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:
[ ] Preliminary proxy statement
[x] 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
<PAGE>
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[First Savings Bank of Washington Bancorp, Inc. Letterhead]
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,
/s/Gary Sirmon
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.;
(3) To consider and vote upon a proposal to adopt the First Washington
Bancorp, Inc. 1998 Stock Option Plan; and
(4) 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
/s/D. ALLAN ROTH
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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<PAGE>
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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 10,635,437 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. If a shareholder of record attends the Annual Meeting, he or she
may vote by ballot. The Board recommends a vote:
. FOR the election of the nominees for director;
. FOR approval of changing the Company's state of incorporation from
Delaware to Washington; and
. FOR adoption of the First Washington Bancorp, Inc. 1998 Stock Option
Plan.
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. Adoption of the 1998 Stock Option Plan will require the
affirmative vote of a majority of the shares present in person or by proxy at
the Annual Meeting. Thus, abstentions
1
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will have the same effect as a vote against adoption of the 1998 Stock Option
Plan, while broker non-votes will have no effect on the voting.
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.
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.
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:
4
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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.
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.
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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.
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 $100,000 during the year
ended March 31, 1998.
Long-Term
-------------------
Compensation
Annual Compensation Awards
--------------------------- -------------------
Other Restricted
Annual Stock Securities All Other
Name and Compensa- Award Underlying Compensa-
Position Year Salary($) Bonus($) tion($)(1) ($)(2) Options(#) tion($)(3)
- -------- ---- --------- -------- ---------- ------ ---------- ----------
Gary Sirmon 1998 $228,125 $52,938 -- -- --- $27,210
Chief 1997 209,125 50,000 -- $1,129,012 189,750 70,651
Executive 1996 191,875 42,883 $11,200 -- --- 37,532
Officer and
President
D. Allan
Roth 1998 128,809 24,375 -- -- --- 15,509
Treasurer 1997 123,275 25,000 -- 564,506 83,015 25,560
and 1996 117,962 23,096 -- -- --- 53,699
Secretary
Michael K.
Larsen 1998 128,809 24,375 -- -- --- 15,343
Vice 1997 123,275 25,000 -- 564,506 83,015 22,445
President 1996 117,437 23,295 -- -- --- 53,393
Jesse G.
Foster(4) 1998 125,622 18,000 -- -- --- 14,768
President 1997 79,878 16,706 -- -- 83,015 13,319
of Inland
Empire Bank
__________
(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 $14,768.
(4) The Company acquired Inland Empire Bank on August 1, 1996. Accordingly,
amounts for 1997 reflect only compensation paid from August 1, 1996
through March 31, 1997.
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Option Exercise/Value Table. The following information with respect to
options exercised during the fiscal year ended March 31, 1998, and remaining
unexercised at the end of the fiscal year, is presented for the named
executive officers.
Value of Unexercised
Number of Securities In-the-Money Options
Shares Underlying at Fiscal Year
Acquired Unexercised Options End($)(1)
on Value --------------------- ---------------------
Exercise Realized Exer- Unexer- Exer- Unexer-
Name (#) ($) 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 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
8
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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.
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
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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 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.
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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 *
11/1/95 3/31/96 3/31/97 3/31/98
------- ------- ------- -------
First Savings Bank of
Washington Bancorp, Inc. 100 109 155 218
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 $100 invested in the Company's Common Stock at the closing price
per share and each index on November 1, 1995 (the date on which the Company's
Common Stock was first traded publicly) and that all dividends were
reinvested. Information for the graph was provided by SNL Securities L.C.
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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 is 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 following the time the person became an interested
shareholder, unless (i) the board of directors of the corporation has
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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 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.
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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 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
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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
$75,000. 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.
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
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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.
