FIRST KANSAS FINANCIAL CORPORATION
Parent Corporation Of
FIRST KANSAS FEDERAL SAVINGS BANK
600 Main Street * Osawatomie, Kansas 66064 * Phone (913) 755-3033
December 30, 1998
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of First Kansas
Financial Corporation (the "Corporation"), I cordially invite you to attend a
Special Meeting of Stockholders to be held at the Corporation's corporate
headquarters at 600 Main Street, Osawatomie, Kansas, on Tuesday, February 2,
1999, at 1:00 p.m. The attached Notice of Special Meeting and Proxy Statement
describe the formal business to be transacted at the Special Meeting.
The Board of Directors of the Corporation has determined that the
matters to be considered at the Meeting, described in the accompanying Notice of
Special Meeting and Proxy Statement, are in the best interest of the Corporation
and its stockholders. For the reasons set forth in the Proxy Statement, the
Board of Directors unanimously recommends a vote "FOR" each matter to be
considered.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID
RETURN ENVELOPE AS PROMPTLY AS POSSIBLE.
This will not prevent you from voting in person at the Special Meeting, but will
assure that your vote is counted if you are unable to attend the Special
Meeting. YOUR VOTE IS VERY IMPORTANT.
Sincerely,
/s/ Larry V. Bailey
--------------------------------------------
Larry V. Bailey
President
600 Main Street * Osawatomie, Kansas 66064 * Phone: (913) 755-3033
<PAGE>
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FIRST KANSAS FINANCIAL CORPORATION
600 MAIN STREET
OSAWATOMIE, KANSAS 66064
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To be Held on February 2, 1999
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NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the "Meeting") of
First Kansas Financial Corporation (the "Corporation"), will be held at the
Corporation's corporate headquarters at 600 Main Street, Osawatomie, Kansas on
Tuesday, February 2, 1999, at 1:00 p.m.
The Meeting is for the purpose of considering and acting upon the following
matters:
1. The approval of the First Kansas Financial Corporation 1999 Stock
Option Plan (the "1999 Stock Option Plan" or "Option Plan"); and
2. The approval of the First Kansas Federal Savings Bank 1999 Restricted
Stock Plan (the "1999 Restricted Stock Plan" or "RSP").
The transaction of such other business as may properly come before the
Meeting or any adjournments thereof may also be acted upon. If necessary, the
Meeting will be adjourned to solicit additional proxies with respect to approval
of the 1999 Stock Option Plan and the 1999 Restricted Stock Plan. The Board of
Directors is not aware of any other business to come before the Meeting.
Action may be taken on any one of the foregoing proposals at the
Meeting on the date specified above, or on any date or dates to which, by
original or later adjournment, the Meeting may be adjourned. Pursuant to the
Corporation's Bylaws, the Board of Directors has fixed the close of business on
December 11, 1998, as the record date for determination of the stockholders
entitled to vote at the Meeting and any adjournments thereof.
EACH STOCKHOLDER, WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY SIGNED PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED BY FILING WITH THE SECRETARY OF THE CORPORATION A WRITTEN REVOCATION OR
A DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE
MEETING MAY REVOKE HIS PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE
THE MEETING. 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/ Galen E. Graham
---------------------------------------
Galen E. Graham
Secretary
Osawatomie, Kansas
December 30, 1998
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IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE CORPORATION 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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<PAGE>
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PROXY STATEMENT
OF
FIRST KANSAS FINANCIAL CORPORATION
600 MAIN STREET
OSAWATOMIE, KANSAS 66064
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SPECIAL MEETING OF STOCKHOLDERS
February 2, 1999
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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 First Kansas Financial Corporation (the
"Corporation") to be used at a Special Meeting of Stockholders of the
Corporation which will be held at the corporate headquarters at 600 Main Street,
Osawatomie, Kansas on Tuesday, February 2, 1999, 1:00 p.m. local time (the
"Meeting"). The accompanying Notice of Special Meeting of Stockholders and this
Proxy Statement are being first mailed to stockholders on or about December 30,
1998. The Corporation is the parent corporation of First Kansas Federal Savings
Bank (the "Bank"). The Corporation was formed as a Kansas corporation on
February 9, 1998 at the direction of the Bank to acquire all of the outstanding
stock of the Bank issued in connection with the completion of the Bank's
mutual-to-stock conversion on June 25, 1998 (the "Conversion").
At the Meeting, stockholders will consider and vote upon (1) the
approval of the First Kansas Financial Corporation 1999 Stock Option Plan (the
"1999 Stock Option Plan" or "Option Plan"), and (2) the approval of the Bank's
1999 Restricted Stock Plan (the "1999 Restricted Stock Plan" or "RSP"). The
Board of Directors knows of no additional matters that will be presented for
consideration at the Meeting. Execution of a proxy, however, confers on the
designated proxyholder the discretionary authority to vote the shares
represented by such proxy in accordance with their best judgment on such other
business, if any, that may properly come before the Meeting or any adjournment
thereof.
The approval of the 1999 Stock Option Plan provides for authorizing the
issuance of an additional 155,393 shares of common stock of the Corporation
("Common Stock") upon the exercise of stock options to be awarded to officers,
Directors, key employees and other persons providing services to the Corporation
or any present or future parent or subsidiary of the Corporation from time to
time. The approval of the 1999 Restricted Stock Plan provides for authorization
to issue up to an additional 62,157 shares of Common Stock upon awards to
personnel of experience and ability in key positions of responsibility with the
Bank and its subsidiaries from time to time. At the present time, the Bank
intends to acquire such Common Stock for RSP purposes through open-market
purchases. The RSP has the authority, however, to buy such Common Stock directly
from the Corporation. Approval of the Option Plan and the RSP may be deemed to
have certain anti-takeover effects with regard to the Corporation. See "Proposal
I - Approval of the 1999 Stock Option Plan - Effect of Mergers, Change of
Control and Other Adjustments, and -Possible Dilutive Effects of the Option
Plan" and "Proposal II Approval of the 1999 Restricted Stock Plan - Possible
Dilutive Effects of RSP."
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VOTING AND REVOCABILITY OF PROXIES
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Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Corporation at the address above or by the filing
of a later dated proxy prior to a vote being taken on a particular proposal at
the Meeting. A proxy will not be voted if a stockholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors will be voted in
accordance with the directions given therein. Where no instructions are
indicated, signed proxies will be voted "FOR" Proposal I and "FOR" Proposal II
at the Meeting or any adjournment thereof.
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INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
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Employees, officers, and Directors of the Corporation have an interest
in certain matters being presented for stockholder approval. Upon stockholder
approval, employees, officers, and Directors of the Corporation may be granted
stock options and restricted stock awards pursuant to the 1999 Stock Option Plan
and the 1999 Restricted Stock Plan. The approval of the 1999 Stock Option Plan
and the RSP are being presented as Proposal I and Proposal II, respectively. See
"Voting Securities and Principal Holders Thereof" for information regarding the
number of shares of Common Stock beneficially owned by executive officers and
Directors.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
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Stockholders of record as of the close of business on December 11, 1998
(the "Record Date"), are entitled to one vote for each share of common stock of
the Corporation (the "Common Stock") then held. As of the Record Date, the
Corporation had 1,553,938 shares of Common Stock issued and outstanding.
The articles of incorporation of the Corporation ("Articles 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 Articles of Incorporation and includes shares
beneficially owned by such person or any of his or her affiliates (as such terms
are defined in the Articles of Incorporation), or which such person or any of
his or her affiliates has the right to acquire upon the exercise of conversion
rights or options and shares as to which such person or any of his or her
affiliates or associates have or share investment or voting power, but neither
any employee stock ownership or similar plan of the Corporation or any
subsidiary, nor any trustee with respect thereto or any affiliate of such
trustee (solely by reason of such capacity of such trustee), shall be deemed,
for purposes of the Articles of Incorporation, to beneficially own any Common
Stock held under any such plan.
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 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.
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<PAGE>
As to matters being proposed for stockholder action as set forth in
Proposal I and Proposal II, the proxy being provided by the Board of Directors
enables a stockholder to check the appropriate box on the proxy to (i) vote
"FOR" the item, (ii) vote "AGAINST" the item, or (iii) vote to "ABSTAIN" on such
item. An affirmative vote of the holders of a majority of the total votes
eligible to be cast at the Meeting, in person or by proxy, is required to
constitute stockholder approval for each of Proposals I and II. Broker Non-Votes
and shares as to which the "ABSTAIN" box is selected on the proxy will have the
effect of a vote against the matter.
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 and the ownership of all executive officers and Directors of
the Corporation as a group. 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.
<TABLE>
<CAPTION>
Percent of Shares
Amount and Nature of of Common Stock
Name and Address of Beneficial Owner Beneficial Ownership Outstanding
- - ------------------------------------ -------------------- -----------
<S> <C> <C>
First Kansas Federal Savings Bank 124,315 8.0%
Employee Stock Ownership Plan ("ESOP")
600 Main Street
Osawatomie, Kansas 66064 (1)
Sandler O'Neill Asset Management, L.L.C. 109,200 7.0%
Terry Maltese
712 Fifth Avenue
New York, New York 10019 (2)
Mr. Bradford M. Johnson 144,200 9.3%
P.O. Box 8208
Shawnee Mission, Kansas 66208 (3)
All Directors and officers of the Corporation as a group 100,580 6.5%
(8 persons) (4)
</TABLE>
-------------------------------------
(1) The ESOP purchased such shares for the exclusive benefit of plan
participants with funds borrowed from the Corporation. 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 ESOP
Committee consisting of certain non-employee Directors of the Board
instructs the ESOP Trustee regarding investment of ESOP plan assets. The
ESOP Trustee must vote all shares allocated to 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.
(2) Based upon a Schedule 13D filed with the Securities and Exchange
Commission, dated December 2, 1998, for which shared voting and dispositive
power is shown with respect to 109,200 shares.
(3) Based upon a Schedule 13D filed with the Securities and Exchange
Commission, dated June 29, 1998, for which shared voting and dispositive
power is shown with respect to 144,200 shares.
(4) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust and other indirect ownership, over which shares
the individuals effectively exercise sole voting and investment power,
unless otherwise indicated. Excludes 124,315 shares held by the ESOP over
which certain non-employee Directors, as trustees to the ESOP, exercise
shared voting and investment power. Such individuals disclaim beneficial
ownership with respect to such shares held by the ESOP.
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<PAGE>
The following table sets forth the amount of Common Stock beneficially
owned by each Director and each of the named executive officers of the
Corporation.
