<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
TRANS FINANCIAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
TRANS FINANCIAL, INC.
500 EAST MAIN STREET
BOWLING GREEN, KENTUCKY 42101
February 28, 1997
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Trans Financial, Inc. (the "Company"), scheduled for 3:00 p.m., Central Time, on
Monday, April 28, 1997 at the Bowling Green - Warren County Convention Center,
1021 Wilkinson Trace, Bowling Green, Kentucky. Holders of the Company's
outstanding shares of common stock as of February 21, 1997 are entitled to vote
at the Annual Meeting.
Accompanying this letter are the Annual Report of the Company, 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 Company during the past year.
Whether or not you plan to attend the meeting in person, please 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,
Thomas R. Wallingford
Chairman of the Board
Vince A. Berta
President and Chief Executive Officer
<PAGE>
TRANS FINANCIAL, 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, Inc. (the "Company") will be held on Monday, April 28, 1997, at 3:00
p.m., Central Time, at the Bowling Green - Warren County Convention Center, 1021
Wilkinson Trace, Bowling Green, Kentucky, for the following purposes:
1. For the election of four Class III directors of the Company 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, Inc. 1996
Consolidated Stock Option Plan; and
3. To consider and act upon such other matters as may properly come
before the meeting or any adjournment or adjournments thereof.
Whether or not you plan to attend the Annual Meeting in person, please mark,
sign and return the enclosed proxy card as soon as possible 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 February 21, 1997
will be entitled to notice of, and to vote at, the meeting. The stock transfer
books of the Company will not be closed.
By Order of the Board of Directors,
Jay B. Simmons
Senior Vice President
General Counsel and Secretary
February 28, 1997
<PAGE>
TRANS FINANCIAL, INC.
500 EAST MAIN STREET
BOWLING GREEN, KENTUCKY 42101
----------------
PROXY STATEMENT
FEBRUARY 28, 1997
---------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Trans Financial, Inc. (the "Company") of proxies for the
Annual Meeting of Shareholders of the Company (the "Annual Meeting") to be held
on April 28, 1997, at the Bowling Green - Warren County Convention Center, 1021
Wilkinson Trace, Bowling Green, Kentucky, at 3:00 p.m. It is anticipated that
this Proxy Statement will first be mailed to the shareholders on February 28,
1997.
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 Company
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 TO THE CONTRARY IS MADE, THE PROXY WILL BE VOTED FOR THE NOMINEES
FOR DIRECTORS, AND FOR THE PROPOSAL TO APPROVE THE TRANS FINANCIAL, INC. 1996
CONSOLIDATED STOCK OPTION PLAN, 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 Company
will bear the cost thereof. Certain officers and directors of the Company 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 Company has retained Georgeson &
Co., Inc. to assist in the solicitation of proxies from the Company's
shareholders. The fees to be paid to such firm for such services by the Company
are not expected to exceed $8,500, plus reasonable out-of-pocket costs and
expenses.
At the Annual Meeting, shareholders will elect four directors to serve as
Class III directors of the Company. In addition, as disclosed in the Notice of
the Annual Meeting, a proposal will be submitted to shareholders at the Annual
Meeting to approve a new stock option plan which will consolidate the remaining
shares available under the Company's existing incentive stock option plans and
authorize an additional 200,000 shares to be optioned. Only shareholders of
record at the close of business on February 21, 1997 (the "Record Date") are
entitled to notice of, and to vote at, the Annual Meeting.
<PAGE>
SHARES AND VOTING
On the Record Date, there were issued and outstanding 11,399,494 shares of
common stock of the Company ("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. Under cumulative voting, the four nominees receiving the most votes
cast for the election of directors at the Annual Meeting will be elected, which
means that abstentions and broker non-votes will have no effect on the outcome
of the vote.
Shareholders are being asked to approve the Trans Financial, Inc. 1996
Consolidated Stock Option Plan. An affirmative vote of a majority of the shares
of the Company's Common Stock represented in person or by proxy at the Annual
Meeting and entitled to vote on the proposal is necessary for approval.
Abstentions and broker non-votes will have the effect of a "No" vote.
VOTING SECURITIES AND OWNERSHIP THEREOF
As of the Record Date, to the knowledge of the Company, 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 Company entitled
to vote at the Annual Meeting, except as follows:
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS NUMBER OF CLASS
TITLE OF CLASS OF BENEFICIAL OWNER OF SHARES OUTSTANDING
- ----------------- ------------------------------------------------------------------- ------------ ---------------
<S> <C> <C> <C>
Common Stock Trans Financial Bank, National Association, as Trustee of the Trans 916,076(1) 8.04%
Financial Savings Investment Plan and as Trustee of the Trans
Financial Employee Stock Ownership Plan
500 East Main Street
Bowling Green, Kentucky 42101
</TABLE>
- ------------
(1) Includes 389,445 shares (or 3.42% of those outstanding) held as Trustee
under the Trans Financial Savings Investment Plan ("Savings Investment
Plan") and 526,631 shares (or 4.62% of those outstanding) held as Trustee
under the Trans Financial 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 572,555 (or 5.02% 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.
2
<PAGE>
The following table sets forth information as of the Record Date relating to
the ownership of Common Stock by each director and nominee, the Company's Chief
Executive Officer, and each of the other "Named Executive Officers" (as such
term is defined in EXECUTIVE COMPENSATION AND OTHER INFORMATION) employed by the
Company as of the Record Date, and by all directors, nominees for director and
executive officers of the Company as a group. Except where otherwise stated,
sole voting and investment power are held by the beneficial owners named.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF CLASS
TITLE OF CLASS NAME OWNERSHIP OUTSTANDING
- ----------------- --------------------------------------------------- ---------------------- -----------------
<S> <C> <C> <C>
Common Stock Vince Berta 18,859(1) 0.17%
Common Stock Barry D. Bray 79,966(2) 0.70%
Common Stock James G. Campbell 9,391(3) 0.08%
Common Stock Mary D. Cohron 21,425 0.19%
Common Stock Tommy Cole 19,379(4) 0.17%
Common Stock Floyd H. Ellis 28,465 0.25%
Common Stock David B. Garvin 353,203(5) 3.10%
Common Stock Wayne Gaunce 28,162(6) 0.25%
Common Stock C.C. Howard Gray 8,668 0.08%
Common Stock Charles A. Hardcastle 50,420(7) 0.44%
Common Stock Carroll Knicely 30,271(8) 0.27%
Common Stock C. Cecil Martin 59,388(9) 0.52%
Common Stock Frank Mastrapasqua 70,505 0.62%
Common Stock James D. Scott 148,294(10) 1.30%
Common Stock Ronald Szejner 21,445(11) 0.19%
Common Stock William B. Van Meter 78,182(12) 0.69%
Common Stock Thomas R. Wallingford 43,590(13) 0.38%
Common Stock Directors, nominees for director and executive 1,143,329(14) 9.95%
officers as a group (26 persons)
</TABLE>
- ------------
(1) Includes 1,943 shares held by the Company's Savings Investment Plan, 1,582
shares held by the Company's ESOP, and 6,333 shares subject to options
granted under the Company's stock option plans that Mr. Berta could exercise
within 60 days of the Record Date.
(2) Includes 14,564 shares held by the Company's Savings Investment Plan, 9,099
shares held by the Company's ESOP, 2,133 shares owned by Mr. Bray's wife,
and 34,354 shares subject to options granted under the Company's stock
option plans that Mr. Bray could exercise within 60 days of the Record Date.
(3) Includes 2,724 shares held by the Company's Savings Investment Plan, 1,234
shares held by the Company's ESOP, and 5,333 shares subject to options
granted under the Company's stock option plans that Mr. Campbell could
exercise within 60 days of the Record Date.
(4) Includes 2,756 shares held by the Company's Savings Investment Plan, 5,974
shares held by the Company's ESOP, and 10,632 shares subject to options
granted under the Company's stock option plans that Mr. Cole could exercise
within 60 days of the Record Date.
(5) Includes 2,662 shares owned by Mr. Garvin's children.
(6) Includes 23,280 shares owned by Mr. Gaunce's wife.
(7) Includes 7,939 shares owned by Mr. Hardcastle's wife and 25,962 shares
owned by B.G. Chemicals, Inc., of which Mr. Hardcastle is a part owner.
(8) Includes 6,683 shares owned by Mr. Knicely's wife.
3
<PAGE>
(9) Includes 29,052 shares owned by Mr. Martin's wife and 3,333 shares owned by
Center of Insurance, Inc., of which Mr. Martin is a part owner.
(10) Includes 35,000 shares owned by Mr. Scott's wife.
(11) Includes 20,982 shares held by the Company's Savings Investment Plan and
463 shares held by the Company's ESOP.
(12) Includes 3,500 owned by a partnership, of which Mr. Van Meter is a general
partner.
(13) Includes 5,618 shares owned by a revocable trust for the benefit of Mr.
Wallingford's wife, of which Mr. Wallingford is the sole trustee.
(14) Includes 93,723 shares subject to options granted under the Company's stock
option plans that executive officers could exercise within 60 days of the
Record Date.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's executive officers and directors and persons who own more
than ten percent (10%) of the Company's Common Stock to file with the Securities
and Exchange Commission ("SEC") reports of ownership and changes in ownership.
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 Company believes that everyone who was an executive officer,
director or greater than 10% beneficial owner at any time during 1996 complied
with all filing requirements applicable to them during 1996, with the following
exceptions. Mr. Garvin filed two late reports, covering eight transactions not
reported on a timely basis. Mr. Martin filed one late report, covering four
transactions not reported on a timely basis. Michael Norris, an executive
officer, filed one late report covering one transaction not reported on a timely
basis. Mr. Scott filed three late reports, covering four transactions not
reported on a timely basis. Mr. Van Meter filed one late report, covering seven
transactions not reported on a timely basis. Douglas M. Lester, a former
director and executive officer of the Company, and Susan Newkirk-Moore, a former
executive officer of the Company, have each failed to file with the Company
either a Form 5 for fiscal year 1996, or a written representation that no Form 5
was required.
PROPOSAL I
ELECTION OF DIRECTORS
The Articles of Incorporation and bylaws of the Company 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 twelve.
Article VIII of the Company'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. Under the laws of
Kentucky, the three classes should be as equal in number as practicable.
Accordingly, four Class III directors will be elected at the upcoming Annual
Meeting.
On June 17, 1996, the Board of Directors acting pursuant to the Bylaws of
the Company increased the number of authorized directors by one, and elected
Vince A. Berta as a Class III director to fill the vacancy thus created.
