SCHEDULE 14A INFORMATION
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
/ / Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
CBT CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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[LOGO]
CBT CORPORATION
333 BROADWAY
PADUCAH, KY 42002
MARCH 8, 1996
Dear Stockholder:
The annual meeting of stockholders of CBT Corporation will be held on
Tuesday, April 16, 1996, at 2:00 P.M., Paducah time, at the main office of
Citizens Bank and Trust Company, 333 Broadway, Paducah, Kentucky. The formal
Notice of the Meeting and Proxy Statement appear in the pages that follow.
In addition to the election of directors, stockholders will be asked to
consider and vote upon amendments to the 1993 Stock Option Plan.
We recommend that you vote for the amendments referred to above, which are
set forth in more detail in the accompanying Proxy Statement.
We hope you will be able to attend the meeting in person. In addition to the
specific matters set forth in the notice of the meeting, we look forward to
discussing with you any questions you may have concerning the Corporation.
Sincerely,
[SIGNATURE]
William J. Jones
PRESIDENT AND CHIEF EXECUTIVE OFFICER
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE, IF YOU DO NOT EXPECT TO BE PERSONALLY
PRESENT AND WISH YOUR STOCK TO BE VOTED. IF YOU LATER FIND THAT
YOU MAY BE PRESENT OR FOR ANY OTHER REASON DESIRE TO REVOKE YOUR
PROXY, YOU MAY DO SO PRIOR TO THE TIME THE PRESENCE OF A QUORUM
HAS BEEN DETERMINED AND DECLARED.
CBT CORPORATION
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 16, 1996
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To the Holders of Common Stock of CBT Corporation:
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of CBT
Corporation, (the "Corporation"), a Kentucky corporation, will be held at the
main office of Citizens Bank and Trust Company, 333 Broadway, Paducah, Kentucky,
on Tuesday, April 16, 1996, at 2:00 p.m., Paducah time, for the following
purposes:
1) To elect directors to hold office until the next annual election and
until their successors shall be duly elected and qualified;
2) To consider and vote upon a proposal to amend the 1993 Stock Option
Plan; and
3) To transact such other business as may properly come before the meeting.
Only holders of common stock of record at the close of business on February
9, 1996, will be entitled to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors,
[SIGNATURE]
William J. Jones
PRESIDENT AND CHIEF EXECUTIVE OFFICER
March 8, 1996
CBT CORPORATION
333 BROADWAY
PADUCAH, KENTUCKY 42002
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PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of CBT Corporation (the "Corporation") of proxies to be voted
at the annual meeting of stockholders to be held on Tuesday, April 16, 1996. Any
stockholder giving a proxy has the right to revoke it by a written notice
delivered to the Secretary of the Corporation, P.O. Box 2400, Paducah, Kentucky,
42002-2400, or in person at the meeting, prior to the time the presence of a
quorum has been determined and declared. All proxies will be voted in accordance
with the directions of the stockholder and, to the extent no directions are
given, will be voted "for" the nominees for directors and "for" the amendments
to the 1993 Stock Option Plan.
This Proxy Statement and form of proxy are first being mailed to
stockholders commencing on or about March 8, 1996.
The Corporation will bear the entire cost of soliciting proxies.
Solicitation will be primarily by mail. Certain officers of the Corporation and
its subsidiaries may solicit proxies personally or by telephone or special
letter, but such persons will not be specially compensated for such services.
SHARES OUTSTANDING AND VOTING
Only stockholders of record at the close of business on February 9, 1996 are
entitled to notice of, and to vote at, the annual meeting. At February 9, 1996,
there were issued and outstanding 7,910,069 shares of common stock. The
Corporation has no class of stock other than common stock. Each share of the
common stock is entitled to one vote on all matters presented to the
stockholders with the exception of the election of directors. In the election of
directors, cumulative voting rules apply. Under cumulative voting, each
stockholder is entitled to cast as many votes in the aggregate as shall equal
the number of shares of the common stock owned by him or her multiplied by the
number of directors to be elected. Each stockholder, or his or her proxy, may
cast all of his or her votes (as thus determined) for a single nominee for
director or may distribute them among two or more nominees, at the stockholder's
discretion. As to the authority of the persons named as proxies in the
accompanying proxy card to cumulate votes, see the section entitled "Election of
Directors".
At February 9, 1996, the trust department of Citizens Bank and Trust Company
("Citizens") held of record 1,013,726 shares of the Corporation's common stock
in a fiduciary capacity representing approximately 12.8 percent of the
Corporation's outstanding shares of common stock. With respect to 562,505 shares
(approximately 7.1 percent), the instrument creating the trust or fiduciary
relationship specifically directs Citizens to vote the shares and the shares
will be voted "for" the proposals presented for consideration. The remaining
shares held by the trust department of Citizens will be voted at the direction
of the beneficial owners.
At February 9, 1996, to the knowledge of the Corporation, there were no
other record or beneficial owners of more than 5 percent of the Corporation's
issued and outstanding common stock.
Shareholders are being asked to approve the amendments to the 1993 Stock
Option Plan so that executive officers who receive stock pursuant to the Plan
will be eligible for the exemption provided by Rule 16b-3 promulgated under
Section 16(b) of the Securities and Exchange Act of 1934. For purposes of Rule
16b-3, the Securities and Exchange Commission has provided that an affirmative
vote of a majority of all outstanding shares of the Corporation's common stock
represented in person or by proxy and entitled to vote on the proposal is
necessary for approval. Under this requirement, abstentions and broker non-votes
will have the effect of a "No" vote.
1
BENEFICIAL OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
OF COMMON STOCK OF THE CORPORATION
Set forth below is information with respect to shares of common stock of the
Corporation beneficially owned as of February 9, 1996 by the current
director-nominees, the executive officers named in the Summary Compensation
Table herein, and all director-nominees and executive officers of the
Corporation as a group. Unless otherwise noted, the named person has sole voting
and investment powers with respect to the reported shares. Where the holdings of
a family member are noted as being held "individually", the family member has
sole voting and investment power with respect to the shares. Where joint
ownership is noted, the joint owners share voting and investment power as to the
shares.
AMOUNT AND NATURE OF PERCENT OF CLASS
NAME BENEFICIAL OWNERSHIP OUTSTANDING
- ------------------------------------------------------ -------------------- ------------------
Irving P. Bright, Jr. ................................ 69,377 **(1)
John Burman........................................... 48,234 **(2)
Patrick J. Cvengros................................... 81,736 1.0(3)
William H. Dyer....................................... 56,023 **
Louis A. Haas......................................... 347,330 4.4(4)
Joe Tom Haltom........................................ 291,032 3.7
Kerry B. Harvey....................................... 29,782 **(5)
F. Donald Higdon...................................... 3,298 **
M. Leon Johnson....................................... 59,946 **(6)
William J. Jones...................................... 65,346 **(7)
Ted S. Kinsey......................................... 19,750 **(8)
Louis M. Michelson.................................... 6,718 **(9)
Bill B. Morgan........................................ 213,267 2.7(10)
C. Thomas Murrell, III................................ 9,497 **(11)
Louis D. Myre, MD..................................... 36,952 **(12)
J. Russell Ogden, III................................. 39,056 **(13)
David M. Paxton....................................... 3,300 **(14)
Robert P. Petter...................................... 24,420 **
Joseph A. Powell...................................... 21,449 **(15)
John E. Sircy......................................... 587 **(16)
William A. Usher...................................... 10,000 **
All directors and named executive officers of the
Corporation and its subsidiaries as a group (26
persons)............................................. 1,437,100 18.2%
- ------------------------
** Represents less than 1 percent of total outstanding shares of common stock.
(1) Shares represented include 6,206 shares owned individually by Mr. Bright's
wife and 12,000 shares in a trust for which she serves as Trustee.
(2) Shares represented include 22,582 shares individually owned by Mr. Burman's
wife.
(3) Shares represented include 32,676 shares owned jointly by Mr. Cvengros and
his wife.
(4) Shares represented include 5,904 shares held in custodian accounts and
58,000 shares held in agency accounts for Mr. Haas' children, 7,886 shares
owned jointly by he and his wife and 177,108 shares of an estate for which
Mr. Haas serves as executor.
(5) Shares represented include 19,888 shares owned jointly by Mr. Harvey and his
wife, 102 shares owned jointly by Mr. Harvey's wife and daughter, 102 shares
owned jointly by Mr. Harvey and his daughter, and 164 shares owned
individually by Mr. Harvey's wife.
2
(6) Shares represented include 10,234 vested shares held by the Corporation's
Retirement, Savings, and Profit Sharing Plan and 2,000 shares of vested
stock options.
(7) Shares represented include 8,798 vested shares held by the Corporation's
Retirement, Savings, and Profit Sharing Plan and 52,653 shares of vested
stock options.
(8) Shares represented include 10,884 shares jointly owned by Mr. Kinsey and his
wife, 300 shares owned individually by Mr. Kinsey's wife, and 2,000 shares
owned individually by Mr. Kinsey's children.
(9) Shares represented include 1,596 shares owned by Michelson Jewelers, Inc.
(10) Shares represented include 4,850 shares owned by Mr. Morgan's wife, 98,724
shares owned by Mr. Morgan's father, 600 shares owned by Mr. Morgan's son,
1,745 shares owned by Mr. Morgan's daughter and son-in-law, 9,704 shares
owned by Mr. Morgan's sister and brother-in-law, 1,504 shares owned by Mr.
Morgan's sister and brother-in-law, and 4,384 shares owned by Mr. Morgan's
brother and sister-in-law.
(11) Shares represented include 210 vested shares held by the Corporation's
Retirement, Savings, and Profit Sharing Plan and 8,333 shares of vested
stock options.
(12) Shares represented include 16,012 shares owned individually by Dr. Myre's
wife and 4,140 shares in a trust for which she serves as a Trustee.
(13) Shares represented include 90 shares held in custodian accounts for Mr.
Ogden's children, 1,467 vested shares held by the Corporation's Retirement,
Savings, and Profit Sharing Plan and 32,499 shares of vested stock options.
(14) Shares represented include 3,200 shares owned jointly by Mr. Paxton and his
wife.
(15) Shares represented include 3,438 shares owned individually by Mr. Powell's
wife.