<TABLE>
<CAPTION>
Common Stock Beneficially
Owned (1)(2)(3)
---------------------------
Name of Individual Title Shares %
- - ------------------ ----- -------------- ----------
<S> <C> <C> <C>
Roger L. Coltrin Director 29,280(4) 1.9
Donald V. Meyer Director 20,000(4) 1.3
James E. Breckenridge Director 10,000(4) 0.6
William R. Butler, Jr. Director 5,350(4) 0.3
J. Darcy Domoney Director 4,020(4) 0.3
Larry V. Bailey President, CEO, CFO 20,000 1.3
and Director
Galen E. Graham Senior Vice President 5,664 0.4
and Secretary
Daniel G. Droste Senior Vice President 6,266 0.4
and Treasurer
</TABLE>
(1) Beneficial ownership as of June 25, 1998. Includes shares of Common Stock
held directly as well as by spouses or minor children, in trust, and other
indirect ownership, over which shares the individuals effectively exercise
sole or shared voting and investment power, unless otherwise indicated.
(2) Excludes proposed stock options to purchase shares of Common Stock issuable
under the 1999 Stock Option Plan, the granting of which are subject to
stockholder approval of the 1999 Stock Option Plan and are not exercisable
within 60 days of the Record Date. See "Proposal I - Approval of the 1999
Stock Option Plan."
(3) Excludes shares of Common Stock proposed to be awarded under the RSP, the
granting of which are subject to stockholder approval of the 1999
Restricted Stock Plan. See "Proposal II - Approval of the 1999 Restricted
Stock Plan."
(4) Excludes 124,315 shares of Common Stock held under the ESOP for which such
individual serves as either a member of the ESOP Committee or as an ESOP
Trustee. Such individual disclaims beneficial ownership with respect to
shares held in a fiduciary capacity. The ESOP purchased such shares for the
exclusive benefit of ESOP participants with funds borrowed from the
Corporation. 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 has appointed J. Darcy
Domoney, James E. Breckenridge, William R. Butler, Jr., Roger L. Coltrin,
and Donald V. Meyer to serve on the ESOP Committee and to serve as ESOP
Trustees. The ESOP Committee or the Board instructs the ESOP Trustee
regarding investment of ESOP plan assets. The ESOP Trustees must vote all
shares allocated to participant accounts under the ESOP as directed by ESOP
participants. Unallocated shares and shares for which no timely voting
direction is received will be voted by the ESOP Trustees as directed by the
Board or the ESOP Committee.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
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Director Compensation
Each director is paid monthly. Total aggregate fees paid to the
directors for the year ended December 31, 1997 were $40,800. Since January 1,
1998, each director (including the chairman of the board) has been paid a
monthly fee of $1,000.
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<PAGE>
Executive Compensation
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by our chief executive officer at
December 31, 1997. No other employee earned in excess of $100,000 for the year
ended December 31, 1997.
<TABLE>
<CAPTION>
Annual Compensation
------------------------------------------
Other Annual All Other
Name and Principal Position Salary Bonus Compensation Compensation
- - --------------------------- ------ ----- ------------ ------------
<S> <C> <C> <C> <C>
Larry V. Bailey
Director, President, CEO & CFO $120,000 $15,000 (1) $11,845(2)
</TABLE>
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(1) Other annual compensation does not equal the lesser of $50,000 or 10% of
the total of individual's annual salary and bonus.
(2) Includes Bank matching contributions of $3,167 under the 401(k) Plan and
Bank contributions of $8,678 made pursuant to the Profit Sharing Plan. No
benefits were accrued under the Bank's Supplemental Executive Retirement
Plan during the year ended December 31, 1997.
Employment Agreement. We have entered into an employment agreement with
our President, Larry V. Bailey. Mr. Bailey's base salary under the employment
agreement is $120,000. The employment agreement has a term of three years. The
agreement is terminable by us for "just cause" as defined in the agreement. If
we terminate Mr. Bailey 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 in no event for a period of less than twenty-four
months. The employment agreement contains a provision stating that in the event
of the termination of employment in connection with any change in control of the
Corporation, Mr. Bailey will be paid a lump sum amount equal to 2.99 times his
five year average annual taxable cash compensation. If such payments had been
made under the agreement as of December 31, 1997, such payments would have
equaled approximately $347,209. The aggregate payments that would have been made
to Mr. Bailey would be an expense to us, thereby reducing our net income and our
capital by that amount. The agreement may be renewed annually by our board of
directors upon a determination of satisfactory performance within the board's
sole discretion. If Mr. Bailey shall become disabled during the term of the
agreement, he shall continue to receive payment of 100% of the base salary for a
period of 12 months and 65% of such base salary for the remaining term of such
agreement. Such payments shall be reduced by any other benefit payments made
under other disability programs in effect for our employees.
Supplemental Executive Retirement Plan. We have implemented a
supplemental executive retirement plan ("SERP") for the benefit of our
President, Mr. Bailey. The SERP will provide Mr. Bailey with a supplemental
retirement benefit in addition to benefits under the Pension Plan and the ESOP.
Under the SERP, Mr. Bailey's retirement pension will be supplemented by the
crediting of an additional 15 years of service, provided that he retires after
attainment of age 58. The SERP will provide a retirement benefit equal to 30% of
final average earnings at retirement after age 65, in addition to the projected
benefit of 36% of final average earnings under the Pension Plan (Pension Plan
benefits are calculated based upon 2% times years of service times Final Average
Earnings). Benefits payable under the Pension Plan will be reduced for
retirement prior to age 65 based upon fewer years of service. Additionally, the
SERP will reduce the Pension Plan reduction for retirement prior to age 65 from
3% per year to 2% per year. Payments under the SERP are accrued for financial
reporting purposes during the period of employment. The SERP is unfunded. All
benefits payable under the SERP would be paid from our current assets. There are
no tax consequences to either the participant or us related to the SERP prior to
payment of benefits. Upon receipt of payment of benefits, the participant will
recognize taxable
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<PAGE>
ordinary income in the amount of such payments received, and we will be entitled
to recognize a tax-deductible compensation expense at that time.
Employee Stock Ownership Plan. We have established an employee stock
ownership plan, the ESOP, for the exclusive benefit of participating employees.
Participating employees are employees who have completed one year of service
with us or our subsidiary and have attained the age of 21.
The ESOP is funded by contributions made by us in cash or common stock.
Benefits may be paid either in shares of the common stock or in cash. The ESOP
borrowed $1,243,150 from the Corporation to acquire 124,315 shares of Common
Stock. Shares purchased with such loan proceeds will be held in a suspense
account for allocation among participants as the loan is repaid. We anticipate
contributing approximately $124,315 annually (based on a $1,243,150 purchase) to
the ESOP to meet principal obligations under the ESOP loan. It is anticipated
that all such contributions will be tax-deductible. This loan is expected to be
fully repaid in approximately 10 years. Our contributions to the ESOP are
discretionary and may cause a reduction in other forms of compensation.
Therefore, benefits payable under the ESOP cannot be estimated.
The board of directors has appointed non-employee directors to the ESOP
Committee to administer the ESOP and to serve as the initial ESOP Trustees. The
board of directors or the ESOP Committee may instruct the ESOP Trustees
regarding investments of funds contributed to the ESOP. The ESOP Trustees must
vote all allocated shares held in the ESOP in accordance with the instructions
of the participating employees. Unallocated shares and allocated shares for
which no timely direction is received will be voted by the ESOP Trustees as
directed by the board of directors or the ESOP Committee, subject to the
Trustees' fiduciary duties.
Other Benefits
1999 Stock Option Plan. The Board of Directors of the Corporation has
adopted the 1999 Stock Option Plan for the benefit of its Directors, officers,
and key employees. The 1999 Stock Option Plan is subject to stockholder
approval. See "Proposal I -- Approval of the 1999 Stock Option Plan" for a
summary of the 1999 Stock Option Plan. The 1999 Stock Option Plan is included as
Exhibit A.
1999 Restricted Stock Plan. The Board of Directors of the Corporation
has adopted a restricted stock program for the benefit of personnel of
experience and ability in key positions of responsibility with the Bank. The RSP
is subject to stockholder approval. See "Proposal II -- Approval of the 1999
Restricted Stock Plan" for a summary of the RSP. The 1999 Restricted Stock Plan
is included as Exhibit B.
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PROPOSAL I - APPROVAL OF THE 1999 STOCK OPTION PLAN
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General
The Corporation's Board of Directors has adopted the 1999 Stock Option
Plan. The Option Plan is subject to approval by the Corporation's stockholders.
Pursuant to the Option Plan, up to 155,393 shares of Common Stock (representing
up to 10% of the total Common Stock previously issued in the Conversion) are to
be reserved under the Corporation's authorized but unissued shares for issuance
by the Corporation upon exercise of stock options to be granted to officers,
Directors, key employees and other persons from time to time. The purpose of the
Option Plan is to attract and retain qualified personnel for positions of
substantial responsibility and to provide additional incentive to certain
officers, Directors, key employees and other persons to promote the success of
the business of the Corporation and the Bank. The Option Plan, which shall
become effective upon the date of approval of the Option Plan by the
stockholders of the Corporation ("Effective Date"), provides for a term of ten
years, after
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<PAGE>
which time no awards may be made. The following summary of the material features
of the Option Plan is qualified in its entirety by reference to the complete
provisions of the Option Plan which is attached hereto as Exhibit A. Such Option
Plan has been drafted to comply with regulations of the Office of Thrift
Supervision ("OTS") applicable to stock benefit plans established or implemented
within one year of the date of a mutual-to-stock conversion transaction.
The Option Plan will be administered by the Board of Directors or a
committee of not less than two non-employee Directors appointed by the
Corporation's Board of Directors and serving at the pleasure of the Board (the
"Option Committee"). Members of the Option Committee shall be deemed
"Non-Employee Directors" within the meaning of Rule 16b-3 pursuant to the 1934
Act. The Option Committee may select the officers and employees to whom options
are to be granted and the number of options to be granted based upon several
factors including prior and anticipated future job duties and responsibilities,
job performance, the Bank's financial performance and a comparison of awards
given by other institutions that have converted from mutual to stock form. A
majority of the members of the Option 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 Option Committee.
Officers, Directors, key employees and other persons who are designated
by the Option Committee will be eligible to receive, at no cost to them, options
under the Option Plan (the "Optionees"). Each option granted pursuant to the
Option Plan shall be evidenced by an instrument in such form as the Option
Committee shall from time to time approve. It is anticipated that options
granted under the Option Plan will constitute either Incentive Stock Options
(options that afford favorable tax treatment to recipients upon compliance with
certain restrictions pursuant to Section 422 of the Internal Revenue Code
("Code") and that do not normally result in tax deductions to the Corporation)
or Non- Incentive Stock Options (options that do not afford recipients favorable
tax treatment under Code Section 422). Option shares may be paid for in cash,
shares of Common Stock, or a combination of both. The Corporation will receive
no monetary consideration for the granting of stock options under the Option
Plan. Further, the Corporation will receive no consideration other than the
option exercise price per share for Common Stock issued to Optionees upon the
exercise of those Options.
