-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rh1L8SfI68a1C3/QHJYPsM3G4nTYxOMeiasGWSy6AgB4Bn98uZlYRHKkYsH0tfwN l93tMDbXmd1Ipxsg5/uavQ== 0000950144-00-000834.txt : 20000203 0000950144-00-000834.hdr.sgml : 20000203 ACCESSION NUMBER: 0000950144-00-000834 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20000202 EFFECTIVENESS DATE: 20000202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: M&F BANCORP INC /NC/ CENTRAL INDEX KEY: 0001094738 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 561980549 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-95973 FILM NUMBER: 520154 BUSINESS ADDRESS: STREET 1: 2634 CHAPTEL HILL BLVD STREET 2: PO BOX 19322 CITY: DURHAM STATE: NC ZIP: 27702-3221 BUSINESS PHONE: 9196831521 MAIL ADDRESS: STREET 1: 2634 CHAPTEL HILL BLVD STREET 2: PO BOX 19322 CITY: DURHAM STATE: NC ZIP: 27701-3221 S-8 1 M & F BANCORP, INC. 1 As filed with the Securities and Exchange Commission on February 1, 2000. Registration No. _______ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------- FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------------------- M&F BANCORP, INC. (Exact name of registrant as specified in its charter) NORTH CAROLINA 56-1980549 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification number) 2634 CHAPEL HILL BLVD., DURHAM, NORTH CAROLINA 27707 (Address, including zip code and telephone number, including area code of registrant's principal executive offices) M&F BANCORP, INC. AND MECHANICS AND FARMERS BANK INCENTIVE STOCK OPTION PLAN OF 1999 (Full title of the plan) JULIA W. TAYLOR CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER M&F BANCORP, INC. 2634 CHAPEL HILL BLVD. DURHAM, NORTH CAROLINA 27707 (919) 683-1521 Copies of communications to: JEFFREY C. GERRISH, ESQ. GERRISH & MCCREARY, P.C. 700 COLONIAL ROAD - SUITE 200 MEMPHIS, TENNESSEE 38117 (901) 767-0900 (Name, address, including zip code and telephone number, including area code, of agent for service) CALCULATION OF REGISTRATION FEE
Proposed Maximum Title of Securities to be Amount to be Maximum Offering Price Aggregate Offering Amount of Registered Registered(1) Per Share(2) Price Registration Fee - -------------------------------------------------------------------------------------------------------------------- Common Stock, 85,500 shares $19.09 $1,632,195 $430.90 no par value - --------------------------------------------------------------------------------------------------------------------
- ----------------------- (1) The Registration Statement also includes an indeterminable number of additional shares that may become issuable as a result of terminated, expired or surrendered options for Common Stock, or pursuant to the antidilution provisions of the plan. This Registration Statement covers, pursuant to Rule 416(a), any increases in the number of shares offered under the Plan to prevent dilution resulting from stock splits, stock dividends or similar transactions. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) and (h), based upon the book value of the Company on December 31, 1999. 2 PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS The documents containing the information required by PART I of this Registration Statement on Form S-8 (the "Registration Statement") will be sent or given to Plan participants as specified by Rule 428(b)(1) under the Securities Act of 1933, as amended. Such documents and the documents incorporated by reference herein pursuant to ITEM 3 of PART II hereof, taken together, constitute a prospectus that meets the requirements of Section 10(a) of the Securities Act. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE The following documents have been filed with the Federal Deposit Insurance Corporation by Mechanics and Farmers Bank (the "Bank"), the sole subsidiary of M&F Bancorp, Inc. (the "Company") prior to the time the Company was formed and are incorporated herein by reference and made a part hereof: 1. The Bank's Annual Report on Form 10-KSB for the year ended December 31, 1998, provided that any information included or incorporated by reference in response to Items 402(a)(8), (i), (k) or (l) of Regulation S-K of the Securities and Exchange Commission shall not be deemed to be incorporated herein and is not a part of the Registration Statement. 2. All reports filed by the Bank and the Company pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 since the end of the fiscal year covered by the financial statements in the Annual Report on Form 10-KSB referred to in paragraph 1 above. 3. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 subsequent to the date hereof and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be part hereof from the date of the filing of such documents. Any statement contained in a document incorporated by reference herein and filed prior to the filing hereof shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein modifies or supersedes such statement, and any statement contained herein or in any other document incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained in any other subsequently filed document which also is incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. The following documents have been filed with the Securities and Exchange Commission by the Company and are incorporated herein by reference and made a part hereof: 1. The Company's Current Report on Form 8-K12G3 dated September 1, 1999 which provided as notice that it is the successor issuer to Bank. 2. The Company's Quarterly Report on Form 10-QSB and the Company's Amended Quarterly Report on Form 10-QSB/A for the quarter ended September 30, 1999. 