SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material pursuant to Rule 14a-12
Harrodsburg First Financial Bancorp, Inc.
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(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the filing
fee is calculated and state how it was determined.)
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials.
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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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[Harrodsburg First Financial Bancorp, Inc. Letterhead]
December 23, 2002
Dear Stockholder:
On behalf of the Board of Directors and management of Harrodsburg First
Financial Bancorp, Inc. (the "Company"), I cordially invite you to attend the
Annual Meeting of Stockholders to be held at the Ragged Edge Community Theater,
111 South Main Street, Harrodsburg, Kentucky, on January 27, 2003, at 5:30 p.m.,
Eastern Time. The attached Notice of Annual Meeting and Proxy Statement describe
the formal business to be transacted at the Annual Meeting. During the Annual
Meeting, I will report on the operations of the Company. Directors and officers
of the Company, as well as a representative of EKW & Associates, llp, certified
public accountants, will be present to respond to any questions stockholders may
have.
You will be asked to elect three directors and to ratify the appointment of
EKW & Associates, llp as the Company's independent accountants for the fiscal
year ending September 30, 2003. The Board of Directors has unanimously approved
each of these proposals and recommends that you vote FOR them.
Your vote is important, regardless of the number of shares you own and
regardless of whether you plan to attend the Annual Meeting. I encourage you to
read the enclosed proxy statement carefully and sign and return your enclosed
proxy card as promptly as possible because a failure to do so could cause a
delay in the Annual Meeting and additional expense to the Company. A
postage-paid return envelope is provided for your convenience. This will not
prevent you from voting in person, but it will assure that your vote will be
counted if you are unable to attend the Annual Meeting. If you do decide to
attend the Annual Meeting and feel for whatever reason that you want to change
your vote at that time, you will be able to do so. If you are planning to attend
the Annual Meeting, please let us know by marking the appropriate box on the
proxy card.
Sincerely,
/s/Arthur L. Freeman
-------------------------------------------
Arthur L. Freeman
Chairman and Chief Executive Officer
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HARRODSBURG FIRST FINANCIAL BANCORP, INC.
104 SOUTH CHILES STREET
HARRODSBURG, KENTUCKY 40330-1620
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 27, 2003
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of Harrodsburg First Financial Bancorp, Inc. (the "Company"), will be held at
the Ragged Edge Community Theater, 111 South Main Street, Harrodsburg, Kentucky,
on Monday, January 27, 2003, at 5:30 p.m., Eastern Time, for the following
purposes:
1. To elect three directors of the Company; and
2. To ratify the appointment of EKW & Associates, llp as independent public
accountants of the Company for the fiscal year ending September 30, 2003;
all as set forth in the Proxy Statement accompanying this notice, and to
transact such other business as may properly come before the Meeting and any
adjournments. The Board of Directors is not aware of any other business to come
before the Meeting. Stockholders of record at the close of business on December
6, 2002 are the stockholders entitled to vote at the Meeting and any
adjournments thereof.
A copy of the Company's Annual Report for the year ended September 30, 2002
is enclosed.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. WE
ENCOURAGE YOU TO VOTE BY PROXY SO THAT YOUR SHARES WILL BE REPRESENTED AND VOTED
AT THE MEETING EVEN IF YOU CANNOT ATTEND. ALL STOCKHOLDERS OF RECORD CAN VOTE BY
WRITTEN PROXY CARD. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT
REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR
RECORD HOLDER TO VOTE PERSONALLY AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Jack D. Hood
----------------------------------------
Jack D. Hood
Secretary
Harrodsburg, Kentucky
December 23, 2002
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
HARRODSBURG FIRST FINANCIAL BANCORP, INC.
104 SOUTH CHILES STREET
HARRODSBURG, KENTUCKY 40330-1620
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ANNUAL MEETING OF STOCKHOLDERS
JANUARY 27, 2003
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GENERAL
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Harrodsburg First Financial Bancorp, Inc.
(the "Company") to be used at the Annual Meeting of Stockholders of the Company
which will be held at the Ragged Edge Community Theater, 111 South Main Street,
Harrodsburg, Kentucky, on Monday, January 27, 2003, at 5:30 p.m., Eastern Time
(the "Meeting"). The accompanying Notice of Annual Meeting of Stockholders and
this Proxy Statement are being first mailed to stockholders on or about December
23, 2002.
