mitchell.
(6) Includes 2,500 shares owned by a company controlled by Mr. Pribilsky.
(7) Includes 1,006 shares owned by Mr. Roth's wife.
(8) Includes 2,275 shares owned by Mr. Larsen's wife.
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PROPOSAL 1 -- ELECTION OF DIRECTORS
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The Company's Board of Directors consists of ten members. The Board of
Directors is divided into three classes with three-year staggered terms, with
one third of the directors elected each year. Three directors will be elected
at the Annual Meeting to serve for a three year period, or until their
respective successors have been elected and qualified. The nominees for
election this year are Gary Sirmon, Wilber Pribilisky and Robert D. Adams.
3
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In connection with the acquisition of Towne Bank on April 1, 1998, the
Board of Directors expanded the size of the Board and appointed S. Rick
Meikle, the President of Towne Bank, to a term expiring in 1999.
It is intended that the proxies solicited by the Board of Directors will be
voted for the election of the above named nominees. If any nominee is unable
to serve, the shares represented by all valid proxies will be voted for the
election of such substitute as the Board of Directors may recommend or the
Board of Directors may adopt a resolution to amend the Bylaws and reduce the
size of the Board. At this time the Board of Directors knows of no reason why
any nominee might be unavailable to serve.
The Board of Directors recommends a vote "FOR" the election of Messrs.
Sirmon, Pribilsky and Adams.
The following table sets forth certain information regarding the nominees
for election at the Annual Meeting, as well as information regarding those
directors continuing in office after the Annual Meeting.
Year First
Elected Term to
Name Age (1) Director (2) Expire
---- --- -------- ------
BOARD NOMINEES
Gary Sirmon 54 1983 2001 (3)
Wilber Pribilsky 64 1987 2001 (3)
Robert D. Adams 56 1984 2001 (3)
DIRECTORS CONTINUING IN OFFICE
Jesse G. Foster 59 1996 1999
Dean W. Mitchell 63 1979 1999
R.R. "Pete" Reid 74 1993 1999
S. Rick Meikle 50 1998 1999
David Casper 61 1976 2000
Morris Ganguet 78 1974 2000
Marvin Sundquist 71 1982 2000
_______________
(1) As of March 31, 1998.
(2) Includes prior service on the Board of Directors of First Savings.
(3) Assuming the individual is re-elected.
The present principal occupation and other business experience during the
last five years of each nominee for election and each director continuing in
office is set forth below:
Gary Sirmon is Chief Executive Officer, President and a director of the
Company and First Savings. He joined First Savings in 1980 as an executive
vice president and assumed his current position in 1982.
Wilber Pribilsky is the Chairman and Chief Executive Officer of Bur-Bee
Co., Inc., a wholesale food distributor, with which he has been affiliated for
50 years.
Robert D. Adams is a partner in and the President and Chief Executive
Officer of Carroll Adams Tractor Co., which sells and rents farm, industrial
and consumer equipment and with which he has been affiliated for 28 years.
4
<PAGE>
Jesse G. Foster is the Chief Executive Officer, President and a Director of
Inland Empire. He joined Inland Empire in 1962.
Dean W. Mitchell is Manager of Tri-Cities Communications, Inc., which
operates KONA AM and FM radio stations, with which he has been affiliated for
40 years.
R.R. "Pete" Reid is currently the Assistant to the President of Whitman
College in Walla Walla, Washington, a position he has held since 1990. Prior
to that time, he served as Treasurer and Chief Financial Officer of Whitman
College from 1966 to 1990.
S. Rick Meikle is the Chief Executive Officer, President and a Director of
Towne Bank, which he helped form in 1991.
David Casper is President of David Casper Ranch, Inc., a farming operation
he has owned since 1973.
Morris Ganguet is President of Morris Ganguet Farms, Inc., a sheep, cattle
and dry land farm operation he has owned since 1940.
Marvin Sundquist is the Secretary and former President and General Manager
of Sundquist Fruit and Cold Storage, Inc., a fruit grower and shipper, with
which he has been affiliated for 47 years.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
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The Board of Directors of the Company conducts its business through
meetings of the Board and through its committees. During the fiscal year
ended March 31, 1998, the Board of Directors of the Company held 12 meetings.
No director of the Company attended fewer than 75 percent of the total
meetings of the Board and committees on which such person served during this
period.
The Executive Committee, consisting of Directors Casper, Adams, Pribilsky,
Sirmon and Ganguet, acts for the Board of Directors when formal Board action
is required between regular meetings. This committee has the authority
to exercise all powers of the full Board of Directors, except that it does not
have the power, among other things, to: declare dividends, issue stock, amend
the Bylaws, or approve any agreement of merger or consolidation other than
mergers with a subsidiary of the Company. The Executive Committee did not
meet during the year ended March 31, 1998.
The Audit Committee, consisting of Directors Adams, Pribilsky, Ganguet,
Casper and Reid is responsible for monitoring adequacy of the Company's
internal controls and accounting procedures. The Audit Committee met five
times during the year ended March 31, 1998.
The Compensation Committee, which consists of the entire Board of
Directors, sets salary policies and levels for senior management and oversees
all salary and bonus programs for the Company. The Compensation Committee
met two times during the year ended March 31, 1998.
The Incentive Stock Option Plan Committee, consisting of Directors Ganguet,
Casper, Mitchell, Sundquist, Adams, Pribilsky and Reid, administers the
Company's stock option plan. This committee met four times during the
year ended March 31, 1998.
The Management Recognition and Development Plan Committee, consisting of
Directors Ganguet, Casper, Mitchell, Sundquist, Adams, Pribilsky and Reid,
administers the Company's Management Recognition and Development
Plan. This committee did not meet during the year ended March 31, 1998.
5
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The Nominating Committee, which consists of the entire Board of Directors,
selects nominees for the election of directors and develops a list of nominees
for board vacancies. The Nominating Committee met two times during the
year ended March 31, 1998.
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DIRECTORS' COMPENSATION
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Non-employee directors of the Company receive a retainer of $9,600 and a
fee of $600 per meeting attended, $400 per special meeting attended and $200
per committee meeting attended. Officers of the Company or its subsidiaries
who are also directors do not receive any fee or remuneration for services as
members of the Board of Directors or of any committee of the Board of
Directors.
In order to encourage the retention of qualified directors, the Company has
entered into deferred fee agreements whereby directors may defer all or a
portion of their regular fees until retirement. Each director may direct the
investment of the deferred fees toward the purchase of life insurance or the
Company's Common Stock. The Company has established a grantor trust to hold
the Common Stock investments. The assets of the trust are considered part of
the Company's general assets and the directors have the status of unsecured
creditors of the Company with respect to the trust assets. The deferred fee
agreements provide pre-retirement death and disability benefits in an amount
based on the value of the director's account balance upon the occurrence of
either event. At retirement, a director may elect to receive the balance of
his account in a lump sum or in annual installments over a period not
exceeding the life expectancy of the director and his beneficiary. At March
31, 1998, the Company's estimated deferred compensation liability expense
accrual with respect to non-employee directors was $2.1 million.
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EXECUTIVE COMPENSATION
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Summary Compensation Table. The following information is furnished for the
Chief Executive Officer of the Company and for the executive officers of the
Company who received salary and bonus in excess of $100,000 for the year ended
March 31, 1998. No other executive officers of the Company or its
subsidiaries received salary and bonus in excess of $100,000 during the year
ended March 31, 1998.
Long-Term
Compensation
------------------
Awards
Annual Compensation ------------------
------------------------- Secu-
Other rities All
Annual Under- Other
Compen- Restricted lying Compen-
Name and sation Stock Opti- sation
Position Year Salary($) Bonus($) ($)(1) Award($)(2) ons(#) ($)(1)
- -------- ---- --------- -------- ------ ----------- ------ -------
Gary Sirmon 1998 228,125 52,938 -- -- -- 27,210
Chief Executive 1997 209,125 50,000 -- $1,129,012 189,750 70,651
Officer and 1996 191,875 42,883 11,200 -- -- 37,532
President
D. Allan Roth 1998 128,809 24,375 -- -- -- 15,509
Treasurer 1997 123,275 25,000 -- 564,506 83,015 25,560
and Secretary 1996 117,962 23,096 -- -- -- 53,699
Michael K.
Larsen 1998 128,809 24,375 -- -- -- 15,343
Vice President 1997 123,275 25,000 -- 564,506 83,015 22,445
1996 117,437 23,295 -- -- -- 53,393
Jesse G.
Foster(4) 1998 125,622 18,000 -- -- -- 14,768
President of 1997 79,878 16,706 -- -- 83,015 13,319
Inland Empire
Bank
6
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_________
(1) Does not include certain benefits, the aggregate amounts of which do not
exceed 10% of total annual salary and bonus.
(2) Represents the total value of the award of shares of restricted stock on
July 26, 1996 in the following amounts: Mr. Sirmon, 75,900 shares; Mr.
Roth, 37,950 shares; and Mr. Larsen, 37,950 shares. Such award will vest
ratably over a five-year period. At March 31, 1998, the value of the
unvested restricted stock awards were: Mr. Sirmon, $1,597,695; Mr. Roth,
$798,848; and Mr. Larsen, $798,848. Dividends will be paid on the
restricted stock.
(3) Amounts for 1998 reflect: for Mr. Sirmon, deferred compensation
contribution of $11,210 and ESOP contribution of $16,000; for Mr. Roth,
ESOP contribution of $15,509; for Mr. Larsen, ESOP contribution of
$15,343; for Mr. Foster, profit sharing plan contribution of $14,768.
(4) The Company acquired Inland Empire Bank on August 1, 1996. Accordingly,
amounts for 1997 reflect only compensation paid from August 1, 1996
through March 31, 1997.
Option Exercise/Value Table. The following information with respect to
options exercised during the fiscal year ended March 31, 1998, and remaining
unexercised at the end of the fiscal year, is presented for the named
executive officers.
Number Value of Unexercised
Shares of Securities In-the-Money Options
Acqu- Underlying Un- at Fiscal
ired exercised Options Year End($)(1)
on Value ----------------- -----------------
Exer- Rea- Exer- Unexer- Exer- Unexer-
Name cise (#) lized ($) cisable cisable cisable cisable
- ---- -------- --------- ------- ------- ------- -------
Gary Sirmon -- -- 37,950 151,800 $434,053 $1,736,213
Jesse G. Foster -- -- 16,603 66,412 181,595 726,381
D. Allan Roth -- -- 16,603 66,412 189,897 759,587
Michael K. Larsen -- -- 16,603 66,412 189,897 759,587
__________
(1) Value of unexercised in-the-money options equals market value of shares
covered by in-the-money options on March 31, 1998 less the option
exercise price. Options are in-the-money if the market value of the
shares covered by the options is greater than the option exercise price.
