KENTUCKY NATIONAL BANCORP, INC.
2000 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE OF THE PLAN.
The purpose of this Plan is to advance the interests of
the Company through providing select key Employees, service
providers and Directors of the Bank, the Company, and their
Affiliates with the opportunity to acquire Shares. By
encouraging such stock ownership, the Company seeks to attract,
retain and motivate the best available personnel for positions
of substantial responsibility and to provide additional
incentives to Directors, service providers and key Employees of
the Company or any Affiliate to promote the success of the
business.
2. DEFINITIONS.
As used herein, the following definitions shall apply.
(a) "Affiliate" shall mean any "parent corporation" or
"subsidiary corporation" of the Company, as such terms are
defined in Section 424(e) and (f), respectively, of the Code.
(b) "Agreement" shall mean a written agreement entered
into in accordance with Paragraph 5(c).
(c) "Awards" shall mean, collectively, Options and SARs,
unless the context clearly indicates a different meaning.
(d) "Bank" shall mean Kentucky National Bank.
(e) "Board" shall mean the Board of Directors of the
Company.
(f) "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(g) "Committee" shall mean the Stock Option Committee
consisting of at least two Non-Employee Directors appointed by
the Board in accordance with Paragraph 5(a) hereof or the Board.
(h) "Common Stock" shall mean the common stock of the
Company.
(i) "Company" shall mean Kentucky National Bancorp, Inc.
(j) "Continuous Service" shall mean the absence of any
interruption or termination of service as an Employee, service
provider or Director of the Company or an Affiliate. Continuous
Service shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by
the Company, in the case of transfers between payroll locations
of the Company or between the Company, an Affiliate or a
successor, or in the case of a Director's performance of
services in an emeritus or advisory capacity.
(k) "Director" shall mean any member of the Board, and
any member of the board of directors of any Affiliate that the
Board has by resolution designated as being eligible for
participation in this Plan.
(l) "Disability" shall mean a physical or mental
condition, which in the sole and absolute discretion of the
Committee, is reasonably expected to be of indefinite duration
and to substantially prevent a Participant from fulfilling his
or her duties or responsibilities to the Company or an
Affiliate.
(m) "Effective Date" shall mean the date specified in
Paragraph 13 hereof.
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(n) "Employee" shall mean any person employed by the
Company, the Bank, or an Affiliate.
(o) "Exercise Price" shall mean the price per Optioned
Share at which an Option or SAR may be exercised.
(p) "ISO" shall mean an option to purchase Common Stock
which meets the requirements set forth in the Plan, and which is
intended to be and is identified as an "incentive stock option"
within the meaning of Section 422 of the Code.
(q) "Market Value" shall mean the fair market value of
the Common Stock, as determined under Paragraph 7(b) hereof.
(r) "Non-Employee Director" shall have the meaning
provided in Rule 16b-3.
(s) "Non-ISO" means an option to purchase Common Stock
which meets the requirements set forth in the Plan but which is
not intended to be and is not identified as an ISO.
(t) "Option" means an ISO and/or a Non-ISO.
(u) "Optioned Shares" shall mean Shares subject to an
Award granted pursuant to this Plan.
(v) [reserved]
(w) "Participant" shall mean any person who receives an
Award pursuant to the Plan.
(x) "Plan" shall mean the Kentucky National Bancorp,
Inc. 2000 Stock Option and Incentive Plan.
(y) "Rule 16b-3" shall mean Rule 16b-3 of the General
Rules and Regulations under the Securities Exchange Act of 1934,
as amended.
(z) "Share" shall mean one share of Common Stock.
(aa) "SAR" (or "Stock Appreciation Right") means a right
to receive the appreciation in value, or a portion of the
appreciation in value, of a specified number of shares of Common
Stock.
(bb) "Year of Service" shall mean a full twelve-month
period, measured from the date of an Award and each annual
anniversary of that date, during which a Participant has not
terminated Continuous Service for any reason.
