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EXHIBIT 10.1
COLUMBIA FINANCIAL OF KENTUCKY, INC.,
1998 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE. The purpose of the Columbia Financial of Kentucky, Inc.,
Stock Option and Incentive Plan (this "Plan") is to promote and advance the
interests of Columbia Financial of Kentucky, Inc. (the "Company") and its
shareholders by enabling the Company to attract, retain and reward directors,
managerial and other key employees of the Company and any Subsidiary
(hereinafter defined), and to strengthen the mutuality of interests between
such directors and employees and the Company's shareholders by providing such
persons with a proprietary interest in pursuing the long-term growth,
profitability and financial success of the Company.
2. DEFINITIONS. For purposes of this Plan, the following terms shall have
the meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended, or
any successor thereto, together with rules, regulations and
interpretations promulgated thereunder.
(c) "Committee" means the Committee of the Board constituted as
provided in Section 3 of this Plan.
(d) "Common Shares" means the common shares, without par value, of
the Company or any security of the Company issued in substitution, in
exchange or in lieu thereof.
(e) "Company" means Columbia Financial of Kentucky, Inc., an Ohio
corporation, or any successor corporation.
(f) "Conversion" means the conversion of Columbia Federal Savings
Bank from a federally-chartered mutual savings bank to a permanent
capital stock savings bank chartered under federal law.
(g) "Employment" means regular employment with the Company or a
Subsidiary and does not include service as a director only.
(h) "ERISA" means the Employee Retirement Income Security Act, as
amended, or any successor thereto, together with rules, regulations and
interpretations promulgated thereunder.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
(j) "Fair Market Value" shall be determined as follows:
(i) If the Common Shares are traded on a national securities
exchange at the time of grant of the Stock Option, then the Fair
Market Value shall be the average of the highest and the lowest
selling price on such exchange on the date such Stock Option is
granted or, if there were no sales on such date, then on the next
prior business day on which there was a sale.
(ii) If the Common Shares are quoted on The Nasdaq Stock
Market at the time of the grant of the Stock Option, then the Fair
Market Value shall be the mean between the closing high bid and
low asked quotation with respect to a Common Share on such date on
The Nasdaq Stock Market.
(iii) If the Common Shares are not traded on a national
securities exchange or quoted on The Nasdaq Stock Market, then the
Fair Market Value shall be as determined by the Committee.
(k) "Incentive Stock Option" means any Stock Option granted pursuant
to the provisions of Section 6 of this Plan that is intended to be and is
specifically designated as an "incentive stock option" within the meaning
of Section 422 of the Code.
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(l) "Non-Qualified Stock Option" means any Stock Option granted
pursuant to the provisions of Section 6 of this Plan that is not an
Incentive Stock Option.
(m) "OTS" means the Office of Thrift Supervision, Department of the
Treasury.
(n) "Participant" means an employee or director of the Company or a
Subsidiary who is granted an Award under this Plan. Notwithstanding the
foregoing, for the purposes of the granting of any Incentive Stock Option
under this Plan, the term "Participant" shall include only employees of
the Company or a Subsidiary.
(o) "Plan" means the Columbia Financial of Kentucky, Inc., 1998
Stock Option and Incentive Plan, as set forth herein and as it may be
hereafter amended from time to time.
(p) "Stock Option" means an award to purchase Common Shares granted
pursuant to the provisions of Section 6 of this Plan.
(q) "Subsidiary" means any corporation or entity in which the
Company directly or indirectly controls 50% or more of the total voting
power of all classes of its stock having voting power and includes,
without limitation, Columbia Federal Savings Bank.
(r) "Terminated for Cause" means any removal of a director or
discharge of an employee for the personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of a
material provision of any law, rule or regulation (other than traffic
violations or similar offenses) or a material violation of a final
cease-and-desist order or for any other action of a director or employee
which results in a substantial financial loss to the Company or a
Subsidiary.
3. ADMINISTRATION.
(a) This Plan shall be administered by the Committee to be comprised
of not fewer than three of the members of the Board. The members of the
Committee shall be appointed from time to time by the Board. Members of
the Committee shall serve at the pleasure of the Board, and the Board may
from time to time remove members from, or add members to, the Committee.
A majority of the members of the Committee shall constitute a quorum for
the transaction of business. An action approved in writing by a majority
of the members of the Committee then serving shall be fully as effective
as if the action had been taken by unanimous vote at a meeting duly
called and held.