All properly executed written proxies that are delivered pursuant to this
Proxy Statement will be voted on all matters that properly come before the
Meeting for a vote. If your signed proxy specifies instructions with respect to
matters being voted upon, your shares will be voted in accordance with your
instructions. If no instructions are specified, your shares will be voted (a)
FOR the election of the directors named in Proposal 1, (b) FOR Proposal 2
(ratification of independent public accountants); and (c) in the discretion of
the proxy holders, as to any other matters that may properly come before the
Meeting. Your proxy may be revoked at any time prior to being voted by: (i)
filing with the Secretary of the Company (Jack D. Hood at 104 South Chiles
Street, Harrodsburg, Kentucky 40330-1620) written notice of such revocation,
(ii) submitting a duly executed proxy bearing a later date, or (iii) attending
the Meeting and giving the Secretary notice of your intention to vote in person.
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VOTING STOCK AND VOTE REQUIRED
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The Board of Directors has fixed the close of business on December 6, 2002
as the record date for the determination of stockholders who are entitled to
notice of, and to vote at, the Meeting. On the record date, there were 1,334,016
shares of the Company's common stock outstanding (the "Common Stock"). Each
stockholder of record on the record date is entitled to one vote for each share
held.
The certificate of incorporation of the Company ("Certificate of
Incorporation") provides that in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a person who beneficially owns in excess of 10% of the then outstanding shares
of Common Stock (the "Limit") be entitled or permitted to any vote with respect
to the shares held in excess of the Limit. Beneficial ownership is determined
pursuant to the definition in the Certificate of Incorporation and includes
shares beneficially owned by such person or any of his or her affiliates or
associates (as such terms are defined in the Certificate of Incorporation),
shares which such person or his or her affiliates or associates have the right
to acquire upon the exercise of conversion rights or options, and shares as to
which such person and his or her affiliates or associates have or share
investment or voting power, but shall not include shares beneficially owned by
any employee stock ownership plan or similar plan of the issuer or any
subsidiary.
1
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting. With respect to any matter, any shares for which a broker indicates on
the proxy that it does not have discretionary authority as to such shares to
vote on such matter (the "Broker Non- Votes") will not be considered present for
purposes of determining whether a quorum is present. In the event there are not
sufficient votes for a quorum or to ratify any proposals at the time of the
Meeting, the Meeting may be adjourned in order to permit the further
solicitation of proxies.
As to the election of directors, the proxy being provided by the Board
enables a stockholder to vote for the election of the nominees proposed by the
Board of Directors, as submitted as Proposal 1, or to withhold authority to vote
for the nominees being proposed. Directors are elected by a plurality of votes
of the shares present in person or represented by proxy at a meeting and
entitled to vote in the election of directors.
As to the ratification of the independent public accountants, which is
submitted as Proposal 2, a stockholder may: (i) vote "FOR" the ratification;
(ii) vote "AGAINST" the ratification; or (iii) "ABSTAIN" with respect to the
ratification. Unless otherwise required by law, Proposal 2 and all other matters
shall be determined by the affirmative vote of a majority of shares present in
person or represented by proxy and entitled to vote without regard to (a) Broker
Non-Votes, or (b) proxies marked "ABSTAIN" as to that matter.
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PRINCIPAL HOLDERS
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Persons and groups owning in excess of 5% of the Common Stock are required
to file certain reports regarding such ownership pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"). The following table sets
forth, as of the record date, persons or groups who own more than 5% of the
Common Stock. Other than as noted below, management knows of no person or group
that owns more than 5% of the outstanding shares of Common Stock at the record
date.