(16) Shares represented include 387 vested shares held by the Corporation's
Retirement, Savings, and Profit Sharing Plan.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's executive officers, directors and persons who own more than ten
percent (10%) of the Corporation's common stock to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC"). Such
persons are required by SEC regulation to furnish the Corporation with copies of
all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it or
representations from such persons that no Form 5s were required, the Corporation
believes that all filing requirements applicable to its officers, directors and
greater than ten percent (10%) beneficial owners were complied with in 1995 with
the following exceptions: Michael L. Woolfolk did not timely file a Form 3, with
respect to his election as an executive officer of the Corporation; Mr. Bright
did not timely file two reports covering 3 transactions; Mr. Dyer did not timely
file two reports covering 3 transactions. All of the exceptions were corrected
as soon as they were discovered.
PROPOSAL ONE
ELECTION OF DIRECTORS
Among items to be acted upon at the annual meeting of stockholders is the
election of seventeen directors to the Board of Directors of the Corporation.
Each of the persons elected will serve a term in office of one year and until
his successor is duly elected and qualified. All nominees for director are
currently directors of the Corporation.
3
Set out below is information concerning all of the current directors and
director-nominees of the Corporation, including their positions held with
Citizens, Bank of Marshall County ("BMC"), Pennyrile Citizens Bank and Trust
("Pennyrile"), Graves County Bank, Inc. ("Graves"), United Commonwealth Bank,
F.S.B.("United"), and Fidelity Credit Corporation ("FCC").
IRVING P. BRIGHT, JR., 63, business consultant. Until 1994, Mr. Bright was
the President and Chief Executive Officer of Bright's, Inc.(a retail clothing
store). Mr. Bright has been a director of the Corporation since 1983. He also
serves as a director of Citizens.
JOHN L. BURMAN, 62, manager of Kentucky Farm Bureau. Mr. Burman has been a
director of the Corporation since 1993. He also serves as a director of
Pennyrile.
PATRICK J. CVENGROS, 59, retired. Until 1992, Mr. Cvengros served as the
President and Chief Executive Officer of the Corporation. Mr. Cvengros has been
a director of the Corporation since 1983. Mr. Cvengros also serves as a director
of Citizens and FCC, as well as serving as a director of Computer Services,
Inc., Paducah, Kentucky.
WILLIAM H. DYER, 60, President and Chief Executive Officer of Tennessee
Valley Towing (a river barge company). Mr. Dyer has been a director of the
Corporation since 1991. Mr. Dyer also serves as a director of Citizens.
LOUIS A. HAAS, 54, investor. Mr. Haas was formerly the President and Chief
Executive Officer of DuBois Pharmaceutical (a wholesale pharmaceuticals
company). Mr. Haas has been a director of the Corporation since 1991. Mr. Haas
also serves as a director of Citizens.
JOE TOM HALTOM, 68, Chairman of BMC. Mr. Haltom previously served as
Chairman of BMC Bankcorp, Inc., which was acquired by the Corporation on May 31,
1994. Mr. Haltom was named a director of the Corporation in 1994. Mr. Haltom
also serves as a director of BMC, Graves, and United.
KERRY B. HARVEY, 39, a partner in the law firm of Owen, Harvey and Carter.
Mr. Harvey was named a director of the Corporation in 1994. Mr. Harvey also
serves as a director of BMC and United.
F. DONALD HIGDON, 64, retired. Mr. Higdon was formerly the General Manager
of Kraft Food Service, Inc. (a wholesale food distributor). Mr. Higdon has been
a director of the Corporation since 1991. Mr. Higdon also serves as a director
of Citizens.
WILLIAM J. JONES, 40, President and Chief Executive Officer of the
Corporation. Mr. Jones served as Executive Vice President of the Corporation
until January 1992, when he assumed his current position. Mr. Jones has been a
director of the Corporation since 1991. Mr. Jones also serves as a director of
Citizens, BMC, FCC, and Pennyrile.
TED S. KINSEY, 50, President and Chief Executive Officer of Parkway Chrysler
(an automobile dealership). Mr. Kinsey was named a director of the Corporation
in 1994. Mr. Kinsey also serves as a director of BMC.
LOUIS M. MICHELSON, 51, President and Chief Executive Officer of Michelson
Jewelers, Inc. (a retail jeweler). Mr. Michelson has been a director of the
Corporation since 1991. Mr. Michelson also serves as a director of Citizens.
BILL B. MORGAN, 66, Senior Vice President of Bradshaw and Weil, Inc. and
Cornerstone Insurance Group (insurance agencies). Mr. Morgan served as a
Brigadier General in the United States Air Force until 1992. Mr. Morgan also
served as Vice President of Morgan, Trevathan and Gunn, Inc. (an insurance
agency) until 1995, when he assumed his current role. Mr. Morgan was named a
director of the Corporation in 1994. Mr. Morgan also serves as a director of BMC
and Graves.
LOUIS D. MYRE, 69, retired physician. Dr. Myre has been a director of the
Corporation since 1983. Dr. Myre also serves as a director of Citizens.
DAVID M. PAXTON, 39, Vice President and Chief Financial Officer of Paxton
Media Group (a television broadcasting and newspaper publishing company). Mr.
Paxton has been a director of the Corporation since 1991. Mr. Paxton also serves
as a director of Citizens.
4
ROBERT P. PETTER, 60, President and Chief Executive Officer of Henry A.
Petter Supply Company (an industrial supply wholesaler). Mr. Petter has been a
director of the Corporation since 1983. Mr. Petter also serves as a director of
Citizens.
JOSEPH A. POWELL, 63, President and Chief Executive Officer of Old Hickory
Clay Company (a mining company). Mr. Powell has been a director of the
Corporation since 1991. Mr. Powell also serves as a director of Citizens.
WILLIAM A. USHER, 66, Chairman and Chief Executive Officer of Usher
Transportation Company (a trucking and transportation company). Mr. Usher has
been a director of the Corporation since 1991. Mr. Usher also serves as a
director of Citizens.
The Board of Directors has no reason to believe that any of the nominees
will be unavailable to serve as director. If any nominee should become
unavailable before the annual meeting, the persons named in the enclosed proxy
card, or their substitutes, or a majority of them, reserve the right to vote for
a substitute nominee selected by the Board of Directors. In addition, if any
stockholder or stockholders shall vote shares cumulatively or otherwise for the
election of a director or directors other than the nominees named above, or
substitute nominees, or for less than all of them, the persons named in the
enclosed proxy card, or their substitutes, or a majority of them, shall have the
right, in their discretion, to vote cumulatively for some number less than all
of the nominees named above or any substitute nominees, and for such of the
persons nominated as they may choose.
MEETINGS AND COMMITTEES
During the year ended December 31, 1995, the Board of Directors of the
Corporation held five regular meetings. During 1995, committees established by
the Board met as follows: the Executive Committee met fifteen times, the
Investment Committee met four times, and the Audit Committee met four times.
Attendance by directors at these meetings averaged 89 percent during 1995, with
all directors attending more than 75 percent of the aggregate number of Board
meetings and meetings of committees on which he served except for David M.
Paxton, who had a 71 percent attendance record, and Louis D. Myre, who was
present 60 percent.
The members of the Executive Committee are Irving P. Bright, Jr., Patrick J.
Cvengros, Louis A. Haas, Joe Tom Haltom, William J. Jones, David M. Paxton, and
William A. Usher. The functions performed by the Committee include: acting as
the Compensation Committee; making recommendations to the Board of Directors in
matters involving dividends, expansion plans, significant expenditures and
strategic initiatives; reviewing and making recommendations to the Board of
Directors regarding proposed directors, the compensation of directors and the
composition and size of the Board and its committees; and reviewing credit
policies and the adequacy of the allowance for credit losses of each subsidiary.
The members of the Audit Committee are Louis A. Haas, Kerry B. Harvey, F.
Donald Higdon, David M. Paxton, Robert P. Petter, and Joseph A. Powell. The
Committee recommends to the Board the engagement of independent auditors;
reviews with independent auditors the scope and results of the audit engagement;
reviews the scope, frequency, and results of internal audits and examinations;
reviews the adequacy of the Corporation's system of internal controls; and
reviews the regulatory examination reports of the Corporation and its
subsidiaries.
The members of the Investment Committee are Patrick J. Cvengros, William J.
Jones, Bill B. Morgan, David M. Paxton, Dr. Charles W. Ransler, and William A.
Usher. Dr. Ransler serves on the board of directors of Citizens. The Committee
reviews the composition and performance of the investment securities portfolios
of each subsidiary bank; establishes policies for monitoring the composition of
subsidiary's investment securities portfolios; and establishes policies for
monitoring liquidity and interest rate risk for the Corporation.
The Corporation has no standing nominating committees. All nominations for
membership on the Board originated with the Board of Directors.
5
COMPENSATION OF DIRECTORS
Prior to October 1995, each non-management director of the Corporation was
paid $200 for each Board meeting or committee meeting attended. Beginning in
October 1995, each director of the Corporation was paid $1,000 for each Board
meeting attended and $500 for attending each committee meeting.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table contains information concerning compensation paid or
accrued by the Corporation and its subsidiaries for the fiscal years ended
December 31, 1993, 1994, and 1995 to, or on behalf of, the Corporation's Chief
Executive Officer and each of the four other most highly compensated executive
officers of the Corporation during 1995 whose compensation exceeded $100,000.
(A) (B) (C) (D) (E) (F) (G)
LONG-TERM
COMPENSATION
-------------
ANNUAL SECURITIES
COMPENSATION UNDERLYING
NAME AND ---------------------- OTHER ANNUAL OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) (# SHARES)(2) COMPENSATION(3)
- --------------------------------- --------- --------- ----------- ------------------- ------------- ----------------
William J. Jones 1995 $ 200,000 $ 0 $ 0 120,000 $ 26,461
President and Chief 1994 180,000 54,216 0 20,000 26,069
Executive Officer, CBT 1993 165,000 48,411 0 14,000 20,788
and Citizens
John E. Sircy (4) 1995 130,000 0 0 70,000 19,998
Executive Vice President and 1994 88,461 30,000 6,358 10,000 18,416
Chief Operating Officer, 1993 0 0 0 0 0
CBT and Citizens
M. Leon Johnson 1995 100,000 38,271 0 3,000 15,948
President and Chief Executive 1994 92,800 29,591 0 6,000 16,927
Officer, FCC 1993 86,800 33,984 0 0 11,088
C. Thomas Murrell, III 1995 120,000 18,144 0 5,000 12,812
Executive Vice President 1994 115,513 30,000 0 6,000 12,284
Commercial and Consumer 1993 105,000 17,965 0 6,500 10,920
Banking, Citizens
J. Russell Ogden, III 1995 110,000 0 0 2,000 11,605
Executive Vice President 1994 106,072 18,610 0 5,000 11,132
Financial Services, Citizens 1993 96,720 16,549 0 6,500 9,923
- ------------------------------
(1) The amount shown in column (e) represents the amount reimbursed to Mr. Sircy
in 1994 for the payment of taxes incurred in connection with his receipt of
relocation expenses.