(b) The Committee is authorized to construe and interpret this Plan
and to make all other determinations necessary or advisable for the
administration of this Plan. The Committee may designate persons other
than members of the Committee to carry out its responsibilities under
such conditions and limitations as it may prescribe. Any determination,
decision or action of the Committee in connection with the construction,
interpretation, administration or application of this Plan shall be
final, conclusive and binding upon all persons participating in this Plan
and any person validly claiming under or through persons participating in
this Plan. The Company shall effect the granting of Stock Options under
this Plan, in accordance with the determinations made by the Committee,
by execution of instruments in writing in such form as approved by the
Committee.
4. DURATION OF, AND COMMON SHARES SUBJECT TO, THIS PLAN.
(a) Term. This Plan shall terminate on the date which is ten (10)
years from the effective date of the Plan, except with respect to Stock
Options then outstanding. Notwithstanding the foregoing, no Incentive
Stock Option may be granted under this Plan after the date which is ten
(10) years from the date on which this Plan is adopted by the Board or
the date on which this Plan is approved by the shareholders of the
Company, whichever is earlier.
(b) Common Shares Subject to Plan. The maximum number of Common
Shares in respect of which Stock Options may be granted under this Plan,
subject to adjustment as provided in Section 9 of this Plan, shall be ten
percent of the total Common Shares sold in connection with the conversion
of Columbia Federal Savings Bank from mutual to stock form.
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For the purpose of computing the total number of Common Shares available
for Stock Options under this Plan, there shall be counted against the foregoing
limitations the number of Common Shares subject to issuance upon exercise or
settlement of Stock Options as of the dates on which such Stock Options are
granted. If any Stock Options are forfeited, terminated or exchanged for other
Stock Options, or expire unexercised, the Common Shares which were theretofore
subject to such Stock Options shall again be available for Stock Options under
this Plan to the extent of such forfeiture, termination or expiration of such
Stock Options, to the extent permissible under Rule 16b-3 promulgated under the
Exchange Act, or any successor rule or regulation thereto as in effect from
time to time.
Common Shares which may be issued under this Plan may be either authorized
and unissued shares or issued shares which have been reacquired by the Company.
No fractional shares shall be issued under this Plan.
5. ELIGIBILITY AND GRANTS. Persons eligible for Stock Options under this
Plan shall consist of directors and managerial and other key employees of the
Company or a Subsidiary who hold positions with significant responsibilities or
whose performance or potential contribution, in the judgment of the Committee,
will benefit the future success of the Company or a Subsidiary. In selecting
the directors and employees to whom Stock Options will be awarded and the
number of shares subject to such Stock Options, the Committee shall consider
the position, duties and responsibilities of the eligible directors and
employees, the value of their services to the Company and the Subsidiaries and
any other factors the Committee may deem relevant.
6. STOCK OPTIONS. Stock Options granted under this Plan may be in the
form of Incentive Stock Options or Non-Qualified Stock Options, and such Stock
Options shall be subject to the following terms and conditions and in such form
as the Committee may from time to time approve and shall contain such
additional terms and conditions as the Committee shall deem desirable, not
inconsistent with the express provisions of the Plan:
(a) Grant. Stock Options may be granted under this Plan on terms
and conditions not inconsistent with the provisions of this Plan;
provided, however, that no more than 25% of the shares subject to Stock
Options may be awarded to any individual who is an employee of the
Company or a Subsidiary, no more than 5% of such shares may be awarded to
any director who is not an employee of the Company or a Subsidiary, and
no more than 30% of such shares may be awarded to non-employee directors
in the aggregate.
(b) Stock Option Price. The option exercise price per Common Share
purchasable under a Stock Option granted to a non-employee director shall
be the Fair Market Value of the Common Shares on the date of grant. The
option exercise price for Common Shares purchasable under a Stock Option
granted to an employee shall be determined by the Committee at the time
of grant; provided, however, that in no event shall the exercise price of
a Stock Option be less than 100% of the Fair Market Value of the Common
Shares on the date of the grant of such Stock Option. Notwithstanding
the foregoing, in the case of a Participant who owns Common Shares
representing more than 10% of the outstanding Common Shares at the time
an Incentive Stock Option is granted, the option exercise price shall in
no event be less than 110% of the Fair Market Value of the Common Shares
at the time the Incentive Stock Option is granted.
(c) Stock Option Terms. Subject to the right of the Company to
provide for earlier termination in the event of any merger, acquisition
or consolidation involving the Company, the term of each Stock Option
shall be fixed by the Committee; provided, however, that the term of
Incentive Stock Options will not exceed ten years after the date the
Incentive Stock Option is granted; provided further, however, that in the
case of a Participant who owns a number of Common Shares representing
more than 10% of the Common Shares outstanding at the time the Incentive
Stock Option is granted, the term of the Incentive Stock Option shall not
exceed five years.
