<PAGE>
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
/X/ DEFINITIVE PROXY STATEMENT
/ / DEFINITIVE ADDITIONAL MATERIALS
/ / SOLICITING MATERIAL PURSUANT TO RULE 14A-11(c) OR RULE 14A-12
/ / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY
(AS PERMITTED BY RULE 14A-6(e)(2))
ISB FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------
(4) DATE FILED:
---------------------------------------------------
<PAGE>
[ISB FINANCIAL CORPORATION LETTERHEAD]
March 19, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
ISB Financial Corporation. The meeting will be held at the main office of
IBERIABANK located at 1101 East Admiral Doyle Drive, New Iberia, Louisiana, on
Wednesday, April 21, 1999 at 3:00 p.m., Central Time. The matters to be
considered by stockholders at the Annual Meeting are described in the
accompanying materials.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend the
meeting in person. We urge you to mark, sign, and date your proxy card today and
return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are unable to attend.
Your continued support of, and interest in, ISB Financial Corporation are
sincerely appreciated.
Sincerely,
/s/ Larrey G. Mouton
Larrey G. Mouton
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
ISB FINANCIAL CORPORATION
1101 EAST ADMIRAL DOYLE DRIVE
NEW IBERIA, LOUISIANA 70560
(318) 365-2361
---------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 21, 1999
---------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of ISB Financial Corporation (the "Company") will be held at the main
office of IBERIABANK located at 1101 East Admiral Doyle Drive, New Iberia,
Louisiana, on Wednesday, April 21, 1999 at 3:00 p.m., Central Time, for the
following purposes, all of which are more completely set forth in the
accompanying Proxy Statement:
(1) To elect two directors for a three-year term expiring in 2002, and
until their successors are elected and qualified;
(2) To consider and approve adoption of the Company's 1999 Stock Option
Plan;
(3) To ratify the appointment by the Board of Directors of Castaing,
Hussey, Lolan & Dauterive, L.L.P. as the Company's independent
auditors for the fiscal year ending December 31, 1999;
(4) To consider a stockholder's proposal to amend the Company's Bylaws to
add a restriction on offers to acquire and acquisitions of more than
10% of the Company's equity securities during the sixth and seventh
years after the mutual-to-stock conversion of Iberia Savings Bank; and
(5) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed March 9, 1999 as the voting record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and at any adjournment thereof. Only those stockholders of record
as of the close of business on that date will be entitled to vote at the Annual
Meeting or at any such adjournment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Emile J. Plaisance, Jr.
Emile J. Plaisance, Jr.
CHAIRMAN OF THE BOARD
New Iberia, Louisiana
March 19, 1999
- -------------------------------------------------------------------------------
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU PLAN TO
BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING
OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE THEREOF.
- -------------------------------------------------------------------------------
<PAGE>
ISB FINANCIAL CORPORATION
---------
PROXY STATEMENT
---------
ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 1999
This Proxy Statement is furnished to holders of common stock, $1.00 par
value per share ("Common Stock"), of ISB Financial Corporation (the "Company"),
the parent holding company of IBERIABANK (the "Bank"). Proxies are being
solicited on behalf of the Board of Directors of the Company to be used at the
Annual Meeting of Stockholders ("Annual Meeting") to be held at the main office
of the Bank located at 1101 East Admiral Doyle Drive, New Iberia, Louisiana, on
Wednesday, April 21, 1999 at 3:00 p.m., Central Time, and at any adjournment
thereof for the purposes set forth in the Notice of Annual Meeting of
Stockholders. This Proxy Statement is first being mailed to stockholders on or
about March 19, 1999.
The proxy solicited hereby, if properly signed and returned to the Company
and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for the nominees for director described herein, for
the adoption of the 1999 Stock Option Plan, for ratification of the appointment
of Castaing, Hussey, Lolan & Dauterive, L.L.P. for fiscal 1999 and against the
stockholder's proposal regarding an amendment to the Company's Bylaws. The proxy
solicited hereby also confers authority upon the Board of Directors, as proxy,
to exercise discretionary authority and vote in accordance with their best
judgment with respect to, among other things, matters which they do not know, a
reasonable time prior to the distribution of this Proxy Statement, are to be
presented at the Annual Meeting. Any stockholder giving a proxy has the power to
revoke it at any time before it is exercised by (i) filing with the Secretary of
the Company written notice thereof (through Guyton H. Watkins, Secretary, ISB
Financial Corporation); (ii) submitting a duly-executed proxy bearing a later
date; or (iii) appearing at the Annual Meeting and giving the Secretary notice
of his or her intention to vote in person. Proxies solicited hereby may be
exercised only at the Annual Meeting and any adjournment thereof and will not be
used for any other meeting.
VOTING
Only stockholders of record at the close of business on March 9, 1999
("Voting Record Date") will be entitled to vote at the Annual Meeting. On the
Voting Record Date, there were 6,840,866 shares of Common Stock issued and
outstanding and the Company had no other class of equity securities outstanding.
Each share of Common Stock is entitled to one vote at the Annual Meeting on all
matters properly presented at the meeting. Directors are elected by a plurality
of the votes cast with a quorum present. The affirmative vote of a majority of
the total votes present in person and by proxy is required to ratify the
appointment of the independent auditors and to approve the proposal to approve
the 1999 Stock Option Plan (the "Option Plan"). The affirmative vote of the
holders of a majority of the shares entitled to vote in the election of
directors is required to approve the stockholder's proposal. Abstensions are
considered in determining the presence of a quorum and will not affect the
plurality vote required for the election of directors. However, because of the
votes required to ratify the appointment of the independent auditors, to approve
the proposal to approve the Option Plan and to approve the stockholder's
proposal to amend the Bylaws, abstensions will have the effect of a vote against
such proposals. Under rules of the New York Stock Exchange, each of the
proposals, except for the stockholder's proposal, is considered a
"discretionary" item upon which brokerage firms may vote in their discretion on
behalf of their clients if such clients have not furnished voting instructions
and, accordingly, there will be no "broker non-votes." The stockholder's
proposal is considered a "non-discretionary" item and brokerage firms which have
received no instructions from their clients will have no discretion with respect
to voting on such items.
<PAGE>
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
ELECTION OF DIRECTORS
The Articles of Incorporation of the Company provide that the Board of
Directors shall be divided into three classes as nearly equal in number as the
then total number of directors constituting the Board of Directors permits. The
directors shall be elected by the stockholders of the Company for staggered
terms, or until their successors are elected and qualified.
At the Annual Meeting, stockholders of the Company will be asked to elect
one class of directors, consisting of two directors, for a three-year term
expiring in 2002, and until their successors are elected and qualified.
No nominee for director is related to any other director or executive
officer of the Company by blood, marriage or adoption. Each nominee currently
serves as a director of the Company and of the Bank.
Unless otherwise directed, each proxy executed and returned by a
stockholder will be voted for the election of the nominees for director listed
below. If any person named as a nominee should be unable or unwilling to stand
for election at the time of the Annual Meeting, the proxies will nominate and
vote for any replacement nominee or nominees recommended by the Board of
Directors. At this time, the Board of Directors knows of no reason why any of
the nominees listed below may not be able to serve as a director if elected.
The following tables present information concerning the nominees for
director of the Company, including tenure as a director.
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERMS EXPIRING IN 2002
<TABLE>
<CAPTION>
Principal Occupation During Director
Name Age(1) the Past Five Years Since(2)
- ------------------------------------ ----------- ----------------------------------------- ---------------
<S> <C> <C> <C>
Harry V. Barton, Jr. 44 Certified public accountant in private 1993
practice in Lafayette, Louisiana.
E. Stewart Shea, III 47 Vice President of Bayou Management 1990
Services, New Iberia, Louisiana, a
provider of contractor services to the oil
field industry; President of Bayou Pipe
Coating Company and Vice President of
Bayou Coating, LLC, affiliates of Bayou
Management Services.
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR ELECTION OF THE NOMINEES
FOR DIRECTOR.
(FOOTNOTES ON FOLLOWING PAGE)
- 2 -
<PAGE>
DIRECTORS WHOSE TERMS ARE CONTINUING
DIRECTORS WITH A TERM EXPIRING IN 2000
<TABLE>
<CAPTION>
Principal Occupation During Director
Name Age(1) the Past Five Years Since(2)
- ------------------------------- ----------- ----------------------------------------- -------------------
<S> <C> <C> <C>
Cecil C. Broussard 67 Self-employed investor. 1967
Ray Himel 71 Owner of Himel Motor Supply Corp., a 1963
chain of auto supply stores located
throughout southern Louisiana; Himel
Marine, a marine dealership located in
New Iberia and Lafayette, Louisiana; and
several Ace Hardware stores located
throughout southern Louisiana.
Emile J. Plaisance, Jr. 71 Retired since August 1992; previously 1981
President of the Bank.
</TABLE>
DIRECTORS WITH A TERM EXPIRING IN 2001
<TABLE>
<CAPTION>
Principal Occupation During Director
Name Age(1) the Past Five Years Since(2)
- ---------------------------------- ----------- ---------------------------------------- -------------------
<S> <C> <C> <C>
Elaine D. Abell 56 Attorney in private practice in Lafayette, 1993
Louisiana.
William H. Fenstermaker 50 President and Chief Executive Officer of 1990
C.H. Fenstermaker and Associates, Inc.,
Lafayette, Louisiana, which provides oil
and gas surveying, mapping, municipal
engineering, environmental consulting
and computer information system
services.
Larrey G. Mouton 57 President and Chief Executive Officer of 1985
the Company and the Bank.
</TABLE>
------------------
(1) As of March 9, 1999.
(2) Includes service as a director of the Bank.
- 3 -
<PAGE>
SHAREHOLDER NOMINATIONS
Article 6, Section F ("Article 6.F.") of the Company's Articles of
Incorporation ("Articles") governs nominations of candidates for election as
director of any annual meeting of stockholders and provides that such
nominations, other than those made by the Board, may be made by any stockholder
entitled to vote at such annual meeting provided such nomination is made in
accordance with the procedures set forth in Article 6.F., which is summarized
below.
Nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Company. To be timely, a stockholder's notice shall be delivered to, or
mailed and received at, the principal executive offices of the Company not later
than 60 days prior to the anniversary date of the immediately preceding annual
meeting of stockholders of the Company. Such stockholder's notice shall set
forth (a) as to each person whom the stockholder proposes to nominate for
election or re-election as a director and as to the stockholder giving the
notice (i) the name, age, business address and residence address of such person,
(ii) the principal occupation or employment of such person, (iii) the class and
number of shares of Company stock which are Beneficially Owned (as defined in
Article 9.A.(e) of the Articles) by such person on the date of such stockholder
notice, and (iv) any other information relating to such person that is required
to be disclosed in solicitations of proxies with respect to nominees for
election as directors, pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "1934 Act"), including, but not limited to,
information required to be disclosed by Items 4, 5, 6 and 7 of Schedule 14A; and
(b) as to the stockholder giving the notice (i) the name and address, as they
appear on the Company's books, of such stockholder and any other stockholders
known by such stockholder to be supporting such nominees and (ii) the class and
number of shares of Company stock which are Beneficially Owned by such
stockholder on the date of such stockholder notice and, to the extent known, by
any other stockholders known by such stockholder to be supporting such nominees
on the date of such stockholder notice. At the request of the Board of
Directors, any person nominated by, or at the direction of, the Board for
election as a director at an annual meeting shall furnish to the Secretary of
the Company that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee.