Shares issuable under the Option Plan may be from authorized but
unissued shares, treasury shares or shares purchased in the open market. An
Option which expires, becomes unexercisable, or is forfeited for any reason
prior to its exercise will again be available for issuance under the Option
Plan. No Option or any right or interest therein is assignable or transferable
except by will or the laws of descent and distribution. The Option Plan shall
continue in effect for a term of ten years from the Effective Date.
Stock Options
The Option Committee may grant either Incentive Stock Options or
Non-Incentive Stock Options. In general, if an Optionee ceases to serve as an
employee of the Corporation for any reason other than disability or death, an
exercisable Incentive Stock Option may continue to be exercisable for three
months but in no event after the expiration date of the option, except as may
otherwise be determined by the Option Committee at the time of the award. In the
event of the disability or death of an Optionee during employment, an
exercisable Incentive Stock Option will continue to be exercisable for one year
and two years, respectively, to the extent exercisable by the Optionee
immediately prior to the Optionee's disability or death but only if, and to the
extent that, the Optionee was entitled to exercise such Incentive Stock Options
on the date of termination of employment. The terms and conditions of
Non-Incentive Stock Options relating to the effect of an Optionee's termination
of employment or service, disability, or death shall be such terms as the Option
Committee, in its sole discretion, shall determine at the time of termination of
service, disability or death, unless specifically determined at the time of
grant of such options.
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<PAGE>
The exercise price for the purchase of Common Stock subject to an
Option may not be less than one hundred percent (100%) of the Fair Market Value
of the Common Stock covered by the Option on the date of grant of such Option.
For purposes of determining the Fair Market Value of the Common Stock, if the
Common Stock is traded otherwise than on a national securities exchange at the
time of the granting of an Option, then the exercise price per share of the
Option shall be not less than the mean between the last bid and ask price on the
date the Option is granted 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 exercise price per
share shall be determined in good faith by the Option Committee. If the Common
Stock is listed on a national securities exchange at the time of the granting of
an the Option, then the exercise price per share of the Option shall be not less
than the average of the highest and lowest selling price of the Common Stock on
such exchange on the date such Option is granted or, if there were no sales on
said date, then the exercise price shall be not less than the mean between the
last bid and ask price on such date. If an officer or employee owns Common Stock
representing more than ten percent of the outstanding Common Stock at the time
an Incentive Stock Option is granted, then the exercise price shall not be less
than one hundred and ten percent (110%) of the Fair Market Value of the Common
Stock at the time the Incentive Stock Option is granted. No more than $100,000
of Incentive Stock Options can become exercisable for the first time in any one
year for any one person. The Option Committee may impose additional conditions
upon the right of an Optionee to exercise any Option granted hereunder which are
not inconsistent with the terms of the Option Plan or the requirements for
qualification as an Incentive Stock Option, if such Option is intended to
qualify as an incentive stock option.
No shares of Common Stock shall be issued upon the exercise of an
Option until full payment has been received by the Corporation, and no Optionee
shall have any of the rights of a stockholder of the Corporation until shares of
Common Stock are issued to such Optionee. Upon the exercise of an Option by an
Optionee (or the Optionee's personal representative), the Option 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 and the Corporation under Section 16(b) of the 1934
Act, and regulations promulgated thereunder.
The Option Plan provides that the Board of Directors of the Corporation
may authorize the Option Committee to direct the execution of an instrument
providing for the modification, extension or renewal of any outstanding option,
provided that no such modification, extension or renewal shall confer on the
Optionee any right or benefit which could not be conferred on the Optionee by
the grant of a new Option at such time, and shall not materially decrease the
Optionee's benefits under the Option without the Optionee's consent, except as
otherwise provided under the Option Plan.
Awards Under the Option Plan
The Board or the Option 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 any Participant under the
Plan, and whether Awards granted to each such Participant under the Plan shall
be Incentive Stock Options and/or Non-Incentive Stock Options. In selecting
Participants and in determining the number of shares of Common Stock subject to
Options to be granted to each such Participant, the Board or the Option
Committee may consider the nature of the services rendered by each such
Participant, each such Participant's current and potential contribution to the
Corporation and such other factors as may be deemed relevant. Participants who
have been granted an Award may, if otherwise eligible, be granted additional
Awards. In no event shall Shares subject to
-8-
<PAGE>
Options granted to non-employee Directors in the aggregate under this Plan
exceed more than 30% of the total number of Shares authorized for delivery under
this Plan, and no more than 5% of total Plan shares may be awarded to any
individual non-employee Director. In no event shall Shares subject to Options
granted to any Employee exceed more than 25% of the total number of Shares
authorized for delivery under the Plan.
Pursuant to the terms of the Option Plan, Non-Incentive Stock Options
to purchase up to 7,769 shares of Common Stock will be granted to each
non-employee Director of the Corporation, as of the Effective Date, at an
exercise price equal to the Fair Market Value of the Common Stock on such date
of grant. Options may be granted to newly appointed or elected non-employee
Directors within the sole discretion of the Option Committee, and the exercise
price shall be equal to the Fair Market Value of such Common Stock on the date
of grant. Twenty percent of the Options granted to non-employee Directors on the
Effective Date will be first exercisable commencing on the one year anniversary
of stockholder approval of the Option Plan and 20% annually thereafter, during
such period of service as a Director or a Director Emeritus. Such Options
granted to non-employee Directors will remain exercisable for up to ten years
from such date of grant. Upon the death or disability of a Director or Director
Emeritus, such Options shall be deemed immediately 100% exercisable for their
remaining term. All outstanding option awards shall become immediately
exercisable in the event of a change in control of the Corporation or the Bank,
provided such accelerated vesting is not inconsistent with applicable OTS
regulations at the time of such change in control. Subject to vesting
requirements, if applicable, except in the event of death or disability of the
Optionee, 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.
-9-
<PAGE>
The table below presents information related to stock option awards
anticipated to be awarded upon stockholder approval of the Option Plan.
<TABLE>
<CAPTION>
NEW PLAN BENEFIT
1999 STOCK OPTION PLAN
----------------------
Number of Options
Name and Position Dollar Value(1) to be Granted(2)
- - ----------------- --------------- -----------------
<S> <C> <C>
Larry V. Bailey, President, CEO, CFO and
Director.............................................. N/A 38,848(3)
Daniel G. Droste, Senior Vice President and
Treasurer............................................. N/A 19,424(3)
Galen E. Graham, Senior Vice President and
Secretary............................................. N/A 19,424(3)
Mark K. Fuchs, Vice President......................... N/A 7,769(3)
Roger L. Coltrin, Director............................ N/A 7,769(4)
Donald V. Meyer, Director............................. N/A 7,769(4)
James E. Breckenridge, Director....................... N/A 7,769(4)
William R. Butler, Jr., Director...................... N/A 7,769(4)
J. Darcy Domoney, Director............................ N/A 7,769(4)
Sherman W. Cole, Advisory Director.................... N/A 7,769(4)
Executive Officer Group (3 persons)................... N/A 77,696
Non-Executive Director Group (5 persons).............. N/A 38,845
Non-Executive Officer Employee Group
(35 persons)........................................ N/A 7,769
</TABLE>
- - -------------------------------
(1) The exercise price of such Options shall be equal to the Fair Market Value
of the Common Stock on the date of stockholder approval of the Option Plan.
Accordingly, the dollar value of the options was not determinable at the
time of mailing this Proxy Statement. On December 21, 1998, the last
reported sale price on the NASDAQ National Market was $10.50 per share.
(2) Awards shall vest 20% annually during periods of continued service as an
employee, Director, or Director Emeritus. Upon vesting, awards shall remain
exercisable for ten years from the date of grant without regard to
continued service as an employee, Director, or Director Emeritus.
(3) Options awarded to officers and employees will be exercisable as follows:
Options awarded at the time of stockholder approval are first exercisable
at the rate of 20% on the one year anniversary of the date of grant and 20%
annually thereafter during periods of continued service as an employee,
Director or Director Emeritus. Such awards shall be 100% exercisable in the
event of death, disability, or upon a change in control of the Corporation
or the Bank. Options awarded to employees shall continue to be exercisable
during continued service as an employee, Director or Director Emeritus.
Options not exercised within three months of termination of service as an
employee shall thereafter be deemed non-incentive stock options.
(4) Options awarded to Directors are first exercisable at a rate of 20% one
year after the date of grant and 20% annually thereafter, during such
period of service as a Director or Director Emeritus, and shall remain
exercisable for ten years without regard to continued service as a Director
or Director Emeritus. Upon disability, death, or a change in control of the
Corporation or the Bank, such awards shall be 100% exercisable.
-10-
<PAGE>
Effect of Mergers, Change of Control and Other Adjustments
Subject to any required action by the stockholders of the Corporation,
within the sole discretion of the Option Committee, the aggregate number of
shares of Common Stock for which Options may be granted hereunder or the number
of shares of Common Stock represented by each outstanding Option will 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 or the payment of a stock dividend or any other increase
or decrease in the number of shares of Common Stock effected without the receipt
or payment of consideration by the Corporation. Subject to any required action
by the stockholders of the Corporation, 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 Option Committee, in its sole
discretion, shall have the power, prior to or subsequent to such action or
events, to (i) appropriately adjust the number of shares of Common Stock subject
to each Option, the exercise price per share of such Option, and the
consideration to be given or received by the Corporation upon the exercise of
any outstanding Options; (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
Option Plan as the Option Committee, in its sole discretion, deems necessary,
desirable, appropriate or advisable. However, no action may be taken by the
Option Committee which would cause Incentive Stock Options granted pursuant to
the Option Plan to fail to meet the requirements of Section 422 of the Code
without the consent of the Optionee.
The Option Committee will at all times have the power to accelerate the
exercise date of all Options granted under the Option Plan. In the case of a
Change in Control of the Corporation as determined by the Option Committee, all
outstanding options shall become immediately exercisable. A Change in Control is
defined to include (i) the sale of all, or a material portion, of the assets of
the Corporation; (ii) the merger or recapitalization of the Corporation whereby
the Corporation is not the surviving entity; (iii) a change in control of the
Corporation as otherwise defined or determined by the OTS or its regulations; or
(iv) the acquisition, directly or indirectly, of the beneficial ownership
(within the meaning of Section 13(d) of the 1934 Act and rules and regulations
promulgated thereunder) of 25% or more of the outstanding voting securities of
the Corporation by any person, trust, entity, or group. This limitation shall
not apply to the purchase of shares by underwriters in connection with a pubic
offering of Corporation stock or the purchase of shares of up to 25% of any
class of securities of the Corporation 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).