Employment Agreements with Named Executive Officers. First Savings entered
into employment agreements with Messrs. Sirmon, Roth, and Larsen
(individually, the "Executive") on June 16, 1994. The agreements provide that
the Executive's base salary is subject to annual review. The current base
salaries for Messrs. Sirmon, Roth, and Larsen, are $248,000, $131,686 and
$131,686, respectively. In addition to base salary, the agreements provide
for the Executive's participation in First Savings's employee benefit plans
and other fringe benefits applicable to executive personnel. The initial
three-year term of each agreement may be extended annually for an additional
year at the discretion of the Board of Directors of First Savings. The
employment of the Executive is terminable at any time for cause as defined in
the agreements. In addition, the Executive may be terminated without cause in
which case the Executive would continue to receive base salary and other
benefits over the remaining term of the agreement.
The agreements also provide for the payment of severance benefits to the
Executive in the event of his termination of employment following a change in
control of First Savings or the Company. Such benefits would include
a lump sum payment equal to 2.99 times the average of the Executive's five
preceding years' compensation and continuation of retirement, life, health,
and disability coverage for a three-year period. In the event of a change in
control of First Savings or the Company, the total cash payment due under the
agreements, excluding any benefits payable under any employee benefit plan,
would be approximately $1,168,654, $715,485 and $661,833 for Messrs. Sirmon,
Roth, and Larsen, respectively. For purposes of the agreements, "change in
control" includes, among other things, a change in control within the meaning
of the rules and regulations promulgated by the Board of Governors of
7
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the Federal Reserve System under the Change in Bank Control Act of 1978, the
acquisition by any person of securities representing 20% or more outstanding
securities of First Savings or the Company, or a plan of reorganization,
merger, consolidation, or sale of substantially all of the assets of First
Savings or the Company in which First Savings or the Company is not the
resulting entity.
The agreements restrict the right of the Executive to compete against First
Savings or the Company for a period of three years following retirement in the
area of Walla Walla or any other area in which First Savings maintains a full
service branch office.
Inland Empire entered into an employment agreement with Mr. Foster on
September 30, 1994. The agreement was continued, with certain modifications,
following the acquisition of Inland Empire by the Company. The initial term
of the agreement expires on September 30, 1999. The agreement provides for an
automatic one-year extension unless either party gives notice of an intention
not to renew at least 60 days prior to the expiration date. Mr. Foster's base
salary, which is subject to periodic review, is currently $132,012. In the
event of Mr. Foster's termination without cause, the Bank is obligated to
continue his then current salary through the expiration date of the agreement.
In the event of Mr. Foster's resignation following a change in control of the
Bank (as defined in the agreement), the Bank is obligated to continue his base
salary for a 12 month period but, in any event, not longer than the expiration
date of the agreement. The agreement restricts Mr. Foster ability to compete
with the Bank within a 50-mile radius of the Bank's main and branch office
locations during any period in which he is receiving compensation payments
from the Bank.
Salary Continuation and Deferred Compensation Agreements. First Savings
has entered into salary continuation agreements with Messrs. Sirmon, Roth, and
Larsen (individually, the "Executive") to ensure their continued service with
First Savings through retirement. First Savings has purchased life insurance
to finance the benefits payable under the agreements. Assuming that the
Executive remains in the employ of First Savings to age 65, the agreements
provide for monthly payments over a minimum of a 180-month period following
retirement. The annual payment for Messrs. Sirmon, Roth, and Larsen would be
$112,000, $64,000, and $64,000, respectively. In the event of the Executive's
termination of employment by reason of death or disability prior to age 65,
the salary continuation benefit would be payable to the Executive or his
designated beneficiary.
For 1994 and subsequent years, Section 401(a)(17) of the Code limits to
$150,000 (indexed) per employee the amount of compensation that is considered
for purposes of determining the maximum contribution to First Savings's
tax-qualified profit sharing plan on behalf of each eligible employee. First
Savings credits certain executive officers whose total compensation exceeds
$150,000 with additional deferred compensation to restore amounts that may not
be contributed to the profit sharing plan as a consequence of the Section
401(a)(17) limitation. For the fiscal year ended March 31, 1998, $11,210 was
credited as deferred compensation on behalf of Mr. Sirmon.
Inland Empire has entered into an agreement with Mr. Foster to provide him
with supplemental retirement benefits. The agreement was continued, with
certain modifications, following the acquisition of Inland Empire by the
Company. The agreement provides that, following Mr. Foster's retirement at or
after attaining age 62 (or in the event of his prior death or disability) and
for a 12-year period thereafter, the Bank will pay him (or his beneficiary)
an annual benefit equal to 40 percent of his average annual salary during the
three years preceding his retirement. In the event of his termination of
employment prior to age 62, Mr. Foster's benefits would be deferred until age
62. The agreement also restricts Mr. Foster's ability to compete with the
Bank within a 50-mile radius of the Bank's main and branch office locations
for a one-year period following his termination of employment.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this Proxy Statement, in
whole or in part, the following Report of the Compensation Committee and
Performance Graph shall not be incorporated by reference into any such
filings.
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Report of the Compensation Committee. Under rules established by the
Securities and Exchange Commission, the Company is required to provide certain
data and information in regard to the compensation and benefits provided to
the Company's Chief Executive Officer and other executive officers. The
disclosure requirements for the Chief Executive Officer and other executive
officers include the use of tables and a report explaining the rationale and
considerations that led to the fundamental executive compensation decisions
affecting those individuals. The Compensation Committee of the Board of
Directors of the Company is responsible for establishing and monitoring
compensation policies of the Company and for reviewing and ratifying the
actions of the Compensation Committees of the Boards of Directors of First
Savings and Inland Empire. Performance is evaluated and salaries are set by
the Compensation Committees of the Banks.
General. The Banks' Compensation Committees' duties are to recommend and
administer policies that govern executive compensation. The Committees
evaluate individual executive performance, compensation policies and
salaries. The Committees are responsible for evaluating the performance of
the Chief Executive Officers of the Banks while the Chief Executive Officers
of the Banks evaluate the performance of other senior officers of the
respective Banks and make recommendations to the Committees regarding
compensation levels. The committees have final authority to set compensation
levels.
Compensation Policies. The executive compensation policies of the Banks
are designed to establish an appropriate relationship between executive pay
and the Company's and the Banks' annual performance, to reflect the attainment
of short- and long-term financial performance goals and to enhance the ability
of the Company and the Banks to attract and retain qualified executive
officers. The principles underlying the executive compensation policies
include the following:
- To attract and retain key executives who are vital to the long-term
success of the Company and the Banks and are of the highest caliber;
- To provide levels of compensation competitive with those offered
throughout the financial industry and consistent with the Company's and
the Banks' level of performance;
- To motivate executives to enhance long-term shareholder value by
building their equity interest in the Company; and
- To integrate the compensation program with the Company's and the Banks'
annual and long-term strategic planning and performance measurement
processes.
The Committees consider a variety of subjective and objective factors in
determining the compensation package for individual executives including: (1)
the performance of the Company and the Banks as a whole with emphasis on
annual performance factors and long-term objectives; (2) the responsibilities
assigned to each executive; and (3) the performance of each executive of
assigned responsibilities as measured by the progress of the Company and the
Banks during the year.
Base Salary. The Banks' current compensation plan involves a combination
of salary, cash bonuses to reward short-term performance, and deferred
compensation. The salary levels of executive officers are designed to be
competitive within the banking and financial services industries. In setting
competitive salary levels, the Compensation Committees continually evaluate
current salary levels by surveying similar institutions in Washington, Oregon,
the Northwest and the United States. The Committees' peer group analysis
focuses on asset size, nature of ownership, type of operation and other common
factors. Specifically, the Committees annually review the Northwest Financial
Industry Salary Survey prepared by Milliman & Robertson, Inc. (actuaries and
consultants) covering 104 Northwest financial organizations, the Oregon
Bankers Association salary survey covering all banks in the state of Oregon,
Federal Home Loan Bank ("FHLB") of Seattle data covering the seven states of
the 12th FHLB District, the America's Community Banker's Survey of salaries
which covers 522 responding financial institutions, the Watson Wyatt Survey of
Top
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Management Compensation, the Moss-Adams Oregon Washington Community Bankers
Executive Compensation Survey and the SNL Executive Compensation Review.
Bonus Program. A short-term incentive bonus plan is in effect for the
officers of the Banks which is designed to compensate for performance. The
plan is designed to provide for bonuses of up to 30% of salary for the chief
executive officers, up to 25% of salary for executive vice presidents, and up
to 20% of salary for vice presidents and certain other officers. In limited
circumstances, bonuses may be payable at higher levels based on exceptional
performance in excess of established targets. The performance bonus is based
primarily on quantifiable data such as return on assets, return on equity and
level of operating expenses. Subjective evaluation of performance is limited.
Deferred Compensation. To the extent that executive officers'
contributions to First Savings retirement programs are limited by applicable
law, First Savings credits each affected executive with deferred compensation
in the amount of the additional annual contribution the executive would have
received if such limits were not applicable.
Long Term Incentive Compensation. The Company, with shareholder approval,
on July 26, 1996, adopted the 1996 Management Recognition and Development Plan
and the 1996 Stock Option Plan, under which executive officers may receive
grants and awards. The Company believes that stock ownership by the Company's
and the Banks' executives is a significant factor in aligning the interests of
the executives with those of shareholders. Stock options and stock awards
under such plans were allocated based upon regulatory practices and policies,
the practices of other recently converted financial institutions as verified
by external surveys and based upon the executive officers' level of
responsibility and contributions to the Company and the Banks.
Compensation of the Chief Executive Officer. During the fiscal year ended
March 31, 1998, the base salary of Gary Sirmon, President and Chief Executive
Officer of the Company and First Savings, was $228,125. In addition, he
received a performance bonus of $52,938 and was credited with $27,210 in other
compensation (comprised of Deferred Compensation - $11,210 and Employees'
Stock Ownership Plan - $16,000). This resulted in total compensation of
$308,273, which represents a 6.2% increase from the previous year (not
including effect of cash distribution of accrued vacation in prior year). Mr.
