<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended March 31, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-27872
MAY & SPEH, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2992650
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1501 Opus Place, Downers Grove, Illinois 60515
(Address of principal executive offices) (Zip Code)
(708) 964-1501
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding as of May 14, 1996
Common Stock, par value $.01 per share 24,934,154
<PAGE>
MAY & SPEH, INC.
INDEX
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Part I -- Financial Information
Item 1. Financial Statements
Balance Sheets -- March 31, 1996 1
and September 30, 1995
Statements of Operations -- Three and six months 2
ended March 31, 1996 and March 31, 1995
Statements of Stockholders Equity -- Six months 3
ended March 31, 1996
Statements of Cash Flows -- Six months ended 4
March 31, 1996 and March 31, 1995
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition 6
and Results of Operations
Part II -- Other Information
Item 6. Exhibits and Reports on Form 8-K 9
</TABLE>
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
May & Speh, Inc.
Balance Sheets
<TABLE>
<CAPTION>
Assets March 31, 1996 September 30, 1995
(unaudited) (audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $40,106,268 $ 6,713,581
Marketable securities 2,752,610 1,888,670
Accounts receivable, net 18,514,690 15,393,701
Prepaid software royalties and other current 2,975,055 3,547,092
assets
Deferred income taxes 359,000 359,000
----------- -----------
Total current assets 64,707,623 27,902,044
Property, plant and equipment, net 17,710,735 16,975,813
Other assets 3,332,156 1,926,199
----------- -----------
Total assets $85,750,514 $46,804,056
=========== ===========
Liabilities and stockholders' equity
Current liabilities:
Current maturities of long-term debt $ 3,248,300 $ 3,359,295
Accounts payable 3,915,685 3,735,579
Accrued payroll and other expenses 6,374,965 4,288,607
----------- -----------
Total current liabilities 13,538,950 11,383,481
Long-term debt 15,220,171 16,860,312
Deferred income taxes 916,000 916,000
----------- -----------
Total liabilities 29,675,121 29,159,793
----------- -----------
Stockholders' equity:
Common stock 239,292 203,627
Additional paid-in capital 34,703,305 1,525,927
Retained earnings 27,666,581 23,636,456
----------- -----------
62,609,178 25,366,010
Unearned ESOP compensation (6,533,785) (7,721,747)
----------- -----------
Total stockholders' equity 56,075,393 17,644,263
----------- -----------
Total liabilities and stockholders' equity $85,750,514 $46,804,056
=========== ===========
</TABLE>
See Accompanying Notes
1
<PAGE>
May & Speh, Inc.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
--------------------------------------------------
1996 1995 1996 1995
--------------------------------------------------
<S> <C> <C> <C> <C>
Net revenues $19,132,514 $15,210,053 $35,176,130 $29,580,082
Operating expenses:
Wages and benefits 6,091,189 5,444,172 11,641,879 10,319,716
Services and supplies 1,676,490 918,784 2,984,358 1,845,887
Rents, leases and maintenance 4,432,695 3,360,299 8,042,602 6,516,458
Depreciation and amortization 377,475 297,009 727,924 516,699
Other operating expenses 1,806,903 1,151,644 3,367,616 2,308,867
ESOP principal payments 593,980 611,201 1,187,962 1,188,136
----------- ----------- ----------- -----------
Total operating expense 14,978,732 11,783,109 27,952,341 22,695,763
----------- ----------- ----------- -----------
Operating income 4,153,782 3,426,944 7,223,789 6,884,319
Interest and other expense:
ESOP interest 145,625 260,238 318,183 513,238
Other (income) expense, net 49,235 108,703 225,881 251,320
----------- ----------- ----------- -----------
Income before income taxes 3,958,922 3,058,003 6,679,725 6,119,761
Income taxes 1,590,200 1,141,000 2,649,600 2,284,000
----------- ----------- ----------- -----------
Net income $ 2,368,722 $ 1,917,003 $ 4,030,125 $ 3,835,761
=========== =========== =========== ===========
Earnings per common share and common $0.11 $0.09 $0.18 $0.18
equivalent shares outstanding
Weighted average shares and common 22,514,624 20,844,511 22,421,590 20,844,511
equivalent shares outstanding
</TABLE>
See Accompanying Notes
2
<PAGE>
May & Speh, Inc.
Statements of Stockholders' Equity
For Six Months Ended March 31, 1996
<TABLE>
<CAPTION>
Common stock Additional Unearned Retained Total
paid-in compensation earnings
Shares Amount capital
<S> <C> <C> <C> <C> <C> <C>
Balance - September 30, 1995 20,362,657 $203,627 $ 1,525,927 ($7,721,747) $23,636,456 $17,644,263
Net income for the six months
ended March 31, 1996 4,030,125 4,030,125
(unaudited)
ESOP compensation earned
during the six months ended
March 31, 1996 (unaudited) 1,187,962 1,187,962
Issuance of common stock 3,350,000 33,500 32,727,758 32,761,258
Exercise of stock options 216,497 2,165 449,620 451,785
---------- -------- ----------- ----------- ----------- -----------
Balance - March 31, 1996 23,929,154 $239,292 $34,703,305 ($6,533,785) $27,666,581 $56,075,393
(unaudited) ========== ======== =========== =========== =========== ===========
</TABLE>
See Accompanying Notes
3
<PAGE>
May & Speh, Inc.
Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended March 31,
1996 1995
--------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,030,125 $ 3,835,761
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 727,924 516,699
ESOP principal payments 1,187,962 1,188,136
Changes in assets and liabilities:
Accounts receivable, net (3,229,595) (1,033,913)
Prepaid expenses and other current assets (182,479) 82,273
Income taxes payable/refundable 1,582,161 (576,203)
Accounts payable and accrued expenses 1,438,819 752,117
Other 111,853 231,357
----------- -----------
Net cash provided by operating activities 5,666,770 4,996,227
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (1,478,075) (1,876,604)
Purchases of marketable securities (1,843,963) (2,628,015)
Sales of marketable securities 980,023 300,000
Software development costs capitalized (1,465,581)
Increase in cash surrender value of insurance (37,000) (37,000)
Other 108,606 45,376
----------- -----------
Net cash used in investing activities (3,735,990) (4,196,243)
----------- -----------
Cash flows from financing activities:
Repayments of long-term obligations (1,751,136) (1,100,518)
Proceeds from issuance of common stock 33,213,043
----------- -----------
Net cash provided by (used in) financing activities 31,461,907 (1,100,518)
----------- -----------
Net change in cash and cash equivalents 33,392,687 (300,534)
Cash and cash equivalents:
Beginning of period 6,713,581 1,642,561
----------- -----------
End of period $40,106,268 $ 1,342,027
=========== ===========
</TABLE>
See Accompanying Notes
4
<PAGE>
May & Speh, Inc.
Notes to Financial Statements
(1) Basis of Presentation.
The financial statements as of March 31, 1996 and for the three- and
six-month periods then ended are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for the fair presentation of the
financial position and operating results for the interim periods.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission (the
"Commission"). Therefore, the financial statements should be read in
conjunction with the Financial Statements and Notes thereto contained in
the Company's Registration Statement on Form S-1 (No. 33-98302), as
amended, filed with the Commission on October 18, 1995. The results of
operations for the three- and six-months ended March 31, 1996 are not
necessarily indicative of the results for the entire fiscal year.
(2) Initial Public Offering.
On March 29, 1996, the Company completed an initial public offering of
3,350,000 shares of the Company's common stock, par value $0.01 per
share (the "Common Stock"). Certain stockholders of the Company sold an
additional 3,350,000 shares of Common Stock in the offering. In
addition, on April 24, 1996, the Company completed the offering of an
additional 1,005,000 shares of Common Stock that were subject to an
over-allotment option granted to the underwriters of the initial public
offering. The total net proceeds to the Company were approximately
$43.8 million after deducting underwriting discounts and commissions and
estimated offering expenses.
5
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Three Months Ended March 31, 1996 Compared to the Three Months Ended
--------------------------------------------------------------------
March 31, 1995
--------------
Net revenues increased to $19.1 million for the three months ended March
31, 1996 from $15.2 million for the three months ended March 31, 1995,
an increase of $3.9 million or 26%. Of the increase, $2.3 million was
attributable to services provided to new clients and the remainder was
attributable to increased demand for services by existing clients. The
Company's direct marketing services revenues increased to $14.7 million
for the three months ended March 31, 1996 versus $12.0 million for the
three months ended March 31, 1995, an increase of 23%. Of this
increase, $0.5 million is attributable to the establishment of the
Company's Credit Strategy Management ("CSM") Division which provides
predictive modeling and analysis and related services. The Company's
CSM Division was established effective February 1, 1996 in connection
with its Asset Purchase Option Agreement and Service Agreement with
Credit Strategy Management, Inc., based in Atlanta, Georgia. The
Company's data processing outsourcing services revenues increased to
$4.4 million for the three months ended March 31, 1996 from $3.2 million
for the three months ended March 31, 1995, an increase of 35%.
Wages and benefits expenses increased to $6.1 million for the three
months ended March 31, 1996 from $5.4 million for the three months ended
March 31, 1995, an increase of 12%. The increased expenses reflect the
net addition of 48 employees as a result of the Company's continued
expansion of business volume and strengthening of its infrastructure.
Services and supplies expenses increased to $1.7 million for the three
months ended March 31, 1996 from $0.9 million for the three months ended
March 31, 1995, an increase of 82%. Services and supplies generally
consist of outsourced data entry services, general supplies, contract
labor and costs related to the use of outside consultants. This
increase resulted primarily from outsourcing of technical support and
data entry services and the use of outside consultants to improve
productivity and to re-engineer certain work flow processes.
Rents, leases and maintenance expenses increased to $4.4 million for the
three months ended March 31, 1996 from $3.4 million for the three months
ended March 31, 1995, an increase of 32%. The increase was primarily
due to leasing of computers and computer peripheral hardware.
Depreciation and amortization expenses increased to $0.4 million for the
three months ended March 31, 1996 from $0.3 million for the three months
ended March 31, 1995, an increase of 27%. The increase was primarily
attributable to continued investment in technology.
Other operating expenses increased to $1.8 million for the three months
ended March 31, 1996 from $1.2 million for the three months ended March
31, 1995, an increase of 57%. The increase was primarily attributable
to variable costs relating to several customer contracts.
