[Harrodsburg First Financial Bancorp, Inc. Letterhead]
December 18, 1996
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Harrodsburg First
Financial Bancorp, Inc., (the "Company"), I cordially invite you to attend the
Annual Meeting of Stockholders to be held at the office of the Company and its
wholly owned subsidiary, First Federal Savings Bank of Harrodsburg at 104 South
Chiles Street, Harrodsburg, Kentucky on January 27, 1997, at 2:00 p.m., local
time. The attached Notice of Annual Meeting and Proxy Statement describe the
formal business to be transacted at the Annual Meeting. During the Annual
Meeting, the President and Chief Executive Officer, Jack D. Hood, will report on
the operations of the Company. Directors and officers of the Company, as well as
a representative of Miller, Mayer, Sullivan & Stevens, LLP, certified public
accountants, will be present to respond to any questions stockholders may have.
The matters to be considered by stockholders at the Annual Meeting are
described in the accompanying Notice of Annual Meeting and Proxy Statement. The
Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interest of the Company and its
stockholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN AND DATE
THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING POSTAGE-PAID RETURN
ENVELOPE AS PROMPTLY AS POSSIBLE. This will not prevent you from voting in
person at the Annual Meeting, but will assure that your vote is counted if you
are unable to attend the Annual Meeting. YOUR VOTE IS VERY IMPORTANT.
Sincerely,
/s/ Jack D. Hood
Jack D. Hood
President
HARRODSBURG FIRST FINANCIAL BANCORP, INC.
104 SOUTH CHILES STREET
HARRODSBURG, KENTUCKY 40330-1620
(606) 734-5452
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on January 27, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Meeting")
of Harrodsburg First Financial Bancorp, Inc. (the "Company"), will be held at
the office of the Company and its wholly owned subsidiary, First Federal Savings
Bank of Harrodsburg, at 104 South Chiles Street, Harrodsburg, Kentucky on
January 27, 1997, at 2:00 p.m., local time. A proxy card and a proxy statement
for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon the following
matters:
1. The election of two directors of the Company;
2. The approval of the Harrodsburg First Financial Bancorp, Inc. 1996 Stock
Option Plan (the "1996 Stock Option Plan" or "Option Plan");
3. The approval of the First Federal Savings Bank of Harrodsburg Restricted
Stock Plan and Trust Agreement (the "Restricted Stock Plan" or "RSP");
4. The ratification of the appointment of Miller, Mayer, Sullivan & Stevens
LLP as independent auditors of the Company for the fiscal year ending
September 30, 1997; and
5. The transaction of such other matters as may properly come before the
Meeting or any adjournments thereof. The Board of Directors is not aware of
any other business to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on the date
specified above or on any date or dates to which, by original or later
adjournment, the Meeting may be adjourned. Stockholders of record at the close
of business on December 9, 1996 are the stockholders entitled to vote at the
Meeting and any adjournments thereof.
EACH STOCKHOLDER, WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE MEETING, IS
REQUESTED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE
REVOKED BY FILING WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A
DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING
MAY REVOKE HIS PROXY AND VOTE IN PERSON ON EACH MATTER BROUGHT BEFORE THE
MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN
YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO
VOTE IN PERSON AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Debbie C. Roach
Debbie C. Roach
Secretary
Harrodsburg, Kentucky
December 18, 1996
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM AT THE MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
PROXY STATEMENT
OF
HARRODSBURG FIRST FINANCIAL BANCORP, INC.
104 SOUTH CHILES STREET
HARRODSBURG, KENTUCKY 40330-1620
ANNUAL MEETING OF STOCKHOLDERS
January 27, 1997
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Harrodsburg First Financial Bancorp, Inc.
(the "Company") to be used at the Annual Meeting of Stockholders of the Company
which will be held at the office of the Company and First Federal Savings Bank
of Harrodsburg, (the "Bank") at 104 South Chiles Street, Harrodsburg, Kentucky
on January 27, 1997, at 2:00 p.m., local time (the "Meeting"). The accompanying
Notice of Annual Meeting of Stockholders and this Proxy Statement are being
first mailed to stockholders on or about December 18, 1996. The Company acquired
all of the outstanding stock of the Bank issued in connection with the Bank's
mutual-to-stock conversion on September 29, 1995 (the "Conversion").
At the Meeting, stockholders will consider and vote upon (i) the election
of two directors; (ii) the approval of the Harrodsburg First Financial Bancorp,
Inc. 1996 Stock Option Plan (the "1996 Stock Option Plan" or "Option Plan");
(iii) the approval of the First Federal Savings Bank of Harrodsburg Restricted
Stock Plan and Trust Agreement (the "Restricted Stock Plan" or "RSP"); and (iv)
the ratification of the appointment of Miller, Mayer, Sullivan & Stevens LLP as
independent auditor of the Company for the fiscal year ending September 30,
1997. The Board of Directors of the Company (the "Board" or the "Board of
Directors") knows of no additional matters that will be presented for
consideration at the Meeting. Execution of a proxy, however, confers on the
designated proxy holder discretionary authority to vote the shares represented
by such proxy in accordance with their best judgment on such other business, if
any, that may properly come before the Meeting or any adjournment thereof.
"Proposal II - Approval of the 1996 Stock Option Plan" provides for
authorizing the issuance of an additional 200,000 shares of common stock of the
Company ("Common Stock") upon the exercise of stock options to be awarded to
officers, directors, key employees and other persons providing services to the
Company or any present or future parent or subsidiary of the Company from time
to time. "Proposal III - Approval of the Restricted Stock Plan and Trust"
provides for authorization to issue up to an additional 85,000 shares of Common
Stock upon awards to personnel of experience and ability in key positions of
responsibility with the Bank and its subsidiaries from time to time; however, at
the present time, the Bank intends to acquire such Common Stock for RSP purposes
through open-market purchases. The RSP has the authority, however, to buy such
Common Stock directly from the Company. Approval of Proposal II and Proposal III
may be deemed to have certain anti-takeover effects with regard to the Company.
See "Proposal II -- Approval of the 1996 Stock Option Plan - Effect of Mergers,
Change of Control and Other Adjustments, and -Possible Dilutive Effects of the
Option Plan" and "Proposal III -- Approval of the Restricted Stock Plan and
Trust Agreement - Possible Dilutive Effects of RSP."
VOTING AND REVOCABILITY OF PROXIES
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the Meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company at the address above or by the filing of
a later dated proxy prior to a vote being taken on a particular proposal at the
Meeting. A proxy will not be voted if a stockholder attends the Meeting and
votes in person. Proxies solicited by the Board of Directors will be voted in
accordance with the directions given thereon. Where no instructions are
indicated, executed proxies will be voted "FOR" the nominees for directors set
forth below and "FOR" the other listed proposals. The proxy confers
discretionary authority on the persons named therein to vote with respect to the
election of any person as a director where the nominee is unable to serve, or
for good cause will not serve, and matters incident to the conduct of the
Meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record as of the close of business on December 9, 1996
(the "Record Date"), are entitled to one vote for each share of common stock of
the Company (the "Common Stock") then held. As of the Record Date, the Company
had 2,047,933 shares of Common Stock issued and outstanding.
The certificate of incorporation of the Company ("Certificate of
Incorporation") provides that in no event shall any record owner of any
outstanding Common Stock which is beneficially owned, directly or indirectly, by
a person who beneficially owns in excess of 10% of the then outstanding shares
of Common Stock (the "Limit") be entitled or permitted to any vote with respect
to the shares held in excess of the Limit. Beneficial ownership is determined
pursuant to the definition in the Certificate of Incorporation and includes
shares beneficially owned by such person or any of his or her affiliates or
associates (as such terms are defined in the Certificate of Incorporation),
shares which such person or his or her affiliates or associates have the right
to acquire upon the exercise of conversion rights or options, and shares as to
which such person and his or her affiliates or associates have or share
investment or voting power, but shall not include shares beneficially owned by
any employee stock ownership plan or similar plan of the issuer or any
subsidiary.
The presence in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote (after subtracting any
shares held in excess of the Limit) is necessary to constitute a quorum at the
Meeting. Any shares voted by a broker will be considered present for purposes of
determining whether a quorum is present as to all matters submitted for approval
of the stockholders. In the event there are not sufficient votes for a quorum or
to ratify any proposals at the time of the Meeting, the Meeting may be adjourned
in order to permit the further solicitation of proxies.
As to Proposal I - the election of directors, the proxy being provided by
the Board enables a stockholder to vote for the election of the nominees
proposed by the Board, or to withhold authority to vote for one or more of the
nominees being proposed. Directors are elected by a plurality of votes of the
shares present in person or represented by proxy at a meeting and entitled to
vote in the election of directors.
As to Proposals II, III and IV as set forth herein and all other matters
that may properly come before the Meeting, by checking the appropriate box, a
stockholder may: vote "FOR" the item, (ii) vote "AGAINST" the item, or (iii)
vote to "ABSTAIN" on such item. Unless otherwise required by law, such matters
shall be determined by the affirmative vote of a majority of shares present in
person or
2
represented by proxy and entitled to vote without regard to broker non-votes.
Proxies marked "ABSTAIN" will be considered present and entitled to vote and
will have the effect of a vote "AGAINST".
Persons and groups owning in excess of 5% of the Common Stock are required
to file certain reports regarding such ownership pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The following table sets
forth, as of the Record Date, persons or groups who own more than 5% of the
Common Stock. Other than as noted below, management knows of no person or group
that owns more than 5% of the outstanding shares of Common Stock at the Record
Date.
Percent of Shares of
Amount and Nature of Common Stock
Name of Beneficial Owner Beneficial Ownership Outstanding
- ------------------------ -------------------- --------------------
First Federal Savings Bank of Harrodsburg
Employee Stock Ownership Plan Trust 174,570(1) 8.52%
104 South Chiles Street
Harrodsburg, Kentucky
- ----------------------------------
(1) Held directly for the benefit of employees of the Bank.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Common Stock is registered pursuant to Section 12(g) of the Exchange
Act. The officers and directors of the Company and beneficial owners of greater
than 10% of the Common Stock ("10% beneficial owners") are required to file
reports on Forms 3, 4 and 5 with the Securities and Exchange Commission ("SEC")
disclosing changes in beneficial ownership of the Common Stock. Based on the
Company's review of such ownership reports, to the Company's knowledge, no
officer, director, or 10% beneficial owner of the Company failed to file such
ownership reports on a timely basis for the fiscal year ended September 30,
1996.
PROPOSAL I - ELECTION OF DIRECTORS
The Certificate of Incorporation requires that the Board of Directors be
divided into three classes, each of which contains approximately one-third of
the members of the Board. The directors are elected by the stockholders of the
Company for staggered three-year terms, or until their successors are elected
and qualified. The Board of Directors currently consists of six members. Two
directors will be elected at the Meeting to serve three-year terms or until a
successor has been elected and qualified.
Jack D. Hood and Jack L. Coleman, Sr. have been nominated by the Board of
Directors to serve as directors. Messrs. Hood and Coleman, Sr. are currently
members of the Board and have been nominated for three-year terms to expire in
1999. If a nominee is unable to serve, the shares represented by all valid
proxies will be voted for the election of such substitute as the Board of
Directors may recommend or the size of the Board may be reduced to eliminate the
vacancy. At this time, the Board knows of no reason why a nominee might be
unavailable to serve.
3
The following table sets forth the nominees and the directors continuing
in office, their name, age, the year they first became a director of the Company
or the Bank, the expiration date of their current term as a director, and the
number and percentage of shares of the Common Stock beneficially owned as of the
Record Date. Each director of the Company is also a member of the Board of
Directors of the Bank.
Shares of
Year First Current Common Stock
Elected or Term to Beneficially Owned Percent
Name Age(1) Appointed(2) Expire (3) of Class
- ---- ------ ------------ ------- ----- --------
BOARD NOMINEES FOR TERM TO EXPIRE IN 1999
Jack D. Hood 47 1976 1996 39,999 1.95%
Jack L. Coleman, Sr. 71 1969 1996 16,000(4) (5)
DIRECTORS CONTINUING IN OFFICE
Thomas Les Letton 44 1985 1997 29,194(4) 1.43%
Jack L. Coleman, Jr. 42 1991 1997 22,016(4) 1.08%
Elwood Burgin 85 1961 1998 19,400(4) (5)
Wickliffe T. Asbury, Sr. 45 1989 1998 8,524 (5)
All executive officers and 189,713 9.26%
directors as a group
(9 persons)
- -----------------------------------
(1) At September 30, 1996.
(2) Refers to the year the individual first became a director of the Company
or the Bank. All directors of the Bank during June 1995 became directors
of the Company when it was incorporated in June 1995.
(3) Includes shares of Common Stock held directly as well as by spouses or
minor children, in trust, and other indirect ownership, over which shares
the individuals effectively exercise sole or shared voting and investment
power, unless otherwise indicated.
(4) Excludes 162,930 unallocated shares of Common Stock held under the
Employee Stock Ownership Plan ("ESOP") for which such individual serves as
a member of the ESOP Committee or Trustee Committee and have shared voting
power. Such individual disclaims beneficial ownership with respect to such
shares held in a fiduciary capacity. As of the Record Date, 11,640 shares
have been allocated under the ESOP to participant accounts. See "Director
and Executive Officer Compensation - Benefits - Employee Stock Ownership
Plan."
(5) Less than 1.0%.
Biographical Information
The business experience of each director and executive officer of the
Company is set forth below. All directors and executive officers have held their
present positions for five years unless otherwise stated.
4
Wickliffe T. Asbury, Sr. is a Vice President and Director of the Company
and has been with the Bank since 1974. Mr. Asbury is also a member of the
Anderson County Habitat For Humanity and the Finance Committee for
Lawrenceburg-Anderson County Proposed Community Park. He is also a coach in the
local Youth Soccer Program.
Elwood Burgin has been a director of the Bank for 35 years. Prior to his
retirement in 1983, Mr. Burgin was self employed as a road contractor and the
owner of Mercer Stone and the Laura Coal Company.
Jack L. Coleman, Sr. has been a director of the Bank since 1969. Mr.
Coleman is a partner and majority stockholder of Coleman's Lumber Yard, a retail
lumber dealer. He is also a member of the Mercer County Homebuilders
Association. Prior to starting the lumber yard, Mr. Coleman was an All Pro
Basketball Player in the NBA. Mr. Coleman is the father of Jack L. Coleman, Jr.
Jack L. Coleman, Jr. has been a director of the Bank for five years. Mr.
Coleman has been a partner and majority stockholder of Coleman's Lumber Yard for
27 years. He has also been a member of the Kentucky House of Representatives for
6 years. Mr. Coleman is a member of the Mercer County Chamber of Commerce. He is
the son of Jack L. Coleman, Sr.
Jack D. Hood is the President, Chief Executive Officer and a director of
the Company and has been with the Bank since 1971. Mr. Hood is also Treasurer of
the Mercer County Chapter American Red Cross and the Mercer County Extension
Office. He is a member of the Harrodsburg Rotary Club and a past Director of the
Kentucky League of Savings Institutions. He is also a past President of
Financial Institution Services of Kentucky.