Pursuant to the Kentucky Business Corporation Act, Mr. Berta's term will expire
on the date of the Annual Meeting. Mr. Berta has been nominated for election as
a Class III director at the Annual Meeting.
4
<PAGE>
Class I directors will be elected at the 1998 Annual Meeting of
Shareholders, and Class II directors will be elected at the 1999 Annual Meeting
of Shareholders.
The following table contains information concerning all of the current
directors whose terms extend beyond the date of the Annual Meeting and of all
nominees for director of the Company, including their positions held with Trans
Financial Bank, National Association located in Bowling Green, Kentucky
("TFBNA"), Trans Financial Bank, F.S.B. located in Russellville, Kentucky
("TFB,FSB"), and Trans Financial Bank Tennessee, National Association located in
Cookeville, Tennessee ("TFBTn,NA") (collectively, the "Banks"); and Trans
Financial Investment Services, Inc. located in Nashville, Tennessee ("TFIS"),
and Trans Financial Mortgage Company located in Tullahoma, Tennessee ("TFMC")
(together with the Banks, collectively, the "Subsidiaries"), 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.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION,
BUSINESS EXPERIENCE
POSITION AND OFFICE POSITION AND DURING PAST FIVE DIRECTOR OF
HELD WITH OFFICE HELD YEARS AND OTHER COMPANY
NAME AND AGE SUBSIDIARIES WITH COMPANY DIRECTORSHIPS HELD OR BANKS SINCE
- ------------------------ -------------------- ------------------ ---------------------------- --------------
<S> <C> <C> <C> <C>
CLASS III DIRECTORS NOMINATED FOR ELECTION AT THE ANNUAL MEETING:
Vince A. Berta, Director and Director, Class President and Chief 1996
age 38 Executive Vice III; President and Executive Officer of the
President of TFBNA; Chief Executive Company since June 4,
Director of TFMC Officer 1996; formerly Executive
Vice President, Senior
Vice President and Chief
Financial Officer of the
Company, beginning in
April 1993; formerly Vice
President, PNC Financial
Corp.
C.C. Howard Gray, Director of TFBNA Director, Class President, James N. Gray 1977
age 47 III Construction Co., Inc.
Carroll Knicely, Director of TFBNA Director, Class President, Associated 1977
age 68 III Publications, Inc.; Real
estate developer
C. Cecil Martin, Director of TFBNA Director, Class President, Center of 1990
age 41 III Insurance, Inc.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION,
BUSINESS EXPERIENCE
POSITION AND OFFICE POSITION AND DURING PAST FIVE DIRECTOR OF
HELD WITH OFFICE HELD YEARS AND OTHER COMPANY
NAME AND AGE SUBSIDIARIES WITH COMPANY DIRECTORSHIPS HELD OR BANKS SINCE
- ------------------------ -------------------- ------------------ ---------------------------- --------------
<S> <C> <C> <C> <C>
DIRECTORS WHOSE TERMS OF OFFICE EXTEND BEYOND THE ANNUAL MEETING:
Mary D. Cohron, Director of TFBNA Director, Class I Employee and Consultant, 1979
age 49 Kentucky School Boards
Association; Owner,
Greencastle Farms, Inc.
and The Aerobic Workout
Floyd H. Ellis, Director of TFBNA Director, Class I President, Warren Rural 1977
age 70 Electric Co-op Corporation
David B. Garvin, Director of TFBNA Director, Class I Chairman of the Board, 1989
age 54 Camping World, Inc.;
Owner, Ironwood Farm
James D. Scott, Director of TFBNA Director, Class I Chairman of the Board, 1994
age 59 Scotty's Contracting and
Stone Company; President,
Scotty's Development
Company
Thomas R. Wallingford, Director and Director, Class I; Retired; Former Chairman of 1994
age 69 Chairman of the Chairman of the the Board and President,
Board of TFBNA Board Kentucky Community
Bancorp, Inc.
Wayne Gaunce, Director of TFBNA Director, Class II President, Gaunce 1977
age 63 Management, Inc.,
Caveland, Inc.; Director,
Papa John's International,
Inc.
Charles A. Hardcastle, Director of TFBNA Director, Class II President, B.G. Chemicals, 1982
age 64 Inc., B.G. Paper Company,
Consolidated Sanitary
Supply
William B. Van Meter, Director of TFBNA Director, Class II Chairman, Van Meter 1992
age 50 Insurance Agency, Inc.;
Owner, Van Meter
Investments
</TABLE>
If any of the nominees named above should become unwilling or unable to
serve, the individuals named as proxies on the enclosed proxy form (the
"Proxies") shall have the right to vote the shares represented by the proxy form
for any substitute nominee that may be proposed by the Board of Directors. No
circumstances are now known that would prevent any of the nominees named above
from serving. The Proxies may also cumulatively vote the shares represented by
the proxy form, and spread such votes among the nominees in any manner, if they
deem such action appropriate; provided, however, that the Proxies may not vote
the shares represented by the proxy forms for more than four nominees.
6
<PAGE>
There are no family relationships between any director or executive officer
of the Company 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.
The Company has an Audit Committee consisting of directors Wallingford,
Cohron, Ellis, Gray, Hardcastle, Knicely and Scott. 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 Company and the Subsidiaries; to ascertain whether the Subsidiaries are
being operated in compliance with the requirements of the various regulatory
authorities having jurisdiction over the Subsidiaries' operations; to review
reports of examinations made by federal and state bank examiners and ascertain
that any and all operational deficiencies set forth in such 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 Company and the Subsidiaries 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 1996.
The Company has a Compensation Committee consisting of directors
Wallingford, Gaunce, Knicely, Martin and Van Meter. It is the responsibility of
the Compensation Committee to review and approve issues pertaining to executive
compensation and stock options granted or to be granted to the executive
officers and employees of the Company and the Subsidiaries. The Compensation
Committee met five times during 1996.
The Company has no Nominating Committee. All nominations for membership on
the Board of Directors originate with the Board of Directors.
During 1996, there were fourteen meetings of the Company'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 held
during the period for which he or she was a director, and (2) the total number
of meetings held by all committees of the Board on which he or she served.
7
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company and its Subsidiaries for the fiscal
years ended December 31, 1994, 1995 and 1996, to or on behalf of (i) each person
who served as the Company's Chief Executive Officer during 1996, and (ii) the
other four most highly compensated executive officers of the Company (determined
as of the end of 1996). These officers are referred to herein as the "Named
Executive Officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION
------------------------------------------------- AWARDS
OTHER -------------
ANNUAL SECURITIES
COMPEN- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SATION OPTIONS (#) COMPENSATION (1)
- -------------------------------- --------- ------------- --------- ------------ ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Vince A. Berta, President and 1996 $ 175,000(2) $ 70,000 -- 25,000 $ 6,569(3)
Chief Executive Officer 1995 170,000 -- -- 44,000 12,203
1994 134,000 22,540 -- 6,000 13,459
Barry D. Bray, Executive Vice 1996 $ 168,100 $ 10,000 -- 2,000 $ 6,965(4)
President and Chief Credit 1995 168,100 -- -- 5,000 12,557
Officer 1994 164,000 26,404 -- 3,000 18,169
James G. Campbell, Executive 1996 $ 135,000 $ 35,000 $ 42,362(5) 37,500 $ 5,811(6)
Vice President and General 1995 109,615 8,350 -- 6,000 9,496
Sales Manager 1994 94,615 -- -- 4,000 9,325
Tommy Cole, Executive Vice 1996 $ 118,269 $ 70,000 -- 35,000 $ 6,269(7)
President 1995 107,997 20,830 -- 1,500 10,411
1994 97,769 23,400 -- 3,000 10,904
Ronald Szejner, Executive Vice 1996 $ 150,000 $ 36,056 $ 30,232(9) 12,500 $ 6,390(10)
President and Chief Trust 1995 108,400 58,065 -- 37,000 7,738
Officer (8) 1994
Douglas M. Lester, former 1996 $ 131,961 $ -- -- 39,000 $ 76,591(12)
President, Chairman and Chief 1995 250,000 -- -- 102,000 20,392
Executive Officer (11) 1994 236,000 42,244 -- 10,000 27,458
</TABLE>
- ------------
(1) Information concerning the Company's annual contribution to the Company's
Employee Stock Ownership Plan for 1996 is not yet available.
(2) Represents the full-year effect of a salary increase in mid-1995. Mr.
Berta's salary was not increased for 1996.
(3) Consists of the Company's matching contribution to the Company's Savings
Investment Plan in the amount of $6,404, and premiums in the amount of $165
paid by the Company for term life insurance for the benefit of Mr. Berta.
(4) Consists of the Company's matching contribution to the Company's Savings
Investment Plan in the amount of $6,285 and premiums in the amount of $680
paid by the Company for term life insurance for the benefit of Mr. Bray.
8
<PAGE>
(5) Consists of $32,884 in moving expense reimbursement paid to Mr. Campbell
pursuant to the human resource policies of the Company, and $9,478 for
reimbursement of taxes payable on moving expense reimbursements.
(6) Consists of the Company's matching contribution to the Company's Savings
Investment Plan in the amount of $5,642 and premiums in the amount of $169
paid by the Company for term life insurance for the benefit of Mr.
Campbell.
(7) Consists of the Company's matching contribution to the Company's Savings
Investment Plan in the amount of $6,131 and premiums in the amount of $138
paid by the Company for term life insurance for the benefit of Mr. Cole.
(8) Mr. Szejner joined the Company in March 1995.
(9) Consists of $18,910 in moving expense reimbursement paid to Mr. Szejner
pursuant to the human resource policies of the Company, and $11,322 for
reimbursement of taxes payable on moving expense reimbursements.
(10) Consists of the Company's matching contribution to the Company's Savings
Investment Plan in the amount of $6,042 and premiums in the amount of $348
paid by the Company for term life insurance for the benefit of Mr. Szejner.
(11) Mr. Lester ceased to be an executive officer of the Company on June 4,
1996.
(12) Consists of the Company's matching contribution to the Company's Savings
Investment Plan in the amount of $2,692, premiums in the amount of $768
paid by the Company for term life insurance for the benefit of Mr. Lester,
and $76,131 in severance payments made pursuant to the Employment Agreement
between Mr. Lester and the Company in connection with the termination of
his employment on June 4, 1996.
STOCK OPTIONS
The following table contains information concerning the grant of stock
options to the Named Executive Officers during the fiscal year ending December
31, 1996.
