As filed with the Securities and Exchange Commission on June 11, 1999
Registration No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Farnsworth Bancorp, Inc.
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(Exact Name of Registrant as Specified in Its Charter)
New Jersey 22-3591051
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
789 Farnsworth Avenue
Bordentown,New Jersey 08505
(609) 298-0723
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(Address of Principal Executive Offices)
Farnsworth Bancorp, Inc.
1999 Stock Option Plan
----------------------
(Full Title of the Plan)
Richard Fisch, Esq.
Evan M. Seigel, Esq.
Malizia, Spidi, Sloane & Fisch, P.C.
1301 K Street, N.W.
Suite 700 East
Washington, D.C. 20005
(202) 434-4660
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(Name, Address and Telephone Number of Agent for Service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
======================== ====================== ====================== ====================== ======================
Proposed Maximum
Title of Proposed Maximum Aggregate Offering Amount of
Securities To Amount To Offering Price Per Price Registration
Be Registered Be Registered Share Fee
Common Stock
<S> <C> <C> <C> <C> <C>
$.10 par value 37,985 shares (1) (2) $ 399,317(2) $111.01
======================== ====================== ====================== ====================== ======================
</TABLE>
(1) The maximum number of shares of common stock issuable upon exercise of
options granted or to be granted under the Farnsworth Bancorp, Inc.
1999 Stock Option Plan consists of 37,985 shares which are being
registered under this Registration Statement and for which a
registration fee is being paid. Additionally, an indeterminate number
of additional shares which may be offered and issued to prevent
dilution resulting from stock splits, stock dividends or similar
transactions are being registered hereunder for which no additional fee
is required.
(2) An aggregate of 37,985 shares are being registered hereby, of which
26,587 shares are under option at a weighted average exercise price of
$10.625 per share ($282,487 in the aggregate). The remainder of such
shares, which are not presently subject to options (11,398 shares), are
being registered based upon the average of the bid and ask prices of
the Common Stock of the Registrant as reported on the OTC Bulletin
Board on June 8, 1999 of $10.25 per share ($116,830 in the aggregate)
for a total offering of $399,317.
Under Rule 462 of the 1933 Act, the Registration Statement on Form S-8
shall be effective upon filing with the SEC.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information. *
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Item 2. Registrant Information and Employee Plan Annual Information. *
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*This Registration Statement relates to the registration of 37,985
shares of Farnsworth Bancorp, Inc. (the "Company" or "Registrant") common stock,
$.10 par value per share (the "Common Stock") issuable to employees, officers
and directors of the Registrant or its subsidiaries as compensation for services
in accordance with the Farnsworth Bancorp, Inc. 1999 Stock Option Plan (the
"Plan"). Documents containing the information required by Part I of this
Registration Statement will be sent or given to participants in the Plan as
specified by Rule 428(b)(1). Such documents are not filed with the Securities
and Exchange Commission (the "Commission") either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant to Rule 424, in
reliance on Rule 428.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
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The Company became subject to the informational requirements of the
Securities Exchange Act of 1934 (the "1934 Act") on July 14, 1998 and,
accordingly, files periodic reports and other information with the Commission.
Reports, proxy statements and other information concerning the Company filed
with the Commission may be inspected and copies may be obtained (at prescribed
rates) at the Commission's Public Reference Section, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549.
The following documents filed by the Company are incorporated in this
Registration Statement and the Prospectus constituting Part I of this
Registration Statement:
(1) The Company's Registration Statement on Form SB-2 (No. 333-56689)
filed with the Commission on June 12, 1998 and amendments thereto;
(2) The Company's Annual Report on Form 10-KSB filed for the fiscal
year ended September 30, 1998, as filed with the Commission;
(3) The Company's Quarterly Report on Form 10-QSB for the quarters
ended March 31, 1999, and December 31, 1998, respectively, as filed with the
Commission;
(4) The Company's Definitive Proxy Statement related to the 1999 Annual
Meeting of Stockholders, as filed with the Commission;
(5) The Company's Definitive Proxy Statement related the Special
Meeting of Stockholders held on April 6, 1999, as filed with the Commission; and
(6) The Company's Registration Statement on Form 8-A as filed with the
Commission on July 14, 1998.
1
<PAGE>
All documents filed by the Company pursuant to Sections 13, 14, or
15(d) of the 1934 Act after the date hereof and prior to the termination of the
offering of the shares of Common Stock shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the date
of filing of such documents.
Item 4. Description of Securities.
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Not Applicable.
Item 5. Interests of Named Experts and Counsel.
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Not Applicable.
Item 6. Indemnification of Directors and Officers.
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Section 14A:3-5 of the New Jersey Business Corporation Act describes
those circumstances under which directors, officers, employees and agents may be
insured or indemnified against liability which they may incur in their
capacities as such.
Section 17 of the Articles of Incorporation of the Company, require
indemnification of directors, officers, employees or agents of the Company to
the full extent permissible under New Jersey law.