2 3 ITEM 4. DESCRIPTION OF SECURITIES Company common stock to be issued under the M&F Bancorp, Inc. and Mechanics and Farmers Bank Incentive Stock Option Plan of 1999 is being registered hereunder. The authorized capital stock of the Company consists of 1,000,000 shares of Common Stock, no par value per share of which 853,800 shares are issued and outstanding. Holders of Company Stock are entitled to one vote per share held of record on all matters submitted to a vote of shareholders. Shareholders are entitled to vote cumulatively in the election of directors. With certain exceptions, an amendment to the Company's charter, including a provision to increase the authorized capital stock of the Company, may be effected if the amendment is recommended to the Company's shareholders by the Board of Directors and if the votes cast by those shareholders in favor of the amendment exceed the votes cast opposing the amendment. In general, North Carolina law requires that any merger, share exchange, voluntary liquidation or transfer of substantially all of the assets (other than in the ordinary course of business) of a business corporation be recommended to the corporation's shareholders by its board of directors and be approved by the affirmative vote of at least a majority of all outstanding shares of the corporation's voting common stock. Holders of the Company's Stock are entitled, upon dissolution or liquidation, to participate ratably in the distribution of assets legally available for distribution to shareholders after payment of debts. The Company's shareholders have preemptive rights to acquire a pro rata amount of other or additional shares which might be issued by the Company. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS The North Carolina Business Corporation Act, North Carolina General Statutes Chapter 55, authorizes indemnification of directors, officers and employees under certain circumstances. The Company's Bylaws provide, among other things, for the indemnification of directors, and authorize the Board to pay reasonable expenses incurred by, or to satisfy a judgment or fine against, a current or former director in connection with any personal legal liability incurred by the individual while acting for the Company within the scope of his or her employment so long as the director acted in good faith and his or her conduct was in the best interest of the Company or at least not opposed to the Company's best interests The Company has purchased an officers' and directors' liability insurance policy which provides insurance coverage for directors and officers of the Company against certain liabilities that they may incur in their capacities as such. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED Not applicable. ITEM 8. EXHIBITS 5.1 Opinion of Gerrish & McCreary, P.C., as to the legality of the securities being registered (including consent of counsel) (filed herewith), 23.1 Consent of Deloitte & Touche, L.L.P. (filed herewith), 24.1 Power of Attorney pursuant to which certain directors have signed this Form S-8 Registration Statement (filed herewith), 99.1 M&F Bancorp, Inc. and Mechanics and Farmers Bank Incentive Stock Option Plan of 1999 (filed herewith). 3 4 ITEM 9. UNDERTAKINGS (a) The Company hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; Provided, however, that paragraph (a)(1)(i) and (a)(1)(ii) shall not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Company pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Company hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Company's Annual Report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions or otherwise, the Company has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling persons of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling persons in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 4 5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Company certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Durham, State of North Carolina, on February 1, 2000. M&F BANCORP, INC. (Registrant) By: /s/ Julia W. Taylor ------------------------------------------------- Julia W. Taylor Chairman, President and Chief Executive Officer 5 6 Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated, on February 1, 2000.
Signature Title /s/ Julia W. Taylor Chairman, President and Chief Executive Officer - ------------------------------- (Principal Executive Officer) Julia W. Taylor /s/ Lee Johnson, Jr. Executive Vice President/Chief Financial Officer - ------------------------------- Lee Johnson, Jr.