9
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------ ANNUAL RATES OF
PERCENT OF STOCK PRICE
NUMBER OF TOTAL OPTIONS APPRECIATION
SECURITIES GRANTED TO FOR OPTION TERM
UNDERLYING EMPLOYEES IN EXERCISE EXPIRATION ----------------------
NAME OPTIONS GRANTED FISCAL YEAR PRICE($/SH) DATE 5%($) 10%($)
- ----------------------------- -------------------- ------------- ----------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
10,000(1) 2.05% $ 20.85 1/15/2006 $ 74,500 $ 242,200
15,000(2) 3.07% $ 20.125 12/10/2006 189,825 481,125
Vince Berta
Barry D. Bray 2,000(2) 0.41% $ 20.125 12/10/2006 $ 25,310 $ 64,150
20,000(1) 4.10% $ 20.85 1/15/2006 $ 149,000 $ 484,400
7,500(2) 1.54% $ 20.125 12/10/2006 94,913 240,563
10,000(3) 2.05% $ 24.15 12/10/2006 86,300 280,500
James G. Campbell
15,000(2) 3.07% $ 20.125 12/10/2006 $ 189,825 $ 481,125
20,000(3) 4.10% $ 24.15 12/10/2006 172,600 561,000
Tommy Cole
5,000(1) 1.02% $ 20.85 1/15/2006 $ 37,250 $ 121,100
7,500(2) 1.54% $ 20.125 12/10/2006 94,913 240,563
Ronald Szejner
4,000(4) 0.82% $ 5.625 (5) $ 0 $ 0
35,000(1) 7.17% $ 20.85 (5) 0 0
Douglas M. Lester
</TABLE>
- ------------
(1) Option granted January 15, 1996 under the Company's 1995 Executive Stock
Option Plan. The option becomes exercisable on January 15, 1999. The
exercise date of the option will be accelerated upon the occurrence of a
Change in Control of the Company, as defined in the Plan. See "Employment
Contracts and Termination of Employment and Change in Control Arrangements."
(2) Option granted December 10, 1996 under the Company's incentive stock option
plans. One-third of the option may be exercised on or after December 10,
1998, a second one-third may be exercised on or after December 10, 1999, and
the final one-third may be exercised on or after December 10, 2000. The
exercise date of the option may be accelerated upon the occurrence of a
Change in Control of the Company, as defined in the Plans. See "Employment
Contracts and Termination of Employment and Change in Control Arrangements."
(3) Option granted December 10, 1996 under the Company's 1995 Executive Stock
Option Plan. The option becomes exercisable on December 10, 1999. The
exercise date of the option will be accelerated upon the occurrence of a
Change in Control of the Company, as defined in the Plan. See "Employment
Contracts and Termination of Employment and Change in Control Arrangements."
(4) Under the terms of Mr. Lester's Employment Agreement, Mr. Lester was granted
on January 1 of each year during the term of the agreement a nontransferable
right to purchase 4,000 shares of Common Stock at $5.265 per share,
exercisable only during the month of July and only while Mr. Lester was
employed by the Company. The market price of the Common Stock on the date of
grant was $17.875.
(5) This option expired on June 4, 1996, prior to the date it became
exercisable, as a result of the termination of Mr. Lester's employment with
the Company.
10
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the Named Executive
Officers concerning the exercise of options during the last fiscal year ending
December 31, 1996, and unexercised options held as of December 31, 1996:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT
OPTIONS AT FISCAL YEAR
FISCAL YEAR END(#) END($)(2)
SHARES ------------------- -------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE
- --------------------------------- ------------- ------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Vince Berta 0 $ 0 2,000/73,000 $13,000/$351,175
Barry D. Bray 0 $ 0 29,604/11,084 $365,053/$83,338
James G. Campbell 0 $ 0 2,666/46,834 $17,996/$146,567
Tommy Cole 0 $ 0 7,665/39,167 $88,481/$75,794
Ronald Szejner 0 $ 0 0/49,500 $0/$258,938
Douglas M. Lester 5,358 $ 43,937 0/0 $0/$0
</TABLE>
- ------------
(1) Market price at time of exercise less exercise price.
(2) Market value of underlying securities at December 31, 1996 minus the
exercise price at December 31, 1996.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
The Company has entered into agreements with certain officers of the
Company, including Messrs. Berta, Campbell, Cole and Szejner, that provide for
severance benefits in the event the officer's employment is terminated without
cause at any time prior to December 31, 1997. Under these agreements, a
termination of employment will be deemed "without cause" if the Company
terminates the officer's employment for any reason other than certain causes set
forth in the agreement, or if the officer terminates his employment with the
Company after his salary has been reduced, his duties and responsibilities with
the Company have been reduced, or he has been required to relocate more than 40
miles to perform the functions of his position with the Company. In the event of
a termination without cause prior to December 31, 1997, the officer will receive
salary continuation and medical benefits under the Company's standard medical
benefits policies, for a period of eighteen months.
Upon a Change in Control of the Company, as hereafter defined, the exercise
dates of all outstanding options under the Company's 1995 Executive Stock Option
Plan will accelerate, and the exercise dates of outstanding options under the
Company's 1988 Stock Option Plan, 1990 Stock Option Plan, 1992 Stock Option Plan
and 1994 Stock Option Plan (collectively, the "Prior Plans") may be accelerated,
at the discretion of the Compensation Committee. To the extent that exercise
dates of outstanding options are accelerated, each affected option may be
exercised on or after the date of the Change in Control. In addition, the shares
subject to the Company's stock option plans will be automatically converted into
and replaced by shares of the common stock of the successor, or other equity
securities having rights and preferences no less favorable than the 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. For a description of the provisions regarding
a Change in Control included in the Company's proposed 1996 Consolidated Stock
Option Plan, see "Proposal II" below.
11
<PAGE>
For purposes of the 1995 Executive Stock Option Plan, a Change in Control of
the Company means:
(a) any share exchange or merger or consolidation to which the Company or a
significant Subsidiary of the Company is a party, or any purchase or
other acquisition of substantially all of the business or assets of the
Company or any significant Subsidiary, in any transaction or series of
transactions, by another corporation or entity, if either (i) the Company
will not be the surviving or acquiring corporation or will not own 100%
of the outstanding capital stock of the surviving, acquiring or
transferee corporate entity immediately following the consummation of the
transactions contemplated by the plan or agreement of exchange, merger,
consolidation, or sale of assets; or (ii) there will be a 25% change in
the proportionate ownership of outstanding shares of voting stock of the
Company as a result of the transactions contemplated by such plan or
agreement of exchange, merger or consolidation or sale of assets;
(b) any person (as that term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder (the "Exchange Act")) is or becomes the beneficial owner (as
that term is used in Section 13(d) of the Exchange Act) of stock of the
Company entitled to cast more than 20% of the votes at the time entitled
to be cast generally for the election of directors;
(c) more than 50% of the members of the Board shall not be Continuing
Directors (meaning the directors of the Company (i) who were members of
the Board on February 1, 1995, (ii) who subsequently became directors of
the Company by a vote of the majority of the Continuing Directors then on
the Board of Directors, or (iii) whose election or nomination for
election by the Company's shareholders was approved by a vote of a
majority of the Continuing Directors then on the Board of Directors); or
(d) the Board or the shareholders of the Company 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.
For purposes of the Prior Plans, a Change in Control of the Company means:
(a) any share exchange or merger or consolidation of the Company or a
significant subsidiary of the Company if either (i) the Company 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 Company 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 Company or a subsidiary of the
Company followed by a liquidation of the Company;
(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 Company or a subsidiary of the
Company; or
(d) the Board or the shareholders of the Company 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.
Seventeen officers of the Company and its subsidiaries, including Messrs.
Berta, Bray, Campbell and Cole, have nonqualified deferred compensation
agreements with the Company or its subsidiaries, 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 Company. All
benefits under each
12
<PAGE>
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 Company, or the employee competes with the Company in violation of the
noncompete provisions contained in the agreements.
REPORT OF COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
This report reflects the Company's compensation policies with respect to its
executive officers, as endorsed by the Compensation Committee of the Board of
Directors, and the resulting actions taken by the Company for the reporting
periods shown in the various compensation tables supporting this report.
The Company through its executive compensation policies seeks to provide
compensation that will enable the Company to compete for and retain talented
executives who are critical to the Company'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 shareholders through
opportunities that can result in ownership of Common Stock. At present, the
executive compensation program of the Company 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 Company's Savings Investment Plan
and Employee Stock Ownership Plan.
In establishing salaries for executive officers at the beginning of 1996,
the Compensation Committee adopted the recommendation from management that,
based on the performance of the Company during 1995, no salary increases be
given to senior executives of the Company and its Subsidiaries, with five
exceptions. The exceptions were as follows: (1) Mr. Campbell was given an
increase in salary in recognition of the increase in his duties and
responsibilities in connection with his election to be President of TFBNA in
January of 1996, (2) another executive officer was given an increase in salary
based on his individual performance and contribution to the Company during 1995,
and (3) three other executive officers were given increases in salary to make
their salaries more competitive with salaries for similar positions in the
financial services industry. These salary increases were made upon the
recommendations of the Chief Executive Officer, which were basically subjective
in nature, although the Chief Executive Officer's recommendations with respect
to the increases based on competitive considerations were based on information
obtained from published national salary surveys for compensation in the
financial services industry nationally, that indicated that the executive
officers' base salaries were significantly below the competitive range for the
industry. In addition, at mid-year the new Chief Executive Officer recommended a
salary increase for Mr. Cole. This recommendation was based on Mr. Cole's
personal performance, and was in recognition of the significant contribution
that the areas under Mr. Cole's supervision make to the financial performance of
the Company. In addition, this salary increase was recommended for the same
competitive considerations, based on the same national salary surveys,
underlying the recommendations for salary increases for the three other
executive officers at the beginning of the year. While the recommendation for
the increase in Mr. Cole's salary was subjective in nature, it was based in
large part on the national salary surveys described above. In each case, the
Compensation Committee adopted the recommendations of management.