6
<PAGE>
Research and development costs representing primarily wages and benefits
for information technology staff decreased to $0.2 million for the three
months ended March 31, 1996 from $0.4 million for the three months ended
March 31, 1995, a decrease of 49%. The Company's research and
development expenses relate primarily to new product development
activities which are not capitalized. Total new product development
activities, including capitalized costs, increased to $1.1 million for
the three months ended March 31, 1996 from $0.4 million for the three
months ended March 31, 1995, an increase of 162%.
Income taxes increased to $1.6 million for the three months ended March
31, 1996 from $1.1 million for the three months ended March 31, 1995.
The Company's effective tax rate was 40.2% for the three months ended
March 31, 1996 and 37.3% for the three months ended March 31, 1995.
Six Months Ended March 31, 1996 Compared to the Six Months Ended
----------------------------------------------------------------
March 31, 1995
--------------
Net revenues increased to $35.2 million for the six months ended March
31, 1996 from $29.6 million for the six months ended March 31, 1995, an
increase of $5.6 million or 19%. Of the increase, $2.8 million was
attributable to services provided to new clients and the remainder was
attributable to increased demand for services by existing clients. The
Company's direct marketing services revenues increased to $27.0 million
for the six months ended March 31, 1996 versus $23.0 million for the six
months ended March 31, 1995, an increase of 18%. Of this increase, $0.5
million is attributable to the establishment of the Company's CSM
Division. The Company's data processing outsourcing services revenues
increased to $8.2 million for the six months ended March 31, 1996 from
$6.6 million for the six months ended March 31, 1995, an increase of
23%.
Wages and benefits expenses increased to $11.6 million for the six
months ended March 31, 1996 from $10.3 million for the six months ended
March 31, 1995, an increase of 13%. The increased expenses reflect the
net addition of 48 employees as a result of the Company's continued
expansion of business volume and strengthening of its infrastructure.
Services and supplies expenses increased to $3.0 million for the six
months ended March 31, 1996 from $1.8 million for the six months ended
March 31, 1995, an increase of 62%. Services and supplies generally
consist of outsourced data entry services, general supplies, contract
labor and costs related to the use of outside consultants. This
increase resulted principally from outsourcing of technical support and
data entry services and the use of outside consultants to improve
productivity and to re-engineer certain work flow processes.
Rents, leases and maintenance expenses increased to $8.0 million for the
six months ended March 31, 1996 from $6.5 million for the six months
ended March 31, 1995, an increase of 23%. The increase was primarily
due to leasing of computers and computer peripheral hardware.
7
<PAGE>
Depreciation and amortization expenses increased to $0.7 million for the
six months ended March 31, 1996 from $0.5 million for the six months
ended March 31, 1995, an increase of 41%. The increase was primarily
attributable to continued investment in technology.
Other operating expenses increased to $3.4 million for the six months
ended March 31, 1996 from $2.3 million for the six months ended March
31, 1995, an increase of 46%. The increase was primarily attributable
to variable costs relating to several customer contracts.
Research and development costs representing primarily wages and benefits
for information technology staff increased to $1.3 million for the six
months ended March 31, 1996 from $0.9 million for the six months ended
March 31, 1995, an increase of 46%. The Company's research and
development expenses relate primarily to new product development
activities.
Income taxes increased to $2.6 million for the six months ended March
31, 1996 from $2.3 million for the six months ended March 31, 1995. The
Company's effective tax rate was 39.7% for the six months ended March
31, 1996 and 37.3% for the six months ended March 31, 1995.
Capital Resources and Liquidity
-------------------------------
The Company's working capital increased to $51.2 million as of March 31,
1996 from $16.5 million as of September 30, 1995. This increase
resulted principally from the Company's initial public offering in March
1996 resulting in net proceeds of $33.2 million to the Company. The
Company's investment policy is to invest in marketable, investment-grade
debt instruments of the U.S. Government or tax-free municipal bonds.
The Company's investments typically have maturities of three years or
less. The Company historically limits its concentration of investments
in individual municipalities to $500,000 or less. As of March 31, 1996,
the Company's net accounts receivable were $18.5 million, an increase of
20% over the previous fiscal year end. This increase reflects
additional business completed and billed during February and March 1996.
The Company has available a $2.0 million revolving credit facility.
There are no outstanding borrowings under this credit facility.
Borrowings under a $12.0 million real estate loan are being repaid over
a ten year period with interest at 8.5%. Maximum borrowings during the
six months ended March 31, 1996 under these credit facilities were $11.6
million. The Company entered into a loan at the time of the formation
of the ESOP, which currently has an outstanding balance of $6.5 million.
Borrowings under this ESOP loan are being repaid through December 31,
1998 with interest at 9.3% on the fixed rate portion of the loan ($5.2
million at March 31, 1996) and at 80% of the lender's prime rate for the
floating rate portion of the loan ($1.3 million at March 31, 1996),
currently 6.60%.
8
<PAGE>
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 May & Speh, Inc. 1995 Key Employee Stock Option Plan, as
amended
10.2 Amendment No. 1 to the May & Speh, Inc. Employee Stock
Ownership Plan
10.3 May & Speh, Inc. Employee Stock Ownership Trust
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the period covered by
this report.
9
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAY & SPEH, INC.
Date: May 14, 1996 By: /s/ Robert C. Early
Robert C. Early
Executive Vice President,
Chief Financial Officer and Treasurer
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Exhibit Page
<S> <C> <C>
10.1 May & Speh, Inc. 1995 Key Employee Stock Option Plan, as
amended
10.2 Amendment No. 1 to the May & Speh, Inc. Employee Stock
Ownership Plan
10.3 May & Speh, Inc. Employee Stock Ownership Trust
27 Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 10.1
1995 KEY EMPLOYEE
STOCK OPTION PLAN OF
MAY & SPEH, INC.
(As Amended and Restated Effective as of February 1, 1996)
1. Introduction and Purpose. The purpose of this Stock Option Plan
(the "Plan") is to advance the interests of May & Speh, Inc. (the "Corporation")
by encouraging and enabling the acquisition of a larger personal proprietary
interest in the Corporation by Eligible Employees upon whose judgment and keen
interest the Corporation and its Subsidiaries are largely dependent for the
successful conduct of their service and operations. It is anticipated that the
acquisition of such proprietary interest in the Corporation will stimulate the
efforts of such Eligible Employees, on behalf of the Corporation and its
Subsidiaries, and strengthen their desire to remain with the Corporation and its
Subsidiaries. It is also expected that the opportunity to acquire such a
proprietary interest will enable the Corporation and its Subsidiaries to attract
desirable personnel.
2. Definitions. When used in this Plan, unless the context
otherwise requires:
a. "Board of Directors" or "Board" shall mean the Board of
Directors of May & Speh, Inc. as constituted at any time.
b. "Change in Control" shall mean the date on which any person
entity, or persons or entities acting in concert, shall acquire the
beneficial ownership, as defined by the Board of Directors in its sole
discretion, of fifty-one percent (51%) or more of the Corporation's
Shares then outstanding within a period of six (6) months.
c. "Committee" shall mean the Stock Option Plan Committee, as
described in Section 3 hereof, appointed by the Board to administer
this Plan.
d. "Common Stock" means the common stock of the Corporation,
par value of $.01 per share, including both treasury shares and
authorized but unissued shares, or any
<PAGE>
security of the Corporation issued in substitution, exchange or in
lieu thereof.
e. "Corporation" shall mean May & Speh, Inc.
f. "Eligible Employees" shall have the meaning assigned in
Section 4 of this Plan.
g. "Fair Market Value" on a specified date shall mean (i) the
average of the bid and asked closing prices at which one Share is
traded on the over-the-counter market, as reported on the National
Association of Securities Dealers Automated Quotation System, but if
no Shares were traded on such date, then on the last previous date on
which a Share was so traded, or (ii) if (i) above is not applicable,
the closing price for a Share on the stock exchange, if any, on which
Shares are primarily traded, but if no Shares were traded on such
date, then on the last previous date on which a Share was so traded,
or (iii) if none of the above is applicable, the value of a Share as
established by the Committee for such date using any reasonable method
of valuation.
h. "Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended, or any successor thereto.
i. "Issue Date" shall mean the date designated by the
Committee for measuring the vesting of an Eligible Employee's Options
under Section 5 hereof. Unless otherwise designated by the Committee,
the Issue Date of an Option shall be the date that the Option is
awarded to the Eligible Employee by the Committee.
j. "Options" shall mean the stock options issued pursuant to
this Plan.
k. "Plan" shall mean the 1995 Key Employee Stock Option Plan
of May & Speh, Inc., as amended from time to time.
l. "Plan Year" means the calendar year.
m. "Securities Exchange Act of 1934" shall mean the Securities
Exchange Act of 1934, as amended from time to time, or any successor
thereto.
<PAGE>
n. "Share" shall mean a share of Common Stock of the
Corporation.
o. "Subsidiary" shall mean any "subsidiary corporation," as
such term is defined in Section 424(f) of the Internal Revenue Code.
p. "Voting Power" means the voting power of all securities of
the Corporation then outstanding, generally entitled to vote for the
election of directors of the Corporation.
3. Administration of the Plan.
a. The Committee shall be appointed by the Board of Directors
and shall consist of at least two (2) outside directors (as defined in
proposed, temporary or final regulations or other guidance issued by
the Internal Revenue Servuce under Section 162(m) of the Internal
Revenue Code). The Committee shall have the authority to award Options
under the Plan and shall administer the Plan as provided herein and,
in exercising this authority, shall establish such rules and
procedures as are necessary or advisable to administer the Plan.
b. Each member of the Committee shall hold office until the
next regular annual meeting of the Board of Directors following his or
her designation and until his or her successor is designated as a
member of the Committee. Any vacancy in the Committee may be filled by
a resolution adopted by a majority of the Board of Directors. Any
member of the Committee may be removed at any time, with or without
cause, by resolution adopted by a majority of the Board of Directors.
A member of the Committee may resign from the Committee at any time by
giving written notice to the President, Secretary or Assistant
Secretary of the Corporation in person or by certified or registered
mail, return receipt requested, sent to 1501 Opus Place, Downers
Grove, Illinois 60515, and, unless otherwise specified therein, such
resignation shall take effect upon receipt of such written notice. The
acceptance of such resignation by the President, Secretary or
Assistant Secretary of the Corporation shall not be necessary for such
resignation to be made effective.