Thomas Les Letton has been a director of the Bank for 11 years. He is also
the President of The Letton Company, Inc., a real estate investment company,
Thomas Travel, Inc., a travel agency, and Old Bridge, Inc., a golf course and
development company, all located in Danville, Kentucky. He is also the secretary
of W.F.L., Inc. and affiliates.
Charles W. Graves, Jr. is a Vice President of the Company and has been with
the Bank since 1974. Mr. Graves is also a member of the Harrodsburg Lion's Club,
Director of the United Way of Mercer County, 1995 Chairman of the
Greater-Harrodsburg/Mercer County Planning and Zoning 127 By-Pass Committee and
a member of the Mercer County Homebuilders Association.
Teresa W. Noel is the Treasurer of the Company and has been with the Bank
since 1975, and has been an officer since 1989. Ms. Noel is active in the
Harrodsburg High School Band Boosters and the Harrodsburg Parent Teacher
Organization.
Debbie C. Roach is the Secretary of the Company and has been with the Bank
since 1970, and an officer since 1979.
Stockholder Nominations
Pursuant to Article X of the Certificate of Incorporation, nominations,
other than those made by or at the direction of the Board of Directors, shall be
made pursuant to timely notice in writing to the Secretary of the Company as set
forth in that Article. To be timely, a stockholder's notice shall be delivered
to, or mailed and received at, the principal executive offices of the Company
not less than 60 days prior to the anniversary date of the immediately preceding
annual meeting of stockholders of the Company.
5
Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director and
as to the stockholder giving the notice (i) the name, age, business address, and
residence address of such person, (ii) the principal occupation or employment of
such person, (iii) the class and number of shares of Common Stock which are
beneficially owned by such person on the date of such stockholder notice, and
(iv) any other information relating to such person that is required to be
disclosed in solicitations of proxies with respect to nominees for election as
directors pursuant to Regulation 14A under the Exchange Act; and (b) as to the
stockholder giving the notice (i) the name and address, as they appear on the
Company's books, of such stockholder and any other stockholders known by such
stockholder to be supporting such nominees and (ii) the class and number of
shares of Common Stock which are beneficially owned by such stockholder on the
date of such stockholder notice and, to the extent known, by any other
stockholders known by such stockholder to be supporting such nominees on the
date of such stockholder notice. At the request of the Board of Directors, any
person nominated by, or at the direction of, the Board for election as a
director at an annual meeting shall furnish to the Secretary of the Company that
information required to be set forth in a stockholder's notice of nomination
which pertains to the nominee.
The Board of Directors may reject any nomination by a stockholder not
timely made in accordance with the requirements of the Certificate of
Incorporation and Bylaws. If the presiding officer at the meeting determines
that a nomination was not made in accordance with the terms of the Certificate
of Incorporation and Bylaws, he shall so declare at the annual meeting, and the
defective nomination shall be disregarded.
Meetings and Committees of the Board of Directors
The Company's Board of Directors conducts its business through meetings of
the Board and through activities of its committees. All committees act for both
the Company and the Bank. During the year ended September 30, 1996, the Board of
Directors held 12 regular meetings. No director attended fewer than 75% of the
total meetings of the Board of Directors of the Company and committees on which
such director served during the fiscal year ended September 30, 1996.
The Executive Committee is comprised of Directors Hood, Coleman, Sr.,
Letton and Asbury, Sr. and possesses the power of the full Board of Directors.
The Executive Committee meets on an as needed basis to act on corporate matters
which require attention between regular board meetings. The executive committee
did not meet during fiscal 1996.
The Nominating Committee meets annually for the purpose of nominating the
directors of the Company. The Nominating Committee for this election consisted
of Messrs. Burgin, Asbury, Coleman, Jr. and Letton.
The Salary Committee is comprised of Directors Letton and Coleman, Jr. The
committee meets to review salaries and performance of officers and employees and
recommends compensation adjustments and promotions. The committee met once in
fiscal 1996.
The Audit Committee is comprised of the entire board of directors. The
audit committee meets once a year before a regular board meeting with the
auditors of the Company.
The Loan Committee meets as needed to review and approve or disapprove
loans in excess of the delegated lending limits set by the Board. The loan
committee is comprised of Directors Hood, Coleman Sr., Letton and Coleman, Jr.
6
Director Compensation
Each member of the Board of Directors of the Bank receives a fee of $750
per month. Separate board fees are not paid by the Company. No additional fees
are paid for committee meetings. For the fiscal year ended September 30, 1996,
fees paid to all directors totaled approximately $54,000, all of which were paid
by the Bank.
In addition, directors are anticipated to receive awards of stock options
and restricted stock upon approval of the 1996 Stock Option Plan and the
Restricted Stock Plan. See "Proposal II -- Approval of the 1996 Stock Option
Plan" and "Proposal III -- Approval of the Restricted Stock Plan and Trust
Agreement."
Executive Compensation
Summary Compensation Table. The following table sets forth the cash and
non-cash compensation awarded to or earned by the Chief Executive Officer of the
Company. No executive officer of the Company had a salary and bonus during the
fiscal year ended September 30, 1996 that exceeded $100,000 for services
rendered in all capacities to the Company and the Bank.
Annual Compensation
-------------------------------------
Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation(1) Compensation(2)
- --------------------------- ---- ------- ------- --------------- ---------------
Jack D. Hood 1996 $79,575 $ -- $9,000 $ 1,099
President and 1995 75,150 12,700 8,550 1,315
Chief Executive Officer 1994 71,475 12,000 6,900 1,251
- ------------------
(1) Constitutes director fees.
(2) 401(k) matching contributions made by the Company.
Employment Agreements. In 1995, the Bank entered into employment agreements
with Jack D. Hood, President, Chief Executive and Managing Officer of the Bank
and Wickliffe T. Asbury, Sr., Vice President of the Bank (the "Agreements"). The
Agreements have a term of three years, expiring in 1998. Mr. Hood's base
compensation under the agreement is currently $80,700. The Agreements will be
reviewed at least annually by the Board of Directors. The Agreements provide a
disability benefit of 100% of compensation for a period of one year and 65%
thereafter for the remaining term of the Agreements reduced by other disability
benefits furnished by the Bank. The Agreements may be terminated by the Bank for
"just cause" as is defined in the Agreements. If the Bank terminates Messrs.
Hood or Asbury, Sr. without just cause, he will be entitled to a continuation of
his salary from the date of termination through the remaining term of the
Agreement. In the event of termination of employment in connection with any
change in control of the Bank, Messrs. Hood and Asbury, Sr. will be paid in a
lump sum an amount equal to 2.99 times his average compensation paid during the
prior five years. In the event of a change in control and termination of
employment had occurred at September 30, 1996, Messrs. Hood and Asbury, Sr.
would have been entitled to an aggregate lump sum payment of approximately
$373,100. The aggregate payments under such provisions would be an expense to
the Bank, thereby reducing net income by that amount. The Agreements may be
renewed annually by the Board of Directors upon a determination of satisfactory
performance within the Board's sole discretion.
Severance Agreements. The Bank entered into severance agreements with
Charles W. Graves, Jr., Vice President, Debbie C. Roach, Secretary and Teresa W.
Noel, Treasurer (collectively, the "Officers"). The severance agreements are for
terms of three years ending in 1999. The agreements may be terminated by the
Bank for "just cause" as defined in the agreements. The agreements contain a
7
provision stating that in the event of termination of employment in
connection with any change in control of the Bank, the employee will be paid a
lump sum amount equal to 1.50 times the employee's salary. In the event of a
change in control of the Bank and termination of employment at September 30,
1996, the Officers as a group would have been entitled to an aggregate lump sum
payment of approximately $198,000. The aggregate payments under such provisions
would be an expense to the Bank, thereby reducing net income by that amount. The
agreements will be reviewed annually by the Board of Directors and can be
extended for additional one-year periods upon a determination of satisfactory
performance within the Board's sole discretion.
1996 Stock Option Plan. The Board of Directors of the Company has adopted
the 1996 Stock Option Plan for the benefit of its directors, officers and key
employees. The 1996 Stock Option Plan is subject to stockholder approval. See
"Proposal II -- Approval of the 1996 Stock Option Plan" for a summary of the
1996 Stock Option Plan. See Exhibit A for a copy of the 1996 Stock Option Plan.
Restricted Stock Plan. The Board of Directors of the Company has recently
adopted a restricted stock program for the benefit of personnel of experience
and ability in key positions of responsibility with the Bank and its
subsidiaries. The RSP is subject to stockholder approval. See "Proposal III -
Approval of the Restricted Stock Plan and Trust Agreement" for a summary of the
RSP. See Exhibit B for a copy of the Restricted Stock Plan.
Compensation Committee Interlocks and Insider Participation
The Salary Committee consists of non-employee Directors Letton and Coleman,
Jr.
Report of the Salary Committee on Executive Compensation
During the year ended September 30, 1996, the executive officers of the
Company consisted of Mr. Jack D. Hood (President), Mr. Wickliffe T. Asbury, Sr.
(Vice President), Mr. Charles W. Graves, Jr. (Vice President), Ms. Teresa W.
Noel (Treasurer) and Ms. Debbie C. Roach (Secretary).
The Salary Committee meets annually to review compensation paid to
executive officers and to determine the compensation levels for all officers.
The Committee reviews various published surveys of compensation paid to
employees performing similar duties for depository institutions and their
holding companies, with a particular focus on the level of compensation paid by
comparable institutions in and around the Bank's market area, including
institutions with total assets of between $50 million and $150 million. Although
the Committee does not specifically set compensation levels for executive
officers based on whether particular financial goals have been achieved by the
Bank, the Committee does consider the overall profitability of the Bank when
making these decisions. With respect to each particular employee, his or her
particular contributions to the Bank over the past year are also evaluated.
8
During the year ended September 30, 1996, Jack D. Hood, President and CEO
received an increase in salary from $75,150, to $79,575. The Committee will
consider the annual compensation paid to the presidents and chief executive
officers of financial institutions with assets of between $50 million and $150
million nationally, in the Commonwealth of Kentucky and surrounding states, and
the individual job performance of such individual in consideration of its
specific salary increase decision with respect to compensation to be paid to the
president and chief executive officers in the future. It is anticipated that Mr.
Hood and other officers will receive stock options and restricted stock awards
under the 1996 Stock Option Plan and the Restricted Stock Plan.
Salary Committee:
Thomas Les Letton
Jack L. Coleman, Jr.
Benefits
Employee Stock Ownership Plan. The Bank has established an employee stock
ownership plan (the "ESOP") for the exclusive benefit of participating
employees. Participating employees are employees who have completed one year of
service with the Bank or its subsidiary and have attained the age 21.
The ESOP is to be funded by contributions made by the Bank in cash or the
Common Stock. Benefits may be paid either in shares of the Common Stock or in
cash. In accordance with the Plan, the ESOP borrowed funds from the Company to
purchase 174,570 shares of the Common Stock issued in the Conversion. This loan
is secured by the shares purchased and earnings of ESOP assets. Shares purchased
with such loan proceeds will be held in a suspense account for allocation among
participants as the loan is repaid. The Bank anticipates contributing
approximately $116,380 annually to the ESOP to meet principal obligations under
the ESOP loan. It is anticipated that all such contributions shall be
tax-deductible. This loan is expected to be fully repaid in approximately 15
years.
Contributions to the ESOP and shares released from the suspense account
will be allocated among participants on the basis of total compensation,
excluding bonuses. All participants must be employed at least 1,000 hours in a
plan year in order to receive an allocation. Participant benefits become 100%
vested after five years of service. Employment prior to the adoption of the ESOP
shall count toward vesting. Vesting will be accelerated upon retirement, death,
disability, change in control of the Company, or termination of the ESOP.
Forfeitures will be reallocated to participants on the same basis as other
contributions in the plan year. Benefits may be payable in the form of a lump
sum upon retirement, death, disability or separation from service. The Bank's
contributions to the ESOP are discretionary and may cause a reduction in other
forms of compensation. Therefore, benefits payable under the ESOP cannot be
estimated.
The Board of Directors has appointed Directors Burgin, Coleman, Sr.,
Coleman, Jr. and Letton to the ESOP Committee to administer the ESOP. Directors
Burgin, Coleman, Sr., Coleman, Jr. and Letton also serve as the ESOP Trustees.
The Board of Directors or the ESOP Committee may instruct the ESOP Trustees
regarding investments of funds contributed to the ESOP. The ESOP Trustees must
vote all allocated shares held in the ESOP in accordance with the instructions
of the participating employees. Unallocated shares and allocated shares for
which no timely direction is received will be voted by the ESOP Trustees as
directed by the Board of Directors or the ESOP Committee, subject to the
Trustees' fiduciary duties.
9
Pension Plan. The Bank sponsors a tax-qualified defined benefit pension
plan (the "Pension Plan"). All full-time employees of the Bank are eligible to
participate after 1 year of service and attainment of age 21. A qualifying
employee becomes fully vested in the Pension Plan upon completion of five years
of qualifying service. The Pension Plan is intended to comply with the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
The Pension Plan provides for monthly payments to each participating
employee at normal retirement age (age 65). Upon termination at or after age 65
and completion of 25 or more years of service, the annual retirement benefit
would be determined based upon 40% times the average of the Five Year Highest
Salary. Retirement benefits may be paid after age 55, in which case such
benefits shall be reduced by an early retirement factor. Retirement benefits at
age 65 with less than 25 years of service are also reduced proportionately. This
benefit may be reduced in the future as allocations under the ESOP are made.
If a participant elects early retirement (age 55), the participant
receives a reduced monthly benefit. If a participant elects late retirement, the
participant receives an increased monthly benefit. Benefits are paid for the
life of the participant following retirement. The Pension Plan also provides for
payments in the event of death. At September 30, 1996, Mr. Hood had 24 years of
credited service under the Pension Plan. At September 30, 1996, the monthly
benefit payable to Mr. Hood at normal retirement age would have been $2,650.
Total pension expense for the fiscal years ended September 30, 1996, 1995 and
1994, amounted to $0, $30,843 and $3,000, respectively.
Benefits are payable in the form of various annuity alternatives,
including a joint and survivor option. For the Pension Plan year ended September
30, 1996, the highest permissible annual benefit under the Internal Revenue Code
(the "Code") is $120,000.
The following table shows the estimated annual benefits payable under the
Pension Plan based on the respective employee's years of credited service and
applicable average annual salary, as calculated under the Pension Plan. Benefits
under the Pension Plan are not subject to offset for Social Security benefits.
Years of Credited Service
--------------------------------------------------------
Salary 15 20 25 30 35
- ------ ---- ----- ------ ----- -----
$ 50,000................ $12,000 $16,000 $20,000 $20,000 $20,000
60,000................ 14,400 19,200 24,000 24,000 24,000
70,000................ 16,800 22,400 28,000 28,000 28,000
80,000................ 19,200 25,600 32,000 32,000 32,000
90,000................ 21,600 28,800 36,000 36,000 36,000
100,000................ 24,000 32,000 40,000 40,000 40,000
110,000................ 26,400 35,200 44,000 44,000 44,000
10
401(k) Savings Plan. The Bank has a tax-qualified defined contribution
savings plan ("401(k) Plan") in place for the benefit of its employees.
