As filed with the Securities and Exchange Commission on March 4, 1999.
Registration No. 333-_______________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PHS Bancorp, Inc.
(Exact name of Registrant as specified in its charter)
Pennsylvania 23-2744266
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
744 Shenango Road
Beaver Falls, Pennsylvania 15010
----------------------------------------
(Address of principal executive offices)
PHS Bancorp, Inc. 1998 Stock Option Plan
----------------------------------------
(Full Title of the Plan)
Richard Fisch, Esq.
Evan M. Seigel, Esq.
Malizia, Spidi, Sloane & Fisch, P.C.
1301 K Street, N.W.
Suite 700 East
Washington, D.C. 20005
(202) 434-4660
---------------------------------------------------------
(Name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================
Title of Proposed Proposed Maximum Amount of
Securities to Amount to be Maximum Offering Aggregate Offering Registration
be Registered Registered(1) Price Per Share Price (2) Fee (2)
- ------------- ------------- --------------- ---------- --------
<S> <C> <C> <C> <C>
Common Stock
$0.10 par value
per share 124,200 shares $11.8125 $1,467,113 $407.86
=================================================================================================
</TABLE>
(1) The maximum number of shares of common stock issuable upon awards to be
granted under the PHS Bancorp, Inc. 1998 Stock Option Plan (the "Plan")
consists of 124,200 shares which are being registered under this
Registration Statement and for which a registration fee is being paid.
Additionally, an indeterminate number of additional shares which may be
offered and issued to prevent dilution resulting from stock splits,
dividends or similar transactions.
(2) Under Rule 457(h) of the 1933 Act, the registration fee may be
calculated, inter alia, based upon the price at which the stock options
may be exercised. An aggregate of 124,200 shares are being registered
hereby, of which 124,200 are under option at a weighted average
exercise price of $11.8125 per share ($1,467,113 in the aggregate).
This Registration Statement shall become effective automatically upon
the date of filing, in accordance with Section 8(a) of the Securities Act of
1933 ("1933 Act") and Rule 462 of the 1933 Act.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information. *
Item 2. Registrant Information and Employee Plan Annual Information. *
*This Registration Statement relates to the registration of 124,200
shares of PHS Bancorp, Inc. (the "Company" or "Registrant") common stock, $.10
par value per share (the "Common Stock") issuable to employees, officers and
directors of the Registrant or its subsidiaries as compensation for services in
accordance with the PHS Bancorp, Inc. 1998 Stock Option Plan (the "Plan").
Documents containing the information required by Part I of this Registration
Statement will be sent or given to participants in the Plan as specified by Rule
428(b)(1). Such documents are not filed with the Securities and Exchange
Commission (the "Commission") either as part of this Registration Statement or
as prospectuses or prospectus supplements pursuant to Rule 424, in reliance on
Rule 428.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
The Company became subject to the informational requirements of the
Securities Exchange Act of 1934 (the "1934 Act") on November 10, 1998 and,
accordingly, files periodic reports and other information with the Commission.
Reports, proxy statements and other information concerning the Company filed
with the Commission may be inspected and copies may be obtained (at prescribed
rates) at the Commission's Public Reference Section, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549.
The following documents filed by the Company are incorporated in this
Registration Statement by reference:
(a) The Company's Form 8-K filed with the Commission on November 10,
1998;
(b) The Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1998, as filed with the Commission.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14, and 15(d) of the 1934 Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents.
Item 4. Description of Securities.
Not Applicable
Item 5. Interests of Named Experts and Counsel.
Not Applicable
<PAGE>
Item 6. Indemnification of Directors and Officers.
Sections 1741 through 1747 of the Pennsylvania Business Corporation Law
provide that an officer, director, employee or agent may be indemnified by the
Company from and against expenses, judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with threatened, pending
or contemplated proceedings (other than an action by or in the right of the
Company) if such person acted in good faith and in a manner that such person
reasonably believes to be in, or not opposed to, the best interests of the
Company.
Provisions regarding indemnification of directors, officers, employees
or agents of the Company are contained in Article 10 of the Company's Articles
of Incorporation.
Under a directors' and officers' liability insurance policy, directors
and officers of the Company are insured against certain liabilities, including
certain liabilities under the Securities Act of 1933, as amended.
The Registrant believes that these provisions assist the Registrant in,
among other things, attracting and retaining qualified persons to serve the
Registrant and its subsidiary. However, a result of such provisions could be to
increase the expenses of the Registrant and effectively reduce the ability of
stockholders to sue on behalf of the Registrant because certain suits could be
barred or amounts that might otherwise be obtained on behalf of the Registrant
could be required to be repaid by the Registrant to an indemnified party.
The Company may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee, or agent of the Company or is or
was serving at the request of the Company as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise against any liability asserted against the person and incurred by the
person in any such capacity or arising out of his status as such, whether or not
the Company would have the power to indemnify the person against such liability
under the provisions of the Certificate of Incorporation.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("1933 Act") may be permitted to directors, officers, or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act and is
therefore unenforceable.
Item 7. Exemption from Registration Claimed.
Not Applicable
Item 8. Exhibits.
For a list of all exhibits filed or included as part of this
Registration Statement, see "Index to Exhibits" at the end of this Registration
Statement.
<PAGE>
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement;
(i) To include any prospectus required by Section 10(a)(3) of
the 1933 Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement;
(iii)To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided however, that paragraphs (a)(1)(i) and (a)(1)(ii) do no apply if the
Registration Statement is on Form S-3, Form S-8, and the information required to
be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or 15(d) of the
1934 Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under
the 1933 Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) If the Registrant is a foreign private issuer, to file a
post-effective amendment to the Registration Statement to include any financial
statements required by Rule 3-19 of Regulation S-X at the start of any delayed
offering or throughout a continuous offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act each filing of the Registrant's
annual report pursuant to section 13(a) or section 15(d) of the 1934 Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the 1934 Act) that is incorporated by reference in
the Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the 1934 Act; and, where interim
financial information required to be presented by Article 3 of Regulation S-X is
not set forth in the prospectus, to deliver, or cause to be delivered to each
person to whom the prospectus is sent or given, the latest quarterly report that
is specifically incorporated by reference in the prospectus to provide such
interim financial information.
<PAGE>
(d) Insofar as indemnification for liabilities arising under the 1933
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling person of the Registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Beaver Falls in the Commonwealth of Pennsylvania, as
of March 4, 1999.
PHS BANCORP, INC.
By: /s/ James P. Wetzel, Jr.
------------------------------------
James P. Wetzel, Jr.
President and Chief Executive Officer
(Duly Authorized Representative)
POWER OF ATTORNEY
We, the undersigned directors and officers of PHS Bancorp, Inc., do
hereby severally constitute and appoint James P. Wetzel, Jr. as our true and
lawful attorney and agent, to do any and all things and acts in our names in the
capacities indicated below and to execute any and all instruments for us and in
our names in the capacities indicated below which said James P. Wetzel, Jr. may
deem necessary or advisable to enable PHS Bancorp, Inc., to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission, in connection with the Registration
Statement on Form S-8 relating to the offering of the Company's Common Stock,
including specifically, but not limited to, power and authority to sign, for any
of us in our names in the capacities indicated below, the Registration Statement
and any and all amendments (including post-effective amendments) thereto; and we
hereby ratify and confirm all that said James P. Wetzel, Jr. shall do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated as of the date indicated.