The registrant believes that these provisions assist the registrant in,
among other things, attracting and retaining qualified persons to serve the
registrant and its subsidiary. However, a result of such provisions could be to
increase the expenses of the registrant and effectively reduce the ability of
stockholders to sue on behalf of the registrant because certain suits could be
barred or amounts that might otherwise be obtained on behalf of the registrant
could be required to be repaid by the registrant to an indemnified party.
The Company may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee, or agent of the Company or is or
was serving at the request of the Company as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise against any liability asserted against the person and incurred by the
person in any such capacity or arising out of his status as such, whether or not
the Company would have the power to indemnify the person against such liability
under the provisions of the Articles of Incorporation.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("1933 Act") may be permitted to directors, officers, or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act and is
therefore unenforceable.
Item 7. Exemption from Registration Claimed.
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Not Applicable.
Item 8. Exhibits.
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For a list of all exhibits filed or included as part of this
Registration Statement, see "Index to Exhibits" at the end of this Registration
Statement.
2
<PAGE>
Item 9. Undertakings.
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(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information
set forth in the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided however, that paragraphs (a)(1)(i) and (a)(1)(ii) do no apply if the
Registration Statement is on Form S-3, Form S-8, and the information required to
be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the Registration Statement to include any financial
statements required by Rule 3-19 of Regulation S-X at the start of any delayed
offering or throughout a continuous offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
3
<PAGE>
(c) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Bordentown in the State of New Jersey, on the 7th day
of June 1999.
FARNSWORTH BANCORP, INC.
By: /s/ Gary N. Pelehaty
-------------------------------------
Gary N. Pelehaty
President and Chief Executive Officer
(Duly Authorized Representative)
POWER OF ATTORNEY
We, the undersigned directors and officers of Farnsworth Bancorp, Inc., do
hereby severally constitute and appoint Gary N. Pelehaty as our true and lawful
attorney and agent, to do any and all things and acts in our names in the
capacities indicated below and to execute any and all instruments for us and in
our names in the capacities indicated below which said Gary N. Pelehaty may deem
necessary or advisable to enable Farnsworth Bancorp, Inc. to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in connection with the Registration
Statement on Form S-8 relating to the registrant, including specifically, but
not limited to, power and authority to sign, for any of us in our names in the
capacities indicated below, this Registration Statement and any and all
amendments (including post-effective amendments) thereto; and we hereby ratify
and confirm all that said Gary N. Pelehaty shall do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
<S> <C>
/s/ Gary N. Pelehaty /s/ Charles Alessi
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Gary N. Pelehaty Charles Alessi
President and Chief Executive Officer Vice President, Secretary and Treasurer
(Principal Executive Officer) (Principal Accounting and Financial Officer)
Date: June 7, 1999 Date: June 7, 1999
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/s/ Herman Gutstein /s/ George G. Aaronson, Jr.
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Herman Gutstein George G. Aaronson, Jr.
Chairman of the Board Director
Date: June 7, 1999 Date: June 7, 1999
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<PAGE>
/s/ G. Edward Koenig, Jr. /s/ Edgar N. Peppler
- ------------------------------------- --------------------------------------
G. Edward Koenig, Jr. Edgar N. Peppler
Director Director
Date: June 7, 1999 Date: June 7, 1999
------------ ------------
/s/ William H. Wainwright, Jr. /s/ Charles E. Adams
- ------------------------------------- --------------------------------------
William H. Wainwright, Jr. Charles E. Adams
Director Director
Date: June 7, 1999 Date: June 7, 1999
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</TABLE>
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
4.1 Farnsworth Bancorp, Inc.
1999 Stock Option Plan
4.2 Form of Stock Option Agreement to be entered into
with respect to Incentive Stock Options
4.3 Form of Stock Option Agreement to be entered into
with Directors with respect to Non-Incentive Stock
Options
4.4 Form of Stock Award Tax Notice
5.1 Opinion of Malizia Spidi & Fisch, P.C. as to the
validity of the Common Stock being registered
23.1 Consent of Malizia Spidi & Fisch, P.C. (appears
in their opinion filed as Exhibit 5.1)
23.2 Consent of Kronick Kalada Berdy & Co.
23.3 Consent of Lewis W. Parker, III
24 Reference is made to the Signatures section of this
Registration Statement for the Power of Attorney
contained therein
EXHIBIT 4.1
Farnsworth Bancorp, Inc.
1999 Stock Option Plan
<PAGE>
FARNSWORTH BANCORP, INC.
1999 STOCK OPTION PLAN
1. Purpose of the Plan. The Plan shall be known as the FARNSWORTH
BANCORP, INC. ("Company") 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 Company, or
any present or future parent or subsidiary of the Company to promote the success
of the business. The Plan is intended to provide for the grant of "Incentive
Stock Options," within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code") and Non-Incentive Stock Options, options that
do not so qualify. The provisions of the Plan relating to Incentive Stock
Options shall be interpreted to conform to the requirements of Section 422 of
the Code.
2. Definitions. The following words and phrases when used in this Plan
with an initial capital letter, unless the context clearly indicates otherwise,
shall have the meaning as set forth below. Wherever appropriate, the masculine
pronoun shall include the feminine pronoun and the singular shall include the
plural.