<PAGE>
4. Participants. Except as hereinafter provided, the class of
individuals who are potential recipients of Options to be granted under this
Plan ("Eligible Employees") consists of those individuals who, in the sole
discretion of the Committee, are the key employees of the Corporation or any of
its Subsidiaries who (i) contribute materially to the success of the Corporation
or its Subsidiaries and (ii) are not subject to the reporting requirements of
Section 16 of the Securities Exchange Act of 1934 and the rules promulgated
thereunder on the date that the Option is awarded under this Plan, provided,
however, that Options may be granted to an independent contractor who, at the
time of such grant, is not an employee of the Corporation or its Subsidiary
(such persons are included in the definition of "Eligible Executives"). The
Eligible Employees to whom Options are granted under this Plan and the number of
Shares subject to each such Option shall be determined by the Committee in its
sole discretion, in accordance with the terms and conditions of this Plan.
5. Grant and Vesting of Options. The Committee may, but shall not
be required to, grant in accordance with this Plan, Options to purchase an
aggregate of up to 2,000,000 Shares of Common Stock, which may be either
treasury shares or authorized but unissued Shares.
a. Options awarded pursuant to this Plan shall vest and become
exercisable in equal monthly installments over a five-year period
commencing one year after the Issue Date of such Option; provided,
however, that the Compensation Committee may in its discretion specify
a shorter or longer vesting period in any particular case.
b. Options granted under this Plan may be either non-qualified
stock options or incentive stock options, within the meaning of
Section 422 of the Internal Revenue Code. An Option granted under this
Plan shall be deemed to be a non-qualified stock option unless the
Committee, in its sole discretion, designates otherwise. Options which
are designated not to be incentive stock options shall not be treated
as such for purposes of this Plan and the Internal Revenue Code.
c. Nothing contained herein shall be construed to prohibit the
grant of Options at different times to the same Eligible Employee,
provided, however, that in no event shall
<PAGE>
an Eligible Employee be granted an Option to purchase more than
500,000 Shares in any fiscal year of the Corporation.
d. The terms of any Option granted to an Eligible Employee
shall, subject to the terms and provisions of this Plan, be
conclusively determined by the Committee, in its sole discretion. The
terms and provisions of the Option shall be set forth in writing in a
certificate or agreement (the "Option Certificate") signed by the
Option holder and on behalf of the Corporation by the President, any
Vice President or the Treasurer of the Corporation. The Option
Certificate shall state whether or not the Option is an incentive
stock option or a non-qualified stock option. At the time an Option is
granted, the Committee may, in its sole discretion, establish one or
more conditions to the exercise of such Option, provided that if such
Option is designated as an incentive stock option, then such condition
or conditions shall not be inconsistent with Section 422 of the
Internal Revenue Code.
6. Price. The exercise price per Share of the Shares to be
purchased pursuant to any Option shall be fixed by the Committee at the time an
Option is granted and may be equal to or greater than (but not less than) the
Fair Market Value of the Common Stock on the date such Option is granted;
provided, however, if the Option is an incentive stock option, in no event shall
the price be less than one hundred ten percent (110%) of the Fair Market Value
of a Share if the employee is a greater than ten percent (10%) shareholder
within the meaning of Section 422(b)(6) of the Internal Revenue Code.
7. Duration of Options. The duration of any Option granted under
this Plan shall be for a period fixed by the Committee, in its sole discretion,
but not more than ten (10) years from the date upon which the Option is granted
(five (5) years if the option is an incentive stock option and the employee is a
greater than ten percent (10%) shareholder within the meaning of Section
422(b)(6) of the Internal Revenue Code).
8. Limitations Regarding Ten Percent Stockholders. No Option which
is intended to qualify as an incentive stock option may be granted under this
Plan to any Eligible Employee who, at the time the Option is granted, owns, or
is considered to own, within the meaning of Section 422 of the Internal Revenue
Code, Shares possessing more than ten percent (10%) of the total
<PAGE>
combined voting power or value of all classes of stock of the Corporation or its
Subsidiaries, unless (i) the exercise price under such Option is at least one
hundred ten percent (110%) of the Fair Market Value of a Share on the date such
Option is granted and (ii) the duration of such Option is no more than five (5)
years.
9. Options Holder Not a Stockholder. An Option holder shall not be
deemed to be the holder of, or to have any of the rights of a stockholder with
respect to, any Shares subject to such Option, unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Corporation
shall have issued and delivered Shares to the Option holder, and (iii) said
holder's name shall have been entered as a stockholder of record on the books of
the Corporation. Thereupon, said holder shall have full voting, dividend and
other ownership rights with respect to such Shares.
10. Non-Transferability of Options. Options and all rights
thereunder shall be non-transferable and non-assignable by the holder thereof,
except to the extent that the representative of the estate or the heirs of a
deceased Option holder may be permitted to exercise such Options and rights
thereunder and, during the holder's lifetime, shall be exercisable only by the
holder or his or her legal representative.
11. Exercise of Options.
a. Except as otherwise provided herein, an Option, after the
grant and vesting thereof in accordance with Section 5 of this Plan,
shall be exercisable by the holder of such Option at such rate and
times as may be fixed by the Committee at the time the Option is
granted; provided, however, no Option may be exercised in part or in
full, prior to the approval of the Plan by a majority vote of the
shareholders of the Corporation, as provided in Section 20 herein.
b. Notwithstanding any other provision of this Plan, any Option
granted under the Plan which is an incentive stock option shall not be
exercisable to the extent that the Fair Market Value of the Shares
(determined as of the date of grant), with respect to which such
Option (and any other incentive stock option granted to the holder
under this Plan or any other stock option plan maintained by the
Corporation
<PAGE>
or any Subsidiary) first becomes exercisable in any calendar year,
exceeds $100,000.
c. All or any part of any remaining unexercised Options
granted to any Eligible Employee may be exercised in full, after
approval of the Plan by the stockholders of the Corporation as
provided in Section 20 herein, whether or not then vested and
exercisable, upon a Change in Control or upon the occurrence of such
special circumstance or event which, in the sole discretion of the
Committee, merits special consideration.
d. An Option shall be exercised by the delivery of a written
notice duly signed by the Option holder (or the representative of the
estate or the heirs of a deceased Option holder), together with the
Option Certificate and either (i) cash, (ii) a certified check payable
to the order of the Corporation, (iii) Shares duly endorsed over to
the Corporation (which Shares shall be valued at their Fair Market
Value as of the date preceding the day of such exercise) or (iv) any
combination of such methods of payment which together amount to the
full exercise price of the Shares purchased pursuant to the exercise
of the Option. Such payment shall be delivered to the Treasurer,
Secretary or Assistant Secretary of the Corporation who has been
designated for the purpose of receiving the same.
e. No Option may be granted or exercised pursuant to the
provisions herein when such Option, or the granting or exercise
thereof, may result in the violation of any law or governmental order
or regulation.
f. Within a reasonable time after the exercise of an Option,
the Corporation shall cause to be delivered to the person entitled
thereto a certificate for the Shares purchased pursuant to the
exercise of the Option. If the Option shall have been exercised with
respect to less than all of the Shares subject to the Option, the
Corporation shall (i) cause to be delivered to the person entitled
thereto a new Option Certificate in replacement of the Option
Certificate surrendered at the time of the exercise of the Option,
indicating the number of Shares with respect to which the Option
remains available for exercise or (ii) endorse the original Option
Certificate to give effect to the partial exercise thereof.
<PAGE>
g. No incentive stock option issued herein shall be exercised
by an Eligible Employee until such employee has been in the employ of
the Company for a period of at least three (3) months following the
date such Option is granted.
12. Disposition of Shares. If the Option is an incentive stock
option, no Shares acquired pursuant to the exercise of an Option granted herein
may be sold, exchanged, gifted or otherwise disposed of within two (2) years of
the date such Option was granted or one (1) year of the date such Option was
exercised, whichever is later.
13. Fractional Shares. The Corporation shall not be required to
issue fractional Shares pursuant to this Plan and, accordingly, Eligible
Employees may be required to accumulate vested Options, or portions thereof,
until they can purchase a whole Share or Shares.
14. Exchange of Options for Cash. The Committee may, from time to
time, in its sole discretion, grant cash to an Eligible Employee, upon his or
her written request, in exchange for any Option granted herein which is vested
but has not been exercised by such employee. The amount of cash to be granted
shall be conclusively determined by the Board, in its sole discretion, as equal
to the difference between (i) the Fair Market Value of a Share on the date such
written request is received and (ii) the exercise price of the Option. Such
written request shall be considered received when personally delivered to the
Secretary or Assistant Secretary of the Corporation or upon the receipt of a
letter sent by certified or registered mail, return receipt requested, to 1501
Opus Place, Downers Grove, Illinois 60515, or three (3) days after such letter
is sent, whichever is earlier. Upon the Committee's grant of cash, as provided
herein, such Option or Options exchanged shall be immediately terminated. This
paragraph 14 shall not be interpreted as creating any affirmative obligation on
the Committee, Corporation or its Subsidiary to purchase any such options of an
Eligible Employee, which decision shall rest in the sole discretion of the
Committee.
15. Termination of Services.
a. All or any part of any Option, to the extent unexercised,
shall terminate immediately if the Option holder ceases to be an
employee of the Corporation or its
<PAGE>
Subsidiary, or (if applicable) ceases to be an independent contractor
awarded an Option pursuant to Section 4 herein; except that, unless
otherwise provided by the Committee, the Option holder shall have
until the end of the thirtieth (30th) day following the date he or she
ceases to be an employee or independent contractor of the Corporation
or its Subsidiary to exercise any unexercised vested Option rights
that he or she could have exercised immediately prior to such
cessation; provided, however, that such exercise must be accomplished
prior to the expiration of the term of such Option. All unvested
Options shall immediately lapse if the Option holder ceases to be an
employee of the Corporation or any of its Subsidiaries or an
independent contractor who is awarded an Option pursuant to Section 4
herein. Notwithstanding the foregoing, if an individual ceases to be
an employee or independent contractor of the Corporation or its
Subsidiary due to (i) retirement on or after attaining the age of
sixty-five (65) years (or such earlier date as such person shall be
permitted under the Corporation's retirement plan), (ii) disability
(as such term is defined in Section 422(c)(6) of the Internal Revenue
Code, the existence of which shall be conclusively determined by the
Committee in its sole discretion), or (iii) death, then the Option
holder, or the representative of the estate or the heirs of a deceased
Option holder, shall have the privilege of exercising the Options
which are unexercised at the time of such retirement, disability or
death; but only to the extent that such Options, which are then
vested, are exercised (i) within three (3) months of the Option
holder's retirement, (ii) within one (1) year of the Option holder's
disability, or (iii) within one (1) year of the Option holder's death,
as the case may be; provided, however, that such exercise must be
accomplished prior to the expiration of the term of such Option. If an
Option holder ceases to be an employee or independent contractor of
the Corporation or its Subsidiary because of the Option holder's
violation of his or her duties to the Corporation and its
Subsidiaries, the existence of such violation to be conclusively
determined by the Committee in its sole discretion, all unexercised
Options of such Option holder shall immediately terminate and such
Option holder shall have no right to exercise any unexercised Option
he or she might have exercised prior to the date he or she ceased to
be an employee or independent contractor of the Corporation or its
Subsidiary.
