Registration No. ________
As filed with the Securities and Exchange
Commission on July 25, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
First Mutual Bancorp, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 37-1339075
(State of Incorporation) (IRS Employer Identification No.)
135 East Main Street
Decatur, Illinois 62525
(Address of Principal Executive Offices)
First Mutual Bancorp, Inc.
1996 Stock Option Plan
First Mutual Bancorp, Inc.
1996 Recognition and Retention Plan
(Full Title of the Plans)
Copies to:
Paul K. Reynolds Robert B. Pomerenk, Esquire
President and Chief Luse Lehman Gorman Pomerenk &
Executive Officer Schick
First Mutual Bancorp, Inc. A Professional Corporation
135 East Main Street 5335 Wisconsin Ave., N.W., #400
Decatur, Illinois 62525 Washington, D.C. 20015
(217) 429-2306 (202) 274-2000
(Name, Address and Telephone
Number of Agent for Service)
If any of the securities being registered on this Form are to
be offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933 check the following box. [X]
Total Number of Pages 31 Exhibit Index on Page 6
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Proposed Proposed
Securities Amount Maximum Maximum Amount of
to be to be Offering Price Aggregate Registration
Registered Registered(1) Per Share Offering Price Fee
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options to
Purchase
common stock
Common Stock,
par value $.10 470,000 $11.6875(2) $5,493,125 $1,894.19
per share shares(3)
Common Stock,
par value $.10 188,000 $11.6875(5) $2,197,250 $ 757.68
per share shares(4)
Total: 658,000 shares $7,690,375 $2,651.87
<FN>
______________
(1) Together with an indeterminate number of additional shares
which may be necessary to adjust the number of shares reserved
for issuance pursuant to the First Mutual Bancorp, Inc. 1996
Stock Option Plan (the "1996 Stock Option Plan") and the First
Mutual Bancorp, Inc. 1996 Recognition and Retention Plan (the
"1996 Recognition Plan"), as the result of a stock split,
stock dividend or similar adjustment of the outstanding Common
Stock of Reliance Financial, Inc. pursuant to 17 C.F.R. Section
230.416(a).
(2) Determined by the exercise price of the options pursuant to 17
C.F.R. Section 230.457(h)(1).
(3) Represents the number of shares currently reserved for
issuance pursuant to the 1996 Stock Option Plan.
(4) Represents the number of shares currently reserved for
issuance pursuant to the 1996 Recognition Plan.
(5) Determined by the fair market value of the common stock as of
July 23, 1996, pursuant to 17 C.F.R. Section 230.457(h)(1)
</TABLE>
--------------------
This Registration Statement shall become effective upon filing
in accordance with Section 8(a) of the Securities Act of 1933 and
17 C.F.R. Section 230.462.
<PAGE> PART I.
Item 1. Plan Information
This Registration Statement relates to the registration of (i)
options to purchase up to 470,000 shares of common stock, par value
$.10 per share (the "Common Stock"), of First Mutual Bancorp, Inc.
(the "Company") pursuant to the First Mutual Bancorp, Inc. 1996
Stock Option Plan (the "1996 Stock Option Plan"), (ii) 470,000
shares of Common Stock reserved for issuance and delivery upon
exercise of options under the 1996 Stock Option Plan, and (iii)
188,000 shares of Common Stock pursuant to the First Mutual
Bancorp, Inc. 1996 Recognition and Retention Plan (the "1996
Recognition Plan") to be awarded to employees and directors under
such plan. Documents containing the information required by Part 1
of this Registration Statement have or will be sent or given to
participants in the 1996 Stock Option Plan and 1996 Recognition
Plan, as appropriate, as specified by Securities Act Rule
428(b)(1). Such documents are not filed with the Securities and
Exchange Commission (the "Commission" or "SEC") either as part of
this Registration Statement or as prospectuses or prospectus
supplements pursuant to Rule 424 in reliance on Rule 428.
PART II.
Item 3. Incorporation of Documents by Reference
All documents filed by the Company pursuant to Sections 13(a)
and (c), 14 or 15(d) of the Exchange Act after the date hereof and
prior to the filing of a post-effective amendment which indicates
that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference to this registration statement and
be part hereof from the date of filing of such documents. Any
statement contained in this Registration Statement, or in a
document incorporated or deemed to be incorporated by reference
herein, shall be deemed to be modified or superseded for purposes
of this Registration Statement to the extent that a statement
contained herein, or in any other subsequently filed document which
also is incorporated or deemed to be incorporated by reference
herein, modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Registration
Statement.
The following documents filed or to be filed with the
Commission are incorporated by reference in this Registration
Statement:
(a) Registrant's Prospectus filed pursuant to Rule 424(b)
under the Securities Act of 1933 on December 23, 1994 and the
audited financial statements in the Registration Statement on S-1
(Commission File No. 33-87886), filed by the Company under the
Securities Act of 1933 with the SEC on December 23, 1994, as
amended on February 6, 1995, February 13, 1995, April 14, 1995 and
April 26, 1995, and incorporated by reference to the Registration
Statement on Form 8-A filed by the Company under the Securities
Exchange Act of 1934 on June 2, 1995.
(b)(1) The Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995, filed with the SEC on March 29, 1996.
(b)(2) The Registrant's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996, filed with the SEC on May 15,
1996.
(c) The description of the Common Stock contained in the
Registration Statement on Form S-1 (Commission File No. 33-87886),
filed by the Company under the Securities Act of 1933 with the SEC
on December 23, 1995, as amended on February 6 and February 13,
1995, April 14, 1995 and April 26, 1995 and incorporated by
reference to the Registration Statement on Form 8-A filed by
Holding Company under the Securities Exchange Act of 1934 on June
2, 1995.
<PAGE>
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
None. Neither the named experts or counsel referenced below
have an interest in the Registrant.
The validity of the Common Stock offered hereby has been
passed upon by Luse Lehman Gorman Pomerenk & Schick, A Professional
Corporation, 5335 Wisconsin Avenue, N.W., Suite 400, Washington,
D.C. 20015, special counsel for the Registrant.
Item 6. Indemnification of Directors and Officers
Directors and officers of the Registrant are indemnified and
held harmless against liability to the fullest extent permissible
by the general corporation law of Delaware as it currently exists
or as it may be amended, provided any such amendment provides
broader indemnification provisions than currently exists. This
indemnification applies to the directors who administer the 1996
Stock Option Plan and the 1996 Recognition Plan.
The right to indemnification includes the right to be paid by
the Registrant the expenses incurred in defending any such
proceeding in advance of its final disposition, provided the
indemnitee undertakes to repay advanced amounts if a final
adjudication determines that such indemnitee is not entitled to be
indemnified for such expenses. The indemnitee shall have the right
to enforce his rights to indemnification or to an advancement of
expenses, and the burden of proof with respect to such matters
shall be on the Registrant. The Registrant may maintain liability
insurance, at its expense, on certain persons to protect itself
against any expense, liability or loss, whether or not the
Registrant would have the power to indemnity such persons against
such expense, liability or loss under Delaware General Corporation
Law.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
persons controlling the Registrant, the Registrant has been
informed that in the opinion of the Commission such indemnification
is against public policy as expressed in the Securities Act of 1933
and is therefore unenforceable.
Item 7. Exemption From Registration Claimed.
Not applicable.
Item 8. List of Exhibits.
The following exhibits are filed with or incorporated by
reference into this Registration Statement on Form S-8:
4.1 First Mutual Bancorp, Inc. 1996 Stock Option Plan.
4.2 First Mutual Bancorp, Inc. 1996 Recognition and Retention
Plan.
5 Opinion of Luse Lehman Gorman Pomerenk & Schick, A
Professional Corporation as to the legality of the Common
Stock registered hereby.
23.1 Consent of Luse Lehman Gorman Pomerenk & Schick, A
Professional Corporation (contained in the opinion
included as Exhibit 5).
