EXHIBIT 4(a)
COLUMBIA FINANCIAL OF KENTUCKY, INC.
1999 STOCK OPTION AND INCENTIVE PLAN
1. Purpose. The purpose of the Columbia Financial of Kentucky,
Inc., 1999 Stock Option and Incentive Plan (this "Plan") is to promote and
advance the interests of Columbia Financial of Kentucky, Inc. (the
"Company"), and its shareholders by enabling the Company to attract, retain
and reward directors, managerial and other key employees of the Company and
any Subsidiary (hereinafter defined), and to strengthen the mutuality of
interests between such directors and employees and the Company's
shareholders by providing such persons with a proprietary interest in
pursuing the long-term growth, profitability and inancial success of the
Company.
2. Definitions. For purposes of this Plan, the following terms
shall have the meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as
amended, or any successor thereto, together with rules, regulations
and interpretations promulgated thereunder.
(c) "Committee" means the Committee of the Board constituted
as provided in Section 3 of this Plan.
(d) "Common Shares" means the common shares, without par
value, of the Company or any security of the Company issued in
substitution, in exchange or in lieu thereof.
(e) "Company" means Columbia Financial of Kentucky, Inc., an
Ohio corporation, or any successor corporation.
(f) "Employment" means regular employment with the Company or
a Subsidiary and does not include service as a director only.
(g) "Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any successor statute.
(h) "Fair Market Value" shall be determined as follows:
(i) If the Common Shares are traded on a national
securities exchange at the time of grant of the Stock Option,
then the Fair Market Value shall be the average of the highest
and the lowest selling price on such exchange on the date such
Stock Option is granted or, if there were no sales on such
date, then on the next prior business day on which there was a
sale.
(ii) If the Common Shares are quoted on The Nasdaq
Stock Market at the time of the grant of the Stock Option, then
the Fair Market Value shall be the mean between the closing bid
and closing asked quotation with respect to a Common Share on
such date on The Nasdaq Stock Market.
(iii) If the Common Shares are not traded on a national
securities exchange or quoted on The Nasdaq Stock Market, then
the Fair Market Value shall be as determined by the Committee.
(i) "Incentive Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of this Plan that is intended
to be and is specifically designated as an "incentive stock option"
within the meaning of Section 422 of the Code.
(j) "Non-Qualified Stock Option" means any Stock Option
granted pursuant to the provisions of Section 6 of this Plan that is
not an Incentive Stock Option.
(k) "Participant" means an employee or director of the
Company or a Subsidiary who is granted a Stock Option under this
Plan. Notwithstanding the foregoing, for the purposes of the
granting of any Incentive Stock Option under this Plan, the term
"Participant" shall include only employees of the Company or a
Subsidiary.
(l) "Plan" means the Columbia Financial of Kentucky, Inc.,
1999 Stock Option and Incentive Plan, as set forth herein and as it
may be hereafter amended from time to time.
(m) "Stock Option" means an award to purchase Common Shares
granted pursuant to the provisions of Section 6 of this Plan.
(n) "Subsidiary" means any corporation or entity in which the
Company directly or indirectly controls 50% or more of the total
voting power of all classes of its stock having voting power and
includes, without limitation, Columbia Federal Savings Bank.
(o) "Terminated for Cause" means any removal of a director or
discharge of an employee for the personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful
violation of a material provision of any law, rule or regulation
(other than traffic violations or similar offenses) or a material
violation of a final cease-and-desist order or for any other action
of a director or employee which results in a substantial financial
loss to the Company or a Subsidiary.
3. Administration.
(a) This Plan shall be administered by the Committee to be
comprised of not fewer than three of the members of the Board. The
members of the Committee shall be appointed from time to time by the
Board. Members of the Committee shall serve at the pleasure of the
Board, and the Board may from time to time remove members from, or
add members to, the Committee. A majority of the members of the
Committee shall constitute a quorum for the transaction of business.
An action approved in writing by all of the members of the Committee
then serving shall be fully as effective as if the action had been
taken by unanimous vote at a meeting duly called and held.
