<PAGE> 1
SCHEDULE 14A INFORMATION
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
TRANS FINANCIAL BANCORP,INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
Caryn F. Price, Esq., Jane C. Foushee, Esq., Wyatt, Tarrant & Combs,
- --------------------------------------------------------------------------------
2800 Citizens Plaza, Louisville, Kentucky 40202
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
...............................................................
(2) Aggregate number of securities to which transaction applies:
...............................................................
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
...............................................................
(4) Proposed maximum aggregate value of transaction:
...............................................................
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
...............................................................
(2) Form, Schedule or Registration Statement No.:
...............................................................
(3) Filing Party:
...............................................................
(4) Date Filed:
...............................................................
<PAGE> 2
TRANS FINANCIAL BANCORP, INC.
500 EAST MAIN STREET
BOWLING GREEN, KENTUCKY 42101
March 18, 1994
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
of Trans Financial Bancorp, Inc. (the "Corporation"), scheduled for 3:00 p.m.,
local time, on Monday, April 25, 1994 at The Phoenix Theatre, 549 East Main
Street, Bowling Green, Kentucky. Holders of the Corporation's outstanding
common stock as of March 1, 1994 are entitled to vote at the Annual Meeting.
Accompanying this letter is the Annual Report of the Corporation, a
notice of the meeting, a proxy card and a proxy statement relating to the
meeting. The proxy statement contains information relating to the actions to
be taken at the meeting. We urge you to review the Annual Report and the proxy
statement in their entirety in order that you may be fully informed about the
matters to be considered at the meeting. After reviewing the enclosed
materials, we urge you to complete the proxy card and return it to us in the
enclosed envelope.
In addition to the specific matters set forth in the enclosed notice
of the meeting, we look forward to discussing with you at the meeting any
questions you may have concerning the operation of the Corporation during the
past year.
We hope you will be able to attend the meeting in person. In any
event it would be appreciated if you would mark, sign and return the enclosed
proxy card. If you do attend the meeting and desire to vote in person, you may
do so even though you have previously sent in a proxy card.
Sincerely,
Douglas M. Lester
Chairman of the Board,
President and Chief Executive Officer
<PAGE> 3
TRANS FINANCIAL BANCORP, INC.
500 EAST MAIN STREET
BOWLING GREEN, KENTUCKY 42101
____________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Annual Meeting of Shareholders
of Trans Financial Bancorp, Inc. (the "Corporation") will be held on Monday,
April 25, 1994, at 3:00 p.m., local time, at The Phoenix Theatre, 549 East Main
Street, Bowling Green, Kentucky, for the following purposes:
1. For the election of seven Class III directors and one Class I
director of the Corporation to hold office in accordance with the terms and
conditions set forth in the accompanying proxy statement;
2. To consider a proposal to approve the Trans Financial Bancorp,
Inc. 1994 Stock Option Plan;
3. To consider a proposal to amend Article VI of the Articles of
Incorporation of the Corporation to increase the number of authorized shares of
common stock; and
4. To consider and act upon such other matters as may properly
come before the meeting or any adjournment or adjournments thereof.
We hope you will attend the Annual Meeting in person. In any
event, it would be appreciated if you would mark, sign and return as soon as
possible the enclosed proxy card in the enclosed stamped, addressed envelope.
If you do attend the Annual Meeting and desire to vote in person, you may do so
even though you have previously sent in a proxy card. Only shareholders of
record at the close of business on March 1, 1994 will be entitled to notice of,
and to vote at, the meeting. The stock transfer books of the Corporation will
not be closed.
By Order of the Board of Directors,
Jay B. Simmons
Secretary
March 18, 1994
<PAGE> 4
TRANS FINANCIAL BANCORP, INC.
500 EAST MAIN STREET
BOWLING GREEN, KENTUCKY 42101
March 18, 1994
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Trans Financial Bancorp, Inc. (the
"Corporation") of proxies for the Annual Meeting of Shareholders of the
Corporation (the "Annual Meeting") to be held on April 25, 1994, at The Phoenix
Theatre, 549 East Main Street, Bowling Green, Kentucky at 3:00 p.m. It is
anticipated that this Proxy Statement will first be mailed to the shareholders
on March 18, 1994.
Anyone executing and delivering a proxy has the power to
revoke it at any time prior to the establishment of a quorum at the Annual
Meeting. Such revocation must be in writing and delivered to the Secretary of
the Corporation prior to the time the presence of a quorum has been determined
and declared. Any valid and unrevoked proxy will be voted as specified in the
proxy. IF NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED FOR THE NOMINEES
FOR DIRECTORS, FOR THE PROPOSAL TO APPROVE THE TRANS FINANCIAL BANCORP, INC.
1994 STOCK OPTION PLAN AND FOR THE PROPOSAL TO AMEND THE ARTICLES OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK, ALL
IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET FORTH IN THIS PROXY STATEMENT.
The solicitation of proxies will be made primarily by mail,
and the Corporation will bear the cost thereof. Certain officers and directors
of the Corporation and persons acting under their instructions, who will not be
specifically compensated for such services, may also solicit proxies on behalf
of management by means of telephone, personal interviews and mail. The cost of
such additional solicitation, if any, will not be material. Brokerage houses,
nominees, fiduciaries and other custodians will be requested to forward
soliciting materials to beneficial owners and will be reimbursed for their
reasonable expenses incurred in doing so. In addition, the Corporation has
retained Georgeson & Co. Inc. to assist in the solicitation of proxies from the
Corporation's shareholders. The fees to be paid to such firm for such services
by the Corporation are not expected to exceed $10,000, plus reasonable
out-of-pocket costs and expenses.
At the Annual Meeting, shareholders will elect seven directors
to serve as Class III directors and one director to serve
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<PAGE> 5
as a Class I director. In addition, as disclosed in the Notice of the Annual
Meeting, proposals will be submitted to shareholders at the Annual Meeting (1)
to approve a new stock option plan under which key employees of the Corporation
and its subsidiaries may be granted options to purchase shares of the common
stock of the Corporation; and (2) to approve an amendment to Article VI of the
Corporation's articles of incorporation increasing the number of authorized
shares of common stock of the Corporation. Only shareholders of record at the
close of business on March 1, 1994 (the "Record Date") are entitled to notice
of, and to vote at, the Annual Meeting.
SHARES AND VOTING
On the Record Date, there were issued and outstanding
8,800,258 shares of common stock ("Common Stock"). Holders of Common Stock are
entitled to one vote for each share held on the Record Date on all matters
presented to the shareholders at the Annual Meeting except that, in the
election of directors, cumulative voting rules will apply. Under cumulative
voting, each shareholder is entitled to cast as many votes in the aggregate as
shall equal the number of shares of Common Stock owned by him or her multiplied
by the number of directors to be elected. Each shareholder, or his or her
proxy, may cast all of his or her votes (as thus determined) for a single
nominee for director or may distribute them among two or more nominees, in the
shareholder's discretion. As to the authority of the persons named as proxies
in the accompanying proxy card to cumulate votes, see the section entitled
ELECTION OF DIRECTORS.
Shareholders are being asked to approve the Trans Financial
Bancorp, Inc. 1994 Stock Option Plan so that executive officers and directors
who receive shares or options pursuant to the plan will be eligible for the
exemption provided by Rule 16b-3 promulgated under Section 16(b) of the
Securities Exchange Act of 1934. For purposes of Rule 16b-3, the Securities
and Exchange Commission (the "SEC") has provided that an affirmative vote of a
majority of all outstanding shares of the Corporation's Common Stock
represented in person or by proxy and entitled to vote on the proposal is
necessary for approval. Under the SEC's voting requirement, abstentions will
have the effect of a "No" vote.
Under the Corporation's articles of incorporation and bylaws
and the Kentucky Business Corporation Act, the proposal to amend Article VI of
the articles of incorporation to increase the number of authorized shares of
Common Stock will require an affirmative vote of a majority of the shares of
Common Stock voted on the proposal. Abstentions are not counted in determining
the number of votes cast and in effect represent no action taken on the matter
by the abstaining shareholder, although they do reduce the number of votes
required for the approval of the proposal.
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<PAGE> 6
VOTING SECURITIES AND OWNERSHIP THEREOF
As of the Record Date, to the knowledge of the Corporation, no
person or entity beneficially owned more than five percent (5%) of the issued
and outstanding shares of Common Stock, which is the only class of stock of the
Corporation entitled to vote at the Annual Meeting, except as follows:
<TABLE>
<CAPTION>
Percent
Number of Class
Title of Class Beneficial Owner of Shares Outstanding
-------------- ---------------- --------- -----------
<S> <C> <C> <C>
Common Stock Trans Financial Bank, N.A., as 828,662(1) 9.4%
Trustee of the Trans Financial
Bancorp Savings Investment Plan and
as Trustee of the Trans Financial
Bancorp Employee Stock Ownership Plan
500 East Main Street
Bowling Green, Kentucky 42101
</TABLE>
(1) Includes 266,020 shares (or 3.0% of those outstanding) held as
Trustee under the Trans Financial Bancorp Savings Investment Plan ("Savings
Investment Plan") and 562,642 shares (or 6.4% of those outstanding) held as
Trustee under the Trans Financial Bancorp Employee Stock Ownership Plan
("ESOP"). The Common Stock was acquired in open market transactions pursuant
to the terms of the Savings Investment Plan and the ESOP. Shares of Common
Stock allocated to the accounts of ESOP participants are voted by the
participants, and the Bank disclaims beneficial ownership of these shares. As
of the Record Date, shares aggregating 595,507 (or 6.8% of those outstanding)
held in the Savings Investment Plan or held in the ESOP and not yet allocated
to participants' accounts may be voted by the Trustee.