Sirmon's performance bonus reflected the attainment of the specific
performance criteria for the fiscal year established by the Board in the
Company's performance bonus plan. The Committee believes that Mr. Sirmon's
compensation is appropriate based on the Company's overall compensation
policy, on the basis of the Committee's consideration of peer group data, and
the superior financial performance of the Company during the fiscal year. Mr.
Sirmon did not participate in the Committee's consideration of his
compensation level for the fiscal year.
Compensation Committee:
Dean Mitchell, Chairman
Marvin Sundquist, Vice-Chairman
Robert D. Adams
David Casper
Jesse G. Foster
Morris Ganguet
Wilber Pribilsky
R.R. "Pete" Reid
Gary Sirmon
Compensation Committee Interlocks and Insider Participation. Mr. Sirmon,
President and Chief Executive Officer of the Company and First Savings, and
Mr. Foster, President and Chief Executive Officer of Inland Empire,
serve as members of the Compensation Committee of the Company and their
respective Banks. Although Mr. Sirmon recommends compensation to be paid to
executive officers, the entire Board of Directors of First Savings reviews
such recommendations and sets the compensation for Mr. Sirmon. Similarly, the
entire Board of Directors of Inland Empire sets the compensation for Mr.
Foster.
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Performance Graph. The following graph compares the cumulative total
shareholder return on the Company's Common Stock with the cumulative total
return on the Nasdaq (U.S. Stock) Index, the old peer group of the SNL $500
Million to $1 Billion Asset Thrift Index and the new peer group of the SNL $1
Billion to $5 Billion Asset Thrift Index. The Company adopted the new peer
group because it exceeded the size of the companies in its old peer group.
Total return assumes the reinvestment of all dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN *
[line graph appears here]
11/1/95 3/30/96 3/31/97 3/31/98
------- ------- ------- -------
First Savings Bank of Washington 100 109 155 218
Bancorp, Inc.
Nasdaq (U.S. Stock) Index 100 106 118 179
SNL $500M - $1B Thrift Index 100 104 143 230
SNL $1B - $5B Thrift Index 100 109 151 265
* Assumes that the value of the investment in the Company's Common Stock and
each index was $100 on November 1, 1995, the date on which the Company's
Common Stock was first traded publicly, and that all dividends were
reinvested.
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PROPOSAL 2 --
REINCORPORATION IN THE STATE OF WASHINGTON
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For the reasons set forth below, the Board of Directors believes that the
best interests of the Company and its shareholders will be served by changing
the Company's state of incorporation from Delaware to Washington (the
"Reincorporation"). The Board of Directors has approved the Reincorporation,
which would be accomplished by merging the Company with and into its newly
formed Washington subsidiary, First Washington Bancorp, Inc. ("First
Washington"). The shareholders will be asked to approve the Reincorporation
at the Annual Meeting.
Upon effectiveness of the merger, the Company will retain the name First
Washington Bancorp, Inc. The Company was formed with the name First Savings
Bank of Washington Bancorp, Inc. because its purpose was to serve as the
holding company for First Savings Bank of Washington after its conversion from
the mutual holding company to the stock holding company form of organization.
Since the conversion, the Company has completed the acquisition of Inland
Empire Bank and Towne Bank, which it continues to hold as separate
subsidiaries. As a result of its strategy of acquiring other community
oriented banks, the Board of Directors believes that the name First Savings
Bank of Washington Bancorp, Inc. no longer best fits the Company. As a
result, the Board of Directors has decided to take this opportunity to shorten
the Company's name to First Washington Bancorp, Inc.
The sole factor in the Board of Directors' recommendation to reincorporate
in Washington was that the Company's franchise fees will be substantially less
in Washington than in Delaware. The Company expects to save approximately
$75,000 annually on state franchise tax fees by reincorporating in Washington.
Furthermore, the Company's headquarters are located in Washington.
Plan of Merger
The Company will be merged with and into First Washington pursuant to the
terms of the proposed Agreement and Plan of Merger (the "Merger Agreement"), a
copy of which is attached as Exhibit A to this Proxy Statement. Upon the
completion of the merger, the owner of each outstanding share of the Company's
Common Stock will automatically own one share of First Washington common
stock. Each outstanding certificate representing a share or shares of the
Company's Common Stock will continue to represent the same number of shares in
First Washington (i.e., a certificate representing one share of the Company's
common stock will then equal one share of First Washington common stock).
IT WILL NOT BE NECESSARY FOR SHAREHOLDERS OF THE COMPANY TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES. The Company's Common Stock will continue to be
traded on the Nasdaq National Market under the symbol "FWWB" subsequent to the
merger.
First Washington's Articles of Incorporation and Bylaws will be the
Articles of Incorporation and Bylaws of the surviving corporation. First
Washington's Articles of Incorporation are attached hereto as Exhibit B. The
discussion contained in this Proxy Statement is qualified in its entirety by
reference to Exhibits A and B.
Effect of Reincorporation and Merger
The Reincorporation and the merger will effect a change in the legal
domicile of the Company and other changes of a legal nature, the most
significant of which are described in this Proxy Statement. The
Reincorporation and merger will not result in any change in the business,
management, location of the Company's principal executive offices,
assets, liabilities, net worth or accounting practices. Moreover, as noted
above, the shares of Common Stock will continue to be publicly traded and
reported on the Nasdaq National Market. The merger will not give rise to any
appraisal or dissenters' rights.
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Principal Differences in Corporate Charters
First Washington's Articles of Incorporation differ from the Company's
Certificate of Incorporation in certain technical aspects. Specific articles
have been included so as to minimize differences in corporate governance
before and after the Reincorporation. A majority vote requirement in the case
of mergers is provided for (which is the same as the Delaware General
Corporation Law ("DGCL") requirement for mergers). Although First
Washington's Articles of Incorporation and the Company's Certificate of
Incorporation contain similar language to the effect that a director
will not be liable for monetary damages for conduct as a director to the full
extent that each entity's respective state's law permits, the Washington
Business Corporation Act ("WBCA") and the DGCL have different director and
officer indemnification and director liability provisions. Various differences
also exist between First Washington's Bylaws and the Company's Bylaws, but
none of these provisions are expected to have a material effect on the
Company's governance.
Certain Differences in Corporate Laws
The DGCL currently governs the rights of the Company's shareholders. After
the merger, the rights of shareholders will be governed by the WBCA. The
following discussion summarizes certain significant differences between the
provisions of the DGCL and the WBCA, as applicable to a public company.
Amendment of Articles/Certificate of Incorporation. The WBCA authorizes a
corporation's board of directors to make various changes of an administrative
nature to its articles of incorporation including changes of corporate name,
changes to the number of outstanding shares in order to effectuate a stock
split or stock dividend in the corporation's own shares, and changes to or
elimination of provisions with respect to par value of its stock. Other
amendments to a corporation's articles of incorporation must be recommended to
the shareholders by the board of directors, unless the board determines that
because of a conflict of interest or other special circumstances, it should
make no recommendation, and must be approved by a majority of all votes
entitled to be cast by each voting group which has a right to vote on the
amendment. Under the DGCL, all amendments to a corporation's certificate of
incorporation require the approval of shareholders holding a majority of the
voting power of the corporation unless a greater proportion is specified in
the certificate of incorporation.
Provisions Affecting Acquisitions and Business Combinations. The WBCA
imposes restrictions on certain transactions between a corporation and certain
significant shareholders. Chapter 23B.19 of the WBCA prohibits a "target
corporation," with certain exceptions, from engaging in certain "significant
business transactions" with an "Acquiring Person" who acquires 10% or more of
the voting securities of a target corporation for a period of five years after
such acquisition, unless the transaction or acquisition of shares is approved
by a majority of the members of the target corporation's board of directors
prior to the date of the acquisition. The prohibited transactions include,
among others, merger or consolidation with, disposition of assets to, or
issuance or redemption of stock to or from, the Acquiring Person, termination
of 5% or more of the employees of the target corporation as a result of the
Acquiring Person's acquisition of 10% or more of the shares, or allowing the
Acquiring Person to receive any disproportionate benefit as a shareholder.
After the five-year period during which significant business transactions are
prohibited, a transaction may occur if certain "fair price" criteria are met.
The holders of shares must receive a value per share at least equal to
the higher of (i) within the last five years prior to the announcement of the
significant business transaction, the highest per share price paid by the
Acquiring Person at a time when it owned five percent or more of the target
corporation (or, if higher, within the five-year period before the Acquiring
Person became one) and (ii) the market value of the shares on the date a
significant business transaction is announced, plus annual interest in either
case. Target corporations include all publicly-traded domestic corporations,
as well as foreign corporations that meet certain requirements. A corporation
may not "opt out" of this statute.
Delaware has enacted a business combination statute that is contained in
Section 203 of the DGCL providing that any person who acquires 15% or more of
a corporation's voting stock (thereby becoming an "interested shareholder")
may not engage in certain "business combinations" with the target corporation
for a period of three years
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following the time the person became an interested shareholder, unless (i) the
board of directors of the corporation has approved, prior to that acquisition
time, either the business combination or the transaction that resulted in the
person becoming an interested shareholder, (ii) upon consummation of the
transaction that resulted in the person becoming an interested shareholder,
that person owns at least 85% of the corporation's voting stock outstanding at
the time the transaction is commenced (excluding shares owned by persons who
are both directors and officers and shares owned by employee stock plans in
which participants do not have the right to determine confidentially whether
shares will be tendered in a tender or exchange offer), or (iii) the business
combination is approved by the board of directors and authorized by the
affirmative vote (at an annual or special meeting and not by written consent)
of at least 66% of the outstanding voting stock not owned by the interested
shareholder.
For purposes of determining whether a person is the "owner" of 15% or more
of a corporation's voting stock for purposes of Section 203, ownership is
defined broadly to include the right, directly or indirectly, to acquire the
stock or to control the voting or disposition of the stock. A business
combination is also defined broadly to include (i) mergers and sales or other
dispositions of 10% or more of the assets of a corporation with or to an
interested shareholder, (ii) certain transactions resulting in the issuance or
transfer to the interested shareholder of any stock of the corporation or
its subsidiaries, (iii) certain transactions which would result in increasing
the proportionate share of the stock of a corporation or its subsidiaries
owned by the interested shareholder, and (iv) receipt by the interested
shareholder of the benefit (except proportionately as a shareholder) of any
loans, advances, guarantees, pledges or other financial benefits.