Shareholders may wish to consult with a tax advisor concerning the specific
tax consequences of the Reincorporation, 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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PROPOSAL 3 -- RATIFICATION OF 1998 STOCK OPTION PLAN
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General
The Company's Board of Directors adopted the First Washington Bancorp,
Inc. 1998 Stock Option Plan (the "Plan") on May 21, 1998, subject to approval
by the Company's stockholders. The objective of the Plan is to reward
performance and build the participants' equity interest in the Company by
providing long-term incentives and rewards to officers, key employees and
other persons who provide services to the Company and its subsidiaries and who
contribute to the success of the Company by their innovation, ability,
industry, loyalty and exceptional service. Although the Plan is intended to
be used primarily to grant stock options in connection with acquisitions of
other financial institutions, the Company anticipates that persons who
previously received or were eligible to receive awards under the Company's
existing option plan may receive awards under the Plan.
The Company currently maintains the First Savings Bank of Washington
Bancorp, Inc. 1996 Stock Option Plan, which was previously approved by
shareholders. Stock options were awarded pursuant to the 1996 Stock Option
Plan to officers and directors of the Company and First Savings, as well as to
the officers and directors of Inland Empire and Towne Bank in connection with
their acquisition by the Company. The Company also assumed certain option
plans of Towne Bancorp, Inc. in connection with the acquisition of Towne Bank.
As of May 1, 1998, options to acquire 1,160,975 shares of Common Stock were
outstanding and 36,318 shares remained available for grant. Awards under
these prior plans will not be affected by adoption of the Plan.
The following summary is a brief description of the material features of
the Plan. This summary is qualified in its entirety by reference to the Plan,
a copy of which is attached as Exhibit C.
Summary of the Plan
Type of Stock Option Grants. The Plan provides for the grant of
incentive stock options ("ISOs"), within the meaning of Section 422 of the
Code, and Non-Qualified Stock Options ("NQSOs"), which do not satisfy the
requirements for ISO treatment.
Administration. The Plan is administered by the Company's Board of
Directors. Subject to the terms of the Plan and resolutions of the Board, the
Board interprets the Plan and is authorized to make all determinations and
decisions thereunder. The Board also determines the participants to whom
stock options will be granted, the type and amount of stock options that will
be granted and the terms and conditions applicable to such grants.
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Participants. All non-employee directors, officers and employees of the
Company and its subsidiaries are eligible to participate in the Plan upon
selection by the Board of Directors.
Number of Shares of Common Stock Available. The Company has reserved
400,000 shares of Common Stock for issuance under the Plan in connection with
the exercise of options. Shares of Common Stock to be issued under the Plan
may be either authorized but unissued shares (including reacquired shares).
Any shares subject to an award which expires or is terminated unexercised will
again be available for issuance under the Plan.
Stock Option Grants. The exercise price of each ISO or NQSO will not be
less than the fair market value of the Common Stock on the date the ISO or
NQSO is granted. The aggregate fair market value of the shares for which ISOs
granted to any employee may be exercisable for the first time by such employee
during any calendar year (under all stock option plans of the Company and its
subsidiaries) may not exceed $100,000.
The exercise price of an option may be paid in cash, Common Stock or
other property, by the surrender of all or part of the option being exercised,
by the immediate sale through a broker of the number of shares being acquired
sufficient to pay the purchase price, or by a combination of these methods, as
and to the extent permitted by the Board.
Under the Plan, the Board may permit participants to transfer options to
eligible transferees (as such eligibility is determined by the Board). Each
option may be exercised during the holder's lifetime only by the holder or the
holder's guardian or legal representative, and after death only by the
holder's beneficiary or, absent a beneficiary, by the estate or by a person
who acquired the right to exercise the option by will or the laws of descent
and distribution. Options may become exercisable in full at the time of grant
or at such other times and in such installments as the Board determines or as
may be specified in the Plan. Options may be exercised during periods before
and after the participant terminates employment, as the case may be, to the
extent authorized by the Board or specified in the Plan. However, no option
may be exercised after the tenth anniversary of the date the option was
granted. The Board may, at any time and without additional consideration,
accelerate the date on which an option becomes exercisable.
