<PAGE>
Registration No. 333-________
Filed April 14, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FORT THOMAS FINANCIAL CORPORATION
------------------------------------------------------------------------
(Exact Name of Registrant as specified in its Articles of Incorporation)
Ohio 61-1278396
------------------------ ---------------------------------
(State of incorporation) (IRS Employer Identification No.)
25 North Fort Thomas Avenue
Fort Thomas, Kentucky 41075
------------------------------------------------------------
(Address of principal executive offices, including zip code)
1996 DIRECTORS' STOCK OPTION PLAN
1996 KEY EMPLOYEE STOCK COMPENSATION PROGRAM
----------------------------------------------------------
(Full Title of the Plan)
Copies to:
Larry N. Hatfield Kevin M. Houlihan, Esq.
President and Chief Executive Officer Elias, Matz, Tiernan & Herrick L.L.P.
Fort Thomas Financial Corporation 734 15th Street, N.W.
25 North Fort Thomas Avenue Washington, D.C. 20005
Fort Thomas, Kentucky 41075 (202) 347-0300
(606) 441-3302
- --------------------------------------
(Name, address, and telephone number
of agent for service)
Page 1 of 38 pages
Index to Exhibits is located on page 7.
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Proposed Proposed
Securities Maximum Maximum Amount of
to be Amount to be Offering Price Aggregate Registration
Registered Registered(1) Per Share Offering Price Fee
---------- ------------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Common Stock, par
value $0.01 per share 78,688(2) $8.34 (3) $656,258 $198.65
Common Stock, par
value $0.01 per share 47,214(2) $10.69(4) $504,718 $152.93
Common Stock, par
value $0.01 per share 31,476(5) $8.34(6) $262,510 $79.54
---------- ---------- --------
Total 157,378 $9.05 $1,423,486 $431.32
---------- ---------- ---------- --------
---------- ---------- ---------- --------
</TABLE>
(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 Fort Thomas Financial Corporation (the "Company" or "Registrant") 1996
Key Employee Stock Compensation Program ("1996 Program") and the 1996
Directors' Stock Option Plan ("Directors' Plan") as a result of a stock
split, stock dividend or similar adjustment of the outstanding common stock,
$0.01 par value per share ("Common Stock"), of the Company.
(2) Represents a portion of the 125,902 shares currently reserved for
issuance pursuant to the 1996 Program.
(3) Estimated solely for the purpose of calculating the registration fee,
which has been calculated pursuant to Rule 457(h)(1) promulgated under the
Securities Act of 1933, as amended ("Securities Act"). The Proposed Maximum
Offering Price Per Share with respect to which stock options have been
granted under the 1996 Program is $8.34 per share, the weighted average
exercise price for the options which are outstanding under the 1996 Program
as of the date hereof.
(4) Estimated solely for the purposes of calculating the registration fee in
accordance with Rule 457(c) promulgated under the Securities Act. The
Proposed Maximum Offering Price Per Share for the 47,214 shares for which
stock options have not been granted under the 1996 Program is equal to the
average of the high and low ($10.625 and $10.75, respectively) prices of the
Common Stock of the Company on April 8, 1997 on the National Association of
Securities Dealers Automated Quotation ("Nasdaq") SmallCap Market.
(5) Represents the 31,476 shares issued pursuant to the Directors' Plan.
2
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(6) Estimated solely for the purposes of calculating the registration fee,
which has been calculated pursuant to Rule 457(h)(1) promulgated under the
Securities Act. The Proposed Maximum Offering Price Per Share with respect
to which stock options have been granted under the Directors' Plan is $8.34
per share, the weighted average exercise price for the options which are
outstanding under the Directors' Plan as of the date hereof.
__________________________
This Registration Statement shall become effective automatically upon the
date of filing in accordance with Section 8(a) of the Securities Act and 17
C.F.R. Section 230.462.
3
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed or to be filed with the Securities and
Exchange Commission (the "Commission") are incorporated by reference in this
Registration Statement:
(a) The Company's Annual Report on Form 10-K for the year ended
September 30, 1996;
(b) All reports filed by the Company pursuant to Sections 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since the end of the fiscal year covered by the Company's Annual
Report on Form 10-K for the year ended September 30, 1996 through the date
of this filing;
(c) The description of the Common Stock of the Company contained in
Item 1 in the Company's Registration Statement on Form 8-A (File No.
0-26242) filed with the Commission on June 14, 1995; and
(d) All documents filed by the Company pursuant to Sections 13(a),
13(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 have been sold or which deregisters all securities then
remaining unsold.
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 or is 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.
Item 4. Description of Securities.
Not applicable since the Company's Common Stock is registered under
Section 12 of the Exchange Act.
Item. 5. Interests of Named Experts and Counsel.
Not applicable.
4
<PAGE>
Item 6. Indemnification of Directors and Officers.
In accordance with the Revised Code of Ohio, Article VII of the
Registrant's Amended and Restated Articles of Incorporation provides as
follows:
Article VII. Indemnification
By resolution adopted by the directors in the manner set forth in
division (E) of Section 1701.13 of the Revised Code of Ohio or its successor,
the Corporation shall indemnify or agree to indemnify:
1. Any person who was or 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,
other than an action by or in the right of the Corporation, by reason of
the fact that he is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, trustee, officer, or agent of another corporation, domestic or
foreign, nonprofit or for profit, partnership, joint venture, trust, or
other enterprise, against expenses, including attorney's 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 or not opposed to the
best interests of the Corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit, or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation and, with respect to
any criminal action or proceeding, he had reasonable cause to believe that
his conduct was unlawful; and
2. Any person who was or is a party or is threatened to be made a
party, to any threatened, pending, or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of
the fact that he is or was a director, officer, employee, or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, trustee, officer, employee, or agent of another corporation,
domestic or foreign, nonprofit or for profit, partnership, joint venture,
trust or other enterprise against expenses, including attorney's fees,
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
of the following:
a. Any claim, issue or matter as to which such person is
adjudged to be liable for negligence or misconduct in the performance of
his duty to the
5
<PAGE>
Corporation unless, and only to the extent that the court of common
pleas or the court in which such action or suit was brought determines
upon application that, despite the adjudication of liability, but in
view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses as the court of
common pleas or such other court shall deem proper; and
b. Any action or suit in which the only liability asserted
against a director is pursuant to Section 1701.95 of the Revised Code of
Ohio.
3. To the extent that a director, trustee, officer, employee, or
agent has been successful on the merits or otherwise in defense of any
action, suit, or proceeding referred to in subsections (1) and (2) of this
Article VII, or in defense of any claim, issue, or matter therein, he shall
be indemnified against expenses, including attorney's fees, actually and
reasonably incurred by him in connection with the action, suit or
proceeding.
4. Any indemnification under subsections (1) and (2) of this Article
VII, unless ordered by a court, shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification
of the director, trustee, officer, employee, or agent is proper in the
circumstances because he has met the applicable standard of conduct set
forth in subsections (1) and (2) of this Article VII. Such determination
shall be made by the directors of the Corporation in the manner set forth
in division (E) of Section 1701.13 of the Revised Code of Ohio.
Item 7. Exemption from Registration Claimed.