Annual cash incentives for the Company's executive officers and certain
other employees for 1996 were to be determined under the Company's Performance
Incentive Plan (the "Incentive Plan"). Under the Incentive Plan, the Company's
and the Subsidiaries' performance for 1996 was to be measured against goals
established and approved by the Compensation Committee prior to the beginning of
the year, in order to determine the cash incentives to be awarded. Performance
measures were established for the Company in the categories of earnings per
share, return on equity, operating efficiency, and acquisitions, and for the
Banks in the categories of return on assets, deposit growth and operating
efficiency. The performance measures and categories applicable to each of the
participants were determined based on the participant's position with the
Company or the Banks, and his or her resulting ability to affect the outcome of
the Company or the Banks with respect to those performance measures. Cash
incentives for a participant were to be determined as a percentage of his or her
base salary on a sliding scale depending on the performance of
13
<PAGE>
the Company and the Banks in the categories applicable to that participant. For
each of the categories, a minimum performance target was established for the
Company or the Banks, below which no cash incentive would be awarded, and a
maximum potential cash incentive award was also established. The cash incentive
to be awarded to the participant would equal the sum of the incentives
determined with respect to each category applicable to that participant.
In June of 1996, the Board of Directors instituted changes in the management
and direction of the Company. At that time, it became apparent that the minimum
performance targets established under the Incentive Plan would not be met and
that no cash incentives would be payable under the Plan to any officers or
employees of the Company for 1996. In order to motivate the senior executives of
the Company during this period of change in the Company, the Compensation
Committee considered and adopted a new cash incentive plan for the remainder of
the calendar year. This new plan established a goal for earnings per share for
the third and fourth quarters of 1996, and established the amount of cash
incentive payable to each participant if such goal was met, with no cash
incentive to be paid if the goal was not met. The Company would have exceeded
the established goal for earnings per share, but for a one-time assessment
against the Banks by the Savings Association Insurance Fund ("SAIF"). The SAIF
assessment was made against all savings and loan associations and all banks with
SAIF insured deposits (which included all of the Banks) and resulted from
congressional legislation enacted during the third quarter of 1996. The
Compensation Committee determined that, in view of the special one-time nature
of the SAIF assessment, and the fact that the senior officers had otherwise
exceeded the goals and objectives that the new plan was designed to encourage,
cash incentives under the new plan should be paid notwithstanding the SAIF
assessment and its effect on the goal established under the new plan.
Accordingly, cash incentives were paid under the new plan in January of 1997.
Stock option grants under the Company's stock option plans (other than the
1995 Executive Stock Option Plan as described in the next paragraph) provide the
right to purchase shares of Common Stock at a minimum of the fair market value
on the date of grant. The fair market value for this purpose is defined as the
closing price or the average of the bid and asked price on the previous trading
day. Options under these plans 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 plans approved by the shareholders. The number of shares
covered by each grant reflects the Compensation Committee's assessment of the
individual's relative value to the Company, 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 quantitative criteria considered.
Stock option grants under the Company's 1995 Executive Stock Option Plan
have an exercise price equal to 120% of the fair market value on the date of
grant, and provide an incentive to certain key executive officers of the Company
to remain in the employ of the Company and to use their best efforts on its
behalf. The fair market value for this purpose is defined as the closing price
or the average of the bid and asked price on the previous trading day. Options
granted under this plan are not exercisable during the first three years after
the date of grant of the option. The Compensation Committee determines the
executive officers who will receive options, and the number and terms of options
granted to such executive officers. The recipients of and number of shares
covered by each option grant reflect the Compensation Committee's assessment of
the executive officer's relative value to the Company 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 quantitative criteria considered.
Awards under the Company's Employee Stock Ownership Plan and Savings
Investment Plan are based on a percentage of the base salary of each of the
executive officers as determined under the respective plan. The Company's
contributions to these plans during 1996 were invested in the Company's Common
Stock.
14
<PAGE>
Douglas M. Lester served as Chief Executive Officer of the Company until
June 4, 1996. Mr. Lester's salary was based principally on his rights under his
Employment Agreement with the Company, dated January 1, 1991. Under the
Employment Agreement, the Compensation Committee established Mr. Lester's
minimum annual base salary for 1996 at $250,000, which reflected no increase
over Mr. Lester's base salary for 1995. Under Mr. Lester's Employment Agreement,
on January 1, 1996, Mr. Lester was granted an option to acquire 4,000 shares of
the Company's common stock exercisable in July 1996. This option terminated at
the time of the termination of Mr. Lester's employment with the Company, and was
not exercised.
On June 4, 1996, Vince A. Berta was elected Acting President and Chief
Executive Officer, pending an executive search to fill this position to be
conducted by a Search Committee established by the Board of Directors. The
search included external candidates as well as Mr. Berta. As part of the search
process, the Search Committee established a potential range for the salary of
the successful candidate, based on the information obtained from published
national salary surveys and advice from an executive search consultant retained
by the Company. On December 16, 1996, after conclusion of the search and upon
recommendation of the Search Committee, the Board of Directors elected Mr. Berta
President and Chief Executive Officer. At the time of Mr. Berta's election as
Acting President and Chief Executive Officer, no adjustment was made in the
salary he received from the Company. Upon Mr. Berta's election as President and
Chief Executive Officer, the Board of Directors set his salary at $250,000,
which was the base salary of the previous Chief Executive Officer but which was
lower than the minimum of the range of salaries previously established by the
Search Committee. The Board of Directors also granted Mr. Berta a bonus in the
amount of $25,000 in recognition of his efforts and achievements during the
interim period, which was in addition to the bonus paid to Mr. Berta under the
cash incentive plan adopted by the Compensation Committee after June 4, 1996, as
described above.
Submitted by the Compensation Committee of the Board of Directors.
Wayne Gaunce Carroll Knicely
C. Cecil Martin William B. Van Meter
Thomas R. Wallingford
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock against
the cumulative total return of the Nasdaq Market Index and a peer group index
for the period of five fiscal years commencing January 1, 1992 and ending
December 31, 1996. The peer group used in the peer group index, the MG Industry
Group 045-East South Central Banks, consists of Alabama National Bancorp,
AmSouth Bancorporation, Area Bancshares Corp, Banco Central Hispano,
BancorpSouth, Britton & Koontz Capital Corp, Cardinal Bancshares, CBT
Corporation, Colonial BancGroup, Community Federal Bancorp, Community Financial
Group, Community Trust Bancorp, Compass Bancshares, Deposit Guaranty
Corporation, Eufaula BancCorp, Farmers Capital Bank Corporation, First American
Corporation, First Federal Financial, First M & F Corporation, First Tennessee
National Corporation, Fort Thomas Financial Corporation, Gateway Bancorp,
Hancock Holding Company, Kentucky First Bancorp, Mid America Bancorp, National
Commerce Bancorporation, Peoples Banctrust Company, Peoples First Corporation,
Peoples Holding Company, Premier Financial Bancorp, Regions Financial
Corporation, S.Y. Bancorp, South Alabama Bancorp, Southern Banc Company,
Southfirst Bancshares, SouthTrust Corporation, TF Financial Corporation, Trans
Financial, Inc., Trustmark Corporation and Union Planters Corporation.
15
<PAGE>
The performance graph assumes that (i) $100 was invested on January 1, 1992,
and (ii) dividends were reinvested during each fiscal year presented.
PERFORMANCE GRAPH
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Trans Financial, Inc. $ 100 $131.17 $146.58 $119.87 $171.22 $228.30
MG Industry Group 045-East $ 100 $103.72 $109.63 $110.09 $147.93 $191.11
South Central Banks
NASDAQ Market Index $ 100 $100.98 $121.13 $127.17 $164.96 $204.98
</TABLE>
DIRECTOR COMPENSATION
Non-employee directors of the Company receive Common Stock in payment for
their services as directors, under the Company's Directors Stock Compensation
Plan. Under the Plan, the amount of Common Stock to be received by each director
is determined based on the amount of fees that would be received by the
director, divided by the average closing stock price for the Common Stock during
the year. Fees earned by the directors for purposes of the Plan are as follows:
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 Committee meeting attended. Only one fee is paid for joint
committee meetings. Salaried employees of the Company or of its subsidiaries who
also serve as directors receive no additional compensation for their services as
directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Directors Cohron, Ellis, Garvin, Gaunce, Hardcastle, Knicely, Martin,
Mastrapasqua, Van Meter and Wallingford served as members of the Compensation
Committee of the Board of Directors at some time during the Company's last
fiscal year ended December 31, 1996.
Mr. Hardcastle, a director of the Company and of TFBNA and a member of the
Audit Committee, is the owner of B.G. Paper Company, from which the Company
purchases paper and other supplies. The aggregate amount of payments made to
B.G. Paper Company during 1996 was $72,936.
Mr. Hardcastle is also part owner of Ashley Center, Inc., which leases a
branch office to TFBNA. The aggregate amount of payments made under the lease in
1996 was $17,110, and the aggregate amount of payments due under the lease for
the current term, which expires March 2002, is $86,976.
16
<PAGE>
The spouse of Mr. Martin, a director of the Company and of TFBNA and a
member of the Compensation Committee, is the owner of approximately fifteen
percent (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 1996 was $168,150, and the aggregate amount of
payments due under the lease for the current term, which expires May 31, 2008,
is $2,089,451.
Mr. Martin is the part owner of an insurance agency, Center of Insurance,
Inc., through which the Company and its Subsidiaries purchased insurance in
1996. Total insurance premiums paid to Mr. Martin's insurance agency during 1996
were approximately $407,612.
Mr. Mastrapasqua, a director of the Company and of TFBNA and a member of the
Executive Committee, is the owner of Mastrapasqua & Associates, Inc., an
investment advisory and research company which has entered into agreements with
TFBNA to (i) provide investment advisory services to the Company and to the
Trust Department of TFBNA, and (ii) to act as subadviser for Trans Adviser
Funds, Inc., an open-ended management company organized under the Investment
Company Act of 1940 for which TFBNA acts as investment adviser. The aggregate
amount of fees paid to Mastrapasqua & Associates, Inc. for both of these
relationships during 1996 was $675,407.
Mr. Mastrapasqua is also the owner of 814 Church Street L.L.C., a limited
liability company that owns the real estate and improvements at 814 Church
Street, Nashville, Tennessee, in which the Company leases space for a branch
office of TFBTn,NA, offices for the Trust Department of TFBNA, and offices for
TFIS. The aggregate amount of rent paid to 814 Church Street L.L.C. during 1996
was $375,365, and the aggregate amount of payments due to 814 Church Street,
L.L.C. under this lease for the current term, which expires October 31, 2010, is
$5,693,051. As part of this lease arrangement, 814 Church Street, L.L.C. assumed
all of the Company's liability for lease payments for the furniture and office
space in the Palmer Plaza office building in Nashville, Tennessee. This office
space was formerly leased by the Company, and a portion thereof was subleased by
the Company to Mastrapasqua & Associates, Inc. The Company's liability for these
lease payments which was assumed by 814 Church Street L.L.C. (net of the amount
which was payable to the Company by Mastrapasqua & Associates, Inc. under the
sublease described above), totaled $172,603 for the remainder of the lease term,
which expires February 28, 1997.