(d) Exercisability. Except as set forth in Section 6(f) and Section
7 of this Plan, Stock Options awarded under this Plan shall become
exercisable at the rate of one-fifth per year commencing on the date that
is one year after the date of the grant of the Stock Option and shall be
subject to such other terms and conditions as shall be determined by the
Committee at the date of grant.
(e) Method of Exercise. A Stock Option may be exercised, in whole
or in part, by giving written notice of exercise to the Company
specifying the number of Common Shares to be purchased. Such notice
shall be accompanied by payment in full of the purchase price in cash or,
if acceptable to the Committee in its sole discretion, in Common Shares
already owned by the Participant, or by surrendering outstanding Stock
Options. The Committee may also permit Participants, either on a
selective or aggregate basis, to simultaneously exercise Options
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and sell Common Shares thereby acquired, pursuant to a brokerage or
similar arrangement, approved in advance by the Committee, and use the
proceeds from such sale as payment of the purchase price of such shares.
(f) Special Rule for Incentive Stock Options. With respect to
Incentive Stock Options granted under this Plan, to the extent the
aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of the number of shares with respect to which
Incentive Stock Options are exercisable under all plans of the Company or
a Subsidiary for the first time by a Participant during any calendar year
exceeds $100,000, or such other limit as may be required by the Code,
such Stock Options shall be Non-Qualified Stock Options to the extent of
such excess.
7. TERMINATION OF EMPLOYMENT OR DIRECTORSHIP.
(a) Except in the event of the death or disability of a Participant,
upon the resignation, removal or retirement from the board of directors
of any Participant who is a director of the Company or a Subsidiary or
upon the termination of Employment of a Participant who is not a director
of the Company or a Subsidiary, any Stock Option which has not yet become
exercisable shall thereupon terminate and be of no further force or
effect, and, subject to extension by the Committee, any Stock Option
which has become exercisable shall terminate if it is not exercised
within 12 months of such resignation, removal or retirement.
(b) Unless the Committee shall specifically state otherwise at the
time an Option is granted, all Options granted under this Plan shall
become exercisable in full on the date of termination of a Participant's
employment or directorship with the Company or a Subsidiary because of
his death or disability, and, subject to extension by the Committee, all
Options shall terminate if not exercised within 12 months of the
Participant's death or disability.
(c) In the event the Employment or the directorship of a Participant
is Terminated for Cause (hereinafter defined), any Option which has not
been exercised shall terminate as of the date of such termination for
cause.
8. NON-TRANSFERABILITY OF STOCK OPTIONS. No Stock Option under this Plan,
and no rights or interests therein, shall be assignable or transferable by a
Participant except by will or the laws of descent and distribution. During the
lifetime of a Participant, Stock Options are exercisable only by, and payments
in settlement of Stock Options will be payable only to, the Participant or his
or her legal representative.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
(a) The existence of this Plan and the Stock Options granted
hereunder shall not affect or restrict in any way the right or power of
the Board or the shareholders of the Company to make or authorize the
following: any adjustment, recapitalization, reorganization or other
change in the Company's capital structure or its business; any merger,
acquisition or consolidation of the Company; any issuance of bonds,
debentures, preferred or prior preference stocks ahead of or affecting
the Company's capital stock or the rights thereof; the dissolution or
liquidation of the Company or any sale or transfer of all or any part of
its assets or business; or any other corporate act or proceeding,
including any merger or acquisition which would result in the exchange of
cash, stock of another company or options to purchase the stock of
another company for any Stock Option outstanding at the time of such
corporate transaction or which would involve the termination of all Stock
Options outstanding at the time of such corporate transaction.
(b) In the event of any change in capitalization affecting the
Common Shares of the Company, such as a stock dividend, stock split,
recapitalization, merger, consolidation, spin-off, split-up, combination or
exchange of shares or other form of reorganization, or any other change
affecting the Common Shares, such proportionate adjustments, if any, as the
Board in its discretion may deem appropriate to reflect such change shall
be made with respect to the aggregate number of Common Shares for which
Stock Options in respect thereof may be granted under this Plan, the
maximum number of Common Shares which may be sold or awarded to any
Participant, the number of Common Shares covered by each outstanding Stock
Option, and the exercise price per share in respect of outstanding Stock
Options.