(b) The Committee is authorized to construe and interpret
this Plan and to make all other determinations necessary or advisable
for the administration of this Plan. The Committee may designate
persons other than members of the Committee to carry out its
responsibilities under such conditions and limitations as it may
prescribe. Any determination, decision or action of the Committee in
connection with the construction, interpretation, administration or
application of this Plan shall be final, conclusive and binding upon
all persons participating in this Plan and any person validly
claiming under or through persons participating in this Plan. The
Company shall effect the granting of Stock Options under this Plan,
in accordance with the determinations made by the Committee, by
execution of instruments in writing in such form as approved by the
Committee.
4. Duration of, and Common Shares Subject to, this Plan.
(a) Term. This Plan shall terminate on the date which is
ten (10) years from the effective date of the Plan, except with
respect to Stock Options then outstanding. Notwithstanding the
foregoing, no Incentive Stock Option may be granted under this Plan
after the date which is ten (10) years from the date on which this
Plan is adopted by the Board or the date on which this Plan is
approved by the shareholders of the Company, whichever is earlier.
(b) Common Shares Subject to Plan. The maximum number of
Common Shares that may be issued pursuant to Stock Options granted
under this Plan, subject to adjustment as provided in Section 9 of
this Plan, shall be 266,095 Common Shares. For the purpose of
computing the total number of Common Shares available for Stock
Options under this Plan, there shall be counted against the foregoing
limitations the number of Common Shares subject to issuance upon
exercise of Stock Options as of the dates on which such Stock Options
are granted. If any Stock Options are forfeited, terminated or
exchanged for other Stock Options, or expire unexercised, the Common
Shares which were theretofore subject to such Stock Options shall
again be available for Stock Options under this Plan to the extent of
such forfeiture, termination or expiration of such Stock Options.
Common Shares that may be issued under this Plan may be either
authorized and unissued shares or issued shares which have been
reacquired by the Company. No fractional shares shall be issued
under this Plan.
5. Eligibility and Grants. Persons eligible for Stock Options
under this Plan shall consist of directors and managerial and other key
employees of the Company or a Subsidiary who hold positions with
significant responsibilities or whose performance or potential
contribution, in the judgment of the Committee, will benefit the future
success of the Company or a Subsidiary. In selecting the directors and
employees to whom Stock Options will be awarded and the number of shares
subject to such Stock Options, the Committee shall consider the position,
duties and responsibilities of the eligible directors and employees, the
value of their services to the Company and the Subsidiaries and any other
factors the Committee may deem relevant.
6. Stock Options. Stock Options granted under this Plan may be in
the form of Incentive Stock Options or Non-Qualified Stock Options, and
such Stock Options shall be subject to the following terms and conditions
and in such form as the Committee may from time to time approve and shall
contain such additional terms and conditions as the Committee shall deem
desirable, not inconsistent with the express provisions of the Plan:
(a) Grant. Stock Options may be granted under this Plan on
terms and conditions not inconsistent with the provisions of this
Plan. Subject to adjustment as provided in Section 9 of this Plan,
the maximum number of Common Shares that may be issued to any
individual during the term of this Plan pursuant to Stock Options
granted under this Plan shall be 25% of the number of Common Shares
that may be issued pursuant to this Plan.
(b) Stock Option Price. The per share option exercise price
of a Stock Option shall be determined by the Committee at the time of
grant; provided, however, that in no event shall the exercise price
of a Stock Option be less than 100% of the Fair Market Value of the
Common Shares on the date of the grant of such Stock Option.
Notwithstanding the foregoing, in the case of a Participant who owns
Common Shares representing more than 10% of the outstanding Common
Shares at the time an Incentive Stock Option is granted, the option
exercise price shall in no event be less than 110% of the Fair Market
Value of the Common Shares at the time such Incentive Stock Option is
granted.
(c) Stock Option Terms. Subject to the right of the Company
to provide for earlier termination in the event of any merger,
acquisition or consolidation involving the Company, the term of each
Stock Option shall be fixed by the Committee; provided, however, that
the term of Incentive Stock Options will not exceed ten years after
the date the Incentive Stock Option is granted; provided further,
however, that in the case of a Participant who owns a number of
Common Shares representing more than 10% of the Common Shares
outstanding at the time the Incentive Stock Option is granted, the
term of the Incentive Stock Option shall not exceed five years.
(d) Exercisability. Except as set forth in Section 6(f) and
Section 7 of this Plan or as designated by the Committee at the time
of grant, Stock Options awarded under this Plan shall be immediately
exercisable in full.