(2) All option grants have been adjusted to reflect the October 1994 2-for-1
stock split.
(3) The amounts shown in column (g) for each named executive officer is the
total of the Corporation's contribution to the 401(k) and Money Purchase
(MPP) retirement plans, subsidiary directors' fees, and term life insurance
premiums for the fiscal year ended December 31, 1995 as summarized on the
following chart:
SUBSIDIARY
401(K)/MPP DIRECTORS' FEES TERM LIFE TOTALS
----------- --------------- ------------- ---------
Mr. Jones $ 16,164 $ 9,850 $ 447 $ 26,461
Mr. Sircy 13,764 6,000 234 19,998
Mr. Johnson 10,100 5,600 248 15,948
Mr. Murrell 12,564 0 229 12,812
Mr. Ogden 11,364 0 241 11,605
- ------------------------------
(4) Mr. Sircy joined the Corporation in April 1994.
6
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is information on grants of stock options during the fiscal year
ended December 31, 1995, to the named executive officers.
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------------------------------------------------------------
(A) (B) (C) (D) (E) (F) (G)
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES IN EXERCISE OR BASE
OPTIONS FISCAL YEAR PRICE PER EXPIRATION
NAME GRANTED(#)(1)(2) 1995(4) SHARE($/SH) DATE
- -------------------------------- ---------------- ------------- ----------------- -------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
OPTION TERMS(5)
----------------------
10%
5% ----------
----------
William J. Jones 20,000 9.05% $ 22.50 01/05 $ 283,000 $ 717,200
100,000(3) 45.25% 23.75 03/05 1,494,800 3,785,000
John E. Sircy 10,000 4.52% 22.50 01/05 141,500 358,600
60,000(3) 27.15% 23.75 03/05 896,400 2,271,000
M. Leon Johnson 3,000 1.36% 22.50 01/05 42,450 107,580
C. Thomas Murrell, III 5,000 2.26% 22.50 01/05 70,750 179,300
J. Russell Ogden, III 2,000 .90% 22.50 01/05 28,300 71,720
- ------------------------------
(1) Stock options have no value on the date of grant because the exercise price
per share is equal to the market price per share of the Corporation's common
stock on the day preceding the date the option is granted. A stock option
has value to the optionee in the future only if the market price of the
Corporation's common stock at the time the option is exercised exceeds the
exercise price.
(2) Options are not exercisable during the first two years after the date of the
grant. Thereafter, options may be exercised on or after the anniversary date
of the grant in three equal installments so that the full grant may be
exercised no sooner than four years after the date of the grant, except as
noted in footnote (3).
(3) Options are not exercisable during the first five years after grant date.
Commencing on the fifth anniversary of the date of grant, 100 percent become
exercisable.
(4) A total of 221,000 options were granted to a total of twenty-one(21)
officers of the Corporation and its subsidiaries during 1995.
(5) The dollar amounts under columns (f) and (g) are the result of calculations
at the 5 percent and 10 percent rates set by the SEC. The potential
realizable value over the option terms of the options included in the above
table are computed using the assumed rates set by the SEC and should not be
viewed as, and are not intended to be, a forecast of possible future
appreciation, if any, in the Corporation's stock price.
AGGREGATE OPTIONS EXERCISED IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AS OF 12/31/95(#) AT 12/31/95($)*
ACQUIRED ON VALUE ------------------------------ --------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- ------------- ----------- --------------- ------------- ----------- -------------
William J. Jones 0 $ 0 39,166 155,334 $ 519,331 $ 245,699
John E. Sircy 0 0 0 80,000 0 34,200
M. Leon Johnson 0 0 0 9,000 0 24,720
C. Thomas Murrell, III 0 0 4,166 16,334 37,751 72,229
J. Russell Ogden, III 2,500 39,775 25,666 14,334 339,571 96,669
- ------------------------------
* Amounts shown represent the difference between exercise price and December 31,
1995 market value of $23.00.
7
EXECUTIVE OFFICERS
Information regarding the current executive officers of the Corporation,
including their names, ages, positions with the Corporation, and a brief
description of their business experience during the past five years, is
presented below. Executive officers are elected annually by the Board of
Directors.
WILLIAM J. JONES, 40, President and Chief Executive Officer and a director.
Mr. Jones also serves as President and Chief Executive Officer of Citizens. Mr.
Jones has been associated with the Corporation for the past 11 years. Additional
information regarding Mr. Jones is set forth on page 4.
JOHN E. SIRCY, 39, Executive Vice President and Chief Operating Officer. Mr.
Sircy also serves as Executive Vice President and Chief Operating Officer of
Citizens and as a director of Graves and United. Mr. Sircy joined the
Corporation in his current role in April 1994. Prior to that, he served as Vice
President and Chief Financial Officer of First Illini Bancorp, Inc., Galesburg,
Illinois, until January 1991. At that time, Mr. Sircy became Vice President and
Controller of Norwest Bank Iowa, N.A. in Des Moines, Iowa, until August 1992,
when he was named Senior Vice President and Chief Financial Officer, a position
he held until April 1994.
M. LEON JOHNSON, 55, President and Chief Executive Officer, FCC. Mr. Johnson
serves as a director of Citizens and FCC and has been associated with the
Corporation for 11 years, serving in his current role.
C. THOMAS MURRELL, III, 52, Executive Vice President-Commercial and Consumer
Banking, Citizens. Mr. Murrell joined the Corporation in November 1991 as Senior
Vice President and Chief Credit Officer of Citizens. Prior to that, he served as
Executive Vice President of the Corporate Banking Group at First Security
National Bank and Trust Company, Lexington, Kentucky. Mr. Murrell assumed his
current role in March 1994.
J. RUSSELL OGDEN, III, 48, Executive Vice President-Financial Services,
Citizens. Mr. Ogden served as Senior Vice President of Trust and Investments
until March 1994, when he assumed his current position. He has been associated
with the Corporation for 14 years.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Corporation does not have a compensation committee of the Board of
Directors. However, all compensation matters, including executive compensation,
are decided by the Executive Committee of the Corporation, except as set forth
below. The following directors served on the Executive Committee during 1995:
Irving P. Bright, Jr., Patrick J. Cvengros, Louis A. Haas, Joe Tom Haltom,
William J. Jones, David M. Paxton, and William A. Usher. Director Cvengros was,
until 1992, President and Chief Executive Officer of the Corporation. Mr. Jones,
President and Chief Executive Officer, did not participate in any discussion or
decisions regarding his own compensation.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Executive Committee of the Board of Directors (the "Committee")
determines annually the compensation to be paid to the Corporation's Chief
Executive Officer and other executive officers, including the executive officers
named in the Summary Compensation Table, except that the Stock Option Committee,
consisting of all members of the Committee, except Mr. Jones, made all decisions
about awards under the Corporation's stock option plans. During 1995, the
Committee retained the services of executive compensation consultants (Watson
Wyatt) to provide professional assistance, data and advice regarding pay
practices at the Corporation. This report discusses the objectives and procedure
used by the Committee to establish 1995 compensation for the Chief Executive
Officer and the four other officers named in the Summary Compensation Table.
This report describes the basis on which such 1995 compensation determinations
or recommendations were made by the Committee with respect to the Corporation's
executive officers. This report, required by rules of the Securities
8
and Exchange Commission, provides specific information regarding compensation of
the Corporation's President and Chief Executive Officer ("CEO") and general
information regarding compensation of the Corporation's executive officers as a
group. The Corporation's CEO and four other most highly compensated executive
officers are sometimes referred to as the "Named Executives."
Section 162(m) of the Code limits to $1,000,000 in a taxable year the
deduction publicly held companies may claim for compensation paid to an
executive officer, unless certain requirements are met. The Corporation has
reviewed this provision and has determined that the Corporation is not affected
by Section 162(m) because no compensation paid to any officer currently
approaches or is expected to approach $1,000,000 in the near term. Accordingly,
no change to any of the compensation plans is contemplated at this time.
COMPENSATION PHILOSOPHY AND OVERALL OBJECTIVES
OF THE EXECUTIVE COMPENSATION PROGRAMS
The Corporation seeks to ensure that executive compensation is directly
linked to Corporate performance and shareholder value, as well as comparable pay
practices in the industry. Each year, the Committee, in making compensation
decisions and recommendations, and the Board of Directors, in approving base
salaries, review the performance of the Corporation and compare such performance
to specified internal and external performance standards. The Committee has
developed the following compensation guidelines as the principles upon which
compensation decisions and recommendations are made:
- Provide variable compensation opportunities that are linked to the
financial performance of the Corporation and that align executive
compensation with the interest of shareholders.
- Provide incentives to increase corporate performance and shareholder
value.
- Establish executive officer base pay levels somewhat below the competitive
market, while providing incentive awards (from the annual and long-term
plans) above the market, provided that performance objectives are
achieved.
- Provide a competitive total compensation package that is "at risk" driven
and enables the Corporation to attract and retain key executives.
The Committee's executive officer compensation policies are structured to
reward contributions to the Corporation's performance and to enable it to
compete favorably with peer institutions in attracting and retaining highly
qualified individuals as executive officers. The Corporation generally defines
its peers as financial institutions of $1 to $2 billion in assets located in
non-metropolitan areas in the southeast and midwest regions of the United
States. The primary objective of the Committee's compensation policies is to pay
for performance. As a result of a study conducted by the executive compensation
consultants the Committee refined its executive compensation philosophy and
strategy and established a desired compensation mix from the various
compensation components. The Corporation's executive compensation strategy is to
set base pay at 90 percent of the competitive market with incentive
opportunities from annual and long term plans providing total direct
compensation (base, annual incentive and long-term incentive) at target
performance higher than the Corporation's peer organizations. As a result, a
significant portion of each executive officer's potential compensation for 1995
consisted of an incentive component with a pay-out based on the Corporation's or
Subsidiary's performance for the year and the executive officer's contribution
to that performance.