(a) "Award" means the grant by the Committee of an Incentive
Stock Option or a Non-Incentive Stock Option, or any combination thereof, as
provided in the Plan.
(b) "Board" shall mean the Board of Directors of the Company,
or any successor or parent corporation thereto.
(c) "Change in Control" shall mean: (i) the sale of all, or a
material portion, of the assets of the Company; (ii) the merger or
recapitalization of the Company whereby the Company is not the surviving entity;
(iii) a change in control of the Company, as otherwise defined or determined by
the Office of Thrift Supervision or regulations promulgated by it; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of that term as it is used in Section 13(d) of the Securities Exchange
Act of 1934 and the rules and regulations promulgated thereunder) of twenty-five
percent (25%) or more of the outstanding voting securities of the Company by any
person, trust, entity or group. This limitation shall not apply to the purchase
of shares by underwriters in connection with a public offering of Company stock,
or the purchase of shares of up to 25% of any class of securities of the Company
by a tax-qualified employee stock benefit plan which is exempt from the approval
requirements, set forth under 12 C.F.R. ss.574.3(c)(1)(vi) as now in effect or
as may hereafter be amended. The term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein. The decision of the Committee as to whether a Change
in Control has occurred shall be conclusive and binding.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and regulations promulgated thereunder.
(e) "Committee" shall mean the Board or the Stock Option
Committee appointed by the Board in accordance with Section 5(a) of the Plan.
<PAGE>
(f) "Common Stock" shall mean common stock of the Company, or
any successor or parent corporation thereto.
(g) "Company" shall mean the Farnsworth Bancorp, Inc., the
parent corporation of the Savings Bank, or any successor or Parent thereof.
(h) "Continuous Employment" or "Continuous Status as an
Employee" shall mean the absence of any interruption or termination of
employment with the Company or any present or future Parent or Subsidiary of the
Company. Employment shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by the Company or
in the case of transfers between payroll locations, of the Company or between
the Company, its Parent, its Subsidiaries or a successor.
(i) "Director" shall mean a member of the Board of the
Company, or any successor or parent corporation thereto.
(j) "Director Emeritus" shall mean a person serving as a
director emeritus, advisory director, consulting director or other similar
position as may be appointed by the Board of Directors of the Savings Bank or
the Company from time to time.
(k) "Disability" means (a) with respect to Incentive Stock
Options, the "permanent and total disability" of the Employee as such term is
defined at Section 22(e)(3) of the Code; and (b) with respect to Non-Incentive
Stock Options, any physical or mental impairment which renders the Participant
incapable of continuing in the employment or service of the Savings Bank or the
Parent in his then current capacity as determined by the Committee.
(l) "Effective Date" shall mean the date specified in Section
15 hereof.
(m) "Employee" shall mean any person employed by the Company
or any present or future Parent or Subsidiary of the Company.
(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.
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 Company or any Parent or Subsidiary of the
Company or any other person providing a service to the Company who is selected
by the Committee to receive an Award, or who by the express terms of the Plan is
granted an Award.
(v) "Plan" shall mean the Farnsworth Bancorp, Inc. 1999
Stock Option Plan.
(w) "Savings Bank" shall mean Peoples 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 37,985 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.
3
<PAGE>
5. Administration of the Plan.
(a) Composition of the Committee. The Plan shall be
administered by the Board of Directors of the Company or a Committee which shall
consist of not less than two Directors of the Company appointed by the Board and
serving at the pleasure of the Board. All persons designated as members of the
Committee shall meet the requirements of a "Non-Employee Director" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, as
found at 17 CFR ss.240.16b-3.
(b) Powers of the Committee. The Committee is authorized (but
only to the extent not contrary to the express provisions of the Plan or to
resolutions adopted by the Board) to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine the form and
content of Awards to be issued under the Plan and to make other determinations
necessary or advisable for the administration of the Plan, and shall have and
may exercise such other power and authority as may be delegated to it by the
Board from time to time. A majority of the entire Committee shall constitute a
quorum and the action of a majority of the members present at any meeting at
which a quorum is present shall be deemed the action of the Committee. In no
event may the Committee revoke outstanding Awards without the consent of the
Participant.
The President of the Company and such other officers
as shall be designated by the Committee are hereby authorized to execute written
agreements evidencing Awards on behalf of the Company and to cause them to be
delivered to the Participants. Such agreements shall set forth the Option
exercise price, the number of shares of Common Stock subject to such Option, the
expiration date of such Options, and such other terms and restrictions
applicable to such Award as are determined in accordance with the Plan or the
actions of the Committee.
(c) Effect of Committee's Decision. All decisions,
determinations and interpretations of the Committee shall be final and
conclusive on all persons affected thereby.
6. Eligibility for Awards and Limitations.
(a) The Committee shall from time to time determine the
officers, Directors, 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 Company and such
other factors as the Committee may, in its sole discretion, deem relevant.
Participants who have been granted an Award may, if otherwise eligible, be
granted additional Awards.