These restrictions placed on interested shareholders by Section 203 do not
apply under certain circumstances, including, but not limited to, the
following: (i) if the corporation's original certificate of incorporation
contains a provision expressly electing not to be governed by Section 203 or
(ii) if the corporation, by action of its shareholders, adopts an amendment to
its bylaws or certificate of incorporation expressly electing not to be
governed by Section 203, provided that such an amendment is approved by the
affirmative vote of not less than a majority of the outstanding shares
entitled to vote and that such an amendment will not be effective until 12
months after its adoption (except for limited circumstances where
effectiveness will occur immediately) and will not apply to any business
combination with a person who became an interested shareholder at or prior to
such adoption.
Mergers, Acquisitions and Other Transactions. Under the WBCA, a merger,
consolidation, sale of all or substantially all of a corporation's assets
other than in the regular course of business, or dissolution of a public
corporation must be approved by the affirmative vote of a majority of
directors when a quorum is present, and by two- thirds of all votes entitled
to be cast by each voting group entitled to vote as a separate group, unless
another proportion is specified in the articles of incorporation. First
Washington's Articles of Incorporation provide that the corporate transactions
specified above may be approved by a majority of the outstanding shares
entitled to vote. Under the DGCL, a merger, consolidation, sale of all or
substantially all of a corporation's assets other than in the regular course
of business or dissolution of a corporation must be approved by a majority of
the outstanding shares entitled to vote.
Action Without a Meeting. Under the WBCA, shareholder action may be taken
without a meeting if written consents setting forth such action are signed by
all holders of outstanding shares entitled to vote thereon. The DGCL
authorizes shareholder action without a meeting if consents are received from
holders of a majority of the outstanding shares. The Company's Certificate of
Incorporation, however, provides that shareholders may not take any action
without a meeting. Although First Washington's Articles of Incorporation and
Bylaws do not restrict the ability of shareholders to act by written consent,
because such a consent must be signed by all holders of outstanding shares
entitled to vote on the action, it is highly unlikely that any shareholder
action would be taken by written consent.
Class Voting. Under the WBCA, the articles of incorporation may authorize
one or more classes of shares that have special, conditional or limited voting
rights, including the right to vote on certain matters as a group. The
articles of incorporation may not limit the rights of holders of a class to
vote as a group with respect to certain amendments to the articles of
incorporation and certain mergers that adversely affect the rights of holders
of that class. The DGCL requires voting by separate classes only with respect
to amendments to the certificate of incorporation that adversely
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affect the holders of those classes or that increase or decrease the aggregate
number of authorized shares or the par value of the shares of any of those
classes.
Transactions With Officers or Directors. The WBCA sets forth a safe harbor
for transactions between a corporation and one or more of its directors. A
conflicting interest transaction may not be enjoined, set aside or give rise
to damages if: (i) it is approved by a majority of qualified directors; (ii)
it is approved by the affirmative vote of a majority of all qualified shares;
or (iii) at the time of commitment, the transaction was fair to the
corporation. For purposes of this provision, a "qualified director" is one
who does not have (a) a conflicting interest respecting the transaction or (b)
a familial, financial, professional or employment relationship with a second
director who does have such a conflict and which relationship would reasonably
be expected to exert an influence on the first director's judgment when voting
on the transaction. "Qualified Shares" are defined generally as shares other
than those beneficially owned, or the voting of which is controlled, by a
director who has a conflicting interest respecting the transaction.
The DGCL provides that contracts or transactions between a corporation and
one or more of its officers or directors or an entity in which they have an
interest is not void or voidable solely because of such interest or the
participation of the director or officer in a meeting of the board or a
committee which authorizes the contract or transaction if: (i) the material
facts as to the relationship or interest and as to the contract or transaction
are disclosed or are known to the board or the committee, and the board or the
committee in good faith authorizes the contract or transaction by the
affirmative vote of a majority of disinterested directors; (ii) the material
facts as to the relationship or interest and as to the contract or transaction
are disclosed or are known to the shareholders entitled to vote thereon, and
the contract or transaction is specifically approved in good faith by a vote
of the shareholders; or (iii) the contract or transaction is fair as to the
corporation as of the time it is authorized, approved or ratified by the board
of directors, a committee thereof, or the shareholders.
Appraisal or Dissenters' Rights. Under the WBCA a shareholder is entitled
to dissent from and, upon perfection of his or her appraisal right, to obtain
fair value of his or her shares in the event of certain corporate actions,
including certain mergers, consolidations, share exchanges, sales of
substantially all assets of the corporation, and amendments to the
corporation's articles of incorporation that materially and adversely affect
shareholder rights.
Under the DGCL, appraisal rights are available only in connection with
certain mergers or consolidations, unless otherwise provided in the
corporation's certificate of incorporation. Even in the event of those
mergers or consolidations, unless the certificate of incorporation otherwise
provides, the DGCL does not provide appraisal rights (i) if the shares of the
corporation are listed on a national securities exchange, designated as a
national market system security on an inter dealer quotation system by the
National Association of Securities Dealers, Inc. or held of record by more
than 2,000 shareholders (as long as in the merger the shareholders receive
shares of the surviving corporation or any other corporation the shares of
which are listed on a national securities exchange or held of record by more
than 2,000 shareholders) or (ii) if the corporation is the surviving
corporation and no vote of its shareholders is required for the merger.
Because the Company is listed on the Nasdaq National Market, shareholders
currently would not have statutory appraisal rights under the DGCL in such
mergers.
Indemnification of Directors and Officers. Under the WBCA, if authorized
by the articles of incorporation, a bylaw adopted or ratified by shareholders,
or a resolution adopted or ratified, before or after the event, by the
shareholders, a corporation has the power to indemnify a director or officer
made a party to a proceeding, or advance or reimburse expenses incurred in a
proceeding, under any circumstances, except that no such indemnification shall
be allowed on account of: (i) acts or omissions of a director or officer
finally adjudged to be intentional misconduct or a knowing violation of the
law; (ii) conduct of a director or officer finally adjudged to be an unlawful
distribution; or (iii) any transaction with respect to which it was finally
adjudged that such director or officer personally received a benefit in money,
property or services to which the director or officer was not legally
entitled. Unless limited by the corporation's articles of incorporation,
Washington law requires indemnification if the director or officer is wholly
successful on the merits of the action. Any indemnification of a director in
a derivative action must be reported to
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shareholders in writing. First Washington's Articles of Incorporation provide
that First Washington shall indemnify its directors and officers to the
fullest extent not prohibited by law, including indemnification for payments
in settlement of actions brought against a director or officer in the name of
the corporation, commonly referred to as a derivative action.
Under the DGCL, indemnification of directors and officers is authorized to
cover judgments, amounts paid in settlement, and expenses arising out of
non-derivative actions where the director or officer acted in good faith and
in or not opposed to the best interests of the corporation. Indemnification
is required to the extent of a director's or officer's successful defense.
Additionally, under the DGCL, a corporation may reimburse directors and
officers for expenses incurred in a derivative action.
The Company has included undertakings in various registration statements
filed with the Securities and Exchange Commission that in the event a claim
for indemnification is asserted by a director or officer relating to
liabilities under the Securities Act of 1933, as amended, the Company will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether indemnification would be against public policy and will be
governed by any final adjudication of such issue.
Filing Fees. Delaware imposes annual franchise tax fees on all
corporations incorporated in Delaware. The annual fee ranges from a nominal
fee to a maximum of $150,000, based on an equation consisting of the number of
shares authorized, the number of shares outstanding and the net assets of the
corporation. The Company is subject to an annual fee of approximately
$100,000. Washington charges corporations incorporated in Washington nominal
annual corporate license renewal fees, and does not impose any franchise tax
fee.
Federal Income Tax Consequences
In connection with the Reincorporation, Breyer & Aguggia, counsel to the
Company, will issue an opinion to the effect that, for federal income tax
purposes:
1. The merger of the Company with and into First Washington will qualify as a
reorganization under section 368(a)(1) of the Internal Revenue Code of
1986, as amended;
2. The Company will recognize no gain or loss as a result of the merger;
3. A shareholder of the Company will recognize no gain or loss upon the deemed
exchange of shares of Company Common Stock for shares of First Washington
common stock;
4. The aggregate basis of the shares of First Washington common stock deemed
received by a shareholder as a result of the merger will equal the
aggregate basis of the shares of Company Common Stock deemed exchanged
therefor; and
5. The holding period of the shares of First Washington common stock deemed
received by a shareholder in the merger will include the holding period of
the shares of Company Common Stock deemed exchanged therefor, provided that
such Company Common Stock is held as a capital asset by the shareholder at
the Effective Time.
The opinion of Breyer & Aguggia is subject to certain assumptions and
qualifications and will be based upon the accuracy of certain representations
contained in the officers' certificates delivered to Breyer & Aguggia by the
parties to the Reincorporation in connection with the delivery of the tax
opinion by Breyer & Aguggia. No ruling from the IRS will be applied for with
respect to the federal income tax consequences of the Reincorporation. Thus,
there can be no assurance that the IRS will agree with the conclusions set
forth herein regarding the federal income tax consequences of the
Reincorporation.
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The federal income tax discussion set forth above is based upon current
law. Although this discussion is intended to cover the material federal
income tax consequences of the Reincorporation, it may not address issues that
are material to a shareholder because of his or her particular tax situation.
It does not address foreign, state or local tax consequences. Each
shareholder is urged to consult his or her own tax advisor concerning the
specific tax consequences of the merger to such shareholder, including the
applicability and effect of federal, state, local and other tax laws.
Vote Required And Board Recommendation
The affirmative vote of a majority of the outstanding shares of Common
Stock of the Company is required to approve the Reincorporation.
The Board of Directors believes that the Reincorporation of the Company
from Delaware to Washington is in the best interests of the Company and its
shareholders and, consequently, recommends a vote "FOR" approval of the
Reincorporation.
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COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
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Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than 10% of any registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Executive officers,
directors and greater than 10% shareholders are required by regulation to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms it has received and
written representations provided to the Company by the above referenced
persons, the Company believes that during the fiscal year ended March 31, 1998
all filing requirements applicable to its reporting officers, directors and
greater than 10% shareholders were properly and timely complied with.
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TRANSACTIONS WITH MANAGEMENT
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Federal regulations require that all loans or extensions of credit to
executive officers and directors of insured financial institutions must be
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other
persons, except for loans made pursuant to programs generally available to all
employees, and must not involve more than the normal risk of repayment or
present other unfavorable features. The Company's subsidiary financial
institutions are therefore prohibited from making any new loans or extensions
of credit to executive officers and directors at different rates or terms than
those offered to the general public, except for loans made pursuant to
programs generally available to all employees, and has adopted a policy to
this effect. In addition, loans made to a director or executive officer in an
amount that, when aggregated with the amount of all other loans to such person
and his or her related interests, are in excess of the greater of $25,000 or
5% of the institution's capital and surplus (up to a maximum of $500,000) must
be approved in advance by a majority of the disinterested members of the Board
of Directors.