The following table sets forth information as of the Record
Date relating to the ownership of Common Stock by each director and
nominee, the Corporation's Chief Executive Officer, and each of the four other
most highly compensated executive officers of the Corporation whose
compensation exceeded $100,000 (determined as of the end of the last fiscal
year) (hereafter referred to as a named executive officer), and by all
directors, nominees for director and executive officers of Trans Financial as a
group. Except where otherwise stated, sole voting and investment power are
held by the beneficial owners named.
3
<PAGE> 7
<TABLE>
<CAPTION>
Amount and
Nature of Percent of
Beneficial Class
Title of Class Name Ownership Outstanding
-------------- ---- ---------- --------------
<S> <C> <C> <C>
Common Stock Vince Berta 5,000 .06%
Common Stock Barry D. Bray 48,975 (1) .55
Common Stock Murray J. Brown 17,532 (2) .19
Common Stock Mary D. Cohron 19,196 .22
Common Stock Floyd H. Ellis 21,516 .24
Common Stock Noel Ennis 15,648 (3) .18
Common Stock J. David Francis 51,042 (4) .58
Common Stock Roy E. Gaddie 13,432 (5) .15
Common Stock John B. Gaines 55,112 (6) .62
Common Stock David B. Garvin 313,076 (7) 3.56
Common Stock Wayne Gaunce 34,336 (8) .39
Common Stock C.C. Howard Gray 4,063 .04
Common Stock Charles A. Hardcastle 44,443 (9) .50
Common Stock Carroll Knicely 26,493 (10) .30
Common Stock Douglas M. Lester 124,245 (11) 1.41
Common Stock C. Cecil Martin 42,210 (12) .48
Common Stock Frank Mastrapasqua 70,000 .79
Common Stock Harold T. Matthews 31,865 (13) .36
Common Stock Joseph I. Medalie 69,753 (14) .79
Common Stock Charles M. Stewart 24,090 (15) .27
Common Stock William B. Van Meter 39,206 (16) .44
Common Stock Thomas R. Wallingford 43,248 (17) .49
Common Stock Roland D. Willock 22,688 .26
Common Stock Directors, nominees for director
and executive officers as a
group (27 persons) 1,200,628 (18) 13.55
</TABLE>
_________________________
(1) Includes 9,894 shares held by the Corporation's Savings Investment
Plan, 6,152 shares held by the Corporation's ESOP, 2,133 shares owned
by Mr. Bray's wife, and 14,070 shares
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<PAGE> 8
issuable upon exercise of options granted under the
Corporation's stock option plans.
(2) Includes 5,398 shares held by TFB of TN's Employee Stock Ownership
Plan. Mr. Brown resigned as President and Chief Executive Officer of
TFB of TN on October 31, 1993.
(3) Includes 667 shares issuable under an option granted under the
Corporation's stock option plans.
(4) Includes 16,932 shares owned by Mr. Francis' wife.
(5) Includes 80 shares owned by Mr. Gaddie's wife.
(6) Includes 15,533 shares owned by a partnership of which Mr. Gaines is a
general partner, and 1,133 shares owned by the Mabel Sharp Gaines
Trust, of which Mr. Gaines is the beneficiary.
(7) Includes 733 shares owned by a partnership of which Mr. Garvin is a
general partner, 101 shares owned by a partnership of which Mr.
Garvin's wife is a general partner and 2,212 shares owned by Mr.
Garvin's children.
(8) Includes 30,103 shares owned by Mr. Gaunce's wife.
(9) Includes 7,079 shares owned by Mr. Hardcastle's wife and 23,152 shares
owned by B.G. Chemicals, Inc., in which Mr. Hardcastle is a 30%
owner.
(10) Includes 6,261 shares owned by Mr. Knicely's wife.
(11) Includes 14,980 shares held by the Corporation's Savings Investment
Plan, 10,136 shares held by the Corporation's ESOP, 18,070 shares
issuable upon exercise of options granted under the Corporation's
stock option plans, 45,326 shares owned by Mr. Lester's wife, and 101
shares owned by a partnership of which Mr. Lester's wife is a general
partner. Under the terms of Mr. Lester's Employment Agreement, Mr.
Lester has the option to purchase 4,000 shares exercisable in July
1994.
(12) Includes 23,787 shares owned by Mr. Martin's wife, 3,333 shares
owned by Center of Insurance, Inc. of which Mr. Martin is a 50% owner,
4,666 shares owned by Prefinco, Inc., a corporation wholly-owned by
Mr. Martin, and 733 shares owned by a partnership of which Mr. Martin
is a general partner.
(13) Includes 8,523 shares held by the Corporation's ESOP, 7,850 shares
held by the Corporation's Savings Investment Plan and 9,242 shares
issuable upon exercise of options granted under the Corporation's
stock option plans.
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<PAGE> 9
(14) Includes 13,950 shares owned by Mr. Medalie's wife, 101 shares owned
by a partnership of which Mr. Medalie's wife is a general partner and
14 shares owned by a partnership of which Mr. Medalie is a general
partner.
(15) Includes 6,082 shares owned by Mr. Stewart's wife and 101 shares owned
by a partnership of which Mr. Stewart's wife is a general partner.
(16) Includes 40 shares owned by Mr. Van Meter's child.
(17) Includes 5,618 shares owned by Mr. Wallingford's wife.
(18) Includes 62,162 shares issuable upon exercise of options granted under
the Corporation's stock option plans.
Section 16(a) of the Securities Exchange Act of 1934 requires
the Corporation's executive officers and directors and persons who own more
than ten percent (10%) of the Corporation's Common Stock to file reports of
ownership and changes in ownership with the SEC. Based solely on its review of
the forms filed with the SEC, or written representations from certain reporting
persons that no Forms 5 were required for those persons, the Corporation
believes that all filing requirements applicable to its officers, directors and
greater than ten percent (10%) beneficial owners were complied with except that
Mr. Ennis did not timely report six transactions, each of Messrs. Hardcastle,
Lester, Martin and Stewart did not timely report one transaction, Mr. Garvin
did not timely file two reports covering three transactions, and each of
Messrs. Mastrapasqua and Medalie did not timely file one report covering one
transaction. All of the above-referenced transactions have been reported on
subsequently filed Forms 4. The Forms 3 of Messrs. Gaunce, Gray, Knicely and
Mastrapasqua were filed late.
PROPOSAL I
ELECTION OF DIRECTORS
The articles of incorporation and bylaws of the Corporation
provide that the Board of Directors shall be composed of not less than nine
nor more than twenty members with the exact number to be determined each year
by resolution of a majority of the full Board of Directors. The Board of
Directors has fixed the number of directors for the ensuing year at twenty.
Article VIII of the Corporation's articles of incorporation provides for the
division of the Board into three classes as permitted by the laws of Kentucky.
Election of directors to each of the three classes is staggered in order that
one class of directors will be elected at each annual meeting. Seven Class III
directors and one Class I director will be elected at the upcoming Annual
Meeting.
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<PAGE> 10
In connection with its acquisition of Kentucky Community
Bancorp, Inc. on February 15, 1994, Thomas R. Wallingford was elected by the
Board of Directors to fill a Class I vacancy on the Board of Directors, and the
Corporation agreed to cause Mr. Wallingford to be nominated for election as a
director of the Corporation at the upcoming Annual Meeting. On May 17, 1993,
C.C. Howard Gray was elected by the Board of Directors to fill the Class III
vacancy created as a result of the death of Everett J. Moore. Pursuant to the
Kentucky Business Corporation Act, Mr. Wallingford's and Mr. Gray's terms will
expire on the date of the Annual Meeting. Mr. Wallingford has been nominated
for election as a Class I director, and Mr. Gray has been nominated for
election as a Class III director.
Class I directors will be elected at the 1995 Annual Meeting
of Shareholders, and Class II directors will be elected at the 1996 Annual
Meeting of Shareholders.
The following table contains information concerning all of the
current directors and nominees for director of the Corporation, including the
positions held with Trans Financial Bank, National Association located in
Bowling Green, Kentucky ("TFBNA"), Trans Financial Bank, Federal Savings Bank
located in Russellville, Kentucky ("TFB, FSB"), Trans Financial Bank of
Tennessee, FSB located in Tullahoma, Tennessee ("TFB of TN"), Trans Financial
Bank located in Pikeville, Kentucky ("TFB Pikeville"), State National Bank
located in Maysville, Kentucky ("SNB"), Peoples First Bank of Morehead located
in Morehead, Kentucky ("PFB"), and Farmers Liberty Bank located in Augusta,
Kentucky ("FLB") (collectively, the "Banks"), and identifies those individuals
who will be nominated for election at the Annual Meeting. The Class III
directors will be elected to serve for a term of three years and until their
successors have been elected and qualified. The Class I director will be
elected to serve for a term of one year and until his successor has been
elected and qualified.
<TABLE>
<CAPTION>
Principal Occupation,
Position and Business Experience Director of
Office Held During Past Five Years Corporation
Name Position and Office with and or Banks
and Age Held with Banks Corporation Other Directorships Held Since
------- --------------- ----------- ------------------------ -----------
CLASS III DIRECTORS NOMINATED FOR ELECTION AT THE ANNUAL MEETING:
<S> <C> <C> <C> <C>
J. David Francis, Director of TFBNA Director, Class Retired; Former Judge, 1964
age 74 III Circuit Court
Roy E. Gaddie, Director of TFBNA Director, Class Retired; Business 1961
age 87 III Consultant
C.C. Howard Gray, Director of TFBNA Director, Class President, James N. Gray 1977
age 44 III Construction Co., Inc.
</TABLE>
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<PAGE> 11
<TABLE>
<CAPTION>
Principal Occupation,
Position and Business Experience Director of
Office Held During Past Five Years Corporaton
Name Position and Office with and or Banks
and Age Held with Banks Corporation Other Directorships Held Since
------- --------------- ----------- ------------------------ -----------
<S> <C> <C> <C> <C>
Carroll Knicely, Director of TFBNA Director, Class President, Associated 1977
age 65 III Publications, Inc.; Real
estate developer
C. Cecil Martin, Director of TFBNA Director, Class President, Center of 1990
age 38 III Insurance, Inc.