(b) The aggregate Fair Market Value (determined as of the date
the Option is granted) of the Shares with respect to which Incentive Stock
Options are exercisable for the first time by each Employee during any calendar
year (under all Incentive Stock Option plans, as defined in Section 422 of the
Code, of the Company or any present or future Parent or Subsidiary of the
Company) shall not exceed $100,000. Notwithstanding the prior provisions of this
Section 6, the Committee may grant Options in
4
<PAGE>
excess of the foregoing limitations, provided said Options shall be clearly and
specifically designated as not being Incentive Stock Options.
(c) In no event shall Shares subject to Options granted to
non-employee Directors in the aggregate under this Plan exceed more than 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 Company shall accept full or partial payment in Common Stock only
to the extent permitted by applicable law. No Shares of Common Stock shall be
issued until full payment has been received by the Company, and no Optionee
shall have any of the rights of a stockholder of the Company until Shares of
Common Stock are issued to the Optionee.
(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.
5
<PAGE>
(d) Exercise Generally. Except as otherwise provided in
Section 10 hereof, no Incentive Stock Option may be exercised unless the
Optionee shall have been in the employ of the Company at all times during the
period beginning with the date of grant of any such Incentive Stock Option and
ending on the date three (3) months prior to the date of exercise of any such
Incentive Stock Option. The Committee may impose additional conditions upon the
right of an Optionee to exercise any Incentive Stock Option granted hereunder
which are not inconsistent with the terms of the Plan or the requirements for
qualification as an Incentive Stock Option. Except as otherwise provided by the
terms of the Plan or by action of the Committee at the time of the grant of the
Options, the Options will be first exercisable at the rate of 20% on the 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 Company written notice of the exercise of the
Option together with an order to a registered broker-dealer or equivalent third
party, to sell part or all of the Optioned Stock and to deliver enough of the
proceeds to the Company to pay the Option exercise price and any applicable
withholding taxes. If the Optionee does not sell the Optioned Stock through a
registered broker-dealer or equivalent third party, the Optionee can give the
Company written notice of the exercise of the Option and the third party
purchaser of the Optioned Stock shall pay the Option exercise price plus any
applicable withholding taxes to the Company.
(f) Transferability. An Incentive Stock Option granted
pursuant to the Plan shall be exercised during an Optionee's lifetime only by
the Optionee to whom it was granted and shall not be assignable or transferable
otherwise than by will or by the laws of descent and distribution.
9. Terms and Conditions of Non-Incentive Stock Options. Each
Non-Incentive Stock Option granted pursuant to the Plan shall be evidenced by an
instrument in such form as the Committee shall from time to time approve. Each
Non-Incentive Stock Option granted pursuant to the Plan shall comply with and be
subject to the following terms and conditions.
(a) Options Granted to Directors. Subject to the limitations
of Section 6(c), Non-Incentive Stock Options to purchase 1,899 shares of Common
Stock will be granted to each Director who is not an Employee as of the
Effective Date, at an exercise price equal to the Fair Market Value of the
Common Stock on such date of grant. The Options will be first exercisable at the
rate of 20% on the 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
6
<PAGE>
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.
(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.
7
<PAGE>
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) 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
8
<PAGE>
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.
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
9
<PAGE>
Securities, then the Optionee will receive upon consummation of the Change in
Control transaction a cash payment for each Option surrendered equal to the
difference between (1) the Fair Market Value of the consideration to be received
for each share of Common Stock in the Change in Control transaction times the
number of shares of Common Stock subject to such surrendered Options, and (2)
the aggregate exercise price of all such surrendered Options, or
(ii) in the event of a transaction under the terms of
which the holders of the Common Stock of the
Company will receive upon consummation thereof a cash payment (the "Merger
Price") for each share of Common Stock exchanged in the Change in Control
transaction, to make or to provide for a cash payment to the Optionees equal to
the difference between (A) the Merger Price times the number of shares of Common
Stock subject to such Options held by each Optionee (to the extent then
exercisable at prices not in excess of the Merger Price) and (B) the aggregate
exercise price of all such surrendered Options in exchange for such surrendered
Options.
(c) Extraordinary Corporate Action. Notwithstanding any
provisions of the Plan to the contrary, subject to any required action by the
stockholders of the Company, in the event of any Change in Control,
recapitalization, merger, consolidation, exchange of Shares, spin-off,
reorganization, tender offer, partial or complete liquidation or other
extraordinary corporate action or event, the Committee, in its sole discretion,
shall have the power, prior or subsequent to such action or event to:
(i) appropriately adjust the number of Shares of
Common Stock subject to each Option, the Option exercise price per Share of
Common Stock, and the consideration to be given or received by the Company upon
the exercise of any outstanding Option;
(ii) cancel any or all previously granted Options,
provided that appropriate consideration is paid to
the Optionee in connection therewith; and/or
(iii) make such other adjustments in connection with
the Plan as the Committee, in its sole discretion,
deems necessary, desirable, appropriate or advisable; provided, however, that no
action shall be taken by the Committee which would cause Incentive Stock Options
granted pursuant to the Plan to fail to meet the requirements of Section 422 of
the Code without the consent of the Optionee.