By /s/ James P. Wetzel, Jr. By: /s/ Richard E. Canonge
------------------------------------ -------------------------------
James P. Wetzel, Jr. Richard E. Canonge
President, Chief Executive Officer Vice President and Treasurer
and Director (Principal Financial Officer)
(Principal Executive Officer)
Date: March 4, 1999
Date: March 4, 1999
By /s/ Douglas K. Brooks By: /s/ Emlyn Charles
------------------------------------ -------------------------------
Douglas K. Brooks Emlyn Charles
Director Director
Date: March 4, 1999 Date: March 4, 1999
<PAGE>
By: /s/ John C. Kelly By: /s/ Earl F. Klear
----------------------------------- -------------------------------
John C. Kelly Earl F. Klear
Director Director
Date: March 4, 1999 Date: March 4, 1999
By: /s/ Howard B. Lenox By: /s/ John M. Rowse
----------------------------------- ------------------------------
Howard B. Lenox John M. Rowse
Director Director
Date: March 4, 1999 Date: March 4, 1999
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
4.1 PHS Bancorp, Inc.
1998 Stock Option Plan
4.2 Form of Stock Option Agreement to be entered into
with respect to Incentive Stock Options
4.3 Form of Stock Option Agreement to be entered into
with respect to Non-Incentive Stock Options
4.4 Form of Stock Award Tax Notice
5.1 Opinion of Malizia, Spidi, Sloane & Fisch, P.C. as to
the validity of the Common Stock being registered
23.1 Consent of Malizia, Spidi, Sloane & Fisch, P.C.
(appears in their opinion filed as Exhibit 5.1)
24 Reference is made to the Signatures section of this
Registration Statement for the Power of Attorney
contained therein
EXHIBIT 4.1
PHS BANCORP, INC.
1998 STOCK OPTION PLAN
<PAGE>
PHS BANCORP, INC.
1998 STOCK OPTION PLAN
1. Purpose of the Plan. The Plan which was formerly known as the Peoples
Home Savings Bank 1998 Stock Option Plan shall be known as the PHS Bancorp, Inc.
1998 Stock Option Plan (the "Plan"). The purpose of the Plan is to attract and
retain qualified personnel for positions of substantial responsibility and to
provide additional incentive to officers, directors, key employees and other
persons providing services to the Company, the Bank or any present or future
Parent or Subsidiary of the Company, the Bank to promote the success of the
business. The Plan is intended to provide for the grant of "Incentive Stock
Options," within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") and Non-Incentive Stock Options, options that do
not so qualify. The provisions of the Plan relating to Incentive Stock Options
shall be interpreted to conform to the requirements of Section 422 of the Code.
2. Definitions. The following words and phrases when used in this Plan with
an initial capital letter, unless the context clearly indicates otherwise, shall
have the meaning as set forth below. Wherever appropriate, the masculine pronoun
shall include the feminine pronoun and the singular shall include the plural.
(a) "Award" means the grant by the Committee of an Incentive Stock Option
or a Non-Incentive Stock Option, or any combination thereof, as provided in the
Plan.
(b) "Board" shall mean the Board of Directors of the Bank for the period of
time prior to November 9, 1998 and shall mean the Board of Directors of the
Company for the period of time on or after November 9, 1998.
(c) "Change in Control" shall mean: (i) the sale of all, or a material
portion, of the assets of the Company or the Bank; (ii) the merger or
recapitalization of the Company whereby the Company is not the surviving entity;
(iii) a change in control of the Company, as otherwise defined or determined by
the Pennsylvania Department of Banking ("Department") or regulations promulgated
by it; or (iv) the acquisition, directly or indirectly, of the beneficial
ownership (within the meaning of that term as it is used in Section 13(d) of the
Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder) of twenty-five percent (25%) or more of the outstanding voting
securities of the Bank by any person, trust, entity or group other than by PHS
Bancorp, M.H.C., the mutual holding company of the Bank. This limitation shall
not apply to the purchase of shares by underwriters in connection with a public
offering of Company stock, or the purchase of shares of up to 25% of any class
of securities of the Company by a tax-qualified employee stock benefit plan. The
term "person" refers to an individual or a corporation, partnership, trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein. The
decision of the Committee as to whether a Change in Control has occurred shall
be conclusive and binding. A Change in Control shall not include a transaction
whereby a Parent is formed which shall be the owner of 100% of the stock of the
Bank.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and regulations promulgated thereunder.
<PAGE>
(e) "Committee" shall mean the Board or the Stock Option
Committee appointed by the Board in accordance with Section 5(a) of the Plan.
The members of the Committee as of November 9, 1998 shall continue unless
otherwise amended by the Board after November 9, 1998.
(f) "Common Stock" shall mean the common stock of the Company,
or any successor or parent corporation thereto.
(g) "Company" shall mean PHS Bancorp, Inc.
(h) "Continuous Employment" or "Continuous Status as an
Employee" shall mean the absence of any interruption or termination of
employment with the Company or any present or future Parent or Subsidiary of the
Company. Employment shall not be considered interrupted in the case of sick
leave, military leave or any other leave of absence approved by the Company or
in the case of transfers between payroll locations, of the Company or between
the Bank, its Parent, its Subsidiaries or a successor.
(i) "Director" shall mean a member of the Board of the
Company, or any successor or Parent thereto.
(j) "Director Emeritus" shall mean a person serving as a
director emeritus, advisory director, consulting director, or other similar
position as may be appointed by the Board of Directors of the Bank or the
Company from time to time.
(k) "Disability" means (a) with respect to Incentive Stock
Options, the "permanent and total disability" of the Employee as such term is
defined at Section 22(e)(3) of the Code; and (b) with respect to Non-Incentive
Stock Options, any physical or mental impairment which renders the Participant
incapable of continuing in the employment or service of the Company, the Bank or
any present or future Parent or Subsidiary of the Company in his then current
capacity as determined by the Committee.
(l) "Dividend Equivalent Rights" shall mean the rights to
receive a cash payment in accordance with Section 12 of the Plan.
(m) "Effective Date" shall mean the date specified in Section
15 hereof.
(n) "Employee" shall mean any person employed by the Company,
the Bank, or any present or future Parent or Subsidiary of the Company.
(o) "Fair Market Value" shall mean: (i) if the Common Stock is
traded otherwise than on a national securities exchange, then the Fair Market
Value per Share shall be equal to the mean between the last bid and ask price of
such Common Stock on such date or, if there is no bid and ask price on said
date, then on the immediately prior business day on which there was a bid and
ask price. If no such bid and ask price is available, then the Fair Market Value
shall be determined by the Committee in good faith; or (ii) if the Common Stock
is listed on a national securities exchange, then the Fair Market Value per
Share shall be not less than the average of the highest and lowest selling price
of such Common Stock on such exchange on such date, or if there were no sales on
said date, then the Fair Market Value shall be not less than the mean between
the last bid and ask price on such date.
2
<PAGE>
(p) "Incentive Stock Option" or "ISO" shall mean an option to
purchase Shares granted by the Committee pursuant to Section 8 hereof which is
subject to the limitations and restrictions of Section 8 hereof and is intended
to qualify as an incentive stock option under Section 422 of the Code.
(q) "Non-Incentive Stock Option" or "Non-ISO" shall mean an
option to purchase Shares granted pursuant to Section 9 hereof, which option is
not intended to qualify under Section 422 of the Code.
(r) "Option" shall mean an Incentive Stock Option or
Non-Incentive Stock Option granted pursuant to this Plan providing the holder of
such Option with the right to purchase Common Stock.
(s) "Optioned Stock" shall mean stock subject to an Option
granted pursuant to the Plan.
(t) "Optionee" shall mean any person who receives an Option or
Award pursuant to the Plan.
(u) "Parent" shall mean any present or future corporation
which would be a "parent corporation" as defined in Sections 424(e) and (g) of
the Code.