Mr. Van Meter, a director of the Company and of TFBNA and a member of the
Compensation Committee, is part owner of an insurance agency, Van Meter
Insurance Agency, through which the Company purchases health insurance. Total
insurance premiums paid for insurance purchased through Mr. Van Meter's
insurance agency during 1996 were $413,456.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
The Subsidiaries 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, partnerships or other entities with which they are connected as
directors, officers or shareholders. The banking transactions between the Banks
and the directors and executive officers 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 opinion of management of the
Company and the Banks, such banking transactions do not involve more than the
normal risk of collectibility or present other unfavorable features.
Other transactions between the directors and the Company or the Subsidiaries
are described under Compensation Committee Interlocks and Insider Participation.
17
<PAGE>
PROPOSAL II
APPROVAL OF TRANS FINANCIAL, INC.
1996 CONSOLIDATED STOCK OPTION PLAN
The Board of Directors of the Company has adopted, subject to the approval
of its shareholders, the Trans Financial, Inc. 1996 Consolidated Stock Option
Plan (the "1996 Plan"), effective December 10, 1996. The Company and its
shareholders have previously approved the 1988 Stock Option Plan, the 1990 Stock
Option Plan, the 1992 Stock Option Plan and the 1994 Stock Option Plan
(collectively, the "Prior Plans"), and the 1995 Executive Stock Option Plan (the
"Executive Plan") to promote the interests of the Company by providing an
incentive for officers and employees to remain in the employ of the Company and
to use their best efforts on its behalf, and further to aid the Company in
attracting, maintaining, and developing capable personnel of a caliber required
to ensure the continued success of the Company. The 1996 Plan has been adopted
by the Board of Directors to serve these same purposes, and the Board of
Directors believes that the accomplishment of these purposes will result in
increased shareholder value through profitable growth of the Company.
Specifically, the purposes of the 1996 Plan are (i) to consolidate the Prior
Plans into the new 1996 Plan for increased ease of administering future option
grants, (ii) to provide 200,000 additional shares to be optioned to officers and
employees to foster the purposes of the Company's option plans, as stated above,
and (iii) with respect to all grants under the 1996 Plan, to provide to all
officers and employees the advantages of certain terms regarding changes in
control of the Company that are contained in the Executive Plan. A copy of the
1996 Plan is attached to this Proxy Statement as Appendix A.
At the Annual Meeting, the shareholders of the Company will be asked to
approve the 1996 Plan. Approval of the 1996 Plan by the Company's shareholders
is required to provide to option recipients the favorable tax treatment afforded
to incentive stock options under Section 422 of the Internal Revenue Code (the
"Code"). Unless otherwise instructed, the persons named in the accompanying form
of proxy will vote shares represented by properly executed proxies in favor of
the 1996 Plan.
SUMMARY OF THE 1996 PLAN
The 1996 Plan will be administered, interpreted and applied by a committee
("Committee") consisting of not less than two directors. The Committee is
empowered to (a) select employees of the Company and its subsidiaries (including
executive officers and directors who are salaried employees) to whom options
will be granted under the 1996 Plan, (b) determine the number of shares subject
to each option, (c) fix the period or periods during which an option may be
exercised, (d) fix the prices at which shares subject to options may be
purchased, and (e) determine all other questions relating to the administration
of the 1996 Plan.
The number of shares of Common Stock that may be issued under the 1996 Plan
will be equal to the sum of (i) the number of shares available but not yet
optioned under the Prior Plans as of December 10, 1996 (a total of 264,340
shares), (ii) the number of shares that would have become available for grant
under the Prior Plans as a result of option forfeitures after December 10, 1996,
and (iii) 200,000 additional shares. The number, price and kind of shares
subject to the 1996 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 1996 Plan) in the nature or number of shares of Common Stock of the
Company 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
Company.
While the Committee is empowered to establish the price at which shares may
be purchased, the 1996 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
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bid quotation, whichever is available, for the Common Stock in the
over-the-counter market on the immediately preceding business day as reported by
the Nasdaq Stock Market. As of February 21, 1997, the fair market value of the
Common Stock for purposes of the 1996 Plan, as reported by the Nasdaq Stock
Market, was $24.75 per share.
The 1996 Plan fixes the maximum term of any option granted under the 1996
Plan at ten years from the date of the grant of the option. The 1996 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 Company, as defined in the
1996 Plan, all outstanding options may become immediately exercisable, as
described below. For this purpose, a Change in Control of the Company means:
(a) any share exchange or merger or consolidation to which the Company or a
Significant Subsidiary of the Company (meaning a subsidiary of the
Company that meets either of the following: [i]the assets of the
subsidiary exceed 40% of the total consolidated assets of the Company as
of the end of the most recently completed fiscal year; or [ii] the
subsidiary's income from continuing operations before income taxes and
extraordinary items exceeds 40% of the consolidated income of the Company
as of the most recently completed fiscal year) is a party, or any
purchase or other acquisition of substantially all of the business or
assets of the Company or any Significant Subsidiary, in any transaction
or series of transactions, by another corporation or entity, if there
will be a change of 25% or more in the proportionate ownership of
outstanding shares of voting stock of the Company as a result of the
transactions contemplated by such plan or agreement of exchange, merger
or consolidation or sale of assets;
(b) any person (as that term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder (the "Exchange Act")) is or becomes the beneficial owner (as
that term is used in Section 13(d) of the Exchange Act) of stock of the
Company entitled to cast more than 20% of the votes at the time entitled
to be cast generally for the election of directors;
(c) more than 50% of the members of the Board shall not be Continuing
Directors (meaning the directors of the Company [i] who were members of
the Board on December 10, 1996, or [ii] who subsequently became directors
of the Company by a vote of the majority of the Continuing Directors then
on the Board of Directors, or whose election or nomination for election
by the Company's shareholders was approved by a vote of a majority of the
Continuing Directors then on the Board of Directors); or
(d) the Board or the shareholders of the Company 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.
Upon the occurrence of a Change in Control, all options granted prior to the
Change in Control will become immediately exercisable, unless the Change in
Control happens within two years of the date of approval of the 1996 Plan by the
shareholders of the Company and is intended to be reflected as a pooling of
interests for purposes of accounting, in which event the Board of Directors may
revoke the provisions of the 1996 Plan regarding acceleration of the right to
exercise. In addition, if the Company engages in a transaction within two years
following adoption of this Plan by the shareholders of the Company, which
transaction does not constitute a Change in Control but which the Company
intends to reflect as a pooling of interests for accounting purposes, the Board
of Directors may, at any time prior to a Change in Control, revoke the
provisions regarding acceleration of the right to exercise upon a Change in
Control, with respect to Options granted as of that time. If the Board of
Directors exercises the right to revoke the provisions regarding acceleration of
the right to exercise, each option previously granted under the 1996 Plan will
become exercisable in accordance with the schedule provided for at the time of
granting of that option.
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Options granted pursuant to the 1996 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 an optionee ceases to be employed by the Company
due to the optionee's death or total and permanent disability, the period during
which the unexercised portion of his or her options may thereafter be exercised
is restricted to a period of not more than one year after the date of the
optionee's termination. The exercise period is extended to fifteen months if the
optionee retires upon or after attaining the age of 65. If an optionee is
dismissed from employment for cause, as determined by the Committee in its sole
discretion, his or her options terminate as of the date of such determination.
If an optionee's employment is terminated after a Change in Control, for reasons
other than retirement, death, disability or cause, the exercise period will
extend for six months after such termination. If any optionee ceases to be
employed by the Company or its subsidiaries for any other reasons, the exercise
period is limited to three months after the date of 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 option price for the Common Stock must be paid in full when the option
is exercised. Subject to such rules as the Committee may impose, the option
price may be paid in whole or in part in (a) cash, (b) whole shares of Common
Stock owned by the optionee and evidenced by negotiable certificates or by a
written attestation of ownership and consent to issue only the net shares (those
equal in value to the difference between the option exercise price and the
then-fair market value determined in accordance with the 1996 Plan), (c) by a
combination of such methods of payment, or (d) such other consideration as shall
constitute lawful consideration for the issuance of Common Stock and be approved
by the Committee (including without limitation assurance satisfactory to the
Committee from a broker registered under the Exchange Act of the delivery of the
proceeds of an imminent sale of the Common Stock to be issued pursuant to the
exercise of the option, such sale to be made at the direction of the optionee).
Employees of the Company and its subsidiaries (including executive officers
and directors who are salaried employees) are eligible to participate in the
1996 Plan if the Committee determines, from time to time in its sole discretion,
that they have contributed in the past or are likely to contribute materially in
the future to the successful performance of the Company. The Committee has not
yet determined all of the persons who may be eligible as key employees entitled
to options under the 1996 Plan, and, therefore, the amount of options to be
received under the 1996 Plan is not determinable at this time.
While the Board of Directors of the Company intends to continue the 1996
Plan in effect until the scheduled termination date on December 10, 2006, the
Board may modify, amend or terminate the 1996 Plan without a vote of the
shareholders.
GRANTS MADE SUBJECT TO SHAREHOLDER APPROVAL OF THE 1996 PLAN
Subject to approval of the 1996 Plan by the full Board of Directors and by
the shareholders, the Compensation Committee of the Company adopted the 1996
Plan and granted to employees of the Company options to purchase an aggregate of
185,400 shares of Common Stock at an exercise price of $20.125 on December 10,
1996. The full Board of Directors approved and adopted the 1996 Plan, and
approved of the grant of options thereunder, on December 16, 1996. The action of
the Compensation Committee, as approved by the Board of Directors, provided
that, if the 1996 Plan was not approved by the shareholders at the next Annual
Meeting, then all options granted on December 10, 1996 would be deemed granted
under the Prior Plans. Options under the 1996 Plan were granted to the Named
Executive Officers as follows: Mr. Berta, 15,000 shares; Mr. Bray, 2,000 shares;
Mr. Campbell, 7,500; Mr. Cole, 15,000 shares; and Mr. Szejner, 7,500 shares.
Options under the 1996 Plan granted to all current executive officers of the
Company totaled 87,500.