(d) Acceleration. The Committee shall at all times have the
power to accelerate the exercise date of Options previously granted under the
Plan; 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,
10
<PAGE>
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.
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.
11
<PAGE>
(d) Notwithstanding anything herein to the contrary, upon the
termination of employment or service of an Optionee by the Company or its
Subsidiaries for "cause" as defined at 12 C.F.R. 563.39(b)(1) as determined by
the Board of Directors, all Options held by such Participant shall cease to be
exercisable as of the date of such termination of employment or service.
(e) Upon the exercise of an Option by an Optionee (or the
Optionee's personal representative), the Committee, in its sole and absolute
discretion, may make a cash payment to the Optionee, in whole or in part, in
lieu of the delivery of shares of Common Stock. Such cash payment to be paid in
lieu of delivery of Common Stock shall be equal to the difference between the
Fair Market Value of the Common Stock on the date of the Option exercise and the
exercise price per share of the Option. Such cash payment shall be in exchange
for the cancellation of such Option. Such cash payment shall not be made in the
event that such transaction would result in liability to the Optionee or the
Company under Section 16(b) of the Securities Exchange Act of 1934, as amended,
and regulations promulgated thereunder.
20. Reservation of Shares. During the term of the Plan, the Company
will reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
21. Unsecured Obligation. No Participant under the Plan shall have any
interest in any fund or special asset of the Company by reason of the Plan or
the grant of any Option under the Plan. No trust fund shall be created in
connection with the Plan or any grant of any Option hereunder and there shall be
no required funding of amounts which may become payable to any Participant.
22. 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 New Jersey, except to the extent that
federal law shall be deemed to apply.
EXHIBIT 4.2
Form of Stock Option Agreement to be entered into
with respect to Incentive Stock Options
<PAGE>
STOCK OPTION AGREEMENT
----------------------
FOR INCENTIVE STOCK OPTIONS UNDER SECTION 422
OF THE INTERNAL REVENUE CODE
PURSUANT TO THE
FARNSWORTH BANCORP, INC.
1999 STOCK OPTION PLAN
----------------------
FOR OFFICERS AND EMPLOYEES
STOCK OPTIONS for a total of ____________ shares of Common Stock of
Farnsworth Bancorp, Inc. (the "Company"), which Option is intended to qualify as
an Incentive Stock Option under Section 422 of the Internal Revenue Code of
1986, as amended, is hereby granted to ___________, (the "Optionee"), at
the price determined as provided in, and in all respects subject to the terms,
definitions and provisions of the 1999 Stock Option Plan (the "Plan") adopted by
the Company which is incorporated by reference herein, receipt of which is
hereby acknowledged.
1. Option Price. The Option price is $______ for each Share, being 100%
of the fair market value, as determined by the Committee, of the Common Stock on
the date of grant of this Option.
2. Exercises of Option. This Option shall be exercisable in accordance
with provisions of the Plan, provided the holder of such Option is an employee,
director or director emeritus of the Company as of such date, as follows:
(a) Schedule of Rights to Exercise.
Percentage of Total
Shares
Awarded Which Are
Exercisable/
Date Options Non-forfeitable
---- ------- ---------------
Upon grant.............................. 0 0%
As of April 6, 2000..................... _____ 20%
As of April 6, 2001..................... _____ 40%
As of April 6, 2002..................... _____ 60%
As of April 6, 2003..................... _____ 80%
As of April 6, 2004..................... _____ 100%
Options awarded to the Optionee shall continue to vest annually during
such period that he serves as an employee, director or director emeritus of
Peoples Savings Bank or the Company. Notwithstanding any provisions in this
Section 2, in no event shall this Option be exercisable prior to six months
following the date of grant. Options shall be 100% vested and exercisable upon
the death or disability of the Optionee, or upon a Change in Control of the
Company, subject to
<PAGE>
limitations under applicable regulations and policies of the Office of Thrift
Supervision.
(b) Method of Exercise. This Option shall be exercisable by a
written notice which shall:
(i) State the election to exercise the Option, the
number of Shares with respect to which it is being exercised, the
person in whose name the stock certificate or certificates for such
Shares of Common Stock is to be registered, his address and Social
Security Number (or if more than one, the names, addresses and Social
Security Numbers of such persons);
(ii) Contain such representations and agreements as
to the holder's investment intent with respect to such shares of Common
Stock as may be satisfactory to the Company's counsel;
(iii) Be signed by the person or persons entitled to
exercise the Option and, if the Option is being exercised by any person
or persons other than the Optionee, be accompanied by proof,
satisfactory to counsel for the Company, of the right of such person or
persons to exercise the Option; and
(iv) Be in writing and delivered in person or by
certified mail to the Treasurer of the Company.
Payment of the purchase price of any Shares with respect to which the
Option is being exercised shall be by certified or bank cashier's or teller's
check. The certificate or certificates for shares of Common Stock as to which
the Option shall be exercised shall be registered in the name of the person or
persons exercising the Option.
(c) Restrictions on Exercise. This Option may not be exercised
if the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities or other law or valid regulation. As
a condition to the Optionee's exercise of this Option, the Company may require
the person exercising this Option to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
3. Non-transferability of Option. This Option may not be transferred in
any manner otherwise than by will or the laws of descent or distribution and may
be exercised during the lifetime of the Optionee only by the Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
<PAGE>
4. Term of Option. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, as set forth below, and may be
exercised during such term only in accordance with the Plan and the terms of
this Option.
5. Related Matters. Notwithstanding anything herein to the contrary,
additional conditions or restrictions related to such Options may be contained
in the Plan or the resolutions of the Plan Committee authorizing such grant of
Options.
Farnsworth Bancorp, Inc.
Date of Grant: By:
---------------------- ----------------------------
Attest:
- ------------------------------
[SEAL]
<PAGE>
INCENTIVE STOCK OPTION EXERCISE FORM
------------------------------------
PURSUANT TO THE
FARNSWORTH BANCORP, INC.
1999 STOCK OPTION PLAN
_______________
(Date)
Farnsworth Bancorp, Inc.
789 Farnsworth Avenue
Bordentown, New Jersey 08505
Dear Sir:
The undersigned elects to exercise the Incentive Stock Option to
purchase ____________ shares of Common Stock of Farnsworth Bancorp, Inc. under
and pursuant to a Stock Option Agreement dated ________________.
Delivered herewith is a certified or bank cashier's or teller's check
and/or shares of Common Stock, valued at the fair market value of the stock on
the date of exercise, as set forth below.
$__________ of cash or check
__________ of Common Stock
$ Total
==========
The name or names to be on the stock certificate or certificates and
the address and Social Security Number of such person(s) is as follows:
Name ____________________________________________
Address _________________________________________
Social Security Number __________________________
Very truly yours,
___________________________
EXHIBIT 4.3
Form of Stock Option Agreement to be entered into
with respect to Non-Incentive Stock Options
<PAGE>
STOCK OPTION AGREEMENT
----------------------
FOR NON-INCENTIVE STOCK OPTIONS
PURSUANT TO THE
FARNSWORTH BANCORP, INC.
1999 STOCK OPTION PLAN
----------------------
NON-EMPLOYEE DIRECTORS
STOCK OPTIONS for a total of ______ shares of Common Stock of
Farnsworth Bancorp, Inc. (the "Company") is hereby granted to ________________
(the "Optionee") at the price determined as provided in, and in all respects
subject to the terms, definitions and provisions of the 1999 Stock Option Plan
(the "Plan") adopted by the Company which is incorporated by reference herein,
receipt of which is hereby acknowledged. Such Stock Options do not comply with
Options granted under Section 422 of the Internal Revenue Code of 1986, as
amended.
1. Option Price. The Option price is $_______ for each Share, being
100% of the fair market value, as determined by the Committee, of the Common
Stock on the date of grant of this Option.
2. Exercise of Option. This Option shall be exercisable in accordance
with provisions of the Plan as follows:
(a) Schedule of Rights to Exercise.
Percentage of Total Shares
Awarded Which Are
Date Options Non-forfeitable
---- ------- ---------------
Upon grant.................... 0 0%
As of April 6, 2000........... _______ 20%
As of April 6, 2001........... _______ 40%
As of April 6, 2002........... _______ 60%
As of April 6, 2003........... _______ 80%
As of April 6, 2004........... _______ 100%
Options shall continue to vest annually provided that such holder
remains a director or director's emeritus of Peoples Savings Bank or the
Company. Notwithstanding any provisions in this Section 2, in no event shall
this Option be exercisable prior to six months following the date of grant.
Options shall be 100% vested and exercisable upon the death or disability of the
Optionee,
<PAGE>
or upon a Change in Control of the Company, subject to limitations under
applicable regulations and policies of the Office of Thrift Supervision.
(b) Method of Exercise. This Option shall be exercisable by a
written notice which shall:
(i) State the election to exercise the Option, the
number of Shares with respect to which it is being exercised, the
person in whose name the stock certificate or certificates for such
Shares of Common Stock is to be registered, his address and Social
Security Number (or if more than one, the names, addresses and Social
Security Numbers of such persons);
(ii) Contain such representations and agreements as
to the holder's investment intent with respect to such shares of Common
Stock as may be satisfactory to the Company's counsel;
(iii) Be signed by the person or persons entitled to
exercise the Option and, if the Option is being exercised by any person
or persons other than the Optionee, be accompanied by proof,
satisfactory to counsel for the Company, of the right of such person or
persons to exercise the Option; and
(iv) Be in writing and delivered in person or by
certified mail to the Treasurer of the Company.
Payment of the purchase price of any Shares with respect to which the
Option is being for shares of Common Stock as to which the Option shall be
exercised shall be registered in the name of the person or persons exercising
the Option.
(c) Restrictions on Exercise. This Option may not be exercised
if the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities or other law or valid regulation. As
a condition to the Optionee's exercise of this Option, the Company may require
the person exercising this Option to make any representation and warranty to the
Company as may be required by any applicable law or regulation.
3. Non-transferability of Option. This Option may not be transferred in
any manner otherwise than by will or the laws of descent or distribution and may
be exercised during the lifetime of the Optionee only by the Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
<PAGE>
4. Term of Option. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, as set forth below, and may be
exercised during such term only in accordance with the Plan and the terms of
this Option.
5. Related Matters. Notwithstanding anything herein to the contrary,
additional conditions or restrictions related to such Options may be contained
in the Plan or the resolutions of the Plan Committee authorizing such grant of
Options.
Farnsworth Bancorp, Inc.
Date of Grant: By:
------------------------- ---------------------------
Attest:
- --------------------------
[SEAL]
<PAGE>
NON-INCENTIVE STOCK OPTION EXERCISE FORM
----------------------------------------
PURSUANT TO THE
FARNSWORTH BANCORP, INC.
1999 STOCK OPTION PLAN
_______________
(Date)
Farnsworth Bancorp, Inc.
789 Farnsworth Avenue
Bordentown, New Jersey 08505
Dear Sir:
The undersigned elects to exercise the Non-Incentive Stock Option to
purchase ____________ shares of Common Stock of Farnsworth Bancorp, Inc. under
- - and pursuant to a Stock Option Agreement dated __________________________.
Delivered herewith is a certified or bank cashier's or teller's check
and/or shares of Common Stock, valued at the fair market value of the stock on
the date of exercise, as set forth below.
$______________ of cash or check
______________ of Common Stock
$ Total
==============
The name or names to be on the stock certificate or certificates and
the address and Social Security Number of such person(s) is as follows:
Name ___________________________________
Address ________________________________
Social Security Number _________________
Very truly yours,
___________________________
EXHIBIT 4.4
Form of Stock Award Tax Notice
<PAGE>
TAX ISSUES RELATED TO EXERCISE OF STOCK OPTIONS
This memorandum reviews the tax effects upon the exercise of "Non-Incentive
Stock Options" ("NSOs") (those options awarded to non-employee directors and
perhaps to some officers) and "Incentive Stock Options" ("ISOs") (those options
generally awarded to officers and employees).
A. Exercise of an NSO
------------------
Upon the exercise of an NSO, the amount by which the fair market value of the
shares on the date of exercise exceeds the exercise price will be taxed to the
optionee as ordinary income. The Company will be entitled to a deduction in the
same amount, provided it makes all required withholdings on the compensation
element of the exercise. In general, the optionee's tax basis in the shares
acquired by exercising an NSO is equal to the fair market value of such shares
on the date of exercise. Upon a subsequent sale of any such shares in a taxable
transaction, the optionee will realize capital gain or loss (long-term or
short-term, depending on whether the shares were held for more than 12 months
before the sale) in an amount equal to the difference between his or her basis
in the shares and the sale price.
Special rules apply if an optionee pays the exercise price upon exercise of
NSOs with previously acquired shares of stock. Except as described below with
respect to shares acquired pursuant to ISOs, such a transaction is treated as a
tax-free exchange of the old shares for the same number of new shares. To that
extent, the optionee's basis in the new shares is the same as his or her basis
in the old shares, i.e., there is a carryover of basis, and the capital gain
holding period runs without interruption from the date when the old shares were
acquired. The value of any new shares received by the optionee in excess of the
number of old shares surrendered less any cash the optionee pays for the new
shares will be taxed as ordinary income. The optionee's basis in the additional
shares is equal to the fair market value of such shares on the date the shares
were transferred, and the capital gain holding period commences on the same
date. The effect of these rules is to defer the date when any gain in the old
shares that are used to buy new shares must be recognized for tax purposes.
Stated differently, these rules allow an optionee to finance the exercise of an
NSO by using shares of stock that he or she already owns, without paying current
tax on any unrealized appreciation in the value of all or a portion of those old
shares.
B. Exercise of an ISO
------------------
The holder of an ISO will not be subject to federal income tax upon the
exercise of the ISO, and the Company will not be entitled to a tax deduction by
reason of such exercise, provided that the holder is still employed by the
Company (or terminated employment no longer than three months before the
exercise date). Additional exceptions to this exercise timing requirement apply
upon the death or disability of the optionee. A sale of the shares received upon
the exercise of an ISO which occurs both more than one year after the exercise
of the ISO and more than two years after the grant of the ISO will result in the
realization of long-term capital gain or loss in the amount of the difference
between the amount realized on the sale and the exercise price for such shares.
Generally, upon a sale or disposition of the shares prior to the foregoing
holding requirements (referred to as a "disqualifying disposition"), the
optionee will recognize ordinary income, and the Company will receive a
corresponding deduction equal to the lesser of (i) the excess of the fair market
value of the shares on the date of transfer to the optionee over the exercise
price, or (ii) the excess of the amount realized on the disposition over the
exercise price for such shares. Currently, ISO exercises are exempt from FICA
and FUTA taxes and a disqualifying disposition is exempt from employer
withholding.
