[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
VERMILION BANCORP, INC.
- ----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- ----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
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(1) Amount previously paid:
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<PAGE> 2
March 30, 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Vermilion Bancorp, Inc. The meeting will be held
at the offices of American Savings Bank, located at 714 North
Vermilion Street, Danville, Illinois, on Wednesday, April 22,
1998 at 5:30 p.m., Central Time. The matters to be considered by
stockholders at the Annual Meeting are described in the
accompanying materials.
It is very important that you be represented at the Annual
Meeting regardless of the number of shares you own or whether you
are able to attend the meeting in person. We urge you to mark,
sign, and date your proxy card today and return it in the
envelope provided, even if you plan to attend the Annual Meeting.
This will not prevent you from voting in person, but will ensure
that your vote is counted if you are unable to attend.
Your continued support of and interest in Vermilion Bancorp, Inc.
are sincerely appreciated.
Sincerely,
/s/Merrill G. Norton
Merrill G. Norton
President and Chief Executive Officer
<PAGE>
VERMILION BANCORP, INC.
714 North Vermilion Street
Danville, Illinois 61832
(217) 442-0270
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 22, 1998
NOTICE IS HEREBY GIVEN that an Annual Meeting of
Stockholders of Vermilion Bancorp, Inc., ("Company") will be held
at the office of American Savings Bank, located at 714 North
Vermilion Street, Danville, Illinois on Wednesday, April 22,
1998, at 5:30 p.m., Central Time, for the following purposes, all
of which are more completely set forth in the accompanying Proxy
Statement:
1. To elect two directors of the Company for a three-
year term and until their successors are elected and qualified;
2. To consider and approve the adoption of the Company's
1998 Stock Option Plan;
3. To consider and approve the adoption of the Company's
1998 Recognition and Retention Plan and Trust;
4. If necessary, to adjourn the Annual Meeting to
solicit additional proxies;
5. To ratify the appointment of Geo. S. Olive & Co. LLC,
as the Company's independent auditors for the fiscal year ending
September 30, 1998; and
6. To transact such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors of the Company has fixed March 27,
1998, as the voting record date for the determination of
stockholders entitled to notice of and to vote at the Annual
Meeting. Only those stockholders of record as of the close of
business on that date will be entitled to vote at the Annual
Meeting or at any such adjournment.
BY ORDER OF THE BOARD OF DIRECTORS
William T. Ingram, Secretary
March 30, 1998
Danville, Illinois
<PAGE>
VERMILION BANCORP, INC.
____________________________
PROXY STATEMENT
____________________________
ANNUAL MEETING OF STOCKHOLDERS
April 22, 1998
General
This Proxy Statement is being furnished to the stockholders
of the Vermilion Bancorp, Inc. (the "Company") in connection with
the solicitation of proxies by the Board of Directors for use at
its Annual Meeting of Stockholders ("Annual Meeting") to be held
at the office of American Savings Bank (the "Bank"), located at
714 North Vermilion Street, Danville, Illinois, on Wednesday,
April 22, 1998, at 5:30 p.m., Central Time, and at any
adjournment thereof, for the purposes set forth in the Notice of
Annual Meeting of Stockholders. This Proxy Statement is first
being mailed to stockholders on or about March 30, 1998.
Voting Rights
Only the holders of record of the outstanding shares of the
common stock, $0.01 par value per share, of the Company ("Common
Stock") at the close of business on March 27,1998 (the "Voting
Record Date") will be entitled to notice of and to vote at the
Annual Meeting. At such date, there were 396,750 shares of
Common Stock issued and outstanding.
Each share of Common Stock is entitled to one vote at the
Annual Meeting on all matters properly presented at the meeting.
Directors are elected by a plurality of the votes cast with a
quorum present. The affirmative vote of the holders of a majority
of the total votes eligible to be cast in person or by proxy at
the Annual Meeting is required for approval of the proposals to
approve the Company's 1998 Stock Option Plan ("Stock Option
Plan") and the Company's 1998 Recognition and Retention Plan and
Trust ("Recognition Plan"). A majority of the total votes
present in person and by proxy will be required to adjourn the
Annual Meeting, if such action is required to be voted on. The
affirmative vote of the holders of a majority of the total votes
present, in person or by proxy, at the Annual Meeting is required
for approval of the proposal to ratify the independent auditors.
The presence, either in person or by proxy, of the holders of a
majority of the shares of Common Stock outstanding on the Voting
Record Date is necessary to constitute a quorum at the Annual
Meeting. Because of the required votes, abstentions will have
the same effect as a vote against the proposals. Under rules
applicable to broker-dealers, the proposal for adjournment, if
necessary, is considered a "discretionary" item upon which
brokerage firms may vote in their discretion on behalf of their
clients if such clients have not furnished voting instructions
and for which there will not be "broker non-votes." The
proposals to approve the Stock Option Plan and the Recognition
Plan, however, are considered "non-discretionary" and for which
there may be broker non-votes. A broker non-vote will have the
same effect as a vote against the proposals to approve the Stock
Option Plan and the Recognition Plan.
Proxies
Shares of Common Stock represented by properly executed
proxies, if such proxies are received in time and not revoked,
will be voted in accordance with the instructions indicated on
the proxies. IF NO INSTRUCTIONS ARE INDICATED, SUCH PROXIES WILL
BE VOTED FOR THE NOMINEES FOR DIRECTOR DESCRIBED HEREIN,
FOR APPROVAL OF THE 1998 STOCK OPTION PLAN, FOR THE APPROVAL OF
THE 1998 RECOGNITION AND RETENTION PLAN AND TRUST, FOR
ADJOURNMENT OF THE ANNUAL MEETING, IF NECESSARY, TO SOLICIT
ADDITIONAL PROXIES, FOR RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT AUDITORS, AND, IN THE DISCRETION OF THE PROXY HOLDER,
AS TO ANY OTHER MATTER WHICH MAY PROPERLY COME BEFORE THE
ANNUAL MEETING. ANY HOLDER OF COMMON STOCK WHO RETURNS A
SIGNED PROXY BUT FAILS TO PROVIDE INSTRUCTIONS AS TO THE MANNER
IN WHICH SUCH SHARES ARE TO BE VOTED WILL BE DEEMED TO HAVE
VOTED IN FAVOR OF THE MATTERS SET FORTH IN THE PRECEDING SENTENCE.
A Company stockholder who has given a proxy may revoke it at
any time prior to its exercise at the Annual Meeting by (i)
giving written notice of revocation to the Secretary of the
Company (ii) properly submitting to the Company a duly-executed
proxy bearing a later date, or (iii) attending the Annual Meeting
and voting in person. All written notices of revocation and
other communications with respect to revocation of proxies should
be addressed as follows: Vermilion Bancorp, Inc., 714 North
Vermilion Street, Danville, Illinois 61832, Attention: Secretary.
Beneficial Ownership
The following table sets forth information as to the Common
Stock beneficially owned, as of March 27, 1998, by the only
persons or entities known to the Company to be the beneficial
owners of more than 5% of the Common Stock and by all directors
and officers of the Company as a group.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership (1)
Vermilion Bancorp,
Inc. Employee
Stock Ownership
Plan 31,740(2) 8.0%
Tonetine Financial
Partners, L.P. (3) 39,600 9.9%
Directors:
Merrill G. Norton 15,250 3.8%
Carl Busby 15,400 3.9%
Thomas B. Meyer 7,700 1.9%
Dr. Robert Ewbank 15,000 3.8%
William T. Ingram 15,000 3.8%
All directors and
Officers of the
Company as a Group
(6 persons) 72,600 18.3%
____________________________
(1) Pursuant to rules promulgated by the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended ("Exchange Act"), a person or entity is
considered to beneficially own shares of Common Stock if the
person or entity has or shares (i) voting power, which includes
the power to vote or to direct the voting of the shares, or (ii)
investment power, which includes the power to dispose or direct
the disposition of the shares. Unless otherwise indicated, a
person or entity has sole voting and sole investment power with
respect to the indicated shares. Shares which are subject to
stock options and which may be exercised within 60 days of the
Voting Record Date are deemed to be outstanding for the purpose
of computing the percentage of Common Stock beneficially owned
by such person.
(2) The Vermilion Bancorp, Inc., Employee Stock Ownership
Plan Trust ("Trust") was established pursuant to the Vermilion
Bancorp, Inc., Employee Stock Ownership Plan ("ESOP") by an
agreement between the Company and Messrs. Thomas B. Meyer,
William T. Ingram, and Merrill G. Norton, who act as trustees of
the plan ("Trustees"). As of March 27, 1998, 31,740 shares held
in the Trust had been designated for allocation to participating
employees. Specific allocated shares for each participating
employee have not been computed at this time by the ESOP
administrators. Under the terms of the ESOP, the Trustees will
generally vote the allocated shares held in the ESOP in
accordance with the instructions of the participating employees.
Unallocated shares held in the ESOP will generally be voted in
the same ratio on any matter as those allocated shares for which
instructions are given, subject in each case to the fiduciary
duties of the ESOP Trustees and applicable law. Any allocated
shares which either abstain on the proposal or are not voted will
be disregarded in determining the percentage of stock voted for
and against each proposal by the participants and beneficiaries.
The amount of Common Stock beneficially owned by directors who
serve as Trustees of the ESOP and by all directors and executive
officers as a group does not include the unallocated shares held
by the Trust.
(3) Based upon a Schedule 13D filed by Tontine Financial
Partners, L.P., on April 4, 1997, Tontine Financial Partners,
L.P., is a private investment limited partnership investing in
financial institutions.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's
officers, directors and persons who own more than 10% of the
Company's Common Stock to file reports of ownership and changes
in ownership with the SEC and the National Association of
Securities Dealers, Inc. Officers, directors and greater than 10%
stockholders are required by regulation to furnish the company
with copies of all forms they file pursuant to Section 16(a) of
the Exchange Act. The Company knows of no person who owns 10% or
more of the Company's Common Stock.
Based solely on review of the copies of such forms furnished
to the Company, or written representations from its officers and
directors, the Company believes that during the fiscal year ended
September 30, 1997, the Company's officers and directors complied
in all respects with the reporting requirements promulgated under
Section 16(a) of the 1934 Act.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR
AND DIRECTORS WHOSE TERMS CONTINUE
Election of Directors
The Bylaws of the Company provide that the Board of
Directors shall be divided into three classes which are as equal
in number as possible, and that the members of each class of
directors are to be elected for a term of three years and until
their successors are elected and qualified.
At the Annual Meeting, stockholders of the Company will be
asked to elect two directors of the Company for a three-year term
and until their successors are elected and qualified. The
nominees for election as directors were selected by the
Nominating Committee of the Board of Directors and, each nominee
currently serves as a director of the Company. There are no
arrangements or understandings between the persons named and any
other person pursuant to which such person was selected as a
nominee for election as a director at the Annual Meeting. No
director or nominee for director is related to any other director
or executive officer of the Company by blood, marriage or
adoption.
If any person named as nominee should be unable or unwilling
to stand for election at the time of the Annual Meeting, the
proxies will nominate and vote for any replacement nominee or
nominees recommended by the Board of Directors of the Company.
At this time, the Board of Directors knows of no reason why any
of the nominees may not be able to serve as a director if
elected.
The following tables present information concerning each
nominee for director and each director whose term continues and
reflects his tenure as a director of the Company (including
service as a director of the Bank), his principal occupation
during the past five years as well as the number of shares of
Common Stock beneficially owned by each such person as of the
Voting Record Date. Each nominee and each director has been a
director of the Company since its formation in 1997.
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM
Position with Common Stock
the Company and Bank and Beneficially
Principal Occupation Owned as of
During the Director March27,1998(1)
Name Age Past Five Years Since No. %
William T. Ingram 56 Director. Mr. Ingram 1990 15,000(2) 3.8%
operates a number of
businesses in the Danville,
Illinois area, including
Automobile Diagnostics,
Quick Air Freight, Ingram's
Quicklube and Ingram's
Apartments.
Dr. Robert Ewbank 65 Director. Dr. Ewbank has 1983 15,000(3) 3.8%
been a medical consultant
since 1995 when he retired
from his oral and
maxillofacial surgery
practice in Danville, Illinois.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
NOMINEES BE ELECTED AS DIRECTORS
DIRECTORS WITH TERMS EXPIRING IN 1999
Position with Common Stock
the Company and Bank and Beneficially
Principal Occupation Owned as of
During the Director March 27,1998(1)
Name Age Past Five Years Since No. %
Merrill G. Norton 52 Director, President and 1996 15,250(4) 3.8%
Chief Executive Officer.