In the event of such a Change in Control, the Option 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 Corporation will receive upon
consummation thereof a cash payment (the "Merger
-11-
<PAGE>
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.
The power of the Option Committee to accelerate the exercise of Options
and the immediate exercisability of Options in the case of a Change in Control
of the Corporation could have an anti-takeover effect by making it more costly
for a potential acquiror to obtain control of the Corporation due to the higher
number of shares outstanding following such exercise of Options. The power of
the Option Committee to make adjustments in connection with the Option Plan,
including adjusting the number of shares subject to Options and canceling
Options, prior to or after the occurrence of an extraordinary corporate action,
allows the Option Committee to adapt the Option Plan to operate in changed
circumstances, to adjust the Option Plan to fit a smaller or larger company, and
to permit the issuance of Options to new management following such extraordinary
corporate action. However, this power of the Option Committee also has an
anti-takeover effect, by allowing the Option Committee to adjust the Option Plan
in a manner to allow the present management of the Corporation to exercise more
options and hold more shares of the Corporation's Common Stock, and to possibly
decrease the number of Options available to new management of the Corporation.
Although the Option Plan may have an anti-takeover effect, the
Corporation's Board of Directors did not adopt the Option Plan specifically for
anti-takeover purposes. The Option Plan could render it more difficult to obtain
support for stockholder proposals opposed by the Corporation's Board and
management in that recipients of Options could choose to exercise such Options
and thereby increase the number of shares for which they hold voting power.
Also, the exercise of such Options could make it easier for the Board and
management to block the approval of certain transactions requiring the voting
approval of 80% of the Common Stock in accordance with the Articles of
Incorporation. In addition, the exercise of such Options could increase the cost
of an acquisition by a potential acquiror.
Amendment and Termination of the Option Plan
The Board of Directors may alter, suspend or discontinue the Option
Plan, except that no action of the Board shall increase the maximum number of
shares of Common Stock issuable under the Option Plan, materially increase the
benefits accruing to Optionees under the Option Plan or materially modify the
requirements for eligibility for participation in the Option Plan unless such
action of the Board shall be subject to approval or ratification by the
stockholders of the Corporation.
Pursuant to regulations of the OTS applicable to stock benefit plans
established or implemented within one year following the completion of a
mutual-to-stock conversion of a federally chartered savings institution such as
the Bank, the Option Plan contains certain restrictions and limitations,
including among others, provisions requiring the vesting of options granted to
occur no more rapidly than ratably over a five year period and the resultant
prohibition against accelerated vesting of option grants upon the occurrence of
an event other than the death or disability of the option holder. The Option
Plan, as adopted, further provides that awards shall vest immediately upon a
Change in Control. Recent OTS interpretive letters permit stock benefit plans to
authorize such accelerated vesting upon a Change in Control, provided that
stockholder ratification of such provision is obtained more than one year
following the completion of the mutual-to-stock conversion. The Board of
Directors intends to seek stockholder ratification of such applicable provisions
related to accelerated vesting of awards upon a Change in Control at a later
date if required by applicable OTS practices. The Corporation does not have any
present intention to engage in any transaction that would result in the
accelerated vesting of Options as permitted by the Option Plan, however, the
Board has determined that the implementation of such plan
-12-
<PAGE>
provisions is in the best interests of the stockholders of the Corporation, as
well as the officers, Directors and employees of the Corporation.
Possible Dilutive Effects of the Option Plan
The Common Stock to be issued upon the exercise of Options awarded
under the Option Plan may either be authorized but unissued shares of Common
Stock or shares purchased in the open market. In that the stockholders of the
Corporation do not have preemptive rights, to the extent that the Corporation
funds the Option Plan, in whole or in part, with authorized but unissued shares,
the interests of current stockholders will be diluted. If upon the exercise of
all of the Options, the Corporation delivers newly issued shares of Common Stock
(i.e., 155,393 shares of Common Stock), then the dilutive effect to current
stockholders would be approximately 9.1%.
Federal Income Tax Consequences
Under present federal tax laws, awards under the Option Plan will have
the following consequences:
1. The grant of an Option will not by itself result in the recognition of
taxable income to an Optionee nor entitle the Corporation to a tax
deduction at the time of such grant.
2. The exercise of an Option which is an "Incentive Stock Option" within
the meaning of Section 422 of the Code generally will not, by itself,
result in the recognition of taxable income to an Optionee nor entitle
the Corporation to a deduction at the time of such exercise. However,
the difference between the Option exercise price and the Fair Market
Value of the Common Stock on the date of Option exercise is an item of
tax preference which may, in certain situations, trigger the
alternative minimum tax for an Optionee. An Optionee will recognize
capital gain or loss upon resale of the shares of Common Stock
received pursuant to the exercise of Incentive Stock Options, provided
that such shares are held for at least one year after transfer of the
shares or two years after the grant of the Option, whichever is later.
Generally, if the shares are not held for that period, the Optionee
will recognize ordinary income upon disposition in an amount equal to
the difference between the Option exercise price and the Fair Market
Value of the Common Stock on the date of exercise, or, if less, the
sales proceeds of the shares acquired pursuant to the Option.
3. The exercise of a Non-Incentive Stock Option will result in the
recognition of ordinary income by the Optionee on the date of exercise
in an amount equal to the difference between the exercise price and
the Fair Market Value of the Common Stock acquired pursuant to the
Option.
4. The Corporation will be allowed a tax deduction for federal tax
purposes equal to the amount of ordinary income recognized by an
Optionee at the time the Optionee recognizes such ordinary income.
5. In accordance with Section 162(m) of the Code, the Corporation's tax
deductions for compensation paid to the most highly paid executives
named in the Corporation's Proxy Statement may be limited to no more
than $1 million per year, excluding certain "performance-based"
compensation. The Corporation intends for the award of Options under
the Option Plan to comply with the requirement for an exception to
Section 162(m) of the Code applicable to stock option plans so that
the Corporation's deduction for
-13-
<PAGE>
compensation related to the exercise of Options would not be subject
to the deduction limitation set forth in Section 162(m) of the Code.
Accounting Treatment
The Corporation expects to use the "intrinsic value based method" as
prescribed by APB Opinion 25. Accordingly, neither the grant nor the exercise of
an Option under the Option Plan currently requires any charge against earnings
under generally accepted accounting principles. Common Stock issuable pursuant
to outstanding Options which are exercisable under the Option Plan will be
considered outstanding for purposes of calculating earnings per share on a fully
diluted basis.
Stockholder Approval
Stockholder approval of the Option Plan is being sought in accordance
with regulations of the OTS. Additional purposes of requesting stockholder
approval of the Option Plan are to qualify the Option Plan for the granting of
Incentive Stock Options in accordance with the Code, to enable Optionees to
qualify for certain exemptive treatment from the short-swing profit recapture
provisions of Section 16(b) of the 1934 Act, to meet the requirements under the
NASDAQ National Market for continued listing of the Corporation's Common Stock,
and to meet the requirements for the tax-deductibility of certain compensation
items under Section 162(m) of the Code. An affirmative vote of the holders of a
majority of the total votes eligible to be cast at the Meeting in person or by
proxy is required to constitute stockholder approval of this Proposal I.
THE OTS IN NO WAY ENDORSES OR APPROVES THE OPTION PLAN.
A VOTE IN FAVOR OF THE OPTION PLAN ALSO AUTHORIZES THE BOARD OF
DIRECTORS TO AMEND THE OPTION PLAN TO COMPLY WITH ANY FUTURE OTS INTERPRETATIONS
UNDER APPLICABLE REGULATIONS, PROVIDED ANY SUCH AMENDMENTS DO NOT HAVE A
MATERIAL ADVERSE EFFECT ON THE CORPORATION'S STOCKHOLDERS AS A GROUP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 1999
STOCK OPTION PLAN.
- - --------------------------------------------------------------------------------
PROPOSAL II - APPROVAL OF THE 1999 RESTRICTED STOCK PLAN
- - --------------------------------------------------------------------------------
General
The Board of Directors of the Corporation and the Bank have adopted the
RSP as a method of providing Directors, officers, and key employees of the Bank
with a proprietary interest in the Corporation in a manner designed to encourage
such persons to remain in the employment or service of the Bank. The Bank will
contribute sufficient funds to the RSP to purchase Common Stock representing up
to 4% of the aggregate number of shares issued in the Conversion (i.e., 62,157
shares of Common Stock) in the open market. Alternatively, the RSP may purchase
authorized but unissued shares of Common Stock or treasury shares from the
Corporation. All of the Common Stock to be purchased by the RSP will be
purchased at the Fair Market Value of such stock on the date of purchase. Awards
under the RSP will be made in recognition of expected future services to the
Bank by its Directors, officers and key employees responsible for implementation
of the policies adopted by the Bank's Board of Directors and as a means of
providing a further retention incentive. The following is a summary of the
material features of the RSP which is qualified in its entirety by reference to
the complete provisions of the RSP which is attached hereto as Exhibit B. Such
RSP has been drafted to comply with regulations of the OTS
-14-
<PAGE>
applicable to stock benefit plans implemented within one year of the date of a
mutual-to-stock conversion transaction.
Awards Under the RSP
Benefits under the RSP ("Plan Share Awards") may be granted at the sole
discretion of a committee comprised of not less than two Directors who are not
employees of the Bank or the Corporation (the "RSP Committee") appointed by the
Bank's Board of Directors. The RSP is managed by trustees (the "RSP Trustees")
who are non-employee Directors of the Bank or the Corporation and who have the
responsibility to invest all funds contributed by the Bank to the trust created
for the RSP (the "RSP Trust"). Unless the terms of the RSP or the RSP Committee
specifies otherwise, awards under the RSP will be in the form of restricted
stock payable as the Plan Share Awards shall be earned and non- forfeitable.
Twenty percent (20%) of such awards shall be earned and non-forfeitable on the
one year anniversary of the date of grant of such awards, and 20% annually
thereafter, provided that the recipient of the award remains an employee,
Director or Director Emeritus during such period. A recipient of such restricted
stock will not be entitled to voting rights associated with such shares prior to
the applicable date such shares are earned. Dividends paid on Plan Share Awards
shall be held in arrears and distributed upon the date such applicable Plan
Share Awards are earned. Any shares held by the RSP Trust which are not yet
earned shall be voted by the RSP Trustees, as directed by the RSP Committee. If
a recipient of such restricted stock terminates employment or service for
reasons other than death, disability, or a change in control of the Corporation
or the Bank, the recipient forfeits all rights to the awards under restriction.