Julia W. Taylor, by signing her name hereto, does hereby sign this document in her capacity as a director and on behalf of the persons named below, such persons constituting at least a majority of the directors of the Registrant, pursuant to powers of attorney duly executed by the persons named and filed with the Securities and Exchange Commission as an exhibit to this document, all in the capacities and on the date stated. Julia W. Taylor Director Benjamin S. Ruffin Director Joseph M. Sansom Director Aaron L. Spaulding Director /s/ Julia W. Taylor --------------------------------------- Julia W. Taylor Attorney-in-Fact 6 7 EXHIBIT INDEX TO REGISTRATION STATEMENT ON FORM S-8 5.1 Opinion of Gerrish & McCreary, P.C., as to the legality of the securities being registered (including consent of counsel).* 23.1 Consent of Deloitte & Touche, L.L.P.* 24.1 Power of Attorney pursuant to which certain directors have signed this Form S-8 Registration Statement.* 99.1 M&F Bancorp, Inc. and Mechanics and Farmers Bank Incentive Stock Option Plan of 1999.*
- ----------------------------- * Filed herewith. 7 EX-5.1 2 OPINION OF GERRISH & MCCREARY 1 EXHIBIT 5.1 January 31, 2000 M&F Bancorp, Inc. 2634 Chapel Hill Blvd. Durham, NC 27707 Re: Legality of Securities to be Issued Ladies and Gentlemen: We have acted as your counsel in connection with the registration by M&F Bancorp, Inc. (the "Company") under the Securities Act of 1933, as amended (the "Act"), of up to 85,500 shares of the Company's Common Stock, no par value (the "Shares"), to be issued by the Company pursuant to the exercise of options or awards under the M&F Bancorp, Inc. and Mechanics and Farmers Bank Incentive Stock Option Plan of 1999 (the "Plan"). The shares will be sold in the manner set forth in the Registration Statement on Form S-8 ("Registration Statement") that is being filed under the Act with respect to the offering of the Shares. In connection with the offering of the shares, we have examined (1) the Company's Amended and Restated Articles of Incorporation, (2) the Registration Statement, (3) the Plan, and (4) such other documents as we have deemed necessary to form the opinion expressed below. As to various questions of fact independently established, we have relied upon statements of officers of the Company. Based on this examination, we advise you that, in our opinion, the shares to be issued upon exercise of Options have been duly authorized and, when issued by the Company in the manner described in the Registration Statement and the Plan, will be validly issued, fully paid and non-assessable. The foregoing opinion is limited to the federal laws of the United States and the laws of the State of North Carolina and we express no opinion as to the effect of the laws of any other jurisdiction. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference in the prospectus delivered pursuant to Form S-8 to this firm under the caption "Legal Matters" as having passed upon the validity of the shares. In giving this consent, we do not admit that we come within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Securities and Exchange Commission adopted under the Act. Very truly yours, GERRISH & McCREARY, P.C. /s/ GERRISH & McCREARY, P.C. EX-23.1 3 CONSENT OF DELOITTE & TOUCHE LLP 1 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of M&F Bancorp, Inc. on Form S-8 of our report dated January 19, 1999, incorporated by reference in the Annual Report on Form 10-KSB of Mechanics and Farmers Bank for the year ended December 31, 1998. /s/ Deloitte & Touche LLP - ---------------------------------- Raleigh, North Carolina January 31, 2000 EX-24.1 4 POWER OF ATTORNEY 1 EXHIBIT 24.1 POWER OF ATTORNEY Each director of M&F Bancorp, Inc. (the "Company") whose signature appears below, hereby appoints Julia W. Taylor, as his or her attorney to sign, in his or her name and behalf and in any and all capacities stated below, the Company's Registration Statement on Form S-8 (the "Registration Statement(s)") for the registration of interests in connection with the participation of employees and management in and acquisition of securities through the Company's Incentive Stock Option Plan and likewise to sign any and all amendments and other documents relating thereto as shall be necessary to cause the Registration Statement(s) to become effective (including post-effective amendments) and to sign any and all such documents upon the advice of legal counsel to carry out the exercise and sale of the option shares, each such person hereby granting to each such attorney power to act with or without the other and full power of substitution and revocation and hereby ratifying all of that any such attorney or his substitute may do by virtue hereof. This Power of Attorney has been signed by the following persons in the capacities indicated on the 14th day of December, 1999.
