As filed with the Securities and Exchange Commission on April 15, 1999.
Registration No. 333-_______________
SECURITIES AND EXCHANGE COMMISSION
- --------------------------------------------------------------------------------
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SFB Bancorp, Inc.
----------------------------
(Exact name of Registrant as specified in its charter)
Tennessee 62-1683732
- --------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
632 East Elk Avenue
Elizabethton, Tennessee 37643
------------------------------------------
(Address of principal executive offices)
SFB Bancorp, Inc. 1998 Stock Option Plan
------------------------------------------
(Full Title of the Plan)
Richard Fisch, Esq.
Evan M. Seigel, Esq.
Malizia, Spidi, Sloane & Fisch, P.C.
1301 K Street, N.W.
Suite 700 East
Washington, D.C. 20005
(202) 434-4660
------------------------------------------
(Name, address and telephone number of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================================================================================
Title of Proposed Proposed Maximum Amount of
Securities to Amount to be Maximum Offering Aggregate Offering Registration
be Registered Registered(1) Price Per Share Price (2) Fee (2)
- ------------- ------------- --------------- ---------- --------
<S> <C> <C> <C> <C>
Common Stock
$0.10 par value
per share 76,700 shares (2) $1,262,663 $351.02
================================================================================================
</TABLE>
(1) The maximum number of shares of common stock issuable upon awards to be
granted under the SFB Bancorp, Inc. 1998 Stock Option Plan (the "Plan")
consists of 76,700 shares which are being registered under this
Registration Statement and for which a registration fee is being paid.
Additionally, an indeterminate number of additional shares which may be
offered and issued to prevent dilution resulting from stock splits,
dividends or similar transactions.
(2) Under Rule 457(h) of the 1933 Act, the registration fee may be calculated,
inter alia, based upon the price at which the stock options may be
exercised. An aggregate of 76,700 shares are being registered hereby, of
which 73,630 shares are under option at a weighted average exercise price
of $16.6875 per share ($1,228,701 in the aggregate). The remainder of such
shares, which are not presently subject to options (3,070 shares), are
being registered based upon the average of the bid and ask prices of the
Common Stock of the Registrant as reported on the OTC Bulletin Board on
April 12, 1999 of $11.0625 per share ($33,962 in the aggregate) for a total
offering of $1,262,663.
This Registration Statement shall become effective automatically upon the
date of filing, in accordance with Section 8(a) of the Securities Act of 1933
("1933 Act") and Rule 462 of the 1933 Act.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information. *
- ------
Item 2. Registrant Information and Employee Plan Annual Information. *
- ------
*This Registration Statement relates to the registration of 76,700
shares of SFB Bancorp, Inc. (the "Company" or "Registrant") common stock, $.10
par value per share (the "Common Stock") issuable to employees, officers and
directors of the Registrant or its subsidiaries as compensation for services in
accordance with the SFB Bancorp, Inc. 1998 Stock Option Plan (the "Plan").
Documents containing the information required by Part I of this Registration
Statement will be sent or given to participants in the Plan as specified by Rule
428(b)(1). Such documents are not filed with the Securities and Exchange
Commission (the "Commission") either as part of this Registration Statement or
as prospectuses or prospectus supplements pursuant to Rule 424, in reliance on
Rule 428.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
- ------
The Company became subject to the informational requirements of the
Securities Exchange Act of 1934 (the "1934 Act") on May 20, 1997 and,
accordingly, files periodic reports and other information with the Commission.
Reports, proxy statements and other information concerning the Company filed
with the Commission may be inspected and copies may be obtained (at prescribed
rates) at the Commission's Public Reference Section, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549.
The following documents filed by the Company are incorporated in this
Registration Statement by reference:
(a) The Company's Registration Statement on Form SB-2 (No. 333-23505) filed
with the Commission on March 18, 1997 and amendments thereto;
(b) The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998, as filed with the Commission;
(c) The Company's Definitive Proxy Statement related to the 1999 Annual
Meeting of stockholders as filed with the Commission; and
(d) The description of the Company's securities as contained in the
Company's Registration Statement on Form 8-A as filed with the Commission on May
20, 1997.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14, and 15(d) of the 1934 Act, prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents.
<PAGE>
Item 4. Description of Securities.
- ------
Not Applicable
Item 5. Interests of Named Experts and Counsel.
- ------
Not Applicable
Item 6. Indemnification of Directors and Officers.
- ------
Sections 48-18-502 through 48-18-507 of the Tennessee Business Corporation
Act sets forth circumstances under which directors, officers, employees and
agents may be insured or indemnified against liability which they may incur in
their capacities as such. Article XIII of the Company's Certificate of
Incorporation, requires indemnification of directors, officers and employees to
the fullest extent permitted by Tennessee law.
The Registrant believes that these provisions assist the Registrant in,
among other things, attracting and retaining qualified persons to serve the
Registrant and its subsidiary. However, a result of such provisions could be to
increase the expenses of the Registrant and effectively reduce the ability of
stockholders to sue on behalf of the Registrant because certain suits could be
barred or amounts that might otherwise be obtained on behalf of the Registrant
could be required to be repaid by the Registrant to an indemnified party.
The Company may purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee, or agent of the Company or is or was
serving at the request of the Company as a director, officer, employee, or agent
of another corporation, partnership, joint venture, trust, or other enterprise
against any liability asserted against the person and incurred by the person in
any such capacity or arising out of his status as such, whether or not the
Company would have the power to indemnify the person against such liability
under the provisions of the Certificate of Incorporation.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ("1933 Act") may be permitted to directors, officers, or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Commission such indemnification is
against public policy as expressed in the 1933 Act and is therefore
unenforceable.
Item 7. Exemption from Registration Claimed.
- ------
Not Applicable
Item 8. Exhibits.
- ------
For a list of all exhibits filed or included as part of this Registration
Statement, see "Index to Exhibits" at the end of this Registration Statement.
<PAGE>
Item 9. Undertakings.
- ------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement;
(i) To include any prospectus required by Section 10(a)(3) of
the 1933 Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement;
(iii)To include any material information with respect to the
plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided however, that paragraphs (a)(1)(i) and (a)(1)(ii) do no apply if the
Registration Statement is on Form S-3, Form S-8, and the information required to
be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or 15(d) of the
1934 Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the 1933 Act,
each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) If the Registrant is a foreign private issuer, to file a post-effective
amendment to the Registration Statement to include any financial statements
required by Rule 3-19 of Regulation S-X at the start of any delayed offering or
throughout a continuous offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to section 13(a) or section 15(d) of the 1934 Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the 1934 Act) that is incorporated by reference in
the Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the 1934 Act; and, where interim
financial information required to be presented by Article 3 of Regulation S-X is
not set forth in the prospectus, to deliver, or cause to be delivered to each
person to whom the prospectus is sent or given, the latest quarterly report
<PAGE>
that is specifically incorporated by reference in the prospectus to provide such
interim financial information.
(d) Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the Registrant 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 whether such indemnification by it is
against public policy expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Elizabethton in the State of Tennessee, as of April
13, 1999.
SFB BANCORP, INC.
By: /s/ Peter W. Hampton
---------------------------------------------
Peter W. Hampton
President and Chief Executive Officer
(Duly Authorized Representative)
POWER OF ATTORNEY
We, the undersigned directors and officers of SFB Bancorp, Inc., do hereby
severally constitute and appoint Peter W. Hampton as our true and lawful
attorney and agent, to do any and all things and acts in our names in the
capacities indicated below and to execute any and all instruments for us and in
our names in the capacities indicated below which said Peter W. Hampton may deem
necessary or advisable to enable SFB Bancorp, Inc., to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission, in connection with the Registration
Statement on Form S-8 relating to the offering of the Company's Common Stock,
including specifically, but not limited to, power and authority to sign, for any
of us in our names in the capacities indicated below, the Registration Statement
and any and all amendments (including post-effective amendments) thereto; and we
hereby ratify and confirm all that said Peter W. Hampton shall do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated as of the date indicated.