Mr. Norton has served as
the Bank's president and
chief executive officer
since 1992, and the
Company's President and
Chief Executive Officer
since 1997. He was the
sole proprietor of
Merrill G. Norton,
CPA from 1973 to 1992.
Carl W. Busby 68 Director, Mr. Busby is 1993 15,400(5) 3.9%
an auctioneer, farm and real
estate appraiser and
agriculture real estate
salesman. He is the president
and owner with his wife of
Busby Farms, Inc. and Busby
Land and Auction Co., Inc.
<PAGE>
DIRECTOR WITH TERM EXPIRING IN 2000
Position with Common Stock
the Company and Bank and Beneficially
Principal Occupation Owned as of
During the Director March 27,1998(1)
Name Age Past Five Years Since No. %
Thomas B. Meyer 53 Chairman of the 1972 7,700(6) 1.9%
Board; Mr. Meyer
is an attorney in private
practice in Danville, Illinois.
He has served as Chairman of the
Board of the Bank since 1992
and of the Company since 1997.
____________________________
(1) Based on information furnished by the respective
individuals. Pursuant to rules promulgated by the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of
1934, as amended ("Exchange Act"), a person or entity is
considered to beneficially own shares of Common Stock if the
person or entity has or shares (i) voting power, which includes
the power to vote or to direct the voting of the shares, or
(ii)investment power, which includes the power to dispose or
direct the disposition of the shares. Unless otherwise
indicated, a person or entity has sole voting and sole
investment power with respect to the indicated shares. Shares
which are subject to stock options and which may be exercised
within 60 days of the Voting Record Date are deemed to be
outstanding for the purpose of computing the percentage of Common
Stock beneficially owned by such person.
(2) Includes 5,000 shares held by Mr. Ingram and his wife,
3,400 shares held by his wife, 1,600 shares held by Mr. Ingram's
individual retirement account, and 1,600 shares held by the
individual retirement account of his wife.
(3) Includes 5,000 shares held by Dr. Ewbank and his wife
and 5,000 shares held by his wife.
(4) Includes 7,700 shares held by the Mr. Norton's
individual retirement account and that of his spouse, 3,300
shares owned jointly with his spouse, and 4,250 in Mr. Norton's
401K with the Company.
(5) Includes 5,000 shares held jointly by Mr. Busby and his
wife, 5,000 shares held by Busby Farms, Inc., owned jointly with
his wife, and 5,400 shares held by Mr. Busby's individual
retirement account.
(6) Includes 5,000 shares held jointly by Mr. Meyer and his
wife and 2,700 shares held by Mr. Meyer's individual retirement
account.
The Board of Directors and Its Committees
Regular meetings of the Board of Directors of the Company
are held once a month and special meetings of the Board of
Directors of the Company are held from time-to-time as needed.
There were 4 meetings of the Board of Directors of the Company
and 17meetings of the Board of Directors of the Bank held during
fiscal 1997. No director attended fewer than 75% of the total
number of meetings of the Board of Directors of the Company or of
the Board of Directors of the Bank held during fiscal 1997 and
the total number of meetings held by all committees of the Board
on which the director served during such year.
The Company's business is primarily conducted through the Bank,
an Illinois-chartered savings bank and a wholly owned subsidiary
of the Company. The Board has established various committees to
which it has delegated certain responsibilities, including a
Nominating Committee, Investment Committee, Audit Committee,
Promotion and Advertising Committee and Interest Rate Risk/Asset
Liability Committee. No director attended fewer than 75% of the
total number of Board meetings and meetings of Board committees
on which he served during the fiscal year ended September 30,
1997.
All of the Board members serve on the Investment Committee
and the Interest Rate Risk/Asset Liability Committee and all of
the Board members except for Mr. Norton serve on the Nominating
Committee. The Audit Committee's current members are Messrs.
Meyer, Ewbank and Busby and the members of the Promotion and
Advertising Committee are Messrs. Norton and Ingram. During
fiscal 1997, the Investment Committee met 12 times, the Interest
Rate Risk/Asset Liability Committee met quarterly, the Promotion
and Advertising Committee met 3 times, the Audit Committee met 2
times and the Nominating Committee met once.
The Nominating Committee will consider nominations made by
shareholders in conformance with the Company's Articles of
Incorporation.
Directors' Compensation
Members of the Bank's Board of Directors receive $500 per
month plus $400 per special meeting attended. Board fees are
subject to adjustment by the Board of Directors annually. Board
members receive no additional fees for service on board
committees. Each of the Bank's directors also serves on the
G.B.W. Service Corporation's board of directors without
compensation.
Executive Officers Who Are Not Directors
The following table sets forth certain information with
respect to the one executive officer of the Company who is not a
director. There are no arrangements or understandings between the
Company and such person pursuant to which such person was elected
an executive officer of the Company, and such officer is not
related to any director or officer of the Company by blood,
marriage or adoption.
Name Age Position
Terry L Stal 46 Treasurer
____________________
Set forth below is information with respect to the principal
occupations of the above executive officer during the last five
years.
Terry L. Stal. Mr. Stal has been Treasurer of the Company
since its formation in January of 1997. He has also served as
Vice President and Controller of the Bank since 1996. He was
previously Director, Secretary and Treasurer of First Prairie
Bankshares, Inc., Georgetown, Illinois and Director and Cashier
of the First National Bank, Georgetown, Illinois until 1995. In
1996 he served in various capacities as an employee of Eliot
Construction Company, Georgetown, Illinois.
EXECUTIVE COMPENSATION
Summary
The following table sets forth a summary of certain
information concerning the compensation awarded to or paid by the
Company, for services rendered in all capacities during the last
fiscal year to the Chief Executive Officer of the Company and,
for the fiscal years ended September 30, 1996 and September 30,
1995, concerning compensation awarded to or paid by the Bank, for
services rendered in all capacities during the last two fiscal
years to the Chief Executive Officer of the Bank. No other
executive officer received salary and bonuses aggregating more
than $100,000 during any of the last three fiscal years.
<TABLE>
Summary Compensation Table
Annual Compensation Long Term Compensation
Other Awards Payouts
Name and Fiscal Annual All Other
Principal Year Salary(1) Bonus Compensation(2) Compensation
Restricted LTIP
Options Stock Payouts
Awards
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Merrill G. 1997 $83,900 $280 -- -- $-- $-- $--
Norton 1996 83,200 250 -- -- -- -- --
1995 81,300 200 -- -- -- -- --
</TABLE>
____________________________
(1) Includes directors fees and fees for services as an
officer and director of G.B.W. Service Corporation, a subsidiary
of the Bank.
(2) Does not include amounts attributable to miscellaneous
benefits received by the named executive officer, including the
payment of club membership dues. The costs to the Company of
providing such benefits to the named executive officer during the
year ended September 30, 1997 did not exceed the lesser of
$50,000 or 10% of the total of annual salary and bonus reported
for such individual.
Employment Agreement
On January 15, 1997, the Bank has entered into an employment
agreement with Mr. Norton under which the Bank agreed to employ
Mr. Norton for a term of three years in his current position at
an initial base salary of $76,000. The agreement is terminable
with or without cause by the Bank. Under the agreement, Mr.
Norton has no right to compensation or other benefits for any
period after voluntary termination or termination by the Bank for
cause, provided, however, that (i) in the event that the Bank
fails to comply with any material provision of the employment
agreement he shall be entitled to severance payments equal to his
annual salary multiplied by three or (ii) if certain adverse
actions are taken with respect to the officer's employment
following a Change in Control of the Company, as defined, Mr.
Norton will be entitled to cash severance payments equal to his
average annual compensation at the date of termination multiplied
by two. A Change in Control of the Company is generally defined
in the employment agreement to mean a change in control of a
nature that would be required to be reported in response to Item
6(c) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended. Mr. Norton's
employment agreement provides that in the event that any payments
to be paid thereunder are deemed to constitute "excess parachute
payments" and, therefore, subject to an excise tax under Section
4999 of the Code, the amount of severance shall be reduced to an
amount that will not result in any excess parachute payments.
Mr. Norton's agreement also provides that in the event of Mr.
Norton's disability, retirement or death during the term of the
agreement, Mr. Norton or his estate will receive payments equal
to the amount of compensation for 12 months at his then current
base salary. Based upon compensation levels at January 1, 1998,
in the event of a termination of employment following a Change in
Control, Mr. Norton would receive $152,320 in cash severance.
Although the above-described employment agreement could
increase the cost of any acquisition of control of the Company,
management of the Company does not believe that the terms thereof
would have a significant anti-takeover effect.
Indebtedness of Management
The Bank, in the ordinary course of business, makes
available to its directors and executive officers mortgage loans
on their primary residences, consumer loans and loans on their
savings accounts. Such loans are made on the same terms as
comparable loans to other borrowers.
PROPOSAL TO ADOPT THE 1998 STOCK OPTION PLAN
General
The Board of Directors has adopted the Stock Option Plan to
improve the growth and profitability of the Company and the Bank
by providing employees and non-employee directors with a
proprietary interest in the Company as an incentive to contribute
to the success of the Company and the Bank, and to reward
employees for outstanding performance. The Stock Option Plan
provides for the grant of incentive stock options intended to
comply with the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") ("incentive stock
options"), non-qualified or compensatory stock options and stock
appreciation rights (collectively "Awards"). Awards will be
available for grant to directors and key employees of the Company
and any subsidiaries, except that directors will not be eligible
to receive incentive stock options. If stockholder approval is
obtained, options to acquire shares of Common Stock will be
awarded to key employees of the Company and the Bank and
directors of the Company (up to 14 persons) with an exercise
price equal to the fair market value of the Common Stock on the
date of such approval.
Description of the Stock Option Plan
The following description of the Stock Option Plan is a
summary of its terms and is qualified in its entirety by
reference to the Stock Option Plan, a copy of which is attached
hereto as Appendix A.
Administration. The Stock Option Plan is administered and
interpreted by a committee of the Board of Directors
("Committee") that is composed solely of two or more "Non-
Employee Directors."
Stock Options. Under the Stock Option Plan, the Board of
Directors or the Committee determines which officers and key
employees will be granted options, whether such options will be
incentive or compensatory options, the number of shares subject
to each option, whether such options may be exercised by
delivering other shares of Common Stock and when such options
become exercisable. The aggregate amount of Awards made to all
Non-Employee Directors may not exceed 11,902 shares (or 30% of
the number of shares available under this Plan), no individual
Non-Employee Director may receive Awards in excess of 11,902
shares divided by the number of Non-Employee Directors serving at
the time the Award is made (currently a limit of 2,975 shares
based upon 4 Non-Employee Directors), and no individual Employee
may receive Awards in excess of 9,918 shares (or 25% of the number
of shares available under this Plan). The per share exercise
price of a stock option shall be not less than to the fair market
value of a share of Common Stock on the date the option is
granted.
All options granted to participants under the Stock Option
Plan shall become vested and exercisable at the rate of 33 1/3%
per year over three years, commencing on the date of grant and an
additional 33 1/3% shall vest on each successive annual
anniversary of the date the options were granted, and the right
to exercise shall be cumulative. Notwithstanding the foregoing,
no vesting shall occur on or after a participant's employment
with the Company is terminated for any reason other than his
death or disability. Unless the Committee shall specifically
state otherwise at the time an option is granted, all options
granted to participants shall become vested and exercisable in
full on the date an optionee terminates his employment with or
service to the Company or a subsidiary company because of his
death or disability. In addition, all stock options will become
vested and exercisable in full on the date of a change in control
of the Company or on the date an optionee terminates his
employment or service to the Company or a subsidiary company due
to retirement, each as defined in the Stock Option Plan, if, as
of such date of retirement or change in control of the Company,
such treatment is either authorized or is not prohibited by
applicable laws and regulations.
Each stock option or portion thereof shall be exercisable at
any time on or after it vests and is exercisable until the
earlier of ten years after its date of grant or three months
after the date on which the optionee's employment or service as a
non-employee director terminates, unless extended by the
Committee to a period not to exceed five years from such
termination. However, failure to exercise incentive stock
options within three months after the date on which the
optionee's employment terminates may result in adverse tax
consequences to the optionee. If an optionee dies while serving
as an employee or a non-employee director or terminates his
service as an employee or a non-employee director as a result of
disability without having fully exercised his options, the
optionee's executors, administrators, legatees or distributees of
his estate shall have the right to exercise such options during
the twelve-month period following the earlier of his death or
termination due to disability, provided no option will be
exercisable more than ten years from the date it was granted.