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10. AMENDMENT AND TERMINATION OF THIS PLAN. Without further approval of
the shareholders, the Board may at any time terminate this Plan, or may amend
it from time to time in such respects as the Board may deem advisable, except
that the Board may not, without approval of the shareholders, make any
amendment which would (a) increase the aggregate number of Common Shares which
may be issued under this Plan (except for adjustments pursuant to Section 9 of
this Plan), (b) materially modify the requirements as to eligibility for
participation in this Plan, or (c) materially increase the benefits accruing to
Participants under this Plan. The above notwithstanding, the Board may amend
this Plan to take into account changes in applicable securities, federal income
tax and other applicable laws.
11. MODIFICATION OF OPTIONS. The Board may authorize the Committee to
direct the execution of an instrument providing for the modification of any
outstanding Stock Option which the Board believes to be in the best interests
of the Company; provided, however, that no such modification, extension or
renewal shall confer on the holder of such Stock Option any right or benefit
which could not be conferred on him by the grant of a new Stock Option at such
time and shall not materially decrease the Participant's benefits under the
Stock Option without the consent of the holder of the Stock Option, except as
otherwise permitted under this Plan.
12. MISCELLANEOUS.
(a) Tax Withholding. The Company shall have the right to deduct
from any settlement, including the delivery or vesting of Common Shares,
made under this Plan any federal, state or local taxes of any kind
required by law to be withheld with respect to such payments or to take
such other action as may be necessary in the opinion of the Company to
satisfy all obligations for the payment of such taxes. If Common Shares
are used to satisfy tax withholding, such shares shall be valued based on
the Fair Market Value when the tax withholding is required to be made.
(b) No Right to Employment. Neither the adoption of this Plan nor
the granting of any Stock Option shall confer upon any employee of the
Company or a Subsidiary any right to continued Employment with the
Company or a Subsidiary, as the case may be, nor shall it interfere in
any way with the right of the Company or a Subsidiary to terminate the
Employment of any of its employees at any time, with or without cause.
(c) Annulment of Stock Options. The grant of any Stock Option
payable in Common Shares is provisional until the Participant becomes
entitled to the certificate in settlement thereof. In the event the
Employment or the directorship of a Participant is Terminated for Cause,
any Stock Option which is provisional shall be annulled as of the date of
such termination.
(d) Other Company Benefit and Compensation Programs. Payments and
other benefits received by a Participant under a Stock Option made
pursuant to this Plan shall not be deemed a part of a Participant's
regular, recurring compensation for purposes of the termination,
indemnity or severance pay law of any country and shall not be included
in, nor have any effect on, the determination of benefits under any other
employee benefit plan or similar arrangement provided by the Company or a
Subsidiary unless expressly so provided by such other plan or
arrangement, or except where the Committee expressly determines that a
Stock Option or portion of a Stock Option should be included to
accurately reflect competitive compensation practices or to recognize
that a Stock Option has been made in lieu of a portion of competitive
annual cash compensation. Stock Options under this Plan may be made in
combination with or in tandem with, or as alternatives to, grants, stock
options or payments under any other plans of the Company or a Subsidiary.
This Plan notwithstanding, the Company or any Subsidiary may adopt such
other compensation programs and additional compensation arrangements as
it deems necessary to attract, retain and reward directors and employees
for their service with the Company and its Subsidiaries.
(e) Securities Law Restrictions. No Common Shares shall be issued
under this Plan unless counsel for the Company shall be satisfied that
such issuance will be in compliance with applicable federal and state
securities laws. Certificates for Common Shares delivered under this
Plan may be subject to such stop-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations and
other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Common Shares are then listed, and any applicable
federal or state securities law. The Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference
to such restrictions.
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(f) Stock Option Agreement. Each Participant receiving a Stock
Option under this Plan shall enter into an agreement with the Company in
a form specified by the Committee agreeing to the terms and conditions of
the Stock Option and such related matters as the Committee shall, in its
sole discretion, determine.
(g) Cost of Plan. The costs and expenses of administering this Plan
shall be borne by the Company.
(h) Governing Law. This Plan and all actions taken hereunder shall
be governed by and construed in accordance with the laws of the
Commonwealth of Kentucky, except to the extent that federal law shall be
deemed applicable.
(i) Effective Date. This Plan shall be effective upon the later of
adoption by the Board and approval by the Company's shareholders. This
Plan shall be submitted to the shareholders of the Company for approval
at an annual or special meeting of shareholders to be held no sooner than
six months after the effective date of the Conversion.