/s/ Peter W. Hampton /s/ Donald W. Tetrick
- ------------------------------------- --------------------------------------
Peter W. Hampton Donald W. Tetrick
President and Director Director
(Principal Executive Officer)
Date: April 13, 1999 Date: April 13, 1999
/s/ Peter W. Hampton, Jr. /s/ John R. Crockett, Jr.
- ------------------------------------- --------------------------------------
Peter W. Hampton, Jr. John R. Crockett, Jr.
Secretary and Director Treasurer and Director
Date: April 13, 1999 Date: April 13, 1999
<PAGE>
/s/ Julian T. Caudill, Jr. /s/ Michael L. McKinney
- ------------------------------------- --------------------------------------
Julian T. Caudill, Jr. Michael L. McKinney
Director Director
Date: April 13, 1999 Date: April 13, 1999
/s/ Bobby Hyatt
- -------------------------------------
Bobby Hyatt
Assistant Vice President
(Principal Accounting Officer)
Date: April 13, 1999
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
4.1 SFB Bancorp, Inc.
1998 Stock Option Plan
4.2 Form of Stock Option Agreement to be entered into with
respect to Incentive Stock Options
4.3 Form of Stock Option Agreement to be entered into with
respect to Non-Incentive Stock Options
4.4 Form of Stock Award Tax Notice
5.1 Opinion of Malizia, Spidi, Sloane & Fisch, P.C. as to
the validity of the Common Stock being registered
23.1 Consent of Malizia, Spidi, Sloane & Fisch, P.C.
(appears in their opinion filed as Exhibit 5.1)
23.2 Consent of Crisp Hughes Evans LLP
24 Reference is made to the Signatures section of this
Registration Statement for the Power of Attorney
contained therein
EXHIBIT 4.1
SFB BANCORP, INC.
1998 STOCK OPTION PLAN
<PAGE>
SFB BANCORP, INC.
1998 STOCK OPTION PLAN
1. Purpose of the Plan. The Plan shall be known as the SFB Bancorp, Inc.
("Company") 1998 Stock Option Plan (the "Plan"). The purpose of the Plan is to
attract and retain qualified personnel for positions of substantial
responsibility and to provide additional incentive to officers, directors, key
employees and other persons providing services to the Company, or any present or
future parent or subsidiary of the Company to promote the success of the
business. The Plan is intended to provide for the grant of "Incentive Stock
Options," within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") and Non-Incentive Stock Options, options that do
not so qualify. The provisions of the Plan relating to Incentive Stock Options
shall be interpreted to conform to the requirements of Section 422 of the Code.
2. Definitions. The following words and phrases when used in this Plan with
an initial capital letter, unless the context clearly indicates otherwise, shall
have the meaning as set forth below. Wherever appropriate, the masculine pronoun
shall include the feminine pronoun and the singular shall include the plural.
(a) "Award" means the grant by the Committee of an Incentive
Stock Option or a Non-Incentive Stock Option, or any combination thereof, as
provided in the Plan.
(b) "Board" shall mean the Board of Directors of the Company,
or any successor or parent corporation thereto.
(c) "Change in Control" shall mean: (i) the sale of all, or a
material portion, of the assets of the Company; (ii) the merger or
recapitalization of the Company whereby the Company is not the surviving entity;
(iii) a change in control of the Company, as otherwise defined or determined by
the Office of Thrift Supervision or regulations promulgated by it; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of that term as it is used in Section 13(d) of the Securities Exchange
Act of 1934 and the rules and regulations promulgated thereunder) of twenty-five
percent (25%) or more of the outstanding voting securities of the Company by any
person, trust, entity or group. This limitation shall not apply to the purchase
of shares by underwriters in connection with a public offering of Company stock,
or the purchase of shares of up to 25% of any class of securities of the Company
by a tax-qualified employee stock benefit plan which is exempt from the approval
requirements, set forth under 12 C.F.R. ss.574.3(c)(1)(vi) as now in effect or
as may hereafter be amended. The term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein. The decision of the Committee as to whether a Change
in Control has occurred shall be conclusive and binding.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and regulations promulgated thereunder.
(e) "Committee" shall mean the Board or the Stock Option
Committee appointed by the Board in accordance with Section 5(a) of the Plan.
(f) "Common Stock" shall mean the common stock of the Company,
or any successor
<PAGE>
or parent corporation thereto.
(g) "Company" shall mean the SFB Bancorp, Inc., the parent
corporation of the Savings Bank, or any successor or Parent thereof.
(h) "Continuous Employment" or "Continuous Status as an
Employee" shall mean the absence of any interruption or termination of
employment with the Company or any present or future Parent or Subsidiary of the
Company. Employment shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by the Company or
in the case of transfers between payroll locations, of the Company or between
the Company, its Parent, its Subsidiaries or a successor.
(i) "Director" shall mean a member of the Board of the
Company, or any successor or parent corporation thereto.
(j) "Director Emeritus" shall mean a person serving as a
director emeritus, advisory director, consulting director, or other similar
position as may be appointed by the Board of Directors of the Savings Bank or
the Company from time to time.
(k) "Disability" means (a) with respect to Incentive Stock
Options, the "permanent and total disability" of the Employee as such term is
defined at Section 22(e)(3) of the Code; and (b) with respect to Non-Incentive
Stock Options, any physical or mental impairment which renders the Participant
incapable of continuing in the employment or service of the Savings Bank or the
Parent in his then current capacity as determined by the Committee.
(l) "Dividend Equivalent Rights" shall mean the rights to
receive a cash payment in accordance with Section 12 of the Plan.
(m) "Effective Date" shall mean the date specified in Section
15 hereof.
(n) "Employee" shall mean any person employed by the Company
or any present or future Parent or Subsidiary of the Company.
(o) "Fair Market Value" shall mean: (i) if the Common Stock is
traded otherwise than on a national securities exchange, then the Fair Market
Value per Share shall be equal to the mean between the last bid and ask price of
such Common Stock on such date or, if there is no bid and ask price on said
date, then on the immediately prior business day on which there was a bid and
ask price. If no such bid and ask price is available, then the Fair Market Value
shall be determined by the Committee in good faith; or (ii) if the Common Stock
is listed on a national securities exchange, then the Fair Market Value per
Share shall be not less than the average of the highest and lowest selling price
of such Common Stock on such exchange on such date, or if there were no sales on
said date, then the Fair Market Value shall be not less than the mean between
the last bid and ask price on such date.
(p) "Incentive Stock Option" or "ISO" shall mean an option to
purchase Shares granted by the Committee pursuant to Section 8 hereof which is
subject to the limitations and restrictions of Section 8 hereof and is intended
to qualify as an incentive stock option under Section 422 of the Code.
2
<PAGE>
(q) "Non-Incentive Stock Option" or "Non-ISO" shall mean an option to
purchase Shares granted pursuant to Section 9 hereof, which option is not
intended to qualify under Section 422 of the Code.
(r) "Option" shall mean an Incentive Stock Option or Non-Incentive Stock
Option granted pursuant to this Plan providing the holder of such Option with
the right to purchase Common Stock.
(s) "Optioned Stock" shall mean stock subject to an Option granted pursuant
to the Plan.
(t) "Optionee" shall mean any person who receives an Option or Award
pursuant to the Plan.
(u) "Parent" shall mean any present or future corporation which would be a
"parent corporation" as defined in Sections 424(e) and (g) of the Code.