Percent of Shares
Amount and Nature of of Common Stock
Name of Beneficial Owner Beneficial Ownership Outstanding (%)
------------------------ -------------------- ----------------
First Financial Bank
Employee Stock Ownership Plan Trust
104 South Chiles Street
Harrodsburg, Kentucky(1) 174,570 13.09
Jack D. Hood
104 South Chiles Street
Harrodsburg, Kentucky (2) 85,235 6.25
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(1) The Employee Stock Ownership Plan ("ESOP") purchased such shares for the
exclusive benefit of plan participants with funds borrowed from the
Company. These shares are held in a suspense account and will be allocated
among ESOP participants annually on the basis of compensation as the ESOP
debt is repaid. The board of directors of the Bank has appointed a
committee consisting of non-employee directors Coleman, Letton and Shryock
to serve as the ESOP administrative committee ("ESOP Committee") and to
serve as the ESOP trustees ("ESOP Trustee"). The ESOP Committee or the
Board instructs the ESOP Trustee regarding investment of ESOP plan assets.
The ESOP Trustee must vote all shares allocated to
(footnotes continue on next page)
2
participant accounts under the ESOP as directed by participants.
Unallocated shares and shares for which no timely voting direction is
received, will be voted by the ESOP Trustee as directed by the ESOP
Committee. As of the record date, 95,629 shares have been allocated under
the ESOP to participant accounts.
(2) See "Proposal 1 - Election of Directors."
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the 1934 Act requires the Company's directors and
executive officers to file reports of ownership and changes in ownership of
their equity securities of the Company with the Securities and Exchange
Commission and to furnish the Company with copies of such reports. To the best
of the Company's knowledge, all of the filings by the Company's directors and
executive officers were made on a timely basis during the 2002 fiscal year. The
Company is not aware of other beneficial owners of more than ten percent of its
Common Stock.
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PROPOSAL 1 - ELECTION OF DIRECTORS
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The Certificate of Incorporation requires that directors be divided into
three classes, as nearly equal in number as possible, each class to serve for a
three year period, with approximately one-third of the directors elected each
year. The Board of Directors currently consists of seven members, each of whom
also serves as a director of First Financial Bank (the "Bank").
Arthur L. Freeman, Jack D. Hood, and W. Dudley Shryock (the "Nominees")
have been nominated by the Board of Directors for a term of three years (the
"Nominees"). The Nominees currently serve as directors for the Company. The
Nominees will serve for their respective terms or until his successor has been
elected and qualified.
The persons named as proxies in the enclosed proxy card intend to vote for
the election of the Nominees, unless the proxy card is marked to indicate that
such authorization is expressly withheld. Should the Nominees withdraw or be
unable to serve (which the Board of Directors does not expect) or should any
other vacancy occur in the Board of Directors, it is the intention of the
persons named in the enclosed proxy card to vote for the election of such person
as may be recommended to the Board of Directors by the Nominating Committee of
the Board. If there are no substitute nominees, the size of the Board of
Directors may be reduced. Beneficial ownership of directors and executive
officers of the Company, as a group, is also shown in this table.
3
Shares of
Common Stock
Year First Current Beneficially Percent
Elected or Term to Owned as of Owned
Name and Title Age(1) Appointed(2) Expire December 6, 2002(3) (%)
-------------- ------ ------------ ------- ------------------- ----
BOARD NOMINEES FOR TERM TO EXPIRE IN 2006
Arthur L. Freeman
Chairman of the Board and
Chief Executive Officer 52 1999 2003 11,961 *
Jack D. Hood
Treasurer,
Secretary, and Director 53 1976 2003 85,235 6.25
W. Dudley Shryock
Director 46 1998 2003 16,562 1.23
DIRECTORS CONTINUING IN OFFICE
Jack L. Coleman, Jr.
Director 48 1991 2004 26,851 2.00
Thomas Les Letton
Director 50 1985 2004 29,995 2.23
Wickliffe T. Asbury, Sr.
Executive Vice President of
the Bank and Director 51 1989 2005 46,221 3.40
James W. Dunn
Director 54 2002 2005 293 *
All directors and executive
officers of the Company as
a group (9 persons) -- -- -- 275,452 18.96
------------------------
(1) At September 30, 2002.
(2) Refers to the year the individual first became a director of the Company or
the Bank.
(3) The share amounts also include shares of Common Stock that the following
persons may acquire through the exercise of stock options within 60 days of
record date: Arthur L. Freeman - 4,000; Jack D. Hood - 30,000; W. Dudley
Shryock - 10,000; Jack L. Coleman, Jr. - 10,000; and Thomas Les Letton -
10,000; and Wickliffe T. Asbury, Sr. - 25,000.
(4) Excludes 174,570 shares of Common Stock held by the ESOP for which such
individual serves as a member of the ESOP Committee or Trustee Committee
and has shared voting power. Such individual disclaims beneficial ownership
with respect to such shares held in a fiduciary capacity.
* Less than 1% of the Common Stock outstanding.
4
Biographical Information
The business experience of each director and executive officer of the
Company is set forth below. All directors and executive officers have held their
present positions for five years unless otherwise stated.
Nominees:
Arthur L. Freeman was named Chairman and Chief Executive Officer of the
Company and the Bank, effective October 1, 1999. Mr. Freeman is a member of the
Board of Directors of Citizens Financial Bank, a majority owned subsidiary of
the Company. From January 1998 to September 1999, Mr. Freeman was Commissioner
of the Kentucky Department of Financial Institutions. Prior to his appointment
as Commissioner, he was the Vice President and Director of Thrift Membership for
the Kentucky Bankers Association ("KBA"), following the merger of the Kentucky
League of Savings Institutions with the KBA in 1995. Mr. Freeman served as
President and Executive Director of the Kentucky League for five years and Vice
President for two years. He is also past Treasurer of the State YMCA of
Kentucky, past Director of the Kentucky School Boards Association and Kentucky
School Boards Insurance Trust, founding Director of the Kentucky School Boards
Liquid Asset Fund, past Chairman of the Harrodsburg Board of Education, past
President of the Mercer Chamber of Commerce, past Director of the Mercer Unit of
the American Cancer Society, past Director of the Wilderness Trail YMCA, past
Director of the Harrodsburg Municipal Housing Authority, and a past Director of
the State Bank and Trust Company.
Jack D. Hood is the Treasurer and Secretary of the Company and the Bank.
Mr. Hood is the Treasurer of the Mercer County Extension Office and a member of
the Harrodsburg Rotary Club. Additionally, Mr. Hood was a past Director of the
Kentucky League of Savings Institutions and past President of Financial
Institution Services of Kentucky. Mr. Hood was previously the President and
Chief Operating Officer of the Company and Bank.
W. Dudley Shryock is a certified public accountant, practicing in
Lawrenceburg, Kentucky. Mr. Shryock is treasurer for the Anderson County Fiscal
Court.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
ABOVE NOMINEES FOR DIRECTORS.
Continuing Directors:
Jack L. Coleman, Jr. has been a partner and majority stockholder of
Coleman's Lumber Yard for 28 years. He has also been a member of the Kentucky
House of Representatives for ten years. Mr. Coleman is a member of the Mercer
County Chamber of Commerce.
Thomas Les Letton is the President of The Letton Company, Inc., a real
estate investment company, Old Bridge, Inc., a golf course and development
company, all located in Danville, Kentucky. He is also the secretary of W.F.L.,
Inc. and affiliates which owns thirteen Papa Johns Pizza franchises.
Wickliffe T. Asbury, Sr. is an Executive Vice President of the Bank. Mr.
Asbury is also a member of the Anderson County Habitat For Humanity.
James W. Dunn has been a member of the Board of Directors of the Company
since January 2002 and of the Bank since May 2000. Mr. Dunn is retired and was
the deputy commissioner for employment
5
services for the Commonwealth of Kentucky. He was also co-owner and President of
Joy Temporary Services. Mr. Dunn currently serves on the board of directors and
is a member of the executive committee of the Bluegrass State Skills
Corporation. Additionally, Mr. Dunn serves on the review board of Juvenile
Justice.
Certain Executive Officers Who Are Not Directors:
Teresa W. Noel, 46, is a Vice President and Assistant Treasurer of the
Company and has been with the Bank since 1975, and has been an officer since
1989. Ms. Noel is active in the Harrodsburg High School Band Boosters and serves
on the Harrodsburg City School Board.
Debbie C. Roach, 53, is a Vice President and Assistant Secretary of the
Company and has been with the Bank since 1970, and an officer since 1979.
Meetings and Committees of the Board of Directors
The Company's Board of Directors conducts its business through meetings of
the Board and through activities of its committees. All committees act for both
the Company and the Bank. During the fiscal year ended September 30, 2002, the
Board of Directors held twelve regular meetings and two special meetings. No
director attended fewer than 75% of the total meetings of the Board of Directors
of the Company and committees on which such director served during the fiscal
year ended September 30, 2002. In addition to other committees, as of September
30, 2002, the Company had a Nominating Committee, a Salary Committee, and an
Audit Committee.
The Nominating Committee is comprised of Directors Coleman, Dunn, Letton
and Asbury. Nominations to the Board of Directors made by stockholders must be
made in writing to the Secretary and received by the Company not less than 60
days prior to the anniversary date of the immediately preceding annual meeting
of stockholders of the Company. Notice to the Company of such nominations must
include certain information required pursuant to the Certificate of
Incorporation. The Nominating Committee, which is not a standing committee, met
once during the 2002 fiscal year.
The Salary Committee is comprised of Directors Coleman, Letton, Shryock and
Dunn. The committee meets to review salaries and performance of officers and
employees and recommends compensation adjustments and promotions. The committee
met once during the fiscal year ended September 30, 2002.
The Audit Committee is comprised of Directors Coleman, Letton, Shryock and
Dunn. The Audit Committee meets once a year before a regular board meeting with
the auditors of the Company to discuss the results of the annual audit and any
related matters. The Board of Directors has determined that each of the members
of the Audit Committee is independent in accordance with rules of the Nasdaq
Stock Market. The Board of Directors has adopted a written Audit Committee
Charter. The Audit Committee is a standing committee and responsible for
developing and maintaining the Company's audit program. In addition to one
regularly scheduled meeting annually, the Audit committee is available either as
a group or individually to discuss any matters that might affect the financial
statements, internal controls or other financial aspects of the operations of
the Company.
6
Audit Committee Report
Review of Audited Financial Statements with Management.
The Audit Committee reviewed and discussed the audited financial statement
for the year ended September 30, 2002 with the management of the Company.
Review of Financial Statements and Other Matters with Independent
Accountant.
The Audit Committee discussed with EKW & Associates, llp ("EKW &
Associates"), the Company's independent accountants, the matters required to be
discussed by the statement on Auditing Standards No. 61 (Communications with
Audit Committees), as may be modified or supplemented. The Audit Committee has
received the written disclosures and the letter from EKW & Associates required
by Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees), as may be modified or supplemented, and has discussed with
EKW its independence.
Recommendation that Financial Statements be Included in Annual Report.
Based on the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-KSB for the year ended
September 30, 2002, for filing with the Securities and Exchange Commission.
Audit Committee:
W. Dudley Shryock, Chairman
Jack L. Coleman, Jr.
Thomas Les Letton
James W. Dunn
Audit Fees
The aggregate fees accrued by the Company for professional services
rendered by EKW & Associates for the audit of the Company's consolidated annual
financial statements for the 2002 fiscal year were approximately $48,000. See
"Proposal 2 - Ratification of Independent Public Accountants."
Financial Information Systems Design and Implementation Fees
For the 2002 fiscal year, EKW & Associates rendered no professional
services to the Company or its subsidiaries for financial information systems
design and implementation. Accordingly, for the 2002 fiscal year, there were no
fees billed by EKW & Associates to the Company or its subsidiaries.
All Other Fees
Other than audit fees, there were no other fees billed by EKW & Associates
for the 2002 fiscal year.
7
Director Compensation
In the fiscal year ended September 30, 2002, each member of the Board of
Directors of the Company received a fee of $750 per month, which included a fee
of $500 per month from the Bank. No additional fees are paid for committee
meetings. For the fiscal year ended September 30, 2002, fees paid to all
directors totaled approximately $63,000.
In 1999, under the Stock Option Plan, Mr. Freeman was granted options to
acquire 5,000 shares of Common Stock. The exercise price of the options is the
fair market value of the Company's Common Stock on the date of grant. The
options granted to Mr. Freeman are exercisable at the rate of 20% commencing on
November 15, 1999. See "Stock Awards".
Executive Compensation
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the Chairman of the Board and the
Chief Executive Officer of the Company. No other executive officer of the
Company had a salary and bonus during the fiscal year ended September 30, 2002
that exceeded $100,000 for services rendered in all capacities to the Company
and the Bank.
Long-Term
Compensation
Annual Compensation Awards
-------------------------------- ------------
Securities
Other Annual Underlying All Other
Name and Principal Position Year Salary($) Bonus($)(1) Compensation($)(2) Options(# ) Compensation($)
--------------------------- ---- --------- ----------- ------------------ ----------- ---------------
Arthur L. Freeman 2002 99,300 11,586 9,000 -- 11,790(3)
Chairman of the Board and 2001 97,875 -- 9,000 -- 14,388
Chief Executive Officer 2000 93,600 -- 9,000 5,000 --
----------------------
(1) Consists of the market value of 1,000 shares of Company common stock at the
date such shares were awarded.
(2) Constitutes director fees.
(3) Includes $1,580 in 401(k) matching contributions made by the Company and
1,021 shares allocated to Mr. Freeman's account pursuant to the ESOP at a
cost of $10.00 per share (with an aggregate market value of $11,844).
Employment Agreement. The Bank entered into a three year employment
agreement (the "Agreement") with Arthur L. Freeman, Chairman of the Board and
Chief Executive Officer. Under the Agreement, Mr. Freeman's employment may be
terminated by the Bank for "just cause" as defined in the Agreement. If the Bank
terminates Mr. Freeman without just cause, he will be entitled to a continuation
of his salary from the date of termination through the remaining term of the
Agreement but not less than one year's salary. In the event of the termination
of employment in connection with any change in control of the Bank during the
term of his Agreement, Mr. Freeman will be paid a lump sum amount equal to 2.99
times his five year average taxable compensation. In the event of a change in
control at September 30, 2002, Mr. Freeman would have been entitled to a lump
sum payment of approximately $299,000.
Stock Awards. The following table sets forth information with respect to
previously awarded stock options to purchase the Common Stock granted to Mr.
Freeman and held by him as of September 30, 2002. The Company has not granted to
Mr. Freeman any stock appreciation rights.
8
Aggregated Option Exercises in Last Fiscal Year, and FY-End Option Values
--------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Shares Acquired Value Options at FY-End (#) at FY-End ($)
Name on Exercise(#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- -------------------- ------------ ------------------------- -------------------------
Arthur L. Freeman -- -- 3,000 / 2,000 -- / -- (1)
-----------------------
(1) Based upon an exercise price of $13.50 per share and estimated price of
$11.60 at September 30, 2002.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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The Bank, like many financial institutions, has followed a policy of
granting various types of loans to officers, directors, and employees. The loans
have been made in the ordinary course of business and on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with the Bank's other customers, and do not involve
more than the normal risk of collectibility, or present other unfavorable
features.
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PROPOSAL 2 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
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At the meeting, stockholders will consider and vote upon the appointment of
independent public accountants for the fiscal year ending September 30, 2003.
EKW & Associates was the Company's independent public accountants for the fiscal
year ended September 30, 2002. The board of Directors has approved the selection
of EKW & Associates, as its independent public accountants for the fiscal year
ending September 30, 2003, subject to ratification by the Company's
stockholders. A representative of EKW & Associates is expected to be present at
the Meeting to respond to stockholders' questions and will have the opportunity
to make a statement if he or she so desires.
On August 26, 2002, Miller, Mayer, Sullivan & Stevens, LLP ("MMSS") the
Company's prior independent public accountants resigned. At the same meeting the
Board of Directors selected the accounting firm of EKW & Associates, as
independent public accountants for the September 30, 2002 year. The
determination to replace MMSS was recommended by the Audit Committee and
approved by the full Board of Directors of the Company. The Company's decisions
were effective on August 26, 2002.
MMSS audited the consolidated financial statements of the Company for the
years ended September 30, 2001 and 2000. MMSS's report on the financial
statements for the last two fiscal years of the Company did not contain an
adverse opinion or disclaimer of opinion, nor were such reports qualified or
modified as to uncertainty, audit scope or accounting principles.
During the two fiscal years ended September 30, 2001 and 2000 and the
subsequent interim period October 1, 2001 to August 26, 2002, there were no
disagreements between the Company and MMSS on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of MMSS,
would have caused it to make reference to the subject matter of the
disagreements in connection with its reports.
9
RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT PUBLIC ACCOUNTANTS
REQUIRES THE APPROVAL OF A MAJORITY OF THE VOTES CAST BY THE STOCKHOLDERS OF THE
COMPANY AT THE MEETING. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
"FOR" THE RATIFICATION OF THE APPOINTMENT OF EKW & ASSOCIATES AS THE COMPANY'S
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2003.
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STOCKHOLDER PROPOSALS
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In order to be considered for inclusion in the Company's proxy statement
for the annual meeting of stockholders to be held in 2004, all stockholder
proposals must be submitted to the Secretary at the Company's office, 104 South
Chiles Street, Harrodsburg, Kentucky 40330-1620, on or before August 23, 2003.
Under the Company's bylaws, in order to be considered for possible action by
stockholders at the 2004 annual meeting of stockholders, stockholder proposals
not included in the Company's proxy statement must be submitted to the Secretary
of the Company, at the address set forth above, no later than November 26, 2003.
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OTHER MATTERS
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The Board of Directors does not know of any other matters that are likely
to be brought before the Meeting. If any other matters, not now known, properly
come before the Meeting or any adjournments, the persons named in the enclosed
proxy card, or their substitutes, will vote the proxy in accordance with their
judgment on such matters.
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
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FORM 10-KSB
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A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 2002, AS FILED WITH THE SEC, WILL BE FURNISHED WITHOUT CHARGE TO
STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY,
HARRODSBURG FIRST FINANCIAL BANCORP, INC., 104 SOUTH CHILES STREET, HARRODSBURG,
KENTUCKY 40330-1620.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Jack D. Hood
--------------------------------------
Jack D. Hood
Secretary
Harrodsburg, Kentucky
December 23, 2003
10
APPENDIX
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HARRODSBURG FIRST FINANCIAL BANCORP, INC.
104 SOUTH CHILES STREET
HARRODSBURG, KENTUCKY 40330-1620
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ANNUAL MEETING OF STOCKHOLDERS
JANUARY 27, 2003
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The undersigned hereby appoints the Board of Directors of Harrodsburg First
Financial Bancorp, Inc. (the "Company"), or its designee, with full powers of
substitution, to act as attorneys and proxies for the undersigned, to vote all
shares of common stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders (the "Meeting"), to be held at the Ragged
Edge Community Theater, 111 South Main Street, Harrodsburg, Kentucky, on Monday,
January 27, 2003, at 5:30 p.m., Eastern Time, and at any and all adjournments
thereof, in the following manner:
FOR WITHHELD
----- --------
1. The election as directors of the nominees
listed below for a three-year term: |_| |_|
Arthur L. Freeman
Jack D. Hood
W. Dudley Shryock
INSTRUCTIONS: To withhold your vote for any individual nominee, insert the
nominee's name on the line provided below.
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FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of the appointment of
EKW & Associates, llp as independent
public accountants of the Company
for the fiscal year ending
September 30, 2003. |_| |_| |_|
In their discretion, such attorneys and proxies are authorized to vote upon such
other business as may properly come before the Meeting or any adjournments
thereof.
The Board of Directors recommends a vote "FOR" all of the above listed
propositions. ---
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THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED.
IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS SIGNED PROXY WILL BE
VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME,
THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
MEETING.
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elects to vote at the Meeting, or at
any adjournments thereof, and after notification to the Secretary of the Company
at the Meeting of the stockholder's decision to terminate this Proxy, the power
of said attorneys and proxies shall be deemed terminated and of no further force
and effect. The undersigned may also revoke this Proxy by filing a subsequently
dated Proxy or by written notification to the Secretary of the Company of his or
her decision to terminate this Proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this Proxy of a Notice of Annual Meeting of Stockholders, an Annual
Report to Stockholders and a Proxy Statement dated December 23, 2002.
Dated: |_| Check box if you plan to attend the
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Meeting
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PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
--------------------------------------- ----------------------------------
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this Proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
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PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
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