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AUDITORS
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The Board of Directors has appointed Deloitte & Touche LLP, independent
public accountants, to serve as the Company's auditors for the fiscal year
ending March 31, 1999. A representative of Deloitte & Touche LLP will be
present at the Annual Meeting to respond to appropriate questions from
shareholders and will have the opportunity to make a statement if he or she so
desires.
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OTHER MATTERS
- ------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Annual Meeting other than those matters described above in this Proxy
Statement. However, if any other matters should properly come before the
Annual Meeting, it is intended that proxies in the accompanying form will be
voted in respect thereof in accordance with the judgment of the person or
persons voting the proxies.
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MISCELLANEOUS
- ------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy
materials to the beneficial owners of the Common Stock. In addition to
solicitations by mail, directors, officers and regular employees of the
Company may solicit proxies personally or by telecopier or telephone without
additional compensation.
The Company's 1998 Annual Report to Shareholders, including financial
statements, has been mailed to all shareholders of record as of the close of
business on June 3, 1998. Any shareholder who has not received a copy of such
annual report may obtain a copy by writing to the Company. The Annual Report
is not to be treated as part of the proxy solicitation material or having been
incorporated herein by reference.
A copy of the Company's Form 10-K for the fiscal year ended March 31, 1998,
as filed with the Securities and Exchange Commission, will be furnished
without charge to shareholders of record as of June 3, 1998 upon written
request to D. Allan Roth, Secretary, First Savings Bank of Washington Bancorp,
Inc., 10 S. First Avenue, PO Box 907, Walla Walla, Washington 99362.
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SHAREHOLDER PROPOSALS
- ------------------------------------------------------------------------------
Proposals of shareholders intended to be presented at the Company's annual
meeting to be held in 1999 must be received by the Company no later than
February 10, 1999 to be considered for inclusion in the proxy materials and
form of proxy relating to such meeting. Any such proposals shall be subject
to the requirements of the proxy rules adopted under the Exchange Act.
In addition, the Company's Certificate of Incorporation provides that in
order for business to be brought before the Annual Meeting, a shareholder must
deliver notice to the Secretary not less than 30 nor more than 60 days prior
to the date of the Annual Meeting; provided that if less than 31 days' notice
of the Annual Meeting is given to shareholders, such notice must be delivered
not later than the close of the tenth day following the day on which notice of
the Annual Meeting was mailed to shareholders. The notice must state the
shareholder's name, address and number of shares of Common Stock held, and
briefly discuss the business to be brought before the Annual Meeting, the
reasons for conducting such business at the Annual Meeting and any interest of
the shareholder in the proposal.
The Company's Certificate of Incorporation provides that if a shareholder
intends to nominate a candidate for election as a director, the shareholder
must deliver written notice of his or her intention to the Secretary of the
Company not less than thirty days nor more than sixty days prior to the date
of the Annual Meeting of shareholders; provided, however, that if less than
thirty-one days' notice of the Annual Meeting is given to shareholders, such
written notice must be delivered to the Secretary of the Company not later
than the close of the tenth day following the day on which notice of the
Annual Meeting was mailed to shareholders. The notice must set forth (i) the
name, age, business address and, if known, residence address of each nominee
for election as a director, (ii) the principal occupation or employment of
each nominee, (iii) the number of shares of Common Stock of the Company which
are beneficially owned by each
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such nominee, (iv) such other information as would be required to be included
pursuant to the Exchange Act in a proxy statement soliciting proxies for the
election of the proposed nominee, including, without limitation, such person's
written consent to being named in the proxy statement as a nominee and to
serving as a director, if elected, and (v) as to the shareholder giving such
notice (a) his or her name and address as they appear on the Company's books
and (b) the class and number of shares of the Company which are beneficially
owned by such shareholder.
BY ORDER OF THE BOARD OF DIRECTORS
D. ALLAN ROTH
SECRETARY
Walla Walla, Washington
June 10, 1998
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EXHIBIT A
AGREEMENT AND PLAN OF MERGER
BETWEEN
FIRST WASHINGTON BANCORP, INC.
AND
FIRST SAVINGS BANK OF WASHINGTON BANCORP, INC.
This Agreement and Plan of Merger (this "Agreement") is entered into this
21st day of May, 1998, by and between First Washington Bancorp, Inc., a
Washington corporation (the "Surviving Corporation"), and First Savings
Bank of Washington Bancorp, Inc., a Delaware corporation ("First Savings").
The Surviving Corporation and First Savings are sometimes referred to jointly
as the "Constituent Corporations."
RECITALS
A. Each of the Constituent Corporations is a corporation organized and
existing under the laws of its respective state as indicated in the first
paragraph of this Agreement.
B. The shareholders and directors of each of the Constituent Corporations
have deemed it advisable for the mutual benefit of the Constituent
Corporations and their respective shareholders that First Savings be merged
into the Surviving Corporation pursuant to the provisions of the Washington
Business Corporation Act, Title 23B of the Revised Code of Washington and the
Delaware General Corporation Law (the "Merger").
AGREEMENT
NOW, THEREFORE, in accordance with the laws of the states of Washington and
Delaware, the Constituent Corporations agree that, subject to the following
terms and conditions, (i) First Savings shall be merged into the Surviving
Corporation, (ii) the Surviving Corporation shall continue to be governed by
the laws of the State of Washington, and (iii) the terms of the Merger, and
the mode of carrying them into effect, shall be as follows:
1. ARTICLES OF SURVIVING CORPORATION
The Articles of Incorporation of the Surviving Corporation as in effect
prior to the Effective Time of the Merger shall constitute the"Articles" of
the Surviving Corporation within the meaning of Section 23B.01.400(1) of the
Washington Business Corporation Act and Section 104 of the Delaware General
Corporation Law.
2. APPOINTMENT OF AGENT FOR SERVICE OF PROCESS
Pursuant to Section 252(d) of the Delaware General Corporation Law, the
Surviving Corporation irrevocably appoints the Delaware Secretary of State to
accept service of process in any proceeding to enforce against the Surviving
Corporation any obligation of any Constituent Corporation as well as for
enforcement of any obligation of the Surviving Corporation arising from the
Merger. The Delaware Secretary of State shall mail a copy of such process to
First Savings Bank of Washington Bancorp, Inc., 10 S. First Avenue, Walla
Walla, Washington 99362.
3. CONVERSION OF SHARES
3.1. FIRST SAVINGS SHARES. At the Effective Time of the Merger each
outstanding share of the common stock of First Savings shall automatically
convert to one share of First Washington Bancorp, Inc. It will not be
necessary for stockholders of First Savings to exchange their existing stock
certificates for stock certificates of the Surviving Corporation.
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3.2. SURVIVING CORPORATION SHARES. At the Effective Time of the
Merger each outstanding share of the common stock of the Surviving Corporation
shall be automatically canceled and returned to the status of authorized but
unissued shares.
4. BYLAWS
The Bylaws of the Surviving Corporation shall be the governing Bylaws.
5. DIRECTORS AND OFFICERS
The directors and officers of First Savings shall be the directors and
officers of the Surviving Corporation.
6. EFFECT OF THE MERGER
The effect of the Merger shall be as provided by the applicable provisions
of the laws of Washington and Delaware. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time of the Merger: the
separate existence of First Savings shall cease; the Surviving Corporation
shall possess all assets and property of every description, and every interest
therein, wherever located, and the rights, privileges, immunities, powers,
franchises and authority, of a public as well as a private nature, of each of
the Constituent Corporations; all obligations belonging to or due either of
the Constituent Corporations shall be vested in, and become the obligations
of, the Surviving Corporation without further act or deed; title to any real
estate or any interest therein shall not revert or in any way be impaired by
reason of the Merger; all rights of creditors and all liens upon any property
of either of the Constituent Corporations shall be preserved unimpaired; and
the Surviving Corporation shall be liable for all the obligations of the
Constituent Corporations and any claim existing, or action or proceeding
pending, by or against either of the Constituent Corporations may be
prosecuted to judgment with right of appeal, as if the Merger had not taken
place. If at any time after the Effective Time of the Merger the Surviving
Corporation shall consider it to be advisable that any further conveyances,
agreements, documents, instruments and assurances of law or any other things
are necessary or desirable to vest, perfect, confirm or record in the
Surviving Corporation the title to any property, rights, privileges, powers
and franchises of the Constituent Corporations or otherwise to carry out the
provisions of this Agreement, the proper directors and officers of the
Constituent Corporation last in office shall execute and deliver, upon the
Surviving Corporation's request, any and all proper conveyances, agreements,
documents, instruments and assurances of law, and do all things necessary or
proper to vest, perfect or confirm title to such property, rights, privileges,
powers and title to such property, rights, privileges, powers and franchises
in the Surviving Corporation, and otherwise to carry out the provisions of
this Agreement.
7. EFFECTIVE TIME OF THE MERGER
As used in this Agreement, the "Effective Time of the Merger" shall mean
the time as which executed counterparts of this Agreement or conformed copies
thereof, together with duly executed Certificates or Articles of Merger have
been duly filed by the Constituent Corporations in the office of the
Washington Secretary of State pursuant to Section 23B.11.050 of the Washington
Business Corporation Act and the Office of the Delaware Secretary of State
pursuant to Section 252 of the Delaware General Corporation Law or at such
time thereafter as is provided in such Certificates or Articles of Merger.
8. TERMINATION
This Agreement may be terminated and the Merger abandoned by mutual consent
of the directors of the Constituent Corporations at any time prior to the
Effective Time of the Merger.
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9. NO THIRD-PARTY BENEFICIARIES
Except as otherwise specifically provided herein, nothing expressed or
implied in this Agreement is intended, or shall be construed, to confer upon
or give any person, firm or corporation, other than the Constituent
Corporations and their respective shareholders, any rights or remedies under
or by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Plan and Agreement
of Merger to be executed as of the date first above written.
FIRST WASHINGTON BANCORP, INC.
By /s/ Gary Sirmon
----------------------------
Gary Sirmon, President
ATTEST: /s/ D. Allan Roth
----------------------------------------
D. Allan Roth, Treasurer and Secretary
FIRST SAVINGS BANK OF WASHINGTON BANCORP, INC.