Employees become eligible to participate under the Plan after reaching age 21
and completing one year of service. Under the 401(k) Plan, employees may
voluntarily elect to defer between 1% and 15% of compensation, not to exceed
applicable limits under the Code (i.e., $9,500 in 1996). The Bank contributes a
matching contribution of 25% of employee savings on the first 6% of an
employee's salary.
Benefits are payable upon termination of employment, retirement, death,
disability or plan termination. Normal retirement age under the 401(k) Plan is
age 65. Additionally, funds under the 401(k) Plan may be distributed upon
application to the plan administrator upon severe financial hardship in
accordance with uniform guidelines which comply with those specified by the
Code. It is intended that the 401(k) Plan operate in compliance with the
provisions of ERISA, and the requirements of Section 401(a) of the Code.
Certain Relationships and Related Transactions
The Bank had no "interlocking" relationships existing on or after October
1, 1995 in which (i) any executive officer is a member of the Board of
Directors/Trustees of another entity, one of whose executive officers is a
member of the Bank's Board of Directors, or where (ii) any executive officer is
a member of the compensation committee of another entity, one of whose executive
officers is a member of the Bank's Board of Directors.
The Bank, like many financial institutions, has followed a policy of
granting various types of loans to officers, directors, and employees. The loans
have been made in the ordinary course of business and on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with the Bank's other customers, and do not involve
more than the normal risk of collectibility, or present other unfavorable
features. Loans to executive officers and directors of the Bank and their
affiliates amounted to $187,574, or .01% of the Bank's risk-based capital at
September 30, 1996.
11
Performance Graph
The following graph compares the cumulative total shareholder return of
the Common Stock of the Company with that of (a) the total return index for
domestic companies listed on the Nasdaq Stock Market and (b) the total return
index for banks listed on the Nasdaq Stock Market. These total return indices of
the Nasdaq Stock Market are computed by the Center for Research in Securities
Prices ("CRSP") at the University of Chicago. All three investment comparisons
assume the investment of $100 at the market close on September 30, 1995 and the
reinvestment of dividends when paid. The Company's Common Stock began trading on
the Nasdaq National Market on October 4, 1995. The graph provides comparisons at
the end of the fiscal years of the Company.
There can be no assurance that the Company's stock performance will
continue with the same or similar trends depicted in the graph below. The
Company will not make or endorse any predictions as to future stock performance.
[GRAPHIC OMITTED-PLOTTING POINTS BELOW]
===================================================
09/30/95 9/30/96
- ---------------------------------------------------
- ---------------------------------------------------
Nasdaq U.S. $100 $119
- ---------------------------------------------------
Nasdaq Bank 100 128
- ---------------------------------------------------
Harrodsburg 100 142
===================================================
12
PROPOSAL II -- APPROVAL OF THE 1996 STOCK OPTION PLAN
General
The Company's Board of Directors has adopted the 1996 Stock Option Plan.
The Option Plan is subject to approval by the Company's stockholders and any
necessary regulatory approvals. Pursuant to the Option Plan, up to 200,000
shares of Common Stock equal to up to approximately 8% of the total Common Stock
issued and outstanding as of the Record Date are to be reserved under the
Company's authorized but unissued shares for issuance by the Company upon
exercise of stock options to be granted to officers, directors, key employees
and other persons from time to time. The purpose of the Option Plan is to
attract and retain qualified personnel for positions of substantial
responsibility and to provide additional incentive to certain officers,
directors, key employees and other persons to promote the success of the
Company's and the Bank's business. The Option Plan, which shall become effective
upon the date of stockholder approval ("Effective Date"), provides for a term of
ten years, after which no awards may be made. The following summary of the
material features of the Option Plan is qualified in its entirety by reference
to the complete provisions of the Option Plan which is attached hereto as
Exhibit A.
The Option Plan will be administered by the Board of Directors or a
committee of not less than two non-employee directors appointed by the Company's
Board of Directors and serving at the pleasure of the Board (the "Option
Committee"). Members of the Option Committee shall be deemed "Non- Employee
Directors" within the meaning of Rule 16b-3 pursuant to the Exchange Act.
Directors Jack L. Coleman, Sr., Thomas Les Letton, Jack L. Coleman, Jr., and
Elwood Burgin serve as members of the Option Committee. The Option Committee may
select the officers and employees to whom options are to be granted and the
number of options to be granted based upon several factors including prior and
anticipated future job duties and responsibilities, job performance, the Bank's
financial performance and a comparison of awards given by other institutions
which have converted from mutual to stock form. A majority of the members of the
Option Committee shall constitute a quorum and the action of a majority of the
members present at any meeting at which a quorum is present shall be deemed the
action of the Option Committee.
Officers, directors, key employees and other persons who are designated by
the Option Committee will be eligible to receive, at no cost to them, options
under the Option Plan (the "Optionees"). Each option granted pursuant to the
Option Plan shall be evidenced by an instrument in such form as the Option
Committee shall from time to time approve. It is anticipated that options
granted under the Option Plan will constitute either Incentive Stock Options
(options that afford favorable tax treatment to recipients upon compliance with
certain restrictions pursuant to Section 422 of the Internal Revenue Code
("Code") and that do not normally result in tax deductions to the Company) or
Non- Incentive Stock Options (options that do not afford recipients favorable
tax treatment under Code Section 422). Option shares may be paid for in cash,
shares of Common Stock, or a combination of both. The Company will receive no
monetary consideration for the granting of stock options under the Option Plan.
Further, the Company will receive no consideration other than the option
exercise price per share for Common Stock issued to Optionees upon the exercise
of those Options.
Options awarded to employees, officers, and directors become first
exercisable at a rate of 20% annually commencing on the date of grant, except
upon the death or disability of the Optionee, or upon a change in control of the
Company. In the event of the death or disability of an Optionee, or a change in
control (as such term is described in the Option Plan), the options granted to
such Optionee shall become immediately exercisable without regard to any vesting
schedule.
13
Shares issuable under the Option Plan may be from authorized but unissued
shares or shares purchased in the open market. An Option which expires, becomes
unexercisable, or is forfeited for any reason prior to its exercise will again
be available for issuance under the Option Plan. No Option or any right or
interest therein is assignable or transferable except by will or the laws of
descent and distribution. The Option Plan shall continue in effect for a term of
ten years from the Effective Date.
Stock Options
The Option Committee may grant either Incentive Stock Options or
Non-Incentive Stock Options. In general, if an Optionee ceases to serve as an
employee of the Company for any reason other than disability or death, an
exercisable Incentive Stock Option may continue to be exercisable for three
months but in no event after the expiration date of the option, except as may
otherwise be determined by the Option Committee at the time of the award. In the
event of the disability or death of an Optionee during employment, an
exercisable Incentive Stock Option will continue to be exercisable for one year
and two years, respectively, to the extent exercisable by the Optionee
immediately prior to the Optionee's disability or death but only if, and to the
extent that, the Optionee was entitled to exercise such Incentive Stock Options
on the date of termination of employment. The terms and conditions of
Non-Incentive Stock Options relating to the effect of an Optionee's termination
of employment or service, disability, or death shall be such terms as the Option
Committee, in its sole discretion, shall determine at the time of termination of
service, disability or death, unless specifically determined at the time of
grant of such options.
The exercise price for the purchase of Common Stock subject to an Option
may not be less than one hundred percent (100%) of the Fair Market Value of the
Common Stock covered by the Option on the date of grant of such Option. For
purposes of determining the Fair Market Value of the Common Stock, the exercise
price per share of the Option shall be not less than the mean between the last
bid and ask price on the date the Option is granted or, if there is no bid and
ask price on said date, then on the immediately prior business day on which
there was a bid and ask price. If no such bid and ask price is available, then
the exercise price per share shall be determined in good faith by the Option
Committee. The Option Committee may impose additional conditions upon the right
of an Optionee to exercise any Option granted hereunder which are not
inconsistent with the terms of the Option Plan or the requirements for
qualification as an Incentive Stock Option, if such Option is intended to
qualify as an incentive stock option.
No shares of Common Stock shall be issued upon the exercise of an Option
until full payment therefor has been received by the Company, and no Optionee
shall have any of the rights of a stockholder of the Company until shares of
Common Stock are issued to such Optionee. Upon the exercise of an Option by an
Optionee (or the Optionee's personal representative), the Option Committee, in
its sole and absolute discretion, may make a cash payment to the Optionee, in
whole or in part, in lieu of the delivery of shares of Common Stock. Such cash
payment to be paid in lieu of delivery of Common Stock shall be equal to the
difference between the Fair Market Value of the Common Stock on the date of the
Option exercise and the exercise price per share of the Option. Such cash
payment shall be in exchange for the cancellation of such Option. Such cash
payment shall not be made in the event that such transaction would result in
liability to the Optionee and the Company under Section 16(b) of the Exchange
Act, and regulations promulgated thereunder.
The Option Plan provides that the Board of Directors of the Company may
authorize the Option Committee to direct the execution of an instrument
providing for the modification, extension or renewal of any outstanding option,
provided that no such modification, extension or renewal shall confer on the
Optionee any right or benefit which could not be conferred on the Optionee by
the grant of a new Option
14
at such time, and shall not materially decrease the Optionee's benefits under
the Option without the Optionee's consent, except as otherwise provided under
the Option Plan.
Awards Under the Option Plan
The Board or the Option Committee shall from time to time determine the
officers, Directors, key employees and other persons who shall be granted Awards
under the Plan, the number of Awards to be granted to any Participant under the
Plan, and whether Awards granted to each such Participant under the Plan shall
be Incentive Stock Options and/or Non-Incentive Stock Options. In selecting
Participants and in determining the number of shares of Common Stock subject to
Options to be granted to each such Participant, the Board or the Option
Committee may consider the nature of the past and anticipated future services
rendered by each such Participant, each such Participant's current and potential
contribution to the Company and such other factors as may be deemed relevant.
Participants who have been granted an Award may, if otherwise eligible, be
granted additional Awards. In no event shall Shares subject to Options granted
to non-employee Directors in the aggregate under this Plan exceed more than 30%
of the total number of Shares authorized for delivery under this Plan, and no
more than 5% of total Plan shares may be awarded to any individual non-employee
Director. In no event shall Shares subject to Options granted to any Employee
exceed more than 25% of the total number of Shares authorized for delivery under
the Plan.
Pursuant to the terms of the Option Plan, Non-Incentive Stock Options to
purchase 10,000 shares of Common Stock will be granted to each non-employee
Director of the Company, as of the Effective Date, at an exercise price equal to
the Fair Market Value of the Common Stock on such date of grant. Options may be
granted to newly appointed or elected non-employee Directors within the sole
discretion of the Option Committee, and the exercise price shall be equal to the
Fair Market Value of such Common Stock on the date of grant. The Options granted
to non-employee Directors on the Effective Date will be first exercisable at the
rate of 20% commencing on the date of grant and 20% annually thereafter, during
such period of service as a Director or a Director Emeritus. Such Options
granted to non-employee Directors will remain exercisable for up to ten years
from such date of grant. Upon the death or disability of a Director or Director
Emeritus, such Options shall be deemed immediately 100% exercisable for their
remaining term.
All outstanding option awards shall become immediately exercisable in the
event of a change in control of the Company or the Bank. Subject to vesting
requirements, if applicable, except in the event of death or disability of the
Optionee, a minimum of six months must elapse between the date of the grant of
an Option and the date of the sale of the Common Stock received through the
exercise of such Option.
15
The table below presents information related to stock option awards
anticipated to be awarded upon stockholder approval of the Option Plan.
NEW PLAN BENEFIT
1996 STOCK OPTION PLAN
Number of Options
Name and Position Dollar Value(1) to be Granted
- ------------------ --------------- -----------------
Jack D. Hood
Director, President and CEO.......... N/A 30,000
Jack L. Coleman, Sr.
Director............................. N/A 10,000
Thomas Les Letton
Director............................. N/A 10,000
Jack L. Coleman, Jr.
Director............................. N/A 10,000
Elwood Burgin
Director............................. N/A 10,000
Wickliffe T. Asbury, Jr.
Director and Vice President.......... N/A 25,000
Debbie C. Roach
Secretary............................ N/A 15,000
Charles W. Graves, Jr.
Vice President....................... N/A 15,000
Teresa Noel
Treasurer............................ N/A 15,000
Executive Officer Group (5 persons).. N/A 100,000(2)(3)
Non-Executive Director Group (4 persons) N/A 40,000
Non-Executive Officer Employee Group (10
persons)............................. N/A 50,000(3)
- -----------------------------
(1) The exercise price of such Options shall be equal to the Fair Market Value
of the Common Stock on the date of stockholder approval of the Option
Plan. Accordingly, the dollar value of the options was not determinable at
the time of mailing this Proxy Statement. On December 5, 1996, the last
sale price of the Common Stock at the close of the market as reported on
the Nasdaq National Market was $18.25 per share.
(2) Options awarded to officers and employees are exercisable as follows:
Options awarded at the time of stockholder approval are exercisable at the
rate of 20% on the date of grant and 20% annually thereafter during
periods of continued service as an employee, Director or Director
Emeritus. Such awards shall be 100% exercisable in the event of death or
disability, or upon a change in control of the Company or the Bank.
Options awarded to employees shall continue to be exercisable during
continued service as an employee, Director or Director Emeritus. Options
not exercised within three months of termination of service as an employee
shall thereafter be deemed non-incentive stock options.
(3) Awards shall vest during periods of continued service as an employee,
director, or director emeritus. Upon vesting, awards shall remain
exercisable for ten years from the date of grant without regard to
continued service as an employee, director, or director emeritus.
16
(4) Options awarded to directors are first exercisable at a rate of 20% on the
date of grant and 20% annually thereafter, during such period of service
as a director or director emeritus, and shall remain exercisable for ten
years without regard to continued service as a director or director
emeritus. Upon disability or death or a change in control of the Company
or the Bank, such awards shall be 100% exercisable.
Effect of Mergers, Change of Control and Other Adjustments
Subject to any required action by the stockholders of the Company, within
the sole discretion of the Option Committee, the aggregate number of shares of
Common Stock for which Options may be granted hereunder or the number of shares
of Common Stock represented by each outstanding Option will be proportionately
adjusted for any increase or decrease in the number of issued and outstanding
shares of Common Stock resulting from a subdivision or consolidation of shares
or the payment of a stock dividend or any other increase or decrease in the
number of shares of Common Stock effected without the receipt or payment of
consideration by the Company. Subject to any required action by the stockholders
of the Company, in the event of any change in control, recapitalization, merger,
consolidation, exchange of shares, spin-off, reorganization, tender offer,
partial or complete liquidation or other extraordinary corporate action or
event, the Option Committee, in its sole discretion, shall have the power, prior
to or subsequent to such action or events, to (i) appropriately adjust the
number of shares of Common Stock subject to each Option, the exercise price per
share of such Option, and the consideration to be given or received by the
Company upon the exercise of any outstanding Options; (ii) cancel any or all
previously granted Options, provided that appropriate consideration is paid to
the Optionee in connection therewith; and/or (iii) make such other adjustments
in connection with the Option Plan as the Option Committee, in its sole
discretion, deems necessary, desirable, appropriate or advisable. However, no
action may be taken by the Option Committee which would cause Incentive Stock
Options granted pursuant to the Option Plan to fail to meet the requirements of
Section 422 of the Code without the consent of the Optionee. Upon the payment of
a special or non-recurring cash dividend that has the effect of a return of
capital to the stockholders, the Option exercise price per share shall be
adjusted proportionately.