Frank Director of TFB of Director, Class President, Mastrapasqua & 1991
Mastrapasqua, TN III Associates; Formerly,
age 52 Partner and Director of
Research, J.C. Bradford &
Co.
Joseph I. Medalie, Director of TFBNA Director, Class Retired; Former Vice- 1972
age 71 III Chairman of the Board,
Fruit-of-the-Loom, Inc.
CLASS I DIRECTOR NOMINATED FOR ELECTION AT ANNUAL MEETING:
Thomas R. Director of TFBNA, Director, Class I Retired; Former Chairman of 1994
Wallingford, SNB, PFB and FLB the Board and President,
age 66 Kentucky Community Bancorp,
Inc.; Former President, SNB
DIRECTORS WHOSE TERMS OF OFFICE EXTEND BEYOND THE ANNUAL MEETING:
Mary D. Cohron, Director of TFBNA Director, Class I Owner, Greencastle Farms, 1979
age 46 Inc.
Floyd H. Ellis, Director of TFBNA Director, Class I President, Warren Rural 1977
age 67 Electric Co-op Corporation;
Farmer
David B. Garvin, Director of TFBNA Director, Class I Chairman of the Board, 1989
age 51 Camping World, Inc.
Douglas M. Lester, Chairman, Chief Director, Class I; Chairman of the Board, 1984
age 51 Executive Officer Chairman of the President and Chief
and Director of Board, President Executive Officer of the
TFBNA; Director of and Chief Corporation; Chairman of
TFB Pikeville Executive Officer the Board and Chief
Executive Officer of TFBNA
</TABLE>
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<PAGE> 12
<TABLE>
<CAPTION>
Principal Occupation,
Position and Business Experience Director of
Office Held During Past Five Years Corporation
Name Position and Office with and or Banks
and Age Held with Banks Corporation Other Directorships Held Since
------- --------------- ----------- ------------------------ -----------
<S> <C> <C> <C> <C>
Roland D. Willock Director of TFBNA Director, Class I Retired; Former Secretary, 1982
age 57 Corporation; Former
Executive Vice President
and Secretary, TFBNA
Barry D. Bray, Director, and Director, Class Executive Vice President 1991
age 47 President of II; Executive and Chief Credit Officer,
TFBNA; Director Vice President Corporation; Former Executive
of TFB of and Chief Credit Vice President and Chief
TN and TFB, FSB Officer Credit Officer, TFBNA;
President of TFBNA since 1991
Noel Ennis, Director of TFBNA Director, Class Retired; Farmer; Former 1986
age 67 II President, Ennis Concrete
Company
John B. Gaines, Director of TFBNA Director, Class President, News Publishing 1964
age 79 II Company, Master Printers,
Inc. and Daily News
Broadcasting
Wayne Gaunce, Director of TFBNA Director, Class President, Gaunce 1977
age 61 II Management, Inc.
Charles A. Director of TFBNA Director, Class President, B.G. Chemicals, 1982
Hardcastle, II Inc., B.G. Paper Company,
age 61 B.G. Fire & Safety,
Consolidated Sanitary
Supply and Contract Staff
Services; Owner, Hardcastle
Company, Southland
Manufacturing, B.G. Cash &
Carry, Ashley Center, Inc.
and Ky. Wood Products
Charles M. Director of TFBNA Director, Class Retired; Business 1961
Stewart, age 85 II Consultant, Director, B.G.
Medical Center
William B. Van Director of TFBNA Director, Class Chairman, Van Meter 1982
Meter, II Insurance Agency, Inc.;
Age 47 Owner, Van Meter
Investments
</TABLE>
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<PAGE> 13
If any person or persons other than the nominees named above
are nominated as directors, then the proxies named in the enclosed proxy card,
or their substitutes, or a majority of them, shall have the right in their
discretion to vote cumulatively for some number less than all the nominees
named above or for such of the other nominees as they may choose. If any of
the nominees named above becomes unwilling or unable to accept nomination or
election, then the proxies shall have the right to vote for any substitute
nominee in place of the nominee who has become unwilling or unable to accept
nomination or election.
There are no family relationships between any director or
executive officer of the Corporation or any nominee. Except as otherwise
described herein, there are no arrangements or understandings regarding the
election of any of the foregoing nominees as directors. All nominations for
membership on the Board of Directors originated with the Board of Directors.
COMMITTEES OF THE BOARD
The Corporation has an Audit Committee consisting of directors
Ennis, Gray, Van Meter and Willock. It is the responsibility of the Audit
Committee annually to cause audits to be made by auditors responsible only to
the Board of Directors; to review the audits and operational procedures of the
Corporation and the Banks; to ascertain whether the Banks are being operated in
compliance with the requirements of the various regulatory authorities having
jurisdiction over the Banks' operations; to review reports of examinations made
by federal and state bank examiners and ascertain that any and all operational
deficiencies set forth in said reports are satisfactorily corrected; to review
the annual reports submitted by the internal auditors and ascertain that the
internal auditors are carrying out internal audit programs that are adequate to
verify that the policies and procedures formulated for the operation of the
Corporation and the Banks are being followed and that a sufficient system of
internal control is being maintained; and to report its findings to the Board
of Directors. The Audit Committee met three times in 1993.
The Corporation has an Executive Committee consisting of
directors Cohron, Ellis, Garvin, Hardcastle, Lester and Medalie. It is
the responsibility of the Executive Committee to study, advise, make
recommendations to, and act on behalf of the Board of Directors on matters
relating to the overall management of the Corporation and the Banks; to review
policies and practices relating to Board functions and banking practices and
make recommendations to the Board of Directors as appropriate; and to study,
advise and make recommendations to the Board of Directors concerning any
acquisitions and mergers contemplated by the Corporation. The Executive
Committee met nine times in 1993.
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<PAGE> 14
In July 1993, the Corporation established a Compensation
Committee consisting of directors Cohron, Ellis, Garvin, Hardcastle and
Medalie. It is the responsibility of the Compensation Committee to review and
approve all issues pertaining to executive compensation for submission to the
full Board of Directors of the Corporation. The Compensation Committee met one
time during 1993.
The Corporation has no Nominating Committee. All nominations
for membership on the Board of Directors originate with the Board of Directors.
During 1993, there were fifteen meetings of the Corporation's
Board of Directors. Each of the directors attended at least seventy-five
percent (75%) of the aggregate of /1/ the total number of meetings of the Board
of Directors, and /2/ the total number of meetings held by all committees of
the Board on which such director served, with the exception of Mr. Garvin.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table provides certain summary information
concerning compensation paid or accrued by the Corporation and its
subsidiaries, to or on behalf of the named executive officers for the fiscal
years ended December 31, 1991, 1992 and 1993:
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<PAGE> 15
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Stock All Other
Name and Principal Position Year Salary Bonus Options Compensation
--------------------------- ---- ------ ----- ------- ------------
<S> <C> <C> <C> <C> <C>
Douglas M. Lester, President, 1993 $ 236,000(1) $ 0 10,250 $10,035(2)
Chairman and Chief Executive 1992 $ 175,000 $ 87,500 4,000 $25,790(2)
Officer 1991 $ 156,000 $ 78,000 18,108 $25,837(2)
Barry D. Bray, Executive Vice 1993 $ 164,000(1) $ 0 6,250 $ 6,940(2)
President and Chief Credit Officer 1992 $ 120,000 $ 60,000 0 $18,585(2)
1991 $ 101,000 $ 50,500 15,107 $14,826(2)
Harold T. Matthews, President of 1993 $ 126,000(1) $ 0 3,500 $ 7,200(2)
Glasgow Division of TFBNA 1992 $ 108,000 $ 54,000 0 $17,365(2)
1991 $ 100,000 $ 50,500 8,886 $14,593(2)
Vince Berta, Executive Vice 1993 $ 88,940 $ 20,000(3) 0 0
President, Chief Financial Officer 1992 -- -- --
and Treasurer (4) 1991 -- -- --
Murray J. Brown, Former President 1993 $ 105,000(1) $ 0 4,000 $30,725(5)
and Chief Executive Officer of TFB 1992 $ 96,795 $ 0 0 $58,000(6)
of TN (7) 1991 -- -- -- --
</TABLE>
__________________
(1) In 1993, the Corporation ceased payment of directors' fees to employees
for attendance at directors' or committee meetings of the Corporation and
the Banks for which they served as director. The salaries of each of the
named executive officers were increased by the annual aggregate amount of
such fees in the following amounts: Mr. Lester - $39,000; Mr. Bray -
$24,000; Mr. Matthews - $18,000; Mr. Brown - $8,205. Directors' fees paid
in 1991 and 1992 were not included in the salaries of the named executive
officers in the table.
(2) Consists of the Corporation's annual contribution to the Corporation's
Employee Stock Ownership Plans as of December 31, 1993 and the
Corporation's annual and matching contributions to the Corporation's
Savings Investment Plan as of June 30, 1993.
(3) Consists of signing bonus paid in connection with Mr. Berta's employment.
(4) Mr. Berta joined the Corporation in April 1993.
(5) Consists of the Corporation's annual and matching contributions to the
Corporation's Savings Investment Plan as of June 30, 1993 in the
aggregate amount of $5,985, and severance payments plus 92 hours of accrued
vacation time aggregating $24,740 paid to Mr. Brown following his
resignation as President and Chief Executive Officer of TFB of TN on
October 31, 1993.
(6) Consists of TFB of TN's contribution to the TFB of TN Employee Stock
Ownership Plan for the year ended December 31, 1992.
(7) Mr. Brown joined TFB of TN in March 1992.