Signature Title - --------- ----- /s/ Julia W. Taylor Director - ------------------------------------ Julia W. Taylor /s/ Benjamin S. Ruffin Director - ------------------------------------ Benjamin S. Ruffin /s/ Joseph M. Sansom Director - ------------------------------------ Joseph M. Sansom /s/ Aaron L. Spaulding Director - ------------------------------------ Aaron L. Spaulding
EX-99.1 5 M & F BANCORP, INC INCENTIVE STOCK OPTION PLAN 1 EXHIBIT 99.1 MECHANICS AND FARMERS BANK INCENTIVE STOCK OPTION PLAN OF 1999 1. Purpose of Plan The purpose of this Stock Option Plan ("Plan") is to aid Mechanics and Farmers Bank (the "Bank") in securing and retaining top management Key Employees of outstanding ability by making it possible to offer them an increased incentive, in the form of a proprietary interest in the Bank, to join or continue in the service of the Bank and to increase their efforts for its welfare and success. 2. Definitions As used in this Plan, the following words shall have the following meanings: (a) "Board" means the Board of Directors of the Bank; (b) "Code" means the Internal Revenue Code of 1986, as amended; (c) Intentionally deleted; (d) "Common Stock" means the $5.00 par value common stock of Mechanics and Farmers Bank; (e) "Bank" means the Mechanics and Farmers Bank; (f) Intentionally deleted; (g) "Disability" means the Participant's inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months; (h) "Incentive Stock Option" means a stock option to purchase shares of Common Stock, which is intended to qualify as an incentive stock option defined in Code Section 422A; (i) "Key Employee" means any person in the regular full-time common law employment of the Corporation or any Subsidiary, as an executive or non-executive officer thereof, who in the opinion of the Board, is or is expected to be primarily responsible for the management, growth or protection of some part or all of the business of the Corporation; (j) "Option" means an Incentive Stock Option; (k) "Parent" means any corporation in an unbroken chain of corporations if each of the corporations owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain; (l) "Participant" means a person to whom an Option is granted that has not expired and ceased to be exercisable under the Plan; and (m) "Subsidiary" means any corporation other than the Bank in an unbroken chain of corporations beginning with the Bank if each of the corporations other than the last corporation in the unbroken chain owns fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 1 2 3. Administration of Plan The Plan shall be administered by the Board. In the event that a director of the Board is eligible to be selected for the grant of an Option, during such membership as a director, such director shall recuse himself and not participate in the discussion nor vote on the award of the Option to him or her. The Board shall have the power and authority to administer, construe and interpret the Plan, to make rules for carrying it out and to make changes in such rules. 4. Granting of Options and $100,000 Limitation The Board may from time to time grant Options under the Plan to such Key Employees and subject to the limitations of paragraph (a) of Section 7, for such number of shares as the Board may determine after receiving recommendations from the compensation committee or the executive officers of the Bank that employs the Participant. Subject to the provisions of the Plan, the Board may impose such terms and conditions as it deems advisable on the grant of an Option. Any of the foregoing to the contrary notwithstanding, the following limitations shall apply to the grant of any Incentive Stock Option: (a) The aggregate fair market value, determined at the time the Incentive Stock Option is granted, of the stock exercised by a Participant for the first time during any calendar year shall not exceed $100,000. (b) Any Option granted to a Participant, who immediately before such grant owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock either of the Bank or any Subsidiary shall not be an Incentive Stock Option, unless (i) at the time such Option is granted the Option price per share is not less than one hundred ten percent (110%) of the optioned stock's then fair market value; and (ii) the Option shall not be exercisable after the expiration of five (5) years from the date of the grant of the Option. 5. Terms of Options The terms of each Option granted under the Plan shall be as determined from time to time by the Board and shall be set forth in an Incentive Stock Option Agreement in a form attached hereto as Exhibit "A" and approved by the Board; provided, however, the terms of such agreement shall not exceed the following limitations: (a) Subject to paragraph (b) of Section 4 with regard to 10% owners, the Option price per share shall not be less than one hundred percent (100%) of the fair market value of the optioned stock at the time the Option is granted. (b) Subject to paragraph (e) of this Section, the Option shall be exercisable in whole or in part from time to time during the period beginning on date of grant of the Option, and ending no later than the expiration of ten (10) years from the date of grant of the Option, unless an earlier expiration date shall be stated in the Option or the Option shall cease to be exercisable pursuant to paragraph (d) of this Section 5. (c) Payment in full of the Option price for shares purchased pursuant to an Option shall be made upon exercise of the Option (in whole or in part) and shall be made in cash. (d) If a Participant's employment with the Bank terminates, the following rules shall apply: (i) If a Participant's employment with the Bank terminates other than by reason of the Participant's death, disability or retirement after reaching age 65, the Participant's Option shall thereupon expire and cease to be exercisable upon the expiration of the earlier of ten (10) years from the date of grant of the Option, or three (3) months from the date of such termination. (ii) If the Participant's employment with the Bank terminates by reason of his death, the Participant's Option shall terminate and cease to be exercisable upon the expiration of the earlier of ten (10) years from the date of grant of the Option, or one (1) year from the date of death. Such Option may be exercised by the duly appointed personal representative of the deceased Participant's estate. 