3. TERM OF THE PLAN AND AWARDS.
(A) TERM OF THE PLAN. The Plan shall continue in effect
for a term of ten years from the Effective Date, unless sooner
terminated pursuant to Paragraph 15 hereof. No Award shall be
granted under the Plan after ten years from the Effective Date.
(B) TERM OF AWARDS. The term of each Award granted
under the Plan shall be established by the Committee, but shall
not exceed 10 years; provided, however, that in the case of an
Employee who owns Shares representing more than 10% of the
outstanding Common Stock at the time an ISO is granted, the term
of such ISO shall not exceed five years.
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4. SHARES SUBJECT TO THE PLAN.
(A) GENERAL RULE. Except as otherwise required under
Paragraph 10, the aggregate number of Shares deliverable
pursuant to Awards shall not exceed 30,000 Shares. Such Shares
may either be authorized but unissued Shares, Shares held in
treasury, or Shares held in a grantor trust created by the
Company. If any Awards should expire, become unexercisable, or
be forfeited for any reason without having been exercised, the
Optioned Shares shall, unless the Plan shall have been
terminated, be available for the grant of additional Awards
under the Plan.
(B) SPECIAL RULE FOR SARS. The number of Shares with
respect to which an SAR is granted shall be charged against the
aggregate number of Shares remaining available under the Plan;
provided, however, that in the case of an SAR granted in
conjunction with an Option, under circumstances in which the
exercise of the SAR results in termination of the Option and
vice versa, only the number of Shares subject to the Option
shall be charged against the aggregate number of Shares
remaining available under the Plan. The Shares involved in an
Option as to which option rights have terminated by reason of
the exercise of a related SAR, as provided in Paragraph 9
hereof, shall not be available for the grant of further Options
under the Plan.
5. ADMINISTRATION OF THE PLAN.
(a) APPOINTMENT OF THE COMMITTEE. The Plan shall be
administered by the Committee. Members of the Committee shall
serve at the pleasure of the Board. In the absence at any time
of a duly appointed Committee, the Plan shall be administered by
the Board.
(B) POWERS OF THE COMMITTEE. Except as limited by the
express provisions of the Plan or by resolutions adopted by the
Board, the Committee shall have sole and complete authority and
discretion (i) to select Participants and grant Awards, (ii) to
determine the form and content of Awards to be issued in the
form of Agreements under the Plan, (iii) to interpret the Plan,
(iv) to prescribe, amend and rescind rules and regulations
relating to the Plan, and (v) to make other determinations
necessary or advisable for the administration of the Plan. The
Committee 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, or acts approved in
writing by a majority of the Committee without a meeting, shall
be deemed the action of the Committee.
(C) AGREEMENT. Each Award shall be evidenced by a
written agreement containing such provisions as may be approved
by the Committee. Each such Agreement shall constitute a
binding contract between the Company and the Participant, and
every Participant, upon acceptance of such Agreement, shall be
bound by the terms and restrictions of the Plan and of such
Agreement. The terms of each such Agreement shall be in
accordance with the Plan, but each Agreement may include such
additional provisions and restrictions determined by the
Committee, in its discretion, provided that such additional
provisions and restrictions are not inconsistent with the terms
of the Plan. In particular, the Committee shall set forth in
each Agreement (i) the Exercise Price of an Option or SAR, (ii)
the number of Shares subject to the Award, and its expiration
date, (iii) the manner, time, and rate (cumulative or otherwise)
of exercise or vesting of such Award, and (iv) the restrictions,
if any, to be placed upon such Award, or upon Shares which may
be issued upon exercise of such Award. The Chairman of the
Committee and such other Directors and officers as shall be
designated by the Committee are hereby authorized to execute
Agreements on behalf of the Company and to cause them to be
delivered to the recipients of Awards.
(D) EFFECT OF THE COMMITTEE'S DECISIONS. All decisions,
determinations and interpretations of the Committee shall be
final and conclusive on all persons affected thereby.