COMPENSATION PROGRAM COMPONENTS
AND EXECUTIVE OFFICER COMPENSATION
The compensation program for executive officers primarily consists of annual
compensation (comprised of base salary and annual performance-related
incentives) and long term compensation (consisting of stock options).
9
ANNUAL COMPENSATION
BASE SALARIES: Salary ranges were established based both on a study of peer
data and an assessment of the relative internal responsibilities of the
executive positions. Generally, the midpoint for each executive officer's salary
range was set at approximately 90% of the median of industry peers. Individual
base salaries for executive officers other than Mr. Jones are recommended by the
Corporation's Chief Executive Officer and approved by the Committee. Mr. Jones'
base salary is determined by the Committee. Salaries are reviewed annually and
adjusted periodically, typically at 12 month intervals. A salary range for each
executive officer position is established using survey data. Adjustments are
based upon the relationship of the executive officer's current salary to the
range for the position and a subjective evaluation of overall company and
personal performance. Base salaries paid in 1995 to the Named Executives were
below the median of estimated base salaries of industry peer survey data
available. With respect to Mr. Jones, the Committee considered his current
salary compared to the established range and the performance of the Corporation
as well as his personal performance.
ANNUAL INCENTIVE COMPENSATION: At the beginning of the fiscal year the
Committee also set potential 1995 incentive award levels, payable in cash, at
threshold, target and maximum performance points for each executive officer
other than Mr. Johnson. Mr. Johnson, as President and Chief Executive Officer of
FCC, receives an incentive award of 2 percent of FCC's pre-tax net income. All
other executives are classified as Corporate, Affiliate or Financial Services
officers, with each classification having a different set of performance
measures. Corporate executives, which would include Mr. Jones and Mr. Sircy,
receive payouts based upon the pre-tax net income of the Corporation. Threshold
performance must be achieved for any awards to be made. Affiliate executives,
which would include Mr. Murrell, receive payouts based upon the performance in
five, equally-weighted categories: Corporate pre-tax net income, affiliate net
interest margin, fee income, loan growth and deposit growth. With respect to
loan growth, minimum acceptable credit quality standards must be maintained to
qualify for an award on that factor. For each factor, threshold performance must
be achieved for an award on that factor to be made. The Financial Services
incentive award, for which Mr. Ogden is eligible, is based upon the pre-tax net
income of the Financial Services business unit, consisting of trust and
brokerage. The payout percentage of Financial Services' pre-tax net income
varies from 3 to 6.5 percent, depending on profitability level. Threshold
performance must be achieved for any awards to be made. Payout percentages vary
by position, with target payouts ranging from 35 to 50 percent of base salary
for Named Executives. Of the Named Executives, Mr. Johnson and Mr. Murrell
received incentive awards in 1995.
LONG-TERM COMPENSATION
Long-term compensation is provided in the form of stock options granted and
is intended to increase management ownership of stock and to provide an
incentive for executive officers to improve long-term Corporate performance. All
options are granted at fair market value and are exercisable in accordance with
the terms of the Corporation's incentive stock option plans.
In fixing the grants of stock options to the individual executive officers,
other than the President and CEO and the Executive Vice President and Chief
Operating Officer ("COO"), the Committee reviewed with the CEO his recommended
individual awards, taking into account the respective responsibilities and
contributions of each of the executive officers. The 1995 awards to the CEO and
COO were fixed separately by the Committee and were based, among other things,
on a review of competitive compensation data from national surveys, data from
selected industry peers, the officers' total compensation, current outstanding
stock options and recommendations from the Committee's compensation consultant.
Rather than granting smaller option awards each year, the Committee chose to
grant a significant block of options in 1995 to the CEO and COO in order to
strengthen their tie to shareholder interests for an extended period of time.
10
1995 COMPENSATION FOR THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
In light of the Committee's stated executive philosophy and compensation
plans, the Committee made the following decisions for 1995 regarding the
compensation for Mr. Jones, the Corporation's President and Chief Executive
Officer:
- BASE SALARY Mr. Jones' base salary was increased effective January 1995
from $180,000 to $200,000, an increase of approximately 11 percent. The
amount of this increase was based on the continued satisfactory
performance of Mr. Jones as evaluated by the Committee. The Committee
believes that, as adjusted, Mr. Jones' base salary remains lower than the
median average salary paid to CEOs by industry peers.
- ANNUAL INCENTIVE Although eligible, Mr. Jones did not receive any award
under the Company's annual incentive compensation program for 1995, as
discussed above under "Annual Incentive Compensation."
- LONG-TERM INCENTIVE The number of options to acquire shares of stock
granted to the Chief Executive Officer under the Corporation's stock
option plans are based on competitive practices. Administration is
consistent with the provisions of the plans as described above under
"Long-Term Compensation." In 1995, Mr. Jones received options for 120,000
shares. Of that amount, 20,000 shares were granted in January and 100,000
shares were granted in March.
SUMMARY
The Committee believes that base-pay levels and increases, and
performance-based incentive awards, are reasonable and competitive with the
compensation programs provided to officers and other executives by financial
services organizations of similar size and complexity to the Corporation. The
Committee believes further that the degree of performance sensitivity in the
annual incentive program continues to be reasonable, yielding awards that are
directly linked to the annual financial and operational results of the
Corporation. The Corporation's long term incentive stock option plans continue
to provide, in the view of the Committee, financial opportunities to
participants and retention features for the Corporation that are consistent with
the relative returns that are generated on behalf of the Corporation's
shareholders.
MEMBERS OF THE COMMITTEE:
Irving P. Bright, Jr.
Patrick J. Cvengros
Louis A. Haas
Joe Tom Haltom
William J. Jones
David M. Paxton
William A. Usher
11
COMPARATIVE STOCK PERFORMANCE
The Performance Graph set forth below compares the cumulative total
stockholder return on the Corporation's common stock for the last five fiscal
years with the cumulative total return of the NASDAQ Market Value Index ("Broad
Market Index"), the MG Industry Group 045 Index (thirty-four bank holding
companies, ranging in asset size from $500 million to $10 billion, located in
the East South Central United States) ("Industry Index") and a peer group of 20
publicly traded bank holding companies in non-metropolitan areas with assets
between $1 and $2 billion located in the southeast and midwest regions of the
United States ("Peer Group Index"). The Corporation believes that the Peer Group
Index is more representative for comparison purposes than the Industry Index
because the companies comprising the Peer Group have asset sizes and
non-metropolitan locations comparable to that of the Corporation. The cumulative
total stockholder return computations set forth in the Performance Graph assume
the investment of $100 in the Corporation's common stock, the Broad Market
Index, the Industry Index and the Peer Group Index on December 31, 1990 and the
reinvestment of all dividends. The 20 bank holding companies (in alphabetical
order) and their states that constitute the Peer Group Index are as follows:
Brenton Banks Inc., IA; Carolina First Corp., SC; City Holding Co., WV; F&M
National Corp., VA; First Commerce Bancshares, NE; First Financial Corp., IN;
First Source Corp., IN; First United Bancshares, AR; Firstbank of Illinois Co.,
IL; Heritage Financial Services., IL; Homeland Bankshares Corp., IA; Irwin
Financial Corp., IN; Mid-America Bancorp, KY; Mississippi Valley Bancshares, MO;
Park National Corp., OH; Peoples First Corp., KY; Pikeville National Corp., KY;
Trans Financial Inc., KY; United Bankshares, Inc., WV; and Wesbanco Inc., WV.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN OF THE CORPORATION, INDUSTRY,
PEER GROUP AND BROAD MARKET INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
CBT CORPORATION BROAD MARKET INDUSTRY PEER GROUP
1990 100 100 100 100
1991 134.44 128.38 163.59 140.52
1992 235.35 129.64 169.68 222.59
1993 326.62 155.50 179.35 251.66
1994 366.46 163.26 180.09 258.85
1995 410.02 211.77 241.99 317.94
12
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL AGREEMENTS
The Corporation has entered into Severance Protection Agreements dated June
28, 1995 ("Severance Agreements") with William J. Jones, President and Chief
Executive Officer, and John E. Sircy, Executive Vice President and Chief
Operating Officer, which provide for the payment of certain benefits to Mr.
Jones and Mr. Sircy upon the termination of their employment with the
Corporation within twenty-four (24) months following a change in control of the
Corporation.
Pursuant to the Severance Agreements, if, following a change in control of
the Corporation, as defined below, Mr. Jones' or Mr. Sircy's employment is
terminated by the Corporation for cause, disability or death, or is voluntarily
terminated by Mr. Jones or Mr. Sircy for other than good reason, as defined
below, they would be entitled to all compensation earned or accrued through the
termination date but not paid. If, following a change in control, Mr. Jones' or
Mr. Sircy's employment is terminated for any other reason (including by Mr.
Jones or Mr. Sircy for good reason), each would be entitled to [i] all accrued
compensation earned or accrued through the termination date, [ii] a payment
equal to two times annual base salary, [iii] immediate vesting of all
outstanding stock options, [iv] benefits under all medical, hospitalization,
vision and dental plans in which each participates for a period of two years or
until comparable coverage began under any plan of a new employer, [v] an award
under the Corporation's incentive compensation plan equal to the amount which he
would have received in the year of termination prorated to the date of
termination, [vi] reimbursement of reasonable moving expenses, [vii] reasonable
attorney fees and other expenses, if any, incurred to enforce the provisions of
the Severance Agreement, and [viii] all benefits payable under the Corporation's
retirement plans.
For purposes of the Severance Agreements, a change in control of the
Corporation includes the following events: [i] the acquisition by any person of
20 percent or more of the combined voting power of the Corporation's outstanding
securities; [ii] the members of the Board of Directors on June 28, 1995 (or such
other newly elected directors whose election was approved by at least two-thirds
of the Board) cease for any reason to constitute at least a majority of the
members of the Board; [iii] the Corporation's shareholders approve a merger,
consolidation, reorganization or share exchange unless (a) the Corporation's
stockholders immediately before such transaction own immediately thereafter at
least 50 percent of the voting securities of the surviving corporation in
substantially the same proportion, and (b) the members of the Board of Directors
immediately before such transaction constitute at least 50 percent of the
members of the Board of the surviving corporation, and (c) no person has
beneficial ownership of 20 percent or more of the combined voting power of the
surviving corporation's securities; and [iv] the Corporation's shareholders
approve an agreement for the sale of all or substantially all of the assets of
the Corporation.