Effect of a Change in Control. In the event of a change in control (as
defined in the Plan) of the Company, each outstanding stock option grant will
become fully vested and immediately exercisable. In addition, in the event of
a change in control, the Plan provides for the cash settlement of any
outstanding stock option if provision is not made for the assumption of the
options in connection with the change in control.
Term of the Plan. The Plan will be effective on the date the Plan is
approved by the stockholders of the Company. The Plan will expire on the
tenth anniversary of the effective date, unless terminated sooner by the
Board.
Amendment of the Plan. The Plan allows the Board to amend the Plan
without stockholder approval unless such approval is required to comply with a
tax law or regulatory requirement.
Certain Federal Income Tax Consequences. The following brief description
of the tax consequences of stock option grants under the Plan is based on
federal income tax laws currently in effect and does not purport to be a
complete description of such federal income tax consequences.
There are no federal income tax consequences either to the optionee or to
the Company upon the grant of an ISO or an NQSO. On the exercise of an ISO
during employment or within three months thereafter, the optionee will not
recognize any income and the Company will not be entitled to a deduction,
although the excess of the fair market value of the shares on the date of
exercise over the option price is includible in the optionee's alternative
minimum taxable income, which may give rise to alternative minimum tax
liability for the optionee. Generally, if the optionee disposes of shares
acquired upon exercise of an ISO within two years of the date of grant or one
year of the date of exercise, the optionee will recognize ordinary income, and
the Company will be entitled to a deduction, equal to the excess of the fair
market value of the shares on the date of exercise over the option price
(limited generally to the gain on the sale). The balance of any gain or loss
will be treated as a capital gain or loss to the optionee. If the shares are
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disposed of after the two year and one year periods mentioned above, the
Company will not be entitled to any deduction, and the entire gain or loss for
the optionee will be treated as a capital gain or loss.
On exercise of an NQSO, the excess of the date-of-exercise fair market
value of the shares acquired over the option price will generally be taxable
to the optionee as ordinary income and deductible by the Company, provided the
Company properly withholds taxes in respect of the exercise. The disposition
of shares acquired upon the exercise of a NQSO will generally result in a
capital gain or loss for the optionee, but will have no tax consequences for
the Company.
Board of Directors Recommendation
The Board of Directors recommends a vote "FOR" the adoption of the 1998
Stock Option Plan attached as Exhibit C.
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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
- ------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------
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 has retained Kissel Blake, Inc. to
assist in soliciting proxies of shareholders whose shares are held in street
name by brokers, banks and other institutions at a cost of $5,500 plus
expenses.
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
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of each nominee, (iii) the number of shares of Common Stock of the Company
which are beneficially owned by each 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
/s/D. ALLAN ROTH
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 at 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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EXHIBIT C
FIRST WASHINGTON BANCORP, INC.
1998 STOCK OPTION PLAN
SECTION 1. PURPOSE
The First Washington Bancorp, Inc. 1998 Stock Option Plan (the "Plan") is
hereby established to foster and promote the long-term success of First
Washington Bancorp, Inc. and its shareholders by providing directors, officers
and employees of the Corporation and its subsidiaries with an equity interest
in the Corporation. The Plan will assist the Corporation in attracting and
retaining the highest quality of experienced persons as directors, officers
and employees and in aligning the interests of such persons more closely with
the interests of the Corporation's shareholders by encouraging such parties to
maintain an equity interest in the Corporation.
SECTION 2. DEFINITIONS
For purposes of this Plan, the capitalized terms set forth below shall
have the following meanings:
BOARD means the Board of Directors of the Corporation.