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(E) INDEMNIFICATION. In addition to such other rights
of indemnification as they may have, the members of the
Committee shall be indemnified by the Company in connection with
any claim, action, suit or proceeding relating to any action
taken or failure to act under or in connection with the Plan or
any Award, granted hereunder to the full extent provided for
under the Company's governing instruments with respect to the
indemnification of Directors.
6. GRANT OF OPTIONS.
(A) GENERAL RULE. Employees, service providers and
Directors shall be eligible to receive Awards. In selecting
those Employees and Directors to whom Awards will be granted and
the number of shares covered by such Awards, the Committee shall
consider the position, duties and responsibilities of the
eligible Employees, service providers and Directors, the value
of their services to the Company and its Affiliates, and any
other factors the Committee may deem relevant. Awards shall be
made at the discretion of the Committee.
(B) AUTOMATIC GRANTS. The automatic grants specified in
"Exhibit A" attached hereto shall be effective on the Plan's
Effective Date, and be subject to such conditions on exercise
such as the attainment of specified performance goals or
standards as the Committee shall determine. The Exercise Price
of each such Option shall equal the Fair Market Value of the
Optioned Shares on such date.
(C) SPECIAL RULES FOR ISOS. Options granted pursuant to
the Plan shall not be ISOs unless the Plan is approved by the
Company's stockholders within 12 months after the Effective
Date. The aggregate Market Value, as of the date the Option is
granted, of the Shares with respect to which ISOs are
exercisable for the first time by an 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 Affiliate of the Company) shall not exceed
$100,000. Notwithstanding the foregoing, the Committee may
grant Options in excess of the foregoing limitations, in which
case Options granted in excess of such limitation shall be Non-
ISOs.
7. EXERCISE PRICE FOR OPTIONS.
(A) LIMITS ON COMMITTEE DISCRETION. The Exercise Price
as to any particular Option shall not be less than 100% of the
Market Value of the Optioned Shares on the date of grant. In
the case of an Employee who owns Shares representing more than
10% of the Company's outstanding Shares of Common Stock at the
time an ISO is granted, the Exercise Price shall not be less
than 110% of the Market Value of the Optioned Shares at the time
the ISO is granted.
(B) STANDARDS FOR DETERMINING EXERCISE PRICE. If the
Common Stock is listed on a national securities exchange
(including the NASDAQ National Market System) on the date in
question, then the Market Value per Share shall be the average
of the highest and lowest selling price on such exchange on such
date, or if there were no sales on such date, then the Exercise
Price shall be the mean between the bid and asked price on such
date. If the Common Stock is traded otherwise than on a
national securities exchange on the date in question, then the
Market Value per Share shall be the mean between the bid and
asked price on such date, or, if there is no bid and asked price
on such date, then on the next prior business day on which there
was a bid and asked price. If no such bid and asked price is
available, then the Market Value per Share shall be its fair
market value as determined by the Committee, in its sole and
absolute discretion.
8. EXERCISE OF OPTIONS.
(A) GENERALLY. Except as otherwise provided by the
Committee in an Agreement, each Option shall be fully
exercisable upon its date of grant.
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(B) PROCEDURE FOR EXERCISE. A Participant may exercise
Options, subject to provisions relative to its termination and
limitations on its exercise, only by (1) written notice of
intent to exercise the Option with respect to a specified number
of Shares, and (2) payment to the Company (contemporaneously
with delivery of such notice) in cash, in Common Stock owned for
more than six months, or a combination of cash and Common Stock
owned for more than six months, of the amount of the Exercise
Price for the number of Shares with respect to which the Option
is then being exercised. Each such notice (and payment where
required) shall be delivered, or mailed by prepaid registered or
certified mail, addressed to the Treasurer of the Company at its
executive offices. Common Stock owned for more than six months
utilized in full or partial payment of the Exercise Price for
Options shall be valued at its Market Value at the date of
exercise. An Option may not be exercised for a fractional
Share.