Under the Severance Agreements, good reason includes [i] a significant
adverse change in duties or responsibilities or a change in reporting
responsibilities or offices, [ii] a material reduction in base salary or a
failure by the Corporation to increase base salary by at least the average
percentage increase for all officers of the Corporation during the preceding 2
years, [iii] a failure to provide employee benefits which are comparable to
those provided to similarly situated employees, [iv] a relocation of the
executive's offices of more than 50 miles, [v] any action which would affect
participation in or materially reduce benefits under any compensation plan then
in effect or which would deprive the executive of any material fringe benefit,
[vi] the Corporation's failure to obtain the assumption of the Severance
Agreements by any successor to the Corporation, and [vii] any termination of
employment which is not effected pursuant to the notice and other provisions of
the Severance Agreements.
13
The Corporation entered into the Severance Agreements in order to promote
conditions of continuity and stability in the Corporation's business, management
and policies, as well as reduce the threat of potential removal of the
Corporation's management, in the event of a change in control of the
Corporation. The Corporation believes that the Severance Agreements will thereby
help to ensure that there would be sufficient time and information to review any
proposal and appropriate alternatives and to negotiate on behalf of the
Corporation and its shareholders from a position of strength. The Severance
Agreements were not adopted in response to any specific effort to obtain control
of the Corporation and the Board of Directors is not aware of any such effort to
obtain control of the Corporation.
Upon a Change in Control of the Corporation, as hereafter defined, with
respect to the Corporation's 1993 Stock Option Plan (the "1993 Plan"), and upon
a takeover or merger of the Corporation, with respect to the Corporation's 1986
Stock Option Plan (the "1986 Plan"), at the discretion of the Plan Committee,
the exercise dates of all outstanding options under the Corporation's stock
option plans will accelerate so that each option outstanding may be exercised on
or after the date of the Change in Control. In addition, the shares subject to
the Corporation's stock option plans will be converted into (automatically in
the 1993 Plan and at the discretion of the Plan Committee under the 1986 Plan)
and replaced by shares of common stock or other equity securities having rights
and preferences no less favorable than common stock of the successor and the
number of shares subject to the options and the purchase price per share upon
exercise of the options will be correspondingly adjusted so the there will be no
change in the aggregate purchase price payable upon exercise of any such option.
Change in Control of the Corporation, for purposes of the 1993 Plan, means (a)
any share exchange or merger or consolidation of the Corporation or a
significant subsidiary of the Corporation if either (i) the Corporation will not
be the surviving or acquiring corporation or will not own 100 percent of the
outstanding capital stock of the surviving or acquiring corporation following
consummation of the transactions contemplated by the plan or agreement of
exchange, merger or consolidation, or (ii) there will be a substantial change in
the proportionate ownership of outstanding shares of voting stock of the
Corporation as a result of the transactions contemplated by such plan or
agreement of exchange, merger or consolidation; (b) any sale, lease, exchange,
transfer or other disposition of all or any substantial part of the assets of
the Corporation or a subsidiary of the Corporation followed by a liquidation of
the Corporation; (c) the commencement of any tender offer, exchange offer or
other purchase offer for, and/or any agreement to purchase, as much as (or more
than) 30 percent of the outstanding Common Stock of the Corporation or a
subsidiary of the Corporation; or (d) the Board of Directors or the shareholders
of the Corporation approve, adopt, agree to recommend, or accept any agreement,
contract, offer or other arrangement providing for, or any series of
transactions resulting in, any of the transactions described above.
TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Corporation are at present, as
in the past, customers of subsidiaries of the Corporation and have had and
expect to have business and banking transactions with such in the ordinary
course of business. In addition, some of the executive officers and directors of
the Corporation are at present, as in the past, also officers, directors or
principal stockholders of corporations which are customers of subsidiaries of
the Corporation and which had and expect to have business and banking
transactions with the Corporation in the ordinary course of business. All such
banking transactions were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons and, in
the opinion of management of the Corporation and its subsidiaries, did not
involve more than normal risk of collectibility or present other unfavorable or
unusual features.
14
Mr. Harvey, a director of the Corporation and BMC, is a partner in the law
firm of Owen, Harvey, and Carter, Benton, Kentucky, which was retained by BMC in
the last fiscal year and is proposed to be retained in the current fiscal year.
In 1995, Mr. Harvey's law firm received payment by BMC of approximately $31,000
for legal fees and retainers.
PROPOSAL TWO
APPROVAL OF AMENDMENTS TO 1993 STOCK OPTION PLAN
The Corporation's 1993 Stock Option Plan (the "Plan") was adopted effective
March 17, 1993, subject to shareholder approval which was received on April 20,
1993. The stated purpose of the Plan is to strengthen the Corporation by
providing an additional means of retaining and attracting competent management
personnel and providing to participating officers and other key employees added
incentive for high levels of performance and for unusual efforts to increase the
earnings of the Corporation through the opportunity for stock ownership offered
by the Plan.
At the Annual Meeting, the shareholders of the Corporation will be asked to
approve an amended and restated 1993 Stock Option Plan. The Board of Directors
of the Corporation adopted, subject to the approval of its shareholders, the
amended and restated 1993 Stock Option Plan (the "Amended Plan"), effective
March 16, 1995. Approval of the Amended Plan by the Corporation's shareholders
is required if executive officers who receive options are to be eligible for the
exemption provided by Rule 16b-3 promulgated under Section 16(b) of the
Securities Exchange Act of 1934.
SUMMARY OF THE PLAN
The Plan currently provides for the grant of options intended to qualify as
incentive stock options ("ISOs") under Section 422A of the Internal Revenue Code
of 1986 (the "Code"). The aggregate number of shares of Common Stock of the
Corporation which may be issued upon exercise of ISOs granted under the Plan may
not exceed 400,000 shares. If any outstanding option under the Plan for any
reason expires or is terminated, the shares of Common Stock subject to the
unexercised portion of the option shall again be available for options under the
Plan as if no option had been granted with respect to such shares. There is no
restriction as to the number of options or the maximum number of shares that may
be granted to any one person. However, the aggregate fair market value
(determined as of the dates options are granted) of the shares with respect to
which ISOs are exercisable by any single employee during any calendar year
cannot exceed $100,000.
The Plan is administered, interpreted and applied by a committee ("Plan
Committee") consisting of not less than three directors, none of whom are
employed by the Corporation or its subsidiaries. The Plan Committee is empowered
to select key employees of the Corporation and its subsidiaries (including
executive officers and directors who are salaried employees) to whom options
will be granted under the Plan, to determine the number of shares subject to
each option, to fix the period or periods during which an option may be
exercised, and to fix the prices at which shares subject to options may be
purchased. The Plan Committee may act by majority at a meeting at which a
majority of the members of the Plan Committee is present, or by a writing signed
by all of the members of the Plan Committee.
The number, price and kind of shares subject to the Plan may be subject to
adjustments in the event of any reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger or consolidation, or any other
change (after the effective date of the Plan) in the nature or number of shares
of Common Stock of the Corporation in order to avoid the dilution of shares
subject to outstanding options and to continue in force outstanding options by
substituting thereunder the option shares of a successor corporation which may
subsequently acquire the Corporation.
Each option is evidenced by a written agreement between the Corporation and
the key employee. While the Plan Committee is empowered to establish the price
at which shares may be purchased, the Plan currently requires that the option
price for each ISO must be at least equal to one hundred percent (100%) of the
fair market value of the shares on the business day immediately preceding the
15
date of the grant, as determined by the average of the closing bid and asked
quotations or the closing high bid quotation for the Common Stock in the
over-the-counter market on the immediately preceding business day as reported by
NASDAQ.
In addition, the Plan fixes the maximum term of any option granted under the
Plan at ten years from the date of the grant of the option. The Plan also
generally provides than any ISO granted may not be exercised within two years
from the date of its grant and then will be exercisable only one third per year
so that the full grant is not exercisable until the fourth year from the date of
grant. Notwithstanding the foregoing, if there is a Change in Control of the
Corporation, as defined in the Plan, all outstanding ISOs may become immediately
exercisable at the discretion of the Plan Committee.
Options granted pursuant to the Plan are not transferable except upon the
death of optionee, in which event they may be transferred only in accordance
with and to the extent provided for by the laws of the descent and distribution
of Kentucky. If an optionee ceases to be employed by the Corporation or its
subsidiaries for any reasons other than for cause, the period during which the
unexercised portion of his or her ISO may thereafter be exercised is restricted
to a period of not more than one year. If an optionee is dismissed from
employment for cause, as determined by the Plan Committee in its sole
discretion, his or her ISO terminates as of the date immediately preceding the
date of termination of employment.
Currently, all employees of the Corporation and its subsidiaries are
eligible to participate in the Plan.
While the Board of Directors of the Corporation intends to continue the Plan
in effect until the scheduled termination date, the Board may modify, amend or
terminate the Plan without a vote of the shareholders; provided that, without
the approval of a majority of the votes represented and entitled to vote at a
duly held meeting of the stockholders, the maximum number of shares which may be
delivered under the Plan may not be increased, the option price under any option
may not be reduced and the period during which an option may be exercised may
not be extended.
SUMMARY OF MATERIAL AMENDMENTS TO THE PLAN
The Board of Directors intends to submit to the shareholders for their
approval at the annual meeting the Amended Plan. The Amended Plan generally
would permit the Plan Committee to grant "non-qualified" stock options ("NSOs")
and provide for additional means for payment of the option exercise price. The
Amended Plan provides that the Plan Committee may authorize the granting of
ISOs, NSOs or a combination of ISOs and NSOs. Unlike ISOs, which are intended to
qualify for favorable tax treatment under Section 422A of the code, NSOs are not
specifically authorized or qualified for favorable federal income tax
consequences. The current provisions of the Plan would remain in effect with
respect to the terms of any ISOs granted under the Plan. However, under the
Amended Plan, the Plan Committee may determine the option price per share of
common stock at the time an NSO is granted, the period for which the NSO is
granted (which may not exceed 10 years), the time or times and the manner in
which the NSO shall be exercisable, and such other provisions of the NSO as it
may deem necessary consistent with the terms of the Plan.