CHANGE IN CONTROL shall mean an event deemed to occur if and when (a) an
offeror other than the Corporation purchases shares of the stock of the
Corporation pursuant to a tender or exchange offer for such shares, (b) any
person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange
Act) is or becomes the beneficial owner, directly or indirectly, of securities
of the Corporation representing twenty-five percent (25%) or more of the
combined voting power of the Corporation's then outstanding securities, (c)
the membership of the board of directors of the Corporation changes as the
result of a contested election, such that individuals who were directors at
the beginning of any twenty-four (24) month period (whether commencing before
or after the date of adoption of this Plan) do not constitute a majority of
the Board at the end of such period, or (d) shareholders of the Corporation
approve a merger, consolidation, sale or disposition of all or substantially
all of the Corporation's assets, or a plan of partial or complete liquidation.
If any of the events enumerated in clauses (a) - (d) occur, the Board shall
determine the effective date of the change in control resulting therefrom, for
purposes of the Plan.
CODE means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.
CORPORATION means, as appropriate, First Washington Bancorp, Inc., a
Washington corporation (or, with respect to the period prior to the effective
date of the reincorporation transaction approved by the Board on May 21, 1998,
its predecessor, First Savings Bank of Washington Bancorp, Inc., a Delaware
corporation).
DIRECTOR shall mean a director of the Corporation or its subsidiaries who
is not also an employee of the Corporation or its subsidiaries.
DISABILITY means any physical or mental injury or disease of a permanent
nature which renders a Participant incapable of meeting the requirements of
the employment or service performed by such Participant immediately prior to
the commencement of such disability. The determination as to whether a
Participant is disabled shall be made by the Board in its sole and absolute
discretion.
EXCHANGE ACT means the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations promulgated thereunder.
FAIR MARKET VALUE shall be determined as follows:
(a) If the Stock is traded or quoted on the Nasdaq Stock Market or other
national securities exchange on any date, then the Fair Market Value shall be
the average of the highest and lowest selling price on such exchange on such
date or, if there were no sales on such date, then on the next prior business
day on which there was a sale.
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(b) If the Stock is not traded or quoted on the Nasdaq Stock Market or
other national securities exchange, then the Fair Market Value shall be a
value determined by the Board in good faith on such basis as it deems
appropriate.
INCENTIVE STOCK OPTION means an option to purchase shares of Stock
granted to a Participant under the Plan which is intended to meet the
requirements of Section 422 of the Code.
NON-QUALIFIED STOCK OPTION means an option to purchase shares of Stock
granted to a Participant under the Plan which is not intended to be an
Incentive Stock Option.
OPTION means an Incentive Stock Option or a Non-Qualified Stock Option.
PARTICIPANT means a Director, Officer or employee of the Corporation or
its subsidiaries selected by the Board to receive an Option under the Plan.
PLAN means this First Washington Bancorp, Inc. 1998 Stock Option Plan.
STOCK means the common stock, $0.01 par value, of the Corporation.
TERMINATION FOR CAUSE shall mean termination because of a Participant's
personal dishonesty, incompetence, willful misconduct, breach of fiduciary
duty involving personal profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or material breach of any provision of any
employment agreement between the Corporation and/or any subsidiary of the
Corporation and a Participant.
SECTION 3. ADMINISTRATION
(a) The Plan shall be administered by the Board. Among other things, the
Board shall have authority, subject to the terms of the Plan, to grant
Options, to determine the individuals to whom and the time or times at which
Options may be granted, to determine whether such Options are to be Incentive
Stock Options or Non-Qualified Stock Options (subject to the requirements of
the Code), to determine the terms and conditions of any Option granted
hereunder, and the exercise price thereof. The Board may, in its sole
discretion, designate a committee of "disinterested" Board members established
in compliance with Rule 16b-3 under the Exchange Act to administer the Plan.