<PAGE>
b. Nothing contained herein or in the Option Certificate shall
be construed to confer on any Eligible Employee any right to continue
in the employ of the Corporation or its Subsidiaries or derogate from
any right of the Corporation or its Subsidiaries to request, in its
sole discretion, the retirement, resignation or discharge of such
Eligible Employee, at any time, with or without cause.
16. Adjustment of Shares.
a. If, prior to the complete exercise of any Option, there
shall be declared and paid a stock dividend upon the Common Stock of
the Corporation or if the Common Stock of the Corporation shall be
split, converted, exchanged, reclassified or in any way substituted,
the Option, to the extent that it has not been exercised, shall
entitle the holder thereof, upon the future exercise of the Option, to
such number and kind of securities, cash or other property, subject to
the terms of the Option, to which he or she would have been entitled
had he or she actually owned the Shares subject to the unexercised
portion of the Option at the time of the occurrence of such stock
dividend, split, conversion, exchange, reclassification or
substitution; and the aggregate exercise price upon the future
exercise of the Option shall be the same as if the originally optioned
Shares were being purchased thereunder. If, prior to the complete
exercise of any Option, there shall be a spin-off transaction pursuant
to the reorganization of the Corporation, the Option, to the extent
that it has not been exercised, shall be adjusted by adjusting the
exercise price of the Option and adjusting the number of Shares
subject thereto, in order to reflect the decrease, if any, in the fair
market value of the Shares resulting from the spin-off transaction; in
any such case, the Option as adjusted, shall entitle the holder
thereof, upon the future exercise of the Option, to the number of
Shares which have a fair market value, immediately after the
occurrence of the spin-off transaction, equal to the fair market value
of the Shares subject to the Option on the day before the occurrence
of such spin-off transaction, and the aggregate exercise price upon
the future exercise of the Option shall be the same as the aggregate
exercise price of the Shares subject to the Option on the day before
the occurrence of such spin-off transaction. Any fractional Shares or
other securities payable upon the exercise of the Option, as a result
of such
<PAGE>
adjustment due to the occurrence of such stock dividend, stock split,
conversion, exchange, reclassification, substitution or spin-off
transaction, shall be payable in cash based upon the Fair Market Value
of such Shares or securities at the time of such exercise. If any such
event should occur, the number of Shares, with respect to which
Options remain to be issued or with respect to which Options may be
reissued, shall be adjusted in a similar manner.
b. Except as otherwise provided in Section 11.c hereof, upon
the dissolution or liquidation of the Corporation, or upon a
reorganization, merger or consolidation in which the Corporation is
not the surviving corporation or entity, or in which the Corporation
becomes a subsidiary of another corporation, or upon the sale of
substantially all of the property of the Corporation to another
corporation, both the Plan and the Options issued thereunder shall
terminate, unless a provision is made in connection with such
transaction for (i) the assumption of Options theretofore granted or
(ii) the substitution for such Option with options of the successor
employer corporation or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kinds of shares and the
per share exercise prices.
17. Issuance of Shares and Compliance with Securities Laws. Before
issuing and delivering any Shares to an Option holder, the Corporation may: (i)
require the holder to give satisfactory assurances that the Shares are being
purchased for investment and not with a view to resale or distribution, and will
not be transferred in violation of applicable federal and state securities laws,
rules and regulations, including but not limited to the Securities and Exchange
Commission Rule 144, (ii) restrict the transferability of such Shares and
require a legend to be endorsed on the certificates representing the Shares, as
appropriate to reflect resale restrictions, if any, imposed by the Committee
pursuant to the Option when granted, or as appropriate to comply with any
applicable state or federal securities laws, rules or regulations, and (iii)
condition the exercise of an Option or the issuance and delivery of Shares upon
the listing, registration or qualification of the Shares covered by such Option
upon a securities exchange or under applicable securities laws.
18. Income Tax Withholding. If the Corporation or its
<PAGE>
Subsidiary shall be required to withhold any amounts by reason of federal, state
or local tax laws, rules or regulations, in respect of the issuance of Shares
pursuant to the exercise of an Option, the Corporation or such Subsidiary shall
be entitled to deduct and withhold such amounts from any cash payments to be
made to the Option holder. In any event, the holder shall promptly make
available to the Corporation or such Subsidiary, when requested by the
Corporation or such Subsidiary, sufficient funds to meet the requirements of
such withholding, and the Corporation or such Subsidiary shall be entitled to
take and authorize such steps as it may deem advisable in order to have such
funds made available to the Corporation or such Subsidiary from any funds or
property due or to become due to the holder.
19. Administration and Amendment of the Plan.
a. Except as hereinafter provided, the Board of Directors and
the Committee may, at any time, withdraw or, from time to time, amend
the Plan as it relates to the terms and conditions of any Options not
theretofore granted. The Board of Directors and the Committee, with
the consent of each affected Option holder may, at any time, withdraw
or cancel any outstanding Option or, from time to time, amend the Plan
as it relates to the terms and conditions of any outstanding Option.
Notwithstanding the foregoing, any amendment which would increase the
number of Shares issuable under Options or change the class of persons
to whom Options may be granted, must be adopted by the Board of
Directors and shall be contingent upon the approval of the
stockholders of the Corporation within one (l) year of such amendment.
b. Determinations of the Committee as to any question which may
arise with respect to the interpretation of the provisions of the Plan
and Options shall be final. The Committee may authorize and establish
such rules, regulations and revisions thereof, not inconsistent with
the provisions of the Plan, as it may deem advisable to make the Plan
and Options effective or provide for their administration and may take
such other action with regard to the Plan and Options as it shall deem
desirable to effectuate their purpose.
20. Effective Date of the Plan.
<PAGE>
a. This Plan has been adopted and approved by the Board of
Directors, and shall be effective as of February 1, 1996; provided,
that no options may be granted under the Plan that are designated by
the Committee as incentive stock options pursuant to Section 5 hereof
prior to (i) the effective date of a registration statement on Form S-
1 filed with the Securities and Exchange Commission by the Corporation
pursuant to the Securities Act of 1933, as amended, and (ii) the
approval by the affirmative vote of the holders of a majority of the
outstanding Shares of the Corporation's voting stock, either in
person, by proxy or by consent, within 12 months following the
adoption of the Plan by the Board of Directors. In the event that this
Plan is not approved by the stockholders of the Corporation as
aforesaid, options designated as incentive stock options hereunder
shall be void and of no force or effect.
b. The Plan shall remain in full force and effect until the
close of business on October 25, 2005, at which time the right to
grant Options under the Plan shall automatically terminate, unless the
stockholders of the Corporation approve an extension or renewal of the
Plan for such new or additional term agreed upon by the stockholders.
Any options granted before the termination of the right to grant
options under the Plan shall continue to be governed thereafter by the
terms of the Plan.
21. Severability. If any provision herein shall be held unlawful or
otherwise invalid or unenforceable in whole or in part, such unlawfulness,
invalidity or unenforceability shall not affect any other provision of the Plan
or part thereof, each of which shall remain in full force and effect. If the
making of any payment required under the Plan shall be held unlawful or
otherwise invalid or unenforceable, such unlawfulness, invalidity or
unenforceability shall not prevent any other payment from being made under the
Plan, and if the making of any payment in full, as required under the Plan,
would be unlawful or otherwise invalid or unenforceable, then such unlawfulness,
invalidity or unenforceability shall not prevent such payment from being made in
part, to the extent that it would not be unlawful, invalid, or unenforceable,
and the maximum payment that would not be unlawful, invalid or unenforceable
shall be made under the Plan.
22. Governing Law. The Plan and all determinations made and actions
taken hereunder, to the extent not otherwise governed
<PAGE>
by the Code or laws of the United States of America, shall be governed by the
laws of the State of Illinois and construed accordingly.
<PAGE>
EXHIBIT 10.2
AMENDMENT NO. 1 TO
EMPLOYEE STOCK OWNERSHIP PLAN
Effective as of March 1, 1996
THIS AMENDMENT NO. 1 TO EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST is
hereby made and entered into as of this 1st day of March, 1996, by and between
May & Speh, Inc. (herein referred to as the "Employer") and Cole Taylor Bank,
and its successors and assigns, as Trustee (the "Trustee").
W I T N E S S E T H :
WHEREAS, effective as of October 1, 1988, the Employer has established
an Employee Stock Ownership Plan and Trust (as described in Section 4975(e)(7)
of the Internal Revenue Code of 1986, as it may be amended from time to time)
(the "Code"), which is known as the May & Speh, Inc. Employee Stock Ownership
Plan and Trust (the "Plan"); and
WHEREAS, the Employer and the Trustee now desire to amend the Plan to,
among other things, amend, restate and continue without interruption the trust
(the "Trust") which implements and forms a part of the Plan in the form of a
Trust Agreement dated of even date herewith, and the Plan shall hereafter be
known as the "May & Speh, Inc. Employee Stock Ownership Plan"; and
WHEREAS, the Employer and the Trustee desire to effect such amendments
in the manner set forth herein;
NOW, THEREFORE, effective March 1, 1996, the Plan is amended as
follows:
23. Section 1.18 of the Plan is amended as follows:
1.18 "Exempt Loan" means a loan made to the Plan by a
disqualified person or a loan to the Plan which is guaranteed by
a disqualified person and which satisfies the requirements of
Section 2550.408b-3 of the Department of Labor Regulations,
Section 54.4975-7(b) of the Treasury Regulations and Section III-
2 of the Trust Agreement.