The Board of Directors or a designated committee thereof may reject any
nomination by a stockholder not made in accordance with the requirements of
Article 6.F. Notwithstanding the foregoing procedures, if neither the Board of
Directors nor such committee makes a determination as to the validity of any
nominations by a stockholder, the presiding officer of the annual meeting shall
determine and declare at the annual meeting whether the nomination was made in
accordance with the terms of Article 6.F.
COMMITTEES AND MEETINGS OF THE BOARD; DIRECTOR NOMINATIONS
The Board of Directors of the Company has established an Audit Committee
and a Compensation Committee. The Board of Directors of the Company meets on a
monthly basis and may have additional special meetings. Nominations for director
of the Company are made by the full Board of Directors. During the fiscal year
ended December 31, 1998, the Board of Directors met thirteen times. No director
attended fewer than 75% of the total number of Board meetings or committee
meetings on which he served that were held during this period.
AUDIT COMMITTEE. The Audit Committee consists of Messrs. Barton, Jr.
(Chairman), Shea and Himel. The Audit Committee supervises the Company's
Internal Auditor and is responsible for reviewing the performance, and
overseeing the engagement, of the Company's independent certified public
accountants. The Audit Committee met ten times during fiscal 1998. No member of
the Audit Committee is a current or former employee of the Company or any of its
subsidiaries.
COMPENSATION COMMITTEE. The Compensation Committee consists of Messrs.
Broussard, Fenstermaker and Shea. The Compensation Committee reviews the
compensation of the Company's executive officers. The Compensation Committee met
five times during fiscal 1998. The report of the Compensation Committee with
respect to compensation for the Chief Executive Officer and all other executive
officers for the fiscal year ended December 31, 1998 is set forth below.
In addition to the committees described above, the Bank has established
committees which include members of the Board and senior management and which
meet as required. These committees include, among others, an Audit
- 4 -
<PAGE>
Committee, Budget and Planning Committee, Executive Committee, Compensation
Committee, Investment Committee, Commercial Loan Committee and Loan Committee.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Set forth below is information with respect to the principal occupations
during the last five years for the seven executive officers of the Company and
the Bank who do not serve as directors.
RONNIE J. FORET, Age 48, is Executive Vice President - Commercial Division
of the Bank. Prior to joining the Bank in March 1996, he served as Executive
Vice President from 1994 to March 1996, and Senior Vice President of First
Commerce Corporation in New Orleans, Louisiana.
JOHN J. BALLATIN, Age 54, is Executive Vice President - Operations of the
Bank, and has served as an Executive Vice President since May 1997. Prior to
joining the Bank, Mr. Ballatin served as Executive Vice President of Operations
for Jefferson Guaranty Bank from March 1985 to April 1997.
DONALD P. LEE, Age 39, is Senior Vice President - Risk Manager and In-House
Legal Counsel of the Bank. Prior to joining the Bank, Mr. Lee served as
Executive Vice President and In-House Counsel at Royal Card Bank from May 1996
to June 1997. From March 1994 to May 1996 he served as Vice President and
In-House Counsel at Bank of Lafayette. From May 1993 to February 1994 he served
as a trial consultant for Litigation Dynamics, Inc.
JAMES R. MCLEMORE, Age 39, is Senior Vice President and Chief Financial
Officer of the Bank. Prior to joining the Bank in August 1998, Mr. McLemore
served as a staff accountant with the Securities and Exchange Commission from
September 1997 to August 1998 and as the Vice President and Treasurer of Bank
Corporation of Georgia from December 1990 to January 1997.
JOSE ORLANDO MUNOZ, Age 33, is Senior Vice President - Retail Division of
the Bank. Prior to joining the Bank in June 1998, Mr. Munoz worked for Bank One
Texas, N.A. as Mobile Sales - Group Sales Manager from December 1996 to June
1998, as Credit Sales - Group Sales Manager from January 1996 to December 1996
and as a Banking Center Manager from March 1993 to December 1995.
RONALD J. HOWTON, Age 43, is Senior Vice President - Credit Administration
of the Bank. Prior to joining the Bank in April 1996, Mr. Howton served as Vice
President - Commercial Loan Officer of Premier Bank of Lafayette from 1985 to
1996.
JANEL F. TATE, Age 45, is Senior Vice President - Mortgage Lending Manager
of the Bank. Ms. Tate has been with the Bank since 1984 and prior to the
appointment to her current position in September 1997, Ms. Tate served as Senior
Vice President - Compliance Manager from October 1996 to September 1997 and as
Vice President - Mortgage Executive prior thereto.
COMPLIANCE WITH SECTION 16(a) OF THE 1934 ACT
Section 16(a) of the 1934 Act, requires the officers and directors, and
persons who own more than 10% of the Company's Common Stock to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the National Association of Securities Dealers, Inc. Officers, directors and
greater than 10% stockholders are required by regulation to furnish the Company
with copies of all Section 16(a) forms they file. Other than DePrince, Race &
Zollo, Inc., the Company knows of no person who owns 10% or more of the
Company's Common Stock.
Based solely on review of the copies of such forms furnished to the
Company, or written representations from its officers and directors, the Company
believes that during, and with respect to, 1998, the Company's officers and
directors complied in all respects with the reporting requirements promulgated
under Section 16(a) of the 1934 Act.
- 5 -
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table includes, as of the Voting Record Date, certain
information as to the Common Stock beneficially owned by (i) the only persons or
entities, including any "group" as that term is used in Section 13(d)(3) of the
1934 Act, who or which was known to the Company to be the beneficial owner of
more than 5% of the issued and outstanding Common Stock, (ii) the directors of
the Company, (iii) certain executive officers of the Company, and (iv) all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Common Stock
Beneficially Owned as of
March 9, 1999(1)
--------------------------------------
Name of Beneficial Owner Amount Percentage
- -------------------------------------------------------------------- -------------------- ----------------
<S> <C> <C>
ISB Financial Corporation 573,654(2) 8.3%
Employee Stock Ownership Plan Trust
1101 E. Admiral Doyle Drive
New Iberia, Louisiana 70560
John Hancock Mutual Life 448,000(3) 6.6
Insurance Company
John Hancock Place
P. O. Box 111
Boston, Massachusetts 02199
DePrince, Race & Zollo, Inc. 701,900(4) 10.2
201 S. Orange Ave., Suite 850
Orlando, Florida 32801
David M. Knott 351,500(5) 5.1
485 Underhill Boulevard, Suite 205
Syosset, New York 11791
Directors:
Elaine D. Abell 23,146(6) *
Harry V. Barton, Jr. 19,976(7) *
Cecil C. Broussard 35,292(8) *
William H. Fenstermaker 23,623(9) *
Ray Himel 21,803(10) *
Larrey G. Mouton 116,431(11) 1.7
Emile J. Plaisance, Jr. 28,785(12) *
E. Stewart Shea, III 28,519(13) *
Executive officers who are not Directors:
John J. Ballatin 13,230(14) *
Ronnie J. Foret 27,138(15) *
All directors and executive officers of the Company and the Bank as a 361,549 5.3%
group (15 persons)
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
- 6 -
<PAGE>
- ----------------
* Represents less than 1% of the outstanding Common Stock.
(1) For purposes of this table, pursuant to rules promulgated under the 1934
Act, an individual is considered to beneficially own shares of Common Stock
if he or she directly or indirectly has or shares (1) voting power, which
includes the power to vote or to direct the voting of the shares; or (2)
investment power, which includes the power to dispose or direct the
disposition of the shares. Unless otherwise indicated, an individual has
sole voting power and sole investment power with respect to the indicated
shares.
(2) The ISB Financial Corporation Employee Stock Ownership Plan Trust was
established pursuant to the ISB Financial Corporation Employee Stock
Ownership Plan ("ESOP") by an agreement between the Company and Messrs.
Broussard, Fenstermaker and Shea, who act as trustees of the plan
("Trustees"). As of the Voting Record Date, 246,999 shares held in the ESOP
Trust had been allocated to the accounts of participating employees. Under
the terms of the ESOP, the Trustees must vote all allocated shares held in
the ESOP in accordance with the instructions of the participating
employees, and allocated shares for which employees do not give
instructions, and unallocated shares, will be voted in the same ratio on
any matter as to those shares for which instructions are given. The amount
of Common Stock beneficially owned by each individual trustee or all
directors and executive officers as a group does not include the
unallocated shares held by the ESOP Trust.
(3) Pursuant to a Schedule 13G, filed on January 15, 1999, John Hancock
Advisers, Inc., a registered investment adviser and indirect, wholly-owned
subsidiary of John Hancock Mutual Life Insurance Company, has sole voting
and dispositive power pursuant to advisory agreements with the following:
the John Hancock Bank and Thrift Opportunity Fund, which holds 106,000
shares of Common Stock, the John Hancock Bank Regional Fund, which holds
320,000 shares of Common Stock, and the Southeastern Thrift and Bank Fund,
Inc., which holds 22,000 shares of Common Stock.
(4) As reported in a Schedule 13G filed by DePrince, Race & Zollo, Inc. on
February 12, 1999.
(5) As reported in a Schedule 13G filed by Mr. Knott on February 3, 1999.
(6) Includes 5,193 shares held by Ms. Abell's spouse, which Ms. Abell may be
deemed to beneficially own, 5,751 shares held in the Company's Recognition
and Retention Plan of Iberia Savings ("RRP") Trust ("RRP Trust"), which may
be voted by her, and 5,752 shares which may be acquired upon the exercise
of stock options exercisable within sixty (60) days of the Voting Record
Date.
(7) Includes 1,778 shares held by Mr. Barton's spouse, which Mr. Barton may be
deemed to beneficially own, 1,265 shares held by Mr. Barton as custodian
for his children, 5,751 shares held in the RRP Trust, which may be voted by
him, and 5,752 shares which may be acquired upon the exercise of stock
options exercisable within sixty (60) days of the Voting Record Date.
(8) Includes a total of 406 shares held by Mr. Broussard's spouse as custodian
for his children, which Mr. Broussard may be deemed to beneficially own,
5,751 shares held in the RRP Trust, which may be voted by him, and 5,752
shares which may be acquired upon the exercise of stock options exercisable
within sixty (60) days of the Voting Record Date. Excludes the shares held
by the ESOP, of which Mr. Broussard is one of three trustees.