(b) Subject to the other provisions of the Plan, the Board shall have
authority to adopt, amend, alter and repeal such administrative rules,
guidelines and practices governing the operation of the Plan as it shall from
time to time consider advisable, to interpret the provisions of the Plan and
any Option and to decide all disputes arising in connection with the Plan. The
Board may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement in the manner and to the
extent it shall deem appropriate to carry the Plan into effect, in its sole
and absolute discretion. The Board's decision and interpretations shall be
final and binding. Any action of the Board with respect to the administration
of the Plan shall be taken pursuant to a majority vote or by the unanimous
written consent of its members.
SECTION 4. ELIGIBILITY AND PARTICIPATION.
Officers and employees of the Corporation and its subsidiaries and
Directors shall be eligible to participate in the Plan. The Participants under
the Plan shall be selected from time to time by the Board, in its sole
discretion, from among those eligible, and the Board shall determine, in its
sole discretion, the numbers of shares to be covered by the Option or Options
granted to each Participant. Options intended to qualify as Incentive Stock
Options shall be granted only to persons who are eligible to receive such
options under Section 422 of the Code.
SECTION 5. SHARES OF STOCK AVAILABLE FOR OPTIONS
(a) The maximum number of shares of Stock which may be issued and
purchased pursuant to Options granted under the Plan is 400,000, subject to
the adjustments as provided in Section 5 and Section 9, to the extent
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applicable. If an Option granted under this Plan expires or terminates before
exercise or is forfeited for any reason, the shares of Stock subject to such
Option, to the extent of such expiration, termination or forfeiture, shall
again be available for subsequent Option grants under the Plan. Shares of
Stock issued under the Plan may consist in whole or in part of authorized but
unissued (including reacquired) shares.
(b) In the event that the Board determines, in its sole discretion, that
any stock dividend, stock split, reverse stock split or combination,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reclassification, reorganization, merger, consolidation,
split-up, spin-off, combination, exchange of shares, or other similar
transaction affects the Stock such that an adjustment is required in order to
preserve the benefits or potential benefits intended to be granted or made
available under the Plan to Participants, the Board shall have the right to
proportionately and appropriately adjust equitably any or all of (i) the
maximum number and kind of shares of Stock in respect of which Options may be
granted under the Plan to Participants, (ii) the number and kind of shares of
Stock subject to outstanding Options held by Participants, and (iii) the
exercise price with respect to any Options held by Participants, without
changing the aggregate purchase price as to which such Options remain
exercisable, provided that no adjustment shall be made pursuant to this
Section if such adjustment would cause the Plan to fail to comply with Section
422 of the Code with regard to any Incentive Stock Options granted hereunder.
No fractional Shares shall be issued on account of any such adjustment.
(c) Any adjustments under this Section will be made by the Board, whose
determination as to what adjustments, if any, will be made and the extent
thereof will be final, binding and conclusive.
SECTION 6. NON-QUALIFIED STOCK OPTIONS
The Board may, from time to time, grant Non-Qualified Stock Options to
Participants upon such terms and conditions as the Board may determine.
Non-Qualified Stock Options granted under this Plan are subject to the
following terms and conditions:
(a) Price. The purchase price per share of Stock deliverable upon the
exercise of each Non-Qualified Stock Option shall be determined by the Board
on the date the option is granted. Such purchase price shall not be less than
one hundred percent (100%) of the Fair Market Value of the Stock on the date
of grant. Shares may be purchased only upon full payment of the purchase
price. Payment of the purchase price may be made, in whole or in part,
through the surrender of shares of the Stock at the Fair Market Value of such
shares on the date of surrender or through a "cashless exercise" involving a
stock brokerage firm.
(b) Terms of Options. The term during which each Non-Qualified Stock
Option may be exercised shall be determined by the Board, but in no event
shall a Non-Qualified Stock Option be exercisable in whole or in part more
than ten (10) years from the date of grant. Except as provided herein, no
Non-Qualified Stock Option granted under this Plan is transferable except by
will or the laws of descent and distribution. The Board shall have
discretionary authority to permit the transfer of any Non-Qualified Stock
Option to members of a Participant's immediate family, including trusts for
the benefit of such family members and partnerships in which such family
members are the only partners; provided, however, that a transferred
Non-Qualified Stock Option may be exercised by the transferee on any date only
to the extent that the Participant would have been entitled to exercise the
Non-Qualified Stock Option on such date had the Non-Qualified Stock Option not
been transferred. Any transferred Non-Qualified Stock Option shall remain
subject to the terms and conditions of the Participant's stock option
agreement.