By: /s/ Gary Sirmon
------------------------
Gary Sirmon, President
ATTEST: /s/ D. Allan Roth
-----------------------------------------
D. Allan Roth, Treasurer and Secretary
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EXHIBIT B
ARTICLES OF INCORPORATION
OF
FIRST WASHINGTON BANCORP, INC.
Pursuant to the provisions of Title 23B of the Revised Code of Washington
("RCW") (the Washington Business Corporation Act), the following shall
constitute the Articles of Incorporation of First Washington Bancorp, Inc., a
Washington corporation:
ARTICLE I. Name. The name of the corporation is First Washington
Bancorp, Inc. (the "corporation").
ARTICLE II. Duration. The duration of the corporation is perpetual.
ARTICLE III. Purpose and Powers. The nature of the business and the
objects and purposes to be transacted, promoted or carried on by the
corporation are to engage in the activities of a bank holding company and in
any other lawful act or business for which corporations may be organized under
the Washington Business Corporation Act (as now in existence or as may
hereafter be amended, the "WBCA").
ARTICLE IV. Capital Stock. The total number of shares of all classes of
capital stock which the corporation has authority to issue is 25,500,000, of
which 25,000,000 shall be common stock of par value of $0.01 per share, and
of which 500,000 shall be serial preferred stock of par value $0.01 per share.
The shares may be issued from time to time as authorized by the board of
directors without further approval of the shareholders, except to the extent
that such approval is required by governing law, rule or regulation. The
consideration for the issuance of the shares shall be paid in full before
their issuance and shall not be less than the stated par value per share.
Upon payment of such consideration such shares shall be deemed to be fully
paid and nonassessable. Upon authorization by its Board of directors, the
corporation may issue its own shares in exchange for or in conversion of its
outstanding shares or distribute its own shares, pro rata to its shareholders
or the shareholders of one or more classes or series, to effectuate stock
dividends or splits, and any such transaction shall not require consideration.
Except as expressly provided by applicable law, these Articles of
Incorporation or by any resolution of the board of directors designating and
establishing the terms of any series of preferred stock, no holders of any
class or series of capital stock shall have any right to vote as a separate
class or series or to vote more than one vote per share. The shareholders of
the corporation shall not be entitled to cumulative voting in any election of
directors.
A description of the different classes and series (if any) of the
corporation's capital stock and a statement of
the designations, and the relative rights, preferences and limitations of the
shares of each class and series (if any) of
capital stock are as follows:
A. Common Stock. On matters on which holders of common stock are
------------ entitled to vote, each holder of shares of common stock
shall be entitled to one vote for each share held by such holder.
Whenever there shall have been paid, or declared and set aside for payment,
to the holders of the outstanding shares of any class of stock having
preference over the common stock as to the payment of dividends, the full
amount of dividends and of sinking fund, retirement fund or other retirement
payments, if any, to which such holders are respectively entitled in
preference to the common stock, then dividends may be paid on the common stock
and on any class or series of stock entitled to participate therewith as to
dividends, out of any assets legally available for the payment of dividends,
but only when and as declared by the board of directors.
In the event of any liquidation, dissolution or winding up of the
corporation, the holders of the common stock (and the holders of any class or
series of stock entitled to participate with the common stock in the
distribution of assets)
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shall be entitled to receive, in cash or in kind, the assets of the
corporation available for distribution remaining after: (i) payment or
provision for payment of the corporation's debts and liabilities; (ii)
distributions or provision for distributions in settlement of its liquidation
account; and (iii) distributions or provision for distributions to holders of
any class or series of stock having preference over the common stock in the
liquidation, dissolution or winding up of the corporation. Each share of
common stock shall have the same relative rights as and be identical in all
respects with all the other shares of common stock.
B. Serial Preferred Stock. The board of directors of the corporation is
---------------------- authorized by resolution or resolutions from
time to time adopted to provide for the issuance of preferred stock in series
and to fix and state the voting powers, designations, preferences and
relative, participating, optional or other special rights of the shares of
each such series and the qualifications, limitations and restrictions thereof,
including, but not limited to, determination of any of the following:
(a) The distinctive serial designation and the number of shares
constituting such series;
(b) The dividend rate or the amount of dividends to be paid on the
shares of such series, whether dividends shall be cumulative and, if so, from
which date or dates, the payment date or dates for dividends, and the
participating or other special rights, if any, with respect to dividends;
(c) The voting powers, full or limited, if any, of shares of such
series;
(d) Whether the shares of such series shall be redeemable and, if
so, the price(s) at which, and the terms and conditions on which, such shares
may be redeemed;
(e) The amount(s) payable upon the shares of such series in the
event of voluntary or involuntary liquidation, dissolution or winding up of
the corporation;
(f) Whether the shares or such series shall be entitled to the
benefit of a sinking or retirement fund to be applied to the purchase or
redemption of such shares, and if so entitled, the amount of such fund and the
manner of its application, including the price(s) at which such shares may be
redeemed or purchased through the application of such fund;
(g) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or of any other series
of the same or any other class or classes of stock of the corporation, and, if
so convertible or exchangeable, the conversion price(s), or the rate or rates
of exchange, and the adjustments thereof, if any, at which such conversion or
exchange may be made, and any other terms and conditions of such conversion or
exchange;
(h) The price or other consideration for which the shares of such
series shall be issued; and
(i) Whether the shares of such series which are redeemed or
converted shall have the status of authorized but unissued shares of serial
preferred stock and whether such shares may be reissued as shares of the same
or any other series of serial preferred stock.
Each share of each series of preferred stock shall have the same relative
rights as and be identical in all respects with all other shares of the same
series.
ARTICLE V. Preemptive Rights. Holders of the capital stock of the
corporation shall not be entitled to preemptive rights with respect to any
shares of the corporation which may be issued.
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ARTICLE VI. Merger, Share Exchange, Sale of Assets and Dissolution. A
merger, share exchange, sale of all or substantially all of the corporation's
assets, or dissolution must be approved by the affirmative vote of holders
of a majority of the outstanding shares entitled to vote thereon, or, if
separate voting by voting groups is required, then by not less than the
affirmative vote of the holders of a majority of the outstanding shares
entitled to be cast by that voting group.
ARTICLE VII. Directors.
A. Number. The number of directors of the corporation shall be such
------ number, not less than 5 nor more than 25 (exclusive of
directors, if any, to be elected by holders of preferred stock of the
corporation, voting separately as a class), as shall be provided from time to
time in or in accordance with the Bylaws; provided, however, that no decrease
in the number of directors shall have the effect of shortening the term of any
incumbent director, and provided further, that no action shall be taken to
decrease or increase the number of directors from time to time unless at least
two-thirds of the directors then in office shall concur in said action.
B. Classified Board. The board of directors shall be divided into three
---------------- groups, with each group containing one-third of the
total number of directors, or as near as may be. The terms of the directors
in the first group shall expire at the first annual shareholders' meeting
following their election, the terms of the second group shall expire at the
second shareholders' meeting following their election, and the terms of the
third group shall expire at the third annual shareholders' meeting following
their election. At each annual shareholders' meeting held thereafter,
directors shall be chosen for a term of three years to succeed those whose
terms expire.
C. Vacancies. Vacancies in the board of directors of the corporation,
--------- however caused, and newly created directorships shall be
filled by a vote of two-thirds of the directors then in office, whether or not
a quorum, and any director so chosen shall hold office for a term expiring at
the annual meeting of stockholders at which the term of the class to which the
director has been chosen expires and when the director's successor is elected
and qualified.
ARTICLE VIII. Removal of Directors. Notwithstanding any other provisions
of these Articles of Incorporation or the corporation's Bylaws (and
notwithstanding the fact that some lesser percentage may be specified by law,
these Articles of Incorporation or the corporation's Bylaws), any director or
the entire Board of directors may be removed only for cause and only by the
affirmative vote of the holders of at least 80% of the total votes eligible to
be cast at a legal meeting called expressly for such purpose. Notwithstanding
the foregoing, whenever the holders of any one or more series of preferred
stock of the corporation shall have the right, voting separately as a class,
to elect one or more directors of the corporation, the preceding provisions of
this Article VIII shall not apply with respect to the director or directors
elected by such holders of preferred stock.
ARTICLE IX. Registered Office and Agent. The registered office of the
corporation shall be located at 10 South First Avenue, Walla Walla, Washington
99362. The initial registered agent of the corporation at such address shall
be Gary Sirmon.
ARTICLE X. Notice for Shareholder Nominations and Proposals.
A. Nominations for the election of directors and proposals for any new
business to be taken up at any annual or special meeting of shareholders may
be made by the board of directors of the corporation or by any shareholder of
the corporation entitled to vote generally in the election of directors. In
order for a shareholder of the corporation to make any such nominations and/or
proposals, he or she shall give notice thereof in writing, delivered or
mailed by first class United States mail, postage prepaid, to the Secretary of
the corporation not less than thirty days nor more than sixty days prior to
any such meeting; provided, however, that if less than thirty-one days' notice
of the meeting is given to shareholders, such written notice shall be
delivered or mailed, as prescribed, to the Secretary of the corporation not
later than the close of the tenth day following the day on which notice of the
meeting was mailed to shareholders. Each such notice given by a shareholder
with respect to nominations for election of directors shall set
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forth (i) the name, age, business address and, if known, residence address of
each nominee proposed in such notice, (ii) the principal occupation or
employment of each such nominees, (iii) the number of shares of stock of the
corporation which are beneficially owned by each such nominee, (iv) such other
information as would be required to be included in a proxy statement
soliciting proxies for the election of the proposed nominee pursuant to
Regulation 14A of the General Rules and Regulations of the Securities Exchange
Act of 1934, including, without limitation, such person's written consent to
being named in the proxy statement as a nominee and to serving as a director,
if elected, and (v) as to the shareholder giving such notice (a) his name and
address as they appear on the corporation's books and (b) the class and number
of shares of the corporation which are beneficially owned by such shareholder.
In addition, the shareholder making such nomination shall promptly provide any
other information reasonably requested by the corporation.
B. Each such notice given by a shareholder to the Secretary with respect
to business proposals to bring before a meeting shall set forth in writing as
to each matter: (i) a brief description of the business desired to be brought
before the meeting and the reasons for conducting such business at the
meeting, (ii) the name and address, as they appear on the corporation's books,
of the shareholder proposing such business; (iii) the class and number of
shares of the corporation which are beneficially owned by the shareholder; and
(iv) any material interest of the shareholder in such business.