<PAGE>
23.2 Consent of Crowe, Chizek and Company LLP.
Item 9. Undertakings
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement to include any material information with respect to the
Registration Statement not previously disclosed in this
Registration Statement or any material change to such information
in this Registration Statement;
2. That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof;
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the 1996 Stock Option Plan or 1996
Recognition Plan; and
4. That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
5. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE>
EXHIBIT INDEX
Exhibit Number Description Page
4.1 First Mutual Bancorp, Inc. 1996 Stock Option Plan.
4.2 First Mutual Bancorp, Inc. 1996 Recognition and
Retention Plan.
5 Opinion of Luse Lehman Gorman Pomerenk &
Schick, A Professional Corporation as to the
legality of the Common Stock registered hereby.
23.1 Consent of Luse Lehman Gorman Pomerenk & Schick,
A Professional Corporation (contained in the
opinion included as Exhibit 5).
23.2 Consent of Crowe, Chizek and Company LLP
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the
Securities Act of 1933, the Registrant certifies that it has
reasonable grounds to believe that it meets all of the requirements
for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Decatur, State of Illinois, on this
25th day of July, 1996.
FIRST MUTUAL BANCORP, INC.
By:/s/ Paul K. Reynolds
Paul K. Reynolds, President
and Chief Executive
Officer
(Principal Executive Officer)
By:/s/ G. Lynn Brinkman
G. Lynn Brinkman, Vice
President, Secretary,
Treasurer and Chief
Financial Officer
(Principal Accounting and
Financial Officer)
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following
persons in the capacities and on the date indicated.
/s/ C. Robert Chartain July 25, 1996
C. Robert Chartain, Chairman of the Board
and Director
/s/ Paul K. Reynolds July 25, 1996
Paul K. Reynolds
Director
/s/ Richard J. Welsh July 25, 1996
Richard J. Welsh
Director
/s/ Richard L. Jacobs July 25, 1996
Richard L. Jacobs
Director
/s/ Glen J. Whitney July 25, 1996
Glen J. Whitney
Director
/s/ Roy M. Ousley July 25, 1996
Roy M. Ousley
Director
/s/ Robert D. Nichols July 25, 1996
Robert D. Nichols
Director
FIRST MUTUAL BANCORP, INC.
1996 STOCK OPTION PLAN
1. PURPOSE
The purpose of the First Mutual Bancorp, Inc. 1996 Stock
Option Plan (the "Plan") is to advance the interests of the Company
and its stockholders by providing Key Employees and Outside
Directors of the Company and its Affiliates, including First Mutual
Bank, S.B., upon whose judgment, initiative and efforts the
successful conduct of the business of the Company and its
Affiliates largely depends, with an additional incentive to perform
in a superior manner as well as to attract people of experience and
ability.
2. DEFINITIONS
"Affiliate" means any "parent corporation" or "subsidiary
corporation" of the Company or the Bank, as such terms are defined
in Section 424(e) or 424(f), respectively, of the Code, or a
successor to a parent corporation or subsidiary corporation.
"Award" means an Award of Non-Statutory Stock Options,
Incentive Stock Options, and/or Limited Rights granted under the
provisions of the Plan.
"Bank" means First Mutual Bank, S.B., or a successor
corporation.
"Beneficiary" means the person or persons designated by a
Participant to receive any benefits payable under the Plan in the
event of such Participant's death. Such person or persons shall be
designated in writing on forms provided for this purpose by the
Committee and may be changed from time to time by similar written
notice to the Committee. In the absence of a written designation,
the Beneficiary shall be the Participant's surviving spouse, if
any, or if none, his estate.
"Board" or "Board of Directors" means the board of directors
of the Company or its Affiliate, as applicable.
"Change in Control" of the Bank or the Company means a change
in control of a nature that: (i) would be required to be reported
in response to Item 1(a) of the current report on Form 8-K, as in
effect on the date hereof, pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"); or (ii)
results in a Change in Control of the Bank or the Company within
the meaning of the Bank Holding Company Act of 1956, as amended,
and applicable rules and regulations promulgated thereunder, as in
effect on at the time of the Change in Control; or (iii) without
limitation such a Change in Control shall be deemed to have
occurred at such time as (a) any "person" (as the 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 Company
representing 25% or more of the combined voting power of Company's
outstanding securities except for any securities purchased by the
Bank's employee stock ownership plan or trust; or (b) individuals
who constitute the Board on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least
three-quarters of the directors comprising the Incumbent Board, or
whose nomination for election by the Company's stockholders was
approved by the same Nominating Committee serving under an
Incumbent Board, shall be, for purposes of this clause (b),
considered as though he were a member of the Incumbent Board; or
(c) a plan of reorganization, merger, consolidation, sale of all or
substantially all the assets of the Bank or the Company or similar
transaction in which the Bank or Company is not the surviving
institution occurs; or (d) a proxy statement soliciting proxies
from stockholders of the Company, by someone other than the current
management of the Company, seeking stockholder approval of a plan
of reorganization, merger or consolidation of the Company or
similar transaction with one or more corporations as a result of
which the outstanding shares of the class of securities then
subject to the Plan are to be exchanged for or converted into cash
or property or securities not issued by the Company; or (e) a
tender offer is made for 25% or more of the voting securities of
the Company and the shareholders owning beneficially or of record
25% or more of the outstanding securities of the Company have
tendered or offered to sell their shares pursuant to such tender
offer and such tendered shares have been accepted by the tender
offeror.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a Committee of the Board consisting of at
least three Outside Directors of the Company, all of whom are and
must be "disinterested directors" as that term is defined under
Rule 16b-3 under the Exchange Act.
"Common Stock" means the Common Stock of the Company, par
value $.10 per share.
"Company" means First Mutual Bancorp, Inc., or a successor
corporation.
"Continuous Service" means employment as a Key Employee or
service as an Outside Director or Director Emeritus without any
interruption or termination of such employment or service. In the
case of a Key Employee, employment shall not be considered
interrupted in the case of sick leave, military leave or any other
leave of absence approved by the Bank or in the case of transfers
between payroll locations of the Bank or between the Bank, its
parent, its subsidiaries or its successor. For purposes of
determining Continuous Service, an Outside Director who terminates
service on the Board but who continues to serve the Bank or Company
as a Director Emeritus will not be deemed to have an interruption
or termination of service under the Plan.
"Conversion" means the June 30, 1995, conversion of First
Mutual Bank, S.B. from the mutual to stock form of organization.
"Date of Grant" means the actual date on which an Award is
granted by the Committee, or in the case of the Outside Directors
the date an Award is granted under the Plan.
"Director" means a member of the Board.
"Director Emeritus" means a former Director, who in
recognition of his or her past contributions, has been titled as a
Director Emeritus and who continues to perform advisory services
for the Board.
"Disability" means the permanent and total inability by reason
of mental or physical infirmity, or both, of an employee to perform
the work customarily assigned to him. Additionally, a medical
doctor selected or approved by the Board must advise the Committee
that it is either not possible to determine when such Disability
will terminate or that it appears probable that such Disability
will be permanent during the remainder of said employee's lifetime.
"Effective Date" means the date of, or a date determined by
the Board of Directors following, approval of the Plan by the
Company's stockholders.
"Fair Market Value" means, when used in connection with the
Common Stock on a certain date, the reported closing price of the
Common Stock as reported by the National Association of Securities
Dealers Automated Quotation ("Nasdaq") National Market System (as
published by the Wall Street Journal, if published) on such date,
or if the Common Stock was not traded on such date, on the next
preceding day on which the Common Stock was traded; provided,
however, that if the Common Stock is not reported on the Nasdaq
National Market System, Fair Market Value shall mean the average
sale price of all shares of Common Stock sold during the 30-day
period immediately preceding the date on which such stock option
was granted, and if no shares of stock have been sold within such
30-day period, the average sale price of the last three sales of
Common Stock sold during the 90-day period immediately preceding
the date on which such stock option was granted. In the event Fair
Market Value cannot be determined in the manner described above,
then Fair Market Value shall be determined by the Committee. The
Committee is authorized, but is not required, to obtain an
independent appraisal to determine the Fair Market Value of the
Common Stock.