As of February 21, 1997, the fair market value of the Common Stock for
purposes of the 1996 Plan, as reported by the Nasdaq Stock Market, was $24.75.
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FEDERAL INCOME TAX CONSEQUENCES
It is intended that, to the extent possible, each option granted under the
terms of the 1996 Plan will constitute an "Incentive Stock Option" as
contemplated and defined in Section 422 of the Code. However, the Committee may
in its discretion grant options under the 1996 Plan that do not qualify as
Incentive Stock Options, and any options that are exercised by an Optionee more
than three months after the optionee's date of retirement will not qualify as
Incentive Stock Options. Generally, there will be no income tax consequences to
the optionee or to the Company when an option is granted.
When an option or portion thereof that qualifies as an Incentive Stock
Option (a "Qualified Option") is exercised, there will generally be no income
tax consequences to the optionee or the Company. If the optionee holds the
Common Stock acquired upon exercise of a Qualified Option for one year, upon
later disposition of that stock, long-term capital gain or loss, as the case may
be, will be recognized, equal to the difference between the amount realized upon
such disposition and the exercise price. If the optionee disposes of such stock
within one year of the exercise of the Qualified Option, the optionee will
recognize ordinary income in the amount of the difference between the fair
market value of the Common Stock on the date of exercise and the exercise price,
and the Company will be entitled to deduct an equal amount as compensation
expense. In addition, the optionee will recognize long-term or short-term
capital gain or loss, as the case may be, equal to the difference between the
amount realized upon such disposition and the basis for the stock, which will
include the amount previously recognized as ordinary income. The holding period
for capital gains purposes will commence on the day the optionee acquires the
shares pursuant to the Qualified Option.
When an option or portion thereof that does not qualify as an Incentive
Stock Option (an "Unqualified Option") is exercised, the optionee will recognize
ordinary income in amount of the difference between the fair market value of the
Common Stock on the date of exercise and the exercise price, and the Company
will be entitled to deduct an equal amount as compensation expense. Upon
disposition of the stock by the optionee, the optionee will recognize long-term
or short-term capital gain or loss, as the case may be, equal to the difference
between the amount realized upon such disposition and the basis for the stock,
which will include the amount previously recognized as ordinary income. The
holding period for capital gains purposes will commence on the day the optionee
acquires the shares pursuant to the Unqualified Option.
EFFECT ON POTENTIAL TAKEOVER ATTEMPTS INCLUDING POSSIBLE DISADVANTAGE
While the purpose of the 1996 Plan is to promote the interests of the
Company by attracting, maintaining and affording an incentive to key management
employees, certain provisions of the 1996 Plan may have an anti-takeover effect.
In the event of a Change in Control, the ability to exercise all outstanding
options may be accelerated, as described above. Additionally, 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 Company subject
to the 1996 Plan and outstanding options granted thereunder.
The effect of these provisions of the 1996 Plan may be to discourage an
unsolicited tender offer or other unsolicited takeover bid for the Company's
Common Stock. These provisions of the 1996 Plan may make the Company a less
attractive takeover target. Additionally, these provisions may encourage persons
desiring to take over or control the Company to initiate such action through
negotiations with the then incumbent Board of Directors and management instead
of through a direct offer to the shareholders. The provisions of the 1996 Plan
could make the accomplishment of a transaction more difficult or more costly
even if the transaction is favorable to the interests of the shareholders.
However, these provisions of the 1996 Plan may also encourage management of the
Company to focus on the merits and the consummation of the transaction, without
being distracted by any potential negative consequences of the transaction on
options granted to them under the 1996 Plan.
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VOTE REQUIRED
The adoption of this proposal will require the affirmative vote of a
majority of the shares of the Company's Common Stock represented in person or by
proxy at the Annual Meeting and entitled to vote on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
For the years ended December 31, 1994, 1995 and 1996, the accounting firm of
KPMG Peat Marwick LLP served as the Company'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 LLP to serve as the
Company's independent public accountants and auditors for the year ending
December 31, 1997.
A representative from the firm of KPMG Peat Marwick LLP 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 Company's proxy statement and proxy for the
annual meeting of the shareholders of the Company in 1998, any proposals which a
shareholder intends to present at that meeting must be received by the Secretary
of the Company not later than November 3, 1997.
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 Company 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.
The annual report of the Company filed with the Securities and Exchange
Commission on Form 10-K is available to shareholders, upon written request to
the Company's Secretary, at no cost to the shareholders.
By Order of the Board of Directors,
Jay B. Simmons
Senior Vice President
General Counsel and Secretary
Bowling Green, Kentucky
February 28, 1997
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APPENDIX A
TRANS FINANCIAL, INC.
1996 CONSOLIDATED STOCK OPTION PLAN
Trans Financial, Inc. (the "Company") hereby establishes this 1996
Consolidated Stock Option Plan (the "Plan") for the purpose of amending and
restating the Company's 1988 Stock Option Plan, 1990 Stock Option Plan, 1992
Stock Option Plan and 1994 Stock Option Plan (collectively the "Prior Plans"),
and adding additional shares to those available under the Prior Plans for
Options.
The Company adopts this Plan to promote the interests of the Company by
affording an incentive to certain key employees to remain in the employ of the
Company and its Subsidiaries and to use their best efforts on its behalf,
resulting in increased shareholder value through profitable growth; and further
to aid the Company and its Subsidiaries in attracting, maintaining, and
developing capable personnel of a caliber required to ensure the continued
success of the Company and its Subsidiaries, through the opportunity for stock
ownership offered under this Plan.
SECTION 1 -- DEFINITIONS
1.1 BOARD OF DIRECTORS. The term "Board of Directors" means the Board of
Directors of the Company.
1.2 BUSINESS COMBINATION. The term "Business Combination" means any
business combination between the Company or a Subsidiaries and any entity other
than the Company or a Subsidiary, that does not constitute a Change in Control
but which the Company intends to reflect as a pooling of interests for
accounting purposes.
1.3 CHANGE IN CONTROL. The term "Change in Control" means: [i] any share
exchange or merger or consolidation to which the Company or a Significant
Subsidiary of the Company is a party, or any purchase or other acquisition of
substantially all the business or assets of the Company or any Significant
Subsidiary in any transaction or series of transactions, by another corporation
or entity, if there will be a 25% change in the proportionate ownership of
outstanding shares of voting stock of the Company as a result of the
transactions contemplated by such plan or agreement of exchange, merger,
consolidation or sale of assets; [ii] any person (as that term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner
(as that term is used in Section 13(d) of the Exchange Act) of stock of the
Company entitled to cast more than 20% of the votes at the time entitled to be
cast generally for the election of directors; [iii] more than 50% of the members
of the Board shall not be Continuing Directors (which term, as used herein,
means the directors of the Company (x) who are members of the Board on December
10, 1996, or (y) who subsequently became directors of the Company by a vote of a
majority of the Continuing Directors then on the Board of Directors, or whose
election or nomination for election by the Company's stockholders was approved
by a vote of a majority of the Continuing Directors then on the Board of
Directors); or [iv] the Board or the shareholders of the Company 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.
1.4 CODE. The word "Code" means the Internal Revenue Code of 1986, as
amended.
1.5 COMMON STOCK. The term "Common Stock" means the Company's common stock
or the common stock or securities of a Successor that have been substituted
therefor pursuant to Section 8.
1.6 COMPANY. The word "Company" means Trans Financial, Inc., a Kentucky
corporation, with its principal place of business at 500 East Main Street,
Bowling Green, Kentucky 42101.
1.7 DISABILITY. The word "Disability" means, as defined by and to be
construed in accordance with Code Section 22(e)(3), any medically determinable
physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
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12 months, and which renders the Optionee unable to engage in any substantial
gainful activity. An Optionee shall not be considered to have a Disability
unless the Optionee furnishes proof of the existence thereof in such form and
manner, and at such time, as the Plan Committee may require.
1.8 EXCHANGE ACT. The term "Exchange Act" means the Securities Exchange
Act of 1934, and the rules and regulations promulgated thereunder as amended
from time to time.
1.9 INCENTIVE STOCK OPTION. The term "Incentive Stock Option" means an
option to purchase Common Stock granted under Section 4 of the Plan which is
designated as an Incentive Stock Option and is intended to meet the requirements
of Section 422 of the Code.
1.10 NONQUALIFIED STOCK OPTION. The term "Nonqualified Stock Option" means
an option to purchase Common Stock granted under Section 4 of the Plan which is
not intended to be an Incentive Stock Option.
1.11 OPTION. The term "Option" shall mean an Incentive Stock Option or a
Nonqualified Stock Option.
1.12 OPTION PRICE. The term "Option Price" means the price to be paid for
Common Stock upon the exercise of an Option granted under the Plan, in
accordance with Section 6.2.
1.13 OPTIONEE. The word "Optionee" means an individual to whom Options
have been granted under the Plan.
1.14 OPTIONEE REPRESENTATIVE. The term "Optionee Representative" means the
personal representative of the Optionee's estate, and after final settlement of
the Optionee's estate, the successor or successors entitled thereto by law.
1.15 PLAN. The word "Plan" means the Trans Financial, Inc. 1996
Consolidated Stock Option Plan, as set forth herein, and as amended from time to
time.
1.16 PLAN COMMITTEE. The term "Plan Committee" means the committee
appointed by the Board to administer the Plan, pursuant to Section 3.
1.17 SIGNIFICANT SUBSIDIARY. The term "Significant Subsidiary" means any
Subsidiary which meets either of the following: [i] the assets of the Subsidiary
exceed 40% of the total consolidated assets of the Company as of the end of the
most recently completed fiscal year; or [ii] the Subsidiary's income from
continuing operations before income taxes and extraordinary items exceeds 40% of
the consolidated income of the Company as of the most recently completed fiscal
year.
1.18 SUBSIDIARY. The word "Subsidiary" or "Subsidiaries" means, as defined
in Code Section 424(t), any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time of the granting
of an Option, under the Plan, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total
combined voting power of all classes of stock of one of the other corporations
in such chain.
1.19 SUCCESSOR. The word "Successor" means the entity surviving a merger
or consolidation with the Company, or the entity that acquires all or a
substantial portion of the Company's assets or outstanding capital stock
(whether by merger, purchase or otherwise).
SECTION 2 --SHARES SUBJECT TO PLAN
2.1 AUTHORIZED SHARES FROM THE PRIOR PLANS. Any Options that have been
issued and are currently outstanding shall remain issued and outstanding. The
Prior Plans, as they exist prior to adoption of this Plan, shall continue to
control all terms and conditions of options granted before December 10, 1996.