If the recipient's termination of employment or service is caused by death,
disability, or a change in control of the Corporation or the Bank (provided that
such accelerated vesting is not inconsistent with applicable regulations of the
OTS at the time of such change in control), all restrictions expire and all
shares allocated shall become unrestricted. Awards of restricted stock to
Directors shall be immediately non-forfeitable in the event of the death or
disability of such Director, or a change in control of the Corporation or the
Bank and distributed as soon as practicable thereafter. The Board of Directors
can terminate the RSP at any time, and if it does so, any shares not allocated
will revert to the Corporation.
Plan Share Awards under the RSP will be determined by the RSP
Committee. In no event shall any Employee receive Plan Share Awards in excess of
25% of the aggregate Plan Shares authorized under the Plan. Plan Share Awards
may be granted to newly elected or appointed non-employee Directors of the Bank
subsequent to the effective date (as defined in the RSP) provided that the Plan
Share Awards made to non-employee Directors shall not exceed 30% of total Plan
Share Reserve in the aggregate under the Plan or 5% of the total Plan Share
Reserve to any individual non-employee Director.
The aggregate number of Plan Shares available for issuance pursuant to
the Plan Share Awards and the number of shares to which any Plan Share Award
relates shall be proportionately adjusted for any increase or decrease in the
total number of outstanding shares of Common Stock issued subsequent to the
effective date (as defined in the RSP) of the RSP resulting from any split,
subdivision or consolidation of the Common Stock or other capital adjustment,
change or exchange of Common Stock, or other increase or decrease in the number
or kind of shares effected without receipt or payment of consideration by the
Corporation.
The following table presents information related to the anticipated
award of Common Stock under the RSP as authorized pursuant to the terms of the
RSP or the anticipated actions of the RSP Committee.
-15-
<PAGE>
NEW PLAN BENEFITS
1999 Restricted Stock Plan
--------------------------
<TABLE>
<CAPTION>
Name and Position Dollar Value ($)(1) Number of Shares (2)(3)
- - ----------------- ------------------- -----------------------
<S> <C> <C>
Larry V. Bailey
President, CEO, CFO and Director.................... 163,159 15,539
Daniel G. Droste
Senior Vice President and Treasurer................. 81,574 7,769
Galen E. Graham
Senior Vice President and Secretary................. 81,575 7,769
Mark K. Fuchs, Vice President......................... 32,623 3,107
Roger L. Coltrin, Director............................ 32,623 3,107
Donald V. Meyer, Director............................. 32,623 3,107
James E. Breckenridge, Director....................... 32,623 3,107
William R. Butler, Jr., Director...................... 32,623 3,107
J. Darcy Domoney, Director............................ 32,623 3,107
Sherman W. Cole, Advisory Director.................... 32,623 3,107
Executive Officer Group (3 persons)................... 326,308 31,077
Non-Executive Director Group (5 persons).............. 163,117 15,535
Non-Executive Officer Employee Group
(35 persons)........................................ 32,630 3,107
</TABLE>
- - ---------------------------------
(1) These values are based on the last reported sale price for the Common Stock
as reported on the NASDAQ National Market on December 21, 1998, which was
$10.50 per share. The exact dollar value of the Common Stock granted will
equal the market price of the Common Stock on the date of vesting of such
awards. Accordingly, the exact dollar value is not presently determinable.
(2) All Plan Share Awards presented herein shall be earned at the rate of 20%
one year after the date of grant and 20% annually thereafter. All awards
shall become immediately 100% vested upon death, disability, or termination
of service following a change in control (as defined in the RSP).
(3) Plan Share Awards shall continue to vest during periods of service as an
employee, Director, or Director Emeritus.
Amendment and Termination of the Plan
The Board may amend or terminate the RSP at any time. However, no
action of the Board may increase the maximum number of Plan Shares permitted to
be awarded under the RSP, except for adjustments in the Common Stock of the
Corporation, materially increase the benefits accruing to Participants under the
RSP or materially modify the requirements for eligibility for participation in
the RSP unless such action of the Board shall be subject to ratification by the
stockholders of the Corporation.
Pursuant to regulations of the OTS applicable to stock benefit plans
established or implemented within one year following the completion of a
mutual-to-stock conversion of a federally chartered savings institution such as
the Bank, the RSP contains certain restrictions and limitations, including among
others, provisions requiring the vesting of awards granted to occur no more
rapidly than ratably over a five year period and the resultant prohibition
against accelerated vesting of award grants upon the occurrence of an event
other than the death or disability of the option holder. The RSP, as adopted,
further provides that awards shall vest immediately upon a Change in Control.
Recent OTS interpretive letters authorize stock benefit plans to permit such
accelerated vesting upon a Change in Control, provided that stockholder
ratification of such provision is obtained more than one year following the
completion of the mutual-to-stock conversion. The Board of Directors intends to
seek stockholder ratification of such
-16-
<PAGE>
applicable provisions related to accelerated vesting of awards upon a Change in
Control at a later date if required by applicable OTS practices. The Corporation
does not have any present intention to engage in any transaction that would
result in the accelerated vesting of Awards as permitted by the RSP, however,
the Board has determined that the implementation of such plan provisions is in
the best interests of the stockholders of the Corporation, as well as the
officers, Directors and employees of the Corporation.
Possible Dilutive Effects of RSP
The RSP provides that Common Stock to be awarded may be acquired by the
RSP through open-market purchases or from authorized but unissued shares of
Common Stock from the Corporation. In that stockholders do not have preemptive
rights, to the extent that the Corporation utilizes authorized but unissued
shares to fund RSP awards, the interests of current stockholders will be
diluted. If all Plan Share Awards are funded with newly issued shares, the
dilutive effect to existing stockholders would be approximately 3.8%. It is the
Corporation's present intention to fund the RSP through open-market purchases of
Common Stock.
Federal Income Tax Consequences
Common Stock awarded under the RSP is generally taxable to the
recipient at the time that such awards become earned and non-forfeitable, based
upon the Fair Market Value of such stock at the time of such vesting.
Alternatively, a recipient may make an election pursuant to Section 83(b) of the
Code within 30 days of the date of the transfer of such Plan Share Award to
elect to include in gross income for the current taxable year the Fair Market
Value of such award. Such election must be filed with the Internal Revenue
Service within 30 days of the date of the transfer of the stock award. The
Corporation will be allowed a tax deduction for federal tax purposes as a
compensation expense equal to the amount of ordinary income recognized by a
recipient of Plan Share Awards at the time the recipient recognizes taxable
ordinary income. A recipient of a Plan Share Award may elect to have a portion
of such award withheld by the RSP Trust in order to meet any necessary tax
withholding obligations.
Accounting Treatment
For accounting purposes, the Corporation will recognize compensation
expense in the amount of the Fair Market Value of the Common Stock subject to
Plan Share Awards at the grant date pro rata over the period of years during
which the awards are earned.
Stockholder Approval
The Corporation is submitting the RSP to stockholders for approval in
accordance with regulations of the OTS. The RSP and awards made thereunder will
not be effective until receipt of stockholder approval of Proposal II.
Additionally, stockholder approval of the RSP will enable recipients of Plan
Share Awards to qualify for certain exemptive treatment from the short-swing
profit recapture provisions of Section 16(b) of the 1934 Act and will allow the
corporation to meet the requirements of the NASDAQ National Market for continued
listing of the corporation's Common stock. The affirmative vote of holders of a
majority of the total votes eligible to be cast at the Meeting in person or by
proxy is required to constitute stockholder approval of this Proposal II.
-17-
<PAGE>
THE OTS IN NO WAY ENDORSES OR APPROVES THE RSP.
A VOTE IN FAVOR OF THE RSP ALSO AUTHORIZES THE BOARD OF DIRECTORS TO
AMEND THE RSP TO COMPLY WITH ANY FUTURE OTS INTERPRETATIONS UNDER APPLICABLE
REGULATIONS, PROVIDED SUCH AMENDMENTS DO NOT HAVE A MATERIAL ADVERSE EFFECT ON
THE CORPORATION'S STOCKHOLDERS AS A GROUP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF
THE 1999 RESTRICTED STOCK PLAN.
- - --------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- - --------------------------------------------------------------------------------
Certain Related Transactions
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.
- - --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- - --------------------------------------------------------------------------------
In order to be eligible for inclusion in the Corporation's proxy
materials for the Annual Meeting of Stockholders, any stockholder proposal to
take action at such meeting must be received at the Corporation's executive
offices at 600 Main Street, Osawatomie, Kansas 66064, in accordance with 17
C.F.R. ss.240.14a-8 of the Rules and Regulations under the 1934 Act. Any such
proposals shall be subject to the requirements of Rule 14a-8 under the 1934 Act.
- - --------------------------------------------------------------------------------
OTHER MATTERS
- - --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described in this Proxy Statement. However, if
any other matters should properly come before the Meeting, it is intended that
proxies in the accompanying form will be voted in respect thereof in accordance
with the judgment of the persons named in the accompanying proxy.
- - --------------------------------------------------------------------------------
MISCELLANEOUS
- - --------------------------------------------------------------------------------
The cost of soliciting proxies will be borne by the Corporation. The
Corporation 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 Corporation may solicit
proxies personally or by telegraph or telephone without additional compensation.
The Corporation has retained Morrow & Company, Inc. to assist in the
solicitation of proxies at a cost not anticipated to exceed $3,000, plus
reimbursement of certain incurred expenses.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Galen E. Graham
----------------------------------------
Galen E. Graham
Secretary
Osawatomie, Kansas
December 30, 1998
-18-
<PAGE>
- - --------------------------------------------------------------------------------
FIRST KANSAS FINANCIAL CORPORATION
600 MAIN STREET
OSAWATOMIE, KANSAS 66064
- - --------------------------------------------------------------------------------
SPECIAL MEETING OF STOCKHOLDERS
February 2, 1999
- - --------------------------------------------------------------------------------
The undersigned hereby appoints the Board of Directors of First Kansas
Financial Corporation (the "Corporation"), 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 Corporation which the undersigned is entitled to
vote at the Special Meeting of Stockholders (the "Meeting"), to be held at 600
Main Street, Osawatomie, Kansas, on Tuesday, February 2, 1999, at 1:00 p.m. and
at any and all adjournments thereof, in the following manner:
FOR AGAINST ABSTAIN
1. The approval of the
First Kansas Financial Corporation
1999 Stock Option Plan. |_| |_| |_|
2. The approval of the
First Kansas Federal Savings
Bank 1999 Restricted Stock Plan. |_| |_| |_|
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. If necessary, the Meeting will be adjourned to solicit additional
proxies with respect to approval of the First Kansas Financial Corporation 1999
Stock Option Plan and the First Kansas Federal Savings Bank 1999 Restricted
Stock Plan.
The Board of Directors recommends a vote "FOR" all of the above listed
propositions.
- - --------------------------------------------------------------------------------
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.
- - --------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Meeting, or
at any adjournments thereof, and after notification to the Secretary of the
Corporation 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 Corporation of his or her decision to terminate this Proxy.
The undersigned acknowledges receipt from the Corporation prior to the
execution of this proxy of a Notice of Special Meeting of Stockholders and a
Proxy Statement dated December 30, 1998.
Dated:
------------------------------------
- - -------------------------------- --------------------------------------------
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.
- - --------------------------------------------------------------------------------
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
- - --------------------------------------------------------------------------------
<PAGE>
Appendix B
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 ss. 240.14a-11(c) or ss. 240.14a-12
First Kansas Financial Corporation
- - --------------------------------------------------------------------------------
(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:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(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):
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Total fee paid:
- - --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] 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:
- - --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- - --------------------------------------------------------------------------------
(3) Filing Party:
- - --------------------------------------------------------------------------------
(4) Date Filed:
- - --------------------------------------------------------------------------------
<PAGE>
Exhibit A
FIRST KANSAS FINANCIAL CORPORATION
1999 STOCK OPTION PLAN
1. Purpose of the Plan. The Plan shall be known as the FIRST KANSAS
FINANCIAL CORPORATION ("Corporation") 1999 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
Corporation, or any present or future parent or subsidiary of the Corporation 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
Corporation, 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 Corporation; (ii) the merger or
recapitalization of the Corporation whereby the Corporation is not the surviving
entity; (iii) a change in control of the Corporation, 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 Corporation 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 Corporation stock, or the purchase of
shares of up to 25% of any class of securities of the Corporation 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.
A-1
<PAGE>
(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 common stock of the Corporation,
or any successor or parent corporation thereto.
(g) "Continuous Employment" or "Continuous Status as an
Employee" shall mean the absence of any interruption or termination of
employment with the Corporation or any present or future Parent or Subsidiary of
the Corporation. Employment shall not be considered interrupted in the case of
sick leave, military leave or any other leave of absence approved by the
Corporation or in the case of transfers between payroll locations, of the
Corporation or between the Corporation, its Parent, its Subsidiaries or a
successor.
(h) "Corporation" shall mean the FIRST KANSAS FINANCIAL
CORPORATION, the parent corporation of the Savings Bank, or any successor or
Parent thereof.
(i) "Director" shall mean a member of the Board of the
Corporation, 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 Corporation 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) "Effective Date" shall mean the date specified in Section
15 hereof.
(m) "Employee" shall mean any person employed by the
Corporation or any present or future Parent or Subsidiary of the Corporation.
(n) "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.
(o) "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.
A-2
<PAGE>
(p) "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.
(q) "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.
(r) "Optioned Stock" shall mean stock subject to an Option
granted pursuant to the Plan.
(s) "Optionee" shall mean any person who receives an Option or
Award pursuant to the Plan.
(t) "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.
(u) "Participant" means any Director, Director Emeritus,
officer or key employee of the Corporation or any Parent or Subsidiary of the
Corporation or any other person providing a service to the Corporation who is
selected by the Committee to receive an Award, or who by the express terms of
the Plan is granted an Award.
(v) "Plan" shall mean the FIRST KANSAS FINANCIAL CORPORATION
1999 Stock Option Plan.
(w) "Savings Bank" shall mean First Kansas Federal Savings
Bank, or any successor corporation thereto.
(x) "Share" shall mean one share of the Common Stock.
(y) "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 155,393 Shares.
Such Shares may either be from authorized but unissued shares, treasury 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.
4. Six Month Holding Period.
Subject to vesting requirements, if applicable, except in the
event of death or disability of the Optionee, 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.
A-3
<PAGE>
5. Administration of the Plan.
(a) Composition of the Committee. The Plan shall be
administered by the Board of Directors of the Corporation or a Committee which
shall consist of not less than two Directors of the Corporation 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 Corporation and such other officers as
shall be designated by the Committee are hereby authorized to execute written
agreements evidencing Awards on behalf of the Corporation 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, Directors Emeritus, 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 Corporation 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
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 Corporation or any present or future Parent or Subsidiary of the
Corporation) 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.
A-4
<PAGE>
(c) In no event shall Shares subject to Options granted to
non-employee Directors in the aggregate under this Plan exceed more than 30% of
the total number of Shares authorized for delivery under this Plan pursuant to
Section 3 herein or more than 5% to any individual non-employee Director. In no
event shall Shares subject to Options granted to any Employee exceed more than
25% 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 Corporation 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 Corporation, and no
Optionee shall have any of the rights of a stockholder of the Corporation until
Shares of Common Stock are issued to the Optionee.
(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 Corporation 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
A-5
<PAGE>
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 one year anniversary
of 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 gives the Corporation 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 Corporation 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 Corporation 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 Corporation.
(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 7,769 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. Further, each advisory director of the
Savings Bank with not less than three years of service as of the Date of Grant
shall also be awarded Non-Incentive Stock Options to purchase 7,769 shares of
Common Stock 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 one year anniversary of the
Effective Date and 20% annually thereafter during such periods of service as a
Director or Director Emeritus. Upon the death or Disability 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 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 outstanding Awards shall become immediately
exercisable in the event of a Change in Control of the Savings Bank or the
Company, provided that such accelerated vesting is not inconsistent with
applicable regulations of the Office of Thrift Supervision or other appropriate
banking regulatory agency at the time of such Change in Control. 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.
A-6
<PAGE>
(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 one year anniversary of 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 gives 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.
(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 or Death 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)
A-7
<PAGE>
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
such date of termination of employment without regard to the Disability or death
of the Participant.
(e) Termination of Incentive Stock Options. 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.
11. Effect of Termination of Employment, Disability or Death on
Non-Incentive Stock Options. The terms and conditions of Non-Incentive Stock
Options relating to the effect of the 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.
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12. Withholding Tax. The Company shall have the right to deduct from
all amounts paid in cash with respect to the cashless exercise of Options 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 number of such Shares
sufficient to cover the amount required to be withheld.
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, as
determined by the Committee, provided that such accelerated vesting is not
inconsistent with applicable regulations of the Office of Thrift Supervision or
other appropriate banking regulatory agency at the time of such Change in
Control. In the event of such a Change in Control, the 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
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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; provided that such action is not contrary to regulations of the OTS or
other appropriate banking regulatory agency then in effect.
Except as expressly provided in Sections 13(a) and
13(b), 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, subject to approval or
non-objection by the Office of Thrift Supervision, if applicable. 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.
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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, regulation or policy 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.
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.
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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. 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.
23. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Kansas, except to the extent that
federal law shall be deemed to apply.
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Exhibit B
First Kansas Federal Savings Bank
1999 Restricted Stock Plan
and Trust Agreement
Article I
---------
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 First Kansas Federal Savings Bank ("Savings Bank") hereby
establishes the 1999 Restricted Stock Plan (the "Plan") and Trust (the "Trust")
upon the terms and conditions hereinafter stated in this Restricted Stock Plan
and Trust Agreement (the "Agreement").
1.02 The Trustee hereby accepts this Trust and agrees to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions hereinafter stated.
Article II
----------
PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to reward and to retain personnel of
experience and ability in key positions of responsibility with the Savings Bank
and its subsidiaries, by providing such personnel of the Savings Bank and its
subsidiaries with an equity interest in the parent corporation of the Savings
Bank, First Kansas Financial Corporation ("Parent"), as compensation for their
prior and anticipated future professional contributions and service to the
Savings Bank and its subsidiaries.
Article III
-----------
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.
3.01 "Beneficiary" means the person or persons designated by the
Participant to receive any benefits payable under the Plan in the event of such
Participant's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Participant's surviving spouse, if
any, or if none, the Participant's estate.
3.02 "Board" means the Board of Directors of the Savings Bank, or any
successor corporation thereto.
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3.03 "Cause" means the personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profits, intentional
failure to perform stated duties, willful violation of a material provision of
any law, rule or regulation (other than traffic violations and similar offense),
or a material violation of a final cease-and-desist order or any other action
which results in a substantial financial loss to the Parent, Savings Bank or its
Subsidiaries.
3.04 "Change in Control" shall mean: (i) the sale of all, or a material
portion, of the assets of the Parent or Savings Bank; (ii) the merger or
recapitalization of the Parent or the Savings Bank whereby the Parent or Savings
Bank is not the surviving entity; (iii) a change in control of the Parent or
Savings Bank, as otherwise defined or determined by the Office of Thrift
Supervision ("OTS") 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 1934 Act and the rules and
regulations promulgated thereunder) of twenty-five percent (25%) or more of the
outstanding voting securities of the Parent or Savings Bank by any person,
trust, entity or group. This limitation shall not apply to the purchase of
shares of up to 25% of any class of securities of the Parent or Savings Bank 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.
3.05 "Committee" means the Board of Directors of the Parent or the
Restricted Stock Plan Committee appointed by the Board of Directors of the
Parent pursuant to Article IV hereof.
3.06 "Common Stock" means shares of the common stock of the Parent, or
any successor corporation or parent thereto.
3.07 "Conversion" means the effective date of the stock charter of the
Savings Bank and simultaneous acquisition of all of the outstanding stock of the
Savings Bank by the Parent.
3.08 "Director" means a member of the Board of the Savings Bank.
3.09 "Director Emeritus" means 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 Parent from time
to time.
3.10 "Disability" means 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 current capacity as determined by the
Committee.
3.11 "Employee" means any person who is employed by the Savings Bank or
a Subsidiary.
3.12 "Effective Date" shall mean the date of stockholder approval of
the Plan by the Parent's stockholders.
3.13 "Parent" shall mean First Kansas Financial Corporation, the parent
corporation of the Savings Bank.
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3.14 "Participant" means an Employee, Director or Director Emeritus who
receives a Plan Share Award under the Plan.
3.15 "Plan Shares" means shares of Common Stock held in the Trust which
are awarded or issuable to a Participant pursuant to the Plan.
3.16 "Plan Share Award" or "Award" means a right granted to a
Participant under this Plan to earn or to receive Plan Shares.
3.17 "Plan Share Reserve" means the shares of Common Stock held by the
Trust pursuant to Sections 5.03 and 5.04.
3.18 "Savings Bank" means First Kansas Federal Savings Bank, and any
successor corporation thereto.
3.19 "Subsidiary" means those subsidiaries of the Savings Bank which,
with the consent of the Board, agree to participate in this Plan.
3.20 "Trustee" or "Trustee Committee" means that person(s) or entity
nominated by the Committee and approved by the Board pursuant to Sections 4.01
and 4.02 to hold legal title to the Plan assets for the purposes set forth
herein.
Article IV
----------
ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered and
interpreted by the Board of Directors of the Parent or a Committee appointed by
said Board, which shall consist of not less than two non-employee members of the
Board, which shall have all of the powers allocated to it in this and other
sections of the Plan. All persons designated as members of the Committee shall
be "Non-Employee Directors" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended ("1934 Act"). The interpretation and
construction by the Committee of any provisions of the Plan or of any Plan Share
Award granted hereunder shall be final and binding. The Committee shall act by
vote or written consent of a majority of its members. Subject to the express
provisions and limitations of the Plan, the Committee may adopt such rules,
regulations and procedures as it deems appropriate for the conduct of its
affairs. The Committee shall report its actions and decisions with respect to
the Plan to the Board at appropriate times, but in no event less than one time
per calendar year. The Committee shall recommend to the Board one or more
persons or entity to act as Trustee in accordance with the provision of this
Plan and Trust and the terms of Article VIII hereof.
4.02 Role of the Board. The members of the Committee and the Trustee
shall be appointed or approved by, and will serve at the pleasure of the Board.
The Board may in its discretion from time to time remove members from, or add
members to, the Committee, and may remove, replace or add Trustees. The Board
shall have all of the powers allocated to it in this and other sections of the
Plan, may take any action under or with respect to the Plan which the Committee
is authorized to take, and may reverse or override any action taken or decision
made by the Committee under or with respect to the Plan, provided, however, that
the Board may not revoke any Plan Share Award already made except as provided in
Section 7.01(b) herein.
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4.03 Limitation on Liability. No member of the Board, the Committee or
the Trustee shall be liable for any determination made in good faith with
respect to the Plan or any Plan Share Awards granted. If a member of the Board,
Committee or any Trustee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by any reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Parent and
the Savings Bank shall indemnify such member against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such action, suit or
proceeding if he or she acted in good faith and in a manner he or she reasonably
believed to be in the best interests of the Parent, the Savings Bank and its
Subsidiaries and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Notwithstanding anything
herein to the contrary, in no event shall the Savings Bank take any actions with
respect to this Section 4.03 which is not in compliance with the limitations or
requirements set forth at 12 CFR 545.121, as may be amended from time to time.
Article V
---------
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Board of Directors of the
Savings Bank shall determine the amounts (or the method of computing the
amounts) to be contributed by the Savings Bank to the Trust established under
this Plan. Such amounts shall be paid to the Trustee at the time of
contribution. No contributions to the Trust by Participants shall be permitted
except with respect to amounts necessary to meet tax withholding obligations.
5.02 Initial Investment. Any funds held by the Trust prior to
investment in the Common Stock shall be invested by the Trustee in such
interest-bearing account or accounts at the Savings Bank as the Trustee shall
determine to be appropriate.
5.03 Investment of Trust Assets. Following approval of the Plan by
stockholders of the Parent and receipt of any other necessary regulatory
approvals, the Trust shall purchase Common Stock of the Parent in an amount
equal to up to 100% of the Trust's assets, after providing for any required
withholding as needed for tax purposes, provided, however, that the Trust shall
not purchase more than 62,157 shares of Common Stock, representing 4% of the
aggregate shares of Common Stock issued by the Parent in the Conversion. The
Trustee may purchase shares of Common Stock in the open market or, in the
alternative, may purchase authorized but unissued shares of the Common Stock or
treasury shares from the Parent sufficient to fund the Plan Share Reserve.
5.04 Effect of Allocations, Returns and Forfeitures Upon Plan Share
Reserves. Upon the allocation of Plan Share Awards under Sections 6.02 and 6.05,
or the decision of the Committee to return Plan Shares to the Parent, the Plan
Share Reserve shall be reduced by the number of Shares subject to the Awards so
allocated or returned. Any Shares subject to an Award which are not earned
because of forfeiture by the Participant pursuant to Section 7.01 shall be added
to the Plan Share Reserve.
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Article VI
----------
ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Employees and Directors Emeritus are eligible to
receive Plan Share Awards within the sole discretion of the Committee. Directors
who are not otherwise Employees shall receive Plan Share Awards pursuant to
Section 6.05.
6.02 Allocations. The Committee will determine which of the Employees
will be granted Plan Share Awards and the number of Shares covered by each
Award, provided, however, that in no event shall any Awards be made which will
violate the Charter or Bylaws of the Savings Bank or its Parent or Subsidiaries
or any applicable federal or state law or regulation. In the event Shares are
forfeited for any reason or additional Shares are purchased by the Trustee, the
Committee may, from time to time, determine which of the Employees will be
granted Plan Share Awards to be awarded from forfeited Shares. In selecting
those Employees and Directors Emeritus to whom Plan Share Awards will be granted
and the number of shares covered by such Awards, the Committee shall consider
the prior and anticipated future position, duties and responsibilities of the
Employees, the value of their prior and anticipated future services to the
Savings Bank and its Subsidiaries, and any other factors the Committee may deem
relevant. All actions by the Committee shall be deemed final, except to the
extent that such actions are revoked by the Board. Notwithstanding anything
herein to the contrary, in no event shall any Participant receive Plan Share
Awards in excess of 25% of the aggregate Plan Shares authorized under the Plan.
6.03 Form of Allocation. As promptly as practicable after a
determination is made pursuant to Section 6.02 or Section 6.05 that a Plan Share
Award is to be made, the Committee shall notify the Participant in writing of
the grant of the Award, the number of Plan Shares covered by the Award, and the
terms upon which the Plan Shares subject to the award may be earned. The date on
which the Committee makes its award determination or the date the Committee so
notifies the Participant shall be considered the date of grant of the Plan Share
Awards as determined by the Committee. The Committee shall maintain records as
to all grants of Plan Share Awards under the Plan.
6.04 Allocations Not Required. Notwithstanding anything to the contrary
at Sections 6.01, 6.02 or 6.05, no Employee shall have any right or entitlement
to receive a Plan Share Award hereunder, such Awards being at the sole
discretion of the Committee and the Board, nor shall the Employees as a group
have such a right. The Committee may, with the approval of the Board (or, if so
directed by the Board) return all Common Stock in the Plan Share Reserve to the
Savings Bank at any time, and cease issuing Plan Share Awards.
6.05 Awards to Directors. Notwithstanding anything herein to the
contrary, upon the Effective Date, a Plan Share Award consisting of 3,107 Plan
Shares shall be awarded to each Director of the Savings Bank that is not
otherwise an Employee. Additionally, upon the Effective Date, a Plan Share Award
consisting of 3,107 Plan Shares shall be awarded to each advisory director of
the Savings Bank that has served not less than three years and is not otherwise
an Employee. Such Plan Share Award shall be earned and non-forfeitable at the
rate of one-fifth as of the one-year anniversary of the Effective Date and an
additional one-fifth following each of the next four successive years during
such periods of service as a Director or Director Emeritus. Further, such Plan
Share Award shall be immediately 100% earned and non-forfeitable in the event of
the death or Disability of such Director or Director Emeritus, or upon a Change
in Control of the Savings Bank or Parent; provided that such accelerated vesting
is not
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<PAGE>
inconsistent with applicable regulations of the Office of Thrift Supervision
("OTS") or other applicable banking regulatory agency at the time of such Change
in Control. Subsequent to the Effective Date, Plan Share Awards may be awarded
to newly elected or appointed Directors of the Savings Bank by the Committee,
provided that total Plan Share Awards granted to non-employee Directors of the
Savings Bank shall not exceed 30% of the total Plan Share Reserve in the
aggregate under the Plan or 5% of the total Plan Share Reserve to any individual
non-employee Director.
Article VII
-----------
EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earnings Plan Shares; Forfeitures.
(a) General Rules. Unless the Committee shall specifically state to the
contrary at the time a Plan Share Award is granted, Plan Shares subject to an
Award shall be earned and non-forfeitable by a Participant at the rate of
one-fifth of such Award following one year after the granting of such Award, and
an additional one-fifth following each of the next four successive years;
provided that such Participant remains an Employee, Director, or Director
Emeritus during such period. Notwithstanding anything herein to the contrary, in
no event shall a Plan Share Award granted hereunder be earned and non-
forfeitable by a Participant more rapidly than at the rate of one-fifth of such
Award as of the one year anniversary of the date of grant and an additional
one-fifth following each of the next four successive years.
(b) Revocation for Misconduct. Notwithstanding anything herein to the
contrary, the Board shall, by resolution, immediately revoke, rescind and
terminate any Plan Share Award, or portion thereof, previously awarded under
this Plan, to the extent Plan Shares have not been delivered thereunder to the
Participant, whether or not yet earned, in the case of a Participant who is
discharged from the employ or service of the Parent, Savings Bank or a
Subsidiary for Cause, or who is discovered after termination of employment or
service to have engaged in conduct that would have justified termination for
Cause. A determination of Cause shall be made by the Board within its sole
discretion.
(c) Exception for Terminations Due to Death or Disability.
Notwithstanding the general rule contained in Section 7.01(a) above, all Plan
Shares subject to a Plan Share Award held by a Participant whose employment or
service with the Parent, Savings Bank or a Subsidiary terminates due to death or
Disability, shall be deemed earned and nonforfeitable as of the Participant's
last date of employment or service with the Parent, Savings Bank or Subsidiary
and shall be distributed as soon as practicable thereafter.
(d) Exception for Termination after a Change in Control.
Notwithstanding the general rule contained in Section 7.01 above, all Plan
Shares subject to a Plan Share Award held by a Participant shall be deemed to be
immediately 100% earned and non-forfeitable in the event of a Change in Control
of the Parent or Savings Bank and shall be distributed as soon as practicable
thereafter; provided that such accelerated vesting is not inconsistent with
applicable regulations of the OTS or other applicable banking regulatory agency
at the time of such Change in Control.
7.02 Accrual and Payment of Dividends. A holder of a Plan Share Award,
whether or not earned, shall also be entitled to receive an amount equal to any
cash dividends declared and paid with respect to shares of Common Stock
represented by such Plan Share Award between the date the relevant
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Plan Share Award was granted to such Participant and the date the Plan Shares
are distributed. Such cash dividend amounts shall be held in arrears under the
Trust and distributed upon the earning of the applicable Plan Share Award. Such
payment shall also include an appropriate amount of earnings, if any, of the
Trust assets with respect to any cash dividends so distributed.
7.03 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Except as provided in
Subsections (d) and (e) below, Plan Shares shall be distributed to the
Participant or his Beneficiary, as the case may be, as soon as practicable after
they have been earned. No fractional shares shall be distributed.
Notwithstanding anything herein to the contrary, at the discretion of the
Committee, Plan Shares may be distributed prior to such Shares being 100%
earned, provided that such Plan Shares shall contain a restrictive legend
detailing the applicable limitations of such shares with respect to transfer and
forfeiture.
(b) Form of Distribution. All Plan Shares, together with any shares
representing stock dividends, shall be distributed in the form of Common Stock.
One share of Common Stock shall be given for each Plan Share earned. Payments
representing cash dividends (and earnings thereon) shall be made in cash.
Notwithstanding anything within the Plan to the contrary, upon a Change in
Control whereby substantially all of the Common Stock of the Parent shall be
acquired for cash, all Plan Shares associated with Plan Share Awards, together
with any shares representing stock dividends associated with Plan Share Awards,
shall be, at the sole discretion of the Committee, distributed as of the
effective date of such Change in Control, or as soon as administratively
feasible thereafter, in the form of cash equal to the consideration received in
exchange for such Common Stock represented by such Plan Shares.
(c) Withholding. The Trustee may withhold from any payment or
distribution made under this Plan sufficient amounts of cash or shares of Common
Stock necessary to cover any applicable withholding and employment taxes, and if
the amount of such payment or distribution is not sufficient, the Trustee may
require the Participant or Beneficiary to pay to the Trustee the amount required
to be withheld in taxes as a condition of delivering the Plan Shares. The
Trustee shall pay over to the Parent, Savings Bank or Subsidiary which employs
or employed such Participant any such amount withheld from or paid by the
Participant or Beneficiary.
(d) Timing: Exception for 10% Shareholders. Notwithstanding Subsection
(a) above, no Plan Shares may be distributed prior to the date which is five
years from the effective date of the Conversion to the extent the Participant or
Beneficiary, as the case may be, would after receipt of such Shares own in
excess of ten percent (10%) of the issued and outstanding shares of Common Stock
held by parties other than Parent, unless such action is approved in advance by
a majority vote of disinterested directors of the Board of the Parent. Any Plan
Shares remaining undistributed solely by reason of the operation of this
Subsection (d) shall be distributed to the Participant or his Beneficiary on the
date which is five years from the effective date of the Conversion.
(e) Regulatory Exceptions. No Plan Shares shall be distributed,
however, unless and until all of the requirements of all applicable law and
regulation shall have been fully complied with, including the receipt of
approval of the Plan by the stockholders of the Parent by such vote, if any, as
may be required by applicable law and regulations as determined by the Board.
7.04 Voting of Plan Shares. After a Plan Share Award has become earned
and non- forfeitable, the Participant shall be entitled to direct the Trustee as
to the voting of the Plan Shares which
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are associated with the Plan Share Award and which have not yet been distributed
pursuant to Section 7.03, subject to rules and procedures adopted by the
Committee for this purpose. All shares of Common Stock held by the Trust as to
which Participants are not entitled to direct, or have not directed, the voting
of such Shares, shall be voted by the Trustee as directed by the Committee.
Article VIII
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TRUST
8.01 Trust. The Trustee shall receive, hold, administer, invest and
make distributions and disbursements from the Trust in accordance with the
provisions of the Plan and Trust and the applicable directions, rules,
regulations, procedures and policies established by the Committee pursuant to
the Plan.
8.02 Management of Trust. It is the intention of this Plan and Trust
that the Trustee shall have complete authority and discretion with respect to
the management, control and investment of the Trust, and that the Trustee shall
invest all assets of the Trust, except those attributable to cash dividends paid
with respect to Plan Shares not held in the Plan Share Reserve, in Common Stock
to the fullest extent practicable, except to the extent that the Trustee
determines that the holding of monies in cash or cash equivalents is necessary
to meet the obligations of the Trust. In performing their duties, the Trustees
shall have the power to do all things and execute such instruments as may be
deemed necessary or proper, including the following powers:
(a) To invest up to one hundred percent (100%) of all Trust assets in
the Common Stock without regard to any law now or hereafter in force
limiting investments for Trustees or other fiduciaries. The investment
authorized herein may constitute the only investment of the Trust, and
in making such investment, the Trustee is authorized to purchase Common
Stock from the Parent or from any other source, and such Common Stock
so purchased may be outstanding, newly issued, or treasury shares.
(b) To invest any Trust assets not otherwise invested in accordance
with (a) above in such deposit accounts, and certificates of deposit
(including those issued by the Savings Bank), obligations of the United
States government or its agencies or such other investments as shall be
considered the equivalent of cash.
(c) To sell, exchange or otherwise dispose of any property at any time
held or acquired by the Trust.
(d) To cause stocks, bonds or other securities to be registered in the
name of a nominee, without the addition of words indicating that such
security is an asset of the Trust (but accurate records shall be
maintained showing that such security is an asset of the Trust).
(e) To hold cash without interest in such amounts as may be in the
opinion of the Trustee reasonable for the proper operation of the Plan
and Trust.
(f) To employ brokers, agents, custodians, consultants and accountants.
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(g) To hire counsel to render advice with respect to their rights,
duties and obligations hereunder, and such other legal services or
representation as they may deem desirable.
(h) To hold funds and securities representing the amounts to be
distributed to a Participant or his Beneficiary as a consequence of a
dispute as to the disposition thereof, whether in a segregated account
or held in common with other assets.
(i) As may be directed by the Committee or the Board from time to time,
the Trustee shall pay to the Saving Bank earnings of the Trust
attributable to the Plan Share Reserve.
Notwithstanding anything herein contained to the contrary, the Trustee
shall not be required to make any inventory, appraisal or settlement or report
to any court, or to secure any order of a court for the exercise of any power
herein contained, or to maintain bond.
8.03 Records and Accounts. The Trustee shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled person
or entity to the extent required by applicable law, or any other person
determined by the Committee.
8.04 Earnings. All earnings, gains and losses with respect to Trust
assets shall be allocated in accordance with a reasonable procedure adopted by
the Committee, to bookkeeping accounts for Participants or to the general
account of the Trust, depending on the nature and allocation of the assets
generating such earnings, gains and losses. In particular, any earnings on cash
dividends received with respect to shares of Common Stock shall be allocated to
accounts for Participants, except to the extent that such cash dividends are
distributed to Participants, if such shares are the subject of outstanding Plan
Share Awards, or, otherwise to the Plan Share Reserve.
8.05 Expenses. All costs and expenses incurred in the operation and
administration of this Plan, including those incurred by the Trustee, shall be
paid by the Savings Bank.
8.06 Indemnification. Subject to the requirements and limitations of
applicable laws and regulations, the Parent and the Savings Bank shall
indemnify, defend and hold the Trustee harmless against all claims, expenses and
liabilities arising out of or related to the exercise of the Trustee's powers
and the discharge of their duties hereunder, unless the same shall be due to
their gross negligence or willful misconduct.
Article IX
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MISCELLANEOUS
9.01 Adjustments for Capital Changes. The aggregate number of Plan
Shares available for issuance pursuant to the Plan Share Awards and the number
of Shares to which any Plan Share Award relates shall be proportionately
adjusted for any increase or decrease in the total number of outstanding shares
of Common Stock issued subsequent to the effective date of the Plan resulting
from any split, subdivision or consolidation of the Common Stock or other
capital adjustment, change or exchange of the Common Stock, or other increase or
decrease in the number or kind of shares effected without receipt or payment of
consideration by the Parent.
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9.02 Amendment and Termination of the Plan. The Board may, by
resolution, at any time, amend or terminate the Plan. The power to amend or
terminate the Plan shall include the power to direct the Trustee to return to
the Parent all or any part of the assets of the Trust, including shares of
Common Stock held in the Plan Share Reserve, as well as shares of Common Stock
and other assets subject to Plan Share Awards which have not yet been earned by
the Participants to whom they have been awarded. However, the termination of the
Trust shall not affect a Participant's right to earn Plan Share Awards and to
the distribution of Common Stock relating thereto, including earnings thereon,
in accordance with the terms of this Plan and the grant by the Committee or the
Board. Notwithstanding the foregoing, no action of the Board may increase (other
than as provided in Section 9.01 hereof) the maximum number of Plan Shares
permitted to be awarded under the Plan as specified at Section 5.03, 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 ratification by the stockholders of
the Parent.
9.03 Nontransferable. Plan Share Awards and rights to Plan Shares shall
not be transferable by a Participant, and during the lifetime of the
Participant, Plan Shares may only be earned by and paid to the Participant who
was notified in writing of the Award by the Committee pursuant to Section 6.03.
No Participant or Beneficiary shall have any right in or claim to any assets of
the Plan or Trust, nor shall the Parent, Savings Bank, or any Subsidiary be
subject to any claim for benefits hereunder.
9.04 No Employment Rights. Neither the Plan nor any grant of a Plan
Share Award or Plan Shares hereunder nor any action taken by the Trustee, the
Committee or the Board in connection with the Plan shall create any right,
either express or implied, on the part of any Participant to continue in the
employ or service of the Parent, Savings Bank, or a Subsidiary thereof.
9.05 Voting and Dividend Rights. No Participant shall have any voting
or dividend rights of a stockholder with respect to any Plan Shares covered by a
Plan Share Award, except as expressly provided in Sections 7.02 and 7.04 above,
prior to the time said Plan Shares are actually distributed to such Participant.
9.06 Governing Law. The Plan and Trust shall be governed by and
construed under the laws of the State of Kansas, except to the extent that
Federal Law shall be deemed applicable.
9.07 Effective Date. The Plan shall be effective as of the date of
approval of the Plan by stockholders of the Parent, subject to the receipt of
approval or non-objection by the OTS or other applicable banking regulator, if
applicable.
9.08 Term of Plan. This Plan shall remain in effect until the earlier
of (i) termination by the Board, (ii) the distribution of all assets of the
Trust, or (iii) 21 years from the Effective Date. Termination of the Plan shall
not effect any Plan Share Awards previously granted, and such Plan Share Awards
shall remain valid and in effect until they have been earned and paid, or by
their terms expire or are forfeited.
9.09 Tax Status of Trust. It is intended that the Trust established
hereby shall be treated as a grantor trust of the Savings Bank under the
provisions of Section 671 et seq. of the Internal Revenue Code of 1986, as
amended, as the same may be amended from time to time.
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