12
<PAGE> 16
STOCK OPTIONS
The following table contains information concerning the grant of stock
options to the named executive officers during the fiscal year ending December
31, 1993 (the Corporation has no outstanding stock appreciation rights ("SARs"):
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Number of Percent of Annual Rates of
Securities Total Options/SARs Exercise Stock Price
Underlying Granted to or Base Appreciation for
Options/SARs Employees Price Expiration Option Term
Name Granted in Fiscal Year per Share Date 5% 10%
---- ------- ----------- --------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Douglas M. Lester 4,000(1) 5.0% $ 5.625 7/31/1993 -- --
6,250 7.8 $16.00 1/25/2003 $62,889 $159,374
Barry D. Bray 6,250 7.8 $16.00 1/25/2003 62,889 159,374
Harold T. Matthews 3,500 4.4 $16.00 1/25/2003 35,218 89,250
Vince Berta 0
Murray J. Brown 4,000 5.0 $16.00 10/31/93(2)
</TABLE>
_______________
(1) Under the terms of Mr. Lester's Employment Agreement, Mr. Lester is granted
on January 1 of each year during the term of the Agreement, subject to
certain limitations, a nontransferable right to purchase annually 4,000
shares of Common Stock at $5.625 per share exercisable only during the
month of July, and only so long as Mr. Lester is then employed by the
Corporation or TFBNA. Mr. Lester's right to purchase stock annually is not
cumulative. However, if the Corporation were to liquidate, dissolve, or
merge or combine into another corporation, Mr. Lester's right to purchase
Common Stock during the unexpired term of the Employment Agreement would be
immediately accelerated so that he may exercise his option to purchase that
total number of shares, as to which he has not previously forfeited
options, for which he would otherwise have had options had he remained
employed throughout the then current term of the Employment Agreement. The
rights to purchase stock granted Mr. Lester are nontransferable and the
death of Mr. Lester or the termination of Mr. Lester's employment under
the Employment Agreement, whether voluntary or involuntary and whether
with or without cause, will terminate all rights and options not previously
exercised by Mr. Lester. In no event shall Mr. Lester have the right
to purchase shares as would cause, immediately after the exercise, the
total number of shares owned by Mr. Lester, or subject to options
exercisable by Mr. Lester, to exceed 5% of the total combined voting power
of all classes of the Corporation's Common Stock. In July 1993, Mr. Lester
exercised his right to purchase stock. See "Aggregate Option
Exercises in Last Fiscal Year and Year-End Option Values."
(2) The options granted to Mr. Brown in 1993 expired following his resignation
as President and Chief Executive Officer of TFB of TN on October 31, 1993.
13
<PAGE> 17
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the named
executive officers (except for Messrs. Berta and Brown who did not exercise any
options in 1993 and did not hold any unexercised options at fiscal year end)
concerning the exercise of options during 1993 and unexercised options held as
of December 31, 1993. The Corporation has no outstanding SARs.
<TABLE>
<CAPTION>
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Number of
Securities Underlying Value of Unexer-
Unexercised Options cised In-the-Money
/SARs Options at
at Fiscal Year End Fiscal Year End(2)
Shares ------------- ------------
Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized(1) Unexercisable Unexercisable
---- ----------- ----------------- ------------- -------------
<S> <C> <C> <C> <C>
Douglas M. Lester 4,000 $50,500 13,889/18,133 $229,169/$299,195
Barry D. Bray 12,556/18,132 $207,174/$299,178
Harold T. Matthews 6,851/10,334 $113,042/$170,511
- -------------------
</TABLE>
(1) Market price at time of exercise less exercise price.
(2) Market value of underlying securities at December 31, 1993 minus the
exercise price at December 31, 1993.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Mr. Lester has an Employment Agreement with the Corporation and TFBNA
pursuant to which Mr. Lester is employed as the Chairman of the Board and Chief
Executive Officer of the Corporation and TFBNA and as President of the
Corporation. Mr. Lester's Employment Agreement has an initial three-year term,
renewable annually such that the outstanding term continues to be three years.
If the Employment Agreement is not renewed by the Corporation or TFBNA, or if
the Corporation or TFBNA terminates the Employment Agreement without cause, as
defined therein, then 30 days after Mr. Lester is so notified his employment
will terminate, Mr. Lester will be entitled to receive, as severance pay,
his base salary for the unexpired term of the Employment Agreement. Mr. Lester
may terminate his employment and the Employment Agreement at any time upon 60
days written notice to the Corporation, in which
14
<PAGE> 18
event all rights to compensation and fringe benefits will terminate. Mr.
Lester's base salary under the Employment Agreement is established by the Board
of Directors of the Corporation at the commencement of each year and for the
fiscal year ending December 31, 1993 was $236,000. Under the terms of Mr.
Lester's Employment Agreement, Mr. Lester is entitled, subject to certain
limitations, to a nontransferable right to purchase annually 4,000 shares of
Common Stock at $5.625 per share. See footnote 1 to the table "Option Grants
in 1993".
Mr. Matthews is employed as the President of the Glasgow
division of TFBNA pursuant to the employment agreement he entered into with
TFBNA effective January 1, 1991. Mr. Matthews' employment agreement had an
initial three year term and is renewable automatically for additional one year
terms. It provides for a base salary of $100,000, subject to increase by
TFBNA's Board of Directors, and may be terminated by TFBNA at any time without
cause upon 90 days notice. Upon such termination, Mr. Matthews will receive,
as severance pay, his compensation and other fringe benefits during the twelve
months following the date notice of termination is given, and all rights to
compensation and fringe benefits which accrue during such twelve month period.
Upon a Change in Control of the Corporation, as hereafter
defined, the exercise dates of all outstanding options under the Corporation's
stock option plans will accelerate so that each option outstanding may be
exercised on or after the date of the Change in Control. In addition, the
shares subject to the Corporation's stock option plans will be automatically
converted into and replaced by shares of common stock or other equity
securities having rights and preferences no less favorable than common stock of
the successor and the number of shares subject to the options and the purchase
price per share upon exercise of the options will be correspondingly adjusted
so that there will be no change in the aggregate purchase price payable upon
exercise of any such option. Change in Control of the Corporation, for
purposes of the Corporation's stock option plans, means /a/ any share exchange
or merger or consolidation of the Corporation or a significant subsidiary of
the Corporation if either /i/ the Corporation will not be the surviving or
acquiring corporation or will not own 100% of the outstanding capital stock of
the surviving or acquiring corporation following the consummation of the
transactions contemplated by the plan or agreement of exchange, merger or
consolidation, or /ii/ there will be a substantial change in the proportionate
ownership of outstanding shares of voting stock of the Corporation as a result
of the transactions contemplated by such plan or agreement of exchange, merger
or consolidation; /b/ any sale, lease, exchange, transfer or other disposition
of all or any substantial part of the assets of the Corporation or a subsidiary
of the Corporation followed by a liquidation of the Corporation; /c/ the
commencement of any tender offer, exchange offer or other purchase offer for,
and/or any agreement to purchase, as much as
15
<PAGE> 19
(or more than) 25% of the outstanding Common Stock of the Corporation or a
subsidiary of the Corporation; or /d/ the Board or the shareholders of the
Corporation approve, adopt, agree to recommend, or accept any agreement,
contract, offer or other arrangement providing for, or any series of
transactions resulting in, any of the transactions described above.
Twenty-five officers of the Corporation and its subsidiaries have
nonqualified deferred compensation agreements, whereby the officers
will receive deferred compensation upon retirement at age 65, death prior to
age 65 or termination for any reason following a Change of Control of the
Corporation. All benefits under each agreement are forfeited if the employee
commits suicide, the employee's employment is terminated for any reason other
than death or Change of Control of the Corporation or the employee competes
with the Corporation in violation of the noncompete provisions contained in the
agreements.
REPORT OF BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
This report reflects the Corporation's compensation policies with
respect to its executive officers as endorsed by the Board of Directors and
resulting actions taken by the Corporation for the reporting periods shown in
the various compensation tables supporting this report. With respect to 1993,
decisions on compensation of the Corporation's executives were made by the
Board of Directors, except for decisions about awards under certain of the
Corporation's stock option plans, which must be made solely by the Stock Option
Committee of the Board, consisting of directors Corhon, Ellis, Garvin,
Hardcastle and Medalie, in order for the grants or awards under such plans to
satisfy Securities Exchange Act Rule 16b-3. With regard to compensation
actions affecting Messrs. Lester and Bray, all of the non-employee members of
the Board of Directors acted as the approving body.
Essentially, the Corporation, through its executive compensation
policies, seeks to provide compensation that will enable the Corporation to
compete for and retain talented executives who are critical to the
Corporation's long-term success, support a pay for performance policy, motivate
key senior officers to achieve strategic business initiatives and reward them
for their achievements, and align the interests of executives with the
long-term interests of stockholders through opportunities that can result in
ownership of Common Stock.
At present, the executive compensation program of the Corporation is
comprised of salary, annual cash incentive opportunities, long term incentive
opportunities in the form of stock options and certain broad based employee
benefit plans in which the executive officers participate, primarily the
Corporation's Savings Investment Plan and Employee Stock Ownership Plan. In
July
16
<PAGE> 20
1993, the Board of Directors established a compensation committee
comprised of directors Cohron, Ellis, Garvin, Hardcastle and Medalie. In
February 1994, the Corporation received the results of a compensation study
performed by an independent compensation consulting firm commissioned by the
Compensation Committee. The Board of Directors is currently reviewing the
results of that study. It is expected that, in the future, the executive
compensation policies of the Corporation and compensation decisions with
respect to the Corporation's executive officers will be determined by the
Corporation's compensation committee and will reflect, in part, the results of
the compensation study.
With respect to 1993 compensation, the Chief Executive Officer advised
the Board of Directors as to the proposed salary for each of the Corporation's
executive officers. The proposed salaries were established by the Chief
Executive Officer based solely on subjective considerations of individual
performance and responsibility and, to a certain extent, the profitability of
the Corporation; no specific criteria were considered. For 1993, the proposed
salaries also included an amount equal to the directors' fees that the
executive officers would have otherwise received as a member of the Board of
Directors of the Corporation and its subsidiaries. After review and
consultation with the Chief Executive Officer, the Board of Directors approved
the salaries proposed by the Chief Executive Officer.