(FOOTNOTES CONTINUED ON NEXT PAGE)
- 7 -
<PAGE>
(FOOTNOTES CONTINUED FROM PREVIOUS PAGE)
- ----------------
(9) Includes 1,820 shares held by Mr. Fenstermaker's 401(k) retirement plan,
5,751 shares held in the RRP Trust, which may be voted by him, and 5,752
shares which may be acquired upon the exercise of stock options exercisable
within sixty (60) days of the Voting Record Date. Excludes the shares held
by the ESOP, of which Mr. Fenstermaker is one of three trustees.
(10) Includes 5,751 shares held in the RRP Trust, which may be voted by him, and
5,752 shares which may be acquired upon the exercise of stock options
exercisable within sixty (60) days of the Voting Record Date.
(11) Includes 616 shares held by Mr. Mouton's spouse, which Mr. Mouton may be
deemed to beneficially own, an estimated 8,361 shares which have been
allocated to Mr. Mouton's account in the ESOP, 11,072 shares held in Mr.
Mouton's account in the Bank's 401(k) retirement plan, 21,087 shares held
in the RRP Trust, which may be voted by him, and 52,720 shares which may be
acquired upon the exercise of stock options exercisable within sixty (60)
days of the Voting Record Date.
(12) Consists of 5,000 shares held by Mr. Plaisance's spouse, which Mr.
Plaisance may be deemed to beneficially own, 9,982 shares held by Mr.
Plaisance's 401(k) retirement plan, 5,751 shares held in the RRP Trust,
which may be voted by him, and 5,752 shares which may be acquired upon the
exercise of stock options exercisable within sixty (60) days of the Voting
Record Date.
(13) Includes 1,000 shares held by Mr. Shea as custodian for his children, 5,751
shares held in the RRP Trust, which may be voted by him, and 5,752 shares
which may be acquired upon the exercise of stock options exercisable within
sixty (60) days of the Voting Record Date. Excludes the shares held by the
ESOP, of which Mr. Shea is one of three trustees.
(14) Includes 647 shares held by Mr. Ballatin's account in the Bank's 401(k)
retirement plan, an estimated 754 shares which have been allocated to Mr.
Ballatin's account in the ESOP, 8,572 shares held by the RRP Trust, which
may be voted by him, and 1,428 shares which may be acquired upon the
exercise of stock options exercisable within sixty (60) days of the Voting
Record Date.
(15) Includes 1,383 shares which have been allocated to Mr. Foret's account in
the Bank's 401(k) retirement plan, 750 shares held in his spouse's IRA
account, 11,798 shares held by the RRP Trust, which may be voted by him, an
estimated 1,979 shares held for the account of Mr. Foret in the ESOP and
7,908 shares which may be acquired upon the exercise of stock options
exercisable within sixty (60) days of the Voting Record Date.
- 8 -
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Directors and officers do not receive separate compensation directly from
the Company. All compensation is paid by the Bank. The following table sets
forth a summary of certain information concerning the compensation paid for
services rendered in all capacities during the years ended December 31, 1998,
1997 and 1996 to the President and Chief Executive Officer and the other
executive officers of the Company and its subsidiaries whose total compensation
during the fiscal year exceeded $100,000.
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
---------------------------------------- ------------------------- -------
Other Securities
Name and Annual Restricted Underlying LTIP
Principal Position Year Salary Bonus Compensation(1) Stock(2) Options Payouts
------------------ ---- -------- ------- --------------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Larrey G. Mouton 1998 $200,003 $ 525 -- $ -- -- --
President and Chief 1997 200,003 500 -- -- -- --
Executive Officer 1996 207,696 475 -- 468,677(3) 184,516 --
Ronnie J. Foret 1998 $121,150 $5,100 -- $ -- -- --
Executive Vice President 1997 125,192 7,810 -- 178,500(4) -- --
1996 94,615 165 -- 128,873(4) 27,677 --
John J. Ballatin 1998 $103,000 $2,500 -- $ -- 5,000 --
Executive Vice President 1997 63,350(9) 14,000 -- 247,500(5) 10,000 --
1996 -- -- -- -- -- --
<CAPTION>
Name and All Other
Principal Position Year Compensation
------------------ ---- ----------------
<S> <C> <C>
Larrey G. Mouton 1998 $38,159(6)
President and Chief 1997 55,804(6)
Executive Officer 1996 46,916(6)
Ronnie J. Foret 1998 $21,904(7)
Executive Vice President 1997 33,997(7)
1996 --
John J. Ballatin 1998 $16,693(8)
Executive Vice President 1997 --
1996 --
</TABLE>
- ---------------
(1) Does not include amounts attributable to miscellaneous benefits received by
the named executive officer. In the opinion of management of the Bank, the
costs to the Bank of providing such benefits to the named executive officer
during the individual periods did not exceed the lesser of $50,000 or 10%
of the total of annual salary and bonus reported for the individual.
(2) Reflects the value of shares of restricted stock granted pursuant to the
RRP. Such restricted stock vests over seven years, 14.29% per year from the
date of grant. Cash dividends declared in respect of restricted stock held
by the RRP Trust is paid by the RRP Trust, as soon as practicable after the
RRP Trust's receipt thereof, to the recipient on whose behalf such
restricted stock is then held by the RRP Trust. Any stock dividends
declared in respect of restricted stock held by the RRP Trust are held by
the RRP Trust until the subject restricted stock is distributed to the
recipient thereof.
(3) Represents 29,523 shares of restricted Common Stock granted in 1996
pursuant to the RRP, which had the indicated value on the date of grant and
a fair market value of $653,196 at December 31, 1998.
(4) Represents 8,118 and 7,000 shares of restricted Common Stock granted in
1996 and 1997, respectively, pursuant to the RRP, which had the indicated
values on the dates of grant. Mr. Foret had aggregate restricted stock
holdings of 15,118 shares with a fair market value of $334,486 at December
31, 1998.
(FOOTNOTES CONTINUED ON NEXT PAGE)
- 9 -
<PAGE>
(FOOTNOTES CONTINUED FROM PREVIOUS PAGE)
- ------------
(5) Represents 10,000 shares of restricted Common Stock granted in 1997
pursuant to the RRP, which had the indicated value on the date of grant.
Mr. Ballatin had aggregate restricted stock holdings of 10,000 shares with
a fair market value of $22,125 at December 31, 1998.
(6) Represents the fair market value of the shares of Common Stock allocated to
Mr. Mouton's account in 1998, 1997 and 1996 pursuant to the Company's ESOP.
(7) Represents the fair market value of the shares of Common Stock allocated to
Mr. Foret's account in 1998 and 1997 pursuant to the Company's ESOP.
(8) Represents the fair market value of the shares of Common Stock allocated to
Mr. Ballatin's account in 1998 pursuant to the Company's ESOP.
(9) Mr. Ballatin was hired as the Company's Executive Vice President effective
May 10, 1997.
STOCK OPTIONS
The following table sets forth certain information concerning grants of
stock options awarded to the named executive officers during fiscal 1998.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
Individual Grants of Stock Price Appreciation
- ------------------------------------------------------------------------------------------ for Option Term(3)
Options % of Total Options Granted Exercise Expiration ---------------------------
Name Granted to Employees(1) Price(2) Date 5% 10%
---- --------- -------------------------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Larrey G. Mouton -- -- -- -- -- --
Ronnie J. Foret -- -- -- -- -- --
John J. Ballatin 5,000 15.0% $27.8125 5/29/08 $87,456 $221,630
</TABLE>
- ---------
(1) Percentage of options granted to all employees during 1998.
(2) In each case the exercise price was based on the fair market value of a
share of Common Stock on the date of grant.
(3) Amounts represent hypothetical gains that could be achieved for the options
if exercised at the end of the option term. These gains are based on
assumed rates of stock price appreciation of 5% and 10% compounded annually
from the date the options were granted to their expiration date. The gains
shown are net of the option exercise price, but do not include deductions
for taxes or other expenses associated with the exercise of the option or
the sale of the underlying shares. The actual gains, if any, on the
exercise of stock options will depend, in part, on the future performance
of the Common Stock, the option holder's continued employment throughout
the option period, and the date on which the options are exercised.
- 10 -
<PAGE>
The following table sets forth information concerning the value of stock
options held at December 31, 1998 by the named executive officers. Such officers
did not exercise any options during 1998.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR END OPTION VALUES
Number of Value of Unexercised
Unexercised In-The-Money
Shares Options at Year End Options at Year End(1)
Acquired on Value ----------------------------------- -----------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ---------------- ------------ --------------- ----------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Larrey G. Mouton -- -- 52,718 131,798 $329,488 $823,738
Ronnie J. Foret -- -- 7,908 19,769 $ 49,425 $123,556
John J. Ballatin -- -- 1,429 13,571 -- --
</TABLE>
- -----------
(1) Calculated by determining the difference between the fair market value of
the Common Stock underlying the options at December 31, 1998 ($22.125) and
the exercise price of the options.
DIRECTOR'S COMPENSATION
During 1998, members of the Board of Directors of the Bank received fees of
$2,000 per month for their services as directors of the Bank, except for the
Chairman, who received fees of $2,300 per month, and Mr. Mouton, who was not
compensated for such service. Members of the Board of Directors receive no
additional compensation for their participation in any of the Committees or for
services as directors of the Company.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company and the Bank (collectively the "Employers") have entered into
an employment agreement with Mr. Mouton. On an annual basis, the term of
employment is automatically extended for an additional one-year period beyond
the then effective expiration date unless written notice from the Employers or
the Executive is received not less than 30 days prior to an anniversary date
advising the other party that the agreement shall not be further extended. The
agreement is terminable with or without cause by the Employers. The officer
shall have no right to compensation or other benefits pursuant to the employment
agreement for any period after voluntary termination or termination by the
Employers for cause, disability or retirement, provided, however, that (i) in
the event that the officer terminates his employment because of failure of the
Employers to comply with any material provision of the employment agreement he
shall be entitled to severance payments equal to the greater of the amount of
his base salary for the remaining term of the agreement or his base salary
multiplied by 1.0 or (ii) the employment agreement is terminated by the
Employers other than for cause, disability, retirement or death or by the
officer as a result of certain adverse actions which are taken with respect to
the officer's employment following a Change in Control of the Company, as
defined, Mr. Mouton will be entitled to cash severance payments equal to the
greater of the amount of his base salary for the remaining term of the agreement
or his base salary at the date of termination multiplied by 2.0. In addition,
Mr. Mouton will be entitled to a continuation of benefits similar to those he is
receiving at the time of such termination for the period otherwise remaining
under the term of the agreement or until he obtains full-time employment with
another employer, whichever occurs first. A Change in Control is generally
defined in the employment agreement to include any change in control required to
be reported under the federal securities laws, as well as the acquisition by any
person of 25% or more of the Company's outstanding voting securities. Mr.
Mouton's employment agreement
- 11 -
<PAGE>
provides that in the event that any payments to be paid thereunder are deemed to
constitute "excess parachute payments" and, therefore, subject to an excise tax
under Section 4999 of the Code, the Employers may (i) contest the liability and
exhaust all administrative and judicial appeals to that end, and/or (ii) pay Mr.