(v) "Participant" means any director, officer or key employee of the
Company or any Parent or Subsidiary of the Company or any other person providing
a service to the Company who is selected by the Committee to receive an Award,
or who by the express terms of the Plan is granted an Award.
(w) "Plan" shall mean the SFB Bancorp, Inc. 1998 Stock Option Plan.
(x) "Retirement" shall mean termination of service in all capacities as an
Employee, Director and Director Emeritus following attainment of not less than
age 55 and completion of not less than ten years of Service to the Company or
the Savings Bank. Service to the Company or the Savings Bank rendered prior to
the Effective Date shall be recognized in determining eligibility to meet the
requirements of Retirement under the Plan.
(y) "Savings Bank" shall mean Security Federal Bank, Elizabethton,
Tennessee, or any successor corporation thereto.
(z) "Share" shall mean one share of the Common Stock.
(aa) "Subsidiary" shall mean any present or future corporation which
constitutes a "subsidiary corporation" as defined in Sections 424(f) and (g) of
the Code.
3. Shares Subject to the Plan. Except as otherwise required by the
provisions of Section 13 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed *76,700 Shares.
Such Shares may either be from authorized but unissued shares or shares
purchased in the market for Plan purposes. If an Award shall expire, become
unexercisable, or be forfeited for any reason prior to its exercise, new Awards
may be granted under the Plan with respect to the number of Shares as to which
such expiration has occurred.
- ---------------------
*10% of shares outstanding as of date of Board adoption
3
<PAGE>
4. Six Month Holding Period.
Subject to vesting requirements, if applicable, except in the event of
death or Disability of the Optionee or a Change in Control of the Company, a
minimum of six months must elapse between the date of the grant of an Option and
the date of the sale of the Common Stock received through the exercise of such
Option.
5. Administration of the Plan.
(a) Composition of the Committee. The Plan shall be administered by the
Board of Directors of the Company or a Committee which shall consist of not less
than two Directors of the Company appointed by the Board and serving at the
pleasure of the Board. All persons designated as members of the Committee shall
meet the requirements of a "Non-Employee Director" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934, as amended, as found at 17 CFR
ss.240.16b-3.
(b) Powers of the Committee. The Committee is authorized (but only to the
extent not contrary to the express provisions of the Plan or to resolutions
adopted by the Board) to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the form and content of
Awards to be issued under the Plan and to make other determinations necessary or
advisable for the administration of the Plan, and shall have and may exercise
such other power and authority as may be delegated to it by the Board from time
to time. A majority of the entire Committee shall constitute a quorum and the
action of a majority of the members present at any meeting at which a quorum is
present shall be deemed the action of the Committee. In no event may the
Committee revoke outstanding Awards without the consent of the Participant.
The President of the Company and such other officers as shall be designated
by the Committee are hereby authorized to execute written agreements evidencing
Awards on behalf of the Company and to cause them to be delivered to the
Participants. Such agreements shall set forth the Option exercise price, the
number of shares of Common Stock subject to such Option, the expiration date of
such Options, and such other terms and restrictions applicable to such Award as
are determined in accordance with the Plan or the actions of the Committee.
(c) Effect of Committee's Decision. All decisions, determinations and
interpretations of the Committee shall be final and conclusive on all persons
affected thereby.
6. Eligibility for Awards and Limitations.
(a) The Committee shall from time to time determine the officers,
Directors, key employees and other persons who shall be granted Awards under the
Plan, the number of Awards to be granted to each such persons, and whether
Awards granted to each such Participant under the Plan shall be Incentive and/or
Non-Incentive Stock Options. In selecting Participants and in determining the
number of Shares of Common Stock to be granted to each such Participant, the
Committee may consider the nature of the prior and anticipated future services
rendered by each such Participant, each such Participant's current and potential
contribution to the Company and such other factors as the Committee may, in its
sole discretion, deem relevant. Participants who have been granted an Award may,
if otherwise eligible, be
4
<PAGE>
granted additional Awards.
(b) The aggregate Fair Market Value (determined as of the date the Option
is granted) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by each Employee during any calendar year (under
all Incentive Stock Option plans, as defined in Section 422 of the Code, of the
Company or any present or future Parent or Subsidiary of the Company) shall not
exceed $100,000. Notwithstanding the prior provisions of this Section 6, the
Committee may grant Options in excess of the foregoing limitations, provided
said Options shall be clearly and specifically designated as not being Incentive
Stock Options.
(c) In no event shall Shares subject to Options granted to non-employee
Directors in the aggregate under this Plan exceed more than 28% of the total
number of Shares authorized for delivery under this Plan pursuant to Section 3
herein or more than 7.5% to any individual non-employee Director. In no event
shall Shares subject to Options granted to any Employee exceed more than 28% of
the total number of Shares authorized for delivery under the Plan.
7. Term of the Plan. The Plan shall continue in effect for a term of ten
(10) years from the Effective Date, unless sooner terminated pursuant to Section
18 hereof. No Option shall be granted under the Plan after ten (10) years from
the Effective Date.
8. Terms and Conditions of Incentive Stock Options. Incentive Stock Options
may be granted only to Participants who are Employees. Each Incentive Stock
Option granted pursuant to the Plan shall be evidenced by an instrument in such
form as the Committee shall from time to time approve. Each Incentive Stock
Option granted pursuant to the Plan shall comply with, and be subject to, the
following terms and conditions:
(a) Option Price.
(i) The price per Share at which each Incentive Stock Option granted by the
Committee under the Plan may be exercised shall not, as to any particular
Incentive Stock Option, be less than the Fair Market Value of the Common Stock
on the date that such Incentive Stock Option is granted.
(ii) In the case of an Employee who owns Common Stock representing more
than ten percent (10%) of the outstanding Common Stock at the time the Incentive
Stock Option is granted, the Incentive Stock Option exercise price shall not be
less than one hundred and ten percent (110%) of the Fair Market Value of the
Common Stock on the date that the Incentive Stock Option is granted.
(b) Payment. Full payment for each Share of Common Stock purchased upon the
exercise of any Incentive Stock Option granted under the Plan shall be made at
the time of exercise of each such Incentive Stock Option and shall be paid in
cash (in United States Dollars), Common Stock or a combination of cash and
Common Stock. Common Stock utilized in full or partial payment of the exercise
price shall be valued at the Fair Market Value at the date of exercise. The
Company shall accept full or partial payment in Common Stock only to the extent
permitted by applicable law. No Shares of Common Stock shall be issued until
full payment has been received by the Company, and no Optionee shall have any of
the rights of a stockholder of the Company until Shares of Common Stock are
issued to the Optionee.
5
<PAGE>
(c) Term of Incentive Stock Option. The term of exercisability of each
Incentive Stock Option granted pursuant to the Plan shall be not more than ten
(10) years from the date each such Incentive Stock Option is granted, provided
that in the case of an Employee who owns stock representing more than ten
percent (10%) of the Common Stock outstanding at the time the Incentive Stock
Option is granted, the term of exercisability of the Incentive Stock Option
shall not exceed five (5) years.
(d) Exercise Generally. Except as otherwise provided in Section 10 hereof,
no Incentive Stock Option may be exercised unless the Optionee shall have been
in the employ of the Company at all times during the period beginning with the
date of grant of any such Incentive Stock Option and ending on the date three
(3) months prior to the date of exercise of any such Incentive Stock Option. The
Committee may impose additional conditions upon the right of an Optionee to
exercise any Incentive Stock Option granted hereunder which are not inconsistent
with the terms of the Plan or the requirements for qualification as an Incentive
Stock Option. Except as otherwise provided by the terms of the Plan or by action
of the Committee at the time of the grant of the Options, the Options will be
first exercisable at the rate of 20% on the date of grant and 20% annually
thereafter during such periods of service as an Employee, Director or Director
Emeritus.