(c) Termination of Service. Unless otherwise determined by the Board,
upon the termination of a Participant's employment (or, in the case of a
Director, service as a member of the Board) for any reason other than
Disability, death or Termination for Cause, the Participant's Non-Qualified
Stock Options shall be exercisable only as to those shares which were
immediately exercisable by the Participant at the date of termination and only
for a period of one (1) year following termination. Notwithstanding any
provision set forth herein nor contained in any Agreement relating to the
award of an Option, in the event of Termination for Cause, all rights under
the Participant's Non-Qualified Stock Options shall expire upon termination.
In the event of death or termination as a result of Disability of any
Participant, all Non-Qualified Stock Options held by the Participant, whether
or not exercisable at such time, shall be exercisable by the Participant or
his legal representatives or beneficiaries of the Participant for two (2)
years or such
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longer period as determined by the Board following the date of the
Participant's death or termination of service due to Disability, provided that
in no event shall the period extend beyond the expiration of the Non-Qualified
Stock Option term.
SECTION 7. INCENTIVE STOCK OPTIONS
The Board may, from time to time, grant Incentive Stock Options to
eligible employees. Incentive Stock Options granted pursuant to the Plan shall
be subject to the following terms and conditions:
(a) Price. The purchase price per share of Stock deliverable upon the
exercise of each Incentive Stock Option shall be not less than one hundred
percent (100%) of the Fair Market Value of the Stock on the date of grant.
However, if a Participant owns (or, under Section 422(d) of the Code, is
deemed to own) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of Stock, the purchase price per share of
Stock deliverable upon the exercise of each Incentive Stock Option shall not
be less than one hundred ten percent (110%) of the Fair Market Value of the
Stock on the date of grant. Shares may be purchased only upon payment of the
full purchase price. Payment of the purchase price may be made, in whole or in
part, through the surrender of shares of the Stock at the Fair Market Value of
such shares on the date of surrender or through a "cashless exercise"
involving a stock brokerage firm.
(b) Amounts of Options. Subject to Sections 4(b) and (c), Incentive
Stock Options may be granted to any eligible employee in such amounts as
determined by the Board. In the case of an option intended to qualify as an
Incentive Stock Option, the aggregate Fair Market Value (determined as of the
time the option is granted) of the Stock with respect to which Incentive Stock
Options granted are exercisable for the first time by the Participant during
any calendar year shall not exceed $100,000. The provisions of this Section
7(b) shall be construed and applied in accordance with Section 422(d) of the
Code and the regulations, if any, promulgated thereunder. To the extent an
award is in excess of such limit, it shall be deemed a Non-Qualified Stock
Option. The Board shall have discretion to redesignate options granted as
Incentive Stock Options as Non-Qualified Stock Options.
(c) Terms of Options. The term during which each Incentive Stock Option
may be exercised shall be determined by the Board, but in no event shall an
Incentive Stock Option be exercisable in whole or in part more than ten (10)
years from the date of grant. If at the time an Incentive Stock Option is
granted to an employee, the employee owns Stock representing more than ten
percent (10%) of the total combined voting power of the Corporation (or, under
Section 422(d) of the Code, is deemed to own Stock representing more than ten
percent (10%) of the total combined voting power of all such classes of Stock,
by reason of the ownership of such classes of Stock, directly or indirectly,
by or for any brother, sister, spouse, ancestor or lineal descendent of such
employee, or by or for any corporation, partnership, estate or trust of which
such employee is a shareholder, partner or beneficiary), the Incentive Stock
Option granted to such employee shall not be exercisable after the expiration
of five (5) years from the date of grant. No Incentive Stock Option granted
under this Plan is transferable except by will or the laws of descent and
distribution.