The Option Committee will at all times have the power to accelerate the
exercise date of all Options granted under the Option Plan. In the case of a
Change in Control of the Company as determined by the Option Committee, all
outstanding options shall become immediately exercisable. A change in control is
defined to include (i) the sale of all, or a material portion, of the assets of
the Company; (ii) the merger or recapitalization of the Company whereby the
Company is not the surviving entity; (iii) a change in control of the Company as
otherwise defined or determined by the OTS or its regulations; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of Section 13(d) of the Exchange Act and rules and regulations
promulgated thereunder) of 25% or more of the outstanding voting securities of
the Company by any person, trust, entity, or group. This limitation shall not
apply to the purchase of shares by underwriters in connection with a pubic
offering of Company stock or the purchase of shares of up to 25% of any class of
securities of the Company by a tax-qualified employee stock benefit plan which
is exempt from the approval requirements set forth under 12 C.F.R.
ss.574.3(c)(1)(vi).
In the event of such a Change in Control, the Option Committee and the
Board of Directors will take one or more of the following actions to be
effective as of the date of such Change in Control: (i) provide that such
Options shall be assumed, or equivalent options shall be substituted,
("Substitute Options") by the acquiring or succeeding corporation (or an
affiliate thereof), provided that: (A) any such Substitute Options exchanged for
Incentive Stock Options shall meet the requirements of Section 424(a) of the
Code, and (B) the shares of stock issuable upon the exercise of such Substitute
Options shall
17
constitute securities registered in accordance with the Securities Act of 1933,
as amended, ("Securities Act") or such securities shall be exempt from such
registration in accordance with Sections 3(a)(2) or 3(a)(5) of the Securities
Act, (collectively, "Registered Securities"), or in the alternative, if the
securities issuable upon the exercise of such Substitute Options shall not
constitute Registered Securities, then the Optionee will receive upon
consummation of the Change in Control transaction a cash payment for each Option
surrendered equal to the difference between (1) the Fair Market Value of the
consideration to be received for each share of Common Stock in the Change in
Control transaction times the number of shares of Common Stock subject to such
surrendered Options, and (2) the aggregate exercise price of all such
surrendered Options, or (ii) in the event of a transaction under the terms of
which the holders of the Common Stock of the Company will receive upon
consummation thereof a cash payment (the "Merger Price") for each share of
Common Stock exchanged in the Change in Control transaction, to make or to
provide for a cash payment to the Optionees equal to the difference between (A)
the Merger Price times the number of shares of Common Stock subject to such
Options held by each Optionee (to the extent then exercisable at prices not in
excess of the Merger Price) and (B) the aggregate exercise price of all such
surrendered Options in exchange for such surrendered Options.
The power of the Option Committee to accelerate the exercise of Options
and the immediate exercisability of Options in the case of a Change in Control
of the Company could have an anti-takeover effect by making it more costly for a
potential acquiror to obtain control of the Company due to the higher number of
shares outstanding following such exercise of Options. The power of the Option
Committee to make adjustments in connection with the Option Plan, including
adjusting the number of shares subject to Options and canceling Options, prior
to or after the occurrence of an extraordinary corporate action, allows the
Option Committee to adapt the Option Plan to operate in changed circumstances,
to adjust the Option Plan to fit a smaller or larger company, and to permit the
issuance of Options to new management following such extraordinary corporate
action. However, this power of the Option Committee may also have an
anti-takeover effect, by allowing the Option Committee to adjust the Option Plan
in a manner to allow the present management of the Company to exercise more
Options and hold more shares of the Company's Common Stock, and to possibly
decrease the number of Options available to new management of the Company.
Although the Option Plan may have an anti-takeover effect, the Company's
Board of Directors did not adopt the Option Plan specifically for anti-takeover
purposes. The Option Plan could render it more difficult to obtain support for
stockholder proposals opposed by the Company's Board and management in that
recipients of Options could choose to exercise such Options and thereby increase
the number of shares for which they hold voting power. Also, the exercise of
such Options could make it easier for the Board and management to block the
approval of certain transactions requiring the voting approval of 80% of the
Common Stock in accordance with the Certificate of Incorporation. In addition,
such Options could increase the cost of an acquisition by a potential acquiror.
Amendment and Termination of the Option Plan
The Board of Directors may alter, suspend or discontinue the Option Plan,
except that no action of the Board shall increase the maximum number of shares
of Common Stock issuable under the Option Plan, materially increase the benefits
accruing to Optionees under the Option Plan or materially modify the
requirements for eligibility for participation in the Option Plan unless such
action of the Board shall be subject to approval or ratification by the
stockholders of the Company.
18
Possible Dilutive Effects of the Option Plan
The Common Stock to be issued upon the exercise of Options awarded under
the Option Plan may either be authorized but unissued shares of Common Stock or
shares purchased in the open market. Because the stockholders of the Company do
not have preemptive rights, to the extent that the Company funds the Option
Plan, in whole or in part, with authorized but unissued shares, the interests of
current stockholders will be diluted. If upon the exercise of all of the
Options, the Company delivers newly issued shares of Common Stock (i.e., 200,000
shares of Common Stock), then the effect to current stockholders would be to
dilute their current ownership percentages by approximately 8.9%.
Federal Income Tax Consequences
Under present federal tax laws, awards under the Option Plan will have the
following consequences:
1. The grant of an Option will not by itself result in the recognition of
taxable income to an Optionee nor entitle the Company to a tax
deduction at the time of such grant.
2. The exercise of an Option which is an "Incentive Stock Option" within
the meaning of Section 422 of the Code generally will not, by itself,
result in the recognition of taxable income to an Optionee nor entitle
the Company to a deduction at the time of such exercise. However, the
difference between the Option exercise price and the Fair Market Value
of the Common Stock on the date of Option exercise is an item of tax
preference which may, in certain situations, trigger the alternative
minimum tax for an Optionee. An Optionee will recognize capital gain
or loss upon resale of the shares of Common Stock received pursuant to
the exercise of Incentive Stock Options, provided that such shares are
held for at least one year after transfer of the shares or two years
after the grant of the Option, whichever is later. Generally, if the
shares are not held for that period, the Optionee will recognize
ordinary income upon disposition in an amount equal to the difference
between the Option exercise price and the Fair Market Value of the
Common Stock on the date of exercise, or, if less, the sales proceeds
of the shares acquired pursuant to the Option.
3. The exercise of a Non-Incentive Stock Option will result in the
recognition of ordinary income by the Optionee on the date of exercise
in an amount equal to the difference between the exercise price and
the Fair Market Value of the Common Stock acquired pursuant to the
Option.
4. The Company will be allowed a tax deduction for federal tax purposes
equal to the amount of ordinary income recognized by an Optionee at
the time the Optionee recognizes such ordinary income.
Accounting Treatment
Neither the grant nor the exercise of an Option under the Option Plan
currently requires any charge against earnings under generally accepted
accounting principles. In certain circumstances, Common Stock issuable pursuant
to outstanding Options which are exercisable under the Option Plan might be
considered outstanding for purposes of calculating earnings per share on a fully
diluted basis.
19
Stockholder Approval
Stockholder approval of the Option Plan is being sought in accordance with
the Code to qualify the Option Plan for the granting of Incentive Stock Options
in accordance with the Code, to enable Optionees to qualify for certain
exemptive treatment from the short-swing profit recapture provisions of Section
16(b) of the Exchange Act, to meet the requirements for the tax-deductibility of
certain compensation items under Section 162(m) of the Code, and to meet the
requirements for continued listing of the Common Stock under the Nasdaq National
Market. An affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and entitled to vote without regard to broker
non- votes is required to constitute stockholder approval of this Proposal II.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 1996
STOCK OPTION PLAN.
PROPOSAL III -- APPROVAL OF THE RESTRICTED
STOCK PLAN AND TRUST AGREEMENT
General
The Board of Directors of the Company has adopted the RSP as a method of
providing directors, officers, and key employees of the Bank with a proprietary
interest in the Company in a manner designed to encourage such persons to remain
in the employment or service of the Bank. The Bank will contribute sufficient
funds to the RSP to purchase Common Stock representing up to approximately 4% of
the aggregate number of shares issued in the Conversion (i.e., 85,000 shares of
Common Stock) in the open market, or alternatively, the RSP may purchase
authorized but unissued shares of Common Stock from the Company. All of the
Common Stock to be purchased by the RSP will be purchased at the Fair Market
Value of such stock on the date of purchase. Awards under the RSP will be made
in recognition of prior and expected future services to the Bank by its
directors, officers and key employees responsible for implementation of the
policies adopted by the Bank's Board of Directors and as a means of providing a
further retention incentive. The following is a summary of the material features
of the RSP which is qualified in its entirety by reference to the complete
provisions of the RSP which is attached hereto as Exhibit B.
Awards Under the RSP
Benefits under the RSP ("Plan Share Awards") may be granted at the sole
discretion of a committee comprised of not less than two directors who are not
employees of the Bank or the Company (the "RSP Committee") appointed by the
Bank's Board of Directors. The RSP is managed by trustees (the "RSP Trustees")
who are non-employee directors of the Bank or the Company and who have the
responsibility to invest all funds contributed by the Bank to the trust created
for the RSP (the "RSP Trust"). Directors Coleman, Jr., Coleman, Sr., Burgin and
Letton have been appointed as the RSP Committee and RSP Trustees. Unless the
terms of the RSP or the RSP Committee specify otherwise, awards under the RSP
will be in the form of restricted stock payable as the Plan Share Awards shall
be earned and non-forfeitable. Twenty percent (20%) of such awards shall be
earned and non-forfeitable on the one year anniversary of the date of grant of
such awards, and 20% annually thereafter, provided that the recipient of the
award remains an employee, Director or Director Emeritus during such period. A
recipient of such restricted stock will not be entitled to voting rights
associated with such shares prior to the applicable date such shares are earned.
Dividends paid on Plan Share Awards shall be held in
20
arrears and distributed upon the date such applicable Plan Share Awards are
earned. Any shares held by the RSP Trust which are not yet earned shall be voted
by the RSP Trustees, as directed by the RSP Committee. If a recipient of such
restricted stock terminates employment or service for reasons other than death,
disability, or a change in control of the Company or the Bank, the recipient
forfeits all rights to the awards under restriction. If the recipient's
termination of employment or service is caused by death, disability, or a change
in control of the Company or the Bank, all restrictions expire and all shares
allocated shall become unrestricted. Awards of restricted stock to directors
shall be immediately non- forfeitable in the event of the death or disability of
such director, or a change in control of the Company or the Bank and distributed
as soon as practicable thereafter. The Board of Directors can terminate the RSP
at any time, and if it does so, any shares not allocated will revert to the
Company.
Plan Share Awards under the RSP will be determined by the RSP Committee.
In no event shall any Employee receive Plan Share Awards in excess of 25% of the
aggregate Plan Shares authorized under the Plan. Plan Share Awards may be
granted to newly elected or appointed non-employee Directors of the Bank
subsequent to the effective date (as defined in the RSP) provided that the Plan
Share Awards made to non-employee Directors shall not exceed 30% of total Plan
Share Reserve in the aggregate under the Plan or 5% of the total Plan Share
Reserve to any individual non-employee Director.
The aggregate number of Plan Shares available for issuance pursuant to the
Plan Share Awards and the number of shares to which any Plan Share Award relates
shall be proportionately adjusted for any increase or decrease in the total
number of outstanding shares of Common Stock issued subsequent to the effective
date (as defined in the RSP) of the RSP resulting from any split, subdivision or
consolidation of the Common Stock or other capital adjustment, change or
exchange of Common Stock, or other increase or decrease in the number or kind of
shares effected without receipt or payment of consideration by the Company. The
Company currently does not intend to award any Plan Shares.
Amendment and Termination of the Plan
The Board may amend or terminate the RSP at any time. However, no action
of the Board may increase the maximum number of Plan Shares permitted to be
awarded under the RSP, except for adjustments in the Common Stock of the
Company, materially increase the benefits accruing to Participants under the RSP
or materially modify the requirements for eligibility for participation in the
RSP unless such action of the Board shall be subject to ratification by the
stockholders of the Company.
Possible Dilutive Effects of RSP
The RSP provides that Common Stock to be awarded may be acquired by the
RSP through open-market purchases or from authorized but unissued shares of
Common Stock from the Company. In that stockholders do not have preemptive
rights, to the extent that the Company utilizes authorized but unissued shares
to fund RSP awards, the interests of current stockholders will be diluted. If
all Plan Share Awards are funded with newly issued shares, the effect on
existing stockholders would be to dilute their current ownership percentages by
approximately 4%. It is the Company's present intention to fund the RSP through
open-market purchases of Common Stock.
Federal Income Tax Consequences
Common Stock awarded under the RSP is generally taxable to the recipient
at the time that such awards become 100% vested and non-forfeitable, based upon
the Fair Market Value of such stock at the time of such vesting. Alternatively,
a recipient may make an election pursuant to Section 83(b) of the Code within 30
days of the date of the award to elect to include in gross income for the
current taxable
21
year the Fair Market Value of such stock as of the date of the award. Such
election must be filed with the Internal Revenue Service within 30 days of the
date of the granting of the stock award. The Company will be allowed a tax
deduction for federal tax purposes as a compensation expense equal to the amount
of ordinary income recognized by a recipient of Plan Share Awards at the time
the recipient recognizes taxable ordinary income. A recipient of a Plan Share
Award may elect to have a portion of such award withheld by the RSP Trust in
order to meet any necessary tax withholding obligations.
Accounting Treatment
For accounting purposes, the Company will recognize a compensation expense
in the amount of the Fair Market Value of the Common Stock subject to Plan Share
Awards at the date of the award pro rata over the period of years during which
the awards are earned.
Stockholder Approval
The Company is submitting the RSP to stockholders for approval in order to
enable recipients of Plan Share Awards to qualify for certain exemptive
treatment from the short-swing profit recapture provisions of Section 16(b) of
the Exchange Act, to meet the requirements for the tax deductibility of certain
compensation items under Section 162(m) of the Code, and to meet the
requirements for continued listing of the Common Stock on the Nasdaq National
Market. The affirmative vote of holders of a majority of the shares present in
person or represented by proxy and entitled to vote without regard to broker
non-votes is required to constitute stockholder approval of this Proposal III.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
RESTRICTED STOCK PLAN.