Notwithstanding anything in this Certificate to the contrary, no business
shall be conducted at the meeting except in accordance with the procedures set
forth in this Article.
C. The Chairman of the annual or special meeting of shareholders may, if
the facts warrant, determine and declare to the meeting that a nomination or
proposal was not made in accordance with the foregoing procedure, and, if the
Chairman should so determine, the Chairman shall so declare to the meeting and
the defective nomination or proposal shall be disregarded and laid over for
action at the next succeeding adjourned, special or annual meeting of the
shareholders taking place thirty days or more thereafter. This provision
shall not require the holding of any adjourned or special meeting of
shareholders for the purpose of considering such defective nomination or
proposal.
ARTICLE XI. Approval of Certain Business Combinations. The shareholder
vote required to approve Business Combinations (as hereinafter defined) shall
be as set forth in this section.
A. (1) Except as otherwise expressly provided in this Article XI,
the affirmative vote of the holders of (i) at least 80% of the outstanding
shares entitled to vote thereon (and, if any class or series of shares is
entitled to vote thereon separately, the affirmative vote of the holders of at
least 80% of the outstanding shares of each such class or series), and (ii) at
least a majority of the outstanding shares entitled to vote thereon, not
including shares deemed beneficially owned by a Related Person (as hereinafter
defined), shall be required to authorize any of the following:
(a) any merger or consolidation of the corporation with or
into a Related Person;
(b) any sale, lease, exchange, transfer or other
disposition, including without limitation, a mortgage, or any other security
device, of all or any Substantial Part (as hereinafter defined) of the assets
of the corporation (including without limitation any voting securities of a
subsidiary) or of a subsidiary, to a Related
Person;
(c) any merger or consolidation of a Related Person with
or into the corporation or a subsidiary of the corporation;
(d) any sale, lease, exchange, transfer or other
disposition of all or any Substantial Part of the assets of a Related Person
to the corporation or a subsidiary of the corporation;
(e) the issuance of any securities of the corporation or a
subsidiary of the corporation to a Related Person;
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(f) the acquisition by the corporation or a subsidiary of
the corporation of any securities of a Related Person;
(g) any reclassification of the common stock of the
corporation, or any recapitalization involving the common stock of the
corporation; and
(h) any agreement, contract or other arrangement providing
for any of the transactions described in this Article XI.
(2) Such affirmative vote shall be required notwithstanding
any other provision of these Articles of Incorporation, any provision of law,
or any agreement with any regulatory agency or national securities exchange
which might otherwise permit a lesser vote or no vote.
(3) The term "Business Combination" as used in this Article XI
shall mean any transaction which is referred to in any one or more of
subparagraphs (a) through (i) above.
B. The provisions of Part A of this Article XI shall not be
applicable to any particular Business Combination, which shall require only
such affirmative vote as is required by any other provision of these Articles
of Incorporation, any provision of law, or any agreement with any regulatory
agency or national securities exchange, if such particular Business
Combination shall have been approved by two-thirds of the Continuing Directors
(as hereinafter defined); provided, however, that such approval shall only be
effective if obtained at a meeting at which a Continuing Director Quorum (as
hereinafter defined) is present.
C. For the purposes of this Article XI the following definitions
apply:
(1) The term "Related Person" shall mean and include (a) any
individual, corporation, partnership or other person or entity which together
with its "affiliates" (as that term is defined in Rule 12b-2 of the
General Rules and Regulations under the Securities Exchange Act of 1934),
"beneficially owns" (as that term is defined in Rule 13d-3 of the General
Rules and Regulations under the Securities Act of 1934) in the aggregate 10%
or more of the outstanding shares of the common stock of the corporation
(excluding tax-qualified benefit plans of the corporation); and (b) any
"affiliate" (as that term is defined in Rule 12b-2 under the Securities
Exchange Act of 1934) of any such individual, corporation, partnership or
other person or entity. Without limitation, any shares of the common stock of
the corporation which any Related Person has the right to acquire pursuant to
any agreement, or upon exercise or conversion rights, warrants or options, or
otherwise, shall be deemed "beneficially owned" by such Related Person.
(2) The term "Substantial Part" shall mean more than 25% of the
total assets of the corporation as of the end of its most recent fiscal year
prior to when the determination is made.
(3) The term "Continuing Director" shall mean any member of the
board of directors of the corporation who is unaffiliated with the Related
Person and was a member of the board of directors prior to the time the
Related Person became a Related Person, and any successor of a Continuing
Director who is unaffiliated with the Related Person and is recommended to
succeed a Continuing Director by a majority of Continuing Directors then
on the board of directors.
(4) The term "Continuing Director Quorum" shall mean two-thirds
of the Continuing Directors capable of exercising the powers conferred on
them.
ARTICLE XII. Evaluation of Business Combinations. In connection with the
exercise of its judgment in determining what is in the best interests of the
corporation and of the shareholders, when evaluating a Business Combination
(as defined in Article XI) or a tender or exchange offer, the board of
directors of the corporation, in addition to considering the adequacy of the
amount to be paid in connection with any such transaction, shall consider
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all of the following factors and any other factors which it deems relevant:
(i) the social and economic effects of the transaction on the corporation and
its subsidiaries, employees, depositors, loan and other customers, creditors
and other elements of the communities in which the corporation and its
subsidiaries operate or are located; (ii) the business and financial condition
and earnings prospects of the acquiring person or entity, including, but not
limited to, debt service and other existing financial obligations, financial
obligations to be incurred in connection with the acquisition and other
likely financial obligations of the acquiring person or entity and the
possible effect of such conditions upon the corporation and its subsidiaries
and the other elements of the communities in which the corporation and its
subsidiaries operate or are located; and (iii) the competence, experience, and
integrity of the acquiring person or entity and its or their management.
ARTICLE XIII. Limitation of Directors' Liability. To the fullest extent
permitted by the WBCA, a director of the corporation shall not be personally
liable to the corporation or its shareholders for monetary damages for conduct
as a director, except for liability of the director for acts or omissions that
involve: (i) intentional misconduct by the director; (ii) a knowing violation
of law by the director; (iii) conduct violating RCW Section 23B.08.310
(relating to unlawful distributions by the corporation); or (iv) any
transaction from which the director will personally receive a benefit in
money, property or services to which the director is not legally entitled. If
the WBCA is amended in the future to authorize corporate action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the corporation shall be eliminated or limited to
the full extent permitted by the WBCA, as so amended, without any requirement
or further action by shareholders. An amendment or repeal of this Article
XIII shall not adversely affect any right or protection of a director of the
corporation existing at the time of such amendment or repeal.
ARTICLE XIV. Indemnification. The corporation shall indemnify and
advance expenses to its directors, officers, agents and employees as follows:
A. Directors and Officers. In all circumstances and to the full
---------------------- extent permitted by the WBCA, the
corporation shall indemnify any person who is or was a director, officer or
agent of the corporation and who was or 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 and whether formal or
informal (including an action by or in the right of the corporation), by
reason of the fact that he is or was an agent of the corporation, against
expenses, judgments, fines, and amounts paid in settlement and incurred by him
in connection with such action, suit or proceeding. However, such indemnity
shall not apply to: (a) acts or omissions of the director or officer finally
adjudged to violate law; (b) conduct of the director or officer finally
adjudged to violate RCW Section 23B.08.310 (relating to unlawful distributions
by the corporation), or (c) any transaction with respect to which it was
finally adjudged that such director and officer personally received a benefit
in money, property, or services to which the director was not legally
entitled. The corporation shall advance expenses incurred in a proceeding for
such persons pursuant to the terms set forth in a separate directors'
resolution or contract.
B. Implementation. The board of directors may take such action as
-------------- is necessary to carry out these indemnification
and expense advancement provisions. It is expressly empowered to adopt,
approve and amend from time to time such Bylaws, resolutions, contracts or
further indemnification and expense advancement arrangements as may be
permitted by law, implementing these provisions. Such Bylaws, resolutions,
contracts, or further arrangements shall include, but not be limited to,
implementing the manner in which determinations as to any indemnity or
advancement of expenses shall be made.
C. Survival of Indemnification Rights. No amendment or repeal of
---------------------------------- this Article XIV shall apply
to or have any effect on any right to indemnification provided hereunder with
respect to acts or omissions occurring prior to such amendment or repeal.
D. Service for Other Entities. The indemnification and advancement
-------------------------- of expenses provided under this
Article XIV shall apply to directors, officers, employees, or agents of the
corporation for both (a) service in such capacities for the corporation, and
(b) service at the corporations's request as a director, officer, partner,
trustee,
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employee, or agent of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan, or other enterprise. A person is
considered to be serving an employee benefit plan at the corporation's request
if such person's duties to the corporation also impose duties on, or otherwise
involve services by, the director to the plan or to participants in or
beneficiaries of the plan.
E. Insurance. The corporation may purchase and maintain insurance
--------- on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee, or agent
of another corporation, partnership, joint venture, trust or other enterprise
against liability asserted against him and incurred by him in such capacity or
arising out of his status as such, whether or not the corporation would have
had the power to indemnify him against such liability under the provisions of
this bylaw and the WBCA.
F. Other Rights. The indemnification provided by this section
------------ shall not be deemed exclusive of any other right
to which those indemnified may be entitled under any other bylaw, agreement,
vote of shareholders, or disinterested directors, or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such an office, and shall continue as to a person who has ceased to be
a director, trustee, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such person.
ARTICLE XV. Acquisition of Capital Stock
A. Five Year Prohibition. For a period of five years from the effective
--------------------- date of the completion of the conversion of
First Savings Bank of Washington to the stock holding company form (which
entity shall become a wholly-owned subsidiary of the corporation upon such
conversion), no person shall directly or indirectly offer to acquire
or acquire beneficial ownership of more than 10% of any class of equity
security of the corporation, unless such offer or acquisition shall have been
approved in advance by a two-thirds vote of the Continuing Directors, as
defined in Article XI. In addition, for a period for five years from the
completion of the conversion of First Savings Bank of Washington to the stock
holding company form (which entity shall become a wholly-owned subsidiary of
the corporation upon such conversion), and notwithstanding any provision to
the contrary in this Certificate or in the Bylaws of the corporation, where
any person directly or indirectly acquires beneficial ownership of more than
10% of any class of equity security of the corporation in violation of this
Article XV, the securities beneficially owned in excess of 10% shall not be
counted as shares entitled to vote, shall not be voted by any person or
counted as voting shares in connection with any matter submitted to the
stockholders for a vote, and shall not be counted as outstanding for purposes
of determining a quorum or the affirmative vote necessary to approve any
matter submitted to the stockholders for a vote.