Mouton an amount equal to the excise tax for which he is liable plus an amount
equal to any additional federal, state, or local taxes that may result because
of such additional payment. Mr. Mouton's agreement also provides that in the
event of Mr. Mouton's death during the term of the agreement, his estate will
receive payments equal to the amount of compensation for 12 months at his
current salary at the time of his death.
The Employers have also entered into severance agreements with Messrs.
Ronnie J. Foret, John J. Ballatin, Donald P. Lee and James R. McLemore, Jr.
Under the terms of such severance agreements, the Employers have agreed that in
the event that such officer's employment is terminated as a result of certain
adverse actions which are taken with respect to the officer's employment
following a Change in Control of the Company, as defined, such officer will be
entitled to a cash severance amount equal to his base salary multiplied by 2.0.
Although the above-described employment and severance agreements could
increase the cost of any acquisition of control of the Company, management of
the Company does not believe that the terms thereof would have a significant
anti-takeover effect.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Bank's policy provides that all loans made by the Bank to its directors
and officers are made in the ordinary course of business, are made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and do not
involve more than the normal risk of collectibility or present other unfavorable
features. As of December 31, 1998, three of the Bank's directors and executive
officers had aggregate loan balances in excess of $60,000, which amounted to
$652,421 in the aggregate, or approximately 0.53% of the Company's equity as of
such date. All such loans were made by the Bank in the ordinary course of
business and were not made with favorable terms nor did they involve more than
the normal risk of collectibility. As of December 31, 1998, all such loans were
current.
- 12 -
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The goals of the Compensation Committee are to assist the Bank in
attracting and retaining qualified management, motivating executives to achieve
performance goals, rewarding management for outstanding performance and to
ensure that the financial interests of the Company's management and shareholders
are satisfied.
The Committee considered several financial and non-financial
accomplishments in setting the compensation of the Chief Executive Officer and
other executive officers, including but not limited to, net income of the Bank,
profitability ratios, satisfactory regulatory examinations, overall growth of
the Bank and market value of the Bank. The committee reviewed and considered the
SNL Executive Compensation Review and the Watson Company Salary Survey for
Executive Officers for a comparison of compensation paid by the Bank's peer
group.
During 1998, Mr. Mouton's base salary was $200,000 and was determined on an
arms'-length basis in 1995 when the Company and the Bank entered into an
employment agreement with Mr. Mouton. In determining Mr. Mouton's base salary,
the compensation considered the above-referenced factors, including the
compensation analyses prepared by the referenced third parties. Under the terms
of his employment agreement, Mr. Mouton's salary may be increased, but not
decreased, by the Board of Directors and Mr. Mouton may receive bonuses, when,
as, and if determined in the sole discretion of the Board of Directors. The
Committee also considers the factors described in the immediately preceding
paragraph in establishing compensation for the other executive officers of the
Bank. During 1998, executive officers of the Bank, except for Mr. Mouton, also
were eligible to participate in the Bank's bonus plan provided that certain
pre-determined performance criteria are satisfied. In determining the awards
granted to the Bank's executive officers under the Company's 1996 Stock Option
Plan and RRP, other than Mr. Mouton who did not receive any such awards in 1998,
the Committee considered the contributions made by such officer to the Company
and the Bank and such officer's responsibilities. The awards granted under the
1996 Stock Option Plan and RRP were also designed to provide an incentive to
executive officers to contribute to the Company's continued success in the
future. Also during 1998, the Board of Directors adopted an Executive Bonus Plan
which provides for bonuses to be paid to executive officers based upon certain
performance criteria, which consists primarily of meeting net income targets.
Although the Executive Bonus Plan was in effect during 1998, bonuses payable
thereunder for 1998 were not paid until March 5, 1999.
Following review and approval by the Committee, all issues pertaining to
executive compensation are submitted to the full Board of Directors for their
approval.
Respectfully submitted,
Cecil C. Broussard
William H. Fenstermaker
E. Stewart Shea, III
- 13 -
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Common
Stock over a measurement period since the Company's initial issuance of Common
Stock in April 1995 with (i) the cumulative total return on the stocks included
in the National Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") Total Return Index (for United States companies) and (ii) the
cumulative total return on the stocks included in the SNL Peer Group Index. All
of these cumulative returns are computed assuming the reinvestment of dividends
which were paid during the applicable time period.
[THE PERFORMANCE GRAPH DEPICTS THE FOLLOWING:]
<TABLE>
<CAPTION>
PERIOD ENDING
------------------------------------------------------------------------------
INDEX 4/7/95 12/31/95 12/31/96 12/31/97 12/31/98
- ----- ------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
ISB Financial Corporation 100.00 117.64 144.13 243.28 184.37
NASDAQ - Total U.S. 100.00 130.26 160.18 196.51 276.24
SNL $1B-$5B Bank Asset-Size Index 100.00 127.87 165.77 276.45 275.81
</TABLE>
- 14 -
<PAGE>
PROPOSAL TO ADOPT THE 1999 STOCK OPTION PLAN
GENERAL
The Board of Directors has adopted the Option Plan which is designed to
attract and retain qualified personnel in key positions, provide directors,
officers and key employees with a proprietary interest in the Company as an
incentive to contribute to the success of the Company, and reward key employees
and directors for outstanding performance and the attainment of targeted goals.
The Option Plan provides for the grant of incentive stock options ("incentive
stock options") intended to comply with the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended ("Code"), non-qualified stock options
and stock appreciation rights (collectively "Awards"). Awards will be available
for grant to directors and key employees of the Company and any of its
subsidiaries, except that non-employee directors will be eligible to receive
only awards of non-qualified stock options. If stockholder approval is obtained,
options to acquire shares of Common Stock will be awarded to officers, key
employees and directors of the Company and the Bank with an exercise price equal
to the fair market value of the Common Stock on the date of grant.
DESCRIPTION OF THE OPTION PLAN
The following description of the Option Plan is a summary of its terms and
is qualified in its entirety by reference to the Option Plan, a copy of which is
attached hereto as Appendix A.
ADMINISTRATION. The Option Plan will be administered and interpreted by a
committee of the Board of Directors ("Committee") that is comprised solely of
two or more non-employee directors. The members of the Committee will initially
consist of Messrs. Broussard, Fenstermaker and Shea.
NUMBER OF SHARES COVERED BY THE OPTION PLAN. A total of 300,000 shares of
Common Stock has been reserved for future issuance pursuant to the Option Plan.
In the event of a stock split, subdivision, stock dividend or any other capital
adjustment, the number of shares of Common Stock under the Option Plan, the
number of shares to which any Award relates and the exercise price per share
under any option or stock appreciation right shall be adjusted to reflect such
increase or decrease in the total number of shares of Common Stock outstanding
or such capital adjustment.
STOCK OPTIONS. Under the Option Plan, the Board of Directors or the
Committee will determine which officers, key employees and non-employee
directors will be granted options, whether such options will be incentive or
non-qualified options (in the case of options granted to employees), the number
of shares subject to each option, the exercise price of each option and whether
such options may be exercised by delivering other shares of Common Stock. The
per share exercise price of both an incentive stock and a non-qualified option
shall at least equal the fair market value of a share of Common Stock on the
date the option is granted (110% of fair market value in the case of incentive
stock options granted to employees who are 10% stockholders).
All options granted to participants under the Option Plan shall become
vested and exercisable at the rate, to the extent and subject to such
limitations and conditions as may be specified by the Board or the Committee.
Notwithstanding the foregoing, no vesting shall occur on or after a
participant's employment or service with the Company is terminated for any
reason other than his death or disability. Unless the Committee or Board of
Directors shall specifically state otherwise at the time an option is granted,
all options granted to participants shall become vested and exercisable in full
on the date an optionee terminates his employment or service with the Company or
a subsidiary company because of his death or disability. All options granted
pursuant to the Option Plan shall become immediately vested and exercisable in
full on the date an optionee terminates his employment with the Company or a
subsidiary company due to retirement. In addition, all stock options granted
under the Option Plan shall become immediately vested and exercisable in full as
of the effective date of a change in control of the Company.
- 15 -
<PAGE>
Each stock option or portion thereof shall be exercisable at any time on or
after it vests and is exercisable until the earlier of ten years after its date
of grant or six months after the date on which the optionee's employment
terminates (three years after termination of service in the case of non-employee
directors), unless extended by the Committee or the Board of Directors to a
period not to exceed five years from such termination. Unless stated otherwise
at the time an option is granted, (i) if an optionee terminates his employment
or service with the Company as a result of disability or retirement without
having fully exercised his options, the optionee shall have three years
following his termination due to disability or retirement to exercise such
options, and (ii) if an optionee terminates his employment or service with the
Company following a change in control of the Company without having fully
exercised his options, the optionee shall have the right to exercise such
options during the remainder of the original ten year term of the option.
However, failure to exercise incentive stock options within three months after
the date on which the optionee's employment terminates may result in adverse tax
consequences to the optionee. If an optionee dies while serving as an employee
or a non-employee director or terminates employment or service as a result of
disability or retirement and dies without having fully exercised his options,
the optionee's executors, administrators, legatees or distributees of his estate
shall have the right to exercise such options during the one year period
following his death. In no event shall any option be exercisable more than ten
years from the date it was granted.
Stock options are non-transferable except by will or the laws of descent
and distribution, and during an optionee's lifetime, shall be exercisable only
by such optionee or his guardian or legal representative. Notwithstanding the
foregoing, an optionee who holds non-qualified options may transfer such options
to his or her spouse, lineal ascendants, lineal descendants, or to a duly
established trust for the benefit of one or more of these individuals. Options
so transferred may thereafter be transferred only to the optionee who originally
received the grant or to an individual or trust to whom the optionee could have
initially transferred the option. Options which are so transferred shall be
exercisable by the transferee according to the same terms and conditions as
applied to the optionee.
Payment for shares purchased upon the exercise of options may be made (i)
in cash or by check, (ii) by delivery of a properly executed exercise notice,
together with irrevocable instructions to a broker to sell the shares and then
to properly deliver to the Company the amount of sale proceeds to pay the
exercise price, all in accordance with applicable laws and regulations or (iii)
if permitted by the Committee or the Board, by delivering shares of Common Stock
(including shares acquired pursuant to the exercise of an option) with a fair
market value equal to the total option price of the shares being acquired
pursuant to the option, by withholding some of the shares of Common Stock which
are being purchased upon exercise of an option, or any combination of the
foregoing. With respect to subclause (iii) in the preceding sentence, the shares
of Common Stock delivered to pay the purchase price must have either been (a)
purchased in open market transactions or (b) issued by the Company pursuant to a
plan thereof, in each case more than six months prior to the exercise date of
the option.