24. Section 1.24 of the Plan is amended as follows:
<PAGE>
1.24 "415 Compensation" with respect to any Participant means
such Participant's wages as defined in Code Section 3401(a) and
all other payments of compensation by the Employer (in the course
of the Employer's trade or business) for which the Employer is
required to furnish the Participant a written statement under
Code Sections 6041(d), 6051(a)(3) and 6052. "415 Compensation"
must be determined without regard to any rules under Code Section
3401(a) that limit the remuneration included in wages based on
the nature or location of the employment or the services
performed (such as the exception for agricultural labor in Code
Section 3401(a)(2).
If, in connection with the adoption of this amendment and
restatement, the definition of "415 Compensation has been
modified, then, for Plan Years prior to the Plan Year which
includes the adoption date of this amendment and restatement,
"415 Compensation" means compensation determined pursuant to the
Plan then in effect.
25. Section 1.29 of the Plan is amended as follows:
Section 1.29 "Investment Manager" means an entity that (a) has
the power to manage, acquire, or dispose of Plan assets and (b)
acknowledges fiduciary responsibility to the Plan in writing.
Such entity must be a person, firm, or corporation registered as
an investment adviser under the Investment Advisers Act of 1940,
a bank, or an insurance company and must be appointed by the
Employer.
26. A new Section 1.52.1 is added as follows:
1.52.1 "Trust Agreement" means any written agreement establishing
a separate trust that forms a part of this Plan.
27. Section 2.3(d) of the Plan is amended as follows:
<PAGE>
(d) The Employer will furnish Plan Fiduciaries and Participants
with notices and information statements when voting rights must be
exercised pursuant to Article IV of the Trust Agreement.
28. Section 2.6(j) of the Plan is amended as follows:
(j) to establish and communicate to Participants a procedure and
method to insure that each Participant will vote Company Stock
allocated to such Participant's Company Stock Account pursuant to
Article IV of the Trust Agreement.
29. Section 2.8 of the Plan is amended as follows:
2.8 APPOINTMENT OF ADVISERS
The Administrator may appoint counsel, specialists,
advisers, and other persons as the Administrator or the Trustee
deems necessary or desirable in connection with the
administration of this Plan.
30. Section 4.3(c) of the Plan is amended as follows:
(c) The Company Stock Account of each Participant shall be
credited as of each Anniversary Date with Forfeitures of Company
Stock and his allocable share of Company Stock (including
fractional shares) purchased and paid for by the Plan or
contributed in kind by the Employer. Stock dividends on Company
Stock held in his Company Stock Account shall be credited to his
Company Stock Account when paid in accordance with Section III-5
of the Trust Agreement. Cash dividends on Company Stock shall be
applied as set forth in Section III-4 of the Trust Agreement;
provided, however, that when cash dividends are used to repay an
Exempt Loan, Company Stock shall be released from the Unallocated
Company Stock Suspense Account in accordance with Section III-3
of the Trust Agreement and allocated to
<PAGE>
the Participant's Company Stock Account pursuant to Section
4.3(e) and, provided further, that Company Stock allocated to the
Participant's Company Stock Account shall have a fair market
value not less than the amount of cash dividends which would have
been allocated to such Participant's Other Investments Account
for the year.
Company Stock acquired by the Plan with the proceeds of an
Exempt Loan shall only be allocated to each Participant's Company
Stock Account upon release from the Unallocated Company Stock
Suspense Account as provided in Section 4.3(e) herein. Company
Stock acquired with the proceeds of an Exempt Loan shall be an
asset of the Trust Fund and maintained in the Unallocated Company
Stock Suspense Account.
31. Section 4.3(e) of the Plan is amended as follows:
(e) All Company Stock acquired by the Plan with the
proceeds of an Exempt Loan must be added to and maintained in the
Unallocated Company Stock Suspense Account. Such Company Stock
shall be released and withdrawn from that account as if all
Company Stock in that account were encumbered in accordance with
Section III-3 of the Trust Agreement. As of each Anniversary
Date, the Plan must consistently allocate to each Participant's
obligations of the Employer under a put option binding upon the
Employer.
32. Section 5.1(f) of the Plan is amended as follows:
(f) All purchases of Company Stock shall be made in
accordance with the terms of Section III-1 of the Trust Agreement.
33. Section 5.2 of the Plan is amended as follows:
5.2 APPLICATION OF CASH
<PAGE>
Employer contributions in cash and other cash received by
the Trust Fund shall be applied in accordance with the terms of
Section III-1 of the Trust Agreement.
34. Section 5.4 of the Plan is amended as follows:
5.4 LOANS TO THE TRUST
The Plan may borrow money for any lawful purpose, provided
the proceeds of an Exempt Loan are used within a reasonable time
after receipt only for any or all of the following purposes:
(a) To acquire Company Stock.
(b) To repay such Loan.
(c) To repay a prior Exempt Loan.
35. Section 7.9(d) of the Plan is amended as follows:
(d) No Company Stock shall be subject to the right of first
refusal provided for in paragraph (a) of this Section so long as
the Company Stock is publicly traded. The term "publicly traded"
refers to a securities exchange registered under Section 6 of the
Securities Exchange Act of 1934 (15 U.S.C. 78f) or that is quoted
on a system sponsored by a national securities association
registered under Section 15A(b) of the Securities Exchange Act
(15 U.S.C. 780).
36. Section 7.10 of the Plan is amended as follows:
7.10 STOCK CERTIFICATE LEGEND
Certificates for shares distributed pursuant to the Plan
during a period in which the shares are not publicly traded (as
defined in Section 7.9(d) hereof) shall contain the following
legend:
<PAGE>
"The shares represented by this certificate are transferable only
upon compliance with the terms of MAY & SPEH, INC. EMPLOYEE STOCK
OWNERSHIP PLAN effective as of October 1, 1988, which grants to
May & Speh, Inc. a right of first refusal, a copy of said Plan
being on file in the office of the Company."
37. In recognition of the adoption of the Trust Agreement as a
separate instrument, Sections 8.1 through 8.10 of the Plan are hereby deleted in
their entirety and Section 8.11 is hereby renumbered 8.1. In addition, the
heading for Article VIII is amended to read as follows: "DIRECT ROLLOVERS".
38. Section 10.12 is amended as follows:
9.12 NAMED FIDUCIARIES AND ALLOCATION OF RESPONSIBILITY
The "named Fiduciaries" of this Plan are (1) the Employer,
(2) the Administrator and (3) the Trustee. The named Fiduciaries
shall have only those specific powers, duties, responsibilities,
and obligations as are specifically given them under the Plan. In
general, the Employer shall have the sole responsibility for
making the contributions provided for under Section 4.1; and
shall have the sole authority to appoint and remove the Trustee
and the Administrator; to formulate the Plan's "funding policy
and method"; and to amend or terminate, in whole or in part, the
Plan. The Administrator shall have the sole responsibility for
the administration of the Plan, which responsibility is
specifically described in the Plan. The Trustee shall have the
sole responsibility of management of the assets held under the
Trust, except those assets, the management of which has been
assigned to an Investment Manager, who shall be solely
responsible for the management of the assets assigned to it, all
as specifically
<PAGE>
provided in the Trust Agreement. Each named Fiduciary warrants
that any directions given, information furnished, or action taken
by it shall be in accordance with the provisions of the Plan,
authorizing or providing for such direction, information or
action. Furthermore, each named Fiduciary may rely upon any such
direction, information or action of another named Fiduciary as
being proper under the Plan, and is not required under the Plan
to inquire into the propriety of any such direction, information
or action. It is intended under the Plan that each named
Fiduciary shall be responsible for the proper exercise of its own
powers, duties, responsibilities and obligations under the Plan.
No named Fiduciary shall guarantee the Trust Fund in any manner
against investment loss or depreciation in asset value. Any
person or group may serve in more than one Fiduciary capacity. In
the furtherance of their responsibilities hereunder, the "named
Fiduciaries" shall be empowered to interpret the Plan and Trust
and to resolve ambiguities, inconsistencies and omissions, which
findings shall be binding, final and conclusive.
IN WITNESS WHEREOF, this Amendment No. 1 to the Employee Stock
Ownership Plan has been executed the day and year first above written.
May & Speh, Inc.
By: /s/ Willard E. Engel, Jr.
Name: Willard E. Engel, Jr.
Title: Vice President
May & Speh, Inc. Employee Stock
Ownership Trust
By: Cole Taylor Bank, solely in its
capacity as Trustee, and not in
<PAGE>
its corporate capacity
By: /s/ John G. Hommel
Name: John G. Hommel
Title: Senior Vice President
<PAGE>
EXHIBIT 10.3
MAY & SPEH, INC.
EMPLOYEE STOCK OWNERSHIP TRUST
(As Amended and Restated
Effective as of March 1, 1996)
THIS TRUST AGREEMENT, made and entered into as of this 1st day of March,
1996 by and between May & Speh, Inc., an Illinois corporation (the "Company"),
and Cole Taylor Bank, and its successor or successors and assigns in the trust
hereby evidenced, as trustee (the "Trustee").
WITNESSETH THAT:
WHEREAS, effective as of October 1, 1988, the Company has established an
employee stock ownership plan and trust (as described in section 4975(e)(7) of
the Internal Revenue Code of 1986, as it may be amended from time to time (the
"Code")), which is known as the May & Speh, Inc. Employee Stock Ownership Plan
and Trust (the "Plan"); and
WHEREAS, the Plan has been established for the exclusive benefit of the
eligible employees of the Company and those of any Related Company (as defined
in Article VIII below) which adopts the Plan and becomes a party to this Trust
Agreement as provided in Article VIII below (the Company and the Related
Companies that are parties hereto are sometimes referred to below collectively
as the "Employers" and individually as an "Employer"); and
WHEREAS, the Company and the Trustee now desire to amend, restate and
continue without interruption the trust (the "Trust") which implements and forms
a part of the Plan in the form of this Trust Agreement, effective as of the day
and year first above written, and the Plan shall hereafter be known as the May &
Speh, Inc. Employee Stock Ownership Plan;
NOW, THEREFORE, pursuant to the authority delegated to the undersigned
officer of the Company by resolution of its Board of Directors adopted on
October 13, 1995, IT IS AGREED, by and between the parties hereto, that the
Trust is hereby amended, restated and continued and the trust provisions
contained herein shall constitute the agreement between the Company and the
Trustee in
<PAGE>
connection with the Trust; and
IT IS FURTHER AGREED that the Trustee hereby accepts its appointment as
such under this Trust Agreement, effective as of the day and year first written
above; and
IT IS FURTHER AGREED, by and between the parties hereto as follows:
ARTICLE I
Name
This Trust Agreement and Trust hereby evidenced shall be known as the
"May & Speh, Inc. Employee Stock Ownership Trust."