(d) Termination of Employment. Upon the termination of a Participant's
service for any reason other than Disability, death or Termination for Cause,
the Participant's Incentive Stock Options which are then exercisable at the
date of termination may only be exercised by the Participant for a period of
three (3) months following termination, after which time they shall be void.
Notwithstanding any provisions set forth herein nor contained in any Agreement
relating to an award of an Option, in the event of Termination for Cause, all
rights under the Participant's Incentive Stock Options shall expire
immediately upon termination.
Unless otherwise determined by the Board, in the event of death or
termination of service as a result of Disability of any Participant, all
Incentive Stock Options held by such Participant, whether or not exercisable
at such time, shall be exercisable by the Participant or the Participant's
legal representatives or the beneficiaries of the Participant for one (1) year
following the date of the Participant's death or termination of employment as
a result of Disability. In no event shall the exercise period extend beyond
the expiration of the Incentive Stock Option term.
(f) Compliance with Code. The options granted under this Section 7 of
the Plan are intended to qualify as incentive stock options within the meaning
of Section 422 of the Code, but the Corporation makes no warranty as
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to the qualification of any option as an incentive stock option within the
meaning of Section 422 of the Code. A Participant shall notify the Board in
writing in the event that he disposes of Stock acquired upon exercise of an
Incentive Stock Option within the two-year period following the date the
Incentive Stock Option was granted or within the one-year period following the
date he received Stock upon the exercise of an Incentive Stock Option and
shall comply with any other requirements imposed by the Corporation in order
to enable the Corporation to secure the related income tax deduction to which
it will be entitled in such event under the Code.
SECTION 8. EXTENSION
The Board may, in its sole discretion, extend the dates during which all
or any particular Option or Options granted under the Plan may be exercised;
provided, however, that no such extension shall be permitted without the
Participant's consent if it would cause Incentive Stock Options issued under
the Plan to fail to comply with Section 422 of the Code.
SECTION 9. GENERAL PROVISIONS APPLICABLE TO OPTIONS
(a) Each Option under the Plan shall be evidenced by a writing delivered
to the Participant specifying the terms and conditions thereof and containing
such other terms and conditions not inconsistent with the provisions of the
Plan as the Board considers necessary or advisable to achieve the purposes of
the Plan or comply with applicable tax and regulatory laws and accounting
principles.
(b) Each Option may be granted alone, in addition to or in relation to
any other Option. The terms of each Option need not be identical, and the
Board need not treat Participants uniformly. Except as otherwise provided by
the Plan or a particular Option, any determination with respect to an Option
may be made by the Board at the time of grant or at any time thereafter.
(c) Notwithstanding anything in this Plan to the contrary, in the event
of a Change in Control, all then outstanding Options shall become one hundred
percent vested and exercisable as of the effective date of the Change in
Control. If, in connection with or as a consequence of a Change in Control,
the Corporation is merged into or consolidated with another corporation, if
the Corporation becomes a subsidiary of another corporation or if the
Corporation sells or otherwise disposes of substantially all of its assets to
another corporation, then unless provisions are made in connection with such
transactions for the continuance of the Plan and/or the assumption or
substitution of then outstanding Options with new options covering the stock
of the successor corporation, or parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares and prices, such
Options shall be canceled as of the effective date of the merger,
consolidation, or sale and the Participant shall be paid in cash an amount
equal to the difference between the Fair Market Value of the Stock subject to
the Options on the effective date of such corporate event and the exercise
price of the Options. Notwithstanding anything in this Section 9(c) or any
Option agreement to the contrary, in the event that the consummation of a
Change in Control is contingent on using pooling of interests accounting
methodology, the Board may, in its discretion, take any action necessary to
preserve the use of pooling of interests accounting.