Currently, the Plan provides that the option price shall be paid in full in
cash, or by certified check, or, if the Plan Committee in its discretion agrees
to accept, in shares of Common Stock, or such combination of cash and Common
Stock as the Plan Committee in its discretion agrees to accept. The Amended Plan
also provides that, subject to such rules as the Plan Committee may impose, the
option price may be paid in whole or in part in such other consideration as
shall constitute lawful consideration for the issuance of Common Stock and be
approved by the Plan. Moreover, subject to such restrictions, terms and
conditions as the Plan Committee may impose, an optionee may request the
Corporation to "pyramid" the optionee's shares; that is, to automatically apply
the shares which the
16
optionee is entitled to receive on the exercise of a portion of an option to
satisfy the exercise for additional portions of the option, thus resulting in
multiple simultaneous exercises of an option by use of whole shares as payment.
GRANTS MADE SUBJECT TO SHAREHOLDER APPROVAL OF PLAN
Subject to shareholder approval of the Plan, NSOs to purchase an aggregate
of 160,000 shares of Common Stock at an exercise price of $23.75 were granted on
March 16, 1995 to current executive officers as a group. The NSOs granted under
the Amended Plan have an exercise price equal to the fair market value of a
share of the Corporation's Common Stock on the date of grant and a term of ten
years from the date of grant. The NSOs granted may not be exercised within five
years from the date of grant and thereafter may be exercised in whole or in
part. Notwithstanding the foregoing, if there is a Change in Control of the
Corporation, such NSOs will become immediately exercisable at the discretion of
the Plan Committee. If the optionee ceases to be employed by the Corporation or
its subsidiaries for any reasons other than for cause, the period during which
the unexercised portion of his NSO may thereafter be exercised is restricted to
a period of not more than one year. If an optionee is dismissed from employment
for cause, as determined by the Plan Committee in its sole discretion, his or
her NSO terminates as of the date immediately preceding the date of termination
of employment.
Subject to shareholder approval of the Amended Plan, NSOs to purchase
100,000 shares of Common Stock were granted to Mr. Jones, President and Chief
Executive Officer of the Corporation, and NSOs to purchase 60,000 shares of
Common Stock were granted to Mr. Sircy, Executive Vice President and Chief
Operating Officer.
As of February 9, 1996, the fair market value of the Common Stock for
purposes of the Plan, as reported by NASDAQ, was $23.00.
FEDERAL INCOME TAX CONSEQUENCES
Generally there will be no income tax consequences to the optionee or the
Corporation when an ISO or NSO is granted under the Plan. When an NSO is
exercised, the excess of the then fair market value of the Common Stock over the
option price will constitute ordinary income to the optionee and the Corporation
will be entitled to deduct an equal amount as compensation expense. Upon
disposition of the stock by the employee, long-term or short-term capital gain
or loss, as the case may be, will be recognized, equal to the difference between
the amount realized on such disposition and the basis for the stock, which will
include the amount previously recognized as ordinary income. The holding period
for capital gains purposes will commence on the day the optionee acquires the
shares pursuant to the option.
There also is no tax consequence to the optionee upon the exercise of an ISO
granted under the Plan. The optionee will be taxed, at capital gains rates, at
the time he or she disposes of the Common Stock acquired pursuant to his or her
exercise of an ISO, on the spread between the sales price and his or her tax
basis in the Common Stock. If the optionee disposes of the Common Stock sooner
than two years from the date the ISO was granted or one year from the date the
Common Stock was transferred to him or her pursuant to the exercise of the
option, the optionee will be taxed in the year of such "disqualifying
disposition," at ordinary income tax rates, on the spread between the fair
market value of the Common Stock on the date of exercise of the ISO and the
option's exercise price. The Corporation will not be entitled to a compensation
deduction unless there is a disqualifying disposition of the Common Stock. If
there is a disqualifying disposition of the Common Stock, the Corporation will
be entitled to a compensation deduction in the same amount that the optionee is
required to include in his or her gross income.
EFFECT ON POTENTIAL TAKEOVER ATTEMPTS INCLUDING POSSIBLE DISADVANTAGE
While the purpose of the Plan is to promote the interests of the Corporation
by attracting, maintaining and affording an incentive to the Corporation's key
officers and employees, certain provisions of the Plan may have an anti-takeover
effect. In the event of a Change in Control, the
17
ability to exercise all outstanding options will be accelerated at the
discretion of the Plan Committee. Additionally, in the event of a Change in
Control, the common stock or other comparable securities of the acquiring entity
may be substituted for the Common Stock of the Corporation subject to the Plan
and outstanding options.
The effect of these provisions of the Plan may be to discourage an
unsolicited tender offer or other unsolicited takeover bid for the Corporation's
Common Stock. These provisions of the Plan may make the Corporation a less
attractive takeover target. Additionally, these provisions may encourage persons
desiring to take over or control the Corporation to initiate such action through
negotiations with the then incumbent Board of Directors and management instead
of through a direct offer to the shareholders. The provisions of the Plan could
make the accomplishment of a transaction more difficult or more costly even if
the transaction is favorable to the interests of the shareholders. Management of
the Corporation presently is aware of no specific efforts to obtain control of
the Corporation, either in a friendly or hostile manner.
VOTE REQUIRED
The adoption of this proposal will require the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock of the
Corporation present, or represented, and entitled to vote on the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL.
INDEPENDENT PUBLIC ACCOUNTANTS
For the fiscal year ending December 31, 1995, the accounting firm of Arthur
Andersen LLP served as the Corporation's independent public accountants and
auditors. The Board of Directors has approved the selection of Arthur Andersen
LLP to serve as the Corporation's independent public accountants and auditors
for the year ending December 31, 1996. A representative from the firm of Arthur
Andersen LLP is expected to be present at the annual meeting and will be
available to make a statement should he desire to do so, and respond to
questions of stockholders.
On June 28, 1995, the Board of Directors of the Corporation determined to
discontinue the services of Deloitte & Touche LLP (the "Former Accountant"), the
independent public accounting firm who was previously engaged as the principal
accountant to audit the Corporation's financial statements. On that same date,
the Corporation engaged a new independent public accounting firm, Arthur
Andersen LLP, as its principal accountant to audit the Corporation's financial
statements. The decision to change accountants was recommended by the audit
committee of the Board of Directors and approved by the Board of Directors. The
Former Accountant's reports on the Corporation's financial statements for the
past two years did not contain any adverse opinion or disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope, or accounting
principles. During the Corporation's two most recent fiscal years and the
subsequent interim period, there were no disagreements with the Former
Accountant on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which disagreement, if not
resolved to the satisfaction of the Former Accountant, would have caused it to
make a reference to the subject matter of the disagreement in connection with
its reports.
18
ANNUAL REPORT
UPON WRITTEN REQUEST, THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO EACH
STOCKHOLDER, A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K WHICH IS
REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE YEAR
ENDED DECEMBER 31, 1995. ADDRESS ALL REQUESTS TO:
SECRETARY
CBT CORPORATION
P. O. BOX 2400
PADUCAH, KENTUCKY 42002-2400
STOCKHOLDERS' PROPOSALS AND OTHER MATTERS
Proposals by stockholders to be presented at the 1997 annual meeting of
stockholders must be received by the President of the Corporation at its
principal office no later than November 1, 1996, for inclusion in the proxy
statement and form of proxy relating to that meeting.
The Board of Directors of the Corporation does not know of any matters for
action by stockholders at the annual meeting other than the matters described in
the notice. However, the enclosed Proxy will confer discretionary authority with
respect to any other matters which may properly come before the meeting.
It is important that proxies be returned promptly. STOCKHOLDERS, WHETHER OR
NOT THEY EXPECT TO ATTEND IN PERSON, ARE REQUESTED TO RETURN THEIR PROXIES IN
ORDER THAT A QUORUM MAY BE ASSURED. Return may be made in the enclosed envelope,
to which no postage need be affixed.
By Order of the Board of Directors,
William J. Jones
PRESIDENT AND CHIEF EXECUTIVE OFFICER
March 8, 1996
19
CBT CORPORATION
1993 STOCK OPTION PLAN
(As Amended and Restated Effective March 16, 1995)
PREAMBLE
CBT Corporation adopted the CBT Corporation 1993 Incentive Stock
Option Plan, effective March 17, 1993. The Plan was subsequently approved by
the shareholders of the Company. The Company now desires to amend and restate
the Plan, subject to shareholder approval, effective for options granted on and
after March 16, 1995, to provide for granting of nonstatutory stock options and
to permit the Plan Committee to determine the vesting period of options granted
under the Plan. The Plan is renamed "CBT Corporation 1993 Stock Option Plan" to
reflect that nonstatutory options can now be awarded under the Plan. These
amendments shall not affect outstanding options granted under the Plan before
March 16, 1995, and the provisions of the Plan as in effect before these
amendments shall apply to such options. The Plan as so amended and restated
reads as follows:
1. PURPOSE. The purpose of the Plan is to strengthen the Company by
providing an additional means of retaining and attracting competent management
personnel and by providing to participating officers and other key employees of
the Company and its Subsidiaries added incentive for high levels of performance
and for unusual efforts to increase the earnings of the Company through the
opportunity for stock ownership offered by the Plan.
2. DEFINITIONS. For purposes of this Plan, capitalized words and phrases
shall have the following meanings:
A. BOARD. The word "Board" means the Company's Board of Directors.
B. CHANGE IN CONTROL. The term Change in Control means: [a] any
share exchange or merger or consolidation of the Corporation or a significant
subsidiary of the Corporation if either [i] the Corporation will not be the
surviving or acquiring corporation or will not own 100% of the outstanding
capital stock of the surviving or acquiring corporation following the
consummation of the transactions contemplated by the plan or agreement of
exchange, merger or consolidation, or [ii] there will be a substantial change in
the proportionate ownership of outstanding share of voting stock of the
Corporation as a result of the transactions contemplated by such plan or
agreement of exchange, merger or consolidation; [b] any sale, lease, exchange,
transfer or other disposition of all or any substantial part of the assets of
the Corporation or a subsidiary of the Corporation followed by a liquidation of
the Corporation; [c] the commencement of any tender offer, exchange offer or
other purchase offer for,
and/or any agreement to purchase, as much as (or more than) 30% of the
outstanding Common Stock of the Corporation or a subsidiary of the Corporation;
or [d] the Board or the shareholders of the Corporation approve, adopt, agree to
recommend, or accept any agreement, contract, offer or other arrangement
providing for, or any series of transactions resulting in, any of the
transactions described above.
C. CODE. The word "Code" means the Internal Revenue Code of 1986,
as amended.
D. COMMON STOCK. The term "Common Stock" means the Company's common
stock or the common stock or securities of a Successor that have been
substituted therefor pursuant to Section 8.
E. COMPANY. The word "Company" means CBT Corporation, a Kentucky
corporation, with its principal place of business at 333 Broadway, Paducah,
Kentucky 42001
F. EXCHANGE ACT. The term "Exchange Act" means the Securities
Exchange Act of 1934, as amended from time to time.
G. ISO. The acronym "ISO" means an option to purchase Common Stock
which at the time the option is granted qualifies as an incentive stock option
within the meaning of Code Section 422.
H. NSO. The acronym "NSO" means a nonstatutory stock option to
purchase Common Stock which at the time the option is granted does not qualify
as an ISO.
I. OPTION PRICE. The term "Option Price" means the price to be paid
for Common Stock upon the exercise of an option granted under the Plan, in
accordance with Section 7.A.
J. OPTIONEE. The word "Optionee" means an employee to whom options
have been granted under the Plan.
K. OPTIONEE REPRESENTATIVE. The term "Optionee Representative"
means the personal representative of the Optionee's estate, and after final
settlement of the Optionee's estate, the successor or successors entitled
thereto by law.
L. PLAN. The word "Plan" means the CBT Corporation 1993 Stock
Option Plan, as set forth herein, and as amended from time to time.
M. PLAN COMMITTEE. The term "Plan Committee" means the committee
appointed by the Board to administer the Plan, pursuant to Section 4.
N. SUBSIDIARY. The word "Subsidiary" means, as defined
2
in Code Section 424(f), any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time of the granting
of an option under the Plan, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock of one of the
other corporations in such chain.
O. SUCCESSOR. The word "Successor" means the entity surviving a
merger or consolidation with the Company, or the entity that acquires all or a
substantial portion of the Company's assets or outstanding capital stock
(whether by merger, purchase or otherwise).
P. TEN PERCENT SHAREHOLDER. The term "Ten Percent Shareholder"
means an employee who, at the time an option is granted, owns stock possessing
more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or Subsidiary employing the Optionee or of its parent
(within the meaning of Code Section 424(e)) or Subsidiary.
3. STOCK SUBJECT TO PLAN. Subject to adjustment as provided in Section
8, the aggregate number of shares of Common Stock which may be issued under the
Plan shall not exceed four hundred thousand (400,000) shares.
_______________________ (_________) shares have been issued under the Plan as of
March 16, 1995, leaving ____________________ shares (_________) shares available
for issuance under the Plan effective March 16, 1995. Authorized and unissued
shares shall be delivered under the Plan. If any option expires or terminates
for any reason, the shares of Common Stock subject thereto shall again become
available under the Plan.
4. ADMINISTRATION.
A. PLAN COMMITTEE. The Board shall appoint an option committee,
known as the Plan Committee, to administer the Plan, whose membership shall be
determined and reviewed from time to time by the Board. Members of the Plan
Committee shall serve until delivery of their written resignation to the Board
or until removal by the Board. The Plan Committee shall consist of not less
than three (3) members of the Board who are not and have not at any time for one
(1) year before appointment to the Committee been eligible to receive stock or
options under any plan of the Company or any of its affiliates. Members of the
Plan Committee shall be subject to any additional restrictions necessary to
satisfy the requirements for disinterested administration of the Plan as set
forth in Rule 16b-3 under the Exchange Act.
B. PLAN ADMINISTRATION. The Plan Committee shall have full power
and authority to construe, interpret and administer the
3
Plan and may from time to time adopt such rules and regulations for carrying out
the Plan as it may deem proper and in the Company's best interests. The
decision of a majority of the members of the Plan Committee shall constitute the
decision of the Plan Committee and the Plan Committee may act either at a
meeting at which a majority of the members of the Plan Committee is present, or
by a writing signed by all of the members of the Plan Committee. The
interpretation of any provisions of the Plan by the Plan Committee shall be
final, conclusive, and binding upon all persons and the officers of the Company
shall place into effect and shall cause the Company to perform its obligations
under the Plan in accordance with the determinations of the Plan Committee in
administering the Plan.
5. GRANT OF OPTIONS.
A. PLAN COMMITTEE'S AUTHORITY. Subject to the terms, provisions and
conditions of the Plan, the Plan Committee shall have exclusive jurisdiction:
[i] to select the employees to whom options shall be granted; [ii] to authorize
the granting of ISOs, NSOs or a combination of ISOs and NSOs to employees; [iii]
to determine the number of shares of Common Stock subject to each option; [iv]
to determine the time or times when options will be granted, the manner in which
each option shall be exercisable, and the duration of the exercise period; [v]
to fix such other provisions of the option agreement as it may deem necessary or
desirable consistent with the terms of the Plan; and [vi] to determine all other
questions relating to the administration of the Plan.
B. $100,000 ISO EXERCISABILITY LIMITATION. Notwithstanding Section
5.A, the aggregate fair market value (determined as of the date the option is
granted) of the Common Stock for which ISOs will first become exercisable by an
Optionee in any calendar year under all ISO plans of the Company and its
Subsidiaries shall not exceed $100,000. Options granted in excess of this
limitation shall constitute NSOs.
6. ELIGIBILITY. Key employees of the Company and its Subsidiaries,
including officers and directors who are also employees of the Company or a
Subsidiary, are eligible to receive ISOs and NSOs under the Plan. Key employees
to whom options may be granted under the Plan will be those selected by the Plan
Committee from time to time who, in the sole discretion of the Plan Committee,
have contributed in the past or who may be expected to contribute materially in
the future to the successful performance of the Company and its Subsidiaries.
7. TERMS OF OPTIONS. Each option granted under the Plan
4
shall be evidenced by an option agreement signed by the Optionee and by a member
of the Plan Committee on behalf of the Company. An option agreement shall
constitute a binding contract between the Company and the Optionee, and every
Optionee, upon acceptance of such option agreement, shall be bound by the terms
and restrictions of the Plan and of the option agreement. Such agreement shall
be subject to the following express terms and conditions and to such other terms
and conditions that are not inconsistent with the Plan as the Plan Committee may
deem appropriate.
A. OPTION PRICE. The Option Price per share of Common Stock shall
be determined by the Plan Committee at the time an option is granted. The
Option Price for ISOs shall be not less than: [i] the fair market value of
Common Stock on the date of grant, or [ii] in the case of an ISO granted to a
Ten Percent Shareholder, one hundred ten percent (110%) of the fair market value
of Common Stock on the date of grant. The fair market value of Common Stock
shall be determined by the average of the closing bid and asked quotations or
the closing high bid quotation, whichever is available, for the Common Stock in
the over-the-counter market, as reported by the National Association of
Securities Dealers Automated Quotation System on the business day immediately
preceding the date of grant. The Option Price shall be subject to adjustment as
provided in Section 8.
B. OPTION PERIOD. Subject to Section 7.C, each option agreement
shall specify the period for which the option thereunder is granted and shall
provide that the option shall expire at the end of such period. The Plan
Committee may extend such period provided that, in the case of an ISO, such
extension shall not in any way disqualify the option as an ISO without the
Optionee's consent. In no case shall such period, including any such
extensions, exceed ten (10) years from the date of grant, provided, however,
that in the case of an ISO granted to a Ten Percent Stockholder, such period,
including extensions, shall not exceed five (5) years from the date of grant.
C. LAPSE OF ISO. An ISO shall lapse at the earliest of the
following times:
[1] ten (10) years from the date of grant;
[2] five (5) years after the date of this Agreement if Optionee
is a Ten Percent Shareholder on the date of this Agreement); or
[3] three (3) months after termination of employment with the
Company or a Subsidiary for reasons other than death, Disability, or
discharge for cause;
[4] one (1) year after termination of employment with the
Company or a Subsidiary because of Optionee's death
5
or Disability; or
[5] immediately upon termination of employment through discharge
for cause, as determined by the Plan Committee in its sole discretion; or
[6] on the date Optionee becomes employed by or renders services
for a financial institution in competition with the Company or its
Subsidiaries in any county in which the Company or any of its Subsidiaries
is located following Optionee's termination of employment with the Company
or its Subsidiaries, as determined by the Plan Committee in its sole
discretion.
D. ISO INSTALLMENT EXERCISE PERIOD. Except to the extent provided
otherwise by Section 7.H, in no event shall an ISO be exercisable during the
first two (2) years after the date of grant. Thereafter, an ISO may be
exercised on or after the anniversary of the date of grant in three (3) equal
annual installments so that the full grant may be exercised not sooner than four
(4) years after the date of grant.
E. LEAVES OF ABSENCE. The Plan Committee may, in its discretion,
treat all or any portion of any period during which an Optionee is on military
or on an approved leave of absence from the Company or a Subsidiary as a period
of employment of the Optionee by the Company or Subsidiary for purposes of
accrual of the Optionee's rights under the Plan. Notwithstanding the foregoing,
if a leave of absence exceeds ninety (90) days and reemployment is not
guaranteed by contract or statute, the Optionee's employment by the Company or a
Subsidiary for the purposes of the Plan shall be deemed to have terminated on
the 91st day of the leave.
F. MANNER OF EXERCISE. To exercise an option, the Optionee shall
deliver to the Company: [i] seven (7) days' prior written notice specifying the
number of shares as to which the option is being exercised and, if determined by
counsel for the Company to be necessary, representing that such shares are being
acquired for investment purposes only and not for purpose of resale or
distribution; and [ii] payment by the Optionee, or a broker-dealer (as provided
in Section 7.G), for such shares of the Option Price for the number of shares
with respect to which the option is exercised. On or before the expiration of
the seven (7) day notice period, and provided that all conditions precedent
contained in the Plan are satisfied, the Company shall, without transfer or
issuance tax or other incidental expenses to Optionee, deliver to Optionee, at
the offices of the Company, a certificate or certificates for the Common Stock.
Options are exercisable only in whole shares, and fractional share interests
shall be disregarded. If Optionee fails to accept delivery of the Common Stock,
the Optionee's rights to exercise the applicable portion of the option shall
terminate.
6
G. PAYMENT FOR SHARES. Except as otherwise provided in this Section
7, the Option Price for the Common Stock shall be paid in full when the option
is exercised. Subject to such rules as the Committee may impose, the Option
Price may be paid in whole or in part in [i] cash, [ii] whole shares of Common
Stock owned by the Optionee evidenced by negotiable certificates, [iii] by a
combination of such methods of payment, or [iv] such other consideration as
shall constitute lawful consideration for the issuance of Common Stock and be
approved by the Committee (including without limitation, assurance satisfactory
to the Committee from a broker registered under the Exchange Act of the delivery
of the proceeds of an imminent sale of the Common Stock to be issued pursuant to
the exercise of such option, such sale to be made at the direction of the
Optionee). Moreover, subject to such restrictions, terms and conditions as the
Committee may impose, an Optionee may request the Company to "pyramid" the
Optionee's shares; that is, to automatically apply the shares which the Optionee
is entitled to receive on the exercise of a portion of an option to satisfy the
exercise for additional portions of the option, thus resulting in multiple
simultaneous exercises of an option by use of whole shares as payment. If
payment of the Option Price is made in Common Stock, the value of the Common
Stock used for payment of the Option Price shall be the fair market value of the
Common Stock, determined in accordance with Section 7.A, on the business day
preceding the day written notice of exercise is delivered to the Company.
H. ACCELERATION. Notwithstanding the provisions of Sections 7.B or
D to the contrary, if there is a Change in Control, at the discretion of the
Plan Committee, the exercise dates of all outstanding options shall accelerate
so that each option outstanding may be exercised on or after the date of the
Change in Control.
I. ISOS. Each option agreement which provides for the grant of an
ISO shall contain such terms and provisions as the Plan Committee deems
necessary or desirable to qualify such option as an ISO within the meaning of
Code Section 422.
J. TRANSFERABILITY OF OPTIONS. Options granted under the Plan may
not be transferred by the Optionee otherwise than by will or the laws of descent
and distribution, and during the lifetime of the Optionee to whom granted, may
be exercised only by such Optionee.
8. ADJUSTMENT OF SHARES. In the event of capital adjustment after the
effective date of the Plan in the Common Stock of the Company by reason of any
reorganization, recapitalization, stock split, stock dividend, combination or
exchange of shares, merger or consolidation, or any other change (after the
effective date of the Plan) in the nature or number of shares of Common Stock of
the Company, a proportionate adjustment shall be made in the maximum number and
kind of shares which may be delivered under the Plan,
7
and in the Option Price under and the number and kind of shares of Common Stock
covered by outstanding options granted under the Plan. By virtue of such a
capital adjustment, the price of any share under option shall be adjusted so
that there will be no change in the aggregate purchase price payable upon
exercise of any such option. Such determination by the Plan Committee shall be
conclusive.
Without limiting the generality of the foregoing, if [a] there is a
Change in Control of the Company, and [b] as a result of the transactions
contemplated by the Change in Control, a Successor will acquire all or a
substantial portion of the assets or outstanding capital stock of the Company,
then the kind of shares of common stock which shall be subject to the Plan and
to each outstanding option shall automatically be converted into and replaced by
shares of common stock, or such other class of equity securities having rights
and preferences no less favorable than common stock of the Successor, and the
number of shares subject to the options and the purchase price per share upon
exercise of the options shall be correspondingly adjusted, so that, by virtue of
such Change in Control of the Company, each optionee shall have the right to
purchase [i] that number of shares of the Successor which, as of the date of the
Change in Control, have a fair market value equal to the fair market value of
the shares of the Company theretofore subject to an option, [ii] for a purchase
price per share which, when multiplied by the number of shares of the Successor
subject to the option, shall equal the aggregate exercise price at which the
Optionee could have acquired shares of the Company under such option.
The granting of an option pursuant to this Plan shall not affect in
any way the right and power of the Company to make adjustments, reorganizations,
reclassifications, or changes of its capital or business structure or to merge,
consolidate, dissolve, liquidate, sell or transfer all of any part of its
business or assets; provided, however, that the Company shall not, and shall not
permit its Subsidiaries to, recommend or agree or consent to a transaction or
series of transactions which would result in a Change of Control of the Company
unless and until the person or persons acquiring or succeeding to assets or
capital stock of the Company or its Subsidiaries as a result of such transaction
or transactions agrees to be bound by the terms of the Plan so far as it
pertains to options therefore granted and agrees to assume and perform the
obligations of the Company and its Successor under the Plan.
9. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. Upon the exercise of an
option at a time when there is not in effect a registration statement under the
Securities Act of 1933 and any applicable state securities laws (the "Securities
Laws") relating to the shares of Common Stock issuable upon exercise thereof and
8
available for delivery, a prospectus meeting the requirements of the Securities
Laws, the shares of Common Stock may be issued only if the Optionee or Optionee
Representative represents and warrants in writing to the Company that the shares
being purchased are being acquired for investment and not with a view to the
distribution thereof. The shares of the Common Stock shall contain such legends
or other restrictive endorsements as counsel for the Company shall deem
necessary or proper. No shares of Common Stock shall be purchased upon the
exercise of any option unless and until there shall have been satisfied any
applicable requirements of the Securities and Exchange Commission or other
regulatory agencies having jurisdiction and of any exchanges upon which stock of
the Company may be listed. The Company covenants that it will take all actions
necessary to register under the Securities Laws the Common Stock issuable upon
exercise of options granted pursuant to this Plan.
10. NO RIGHTS AS SHAREHOLDER. No Optionee or Optionee's Representative
shall have any rights as a shareholder with respect to Common Stock subject to
Optionee's option before the date of transfer to the Optionee of a certificate
or certificates for such shares.
11. NO RIGHTS TO CONTINUED EMPLOYMENT. The Plan and any option granted
under the Plan shall not confer upon any Optionee any right with respect to
continuance of employment by the Company or any Subsidiary, nor shall it
interfere in any way with the right of the Company or any Subsidiary by which an
Optionee is employed to terminate Optionee's employment at any time.
12. TERMINATION. The Plan shall terminate on December 31, 2002, and may
be terminated at any earlier time by the Plan Committee. No option shall be
granted after termination of the Plan. Termination of the Plan, however, shall
not affect the validity of any option theretofore granted under the Plan.
13. AMENDMENT. The Board shall have the right, at any time, to amend,
suspend or terminate the Plan in any respect that it may deem to be in the best
interests of the Company, except that, without approval by shareholders of the
Company holding not less than a majority of the votes represented and entitled
to be voted at a duly held meeting of the Company's shareholders, no amendment
shall be made if shareholder approval is necessary to continue to qualify the
Plan under the Securities and Exchange Commission Rule 16b-3. No amendment of
the Plan, however, may, without the consent of the Optionee or Optionee
Representative, make any changes in any outstanding option theretofore granted
under the Plan which would adversely affect the rights of such Optionee or
Optionee Repre-
9
sentative.
14. TAX WITHHOLDING. Upon the exercise of any option granted under the
Plan, or upon the disposition of any Common Stock acquired by the exercise of an
ISO granted under the Plan within two (2) years from the date of grant or one
(1) year after such Common Stock is transferred to the Optionee, the Company
shall have the right to require Optionee to remit to the Company an amount
sufficient to satisfy all federal, state and local withholding tax requirements,
or, alternatively, the Company shall have the right to retain Common Stock
otherwise payable to the Optionee pursuant to exercise of an option in an amount
sufficient to satisfy such withholding requirements, before the delivery to the
Optionee of any certificate(s) for shares of Common Stock.
15. GOVERNING LAW. This Plan and the stock option agreements entered into
under the Plan shall be governed by, and construed in accordance with, the laws
of the Commonwealth of Kentucky.
16. EFFECTIVE DATE. This Plan, as amended and restated, is effective upon
the approval by the Board on March 16, 1995; subject, however, to the
ratification of this Plan, as amended and restated, by the shareholders of the
Company. The Plan was originally approved by the Board on March 17, 1993 and
ratified by the affirmative vote of a majority of the shares present or
represented by proxy at the Annual Meeting of Stockholders held on April 20,
1993. The effective date of each option shall be the day on which it is granted
to any Optionee.
Dated as of the 16th day of March, 1995.
CBT CORPORATION
By:
---------------------------------------------
Title:
------------------------------------------
ATTEST:
- ---------------------------------
10
CBT CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned shareholder(s) of CBT Corporation hereby appoints Patrick J.
Cvengros and William J. Jones, or either of them, as Proxies, with full power of
substitution in and for each of them, and hereby authorizes them to represent
and to vote as designated below, all the shares of Common Stock of CBT
Corporation which the undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held on April 16, 1996, or at any adjournment or adjournments
thereof, with all the powers the undersigned would possess if present personally
at said meeting, or any adjournment or adjournments thereof.
The Directors recommend a vote FOR Proposals 1 and 2.
1. ELECTION OF DIRECTORS / / FOR ALL NOMINEES LISTED BELOW (except as
otherwise indicated below) / / WITHHOLD AUTHORITY to vote for all nominees
listed below
Irving P. Bright, Jr., John L. Burman, Patrick J. Cvengros, William H. Dyer,
Louis A. Haas, Joe Tom Haltom, Kerry B. Harvey, F. Donald Higdon, William J.
Jones, Ted S. Kinsey, Louis M. Michelson, Bill B. Morgan, Louis D. Myre,
David M. Paxton, Robert P. Petter, Joseph A. Powell, William A. Usher
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. PROPOSAL TO APPROVE AMENDMENTS TO THE 1993 CBT CORPORATION STOCK OPTION
PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
adjournments thereof.
(continued, and to be signed on reverse side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. UNLESS AUTHORITY TO VOTE FOR THE NOMINEES LISTED
ABOVE IS WITHHELD, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED ABOVE WITH
THE DISCRETIONARY AUTHORITY DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT AND,
IF NO DIRECTION IS MADE, WILL BE VOTED FOR PROPOSAL 2.
Please sign exactly as name appears below.
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated:---------------------------------------------------------, 1996
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Signature
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Signature (if held jointly)
Please mark, sign, date, and promptly return the proxy using the
enclosed envelope.