Options granted by the Plan Committee on or after December 10, 1996 shall be
governed by this Plan, as an amendment to and restatement of the Prior Plans.
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2.2 AUTHORIZED UNISSUED SHARES. Subject to the provisions of Section 8,
the shares to be delivered upon exercise of Options granted under the Plan shall
be made available, at the discretion of the Board, from the authorized unissued
shares of Common Stock.
2.3 AGGREGATE NUMBER OF SHARES. Subject to adjustments and substitutions
made pursuant to the provisions of Section 8, the aggregate number of shares
that may be issued upon exercise of all Options that may be granted under the
Plan shall be the aggregate number of shares provided for in the Prior Plans,
minus any shares of Common Stock actually issued upon exercise of an option
granted under the Prior Plans, plus an additional 200,000 shares of Common
Stock. Annex A sets forth the number of shares of Common Stock originally
available for option pursuant to the Prior Plans, the number of shares issued
prior to December 10, 1996 pursuant to the Prior Plans, the number of shares
subject to outstanding option agreements which may, if not exercised, be
available under this Plan pursuant to Section 2.4, and the net number of shares
available for Option as of December 10, 1996 if all Prior Plan Options are
exercised before they lapse.
2.4 SHARES SUBJECT TO EXPIRED OPTIONS. If any Option granted under the
Plan or the Prior Plans expires or terminates for any reason without having been
exercised in full in accordance with the terms of the respective plan, the
shares of Common Stock subject to, but not delivered under such Option shall
become available for any lawful corporate purpose, including for transfer
pursuant to other options granted to the same employee or other employees
without decreasing the aggregate number of shares of Common Stock that may be
granted under the Plan.
SECTION 3 --ADMINISTRATION
The Plan shall be administered by the Plan Committee, whose membership shall
be determined and reviewed from time to time by the Board. The Plan Committee
shall consist of not less than two members of the Board. 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
the Plan as it may deem proper and in the best interests of the Company. The
interpretation of any provisions of the Plan by the Plan Committee shall be
final, conclusive, and binding upon all persons, and the officers of the Company
shall place into effect and shall cause the Company to perform its obligations
under the Plan in accordance with the determinations of the Plan Committee in
administering the Plan. 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.
SECTION 4 --GRANT OF OPTIONS
Subject to the terms, provisions and conditions of the Plan, the Plan
Committee shall have exclusive jurisdiction: [i] to select officers of the
Company and its Subsidiaries to participate in the Plan; [ii] to determine the
number of shares covered by each Option, [iii] to determine the time or times
when Options will be granted; [iv] to determine whether the Option shall be an
Incentive Stock Option or a Nonqualified Stock Option; [v] to fix such other
provisions of any stock option agreement as it may deem necessary or desirable
consistent with the terms of the Plan; and [vi] to determine all other questions
relating to the administration of the Plan. Notwithstanding the foregoing, the
Plan Committee shall have authority to delegate to one or more "insider"
participants in the Plan the authority to determine the "non-insider"
individuals to whom Options may be granted, the number of shares of Common Stock
to be granted under such Options, and the price to be paid for the Common Stock
upon the exercise of each Option. For purposes of the preceding sentence,
"insider" shall mean and refer to an individual who is subject to the reporting
requirements of Section 16 of the Securities Exchange Act at the time of the
granting of an Option.
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SECTION 5 --ELIGIBILITY
The employees of the Company 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, or will in the future
materially contribute, to the successful performance of the Company or of 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 Company or any of its
Subsidiaries.
SECTION 6 -- TERMS AND CONDITIONS OF OPTIONS
Each Option granted under the Plan shall be evidenced by a stock option
agreement (the "Stock Option Agreement") signed by the Optionee and by a member
of the Plan Committee on behalf of the Company. The Stock Option Agreement shall
constitute a binding contract between the Company and the Optionee, and every
Optionee, upon acceptance of the Stock Option Agreement, shall be bound by the
terms and restrictions of the Plan and of the Stock Option Agreement. The Stock
Option Agreement shall be subject to the following express terms and conditions
and to such other terms and conditions that are not inconsistent with the Plan
as the Plan Committee may deem appropriate:
6.1 OPTION EXERCISE PERIOD. 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.
[a] The Option shall lapse at the earliest of the following times:
[1] ten years after the date of grant; or
[2] in the event of the termination of Optionee's employment with the
Company or any of its Subsidiaries:
[A] fifteen months after such termination of employment because
of the Optionee's retiring upon or after attaining the age of 65;
provided, however, that with respect to any Option not yet
exercisable at the date of termination, Optionee may exercise an
Option during such fifteen month period only to the extent the
Optionee would have the right to exercise such Option pursuant to
Section 6.1[b] on the date of exercise, and in no event shall
additional exercise rights accrue after the date that is one year
after the date of termination of employment;
[B] one year after such termination of employment because of
Optionee's death or Disability; provided, however, that the Optionee
may exercise an Option during such one year period only to the extent
the Optionee had the right to exercise such Option at the date of
such termination;
[C] immediately upon the determination by the Committee, in its
sole discretion, that the Optionee's employment was terminated for
cause;
[D] six months after such termination of employment, if such
termination of employment occurs after a Change in Control and is for
reasons other than retirement, death, Disability or cause as provided
in subsections [A] through [C] above; provided, however, that the
Optionee may exercise an Option during such six month period only to
the extent the Optionee had the right to exercise such Option at the
date of such termination; or
[E] three months after such termination of employment for any
reason other than the reasons set forth in subsections [A] through
[D] above; provided, however, that Optionee may exercise an Option
during such three month period [i] only to the extent the Optionee
had the
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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 Company or any of its
Subsidiares; or
[3] any earlier times set by the grant.
Termination of employment shall be deemed to occur on the earlier of: [i]
the date of termination of Optionee's employment; or [ii] the date on which
written notice of such termination is delivered by the Company to the
Optionee.
[b] Time First Exercisable. Except to the extent provided otherwise by
Section 6.5, in no event shall an Option be exercisable during the first two
years after the date of grant. Thereafter, Options may be exercised on or
after the anniversary of the date of grant in three equal annual
installments so that the full grant may be exercised not sooner than four
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.
6.2 OPTION PRICE. The Option Price per share of Common Stock shall be set
by the grant, but shall in no instance be less than the fair market value of the
Common Stock on the date of grant. The fair market value of Common Stock shall
be 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 National Market, on the business day
immediately preceding the date of grant. The Option Price shall be subject to
adjustments in accordance with the provisions of Section 8 of this Plan.
6.3 EXERCISE IN THE EVENT OF DEATH, DISABILITY, RETIREMENT OR CHANGE IN
CONTROL. Options may be exercised during an Optionee's life only by the
Optionee, unless the Optionee shall be incapacitated, and then by the
duly-authorized personal representative of the Optionee. The Optionee's estate
may exercise an Option after the Optionee's death. In each case, an Option may
only be exercised during the time periods specified in Section 6.1, and only for
the number of shares exercisable as provided in Section 6.1. If the Optionee
exercises Options after the termination of Optionee's employment [i] because of
Optionee's retiring upon or after attaining the age of 65, or [ii] that occurs
(for reasons other than death or Disability) after the occurrence of a Change in
Control, any Options exercised more than three months after the date of such
termination shall be treated as Nonqualifed Stock Options for tax purposes.
6.4 MAXIMUM AMOUNT. The aggregate fair market value (determined as of the
time the Option is granted pursuant to Section 6.2) of the Common Stock with
respect to which a Optionee's Incentive Stock Options are exercisable for the
first time during any calendar year (under this and all other stock option plans
of the Company and its Subsidiaries) shall not exceed $100,000. Options or
portions of Options that become exercisable for the first time during any
calendar year, for any reason, in excess of the $100,000 limit described herein,
shall be treated as Nonqualified Stock Options for tax purposes.
6.5 ACCELERATION. Notwithstanding the provisions of Section 6.1[b], if
there is a Change in Control, then the right to exercise all Options shall be
accelerated [i] immediately upon the Change in Control if it occurs more than
two years following the adoption of the Plan by the stockholders of the Company;
[ii] immediately upon the Change in Control if the transaction in which it
occurs is not intended to be reflected as a pooling of interests for accounting
purposes; or [iii] if the Change in Control occurs within two years following
adoption of the Plan by the stockholders of the Company and the transaction with
respect to which the Change in Control occurs is intended to be reflected as a
pooling of interests for accounting purposes, on earlier to occur of [x] the
date which is three months after the occurrence of the Change in Control or [y]
the date of consummation of such transaction, unless prior to that date the
Board of Directors
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finds that the acceleration of the right to exercise Options would prevent the
transaction being reflected as a pooling of interests for accounting purposes.
If the Company or a Subsidiary engages in a Business Combination within two
years following adoption of this Plan by the stockholders of the Company, and if
the Board of Directors finds that a future acceleration of the right to exercise
Options upon the occurrence of a Change in Control would prevent the Business
Combination being reflected as a pooling of interests for accounting purposes,
the Board of Directors may, at any time prior to a Change in Control, revoke the
provisions of this Section 6.5 regarding acceleration of the right to exercise
with respect to any Options granted prior the earlier of [i] the date of the
finding by the Board of Director, or [ii] two years following the adoption of
the Plan by the stockholders of the Company.
6.6 LEAVES OF ABSENCE. The Plan Committee may, in its discretion, treat
all or any portion of any period during which an Optionee is on military duty or
on an approved leave of absence from the Company or a Subsidiary as a period of
employment of such Optionee by the Company or Subsidiary for purposes of the
Plan. Notwithstanding the foregoing, if a leave of absence exceeds 90 days and
reemployment is not guaranteed by contract or statute, the Optionee's employment
by the Company or a Subsidiary for the purposes of the Plan shall be deemed to
have terminated on the 91st day of the leave.
6.7 MANNER OF EXERCISE. To exercise an Option, the Optionee shall deliver
to the Company: [i] seven days' prior written notice specifying the number of
shares as to which the Option is being exercised and, if determined by counsel
for the Company to be necessary, representing that such shares are being
acquired for investment purposes only and not for purpose of resale or
distribution; and [ii] payment by the Optionee, or a broker-dealer (as provided
in Section 6.8), for such shares at the Option Price for the number of shares
with respect to which the Option is exercised. On or before the expiration of
the seven day notice period, and provided that all conditions precedent
contained in the Plan are satisfied, the Company shall, without transfer or
issuance tax or other incidental expenses to Optionee, deliver to Optionee, at
the offices of the Company, a certificate or certificates for the Common Stock.