If the fair market value of a share of Common Stock at the time of exercise
is greater than the exercise price per share, this feature would enable the
optionee to acquire a number of shares of Common Stock upon exercise of the
Option, which is greater than the number of shares delivered as payment for the
exercise price. In addition, an optionee can exercise his or her option in whole
or in part and then deliver the shares acquired upon such exercise (if permitted
by the Committee or the Board) as-payment for the exercise price of all or part
of his options. Again, if the fair market value of a share of Common Stock at
the time of exercise is greater than the exercise price per share, this feature
would enable the optionee to either (i) reduce the amount of cash required to
receive a fixed number of shares upon exercise of the option or (ii) receive a
greater number of shares upon exercise of the option for the same amount of cash
that would have otherwise been used. Because options may be exercised in part
from time to time, the ability to deliver Common Stock as payment of the
exercise price could enable the optionee to turn a relatively small number of
shares into a large number of shares.
STOCK APPRECIATION RIGHTS. Under the Option Plan, the Board of Directors or
the Committee is authorized to grant rights to optionees ("stock appreciation
rights") under which an optionee may surrender any exercisable incentive stock
option or non-qualified stock option or part thereof in return for payment by
the Company to the optionee of cash or Common Stock, or a combination thereof,
in an amount equal to the excess of the fair market value of the shares of
Common Stock subject to option at the time over the option price of such shares.
Stock Appreciation
- 16 -
<PAGE>
Rights may be granted concurrently with the stock options to which they relate
or, with respect to non-qualified options, at any time thereafter which is prior
to the exercise or expiration of such options.
AMENDMENT AND TERMINATION OF THE OPTION PLAN. Unless sooner terminated, the
Option Plan shall continue in effect for a period of ten years from February 17,
1999, the date the Option Plan was adopted by the Board of Directors.
Termination of the Option Plan shall not affect any previously granted Awards.
FEDERAL INCOME TAX CONSEQUENCES. Under current provisions of the Code, the
federal income tax treatment of incentive stock options and non-qualified stock
options is different. As regards incentive stock options, an optionee who meets
certain holding period requirements will not recognize income at the time the
option is granted or at the time the option is exercised, and a federal income
tax deduction generally will not be available to the Company at any time as a
result of such grant or exercise. With respect to non-qualified stock options,
the difference between the fair market value on the date of exercise and the
option exercise price generally will be treated as compensation income upon
exercise, and the Company will be entitled to a deduction in the amount of
income so recognized by the optionee. Upon the exercise of a stock appreciation
right, the holder will realize income for federal income tax purposes equal to
the amount received by him, whether in cash, shares of stock or both, and the
Company will be entitled to a deduction for federal income tax purposes in the
same amount.
Section 162(m) of the Code generally limits the deduction for certain
compensation in excess of $1.0 million per year paid by a publicly-traded
corporation to its chief executive officer and the four other most highly
compensated executive officers ("covered executives"). Certain types of
compensation, including compensation based on performance goals, are excluded
from the $1.0 million deduction limitation. In order for compensation to qualify
for this exception: (i) it must be paid solely on account of the attainment of
one or more preestablished, objective performance goals; (ii) the performance
goal must be established by a compensation committee consisting solely of two or
more outside directors, as defined; (iii) the material terms under which the
compensation is to be paid, including performance goals, must be disclosed to,
and approved by, stockholders in a separate vote prior to payment; and (iv)
prior to payment, the compensation committee must certify that the performance
goals and any other material terms were in fact satisfied (the "Certification
Requirement").
Treasury regulations provide that compensation attributable to a stock
option or stock appreciation right is deemed to satisfy the requirement that
compensation be paid solely on account of the attainment of one or more
performance goals if: (i) the grant is made by a compensation committee
consisting solely of two or more outside directors, as defined; (ii) the plan
under which the option or stock appreciation right is granted states the maximum
number of shares with respect to which options or stock appreciation rights may
be granted during a specified period to any employee; and (iii) under the terms
of the option or stock appreciation right, the amount of compensation the
employee could receive is based solely on an increase in the value of the stock
after the date of grant or award. The Certification Requirement is not necessary
if these other requirements are satisfied.
The Option Plan has been designed to meet the requirements of Section
162(m) of the Code and, as a result, the Company believes that compensation
attributable to stock options and stock appreciation rights granted under the
Option Plan in accordance with the foregoing requirements will be fully
deductible under Section 162(m) of the Code. If the non-excluded compensation of
a covered executive exceeded $1.0 million, however, compensation attributable to
other awards, such as restricted stock, may not be fully deductible unless the
grant or vesting of the award is contingent on the attainment of a performance
goal determined by a compensation committee meeting specified requirements and
disclosed to and approved by the stockholders of the Company. The Board of
Directors believes that the likelihood of any impact on the Company from the
deduction limitation contained in Section 162(m) of the Code is remote at this
time.
The above description of tax consequences under federal law is necessarily
general in nature and does not purport to be complete. Moreover, statutory
provisions are subject to change, as are their interpretations, and their
application may vary in individual circumstances. Finally, the consequences
under applicable state and local income tax laws may not be the same as under
the federal income tax laws.
- 17 -
<PAGE>
ACCOUNTING TREATMENT. Stock appreciation rights will, in most cases,
require a charge against the earnings of the Company each year representing
appreciation in the value of such rights over periods in which they become
exercisable. Such charge is based on the difference between the exercise price
specified in the related option and the current market price of the Common
Stock. In the event of a decline in the market price of the Common Stock
subsequent to a charge against earnings related to the estimated costs of stock
appreciation rights, a reversal of prior charges is made in the amount of such
decline (but not to exceed aggregate prior charges).
Neither the grant nor the exercise of an incentive stock option or a
non-qualified stock option under the Option Plan currently requires any charge
against earnings under generally accepted accounting principles. In October
1995, the Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation," which is effective for transactions entered into after December
15, 1995. This Statement establishes financial accounting and reporting
standards for stock-based employee compensation plans. This Statement defines a
fair value method of accounting for an employee stock option or similar equity
instrument and encourages all entities to adopt that method of accounting for
all of their employee stock compensation plans. However, it also allows an
entity to continue to measure compensation cost for those plans using the
intrinsic value method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees." Under the fair value method,
compensation cost is measured at the grant date based on the value of the award
and is recognized over the service period, which is usually the vesting period.
Under the intrinsic value method, compensation cost is the excess, if any, of
the quoted market price of the stock at grant date or other measurement date
over the amount an employee must pay to acquire the stock. The Company
anticipates that it will use the intrinsic value method, in which event pro
forma disclosure will be included in the footnotes to the Company's financial
statements to show what net income and earnings per share would have been if the
fair value method had been utilized. If the Company elects to utilize the fair
value method, its net income and earnings per share may be adversely affected.
STOCKHOLDER APPROVAL. No Awards will be granted under the Option Plan
unless the Option Plan is approved by stockholders. Stockholder ratification of
the Option Plan will satisfy Nasdaq Stock Market listing and federal tax
requirements.
AWARDS TO BE GRANTED. The Board of Directors of the Company adopted the
Option Plan and the Committee established thereunder intends to grant options to
executive officers, employees and non-employee directors of the Company and the
Bank. However, the timing of any such grants, the individual recipients and the
specific amounts of such grants have not been determined.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR ADOPTION OF
THE 1999 STOCK OPTION PLAN.
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed Castaing, Hussey, Lolan
& Dauterive, L.L.P., independent certified public accountants, to perform the
audit of the Company's financial statements for the year ending December 31,
1999, and further directed that the selection of auditors be submitted for
ratification by the stockholders at the Annual Meeting.
The Company has been advised by Castaing, Hussey, Lolan & Dauterive, L.L.P.
that neither that firm nor any of its associates has any relationship with the
Company or its subsidiaries other than the usual relationship that exists
between independent certified public accountants and clients. Castaing, Hussey,
Lolan & Dauterive, L.L.P. will have one or more representatives at the Annual
Meeting who will have an opportunity to make a statement, if they so desire, and
will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF CASTAING, HUSSEY, LOLAN & DAUTERIVE, L.L.P. AS INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1999.
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STOCKHOLDER'S PROPOSAL CONCERNING AN
AMENDMENT TO THE COMPANY'S BYLAWS
Mr. Arthur R. Mixon, 513 Astor Place, New Iberia, Louisiana 70563, who has
represented that he is the beneficial owner of 164 shares of Common Stock, has
presented the proposal below for stockholder consideration at the Annual
Meeting.
STOCKHOLDER'S PROPOSAL
"The by-laws of ISB Financial Corporation shall be amended to include the
following:
For the two years following the expiration of the restrictions in the
initial articles of incorporation of ISB Financial on offers and acquisitions of
the corporation's equity securities (those being years six and seven after the
mutual-to-stock conversion).
No Person shall directly or indirectly offer to acquire or acquire the
Beneficial Ownership of (i) more than 10% of the issued and outstanding shares
of any class of an equity security of the Corporation, or (ii) any securities
convertible into, or exercisable for, any equity securities of the Corporation
if, assuming conversion or exercise by such Person of all securities of which
such Person is the Beneficial Owner which are convertible into, or exercisable
for, such equity securities (but of no securities convertible into, or
exercisable for, such equity securities of which such Person is not the
Beneficial Owner), such Person would be the Beneficial Owner of more than 10% of
any class of an equity security of the Corporation. The foregoing restrictions
shall not apply to any employee benefit plan established by the Corporation or
the Savings Bank and any trustee of such a plan."
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST THE FOREGOING
STOCKHOLDER'S PROPOSAL.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders of
the Company, which is scheduled to be held in April 2000, must be received at
the principal executive offices of the Company, 1101 E. Admiral Doyle Drive, New
Iberia, Louisiana, Attention: Guyton H. Watkins, Secretary, no later than
November 20, 1999. If such proposal is in compliance with all of the
requirements of Rule 14a-8 under the 1934 Act, it will be included in the proxy
statement and set forth on the form of proxy issued for such annual meeting of
stockholders. It is urged that any such proposals be sent certified mail, return
receipt requested.
Stockholder proposals which are not submitted for inclusion in the
Company's proxy materials pursuant to Rule 14a-8 under the 1934 Act may be
brought before an annual meeting pursuant to Article 9.D. of the Company's
Articles, which provide that the stockholder must give timely notice thereof in
writing to the Secretary of the Company. A stockholder's notice to the Secretary
shall set forth as to each matter the stockholder proposes to bring before the
annual meeting (a) a brief description of the proposal desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (b) the name and address, as they appear on the Company's books,
of the stockholder proposing such business and, to the extent known, any other
stockholders known by such stockholder to be supporting such proposal, (c) the
class and number of shares of the Company's capital stock which are beneficially
owned by the stockholder on the date of such stockholder notice and, to the
extent known, by any other stockholders known by such stockholder to be
supporting such proposal on the date of such stockholder notice, and (d) any
financial interest of the stockholder in such proposal (other than interests
which all stockholders would have). To be timely with respect to the annual
meeting of stockholder scheduled to be held in April 2000, a stockholder's
notice must be delivered to, or mailed and received at, the principal executive
offices of the Company no later than February 21, 2000.
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ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1998 accompanies this Proxy Statement. Such annual report is not
part of the proxy solicitation materials.
Upon receipt of a written request, the Company will furnish to any
stockholder without charge a copy of the Company's Annual Report on Form 10-K
for fiscal 1998 required to be filed with the Commission under the Exchange Act.
Such written requests should be directed to Guyton H. Watkins, Secretary, ISB
Financial Corporation, 1101 East Admiral Doyle Drive, New Iberia, Louisiana
70560. The Form 10-K is not part of the proxy solicitation materials.
OTHER MATTERS
Management is not aware of any business to come before the Annual Meeting
other than the matters described above in this Proxy Statement. However, if any
matters should properly come before the meeting other than those which are
described in this Proxy Statement, it is intended that the proxies solicited
hereby will be voted with respect to those other matters in accordance with the
judgment of the persons voting the proxies.
The cost of the solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending the proxy
materials to the beneficial owner of the Company's Common Stock. In addition to
solicitations by mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional compensation.
By Order of the Board of Directors
/s/ Emile J. Plaisance, Jr.
Emile J. Plaisance, Jr.
CHAIRMAN OF THE BOARD
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APPENDIX A
ISB FINANCIAL CORPORATION
1999 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
ISB Financial Corporation (the "Corporation") hereby establishes this 1999
Stock Option Plan (the "Plan") upon the terms and conditions hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of this Plan is to improve the growth and profitability of the
Corporation and its Subsidiary Companies by providing Employees and Non-Employee
Directors with a proprietary interest in the Corporation as an incentive to
contribute to the success of the Corporation and its Subsidiary Companies, and
rewarding Employees and Non-Employee Directors for outstanding performance and
the attainment of targeted goals. All Incentive Stock Options issued under this
Plan are intended to comply with the requirements of Section 422 of the Code,
and the regulations thereunder, and all provisions hereunder shall be read,
interpreted and applied with that purpose in mind. Each recipient of an Award
hereunder is advised to consult with his or her personal tax advisor with
respect to the tax consequences under federal, state, local and other tax laws
of the receipt and/or exercise of an Award hereunder.
ARTICLE III
DEFINITIONS
3.01 "Award" means an Option or Stock Appreciation Right granted pursuant
to the terms of this Plan.
3.02 "Bank" means IBERIABANK, the wholly owned subsidiary of the
Corporation.
3.03 "Board" means the Board of Directors of the Corporation.
3.04 "Change in Control of the Corporation" shall mean the occurrence of
any of the following: (i) an event that would be required to be reported in
response to Item 1(a) of Form 8-K or Item 6(e) of Schedule 14A of Regulation 14A
pursuant to the Exchange Act, or any successor thereto, whether or not any class
of securities of the Corporation is registered under the Exchange Act; (ii) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the Corporation's then
outstanding securities except for any securities purchased by the Corporation or
the Bank; or (iii) during any period of thirty-six consecutive months during the
term of an Option, individuals who at the beginning of such period constitute
the Board of Directors of the Corporation cease for any reason to constitute at
least a majority thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
3.05 "Code" means the Internal Revenue Code of 1986, as amended.
3.06 "Committee" means a committee of two or more directors appointed by
the Board pursuant to Article IV hereof each of whom shall be a Non-Employee
Director as defined in Rule 16b-3(b)(3)(i) of the Exchange Act or
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any successor thereto and within the meaning of Section 162(m) of the Code and
the regulations promulgated thereunder.
3.07 "Common Stock" means shares of the common stock, par value $1.00 per
share, of the Corporation.
3.08 "Disability" means any physical or mental impairment which qualifies
an individual for disability benefits under the applicable long-term disability
plan maintained by the Corporation or a Subsidiary Company, or, if no such plan
applies, which would qualify such individual for disability benefits under the
long-term disability plan maintained by the Corporation, if such individual were
covered by that plan.
3.09 "Effective Date" means the day upon which the Board approves this
Plan.
3.10 "Employee" means any person who is employed by the Corporation, the
Bank or any Subsidiary Company, or is an Officer of the Corporation, the Bank or
any Subsidiary Company, but not including directors who are not also Officers of
or otherwise employed by the Corporation, the Bank or any Subsidiary Company.
3.11 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
3.12 "Fair Market Value" shall be equal to the fair market value per share
of the Corporation's Common Stock on the date an Award is granted. For purposes
hereof, the Fair Market Value of a share of Common Stock shall be the closing
sale price of a share of Common Stock on the date in question (or, if such day
is not a trading day in the U.S. markets, on the nearest preceding trading day),
as reported with respect to the principal market (or the composite of the
markets, if more than one) or national quotation system in which such shares are
then traded, or if no such closing prices are reported, the mean between the
high bid and low asked prices that day on the principal market or national
quotation system then in use, or if no such quotations are available, the price
furnished by a professional securities dealer making a market in such shares
selected by the Committee.
3.13 "Incentive Stock Option" means any Option granted under this Plan
which the Board intends (at the time it is granted) to be an incentive stock
option within the meaning of Section 422 of the Code or any successor thereto.
3.14 "Non-Employee Director" means a member of the Board of the Corporation
or Board of Directors of the Bank or any successor thereto, including a Director
Emeritus of the Boards of the Corporation and/or the Bank, who is not an Officer
or Employee of the Corporation, the Bank or any Subsidiary Company.
3.15 "Non-Qualified Option" means any Option granted under this Plan which
is not an Incentive Stock Option.
3.16 "Officer" means an Employee whose position in the Corporation or a
Subsidiary Company is that of a corporate officer, as determined by the Board.
3.17 "Option" means a right granted under this Plan to purchase Common
Stock.
3.18 "Optionee" means an Employee or Non-Employee Director or former
Employee or Non-Employee Director to whom an Option is granted under the Plan.
3.19 "Retirement" means a termination of employment which constitutes a
"retirement" under any applicable qualified pension benefit plan maintained by
the Corporation or a Subsidiary Corporation, or, if no such plan is applicable,
which would constitute "retirement" under the Corporation's pension benefit
plan, if such individual were a participant in that plan. With respect to
Non-Employee Directors, retirement means retirement from service on the Board of
Directors of the Corporation or the Bank or any successor thereto (including
service as an Director Emeritus) after attaining the age of 70.
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3.20 "Stock Appreciation Right" means a right to surrender an Option in
consideration for a payment by the Corporation in cash and/or Common Stock, as
provided in the discretion of the Board or the Committee in accordance with
Section 8.10.
3.21 "Subsidiary Companies" means those subsidiaries of the Corporation,
including the Bank, which meet the definition of "subsidiary corporations" set
forth in Section 424(f) of the Code, at the time of granting of the Award in
question.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 DUTIES OF THE COMMITTEE. The Plan shall be administered and
interpreted by the Committee, as appointed from time to time by the Board
pursuant to Section 4.02. The Committee shall have the authority to adopt, amend
and rescind such rules, regulations and procedures as, in its opinion, may be
advisable in the administration of the Plan, including, without limitation,
rules, regulations and procedures which (i) deal with satisfaction of an
Optionee's tax withholding obligation pursuant to Section 12.02 hereof, (ii)
include arrangements to facilitate the Optionee's ability to borrow funds for
payment of the exercise or purchase price of an Award, if applicable, from
securities brokers and dealers, and (iii) include arrangements which provide for
the payment of some or all of such exercise or purchase price by delivery of
previously-owned shares of Common Stock or other property and/or by withholding
some of the shares of Common Stock which are being acquired. The interpretation
and construction by the Committee of any provisions of the Plan, any rule,
regulation or procedure adopted by it pursuant thereto or of any Award shall be
final and binding in the absence of action by the Board.
4.02 APPOINTMENT AND OPERATION OF THE COMMITTEE. The members of the
Committee shall be appointed by, and will serve at the pleasure of, the Board.
The Board from time to time may remove members from, or add members to, the
Committee, provided the Committee shall continue to consist of two or more
members of the Board, each of whom shall be a Non-Employee Director, as defined
in Rule 16b-3(b)(3)(i) of the Exchange Act or any successor thereto. In
addition, each member of the Committee shall be an "outside director" within the
meaning of Section 162(m) of the Code and regulations thereunder at such times
as is required under such regulations. The Committee shall act by vote or
written consent of a majority of its members. Subject to the express provisions
and limitations of the Plan, the Committee may adopt such rules, regulations and
procedures as it deems appropriate for the conduct of its affairs. It may
appoint one of its members to be chairman and any person, whether or not a
member, to be its secretary or agent. The Committee shall report its actions and
decisions to the Board at appropriate times but in no event less than one time
per calendar year.
4.03 REVOCATION FOR MISCONDUCT. The Board or the Committee may by
resolution immediately revoke, rescind and terminate any Option or Performance
Share, or portion thereof, to the extent not yet vested, or any Stock
Appreciation Right, to the extent not yet exercised, previously granted or
awarded under this Plan to an Employee who is discharged from the employ of the
Corporation or a Subsidiary Company for cause, which, for purposes hereof, shall
mean termination because of the Employee's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law,
rule, or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order. Options granted to a Non-Employee Director who is
removed for cause pursuant to the Corporation's Articles of Incorporation and
Bylaws or the Bank's Charter and Bylaws shall terminate as of the effective date
of such removal.
4.04 LIMITATION ON LIABILITY. Neither the members of the Board nor any
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan, any rule, regulation or procedure adopted
by it pursuant thereto or any Awards granted hereunder. If a member of the Board
or the Committee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of anything done or not
done by him in such capacity under or with respect to the Plan, the Corporation
shall, subject to the requirements of applicable laws and regulations, indemnify
such member against all liabilities and expenses (including attorneys' fees),
judgments, fines and amounts paid in
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settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the Corporation and its
Subsidiary Companies and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful.
4.05 COMPLIANCE WITH LAW AND REGULATIONS. All Awards granted hereunder
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
The Corporation shall not be required to issue or deliver any certificates for
shares of Common Stock prior to the completion of any registration or
qualification of or obtaining of consents or approvals with respect to such
shares under any federal or state law or any rule or regulation of any
government body, which the Corporation shall, in its sole discretion, determine
to be necessary or advisable. Moreover, no Option or Stock Appreciation Right
may be exercised if such exercise would be contrary to applicable laws and
regulations.
4.06 RESTRICTIONS ON TRANSFER. The Corporation may place a legend upon any
certificate representing shares acquired pursuant to an Award granted hereunder
noting that the transfer of such shares may be restricted by applicable laws and
regulations.
ARTICLE V
ELIGIBILITY
Awards may be granted to such Employees and Non-Employee Directors of the
Corporation and its Subsidiary Companies as may be designated from time to time
by the Board or the Committee. Awards may not be granted to individuals who are
not Employees or Non-Employee Directors of either the Corporation or its
Subsidiary Companies. Non-Employee Directors shall be eligible to receive only
Awards of Non-Qualified Options pursuant to this Plan.