(d) The Corporation shall be entitled to withhold (or secure payment
from the Participant in lieu of withholding) the amount of any withholding or
other tax required by law to be withheld or paid by the Corporation with
respect to any Options exercised under this Plan, and the Corporation may
defer issuance of Stock hereunder until and unless indemnified to its
satisfaction against any liability for any such tax. The amount of such
withholding or tax payment shall be determined by the Board or its delegate
and shall be payable by the Participant at such time as the Board determines.
To the extent authorized by the Board, such withholding obligation may also be
satisfied by the payment of cash by the Participant to the Corporation, the
tendering of previously acquired shares of Stock of the Participant or the
withholding, at the appropriate time, of shares of Stock otherwise issuable to
the Participant, in a number sufficient, based upon the Fair Market Value of
such Stock, to satisfy such tax withholding requirements. The Board shall be
authorized, in its sole discretion, to establish such rules and procedures
relating to any such withholding methods as it deems necessary or appropriate,
including, without limitation, rules and procedures relating to elections by
Participants who are subject to the provisions of Section 16 of the Exchange
Act.
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(e) Subject to the terms of the Plan, the Board may at any time, and
from time to time, amend, modify or terminate the Plan or any outstanding
Option held by a Participant, including substituting therefor another Option
of the same or a different type or changing the date of exercise or
realization, provided that the Participant's consent to each action shall be
required unless the Board determines that the action, taking into account any
related action, would not materially and adversely affect the Participant.
SECTION 10. MISCELLANEOUS
(a) No person shall have any claim or right to be granted an Option, and
the grant of an Option shall not be construed as giving a Participant the
right to continued employment or service on the Board. The Corporation
expressly reserves the right at any time to dismiss a Participant free from
any liability or claim under the Plan, except as expressly provided in the
Plan or the applicable Option.
(b) Nothing contained in the Plan shall prevent the Corporation from
adopting other or additional compensation arrangements.
(c) Subject to the provisions of the applicable Option, no Participant
shall have any rights as a shareholder (including, without limitation, any
rights to receive dividends, or non cash distributions with respect to such
shares) with respect to any shares of Stock to be distributed under the Plan
until he or she becomes the holder thereof.
(d) Notwithstanding anything to the contrary expressed in this Plan, any
provisions hereof that vary from or conflict with any applicable Federal or
State securities laws (including any regulations promulgated thereunder) shall
be deemed to be modified to conform to and comply with such laws.
(e) No member of the Board shall be liable for any action or
determination taken or granted in good faith with respect to this Plan nor
shall any member of the Board be liable for any agreement issued pursuant to
this Plan or any grants under it. Each member of the Board shall be
indemnified by the Corporation against any losses incurred in such
administration of the Plan, unless his action constitutes serious and willful
misconduct.
(f) The Plan shall be effective upon approval by the Corporation's
shareholders. The Plan will be so approved if at a meeting of shareholders
held within twelve (12) months of the date of adoption of the Plan by the
Board a quorum is present and the votes of the holders of a majority of the
securities of the Corporation present or represented by proxy and entitled to
vote on such matter shall be cast in favor of its approval.
(g) The Board may amend, suspend or terminate the Plan or any portion
thereof at any time, provided that no amendment shall be made without
shareholder approval if such approval is necessary to comply with any
applicable tax laws or regulatory requirement.
(h) Options may not be granted under the Plan after the tenth
anniversary of the effective date of the Plan, but then outstanding Options
may extend beyond such date.
(i) To the extent that State laws shall not have been preempted by any
laws of the United States, the Plan shall be construed, regulated, interpreted
and administered according to the other laws of the State of Washington.
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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 in the Company's state of FOR AGAINST ABSTAIN
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.
3. The adoption of the First Washington [ ] [ ] [ ]
Bancorp, Inc. 1998 Stock Option Plan.
4. 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
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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.
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