PROPOSAL IV - RATIFICATION OF INDEPENDENT AUDITOR
Miller, Mayer, Sullivan & Stevens LLP was the Company's independent
auditor for the 1996 fiscal year. The Board of Directors has approved the
selection of Miller, Mayer, Sullivan & Stevens LLP as its auditor for the 1997
fiscal year, subject to ratification by the Company's stockholders. A
representative of Miller, Mayer, Sullivan & Stevens LLP is expected to be
present at the Meeting to respond to stockholders' questions and will have the
opportunity to make a statement if he or she so desires.
Ratification of the appointment of the auditor requires the approval of a
majority of the shares present and entitled to vote by the stockholders of the
Company at the Meeting. The Board of Directors recommends that stockholders vote
"FOR" the ratification of the appointment of Miller, Mayer, Sullivan & Stevens
LLP as the Company's auditor for the 1997 fiscal year.
22
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the persons named in the accompanying proxy.
MISCELLANEOUS
The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Common Stock.
The Company's 1996 Annual Report to Stockholders, including financial
statements, will be mailed on or about December 18, 1996 to all stockholders of
record as of the close of business on December 9, 1996. Any stockholder who has
not received a copy of such Annual Report may obtain a copy by writing to the
Secretary of the Company. Such Annual Report is not to be treated as a part of
the proxy solicitation material or as having been incorporated herein by
reference.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
next year's Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's executive offices at
104 South Chiles Street, Harrodsburg, Kentucky 40330-1620, no later than August
20, 1997.
FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
SEPTEMBER 30, 1996, AS FILED WITH THE SEC, WILL BE FURNISHED WITHOUT CHARGE TO
STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY,
HARRODSBURG FIRST FINANCIAL BANCORP, INC., 104 SOUTH CHILES STREET, HARRODSBURG,
KENTUCKY 40330-1620.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Debbie C. Roach
Debbie C. Roach
Secretary
Harrodsburg, Kentucky
December 18, 1996
23
Exhibit A
HARRODSBURG FIRST FINANCIAL BANCORP, INC.
1996 STOCK OPTION PLAN
1. Purpose of the Plan. The Plan shall be known as the Harrodsburg First
Financial Bancorp, Inc. ("Company") 1996 Stock Option Plan (the "Plan"). The
purpose of the Plan is to attract and retain qualified personnel for positions
of substantial responsibility and to provide additional incentive to officers,
directors, key employees and other persons providing services to the Company, or
any present or future parent or subsidiary of the Company to promote the success
of the business. The Plan is intended to provide for the grant of "Incentive
Stock Options," within the meaning of Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code") and Non-Incentive Stock Options, options that
do not so qualify. The provisions of the Plan relating to Incentive Stock
Options shall be interpreted to conform to the requirements of Section 422 of
the Code.
2. Definitions. The following words and phrases when used in this Plan
with an initial capital letter, unless the context clearly indicates otherwise,
shall have the meaning as set forth below. Wherever appropriate, the masculine
pronoun shall include the feminine pronoun and the singular shall include the
plural.
(a) "Award" means the grant by the Committee of an Incentive Stock
Option or a Non-Incentive Stock Option, or any combination thereof, as provided
in the Plan.
(b) "Board" shall mean the Board of Directors of the Company, or any
successor or parent corporation thereto.
(c) "Change in Control" shall mean: (i) the sale of all, or a
material portion, of the assets of the Company; (ii) the merger or
recapitalization of the Company whereby the Company is not the surviving entity;
(iii) a change in control of the Company, as otherwise defined or determined by
the Office of Thrift Supervision or regulations promulgated by it; or (iv) the
acquisition, directly or indirectly, of the beneficial ownership (within the
meaning of that term as it is used in Section 13(d) of the Securities Exchange
Act of 1934 and the rules and regulations promulgated thereunder) of twenty-five
percent (25%) or more of the outstanding voting securities of the Company by any
person, trust, entity or group. This limitation shall not apply to the purchase
of shares by underwriters in connection with a public offering of Company stock,
or the purchase of shares of up to 25% of any class of securities of the Company
by a tax-qualified employee stock benefit plan which is exempt from the approval
requirements, set forth under 12 C.F.R. ss.574.3(c)(1)(vi) as now in effect or
as may hereafter be amended. The term "person" refers to an individual or a
corporation, partnership, trust, association, joint venture, pool, syndicate,
sole proprietorship, unincorporated organization or any other form of entity not
specifically listed herein. The decision of the Committee as to whether a Change
in Control has occurred shall be conclusive and binding.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and regulations promulgated thereunder.
(e) "Committee" shall mean the Board or the Stock Option Committee
appointed by the Board in accordance with Section 5(a) of the Plan.
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(f) "Common Stock" shall mean the common stock of the Company, or any
successor or parent corporation thereto.
(g) "Continuous Employment" or "Continuous Status as an Employee"
shall mean the absence of any interruption or termination of employment with the
Company or any present or future Parent or Subsidiary of the Company. Employment
shall not be considered interrupted in the case of sick leave, military leave or
any other leave of absence approved by the Company or in the case of transfers
between payroll locations, of the Company or between the Company, its Parent,
its Subsidiaries or a successor.
(h) "Company" shall mean the Harrodsburg First Financial Bancorp,
Inc., the parent corporation of the Savings Bank, or any successor or Parent
thereof.
(i) "Director" shall mean a member of the Board of the Company, or any
successor or parent corporation thereto.
(j) "Director Emeritus" shall mean a person serving as a director
emeritus, advisory director, consulting director, or other similar position as
may be appointed by the Board of Directors of the Savings Bank or the Company
from time to time.
(k) "Disability" means (a) with respect to Incentive Stock Options,
the "permanent and total disability" of the Employee as such term is defined at
Section 22(e)(3) of the Code; and (b) with respect to Non-Incentive Stock
Options, any physical or mental impairment which renders the Participant
incapable of continuing in the employment or service of the Savings Bank or the
Parent in his then current capacity as determined by the Committee.
(l) "Effective Date" shall mean the date specified in Section 14
hereof.
(m) "Employee" shall mean any person employed by the Company or any
present or future Parent or Subsidiary of the Company.
(n) "Fair Market Value" shall mean: (i) if the Common Stock is traded
otherwise than on a national securities exchange, then the Fair Market Value per
Share shall be equal to the mean between the last bid and ask price of such
Common Stock on such date or, if there is no bid and ask price on said date,
then on the immediately prior business day on which there was a bid and ask
price. If no such bid and ask price is available, then the Fair Market Value
shall be determined by the Committee in good faith; or (ii) if the Common Stock
is listed on a national securities exchange, then the Fair Market Value per
Share shall be not less than the average of the highest and lowest selling price
of such Common Stock on such exchange on such date, or if there were no sales on
said date, then the Fair Market Value shall be not less than the mean between
the last bid and ask price on such date.
(o) "Incentive Stock Option" or "ISO" shall mean an option to purchase
Shares granted by the Committee pursuant to Section 8 hereof which is subject to
the limitations and restrictions of Section 8 hereof and is intended to qualify
as an incentive stock option under Section 422 of the Code.
(p) "Non-Incentive Stock Option" or "Non-ISO" shall mean an option to
purchase Shares granted pursuant to Section 9 hereof, which option is not
intended to qualify under Section 422 of the Code.
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(q) "Option" shall mean an Incentive Stock Option or Non-Incentive
Stock Option granted pursuant to this Plan providing the holder of such Option
with the right to purchase Common Stock.
(r) "Optioned Stock" shall mean stock subject to an Option granted
pursuant to the Plan.
(s) "Optionee" shall mean any person who receives an Option or Award
pursuant to the Plan.
(t) "Parent" shall mean any present or future corporation which would
be a "parent corporation" as defined in Sections 424(e) and (g) of the Code.
(u) "Participant" means any director, officer or key employee of the
Company or any Parent or Subsidiary of the Company or any other person providing
a service to the Company who is selected by the Committee to receive an Award,
or who by the express terms of the Plan is granted an Award.
(v) "Plan" shall mean the Harrodsburg First Financial Bancorp, Inc.
1996 Stock Option Plan.
(w) "Savings Bank" shall mean First Federal Savings Bank of
Harrodsburg, Harrodsburg, Kentucky, or any successor corporation thereto.
(x) "Share" shall mean one share of the Common Stock.
(y) "Subsidiary" shall mean any present or future corporation which
constitutes a "subsidiary corporation" as defined in Sections 424(f) and (g) of
the Code.
4. Shares Subject to the Plan. Except as otherwise required by the
provisions of Section 12 hereof, the aggregate number of Shares with respect to
which Awards may be made pursuant to the Plan shall not exceed 200,000 Shares.
Such Shares may either be from authorized but unissued shares or shares
purchased in the market for Plan purposes.
If an Award shall expire, become unexercisable, or be forfeited for
any reason prior to its exercise, new Awards may be granted under the Plan with
respect to the number of Shares as to which such expiration has occurred.
5. Six Month Holding Period.
Subject to vesting requirements, if applicable, except in the event of
death or disability of the Optionee, a minimum of six months must elapse between
the date of the grant of an Option and the date of the sale of the Common Stock
received through the exercise of such Option.
6. Administration of the Plan.
(a) Composition of the Committee. The Plan shall be administered by
the Board of Directors of the Company or a Committee which shall consist of not
less than two Directors of the
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Company appointed by the Board and serving at the pleasure of the Board. All
persons designated as members of the Committee shall meet the requirements of a
"Non-Employee Director" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, as found at 17 CFR ss.240.16b-3.
(b) Powers of the Committee. The Committee is authorized (but only to
the extent not contrary to the express provisions of the Plan or to resolutions
adopted by the Board) to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the form and content of
Awards to be issued under the Plan and to make other determinations necessary or
advisable for the administration of the Plan, and shall have and may exercise
such other power and authority as may be delegated to it by the Board from time
to time. A majority of the entire Committee shall constitute a quorum and the
action of a majority of the members present at any meeting at which a quorum is
present shall be deemed the action of the Committee. In no event may the
Committee revoke outstanding Awards without the consent of the Participant.
The President of the Company and such other officers as shall be
designated by the Committee are hereby authorized to execute written agreements
evidencing Awards on behalf of the Company and to cause them to be delivered to
the Participants. Such agreements shall set forth the Option exercise price, the
number of shares of Common Stock subject to such Option, the expiration date of
such Options, and such other terms and restrictions applicable to such Award as
are determined in accordance with the Plan or the actions of the Committee.
(c) Effect of Committee's Decision. All decisions, determinations and
interpretations of the Committee shall be final and conclusive on all persons
affected thereby.
6. Eligibility for Awards and Limitations.
(a) The Committee shall from time to time determine the officers,
Directors, key employees and other persons who shall be granted Awards under the
Plan, the number of Awards to be granted to each such persons, and whether
Awards granted to each such Participant under the Plan shall be Incentive and/or
Non-Incentive Stock Options. In selecting Participants and in determining the
number of Shares of Common Stock to be granted to each such Participant, the
Committee may consider the nature of the prior and anticipated future services
rendered by each such Participant, each such Participant's current and potential
contribution to the Company and such other factors as the Committee may, in its
sole discretion, deem relevant. Participants who have been granted an Award may,
if otherwise eligible, be granted additional Awards.
(b) The aggregate Fair Market Value (determined as of the date the
Option is granted) of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by each Employee during any calendar year
(under all Incentive Stock Option plans, as defined in Section 422 of the Code,
of the Company or any present or future Parent or Subsidiary of the Company)
shall not exceed $100,000. Notwithstanding the prior provisions of this Section
6, the Committee may grant Options in excess of the foregoing limitations,
provided said Options shall be clearly and specifically designated as not being
Incentive Stock Options.
(c) In no event shall Shares subject to Options granted to
non-employee Directors in the aggregate under this Plan exceed more than 30% of
the total number of Shares authorized for delivery under this Plan pursuant to
Section 3 herein or more than 5% to any individual non-employee
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Director. In no event shall Shares subject to Options granted to any Employee
exceed more than 25% of the total number of Shares authorized for delivery under
the Plan.
7. Term of the Plan. The Plan shall continue in effect for a term of ten
(10) years from the Effective Date, unless sooner terminated pursuant to Section
18 hereof. No Option shall be granted under the Plan after ten (10) years from
the Effective Date.
8. Terms and Conditions of Incentive Stock Options. Incentive Stock
Options may be granted only to Participants who are Employees. Each Incentive
Stock Option granted pursuant to the Plan shall be evidenced by an instrument in
such form as the Committee shall from time to time approve. Each Incentive Stock
Option granted pursuant to the Plan shall comply with, and be subject to, the
following terms and conditions:
(a) Option Price.
(i) The price per Share at which each Incentive Stock Option
granted by the Committee under the Plan may be exercised shall not, as to any
particular Incentive Stock Option, be less than the Fair Market Value of the
Common Stock on the date that such Incentive Stock Option is granted.
(ii) In the case of an Employee who owns Common Stock
representing more than ten percent (10%) of the outstanding Common Stock at the
time the Incentive Stock Option is granted, the Incentive Stock Option exercise
price shall not be less than one hundred and ten percent (110%) of the Fair
Market Value of the Common Stock on the date that the Incentive Stock Option is
granted.
(b) Payment. Full payment for each Share of Common Stock purchased
upon the exercise of any Incentive Stock Option granted under the Plan shall be
made at the time of exercise of each such Incentive Stock Option and shall be
paid in cash (in United States Dollars), Common Stock or a combination of cash
and Common Stock. Common Stock utilized in full or partial payment of the
exercise price shall be valued at the Fair Market Value at the date of exercise.
The Company shall accept full or partial payment in Common Stock only to the
extent permitted by applicable law. No Shares of Common Stock shall be issued
until full payment has been received by the Company, and no Optionee shall have
any of the rights of a stockholder of the Company until Shares of Common Stock
are issued to the Optionee.
(c) Term of Incentive Stock Option. The term of exercisability of
each Incentive Stock Option granted pursuant to the Plan shall be not more than
ten (10) years from the date each such Incentive Stock Option is granted,
provided that in the case of an Employee who owns stock representing more than
ten percent (10%) of the Common Stock outstanding at the time the Incentive
Stock Option is granted, the term of exercisability of the Incentive Stock
Option shall not exceed five (5) years.
(d) Exercise Generally. Except as otherwise provided in Section 10
hereof, no Incentive Stock Option may be exercised unless the Optionee shall
have been in the employ of the Company at all times during the period beginning
with the date of grant of any such Incentive Stock Option and ending on the date
three (3) months prior to the date of exercise of any such Incentive Stock
Option. The Committee may impose additional conditions upon the right of an
Optionee to exercise any Incentive Stock Option granted hereunder which are not
inconsistent with the terms of the Plan or the requirements for qualification as
an Incentive Stock Option. Except as otherwise provided by the terms
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of the Plan or by action of the Committee at the time of the grant of the
Options, the Options will be first exercisable at the rate of 20% on the date of
grant and 20% annually thereafter during such periods of service as an Employee,
Director or Director Emeritus.