The Chief Executive Officer's salary was based principally on his
rights under his Employment Agreement with the Corporation dated January 1,
1991, described elsewhere in the Proxy Statement. Under the Employment
Agreement, the Board established Mr. Lester's minimum annual base salary for
1992 at $175,000. This amount was increased to $236,000 by the Board in 1993,
an increase of $61,000. Approximately $39,000 of the increase resulted from
the inclusion of directors fees which would have otherwise been received by Mr.
Lester from the Corporation and the Corporation's subsidiaries. The remainder
of the increase, $22,000, reflected the Board's subjective determination of Mr.
Lester's relative value to the Corporation, including the profitability of the
Corporation during 1992. No specific criteria were considered.
The Corporation's performance for purposes of cash incentive
opportunities is measured under the Corporation's Performance Incentive Plan
against goals established prior to the start of the fiscal year by the Board of
Directors. The goals consisted of achievement of certain levels of return on
equity and return on assets and acquisitions of financial institutions
completed. The return on assets and return on equity bonuses allocate a
percentage of salary for each percentage increase in the calculated return on
assets and return on equity above an established minimum. The return on assets
and return on equity goals established under the plan were not met in 1993 and,
therefore,
17
<PAGE> 21
Management and the Board of Directors determined that no bonuses should
be paid to the Corporation's executive officers, including the Chief Executive
Officer, for 1993.
Stock option grants provide the right to purchase shares of common
stock at the fair market value (the average of the bid and asked price) on the
date of grant. Options are not exercisable during the first two years after
the date of grant of the option. The option grants cover shares of Common
Stock authorized under stockholder approved plans. The number of shares
covered by each grant reflects the Stock Option Committee's assessment of the
individual's relative value to the Corporation and its success and is purely a
subjective determination by the Committee (with input from the Chief Executive
Officer with respect to all awards other than those to the Chief Executive
Officer) with no specific criteria considered. The Board of Directors
believes that stock ownership by management and stock-based performance
compensation arrangements are beneficial in aligning management's and
shareholder's interests in the enhancement of shareholder value.
Under Mr. Lester's Employment Agreement, on January 1, 1993, Mr. Lester
was granted an option to acquire 4,000 shares of the Corporation's common stock
exercisable in July 1993. Mr. Lester exercised the option which had an
exercise price equal to approximately 69% of the market price of the
Corporation's stock on January 1, 1991, the date the Employment Agreement was
executed, and an exercise price equal to approximately 31% of the market price
of the Corporation's stock on the date of exercise. Thus, the amount realized
by Mr. Lester upon exercise of the option resulted in part from appreciation in
the Corporation's stock price during Mr. Lester's tenure with the Corporation.
The Board of Directors believes that the grant, as well as grants made to Mr.
Lester under the Corporation's incentive stock option plans, further encourages
long-term performance, promotes management retention and align shareholders'
and managements' interest in the performance of the Corporation's common stock.
The Chief Executive Officer and the named executive officers particpate
in awards under the Corporation's Employee Stock Ownership Plan and Savings
Investment Plan on the same basis as other employees of the Corporation and its
subsidiaries as determined under the respective plan. The Corporation's
contributions to these Plans are invested in the Corporation's Common Stock.
18
<PAGE> 22
Submitted by the Corporation's 1993 Board of Directors
<TABLE>
<S> <C>
Barry D. Bray Charles A. Hardcastle
Mary D. Cohron Carroll Knicely
Floyd H. Ellis Douglas M. Lester
Noel Ennis C. Cecil Martin
J. David Francis Frank Mastrapasqua
Roy E. Gaddie Joseph I. Medalie
John B. Gaines Charles M. Stewart
David B. Garvin William B. Van Meter
O. Wayne Gaunce Roland D. Willock
C.C. Howard Gray
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Hardcastle, a director of TFBNA and the Corporation and a
member of the Compensation Committee, is the owner of 38% of the stock of
Ashley Center, Inc., which leases a branch office to TFBNA. The aggregate
amount of payments made under the lease in 1993 was $17,110, and the aggregate
amount of payments due under the lease for the current term, which expires in
April 1997, is $52,756. The Corporation believes that the terms and
conditions of its relationship with Ashley Center, Inc. are as favorable as
those which could have been obtained from a third party.
The spouse of Mr. Martin, a director of TFBNA and the
Corporation, is the owner of approximately 15% of the Plaza Shopping Center of
Elizabethtown, Inc., which leases a building to TFBNA for use as an operations
facility. The aggregate amount of payments made under the lease in 1993 was
$98,088, and the aggregate amount of payments due under the lease for the
current term, which expires May 31, 2008, is $2,565,876 (subject to adjustment
for increases in operating costs). The Corporation believes that the terms and
conditions of its relationship with Plaza Shopping Center of Elizabethtown,
Inc. are as favorable as those which could have been obtained from a third
party.
Mr. Martin is the part owner of an insurance agency, Center of
Insurance, Inc., through which the Corporation and its subsidiaries purchased
insurance in 1993. Total insurance premiums paid to Mr. Martin's insurance
agency during 1993 were approximately $652,383.
Mr. Mastrapasqua, a director of TFB of TN and the Corporation,
is a 66 2/3% owner of Mastrapasqua & Associates, Inc., an investment advisory
and research company which has entered into an agreement with the Corporation
and TFBNA to provide investment advisory services to the Corporation and to the
Trust Department of TFBNA. The aggregate amount of fees paid to Mastrapasqua &
Associates, Inc. during 1993 was $207,524. In addition,
19
<PAGE> 23
Mastrapasqua & Associates, Inc. subleases from TF Real Estate Company, a
subsidiary of the Corporation, certain furniture and office space in the Palmer
Plaza office building in Nashville, Tennessee and pays as rental one-half of
the rent payable by TF Real Estate Company. The aggregate amount of payments
made by Mastrapasqua & Associates, Inc. under this sublease in 1993 was
$25,438, and the aggregate amount of payments due from Mastrapasqua &
Associates, Inc. under this sublease for the current term, which expires
February 28, 1997, is $202,981. The Corporation believes that the terms and
conditions of its relationship with Mastraspasqua & Associates, Inc. are as
favorable as those which could have been obtained from a third party.
Mr. Van Meter, a director of TFBNA and the Corporation,
received in 1993 and January of 1994 payments in the aggregate amount of
$187,305 for use of an airplane by the Corporation. On January 2, 1994, the
Corporation purchased the airplane from Mr. Van Meter for $430,000. In order
to determine the fair price of the airplane, the Corporation solicited bids for
the purchase of an identical or similar aircraft with comparable air miles
flown. The purchase price paid by the Corporation was in the middle range of
the ten bids received.
20
<PAGE> 24
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly
percentage change in the cumulative total shareowner return on the
Corporation's Common Stock against the cumulative total return of the NASDAQ
Stock Index and a peer group index for the period of five fiscal years
commencing January 1, 1989 and ending December 31, 1993. The peer group used
in the peer group index, the Media General Industry Group 045-East South
Central Banks, consists of AmSouth Bancorporation, BancFirst Corporation,
Banco Central Hispano, Bancorp South, Cardinal Bancshares, CBT Corporation,
Colonial BancGroup, Community Bancshares, Compass Bancshares, Deposit Guaranty
Corporation, Farmers Capital Bank Corporation, First Alabama Bancshares, Inc.,
First American Corporation, First City Bancorp, Inc., First Federal Financial,
First Tennessee National Corporation, Grenada Sunburst System Corporation,
Hancock Holding Company, Kentucky Enterprise Bancorp, Leader Financial
Corporation, Liberty National Bancorp, Inc., Mid America Bancorp, National
Commerce Bancorporation, Peoples First Corporation, Peoples Holding Company,
Pikeville National, S.Y. Bancorp Inc., South Alabama Bancorp, SouthTrust
Corporation, Tennessee Bancorp Inc., Trans Financial Bancorp, Inc., Trustmark
Corporation and Union Planters Corporation.
The performance graph assumes that (i) $100 was invested on
January 1, 1989, and (ii) dividends were reinvested during each fiscal year
presented.
21
<PAGE> 25
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
MG Industry
Group 045-
Measurement Period Trans Finan- NASDAQ Market East South
(Fiscal Year Covered) cial Bancorp Index Central Banks
<S> <C> <C> <C>
1988 $ 100.00 $ 100.00 $ 100.00
1989 102.03 112.89 104.81
1990 93.25 91.57 92.42
1991 142.37 117.56 151.19
1992 186.75 118.71 156.82
1993 208.68 142.40 165.75
</TABLE>
DIRECTOR COMPENSATION
Non-employee directors of the Corporation receive an annual
fee of $2,400, plus a fee of $250 for each regular Board of Directors meeting
attended, $350 for each special Board of Directors meeting attended, and $150
for each Audit or Executive Committee meeting attended. Only one fee is paid
for joint committee meetings. Salaried employees of the Corporation or the
Banks who also serve as directors receive no additional compensation for their
services as directors.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Corporation and the Banks have had and expect to have in
the future business and banking transactions in the ordinary course of business
with certain of their directors and executive officers and their associates,
as well as with corporations with which they are connected as directors,
officers or shareholders. The banking transactions which have occurred were on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons. In the
22
<PAGE> 26
opinion of management of the Corporation and the Banks, such transactions do
not involve more than the normal risk of collectability or present other
unfavorable features. The business transactions between the Corporation and
the Banks and certain of their directors and officers and their associates do
not result in material income or expense to either the Corporation, the Banks
or the participating directors, officers or their associates.
Walter Winn Davis, a Glasgow attorney, is a member of the
Advisory Board of Directors of TFBNA and is the brother of Board member, Mary
D. Cohron. In 1993, Mr. Davis received payment by TFBNA of approximately
$18,000 for legal fees and retainers, in addition to regular directors' fees.