If Optionee fails to accept delivery of the Common Stock, the Optionee's rights
to exercise the applicable portion of the Option shall terminate.
6.8 PAYMENT FOR SHARES. Except as otherwise provided in this Section 6,
the Option Price for the Common Stock shall be paid in full when the Option is
exercised. Subject to such rules as the Plan Committee may impose, the Option
Price may be paid in whole or in part in [i] cash, [ii] whole shares of Common
Stock owned by the Optionee evidenced by negotiable certificates or by a written
attestation of ownership and consent to issue only the net shares (those equal
in value to the difference between the Option Price and the then-fair market
value determined in accordance with Section 6.2) upon exercise, [iii] by a
combination of such methods of payment, or [iv] such other consideration as
shall constitute lawful consideration for the issuance of Common Stock and be
approved by the Plan Committee (including without limitation, assurance
satisfactory to the Plan Committee from a broker registered under the Exchange
Act that the proceeds of an imminent sale of the Common Stock to be issued
pursuant to the exercise of such Option, such sale being made at the direction
of the Optionee, will be delivered to the Company in satisfaction 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 the fair market value
of the Common Stock, determined in accordance with Section 6.2, on the business
day preceding the day written notice of exercise is delivered to the Company.
6.9 MAXIMUM NUMBER OF SHARES. In no event shall an Optionee be granted
under the Plan during any one calendar year Options to purchase, in the
aggregate, in excess of 50,000 shares.
6.10 INVESTMENT REPRESENTATION. Each Stock Option Agreement may provide
that, upon demand by the Plan Committee for such a representation, the Optionee
or Optionee's Representative shall deliver to the Plan Committee at the time of
any exercise of an Option or portion thereof a written representation that the
shares to be acquired upon such exercise are to be acquired for investment and
not for resale or with a
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view to the distribution thereof. Upon such demand, delivery of such
representation before delivery of Common Stock issued upon exercise of an Option
and before expiration of the Option Period shall be a condition precedent to the
right of the Optionee or Optionee's Representative to purchase Common Stock.
6.11 TRANSFERABILITY OF OPTIONS. An Option granted under the Plan may not
be transferred by the Optionee otherwise than by will or the laws of descent and
distribution, and during the lifetime of the Optionee to whom granted, may be
exercised only by such Optionee.
6.12 NO RIGHTS AS SHAREHOLDER. No Optionee or Optionee's Representative
shall have any rights as a shareholder with respect to Common Stock subject to
Optionee's Option before the date of transfer to the Optionee of a certificate
or certificates for such shares.
6.13 NO RIGHTS TO CONTINUED EMPLOYMENT. The Plan and any Option granted
under the Plan shall not confer upon any Optionee any right with respect to
continuance of employment by the Company or any Subsidiary, nor shall it
interfere in any way with the right of the Company or any Subsidiary by which an
Optionee is employed to terminate Optionee's employment at any time.
SECTION 7 -- COMPLIANCE WITH OTHER LAWS AND REGULATION
The Plan, the grant and exercise of Options thereunder, and the obligation
of the Company to sell and deliver Common Stock under the Options, shall be
subject to all applicable federal and state laws, rules and regulations and to
all approvals by any government or regulatory agency as may be required. The
Company shall not be required to issue or deliver any certificates for Common
Stock before [i] the listing of the Common Stock on any stock exchange or
over-the-counter market on which the Common Stock may then be listed, and [ii]
the completion of any qualification of any governmental body which the Company
shall, in its sole discretion, determine to be necessary or advisable.
SECTION 8 -- CAPITAL ADJUSTMENTS AFFECTING STOCK, MERGERS AND CONSOLIDATIONS
8.1 CAPITAL ADJUSTMENTS. In the event of capital adjustment after the
effective date of the Plan in the Common Stock of the Company by reason of any
reorganization, recapitalization, stock split, stock dividend, combination or
exchange 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 Company, 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 an Option shall be adjusted so that there will be no
change in the aggregate purchase price payable upon exercise of such Option.
Such determinations by the Plan Committee shall be conclusive.
8.2 CHANGE IN CONTROL. Without limiting the generality of the foregoing,
if there is a Change in Control and, as a result of the transactions
contemplated by the Change in Control, a Successor will acquire all or a
substantial portion of the assets or outstanding capital stock of the Company,
then the kind of 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 Company, 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 Company 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 Company under such Option.
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8.3 NO EFFECT ON COMPANY'S RIGHTS. The granting of an Option pursuant to
the Plan shall not affect in any way the right and power of the Company to make
adjustments, reorganizations, reclassifications, or changes of its capital or
business structure or to merge, consolidate, dissolve, liquidate, sell or
transfer all or any part of its business or assets; provided, however, that the
Company 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 Company unless and until the person or persons
acquiring or succeeding to assets or capital stock of the Company or its
subsidiaries as a result of such transaction or transactions agrees to be bound
by the terms of the Plan so far as it pertains to Options therefore granted and
agrees to assume and perform the obligations of the Company and its Successor
hereunder.
SECTION 9 -- TAX WITHHOLDING
Upon the exercise of an Option granted by the Plan, the Company shall have
the right to withhold from any payment due to Optionee or Optionee's
Representative, or to require Optionee or Optionee's Representative to remit to
the Company, an amount sufficient to satisfy all federal, state and local
withholding tax requirements; alternatively, the Company shall have the right to
retain Common Stock otherwise payable to the Optionee or Optionee's
Representative pursuant to exercise of the Option in an amount sufficient to
satisfy such withholding requirements before delivery to the Optionee or
Optionee's Representative any certificate(s) for shares of Common Stock.
SECTION 10 -- AMENDMENT, SUSPENSION. OR TERMINATION
The Board shall have the right, at any time, to amend, suspend or terminate
the Plan in any respect that it may deem to be in the best interests of the
Company, except that, without approval by shareholders of the Company holding
not less than a majority of the votes represented and entitled to be voted at a
duly held meeting of the Company's shareholders, no amendment shall be made if
shareholder approval is necessary to continue to qualify the Plan under the
Securities and Exchange Commission Rule 16b-3 or to maintain the Plan as one
under which Incentive Stock Options may be granted.
In granting an Option, the Board may establish any conditions that it
determines are consistent with the purposes and provisions of the Plan,
including, without limitation, a condition that the granting of an Option is
subject to the surrender for cancellation of any or all outstanding Options held
by the Optionee. Any new Option made under this Section 10 may contain such
terms and conditions as the Board may determine, including an exercise price
that is lower than that of any surrendered Option.
Any amendment or alteration of the Plan may be limited to, or may exclude
from its effect, a particular class of Optionees. No amendment of the Plan may,
without the consent of the Optionee, make any changes in any outstanding Option
theretofore granted under the Plan which would adversely affect the rights of
such Optionee.
SECTION 11 -- EFFECTIVE DATE, TERM AND APPROVAL
The effective date of the Plan shall be December 10, 1996 with respect to
the Common Stock reserved for Options under the Prior Plans (which plans allowed
amendment by the Plan Committee as was resolved with respect to these changes on
that date), and on December 16, 1996 with respect to the additional shares made
available pursuant to Section 2.3. The Plan was adopted by the Compensation
Committee of the Board on December 10, 1996 and by the Board on December 16,
1996, subject to approval by stockholders of the Company holding not less than a
majority of the shares represented and entitled to vote at its 1997 annual
meeting. The Plan shall terminate on December 10, 2006, and no Options may be
granted under the Plan after such time, but any Option granted prior thereto may
be exercised in accordance with its terms.
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SECTION 12 -- GOVERNING, LAW; SEVERABILITY
The Plan shall be governed by the laws of the Commonwealth of Kentucky. The
invalidity or unenforceablity of any provision of the Plan or any Option granted
pursuant to the Plan shall not affect the validity and enforceability of the
remaining provisions of the Plan and the Options granted hereunder, and such
invalid or unenforceable provision shall be stricken to the extent necessary to
preserve the validity and enforceability of the Plan and the Options granted
hereunder.
Dated as of December 16, 1996, but effective as of the dates set forth
above.
TRANS FINANCIAL, INC.
By: __________________________________
Title: _______________________________
- --------------------------------------------------------------------------------
ANNEX A
STOCK AVAILABLE FROM PRIOR PLANS
<TABLE>
<CAPTION>
NET NO. OF
AGGREGATE NO. SHARES
OF SHARES NO. OF SHARES AVAILABLE FOR
ORIGINALLY SUBJECT TO OPTION AS OF
AVAILABLE FOR NO. OF SHARES OPTION DECEMBER 10,
PRIOR PLAN OPTIONS ISSUED AGREEMENTS 1996
- ---------------------------- ------------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C>
1988........................ 93,333 30,707 55,749 6,877
1990........................ 88,888 21,128 54,790 12,970
1992........................ 250,666 134 138,714 111,818
1994........................ 425,000 0 292,325 132,675
</TABLE>
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<PAGE>
TRANS FINANCIAL, INC.
BOWLING GREEN, KENTUCKY
ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder in Trans Financial, Inc., Bowling Green,
Kentucky (the "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 Bowling Green-Warren County Convention Center,
1021 Wilkinson Trace, Bowling Green, Kentucky, on Monday, April 28, 1997, 3:00
p.m. Central 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 and 2.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS
FOR all nominees listed below / / WITHHOLD AUTHORITY / /
(except as marked to the contrary, to vote for all nominees listed
see Instruction below) below
Vince A. Berta, C.C. Howard Gray, Carroll Knicely and C. Cecil Martin (to
be elected as Class III directors 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, INC. 1996 CONSOLIDATED STOCK
OPTION PLAN.
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
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, AND FOR PROPOSAL 2.
<PAGE>
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 _________________________ , 1997
______________________________________
______________________________________
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS AND RETURN THIS PROXY
IMMEDIATELY IN THE ENCLOSED STAMPED
SELF-ADDRESSED ENVELOPE. IF ACTING AS
EXECUTOR, ADMINISTRATOR, TRUSTEE OR
GUARDIAN, YOU SHOULD SO INDICATE WHEN
SIGNING. IF THE SIGNER IS A
CORPORATION, PLEASE SIGN THE FULL
CORPORATE NAME, BY DULY AUTHORIZED
OFFICER. IF SHARES ARE HELD JOINTLY,
EACH STOCKHOLDER NAMED SHOULD SIGN.