(C) PERIOD OF EXERCISABILITY. Except to the extent
otherwise provided in the terms of an Agreement, an Option may
be exercised by a Participant only while he is an Employee and
has maintained Continuous Service from the date of the grant of
the Option, or within one year after termination of such
Continuous Service or Disability (but not later than the date on
which the Option would otherwise expire), except if the
Employee's Continuous Service terminates by reason of --
(1) "Just Cause" which for purposes hereof shall
have the meaning set forth in any unexpired employment or
severance agreement between the Participant and the Bank
and/or the Company (and, in the absence of any such
agreement, shall mean termination because of the
Employee's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties,
willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final
cease-and-desist order), then the Participant's rights to
exercise such Option shall expire on the date of such
termination; or
(2) death, then to the extent that the Participant
would have been entitled to exercise the Option
immediately prior to his death, such Option of the
deceased Participant may be exercised within two years
from the date of his death (but not later than the date on
which the Option would otherwise expire) by the personal
representatives of his estate or person or persons to whom
his rights under such Option shall have passed by will or
by laws of descent and distribution.
(D) EFFECT OF THE COMMITTEE'S DECISIONS. The
Committee's determination whether a Participant's Continuous
Service has ceased, and the effective date thereof, shall be
final and conclusive on all persons affected thereby.
(E) MANDATORY SIX-MONTH HOLDING PERIOD. Notwithstanding
any other provision of this Plan to the contrary, common stock
of the Company that is purchased upon exercise of an Option or
SAR may not be sold within the six-month period following the
grant of that Option or SAR except as expressly approved by the
Committee.
9. SARS (STOCK APPRECIATION RIGHTS)
(A) GRANTING OF SARS. In its sole discretion, the
Committee may from time to time grant SARs to Employees either
in conjunction with, or independently of, any Options granted
under the Plan. An SAR granted in conjunction with an Option
may be an alternative right wherein the exercise of the Option
terminates the SAR to the extent of the number of shares
purchased upon exercise of the Option and, correspondingly, the
exercise of the SAR terminates the Option to the extent of the
number of Shares with respect to which the SAR is exercised.
Alternatively, an SAR granted in conjunction with an Option may
be an additional right wherein both the SAR and the Option may
be exercised. An SAR may not be granted in conjunction with an
ISO under circumstances in which the exercise of the SAR affects
the right to exercise the ISO or vice versa, unless the SAR, by
its terms, meets all of the following requirements:
(1) The SAR will expire no later than the ISO;
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(2) The SAR may be for no more than the difference
between the Exercise Price of the ISO and the
Market Value of the Shares subject to the ISO
at the time the SAR is exercised;
(3) The SAR is transferable only when the ISO is
transferable, and under the same conditions;
(4) The SAR may be exercised only when the ISO may
be exercised; and
(5) The SAR may be exercised only when the Market
Value of the Shares subject to the ISO exceeds
the Exercise Price of the ISO.
(B) TERMS OF SAR AWARDS. The provisions of Paragraphs
7 and 8 are incorporated by reference herein, and shall
determine the terms of SARs (to the extent not inconsistent
herewith).
(C) EXERCISE OF SARS. An SAR granted hereunder shall be
exercisable at such times and under such conditions as shall be
permissible under the terms of the Plan and of the Agreement
granted to a Participant, provided that an SAR may not be
exercised for a fractional Share. Upon exercise of an SAR, the
Participant shall be entitled to receive, without payment to the
Company except for applicable withholding taxes, an amount equal
to the excess of (or, in the discretion of the Committee if
provided in the Agreement, a portion of) the excess of the then
aggregate Market Value of the number of Optioned Shares with
respect to which the Participant exercises the SAR, over the
aggregate Exercise Price of such number of Optioned Shares.
This amount shall be payable by the Company, in the discretion
of the Committee, in cash or in Shares valued at the then Market
Value thereof, or any combination thereof.
10. EFFECT OF CHANGES IN COMMON STOCK SUBJECT TO THE
PLAN.
(A) RECAPITALIZATIONS; STOCK SPLITS, ETC. The number
and kind of shares reserved for issuance under the Plan, and the
number and kind of shares subject to outstanding Awards, and the
Exercise Price thereof, shall be proportionately adjusted for
any increase, decrease, change or exchange of Shares for a
different number or kind of shares or other securities of the
Company which results from a merger, consolidation,
recapitalization, reorganization, reclassification, stock
dividend, split-up, combination of shares, or similar event in
which the number or kind of shares is changed without the
receipt or payment of consideration by the Company.
(B) TRANSACTIONS IN WHICH THE COMPANY IS NOT THE
SURVIVING ENTITY. In the event of (i) the liquidation or
dissolution of the Company, (ii) a merger or consolidation in
which the Company is not the surviving entity, or (iii) the sale
or disposition of all or substantially all of the Company's
assets (any of the foregoing to be referred to herein as a
"Transaction"), all outstanding Awards, together with the
Exercise Prices thereof, shall be equitably adjusted for any
change or exchange of Shares for a different number or kind of
shares or other securities which results from the Transaction.
(C) SPECIAL RULE FOR ISOS. Any adjustment made pursuant
to subparagraphs (a) or (b) hereof shall be made in such a
manner as not to constitute a modification, within the meaning
of Section 424(h) of the Code, of outstanding ISOs.
(D) CONDITIONS AND RESTRICTIONS ON NEW, ADDITIONAL, OR
DIFFERENT SHARES OR SECURITIES. If, by reason of any adjustment
made pursuant to this Paragraph, a Participant becomes entitled
to new, additional, or different shares of stock or securities,
such new, additional, or different shares of stock or securities
shall thereupon be subject to all of the conditions and
restrictions which were applicable to the Shares pursuant to the
Award before the adjustment was made.
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(E) OTHER ISSUANCES. Except as expressly provided in
this Paragraph, the issuance by the Company or an Affiliate of
shares of stock of any class, or of securities convertible into
Shares or stock of another class, for cash or property or for
labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, shall not affect,
and no adjustment shall be made with respect to, the number,
class, or Exercise Price of Shares then subject to Awards or
reserved for issuance under the Plan.
(F) CERTAIN SPECIAL DIVIDENDS. The Exercise Price and
number of shares subject to outstanding Awards shall be
proportionately adjusted upon the payment of a special large and
nonrecurring dividend that has the effect of a return of capital
to the shareholders.
11. NON-TRANSFERABILITY OF AWARDS.
Awards may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or
by the laws of descent and distribution. Notwithstanding the
foregoing, or any other provision of this Plan, a Participant
who holds Awards may transfer such Awards (but not Incentive
Stock Options) to his or her spouse, lineal ascendants, lineal
descendants, or to a duly established trust for the benefit of
one or more of these individuals. Awards so transferred may
thereafter be transferred only to the Participant who originally
received the grant or to an individual or trust to whom the
Participant could have initially transferred the Awards pursuant
to this Paragraph 11. Awards which are transferred pursuant to
this Paragraph 11 shall be exercisable by the transferee
according to the same terms and conditions as applied to the
Participant.
12. TIME OF GRANTING AWARDS.
The date of grant of an Award shall, for all purposes, be
the later of the date on which the Committee makes the
determination of granting such Award, and the Effective Date.
Notice of the determination shall be given to each Participant
to whom an Award is so granted within a reasonable time after
the date of such grant.
13. EFFECTIVE DATE.
The Plan shall become effective immediately upon its
approval by the Board.
14. MODIFICATION OF AWARDS.
At any time, and from time to time, the Board may authorize
the Committee to direct execution of an instrument providing for
the modification of any outstanding Award, provided no such
modification shall confer on the holder of said Award any right
or benefit which could not be conferred on him by the grant of a
new Award at such time, or impair the Award without the consent
of the holder of the Award.
15. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may from time to time amend the terms of the
Plan and, with respect to any Shares at the time not subject to
Awards, suspend or terminate the Plan. No amendment, suspension
or termination of the Plan shall, without the consent of any
affected holders of an Award, alter or impair any rights or
obligations under any Award theretofore granted.
16. CONDITIONS UPON ISSUANCE OF SHARES.
(A) COMPLIANCE WITH SECURITIES LAWS. Shares of Common
Stock shall not be issued with respect to any Award unless the
issuance and delivery of such Shares shall comply with all
relevant provisions of law, including, without limitation, the
Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities law, and
the requirements of any stock exchange upon which the Shares may
then be listed.
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(B) SPECIAL CIRCUMSTANCES. The inability of the Company
to obtain approval from any regulatory body or authority deemed
by the Company's counsel to be necessary to the lawful issuance
and sale of any Shares hereunder shall relieve the Company of
any liability in respect of the non-issuance or sale of such
Shares. As a condition to the exercise of an Option or SAR, the
Company may require the person exercising the Option or SAR 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.
(C) COMMITTEE DISCRETION. The Committee shall have the
discretionary authority to impose in Agreements such
restrictions on Shares as it may deem appropriate or desirable,
including but not limited to the authority to impose a right of
first refusal or to establish repurchase rights or both of these
restrictions.
17. RESERVATION OF SHARES.
The Company, during the term of the Plan, will reserve and
keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
18. WITHHOLDING TAX.
The Company's obligation to deliver Shares upon exercise
of Options and/or SARs shall be subject to the Participant's
satisfaction of all applicable federal, state and local income
and employment tax withholding obligations. The Committee, in
its discretion, may permit the Participant to satisfy the
obligation, in whole or in part, by irrevocably electing to have
the Company withhold Shares, or to deliver to the Company Shares
that he already owns, having a value equal to the amount
required to be withheld. The value of the Shares to be
withheld, or delivered to the Company, shall be based on the
Market Value of the Shares on the date the amount of tax to be
withheld is to be determined. The amount of the withholding
requirement shall be the applicable statutory minimum federal,
state or local income tax with respect to the award on the date
that the amount of tax is to be held. As an alternative, the
Company may retain, or sell without notice, a number of such
Shares sufficient to cover the amount required to be withheld.
19. NO EMPLOYMENT OR OTHER RIGHTS.
In no event shall an Employee's, service provider's or
Director's eligibility to participate or participation in the
Plan create or be deemed to create any legal or equitable right
of the Employee, Director, or any other party to continue
service with the Company, the Bank, or any Affiliate of such
corporations. No Employee, service provider or Director shall
have a right to be granted an Award or, having received an
Award, the right to again be granted an Award. However, an
Employee, service provider or Director who has been granted an
Award may, if otherwise eligible, be granted an additional Award
or Awards.
20. GOVERNING LAW.
The Plan shall be governed by and construed in accordance
with the laws of the Commonwealth of Kentucky, except to the
extent that the Indiana Business Corporation Act or federal law
shall be deemed to apply.
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Exhibit "A"
AUTOMATIC GRANTS TO EMPLOYEES, SERVICE PROVIDERS & DIRECTORS
------------------------------------------------------------
NUMBER OF OPTION
NAME SHARES GRANTED
---- ----------------
Lawrence P. Calvert 4,500
Ronald J. Pence 4,500
Larry R. Witten 4,500
Robert E. Robbins, M.D. 1,000
Kevin D. Addington 1,000
Henry Lee Chitwood 1,000
Lois Watkins Gray 1,000
William R. Hawkins 1,000
Christopher G. Knight, M.D. 1,000
Leonard Allen McNutt 1,000
John Scott 1,000
Jenean Cooper 1,250
Paula Croston 1,250
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