Stock options are non-transferable except by will or the laws of
descent and distribution. Notwithstanding the foregoing, an
optionee who holds non-qualified options may transfer such
options to his or her spouse, lineal ascendants, lineal
descendants, or to a duly established trust for the benefit or
one or more of these individuals. Options so transferred may
thereafter be transferred only to the optionee who originally
received the grant or to an individual or trust to whom the
optionee could have initially transferred the option. Options
which are so transferred shall be exercisable by the transferee
according to the same terms and conditions as applied to the
optionee.
Payment for shares purchased upon the exercise of options
may be made in cash or, at the discretion of the Committee or the
Board, by delivering shares of Common Stock (including shares
acquired pursuant to the exercise of an option) or other property
with a fair market value equal to the total option price, by
withholding some of the shares of Common Stock which are being
purchased upon exercise of an option, or any combination of the
foregoing. To the extent an optionee already owns shares of
Common Stock prior to the exercise of his or her option, such
shares could be used (if permitted by Committee or the Board) as
payment for the exercise price of the option. If the fair market
value of a share of Common Stock at the time of exercise is
greater than the exercise price per share, this feature would
enable the optionee to acquire a number of shares of Common Stock
upon exercise of the option which is greater than the number of
shares delivered as payment for the exercise price. In addition,
an optionee can exercise his or her option in whole or in part
and then deliver the shares acquired upon such exercise (if
permitted by the Committee or the Board) as payment for the
exercise price of all or part of his options. Again, if the fair
market value of a share of Common Stock at the time of exercise
is greater than the exercise price per share, this feature would
enable the optionee to either (1) reduce the amount of cash
required to receive a fixed number of shares upon exercise of the
option or (2) receive a greater number of shares upon exercise of
the option for the same amount of cash that would have otherwise
been used. Because options may be exercised in part from time to
time, the ability to deliver Common Stock as payment of the
exercise price could enable the optionee to turn a relatively
small number of shares into a large number of shares.
Stock Appreciation Rights. Under the Stock Option Plan, the
Board of Directors or the Committee is authorized to grant rights
to optionees ("stock appreciation rights") under which an
optionee may surrender any exercisable incentive stock option or
compensatory stock option or part thereof in return for payment
by the Company to the optionee of cash or Common Stock in an
amount equal to the excess of the fair market value of the shares
of Common Stock subject to option at the time over the option
price of such shares, or a combination of cash and Common Stock.
Stock appreciation rights may be granted concurrently with the
stock options to which they relate or at any time thereafter
which is prior to the exercise or expiration of such options.
Number of Shares Covered by the Stock Option Plan. A total
of 39,675 shares of Common Stock has been reserved for issuance
pursuant to the Stock Option Plan, which is 10% of the Common
Stock issued in connection with the conversion of American
Savings Bank from the mutual to stock form or organization
completed on March 25, 1997 ("Conversion"). In the event of a
stock split, reverse stock split or stock dividend, the number of
shares of Common Stock under the Stock Option Plan, the number of
shares to which any Award relates and the exercise price per
share under any option shall be adjusted to reflect such increase
or decrease in the total number of shares of the Common Stock
outstanding.
Amendment and Termination of the Stock Option Plan. Unless
sooner terminated, the Stock Option Plan shall continue in effect
for a period of ten years from the date the Stock Option Plan was
adopted by the Board and became effective by its terms.
Termination of the Stock Option Plan shall not affect any
previously granted Awards.
Federal Income Tax Consequences. Under current provisions
of the Code, the federal income tax treatment of incentive stock
options and compensatory stock options is different. As regards
incentive stock options, an optionee who meets certain holding
period requirements will not recognize income at the time the
option is granted or at the time the option is exercised, and a
federal income tax deduction generally will not be available to
the Company at any time as a result of such grant or exercise.
With respect to compensatory stock options, the difference
between the fair market value on the date of exercise and the
option exercise price generally will be treated as compensation
income upon exercise, and the Company will be entitled to a
deduction in the amount of income so recognized by the optionee.
The above description of tax consequences under federal law
is necessarily general in nature and does not purport to be
complete. Moreover, statutory provisions are subject to change,
as are their interpretations, and their application may vary in
individual circumstances. Finally, the consequences under
applicable state and local income tax laws may not be the same as
under the federal income tax laws.
Accounting Treatment. Stock appreciation rights will, in
most cases, require a charge against the earnings of the Company
each year representing appreciation in the value of such rights
over periods in which they become exercisable. Such charge is
based on the difference between the exercise price specified in
the related option and the current market price of the Common
Stock. In the event of a decline in the market price of the
Common Stock subsequent to a charge against earnings related to
the estimated costs of stock appreciation rights, a reversal of
prior charges is made in the amount of such decline (but not to
exceed aggregate prior charges).
Neither the grant nor the exercise of an incentive stock
option or a compensatory stock option under the Option Plan
currently requires any charge against earnings under Generally
Accepted Accounting Principles ("GAAP"). This treatment
currently is being evaluated by the Financial Accounting
Standards Board, which has issued an exposure draft which would
require the recognition of expense under GAAP based upon the fair
market value of stock compensation awards when stock options and
similar awards are granted, and thus could change in the future.
In certain circumstances, shares issuable pursuant to outstanding
options under the Option Plan might be considered outstanding for
purposes of calculating earnings per share.
Stockholder Approval. No Awards will be granted under the
Stock Option Plan unless the Stock Option Plan is approved by
stockholders. Stockholder ratification of the Stock Option Plan
will satisfy certain federal tax requirements.
Awards to be Granted. The Board of Directors of the Company
adopted the Stock Option Plan and approved the initial grant of
non-qualified options to non-employee directors of the Company
and the Bank. The options shall be effective upon stockholder
approval of the Stock Option Plan with a per share exercise price
equal to the fair market value of a share of Common Stock on the
date of such approval. The following table sets forth certain
information with respect to such initial grants. The Company has
reserved the right to make future grants of shares to executive
officers and employees of the Company and the Bank. The market
value of shares of Common Stock of Vermilion Bancorp, Inc., at
March 20, 1998 was $15 3/4 per share.
Name of Individual or Number of Shares
Title Subject to
Number of Persons in Group Stock Options
All non-employee directors --- 11,902
as a group (4 persons)
____________________________
(1) The amount of options to be granted to the executive
officers, to executive officers as a group (2 persons) and all
employees, not including executive officers, as a group
(8persons) has not been determined.
The Board of Directors recommends that stockholders vote FOR
adoption of the Stock Option Plan.
<PAGE>
PROPOSAL TO ADOPT THE 1998 RECOGNITION
AND RETENTION PLAN AND TRUST
General
The Board of Directors of the Company has adopted the
Recognition Plan, the objective of which is to retain personnel
of experience and ability in key positions by providing employees
and non-employee directors of the Company and the Bank with a
proprietary interest in the Company as compensation for their
contributions to the Company and the Bank and as an incentive to
make such contributions in the future. Officers and key
employees of the Company who are selected by the Board of
Directors of the Company or a committee thereof, as well as non-
employee directors of the Company, (for a total of 6 officers, key
employees and directors) will be eligible to receive benefits
under the Recognition Plan. If stockholder approval is obtained,
shares will be granted to employees and to non-employee directors
as described below.
_Description of the Recognition Plan
The following description of the Recognition Plan is a
summary of its terms and is qualified in its entirety by
reference to the Recognition Plan, a copy of which is attached
hereto as Appendix B.
Administration. The Recognition Plan is administered and
interpreted by a committee of the Board of Directors
("Committee") that is composed solely of two or more "Non-
Employee Directors."
Upon stockholder approval of the Recognition Plan, the
Company will acquire Common Stock on behalf of the Recognition
Plan, in an amount necessary to purchase the number of shares of
Common Stock equal to 4% of the Common Stock issued in the
Conversion, or 15,870 shares. It is anticipated that these shares
will be acquired through open market purchases. The aggregate
amount of Awards made to all Non-Employee Directors may not
exceed 4,761 shares (or 30% of the number of shares available
under this Plan), no individual Non-Employee Director may receive
Awards in excess of 4,761 shares divided by the number of Non-
Employee Directors serving at the time the Award is
made (currently a limit of 1,190 shares based upon 4 Non-Employee
Directors), and no individual Employee may receive Awards in
excess of 3,967 shares (or 25% of the number of shares available
under this Plan).
Grants. Shares of Common Stock granted pursuant to the
Recognition Plan will be in the form of restricted stock and
shall be earned by a recipient at the rate of 33 1/3% per year
over three years, commencing on the date of grant and an
additional 33 1/3% shall be earned as of each successive annual
anniversary of the date of grant. A recipient will been titled
to all voting and other stockholder rights with respect to shares
which have been earned and distributed to such recipient under
the Recognition Plan. However, until such shares have been
earned and distributed, they may not be sold, pledged or
otherwise disposed of and are required to be held in the
Recognition Plan Trust ("Trust"). Under the terms of the
Recognition Plan, after an award has been made, the recipient
will be entitled to direct the Trustee as to the voting of the
Common Stock covered by such award which has not yet been earned
and distributed to the recipient. All shares of Common Stock
held by the Trust which have not been awarded and shares which
have been awarded as to which recipients have not directed the
voting shall be voted by the Recognition Plan Trustee ("Trustee")
in the same proportion as voted by the Trustee for shares
allocated and which the Trustee receives directions for such vote
by recipients. In addition, any cash dividends or stock
dividends declared in respect of unvested share awards will be
held by the Trust for the benefit of the recipients and such
dividends, including any interest thereon, will be paid out
proportionately by the Trust to the recipients thereof as soon as
practicable after the share awards become earned. Any cash
dividends or stock dividends declared in respect of each vested
share held by the Trust will be paid by the Trust as soon as
practicable after the Trust's receipt thereof to the recipient on
whose behalf such share is then held by the Trust.
If a recipient terminates employment for reasons other than
death, disability or retirement, the recipient will forfeit all
rights to the allocated shares under restriction. All shares
subject to an award held by a recipient whose employment with or
service to the Company or any subsidiary terminates due to death
or Disability, as defined in the Recognition Plan, shall be
deemed earned as of the recipient's last day of employment with
or service to the Company or any subsidiary and shall be
distributed as soon as practicable there after; provided,
however, that awards shall be distributed in accordance with the
Recognition Plan. In addition, in the event that a recipient's
employment with or service to the Company or any subsidiary
terminates due to retirement, as defined in the Recognition Plan,
all shares subject to an award held by a recipient shall be
deemed earned as of the recipient's last day of employment with
or service to the Company or any subsidiary and shall be
distributed as soon as practicable thereafter, provided that as
of the date of such retirement, such treatment is either
authorized or is not prohibited by applicable laws and
regulations. All shares subject to an award held by a recipient
also shall be deemed to be earned in the event of a change in
control of the Company, as defined in the Recognition Plan,
provided that as of the date of such change in control of the
Company, such treatment is either authorized or is not prohibited
by applicable laws an regulations.
During the lifetime of the recipient, shares subject to an
award may only be earned by and paid to the recipient, provided
that shares subject to an award and rights to such shares shall
be transferable by a recipient to his or her spouse, lineal
ascendants, lineal descendants, or to a duly established trust.
Shares subject to an award so transferred may not again be
transferred other than to the recipient who originally received
the grant or to an individual or trust to whom such recipient
could have transferred shares subject to an award. Shares
subject to awards which are transferred shall be subject to the
same terms and conditions as would have applied to such shares
subject to awards in the hands of the recipient who originally
received the grant.
Federal Income Tax Consequences. Pursuant to Section 83 of
the Code, recipients of Recognition Plan awards will recognize
ordinary income in an amount equal to the fair market value of
the shares of Common Stock granted to them at the time that the
shares vest and become transferable. A recipient of a Recognition
Plan award may also elect, however, to accelerate the recognition
of income with respect to his or her grant to the time when
shares of Common Stock are first transferred to him or her,
notwithstanding the vesting schedule of such awards. The Company
will be entitled to deduct as a compensation expense for tax
purposes the same amounts recognized as income by recipients of
Recognition Plan awards in the year in which such amounts are
included in income.