ARTICLE VI
COMMON STOCK COVERED BY THE PLAN
6.01 NUMBER OF SHARES. The aggregate number of shares of Common Stock which
may be issued pursuant to this Plan, subject to adjustment as provided in
Article IX, shall be 300,000. None of such shares shall be the subject of more
than one Award at any time, but if an Option as to any shares is surrendered
before exercise, or expires or terminates for any reason without having been
exercised in full, or for any other reason ceases to be exercisable, the number
of shares covered thereby shall again become available for grant under the Plan
as if no Awards had been previously granted with respect to such shares.
Notwithstanding the foregoing, if an Option is surrendered in connection with
the exercise of a Stock Appreciation Right, the number of shares covered thereby
shall not be available for grant under the Plan.
6.02 SOURCE OF SHARES. The shares of Common Stock issued under the Plan may
be authorized but unissued shares, treasury shares or shares purchased by the
Corporation on the open market or from private sources for use under the Plan.
ARTICLE VII
DETERMINATION OF
AWARDS, NUMBER OF SHARES, ETC.
The Board or the Committee shall, in its discretion, determine from time to
time which Employees and Non-Employee Directors will be granted Awards under
the Plan, the number of shares of Common Stock subject to each Award, whether
each Option will be an Incentive Stock Option or a Non-Qualified Stock Option
(in the case of Employees) and the exercise price of an Option. In making all
such determinations there shall be taken into account
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the duties, responsibilities and performance of each respective Employee and
Non-Employee Director, his present and potential contributions to the growth and
success of the Corporation, his salary and such other factors deemed relevant to
accomplishing the purposes of the Plan.
ARTICLE VIII
OPTIONS AND STOCK APPRECIATION RIGHTS
Each Option granted hereunder shall be on the following terms and
conditions:
8.01 STOCK OPTION AGREEMENT. The proper Officers on behalf of the
Corporation and each Optionee shall execute a Stock Option Agreement which shall
set forth the total number of shares of Common Stock to which it pertains, the
exercise price, whether it is a Non-Qualified Option or an Incentive Stock
Option, and such other terms, conditions, restrictions and privileges as the
Board or the Committee in each instance shall deem appropriate, provided they
are not inconsistent with the terms, conditions and provisions of this Plan.
Each Optionee shall receive a copy of his executed Stock Option Agreement.
8.02 OPTION EXERCISE PRICE.
(a) INCENTIVE STOCK OPTIONS. The per share price at which the subject
Common Stock may be purchased upon exercise of an Incentive Stock Option shall
be no less than one hundred percent (100%) of the Fair Market Value of a share
of Common Stock at the time such Incentive Stock Option is granted, except as
provided in Section 8.09(b).
(b) NON-QUALIFIED OPTIONS. The per share price at which the subject
Common Stock may be purchased upon exercise of a Non-Qualified Option shall be
established by the Committee at the time of grant, but in no event shall be less
than the one hundred percent (100%) of the Fair Market Value of a share of
Common Stock at the time such Non-Qualified Option is granted.
8.03 VESTING AND EXERCISE OF OPTIONS.
(a) GENERAL RULES. Incentive Stock Options and Non-Qualified Options
granted to Optionees shall become vested and exercisable at the rate, to the
extent and subject to such limitations or criteria as may be specified by the
Board or the Committee. Notwithstanding the foregoing, except as provided in
Section 8.03(b) hereof, no vesting shall occur on or after an Optionee's
employment or service as a Non-Employee Director with the Corporation and all
Subsidiary Companies is terminated for any reason other than his death or
Disability. In determining the number of shares of Common Stock with respect to
which Options are vested and/or exercisable, fractional shares will be rounded
up to the nearest whole number if the fraction is 0.5 or higher, and down if it
is less.
(b) ACCELERATED VESTING. Unless the Board or the Committee shall
specifically state otherwise at the time an Option is granted, all Options
granted under this Plan shall become vested and exercisable in full on the date
an Optionee terminates his employment with the Corporation or a Subsidiary
Company or service as a Non-Employee Director because of his death or
Disability. All Options hereunder shall become immediately vested and
exercisable in full on the date an Optionee terminates his employment with the
Corporation or a Subsidiary Corporation due to Retirement. In addition, all
Options hereunder shall become immediately vested and exercisable in full as of
the effective date of a Change in Control of the Corporation.
8.04 DURATION OF OPTIONS.
(a) GENERAL RULE. Except as provided in Sections 8.04(b) and 8.09,
each Option or portion thereof granted to an Employee shall be exercisable at
any time on or after it vests and becomes exercisable until the earlier of (i)
ten (10) years after its date of grant or (ii) six (6) months after the date on
which the Employee ceases to be employed by the Corporation and all Subsidiary
Companies, unless the Board or the Committee in its discretion
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decides at the time of grant or thereafter to extend such period of exercise
upon termination of employment to a period not exceeding five (5) years.
Except as provided in Section 8.04(b), each Option or portion thereof
granted to a Non-Employee Director shall be exercisable at any time on or after
it vests and becomes exercisable until the earlier of (i) ten (10) years after
its date of grant or (ii) three (3) years after the date on which the
Non-Employee Director ceases to serve as a director of the Corporation and all
Subsidiary Companies, unless the Board or the Committee in its discretion
decides at the time of grant or thereafter to extend such period of exercise
upon termination of service to a period not exceeding five (5) years.
(b) EXCEPTIONS. Unless the Board or the Committee shall specifically
state otherwise at the time an Option is granted, if an Employee or Non-Employee
Director terminates his employment or service with the Corporation or a
Subsidiary Company as a result of Disability or Retirement without having fully
exercised his Options, the Optionee shall have the right, during the three (3)
year period following his termination due to Disability or Retirement, to
exercise such Options.
Unless the Board or the Committee shall specifically state otherwise at the
time an Option is granted, if an Employee or Non-Employee Director terminates
his employment or service with the Corporation or a Subsidiary Company following
a Change in Control of the Corporation without having fully exercised his
Options, the Optionee shall have the right to exercise such Options during the
remainder of the original ten (10) year term of the Option from the date of
grant.
If an Optionee dies while in the employ or service of the Corporation or a
Subsidiary Company or terminates employment or service with the Corporation or a
Subsidiary Company as a result of Disability or Retirement and dies without
having fully exercised his Options, the executors, administrators, legatees or
distributees of his estate shall have the right, during the one (1) year period
following his death, to exercise such Options.
In no event, however, shall any Option be exercisable more than ten (10)
years from the date it was granted.
8.05 NONASSIGNABILITY. Options shall not be transferable by an Optionee
except by will or the laws of descent or distribution, and during an Optionee's
lifetime shall be exercisable only by such Optionee or the Optionee's guardian
or legal representative. Notwithstanding the foregoing, or any other provision
of this Plan, an Optionee who holds Non-Qualified Options may transfer such
Options to his or her spouse, lineal ascendants, lineal descendants, or to a
duly established trust for the benefit of one or more of these individuals.
Options so transferred may thereafter be transferred only to the Optionee who
originally received the grant or to an individual or trust to whom the Optionee
could have initially transferred the Option pursuant to this Section 8.05.
Options which are transferred pursuant to this Section 8.05 shall be exercisable
by the transferee according to the same terms and conditions as applied to the
Optionee.
8.06 MANNER OF EXERCISE. Options may be exercised in part or in whole and
at one time or from time to time. The procedures for exercise shall be set forth
in the written Stock Option Agreement provided for in Section 8.01 above.
8.07 PAYMENT FOR SHARES. Payment in full of the purchase price for shares
of Common Stock purchased pursuant to the exercise of any Option shall be made
to the Corporation upon exercise of the Option. All shares sold under the Plan
shall be fully paid and nonassessable. Payment for shares may be made by the
Optionee (i) in cash or by check, (ii) by delivery of a properly executed
exercise notice, together with irrevocable instructions to a broker to sell the
shares and then to properly deliver to the Corporation the amount of sale
proceeds to pay the exercise price, all in accordance with applicable laws and
regulations, or (iii) at the discretion of the Committee, by delivering shares
of Common Stock (including shares acquired pursuant to the exercise of an
Option) equal in Fair Market Value to the purchase price of the shares to be
acquired pursuant to the Option, by withholding some of the shares of Common
Stock which are being purchased upon exercise of an Option, or any combination
of the foregoing. With respect to
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subclause (iii) hereof, the shares of Common Stock delivered to pay the purchase
price must have either been (x) purchased in open market transactions or (y)
issued by the Corporation pursuant to a plan thereof, in each case more than six
months prior to the exercise date of the Option.
8.08 VOTING AND DIVIDEND RIGHTS. No Optionee shall have any voting or
dividend rights or other rights of a stockholder in respect of any shares of
Common Stock covered by an Option prior to the time that his name is recorded on
the Corporation's stockholder ledger as the holder of record of such shares
acquired pursuant to an exercise of an Option.
8.09 ADDITIONAL TERMS APPLICABLE TO INCENTIVE STOCK OPTIONS. All Options
issued under the Plan as Incentive Stock Options will be subject, in addition to
the terms detailed in Sections 8.01 to 8.08 above, to those contained in this
Section 8.09.
(a) Notwithstanding any contrary provisions contained elsewhere in
this Plan and as long as required by Section 422 of the Code, the aggregate Fair
Market Value, determined as of the time an Incentive Stock Option is granted, of
the Common Stock with respect to which Incentive Stock Options are exercisable
for the first time by the Optionee during any calendar year under this Plan, and
stock options that satisfy the requirements of Section 422 of the Code under any
other stock option plan or plans maintained by the Corporation (or any parent or
Subsidiary Company), shall not exceed $100,000.
(b) LIMITATION ON TEN PERCENT STOCKHOLDERS. The price at which shares
of Common Stock may be purchased upon exercise of an Incentive Stock Option
granted to an individual who, at the time such Incentive Stock Option is
granted, owns, directly or indirectly, more than ten percent (10%) of the total
combined voting power of all classes of stock issued to stockholders of the
Corporation or any Subsidiary Company, shall be no less than one hundred and ten
percent (110%) of the Fair Market Value of a share of the Common Stock of the
Corporation at the time of grant, and such Incentive Stock Option shall by its
terms not be exercisable after the earlier of the date determined under Section
8.03 or the expiration of five (5) years from the date such Incentive Stock
Option is granted.
(c) NOTICE OF DISPOSITION; WITHHOLDING; ESCROW. An Optionee shall
immediately notify the Corporation in writing of any sale, transfer, assignment
or other disposition (or action constituting a disqualifying disposition within
the meaning of Section 421 of the Code) of any shares of Common Stock acquired
through exercise of an Incentive Stock Option, within two (2) years after the
grant of such Incentive Stock Option or within one (1) year after the
acquisition of such shares, setting forth the date and manner of disposition,
the number of shares disposed of and the price at which such shares were
disposed of. The Corporation shall be entitled to withhold from any compensation
or other payments then or thereafter due to the Optionee such amounts as may be
necessary to satisfy any withholding requirements of federal or state law or
regulation and, further, to collect from the Optionee any additional amounts
which may be required for such purpose. The Committee or the Board may, in its
discretion, require shares of Common Stock acquired by an Optionee upon exercise
of an Incentive Stock Option to be held in an escrow arrangement for the purpose
of enabling compliance with the provisions of this Section 8.09(c).
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8.10 STOCK APPRECIATION RIGHTS.
(a) GENERAL TERMS AND CONDITIONS. The Board or the Committee may, but
shall not be obligated to, authorize the Corporation, on such terms and
conditions as it deems appropriate in each case, to grant rights to Optionees to
surrender an exercisable Option, or any portion thereof, in consideration for
the payment by the Corporation of an amount equal to the excess of the Fair
Market Value of the shares of Common Stock subject to the Option, or portion
thereof, surrendered over the exercise price of the Option with respect to such
shares (any such authorized surrender and payment being hereinafter referred to
as a "Stock Appreciation Right"). Such payment, at the discretion of the Board
or the Committee, may be made in shares of Common Stock valued at the then Fair
Market Value thereof, or in cash, or partly in cash and partly in shares of
Common Stock.
The terms and conditions with respect to a Stock Appreciation Right may
include (without limitation), subject to other provisions of this Section 8.10
and the Plan: the period during which, date by which or event upon which the
Stock Appreciation Right may be exercised; the method for valuing shares of
Common Stock for purposes of this Section 8.10; a ceiling on the amount of
consideration which the Corporation may pay in connection with exercise and
cancellation of the Stock Appreciation Right; and arrangements for income tax
withholding. The Board or the Committee shall have complete discretion to
determine whether, when and to whom Stock Appreciation Rights may be granted.
(b) TIME LIMITATIONS. If a holder of a Stock Appreciation Right
terminates service with the Corporation as an Officer or Employee, the Stock
Appreciation Right may be exercised only within the period, if any, within which
the Option to which it relates may be exercised.
(c) EFFECTS OF EXERCISE OF STOCK APPRECIATION RIGHTS OR OPTIONS. Upon
the exercise of a Stock Appreciation Right, the number of shares of Common Stock
available under the Option to which it relates shall decrease by a number equal
to the number of shares for which the Stock Appreciation Right was exercised.
Upon the exercise of an Option, any related Stock Appreciation Right shall
terminate as to any number of shares of Common Stock subject to the Stock
Appreciation Right that exceeds the total number of shares for which the Option
remains unexercised.
(d) TIME OF GRANT. A Stock Appreciation Right granted in connection
with an Incentive Stock Option must be granted concurrently with the Option to
which it relates, while a Stock Appreciation Right granted in connection with a
Non-Qualified Option may be granted concurrently with the Option to which it
relates or at any time thereafter prior to the exercise or expiration of such
Option.
(e) NON-TRANSFERABLE. The holder of a Stock Appreciation Right may not
transfer or assign the Stock Appreciation Right otherwise than by will or in
accordance with the laws of descent and distribution, and during a holder's
lifetime a Stock Appreciation Right may be exercisable only by the holder.
ARTICLE IX
ADJUSTMENTS FOR CAPITAL CHANGES
The aggregate number of shares of Common Stock available for issuance under
this Plan, the number of shares to which any outstanding Award relates, the
maximum number of shares that can be covered by Award to each Employee and each
Non-Employee Director and the exercise price per share of Common Stock under any
outstanding Option shall be proportionately adjusted for any increase or
decrease in the total number of outstanding shares of Common Stock issued
subsequent to the effective date of this Plan resulting from a split,
subdivision or consolidation of shares or any other capital adjustment, the
payment of a stock dividend, or other increase or decrease in such shares
effected without receipt or payment of consideration by the Corporation. If,
upon a merger, consolidation, reorganization, liquidation, recapitalization or
the like of the Corporation, the shares of the Corporation's Common Stock shall
be exchanged for other securities of the Corporation or of another corporation,
each recipient of an Award shall be entitled, subject to the conditions herein
stated, to purchase or acquire such number of shares of Common
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Stock or amount of other securities of the Corporation or such other corporation
as were exchangeable for the number of shares of Common Stock of the Corporation
which such optionees would have been entitled to purchase or acquire except for
such action, and appropriate adjustments shall be made to the per share exercise
price of outstanding Options. Notwithstanding any provision to the contrary
herein and to the extent permitted by applicable laws and regulations and
interpretations thereof, the exercise price of shares subject to outstanding
Awards may be proportionately adjusted upon the payment of a special large and
nonrecurring dividend that has the effect of a return of capital to the
stockholders, providing that the adjustment to the per share exercise price
shall satisfy the criteria set forth in Emerging Issues Task Force 90-9 (or any
successor thereto) so that the adjustments do not result in compensation
expense, and provided further that if such adjustment with respect to incentive
stock options would be treated as a modification of the outstanding incentive
stock options with the effect that, for purposes of Sections 422 and 425(h) of
the Code, and the rules and regulations promulgated thereunder, new Incentive
Stock Options would be deemed to be granted hereunder, then no adjustment to the
per share exercise price of outstanding stock options shall be made.
ARTICLE X
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend the Plan with
respect to any shares of Common Stock as to which Awards have not been granted,
subject to any required stockholder approval or any stockholder approval which
the Board may deem to be advisable for any reason, such as for the purpose of
obtaining or retaining any statutory or regulatory benefits under tax,
securities or other laws or satisfying any applicable stock exchange listing
requirements. The Board may not, without the consent of the holder of an Award,
alter or impair any Award previously granted or awarded under this Plan except
as specifically authorized herein.
ARTICLE XI
EMPLOYMENT AND SERVICE RIGHTS
Neither the Plan nor the grant of any Awards hereunder nor any action taken
by the Committee or the Board in connection with the Plan shall create any right
on the part of any Employee or Non-Employee Director to continue in such
capacity.
ARTICLE XII
WITHHOLDING
12.01 TAX WITHHOLDING. The Corporation may withhold from any cash payment
made under this Plan sufficient amounts to cover any applicable withholding and
employment taxes, and if the amount of such cash payment is insufficient, the
Corporation may require the Optionee to pay to the Corporation the amount
required to be withheld as a condition to delivering the shares acquired
pursuant to an Award. The Corporation also may withhold or collect amounts with
respect to a disqualifying disposition of shares of Common Stock acquired
pursuant to exercise of an Incentive Stock Option, as provided in Section
8.09(c).
12.02 METHODS OF TAX WITHHOLDING. The Board or the Committee is authorized
to adopt rules, regulations or procedures which provide for the satisfaction of
an Optionee's tax withholding obligation by the retention of shares of Common
Stock to which the Employee would otherwise be entitled pursuant to an Award
and/or by the Optionee's delivery of previously owned shares of Common Stock or
other property.
ARTICLE XIII
EFFECTIVE DATE OF THE PLAN; TERM
13.01 EFFECTIVE DATE OF THE PLAN. This Plan shall become effective on the
Effective Date, and Awards may be granted hereunder no earlier than the date
that this Plan is approved by stockholders of the Corporation and
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<PAGE>
prior to the termination of the Plan, provided that this Plan is approved by
stockholders of the Corporation pursuant to Article XIV hereof.
13.02 TERM OF THE PLAN. Unless sooner terminated, this Plan shall remain in
effect for a period of ten (10) years ending on the tenth anniversary of the
Effective Date. Termination of the Plan shall not affect any Awards previously
granted and such Awards shall remain valid and in effect until they have been
fully exercised or earned, are surrendered or by their terms expire or are
forfeited.
ARTICLE XIV
STOCKHOLDER APPROVAL
The Corporation shall submit this Plan to stockholders for approval at a
meeting of stockholders of the Corporation held within twelve (12) months
following the Effective Date in order to meet the requirements of (i) Section
422 of the Code and regulations thereunder, (ii) Section 162(m) of the Code and
regulations thereunder and (iii) the Nasdaq Stock Market for continued quotation
of the Common Stock on the Nasdaq Stock Market.
ARTICLE XV
MISCELLANEOUS
15.01 GOVERNING LAW. To the extent not governed by federal law, this Plan
shall be construed under the laws of the State of Louisiana.
15.02 PRONOUNS. Wherever appropriate, the masculine pronoun shall include
the feminine pronoun, and the singular shall include the plural.
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FORM OF
REVOCABLE PROXY
ISB FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 1999
The undersigned, being a stockholder of ISB Financial Corporation
("Company") as of March 9, 1999, hereby authorizes the Board of Directors of the
Company or any successors thereto as proxies with full powers of substitution,
to represent the undersigned at the Annual Meeting of Stockholders of the
Company to be held at the main office of IBERIABANK, located at 1101 East
Admiral Doyle Drive, New Iberia, Louisiana, on Wednesday, April 21, 1999 at 3:00
p.m., Central Time, and at any adjournment of said meeting, and thereat to act
with respect to all votes that the undersigned would be entitled to cast, if
then personally present, as follows:
1. ELECTION OF DIRECTORS FOR THREE-YEAR TERM
/ / FOR / / WITHHOLD / / FOR ALL EXCEPT
Nominees for three-year term expiring in 2002: Harry V. Barton, Jr. and E.
Stewart Shea, III
(Instruction: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.)
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ALL OF THE NOMINEES LISTED
ABOVE.
2. PROPOSAL to adopt the 1999 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ADOPTION OF THE 1999
STOCK OPTION PLAN.
3. PROPOSAL TO RATIFY THE APPOINTMENT by the Board of Directors of Castaing,
Hussey, Lolan & Dauterive, L.L.P. as the Company's independent auditors for the
year ending December 31, 1999
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF
CASTAING, HUSSEY, LOLAN & DAUTERIVE, L.L.P.
(CONTINUED ON REVERSE SIDE)
<PAGE>
4. STOCKHOLDER'S PROPOSAL to amend the Company's Bylaws to add a restriction
on offers to acquire and acquisitions of more than 10% of the Company's equity
securities during the sixth and seventh years after the mutual-to-stock
conversion of Iberia Savings Bank.
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" THE STOCKHOLDER'S
PROPOSAL TO AMEND THE COMPANY'S BYLAWS.
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED. IF
RETURNED BUT NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF THE BOARD OF DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS, FOR THE PROPOSAL
TO ADOPT THE 1999 STOCK OPTION PLAN, FOR RATIFICATION OF THE COMPANY'S
INDEPENDENT AUDITORS, AGAINST THE STOCKHOLDER'S PROPOSAL, AND OTHERWISE AT THE
DISCRETION OF THE PROXIES. YOU MAY REVOKE THIS PROXY AT ANY TIME PRIOR TO THE
TIME IT IS VOTED AT THE ANNUAL MEETING.
Dated: , 1999
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Signatures
PLEASE SIGN THIS PROXY EXACTLY AS YOUR NAMES(S) APPEAR(S) ON THIS PROXY. WHEN
SIGNING IN A REPRESENTATIVE CAPACITY, PLEASE GIVE TITLE. WHEN SHARES ARE HELD
JOINTLY, ONLY ONE HOLDER NEED SIGN.
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PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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