<PAGE>
A special rule applies if an optionee pays all or part of the exercise price
of an ISO by surrendering shares of stock that he or she previously acquired by
exercising any other ISO. If the optionee has not held the old shares for the
full duration of the applicable holding periods before surrendering them, then
the surrender of such shares to exercise the new ISO will be treated as a
disqualifying disposition of the old shares. As described above, the result of a
disqualifying disposition is the loss of favorable tax consequences with respect
to the acquisition of the old shares pursuant to the previously exercised ISO.
Where the applicable holding period requirements have been met, the use of
previously acquired shares of stock to pay all or a portion of the exercise
price of an ISO may offer significant tax advantages, particularly a deferral of
the recognition of any appreciation in the surrendered shares in the same manner
as discussed above with respect to NSOs.
C. Alternative Minimum Tax
-----------------------
The "alternative minimum tax" is paid when such tax exceeds a taxpayer's
regular federal income tax. The alternative minimum tax is calculated based on
alternative minimum taxable income, which is taxable income for federal income
tax purposes, modified by certain adjustments and increased by tax preference
items.
The spread under an ISO - i.e., the difference between (a) the fair market
value of the shares at exercise and (b) the exercise price - is classified as
alternative minimum taxable income for the year of exercise. Alternative minimum
taxable income may be subject to the alternative minimum tax. However, a
disqualifying disposition of the shares subject to the ISO during the same year
in which the ISO was exercised will generally cancel the alternative minimum
taxable income generated upon exercise of the ISO.
When a taxpayer sells stock acquired through the exercise of an ISO, generally
only the difference between the fair market value of the shares on the date of
exercise and the date of sale is used in computing the alternative minimum tax.
The portion of a taxpayer's minimum tax attributable to certain items of tax
preference (including the spread upon the exercise of an ISO) can be credited
against the taxpayer's regular liability in later years to the extent that
liability exceeds the alternative minimum tax.
EXHIBIT 5.1
Opinion of Malizia Spidi & Fisch, P.C. as to
the validity of the Common Stock being registered
<PAGE>
June 11, 1999
Board of Directors
Farnsworth Bancorp, Inc.
789 Farnsworth Avenue
Bordentown, New Jersey 08505
RE: Registration Statement on Form S-8:
----------------------------------
Farnsworth Bancorp, Inc. 1999 Stock Option Plan
Gentlemen:
We have acted as special counsel to Farnsworth Bancorp, Inc., a New
Jersey corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S-8 to be filed with the Securities and Exchange
Commission (the "Registration Statement") under the Securities Act of 1933, as
amended, relating to 37,985 shares of common stock, par value $.10 per share
(the "Common Stock") of the Company which may be issued upon the exercise of
options granted or which may be granted under the Farnsworth Bancorp, Inc. 1999
Stock Option Plan (the "Plan"), as more fully described in the Registration
Statement. You have requested the opinion of this firm with respect to certain
legal aspects of the proposed offering.
We have examined such documents, records, and matters of law as we have
deemed necessary for purposes of this opinion and based thereon, we are of the
opinion that the Common Stock when issued pursuant to the exercise of options
granted under and in accordance with the terms of the Plan will be duly and
validly issued, fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Sincerely,
/s/ Malizia Spidi & Fisch, P.C.
Malizia Spidi & Fisch, P.C.
EXHIBIT 23.1
Consent of Malizia Spidi & Fisch, P.C.
(appears in their opinion filed as Exhibit 5.1)
EXHIBIT 23.2
Consent of Kronick Kalada Berdy & Co.
<PAGE>
[LETTERHEAD OF KRONICK KALADA BERDY & CO.]
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors and Stockholders
Farnsworth Bancorp, Inc.
789 Farnsworth Avenue
Bordentown, New Jersey 08505
We consent to incorporation by reference in the Registration Statement
on Form S-8, of our report dated November 9, 1998 relating to the consolidated
statement of financial condition of Farnsworth Bancorp, Inc. and subsidiary as
of September 30, 1998 and the related consolidated statements of income, changes
in stockholders' equity, and cash flows for the year ended September 30, 1998,
which report appears in the September 30, 1998 annual report on Form 10-KSB of
Farnsworth Bancorp, Inc.
/s/ Kronick Kalada Berdy & Co.
Kronick Kalada Berdy & Co.
June 10, 1999
Kingston, Pennsylvania
EXHIBIT 23.3
Consent of Lewis W. Parker, III
<PAGE>
[LETTERHEAD OF LEWIS W. PARKER, III]
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors and Stockholders
Farnsworth Bancorp, Inc.
789 Farnsworth Avenue
Bordentown, New Jersey 08505
I consent to incorporation by reference in the Registration Statement
on Form S-8, of my report dated October 29, 1997 relating to the statement of
financial condition of Peoples Savings Bank as of September 30, 1997 and the
related statements of income, changes in stockholders' equity and cash flows for
the year ended September 30, 1997, which report appears in the September 30,
1998 annual report on Form 10-KSB of Farnsworth Bancorp, Inc.
/s/ Lewis W. Parker, III
Lewis W. Parker, III
June 10, 1999
Lawrenceville, New Jersey