(e) Method of Exercise. A Stock Option may be exercised, in
whole or in part, by giving written notice of exercise to the Company
specifying the number of Common Shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price in cash
or, if acceptable to the Committee in its sole discretion, in Common
Shares already owned by the Participant, or by surrendering
outstanding Stock Options. The Committee may also permit
Participants, either on a selective or aggregate basis,
simultaneously to exercise Stock Options and sell Common Shares
thereby acquired, pursuant to a brokerage or similar arrangement,
approved in advance by the Committee, and use the proceeds from such
sale as payment of the purchase price of such shares. In such event,
the Committee may permit the exercise price to be paid as soon as
practicable after exercise.
(f) Special Rule for Incentive Stock Options. With respect
to Incentive Stock Options granted under this Plan, to the extent the
aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of the number of shares with respect to
which Incentive Stock Options are exercisable under all plans of the
Company or a Subsidiary for the first time by a Participant during
any calendar year exceeds $100,000, or such other limit as may be
required by the Code, such Stock Options shall be Non-Qualified Stock
Options to the extent of such excess.
7. Termination of Employment or Directorship.
(a) Except in the event of the death or disability of a
Participant, upon the resignation, removal or retirement from the
board of directors of any Participant who is a director of the
Company or a Subsidiary or upon the termination of Employment of a
Participant who is not a director of the Company or a Subsidiary, any
Stock Option which has not yet become exercisable shall thereupon
terminate and be of no further force or effect, and, unless the
Committee shall specifically state otherwise at the time a Stock
Option is granted, any Stock Option which has become exercisable
shall terminate if it is not exercised within three months of such
resignation, removal, retirement or termination of Employment.
(b) Unless the Committee shall specifically state otherwise
at the time a Stock Option is granted, all Stock Options granted
under this Plan shall become exercisable in full on the date of
termination of a Participant's employment or directorship with the
Company or a Subsidiary because of his death or disability, and,
subject to extension by the Committee, all Stock Options shall
terminate if not exercised within 12 months of the Participant's
death or disability.
(c) Unless the Committee shall specifically state otherwise
at the time a Stock Option is granted, in the event the Employment or
the directorship of a Participant is Terminated for Cause, any Stock
Option that has not been exercised shall thereupon terminate and be
of no further force or effect.
8. Non-transferability of Stock Options. No Stock Option under
this Plan, and no rights or interests therein, shall be assignable or
transferable by a Participant except by will or the laws of descent and
distribution. During the lifetime of a Participant, Stock Options are
exercisable only by, and payments in settlement of Stock Options will be
payable only to, the Participant or his or her legal representative.
9. Adjustments Upon Changes in Capitalization.
(a) The existence of this Plan and the Stock Options granted
hereunder shall not affect or restrict in any way the right or power
of the Board or the shareholders of the Company to make or authorize
the following: any adjustment, recapitalization, reorganization or
other change in the Company's capital structure or its business; any
merger, acquisition or consolidation of the Company; any issuance of
bonds, debentures, preferred or prior preference stocks ahead of or
affecting the Company's capital stock or the rights thereof; the
dissolution or liquidation of the Company or any sale or transfer of
all or any part of its assets or business; or any other corporate act
or proceeding, including any merger or acquisition which would result
in the exchange of cash, stock of another company or options to
purchase the stock of another company for any Stock Option
outstanding at the time of such corporate transaction or which would
involve the termination of all Stock Options outstanding at the time
of such corporate transaction.
(b) In the event of any change in capitalization affecting
the Common Shares of the Company, such as a stock dividend, stock
split, recapitalization, merger, consolidation, spin-off, split-up,
combination or exchange of shares or other form of reorganization, or
any other change affecting the Common Shares, including a
distribution (other than normal cash dividends) of company assets to
shareholders, such proportionate adjustments, if any, as the Board in
its discretion may deem appropriate to reflect such change shall be
made with respect to the aggregate number of Common Shares for which
Stock Options in respect thereof may be granted under this Plan, the
maximum number of Common Shares which may be sold or awarded to any
Participant, the number of Common Shares covered by each outstanding
Stock Option, and the exercise price per share in respect of
outstanding Stock Options.