(e) Cashless Exercise. Subject to vesting requirements, if applicable,
an Optionee who has held an Incentive Stock Option for at least six months may
engage in the "cashless exercise" of the Option. Upon a cashless exercise, an
Optionee shall give the Company written notice of the exercise of the Option
together with an order to a registered broker-dealer or equivalent third party,
to sell part or all of the Optioned Stock and to deliver enough of the proceeds
to the Company to pay the Option exercise price and any applicable withholding
taxes. If the Optionee does not sell the Optioned Stock through a registered
broker-dealer or equivalent third party, the Optionee can give the Company
written notice of the exercise of the Option and the third party purchaser of
the Optioned Stock shall pay the Option exercise price plus any applicable
withholding taxes to the Company.
(f) Transferability. An Incentive Stock Option granted pursuant to the
Plan shall be exercised during an Optionee's lifetime only by the Optionee to
whom it was granted and shall not be assignable or transferable otherwise than
by will or by the laws of descent and distribution.
9. Terms and Conditions of Non-Incentive Stock Options. Each
Non-Incentive Stock Option granted pursuant to the Plan shall be evidenced by an
instrument in such form as the Committee shall from time to time approve. Each
Non-Incentive Stock Option granted pursuant to the Plan shall comply with and be
subject to the following terms and conditions.
(a) Options Granted to Directors. Subject to the limitations of
Section 6(c), Non- Incentive Stock Options to purchase 10,000 shares of Common
Stock will be granted to each Director who is not an Employee as of the
Effective Date, at an exercise price equal to the Fair Market Value of the
Common Stock on such date of grant. The Options will be first exercisable at the
rate of 20% on the Effective Date and 20% annually thereafter during such
periods of service as a Director or Director Emeritus. Upon the death or
Disability of the Director or Director Emeritus, such Option shall be deemed
immediately 100% exercisable. Such Options shall continue to be exercisable for
a period of ten years following the date of grant without regard to the
continued services of such Director as a Director or Director Emeritus. In the
event of the Optionee's death, such Options may be exercised by the personal
representative of his estate or person or persons to whom his rights under such
Option shall have passed by will or by the laws of descent and distribution.
Options may be granted to newly appointed or elected non-employee Directors
within the sole discretion of the Committee. The exercise price per Share of
such Options granted shall be equal to the Fair Market Value of the Common Stock
at the time such Options are granted. All outstanding Awards shall become
immediately exercisable in the event of a Change in Control of the Savings Bank
or the Company. Unless otherwise inapplicable, or inconsistent with the
provisions of this paragraph, the Options to be granted to Directors hereunder
shall be subject to all other provisions of this Plan.
(b) Option Price. The exercise price per Share of Common Stock for
each Non-Incentive Stock Option granted pursuant to the Plan shall be at such
price as the Committee may determine in its sole discretion, but in no event
less than the Fair Market Value of such Common Stock on the date of grant as
determined by the Committee in good faith.
(c) Payment. Full payment for each Share of Common Stock purchased
upon the exercise of any Non-Incentive Stock Option granted under the Plan shall
be made at the time of exercise
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of each such Non-Incentive Stock Option and shall be paid in cash (in United
States Dollars), Common Stock or a combination of cash and Common Stock. Common
Stock utilized in full or partial payment of the exercise price shall be valued
at its Fair Market Value at the date of exercise. The Company shall accept full
or partial payment in Common Stock only to the extent permitted by applicable
law. No Shares of Common Stock shall be issued until full payment has been
received by the Company and no Optionee shall have any of the rights of a
stockholder of the Company until the Shares of Common Stock are issued to the
Optionee.
(d) Term. The term of exercisability of each Non-Incentive Stock
Option granted pursuant to the Plan shall be not more than ten (10) years from
the date each such Non-Incentive Stock Option is granted.
(e) Exercise Generally. The Committee may impose additional conditions
upon the right of any Participant to exercise any Non-Incentive Stock Option
granted hereunder which is not inconsistent with the terms of the Plan. Except
as otherwise provided by the terms of the Plan or by action of the Committee at
the time of the grant of the Options, the Options will be first exercisable at
the rate of 20% on the date of grant and 20% annually thereafter during such
periods of service as an Employee, Director or Director Emeritus.
(f) Cashless Exercise. Subject to vesting requirements, if applicable,
an Optionee who has held a Non-Incentive Stock Option for at least six months
may engage in the "cashless exercise" of the Option. Upon a cashless exercise,
an Optionee shall give the Company written notice of the exercise of the Option
together with an order to a registered broker-dealer or equivalent third party,
to sell part or all of the Optioned Stock and to deliver enough of the proceeds
to the Company to pay the Option exercise price and any applicable withholding
taxes. If the Optionee does not sell the Optioned Stock through a registered
broker-dealer or equivalent third party, the Optionee can give the Company
written notice of the exercise of the Option and the third party purchaser of
the Optioned Stock shall pay the Option exercise price plus any applicable
withholding taxes to the Company.
(g) Transferability. Any Non-Incentive Stock Option granted pursuant
to the Plan shall be exercised during an Optionee's lifetime only by the
Optionee to whom it was granted and shall not be assignable or transferable
otherwise than by will or by the laws of descent and distribution.
10. Effect of Termination of Employment, Disability or Death on Incentive
Stock Options.
(a) Termination of Employment. In the event that any Optionee's
employment with the Company shall terminate for any reason, other than
Disability or death, all of any such Optionee's Incentive Stock Options, and all
of any such Optionee's rights to purchase or receive Shares of Common Stock
pursuant thereto, shall automatically terminate on (A) the earlier of (i) or
(ii): (i) the respective expiration dates of any such Incentive Stock Options,
or (ii) the expiration of not more than three (3) months after the date of such
termination of employment; or (B) at such later date as is determined by the
Committee at the time of the grant of such Award based upon the Optionee's
continuing status as a Director or Director Emeritus of the Savings Bank or the
Company, but only if, and to the extent that, the Optionee was entitled to
exercise any such Incentive Stock Options at the date of such termination of
employment, and further that such Award shall thereafter be deemed a
Non-Incentive Stock Option. In the event that a Subsidiary ceases to be a
Subsidiary of the Company, the employment of all of its
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employees who are not immediately thereafter employees of the Company shall be
deemed to terminate upon the date such Subsidiary so ceases to be a Subsidiary
of the Company.
(b) Disability. In the event that any Optionee's employment with the
Company shall terminate as the result of the Disability of such Optionee, such
Optionee may exercise any Incentive Stock Options granted to the Optionee
pursuant to the Plan at any time prior to the earlier of (i) the respective
expiration dates of any such Incentive Stock Options or (ii) the date which is
one (1) year after the date of such termination of employment, but only if, and
to the extent that, the Optionee was entitled to exercise any such Incentive
Stock Options at the date of such termination of employment.
(c) Death. In the event of the death of an Optionee, any Incentive
Stock Options granted to such Optionee may be exercised by the person or persons
to whom the Optionee's rights under any such Incentive Stock Options pass by
will or by the laws of descent and distribution (including the Optionee's estate
during the period of administration) at any time prior to the earlier of (i) the
respective expiration dates of any such Incentive Stock Options or (ii) the date
which is two (2) years after the date of death of such Optionee but only if, and
to the extent that, the Optionee was entitled to exercise any such Incentive
Stock Options at the date of death. For purposes of this Section 10(c), any
Incentive Stock Option held by an Optionee shall be considered exercisable at
the date of his death if the only unsatisfied condition precedent to the
exercisability of such Incentive Stock Option at the date of death is the
passage of a specified period of time. At the discretion of the Committee, upon
exercise of such Options the Optionee may receive Shares or cash or a
combination thereof. If cash shall be paid in lieu of Shares, such cash shall be
equal to the difference between the Fair Market Value of such Shares and the
exercise price of such Options on the exercise date.
(d) Incentive Stock Options Deemed Exercisable. For purposes of
Sections 10(a), 10(b) and 10(c) above, any Incentive Stock Option held by any
Optionee shall be considered exercisable at the date of termination of
employment if any such Incentive Stock Option would have been exercisable at
such date of termination of employment without regard to the Disability or death
of the Participant.
(e) Termination of Incentive Stock Options. Except as may be specified
by the Committee at the time of grant of an Option, to the extent that any
Incentive Stock Option granted under the Plan to any Optionee whose employment
with the Company terminates shall not have been exercised within the applicable
period set forth in this Section 10, any such Incentive Stock Option, and all
rights to purchase or receive Shares of Common Stock pursuant thereto, as the
case may be, shall terminate on the last day of the applicable period.
11. Effect of Termination of Employment, Disability or Death on
Non-Incentive Stock Options. The terms and conditions of Non-Incentive Stock
Options relating to the effect of the termination of an Optionee's employment or
service, Disability of an Optionee or his death shall be such terms and
conditions as the Committee shall, in its sole discretion, determine at the time
of termination of service, unless specifically provided for by the terms of the
Agreement at the time of grant of the Award.
12. Recapitalization, Merger, Consolidation, Change in Control and Other
Transactions.
(a) Adjustment. Subject to any required action by the stockholders of
the Company, within the sole discretion of the Committee, the aggregate number
of Shares of Common Stock for which Options may be granted hereunder, the number
of Shares of Common Stock covered by each outstanding
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Option, and the exercise price per Share of Common Stock of each such Option,
shall all be proportionately adjusted for any increase or decrease in the number
of issued and outstanding Shares of Common Stock resulting from a subdivision or
consolidation of Shares (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares, or
otherwise) or the payment of a stock dividend (but only on the Common Stock) or
any other increase or decrease in the number of such Shares of Common Stock
effected without the receipt or payment of consideration by the Company (other
than Shares held by dissenting stockholders).
(b) Change in Control. All outstanding Awards shall become
immediately exercisable in the event of a Change in Control of the Company, as
determined by the Committee. In the event of such a Change in Control, the
Committee and the Board of Directors will take one or more of the following
actions to be effective as of the date of such Change in Control:
(i) provide that such Options shall be assumed, or equivalent
options shall be substituted, ("Substitute Options") by the acquiring or
succeeding corporation (or an affiliate thereof), provided that: (A) any such
Substitute Options exchanged for Incentive Stock Options shall meet the
requirements of Section 424(a) of the Code, and (B) the shares of stock issuable
upon the exercise of such Substitute Options shall constitute securities
registered in accordance with the Securities Act of 1933, as amended, ("1933
Act") or such securities shall be exempt from such registration in accordance
with Sections 3(a)(2) or 3(a)(5) of the 1933 Act, (collectively, "Registered
Securities"), or in the alternative, if the securities issuable upon the
exercise of such Substitute Options shall not constitute Registered Securities,
then the Optionee will receive upon consummation of the Change in Control
transaction a cash payment for each Option surrendered equal to the difference
between (1) the Fair Market Value of the consideration to be received for each
share of Common Stock in the Change in Control transaction times the number of
shares of Common Stock subject to such surrendered Options, and (2) the
aggregate exercise price of all such surrendered Options, or
(ii) in the event of a transaction under the terms of which the
holders of the Common Stock of the Company will receive upon consummation
thereof a cash payment (the "Merger Price") for each share of Common Stock
exchanged in the Change in Control transaction, to make or to provide for a cash
payment to the Optionees equal to the difference between (A) the Merger Price
times the number of shares of Common Stock subject to such Options held by each
Optionee (to the extent then exercisable at prices not in excess of the Merger
Price) and (B) the aggregate exercise price of all such surrendered Options in
exchange for such surrendered Options.
(c) Extraordinary Corporate Action. Notwithstanding any provisions of
the Plan to the contrary, subject to any required action by the stockholders of
the Company, in the event of any Change in Control, recapitalization, merger,
consolidation, exchange of Shares, spin-off, reorganization, tender offer,
partial or complete liquidation or other extraordinary corporate action or
event, the Committee, in its sole discretion, shall have the power, prior or
subsequent to such action or event to:
(i) appropriately adjust the number of Shares of Common Stock
subject to each Option, the Option exercise price per Share of Common Stock, and
the consideration to be given or received by the Company upon the exercise of
any outstanding Option;
(ii) cancel any or all previously granted Options, provided that
appropriate consideration is paid to the Optionee in connection therewith;
and/or
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(iii) make such other adjustments in connection with the Plan as
the Committee, in its sole discretion, deems necessary, desirable, appropriate
or advisable; provided, however, that no action shall be taken by the Committee
which would cause Incentive Stock Options granted pursuant to the Plan to fail
to meet the requirements of Section 422 of the Code without the consent of the
Optionee.
(d) Acceleration. The Committee shall at all times have the power to
accelerate the exercise date of Options previously granted under the Plan.
(e) Non-recurring Dividends. Upon the payment of a special or
non-recurring cash dividend that has the effect of a return of capital to the
stockholders, the Option exercise price per share shall be adjusted
proportionately.
Except as expressly provided in Sections 12(a), 12(b) and 12(e)
hereof, no Optionee shall have any rights by reason of the occurrence of any of
the events described in this Section 12.
13. Time of Granting Options. The date of grant of an Option under the
Plan shall, for all purposes, be the date on which the Committee makes the
determination of granting such Option. Notice of the grant of an Option shall be
given to each individual to whom an Option is so granted within a reasonable
time after the date of such grant in a form determined by the Committee.
14. Effective Date. The Plan shall become effective upon the date of
approval of the Plan by the stockholders of the Company. The Committee may make
a determination related to Awards prior to the Effective Date with such Awards
to be effective upon the date of stockholder approval of the Plan.
15. Approval by Stockholders. The Plan shall be approved by stockholders
of the Company within twelve (12) months before or after the date the Plan is
approved by the Board.
16. Modification of Options. At any time and from time to time, the Board
may authorize the Committee to direct the execution of an instrument providing
for the modification of any outstanding Option, provided no such modification,
extension or renewal shall confer on the holder of said Option any right or
benefit which could not be conferred on the Optionee by the grant of a new
Option at such time, or shall not materially decrease the Optionee's benefits
under the Option without the consent of the holder of the Option, except as
otherwise permitted under Section 18 hereof.
17. Amendment and Termination of the Plan.
(a) Action by the Board. The Board may alter, suspend or discontinue
the Plan, except that no action of the Board may increase (other than as
provided in Section 12 hereof) the maximum number of Shares permitted to be
optioned under the Plan, materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements for
eligibility for participation in the Plan unless such action of the Board shall
be subject to approval or ratification by the stockholders of the Company.
(b) Change in Applicable Law. Notwithstanding any other provision
contained in the Plan, in the event of a change in any federal or state law,
rule or regulation which would make the exercise of all or part of any
previously granted Option unlawful or subject the Company to any penalty,
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the Committee may restrict any such exercise without the consent of the Optionee
or other holder thereof in order to comply with any such law, rule or regulation
or to avoid any such penalty.
18. Conditions Upon Issuance of Shares; Limitations on Option Exercise;
Cancellation of Option Rights.
(a) Shares shall not be issued with respect to any Option granted
under the Plan unless the issuance and delivery of such Shares shall comply with
all relevant provisions of applicable law, including, without limitation, the
Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder, any applicable state securities laws and the requirements of any
stock exchange upon which the Shares may then be listed.