(e) Cashless Exercise. Subject to vesting requirements, if applicable, an
Optionee who has held an Incentive Stock Option for at least six months may
engage in the "cashless exercise" of the Option. Upon a cashless exercise, an
Optionee shall give the Company written notice of the exercise of the Option
together with an order to a registered broker-dealer or equivalent third party,
to sell part or all of the Optioned Stock and to deliver enough of the proceeds
to the Company to pay the Option exercise price and any applicable withholding
taxes. If the Optionee does not sell the Optioned Stock through a registered
broker-dealer or equivalent third party, the Optionee can give the Company
written notice of the exercise of the Option and the third party purchaser of
the Optioned Stock shall pay the Option exercise price plus any applicable
withholding taxes to the Company.
(f) Transferability. An Incentive Stock Option granted pursuant to the Plan
shall be exercised during an Optionee's lifetime only by the Optionee to whom it
was granted and shall not be assignable or transferable otherwise than by will
or by the laws of descent and distribution.
9. Terms and Conditions of Non-Incentive Stock Options. Each Non-Incentive
Stock Option granted pursuant to the Plan shall be evidenced by an instrument in
such form as the Committee shall from time to time approve. Each Non-Incentive
Stock Option granted pursuant to the Plan shall comply with and be subject to
the following terms and conditions.
(a) Options Granted to Directors. Subject to the limitations of Section
6(c), Non- Incentive Stock Options to purchase 5,752 shares of Common Stock will
be granted to each Director who is not an Employee as of the Effective Date, at
an exercise price equal to the Fair Market Value of the Common Stock on such
date of grant. The Options will be first exercisable at the rate of 20% on the
Effective Date and 20% annually thereafter during such periods of service as a
Director or Director Emeritus. Upon the death, Disability or Retirement of the
Director or Director Emeritus, such Option shall be deemed immediately 100%
exercisable. Such Options shall continue to be exercisable for a period of ten
years following the date of grant without regard to the continued services of
such Director as a Director or Director Emeritus. In the event of the Optionee's
death, such Options may be exercised by the personal representative
6
<PAGE>
of his estate or person or persons to whom his rights under such Option shall
have passed by will or by the laws of descent and distribution. Options may be
granted to newly appointed or elected non-employee Directors within the sole
discretion of the Committee. The exercise price per Share of such Options
granted shall be equal to the Fair Market Value of the Common Stock at the time
such Options are granted. All Options awarded in accordance with this Section
9(a) as of the Effective Date shall have Dividend Equivalent Rights associated
with such Options, as detailed at Section 12 herein. All outstanding Awards
shall become immediately exercisable in the event of a Change in Control of the
Savings Bank or the Company. Unless otherwise inapplicable, or inconsistent with
the provisions of this paragraph, the Options to be granted to Directors
hereunder shall be subject to all other provisions of this Plan.
(b) Option Price. The exercise price per Share of Common Stock for each
Non-Incentive Stock Option granted pursuant to the Plan shall be at such price
as the Committee may determine in its sole discretion, but in no event less than
the Fair Market Value of such Common Stock on the date of grant as determined by
the Committee in good faith.
(c) Payment. Full payment for each Share of Common Stock purchased upon the
exercise of any Non-Incentive Stock Option granted under the Plan shall be made
at the time of exercise of each such Non-Incentive Stock Option and shall be
paid in cash (in United States Dollars), Common Stock or a combination of cash
and Common Stock. Common Stock utilized in full or partial payment of the
exercise price shall be valued at its Fair Market Value at the date of exercise.
The Company shall accept full or partial payment in Common Stock only to the
extent permitted by applicable law. No Shares of Common Stock shall be issued
until full payment has been received by the Company and no Optionee shall have
any of the rights of a stockholder of the Company until the Shares of Common
Stock are issued to the Optionee.
(d) Term. The term of exercisability of each Non-Incentive Stock Option
granted pursuant to the Plan shall be not more than ten (10) years from the date
each such Non-Incentive Stock Option is granted.
(e) Exercise Generally. The Committee may impose additional conditions upon
the right of any Participant to exercise any Non-Incentive Stock Option granted
hereunder which is not inconsistent with the terms of the Plan. Except as
otherwise provided by the terms of the Plan or by action of the Committee at the
time of the grant of the Options, the Options will be first exercisable at the
rate of 20% on the date of grant and 20% annually thereafter during such periods
of service as an Employee, Director or Director Emeritus.
(f) Cashless Exercise. Subject to vesting requirements, if applicable, an
Optionee who has held a Non-Incentive Stock Option for at least six months may
engage in the "cashless exercise" of the Option. Upon a cashless exercise, an
Optionee shall give the Company written notice of the exercise of the Option
together with an order to a registered broker-dealer or equivalent third party,
to sell part or all of the Optioned Stock and to deliver enough of the proceeds
to the Company to pay the Option exercise price and any applicable withholding
taxes. If the Optionee does not sell the Optioned Stock through a registered
broker-dealer or equivalent third party, the Optionee can give the Company
written notice of the exercise of the Option and the third party purchaser of
the Optioned Stock shall pay the Option exercise price plus any applicable
withholding taxes to the Company.
7
<PAGE>
(g) Transferability. Any Non-Incentive Stock Option granted pursuant to the
Plan shall be exercised during an Optionee's lifetime only by the Optionee to
whom it was granted and shall not be assignable or transferable otherwise than
by will or by the laws of descent and distribution.
10. Effect of Termination of Employment, Disability, Death and Retirement
on Incentive Stock Options.
(a) Termination of Employment. In the event that any Optionee's employment
with the Company shall terminate for any reason, other than Disability or death,
all of any such Optionee's Incentive Stock Options, and all of any such
Optionee's rights to purchase or receive Shares of Common Stock pursuant
thereto, shall automatically terminate on (A) the earlier of (i) or (ii): (i)
the respective expiration dates of any such Incentive Stock Options, or (ii) the
expiration of not more than three (3) months after the date of such termination
of employment; or (B) at such later date as is determined by the Committee at
the time of the grant of such Award based upon the Optionee's continuing status
as a Director or Director Emeritus of the Savings Bank or the Company, but only
if, and to the extent that, the Optionee was entitled to exercise any such
Incentive Stock Options at the date of such termination of employment, and
further that such Award shall thereafter be deemed a Non-Incentive Stock Option.
In the event that a Subsidiary ceases to be a Subsidiary of the Company, the
employment of all of its employees who are not immediately thereafter employees
of the Company shall be deemed to terminate upon the date such Subsidiary so
ceases to be a Subsidiary of the Company.
(b) Disability. In the event that any Optionee's employment with the
Company shall terminate as the result of the Disability of such Optionee, such
Optionee may exercise any Incentive Stock Options granted to the Optionee
pursuant to the Plan at any time prior to the earlier of (i) the respective
expiration dates of any such Incentive Stock Options or (ii) the date which is
one (1) year after the date of such termination of employment, but only if, and
to the extent that, the Optionee was entitled to exercise any such Incentive
Stock Options at the date of such termination of employment.
(c) Death. In the event of the death of an Optionee, any Incentive Stock
Options granted to such Optionee may be exercised by the person or persons to
whom the Optionee's rights under any such Incentive Stock Options pass by will
or by the laws of descent and distribution (including the Optionee's estate
during the period of administration) at any time prior to the earlier of (i) the
respective expiration dates of any such Incentive Stock Options or (ii) the date
which is two (2) years after the date of death of such Optionee but only if, and
to the extent that, the Optionee was entitled to exercise any such Incentive
Stock Options at the date of death. For purposes of this Section 10(c), any
Incentive Stock Option held by an Optionee shall be considered exercisable at
the date of his death if the only unsatisfied condition precedent to the
exercisability of such Incentive Stock Option at the date of death is the
passage of a specified period of time. At the discretion of the Committee, upon
exercise of such Options the Optionee may receive Shares or cash or a
combination thereof. If cash shall be paid in lieu of Shares, such cash shall be
equal to the difference between the Fair Market Value of such Shares and the
exercise price of such Options on the exercise date.
(d) Incentive Stock Options Deemed Exercisable. For purposes of Sections
10(a), 10(b) and 10(c) above, any Incentive Stock Option held by any Optionee
shall be considered exercisable at the date of termination of employment if any
such Incentive Stock Option would have been exercisable at
8
<PAGE>
such date of termination of employment without regard to the Disability or death
of the Participant.
(e) Termination of Incentive Stock Options; Vesting Upon Retirement. Except
as may be specified by the Committee at the time of grant of an Option, to the
extent that any Incentive Stock Option granted under the Plan to any Optionee
whose employment with the Company terminates shall not have been exercised
within the applicable period set forth in this Section 10, any such Incentive
Stock Option, and all rights to purchase or receive Shares of Common Stock
pursuant thereto, as the case may be, shall terminate on the last day of the
applicable period. Notwithstanding the foregoing, the Committee may authorize at
the time of the grant of an Option that such Award shall be immediately 100%
exercisable upon the Retirement of the Optionee.
11. Effect of Termination of Employment, Disability, Death or Retirement on
Non-Incentive Stock Options. The terms and conditions of Non-Incentive Stock
Options relating to the effect of the Retirement or other termination of an
Optionee's employment or service, Disability of an Optionee or his death shall
be such terms and conditions as the Committee shall, in its sole discretion,
determine at the time of termination of service, unless specifically provided
for by the terms of the Agreement at the time of grant of the Award.
12. Dividend Equivalent Rights. The Committee, in its sole discretion, may
include as a term of any Option, the right of the Optionee to receive Dividend
Equivalent Rights. Such rights shall provide that upon the payment of a cash
dividend on the Common Stock, the holder of such Options shall receive payment
of compensation in an amount equivalent to the dividend payable as if such
Options had been exercised and such Common Stock held as of the dividend record
date. Such rights shall expire upon the expiration or exercise of such
underlying Options. Such rights are non-transferable and shall attach to Options
whether or not such Options are immediately exercisable. The dividend equivalent
payments associated with Options shall be paid to the Option holder within 30
days of the dividend payment date of the Common Stock. All Options granted to
non-employee Directors of the Company or the Savings Bank as of the Effective
Date in accordance Section 9(a) of the Plan shall have Dividend Equivalent
Rights associated with such Options.
13. Recapitalization, Merger, Consolidation, Change in Control and Other
Transactions.
(a) Adjustment. Subject to any required action by the stockholders of the
Company, within the sole discretion of the Committee, the aggregate number of
Shares of Common Stock for which Options may be granted hereunder, the number of
Shares of Common Stock covered by each outstanding Option, and the exercise
price per Share of Common Stock of each such Option, shall all be
proportionately adjusted for any increase or decrease in the number of issued
and outstanding Shares of Common Stock resulting from a subdivision or
consolidation of Shares (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares, or
otherwise) or the payment of a stock dividend (but only on the Common Stock) or
any other increase or decrease in the number of such Shares of Common Stock
effected without the receipt or payment of consideration by the Company (other
than Shares held by dissenting stockholders).
(b) Change in Control. All outstanding Awards shall become immediately
exercisable in the event of a Change in Control of the Company. In the event of
such a Change in Control, the
9
<PAGE>
Committee and the Board of Directors will take one or more of the following
actions to be effective as of the date of such Change in Control:
(i) provide that such Options shall be assumed, or equivalent options shall
be substituted, ("Substitute Options") by the acquiring or succeeding
corporation (or an affiliate thereof), provided that: (A) any such Substitute
Options exchanged for Incentive Stock Options shall meet the requirements of
Section 424(a) of the Code, and (B) the shares of stock issuable upon the
exercise of such Substitute Options shall constitute securities registered in
accordance with the Securities Act of 1933, as amended, ("1933 Act") or such
securities shall be exempt from such registration in accordance with Sections
3(a)(2) or 3(a)(5) of the 1933 Act, (collectively, "Registered Securities"), or
in the alternative, if the securities issuable upon the exercise of such
Substitute Options shall not constitute Registered Securities, then the Optionee
will receive upon consummation of the Change in Control transaction a cash
payment for each Option surrendered equal to the difference between (1) the Fair
Market Value of the consideration to be received for each share of Common Stock
in the Change in Control transaction times the number of shares of Common Stock
subject to such surrendered Options, and (2) the aggregate exercise price of all
such surrendered Options, or
(ii) in the event of a transaction under the terms of which the holders of
the Common Stock of the Company will receive upon consummation thereof a cash
payment (the "Merger Price") for each share of Common Stock exchanged in the
Change in Control transaction, to make or to provide for a cash payment to the
Optionees equal to the difference between (A) the Merger Price times the number
of shares of Common Stock subject to such Options held by each Optionee (to the
extent then exercisable at prices not in excess of the Merger Price) and (B) the
aggregate exercise price of all such surrendered Options in exchange for such
surrendered Options.
(c) Extraordinary Corporate Action. Notwithstanding any provisions of the
Plan to the contrary, subject to any required action by the stockholders of the
Company, in the event of any Change in Control, recapitalization, merger,
consolidation, exchange of Shares, spin-off, reorganization, tender offer,
partial or complete liquidation or other extraordinary corporate action or
event, the Committee, in its sole discretion, shall have the power, prior or
subsequent to such action or event to:
(i) appropriately adjust the number of Shares of Common Stock subject to
each Option, the Option exercise price per Share of Common Stock, and the
consideration to be given or received by the Company upon the exercise of any
outstanding Option;
(ii) cancel any or all previously granted Options, provided that
appropriate consideration is paid to the Optionee in connection therewith;
and/or
(iii)make such other adjustments in connection with the Plan as the
Committee, in its sole discretion, deems necessary, desirable, appropriate or
advisable; provided, however, that no action shall be taken by the Committee
which would cause Incentive Stock Options granted pursuant to the Plan to fail
to meet the requirements of Section 422 of the Code without the consent of the
Optionee.
(d) Acceleration. The Committee shall at all times have the power to
accelerate the exercise date of Options previously granted under the Plan.
(e) Non-recurring Dividends. Upon the payment of a special or non-recurring
cash
10
<PAGE>
dividend that has the effect of a return of capital to the stockholders, the
Option exercise price per share shall be adjusted proportionately and in an
equitable manner, except to the extent that the Participant shall otherwise
receive payments associated with Dividend Equivalent Rights attributable to such
Options with regard to such special or non-recurring cash dividends.
Except as expressly provided in Sections 13(a), 13(b) and 13(e) hereof, no
Optionee shall have any rights by reason of the occurrence of any of the events
described in this Section 13.
14. Time of Granting Options. The date of grant of an Option under the Plan
shall, for all purposes, be the date on which the Committee makes the
determination of granting such Option. Notice of the grant of an Option shall be
given to each individual to whom an Option is so granted within a reasonable
time after the date of such grant in a form determined by the Committee.
15. Effective Date. The Plan shall become effective upon the date of
approval of the Plan by the stockholders of the Company. The Committee may make
a determination related to Awards prior to the Effective Date with such Awards
to be effective upon the date of stockholder approval of the Plan.
16. Approval by Stockholders. The Plan shall be approved by stockholders of
the Company within twelve (12) months before or after the date the Plan is
approved by the Board.
17. Modification of Options. At any time and from time to time, the Board
may authorize the Committee to direct the execution of an instrument providing
for the modification of any outstanding Option, provided no such modification,
extension or renewal shall confer on the holder of said Option any right or
benefit which could not be conferred on the Optionee by the grant of a new
Option at such time, or shall not materially decrease the Optionee's benefits
under the Option without the consent of the holder of the Option, except as
otherwise permitted under Section 18 hereof.
18. Amendment and Termination of the Plan.
(a) Action by the Board. The Board may alter, suspend or discontinue the
Plan, except that no action of the Board may increase (other than as provided in
Section 13 hereof) the maximum number of Shares permitted to be optioned under
the Plan, materially increase the benefits accruing to Participants under the
Plan or materially modify the requirements for eligibility for participation in
the Plan unless such action of the Board shall be subject to approval or
ratification by the stockholders of the Company.
(b) Change in Applicable Law. Notwithstanding any other provision contained
in the Plan, in the event of a change in any federal or state law, rule or
regulation which would make the exercise of all or part of any previously
granted Option unlawful or subject the Company to any penalty, the Committee may
restrict any such exercise without the consent of the Optionee or other holder
thereof in order to comply with any such law, rule or regulation or to avoid any
such penalty.
11
<PAGE>
19. Conditions Upon Issuance of Shares; Limitations on Option Exercise;
Cancellation of Option Rights.
(a) Shares shall not be issued with respect to any Option granted under the
Plan unless the issuance and delivery of such Shares shall comply with all
relevant provisions of applicable law, including, without limitation, the
Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder, any applicable state securities laws and the requirements of any
stock exchange upon which the Shares may then be listed.
(b) The inability of the Company to obtain any necessary authorizations,
approvals or letters of non-objection from any regulatory body or authority
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares issuable hereunder shall relieve the Company of any liability with
respect to the non-issuance or sale of such Shares.
(c) As a condition to the exercise of an Option, the Company may require
the person exercising the Option to make such representations and warranties as
may be necessary to assure the availability of an exemption from the
registration requirements of federal or state securities law.
(d) Notwithstanding anything herein to the contrary, upon the termination
of employment or service of an Optionee by the Company or its Subsidiaries for
"cause" as defined at 12 C.F.R. 563.39(b)(1) as determined by the Board of
Directors, all Options held by such Participant shall cease to be exercisable as
of the date of such termination of employment or service.
(e) Upon the exercise of an Option by an Optionee (or the Optionee's
personal representative), the Committee, in its sole and absolute discretion,
may make a cash payment to the Optionee, in whole or in part, in lieu of the
delivery of shares of Common Stock. Such cash payment to be paid in lieu of
delivery of Common Stock shall be equal to the difference between the Fair
Market Value of the Common Stock on the date of the Option exercise and the
exercise price per share of the Option. Such cash payment shall be in exchange
for the cancellation of such Option. Such cash payment shall not be made in the
event that such transaction would result in liability to the Optionee or the
Company under Section 16(b) of the Securities Exchange Act of 1934, as amended,
and regulations promulgated thereunder.
20. Reservation of Shares. During the term of the Plan, the Company will
reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
21. Unsecured Obligation. No Participant under the Plan shall have any
interest in any fund or special asset of the Company by reason of the Plan or
the grant of any Option under the Plan. No trust fund shall be created in
connection with the Plan or any grant of any Option hereunder and there shall be
no required funding of amounts which may become payable to any Participant.
22. Withholding Tax. The Company shall have the right to deduct from all
amounts paid in cash with respect to the cashless exercise of Options and
Dividend Equivalent Rights under the Plan any taxes required by law to be
withheld with respect to such cash payments. Where a Participant or other person
is entitled to receive Shares pursuant to the exercise of an Option, the Company
shall have the right to require the Participant or such other person to pay the
Company the amount of any taxes which the Company is required to withhold with
respect to such Shares, or, in lieu thereof, to retain, or to sell without
notice, a
12
<PAGE>
number of such Shares sufficient to cover the amount required to be withheld.
23. No Employment Rights. No Director, Employee or other person shall have
a right to be selected as a Participant under the Plan. Neither the Plan nor any
action taken by the Committee in administration of the Plan shall be construed
as giving any person any rights of employment or retention as an Employee,
Director or in any other capacity with the Company, the Savings Bank or other
Subsidiaries.
24. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Tennessee, except to the extent that
federal law shall be deemed to apply.
13
EXHIBIT 4.2
FORM OF STOCK OPTION AGREEMENT TO BE ENTERED INTO
WITH RESPECT TO INCENTIVE STOCK OPTIONS
<PAGE>
STOCK OPTION AGREEMENT
----------------------
FOR INCENTIVE STOCK OPTIONS UNDER SECTION 422
OF THE INTERNAL REVENUE CODE
PURSUANT TO THE
SFB BANCORP, INC.
1998 STOCK OPTION PLAN
----------------------
FOR OFFICERS AND EMPLOYEES
STOCK OPTIONS for a total of __________ shares of Common Stock of SFB
Bancorp, Inc. (the "Company"), which Option is intended to qualify as an
Incentive Stock Option under Section 422 of the Internal Revenue Code of 1986,
as amended, is hereby granted to ___________ (the "Optionee") at the price
determined as provided in, and in all respects subject to the terms, definitions
and provisions of the 1998 Stock Option Plan (the "Plan") adopted by the Company
which is incorporated by reference herein, receipt of which is hereby
acknowledged.
1. Option Price. The Option price is $__________ for each Share, being 100%
of the fair market value, as determined by the Committee, of the Common Stock on
the date of grant of this Option.
2. Exercises of Option. This Option shall be exercisable in accordance with
provisions of the Plan, provided the holder of such Option is an employee,
director or director emeritus of the Company as of such date, as follows:
(a) Schedule of Rights to Exercise.
Date Percentage of
-------- Total Shares
Awarded Which
Are Exercisable/
Options Non-forfeitable
------- ---------------
June 1, 1998 .............................. _____ 20%
As of June 1, 1999......................... _____ 40%
As of June 1, 2000......................... _____ 60%
As of June 1, 2001......................... _____ 80%
As of June 1, 2002......................... _____ 100%
<PAGE>
Options awarded to the Optionee shall continue to vest annually during such
period that he serves as an employee, director or director emeritus of the
Savings Bank or the Company. Notwithstanding any provisions in this Section 2,
in no event shall this Option be exercisable prior to six months following the
date of grant. Options shall be 100% vested and exercisable upon the death or
disability of the Optionee, or upon a Change in Control of the Company. Options
shall become "non-incentive" options and remain exercisable for remaining term
upon retirement after not less than 10 years of service, if not exercised within
3 months of retirement.
(b) Method of Exercise. This Option shall be exercisable by a
written notice which shall:
(i) State the election to exercise the Option, the
number of Shares with respect to which it is being exercised, the
person in whose name the stock certificate or certificates for such
Shares of Common Stock is to be registered, his address and Social
Security Number (or if more than one, the names, addresses and Social
Security Numbers of such persons);
(ii) Contain such representations and agreements as
to the holder's investment intent with respect to such shares of Common
Stock as may be satisfactory to the Company's counsel;
(iii) Be signed by the person or persons entitled to
exercise the Option and, if the Option is being exercised by any person
or persons other than the Optionee, be accompanied by proof,
satisfactory to counsel for the Company, of the right of such person or
persons to exercise the Option; and
(iv) Be in writing and delivered in person or by
certified mail to the Treasurer of the Company.
Payment of the purchase price of any Shares with respect to which the
Option is being exercised shall be by certified or bank cashier's or teller's
check. The certificate or certificates for shares of Common Stock as to which
the Option shall be exercised shall be registered in the name of the person or
persons exercising the Option.
(c) Restrictions on Exercise. This Option may not be exercised
if the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities or other law or valid regulation. As
a condition to the Optionee's exercise of this Option, the Company may require
the person exercising this Option to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
3. Non-transferability of Option. This Option may not be transferred in
any manner otherwise than by will or the laws of descent or distribution and may
be exercised during the lifetime of the Optionee only by the Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
<PAGE>
4. Term of Option. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, as set forth below, and may be
exercised during such term only in accordance with the Plan and the terms of
this Option.
5. Dividend Equivalent Rights. The Stock Options represented by this
Agreement shall include the right of the Optionee to receive payment of dividend
equivalent rights. Such rights shall provide that upon the payment of a cash
dividend on the Common Stock, the holder of such Options shall receive payment
of cash in an amount equivalent to the cash dividend payable as if such Options
had been exercised and such Common Stock held as of the dividend record date.
Such rights shall expire upon the expiration or exercise of such underlying
Options. Such rights are non-transferable and shall attach to Options
represented by this Agreement whether or not such Options are immediately
exercisable.
6. Related Matters. Notwithstanding anything herein to the contrary,
additional conditions or restrictions related to such Options may be contained
in the Plan or the resolutions of the Plan Committee authorizing such grant of
Options.
SFB Bancorp, Inc.
Date of Grant: By:
------------------ ---------------------------------------
Attest:
- --------------------------------
[SEAL]
<PAGE>
INCENTIVE STOCK OPTION EXERCISE FORM
PURSUANT TO THE
SFB BANCORP, INC.
1998 STOCK OPTION PLAN
----------------
(Date)
SFB Bancorp, Inc.
632 Elk Avenue
Elizabethton, Tennessee 37643-3378
Dear Sir:
The undersigned elects to exercise the Incentive Stock Option to purchase
__________ shares of Common Stock of SFB Bancorp, Inc. under and pursuant to a
Stock Option Agreement dated _______________, 19____.
Delivered herewith is a certified or bank cashier's or teller's check
and/or shares of Common Stock, valued at the fair market value of the stock on
the date of exercise, as set forth below.
$_____________________ of cash or check
_____________________ of Common Stock
$ Total
=====================
The name or names to be on the stock certificate or certificates and the
address and Social Security Number of such person(s) is as follows:
Name ________________________________
Address______________________________
Social Security Number ______________
Very truly yours,
----------------------------------------
EXHIBIT 4.3
FORM OF STOCK OPTION AGREEMENT TO BE ENTERED INTO
WITH RESPECT TO NON-INCENTIVE STOCK OPTIONS
<PAGE>
STOCK OPTION AGREEMENT
----------------------
FOR NON-INCENTIVE STOCK OPTIONS
PURSUANT TO THE
SFB BANCORP, INC.
1998 STOCK OPTION PLAN
----------------------
NON-EMPLOYEE DIRECTORS
STOCK OPTIONS for a total of _________ shares of Common Stock of SFB
Bancorp, Inc. (the "Company") is hereby granted to ___________________ (the
"Optionee") at the price determined as provided in, and in all respects subject
to the terms, definitions and provisions of the 1998 Stock Option Plan (the
"Plan") adopted by the Company which is incorporated by reference herein,
receipt of which is hereby acknowledged. Such Stock Options do not comply with
Options granted under Section 422 of the Internal Revenue Code of 1986, as
amended.
1. Option Price. The Option price is $__________ for each Share, being 100%
of the fair market value, as determined by the Committee, of the Common Stock on
the date of grant of this Option.
2. Exercise of Option. This Option shall be exercisable in accordance with
provisions of the Plan as follows:
(a) Schedule of Rights to Exercise.
Date Percentage of Total Shares
------ Awarded Which Are
Number Non-forfeitable
------ ---------------
June 1, 1998...................... _____ 20%
As of June 1, 1999................ _____ 40%
As of June 1, 2000................ _____ 60%
As of June 1, 2001................ _____ 80%
As of June 1, 2002................ _____ 100%
Options shall continue to vest annually provided that such holder
remains a director or director's emeritus of the Company. Notwithstanding any
provisions in this Section 2, in no event shall this Option be exercisable prior
to six months following the date of grant. Options shall be 100% vested and
exercisable upon the Retirement after 10 years of service, death or disability
of the Optionee, or upon a Change in Control of the Company.
<PAGE>
(b) Method of Exercise. This Option shall be exercisable by a
written notice which shall:
(i) State the election to exercise the Option, the
number of Shares with respect to which it is being exercised, the
person in whose name the stock certificate or certificates for such
Shares of Common Stock is to be registered, his address and Social
Security Number (or if more than one, the names, addresses and Social
Security Numbers of such persons);
(ii) Contain such representations and agreements as
to the holder's investment intent with respect to such shares of Common
Stock as may be satisfactory to the Company's counsel;
(iii) Be signed by the person or persons entitled to
exercise the Option and, if the Option is being exercised by any person
or persons other than the Optionee, be accompanied by proof,
satisfactory to counsel for the Company, of the right of such person or
persons to exercise the Option; and
(iv) Be in writing and delivered in person or by
certified mail to the Treasurer of the Company.
Payment of the purchase price of any Shares with respect to which the
Option is being exercised shall be by certified or bank cashier's or teller's
check. The certificate or certificates for shares of Common Stock as to which
the Option shall be exercised shall be registered in the name of the person or
persons exercising the Option.
(c) Restrictions on Exercise. This Option may not be exercised
if the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities or other law or valid regulation. As
a condition to the Optionee's exercise of this Option, the Company may require
the person exercising this Option to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
3. Non-transferability of Option. This Option may not be transferred in any
manner otherwise than by will or the laws of descent or distribution and may be
exercised during the lifetime of the Optionee only by the Optionee. The terms of
this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
<PAGE>
4. Term of Option. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, as set forth below, and may be
exercised during such term only in accordance with the Plan and the terms of
this Option.
5. Dividend Equivalent Rights. The Stock Options represented by this
Agreement shall include the right of the Optionee to receive payment of dividend
equivalent rights. Such rights shall provide that upon the payment of a cash
dividend on the Common Stock, the holder of such Options shall receive payment
of cash in an amount equivalent to the cash dividend payable as if such Options
had been exercised and such Common Stock held as of the dividend record date.
Such rights shall expire upon the expiration or exercise of such underlying
Options. Such rights are non-transferable and shall attach to Options
represented by this Agreement whether or not such Options are immediately
exercisable.
6. Related Matters. Notwithstanding anything herein to the contrary,
additional conditions or restrictions related to such Options may be contained
in the Plan or the resolutions of the Plan Committee authorizing such grant of
Options.
SFB Bancorp, Inc.
Date of Grant: By:
---------------------- ---------------------------------
Attest:
- ------------------------------------
[SEAL]
<PAGE>
NON-INCENTIVE STOCK OPTION EXERCISE FORM
PURSUANT TO THE
SFB BANCORP, INC.
1998 STOCK OPTION PLAN
--------------
(Date)
SFB Bancorp, Inc.
632 Elk Avenue
Elizabethton, Tennessee 37643-3378
Dear Sir:
The undersigned elects to exercise the Non-Incentive Stock Option to
purchase ________ shares of Common Stock of SFB Bancorp, Inc. under and pursuant
to a Stock Option Agreement dated _________, 19____.
Delivered herewith is a certified or bank cashier's or teller's check
and/or shares of Common Stock, valued at the fair market value of the stock on
the date of exercise, as set forth below.