(v) "Participant" means any director, officer or key employee
of the Company, the Bank, or any Parent or Subsidiary of the Company or any
other person providing a service to the Company who is selected by the Committee
to receive an Award, or who by the express terms of the Plan is granted an
Award.
(w) "Plan" shall mean the PHS Bancorp, Inc. 1998 Stock Option
Plan.
(x) "Retirement" shall mean termination of service in all
capacities as an Employee, Director and Director Emeritus following attainment
of not less than age 55 and completion of not less than ten years of Service to
the Company. Service to the Company rendered prior to the Effective Date shall
be recognized in determining eligibility to meet the requirements of Retirement
under the Plan.
(y) "Savings Bank" or "Bank" shall mean Peoples Home Savings
Bank, or any successor corporation thereto.
(z) "Share" shall mean one share of the Common Stock.
(aa) "Subsidiary" shall mean any present or future corporation
which constitutes a "subsidiary corporation" as defined in Sections 424(f) and
(g) of the Code.
3. Shares Subject to the Plan. Except as otherwise required by the
provisions of Section 13 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed 124,200 Shares.
Such Shares may either be from authorized but unissued shares or shares
purchased in the market for Plan purposes. If an Award shall expire, become
unexercisable, or be forfeited for any reason prior to its exercise, new Awards
may be granted under the Plan with respect to the number of Shares as to which
such expiration has occurred.
3
<PAGE>
4. Six Month Holding Period.
Subject to vesting requirements, if applicable, except in the
event of death or Disability of the Optionee or a Change in Control of the
Company, a minimum of six months must elapse between the date of the grant of an
Option and the date of the sale of the Common Stock received through the
exercise of such Option.
5. Administration of the Plan.
(a) Composition of the Committee. The Plan shall be
administered by the Board of Directors of the Company or a Committee which shall
consist of not less than two Directors of the Company appointed by the Board and
serving at the pleasure of the Board. All persons designated as members of the
Committee shall meet the requirements of a "Non-Employee Director" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, as
found at 17 CFR ss.240.16b-3.
(b) Powers of the Committee. The Committee is authorized (but
only to the extent not contrary to the express provisions of the Plan or to
resolutions adopted by the Board) to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine the form and
content of Awards to be issued under the Plan and to make other determinations
necessary or advisable for the administration of the Plan, and shall have and
may exercise such other power and authority as may be delegated to it by the
Board from time to time. A majority of the entire Committee shall constitute a
quorum and the action of a majority of the members present at any meeting at
which a quorum is present shall be deemed the action of the Committee. In no
event may the Committee revoke outstanding Awards without the consent of the
Participant.
The President of the Company and such other officers as shall
be designated by the Committee are hereby authorized to execute written
agreements evidencing Awards on behalf of the Company and to cause them to be
delivered to the Participants. Such agreements shall set forth the Option
exercise price, the number of shares of Common Stock subject to such Option, the
expiration date of such Options, and such other terms and restrictions
applicable to such Award as are determined in accordance with the Plan or the
actions of the Committee.
(c) Effect of Committee's Decision. All decisions,
determinations and interpretations of the Committee shall be final and
conclusive on all persons affected thereby.
6. Eligibility for Awards and Limitations.
(a) The Committee shall from time to time determine the officers,
Directors, key employees and other persons who shall be granted Awards under the
Plan, the number of Awards to be granted to each such persons, and whether
Awards granted to each such Participant under the Plan shall be Incentive and/or
Non-Incentive Stock Options. In selecting Participants and in determining the
number of Shares of Common Stock to be granted to each such Participant, the
Committee may consider the nature of the prior and anticipated future services
rendered by each such Participant, each such Participant's current and potential
contribution to the Company and such other factors as the Committee may, in its
sole discretion, deem relevant. Participants who have been granted an Award may,
if otherwise eligible, be granted additional Awards.
4
<PAGE>
(b) The aggregate Fair Market Value (determined as of the date the Option
is granted) of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by each Employee during any calendar year (under
all Incentive Stock Option plans, as defined in Section 422 of the Code, of the
Company or any present or future Parent or Subsidiary of the Company) shall not
exceed $100,000. Notwithstanding the prior provisions of this Section 6, the
Committee may grant Options in excess of the foregoing limitations, provided
said Options shall be clearly and specifically designated as not being Incentive
Stock Options.
(c) In no event shall Shares subject to Options granted to non-employee
Directors in the aggregate under this Plan exceed more than 30% of the total
number of Shares authorized for delivery under this Plan pursuant to Section 3
herein or more than 5% to any individual non-employee Director. In no event
shall Shares subject to Options granted to any Employee exceed more than 25% of
the total number of Shares authorized for delivery under the Plan.
7. Term of the Plan. The Plan shall continue in effect for a term of
ten (10) years from the Effective Date, unless sooner terminated pursuant to
Section 18 hereof. No Option shall be granted under the Plan after ten (10)
years from the Effective Date.
8. Terms and Conditions of Incentive Stock Options. Incentive Stock
Options may be granted only to Participants who are Employees. Each Incentive
Stock Option granted pursuant to the Plan shall be evidenced by an instrument in
such form as the Committee shall from time to time approve. Each Incentive Stock
Option granted pursuant to the Plan shall comply with, and be subject to, the
following terms and conditions:
(a) Option Price.
(i) The price per Share at which each Incentive Stock Option granted by the
Committee under the Plan may be exercised shall not, as to any particular
Incentive Stock Option, be less than the Fair Market Value of the Common Stock
on the date that such Incentive Stock Option is granted.
(ii) In the case of an Employee who owns Common Stock representing more
than ten percent (10%) of the outstanding Common Stock at the time the Incentive
Stock Option is granted, the Incentive Stock Option exercise price shall not be
less than one hundred and ten percent (110%) of the Fair Market Value of the
Common Stock on the date that the Incentive Stock Option is granted.
(b) Payment. Full payment for each Share of Common Stock
purchased upon the exercise of any Incentive Stock Option granted under the Plan
shall be made at the time of exercise of each such Incentive Stock Option and
shall be paid in cash (in United States Dollars), Common Stock or a combination
of cash and Common Stock. Common Stock utilized in full or partial payment of
the exercise price shall be valued at the Fair Market Value at the date of
exercise. The Company shall accept full or partial payment in Common Stock only
to the extent permitted by applicable law. No Shares of Common Stock shall be
issued until full payment has been received by the Company, and no Optionee
shall have any of the rights of a stockholder of the Company until Shares of
Common Stock are issued to the Optionee.
(c) Term of Incentive Stock Option. The term of exercisability
of each Incentive Stock Option granted pursuant to the Plan shall be not more
than ten (10) years from the date each such
5
<PAGE>
Incentive Stock Option is granted, provided that in the case of an Employee who
owns stock representing more than ten percent (10%) of the Common Stock
outstanding at the time the Incentive Stock Option is granted, the term of
exercisability of the Incentive Stock Option shall not exceed five (5) years.
(d) Exercise Generally. Except as otherwise provided in
Section 10 hereof, no Incentive Stock Option may be exercised unless the
Optionee shall have been in the employ of the Company, the Bank, or any present
or future Parent or Subsidiary of the Company at all times during the period
beginning with the date of grant of any such Incentive Stock Option and ending
on the date three (3) months prior to the date of exercise of any such Incentive
Stock Option. The Committee may impose additional conditions upon the right of
an Optionee to exercise any Incentive Stock Option granted hereunder which are
not inconsistent with the terms of the Plan or the requirements for
qualification as an Incentive Stock Option. Except as otherwise provided by the
terms of the Plan or by action of the Committee at the time of the grant of the
Options, the Options will be first exercisable at the rate of one-third on the
date of grant and one-third annually thereafter during such periods of service
as an Employee, Director or Director Emeritus.
(e) Cashless Exercise. Subject to vesting requirements, if
applicable, an Optionee who has held an Incentive Stock Option for at least six
months may engage in the "cashless exercise" of the Option. Upon a cashless
exercise, an Optionee shall give the Company written notice of the exercise of
the Option together with an order to a registered broker-dealer or equivalent
third party, to sell part or all of the Optioned Stock and to deliver enough of
the proceeds to the Company to pay the Option exercise price and any applicable
withholding taxes. If the Optionee does not sell the Optioned Stock through a
registered broker-dealer or equivalent third party, the Optionee can give the
Company written notice of the exercise of the Option and the third party
purchaser of the Optioned Stock shall pay the Option exercise price plus any
applicable withholding taxes to the Company.
(f) Transferability. An Incentive Stock Option granted
pursuant to the Plan shall be exercised during an Optionee's lifetime only by
the Optionee to whom it was granted and shall not be assignable or transferable
otherwise than by will or by the laws of descent and distribution.
9. Terms and Conditions of Non-Incentive Stock Options. Each
Non-Incentive Stock Option granted pursuant to the Plan shall be evidenced by an
instrument in such form as the Committee shall from time to time approve. Each
Non-Incentive Stock Option granted pursuant to the Plan shall comply with and be
subject to the following terms and conditions.
(a) Options Granted to Directors. Subject to the limitations
of Section 6(c), Non- Incentive Stock Options to purchase 6,210 shares of Common
Stock will be granted to each Director who is not an Employee as of the
Effective Date, at an exercise price equal to the Fair Market Value of the
Common Stock on such date of grant. The Options will be first exercisable at the
rate of one-third on the Effective Date and one-third annually thereafter during
such periods of service as a Director or Director Emeritus. Upon the death,
Disability or Retirement of the Director or Director Emeritus, such Option shall
be deemed immediately 100% exercisable. Such Options shall continue to be
exercisable for a period of ten years following the date of grant without regard
to the continued services of such Director as a Director or Director Emeritus.
In the event of the Optionee's death, such Options may be exercised by the
personal representative of his estate or person or persons to whom his rights
under such Option shall have passed by will or by the laws of descent and
distribution. Options may be granted to newly appointed or elected non-employee
Directors within the sole discretion of the Committee. The exercise price per
Share of such Options granted shall be equal to the Fair Market Value of the
Common
6
<PAGE>
Stock at the time such Options are granted. All Options awarded in accordance
with this Section 9(a) as of the Effective Date shall have Dividend Equivalent
Rights associated with such Options, as detailed at Section 12 herein. All
outstanding Awards shall become immediately exercisable in the event of a Change
in Control of the Company. Unless otherwise inapplicable, or inconsistent with
the provisions of this paragraph, the Options to be granted to Directors
hereunder shall be subject to all other provisions of this Plan.
(b) Option Price. The exercise price per Share of Common Stock
for each Non-Incentive Stock Option granted pursuant to the Plan shall be at
such price as the Committee may determine in its sole discretion, but in no
event less than the Fair Market Value of such Common Stock on the date of grant
as determined by the Committee in good faith.
(c) Payment. Full payment for each Share of Common Stock
purchased upon the exercise of any Non-Incentive Stock Option granted under the
Plan shall be made at the time of exercise of each such Non-Incentive Stock
Option and shall be paid in cash (in United States Dollars), Common Stock or a
combination of cash and Common Stock. Common Stock utilized in full or partial
payment of the exercise price shall be valued at its Fair Market Value at the
date of exercise. The Company shall accept full or partial payment in Common
Stock only to the extent permitted by applicable law. No Shares of Common Stock
shall be issued until full payment has been received by the Company and no
Optionee shall have any of the rights of a stockholder of the Company until the
Shares of Common Stock are issued to the Optionee.
(d) Term. The term of exercisability of each Non-Incentive
Stock Option granted pursuant to the Plan shall be not more than ten (10) years
from the date each such Non-Incentive Stock Option is granted.
(e) Exercise Generally. The Committee may impose additional
conditions upon the right of any Participant to exercise any Non-Incentive Stock
Option granted hereunder which is not inconsistent with the terms of the Plan.
Except as otherwise provided by the terms of the Plan or by action of the
Committee at the time of the grant of the Options, the Options will be first
exercisable at the rate of one-third on the date of grant and one-third annually
thereafter during such periods of service as an Employee, Director or Director
Emeritus.
(f) Cashless Exercise. Subject to vesting requirements, if
applicable, an Optionee who has held a Non-Incentive Stock Option for at least
six months may engage in the "cashless exercise" of the Option. Upon a cashless
exercise, an Optionee shall give the Company written notice of the exercise of
the Option together with an order to a registered broker-dealer or equivalent
third party, to sell part or all of the Optioned Stock and to deliver enough of
the proceeds to the Company to pay the Option exercise price and any applicable
withholding taxes. If the Optionee does not sell the Optioned Stock through a
registered broker-dealer or equivalent third party, the Optionee can give the
Company written notice of the exercise of the Option and the third party
purchaser of the Optioned Stock shall pay the Option exercise price plus any
applicable withholding taxes to the Company.
(g) Transferability. Any Non-Incentive Stock Option granted
pursuant to the Plan shall be exercised during an Optionee's lifetime only by
the Optionee to whom it was granted and shall not be assignable or transferable
otherwise than by will or by the laws of descent and distribution.
7
<PAGE>
10. Effect of Termination of Employment, Disability, Death and Retirement
on Incentive Stock Options.
(a) Termination of Employment. In the event that any
Optionee's employment with the Company, the Bank, or other present or future
Parent or Subsidiaries shall terminate for any reason, other than Disability or
death, all of any such Optionee's Incentive Stock Options, and all of any such
Optionee's rights to purchase or receive Shares of Common Stock pursuant
thereto, shall automatically terminate on (A) the earlier of (i) or (ii): (i)
the respective expiration dates of any such Incentive Stock Options, or (ii) the
expiration of not more than three (3) months after the date of such termination
of employment; or (B) at such later date as is determined by the Committee at
the time of the grant of such Award based upon the Optionee's continuing status
as a Director or Director Emeritus of the Bank or the Company, but only if, and
to the extent that, the Optionee was entitled to exercise any such Incentive
Stock Options at the date of such termination of employment, and further that
such Award shall thereafter be deemed a Non-Incentive Stock Option. In the event
that a Subsidiary ceases to be a Subsidiary of the Company, the employment of
all of its employees who are not immediately thereafter employees of the Company
shall be deemed to terminate upon the date such Subsidiary so ceases to be a
Subsidiary of the Company.
(b) Disability. In the event that any Optionee's employment
with the Bank, the Company, or any present or future Parent or Subsidiaries of
the Company shall terminate as the result of the Disability of such Optionee,
such Optionee may exercise any Incentive Stock Options granted to the Optionee
pursuant to the Plan at any time prior to the earlier of (i) the respective
expiration dates of any such Incentive Stock Options or (ii) the date which is
one (1) year after the date of such termination of employment, but only if, and
to the extent that, the Optionee was entitled to exercise any such Incentive
Stock Options at the date of such termination of employment.
(c) Death. In the event of the death of an Optionee, any
Incentive Stock Options granted to such Optionee may be exercised by the person
or persons to whom the Optionee's rights under any such Incentive Stock Options
pass by will or by the laws of descent and distribution (including the
Optionee's estate during the period of administration) at any time prior to the
earlier of (i) the respective expiration dates of any such Incentive Stock
Options or (ii) the date which is two (2) years after the date of death of such
Optionee but only if, and to the extent that, the Optionee was entitled to
exercise any such Incentive Stock Options at the date of death. For purposes of
this Section 10(c), any Incentive Stock Option held by an Optionee shall be
considered exercisable at the date of his death if the only unsatisfied
condition precedent to the exercisability of such Incentive Stock Option at the
date of death is the passage of a specified period of time. At the discretion of
the Committee, upon exercise of such Options the Optionee may receive Shares or
cash or a combination thereof. If cash shall be paid in lieu of Shares, such
cash shall be equal to the difference between the Fair Market Value of such
Shares and the exercise price of such Options on the exercise date.
(d) Incentive Stock Options Deemed Exercisable. For purposes
of Sections 10(a), 10(b) and 10(c) above, any Incentive Stock Option held by any
Optionee shall be considered exercisable at the date of termination of
employment if any such Incentive Stock Option would have been exercisable at
such date of termination of employment without regard to the Disability or death
of the Participant.
(e) Termination of Incentive Stock Options; Vesting Upon
Retirement. Except as may be specified by the Committee at the time of grant of
an Option, to the extent that any Incentive Stock Option granted under the Plan
to any Optionee whose employment with the Company or the Bank
8
<PAGE>
terminates shall not have been exercised within the applicable period set forth
in this Section 10, any such Incentive Stock Option, and all rights to purchase
or receive Shares of Common Stock pursuant thereto, as the case may be, shall
terminate on the last day of the applicable period. Notwithstanding the
foregoing, the Committee may authorize at the time of the grant of an Option
that such Award shall be immediately 100% exercisable upon the Retirement of the
Optionee.
11. Effect of Termination of Employment, Disability, Death or
Retirement on Non-Incentive Stock Options. The terms and conditions of
Non-Incentive Stock Options relating to the effect of the Retirement or other
termination of an Optionee's employment or service, Disability of an Optionee or
his death shall be such terms and conditions as the Committee shall, in its sole
discretion, determine at the time of termination of service, unless specifically
provided for by the terms of the Agreement at the time of grant of the Award.
12. Dividend Equivalent Rights. The Committee, in its sole discretion,
may include as a term of any Option, the right of the Optionee to receive
Dividend Equivalent Rights. Such rights shall provide that upon the payment of a
cash dividend on the Common Stock, the holder of such Options shall receive
payment of compensation in an amount equivalent to the dividend payable as if
such Options had been exercised and such Common Stock held as of the dividend
record date. Such rights shall expire upon the expiration or exercise of such
underlying Options. Such rights are non-transferable and shall attach to Options
whether or not such Options are immediately exercisable. The dividend equivalent
payments associated with Options shall be paid to the Option holder within 30
days of the dividend payment date of the Common Stock. All Options granted to
non-employee Directors of the Company as of the Effective Date in accordance
with Section 9(a) of the Plan shall have Dividend Equivalent Rights associated
with such Options.
13. Recapitalization, Merger, Consolidation, Change in Control and Other
Transactions.
(a) Adjustment. Subject to any required action by the
stockholders of the Company, within the sole discretion of the Committee, the
aggregate number of Shares of Common Stock for which Options may be granted
hereunder, the number of Shares of Common Stock covered by each outstanding
Option, and the exercise price per Share of Common Stock of each such Option,
shall all be proportionately adjusted for any increase or decrease in the number
of issued and outstanding Shares of Common Stock resulting from a subdivision or
consolidation of Shares (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares, or
otherwise) or the payment of a stock dividend (but only on the Common Stock) or
any other increase or decrease in the number of such Shares of Common Stock
effected without the receipt or payment of consideration by the Company (other
than Shares held by dissenting stockholders).
(b) Change in Control. All outstanding Awards shall become
immediately exercisable in the event of a Change in Control of the Company. In
the event of such a Change in Control, the Committee and the Board of Directors
will take one or more of the following actions to be effective as of the date of
such Change in Control:
(i) provide that such Options shall be assumed, or equivalent
options shall be substituted, ("Substitute Options") by the acquiring or
succeeding corporation (or an affiliate thereof), provided that: (A) any such
Substitute Options exchanged for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, and (B) the shares of stock issuable
upon the exercise of such Substitute Options shall constitute securities
registered in accordance with the Securities Act of 1933, as amended,
9
<PAGE>
("1933 Act") or such securities shall be exempt from such registration in
accordance with Sections 3(a)(2) or 3(a)(5) of the 1933 Act, (collectively,
"Registered Securities"), or in the alternative, if the securities issuable upon
the exercise of such Substitute Options shall not constitute Registered
Securities, then the Optionee will receive upon consummation of the Change in
Control transaction a cash payment for each Option surrendered equal to the
difference between (1) the Fair Market Value of the consideration to be received
for each share of Common Stock in the Change in Control transaction times the
number of shares of Common Stock subject to such surrendered Options, and (2)
the aggregate exercise price of all such surrendered Options, or
(ii) in the event of a transaction under the terms of which
the holders of the Common Stock of the Company will receive upon consummation
thereof a cash payment (the "Merger Price") for each share of Common Stock
exchanged in the Change in Control transaction, to make or to provide for a cash
payment to the Optionees equal to the difference between (A) the Merger Price
times the number of shares of Common Stock subject to such Options held by each
Optionee (to the extent then exercisable at prices not in excess of the Merger
Price) and (B) the aggregate exercise price of all such surrendered Options in
exchange for such surrendered Options.
(c) Extraordinary Corporate Action. Notwithstanding any
provisions of the Plan to the contrary, subject to any required action by the
stockholders of the Company, in the event of any Change in Control,
recapitalization, merger, consolidation, exchange of Shares, spin-off,
reorganization, tender offer, partial or complete liquidation or other
extraordinary corporate action or event, the Committee, in its sole discretion,
shall have the power, prior or subsequent to such action or event to:
(i) appropriately adjust the number of Shares of Common Stock subject to
each Option, the Option exercise price per Share of Common Stock, and the
consideration to be given or received by the Company upon the exercise of any
outstanding Option;
(ii) cancel any or all previously granted Options, provided that
appropriate consideration is paid to the Optionee in connection therewith;
and/or
(iii) make such other adjustments in connection with the Plan as the
Committee, in its sole discretion, deems necessary, desirable, appropriate or
advisable; provided, however, that no action shall be taken by the Committee
which would cause Incentive Stock Options granted pursuant to the Plan to fail
to meet the requirements of Section 422 of the Code without the consent of the
Optionee.
(d) Acceleration. The Committee shall at all times have the
power to accelerate the exercise date of Options previously granted under the
Plan.
(e) Non-recurring Dividends. Upon the payment of a special or
non-recurring cash dividend that has the effect of a return of capital to the
stockholders, the Option exercise price per share shall be adjusted
proportionately and in an equitable manner, except to the extent that the
Participant shall otherwise receive payments associated with Dividend Equivalent
Rights attributable to such Options with regard to such special or non-recurring
cash dividends.
Except as expressly provided in Sections 13(a), 13(b) and 13(e) hereof,
no Optionee shall have any rights by reason of the occurrence of any of the
events described in this Section 13.
10
<PAGE>
14. Time of Granting Options. The date of grant of an Option under the
Plan shall, for all purposes, be the date on which the Committee makes the
determination of granting such Option. Notice of the grant of an Option shall be
given to each individual to whom an Option is so granted within a reasonable
time after the date of such grant in a form determined by the Committee.
15. Effective Date. On October 22, 1998, the Plan shall became
effective upon the date of approval of the Plan by the stockholders of the
Company. The Committee may make a determination related to Awards prior to the
Effective Date with such Awards to be effective upon the date of stockholder
approval of the Plan.
16. Approval by Stockholders. The Plan shall be approved by
stockholders of the Bank within twelve (12) months before or after the date the
Plan is approved by the Board.
17. Modification of Options. At any time and from time to time, the
Board may authorize the Committee to direct the execution of an instrument
providing for the modification of any outstanding Option, provided no such
modification, extension or renewal shall confer on the holder of said Option any
right or benefit which could not be conferred on the Optionee by the grant of a
new Option at such time, or shall not materially decrease the Optionee's
benefits under the Option without the consent of the holder of the Option,
except as otherwise permitted under Section 18 hereof.
18. Amendment and Termination of the Plan.
(a) Action by the Board. The Board may alter, suspend or
discontinue the Plan, except that no action of the Board may increase (other
than as provided in Section 13 hereof) the maximum number of Shares permitted to
be optioned under the Plan, materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements for
eligibility for participation in the Plan unless such action of the Board shall
be subject to approval or ratification by the stockholders of the Company.
(b) Change in Applicable Law. Notwithstanding any other
provision contained in the Plan, in the event of a change in any federal or
state law, rule or regulation which would make the exercise of all or part of
any previously granted Option unlawful or subject the Company to any penalty,
the Committee may restrict any such exercise without the consent of the Optionee
or other holder thereof in order to comply with any such law, rule or regulation
or to avoid any such penalty.
19. Conditions Upon Issuance of Shares; Limitations on Option
Exercise; Cancellation of Option Rights.
(a) Shares shall not be issued with respect to any Option
granted under the Plan unless the issuance and delivery of such Shares shall
comply with all relevant provisions of applicable law, including, without
limitation, the Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities laws and the
requirements of any stock exchange upon which the Shares may then be listed.
(b) The inability of the Company to obtain any necessary
authorizations, approvals or letters of non-objection from any regulatory body
or authority deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares issuable hereunder shall relieve the Company of
any liability with respect to the non-issuance or sale of such Shares.
11
<PAGE>
(c) As a condition to the exercise of an Option, the Company
may require the person exercising the Option to make such representations and
warranties as may be necessary to assure the availability of an exemption from
the registration requirements of federal or state securities law.
(d) Notwithstanding anything herein to the contrary, upon the
termination of employment or service of an Optionee by the Company or its
Subsidiaries for "cause" as defined at 12 C.F.R. 563.39(b)(1) as determined by
the Board of Directors, all Options held by such Participant shall cease to be
exercisable as of the date of such termination of employment or service.
(e) Upon the exercise of an Option by an Optionee (or the
Optionee's personal representative), the Committee, in its sole and absolute
discretion, may make a cash payment to the Optionee, in whole or in part, in
lieu of the delivery of shares of Common Stock. Such cash payment to be paid in
lieu of delivery of Common Stock shall be equal to the difference between the
Fair Market Value of the Common Stock on the date of the Option exercise and the
exercise price per share of the Option. Such cash payment shall be in exchange
for the cancellation of such Option. Such cash payment shall not be made in the
event that such transaction would result in liability to the Optionee or the
Company under Section 16(b) of the Securities Exchange Act of 1934, as amended,
and regulations promulgated thereunder.
20. Reservation of Shares. During the term of the Plan, the Company
will reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
21. Unsecured Obligation. No Participant under the Plan shall have any
interest in any fund or special asset of the Company by reason of the Plan or
the grant of any Option under the Plan. No trust fund shall be created in
connection with the Plan or any grant of any Option hereunder and there shall be
no required funding of amounts which may become payable to any Participant.
22. Withholding Tax. The Company shall have the right to deduct from
all amounts paid in cash with respect to the cashless exercise of Options and
Dividend Equivalent Rights under the Plan any taxes required by law to be
withheld with respect to such cash payments. Where a Participant or other person
is entitled to receive Shares pursuant to the exercise of an Option, the Company
shall have the right to require the Participant or such other person to pay the
Company the amount of any taxes which the Company is required to withhold with
respect to such Shares, or, in lieu thereof, to retain, or to sell without
notice, a number of such Shares sufficient to cover the amount required to be
withheld.
23. No Employment Rights. No Director, Employee or other person shall
have a right to be selected as a Participant under the Plan. Neither the Plan
nor any action taken by the Committee in administration of the Plan shall be
construed as giving any person any rights of employment or retention as an
Employee, Director or in any other capacity with the Company, the Bank, or any
present or future Parent or Subsidiary.
24. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Pennsylvania, except to the extent that
federal law shall be deemed to apply.
12
EXHIBIT 4.2
FORM OF STOCK OPTION AGREEMENT TO BE ENTERED INTO
WITH RESPECT TO INCENTIVE STOCK OPTIONS
<PAGE>
STOCK OPTION AGREEMENT
----------------------
FOR INCENTIVE STOCK OPTIONS UNDER SECTION 422
OF THE INTERNAL REVENUE CODE
PURSUANT TO THE
PHS BANCORP, INC.
1998 STOCK OPTION PLAN
----------------------
FOR OFFICERS AND EMPLOYEES
--------------------------
STOCK OPTIONS for a total of _________ shares of Common Stock of PHS
Bancorp, Inc. (the "Company"), which Option is intended to qualify as an
Incentive Stock Option under Section 422 of the Internal Revenue Code of 1986,
as amended, is hereby granted to ___________ (the "Optionee") at the price
determined as provided in, and in all respects subject to the terms, definitions
and provisions of the 1998 Stock Option Plan (the "Plan") adopted by the Company
which is incorporated by reference herein, receipt of which is hereby
acknowledged.
1. Option Price. The Option price is $_______ for each Share, being
100% of the fair market value, as determined by the Committee, of the Common
Stock on the date of grant of this Option.
2. Exercises of Option. This Option shall be exercisable in accordance
with provisions of the Plan, provided the holder of such Option is an employee
of the Company as of such date, as follows:
(a) Schedule of Rights to Exercise.
Percentage of
Total Shares
Awarded Which
Are Exercisable/
Date Options Non-forfeitable
---- ------- ---------------
October 22, 1998 ........................ _____ 20%
As of October 22, 1999................... _____ 40%
As of October 22, 2000................... _____ 60%
As of October 22, 2001................... _____ 80%
As of October 22, 2002................... _____ 100%
Notwithstanding any provisions in this Section 2, in no event shall
this Option be exercisable prior to six months following the date of grant.
Options shall be 100% vested and exercisable upon the death, disability or
Retirement of the Optionee, or upon a Change in Control of the Company. Options
shall become "non-incentive" options and remain exercisable for remaining term
upon Retirement after not less than 10 years of service, if not exercised within
3 months of retirement.
<PAGE>
(b) Method of Exercise. This Option shall be exercisable by a
written notice which shall:
(i) State the election to exercise the Option, the
number of Shares with respect to which it is being exercised, the
person in whose name the stock certificate or certificates for such
Shares of Common Stock is to be registered, his address and Social
Security Number (or if more than one, the names, addresses and Social
Security Numbers of such persons);
(ii) Contain such representations and agreements as
to the holder's investment intent with respect to such shares of Common
Stock as may be satisfactory to the Company's counsel;
(iii) Be signed by the person or persons entitled to
exercise the Option and, if the Option is being exercised by any person
or persons other than the Optionee, be accompanied by proof,
satisfactory to counsel for the Bank, of the right of such person or
persons to exercise the Option; and
(iv) Be in writing and delivered in person or by
certified mail to the Treasurer of the Bank.
Payment of the purchase price of any Shares with respect to which the
Option is being exercised shall be by certified or bank cashier's or teller's
check. The certificate or certificates for shares of Common Stock as to which
the Option shall be exercised shall be registered in the name of the person or
persons exercising the Option.
(c) Restrictions on Exercise. This Option may not be exercised
if the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities or other law or valid regulation. As
a condition to the Optionee's exercise of this Option, the Bank may require the
person exercising this Option to make any representation and warranty to the
Bank as may be required by any applicable law or regulation.
3. Non-transferability of Option. This Option may not be transferred in
any manner otherwise than by will or the laws of descent or distribution and may
be exercised during the lifetime of the Optionee only by the Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
<PAGE>
4. Term of Option. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, as set forth below, and may be
exercised during such term only in accordance with the Plan and the terms of
this Option.
5. Dividend Equivalent Rights. The Stock Options represented by this
Agreement shall include the right of the Optionee to receive payment of dividend
equivalent rights. Such rights shall provide that upon a payment of a cash
dividend on the Common Stock, the holder of such Options shall receive payment
of cash in an amount equivalent to the cash dividend payable as if such Options
had been exercised and such Common Stock held as of the dividend record date.
Such rights shall expire upon the expiration or exercise of such underlying
Options. Such rights are non-transferable and shall attach to Options
represented by this Agreement, whether or not such Options are immediately
exercisable.
6. Related Matters. Notwithstanding anything herein to the contrary,
additional conditions or restrictions related to such Options may be contained
in the Plan or the resolutions of the Plan Committee authorizing such grant of
Options.
PHS Bancorp, Inc.
Date of Grant: ________________ By: __________________________________
Attest:
- -------------------------------------
[SEAL]
<PAGE>
INCENTIVE STOCK OPTION EXERCISE FORM
------------------------------------
PURSUANT TO THE
PHS BANCORP, INC.
1998 STOCK OPTION PLAN
-------------------
(Date)
PHS Bancorp, Inc.
744 Shenango Road
Beaver Falls, Pennsylvania 15010
Dear Sir:
The undersigned elects to exercise the Incentive Stock Option to purchase
_________ shares of Common Stock of PHS Bancorp, Inc. under and pursuant to a
Stock Option Agreement dated _____________.
Delivered herewith is a certified or bank cashier's or teller's check
and/or shares of Common Stock, valued at the fair market value of the stock on
the date of exercise, as set forth below.
$ ______________ of cash or check
______________ of Common Stock
$
============== Total
The name or names to be on the stock certificate or certificates and
the address and Social Security Number of such person(s) is as follows:
Name
---------------------------------------------------
Address
---------------------------------------------------
Social Security Number
-------------------------------------
Very truly yours,
-----------------------------
EXHIBIT 4.3
FORM OF STOCK OPTION AGREEMENT TO BE ENTERED INTO
WITH RESPECT TO NON-INCENTIVE STOCK OPTIONS
<PAGE>
STOCK OPTION AGREEMENT
----------------------
FOR NON-INCENTIVE STOCK OPTIONS
PURSUANT TO THE
PHS BANCORP, INC.
1998 STOCK OPTION PLAN
----------------------
FOR DIRECTORS
STOCK OPTIONS for a total of _____________ shares of Common Stock of PHS
Bancorp, Inc. (the "Company"), which Option is not intended to qualify as an
Incentive Stock Option under Section 422 of the Internal Revenue Code of 1986,
as amended, is hereby granted to _________________ (the "Optionee") at the price
determined as provided in, and in all respects subject to the terms, definitions
and provisions of the 1998 Stock Option Plan (the "Plan") adopted by the Company
which is incorporated by reference herein, receipt of which is hereby
acknowledged.
1. Option Price. The Option price is $_______ for each Share, being
100% of the fair market value, as determined by the Committee, of the Common
Stock on the date of grant of this Option.
2. Exercises of Option. This Option shall be exercisable in accordance
with provisions of the Plan, provided the holder of such Option is an employee,
director or director emeritus of the Bank or the Company as of such date, as
follows:
(a) Schedule of Rights to Exercise.
Percentage of
Total Shares
Awarded Which
Are Exercisable/
Date Options Non-forfeitable
---- ------- ---------------
October 22, 1998 ............................... _____ 33 1/3%
As of October 22, 1999.......................... _____ 66 2/3%
As of October 22, 2000.......................... _____ 100%
Notwithstanding any provisions in this Section 2, in no event shall
this Option be exercisable prior to six months following the date of grant.
Options shall be 100% vested and exercisable upon the death, disability or
Retirement of the Optionee, or upon a Change in Control of the Company.
<PAGE>
(b) Method of Exercise. This Option shall be exercisable by a
written notice which shall:
(i) State the election to exercise the Option, the
number of Shares with respect to which it is being exercised, the
person in whose name the stock certificate or certificates for such
Shares of Common Stock is to be registered, his address and Social
Security Number (or if more than one, the names, addresses and Social
Security Numbers of such persons);
(ii) Contain such representations and agreements as
to the holder's investment intent with respect to such shares of Common
Stock as may be satisfactory to the Bank's counsel;
(iii) Be signed by the person or persons entitled to
exercise the Option and, if the Option is being exercised by any person
or persons other than the Optionee, be accompanied by proof,
satisfactory to counsel for the Bank, of the right of such person or
persons to exercise the Option; and
(iv) Be in writing and delivered in person or by
certified mail to the Treasurer of the Bank.
Payment of the purchase price of any Shares with respect to which the
Option is being exercised shall be by certified or bank cashier's or teller's
check. The certificate or certificates for shares of Common Stock as to which
the Option shall be exercised shall be registered in the name of the person or
persons exercising the Option.
(c) Restrictions on Exercise. This Option may not be exercised
if the issuance of the Shares upon such exercise would constitute a violation of
any applicable federal or state securities or other law or valid regulation. As
a condition to the Optionee's exercise of this Option, the Bank may require the
person exercising this Option to make any representation and warranty to the
Bank as may be required by any applicable law or regulation.
3. Non-transferability of Option. This Option may not be transferred in
any manner otherwise than by will or the laws of descent or distribution and may
be exercised during the lifetime of the Optionee only by the Optionee. The terms
of this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
<PAGE>
4. Term of Option. This Option may not be exercised more than ten (10)
years from the date of grant of this Option, as set forth below, and may be
exercised during such term only in accordance with the Plan and the terms of
this Option.
5. Dividend Equivalent Rights. The Stock Options represented by this
Agreement shall include the right of the Optionee to receive payment of dividend
equivalent rights. Such rights shall provide that upon a payment of a cash
dividend on the Common Stock, the holder of such Options shall receive payment
of cash in an amount equivalent to the cash dividend payable as if such Options
had been exercised and such Common Stock held as of the dividend record date.
Such rights shall expire upon the expiration or exercise of such underlying
Options. Such rights are non-transferable and shall attach to Options
represented by this Agreement whether or not such Options are immediately
exercisable.
6. Related Matters. Notwithstanding anything herein to the contrary,
additional conditions or restrictions related to such Options may be contained
in the Plan or the resolutions of the Plan Committee authorizing such grant of
Options.
PHS Bancorp, Inc.
Date of Grant: By:
----------------------- -----------------------------------
Attest:
- -------------------------------
[SEAL]
<PAGE>
NON-INCENTIVE STOCK OPTION EXERCISE FORM
----------------------------------------
PURSUANT TO THE
PHS BANCORP, INC.
1998 STOCK OPTION PLAN
--------------
(Date)
PHS Bancorp, Inc.
744 Shenango Road
Beaver Falls, Pennsylvania 15010
Dear Sir:
The undersigned elects to exercise the Non-Incentive Stock Option to
purchase __________ shares of Common Stock of PHS Bancorp, Inc. under and
pursuant to a Stock Option Agreement dated _______________.
Delivered herewith is a certified or bank cashier's or teller's check
and/or shares of Common Stock, valued at the fair market value of the stock on
the date of exercise, as set forth below.
$ ________________ of cash or check
________________ of Common Stock
$
================ Total
The name or names to be on the stock certificate or certificates and
the address and Social Security Number of such person(s) is as follows:
Name
-------------------------------------------------
Address
-------------------------------------------------
Social Security Number
------------------------------------
Very truly yours,
---------------------------------
EXHIBIT 4.4
FORM OF STOCK AWARD TAX NOTICE
<PAGE>
TAX ISSUES RELATED TO EXERCISE OF STOCK OPTIONS
This memorandum reviews the tax effects upon the exercise of
"Non-Incentive Stock Options" ("NSOs") (those options awarded to non-employee
directors and perhaps to some officers) and "Incentive Stock Options" ("ISOs")
(those options generally awarded to officers and employees).
A. Exercise of an NSO
Upon the exercise of an NSO, the amount by which the fair market value
of the shares on the date of exercise exceeds the exercise price will be taxed
to the optionee as ordinary income. The Company will be entitled to a deduction
in the same amount, provided it makes all required withholdings on the
compensation element of the exercise. In general, the optionee's tax basis in
the shares acquired by exercising an NSO is equal to the fair market value of
such shares on the date of exercise. Upon a subsequent sale of any such shares
in a taxable transaction, the optionee will realize capital gain or loss
(long-term or short-term, depending on whether the shares were held for more
than 12 months before the sale) in an amount equal to the difference between his
or her basis in the shares and the sale price.
Special rules apply if an optionee pays the exercise price upon
exercise of NSOs with previously acquired shares of stock. Except as described
below with respect to shares acquired pursuant to ISOs, such a transaction is
treated as a tax-free exchange of the old shares for the same number of new
shares. To that extent, the optionee's basis in the new shares is the same as
his or her basis in the old shares, i.e., there is a carryover of basis, and the
capital gain holding period runs without interruption from the date when the old
shares were acquired. The value of any new shares received by the optionee in
excess of the number of old shares surrendered less any cash the optionee pays
for the new shares will be taxed as ordinary income. The optionee's basis in the
additional shares is equal to the fair market value of such shares on the date
the shares were transferred, and the capital gain holding period commences on
the same date. The effect of these rules is to defer the date when any gain in
the old shares that are used to buy new shares must be recognized for tax
purposes. Stated differently, these rules allow an optionee to finance the
exercise of an NSO by using shares of stock that he or she already owns, without
paying current tax on any unrealized appreciation in the value of all or a
portion of those old shares.
B. Exercise of an ISO
The holder of an ISO will not be subject to federal income tax upon the
exercise of the ISO, and the Company will not be entitled to a tax deduction by
reason of such exercise, provided that the holder is still employed by the
Company (or terminated employment no longer than three months before the
exercise date). Additional exceptions to this exercise timing requirement apply
upon the death or disability of the optionee. A sale of the shares received upon
the exercise of an ISO which occurs both more than one year after the exercise
of the ISO and more than two years after the grant of the ISO will result in the
realization of long-term capital gain or loss in the amount of the difference
between the amount realized on the sale and
<PAGE>
the exercise price for such shares. Generally, upon a sale or disposition of the
shares prior to the foregoing holding requirements (referred to as a
"disqualifying disposition"), the optionee will recognize ordinary income, and
the Company will receive a corresponding deduction equal to the lesser of (i)
the excess of the fair market value of the shares on the date of transfer to the
optionee over the exercise price, or (ii) the excess of the amount realized on
the disposition over the exercise price for such shares. Currently, ISO
exercises are exempt from FICA and FUTA taxes and a disqualifying disposition is
exempt from employer withholding.
A special rule applies if an optionee pays all or part of the exercise
price of an ISO by surrendering shares of stock that he or she previously
acquired by exercising any other ISO. If the optionee has not held the old
shares for the full duration of the applicable holding periods before
surrendering them, then the surrender of such shares to exercise the new ISO
will be treated as a disqualifying disposition of the old shares. As described
above, the result of a disqualifying disposition is the loss of favorable tax
consequences with respect to the acquisition of the old shares pursuant to the
previously exercised ISO.
Where the applicable holding period requirements have been met, the use
of previously acquired shares of stock to pay all or a portion of the exercise
price of an ISO may offer significant tax advantages, particularly a deferral of
the recognition of any appreciation in the surrendered shares in the same manner
as discussed above with respect to NSOs.
C. Alternative Minimum Tax
The "alternative minimum tax" is paid when such tax exceeds a
taxpayer's regular federal income tax. The alternative minimum tax is calculated
based on alternative minimum taxable income, which is taxable income for federal
income tax purposes, modified by certain adjustments and increased by tax
preference items.
The spread under an ISO - i.e., the difference between (a) the fair
market value of the shares at exercise and (b) the exercise price - is
classified as alternative minimum taxable income for the year of exercise.
Alternative minimum taxable income may be subject to the alternative minimum
tax. However, a disqualifying disposition of the shares subject to the ISO
during the same year in which the ISO was exercised will generally cancel the
alternative minimum taxable income generated upon exercise of the ISO.
When a taxpayer sells stock acquired through the exercise of an ISO,
generally only the difference between the fair market value of the shares on the
date of exercise and the date of sale is used in computing the alternative
minimum tax. The portion of a taxpayer's minimum tax attributable to certain
items of tax preference (including the spread upon the exercise of an ISO) can
be credited against the taxpayer's regular liability in later years to the
extent that liability exceeds the alternative minimum tax.
EXHIBIT 5.1
OPINION OF MALIZIA, SPIDI, SLOANE & FISCH, P.C. AS TO
THE VALIDITY OF THE COMMON STOCK BEING REGISTERED
<PAGE>
March 4, 1999
Board of Directors
PHS Bancorp, Inc.
744 Shenango Road
Beaver Falls, Pennsylvania 15010
RE: Registration Statement on Form S-8:
----------------------------------
PHS Bancorp, Inc. 1998 Stock Option Plan
Gentlemen:
We have acted as special counsel to PHS Bancorp, Inc., a Pennsylvania
corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S-8 to be filed with the Securities and Exchange
Commission (the "Registration Statement") under the Securities Act of 1933, as
amended, relating to 124,200 shares of common stock, par value $.10 per share
(the "Common Stock") of the Company which may be issued upon the exercise of
options granted or which may be granted under the PHS Bancorp, Inc. 1998 Stock
Option Plan (the "Plan"), as more fully described in the Registration Statement.
You have requested the opinion of this firm with respect to certain legal
aspects of the proposed offering.
We have examined such documents, records, and matters of law as we have
deemed necessary for purposes of this opinion and based thereon, we are of the
opinion that the Common Stock when issued pursuant to the stock awards granted
under and in accordance with the terms of the Plan will be duly and validly
issued, fully paid, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-8.
Sincerely,
/s/ Malizia, Spidi, Sloane & Fisch, P.C.
----------------------------------------
Malizia, Spidi, Sloane & Fisch, P.C.
EXHIBIT 23.1
CONSENT OF MALIZIA, SPIDI, SLOANE & FISCH, P.C.
(APPEARS IN THEIR OPINION FILED AS EXHIBIT 5.1)