Other transactions between the Corporation or the Banks and
management are described under Compensation Committee Interlocks and Insider
Participation.
PROPOSAL II
APPROVAL OF TRANS FINANCIAL BANCORP, INC.
1994 STOCK OPTION PLAN
The Board of Directors of the Corporation adopted, subject to
the approval of its shareholders, the Trans Financial Bancorp, Inc. 1994 Stock
Option Plan (the "1994 Plan"), effective January 1, 1994. Like the
Corporation's 1992 Stock Option Plan and 1990 Stock Option Plan, the purpose of
the 1994 Plan is to strengthen the Corporation by providing an additional means
of retaining and attracting competent management personnel by enabling key
employees to share in the Corporation's growth and prosperity and to promote a
continuing interest in the successful operation of the business. The Board of
Directors adopted the 1994 Plan to provide additional shares of the
Corporation's Common Stock which may be optioned to key employees to enable
them to obtain a proprietary interest in the stock of the Corporation. A copy
of the 1994 Plan is attached to this Proxy Statement as Annex A.
At the Annual Meeting, the shareholders of the Corporation
will be asked to approve the 1994 Plan. Approval of the 1994 Plan by the
Corporation's shareholders is required if executive officers and directors who
receive options are to be eligible for the exemption provided by Rule 16b-3
promulgated under Section 16(b) of the Securities Exchange Act of 1934.
Approval of the shareholders is also required to qualify options granted under
the 1994 Plan for favorable tax treatment as incentive stock options under
Section 422 of the Internal Revenue Code (the "Code"). Unless otherwise
instructed, it is the intention of the persons named in the accompanying form
of proxy to vote shares represented by properly executed proxies in favor of
the 1994 Plan.
23
<PAGE> 27
SUMMARY OF THE 1994 PLAN
The 1994 Plan will be administered, interpreted and applied by
a committee ("Committee") consisting of not less than three directors, none of
whom will have, at any time for one year prior to appointment to the Committee,
been eligible to receive stock or options under any plan of the Corporation or
its subsidiaries. The Committee is empowered to select key employees of the
Corporation and its subsidiaries (including executive officers and directors
who are salaried employees) to whom options will be granted under the 1994
Plan, to determine the number of shares subject to each option, to fix the
period or periods during which an option may be exercised and to fix the prices
at which shares subject to options may be purchased. The Committee may act by
majority at a meeting at which a majority of the members of the Committee is
present, or by a writing signed by all of the members of the Committee. A
total of 500,000 shares of Common Stock may be issued under the 1994 Plan. The
number, price and kind of shares subject to the 1994 Plan may be subject to
adjustments in the event of any reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger or consolidation, or any other
change (after the effective date of the 1994 Plan) in the nature or number of
shares of Common Stock of the Corporation in order to avoid the dilution of
shares subject to outstanding options and to continue in force outstanding
options by substituting thereunder the option shares of a successor corporation
which may subsequently acquire the Corporation.
It is intended that each option granted under the terms of the
1994 Plan will constitute an "Incentive Stock Option" as contemplated and
defined in Section 422 of the Code. The issuance of options under the Plan
will not have any immediate federal income tax consequences to the Corporation
or the optionee. Each option will be evidenced by a written agreement between
the Corporation and the optionees.
While the Committee is empowered to establish the price at
which shares may be purchased, the 1994 Plan requires that the option price
must be at least equal to 100% of the fair market value of the shares on the
date of the grant, as determined by the average of the closing bid and asked
quotations or the closing high bid quotation, whichever is available, for the
Common Stock in the over-the-counter market on the immediately preceding
business day as reported by NASDAQ. As of ____________, 1994, the fair market
value of the Common Stock for purposes of the 1994 Plan, as reported by NASDAQ,
was $______________.
The 1994 Plan limits the number of shares which may be subject
to an option so that the aggregate fair market value (determined at the time
the option is granted) of the shares of Common Stock subject to incentive stock
options granted to any person which become exercisable for the first time
during any
24
<PAGE> 28
calendar year does not exceed $100,000. The 1994 Plan fixes the maximum term
of any option granted under the 1994 Plan at ten years from the date of the
grant of the option. The 1994 Plan also generally provides that an option
granted may not be exercised within two years from the date of its grant.
Thereafter, options may be exercised on or after the anniversary date of grant
in three equal installments so that the full grant may be exercised not sooner
than four years after the date of grant. Notwithstanding the foregoing, if
there is a Change in Control of the Corporation, as defined in the 1994 Plan,
all outstanding options may become immediately exercisable.
Options granted pursuant to the 1994 Plan are not transferable
except upon the death of an optionee, in which event they may be transferred
only in accordance with and to the extent provided for in the laws of descent
and distribution of Kentucky. If any optionee ceases to be employed by the
Corporation or its subsidiaries for any reasons other than for cause, total and
permanent disability or death, the period during which the unexercised portion
of his or her option may thereafter be exercised is restricted to a period of
not more than three months after the date of the optionee's termination. An
optionee who takes a leave of absence exceeding 90 days will be deemed to have
terminated his or her employment on the 91st day of such leave. The exercise
period is extended to one year if the termination is due to the optionee's
death or disability. If an optionee is dismissed from employment for cause, as
determined by the Committee in its sole discretion, his or her option
terminates as of the date immediately preceding the date of the termination of
employment.
Employees of the Corporation and its subsidiaries (including
executive officers and directors who are salaried employees) are eligible to
participate in the 1994 Plan if the Committee determines, from time to time in
its sole discretion, that they are key employees because they have contributed
in the past or are likely to contribute materially in the future to the
successful performance of the Corporation. The Committee has not yet selected
any eligible persons as key employees entitled to options under the 1994 Plan.
Therefore, the amount of options to be received under the 1994 Plan is not
determinable at this time.
While the Board of Directors of the Corporation intends to
continue the 1994 Plan in effect until the scheduled termination date on
December 31, 2003, the Board may modify, amend or terminate the 1994 Plan
without a vote of the shareholders.
EFFECT ON POTENTIAL TAKEOVER ATTEMPTS INCLUDING POSSIBLE DISADVANTAGE
While the purpose of the 1994 Plan is to promote the interests
of the Corporation by attracting, maintaining and affording an incentive to key
management employees, certain
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<PAGE> 29
provisions of the 1994 Plan may have an anti-takeover effect. In the event of
a Change in Control, the ability to exercise all outstanding options may also
be accelerated at the discretion of the Committee. Additionally, at the
discretion of the Committee, and in the event of a Change in Control, the
common stock or other comparable securities of the acquiring entity may be
substituted for the Common Stock of the Corporation subject to the 1994 Plan
and outstanding options. The definition of a Change in Control under the 1994
Plan generally includes any merger or consolidation of the Corporation, or a
significant subsidiary of the Corporation, any sale, lease, exchange, transfer
or other disposition of all or any part of the assets of the Corporation or a
subsidiary of the Corporation, followed by a liquidation of the Corporation,
any tender offer for at least 30% of the outstanding shares of the
Corporation's Common Stock or the agreement or approval of a majority of the
Board of Directors or the shareholders of the Corporation to any of these
transactions.
The effect of these provisions of the 1994 Plan may be to
discourage an unsolicited tender offer or other unsolicited takeover bid for
the Corporation's Common Stock. These provisions of the 1994 Plan may make the
Corporation a less attractive takeover target. Additionally, these provisions
may encourage persons desiring to take over or control the Corporation to
initiate such action through negotiations with the then incumbent Board of
Directors and management instead of through a direct offer to the shareholders
which may or may not be in the shareholders' best interests. The provisions of
the 1994 Plan could make the accomplishment of a transaction more difficult or
more costly even if the transaction is favorable to the interests of the
shareholder, and could also make the removal of management employees who have
been granted options difficult even if such removal would be beneficial to the
shareholders.
The management of the Corporation presently is aware of no
specific efforts to obtain control of the Corporation, either in a friendly or
hostile manner.
VOTE REQUIRED
The adoption of this proposal will require the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock of
the Corporation entitled to vote on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR THIS PROPOSAL.
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<PAGE> 30
PROPOSAL III
AMENDMENT OF ARTICLE VI OF THE ARTICLES OF INCORPORATION
Article VI of the Articles of Incorporation presently
authorizes the issuance of 25,000,000 shares of Common Stock having no par
value, 50,000 shares of Class A Preferred Stock having no par value, and 500,000
shares of Class B Preferred Stock having no par value. Article VI presently
defines the relative rights, preferences and limitations of the shares of the
three classes of the Corporation's stock and authorizes the Board of Directors
to create series of the classes of preferred stock and to fix the relative
rights of each series, including dividend rates, conversion prices, voting
prices, redemption prices and similar matters.
At the Annual Meeting, the shareholders will be asked to
approve the Board of Directors' proposal that the Articles of Incorporation be
amended to increase the number of authorized shares of Common Stock to
50,000,000.
OUTSTANDING SHARES; REASONS FOR AND EFFECT OF THE PROPOSED AMENDMENT.
As of the Record Date, the Corporation had 8,800,258 shares of
Common Stock issued and outstanding. The Proposed Amendment will make
available additional shares of Common Stock for issuance by the Board of
Directors from time to time for corporate purposes, including stock splits,
stock dividends, acquisitions, future financing and employee benefit plans,
including the 1994 Plan.
The additional shares of Common Stock for which authorization
is sought would be identical to the shares of Common Stock of the Corporation
now authorized. The Board of Directors of the Corporation has no present
intent to issue and no specific plans as to any specific use or uses of
additional shares of Common Stock, if authorized.
VOTE REQUIRED
The adoption of this proposal will require the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock of
the Corporation voted on the proposal, assuming a quorum is present.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
"FOR" THIS PROPOSAL.