2 3 (iii) If a Participant's employment with the Bank terminates by reason of Disability, the Participant's Option shall terminate and cease to be exercisable upon the expiration of the earlier of ten (10) years from the date of grant of the Option, or one (1) year from the date of such termination in the case of disability. (iv) If a Participant's employment with the Bank terminates by reason of retirement after reaching age 65 (other than for Disability), the Participant's Option shall expire and cease to be exercisable upon the expiration of the earlier of ten (10) years from the date of grant of the Option, or three (3) months from the date of such termination. (v) Notwithstanding anything contained herein to the contrary, if a Participant's employment with the Bank is terminated for cause (fraud, embezzlement, failure to perform job responsibilities, etc.) as determined by the Board, in the Board's sole discretion, or if a Participant competes with the Bank, any Option granted to that Participant shall be immediately revoked and terminated and the Participant shall have no further rights under this Plan. For purposes of this Plan, competition with the Bank shall include direct or indirect ownership of a financial services business (specifically excluding, however, any ownership of 5% or less of the outstanding shares of such financial services business) or employment within six months of termination with a financial services business located within a 100 mile radius of any office operated by the Bank or any of its subsidiaries. (e) Notwithstanding any other provision herein, the options granted hereunder may vest and be exercisable on a cumulative basis as may be set forth in the Incentive Stock Option Agreement under a vesting schedule determined by the Board in the Board's sole discretion. In the event that the Bank has a change of control in which more than 50% of the stock of the Bank is acquired or the Bank sells substantially all of the assets of the Bank, or the Bank which employs the Participant is merged or consolidated with another Bank not owned over 50% by the shareholders who own the Bank immediately before the merger, then immediately prior to any such transaction, the vesting schedule provided for above shall not be applicable and the holder of any options granted hereunder shall be 100% vested in such options, subject to the other terms and conditions herein. In the event the Bank forms a bank holding company ("BHC") and that BHC has a change in control in which more than 50% of the stock of the BHC is acquired or the BHC is merged or consolidated with another corporation in an acquisition transaction, or the BHC sells substantially all of its assets, then immediately prior to any such transaction, the vesting schedule provided for above shall not be applicable and the holder of any options granted hereunder shall be 100% vested in such options, subject to he other terms and conditions herein. In the event a bank holding company is formed to own the stock of the Bank, the options granted hereunder shall be converted to options to purchase BHC stock as provided in Section 9; however, there shall be no increase in any vesting schedule provided for herein. 6. Exercise of Options The holder of an Option who decides to exercise the Option in whole or in part shall give notice to the Secretary of the Bank of such exercise in writing on a form approved by the Board. Any exercise shall be effective as of the date specified in the notice of exercise, but not earlier than the date the notice of exercise and payment in full of the Option price is actually received and in the hands of the Secretary of the Bank. 7. Limitations and Conditions (a) The total number of shares of Common Stock that may be optioned as Incentive Stock Options under the Plan is Fifty-seven Thousand (57,000) shares of Mechanics and Farmers Bank's $5.00 par value common stock. Such total number of shares may consist, in whole or in part, of unissued shares or reacquired shares. The foregoing numbers of shares may be increased or decreased by the events set forth in Section 9. (b) There shall be no limitations on the amount of shares of Common Stock that may be optioned as Incentive Stock Options under the Plan as set forth in Section 7(a) above, on an annual basis. The amount of shares to be optioned, within the total limitation set forth in Section 7(a) above, shall be determined solely at the discretion of the Board as set forth herein. If there is a proposed acquisition, merger, change of control or other takeover of the Bank 3 4 that employs the Participant as defined in Section 5(e) of this Plan, the Board, at its sole discretion, may issue any options authorized under this Plan but unissued prior to such time. (c) Any shares that have been optioned that cease to be subject to an Option (other than by reason of exercise of the Option) shall again be available for option and shall not be considered as having been theretofore optioned. (d) No Option shall be granted under the Plan after May 20, 2009, (10 years after the effective date), and the Plan shall terminate on such date, but Options theretofore granted may extend beyond that date in accordance with the Plan. At the time an Option is granted or amended or the terms or conditions of an Option are changed, the Board may provide for limitations or conditions on the exercisability of the Option. (e) An Option shall not be transferable by the Participant otherwise than by Will or by the laws of descent and distribution. During the lifetime of the Participant, an Option shall only be exercisable by the Participant. (f) No person shall have any rights of a stockholder as to shares under option until, after proper exercise of the Option, such shares shall have been recorded on the Bank's official stockholder records as having been issued or transferred. (g) The Bank shall not be obligated to deliver any shares until there has been compliance with such laws or regulations as the Bank may deem applicable. The Bank shall use its best efforts to effect such compliance. In addition to the foregoing and not by way of limitation, the Bank may require that the person exercising the Option represent and warrant at the time of such exercise that any shares acquired by exercise are being acquired only for investment and without any present intention to sell or distribute such shares, if, in the opinion of counsel for the Bank, such a representation is required under the Securities Act of 1933 or any other applicable law, regulation or rule of any governmental agency. 8. Transfers and Leaves of Absence For the purposes of the Plan: (a) a transfer of a Participant's employment without an intervening period from the Bank to a subsidiary or vice versa, or from one subsidiary to another or from parent to subsidiary or vice versa, shall not be deemed a termination of employment, and (b) a Key Employee who is granted in writing a leave of absence of no more than ninety (90) days, or if more than ninety (90) days, which guarantees his employment with the Bank at the end of such leave, shall be deemed to have remained in the employ of the Bank during such leave of absence. 9. Stock Adjustments In the event of any merger, consolidation, stock dividend, split-up, combination or exchange of shares or recapitalization or change in capitalization, the total number of shares set forth in paragraph (a) of Section 7 shall be proportionately and appropriately adjusted. In any such case, the number and kind of shares that are subject to any Option (including any Option outstanding after termination of employment) and the Option price per share shall be proportionately and appropriately adjusted without any change in the aggregate Option price to be paid therefor upon the exercise of the Option. The determination by the Board as to the terms of any of the foregoing adjustments shall be conclusive and binding. 10. Amendment and Termination (a) The Board shall have the power to amend the Plan, including the power to change the amount of the aggregate fair market value of the shares for which any Key Employee may be granted Incentive Stock Options under Section 4 to the extent provided in Code Section 422A. It shall not, however, except as otherwise provided in the Plan, increase the maximum number of shares authorized for the Plan, nor change the class of eligible employees to other than Key Employees, nor reduce the basis upon which the minimum Option price is determined, nor extend the period within which Options under the Plan may be granted, nor provide for an Option that is exercisable during a period of more than ten (10) years from the date it is granted. It shall have no power (without the consent of the person or 4 5 persons at the time entitled to exercise the Option) to change the terms and conditions of any Option after the Option is granted in a manner that would adversely affect the rights of such persons except to the extent, if any, provided in the Option. (b) The Board may suspend or terminate the Plan at any time. No such suspension or termination shall affect Options then in effect. 11. No Employment Right The grant of an Option hereunder shall not constitute an agreement or understanding, expressed or implied, on the part of the Bank, any Parent or any Subsidiary, to employ the Participant for any specified period and shall not confer upon any employee the right to continue in the employment of the Bank, any Parent or any Subsidiary, nor affect any right which the Bank, a Parent or Subsidiary may have to terminate the employment of such employee. 12. Effective Date The Plan is adopted on and shall be effective as of May 20, 1999 (the date such Plan shall have been approved by the Bank's shareholders). /s/ Fohliette W. Becote ------------------------------------- Secretary 5 6 ADDENDUM TO MECHANICS AND FARMERS BANK INCENTIVE STOCK OPTION PLAN OF 1999 This Addendum to the Mechanics and Farmers Incentive Stock Option Plan of 1999 (the "Plan") has been created for the purpose of recognizing that the Plan has been assumed by the newly formed holding company of Mechanics and Farmers Bank, M&F Bancorp, Inc. Participants in the Plan who were to receive options representing shares of common stock, $5.00 par value, of Mechanics and Farmers Bank will now be eligible to receive the same number of shares of common stock, no par value, of M&F Bancorp, Inc. From this time forward, the Plan shall be known as the "M&F Bancorp, Inc. and Mechanics and Farmers Bank Incentive Stock Option Plan of 1999". ATTESTED: /s/ Fohliette W. Becote /s/ Julia W. Taylor - ---------------------------------- ------------------------------------ Secretary Julia W. Taylor, Chairman, President and CEO -----END PRIVACY-ENHANCED MESSAGE-----