"Incentive Stock Option" means an Option granted by the
Committee to a Participant, which Option is designated as an
Incentive Stock Option pursuant to Section 8.
"Key Employee" means any person who is currently employed by
the Company or an Affiliate who is chosen by the Committee to
participate in the Plan.
"Limited Right" means the right to receive an amount of cash
based upon the terms set forth in Section 9.
"Non-Statutory Stock Option" means an Option granted by the
Committee to (i) an Outside Director or (ii) to any other
Participant and such Option is either (A) not designated by the
Committee as an Incentive Stock Option, or (B) fails to satisfy the
requirements of an Incentive Stock Option as set forth in Section
422 of the Code and the regulations thereunder.
"Normal Retirement" means for a Key Employee retirement at the
normal or early retirement date as set forth in the Bank's Employee
Stock Ownership Plan, or any successor plan.
"Offering" means the June 30, 1995 subscription offering of
the Common Stock of the Company.
"Outside Director" means a Director who is not an employee of
the Company or its Affiliates.
"Option" means an Award granted under Section 7 or Section 8.
"Participant" means a Key Employee, Outside Director or
Director Emeritus of the Company or its Affiliates who receives or
has received an award under the Plan.
"Termination for Cause" means the termination of employment or
termination of service on the Board caused by the individual's
personal dishonesty, willful misconduct, any breach of fiduciary
duty involving personal profit, intentional failure to perform
stated duties, or the willful violation of any law, rule or
regulation (other than traffic violations or similar offenses), or
a final cease-and-desist order, any of which results in material
loss to the Company or one of its Affiliates.
3. ADMINISTRATION
The Plan shall be administered by the Committee. The
Committee is authorized, subject to the provisions of the Plan, to
establish such rules and regulations as it deems necessary for the
proper administration of the Plan and to make whatever
determinations and interpretations in connection with the Plan it
deems necessary or advisable. All determinations and
interpretations made by the Committee shall be binding and
conclusive on all Participants in the Plan and on their legal
representatives and beneficiaries.
The Awards of Non-Statutory Options to Outside Directors under
Section 7 are intended to comply with Rule 16b-3 under the Exchange
Act. Notwithstanding any term to the contrary appearing herein,
unless permitted by Rule 16b-3(c)(2)(ii), neither the Committee nor
the Board shall have the authority to determine the amount and
price of securities to be awarded and/or timing of awards under
Section 7 to designated directors or categories of directors, which
terms shall be set forth herein. To the extent any provision of
the Plan or action by Plan administrators fails to comply with this
Section 3, such provision or action shall be deemed null and void
to the extent permitted by law and deemed advisable by the Board.
4. TYPES OF AWARDS
Awards under the Plan may be granted in any one or a
combination of: (a) Incentive Stock Options; (b) Non-Statutory
Stock Options; and (c) Limited Rights.
5. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 14, the maximum
number of shares reserved for issuance under the Plan is 470,000
shares, or 10% of the shares of Common Stock of the Company, par
value $.10 per share, issued in connection with the Offering. The
maximum number of shares reserved for issuance to Key Employees is
329,000 shares, or 7% of the shares of Common Stock, par value $.10
per share issued in connection with the Offering. The maximum
number of shares reserved for issuance to the Outside Directors is
141,000 shares, or 3% of the shares of Common Stock of the Company,
par value $.10 per share, issued in connection with the Offering.
These shares of Common Stock may be either authorized-but-unissued
shares or shares previously issued and reacquired by the Company.
To the extent that Options or rights granted under the Plan are
exercised, the shares covered will be unavailable for future grants
under the Plan; to the extent that Options together with any
related rights granted under the Plan terminate, expire or are
cancelled without having been exercised or, in the case of Limited
Rights exercised for cash, new Awards may be made with respect to
these shares.
6. ELIGIBILITY
Key Employees of the Company and its Affiliates, including the
Bank, shall be eligible to receive Incentive Stock Options,
Non-Statutory Stock Options and/or Limited Rights under the Plan.
Outside Directors shall be eligible to receive Non-Statutory Stock
Options under the Plan.
7. NON-STATUTORY STOCK OPTIONS
7.1 Grant of Non-Statutory Stock Options.
(a) Grants to Outside Directors. The aggregate number of
Non-Statutory Stock Options that shall be awarded to Outside
Directors is 141,000 Options, or 30% of the Options awarded
hereunder. Each Outside Director who is serving in such capacity
at the Effective Date shall be granted Options to purchase 23,500
shares of the Common Stock, subject to adjustment pursuant to
Section 14. In each subsequent year on the anniversary date of the
Plan, each Outside Director shall receive an Award equal to 1,000
Options multiplied by the number of full years that an Outside
Director has served on the Board. If, in any year, the Plan does
not have sufficient Options available for award to Outside
Directors to satisfy the above formula in full, then each Outside
Director shall receive "X" number of Options multiplied by his
years of service on the Board with "X" being determined by dividing
the total number of Options available for award to Outside
Directors by the aggregate number of full years of service of all
Outside Directors. Non-Statutory Stock Options granted under the
Plan are subject to the terms and conditions set forth in this
Section 7.
(b) Grants to Key Employees. The Committee may, from time to
time, grant Non-Statutory Stock Options to eligible Key Employees
and, upon such terms and conditions as the Committee may determine,
grant Non-Statutory Stock Options in exchange for and upon
surrender of previously granted Awards under the Plan, provided,
however, that no Non-Statutory Stock Option granted in exchange for
a previously granted Award shall be granted at an exercise price
that is less than the market price of the Common Stock at the time
of such previously granted Award. Non-Statutory Stock Options
granted under the Plan, including Non-Statutory Stock Options
granted in exchange for and upon surrender of previously granted
Awards, are subject to the terms and conditions set forth in this
Section 7. The maximum number of shares subject to a Non-Statutory
Option that may be awarded under the Plan to any Key Employee shall
be 150,000.
(c) Option Agreement. Each Option shall be evidenced by a
written option agreement between the Company and the Participant
specifying the number of shares of Common Stock that may be
acquired through its exercise and containing such other terms and
conditions that are not inconsistent with the terms of the Plan.
(d) Price. The purchase price per share of Common Stock
deliverable upon the exercise of each Non-Statutory Stock Option
shall be the Fair Market Value of the Common Stock of the Company
on the date the Option is granted. Shares may be purchased only
upon full payment of the purchase price. Payment of the purchase
price may be made, in whole or in part, through the surrender of
shares of the Common Stock of the Company at the Fair Market Value
of such shares determined in the manner described in Section 2.
(e) Manner of Exercise and Vesting. Non-Statutory Stock
Options awarded to Outside Directors or Directors Emeritus shall
vest in the Outside Directors or Directors Emeritus at the rate of
twenty percent (20%) of the initially awarded amount per year
commencing with the vesting of the first installment on the date of
grant, and succeeding installments on each anniversary of the date
of grant. The Non-Statutory Options awarded to Employees shall be
exercisable in installments, as determined by the Committee which
shall also determine the date on which each installment shall
become exercisable. The vested Option may be exercised from time
to time, in whole or in part, by delivering a written notice of
exercise to the President or Chief Executive Officer of the
Company. Such notice shall be irrevocable and must be accompanied
by full payment of the purchase price in cash or shares of
previously acquired Common Stock at the Fair Market Value of such
shares, determined on the exercise date in the manner described in
Section 2 hereof. If previously acquired shares of Common Stock
are tendered in payment of all or part of the exercise price, the
value of such shares shall be determined as of the date of such
exercise.
(f) Terms of Options. The term during which each
Non-Statutory Stock Option may be exercised shall be determined by
the Committee, but in no event shall a Non-Statutory Stock Option
be exercisable in whole or in part more than 10 years and one day
from the Date of Grant. No Options shall be earned by a
Participant unless the Participant maintains Continuous Service
until the vesting date of such Option, except as set forth herein.
The shares comprising each installment may be purchased in whole or
in part at any time after such installment becomes purchasable.
The Committee may, in its sole discretion, accelerate the time at
which any Non-Statutory Stock Option may be exercised in whole or
in part by Key Employees of the Company. Notwithstanding any other
provision of this Plan, in the event of a Change in Control of the
Company, all Non-Statutory Stock Options that have been awarded
shall become immediately exercisable.
(g) Termination of Employment or Service. Upon the
termination of a Key Employee's employment or upon termination of
an Outside Director's or Director Emeritus' service for any reason
other than, in the case of a Key Employee, Normal Retirement, or
in the case of all Participants, death, Disability, Change in
Control or Termination for Cause, his Non-Statutory Stock Options
shall be exercisable only as to those shares that were immediately
purchasable by him at the date of termination and only for one year
following termination. In the event of Termination for Cause, all
rights under his Non-Statutory Stock Options shall expire upon
termination. In the event of the death or Disability of any
Participant, all Non-Statutory Stock Options held by the
Participant, whether or not exercisable at such time, shall be
exercisable by the Participant or his legal representative or
beneficiaries for one year following the date of his death or
cessation of employment due to Disability, provided that in no
event shall the period extend beyond the expiration of the
Non-Statutory Stock Option term. In the event of a Key Employee's
termination of employment due to Normal Retirement, all
Nonstatutory Stock Options held by such Key Employee, whether or
not exercisable at such time, shall be exercisable for one year
following his termination of employment.
(h) Transferability. Each Option granted hereby may be
exercised only by the Participant to whom it is issued and is not
transferable except that in the event of the Participant's death
his or her personal representative(s), heir(s) or devisee(s) may
exercise the Option pursuant to the terms of Section 7(g). The
designation of a Beneficiary by a Participant shall not constitute
a transfer.
8. INCENTIVE STOCK OPTIONS
8.1 Grant of Incentive Stock Options.
The Committee may, from time to time, grant Incentive Stock
Options to Key Employees. Incentive Stock Options granted pursuant
to the Plan shall be subject to the following terms and conditions:
(a) Option Agreement. Each Option shall be evidenced by a
written option agreement between the Company and the Key Employee
specifying the number of shares of Common Stock that may be
acquired through its exercise and containing such other terms and
conditions that are not inconsistent with the terms of the Plan.
(b) Price. Subject to Section 14 of the Plan and Section 422
of the Code, the purchase price per share of Common Stock
deliverable upon the exercise of each Incentive Stock Option shall
be not less than 100% of the Fair Market Value of the Company's
Common Stock on the date the Incentive Stock Option is granted.
However, if a Key Employee owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the
Company or its Affiliates (or under Section 424(d) of the Code, is
deemed to own stock representing more than 10% of the total
combined voting power of all classes of stock of the Company or its
Affiliates, by reason of the ownership of such classes of stock,
directly or indirectly, by or for any brother, sister, spouse,
ancestor or lineal descendent of such Key Employee, or by or for
any corporation, partnership, estate or trust of which such Key
Employee is a shareholder, partner or Beneficiary), the purchase
price per share of Common Stock deliverable upon the exercise of
each Incentive Stock Option shall not be less than 110% of the Fair
Market Value of the Company's Common Stock on the date the
Incentive Stock Option is granted. Shares may be purchased only
upon payment of the full purchase price. Payment of the purchase
price may be made, in whole or in part, through the surrender of
shares of the Common Stock of the Company at the Fair Market Value
of such shares, determined on the exercise date, in the manner
described in Section 2.
(c) Manner of Exercise. Incentive Stock Options granted
under the Plan shall vest in a Participant at the rate or rates
determined by the Committee. The vested Options may be exercised
from time to time, in whole or in part, by delivering a written
notice of exercise to the President or Chief Executive Officer of
the Company. Such notice is irrevocable and must be accompanied by
full payment of the purchase price in cash or shares of previously
acquired Common Stock at the Fair Market Value of such previously
acquired shares determined on the exercise date by the manner
described in Section 2.
(d) Amounts of Options. Incentive Stock Options may be
granted to any eligible Key Employee in such amounts as determined
by the Committee; provided that the amount granted is consistent
with the terms of Section 422 of the Code. Notwithstanding the
above, the maximum number of shares that may be subject to an
Incentive Stock Option awarded under the Plan to any Key Employee
shall be 141,000. In granting Incentive Stock Options, the
Committee shall consider the position and responsibilities of the
Key Employee, the length and value of his or her service to the
Bank, the Company, or the Affiliate, the compensation paid to the
Key Employee and the Committee's evaluation of the performance of
the Bank, the Company, or the Affiliate, according to measurements
that may include, among others, key financial ratios, levels of
classified assets, and independent audit findings. In the case of
an Option intended to qualify as an Incentive Stock Option, the
aggregate Fair Market Value (determined as of the time the Option
is granted) of the Common Stock with respect to which Incentive
Stock Options granted are exercisable for the first time by the
Participant during any calendar year (under all plans of the
Company and its Affiliates) shall not exceed $100,000. The
provisions of this Section 8.1(d) shall be construed and applied in
accordance with Section 422(d) of the Code and the regulations, if
any, promulgated thereunder.
(e) Terms of Options. The term during which each Incentive
Stock Option may be exercised shall be determined by the Committee,
but in no event shall an Incentive Stock Option be exercisable in
whole or in part more than 10 years from the Date of Grant. If any
Key Employee, at the time an Incentive Stock Option is granted to
him, owns stock representing more than 10% of the total combined
voting power of all classes of stock of the Company or its
Affiliate (or, under Section 424(d) of the Code, is deemed to own
stock representing more than 10% of the total combined voting power
of all classes of stock, by reason of the ownership of such classes
of stock, directly or indirectly, by or for any brother, sister,
spouse, ancestor or lineal descendent of such Key Employee, or by
or for any corporation, partnership, estate or trust of which such
Key Employee is a shareholder, partner or Beneficiary), the
Incentive Stock Option granted to him shall not be exercisable
after the expiration of five years from the Date of Grant. No
Incentive Stock Option granted under the Plan is transferable
except by will or the laws of descent and distribution and is
exercisable during his lifetime only by the Key Employee to which
it is granted.
The Committee shall determine the date on which each Incentive
Stock Option shall become exercisable and may provide that an
Incentive Stock Option shall become exercisable in installments.
The shares comprising each installment may be purchased in whole or
in part at any time after such installment becomes purchasable,
provided that the amount able to be first exercised in a given year
is consistent with the terms of Section 422 of the Code. To the
extent required by Section 422 of the Code, the aggregate Fair
Market Value (determined at the time the option is granted) of the
Common Stock for which Incentive Stock Options are exercisable for
the first time by a Participant during any calendar year (under all
plans of the Company and its Affiliates) shall not exceed $100,000.
The Committee may, in its sole discretion, accelerate the time
at which any Incentive Stock Option may be exercised in whole or in
part, provided that it is consistent with the terms of Section 422
of the Code. Notwithstanding the above, in the event of a Change
in Control of the Company, all Incentive Stock Options that have
been awarded shall become immediately exercisable, unless the Fair
Market Value of the amount exercisable as a result of a Change in
Control shall exceed $100,000 (determined as of the Date of Grant).
In such event, the first $100,000 of Incentive Stock Options
(determined as of the Date of Grant) shall be exercisable as
Incentive Stock Options and any excess shall be exercisable as
Non-Statutory Stock Options.
(f) Termination of Employment. Upon the termination of a Key
Employee's service for any reason other than Disability, Normal
Retirement, Change of Control, death or Termination for Cause, the
Key Employee's Incentive Stock Options shall be exercisable only as
to those shares that were immediately purchasable by such Key
Employee at the date of termination and only for a period of three
months following termination. In the event of Termination for
Cause all rights under the Incentive Stock Options shall expire
upon termination.
Upon termination of a Key Employee's service due to Normal
Retirement, death, Disability, or a Change in Control, all
Incentive Stock Options held by such Key Employee, whether or not
exercisable at such time, shall be exercisable for a period of one
year following the date of his cessation of employment, provided
however, that any such Option shall not be eligible for treatment
as an Incentive Stock Option in the event such Option is exercised
more than three months following the date of his Normal Retirement
or termination of employment due to a Change in Control. In no
event shall the exercise period extend beyond the expiration of the
Incentive Stock Option term.
(g) Compliance with Code. The options granted under this
Section 8 are intended to qualify as incentive stock options within
the meaning of Section 422 of the Code, but the Company makes no
warranty as to the qualification of any option as an incentive
stock option within the meaning of Section 422 of the Code. If an
Option granted hereunder fails for whatever reason to comply with
the provisions of Section 422 of the Code, and such failure is not
or cannot be cured, such Option shall be a Non-Statutory Stock
Option.
9. LIMITED RIGHTS
9.1 Grant of Limited Rights
The Committee may grant a Limited Right simultaneously with
the grant of any Option to any Key Employee of the Bank, with
respect to all or some of the shares covered by such Option.
Limited Rights granted under the Plan are subject to the following
terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be
exercisable in whole or in part before the expiration of six months
from the date of grant of the Limited Right. A Limited Right may
be exercised only in the event of a Change in Control of the
Company.
The Limited Right may be exercised only when the underlying
Option is eligible to be exercised, provided that the Fair Market
Value of the underlying shares on the day of exercise is greater
than the exercise price of the related Option.
Upon exercise of a Limited Right, the related Option shall
cease to be exercisable. Upon exercise or termination of an
Option, any related Limited Rights shall terminate. The Limited
Rights may be for no more than 100% of the difference between the
exercise price and the Fair Market Value of the Common Stock
subject to the underlying Option. The Limited Right is
transferable only when the underlying Option is transferable and
under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder
shall promptly receive from the Company an amount of cash equal to
the difference between the Fair Market Value on the Date of Grant
of the related Option and the Fair Market Value of the underlying
shares on the date the Limited Right is exercised, multiplied by
the number of shares with respect to which such Limited Right is
being exercised. In the event of a Change in Control in which
pooling accounting treatment is a condition to the transaction, the
Limited Right shall be exercisable solely for shares of stock of
the Company, or in the event of a merger transaction, for shares of
the acquiring corporation or its parent, as applicable. The number
of shares to be received on the exercise of such Limited Right
shall be determined by dividing the amount of cash that would have
been available under the first sentence above by the Fair Market
Value at the time of exercise of the shares underlying the Option
subject to the Limited Right.
10. SURRENDER OPTION
In the event of a Participant's termination of employment or
termination of service as a result of death, Disability or, in the
case of a Key Employee, Normal Retirement, the Participant (or his
or her personal representative(s), heir(s), or devisee(s)) may, in
a form acceptable to the Committee make application to surrender
all or part of the Options held by such Participant in exchange for
a cash payment from the Company of an amount equal to the
difference between the Fair Market Value of the Common Stock on the
date of termination of employment or the date of termination of
service on the Board and the exercise price per share of the Option
on the Date of Grant. Whether the Company accepts such application
or determines to make payment, in whole or part, is within its
absolute and sole discretion, it being expressly understood that
the Company is under no obligation to any Participant whatsoever to
make such payments. In the event that the Company accepts such
application and determines to make payment, such payment shall be
in lieu of the exercise of the underlying Option and such Option
shall cease to be exercisable.
No award under the Plan shall be transferable by the optionee
other than by will or the laws of descent and distribution and may
only be exercised during his or her lifetime by the Participant, or
by a guardian or legal representative of the Participant.
11. RIGHTS OF A STOCKHOLDER; NONTRANSFERABILITY
A Participant shall have no rights as a stockholder with
respect to any shares covered by a Non-Statutory and/or Incentive
Stock Option until the date of issuance of a stock certificate for
such shares. Nothing in the Plan or in any Award granted confers
on any person any right to continue in the employ of the Company or
its Affiliates or to continue to perform services for the Company
or its Affiliates or interferes in any way with the right of the
Company or its Affiliates to terminate his services as an officer,
director or employee at any time.
12. AGREEMENT WITH PARTICIPANTS
Each Award of Options, and/or Limited Rights will be evidenced
by a written agreement, executed by the Participant and the Company
or its Affiliates that describes the conditions for receiving the
Awards including the date of Award, the purchase price, applicable
periods, and any other terms and conditions as may be required by
the Board or applicable securities law.
13. DESIGNATION OF BENEFICIARY
A Participant may, with the consent of the Committee,
designate a person or persons to receive, in the event of death,
any stock option or Limited Rights Award to which he would then be
entitled. Such designation will be made upon forms supplied by and
delivered to the Company and may be revoked in writing. If a
Participant fails effectively to designate a Beneficiary, then his
estate will be deemed to be the Beneficiary.
14. DILUTION AND OTHER ADJUSTMENTS
In the event of any change in the outstanding shares of Common
Stock of the Company by reason of any stock dividend or split, pro
rata return of capital to all shareholders, recapitalization,
merger, consolidation, spin-off, reorganization, combination or
exchange of shares, or other similar corporate change, or other
increase or decrease in such shares without receipt or payment of
consideration by the Company, the Committee will make such
adjustments to previously granted Awards, to prevent dilution or
enlargement of the rights of the Participant, including any or all
of the following:
(a) adjustments in the aggregate number or kind of shares of
Common Stock that may be awarded under the Plan;
(b) adjustments in the aggregate number or kind of shares of
Common Stock covered by Awards already made under the
Plan; or
(c) adjustments in the purchase price of outstanding
Incentive and/or Non-Statutory Stock Options, or any
Limited Rights attached to such Options.
No such adjustments may, however, materially change the value
of benefits available to a Participant under a previously granted
Award.
15. WITHHOLDING
There may be deducted from each distribution of cash and/or
Common Stock under the Plan the amount of tax required by any
governmental authority to be withheld.
16. AMENDMENT OF THE PLAN
The Board may at any time, and from time to time, modify or
amend the Plan in any respect with regard to Awards received by Key
Employees; provided however, that if necessary to continue to
qualify the Plan under the Securities and Exchange Commission Rule
16b-3, the approval by a majority of the shares represented in
person or by proxy shall be required for any such modification or
amendment that:
(a) increases the maximum number of shares for which Options
may be granted under the Plan (subject, however, to the
provisions of Section 14);
(b) reduces the exercise price at which Awards may be granted
subject, however, to the provisions of Sections 7, 8 and
14:
(c) extends the period during which Options may be granted or
exercised beyond the times originally prescribed; or
(d) changes the persons eligible to participate in the Plan.
Failure by stockholders to ratify or approve the amendments or
modifications referred to in subsections (a) through (d) of this
Section 16 shall be effective only as to the specific amendment or
modification requiring such ratification. Other amendments or
modifications of the Plan will remain in full force and effect.
Notwithstanding anything in this Plan to the contrary, to the
extent that the Plan provides for formula awards, as defined in
Rule 16b-3(c)(2)(ii) under the Exchange Act, such provisions may
not be amended more than once every six months, other than to
comport with changes in the Code, ERISA or the rules thereunder.
No such termination, modification or amendment may affect the
rights of a Participant under an outstanding Award.
17. EFFECTIVE DATE OF PLAN
The Plan shall become effective upon the date of, or a date
determined by the Board of Directors following, approval of the
Plan by the Company's stockholders.
18. TERMINATION OF THE PLAN
The right to grant Awards under the Plan will terminate upon
the earlier of (i) 10 years after the Effective Date, or (ii) the
date on which the exercise of Options or related rights equaling
the maximum number of shares reserved under the Plan occurs, as set
forth in Section 5. The Board may suspend or terminate the Plan at
any time, provided that no such action will, without the consent of
a Participant, adversely affect his rights under a previously
granted Award.
19. APPLICABLE LAW
The Plan will be administered in accordance with the laws of
the State of Illinois.
IN WITNESS WHEREOF, the Company has caused the Plan to be
executed by its duly authorized officers and the corporate seal to
be affixed and duly attested, as of the 25th day of July, 1996.
Date Approved by Stockholders: July 25, 1996
Effective Date: July 25, 1996
ATTEST: FIRST MUTUAL BANCORP, INC.
/s/ G. Lynn Brinkman /s/ Paul K. Reynolds
Secretary President and Chief Executive
Officer
FIRST MUTUAL BANCORP, INC.
1996 RECOGNITION AND RETENTION PLAN
1. Establishment of the Plan
First Mutual Bancorp, Inc. hereby establishes the Company
Recognition and Retention Plan (the "Plan") upon the terms and
conditions hereinafter stated in the Plan.
2. Purpose of the Plan
The purpose of the Plan is to retain Key Employees and Outside
Directors of experience and ability by providing such persons with
a proprietary interest in the Company, the stock holding company of
First Mutual Bank, S.B. (the "Bank"), as compensation for their
contributions to the Company and its affiliates and as an incentive
to make such contributions and to promote the Bank's growth and
profitability in the future.
3. Definitions
The following words and phrases when used in this Plan with an
initial capital letter,
unless the context clearly indicates otherwise, shall have the
meanings set forth below.
Wherever appropriate, the masculine pronoun shall include the
feminine pronoun and the
singular shall include the plural:
"Affiliate" means any "parent corporation" or "subsidiary
corporation" of the Company
or the Bank, as such terms are defined in Section 424(e) and (f),
respectively, of the Code, or
a successor to a parent corporation or subsidiary corporation.
"Award" means the grant by the Committee of Restricted Stock,
as provided in the Plan.
"Bank" means First Mutual Bank, S.B., or a successor
corporation.
"Beneficiary" means the person or persons designated by a
Recipient to receive any benefits payable under the Plan in the
event of such Recipient's death. Such person or persons shall be
designated in writing on forms provided for this purpose by the
Committee and may be changed from time to time by similar written
notice to the Committee. In the absence of a written designation,
the Beneficiary shall be the Recipient's surviving spouse, if any,
or if none, his estate.
"Board" or "Board of Directors" means the Board of Directors
of the Company or an Affiliate, as applicable. For purposes of
Section 4 of the Plan, "Board" shall refer solely to the Board of
the Company.
"Cause" means personal dishonesty, willful misconduct, any
breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, or the willful violation of any
law, rule or regulation (other than traffic violations or similar
offenses) or a final cease-and-desist order, any of which results
in a material loss to the Company or an Affiliate.
"Change in Control" of the Company means a change in control
of a nature that: (i) would be required to be reported in response
to Item 1(a) of the current report on Form 8-K, as in effect on the
date hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"); or (ii) results in a
Change in Control of the Company within the meaning of the Bank
Holding Company Act of 1956, as amended, and applicable rules and
regulations promulgated thereunder, as in effect on at the time of
the Change in Control; or (iii) without limitation such a Change in
Control shall be deemed to have occurred at such time as (a) any
"person" (as the 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 Company representing 25% or more of the combined
voting power of the Company's outstanding securities except for any
securities purchased by the Bank's employee stock ownership plan or
trust; or (b) individuals who constitute the Board on the date
hereof (the "Incumbent Board") cease for any reason to constitute
at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election was approved
by a vote of at least three-quarters of the directors comprising
the Incumbent Board, or whose nomination for election by the
Company's stockholders was approved by the same Nominating
Committee serving under an Incumbent Board, shall be, for purposes
of this clause (b), considered as though he were a member of the
Incumbent Board; or (c) a plan of reorganization, merger,
consolidation, sale of all or substantially all the assets of the
Company or similar transaction in which the Company is not the
surviving institution occurs; or (d) a proxy statement soliciting
proxies from stockholders of the Company, by someone other than the
current management of the Company, seeking stockholder approval of
a plan of reorganization, merger or consolidation of the Company or
similar transaction with one or more corporations as a result of
which the outstanding shares of the class of securities then
subject to the Plan are to be exchanged for or converted into cash
or property or securities not issued by the Company; or (e) a
tender offer is made for 25% or more of the voting securities of
the Company and the shareholders owning beneficially or of record
25% or more of the outstanding securities of the Company have
tendered or offered to sell their shares pursuant to such tender
offer and such tendered shares have been accepted by the tender
offeror.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a Committee of the Board consisting of at
least three non-employee Directors of the Company, all of whom are
and must be "disinterested directors" as that term is defined in
Rule 16b-3 under the Exchange Act.
"Common Stock" means shares of the common stock of the
Company, par value $.10 per share.
"Company" means First Mutual Bancorp, Inc., the stock holding
company of the Bank, or a successor corporation.
"Continuous Service" means employment as a Key Employee or
service as an Outside Director or Director Emeritus without any
interruption or termination of such employment or service. In the
case of a Key Employee, employment shall not be considered
interrupted in the case of sick leave, military leave or any other
leave of absence approved by the Bank or in the case of transfers
between payroll locations of the Bank or between the Bank, its
parent, its subsidiaries or its successor. For purposes of
determining Continuous Service, an Outside Director who terminates
service on the Board but who continues to serve the Bank or Company
as a Director Emeritus will not be deemed to have an interruption
or termination of service under the Plan.
"Conversion" means the June 30, 1995, conversion of First
Mutual Bank, S.B. from the mutual to stock form of organization.
"Director" means a member of the Board.
"Director Emeritus" means a former Director, who in
recognition of his or her past contributions, has been titled as a
Director Emeritus and who continues to perform advisory services
for the Board.
"Disability" means the permanent and total inability by
reason of mental or physical infirmity, or both, of an employee to
perform the work customarily assigned to him. Additionally, a
medical doctor selected or approved by the Board must advise the
Committee that it is either not possible to determine when such
Disability will terminate or that it appears probable that such
Disability will be permanent during the remainder of such
employee's lifetime.
"Effective Date" means the date of, or a date determined by
the Board of Directors following, approval of the Plan by the
Company's stockholders.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended. "Key Employee" means any person who is
currently employed by the Company or an Affiliate who is chosen by
the Committee to participate in the Plan.
"Normal Retirement" means for a Key Employee, retirement at
the normal or early retirement date set forth in the Bank's
Employee Stock Ownership Plan, or any successor plan.
"Offering" means the June 30, 1995 subscription offering of
the Common Stock of the Company. "Outside Director"
means a Director who is not an employee of the Company or its
Affiliates.
"Recipient" means a Key Employee, Outside Director or Director
Emeritus of the Company or its Affiliates who receives or has
received an Award under the Plan.
"Restricted Period" means the period of time selected by the
Committee for the purpose of determining when restrictions are in
effect under Section 6 with respect to Restricted Stock awarded
under the Plan.
"Restricted Stock" means shares of Common Stock that have been
contingently awarded to a Recipient by the Committee subject to the
restrictions referred to in Section 6, so long as such restrictions
are in effect.
4. Administration of the Plan.
4.01 Role of the Committee. The Plan shall be administered
and interpreted by the Committee, which shall have all of the
powers allocated to it in this and other Sections of the Plan. The
interpretation and construction by the Committee of any provisions
of the Plan or of any Award granted hereunder shall be final and
binding. 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. The Committee shall report its actions and
decisions with respect to the Plan to the Board at appropriate
times, but in no event less than one time per calendar year.
4.02 Role of the Board. The members of the Committee shall be
appointed or approved by, and will serve at the pleasure of, the
Board. The Board may in its discretion from time to time remove
members from, or add members to, the Committee. The Board shall
have all of the powers allocated to it in this and other Sections
of the Plan, may take any action under or with respect to the Plan
that the Committee is authorized to take, and may reverse or
override any action taken or decision made by the Committee under
or with respect to the Plan, provided, however, that except as
provided in Section 6.03, the Board may not revoke any Award except
in the event of revocation for Cause, or with respect to unearned
Awards to Key Employees, in the event the Recipient of an Award
voluntarily terminates employment with the Bank prior to Normal
Retirement.
4.03 Plan Administration Restrictions. Awards to Outside
Directors are intended to comply with Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act").
Notwithstanding any term to the contrary appearing in the Plan,
unless permitted by Rule 16b-3(c)(2)(ii) of the Exchange Act,
subsequent to the establishment of the Plan, the Committee and the
Board of Directors shall not have the authority to determine the
amount and price of securities to be awarded and/or timing of
awards to designated Outside Directors or categories of Outside
Directors, which terms shall be set forth in the Plan. To the
extent any provision of the Plan or action by Plan administrators
fails to comply with this Section 4.03, such provision or action
shall be deemed null and void to the extent permitted by law and
deemed advisable by the Board of Directors.
4.04 Limitation on Liability. No member of the Board or the
Committee shall be liable for any determination made in good faith
with respect to the Plan or any Awards granted under it. 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 Bank or the
Company shall indemnify such member against expense (including
attorneys' fees), judgments, fines and amounts paid in 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
Bank and the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful.
5. Eligibility; Awards
5.01 Eligibility. Key Employees and Outside Directors are
eligible to receive Awards.
5.02 Awards to Employees. The Committee may determine which
of the Key Employees referenced in Section 5.01 will be granted
Awards and the number of shares covered by each Award; provided,
however, that in no event shall any Awards be made that will
violate the Bank's Charter and Bylaws, the Company's Articles of
Incorporation and Bylaws, or Plan of Conversion adopted to
implement the Conversion, or any applicable federal or state law or
regulation. Shares of Restricted Stock that are awarded by the
Committee shall, on the date of the Award, be registered in the
name of the Recipient and transferred to the Recipient, in
accordance with the terms and conditions established under the
Plan. The aggregate number of shares that shall be issued to Key
Employees is 131,600 or 70% of the shares of Restricted Stock
awarded under the Plan.
In the event Restricted Stock is forfeited for any reason, the
Committee, from time to time, may determine which of the Key
Employees will be granted additional Awards to be awarded from
forfeited Restricted Stock. In selecting those Key Employees to
whom Awards will be granted and the amount of Restricted Stock
covered by such Awards, the Committee shall consider the position
and responsibilities of the Key Employees, the length and value of
their services to the Bank and its Affiliates, the compensation
paid to the Key Employees and any other factors the Committee may
deem relevant, and the Committee may request the written
recommendation of the Chief Executive Officer and other senior
executive officers of the Bank, the Company and its Affiliates.
All allocations by the Committee shall be subject to review, and
approval or rejection, by the Board.
No Restricted Stock shall be earned unless the Recipient
maintains Continuous Service with the Bank or any Affiliate until
the restrictions lapse.
5.03 Outside Directors' Awards.
(a) The aggregate number of shares that shall be issued
to Outside Directors under the Plan is 56,400 shares of Restricted
Stock, or 30% of the shares of Restricted Stock awarded under the
Plan. Each Outside Director serving in such capacity on the
Effective Date shall be issued an Award equal to 9,400 shares of
Restricted Stock. In each subsequent year on the anniversary date
of the Plan, each Outside Director shall receive an Award equal to
100 shares multiplied by the number of full years that an Outside
Director has served on the Board. If, in any year, the Plan does
not have sufficient shares available for award to Outside Directors
to satisfy the above formula in full, then each Outside Director
shall receive "X" number of shares multiplied by his years of
service on the Board with "X" being determined by dividing the
total number of shares available for award to Outside Directors by
the aggregate number of full years of service of all Outside
Directors. Fractional shares shall not be awarded.
(b) No Restricted Stock shall be earned by an Outside
Director or Director Emeritus unless the Recipient maintains
Continuous Service with the Bank or any Affiliate until the
restrictions lapse.
5.04 Manner of Award. As promptly as practicable after a
determination is made pursuant to Sections 5.02 and 5.03 to grant
an Award, the Committee shall notify the Recipient in writing of
the grant of the Award, the number of shares of Restricted Stock
covered by the Award, and the terms upon which the Restricted Stock
subject to the Award may be earned. Upon notification of an Award
of Restricted Stock, the Recipient shall execute and return to the
Company a restricted stock agreement setting forth the terms and
conditions under which the Recipient shall earn the Restricted
Stock (the "Restricted Stock Agreement"), together with a stock
power endorsed in blank. Thereafter, the Recipient's Restricted
Stock and stock power shall be deposited with an escrow agent
specified by the Company who shall hold such Restricted Stock under
the terms and conditions set forth in the Restricted Stock
Agreement. Each certificate in respect of shares of Restricted
Stock Awarded under the Plan shall be registered in the name of the
Recipient.
5.05 Treatment of Forfeited Shares. In the event shares of
Restricted Stock are forfeited by a Recipient, such shares shall be
returned to the Company and shall be held and accounted for
pursuant to the terms of the Plan until such time as the Restricted
Stock is re-awarded to another Recipient, in accordance with the
terms of the Plan and the applicable state and federal laws, rules
and regulations.
6. Terms and Conditions of Restricted Stock
The Committee shall have full and complete authority, subject
to the limitations of the Plan, to grant awards of Restricted Stock
to Key Employees and, in addition to the terms and conditions
contained in Sections 6.01 through 6.07 to provide such other terms
and conditions (which need not be identical among Recipients) in
respect of such Awards, and the vesting thereof, as the Committee
shall determine.
6.01 General Rules. Unless the Committee shall specifically
state to the contrary at the time an Award is granted, Restricted
Stock shall be earned by a Key Employee at the rate of 20% of the
initially awarded amount per year commencing with the first
installment being earned as of the date of grant, and succeeding
installments being earned on each anniversary of the date of grant,
provided that such Recipient maintains Continuous Service;
provided, however, that no shares shall be earned for any year in
which the Bank is not meeting all of its fully phased-in capital
requirements. Restricted Stock shall be earned by an Outside
Director or Director Emeritus at the rate of 20% of the initially
awarded amount per year commencing with the first installment being
earned as of the date of grant, and succeeding installments being
earned on each anniversary of the date of grant, provided that such
Recipient maintains Continuous Service; provided, however that no
shares shall be earned if the Bank is not meeting all of its fully
phased-in capital requirements. Subject to any such other terms
and conditions as the Committee shall provide with respect to
awards to Key Employees, shares of Restricted Stock may not be
sold, assigned, transferred (within the meaning of Code Section
83), pledged or otherwise encumbered by the Recipient, except as
hereinafter provided, during the Restricted Period. The Committee
shall have the authority, in its discretion, to accelerate the time
at which any or all of the restrictions shall lapse with respect to
shares issued to Key Employees, or to remove any or all of such
restrictions, whenever it may determine that such action is
appropriate by reason of changed conditions or changes in
applicable tax or other laws or regulations occurring after the
commencement of such Restricted Period.
6.02 Continuous Service; Forfeiture. Except as provided in
Section 6.03, if a Recipient ceases to maintain Continuous Service
for any reason (other than death, Disability, Change in Control or,
with respect to Key Employees, Normal Retirement as provided in
Section 6.03), unless the Committee shall otherwise determine, all
shares of Restricted Stock theretofore awarded to such Recipient
and which at the time of such termination of Continuous Service are
subject to the restrictions imposed by Section 6.01 shall upon such
termination of Continuous Service be forfeited. Any cash dividends
or stock dividends attributable to such shares of Restricted Stock
shall also be forfeited.
6.03 Exception for Termination Due to Death, Disability,
Normal Retirement or Change in Control Notwithstanding the general
rule contained in Section 6.01, Restricted Stock awarded to a
Recipient whose employment with or service on the Board of the Bank
or an Affiliate terminates due to death or Disability shall be
deemed earned as of the Recipient's last day of employment with the
Bank or an Affiliate, or last day of service on the Board of the
Bank or an Affiliate. Notwithstanding, the general rule contained
in Section 6.01, Restricted Stock awarded to a Key Employee whose
employment terminates due to Normal Retirement shall be deemed
earned as of the Recipient's last day of employment. Additionally,
notwithstanding the general rule contained in Section 6.01, all
Restricted Stock subject to an Award held by a Recipient whose
service as a Key Employee, Outside Director, or Director Emeritus
of the Bank or an Affiliate terminates upon or following a Change
in Control of the Company or the Bank shall be deemed earned as of
the Recipient's last day of service with the Bank or an Affiliate.
6.04 Revocation for Cause. Notwithstanding anything
hereinafter to the contrary, the Board may by resolution
immediately revoke, rescind and terminate any Award, or portion
thereof, previously awarded under the Plan, to the extent
Restricted Stock has not been redelivered by the Escrow Agent to
the Recipient, whether or not yet earned, in the case of a Key
Employee whose employment is terminated by the Bank or an Affiliate
or an Outside Director or Director Emeritus whose service is
terminated by the Bank or an Affiliate for Cause or who is
discovered after termination of employment or service on the Board
to have engaged in conduct that would have justified termination
for Cause.
6.05 Restricted Stock Legend. Each certificate in respect of
shares of Restricted Stock awarded under the Plan shall be
registered in the name of the Recipient and deposited by the
Recipient, together with a stock power endorsed in blank, with the
Escrow Agent and shall bear the following (or a similar) legend:
"The transferability of this certificate and
the shares of stock represented hereby are subject
to the terms and conditions (including forfeiture)
contained in the First Mutual Bancorp, Inc. 1996
Recognition and Retention Plan. Copies of such
Plan are on file in the offices of the Secretary of
First Mutual Bank, S.B., 135 East Main Street,
Decatur, Illinois 62523."
6.06 Payment of Dividends and Return of Capital. After an
Award has been granted but before such Award has been earned, the
Recipient shall receive any cash dividends or stock dividends paid
with respect to such shares, or shall share in any pro-rata return
of capital to all shareholders with respect to the Common Stock.
Unless the Recipient has made an election under Section 83(b) of
the Code, cash dividends or other amounts so paid on shares that
have not yet been earned by the Recipient shall be treated as
compensation income to the Recipient when paid.
6.07 Voting of Restricted Shares. After an Award has been
granted, the Recipient as owner of such shares shall have the right
to vote such shares until such Award is earned by the Recipient.
6.08 Delivery of Earned Shares. At the expiration of the
restrictions imposed by Section 6.01, the Escrow Agent shall
redeliver to the Recipient (or where the relevant provision of
Section 6.02 applies in the case of a deceased Recipient, to his
Beneficiary) the certificate(s) and stock power deposited with it
pursuant to Section 6.03 and the shares represented by such
certificate(s) shall be free of the restrictions referred to
Section 6.01.
7. Adjustments upon Changes in Capitalization
In the event of any change in the outstanding shares
subsequent to the Effective Date by reason of any reorganization,
recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation or any change in the
corporate structure or shares of the Company, the maximum aggregate
number and class of shares as to which Awards may be granted under
the Plan shall be appropriately adjusted by the Committee, whose
determination shall be conclusive. Any shares of stock or other
securities received, as a result of any of the foregoing, by a
Recipient with respect to Restricted Stock shall be subject to the
same restrictions and the certificate(s) or other instruments
representing or evidencing such shares or securities shall be
legended and deposited with the Escrow Agent in the manner provided
in Section 6.05.
8. Assignments and Transfers
No Award nor any right or interest of a Recipient under the
Plan in any instrument evidencing any Award under the Plan may be
assigned, encumbered or transferred except, in the event of the
death of a Recipient, by will or the laws of descent and
distribution.
9. Key Employee Rights under the Plan
No Key Employee shall have a right to be selected as a
Recipient nor, having been so selected, to be selected again as a
Recipient and no Key Employee or other person shall have any claim
or right to be granted an Award under the Plan or under any other
incentive or similar plan of the Bank or any Affiliate. Neither
the Plan nor any action taken thereunder shall be construed as
giving any Key Employee any right to be retained in the employ of
the Bank or any Affiliate.
10. Outside Director and Director Emeritus Rights under the Plan
Neither the Plan nor any action taken thereunder shall be
construed as giving any Outside Director or Director Emeritus any
right to be retained in the service of the Bank or any Affiliate.
11. Withholding Tax
Upon the termination of the Restricted Period with respect to
any shares of Restricted Stock (or at any such earlier time, if
any, that an election is made by the Recipient under Section 83(b)
of the Code, or any successor provision thereto, to include the
value of such shares in taxable income), the Bank or the Company
shall have the right to require the Recipient or other person
receiving such shares to pay the Bank or the Company the amount of
any taxes that the Bank or the Company is required to withhold with
respect to such shares, or, in lieu thereof, to retain or sell
without notice, a sufficient number of shares held by it to cover
the amount required to be withheld. The Bank or the Company shall
have the right to deduct from all dividends paid with respect to
shares of Restricted Stock the amount of any taxes which the Bank
or the Company is required to withhold with respect to such
dividend payments.
12. Amendment or Termination
The Board of Directors of the Company may amend, suspend or
terminate the Plan or any portion thereof at any time, but (except
as provided in Section 6) no amendment shall be made without
approval of the stockholders of the Company which shall (i)
materially increase the aggregate number of shares with respect to
which Awards may be made under the Plan, (ii) materially increase
the aggregate number of shares that may be subject to Awards to
Recipients who are not Key Employees, or (iii) change the class of
persons eligible to participate in the Plan; provided, however,
that no such amendment, suspension or termination shall impair the
rights of any Recipient, without his consent, in any Award
theretofore made pursuant to the Plan.
Notwithstanding anything in this Plan to the contrary, to the
extent that the Plan provides for formula awards, as defined in
Rule 16b-3(c)(2)(ii) under the Exchange Act, such provisions may
not be amended more than once every six months, other than to
comport with changes in the Code, ERISA or the rules thereunder.
13. Governing Law
The Plan shall be governed by the laws of the State of
Illinois.
14. Term of Plan
The Plan shall become effective on the date of, or a date
determined by the Board of Directors following, approval of the
Plan by the Company's stockholders. It shall continue in effect
until the earlier of (i) fifteen years from the Effective Date
unless sooner terminated under Section 12 hereof, or (ii) the date
on which all shares of Common Stock available for award hereunder,
have vested in the Recipients of such Awards.
IN WITNESS WHEREOF, the Company has caused the Plan to be
executed by its duly authorized officers and the corporate seal to
be affixed and duly attested, as of the 25th day of July, 1996.
Date Approved by Shareholders: July 25, 1996
Effective Date: July 25, 1996
ATTEST: FIRST MUTUAL BANCORP, INC.
/s/ G. Lynn Brinkman /s/ Paul K. Reynolds
Secretary President and Chief Executive
Officer
July 25, 1996 (202) 274-2000
Board of Directors
First Mutual Bancorp, Inc.
135 East Main Street
Decatur, Illinois 62523
Re: First Mutual Bancorp, Inc.
Registration Statement on Form S-8
Gentlemen:
You have requested the opinion of this firm as to certain
matters in connection with the offer and sale of Fisrt Mutual
Bancorp, Inc. (the "Company") common stock, par value $.10 per
share (the "Common Stock") pursuant to the First Mutual Bancorp,
Inc. 1996 Stock Option Plan ( the "Plan"). We have reviewed the
Company's Certificate of Incorporation, Registration Statement on
Form S-8 (the "Form S-8"), as well as applicable statutes and
regulations governing the Company and the offer and sale of the
Common Stock.
Based on the foregoing, we are of the following opinion:
Upon the effectiveness of the Form S-8, the Common Stock,
when sold in connection with the exercise of options
granted pursuant to the Plan, will be legally issued,
fully paid and non-assessable.
This opinion has been prepared solely for the use of the
Company in connection with the preparation and filing of the Form
S-8, and should not be used for any other purpose or relied upon by
any other person without the prior written consent of this firm.
We consent to this reference to our opinion in the Form S-8.
Very truly yours,
LUSE LEHMAN GORMAN POMERENK & SCHICK
A Professional Corporation
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
First Mutual Bancorp, Inc.
We consent to the incorporation by reference in this Registration
Statement of First Mutual Bancorp, Inc. 1996 Stock Option Plan and
1996 Recognition Plan on Form S-8 filed with the Securities and
Exchange Commission of our report to the financial statements
included in the Form 10-K of First Mutual Bancorp, Inc. for the
year ended December 31, 1995.
Crowe, Chizek and Company LLP
Oak Brook, Illinois
July 19, 1996