10. Amendment and Termination of this Plan. Without further
approval of the shareholders, the Board may at any time terminate this
Plan, or may amend it from time to time in such respects as the Board may
deem advisable, except that the Board may not, without approval of the
shareholders, make any amendment which would (a) increase the aggregate
number of Common Shares that may be issued under this Plan (except for
adjustments pursuant to Section 9 of this Plan), (b) materially modify the
requirements as to eligibility for participation in this Plan, or (c)
materially increase the benefits accruing to Participants under this Plan.
The above notwithstanding, the Board may amend this Plan to take into
account changes in applicable securities, federal income tax and other
applicable laws.
11. Modification of Options. The Board may authorize the Committee
to direct the execution of an instrument providing for the modification of
any outstanding Stock Option which the Board believes to be in the best
interests of the Company; provided, however, that no such modification,
extension or renewal shall confer on the holder of such Stock Option any
right or benefit which could not be conferred on him by the grant of a new
Stock Option at such time and shall not materially decrease the
Participant's benefits under the Stock Option without the consent of the
holder of the Stock Option, except as otherwise permitted under this Plan.
12. Miscellaneous.
(a) Tax Withholding. The Company shall have the right to
deduct from any settlement, including the delivery or vesting of
Common Shares, made under this Plan any federal, state or local taxes
of any kind required by law to be withheld with respect to such
payments or to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for the payment of
such taxes. If Common Shares are used to satisfy tax withholding,
such shares shall be valued based on the Fair Market Value when the
tax withholding is required to be made.
(b) No Right to Employment. Neither the adoption of this
Plan nor the granting of any Stock Option shall confer upon any
employee of the Company or a Subsidiary any right to continued
Employment with the Company or a Subsidiary, as the case may be, nor
shall it interfere in any way with the right of the Company or a
Subsidiary to terminate the Employment of any of its employees at any
time, with or without cause.
(c) Annulment of Stock Options. The grant of any Stock
Option payable in Common Shares is provisional until the Participant
becomes entitled to the certificate in settlement thereof. In the
event the Employment or the directorship of a Participant is
Terminated for Cause, any Stock Option which is provisional shall be
annulled as of the date of such termination.
(d) Other Company Benefit and Compensation Programs.
Payments and other benefits received by a Participant under a Stock
Option made pursuant to this Plan shall not be deemed a part of a
Participant's regular, recurring compensation for purposes of the
termination, indemnity or severance pay law of any country and shall
not be included in, nor have any effect on, the determination of
benefits under any other employee benefit plan or similar arrangement
provided by the Company or a Subsidiary unless expressly so provided
by such other plan or arrangement, or except where the Committee
expressly determines that a Stock Option or portion of a Stock Option
should be included to accurately reflect competitive compensation
practices or to recognize that a Stock Option has been made in lieu
of a portion of competitive annual cash compensation. Stock Options
under this Plan may be made in combination with or in tandem with, or
as alternatives to, grants, stock options or payments under any other
plans of the Company or a Subsidiary. This Plan notwithstanding, the
Company or any Subsidiary may adopt such other compensation programs
and additional compensation arrangements as it deems necessary to
attract, retain and reward directors and employees for their service
with the Company and its Subsidiaries.
(e) Securities Law Restrictions. No Common Shares shall be
issued under this Plan unless counsel for the Company shall be
satisfied that such issuance will be in compliance with applicable
federal and state securities laws. Certificates for Common Shares
delivered under this Plan may be subject to such stop-transfer orders
and other restrictions as the Committee may deem advisable under the
rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Common Shares
are then listed, and any applicable federal or state securities law.
The Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(f) Stock Option Agreement. Each Participant receiving a
Stock Option under this Plan shall enter into an agreement with the
Company in a form specified by the Committee agreeing to the terms
and conditions of the Stock Option and such related matters as the
Committee shall, in its sole discretion, determine.
(g) Cost of Plan. The costs and expenses of administering
this Plan shall be borne by the Company.
(h) Governing Law. This Plan and all actions taken hereunder
shall be governed by and construed in accordance with the laws of the
State of Ohio, except to the extent that federal law shall be deemed
applicable.
(i) Effective Date. This Plan shall be effective upon the
later of adoption by the Board and approval by the Company's
shareholders. This Plan shall be submitted to the shareholders of
the Company for approval at an annual or special meeting of
shareholders to be held no later than twelve months after the date of
adoption by the Board.