ARTICLE II
Management and Control of Trust Fund Assets
II-1. Plan Administration. The Trustee shall manage and control the
assets of the Trust Fund (as defined in paragraph II-3) in accordance with the
terms of this Trust Agreement. The Plan shall be administered by such persons or
entity appointed for such purpose by the Company under the terms of the Plan
(the "Administrator"), and the Administrator shall direct the Trustee with
respect to certain matters set forth in this Trust Agreement, including payments
to participants in the Plan and other persons entitled to benefits under the
Plan. The Administrator may designate any person or persons to act on its behalf
with respect to the Trustee. The Company, the Administrator and each participant
under the Plan (to the extent of the participant's authority to exercise certain
voting rights as provided in accordance with Article IV) are "named
fiduciaries," as described in section 402 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), with respect to their authority
under the Plan and Trust. The Secretary or any Assistant Secretary of the
Company will certify to the Trustee and provide specimen signatures of the
persons who are, from time to time, the Administrator and the signatures of any
other persons who are designated by the Administrator to act on behalf of the
Administrator with respect to the Trustee. The Trustee may rely on the latest
certificate without further inquiry or verification. The Trustee may also rely
on any instrument signed by the
<PAGE>
Administrator or designated delegate, if any, thereof as to any action or
direction or absence of action or direction of the Administrator.
II-2. Plan Year and Accounting Dates. The term "Plan Year" means the
Plan's accounting year of twelve months commencing on October 1 of each year and
ending the following September 30th. The term "Accounting Date" shall mean the
last day of each Plan Year, an Accounting Date occurring under paragraph II-3,
and any other date determined by the Company or the Administrator in their
discretion.
II-3. The Trust Fund. The "Trust Fund" as at any date means all property
of every kind then held by the Trustee as assets of the Plan and Trust. The
Trustee may manage, administer and invest all contributions made by the several
Employers under the Plan as one Trust Fund. If, for any reason, it becomes
necessary to determine the portion of the Trust Fund allocable to employees and
former employees of any Employer as of any date, the Trustee shall specify such
date as an Accounting Date, and after all adjustments required under the Plan as
of that Accounting Date have been made, the portion of the Trust Fund
attributable to such employees and former employees shall be determined and
shall consist of an amount equal to the aggregate of the account balances of
employees and former employees of that Employer.
II-4. General Powers. Subject to the provisions of paragraphs II-1 and
II-6 and Articles III and IV, with respect to the Trust Fund, the Trustee shall
have the following powers, rights and duties in addition to those provided
elsewhere in this Trust Agreement or by law:
(a) to receive and to hold all contributions paid to it under the Plan;
provided, however, that the Trustee shall have no duty to require any
contributions to be made to it or to determine that the contributions
received by it comply with the provisions of the Plan or with any
resolution of the Board of Directors of any Employer providing
therefor;
(b) to retain in cash (pending investment, reinvestment or the payment of
dividends) such reasonable amount as may be required for the proper
administration of the Plan and Trust and to invest such cash as
provided in paragraph III-1;
<PAGE>
(c) to make payments from the Trust Fund to such persons, in such manner,
at such times and in such amounts as the Administrator shall direct,
without inquiring as to whether a payee is entitled to the payment, or
as to whether a payment is proper, and without liability for a payment
made in good faith without actual notice or knowledge of the changed
condition or status of the payee;
(d) to enter into ESOP Loans (as defined in paragraph III-2), whether in
the form of notes or other obligations, and whether registered for
sale to the public or sold in private transactions, to do such other
acts and things, enter into such agreements, and deliver such
documents, instruments or certificates, in each case as may be
necessary or appropriate to enter into such ESOP Loans, including but
not limited to entering into agency agreements, trust indentures,
credit support documents, paying agent agreements and transfer agent
agreements, and to take any actions with respect to any ESOP Loan, all
as the Administrator may direct;
(e) to vote any stocks (including Company Stock (as defined in paragraph
III-1) as provided in Article IV), bonds or other securities held in
the Trust, or otherwise consent to or request any action on the part
of the issuer in person or by proxy;
(f) as directed by the Administrator, to deposit securities in any voting
trust, or with any protective or like committee, or with a trustee or
with depositories designated thereby;
(g) as directed by the Administrator, to contract or otherwise enter into
transactions between itself, as Trustee, and the Company or any
Employer or any shareholder of the Company, for the purpose of
acquiring or selling Company Stock;
(h) to compromise, contest, arbitrate, settle or abandon claims and
demands;
(i) to begin, maintain or defend any litigation necessary in connection
with the investment, reinvestment and administration of the Trust;
<PAGE>
(j) to retain any funds or property subject to any dispute without
liability for the payment of interest, or to decline to make payment
or delivery thereof until final adjudication is made by a court of
competent jurisdiction;
(k) to report to the Employers as of the last day of each Plan Year, as
of any Accounting Date (or as soon thereafter as practicable), or at
such other times as may be required under the Plan, the then "Net
Worth" of the Trust Fund, that is, the fair market value of all
property held in the Trust Fund, reduced by any liabilities other than
liabilities to participants in the Plan and their beneficiaries, as
determined by the Trustee;
(l) to furnish to the Employers an annual written account and accounts
for such other periods as may be required under the Plan, showing the
Net Worth of the Trust Fund at the end of the period, all investments,
receipts, disbursements and other transactions made by the Trustee
during the accounting period, and such other information as the
Trustee may possess which the Employers require in order to comply
with section 103 of ERISA. All accounts of the Trustee shall be kept
on an accrual basis. The Trustee shall use such valuation methods for
purposes of the accounts described by this subparagraph as required by
any regulations issued by the Department of Labor under ERISA
regarding the valuation of securities or other assets for purposes of
the reports required by ERISA. All valuations of shares of Company
Stock which are not readily tradeable on an established securities
market shall be made by an "Independent Appraiser" (as described in
section 401(a)(28)(C) of the Code) chosen by the Trustee;
(m) to pay any estate, inheritance, income or other tax, charge or
assessment attributable to any benefit which it shall or may be
required to pay out of such benefit; and to require before making any
payment such release or other document from any taxing authority and
such indemnity from the intended payee as the Trustee shall deem
necessary for its protection;
(n) to employ agents, attorneys, actuaries, accountants or
<PAGE>
other persons (who also may be employed by or may represent any
Employer) for such purposes as the Trustee considers desirable;
(o) to furnish the Employers with such information in the Trustee's
possession as the Employers may need for tax or other purposes;
(p) to assume, until advised to the contrary, that the Trust evidenced by
this Trust Agreement is qualified under section 401(a) of the Code and
is entitled to tax exemption under section 501(a) thereof;
(q) to establish an investment policy and objective for the Plan
consistent with the "funding policy and method" determined by the
Company, and to have the exclusive authority and discretion, subject,
however, to the direction of an investment manager (as defined in
section 3(38) of ERISA) if the Company should appoint such manager, as
to all or a portion of the assets of the Trust Fund, to invest and
reinvest the assets of the Trust Fund in real or personal property of
any kind, except that assets attributable to Employer contributions
shall be invested primarily in Company Stock;
(r) to hold securities or other property in the name of the Trustee or its
nominee, or in any other way, with or without disclosing the trust
relationship, provided the records of the Trust and the Trustee shall
indicate the actual ownership of such securities or other property;
and
(s) to perform any and all other acts in its judgment necessary or
appropriate for the proper and advantageous management, investment and
distribution of the Trust Fund.
II-5. Compensation and Expenses. The Trustee shall be entitled to
reasonable compensation payable from the Trust Fund for its services, as agreed
to between the Company and Trustee from time to time in writing. The Trustee is
authorized to pay from the Trust Fund such fees and all of the Trustee's
expenses, taxes and charges (including fees of persons employed by him in
accordance with subparagraphs II-4(l) and (n)) incurred in connection with the
collection, administration, management, investment, protection and
<PAGE>
distribution of the Trust Fund to the extent that they are not paid directly by
the Employers.
II-6. Exercise of Trustee's Duties. The Trustee shall discharge its
duties hereunder solely in the interest of the Plan participants and other
persons entitled to benefits under the Plan, and:
(a) for the exclusive purpose of:
(i) providing benefits to participants and other persons
entitled to benefits under the Plan; and
(ii) defraying reasonable expenses of administering the Plan;
(b) with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent person acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims;
and
(c) in accordance with the documents and instruments governing the
Plan insofar as such documents and instruments are consistent with
the provisions of ERISA.
ARTICLE III
Provisions Related to
Investment in Company Stock
III-1. Investment of Cash. If an Employer's contribution for any Plan
Year is in cash, such cash shall be used first to make any scheduled or
accelerated amortization payment on any outstanding ESOP Loan, except as
otherwise directed by the Employer, and, if any amounts remain thereafter, shall
be invested as determined in the discretion of the Trustee, subject to the
provisions of the next sentence. As directed by the Administrator, the Trustee
is authorized to purchase stock that constitutes "employer securities" within
the meaning of section 409(l) of the Code ("Company Stock") with the assets of
the Trust Fund. The Trustee is further authorized to purchase Company Stock from
the Company or from any shareholder, and such stock may be outstanding, newly
issued or
<PAGE>
treasury stock. Any such purchase which is from a party-in-interest (as defined
in section 3(14) of ERISA) or a disqualified person (as defined in section 4975
of the Code) shall be without payment of any commissions and for an amount which
is no greater than adequate consideration (as defined in section 3(18) of ERISA)
for such Company Stock. Pending investment of cash in Company Stock or as it
is otherwise to be invested or used to make distributions or payments, such cash
may be invested in savings accounts, certificates of deposit, high-grade short-
term securities, common or preferred stocks, bonds, or other investments, or may
be held in cash, and may be deposited in such banking or savings institutions as
the Trustee may select, including the banking department of any bank acting as
Trustee. Such investments may include any collective investment trust, including
a collective investment trust maintained by any bank acting as Trustee, which
then provides for the pooling of the assets of plans described in section 401(a)
and exempt from tax under section 501(a) of the Code, or any comparable
provisions of any future legislation that amends, supplements or supersedes
those sections (whether or not such collective investment trust provides for the
pooling of assets of other tax-exempt trusts), provided that such collective
investment trust is exempt from tax under the Code or regulations or rulings
issued by the Internal Revenue Service and the assets of such collective
investment trust are invested in commercial paper or certificates of deposit or
other similar short term investments, and the provisions of the document
governing such collective investment trust as it may be amended from time to
time shall govern any investment therein.