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<PAGE> 31
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
For the years ended December 31, 1991, 1992 and 1993, the
accounting firm of KPMG Peat Marwick served as the Corporation's and the Banks'
independent public accountants and auditors. Upon the recommendation of
management, the Board of Directors has approved the selection of KPMG Peat
Marwick to serve as the Corporation's independent public accountants and
auditors for the year ending December 31, 1994.
A representative from the firm of KPMG Peat Marwick is
expected to be present at the Annual Meeting and will be available to make a
statement should he desire to do so, and respond to questions of the
shareholders.
SHAREHOLDER PROPOSALS AND OTHER MATTERS
In order to be included in the Corporation's proxy statement
and proxy for the annual meeting of the shareholders of the Corporation in
1995, any proposals which a shareholder intends to present at that meeting must
be received by the Secretary of the Corporation not later than November 18,
1994.
Any shareholder may strike out the names of the proxies
designated by the Board of Directors on the form of proxy and may write in and
substitute the name of any other person and may deliver the revised form of
proxy to such other person whom the shareholder may wish to designate as proxy
for the purpose of representing the shareholder at the Annual Meeting.
At the time of preparation of this proxy material, the
Corporation knows of no other matters to be presented for action at the Annual
Meeting. If any other matters are properly brought before the Annual Meeting,
the persons named in the accompanying proxy card intend to vote the shares
represented thereby in accordance with their judgment.
By Order of the Board of Directors,
Jay B. Simmons
Secretary
Bowling Green, Kentucky
March 18, 1994
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<PAGE> 32
TRANS FINANCIAL BANCORP, INC.
1994 STOCK OPTION PLAN
1. Purpose. The purpose of this Stock Option Plan ("Plan") is to
strengthen Trans Financial Bancorp, Inc. ("Corporation") by providing an
additional means of retaining and attracting competent management personnel and
by providing to participating officers and other key employees of the
Corporation and its subsidiaries added incentive for high levels of performance
and for unusual efforts to increase the earnings of the Corporation through the
opportunity for stock ownership offered under this Plan.
It is intended that the options granted under the terms of
this Plan will, to the maximum extent permitted by law, constitute "incentive
stock options" as contemplated by and defined in Section 422 of the Internal
Revenue Code of 1986, as amended ("Code" ).
2. Administration. The Board of Directors of the Corporation
("Board") shall appoint an option committee ("Plan Committee") to administer
the Plan, which Plan Committee shall consist of not less than three members of
the Board who are not and have not at any time for one year prior to
appointment to the Committee been eligible to receive stock or options under
any plan of the Corporation or any of its subsidiaries. The decision of a
majority of the members of the Plan Committee shall constitute the decision of
the Plan Committee and the Plan Committee may act either at a meeting at which
a majority of the members of the Plan Committee is present, or by a writing
signed by all of the members of the Plan Committee. The Plan Committee shall
have full power and authority to construe, interpret and administer the Plan
and may from time to time adopt such rules and regulations for carrying out
this Plan as it may deem proper and in the best interests of the Corporation.
The Plan Committee shall have the sole, final and conclusive authority to
determine, consistent with and subject to the provisions of the Plan:
A. The individuals ("Optionees") to whom options shall
be granted under the Plan;
B. The number of shares of the common stock of the
Corporation ("Common Stock") to be granted under each option;
C. The price to be paid for the Common Stock upon the
exercise of each option ("Option Price"); and
D. The terms and conditions of each option between the
Corporation and an Optionee.
3. Eligibility. The employees of the Corporation or any of its
subsidiaries who, in the opinion of the Plan Committee, are from time to time
materially responsible for the management of the business or have materially
contributed to the successful perform-
<PAGE> 33
ance of the Corporation or any of its subsidiaries, shall be eligible to be
granted options under the Plan; provided, however, that no employee may be
granted options if, at the time such options are granted, the employee owns
stock possessing more than 10% of the total combined voting power of all
classes of stock of the Corporation or any of its subsidiaries. The terms
"subsidiary" or "subsidiaries," as used herein, mean any company or companies
whose relationship to the Corporation, whether established before or after
adoption of this Plan, is such that the Corporation would be deemed to be the
"parent corporation" of such company or companies within the meaning of Section
424(e) of the Code.
4. Stock Subject to Plan. The aggregate number of shares of
Common Stock which may be issued under the Plan shall not exceed 500,000
shares; subject, however, to adjustment as provided in Section 6 hereof.
Either authorized and unissued shares or shares reacquired by the Corporation,
including shares purchased in the open market, may be delivered under the Plan.
If any option shall expire or terminate for any reason, as to any shares, such
shares shall again become available under the Plan.
5. Terms of Options. Each option shall be evidenced by a written
agreement (a "1994 Incentive Stock Option Agreement") between the Corporation
and the Optionee, and shall be subject to the following terms and conditions,
and to such other terms and conditions not inconsistent therewith as the Plan
Committee may deem appropriate in each case:
A. Option Price. The Option Price per share of Common
Stock shall be set by the grant but shall in no instance be less than fair
market value on the date of grant, determined by the average of the closing bid
and asked quotations or the closing high bid quotation, whichever is available,
for the Common Stock in the over-the-counter market, as reported by the
National Association of Securities Dealers Automated Quotation System (the
"Market Price"), on the business day immediately preceding the date of grant.
B. Period for Exercise of Option. The option shall be
exercisable in such manner and within such period or periods as shall be
determined by the Plan Committee upon payment in full in cash and/or Common
Stock of the Option Price. If payment of the Option Price is made in Common
Stock, the value of the Common Stock used for payment of the Option Price shall
be based on the Market Price of the Common Stock as determined on the business
day preceding the day the notice of exercise is sent to the Secretary of the
Corporation. The option shall lapse at the earliest of the following times:
/1/ ten (10) years after the date of grant; or
/2/ three (3) months after termination of
employment, other than discharge for cause, permanent and total
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<PAGE> 34
disability or death, but /i/ only to the extent the Optionee had the
right to exercise such option at the date of such termination, and
/ii/ if the termination was the result of the resignation of the
Optionee, only so long as the Optionee does not become employed by or
render services for a financial institution having an office within an
area of 100 miles from any office of the Corporation or any of its
subsidiaries; or
/3/ immediately upon termination of employment
through discharge for cause as determined by the Plan Committee in its
sole discretion; or
/4/ one (1) year after termination of employment
by reason of death or permanent and total disability (within the
meaning of Section 22(e)(3) of the Code); or
/4/ any earlier times set by the grant.
Except to the extent provided otherwise by Section 5.E., in no event
shall an option be exercisable during the first two (2) years after the date of
grant. Thereafter, options may be exercised on or after the anniversary of the
date of grant in three (3) equal annual installments so that the full grant may
be exercised not sooner than four (4) years after the date of grant. If the
holder of the option shall not purchase all of the Common Stock which he or she
is entitled to purchase in any given installment period, the right to purchase
the Common Stock not purchased in such installment period shall continue until
the lapse or termination of such. No option or installment thereof shall be
exercisable except in respect of whole shares, and fractional share interests
shall be disregarded.
Leaves of Absence. Leaves of absence approved by the Plan
Committee or a transfer of employment from the Corporation to any subsidiary or
from a subsidiary to the Corporation or any other subsidiary, shall not
constitute termination of employment; provided, however, that any leave of
absence exceeding ninety (90) days shall be treated as a termination of
employment on the 91st day of such leave unless the Optionee's right to
reemployment with the Corporation (or a related corporation) is guaranteed
either by statute or by contract.
Disability. If any Optionee ceases to be an employee of the
Corporation or any of its subsidiaries by reason of permanent and total
disability (within the meaning of Section 22(e)(3) of the Code), any option
granted to him or her pursuant to the Plan may be exercised by him or her
within one (1) year after the date of his or her cessation of employment (but
not later than ten (10) years after the date such option was granted) to the
full extent such option was exercisable on the date of such cessation.
3
<PAGE> 35
Death. In the event of the death of an Optionee while in the
employ of the Corporation or any of its subsidiaries and within ten (10) years
after the date on which an option is granted, such option granted to him or her
pursuant to the Plan may be exercised within one (1) year after the date of his
or her death by his estate or by the person or persons entitled thereto by will
or by applicable laws of descent and distribution ("Optionee Representative"),
to the full extent such option was exercisable on the date of his or her death
(provided, however, that in no event shall an option be exercisable after the
expiration of ten (10) years from date of grant).
C. Maximum Amount. Notwithstanding any provisions
contained herein to the contrary, except to the extent provided otherwise by
Section 5.D., the aggregate fair market value (determined at the time the
option is granted) of the shares of Common Stock with respect to which options
are exercisable for the first time by such Optionee during any calendar year
(under all incentive stock option plans of the Optionee's employer corporation
and its parent and subsidiary corporations) shall not exceed $100,000.
D. Acceleration. Notwithstanding the provisions of
Section 5.B. or Section 5.C. to the contrary, if there is a Change in Control
of the Corporation, as defined by Section 7, then, at the discretion of the
Plan Committee, the exercise dates of all outstanding options shall accelerate
so that each option outstanding may be exercised on or after the date of the
Change in Control of the Corporation.
6. Adjustment of Shares. In the event of capital adjustment
after the effective date of the Plan in the Common Stock of the Corporation by
reason of any reorganization, recapitalization, stock split, stock dividend,
combination of shares, merger or consolidation, or any other change (after the
effective date of the Plan) in the nature or number of shares of Common Stock
of the Corporation, a proportionate adjustment shall be made in the maximum
number and kind of shares which may be delivered under the Plan, and in the
Option Price under and the number and kind of shares of Common Stock covered by
outstanding options granted under the Plan. By virtue of such a capital
adjustment, the price of any share under option shall be adjusted so that there
will be no change in the aggregate purchase price payable upon exercise of any
such option. Such determination by the Plan Committee shall be conclusive.
Without limiting the generality of the foregoing, if /a/ there
is a Change in Control of the Corporation, as hereafter defined, and /b/ as a
result of the transactions contemplated by the Change in Control, another
person or entity (a "Successor") will acquire all or a substantial portion of
the assets or outstanding capital stock of the Corporation, then the kind of
4
<PAGE> 36
shares of common stock which shall be subject to the Plan and to each
outstanding option shall automatically be converted into and replaced by shares
of common stock, or such other class of equity securities having rights and
preferences no less favorable than common stock of the Successor, and the
number of shares subject to the options and the purchase price per share upon
exercise of the options shall be correspondingly adjusted, so that, by virtue
of such Change in Control of the Corporation, each optionee shall have the
right to purchase /i/ that number of shares of the Successor which, as of the
date of the Change in Control, have a fair market value equal to the fair
market value of the shares of the Corporation theretofore subject to an option,
/ii/ for a purchase price per share which, when multiplied by the number of
shares of the Successor subject to the option, shall equal the aggregate
exercise price at which the Optionee could have acquired shares of the
Corporation under such option.
The granting of an option pursuant to this Plan shall not
affect in any way the right and power of the Corporation to make adjustments,
reorganizations, reclassifications, or changes of its capital or business
structure or to merge, consolidate, dissolve, liquidate, sell or transfer all
of any part of its business or assets; provided, however, that the Corporation
shall not, and shall not permit its subsidiaries to, recommend or agree or
consent to a transaction or series of transactions which would result in a
Change of Control of the Corporation unless and until the person or persons
acquiring or succeeding to assets or capital stock of the Corporation or its
subsidiaries as a result of such transaction or transactions agree to be bound
by the terms of the Plan so far as it pertains to options therefore granted and
agree to assume and perform the obligations of the Corporation and its
Successor hereunder.
7. Change in Control of the Corporation Defined. The term Change
in Control of the Corporation shall mean /a/ any share exchange or merger or
consolidation of the Corporation or a significant subsidiary of the Corporation
if either /i/ the Corporation will not be the surviving or acquiring
corporation or will not own 100% of the outstanding capital stock of the
surviving or acquiring corporation following the consummation of the
transactions contemplated by the plan or agreement of exchange, merger or
consolidation, or /ii/ there will be a substantial change in the proportionate
ownership of outstanding shares of voting stock of the Corporation as a result
of the transactions contemplated by such plan or agreement of exchange, merger
or consolidation; /b/ any sale, lease, exchange, transfer or other disposition
of all or any substantial part of the assets of the Corporation or a subsidiary
of the Corporation followed by a liquidation of the Corporation; /c/ the
commencement of any tender offer, exchange offer or other purchase offer for,
and/or any agreement to purchase, as much as (or more than) 25% of the
outstanding Common Stock of the Corporation or a subsidiary of the Corporation;
or /d/
5
<PAGE> 37
the Board or the shareholders of the Corporation approve, adopt, agree to
recommend, or accept any agreement, contract, offer or other arrangement
providing for, or any series of transactions resulting in, any of the
transactions described above.
8. Employees' and Optionees' Rights. No employee or other person
shall have any claim or right to be granted an option under the Plan except as
the Plan Committee shall have conferred in its discretion in the administration
of the Plan. Participation in the Plan shall not confer upon any Optionee any
right with respect to continuation of employment by the Corporation or any of
its subsidiaries, nor interfere with the right of the Corporation or such
subsidiary to terminate at any time the employment of any Optionee. An option
shall not confer any rights as a stockholder upon the holder thereof, except
only as to shares of Common Stock actually delivered pursuant to the Plan.
9. Privileges of Stock Ownership/Purchase for Investment. Neither
the Optionee nor any Optionee Representative shall be entitled to the privilege
of stock ownership as to any shares of Common Stock not actually issued and
delivered to such Optionee or Optionee Representative. Upon the exercise of an
option at a time when there is not in effect a registration statement under the
Securities Act of 1933 and any applicable state securities laws (the
"Securities Laws") relating to the shares of Common Stock issuable upon
exercise thereof, and available for delivery a prospectus meeting the
requirements of the Securities Laws, the shares of Common Stock may be issued
only if the Optionee or Optionee Representative represents and warrants in
writing to the Corporation that the shares being purchased are being acquired
for investment and not with a view to the distribution thereof. The shares of
the Common Stock shall contain such legends or other restrictive endorsements
as counsel for the Corporation shall deem necessary or proper. No shares of
Common Stock shall be purchased upon the exercise of any option unless and
until there shall have been satisfied any applicable requirements of the
Securities and Exchange Commission or other regulatory agencies having
jurisdiction and of any exchanges upon which stock of the Corporation may be
listed. The Corporation covenants that it will take all actions necessary to
register under the Securities Laws the Common Stock issuable upon exercise of
options granted pursuant to this Plan.
10. Transferability. Options are not transferable except by will
or the laws of descent and distribution, and then only to the extent provided
herein. Options may be exercised during the lifetime of the Optionee only by
the Optionee and after the death the Optionee, only as provided in Section 5
hereof.
11. Termination. The Plan shall terminate on December 31, 2003,
and may be terminated at any earlier time by the Plan Committee. No option
shall be granted hereunder after termination
6
<PAGE> 38
of the Plan. Termination of the Plan, however, shall not affect the validity
of any option theretofore granted under the Plan.
12. Amendment. The Plan Committee may amend the Plan from time to
time, except that, without the approval of a majority of the votes represented
and entitled to be voted at a duly held meeting of the stockholders of the
Corporation:
A. The maximum number of shares of Common Stock which
may be delivered under the Plan may not be increased except as provided in
Section 6 hereof;
B. The Option Price under any option may not be reduced
except as provided in Section 6 hereof; and
C. The period during which an option may be exercised
may not be extended beyond the period provided in Section 5 hereof.
No amendment of the Plan may, without the consent of the
Optionee or Optionee Representative, make any changes in any outstanding option
theretofore granted under the Plan which would adversely affect the rights of
such Optionee or Optionee Representative.
13. Tax Withholding. The Corporation shall have the right to
deduct any sums required by federal, state or local law to be withheld due to
the exercise of any option, or alternatively to retain shares of Common Stock
otherwise payable to the Optionee pursuant to the exercise of the option in an
amount sufficient to satisfy any withholding requirements. Alternatively, the
Optionee or Optionee's Representative may elect to pay such sums to the
Corporation by delivering written notice of that election to the Board not less
than thirty (30) nor more than sixty (60) days prior to exercise. There is no
obligation hereunder that Optionee be advised of the existence of the tax or
the amount which the Corporation may be so required to withhold.
14. Governing Law. The Plan and the 1994 Incentive Stock Option
Agreements issued hereunder shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Kentucky.
15. Effective Date. This Plan is effective January 1, 1994;
subject, however, to the ratification of the Plan by the affirmative vote of a
majority of the shares present or represented by proxy at the annual meeting of
stockholders to be held on April 25, 1994, or any adjournment thereof. The
effective date of each option shall be the day on which it is granted to any
Optionee; provided however, if the Plan is not approved at the aforementioned
7
<PAGE> 39
annual meeting of stockholders, then any options theretofore granted shall be
void and of no effect.
Dated this ______ day of _________________, 1994.
TRANS FINANCIAL BANCORP, INC.
By__________________________________
Douglas M. Lester, Chairman
of the Board, President
and Chief Executive
Officer
ATTEST:
___________________________
Jay B. Simmons, Secretary
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<PAGE> 40
(NOTE: THIS IS THE FORMAT FOR THE PROXY CARD)
TRANS FINANCIAL BANCORP, INC.
Bowling Green, Kentucky
Annual Meeting of Shareholders
April 25, 1994
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder in Trans Financial Bancorp, Inc., Bowling
Green, Kentucky ("Corporation") hereby constitutes and appoints Gregg Hall and
Roger Lundin, or either of them, his true and lawful attorneys and proxies,
with full power of substitution in and for each of them, to vote all shares of
the Corporation which the undersigned is entitled to vote at the Annual Meeting
of Shareholders to be held at The Phoenix Theatre, 549 East Main Street, Bowling
Green, Kentucky, on Monday, April 25, 1994, 3:00 p.m. local time, or at
any adjournment or adjournments thereof, on any and all of the proposals
contained in the Notice of the Annual Meeting of Shareholders, with all the
powers the undersigned would possess if present personally at said meeting, or
at any adjournment or adjournments thereof.
The Directors recommend a vote FOR Proposals 1, 2, and 3.
1. ELECTION OF DIRECTORS
FOR all nominees listed below / /
(except as marked to the contrary,
see Instruction below)
WITHHOLD AUTHORITY / /
to vote for all nominees listed
below
J. David Francis, Roy E. Gaddie, C.C. Howard Gray, Carroll Knicely, C.
Cecil Martin, Frank Mastrapasqua and Joseph I. Medalie (to be elected
as Class III directors as set forth in the proxy statement), and
Thomas R. Wallingford (to be elected as a Class I director as set
forth in the proxy statement).
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below:)
_______________________________________________________
2. PROPOSAL TO APPROVE THE TRANS FINANCIAL BANCORP, INC. 1994
STOCK OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE> 41
3. PROPOSAL TO APPROVE AN AMENDMENT TO ARTICLE VI OF THE ARTICLES
OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK.
/ / FOR / / AGAINST / / ABSTAIN
The above-named proxies are granted the authority, in their
discretion, to act upon such other matters as may properly come before the
meeting or any adjournment or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE NOMINEES LISTED ABOVE WITH THE
DISCRETIONARY AUTHORITY DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT.
This Proxy may be revoked at any time prior to the time the presence
of a quorum has been determined and declared, by a written notice of revocation
executed by the undersigned and delivered to the Secretary of the Corporation.
Dated _______________________, 1994
___________________________________
___________________________________
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS AND RETURN THIS PROXY
IMMEDIATELY IN THE ENCLOSED STAMPED
SELF-ADDRESSED ENVELOPE.
2