Not applicable since no restricted securities will be reoffered or resold
pursuant to this Registration Statement.
6
<PAGE>
Item 8. Exhibits
The following exhibits are filed with or incorporated by reference into
this Registration Statement on Form S-8 (numbering corresponds to Exhibit
Table in Item 601 of Regulation S-K):
No. Exhibit Page No.
--- ------- --------
4 Common Stock Certificate*
5 Opinion of Elias, Matz, Tiernan & Herrick
L.L.P. as to the legality of the securities E-1
23.1 Consent of Elias, Matz, Tiernan & Herrick
L.L.P. (contained in the opinion included
as Exhibit 5)
23.2 Consent of VonLehman & Company Inc. E-4
24 Power of attorney for any subsequent
amendments is located in the signature pages
99.1 1996 Directors' Stock Option Plan E-6
99.2 1996 Key Employee Stock Compensation Program E-15
- ---------------------
* Incorporated by reference from the Company's Annual Report on Form 10-K
for the year ended September 30, 1995 (Commission File No. 0-26242) filed by
the Company with the Commission on December 28, 1995.
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 (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act, (ii) to
reflect in the prospectus any facts or events arising after the effective
date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the Registration
Statement, and (iii) to include any material information with respect to the
plan of distribution not previously
7
<PAGE>
disclosed in the Registration Statement or any material change in such
information in the Registration Statement; provided, however, that clauses
(i) and (ii) do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
4. That, for the purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
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
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against 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 questions
whether such indemnification by it is against public policy expressed in the
Securities Act and will be governed by the final adjudication of such issue.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Fort Thomas, Commonwealth of
Kentucky on April 7, 1997.
FORT THOMAS FINANCIAL CORPORATION
By: /s/Larry N. Hatfield
------------------------------
Larry N. Hatfield
President and Chief Executive 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 dates indicated. Each person whose signature appears
below hereby makes, constitutes and appoints Larry N. Hatfield his true and
lawful attorney, with full power to sign for such person and in such person's
name and capacity indicated below, and with full power of substitution any
and all amendments to this Registration Statement, hereby ratifying and
confirming such person's signature as it may be signed by said attorney to
any and all amendments.
/s/Larry N. Hatfield
- -------------------------------- April 7, 1997
Larry N. Hatfield
President and Chief Executive Officer
(Principal Executive Officer)
/s/Robert L. Grimm
- -------------------------------- April 7, 1997
Robert L. Grimm
Chairman of the Board
9
<PAGE>
/s/Harold A. Luersen
- -------------------------------- April 7, 1997
Harold A. Luersen
Director
/s/Don J. Beckmeyer
- ------------------------------- April 7, 1997
Don J. Beckmeyer
Director
/s/J. Steven McLane
- ------------------------------- April 7, 1997
J. Steven McLane
Director
/s/J. Michael Lonnemann
- ------------------------------- April 7, 1997
J. Michael Lonnemann
Vice President and Secretary
(Principal accounting officer)
10
<PAGE>
Exhibit 5
Law Offices
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
12th Floor
734 15th Street, N.W.
Washington, D.C. 20005
______
TIMOTHY B. MATZ Telephone: (202) 347-0300 JEFFREY D. HAAS
STEPHEN M. EGE Facsimile: (202) 347-2172 KEVIN M. HOULIHAN
RAYMOND A. TIERNAN WWW.EMTH.COM KENNETH B. TABACH
W. MICHAEL HERRICK PATRICIA J. WOHL
GERARD L. HAWKINS JEFFREY R. HOULE
NORMAN B. ANTIN
JOHN P. SOUKENIK*
GERALD F. HEUPEL, JR.
JEFFREY A. KOEPPEL ____________
DANIEL P. WEITZEL
PHILIP ROSS BEVAN
HUGH T. WILKINSON April 14, 1997 OF COUNSEL
ALLIN P. BAXTER
JACK I. ELIAS
SHERYL JONES ALU
*NOT ADMITTED IN D.C.
VIA EDGAR
Board of Directors
Fort Thomas Financial Corporation
25 North Fort Thomas Avenue
Fort Thomas, Kentucky 41075
Re: Registration Statement on Form S-8
157,378 Shares of Common Stock
Gentlemen:
We are special counsel to Fort Thomas Financial Corporation, an Ohio
corporation (the "Corporation"), in connection with the preparation and filing
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended, of a Registration Statement on Form S-8 (the "Registration
Statement"), relating to the registration of up to 157,378 shares of common
stock, par value $.01 per share ("Common Stock"), to be issued pursuant to the
Corporation's 1996 Key Employee Stock Compensation Program and 1996 Directors'
Stock Option Plan (collectively, the "Plans") upon the exercise of stock options
and/or appreciation rights (referred to as "Option Rights"). The Registration
Statement also registers an indeterminate number of additional shares which may
be necessary under the Plans to adjust the number of shares reserved thereby for
issuance as the result of a stock split, stock dividend or similar adjustment of
the outstanding Common Stock of the Corporation. We have been requested by the
Corporation to furnish an opinion to be included as an exhibit to the
Registration Statement.
<PAGE>
Board of Directors
April 14, 1997
Page 2
For this purpose, we have reviewed the Registration Statement and related
Prospectuses, the Amended and Restated Articles of Incorporation, Code of
Regulations and Bylaws of the Corporation, the Plans, a specimen stock
certificate evidencing the Common Stock of the Corporation and such other
corporate records and documents as we have deemed appropriate. We are relying
upon the originals, or copies certified or otherwise identified to our
satisfaction, of the corporate records of the Corporation and such other
instruments, certificates and representations of public officials, officers and
representatives of the Corporation as we have deemed relevant as a basis for
this opinion. In addition, we have assumed, without independent verification,
the genuineness of all signatures and the authenticity of all documents
furnished to us and the conformance in all respects of copies to originals.
Furthermore, we have made such factual inquiries and reviewed such laws as we
determined to be relevant for this opinion.
For purposes of this opinion, we have also assumed that (i) the shares of
Common Stock issuable pursuant to Option Rights granted under the terms of the
Plans will continue to be validly authorized on the dates the Common Stock is
issued pursuant to the Option Rights; (ii) on the dates the Option Rights are
exercised, the Option Rights granted under the terms of the Plans will
constitute valid, legal and binding obligations of the Corporation and will
(subject to applicable bankruptcy, moratorium, insolvency, reorganization and
other laws and legal principles affecting the enforceability of creditors'
rights generally) be enforceable as to the Corporation in accordance with their
terms; (iii)the Option Rights are exercised in accordance with their terms
and the exercise price therefor is paid in accordance with the terms thereof;
(iv) no change occurs in applicable law or the pertinent facts; and (v)
the provisions of "blue sky" and other securities laws as may be applicable will
have been complied with to the extent required.
Based on the foregoing, and subject to the assumptions set forth herein,
we are of the opinion as of the date hereof that the shares of Common Stock to
be issued pursuant to the Plans, when issued and sold pursuant to the Plans and
upon receipt of the consideration required thereby, will be legally issued,
fully paid and non-assessable shares of Common Stock of the Corporation.
We hereby consent to the reference to this firm under the caption "Legal
Opinion" in the Prospectuses for the two Plans and to the filing of this opinion
as an exhibit to the Registration Statement.
Very truly yours,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: /s/ Kevin M. Houlihan
----------------------------------
Kevin M. Houlihan, a Partner
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement for
the common stock to be issued pursuant to the Fort Thomas Financial Corporation
(the "Company") 1996 Directors' Stock Option Plan and the 1996 Key Employee
Stock Compensation Program on Form S-8 of our report dated November 15, 1996,
on the financial statements included in the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1996.
VonLehman & Company, Inc.
Fort Thomas, Kentucky
April 11, 1997
<PAGE>
Exhibit 99.1
FORT THOMAS FINANCIAL CORPORATION
1996 DIRECTORS' STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Fort Thomas Financial Corporation (the "Corporation") hereby establishes
this 1996 Directors' 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 by attracting and retaining qualified non-employee directors and
providing such directors with a proprietary interest in the Corporation through
non-discretionary grants of non-qualified stock options (an "Option" or
"Options") to purchase shares of the Corporation's common stock, par value $.01
per share ("Common Stock").
ARTICLE III
ADMINISTRATION OF THE PLAN
3.01 Administration. This Plan shall be administered by the entire Board
of Directors of the Corporation (the "Board"). The Board shall have the power,
subject to and within the limits of the express provisions of this Plan, to
exercise such powers and to perform such acts as are deemed necessary or
expedient to promote the best interests of the Corporation with respect to this
Plan.
3.02 Compliance with Law and Regulations. All Options 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 may be exercised
if such exercise or issuance would be contrary to applicable laws and
regulations.
3.03 Restrictions on Transfer. The Corporation may place a legend upon
any certificate representing shares acquired pursuant to an Option granted
hereunder noting that the transfer of such shares may be restricted by
applicable laws and regulations.
<PAGE>
2
ARTICLE IV
ELIGIBILITY
Options shall be granted pursuant to the terms hereof to each director of
the Corporation as of the dates specified in Article VI hereof who is not an
employee of the Corporation or any subsidiary of the Corporation ("Non-employee
Director"), except as otherwise specified herein. No honorary directors,
advisory directors or directors emeritus shall be entitled to receive Options
hereunder.
ARTICLE V
COMMON STOCK COVERED BY THE PLAN
5.01 Option Shares. The aggregate number of shares of Common Stock of the
Corporation which may be issued pursuant to this Plan, subject to adjustment as
provided in Article VIII, shall be an amount equal to 2.0% of the Common Stock
issued and sold by the Corporation in the subscription offering and any
community offering (collectively, the "Offering") pursuant to the Plan of
Conversion of Fort Thomas Federal Savings and Loan Association ("Plan of
Conversion"). None of such shares shall be the subject of more than one Option
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 Options
had been previously granted with respect to such shares.
5.02 Source of Shares. The shares of Common Stock issued under this Plan
may be authorized but previously unissued shares, treasury shares or shares
purchased by the Corporation on the open market or from private sources for use
under the Plan.
ARTICLE VI
OPTION GRANTS
6.01 Option Grants. Options to purchase shares of Common Stock shall be
granted to Non-employee Directors of the Corporation at the following times and
in the following amounts:
(a) Initial Grant. An Option shall be allocated to each Non-employee
Director on the date this Plan is approved by the stockholders of the
Corporation. Specifically, each Non-employee Director shall receive an Option
for the number of whole shares of Common Stock (rounded down to the nearest
whole share) determined by multiplying the number of Options which may be issued
pursuant to this Plan by 90% and dividing such product by the number of
Non-employee Directors at such time.
<PAGE>
3
(b) Grant on One-Year Anniversary Date. An Option shall be
allocated to each Non-employee Director on the one-year anniversary of the date
this Plan is approved by stockholders of the Corporation. Specifically, each
Non-employee Director shall receive an Option for the number of whole shares of
Common Stock (rounded down to the nearest whole share) determined by dividing
the remaining number of Options which may be issued pursuant to this Plan by the
number of Non-employee Directors at such time.
(c) Subsequent Grants. In the event any Options granted to a
Non-employee Director expire or terminate for any reason before they have been
exercised in full, the unpurchased shares subject to those expired or terminated
Options shall be granted to persons who become a Non-employee Director for the
first time following the date Options are granted pursuant to Section 6.01(b)
above, as follows: (1) on the date such person is first appointed or elected as
a Non-employee Director, he shall receive an Option for 1,000 shares or such
lesser number of shares as may be available for grants under the Plan; and
(2) if such person does not receive an Option for 1,000 shares as of the date he
is first appointed or elected as a Non-employee Director because sufficient
shares were not available, he shall receive one or more additional grants as of
each day, if any, that an Option subsequently expires or terminates until the
number of Options granted to him shall aggregate 1,000 shares.
6.02 Allocation of Grants. If, on any date on which Options are to be
granted pursuant to this Plan, the number of shares of Common Stock remaining
available under this Plan (after taking into account both shares theretofore
issued and shares subject to issuance upon exercise of outstanding Options) is
insufficient for the grant of Options to purchase the entire number of shares
specified above, then Options to purchase a proportionate amount of such
available number of shares (rounded down to the greatest number of whole shares)
shall be granted to each Non-employee Director entitled to receive an Option on
such date.
6.03 Maximum Number of Shares to Any Non-Employee Director. During the
life of this Plan, no Non-employee Director of the Corporation or of any
subsidiary shall be granted Options pursuant to this Plan in an aggregate amount
in excess of .5% of the shares of Common Stock issued and sold by the
Corporation in the Offering, subject to adjustment as provided in Article VIII
hereof.
ARTICLE VII
OPTION TERMS
Each Option granted hereunder shall be on the following terms and
conditions:
7.01 Option Agreement. The proper officers of the Corporation and each
optionee shall execute an Option Agreement which shall set forth the total
number of shares of Common Stock to which it pertains, the exercise price and
such other terms, conditions and provisions as are appropriate, provided that
they are not inconsistent with the terms,
<PAGE>
4
conditions and provisions of this Plan. Each optionee shall receive a copy of
his executed Option Agreement.
7.02 Option Exercise Price. The per share exercise price at which the
shares of Common Stock may be purchased upon exercise of an Option granted
pursuant to Section 6.01 hereof shall be equal to the fair market value of the
shares at the time of the grant of the Option. For purposes of this Plan, fair
market value shall be the mean of the high and low sales prices 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 prices are reported, the mean between the closing high bid and low asked
prices of a share of Common Stock on 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 Board of Directors of the Corporation, or if no such
prices are available, the book value of a share of Common Stock as determined
under generally accepted accounting principles as of the latest practicable
date.
7.03 Exercise and Duration of Options.
(a) Except as provided below, each Option shall become exercisable at the
rate of 20% per year on each annual anniversary of the date the Option was
granted, and the right to exercise shall be cumulative. No Option or portion
thereof shall be exercisable more than ten (10) years after the date of grant.
The maximum rate at which options vest and become exercisable under the Plan is
20% per year, provided however that such rate may be accelerated as set forth in
Section 7.03(b) and provided further that the Board may amend the Plan to
provide for accelerated vesting upon a change in control of the Corporation if,
and only to the extent that, the Office of Thrift Supervision ("OTS") amends its
policy or regulations to permit such accelerated vesting.
(b) Exception for Termination Due to Death or Disability. If an optionee
dies while serving as a Non-employee Director or if his service as a
Non-employee Director is terminated as a result of disability without the
optionee having fully exercised his Options, the optionee's right to exercise
his Options shall be accelerated and his Options shall be 100% exercisable (to
the extent not previously exercised) as of the date of such death or
disability. Thereafter, the optionee or the executors, administrators, legatees
or distributees of his estate shall have the right to exercise such Options
during the twelve-month period following such death or disability, provided
that no Option shall be exercisable within six (6) months after the date of
grant or more than ten (10) years from the date it was granted.
(c) Exception for Termination Due to Retirement, Resignation or
Non-Reelection. If the service of a Non-employee Director is terminated as a
result of retirement, resignation or non-reelection before the Options granted
to such Non-employee
<PAGE>
5
Director have become fully exercisable, any portion of the
Options which had not yet become exercisable as of the date of such termination
shall expire and be terminated, and the Non-employee Director shall forfeit any
rights to that portion of his Options which had not yet become exercisable.
Following the date his service is terminated as a result of retirement,
resignation or non-reelection, the Non-employee Director shall have the right to
exercise his Options, to the extent exercisable on the date of such termination
of service, during the twelve-month period following such retirement,
resignation or non-reelection, provided that no Option shall be exercisable
within six (6) months after the date of grant or more than ten (10) years from
the date it was granted.
(d) Options granted to a Non-employee Director who is removed for cause
pursuant to the Corporation's Bylaws shall terminate as of the effective date of
such removal.
7.04 Nonassignability. Options shall not be transferable by an optionee
except by will or the laws of descent and distribution, and during an optionee's
lifetime shall be exercisable only by such optionee or the optionee's guardian
or legal representative.
7.05 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 Option Agreement provided for in Section 7.01.
7.06 Payment for Shares. Payment in full of the purchase price for shares
of Common Stock purchased pursuant to the exercise of an Option shall be made to
the Corporation upon exercise of the Option. Payment for shares may be made by
the optionee in cash, by certified or cashier's check payable to the
Corporation, or 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, or any
combination of the foregoing.
7.07 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.
ARTICLE VIII
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 Option relates, the exercise price
per share of Common Stock under any Option and the maximum number of Options
which may be granted to any Non-employee Director shall be proportionately
adjusted for any increase or decrease in the total number of outstanding shares
of Common Stock issued subsequent
<PAGE>
6
to the consummation of the transactions contemplated by the Plan of Conversion
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 Option shall be
entitled, subject to the conditions herein stated, to purchase or acquire such
number of shares of Common 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.
ARTICLE IX
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time and subject to OTS regulations,
terminate, amend or revise this Plan with respect to any shares of Common Stock
as to which Options have not been granted, provided, however, that no amendment
which (a) changes the maximum number of shares that may be sold or issued under
the Plan (other than in accordance with the provisions of Article VIII) or (b)
changes the class of persons that may be granted Options shall become effective
until it receives the approval of the stockholders of the Corporation, and
further provided that the Board may determine that stockholder approval for any
other amendment to this Plan may 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 Option, alter or impair any Option previously granted under this Plan except
as specifically authorized herein. Notwithstanding anything contained in this
Plan to the contrary, the provisions of Articles IV, VI and VII of this Plan
shall not be amended more than once every six months, other than to comport with
changes in the Internal Revenue Code of 1986, as amended, the Employee
Retirement Income Security Act of 1974, as amended, or the rules and regulations
promulgated under such statutes.
ARTICLE X
RIGHTS TO CONTINUE AS A DIRECTOR
Neither this Plan nor the grant of any Options hereunder nor any action
taken by the Board in connection with this Plan shall create any right on the
part of any Non-employee Director of the Corporation to continue as such.
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7
ARTICLE XI
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 Option.
ARTICLE XII
EFFECTIVE DATE OF THE PLAN; TERM
12.01 Effective Date of the Plan. This Plan shall become effective on the
date this Plan is approved by the stockholders of the Corporation, which shall
not be earlier than the sixth month anniversary of the consummation of the
transactions contemplated by the Plan of Conversion (the "Effective Date"), and
Options may be granted hereunder as of or after the effective Date and prior to
the termination of this Plan.
12.02 Term of Plan. Unless sooner terminated, this Plan shall remain in
effect for a period of ten (10) years ending on the tenth anniversary of the
adoption of this Plan by the Board of Directors of the Corporation. Termination
of this Plan shall not affect any Options previously granted, and such Options
shall remain valid and in effect until they (a) have been fully exercised, (b)
are surrendered, or (c) expire or are forfeited in accordance with their terms.
ARTICLE XIII
APPROVAL BY STOCKHOLDERS
The Corporation shall submit this Plan to its stockholders for approval at
a meeting of stockholders of the Corporation held within twelve (12) months
following the adoption of this Plan by the Board of Directors of the Corporation
in order to meet the requirements of Rule 16b-3 under the Securities Exchange
Act of 1934 and, to the extent applicable, the requirements of the National
Association of Securities Dealers, Inc. for quotation of the Common Stock on the
Nasdaq System.
ARTICLE XIV
MISCELLANEOUS
13.01 Governing Law. This Plan shall be construed under the laws of the
State of Kentucky except as otherwise preempted by federal law or regulation,
including regulations of the OTS.
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8
13.02 Pronouns. Wherever appropriate, the masculine pronoun shall include
the feminine pronoun, and the singular shall include the plural.
<PAGE>
Exhibit 99.2
FORT THOMAS FINANCIAL CORPORATION
1996 KEY EMPLOYEE STOCK COMPENSATION PROGRAM
1. Purpose. This Fort Thomas Financial Corporation 1996 Key Employee
Stock Compensation Program ("Program") is intended to secure for Fort Thomas
Financial Corporation ("Corporation"), and its subsidiaries, including Fort
Thomas Savings Bank, F.S.B. (the "Bank"), and its stockholders, the benefits
arising from ownership of the Corporation's common stock, par value $.01 per
share ("Common Stock"), by those selected officers and other key employees of
the Corporation who will be responsible for its future growth. The Program is
designed to help attract and retain superior personnel for positions of
responsibility with the Corporation and to provide key employees with an
additional incentive to contribute to the success of the Corporation.
2. Elements of the Program. In order to maintain flexibility in the
award of stock benefits, the Program is comprised of three parts. The first
part is the Incentive Stock Option Plan ("Incentive Plan"). The second part is
the Compensatory Stock Option Plan ("Compensatory Plan"). The third part is the
Stock Appreciation Rights Plan ("S.A.R. Plan"). Copies of the Incentive Plan,
Compensatory Plan and S.A.R. Plan are attached hereto as Part I, Part II and
Part III, respectively, and are collectively referred to herein as the "Plans."
The grant of an option or appreciation right under one of the Plans shall not be
construed to prohibit the grant of an option or appreciation right under any of
the other Plans.
3. Applicability of General Provisions. Unless any Plan specifically
indicates to the contrary, all Plans shall be subject to the General Provisions
of the Program set forth below.
4. Administration of the Plans. The Plans shall be administered,
construed, governed and amended in accordance with their respective terms.
GENERAL PROVISIONS OF THE PROGRAM
Article 1. Administration. The Program shall be administered by a
committee appointed by the Board of Directors of the Corporation and composed of
not less than two directors of the Corporation, none of whom is a full-time
officer or employee of the Corporation. The committee, when acting to
administer the Program, is referred to as the "Program Administrators." Each
Program Administrator shall be a "disinterested person" as set forth in
Rule 16b-3(c)(2)(i) under the Securities Exchange Act of 1934. Any action of
the Program Administrators shall be taken by majority vote or the unanimous
written consent of the Program Administrators. No Program Administrator shall
be liable for any action or determination made in good faith with respect to the
Program or to any option or stock appreciation right granted thereunder.
<PAGE>
2
Article 2. Authority of Program Administrators. Subject to the other
provisions of this Program and applicable laws and regulations, including
regulations of the Office of Thrift Supervision ("OTS"), and with a view to
effecting its purpose, the Program Administrators shall have sole authority in
their absolute discretion: (a) to construe and interpret the Program; (b) to
define the terms used herein; (c) to prescribe, amend and rescind rules and
regulations relating to the Program; (d) to determine the employees to whom
options and appreciation rights shall be granted under the Program; (e) to
determine the time or times at which options and appreciation rights shall be
granted under the Program; (f) to determine the number of shares subject to any
option or stock appreciation right under the Program as well as the option
price, and the duration of each option and appreciation right, and any other
terms and conditions of options and appreciation rights; (g) to terminate the
Program; and (h) to make any other determinations necessary or advisable for the
administration of the Program and to do everything necessary or appropriate to
administer the Program. All decisions, determinations and interpretations made
by the Program Administrators shall be binding and conclusive on all
participants in the Program and on their legal representatives, heirs and
beneficiaries.
Article 3. Maximum Number of Shares Subject to the Program. The
maximum aggregate number of shares of Common Stock available pursuant to the
Plans, subject to adjustment as provided in Article 7 hereof, shall be an amount
equal to 8.0% of the Common Stock to be issued and sold by the Corporation in
the subscription offering and any community offering (the "Offering") pursuant
to the Plan of Conversion of Fort Thomas Federal Savings and Loan Association
("Plan of Conversion"). If any of the options granted under this Program expire
or terminate for any reason before they have been exercised in full, the
unpurchased shares subject to those expired or terminated options shall again be
available for the purposes of the Program.
Article 4. Eligibility and Participation. Only regular full-time
employees of the Corporation, including officers whether or not directors of the
Corporation, or of any subsidiary, shall be eligible for selection by the
Program Administrators to participate in the Program. Directors who are not
full-time, salaried employees of the Corporation, or of any subsidiary, shall
not be eligible to participate in the Program.
Article 5. Maximum Number of Shares to Any Individual. During the life
of the Program, no employee or officer of the Corporation or of any subsidiary
shall be granted stock options or stock appreciation rights pursuant to this
Program in an aggregate amount in excess of 2.5% of the shares of Common Stock
issued and sold by the Corporation in the Offering, subject to adjustment as
provided in Article 7 hereof.
Article 6. Effective Date and Term of Program. After its adoption by
the Board of Directors of the Corporation, the Program shall become effective
upon the subsequent approval of the Program by the stockholders of the
Corporation by such vote as may be required by applicable laws and regulations,
which vote shall be taken within 12 months of adoption of the Program by the
Corporation's Board of Directors, provided, however, that
<PAGE>
3
stockholder approval shall not be obtained within the first six months
following consummation of the Offering. No stock options or appreciation
rights shall be granted under this Program prior to obtaining stockholder
approval of the Program. The Program shall continue in effect for a term of
ten years following the date it is adopted by the Board of Directors or
approved by stockholders, whichever is earlier, unless sooner terminated under
Article 2 of the General Provisions.
Article 7. Adjustments. If the shares of Common Stock of the
Corporation as a whole are increased, decreased, changed into or exchanged for a
different number or kind of shares or securities through merger, consolidation,
combination, exchange of shares, other reorganization, recapitalization,
reclassification, stock dividend, stock split or reverse stock split, an
appropriate and proportionate adjustment shall be made in the maximum number and
kind of shares as to which options and appreciation rights may be granted under
this Program, including the maximum number of options and appreciation rights
that may be granted to any individual. A corresponding adjustment changing the
number or kind of shares allocated to unexercised options, appreciation rights
or portions thereof, which shall have been granted prior to any such change,
shall likewise be made. Any such adjustment in outstanding options and
appreciation rights shall be made without change in the aggregate purchase price
applicable to the unexercised portion of the option or appreciation right but
with a corresponding adjustment in the price for each share or other unit of any
security covered by the option or appreciation right. In making any adjustment
to the number of shares pursuant to this Article 7, any fractional shares shall
be disregarded.
Article 8. Termination and Amendment of Program. The Program shall
terminate no later than ten years from the date such Program is adopted by the
Board of Directors or the date such Program is approved by the stockholders,
whichever is earlier. No options or appreciation rights shall be granted under
the Program after that date. Subject to the limitation contained in Article 9
of the General Provisions, the Program Administrators may at any time amend or
revise the terms of the Program, including the form and substance of the option
and appreciation right agreements to be used hereunder; provided that no
amendment or revision shall (a) increase the maximum aggregate number of shares
that may be sold or appreciated pursuant to options or appreciation rights
granted under this Program, except as permitted under Article 7 of the General
Provisions or as may be approved by the stockholders of the Corporation; (b)
change the minimum purchase price for shares under Section 4 of Plan I; (c)
increase the maximum term established under the Plans for any option or
appreciation right; or (d) permit the granting of an option or appreciation
right to anyone other than as provided in Article 4 of the General Provisions
and provided further that any amendment or revision must be in compliance with
regulations of the OTS.
Article 9. Prior Rights and Obligations. No amendment, suspension or
termination of the Program shall, without the consent of the employee who has
received an option or appreciation right, alter or impair any of that employee's
rights or obligations
<PAGE>
4
under any option or appreciation right granted under the Program prior to such
amendment, suspension or termination.
Article 10. Privileges of Stock Ownership. Notwithstanding the exercise
of any options granted pursuant to the terms of this Program, no employee shall
have any of the rights or privileges of a stockholder of the Corporation in
respect of any shares of stock issuable upon the exercise of his or her option
until certificates representing the shares have been issued and delivered. No
shares shall be required to be issued and delivered upon exercise of any option
unless and until all of the requirements of law and of all regulatory agencies
having jurisdiction over the issuance and delivery of the securities shall have
been fully complied with. No adjustment shall be made for dividends or any
other distributions for which the record date is prior to the date on which such
stock certificate is issued.
Article 11. Reservation of Shares of Common Stock. The Corporation,
during the term of this Program, will at all times reserve and keep available
such number of shares of its Common Stock as shall be sufficient to satisfy the
requirements of the Program. In addition, the Corporation will from time to
time, as is necessary to accomplish the purposes of this Program, seek to obtain
from any regulatory agency having jurisdiction any requisite authority in order
to issue and sell shares of Common Stock hereunder. The inability of the
Corporation to obtain from any regulatory agency having jurisdiction the
authority deemed by the Corporation's counsel to be necessary to the lawful
issuance and sale of any shares of its stock hereunder shall relieve the
Corporation of any liability in respect of the non-issuance or sale of the stock
as to which the requisite authority shall not have been obtained.
Article 12. Tax Withholding. The exercise of any option or appreciation
right granted under the Program is subject to the condition that if at any time
the Corporation shall determine, in its discretion, that the satisfaction of
withholding tax or other withholding liabilities under any state or federal law
is necessary or desirable as a condition of, or in any connection with, such
exercise or the delivery or purchase of shares pursuant thereto, then in such
event, the exercise of the option or appreciation right shall not be effective
unless such withholding tax or other withholding liabilities shall have been
satisfied in a manner acceptable to the Corporation.
Article 13. Employment. Nothing in the Program or in any option or
stock appreciation right shall confer upon any eligible employee any right to
continued employment by the Corporation, or by any subsidiary corporations, or
limit in any way the right of the Corporation or its subsidiary corporations at
any time to terminate or alter the terms of that employment.
<PAGE>
5
PART I
INCENTIVE STOCK OPTION PLAN
Section 1. Purpose. The purpose of this Incentive Plan is to promote
the growth and general prosperity of the Corporation by permitting the
Corporation to grant options to purchase shares of its Common Stock. This
Incentive Plan is designed to help attract and retain superior personnel for
positions of responsibility with the Corporation, or of any subsidiary, and to
provide key employees with an additional incentive to contribute to the success
of the Corporation. The Corporation intends that options granted pursuant to
the provisions of this Incentive Plan will qualify and will be identified as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended ("Code"). This Incentive Plan is Part I of the
Corporation's Program. Unless any provision herein indicates to the contrary,
this Incentive Plan shall be subject to the General Provisions of the Program.
Section 2. Option Terms and Conditions. The terms and conditions of
options granted under this Incentive Plan may differ from one another as the
Program Administrators shall, in their discretion, determine, as long as all
options granted under this Incentive Plan satisfy the requirements of this
Incentive Plan and the regulations of the OTS.
Section 3. Duration of Options. Each option and all rights thereunder
granted pursuant to the terms of this Incentive Plan shall expire on the date
determined by the Program Administrators, but in no event shall any option
granted under this Incentive Plan expire later than ten years from the date on
which the option is granted, except that any employee who owns more than 10% of
the combined voting power of all classes of stock of the Corporation, or of its
subsidiaries, must exercise any options within five years from the date of
grant. In addition, each option shall be subject to early termination as
provided in this Incentive Plan.
Section 4. Purchase Price. The purchase price for shares acquired
pursuant to the exercise, in whole or in part, of any option shall not be less
than the fair market value of the shares at the time of the grant of the option;
except that for any employee who owns more than 10% of the combined voting power
of all classes of stock of the Corporation, or of its subsidiaries, the
purchase price shall not be less than 110% of fair market value. For purposes
of this Part I, fair market value shall be the mean of the high and low sales
prices 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 prices are reported, the mean between the closing high bid
and low asked prices of a share of Common Stock on that day on the principal
market or national quotation system then in use, or if no such quotations
<PAGE>
6
are available, the price furnished by a professional securities dealer making a
market in such shares selected by the Board of Directors of the Corporation, or
if no such prices are available, the book value of a share of Common Stock as
determined under generally accepted accounting principles as of the latest
practicable date.
Section 5. Maximum Amount of Options in Any Calendar Year. 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, as defined in
Section 422(b) of the Code, are exercisable for the first time by any employee
during any calendar year (under the terms of this Plan and all such plans of the
Corporation and any subsidiaries) shall not exceed $100,000.
Section 6. Exercise of Options. Each option shall become exercisable
at the rate of 20% per year on each annual anniversary of the date the option
was granted, and the right to exercise may be cumulative as determined by the
Program Administrators. No option may be exercised for a fraction of a share of
Common Stock. The purchase price of any shares purchased shall be paid in full
in cash or by certified or cashier's check payable to the order of the
Corporation or by shares of Common Stock (including shares acquired pursuant to
the exercise of an option), if permitted by the Program Administrators, or by a
combination of cash, check or shares of Common Stock, at the time of exercise of
the option, provided that the form(s) of payment allowed the employee shall be
established when the option is granted. If any portion of the purchase price is
paid in shares of Common Stock, those shares shall be tendered at their then
fair market value as determined by the Program Administrators in accordance with
Section 4 of this Incentive Plan. The maximum rate at which options vest and
become exercisable under the Program is 20% per year, provided however that such
rate may be accelerated as set forth in Section 7 and provided further that the
Program Administrators may amend the Program to provide for accelerated vesting
upon a change in control of the Corporation if, and only to the extent that, the
OTS amends its policy or regulations to permit such accelerated vesting.
Section 7. Acceleration of Right of Exercise of Installments.
Notwithstanding the first sentence of Section 6 of this Incentive Plan, in the
event an Optionee becomes disabled within the meaning of Section 22(e)(3) of the
Code or dies while employed by the Corporation or any subsidiary corporation (or
a corporation or a parent or subsidiary of such corporation issuing or assuming
a stock option in a transaction to which Section 424(a) of the Code applies),
the right to exercise the option shall be accelerated and the option shall be
100% exercisable (to the extent not previously exercised) as of the date of such
disability or death. However, no stock option shall be exercisable within the
first six months following the date of grant.
Section 8. Written Notice Required. Any option granted pursuant to the
terms of this Incentive Plan shall be exercised when written notice of that
exercise has been given to the Corporation at its principal office by the person
entitled to exercise the option and
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7
full payment for the shares with respect to which the option is exercised has
been received by the Corporation.
Section 9. Compliance With Applicable Laws. Shares of Common Stock
shall not be issued with respect to any option granted under this Incentive Plan
unless the exercise of that option and the issuance and delivery of those shares
pursuant to that exercise shall comply with all relevant provisions of state and
federal law including, without limitation, the Securities Act of 1933, as
amended, the rules and regulations promulgated thereunder, the regulations of
the OTS, and the requirements of any stock exchange or national quotation system
upon which the shares may then be listed, and shall be further subject to the
approval of counsel for the Corporation with respect to such compliance. The
Program Administrators may also require a person to whom an option has been
granted under this Incentive Plan ("Optionee") to furnish evidence satisfactory
to the Corporation, including a written and signed representation letter and
consent to be bound by any transfer restrictions imposed by law, legend,
condition or otherwise, that the shares are being purchased only for investment
and without any present intention to sell or distribute the shares in violation
of any state or federal law, rule or regulation. Further, each Optionee shall
consent to the imposition of a legend on the shares of Common Stock subject to
his or her option restricting their transferability to the extent required by
law or by this Section 9.
Section 10. Employment of Optionee. Each Optionee, if requested by the
Program Administrators when the option is granted, must agree in writing as a
condition of receiving his or her option that he or she will remain in the
employ of the Corporation or any subsidiary of the Corporation, as the case may
be, following the date of the granting of that option for a period specified by
the Program Administrators, which period shall in no event exceed three years.
Nothing in this Incentive Plan or in any option granted hereunder shall confer
upon any Optionee any right to continued employment by the Corporation, or its
subsidiary corporations, or limit in any way the right of the Corporation or any
of its subsidiary corporations at any time to terminate or alter the terms of
that employment.
Section 11. Option Rights Upon Termination of Employment. If an
Optionee ceases to be employed by the Corporation or any subsidiary corporation
(or a corporation or a parent or subsidiary of such corporation issuing or
assuming a stock option in a transaction to which Section 424(a) of the Code
applies), for any reason other than death or disability, his or her option shall
immediately terminate; provided, however, that the Program Administrators may,
in their discretion, allow such option to be exercised (to the extent
exercisable on the date of termination of employment) at any time within three
months after the date of termination of employment, unless either the option or
this Incentive Plan otherwise provides for earlier termination.
Section 12. Option Rights Upon Disability. If an Optionee becomes
disabled within the meaning of Section 22(e)(3) of the Code while employed by
the Corporation or any subsidiary corporation (or a corporation or a parent or
subsidiary of such corporation
<PAGE>
8
issuing or assuming a stock option in a transaction to which Section 424(a) of
the Code applies), the option may be exercised, to the extent exercisable on
the date of termination of employment, at any time within one year after the
date of termination of employment due to disability, unless either the option
or this Incentive Plan otherwise provides for earlier termination.
Section 13. Option Rights Upon Death of Optionee. Except as otherwise
limited by the Program Administrators at the time of the grant of an option, if
an Optionee dies while employed by the Corporation or any subsidiary corporation
(or a corporation or a parent or subsidiary of such corporation issuing or
assuming a stock option in a transaction to which Section 424(a) of the Code
applies), or within three months after ceasing to be an employee thereof, his or
her option shall expire one year after the date of death unless by its terms it
expires sooner. During this one year or shorter period, the option may be
exercised, to the extent that it remains unexercised on the date of death, by
the person or persons to whom the Optionee's rights under the option shall pass
by will or by the laws of descent and distribution, but only to the extent that
the Optionee is entitled to exercise the option at the date of death. However,
in order for the option to continue to be treated as an incentive stock option
under Section 422 of the Code, the option must be exercised no later than three
months after the date of termination of employment.
Section 14. Options Not Transferable. Options granted pursuant to the
terms of this Incentive Plan may not be sold, pledged, assigned or transferred
in any manner otherwise than by will or the laws of descent and distribution and
may be exercised during the lifetime of an Optionee only by that Optionee or his
guardian or legal representative.
PART II
COMPENSATORY STOCK OPTION PLAN
Section 1. Purpose. The purpose of this Compensatory Plan is to permit
the Corporation to grant options to purchase shares of its Common Stock to
selected officers and full-time, key employees of the Corporation or any
subsidiary. This Compensatory Plan is designed to help attract and retain
superior personnel for positions of responsibility with the Corporation and its
subsidiaries and to provide key employees with an additional incentive to
contribute to the success of the Corporation. Any option granted pursuant to
this Compensatory Plan shall be clearly and specifically designated as not being
an incentive stock option, as defined in Section 422(b) of the Code. This
Compensatory Plan is Part II of the Corporation's Program. Unless any provision
herein indicates to the contrary, this Compensatory Plan shall be subject to the
General Provisions of the Program.
Section 2. Option Terms and Conditions. The terms and conditions of
options granted under this Compensatory Plan may differ from one another as the
Program Administrators shall, in their discretion, determine as long as all
options granted under this
<PAGE>
9
Compensatory Plan satisfy the requirements of the Compensatory Plan and the
regulations of the OTS.
Section 3. Duration of Options. Each option and all rights thereunder
granted pursuant to the terms of this Compensatory Plan shall expire on the date
determined by the Program Administrators, but in no event shall any option
granted under this Compensatory Plan expire later than ten years and one month
from the date on which the option is granted. In addition, each option shall be
subject to early termination as provided in this Compensatory Plan.
Section 4. Purchase Price. The purchase price for shares acquired
pursuant to the exercise, in whole or in part, of any option shall be equal to
the fair market value of the shares at the time of the grant of the option. For
purposes of this Part II, fair market value shall be the closing sales 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 closing
high bid and low asked prices of a share of Common Stock on 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 Board of Directors of the
Corporation, or if no such prices are available, the book value of a share of a
share of Common Stock as determined under generally accepted accounting
principles as of the latest practicable date.
Section 5. Exercise of Options. Each option shall become exercisable
at the rate of 20% per year on each annual anniversary of the date the option
was granted, and the right to exercise may be cumulative as determined by the
Program Administrators. No option may be exercised for a fraction of a share of
Common Stock. The purchase price of any shares purchased shall be paid in full
in cash or by certified or cashier's check payable to the order of the
Corporation or by shares of Common Stock (including shares acquired pursuant to
the exercise of an option), if permitted by the Program Administrators, or by a
combination of cash, check or shares of Common Stock, at the time of exercise of
the option. If any portion of the purchase price is paid in shares of Common
Stock, those shares shall be tendered at their then fair market value as
determined by the Program Administrators in accordance with Section 4 of this
Compensatory Plan. The maximum rate at which options vest and become
exercisable under the Program is 20% per year, provided however that such rate
may be accelerated as set forth in Section 6 and provided further that the
Program Administrators may amend the Program to provide for accelerated vesting
upon a change in control of the Corporation if, and only to the extent that, the
OTS amends its policy or regulations to permit such accelerated vesting.
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Section 6. Acceleration of Right of Exercise of Installments.
Notwithstanding the first sentence of Section 5 of this Compensatory Plan, if an
Optionee becomes disabled within the meaning of Section 22(e)(3) of the Code or
dies while employed by the Corporation or any subsidiary corporation (or a
corporation or a parent or subsidiary of such corporation issuing or assuming a
stock option in a transaction to which Section 424(a) of the Code applies), the
right to exercise the option shall be accelerated and the option shall be 100%
exercisable (to the extent not previously exercised) as of the date of such
disability or death. However, no stock option shall be exercisable within the
first six months following the date of grant.
Section 7. Written Notice Required. Any option granted pursuant to the
terms of this Compensatory Plan shall be exercised when written notice of that
exercise has been given to the Corporation at its principal office by the person
entitled to exercise the option and full payment for the shares with respect to
which the option is exercised has been received by the Corporation.
Section 8. Compliance With Applicable Laws. Shares shall not be issued
with respect to any option granted under this Compensatory Plan unless the
exercise of that option and the issuance and delivery of the shares pursuant
thereto shall comply with all relevant provisions of state and federal law,
including, without limitation, the Securities Act of 1933, as amended, the rules
and regulations promulgated thereunder, the regulations of the OTS and the
requirements of any stock exchange or national quotation system upon which the
shares may then be listed, and shall be further subject to the approval of
counsel for the Corporation with respect to such compliance. The Program
Administrators may also require a person to whom an option has been granted
("Optionee") to furnish evidence satisfactory to the Corporation, including a
written and signed representation letter and consent to be bound by any transfer
restrictions imposed by law, legend, condition or otherwise, that the shares are
being purchased only for investment purposes and without any present intention
to sell or distribute the shares in violation of any state or federal law, rule
or regulation. Further, each Optionee shall consent to the imposition of a
legend on the shares of Common Stock subject to his or her option restricting
their transferability to the extent required by law or by this Section 8.
Section 9. Employment of Optionee. Each Optionee, if requested by the
Program Administrators, must agree in writing as a condition of receiving his or
her option that he or she will remain in the employment of the Corporation or
any subsidiary, following the date of the granting of that option for a period
specified by the Program Administrators, which period shall in no event exceed
three years. Nothing in this Compensatory Plan or in any option granted
hereunder shall confer upon any Optionee any right to continued employment by
the Corporation or any of its subsidiaries, or limit in any way the right of the
Corporation or any subsidiary at any time to terminate or alter the terms of
that employment.
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Section 10. Option Rights Upon Termination of Employment. If any
Optionee under this Compensatory Plan ceases to be employed by the Corporation
or any subsidiary (or a corporation or a parent or subsidiary of such
corporation issuing or assuming a stock option in a transaction to which Section
424(a) of the Code applies), for any reason other than disability or death, his
or her option shall immediately terminate; provided, however, that the Program
Administrators may, in their discretion, allow such option to be exercised, to
the extent exercisable on the date of termination of employment, at any time
within one year after the date of termination of employment, unless either the
option or this Compensatory Plan otherwise provides for earlier termination.
Section 11. Option Rights Upon Disability. If an Optionee becomes
disabled within the meaning of Section 22(e)(3) of the Code while employed by
the Corporation or any subsidiary corporation (or a corporation or a parent or
subsidiary of such corporation issuing or assuming a stock option in a
transaction to which Section 424(a) of the Code applies), the Program
Administrators, in their discretion, may allow the option to be exercised, to
the extent exercisable on the date of termination of employment, at any time
within one year after the date of termination of employment due to disability,
unless either the option or this Compensatory Plan otherwise provides for
earlier termination.
Section 12. Option Rights Upon Death of Optionee. Except as otherwise
limited by the Program Administrators at the time of the grant of an option, if
an Optionee dies while employed by the Corporation or any subsidiary corporation
(or a corporation or a parent or subsidiary of such corporation issuing or
assuming a stock option in a transaction to which Section 424(a) of the Code
applies), his or her option shall expire one year after the date of death unless
by its terms it expires sooner. During this one year or shorter period, the
option may be exercised, to the extent that it remains unexercised on the date
of death, by the person or persons to whom the Optionee's rights under the
option shall pass by will or by the laws of descent and distribution, but only
to the extent that the Optionee is entitled to exercise the option at the date
of death.
Section 13. Options Not Transferable. Options granted pursuant to the
terms of this Compensatory Plan may not be sold, pledged, assigned or
transferred in any manner otherwise than by will or the laws of descent and
distribution and may be exercised during the lifetime of an Optionee only by
that Optionee or his guardian or legal representative.
PART III
STOCK APPRECIATION RIGHTS PLAN
Section 1. Purpose. The purpose of this S.A.R. Plan is to permit the
Corporation to grant stock appreciation rights for its Common Stock to its
full-time key employees. This S.A.R. Plan is designed to help attract and
retain superior personnel for positions of
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responsibility with the Corporation and any subsidiary and to provide key
employees with an additional incentive to contribute to the success of the
Corporation. This S.A.R. Plan is Part III of the Corporation's Program.
Unless any provision herein indicates to the contrary, this S.A.R. Plan shall
be subject to the General Provisions of the Program.
Section 2. Terms and Conditions. The Program Administrators may, but
shall not be obligated to, authorize, on such terms and conditions as they deem
appropriate in each case, the Corporation to accept the surrender by the
recipient of a stock option granted under Part I or Part II of the right to
exercise that option, or 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 such surrendered option, or portion thereof,
over the option price of such shares. Such payment, at the discretion of the
Program Administrators, may be made in shares of Common Stock valued at the then
fair market value thereof, determined as provided in Section 4 of Part I, in
cash or partly in cash and partly in shares of Common Stock; provided that with
respect to rights granted in conjunction with incentive stock options, the
Program Administrators shall establish the form(s) of payment allowed the
Optionee at the date of grant. The Program Administrators shall not be
authorized to make payment to any Optionee in shares of the Corporation's Common
Stock unless Section 83 of the Code would apply to the Common Stock transferred
to the Optionee.
Section 3. Time of Grant. With respect to options granted under Part
I, stock appreciation rights must be granted concurrently with the stock options
to which they relate; with respect to options granted under Part II, stock
appreciation rights may be granted concurrently or at any time thereafter prior
to the exercise or expiration of such options.
Section 4. Exercise of Stock Appreciation Rights; Effect on Stock
Options and Vice Versa. Each stock appreciation right shall become exercisable
at the rate of 20% per year on each annual anniversary of the date the stock
appreciation right was granted, and the right to exercise may be cumulative as
determined by the Program Administrators. Upon the exercise of a stock
appreciation right, the number of shares available under the stock option to
which it relates shall decrease by a number equal to the number of shares for
which the right was exercised. Upon the exercise of a stock option, any related
stock appreciation right shall terminate as to any number of shares subject to
the right that exceeds the total number of shares for which the stock option
remains unexercised.
Section 5. Time Limitations. Any election by an Optionee to exercise
the stock appreciation rights provided in this S.A.R. Plan shall be made during
the period beginning on the third business day following the release for
publication of quarterly or annual financial information required to be prepared
and disseminated by the Corporation pursuant to the requirements of the Exchange
Act and ending on the twelfth business day following such date. The required
release of information shall be deemed to have been satisfied when the specified
financial data appears on or in a wire service, financial news service or
newspaper of general circulation or is otherwise first made publicly available.
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Section 6. Non-Transferable. The holder of a stock appreciation right
may not transfer or assign the right otherwise than by will or in accordance
with the laws of descent and distribution. Furthermore, in the event of the
termination of his or her service with the Corporation as an officer and/or
employee, the right may be exercised only within the period, if any, which the
option to which it relates may be exercised.
Section 7. Tandem Incentive Stock Option - Stock Appreciation Right.
Whenever an incentive stock option authorized pursuant to Part I and a stock
appreciation right authorized hereunder are granted together and the exercise of
one affects the right to exercise the other, the following requirements shall
apply:
(a) The stock appreciation right will expire no later than the expiration
of the underlying incentive stock option;
(b) The stock appreciation right may be for no more than the difference
between the exercise price of the underlying option and the market price of the
stock subject to the underlying option at the time the stock appreciation right
is exercised;
(c) The stock appreciation right is transferable only when the underlying
incentive stock option is transferable and under the same conditions;
(d) The stock appreciation right may be exercised only when the underlying
incentive stock option is eligible to be exercised; and
(e) The stock appreciation right may be exercised only when the market
price of the stock subject to the option exceeds the exercise price of the stock
subject to the option.
Section 8. Request for Reports. A copy of the Corporation's annual
report to stockholders shall be delivered to each Optionee. Upon written
request, the Corporation shall furnish to each Optionee a copy of its most
recent Form 10-K Annual Report and each Form 10-Q Quarterly Report and Form 8-K
Current Report filed with the Securities and Exchange Commission since the end
of the Corporation's prior fiscal year, or the comparable forms for small
business issuers if such forms are utilized by the Corporation.