Accounting Treatment. For accounting purposes, the Company
will also recognize a compensation expense as shares of Common
Stock granted pursuant to the Recognition Plan vest. Unlike the
treatment of Recognition Plan awards for tax purposes, however,
the compensation expense recognized for accounting purposes is
limited to the fair market value of the Common Stock at the date
of grant to recipients, rather than the fair market value of the
Common Stock at the time that a Recognition Plan grant vests.
Stockholder Approval. No shares will be granted under the
Recognition Plan unless the Recognition Plan is approved by
stockholders.
Shares to be Granted. The Board of Directors of the Company
adopted the Recognition Plan and approved the initial grant of
shares to non-employee directors of the Company and the Bank.
The awards shall be effective upon stockholder approval of the
Recognition Plan. The following table sets forth certain
information with respect to such grants. The Company has reserved
the right to make future grants of shares to executive officers
and employees of the Company and the Bank.
Name of Individual or Number of Shares
Number of Persons in Group Title Awarded
All non-employee directors --- 4,761
as a group (4 persons)
The Board of Directors recommends that stockholders vote FOR
adoption of the Recognition and Retention Plan and Trust.
<PAGE>
ADJOURNMENT OF ANNUAL MEETING
Each proxy solicited hereby requests authority to vote for
an adjournment of the Annual Meeting, if an adjournment is deemed
to be necessary. The Company may seek an adjournment of the
Annual Meeting for not more than 30 days in order to enable the
Company to solicit additional votes in favor of the proposals to
adopt the Stock Option Plan and/or the Recognition Plan in the
event that either or both of such proposals have not received the
requisite vote of stockholders at the Annual Meeting and either
or both of such proposals have not received the negative votes of
the holders of a majority of the Company's Common Stock. If the
Company desires to adjourn the meeting with respect to either or
both of the foregoing proposals, it will request a motion that
the meeting be adjourned for up to 30 days with respect to such
proposal or proposals (and solely with respect to such proposal
or proposals, provided that a quorum is present at the Annual
Meeting), and no vote will be taken on such proposal(s) at the
originally scheduled Annual Meeting. Each proxy solicited
hereby, if properly signed and returned to the Company and not
revoked prior to its use, will be voted on any motion for
adjournment in accordance with the instructions contained
therein. If no contrary instructions are given, each proxy
received will be voted in favor of any motion to adjourn the
meeting. Unless revoked prior to its use, any proxy solicited
for the Annual Meeting will continue to be valid for any
adjournment of the Annual Meeting, and will be voted in
accordance with instructions contained therein, and if no
contrary instructions are given, for the proposal(s) in question.
Any adjournment will permit the Company to solicit
additional proxies and will permit a greater expression of the
stockholders' views with respect to such proposal(s). Such an
adjournment would be disadvantageous to stockholders who are
against the proposal(s), because an adjournment will give the
Company additional time to solicit favorable votes and thus
increase the chances of passing such proposal(s).
If a quorum is not present at the Annual Meeting, no
proposal will be acted upon and the Board of Directors of the
Company will adjourn the Annual Meeting to a later date in order
to solicit additional proxies on each of the proposals being
submitted to stockholders.
An adjournment for up to 30 days will not require either the
setting of a new record date or notice of the adjourned meeting
as in the case of an original meeting. The Company has no reason
to believe that an adjournment of the Annual Meeting will be
necessary at this time.
Because the Board of Directors recommends that stockholders vote
FOR the proposals to adopt the Stock Option Plan and Recognition
Plan, as discussed above, the Board of Directors recommends that
stockholders vote FOR the possible adjournment of the Annual
Meeting. The holders of a majority of the Company's Common Stock
present, in person or by proxy, at the Annual Meeting will be
required to approve a motion to adjourn the Annual Meeting.
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed Geo. S.
Olive & Co. LLC as independent auditors for the Company for the
year ending September 30, 1998, and further directed that the
selection of auditors be submitted for ratification by the
stockholders at the Annual Meeting. The Company has been advised
by Geo. S. Olive & Co. LLC that neither the firm nor any of its
associates has any relationship with the Company other than the
usual relationship that exists between independent public
accountants and clients. Geo. S. Olive & Co. LLC will have
representatives at the Annual Meeting who will have an
opportunity to make a statement, if they so desire, and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF GEO. S. OLIVE & CO. LLC, AS
INDEPENDENT AUDITORS FOR THE YEAR ENDING SEPTEMBER 30, 1998.
OTHER MATTERS
Management is not aware of any business to come before the
Annual Meeting other than those matters described in this Proxy
Statement. However, if any other matters should properly come
before the Annual Meeting, it is intended that the proxies
solicited hereby will be voted with respect to those other
matters in accordance with the judgment of the persons voting the
proxies.
The cost of solicitation of proxies will be borne by the
Company. The Company will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses
incurred by them in sending proxy materials to the beneficial
owners of the Common Stock. In addition to solicitations by
mail, directors, officers and employees of the Company may
solicit proxies personally or by telephone without additional
compensation.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in
the proxy solicitation materials to be used in connection with
the next Annual Meeting of Stockholders of the Company must be
received at the office of the Company no later than November 30,
1998. If such proposal is in compliance with all of the
requirements of Rule 14a-8 under the Exchange Act, it will be
included in the Proxy Statement and set forth on the form of
proxy issued for the next Annual Meeting of Stockholders. It is
urged that any such proposals be sent by certified mail, return
receipt requested.
ANNUAL REPORTS AND FINANCIAL STATEMENTS
Stockholders of the Company as of the record date for the
Annual Meeting are being forwarded a copy of the Company's Annual
Report to Stockholders for the year ended September 30, 1997
("Annual Report"). Included in the Annual Report are the
financial statements of the Company as of September 30, 1997 and
1996 and for each of the years in the three-year period ended
September 30, 1997, prepared in accordance with generally
accepted accounting principles, and the related report of the
Company's independent public accountants. The Annual Report is
not a part of this Proxy Statement.
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL
FURNISH TO ANY STOCKHOLDER WITHOUT CHARGE A COPY OF ITS ANNUAL
REPORT ON FORM 10-KSB FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE EXCHANGE ACT FOR THE YEAR ENDED SEPTEMBER 30,
1997. UPON WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
SUCH STOCKHOLDER A COPY OF THE EXHIBITS TO THE ANNUAL REPORT
ON FORM 10-KSB. SUCH WRITTEN REQUESTS SHOULD BE DIRECTED
TO VERMILION BANCORP, INC., 714 NORTH VERMILION STREET,
DANVILLE, ILLINOIS 61832, ATTENTION: SECRETARY. THE ANNUAL REPORT
ON FORM 10-KSB IS NOT A PART OF THIS PROXY STATEMENT. THE
COMPANY'S FORM 10-KSB MAY ALSO BE RETRIEVED ON THE WEBSITE OF THE
SECURITIES AND EXCHANGE COMMISSION: WWW.SEC.GOV.
<PAGE>
Appendix A
VERMILION BANCORP, INC.
1998 STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT OF THE PLAN
Vermilion Bancorp, Inc. (the "Corporation") hereby
establishes this 1998 Stock Option Plan (the "Plan") upon the
terms and conditions hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
The purpose of this Plan is to improve the growth and
profitability of the Corporation and American Savings Bank (the
"Bank") by providing Employees and Non-Employee Directors with a
proprietary interest in the Corporation as an incentive to
contribute to the success of the Corporation and its Subsidiary
Companies, and rewarding Employees for outstanding performance.
All Incentive Stock Options issued under this Plan are intended
to comply with the requirements of Section 422 of the Code, and
the regulations thereunder, and all provisions hereunder shall be
read, interpreted and applied with that purpose in mind.
ARTICLE III
DEFINITIONS
3.01 "Bank" means American Savings Bank, the wholly owned
subsidiary of the Corporation.
3.02 "Award" means an Option or Stock Appreciation Right
granted pursuant to the terms of this Plan.
3.03 "Board" means the Board of Directors of the
Corporation.
3.04 "Change in Control of the Corporation" shall mean a
change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Exchange Act, whether or not the
Corporation in fact is required to comply with Regulation 14A
thereunder; provided that, without limitation, such a change in
control shall be deemed to have occurred if (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange
Act), other than the Corporation, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation
representing 25% or more of the combined voting power of the
Corporation's then outstanding securities, or (ii) during any
period of twenty-four consecutive months during the term of an
Award, individuals who at the beginning of such period constitute
the Board of Directors, and any new director whose election by
the Board of Directors or nomination for election by the
Corporation's stockholders was approved by a vote of at least two-
thirds of the directors then still in office who either were
directors at the beginning of the two-year period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority of the
Board of Directors; (iii) the stockholders of the Corporation
approve a merger or consolidation of the Corporation with any
other corporation, other than a merger or consolidation that
would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Corporation
outstanding immediately after such merger or consolidation; or
(iv) the stockholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the
sale or disposition by the Corporation of all or substantially
all of the Corporation's assets. If any of the events enumerated
in clauses (i) through (iv) occur, the Board shall determine the
effective date of the Change in Control resulting therefrom for
purposes of the Plan.
3.05 "Code" means the Internal Revenue Code of 1986, as
amended.
3.06 "Committee" means a committee of two or more directors
appointed by the Board pursuant to Article IV hereof, each of
whom shall be a Non-Employee Director as defined in Rule 16b-
3(b)(3)(i) of the Exchange Act or any successor thereto.
3.07 "Common Stock" means shares of the common stock, $.01
par value per share, of the Corporation.
3.08 "Disability" means any physical or mental impairment
which qualifies an individual for disability benefits under the
applicable long-term disability plan maintained by the
Corporation or a Subsidiary Company, or, if no such plan applies,
which would qualify such individual for disability benefits under
any long-term disability plan maintained by the Corporation, if
such individual were covered by that plan.
3.09 "Effective Date" means the day upon which the Board
approves this Plan.
3.10 "Employee" means any person who is employed by the
Corporation or a Subsidiary Company, or is an Officer of the
Corporation or a Subsidiary Company, but not including directors
who are not also Officers of or otherwise employed by the
Corporation or a Subsidiary Company.
3.11 "Exchange Act" means the Securities Exchange Act of
1934, as amended.
3.12 "Fair Market Value" shall be equal to the fair market
value per share of the Corporation's Common Stock on the date an
Award is granted. For purposes hereof, the Fair Market Value of
a share of Common Stock shall be the closing sale price of a
share of Common Stock on the date in question (or, if such day is
not a trading day in the U.S. markets, on the nearest preceding
trading day), as reported with respect to the principal market
(or the composite of the markets, if more than one) or national
quotation system in which such shares are then traded, or if no
such closing prices are reported, the mean between the high bid
and low asked prices that day on the principal market or national
quotation system then in use, or if no such quotations are
available, the price furnished by a professional securities
dealer making a market in such shares selected by the Committee.
3.13 "Incentive Stock Option" means any Option granted
under this Plan which the Board intends (at the time it is
granted) to be an incentive stock option within the meaning of
Section 422 of the Code or any successor thereto.
3.14 "Non-Employee Director" means a member of the Board of
the Corporation or Board of Directors of the Bank or any
Subsidiary Company, including a Director Emeritus of the Board of
Directors of the Corporation or the Board of Directors of the
Bank, who is not an Officer or Employee of the Corporation or any
Subsidiary Company.
3.15 "Non-Qualified Option" means any Option granted under
this Plan which is not an Incentive Stock Option.
3.16 "Offering" means the offering of Common Stock to the
public pursuant to the conversion of the Bank to the stock form
in March 1997.
3.17 "Officer" means an Employee whose position in the
Corporation or Subsidiary Company is that of a corporate officer,
as determined by the Board.
3.18 "Option" means a right granted under this Plan to
purchase Common Stock.
3.19 "Optionee" means an Employee or Non-Employee Director
or former Employee or Non-Employee Director to whom an Option is
granted under the Plan.
3.20 "Retirement" means a termination of employment which
constitutes a "retirement" under any applicable qualified pension
benefit plan maintained by the Corporation or a Subsidiary
Corporation, or, if no such plan is applicable, which would
constitute "retirement" under the Corporation's pension benefit
plan, if such individual were a participant in that plan.
3.21 "Stock Appreciation Right" means a right to surrender
an Option in consideration for a payment by the Corporation in
cash and/or Common Stock, as provided in the discretion of the
Committee in accordance with Section 8.11.
3.22 "Subsidiary Companies" means those subsidiaries of the
Corporation, including the Bank, which meet the definition of
"subsidiary corporations" set forth in Section 425(f)of the Code,
at the time of granting of the Option in question.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Duties of the Committee. The Plan shall be
administered and interpreted by the Committee, as appointed from
time to time by the Board pursuant to Section 4.02. The
Committee shall have the authority to adopt, amend and rescind
such rules, regulations and procedures as, in its opinion, may be
advisable in the administration of the Plan, including, without
limitation, rules, regulations and procedures which (i) deal with
satisfaction of an Optionee's tax withholding obligation pursuant
to Section 12.02 hereof, (ii) include arrangements to facilitate
the Optionee's ability to borrow funds for payment of the
exercise or purchase price of an Award, if applicable, from
securities brokers and dealers, and (iii) include arrangements
which provide for the payment of some or all of such exercise or
purchase price by delivery of previously-owned shares of Common
Stock or other property and/or by withholding some of the shares
of Common Stock which are being acquired. The interpretation and
construction by the Committee of any provisions of the Plan, any
rule, regulation or procedure adopted by it pursuant thereto or
of any Award shall be final and binding in the absence of action
by the Board.
4.02 Appointment and Operation of the Committee. The
members of the Committee shall be appointed by, and will serve at
the pleasure of, the Board. The Board from time to time may
remove members from, or add members to, the Committee, provided
the Committee shall continue to consist of two or more members of
the Board, each of whom shall be a Non-Employee Director, as
defined in Rule 16b-3(b)(3)(i) of the Exchange Act or any
successor thereto. The Committee shall act by vote or written
consent of a majority of its members. Subject to the express
provisions and limitations of the Plan, the Committee may adopt
such rules, regulations and procedures as it deems appropriate
for the conduct of its affairs. It may appoint one of its
members to be chairman and any person, whether or not a member,
to be its secretary or agent. The Committee shall report its
actions and decisions to the Board at appropriate times but in no
event less than one time per calendar year.
4.03 Revocation for Misconduct. The Board or the Committee
may by resolution immediately revoke, rescind and terminate any
Option, or portion thereof, to the extent not yet vested, or any
Stock Appreciation Right, to the extent not yet exercised,
previously granted or awarded under this Plan to an Employee who
is discharged from the employ of the Corporation or a Subsidiary
Company for cause, which, for purposes hereof, shall mean
termination because of the Employee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule, or regulation (other
than traffic violations or similar offenses) or final cease-and-
desist order. Options granted to a Non-Employee Director who is
removed for cause pursuant to the Corporation's Articles of
Incorporation and Bylaws or the Bank's Charter and Bylaws shall
terminate as of the effective date of such removal.
4.04 Limitation on Liability. Neither the members of
the Board nor any member of the Committee shall be liable for any
action or determination made in good faith with respect to the
Plan, any rule, regulation or procedure adopted by it pursuant
thereto or any Awards granted under it. If a member of the Board
or the Committee is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative, by reason of anything done or not done by him in
such capacity under or with respect to the Plan, the Corporation
shall, subject to the requirements of applicable laws and
regulations, indemnify such member against all liabilities and
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to
bein the best interests of the Corporation and its Subsidiary
Companies and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful.
4.05 Compliance with Law and Regulations. All Awards
granted hereunder shall be subject to all applicable federal and
state laws, rules and regulations and to such approvals by any
government or regulatory agency as may be required. The
Corporation shall not be required to issue or deliver any
certificates for shares of Common Stock prior to the completion
of any registration or qualification of or obtaining of consents
or approvals with respect to such shares under any federal or
state law or any rule or regulation of any government body, which
the Corporation shall, in its sole discretion, determine to be
necessary or advisable. Moreover, no Option or Stock
Appreciation Right may be exercised if such exercise would be
contrary to applicable laws and regulations.
4.06 Restrictions on Transfer. The Corporation may place a
legend upon any certificate representing shares acquired pursuant
to an Award granted hereunder noting that the transfer of such
shares may be restricted by applicable laws and regulations.
ARTICLE V
ELIGIBILITY
Awards may be granted to such Employees or Non-Employee
Directors of the Corporation and its Subsidiary Companies as may
be designated from time to time by the Board or the Committee.
Awards may not be granted to individuals who are not Employees or
Non-Employee Directors of either the Corporation or its
Subsidiary Companies. Non-Employee Directors shall be eligible to
receive only Awards of Non-Qualified Options.
ARTICLE VI
COMMON STOCK COVERED BY THE PLAN
6.01 Option Shares. The aggregate number of shares of
Common Stock which maybe issued pursuant to this Plan, subject to
adjustment as provided in Article IX, shall be 39,675, which is
equal to 10.0% of the shares of Common Stock issued in the
Offering. None of such shares shall be the subject of more than
one Award at any time, but if an Option as to any shares is
surrendered before exercise, or expires or terminates for any
reason without having been exercised in full, or for any other
reason ceases to be exercisable, the number of shares covered
thereby shall again become available for grant under the Plan as
if no Awards had been previously granted with respect to such
shares. Notwithstanding the foregoing, if an Option is
surrendered in connection with the exercise of a Stock
Appreciation Right, the number of shares covered thereby shall
not be available for grant under the Plan.
6.02 Source of Shares. The shares of Common Stock issued
under the Plan may be authorized but unissued shares, treasury
shares or shares purchased by the Corporation on the open market
or from private sources for use under the Plan.
ARTICLE VII
DETERMINATION OF
AWARDS, NUMBER OF SHARES, ETC.
The Board or the Committee shall, in its discretion,
determine from time to time which Employees and Non-Employee
Directors will be granted Awards under the Plan, the number of
shares of Common Stock subject to each Award, whether each Option
will bean Incentive Stock Option or a Non-Qualified Stock Option
and the exercise price of an Option. In making all such
determinations there shall be taken into account the duties,
responsibilities and performance of each respective Employee, his
present and potential contributions to the growth and success of
the Corporation, his salary and such other factors deemed
relevant to accomplishing the purposes of the Plan.
ARTICLE VIII
OPTIONS AND STOCK APPRECIATION RIGHTS
Each Option granted hereunder shall be on the following
terms and conditions:
8.01 Stock Option Agreement. The proper Officers on behalf
of the Corporation and each Optionee shall execute a Stock Option
Agreement which shall set forth the total number of shares of
Common Stock to which it pertains, the exercise price, whether it
is a Non-Qualified Option or an Incentive Stock Option, and such
other terms, conditions, restrictions and privileges as the Board
or the Committee in each instance shall deem appropriate,
provided they are not inconsistent with the terms, conditions and
provisions of this Plan. Each Optionee shall receive a copy of
his executed Stock Option Agreement.
8.02 Awards to Employee and Non-Employee Directors.
Specific Awards to Employees and Non-Employee Directors shall be
made to such persons and in such amounts as are determined by the
Board of Directors or the Committee. However, the aggregate
amount of Awards made to all Non-Employee Directors may not
exceed 11,902 shares (or 30% of the number of shares available
under this Plan), no individual Non-Employee Director may receive
Awards in excess of 11,902 shares divided by the number of Non-
Employee Directors serving at the time the Award is made, and no
individual Employee may receive Awards in excess of 9,918 shares
(or 25% of the number of shares available under this Plan).
8.03 Option Exercise Price.
(a) Incentive Stock Options. The per share price at
which the subject Common Stock may be purchased upon exercise of
an Incentive Stock Option shall be no less than one hundred
percent (100%) of the Fair Market Value of a share of Common
Stock at the time such Incentive Stock Option is granted, except
as provided in Section 8.10(b), and subject to any applicable
adjustment pursuant to Article IX hereof.
(b) Non-Qualified Options. The per share price at
which the subject Common Stock may be purchased upon exercise of
a Non-Qualified Option shall be no less than one hundred percent
(100%) of the Fair Market Value of a share of Common Stock at the
time such Non-Qualified Option is granted, and subject to any
applicable adjustment pursuant to Article IX hereof.
8.04 Vesting and Exercise of Options.
(a) General Rules. Incentive Stock Options and Non-
Qualified Options granted hereunder shall become vested and
exercisable at the rate of 33 1/3 per year over three years,
commencing on the date of grant and an additional 33 1/3% shall
vest on each successive annual anniversary of the date the Option
was granted, and the right to exercise shall be cumulative.
Notwithstanding the foregoing, no vesting shall occur on or after
an Employee's employment or service as a Non-Employee Director
with the Corporation and all Subsidiary Companies is terminated
for any reason other than his death or Disability. In determining
the number of shares of Common Stock with respect to which
Options are vested and/or exercisable, fractional shares will be
rounded up to the nearest whole number if the fraction is 0.5 or
higher, and down if it is less.
(b) Accelerated Vesting. Unless the Committee
shall specifically state otherwise at the time an Option is
granted, all Options granted under this Plan shall become vested
and exercisable in full on the date an Optionee terminates his
employment with the Corporation or a Subsidiary Company or
service as a Non-Employee Director because of his death or
Disability. All Options hereunder shall become immediately
vested and exercisable in full on the date an Optionee terminates
his employment with the Corporation or a Subsidiary Company or
service as a Non-Employee Director due to Retirement or there
occurs a Change in Control of the Corporation if, as of such date
of such Retirement or Change in Control of the Corporation, such
treatment is either authorized or is not prohibited by applicable
laws and regulations.
8.05 Duration of Options.
(a) General Rule. Except as provided in Sections
8.05(b) and 8.10, each Option or portion thereof granted to an
Optionee shall be exercisable at any time on or after it vests
and becomes exercisable until the earlier of (i) ten (10) years
after its date of grant or (ii) three (3) months after the date
on which the Optionee ceases to be employed by the Corporation
and all Subsidiary Companies or serve as a Non-Employee Director,
unless the Board or the Committee in its discretion decides at
the time of grant or thereafter to extend such period of exercise
upon termination of employment or service from three (3) months
to a period not exceeding five (5) years.
(b) Exceptions. If an Employee dies while in the
employ of the Corporation or a Subsidiary Company or terminates
employment with the Corporation or a Subsidiary Company as a
result of Disability without having fully exercised his Options,
the Optionee or the executors, administrators, legatees or
distributees of his estate shall have the right, during the
twelve-month period following the earlier of his death or
termination due to Disability, to exercise such Options. If a
Non-Employee Director dies while serving as a Non-Employee
Director or terminates his service to the Corporation or a
Subsidiary Company as a result of Disability without having fully
exercised his Options, the Non-Employee Director or the
executors, administrators, legatees or distributees of his estate
shall have the right, during the twelve-month period following
the earlier of his death or termination due to Disability, to
exercise such Options. In no event, however, shall any Option be
exercisable more than ten (10) years from the date it was
granted. In the event of Retirement, an Employee or Non-Employee
Director shall be entitled to the same time period set forth
above in this Section 8.05(b) to exercise an Option if, as of the
date of such Retirement, such treatment is either authorized or
is not prohibited by applicable laws and regulations.
8.06 Non-assignability. Options shall not be transferable
by an Optionee except by will or the laws of descent or
distribution, and during an Optionee's lifetime shall be
exercisable only by such Optionee or the Optionee's guardian or
legal representative. Notwithstanding the foregoing, or any other
provision of this Plan, an Optionee who holds Non-Qualified
Options may transfer such Options to his or her spouse, lineal
ascendants, lineal descendants, or to a duly established trust
for the benefit of one or more of these individuals. Options so
transferred may thereafter be transferred only to the Optionee
who originally received the grant or to an individual or trust to
whom the Optionee could have initially transferred the Option
pursuant to this Section 8.06. Options which are transferred
pursuant to this Section 8.06 shall be exercisable by the
transferee according to the same terms and conditions as applied
to the Optionee.
8.07 Manner of Exercise. Options may be exercised in part
or in whole and at one time or from time to time. The procedures
for exercise shall be set forth in the written Stock Option
Agreement provided for in Section 8.01 above.
8.08 Payment for Shares. Payment in full of the purchase
price for shares of Common Stock purchased pursuant to the
exercise of any Option shall be made to the Corporation upon
exercise of the Option. All shares sold under the Plan shall be
fully paid and non-assessable. Payment for shares may be made by
the Optionee in cash or, at the discretion of the Board or the
Committee, by delivering shares of Common Stock (including shares
acquired pursuant to the exercise of an Option) or other property
equal in Fair Market Value to the purchase price of the shares to
be acquired pursuant to the Option, by withholding some of the
shares of Common Stock which are being purchased upon exercise of
an Option, or any combination of the foregoing.
8.09 Voting and Dividend Rights. No Optionee shall have
any voting or dividend rights or other rights of a stockholder in
respect of any shares of Common Stock covered by an Option prior
to the time that his name is recorded on the Corporation's
stockholder ledger as the holder of record of such shares
acquired pursuant to an exercise of an Option.
8.10 Additional Terms Applicable to Incentive Stock
Options. All Options issued under the Plan as Incentive Stock
Options will be subject, in addition to the terms detailed in
Sections 8.01 to 8.09 above, to those contained in this Section
8.10.
(a) Notwithstanding any contrary provisions
contained elsewhere in this Plan and as long as required by
Section 422 of the Code, the aggregate Fair Market Value,
determined as of the time an Incentive Stock Option is granted,
of the Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any
calendar year under this Plan, and stock options that satisfy the
requirements of Section 422 of the Code under any other stock
option plan or plans maintained by the Corporation (or any parent
or Subsidiary Company), shall not exceed $100,000.
(b) Limitation on Ten Percent Stockholders. The
price at which shares of Common Stock may be purchased upon
exercise of an Incentive Stock Option granted to an individual
who, at the time such Incentive Stock Option is granted, owns,
directly or indirectly, more than ten percent (10%) of the total
combined voting power of all classes of stock issued to
stockholders of the Corporation or any Subsidiary Company, shall
be no less than one hundred and ten percent (110%) of the Fair
Market Value of a share of the Common Stock of the Corporation at
the time of grant, and such Incentive Stock Option shall by its
terms not be exercisable after the earlier of the date determined
under Section 8.04 or the expiration of five (5) years from the
date such Incentive Stock Option is granted.
(c) Notice of Disposition; Withholding; Escrow. An
Optionee shall immediately notify the Corporation in writing of
any sale, transfer, assignment or other disposition (or action
constituting a disqualifying disposition within the meaning of
Section 421 of the Code) of any shares of Common Stock acquired
through exercise of an Incentive Stock Option, within two (2)
years after the grant of such Incentive Stock Option or within
one (1) year after the acquisition of such shares, setting forth
the date and manner of disposition, the number of shares disposed
of and the price at which such shares were disposed of. The
Corporation shall be entitled to withhold from any compensation
or other payments then or thereafter due to the Optionee such
amounts as may be necessary to satisfy any withholding
requirements of federal or state law or regulation and, further,
to collect from the Optionee any additional amounts which may be
required for such purpose. The Committee may, in its discretion,
require shares of Common Stock acquired by an Optionee upon
exercise of an Incentive Stock Option to be held in an escrow
arrangement for the purpose of enabling compliance with the
provisions of this Section 8.10(c).
8.11 Stock Appreciation Rights.
(a) General Terms and Conditions. The Board or
the Committee may, but shall not be obligated to, authorize
the Corporation, on such terms and conditions as it deems
appropriate in each case, to grant rights to Optionees to
surrender an exercisable Option, or any portion thereof, in
consideration for the payment by the Corporation of an
amount equal to the excess of the Fair Market Value of the
shares of Common Stock subject to the Option, or portion
thereof, surrendered over the exercise price of the Option
with respect to such shares (any such authorized surrender
and payment being hereinafter referred to as a "Stock
Appreciation Right"). Such payment, at the discretion of
the Board or the Committee, may be made in shares of Common
Stock valued at the then Fair Market Value thereof, or in
cash, or partly in cash and partly in shares of Common
Stock.
The terms and conditions set with respect to a Stock
Appreciation Right may include(without limitation), subject to
other provisions of this Section 8.11 and the Plan: the period
during which, date by which or event upon which the Stock
Appreciation Right may be exercised (which shall be on the same
terms as the option to which it relates pursuant to Section 8.04
hereunder); the method for valuing shares of Common Stock for
purposes of this Section 8.11; a ceiling on the amount of
consideration which the Corporation may pay in connection with
exercise and cancellation of the Stock Appreciation Right; and
arrangements for income tax withholding. The Board or the
Committee shall have complete discretion to determine whether,
when and to whom Stock Appreciation Rights may be granted.
(b) Time Limitations. If a holder of a Stock
Appreciation Right terminates service with the Corporation as an
Officer or Employee, the Stock Appreciation Right maybe exercised
only within the period, if any, within which the Option to which
it relates maybe exercised.
(c) Effects of Exercise of Stock Appreciation
Rights or Options. Upon the exercise of a Stock Appreciation
Right, the number of shares of Common Stock available under the
Option to which it relates shall decrease by a number equal to
the number of shares for which the Stock Appreciation Right was
exercised. Upon the exercise of an Option, any related Stock
Appreciation Right shall terminate as to any number of shares of
Common Stock subject to the Stock Appreciation Right that exceeds
the total number of shares for which the Option remains
unexercised.
(d) Time of Grant. A Stock Appreciation Right
granted in connection with an Incentive Stock Option must be
granted concurrently with the Option to which it relates, while a
Stock Appreciation Right granted in connection with a Non-
Qualified Option maybe granted concurrently with the Option to
which it relates or at any time thereafter prior to the exercise
or expiration of such Option.
(e) Non-Transferable. The holder of a Stock
Appreciation Right may not transfer or assign the Stock
Appreciation Right otherwise than by will or in accordance with
the laws of descent and distribution, and during a holder's
lifetime a Stock Appreciation Right may be exercisable only by
the holder.
ARTICLE IX
ADJUSTMENTS FOR CAPITAL CHANGES
The aggregate number of shares of Common Stock available for
issuance under this Plan, the number of shares to which any
outstanding Award relates, the maximum number of shares that can
be covered by Award to each Employee and each Non-Employee
Director and the exercise price per share of Common Stock under
any outstanding Option shall be proportionately adjusted for any
increase or decrease in the total number of outstanding shares of
Common Stock issued subsequent to the effective date of this Plan
resulting from a split, subdivision or consolidation of shares or
any other capital adjustment, the payment of a stock dividend, or
other increase or decrease in such shares effected without
receipt or payment of consideration by the Corporation. If, upon
a merger, consolidation, reorganization, liquidation,
recapitalization or the like of the Corporation, the shares of
the Corporation's Common Stock shall be exchanged for other
securities of the Corporation or of another corporation, each
recipient of an Award shall be entitled, subject to the
conditions herein stated, to purchase or acquire such number of
shares of Common Stock or amount of other securities of the
Corporation or such other corporation as were exchangeable for
the number of shares of Common Stock of the Corporation which
such optionees would have been entitled to purchase or acquire
except for such action, and appropriate adjustments shall be made
to the per share exercise price of outstanding Options.
Notwithstanding any provision to the contrary, the exercise price
of shares subject to outstanding Awards may be proportionately
adjusted upon the payment of a special large and nonrecurring
dividend that has the effect of a return of capital to the
stockholders, provided that the adjustments to the per shares
exercise price shall satisfy the criteria set forth in Emerging
Issues Task Force 90-9 (or any successor thereto) so that the
adjustments do not result in compensation expense, and provided
further that if such adjustment with respect to incentive stock
options would be treated as a modification of the outstanding
incentive stock options with the effect that, for purposes of
Section 422 and 425(h) of the Code, and the rules and regulations
thereunder, new incentive stock options would be deemed to be
granted, then no adjustment to the per share exercise price of
outstanding incentive stock options shall be made.
ARTICLE X
AMENDMENT AND TERMINATION OF THE PLAN
The Board may, by resolution, at any time terminate or amend
the Plan with respect to any shares of Common Stock as to which
Awards have not been granted, subject to any applicable
regulatory requirements, required stockholder approval or any
stockholder approval which the Board may deem to be advisable for
any reason, such as for the purpose of obtaining or retaining any
statutory or regulatory benefits under tax, securities or other
laws or satisfying any applicable stock exchange listing
requirements. The Board may not, without the consent of the
holder of an Award, alter or impair any Award previously granted
or awarded under this Plan as specifically authorized herein.
ARTICLE XI
EMPLOYMENT AND SERVICE RIGHTS
Neither the Plan nor the grant of any Awards hereunder nor
any action taken by the Committee or the Board in connection with
the Plan shall create any right on the part of any Employee or
Non-Employee Director to continue in such capacity.
ARTICLE XII
WITHHOLDING
12.01 Tax Withholding. The Corporation may withhold from
any cash payment made under this Plan sufficient amounts to cover
any applicable withholding and employment taxes, and if the
amount of such cash payment is insufficient, the Corporation may
require the Optionee to pay to the Corporation the amount
required to be withheld as a condition to delivering the shares
acquired pursuant to an Award. The Corporation also may withhold
or collect amounts with respect to a disqualifying disposition of
shares of Common Stock acquired pursuant to exercise of an
Incentive Stock Option, as provided in Section 8.10(c).
12.02 Methods of Tax Withholding. The Board or the
Committee is authorized to adopt rules, regulations or procedures
which provide for the satisfaction of an Optionee's tax
withholding obligation by the retention of shares of Common Stock
to which the Employee would otherwise be entitled pursuant to an
Award and/or by the Optionee's delivery of previously-owned
shares of Common Stock or other property.
ARTICLE XIII
EFFECTIVE DATE OF THE PLAN; TERM
13.01 Effective Date of the Plan. This Plan shall become
effective on the Effective Date, and Awards may be granted
hereunder no earlier than the date that this Plan is approved by
stockholders of the Corporation and prior to the termination of
the Plan, provided that this Plan is approved by stockholders of
the Corporation pursuant to Article XIV hereof.
13.02 Term of the Plan. Unless sooner terminated, this
Plan shall remain in effect for a period of ten (10) years ending
on the tenth anniversary of the Effective Date. Termination of
the Plan shall not affect any Awards previously granted and such
Awards shall remain valid and in effect until they have been
fully exercised or earned, are surrendered or by their terms
expire or are forfeited.
ARTICLE XIV
STOCKHOLDER APPROVAL
The Corporation shall submit this Plan to stockholders for
approval at a meeting of stockholders of the Corporation in order
to meet the requirements of Section 422 of the Code and
regulations thereunder.
ARTICLE XV
MISCELLANEOUS
15.01 Governing Law. To the extent not governed by federal
law, this Plan shall be construed under the laws of the State of
Delaware.
15.02 Pronouns. Wherever appropriate, the masculine
pronoun shall include the feminine pronoun, and the singular
shall include the plural.
<PAGE>
Appendix B
VERMILION BANCORP, INC.
1998 RECOGNITION AND RETENTION PLAN AND TRUST AGREEMENT
ARTICLE I
ESTABLISHMENT OF THE PLAN AND TRUST
1.01 Vermilion Bancorp, Inc. (the "Corporation") hereby
establishes the 1998 Recognition and Retention Plan (the "Plan")
and the Trust (the "Trust") upon the terms and conditions
hereinafter stated in this 1998 Recognition and Retention Plan
and Trust Agreement (the "Agreement").
1.02 The Trustee hereby accepts this Trust and agrees to
hold the Trust assets existing on the date of this Agreement and
all additions and accretions thereto upon the terms and
conditions hereinafter stated.
ARTICLE II
PURPOSE OF THE PLAN
2.01 The purpose of the Plan is to retain personnel of
experience and ability in key positions by providing Employees
and Non-Employee Directors of the Corporation and American
Savings Bank (the "Bank") with a proprietary interest in the
Corporation as compensation for their contributions to the
Corporation and the Bank and as an incentive to make such
contributions in the future.
ARTICLE III
DEFINITIONS
The following words and phrases when used in this Agreement
with an initial capital letter, unless the context clearly
indicates otherwise, shall have the meanings set forth below.
Wherever appropriate, the masculine pronouns shall include the
feminine pronouns and the singular shall include the plural.
3.01 Bank" means American Savings Bank, the wholly-owned
subsidiary of the Corporation.
3.02 Beneficiary" means the person or persons designated by
a Recipient to receive any benefits payable under the Plan in the
event of such Recipient's death. Such person or persons shall be
designated in writing on forms provided for this purpose by the
Committee and may be changed from time to time by similar written
notice to the Committee. In the absence of a written
designation, the Beneficiary shall be the Recipient's surviving
spouse, if any, or if none, his estate.
3.03 Board" means the Board of Directors of the
Corporation.
3.04 Change in Control of the Corporation" shall mean a
change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Exchange Act, whether or not the
Corporation in fact is required to comply with Regulation 14A
thereunder; provided that, without limitation, such a change in
control shall be deemed to have occurred if (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange
Act), other than the Corporation, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation
representing 25% or more of the combined voting power of the
Corporation's then outstanding securities, or (ii) during any
period of twenty-four consecutive months during the term of a
Plan Share Award, individuals who at the beginning of such period
constitute the Board of Directors, and any new director whose
election by the Board of Directors or nomination for election by
the Corporation's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were
directors at the beginning of the two-year period or whose
election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority of the
Board of Directors; (iii) the stockholders of the Corporation
approve a merger or consolidation of the Corporation with any
other corporation, other than a merger or consolidation that
would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Corporation
outstanding immediately after such merger or consolidation; or
(iv) the stockholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the
sale or disposition by the Corporation of all or substantially
all of the Corporation's assets. If any of the events enumerated
in clauses (i) through (iv) occur, the Board shall determine the
effective date of the Change in Control resulting therefrom for
purposes of the Plan.
3.05 Code" means the Internal Revenue Code of 1986, as
amended.
3.06 Committee" means the committee appointed by the Board
pursuant to Article IV hereof.
3.07 Common Stock" means shares of the common stock, $.01
par value per share, of the Corporation.
3.08 Disability" means any physical or mental impairment
which qualifies an individual for disability benefits under the
applicable long-term disability plan maintained by the
Corporation or any Subsidiary or, if no such plan applies, which
would qualify such individual for disability benefits under the
long-term disability plan maintained by the Corporation, if such
individual were covered by that plan.
3.09 Effective Date" means the day upon which the Board
approves this Plan.
3.10 Employee" means any person who is employed by the
Corporation, the Bank or a Subsidiary, or is an officer of the
Corporation, the Bank or a Subsidiary, including officers or
other employees who may be directors of the Corporation or the
Bank.
3.11 Exchange Act" means the Securities Exchange Act of
1934, as amended.
3.12 Non-Employee Director" means a member of the Board of
the Corporation or Board of Directors of the Bank or any
Subsidiary, including a Director Emeritus of the Board of
Directors of the Corporation or the Board of Directors of the
Bank, who is not an Officer or Employee of the Corporation or any
Subsidiary.
3.13 Plan Shares" or "Shares" means shares of Common Stock
held in the Trust which may be distributed to a Recipient
pursuant to the Plan.
3.14 Plan Share Award" or "Award" means a right granted
under this Plan to receive a distribution of Plan Shares upon
completion of the service requirements described in Article VII.
3.15 Recipient" means an Employee or Non-Employee Director
who receives a Plan Share Award under the Plan.
3.16 Retirement" means a termination of employment which
constitutes a "retirement" under any applicable qualified pension
benefit plan maintained by the Corporation or a Subsidiary
Corporation, or, if no such plan is applicable, which would
constitute "retirement" under the Corporation's pension benefit
plan, if such individual were a participant in that plan.
3.17 Subsidiary" means the Bank and any other subsidiaries
of the Corporation or the Bank which, with the consent of the
Board, agree to participate in this Plan.
3.18 Trustee" means such firm, entity or persons approved
by the Board to hold legal title to the Plan for the purposes set
forth herein.
ARTICLE IV
ADMINISTRATION OF THE PLAN
4.01 Role of the Committee. The Plan shall be administered
and interpreted by the Committee, which shall consist of two or
more members of the Board, each of whom shall be a Non-Employee
Director, as defined in Rule 16b-3(b)(3)(i) of the Exchange Act,
or any successor thereto. The Committee shall have all of the
powers allocated to it in this and other Sections of the Plan.
The interpretation and construction by the Committee of any
provisions of the Plan or of any Plan Share Award granted
hereunder shall be final and binding in the absence of action by
the Board. The Committee shall act by vote or written consent of
a majority of its members. Subject to the express provisions and
limitations of the Plan, the Committee may adopt such rules,
regulations and procedures as it deems appropriate for the
conduct of its affairs. The Committee shall report its actions
and decisions with respect to the Plan to the Board at
appropriate times, but in no event less than one time per
calendar year.
4.02 Role of the Board. The members of the Committee and
the Trustee shall be appointed or approved by, and will serve at
the pleasure of, the Board. The Board may in its discretion from
time to time remove members from, or add members to, the
Committee, and may remove or replace the Trustee, provided that
any directors who are selected as members of the Committee shall
be Non-Employee Directors.
4.03 Limitation on Liability. No member of the Board or
the Committee shall be liable for any determination made in good
faith with respect to the Plan or any Plan Shares or Plan Share
Awards granted under it. If a member of the Board or the
Committee is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of anything done or not done by him in such capacity under
or with respect to the Plan, the Corporation shall, subject to
the requirements of applicable laws and regulations, indemnify
such member against all liabilities and expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in the best interests of the
Corporation and any Subsidiaries and, with respect to any
criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.
4.04 Compliance with Laws and Regulations. All Awards
granted hereunder shall be subject to all applicable federal and
state laws, rules and regulations and to such approvals by any
government or regulatory agency or stockholders as may be
required.
ARTICLE V
CONTRIBUTIONS
5.01 Amount and Timing of Contributions. The Board shall
determine the amount (or the method of computing the amount) and
timing of any contributions by the Corporation and any
Subsidiaries to the Trust established under this Plan. Such
amounts may be paid in cash or in shares of Common Stock and
shall be paid to the Trust at the designated time of
contribution. No contributions by Employees or Non-Employee
Directors shall be permitted.
5.02 Investment of Trust Assets; Number of Plan Shares.
Subject to Section 8.02 hereof, the Trustee shall invest all of
the Trust's assets primarily in Common Stock. The aggregate
number of Plan Shares available for distribution pursuant to this
Plan shall be 15,870 shares of Common Stock, subject to
adjustment as provided in Section 9.01 hereof, which shares shall
be purchased (from the Corporation and/or, if permitted by
applicable regulations, from stockholders thereof) by the Trust
with funds contributed by the Corporation.
ARTICLE VI
ELIGIBILITY; ALLOCATIONS
6.01 Awards to Non-Employee Directors. Plan Share Awards
to Non-Employee Directors shall be made to such persons and in
such amounts as determined by the Board or the Committee. Plan
Share Awards to Non-Employee Directors in the aggregate shall not
exceed 4,761 shares (30% of the number of shares available under
this Plan) and no individual Non-Employee Director may receive
Plan Share Awards in excess of 4,761 shares divided by the number
of Non-Employee Directors serving at the time the Award is made.
6.02 Awards to Employees. Plan Share Awards may be made to
such Employees as may be selected by the Board or the Committee.
In selecting those Employees to whom Plan Share Awards may be
granted and the number of Shares covered by such Awards, the
Board or the Committee shall consider the duties,
responsibilities and performance of each respective Employee, his
present and potential contributions to the growth and success of
the Corporation, his salary and such other factors as deemed
relevant to accomplishing the purposes of the Plan. The Board or
the Committee may but shall not be required to request the
written recommendation of the Chief Executive Officer of the
Corporation other than with respect to Plan Share Awards to be
granted to him. Plan Share Awards to Employees shall not exceed
3,967 shares (25% of the shares of Common Stock available under
the Plan).
6.03 Form of Allocation. As promptly as practicable after
an allocation pursuant to Sections 6.01 or 6.02 that a Plan Share
Award is to be issued, the Board or the Committee shall notify
the Recipient in writing of the grant of the Award, the number of
Plan Shares covered by the Award, and the terms upon which the
Plan Shares subject to the Award shall be distributed to the
Recipient. The date on which the Board or the Committee so
notifies the Recipient shall be considered the date of grant of
the Plan Share Award. The Board or the Committee shall maintain
records as to all grants of Plan Share Awards under the Plan.
6.04 Allocations Not Required to any Specific Employee or
Non-Employee Director. Notwithstanding anything to the contrary
in Sections 6.01 or 6.02 hereof, no Employee or Non-Employee
Director shall have any right or entitlement to receive a Plan
Share Award hereunder, such Awards being at the total discretion
of the Board or the Committee.
ARTICLE VII
EARNING AND DISTRIBUTION OF PLAN SHARES; VOTING RIGHTS
7.01 Earning Plan Shares; Forfeitures.
(a) General Rules. Subject to the terms hereof,
Plan Share Awards shall be earned by a Recipient at the rate of
thirty-three and one-third percent (33 1/3%) of the aggregate
number of Shares covered by the Award over three years,
commencing on the date of award and an additional 33 1/3% shall
be earned as of each successive annual anniversary of the date of
grant of the Award. If the employment of an Employee or service
as a Non-Employee Director is terminated prior to the third (3rd)
annual anniversary of the date of grant of a Plan Share Award for
any reason (except as specifically provided in subsections (b)
and (c) below), the Recipient shall forfeit the right to any
Shares subject to the Award which have not theretofore been
earned. In the event of a forfeiture of the right to any Shares
subject to an Award, such forfeited Shares shall become available
for allocation pursuant to Sections 6.01 and 6.02 hereof as if no
Award had been previously granted with respect to such Shares.
No fractional shares shall be distributed pursuant to this Plan.
(b) Exception for Terminations Due to Death,
Disability or Retirement. Notwithstanding the general rule
contained in Section 7.01(a), all Plan Shares subject to a Plan
Share Award held by a Recipient whose employment with the
Corporation or any Subsidiary or service as a Non-Employee
Director terminates due to death or Disability shall be deemed
earned as of the Recipient's last day of employment with or
service to the Corporation or any Subsidiary and shall be
distributed as soon as practicable thereafter; provided, however,
that Awards shall be distributed in accordance with Section
7.03(a). In addition, in the event that a Recipient's employment
or service as a Non-Employee Director with the Corporation, the
Bank or any Subsidiary terminates due to Retirement, all Plan
Shares subject to a Plan Share Award held by a Recipient shall be
deemed earned as of the Recipient's last day of employment with
or service to the Corporation or any Subsidiary and shall be
distributed as soon as practicable thereafter; provided, however,
that as of the date of such Retirement, such treatment is either
authorized or is not prohibited by applicable laws and
regulations.
(c) Exception for Terminations after a Change in
Control of the Corporation. Notwithstanding the general rule
contained in Section 7.01(a), all Plan Shares subject to a Plan
Share Award held by a Recipient shall be deemed to be earned in
the event of a Change in Control of the Corporation if, as of the
date of such Change in Control of the Corporation, such treatment
is either authorized or is not prohibited by applicable laws and
regulations.
(d) Revocation for Misconduct. Notwithstanding
anything hereinafter to the contrary, the Board may by resolution
immediately revoke, rescind and terminate any Plan Share Award,
or portion thereof, previously awarded under this Plan, to the
extent Plan Shares have not been distributed hereunder to the
Recipient, whether or not yet earned, in the case of an Employee
who is discharged from the employ of the Corporation or any
Subsidiary for cause (as hereinafter defined). Termination for
cause shall mean termination because of the Employee's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary
duty involving personal profit, intentional failure to perform
stated duties, willful violation of any law, rule, or regulation
(other than traffic violations or similar offenses) or final
cease-and-desist order. Plan Share Awards granted to a Non-
Employee Director who is removed for cause pursuant to the
Corporation's Articles of Incorporation and Bylaws or the Bank's
Charter and Bylaws shall terminate as of the effective date of
such removal.
7.02 Distribution of Dividends. Any cash dividends
(including special large and nonrecurring dividends including one
that has the effect of a return of capital to the Corporation's
stockholders) or stock dividends declared in respect of each
unvested Plan Share Award will be held by the Trust for the
benefit of the Recipient on whose behalf such Plan Share Award is
then held by the Trust and such dividends, including any interest
thereon, will be paid out proportionately by the Trust to the
Recipient thereof as soon as practicable after the Plan Share
Awards become earned. Any cash dividends or stock dividends
declared in respect of each vested Plan Share held by the Trust
will be paid by the Trust, as soon as practicable after the
Trust's receipt thereof, to the Recipient on whose behalf such
Plan Share is then held by the Trust.
7.03 Distribution of Plan Shares.
(a) Timing of Distributions: General Rule. Plan
Shares shall be distributed to the Recipient or his Beneficiary,
as the case may be, as soon as practicable after they have been
earned.
(b) Form of Distributions. All Plan Shares,
together with any Shares representing stock dividends, shall be
distributed in the form of Common Stock. One share of Common
Stock shall be given for each Plan Share earned and
distributable. Payments representing cash dividends shall be
made in cash.
(c) Withholding. The Trustee may withhold from any
cash payment or Common Stock distribution made under this Plan
sufficient amounts to cover any applicable withholding and
employment taxes, and if the amount of a cash payment is
insufficient, the Trustee may require the Recipient or
Beneficiary to pay to the Trustee the amount required to be
withheld as a condition of delivering the Plan Shares. The
Trustee shall pay over to the Corporation or any Subsidiary which
employs or employed such Recipient any such amount withheld from
or paid by the Recipient or Beneficiary.
(d) Restrictions on Selling of Plan Shares. Plan
Share Awards may not be sold, assigned, pledged or otherwise
disposed of prior to the time that they are earned and
distributed pursuant to the terms of this Plan. Following
distribution, the Board or the Committee may require the
Recipient or his Beneficiary, as the case may be, to agree not to
sell or otherwise dispose of his distributed Plan Shares except
in accordance with all then applicable Federal and state
securities laws, and the Board or the Committee may cause a
legend to be placed on the stock certificate(s) representing the
distributed Plan Shares in order to restrict the transfer of the
distributed Plan Shares for such period of time or under such
circumstances as the Board or the Committee, upon the advice of
counsel, may deem appropriate.
7.04 Voting of Plan Shares. After a Plan Share Award has
been made, the Recipient shall be entitled to direct the Trustee
as to the voting of the Plan Shares which are covered by the Plan
Share Award and which have not yet been earned and distributed to
him pursuant to Section 7.03, subject to rules and procedures
adopted by the Committee for this purpose. All shares of Common
Stock held by the Trust which have not been awarded under a Plan
Share Award and shares which have been awarded as to which
Recipients have not directed the voting shall be voted by the
Trustee in the same proportion as voted by the Trustee for shares
allocated and which the Trustee receives directions for such vote
by Recipients.
ARTICLE VIII
TRUST
8.01 Trust. The Trustee shall receive, hold, administer,
invest and make distributions and disbursements from the Trust in
accordance with the provisions of the Plan and Trust and the
applicable directions, rules, regulations, procedures and
policies established by the Board or the Committee pursuant to
the Plan.
8.02 Management of Trust. It is the intent of this
Plan and Trust that the Trustee shall have complete authority and
discretion with respect to the arrangement, control and
investment of the Trust, and that the Trustee shall invest all
assets of the Trust in Common Stock to the fullest extent
practicable, except to the extent that the Trustee determines
that the holding of monies in cash or cash equivalents is
necessary to meet the obligations of the Trust. In performing
their duties, the Trustee shall have the power to do all things
and execute such instruments as may be deemed necessary or
proper, including the following powers:
(a) To invest up to one hundred percent (100%) of
all Trust assets in Common Stock without regard to any law now or
hereafter in force limiting investments for trustees or other
fiduciaries. The investment authorized herein may constitute the
only investment of the Trust, and in making such investment, the
Trustee is authorized to purchase Common Stock from the
Corporation or from any other source, and such Common Stock so
purchased may be outstanding, newly issued, or treasury shares.
(b) To invest any Trust assets not otherwise
invested in accordance with (a)above, in such deposit accounts,
and certificates of deposit, obligations of the United States
Government or its agencies or such other investments as shall be
considered the equivalent of cash.
(c) To sell, exchange or otherwise dispose of any
property at any time held or acquired by the Trust.
(d) To cause stocks, bonds or other securities to
be registered in the name of a nominee, without the addition of
words indicating that such security is an asset of the Trust (but
accurate records shall be maintained showing that such security
is an asset of the Trust).
(e) To hold cash without interest in such amounts
as may in the opinion of the Trustee be reasonable for the proper
operation of the Plan and Trust.
(f) To employ brokers, agents, custodians,
consultants and accountants.
(g) To hire counsel to render advice with respect
to their rights, duties and obligations hereunder, and such other
legal services or representation as they may deem desirable.
(h) To hold funds and securities representing the
amounts to be distributed to a Recipient or his Beneficiary as a
consequence of a dispute as to the disposition thereof, whether
in a segregated account or held in common with other assets of
the Trust.
Notwithstanding anything herein contained to the contrary,
the Trustee shall not be required to make any inventory,
appraisal or settlement or report to any court, or to secure any
order of court for the exercise of any power herein contained, or
give bond.
8.03 Records and Accounts. The Trustee shall maintain
accurate and detailed records and accounts of all transactions of
the Trust, which shall be available at all reasonable times for
inspection by any legally entitled person or entity to the extent
required by applicable law, or any other person determined by the
Board or the Committee.
8.04 Expenses. All costs and expenses incurred in the
operation and administration of this Plan shall be borne by the
Corporation or, in the discretion of the Corporation, the Trust.
8.05 Indemnification. Subject to the requirements of
applicable laws and regulations, the Corporation shall indemnify,
defend and hold the Trustee harmless against all claims, expenses
and liabilities arising out of or related to the exercise of the
Trustee's powers and the discharge of its duties hereunder,
unless the same shall be due to their gross negligence or willful
misconduct.
ARTICLE IX
MISCELLANEOUS
9.01 Adjustments for Capital Changes. The aggregate number
of Plan Shares available for distribution pursuant to the Plan
Share Awards and the number of Shares to which any Plan Share
Award relates shall be proportionately adjusted for any increase
or decrease in the total number of outstanding shares of Common
Stock issued subsequent to the effective date of the Plan
resulting from any split, subdivision or consolidation of shares
or other capital adjustment, or other increase or decrease in
such shares effected without receipt or payment of consideration
by the Corporation.
9.02 Amendment and Termination of Plan. The Board may, by
resolution, at anytime amend or terminate the Plan and the Trust
(including amendments which may result in the merger of the Plan
or the Trust with and into other plans or trusts of the
Corporation or successor thereto), subject to any applicable
regulatory requirement, any required stockholder approval or any
stockholder approval which the Board may deem to be advisable for
any reason, such as for the purpose of obtaining or retaining any
statutory or regulatory benefits under tax, securities or other
laws or satisfying any applicable stock exchange listing
requirements. The Board may not, without the consent of the
Recipient, alter or impair his Plan Share Award except as
specifically authorized herein. Upon termination of the Plan,
the Recipient's Plan Share Awards shall be distributed to the
Recipient regardless of whether or not such Plan Share Award had
otherwise been earned under the service requirements set forth in
Article VII.
9.03 Nontransferable. During the lifetime of the
Recipient, Plan Shares may only be earned by and paid to the
Recipient who was notified in writing of the Award pursuant to
Section 6.03, provided that Plan Share Awards and rights to Plan
Shares shall be transferable by a Recipient to his or her spouse,
lineal ascendants, lineal descendants, or to a duly established
trust. Plan Share Awards so transferred may not again be
transferred other than to the Recipient who originally received
the grant of Plan Share Award or to an individual or trust to
whom such Recipient could have transferred Plan Share Awards
pursuant to this Section 9.03. Plan Share Awards which are
transferred pursuant to this Section 9.03 shall be subject to the
same terms and conditions as would have applied to such Plan
Share Awards in the hands of the Recipient who originally
received the grant of such Plan Share Award. No Recipient or
Beneficiary shall have any right in or claim to any assets of the
Plan or Trust, nor shall the Corporation or any Subsidiary be
subject to any claim for benefits hereunder.
9.04 Employment or Service Rights. Neither the Plan nor
any grant of a Plan Share Award or Plan Shares hereunder nor any
action taken by the Trustee, the Committee or the Board in
connection with the Plan shall create any right on the part of
any Employee or Non-Employee Director to continue in such
capacity.
9.05 Voting and Dividend Rights. No Recipient shall have
any voting or dividend rights or other rights of a stockholder in
respect of any Plan Shares covered by a Plan Share Award, except
as expressly provided in Sections 7.02 and 7.04 above, prior to
the time said Plan Shares are actually earned and distributed to
him.
9.06 Governing Law. To the extent not governed by federal
law, the Plan and Trust shall be governed by the laws of the
State of Delaware.
9.07 Effective Date. This Plan shall be effective as of
the Effective Date, and Awards may be granted hereunder as of or
after the Effective Date and as long as the Plan remains in
effect. Notwithstanding the foregoing or anything to the
contrary in this Plan, the implementation of this Plan and any
Awards granted pursuant hereto are subject to the receipt of any
applicable regulatory approvals or non-objections and approval of
the Corporation's stockholders.
9.08 Term of Plan. This Plan shall remain in effect until
the earlier of (1) ten (10) years from the Effective Date, (2)
termination by the Board, or (3) the distribution to Recipients
and Beneficiaries of all assets of the Trust.
9.09 Tax Status of Trust. It is intended that the trust
established hereby be treated as a Grantor Trust of the
Corporation under the provisions of Section 671 et seq. of the
Code, as the same may be amended from time to time.
IN WITNESS WHEREOF, the Corporation has caused this
Agreement to be executed by its duly authorized officers and the
corporate seal to be affixed and duly attested, and the initial
Trustee of the Trust established pursuant hereto have duly and
validly executed this Agreement, all on this 24th day of March
1998.
VERMILION BANCORP, INC.
By: /s/ MERRILL G. NORTON
Merrill G. Norton
President and
Chief Executive Officer
ATTEST: TRUSTEES:
/s/ WILLIAM T. INGRAM /s/ MERRILL G. NORTON
William T. Ingram Merrill G. Norton
Corporate Secretary
/s/ WILLIAM T. INGRAM
William T. Ingram
/s/ THOMAS B. MEYER
Thomas B. Meyer
<PAGE>
REVOCABLE PROXY
VERMILION BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF VERMILION BANCORP, INC. ("COMPANY") FOR USE AT THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 22, 1998 AND AT ANY
ADJOURNMENT THEREOF.
The undersigned, being a stockholder of the Company as of
March 27, 1998, hereby authorizes the Board of Directors of the
Company or any successors thereto as proxies with full powers of
substitution, to represent the undersigned at the Annual Meeting
of Stockholders of the Company to be held at the main office of
the Company located at 714 North Vermilion Street, Danville,
Illinois 61832 on Wednesday, April 22, 1998 at 5:30 p.m., Central
Time, and at any adjournment of said meeting, and thereat to act
with respect to all votes that the undersigned would be entitled
to cast, if then personally present, as follows:
1. ELECTION OF DIRECTORS.
___ FOR all nominees listed below ___ WITHHOLD AUTHORITY
(except as marked to the to vote for all
contrary below) nominees listed
below
William T. Ingam and Dr. Robert Ewbank
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
_________________________________
2. PROPOSAL to adopt the Company's 1998 Stock Option Plan.
___ FOR ___ AGAINST ___ ABSTAIN
<PAGE>
3. PROPOSAL to adopt the Company's 1998 Recognition and
Retention Plan and Trust.
___ FOR ___ AGAINST ___ ABSTAIN
4. PROPOSAL to adjourn the Annual Meeting, if necessary, to
solicit additional proxies.
___ FOR ___ AGAINST ___ ABSTAIN
5. RATIFICATION OF THE APPOINTMENT of Geo. S. Olive & Co. LLC
as independent auditors of the Company for the year ending
September 30, 1998.
___ FOR ___ AGAINST ___ ABSTAIN
6. In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the Annual
Meeting
Shares of Common Stock of the Company will be voted as
specified. If not otherwise specified, this proxy will be voted
FOR the election of the Board of Directors' nominees to the Board
of Directors, FOR the adoption of the Company's 1998 Stock Option
Plan, FOR the adoption of the Company's 1998 Recognition and
Retention Plan and Trust, FOR the proposal to adjourn the Annual
Meeting, if necessary, to solicit additional proxies, and FOR the
ratification of the appointment of Geo. S. Olive & Co. LLC as
independent auditors. You may revoke this proxy at any time prior
to the time it is voted at the Annual Meeting.
The undersigned hereby acknowledges receipt of the Notice of
Annual Meeting of Stockholders of the Company to be held on April
22, 1998, or any adjournment thereof, a Proxy Statement for the
Annual Meeting and the 1997 Annual Report to Stockholders of the
Company prior to the signing of this proxy.
Dated: ___________ ___, 1998.
____________________________________
Signature(s)
Please sign exactly as your name(s)
appear(s) on this Proxy. When signing
in a representative capacity, please
give title. When shares are held
jointly, both should sign. YOU MAY
REVOKE THIS PROXY AT ANY TIME PRIOR TO
THE TIME IT IS VOTED AT THE ANNUAL
MEETING.
Please check if you plan to attend
the meeting. ___
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
============================== End Part 2
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