$______________ of cash or check
______________ of Common Stock
$ Total
==============
The name or names to be on the stock certificate or certificates and the
address and Social Security Number of such person(s) is as follows:
Name __________________________________________
Address _______________________________________
Social Security Number ________________________
Very truly yours,
-------------------------
EXHIBIT 4.4
FORM OF STOCK AWARD TAX NOTICE
<PAGE>
TAX ISSUES RELATED TO EXERCISE OF STOCK OPTIONS
This memorandum reviews the tax effects upon the exercise of "Non-Incentive
Stock Options" ("NSOs") (those options awarded to non-employee directors and
perhaps to some officers) and "Incentive Stock Options" ("ISOs") (those options
generally awarded to officers and employees).
A. Exercise of an NSO
Upon the exercise of an NSO, the amount by which the fair market value of
the shares on the date of exercise exceeds the exercise price will be taxed to
the optionee as ordinary income. The Company will be entitled to a deduction in
the same amount, provided it makes all required withholdings on the compensation
element of the exercise. In general, the optionee's tax basis in the shares
acquired by exercising an NSO is equal to the fair market value of such shares
on the date of exercise. Upon a subsequent sale of any such shares in a taxable
transaction, the optionee will realize capital gain or loss (long-term or
short-term, depending on whether the shares were held for more than 12 months
before the sale) in an amount equal to the difference between his or her basis
in the shares and the sale price.
Special rules apply if an optionee pays the exercise price upon exercise of
NSOs with previously acquired shares of stock. Except as described below with
respect to shares acquired pursuant to ISOs, such a transaction is treated as a
tax-free exchange of the old shares for the same number of new shares. To that
extent, the optionee's basis in the new shares is the same as his or her basis
in the old shares, i.e., there is a carryover of basis, and the capital gain
holding period runs without interruption from the date when the old shares were
acquired. The value of any new shares received by the optionee in excess of the
number of old shares surrendered less any cash the optionee pays for the new
shares will be taxed as ordinary income. The optionee's basis in the additional
shares is equal to the fair market value of such shares on the date the shares
were transferred, and the capital gain holding period commences on the same
date. The effect of these rules is to defer the date when any gain in the old
shares that are used to buy new shares must be recognized for tax purposes.
Stated differently, these rules allow an optionee to finance the exercise of an
NSO by using shares of stock that he or she already owns, without paying current
tax on any unrealized appreciation in the value of all or a portion of those old
shares.
B. Exercise of an ISO
The holder of an ISO will not be subject to federal income tax upon the
exercise of the ISO, and the Company will not be entitled to a tax deduction by
reason of such exercise, provided that the holder is still employed by the
Company (or terminated employment no longer than three months before the
exercise date). Additional exceptions to this exercise timing requirement apply
upon the death or disability of the optionee. A sale of the shares received upon
the exercise of an ISO which occurs both more than one year after the exercise
<PAGE>
of the ISO and more than two years after the grant of the ISO will result in the
realization of long-term capital gain or loss in the amount of the difference
between the amount realized on the sale and the exercise price for such shares.
Generally, upon a sale or disposition of the shares prior to the foregoing
holding requirements (referred to as a "disqualifying disposition"), the
optionee will recognize ordinary income, and the Company will receive a
corresponding deduction equal to the lesser of (i) the excess of the fair market
value of the shares on the date of transfer to the optionee over the exercise
price, or (ii) the excess of the amount realized on the disposition over the
exercise price for such shares. Currently, ISO exercises are exempt from FICA
and FUTA taxes and a disqualifying disposition is exempt from employer
withholding.
A special rule applies if an optionee pays all or part of the exercise
price of an ISO by surrendering shares of stock that he or she previously
acquired by exercising any other ISO. If the optionee has not held the old
shares for the full duration of the applicable holding periods before
surrendering them, then the surrender of such shares to exercise the new ISO
will be treated as a disqualifying disposition of the old shares. As described
above, the result of a disqualifying disposition is the loss of favorable tax
consequences with respect to the acquisition of the old shares pursuant to the
previously exercised ISO.
Where the applicable holding period requirements have been met, the use of
previously acquired shares of stock to pay all or a portion of the exercise
price of an ISO may offer significant tax advantages, particularly a deferral of
the recognition of any appreciation in the surrendered shares in the same manner
as discussed above with respect to NSOs.
C. Alternative Minimum Tax
The "alternative minimum tax" is paid when such tax exceeds a taxpayer's
regular federal income tax. The alternative minimum tax is calculated based on
alternative minimum taxable income, which is taxable income for federal income
tax purposes, modified by certain adjustments and increased by tax preference
items.
The spread under an ISO - i.e., the difference between (a) the fair market
value of the shares at exercise and (b) the exercise price - is classified as
alternative minimum taxable income for the year of exercise. Alternative minimum
taxable income may be subject to the alternative minimum tax. However, a
disqualifying disposition of the shares subject to the ISO during the same year
in which the ISO was exercised will generally cancel the alternative minimum
taxable income generated upon exercise of the ISO.
When a taxpayer sells stock acquired through the exercise of an ISO,
generally only the difference between the fair market value of the shares on the
date of exercise and the date of sale is used in computing the alternative
minimum tax. The portion of a taxpayer's minimum tax attributable to certain
items of tax preference (including the spread upon the exercise of an ISO) can
be credited against the taxpayer's regular liability in later years to the
extent that liability exceeds the alternative minimum tax.
EXHIBIT 5.1
OPINION OF MALIZIA, SPIDI, SLOANE & FISCH, P.C.
AS TO THE VALIDITY OF THE
COMMON STOCK BEING REGISTERED
<PAGE>
April 15, 1999
Board of Directors
SFB Bancorp, Inc.
632 East Elk Avenue
Elizabethton, Tennessee 37643
RE: Registration Statement on Form S-8:
-----------------------------------
SFB Bancorp, Inc. 1998 Stock Option Plan
Gentlemen:
We have acted as special counsel to SFB Bancorp, Inc., a Tennessee
corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S-8 to be filed with the Securities and Exchange
Commission (the "Registration Statement") under the Securities Act of 1933, as
amended, relating to 76,700 shares of common stock, par value $.10 per share
(the "Common Stock") of the Company which may be issued upon the exercise of
options granted or which may be granted under the SFB Bancorp, Inc. 1998 Stock
Option Plan (the "Plan"), as more fully described in the Registration Statement.
You have requested the opinion of this firm with respect to certain legal
aspects of the proposed offering.
We have examined such documents, records, and matters of law as we have
deemed necessary for purposes of this opinion and based thereon, we are of the
opinion that the Common Stock when issued pursuant to the stock awards granted
under and in accordance with the terms of the Plan will be duly and validly
issued, fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-8.
Sincerely,
/s/ Malizia, Spidi, Sloane & Fisch, P.C.
Malizia, Spidi, Sloane & Fisch, P.C.
EXHIBIT 23.1
CONSENT OF MALIZIA, SPIDI, SLOANE & FISCH, P.C.
(APPEARS IN THEIR OPINION FILED AS EXHIBIT 5.1)
EXHIBIT 23.2
CONSENT OF CRISP HUGHES EVANS LLP
<PAGE>
[LETTERHEAD OF CRISP HUGHES EVANS LLP]
CONSENT OF INDEPENDENT AUDITORS
We consent to incorporation by reference in the Registration Statement on Form
S-8, of our report dated January 22, 1999, relating to the consolidated balance
sheets of SFB Bancorp, Inc. and subsidiary as of December 31, 1998 and 1997 and
the related consolidated statements of income, comprehensive income,
stockholders' equity, and cash flows for the years ending December 31, 1998 and
1997, which report appears in the December 31, 1998 annual report on Form 10-KSB
of SFB Bancorp, Inc.
/s/ Crisp Hughes Evans LLP
CRISP HUGHES EVANS LLP
Asheville, North Carolina
April 13, 1999