B. Prohibition after Five Years. If, at any time after five years from
---------------------------- the effective date of the completion of
the conversion of First Savings Bank of Washington to the stock holding
company form (which entity shall become a wholly-owned subsidiary of the
corporation upon such conversion), any person shall acquire the beneficial
ownership of more than 10% of any class of equity security of the corporation
without the prior approval by a two-thirds vote of the Continuing Directors
(as defined in Article XI), then the record holders of voting stock of the
corporation beneficially owned by such acquiring person shall have only the
voting rights set forth in this paragraph B on any matter requiring their vote
or consent. With respect to each vote in excess of 10% of the voting power of
the outstanding shares of voting stock of the corporation which such record
holders would otherwise be entitled to cast without giving effect to this
paragraph B, the record holders in the aggregate shall be entitled to cast
only one-hundredth of a vote, and the aggregate voting power of such record
holders, so limited for all shares of voting stock of the corporation
beneficially owned by such acquiring person, shall be allocated
proportionately among such record holders. For each such record holder, this
allocation shall be accomplished by multiplying the aggregate voting power, as
so limited, of the outstanding shares of voting stock of the corporation
beneficially owned by such acquiring person by a fraction whose numerator
is the number of votes represented by the shares of voting stock of the
corporation and whose denominator is the total number of votes represented by
the shares of voting stock of the corporation that are beneficially owned by
such acquiring person. A person who is a record owner of shares of voting
stock of the corporation that are beneficially owned simultaneously by more
than one person shall have, with respect to such shares, the right to cast the
least number
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of votes that such person would be entitled to cast under this paragraph B by
virtue of such shares being so beneficially owned by any of such acquiring
persons.
C. Definitions. The term "person" means an individual, a group acting in
----------- concert, a corporation, a partnership, an association, a
joint stock company, a trust, an unincorporated organization or similar
company, a syndicate or any other group acting in concert formed for the
purpose of acquiring, holding or disposing of securities of the corporation.
The term "acquire" includes every type of acquisition, whether effected by
purchase, exchange, operation of law or otherwise. The term "group acting in
concert" includes (a) knowing participation in a joint activity or conscious
parallel action towards a common goal whether or not pursuant to an express
agreement, and (b) a combination or pooling of voting or other interest in the
corporation's outstanding shares for a common purpose, pursuant to any
contract, understanding, relationship, agreement or other arrangement, whether
written or otherwise. The term "beneficial ownership" shall have the meaning
defined in Rule 13d-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended.
D. Exclusion for Employee Benefit Plans, Directors, Officers, Employees
and Certain Proxies.
--------------------------------------------------------------------
The restrictions contained in this Article XV shall not apply to (i) any
underwriter or member of an underwriting or selling group involving a public
sale or resale of securities of the corporation or a subsidiary thereof;
provided, however, that upon completion of the sale or resale of such
securities, no such underwriter or member of such selling group is a
beneficial owner of more than 10% of any class of equity security of the
corporation, (ii) any proxy granted to one or more Continuing Directors (as
defined in Article XI) by a stockholder of the corporation or (iii) any
employee benefit plans of the corporation. In addition, the Continuing
Directors of the corporation, the officers and employees of the corporation
and its subsidiaries, the directors of subsidiaries of the corporation, the
employee benefit plans of the corporation and its subsidiaries, entities
organized or established by the corporation or any subsidiary thereof pursuant
to the terms of such plans and trustees and fiduciaries with respect to such
plans acting in such capacity shall not be deemed to be a group with respect
to their beneficial ownership or voting stock of the corporation solely by
virtue of their being directors, officers or employees of the corporation or a
subsidiary thereof or by virtue of the Continuing Directors of the
corporation, the officers and employees of the corporation and its
subsidiaries and the directors of subsidiaries of the corporation being
fiduciaries or beneficiaries of an employee benefit plan of the corporation or
a subsidiary of the corporation. Notwithstanding the foregoing, no director,
officer or employee of the corporation or any of its subsidiaries or group of
any of them shall be exempt from the provisions of this Article XV should any
such person or group become a beneficial owner of more than 10% of any class
or equity security of the corporation.
E. Determinations. A majority of the Continuing Directors (as defined in
-------------- Article XI) shall have the power to construe and apply
the provisions of the Article and to make all determinations necessary or
desirable to implement such provisions, including but not limited to matters
with respect to (i) the number of shares beneficially owned by any person,
(ii) whether a person has an agreement, arrangement, or understanding with
another as to the matters referred to in the definition of beneficial
ownership, (iii) the application of any other definition or operative
provision of this Article XV to the given facts or (iv) any other matter
relating to the applicability or effect of this Article XV. Any
constructions, applications, or determinations made by the Continuing
Directors pursuant to this Article XV in good faith and on the basis of such
information and assistance as was then reasonably available for such purpose
shall be conclusive and binding upon the corporation and its stockholders
ARTICLE XVI. Special Meeting of Shareholders. Special meetings of the
stockholders of the corporation for any purpose or purposes may be called at
any time by the board of directors of the corporation, or by a committee
of the board of directors which has been duly designated by the board of
directors and whose powers and authorities, as provided in a resolution of the
board of directors or in the Bylaws of the corporation, include the power and
authority to call such meetings, but such special meetings may not be called
by any other person or persons.
ARTICLE XVII. Repurchase of Shares. The corporation may from time to
time, pursuant to authorization by the board of directors of the corporation
and without action by the shareholders, purchase or otherwise acquire shares
of any class, bonds, debentures, notes, scrip, warrants, obligations,
evidences of indebtedness, or other securities of the
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corporation in such manner, upon such terms, and in such amounts as the board
of directors shall determine; subject, however, to such limitations or
restrictions, if any, as are contained in the express terms of any class of
shares of the corporation outstanding at the time of the purchase or
acquisition in question or as are imposed by law.
ARTICLE XVIII. Amendment of Bylaws. In furtherance and not in limitation
of the powers conferred by statute, the board of directors of the corporation
is expressly authorized to make, repeal, alter, amend and rescind the Bylaws
of the corporation by a majority vote of the board of directors.
Notwithstanding any other provision of these Articles of Incorporation or the
Bylaws of the corporation (and notwithstanding the fact that some lesser
percentage may be specified by law), the Bylaws shall not be adopted,
repealed, altered, amended or rescinded by the shareholders of the corporation
except by the vote of the holders of not less than 80% of the outstanding
shares of capital stock of the corporation entitled to vote generally in the
election of directors (considered for this purpose as one class) cast at a
meeting of the shareholders called for that purpose (provided that notice of
such proposed adoption, repeal, alteration, amendment or rescission is
included in the notice of such meeting), or, as set forth above, by the board
of directors.
ARTICLE XIX. Amendment of Articles of Incorporation. The corporation
reserves the right to repeal, alter, amend or rescind any provision contained
in the Articles of Incorporation in the manner now or hereafter prescribed
by law, and all rights conferred on shareholders herein are granted subject to
this reservation. Notwithstanding the foregoing, the provisions set forth in
Articles VIII, X, XI, XII, XIII, XIV, XV, XVI, XVIII and this Article XIX of
these Articles of Incorporation may not be repealed, altered, amended or
rescinded in any respect unless the same is approved by the affirmative vote
of the holders of not less than 80% of the votes entitled to be cast by each
separate voting group entitled to vote thereon, cast at a meeting of the
shareholders called for that purpose (provided that notice of such proposed
adoption, repeal, alteration, amendment or rescission is included in the
notice of such meeting).
ARTICLE XX. Incorporator. The name and mailing address of the
incorporator are Gary Sirmon, 10 South First Avenue, Walla Walla, Washington
99362.
* * *
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REVOCABLE PROXY
FIRST SAVINGS BANK OF WASHINGTON BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
July 24, 1998
The undersigned hereby appoints R.R. Reid, David Casper and Morris Ganguet,
and each of them, with full powers of substitution to act as attorneys and
proxies for the undersigned, to vote all shares of Common Stock of First
Savings Bank of Washington Bancorp, Inc. (the "Company") which the undersigned
is entitled to vote at the Annual Meeting of Shareholders, to be held at the
Elks Lodge at 351 E. Rose Street, Walla Walla, Washington, on Friday, July 24,
1998, at 10:00 a.m., local time, and at any and all adjournments thereof, as
indicated. This proxy also provides voting instructions to the Trustees of
the First Savings Bank of Washington Employee Stock Ownership Plan for
participants with shares allocated to their accounts.
VOTE
1. The election as director of the nominees FOR WITHHELD
--- --------
listed below (except as marked to the
contrary below). [ ] [ ]
Gary Sirmon
Wilber Pribilsky
Robert D. Adams
INSTRUCTIONS: To withhold your vote
for any individual nominee, write the
nominee's name on the line below.
--------------------
2. The change the Company's state of incorporation from FOR AGAINST ABSTAIN
--- ------- -------
Delaware to Washington through a merger of the [ ] [ ] [ ]
Company with a newly formed, wholly owned Washington
subsidiary and at the same time change the name of
the Company to First Washington Bancorp, Inc.
3. In their discretion, upon such other matters
as may properly come before the meeting.
The Board of Directors recommends a vote "FOR" the listed propositions.
The proxies or the trustees of the ESOP, as the case may be, will vote your
shares as directed on this card. If you do not indicate your choices on this
card, the proxies will vote your shares in accordance with the directors'
recommendations. If any other business is presented at the Annual Meeting,
the proxies will vote your shares in accordance with the directors'
recommendations. At the present time, the Board of Directors knows of no
other business to be presented at the Annual Meeting. This proxy card also
confers discretionary authority on the Board of Directors to vote with respect
to the election of any person as director where the nominees are unable to
serve or for good cause will not serve and on matters incident to the conduct
of the Annual Meeting.
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Annual Meeting
or at any adjournment thereof and after notification to the Secretary of the
Company at the Annual Meeting of the shareholder's decision to terminate this
proxy, then the power of said attorneys and proxies shall be deemed terminated
and of no further force and effect.
The undersigned acknowledges receipt from the Company prior to the
execution of this proxy of the Notice of Annual Meeting of Shareholders, a
Proxy Statement dated June 10, 1998 and the 1998 Annual Report to
Shareholders.
Dated: _____________, 1998
- --------------------------- ---------------------------
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
- --------------------------- ---------------------------
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
Please sign exactly as your name appears on the enclosed card. When signing
as attorney, executor, administrator, trustee or guardian, please give your
full title. If shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
<PAGE>