(b) The inability of the Company to obtain any necessary
authorizations, approvals or letters of non-objection from any regulatory body
or authority deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares issuable hereunder shall relieve the Company of
any liability with respect to the non-issuance or sale of such Shares.
(c) As a condition to the exercise of an Option, the Company may
require the person exercising the Option to make such representations and
warranties as may be necessary to assure the availability of an exemption from
the registration requirements of federal or state securities law.
(d) Notwithstanding anything herein to the contrary, upon the
termination of employment or service of an Optionee by the Company or its
Subsidiaries for "cause" as defined at 12 C.F.R. 563.39(b)(1) as determined by
the Board of Directors, all Options held by such Participant shall cease to be
exercisable as of the date of such termination of employment or service.
(e) Upon the exercise of an Option by an Optionee (or the Optionee's
personal representative), the Committee, in its sole and absolute discretion,
may make a cash payment to the Optionee, in whole or in part, in lieu of the
delivery of shares of Common Stock. Such cash payment to be paid in lieu of
delivery of Common Stock shall be equal to the difference between the Fair
Market Value of the Common Stock on the date of the Option exercise and the
exercise price per share of the Option. Such cash payment shall be in exchange
for the cancellation of such Option. Such cash payment shall not be made in the
event that such transaction would result in liability to the Optionee or the
Company under Section 16(b) of the Securities Exchange Act of 1934, as amended,
and regulations promulgated thereunder.
19. Reservation of Shares. During the term of the Plan, the Company will
reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.
20. Unsecured Obligation. No Participant under the Plan shall have any
interest in any fund or special asset of the Company by reason of the Plan or
the grant of any Option under the Plan. No trust fund shall be created in
connection with the Plan or any grant of any Option hereunder and there shall be
no required funding of amounts which may become payable to any Participant.
21. Withholding Tax. The Company shall have the right to deduct from all
amounts paid in cash with respect to the cashless exercise of Options under the
Plan any taxes required by law to be withheld with respect to such cash
payments. Where a Participant or other person is entitled to receive Shares
pursuant to the exercise of an Option, the Company shall have the right to
require the Participant
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or such other person to pay the Company the amount of any taxes which the
Company is required to withhold with respect to such Shares, or, in lieu
thereof, to retain, or to sell without notice, a number of such Shares
sufficient to cover the amount required to be withheld.
22. No Employment Rights. No Director, Employee or other person shall have
a right to be selected as a Participant under the Plan. Neither the Plan nor any
action taken by the Committee in administration of the Plan shall be construed
as giving any person any rights of employment or retention as an Employee,
Director or in any other capacity with the Company, the Savings Bank or other
Subsidiaries.
23. Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Kentucky, except to the extent that
federal law shall be deemed to apply.
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Exhibit B
First Federal Savings Bank of Harrodsburg
Restricted Stock Plan
and Trust Agreement
Article I
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 First Federal Savings Bank of Harrodsburg ("Savings Bank") hereby
establishes the Restricted Stock Plan (the "Plan") and Trust (the "Trust") upon
the terms and conditions hereinafter stated in this Restricted Stock Plan and
Trust Agreement (the "Agreement").
1.02 The Trustee hereby accepts this Trust and agrees to hold the Trust
assets existing on the date of this Agreement and all additions and accretions
thereto upon the terms and conditions hereinafter stated.
Article II
PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to reward and to retain personnel of
experience and ability in key positions of responsibility with the Savings Bank
and its subsidiaries, by providing such personnel of the Savings Bank and its
subsidiaries with an equity interest in the parent corporation of the Savings
Bank, Harrodsburg First Financial Bancorp, Inc. ("Parent"), as compensation for
their prior and anticipated future professional contributions and service to the
Savings Bank and its subsidiaries.
Article III
DEFINITIONS
The following words and phrases when used in this Plan with an initial
capital letter, unless the context clearly indicates otherwise, shall have the
meaning as set forth below. Wherever appropriate, the masculine pronoun shall
include the feminine pronoun and the singular shall include the plural.
3.01 "Beneficiary" means the person or persons designated by the
Participant to receive any benefits payable under the Plan in the event of such
Participant's death. Such person or persons shall be designated in writing on
forms provided for this purpose by the Committee and may be changed from time to
time by similar written notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Participant's surviving spouse, if
any, or if none, the Participant's estate.
3.02 "Board" means the Board of Directors of the Savings Bank, or any
successor corporation thereto.
3.03 "Cause" means the personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profits, intentional
failure to perform stated duties, willful violation of a material provision of
any law, rule or regulation (other than traffic violations and similar offense),
or a material violation of a final cease-and-desist order or any other action
which results in a substantial financial loss to the Parent, Savings Bank or its
Subsidiaries.
3.04 "Change in Control" shall mean: (i) the sale of all, or a material
portion, of the assets of the Parent or Savings Bank; (ii) the merger or
recapitalization of the Parent or the Savings Bank
B-1
whereby the Parent or Savings Bank is not the surviving entity; (iii) a change
in control of the Parent or Savings Bank, as otherwise defined or determined by
the Office of Thrift Supervision ("OTS") or regulations promulgated by it; or
(iv) the acquisition, directly or indirectly, of the beneficial ownership
(within the meaning of that term as it is used in Section 13(d) of the 1934 Act
and the rules and regulations promulgated thereunder) of twenty-five percent
(25%) or more of the outstanding voting securities of the Parent or Savings Bank
by any person, trust, entity or group. This limitation shall not apply to the
purchase of shares of up to 25% of any class of securities of the Parent or
Savings Bank by a tax-qualified employee stock benefit plan which is exempt from
the approval requirements, set forth under 12 C.F.R. ss.574.3(c)(1)(vi) as now
in effect or as may hereafter be amended. The term "person" refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein. The decision of the Committee as
to whether a Change in Control has occurred shall be conclusive and binding.
3.05 "Committee" means the Board of Directors of the Parent or the
Restricted Stock Plan Committee appointed by the Board of Directors of the
Parent pursuant to Article IV hereof.
3.06 "Common Stock" means shares of the common stock of the Savings Bank or
any successor corporation or Parent thereto.
3.07 "Conversion" means the effective date of the stock charter of the
Savings Bank and simultaneous acquisition of all of the outstanding stock of the
Savings Bank by the Parent.
3.08 "Director" means a member of the Board of the Savings Bank.
3.09 "Director Emeritus" means a person serving as a director emeritus,
advisory director, consulting director, or other similar position as may be
appointed by the Board of Directors of the Savings Bank or the Parent from time
to time.
3.10 "Disability" means any physical or mental impairment which renders the
Participant incapable of continuing in the employment or service of the Savings
Bank or the Parent in his current capacity as determined by the Committee.
3.11 "Employee" means any person who is employed by the Savings Bank or a
Subsidiary.
3.12 "Effective Date" shall mean the date of stockholder approval of the
Plan by the Parent's stockholders.
3.13 "Parent" shall mean Harrodsburg First Financial Bancorp, Inc., the
parent corporation of the Savings Bank.
3.14 "Participant" means an Employee or Director who receives a Plan Share
Award under the Plan.
3.15 "Plan Shares" means shares of Common Stock held in the Trust which are
awarded or issuable to a Participant pursuant to the Plan.
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3.16 "Plan Share Award" or "Award" means a right granted to a Participant
under this Plan to earn or to receive Plan Shares.
3.17 "Plan Share Reserve" means the shares of Common Stock held by the
Trust pursuant to Sections 5.03 and 5.04.
3.18 "Savings Bank" means First Federal Savings Bank of Harrodsburg, and
any successor corporation thereto.
3.19 "Subsidiary" means those subsidiaries of the Savings Bank which, with
the consent of the Board, agree to participate in this Plan.
3.20 "Trustee" or "Trustee Committee" means that person(s) or entity
nominated by the Committee and approved by the Board pursuant to Sections 4.01
and 4.02 to hold legal title to the Plan assets for the purposes set forth
herein.
Article IV
ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered and interpreted
by the Board of Directors of the Parent or a Committee appointed by said Board,
which shall consist of not less than two non-employee members of the Board,
which shall have all of the powers allocated to it in this and other sections of
the Plan. All persons designated as members of the Committee shall be
"Non-Employee Directors" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended ("1934 Act"). The interpretation and
construction by the Committee of any provisions of the Plan or of any Plan Share
Award granted hereunder shall be final and binding. The Committee shall act by
vote or written consent of a majority of its members. Subject to the express
provisions and limitations of the Plan, the Committee may adopt such rules,
regulations and procedures as it deems appropriate for the conduct of its
affairs. The Committee shall report its actions and decisions with respect to
the Plan to the Board at appropriate times, but in no event less than one time
per calendar year. The Committee shall recommend to the Board one or more
persons or entity to act as Trustee in accordance with the provision of this
Plan and Trust and the terms of Article VIII hereof.
4.02 Role of the Board. The members of the Committee and the Trustee shall
be appointed or approved by, and will serve at the pleasure of the Board. The
Board may in its discretion from time to time remove members from, or add
members to, the Committee, and may remove, replace or add Trustees. The Board
shall have all of the powers allocated to it in this and other sections of the
Plan, may take any action under or with respect to the Plan which the Committee
is authorized to take, and may reverse or override any action taken or decision
made by the Committee under or with respect to the Plan, provided, however, that
the Board may not revoke any Plan Share Award already made except as provided in
Section 7.01(b) herein.
4.03 Limitation on Liability. No member of the Board, the Committee or the
Trustee shall be liable for any determination made in good faith with respect to
the Plan or any Plan Share Awards granted. If a member of the Board, Committee
or any Trustee is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by any reason of anything done or not done by
him in such capacity under
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or with respect to the Plan, the Parent and the Savings Bank shall indemnify
such member against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in the best interests of the
Parent, the Savings Bank and its Subsidiaries and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
Article V
CONTRIBUTIONS; PLAN SHARE RESERVE
5.01 Amount and Timing of Contributions. The Board of Directors of the
Savings Bank shall determine the amounts (or the method of computing the
amounts) to be contributed by the Savings Bank to the Trust established under
this Plan. Such amounts shall be paid to the Trustee at the time of
contribution. No contributions to the Trust by Participants shall be permitted
except with respect to amounts necessary to meet tax withholding obligations.
5.02 Initial Investment. Any funds held by the Trust prior to investment in
the Common Stock shall be invested by the Trustee in such interest-bearing
account or accounts at the Savings Bank as the Trustee shall determine to be
appropriate.
5.03 Investment of Trust Assets. Following approval of the Plan by
stockholders of the Parent and receipt of any other necessary regulatory
approvals, the Trust shall purchase Common Stock of the Parent in an amount
equal to up to 100% of the Trust's assets, after providing for any required
withholding as needed for tax purposes, provided, however, that the Trust shall
not purchase more than 85,000 shares of Common Stock, representing 4% of the
aggregate shares of Common Stock issued and outstanding of the Parent as of the
date of adoption of the Plan. The Trustee may purchase shares of Common Stock in
the open-market or, in the alternative, may purchase authorized but unissued
shares of the Common Stock from the Parent sufficient to fund the Plan Share
Reserve.
5.04 Effect of Allocations, Returns and Forfeitures Upon Plan Share
Reserves. Upon the allocation of Plan Share Awards under Sections 6.02 and 6.05,
or the decision of the Committee to return Plan Shares to the Parent, the Plan
Share Reserve shall be reduced by the number of Shares subject to the Awards so
allocated or returned. Any Shares subject to an Award which are not earned
because of forfeiture by the Participant pursuant to Section 7.01 shall be added
to the Plan Share Reserve.
Article VI
ELIGIBILITY; ALLOCATIONS
6.01 Eligibility. Employees are eligible to receive Plan Share Awards
within the sole discretion of the Committee. Directors who are not otherwise
Employees shall receive Plan Share Awards pursuant to Section 6.05.
6.02 Allocations. The Committee will determine which of the Employees will
be granted Plan Share Awards and the number of Shares covered by each Award,
provided, however, that in no event shall any Awards be made which will violate
the Charter or Bylaws of the Savings Bank or its Parent or Subsidiaries or any
applicable federal or state law or regulation. In the event Shares are forfeited
for any
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reason or additional Shares are purchased by the Trustee, the Committee may,
from time to time, determine which of the Employees will be granted Plan Share
Awards to be awarded from forfeited Shares. In selecting those Employees to whom
Plan Share Awards will be granted and the number of shares covered by such
Awards, the Committee shall consider the prior and anticipated future position,
duties and responsibilities of the Employees, the value of their prior and
anticipated future services to the Savings Bank and its Subsidiaries, and any
other factors the Committee may deem relevant. All actions by the Committee
shall be deemed final, except to the extent that such actions are revoked by the
Board. Notwithstanding anything herein to the contrary, in no event shall any
Employee receive Plan Share Awards in excess of 25% of the aggregate Plan Shares
authorized under the Plan.
6.03 Form of Allocation. As promptly as practicable after a determination
is made pursuant to Section 6.02 or Section 6.05 that a Plan Share Award is to
be made, the Committee shall notify the Participant in writing of the grant of
the Award, the number of Plan Shares covered by the Award, and the terms upon
which the Plan Shares subject to the award may be earned. The date on which the
Committee makes its award determination or the date the Committee so notifies
the Participant shall be considered the date of grant of the Plan Share Awards
as determined by the Committee. The Committee shall maintain records as to all
grants of Plan Share Awards under the Plan.
6.04 Allocations Not Required. Notwithstanding anything to the contrary at
Sections 6.01, 6.02 or 6.05, no Employee shall have any right or entitlement to
receive a Plan Share Award hereunder, such Awards being at the sole discretion
of the Committee and the Board, nor shall the Employees as a group have such a
right. The Committee may, with the approval of the Board (or, if so directed by
the Board) return all Common Stock in the Plan Share Reserve to the Savings Bank
at any time, and cease issuing Plan Share Awards.
6.05 Awards to Directors. Notwithstanding anything herein to the contrary,
the Board may grant Plan Shares to any Director of the Savings Bank that is not
otherwise an Employee. Such Plan Share Award shall be earned and non-forfeitable
at the rate of one-fifth as of the one-year anniversary of the Effective Date
and an additional one-fifth following each of the next four successive years
during such periods of service as a Director or Director Emeritus. Further, such
Plan Share Award shall be immediately 100% earned and non-forfeitable in the
event of the death or Disability of such Director or Director Emeritus, or upon
a Change in Control of the Savings Bank or Parent. The aggregate of Plan Share
Awards granted to non-employee Directors of the Savings Bank shall not exceed
30% of the total Plan Share Reserve in the aggregate under the Plan or 5% of the
total Plan Share Reserve to any individual non-employee Director.
Article VII
EARNINGS AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earnings Plan Shares; Forfeitures.
(a) General Rules. Unless the Committee shall specifically state to the
contrary at the time a Plan Share Award is granted, Plan Shares subject to an
Award shall be earned and non-forfeitable by a Participant at the rate of
one-fifth of such Award following one year after the granting of such Award, and
an additional one-fifth following each of the next four successive years;
provided that such Participant remains an Employee, Director, or Director
Emeritus during such period.