III-2. ESOP Loans. The Trust has incurred, and as directed by the
Administrator the Trustee may incur, debt (an "ESOP Loan"), which may include
indebtedness to the Company or any Employer, for the purpose of acquiring
Company Stock or for the purpose of repaying all or any portion of any
outstanding ESOP Loan, subject to the following:
(a) Each ESOP Loan shall be for a specific term, and the term of each
ESOP Loan (including the sum of the expired duration of the loan, any
renewal period, any extension period, and the duration of any new
loan) shall not exceed 10 years .
(b) The interest rate with respect to an ESOP Loan may be fixed or
variable; provided, however, that in either case such rate shall not
be in excess of a reasonable rate of
<PAGE>
interest taking into account all relevant factors, including the
amount and duration of the ESOP Loan, the security and the guarantee,
if any, and the credit standing of the Plan and the guarantor, if any.
The amount of interest paid shall not exceed the amount of each
payment which would be treated as interest under standard loan
amortization tables.
(c) The only Trust assets which may be given as collateral for an ESOP
Loan are Company Stock acquired with the loan proceeds, or with the
proceeds of any prior ESOP Loan to the extent that such prior ESOP
Loan is repaid with the proceeds of the current ESOP Loan. Any such
collateral shall be released as provided in paragraph III-3.
(d) Under the terms of the ESOP Loan, no person entitled to payment
thereunder shall have any right to any Plan assets other than (i)
collateral, if any, given for the ESOP Loan in accordance with
subparagraph (c) above, (ii) Employer contributions (other than
contributions of employer securities) that are made to enable the
Trust to meets its obligations under the ESOP Loan, and (iii) earnings
attributable to such collateral and to the investment of such
contributions.
(e) Subject to paragraph (d) next above, the ESOP Loan shall be without
recourse against the Plan.
(f) Payments during any Plan Year on all outstanding ESOP Loans shall not
exceed an amount equal to the sum for all Plan Years of all Employer
contributions (other than contributions of employer securities), all
earnings on such contributions and all earnings on the Company Stock
acquired with the loan proceeds, reduced by all prior payments on ESOP
Loans during all prior Plan Years. A separate accounting shall be
maintained for such Employer contributions, cash dividends and
earnings until the ESOP Loans have been repaid.
(g) In the event of a default under the ESOP Loan, the value of Plan
assets transferred in satisfaction of the ESOP Loan shall not exceed
the amount of the default. If the lender is a disqualified person (as
defined in section 4975(e) of the Code) or a party in interest to the
Plan (as defined in section 3(14) of ERISA), the ESOP Loan
<PAGE>
shall provide for a transfer of Plan assets upon default only upon and
to the extent of the failure of the Plan to meet the payment schedule
of the ESOP Loan.
(h) In addition to the foregoing, each ESOP Loan shall meet such other
requirements as are necessary to constitute an "exempt loan" within
the meaning of Treasury Regulation section 54.4975-7(b).
III-3. Release of Company Stock From Collateral. For each Plan Year
during the duration of an ESOP Loan, the number of shares of Company Stock which
shall be released from encumbrance shall be equal to the product of the number
of shares of Company Stock, if any, which serve as collateral for such ESOP Loan
multiplied by a fraction, the numerator of which is the amount of principal paid
on the loan for that Plan Year and the denominator of which is the amount of
principal paid or payable on the loan for that Plan Year and for all future
years.
III-4. Use of Dividends. Cash dividends received by the Trustee on
shares of Company Stock shall be applied as follows:
(a) Subject to provisions of paragraph (b) below, cash dividends with
respect to shares of Company Stock acquired on or before August 4,
1989 shall be used first to make payments on the ESOP Loan, if any,
the proceeds of which were used to acquire such Company Stock and,
thereafter, to make payments on any other outstanding ESOP Loan, and
cash dividends with respect to shares of Company Stock acquired with
the proceeds of an ESOP Loan made after August 4, 1989 shall be used
to make payments on such ESOP Loan.
(b) If the Trustee is so directed by the Administrator, cash dividends (i)
shall be distributed to participants (to the extent such dividends are
attributable to shares of Company Stock allocated to their accounts)
no later than 90 days after the close of the Plan Year in which such
dividends were paid, and/or (ii) shall be used to acquire additional
shares of Company Stock, and/or (iii) shall be allocated to
participants' accounts (to the extent such dividends are attributable
to shares of Company Stock allocated to their accounts).
III-5. Stock Dividends, Splits and Other Capital
<PAGE>
Reorganizations. Any Company Stock received by the Trustee as a stock split or
dividend or as a result of a reorganization or other recapitalization of the
Company shall be allocated as of each Accounting Date under the Plan in
proportion to the Company Stock to which it is attributable.
III-6. Trustee Responsibilities Regarding Initial Public Offering.
Notwithstanding any provisions of this Trust Agreement to the contrary, with
respect to the initial public offering of shares of the Company's common stock
(the "IPO"), the Trustee shall have the sole discretion, authority and power to
sell allocated shares of Company Stock as part of the IPO on behalf of the Plan
and Trust, without direction from the Administrator.
ARTICLE IV
Voting and Other Shareholder Rights
IV-1. Voting of Shares. Company Stock held in the Trust Fund shall be
voted by the Trustee as follows:
(a) Each participant in the Plan (or if applicable, his beneficiary)
shall be entitled to direct the Trustee as to the exercise of any and
all voting rights with respect to the shares of Company Stock
allocated to his account under the Plan (i) if the Company or any
Related Company has a "registration-type class of securities" within
the meaning of section 409(e) of the Code, or (ii) with respect to
Company Stock acquired by the Plan in connection with a "securities
acquisition loan" (as defined in section 133(b) of the Code) made
after July 10, 1989. If the Company or any Related Company does not
have a registration-type class of securities, each participant in the
Plan (or if applicable, his beneficiary) shall be entitled to direct
the Trustee as to the exercise of voting rights on shares of Company
Stock allocated to his account under the Plan and not acquired by the
Plan in connection with a securities acquisition loan made after July
10, 1989, solely with respect to any corporate matter which involves
the voting of such shares with respect to the approval or disapproval
of any corporate merger or consolidation, recapitalization,
reclassification, liquidation, dissolution, sale of substantially all
assets of a trade
<PAGE>
or business, or such similar transaction as prescribed in regulations
issued by the Secretary of the Treasury. If a participant is entitled
to so direct the Trustee as to the voting of Company Stock allocated
to his account, all Company Stock as to which such instructions have
been timely received by the Trustee shall be voted in accordance with
such instructions.
(b) The Trustee shall vote the shares of Company Stock which are subject
to the pass-through voting provisions of paragraph (a) next above but
for which it does not timely receive voting directions, or which are
not allocated to participant accounts, or which are otherwise not
subject to the pass-through voting provisions of paragraph (a) next
above, in proportion to the directions received from participants on
such issue pursuant to paragraph (a) above, subject to its duties
under paragraph II-6.
IV-2. Tender and Exchange Rights. If any tender or exchange or similar
offer to purchase all or any portion of outstanding Company Stock is made by any
person, the Trustee shall accept or reject the offer with respect to the shares
of Company Stock held in the Trust Fund in accordance with the procedures set
forth in paragraph IV-1 and consistent with its duties under paragraph II-6.
ARTICLE V
Miscellaneous
V-1. Disagreement as to Acts. If there is a disagreement between the
Trustee and anyone as to any act or transaction reported in any accounting, the
Trustee shall have the right to have its account settled by a court of competent
jurisdiction.
V-2. Persons Dealing with the Trustee. No person dealing with the Trustee
shall be required to see to the application of any money paid or property
delivered to the Trustee, or to determine whether or not the Trustee is acting
pursuant to any authority granted to it under this Trust Agreement or the Plan.
V-3. Benefits May Not Be Assigned or Alienated. The interests under the
Plan and this Trust Agreement of Participants and other persons entitled to
benefits under the Plan are not subject to the claims of their creditors and may
not be voluntarily
<PAGE>
or involuntarily assigned, alienated or encumbered, except in the case of
certain qualified domestic relations orders which relate to the provision of
child support, alimony or marital rights of a spouse, child or other dependent
of a participant and which meet such other requirements as may be imposed by
section 414(p) of the Code or regulations issued thereunder.
V-4. Indemnification of Trustee. The Company shall indemnify the Trustee
as provided in Exhibit A attached hereto.
V-5. Evidence. Evidence required of anyone under this Trust Agreement
may be by certificate, affidavit, document or other instrument which the person
acting in reliance thereon considers pertinent and reliable, and signed, made or
presented by the proper party.
V-6. Waiver of Notice. Any notice required under this Trust Agreement
may be waived in writing by the person entitled thereto.
V-7. Counterparts. This Trust Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and no other
counterparts need be produced.
V-8. Governing Laws. This Trust Agreement shall be construed and
administered according to the laws of the State of Illinois to the extent that
such laws are not preempted by the laws of the United States of America.
V-9. Successors, Etc. This Trust Agreement shall be binding on the
Employers, the Trustee and their successors and on all persons entitled to
benefits under the Plan and their respective heirs and legal representatives.
V-10. Successors to Employers. If provision is made for a successor to any
Employer or a purchaser of all or substantially all of any Employer's assets to
continue the Plan, such successor or purchaser shall be substituted for that
Employer under this Trust Agreement.
V-11. Action By Employers. Any action required or permitted to be taken by
an Employer under this Trust Agreement shall be by resolution of its Board of
Directors or by a person or persons authorized by resolution of its Board of
Directors.
<PAGE>
V-12. Copy of Plan. The Company has furnished the Trustee with a copy of
the Plan and will furnish the Trustee with a copy of any amendments to the Plan
promptly after adoption of the amendments, but the rights, powers and duties of
the Trustee shall be governed solely by the terms of this Trust Agreement
without reference to the provisions of the Plan.
ARTICLE VI
No Reversion to Employers
No part of the corpus or income of the Trust Fund shall revert to any
Employer or be used for, or diverted to, purposes other than for the exclusive
benefit of Participants and other persons entitled to benefits under the Plan,
except as provided below:
(a) if a contribution or any portion thereof is made by an Employer by a
mistake of fact, the Trustee shall, upon written request of that
Employer, return the contribution or such portion, reduced by the
amount of any losses thereon, to that Employer within one year after
the date of payment to the Trustee;
(b) the contributions of each Employer under the Plan are conditioned
upon the deductibility thereof under section 404 of the Code, and, to
the extent any such deduction is disallowed, the Trustee shall, upon
written request of that Employer, return the amount of the
contribution (to the extent disallowed), reduced by the amount of any
losses thereon, to that Employer within one year after the date the
deduction is disallowed; and
(c) if, upon termination of the Plan with respect to any Employer, any
amounts are held in a suspense account maintained under section 415 of
the Code and the regulations thereunder which are attributable to the
contributions of such Employer, and such amounts may not be credited
to the Accounts of Participants, such amounts will be returned to that
Employer as soon as practicable after the termination of the Plan with
respect to that Employer.
ARTICLE VII
<PAGE>
Change of Trustee
VII-1. Resignation. The Trustee may resign at any time by giving thirty
(30) days' advance written notice to the Company and the Employers.
VII-2. Removal of the Trustee. The Company may, at its discretion, remove
the Trustee by giving thirty (30) days' advance written notice to the Trustee,
subject to providing the removed Trustee with satisfactory written evidence of
the appointment of a successor Trustee and of the successor Trustee's acceptance
of the trusteeship. The Company may fill a vacancy in the office of Trustee as
soon as practicable by writing filed with the person or corporation appointed to
fill the vacancy, with any other Trustee or Trustees then acting and with the
Employers; provided however, there must always be at least one Trustee acting.
VII-3. Duties of Resigning or Removed Trustee and of Successor Trustee.
If the Trustee resigns or is removed, it shall promptly transfer and deliver the
assets of the Trust Fund to the successor Trustee, after reserving such
reasonable amount as it shall deem necessary to provide for expenses and any
sums chargeable against the Trust Fund for which it may be liable. Within 120
days, the resigned or removed Trustee shall furnish to the Company and the
successor Trustee an account of its administration of the Trust from the date of
its last account. The successor Trustee shall succeed to the title to the Trust
Fund vested in its predecessor without the signing or filing of any further
instrument, but the resigning or removed Trustee shall execute all documents and
do all acts necessary to vest such title or record in any successor Trustee.
Any successor Trustee shall have all the powers, rights and duties conferred by
this Trust Agreement as if originally named the Trustee. The successor Trustee
shall not be personally liable for any act or failure to act of the predecessor
Trustee.
ARTICLE VIII
Additional Employers
Any Related Company (as defined below) may become a party to this Trust
Agreement by:
(a) filing with the Company and the Trustee a certified copy
<PAGE>
of a resolution of its Board of Directors to that effect; and
(b) filing with the Trustee a certified copy of a resolution of the Board
of Directors of the Company consenting to such action.
A "Related Company" is any corporation, trade or business during any period in
which it is, along with the Company, a member of a controlled group of
corporations, a group of trades or businesses under common control or an
affiliated service group, as described in sections 414(b), 414(c) and 414(m)
respectively, of the Code and the regulations issued thereunder, and any other
entity required to be aggregated with the Company pursuant to regulations issued
under section 414(o) of the Code.
ARTICLE IX
Amendment and Termination
IX-1. Amendment. Subject to the provisions of Article VI, the Company
reserves the right to amend the Trust Agreement at any time, except that no
amendment shall substantially change the rights, duties and liabilities of the
Trustee under this Trust Agreement without its consent.
IX-2. Termination. If the Plan, as applied to all of the Employers, is
terminated, all of the provisions of the Trust evidenced by this Trust Agreement
nevertheless shall continue in effect until the entire Trust Fund has been
distributed by the Trustee in accordance with the provisions of the Plan. If
the Plan, as applied to any Employer, is terminated, all of the provisions of
the Trust evidenced by this Trust Agreement, as applied to that Employer,
nevertheless shall continue in effect until the portion of the Trust Fund
attributable to employees and former employees of that Employer has been
distributed in its entirety by the Trustee in accordance with the provisions of
the Plan.
IN WITNESS WHEREOF, the Company and the Trustee have caused these presents
to be signed as of the day and year first above written.
<PAGE>
MAY & SPEH, INC.
By: /s/ Willard E. Engel, Jr.
Its: Vice President
COLE TAYLOR BANK, solely in its
capacity as Trustee, and not in its
corporate capacity.
By: /s/ John G. Hommel
Its: Senior Vice President
Exhibit A
Indemnification.
(1) Subject to the applicable provisions of ERISA, the Company hereby agrees to
discharge, indemnify and hold Cole Taylor and its shareholders, directors,
officers, employees, representatives and agents (hereinafter collectively
referred to as the "Indemnitees"), harmless from and against:
(a) any and all reasonable costs and expenses incurred by Cole Taylor in
the enforcement of the indemnification provisions of this Agreement
including, but not limited to, reasonable attorneys' fees and court
costs; and
(b) any and all past, present, or future losses, claims, damages,
expenses, or liabilities (including, but not limited to, court costs
judgments, fines, excise taxes, reasonable time charges for Cole
Taylor's time related to litigation or threatened litigation and the
aggregate amount paid in reasonable settlement of any actions, suits,
proceedings, or claims) (hereinafter collectively referred to as
"Losses") incurred by any one or more of the Indemnitees or to which
one or more of the Indemnitees may become subject, in connection with
any actions,
<PAGE>
proceedings or suits of any kind or nature whatsoever, whether civil,
criminal, administrative or investigative under any statute or common
law or otherwise, insofar as such Losses arise out of, or are based or
related directly or indirectly, upon the performance of services
rendered by one or more of the Indemnitees in connection with the
engagement of Cole Taylor as trustee of the ESOP in accordance with
the provisions of this Agreement, the Plan, or the Trust including,
but not limited to, any actions or inactions occurring pursuant to the
direction or request of the Plan's Administrator or its agent (such
indemnification shall include reasonable fees and expenses of legal
counsel and financial advisors which shall be paid as and when
billed); provided, however, that the provisions of this paragraph
shall not apply to the extent that any Loss is found in a final
judgment by a court of competent jurisdiction from which no appeal can
be or is taken to have resulted from: (i) the gross negligence of one
or more Indemnitees; or (ii) the willful misconduct of one or more
Indemnitees.
If notice of any action, claim, proceeding or investigation
(hereinafter collectively referred to as "Proceeding") is received by
one or more Indemnitees in respect to which indemnity may be sought
against the Company hereunder, such Indemnitee or Indemnitees shall
notify the Company, in writing within 30 days of the commencement
thereof, but the omission to so notify the Company shall not relieve
the Company from any liability to any one or more Indemnitees
hereunder, except to the extent that such failure shall have actually
prejudiced the defense of such action. The Company will be entitled to
participate in any such Proceeding and, to the extent that it may
wish, assume the defense of the Proceeding, with counsel reasonably
satisfactory to the Indemnitees. After notice from the Company to the
Indemnitees of its election to assume the defense of any Proceeding,
the Company will pay all costs of defense of such Proceeding of every
<PAGE>
kind whatsoever. The Company shall pay the Indemnitees' reasonable
costs of investigation, of testifying in any hearing, of responding to
discovery proceedings, or of consulting with the Company or the
Company's attorneys. Indemnitees shall have the right to employ their
own counsel in any Proceeding and the fees and expenses of such
counsel shall be paid by the Company, as they are incurred, if: (i)
Indemnitees have been advised by such counsel that there may be one or
more legal defenses available to them which are different from or
additional to defenses available to the Company (in which case the
Company shall not have the right to assume the defense of the
Proceeding on behalf of Indemnitees); (ii) the Company has not assumed
the defense of the Proceeding and employed counsel satisfactory to
Indemnitees within fifteen (15) days after notice of commencement of
the Proceeding; (iii) the employment of such counsel has been
authorized by the Company in connection with the defense of the
Proceeding; or (iv) Indemnitees have been informed by such counsel
that a conflict exists with the counsel selected by the Company.
The Company agrees that, in the event any governmental or private
department, bureau, commission or regulatory authority, including
without limitation any agency of the United States or of any state, a
committee of the Congress of the United States of America or of the
legislature of any state, or a stock exchange or other entity having
similar investigative or regulatory authority, shall investigate
Indemnitees or require Indemnitees to testify in any hearing or in
connection with any investigation or otherwise request or require
Indemnitees to respond to procedures designed to discover information
(hereinafter referred to as "Investigation") regarding, in connection
with, or by reason of, the performance of services rendered by
Indemnitees pursuant to this Agreement, Indemnitees shall have the
right to employ separate counsel in connection therewith, and
reasonable fees and expenses of such counsel shall
<PAGE>
be paid by the Company as they are incurred. The Trustee agrees that
it shall reasonably cooperate with the Company in connection with any
Investigation.
Neither termination nor completion of the engagement of Indemnitee or
Indemnitees referred to above shall affect the indemnification
provisions of this Agreement which shall nonetheless remain operative
and in full force and effect.
(2) The Company hereby agrees that, in the event a court of competent
jurisdiction holds that any payment or award of indemnification under this
Agreement shall be unavailable to any one or more of the Indemnitees from
the Company for any reason, the Company shall contribute to the aggregate
Losses such amount as shall be consistent with the Company's obligation set
forth in paragraph (1) to indemnify fully the Indemnitees, but taking into
account the basis for the denial of full indemnity by the court.
(3) The indemnification provisions of this Agreement shall be binding upon and
inure to the benefit of the assigns, successors and legal representatives
of the parties hereto. The Company hereby agrees that it shall not merge
or consolidate with any other entity or corporation in a transaction after
which the Company is not the surviving entity, nor shall it sell all or
substantially all of its assets to another person, corporation,
association, partnership or other entity, unless that other person,
corporation, association, partnership or other entity expressly assumes the
duties and obligations of the Company as set forth in this Agreement.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR
THE QUARTER ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 40,106,268
<SECURITIES> 2,752,610
<RECEIVABLES> 18,514,690
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 64,707,623
<PP&E> 25,650,704
<DEPRECIATION> 7,939,969
<TOTAL-ASSETS> 85,750,514
<CURRENT-LIABILITIES> 13,538,950
<BONDS> 15,220,171
0
0
<COMMON> 239,292
<OTHER-SE> 55,836,101
<TOTAL-LIABILITY-AND-EQUITY> 85,750,514
<SALES> 0
<TOTAL-REVENUES> 35,176,130
<CGS> 0
<TOTAL-COSTS> 27,952,341
<OTHER-EXPENSES> 544,064
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,679,725
<INCOME-TAX> 2,649,600
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,030,125
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