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(b) Revocation for Misconduct. Notwithstanding anything herein to the
contrary, the Board may, by resolution, immediately revoke, rescind and
terminate any Plan Share Award, or portion thereof, previously awarded under
this Plan, to the extent Plan Shares have not been delivered thereunder to the
Participant, whether or not yet earned, in the case of a Participant who is
discharged from the employ or service of the Parent, Savings Bank or a
Subsidiary for Cause, or who is discovered after termination of employment or
service to have engaged in conduct that would have justified termination for
Cause. A determination of Cause shall be made by the Board within its sole
discretion.
(c) Exception for Terminations Due to Death or Disability. Notwithstanding
the general rule contained in Section 7.01(a) above, all Plan Shares subject to
a Plan Share Award held by a Participant whose employment or service with the
Parent, Savings Bank or a Subsidiary terminates due to death or Disability,
shall be deemed earned and nonforfeitable as of the Participant's last date of
employment or service with the Parent, Savings Bank or Subsidiary and shall be
distributed as soon as practicable thereafter.
(d) Exception for Termination after a Change in Control. Notwithstanding
the general rule contained in Section 7.01 above, all Plan Shares subject to a
Plan Share Award held by a Participant shall be deemed to be immediately 100%
earned and non-forfeitable in the event of a Change in Control of the Parent or
Savings Bank and shall be distributed as soon as practicable thereafter.
7.02 Accrual and Payment of Dividends. A holder of a Plan Share Award,
whether or not earned, shall also be entitled to receive an amount equal to any
cash dividends declared and paid with respect to shares of Common Stock
represented by such Plan Share Award between the date the relevant Plan Share
Award was granted to such Participant and the date the Plan Shares are
distributed. Such cash dividend amounts shall be paid by the Trust and
distributed at the time of the payment of dividends on the Common Stock
represented by a Plan Share Award.
7.03 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Except as provided in
Subsections (d) and (e) below, Plan Shares shall be distributed to the
Participant or his Beneficiary, as the case may be, as soon as practicable after
they have been earned. No fractional shares shall be distributed.
Notwithstanding anything herein to the contrary, at the discretion of the
Committee, Plan Shares may be distributed prior to such Shares being 100%
earned, provided that such Plan Shares shall contain a restrictive legend
detailing the applicable limitations of such shares with respect to transfer and
forfeiture.
(b) Form of Distribution. All Plan Shares, together with any shares
representing stock dividends, shall be distributed in the form of Common Stock.
One share of Common Stock shall be given for each Plan Share earned. Payments
representing cash dividends (and earnings thereon) shall be made in cash.
Notwithstanding anything within the Plan to the contrary, upon a Change in
Control whereby substantially all of the Common Stock of the Company shall be
acquired for cash, all Plan Shares associated with Plan Share Awards, together
with any shares representing stock dividends associated with Plan Share Awards,
shall be, at the sole discretion of the Committee, distributed as of the
effective date of such Change in Control, or as soon as administratively
feasible thereafter, in the form of cash equal to the consideration received in
exchange for such Common Stock represented by such Plan Shares.
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(c) Withholding. The Trustee may withhold from any payment or distribution
made under this Plan sufficient amounts of cash or shares of Common Stock
necessary to cover any applicable withholding and employment taxes, and if the
amount of such payment or distribution is not sufficient, the Trustee may
require the Participant or Beneficiary to pay to the Trustee the amount required
to be withheld in taxes as a condition of delivering the Plan Shares. The
Trustee shall pay over to the Parent, Savings Bank or Subsidiary which employs
or employed such Participant any such amount withheld from or paid by the
Participant or Beneficiary.
(d) Timing: Exception for 10% Shareholders. Notwithstanding Subsection (a)
above, no Plan Shares may be distributed prior to the date which is five years
from the effective date of the Conversion to the extent the Participant or
Beneficiary, as the case may be, would after receipt of such Shares own in
excess of ten percent (10%) of the issued and outstanding shares of Common Stock
held by parties other than Parent, unless such action is approved in advance by
a majority vote of disinterested directors of the Board of the Parent. Any Plan
Shares remaining undistributed solely by reason of the operation of this
Subsection (d) shall be distributed to the Participant or his Beneficiary on the
date which is five years from the effective date of the Conversion.
(e) Regulatory Exceptions. No Plan Shares shall be distributed, however,
unless and until all of the requirements of all applicable law and regulation
shall have been fully complied with, including the receipt of approval of the
Plan by the stockholders of the Parent by such vote, if any, as may be required
by applicable law and regulations as determined by the Board.
7.04 Voting of Plan Shares. After a Plan Share Award has become earned and
non- forfeitable, the Participant shall be entitled to direct the Trustee as to
the voting of the Plan Shares which are associated with the Plan Share Award and
which have not yet been distributed pursuant to Section 7.03, subject to rules
and procedures adopted by the Committee for this purpose. All shares of Common
Stock held by the Trust as to which Participants are not entitled to direct, or
have not directed, the voting of such Shares, shall be voted by the Trustee as
directed by the Committee.
Article VIII
TRUST
8.01 Trust. The Trustee shall receive, hold, administer, invest and make
distributions and disbursements from the Trust in accordance with the provisions
of the Plan and Trust and the applicable directions, rules, regulations,
procedures and policies established by the Committee pursuant to the Plan.
8.02 Management of Trust. It is the intention of this Plan and Trust that
the Trustee shall have complete authority and discretion with respect to the
management, control and investment of the Trust, and that the Trustee shall
invest all assets of the Trust, except those attributable to cash dividends paid
with respect to Plan Shares not held in the Plan Share Reserve, in Common Stock
to the fullest extent practicable, except to the extent that the Trustee
determines that the holding of monies in cash or cash equivalents is necessary
to meet the obligations of the Trust. In performing their duties, the Trustees
shall have the power to do all things and execute such instruments as may be
deemed necessary or proper, including the following powers:
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(a) To invest up to one hundred percent (100%) of all Trust assets in the
Common Stock without regard to any law now or hereafter in force limiting
investments for Trustees or other fiduciaries. The investment authorized
herein may constitute the only investment of the Trust, and in making such
investment, the Trustee is authorized to purchase Common Stock from the
Parent or from any other source, and such Common Stock so purchased may be
outstanding or newly issued shares.
(b) To invest any Trust assets not otherwise invested in accordance with
(a) above in such deposit accounts, and certificates of deposit (including
those issued by the Savings Bank), obligations of the United States
government or its agencies or such other investments as shall be
considered the equivalent of cash.
(c) To sell, exchange or otherwise dispose of any property at any time
held or acquired by the Trust.
(d) To cause stocks, bonds or other securities to be registered in the
name of a nominee, without the addition of words indicating that such
security is an asset of the Trust (but accurate records shall be
maintained showing that such security is an asset of the Trust).
(e) To hold cash without interest in such amounts as may be in the opinion
of the Trustee reasonable for the proper operation of the Plan and Trust.
(f) To employ brokers, agents, custodians, consultants and accountants.
(g) To hire counsel to render advice with respect to their rights, duties
and obligations hereunder, and such other legal services or representation
as they may deem desirable.
(h) To hold funds and securities representing the amounts to be
distributed to a Participant or his Beneficiary as a consequence of a
dispute as to the disposition thereof, whether in a segregated account or
held in common with other assets.
Notwithstanding anything herein contained to the contrary, the Trustee
shall not be required to make any inventory, appraisal or settlement or report
to any court, or to secure any order of a court for the exercise of any power
herein contained, or to maintain bond.
8.03 Records and Accounts. The Trustee shall maintain accurate and
detailed records and accounts of all transactions of the Trust, which shall be
available at all reasonable times for inspection by any legally entitled person
or entity to the extent required by applicable law, or any other person
determined by the Committee.
8.04 Earnings. All earnings, gains and losses with respect to Trust assets
shall be allocated in accordance with a reasonable procedure adopted by the
Committee, to bookkeeping accounts for Participants or to the general account of
the Trust, depending on the nature and allocation of the assets generating such
earnings, gains and losses. In particular, any earnings on cash dividends
received with respect to shares of Common Stock shall be allocated to accounts
for Participants, except to the extent that such cash dividends are distributed
to Participants, if such shares are the subject of outstanding Plan Share
Awards, or, otherwise to the Plan Share Reserve.
B-8
8.05 Expenses. All costs and expenses incurred in the operation and
administration of this Plan, including those incurred by the Trustee, shall be
paid by the Savings Bank.
8.06 Indemnification. Subject to the requirements and limitations of
applicable laws and regulations, the Parent and the Savings Bank shall
indemnify, defend and hold the Trustee harmless against all claims, expenses and
liabilities arising out of or related to the exercise of the Trustee's powers
and the discharge of their duties hereunder, unless the same shall be due to
their gross negligence or willful misconduct.
Article IX
MISCELLANEOUS
9.01 Adjustments for Capital Changes. The aggregate number of Plan Shares
available for issuance pursuant to the Plan Share Awards and the number of
Shares to which any Plan Share Award relates shall be proportionately adjusted
for any increase or decrease in the total number of outstanding shares of Common
Stock issued subsequent to the effective date of the Plan resulting from any
split, subdivision or consolidation of the Common Stock or other capital
adjustment, change or exchange of the Common Stock, or other increase or
decrease in the number or kind of shares effected without receipt or payment of
consideration by the Parent.
9.02 Amendment and Termination of the Plan. The Board may, by resolution,
at any time, amend or terminate the Plan. The power to amend or terminate the
Plan shall include the power to direct the Trustee to return to the Parent all
or any part of the assets of the Trust, including shares of Common Stock held in
the Plan Share Reserve, as well as shares of Common Stock and other assets
subject to Plan Share Awards which have not yet been earned by the Participants
to whom they have been awarded. However, the termination of the Trust shall not
affect a Participant's right to earn Plan Share Awards and to the distribution
of Common Stock relating thereto, including earnings thereon, in accordance with
the terms of this Plan and the grant by the Committee or the Board.
Notwithstanding the foregoing, no action of the Board may increase (other than
as provided in Section 9.01 hereof) the maximum number of Plan Shares permitted
to be awarded under the Plan as specified at Section 5.03, materially increase
the benefits accruing to Participants under the Plan or materially modify the
requirements for eligibility for participation in the Plan unless such action of
the Board shall be subject to ratification by the stockholders of the Parent.
9.03 Nontransferable. Plan Share Awards and rights to Plan Shares shall
not be transferable by a Participant, and during the lifetime of the
Participant, Plan Shares may only be earned by and paid to the Participant who
was notified in writing of the Award by the Committee pursuant to Section 6.03.
No Participant or Beneficiary shall have any right in or claim to any assets of
the Plan or Trust, nor shall the Parent, Savings Bank, or any Subsidiary be
subject to any claim for benefits hereunder.
9.04 No Employment Rights. Neither the Plan nor any grant of a Plan Share
Award or Plan Shares hereunder nor any action taken by the Trustee, the
Committee or the Board in connection with the Plan shall create any right,
either express or implied, on the part of any Participant to continue in the
employ or service of the Parent, Savings Bank, or a Subsidiary thereof.
B-9
9.05 Voting and Dividend Rights. No Participant shall have any voting or
dividend rights of a stockholder with respect to any Plan Shares covered by a
Plan Share Award, except as expressly provided in Sections 7.02 and 7.04 above,
prior to the time said Plan Shares are actually distributed to such Participant.
9.06 Governing Law. The Plan and Trust shall be governed by and construed
under the laws of the State of Kentucky, except to the extent that Federal Law
shall be deemed applicable.
9.07 Effective Date. The Plan shall be effective as of the date of approval
of the Plan by stockholders of the Parent.
9.08 Term of Plan. This Plan shall remain in effect until the earlier of
(i) termination by the Board, (ii) the distribution of all assets of the Trust,
or (iii) 21 years from the Effective Date. Termination of the Plan shall not
effect any Plan Share Awards previously granted, and such Plan Share Awards
shall remain valid and in effect until they have been earned and paid, or by
their terms expire or are forfeited.
9.09 Tax Status of Trust. It is intended that the Trust established hereby
shall be treated as a grantor trust of the Savings Bank under the provisions of
Section 671 et seq. of the Internal Revenue Code of 1986, as amended, as the
same may be amended from time to time.
B-10
HARRODSBURG FIRST FINANCIAL BANCORP, INC.
104 SOUTH CHILES STREET
HARRODSBURG, KENTUCKY 40330-1620
(606) 734-5452
ANNUAL MEETING OF STOCKHOLDERS
January 27, 1997
The undersigned hereby appoints the Board of Directors of Harrodsburg
First Financial Bancorp, Inc. (the "Company"), or its designee, with full powers
of substitution, to act as attorneys and proxies for the undersigned, to vote
all shares of common stock of the Company which the undersigned is entitled to
vote at the Annual Meeting of Stockholders (the "Meeting"), to be held at the
office of First Federal Savings Bank of Harrodsburg, 104 South Chiles Street,
Harrodsburg, Kentucky, on January 27, 1997, at 2:00 p.m., local time, and at any
and all adjournments thereof, in the following manner:
FOR WITHHELD
1. The election as director of all nominees
listed below: |_| |_|
Jack D. Hood
Jack L. Coleman, Sr.
INSTRUCTIONS: To withhold your vote for any individual nominee, insert the
nominee's name on the line provided below.
FOR AGAINST ABSTAIN
2. The approval of the
Harrodsburg First Financial Bancorp, Inc.
1996 Stock Option Plan. |_| |_| |_|
3. The approval of the
First Federal Savings Bank of Harrodsburg
Restricted Stock Plan and Trust Agreement. |_| |_| |_|
4. The ratification of the appointment of Miller,
Mayer, Sullivan & Stevens LLP as
independent auditors of Harrodsburg First
Financial Bancorp, Inc., for
the fiscal year ending September 30, 1997. |_| |_| |_|
In their discretion, such attorneys and proxies are authorized to vote upon such
other business as may properly come before the Meeting or any adjournments
thereof.
The Board of Directors recommends a vote "FOR" all of the above listed
propositions.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elects to vote at the Meeting, or at
any adjournments thereof, and after notification to the Secretary of the Company
at the Meeting of the stockholder's decision to terminate this Proxy, the power
of said attorneys and proxies shall be deemed terminated and of no further force
and effect. The undersigned may also revoke this Proxy by filing a subsequently
dated Proxy or by written notification to the Secretary of the Company of his or
her decision to terminate this Proxy.
The undersigned acknowledges receipt from the Company prior to the
execution of this Proxy of a Notice of Annual Meeting of Stockholders, an Annual
Report to Stockholders and a Proxy Statement dated December 18, 1996.
Dated: , 199
----------------------------- ------
_____________________________ _____________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
_____________________________ _____________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on this Proxy. When signing as
attorney, executor, administrator, trustee, or guardian, please give your full
title. If shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
Harrodsburg First Financial Bancorp, Inc.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the filing
fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed: