<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
UNIFIED FINANCIAL SERVICES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total Fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
<PAGE>
[LOGO] UNIFIED FINANCIAL SERVICES, INC.
April 30, 1999
Dear Fellow Stockholders:
Our Annual Meeting of Stockholders will be held at Champion Trace
Golf Club, 20 Avenue of Champions, Nicholasville, Kentucky, at 10:00
a.m., local time, on Thursday, May 27, 1999. The Notice of Annual
Meeting of Stockholders, Proxy Statement and proxy that accompany this
letter outline fully matters on which action is expected to be taken at
the Annual Meeting.
We cordially invite you to attend the Annual Meeting. Even if you
plan to be present at the meeting, you are requested to date, sign and
return the enclosed proxy in the envelope provided so that your shares
will be represented. The mailing of an executed proxy will not affect
your right to vote in person should you later decide to attend the
Annual Meeting.
Sincerely,
/s/ Timothy L. Ashburn
Timothy L. Ashburn
Chairman, President and
Chief Executive Officer
<PAGE>
<PAGE>
UNIFIED FINANCIAL SERVICES, INC.
431 NORTH PENNSYLVANIA STREET
INDIANAPOLIS, INDIANA 46204-1873
(800) 862-7283
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, MAY 27, 1999
To the Holders of the Capital Stock of
Unified Financial Services, Inc.:
The Annual Meeting of Stockholders of Unified Financial Services,
Inc., a Delaware corporation (the "Company"), will be held at Champion
Trace Golf Club, 20 Avenue of Champions, Nicholasville, Kentucky, on
Thursday, May 27, 1999 at 10:00 a.m., local time, for the following
purposes:
1. To elect three (3) Class II directors to hold office for
a term of three years or until their successors shall have
been duly elected and qualified;
2. To consider and act upon a proposal to adopt an amendment to
Article 4 of the Company's Amended and Restated Certificate
of Incorporation;
3. To consider and act upon a proposal to adopt the Amended
and Restated Unified Financial Services, Inc. 1998 Stock
Incentive Plan; and
4. To consider and act upon such other business as may
properly come before the meeting and any adjournment or
postponement thereof.
The Company's Board of Directors has fixed the close of business
on April 16, 1999 as the record date for the determination of
stockholders entitled to receive notice of and to vote at the meeting
and any adjournment or postponement thereof.
By Order of the Board of Directors,
Carol J. Highsmith, Secretary
April 30, 1999
Indianapolis, Indiana
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED
ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE
NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
<PAGE>
<PAGE>
UNIFIED FINANCIAL SERVICES [LOGO]
UNIFIED FINANCIAL SERVICES, INC.
431 NORTH PENNSYLVANIA STREET
INDIANAPOLIS, INDIANA 46204-1873
(800) 862-7283
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON THURSDAY, MAY 27, 1999
APPROXIMATE DATE OF MAILING: APRIL 30, 1999
GENERAL
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Unified Financial
Services, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on Thursday, May 27, 1999 at
10:00 a.m., local time, at Champion Trace Golf Club, 20 Avenue of
Champions, Nicholasville, Kentucky, and any adjournment thereof, for the
purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders.
All proxies will be voted in accordance with the instructions
contained in the proxy. If no choice is specified, proxies will be
voted in favor of the election of the nominees for director proposed by
the Board of Directors in Proposal I, in favor of the adoption of the
amendment to Article 4 of the Company's Amended and Restated Certificate
of Incorporation, as amended (the "Certificate of Incorporation"), in
Proposal II and in favor of the adoption of the Amended and Restated
Unified Financial Services, Inc. 1998 Stock Incentive Plan (the "Plan")
in Proposal III. A stockholder who executes a proxy may revoke it at
any time before it is exercised by delivering to the Company another
proxy bearing a later date, by submitting written notice of such
revocation to the Secretary of the Company or by personally appearing at
the Annual Meeting and casting a contrary vote.
This Proxy Statement, the Notice of Annual Meeting and the
accompanying proxy were first mailed to the holders of (i) Common Stock,
$0.01 par value (the "Common Stock"), and (ii) Series C 6.75% Cumulative
Convertible Preferred Stock, $0.01 par value (the "Series C Preferred
Stock"), of the Company (collectively, the "Voting Stock") on or about
April 30, 1999. The Company will bear the entire expense of soliciting
proxies. Proxies will be solicited by mail initially. The directors,
executive officers and employees of the Company also may solicit proxies
personally or by telephone or other means, but such persons will not be
specially compensated for such services. Certain holders of record,
such as brokers, custodians and nominees, may be requested to distribute
proxy materials to beneficial owners and will be reimbursed by the
Company for their reasonable expenses incurred in sending proxy
materials to beneficial owners.
A plurality of the votes cast is required for the election of
directors. Under the Delaware General Corporation Law, an abstaining
vote is not deemed to be a "vote cast." As a result, abstentions and
- 1 -
<PAGE>
<PAGE>
broker "non-votes" are not included in the tabulation of the voting
results on the election of directors and, therefore, do not have the
effect of votes in opposition. The adoption of the amendment to Article
4 of the Company's Certificate of Incorporation requires the affirmative
vote of a majority of the outstanding Voting Shares (after giving effect
to the 135 votes attributable to each outstanding share of Series C
Preferred Stock). The adoption of the Plan requires the affirmative
vote of a majority of the votes cast on such proposal at the meeting;
provided, that the number of votes cast constitutes more than 50% of the
shares entitled to vote on the proposal. Abstentions on such matter
will be counted, but broker "non-votes" will not be counted, for the
purpose of determining the number of shares represented at the meeting
for purposes of determining whether a quorum of shares is present at the
meeting. Neither abstentions nor broker "non-votes" will be deemed to
be a vote cast in determining whether the 50% or more requirement is met
for purposes of the adoption of the amendment to the Certificate of
Incorporation or the Plan. A broker "non-vote" occurs when a nominee
holding shares for a beneficial owner does not vote a particular
proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the
beneficial owner.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only stockholders of record at the close of business on April 16,
1999 are entitled to notice of, and to vote at, the Annual Meeting. On
such date, there were 2,277,580 shares of Common Stock and 1,672 shares
of Series C Preferred Stock outstanding. The Common Stock and Series C
Preferred Stock vote as a single class on each matter submitted to the
stockholders. Each share of Common Stock and Series C Preferred Stock
is entitled to one and 135, respectively, vote(s) on each such matter.
Holders of the Voting Stock do not have the right to cumulate votes in
the election of directors.
To the knowledge of the Company, and except as set forth under
"Security Ownership of Certain Beneficial Owners and Management," no
person beneficially owned more than 5% of the shares of Common Stock
outstanding on April 16, 1999 (which class of represented approximately
91.0% of the Company's total outstanding Voting Stock). Of the shares
of Series C Preferred Stock outstanding on such date, there were seven
stockholders who each owned more than 5% of such securities.
- 2 -
<PAGE>
<PAGE>
PROPOSAL I: ELECTION OF DIRECTORS
In accordance with the by-laws of the Company, the Board of
Directors has fixed the number of directors at seven, divided into three
classes, with the terms of office of each class ending in successive
years. The Board of Directors has nominated Thomas G. Napurano, John R.
Owens and Lynn E. Wood for election as Class II directors to hold office
until the 2002 Annual Meeting of Stockholders, until their respective
successors are elected and qualified, or until their earlier death,
resignation or removal. There is no cumulative voting in the election
of directors.
The persons named as proxies on the accompanying proxy intend to
vote all duly executed proxies received by the Board of Directors for
the election of Thomas G. Napurano, John R. Owens and Lynn E. Wood as
Class II directors, except as otherwise directed by the stockholder on
the proxy. Messrs. Napurano, Owens and Wood currently are directors of
the Company. If for any reason Messrs. Napurano, Owens and Wood become
unavailable for election, which is not now anticipated, the persons
named in the accompanying proxy will vote for such substitute nominee as
is designated by the Board of Directors. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" THE ELECTION OF THOMAS G. NAPURANO, JOHN R.
OWENS AND LYNN E. WOOD AS CLASS II DIRECTORS.
The name, age, principal occupation or position, term of office
and other directorships with respect to Messrs. Napurano, Owens and Wood
and the other directors whose terms of office will continue after the
Annual Meeting are set forth below, including any positions they hold
with the Company and its active subsidiaries, Unified Management
Corporation ("UMC"), Unified Fund Services, Inc. ("UFSI"), First
Lexington Trust Company ("First Lexington"), Health Financial, Inc.
("Health Financial"), Unified Investment Advisers, Inc. ("UIA"),
Resource Benefit Planners, Inc. ("RBP"), Unified Internet Services, Inc.
("Unified Internet Services"), Fiduciary Counsel, Inc. ("Fiduciary"),
EMCO Estate Management Company, Inc. ("EMCO"), Equity Underwriting
Group, Inc. ("Equity"), Commonwealth Premium Finance Corporation
("CPFC"), Strategic Fund Services, Inc. ("Strategic"), AmeriPrime
Financial Services, Inc. ("AmeriPrime"), AmeriPrime Financial
Securities, Inc. ("AFS"), Equity Insurance Managers, Inc. ("EIM"), 21st
Century Claims Service, Inc. ("21st Century"), Equity Insurance
Administrators, Inc. ("EIA"), Equity Insurance Managers of
Illinois, L.L.C. ("EIM of Illinois"), Unified Aviation, Inc. ("Unified
Aviation"), VSX Technologies, Inc. ("VSX") and Unified Capital
Resources, Inc. ("Unified Capital Resources").
CLASS II NOMINEES TO BE ELECTED FOR A TERM OF
THREE YEARS EXPIRING IN 2002
THOMAS G. NAPURANO, 57, a certified public accountant and a
certified management accountant, has served as a director, the Chief
Financial Officer and Executive Vice President of the Company since
1989. Mr. Napurano also is a director and the Chief Financial Officer
of Unified Internet Services, a director and the Chief Financial Officer
and Executive Vice President of each of UFSI and UMC, a director and
Treasurer of Unified Aviation, a director and Assistant Treasurer of
each of VSX and Unified Capital Resources, the Chief Financial Officer
and the Treasurer for the Unified Funds, the Assistant Treasurer of each
of Fiduciary, EMCO, Equity and CPFC, and the Treasurer of each of
Strategic, AmeriPrime and AFS.
JOHN R. OWENS, 45, a certified public accountant, has served as a
director and an Executive Vice President of the Company since 1998. Mr.
Owens has served as a director and the President of Equity since 1998, a
director and Vice-President and the Secretary and Treasurer of CPFC
since 1991 and 1998, respectively, a director and the President of each
of EIM and EIA since 1990 and 1997, respectively, a director, the
Secretary and Treasurer of 21st Century since 1996 and a director of EIM
of Illinois since 1996. Mr. Owens also is a director, the Vice
President and Secretary of Unified Aviation.
- 3 -
<PAGE>
<PAGE>
LYNN E. WOOD, 52, has served as a director of the Company since
1992, and served as Chief Operating Officer and President of the Company
from 1993 through November 1997. Mr. Wood also has served as Executive
Vice President of the Company since 1998. Mr. Wood also is the
President and Chief Executive Officer of UMC, a director of Unified
Internet Services and the Assistant Secretary of the Unified Funds.
CLASS III - TO CONTINUE IN OFFICE UNTIL 2000
WEAVER H. GAINES, 55, has served as a director of the Company from
1990 to 1992 and 1993 to present. Since 1993, Mr. Gaines has been a
director, the Chairman and Chief Executive Officer for Ixion
Biotechnology, Inc., founding and managing the development-stage
biotechnology company. From 1985 until 1992, Mr. Gaines held various
executive positions at the Mutual Life Insurance Company of New York
(MONY), including Executive Vice President and General Counsel, and was
a member of its executive and compensation committees and management of
MONY's investment services subsidiaries. Mr. Gaines is a director of
each of Voyetra Turtle Beach, Inc., First ING Life Insurance Company of
New York, AquaGene, Inc. and Bio + Florida, Florida's biotechnology
trade association.
JACK R. ORBEN, 60, has served as a director of the Company since
1989. Mr. Orben was the Chairman and an executive officer of Fiduciary
from 1979 through August 1998 and has been a director and the Chairman,
Chief Executive Officer and Treasurer of Fiduciary from August 1998
through the present. Mr. Orben also is the Chairman, Chief Executive
Officer and Treasurer of Associated Family Services, Inc., which owns
100% of Starwood Corporation, an investment adviser firm. Starwood is a
sub-adviser for the Starwood Strategic portfolio of the Company's
affiliated mutual funds, the Unified Funds. Mr. Orben serves as a
director and the Chairman, Chief Executive Officer and Treasurer of
EMCO. Mr. Orben also serves as a director and the President and
Treasurer of Fiduciary Alliance Inc. For various periods during the
past five years, Mr. Orben has served as the Chairman, Chief Executive
Officer and Treasurer of each of Venvestech Corp., Seward, Groves,
Richards & Wells, Starwood Corporation, Fiduciary Alliance Inc., NUSTAR
Inc., Intellectronic Management Systems Inc., Economic Analysts Inc.,
EMCO Nominees Inc. and Ra X Productions Inc. and as a director of UIA.
CLASS I - TO CONTINUE IN OFFICE UNTIL 2001
TIMOTHY L. ASHBURN, 48, has served as Chairman of the Board of the
Company since 1989, as Chief Executive Officer from 1989 to 1992 and
1994 to present, and as President since November 1997. Mr. Ashburn was
employed by Vine Street Trust Company, Lexington, Kentucky, a wholly
owned subsidiary of Cardinal Bancshares, a Kentucky bank holding
company, for the two-year period from April 1992 through March 1994.
Mr. Ashburn also is a director of each of UMC, UFSI, First Lexington,
Health Financial, RBP, Unified Internet Services, UIA, Fiduciary, EMCO,
Equity, CPFC, Strategic, AmeriPrime, AFS, Unified Aviation, VSX and
Unified Capital Resources, is Chairman of the Board of Trustees,
President, Chief Executive Officer and Assistant Secretary of the
Unified Funds, a family of no-load mutual funds sponsored by UFSI,
is Chairman and Chief Executive Officer of UFSI, is Chairman of UMC,
is Assistant Secretary of Fiduciary, EMCO, Equity, CPFC, Strategic,
AmeriPrime and AFS, is Vice-President and Assistant Secretary of each
of VSX and Unified Capital Resources and is President and Assistant
Secretary of Unified Aviation.
DR. GREGORY W. KASTEN, 44, has served as a director of the Company
since 1997. Dr. Kasten has served as President and Chief Executive
Officer of Health Financial and First Lexington since 1986 and 1994,
respectively. Dr. Kasten also is a director of each of Health
Financial, First Lexington and RBP.
- 4 -
<PAGE>
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
During the year ended December 31, 1998, the Board of Directors of
the Company met four times, including both regularly scheduled and
special meetings. During such year, all of the incumbent directors
attended at least 75% of all meetings held by the Board of Directors and
all committees on which they serve.
The standing committees of the Board of Directors are the
Executive Committee and the Audit, Nominating and Compensation
Committee.
The members of the Executive Committee are Messrs. Timothy L.
Ashburn, Thomas G. Napurano and John R. Owens. The Executive Committee
may exercise all powers of the Board of Directors which may lawfully be
delegated when the Board of Directors is not in session. The Executive
Committee was organized in March 1999 and, as such, did not meet during
1998.
The members of the Audit, Nominating and Compensation Committee
are Messrs. Weaver H. Gaines and Jack R. Orben. The Audit, Nominating
and Compensation Committee (i) meets with the Company's independent
auditors, management and Chief Financial Officer periodically to review
the work of each and to ensure that each is properly discharging its
responsibilities, (ii) proposes nominees for election to the Board of
Directors, (iii) reviews and approves the salaries of the executive
officers and certain selected other senior officers of the Company and
its subsidiaries and authorizes all other forms of executive
compensation and (iv) administers the Company's executive incentive
plans. The Committee will consider written recommendations of
stockholders with regards to potential nominees to the Board of
Directors. Stockholder recommendations must contain certain information
regarding the potential nominee and comply with certain requirements for
presentation as set forth in the Company's by-laws. The Audit,
Nominating and Compensation Committee was organized in March 1999 and is
the successor to the Executive Compensation Committee which met four
times during the year ended December 31, 1998.
Directors currently are not compensated for attending meetings of
the Board, except for reimbursements for reasonable expenses related to
attendance at such meetings.
- 5 -
<PAGE>
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Dr. Kasten, a director of the Company, is the President and Chief
Financial Officer of Health Financial, a registered investment adviser,
and the President and Chief Financial Officer of First Lexington, a non-
bank affiliated trust company. All of the outstanding capital stock of
each of Health Financial and First Lexington was acquired by the Company
on June 1, 1997 and December 31, 1997, respectively. Dr. Kasten was the
sole shareholder of Health Financial and received 325,000 shares of
Common Stock pursuant to the Company's acquisition of Health Financial.
Dr. Kasten and his spouse also were shareholders of First Lexington and
received 28,935 shares and 869 shares, respectively, of Common Stock
pursuant to the Company's acquisition of First Lexington.
Dr. Kasten also is a 25% member in and the Chief Executive Officer
of Cygnus, LLC, a Kentucky limited liability company that owns an office
building in which various subsidiaries of the Company lease space.
During 1997 and 1998, Cygnus, LLC received payments of approximately
$24,500 and $727,500, respectively, from the Company and its
subsidiaries with respect to such leases.
Mr. Orben, a director of the Company, is the Chairman, Chief
Executive Officer and Treasurer of both Fiduciary, an investment
management company, and EMCO, a wealth management firm. All of the
outstanding capital stock of Fiduciary was acquired by the Company on
August 21, 1998. On August 21, 1998, the Company also acquired certain
of the assets and certain of the liabilities of The Patty Corporation
(f/k/a EMCO Estate Management Company, Inc.). The Company issued a total
of 47,110 shares and paid $800,835 in cash in connection with these
transactions. Such shares are held by Associated Family Services, Inc.,
of which Mr. Orben is a director and officer. Mr. Orben also is a 50%
stockholder of Intellectronic Management Systems, Inc. and a 33 1/3%
stockholder of Associated Family Services, Inc.
Mr. Owens, a director of the Company, is a director and the
President of Equity and a director and the Vice-President, Secretary and
Treasurer of CPFC. All of the outstanding capital stock of each of
Equity and CPFC was acquired by the Company on December 17, 1998. Mr.
Owens was a shareholder of both Equity and CPFC on December 17, 1998 and
received an aggregate of 195,179 shares of Common Stock pursuant to the
acquisitions of Equity and CPFC.
Kenneth D. Trumpfheller, a holder of more than 5% of the Company's
Common Stock, is a director, the President and the Secretary of
AmeriPrime. All of the outstanding capital stock of AmeriPrime was
acquired by the Company on December 31, 1998. Mr. Trumpfheller was the
sole shareholder of AmeriPrime on December 31, 1998 and received 410,000
shares of Common Stock pursuant to such acquisition.
Weaver H. Gaines, a director of the Company, is a director and the
Chairman and Chief Executive Officer of Ixion Biotechnology, Inc., a
development-stage biotechnology company. UMC acts as a broker for an
offering of Ixion common stock in the State of Florida. Fees have been
paid to the Company for such services. Such fees cannot exceed $80,000
in the aggregate.
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<PAGE>
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation of the Company's
Chief Executive Officer and each other executive officer whose base
salary and bonus exceeded $100,000 in 1998.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------------- ----------------------
Securities
Other Annual Restricted Underlying
Compensation Stock Options/ All Other
Name and Principal Position Year Salary($) Bonus($) ($)<F1> Awards($) SARs(#) Compensation($)
- --------------------------- ---- --------- -------- ------------ ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Timothy L. Ashburn 1998 176,969 50,000 -- -- 500 5,105<F2>
Chairman, President and 1997 122,885 13,941 -- -- 63,656 3,610
Chief Executive Officer 1996 100,000 100 -- -- -- --
Dr. Gregory W. Kasten<F3> 1998 510,000 60,000 -- -- 500 4,615<F4>
President and Chief 1997 250,000 12,000 -- -- -- 5,341
Executive Officer of Health 1996 -- -- -- -- -- --
Financial and First Lexington
Thomas G. Napurano 1998 123,638 28,747 -- -- 2,000 5,517<F5>
Executive Vice President and 1997 92,077 13,786 -- -- 62,949 3,247
Chief Financial Officer 1996 92,077 100 -- -- -- --
Jack R. Orben<F6> 1998 59,019 90,000 -- -- 500 157<F7>
Chairman, Chief Executive 1997 -- -- -- -- -- --
Officer and Treasurer of 1996 -- -- -- -- -- --
Fiduciary and EMCO
<FN>
- --------------------
<F1> The named executive officers received certain perquisites in 1998,
1997 and 1996, the amount of which did not exceed the lesser of
$50,000 or 10% of any such officer's salary or bonus.
<F2> Includes the following: $5,000 in matching contributions to the
Company's Section 401(k) Plan; and $105 for premiums paid by the
Company on a term life insurance policy for the benefit of Mr.
Ashburn.
<F3> Dr. Kasten has been employed by the Company since the acquisition
of Health Financial by the Company on June 1, 1997. Prior
thereto, Dr. Kasten was not employed by the Company.
<F4> Reflects $4,615 in matching contributions to the Company's Section
401(k) Plan.
<F5> Includes the following: $3,335 in matching contributions to the
Company's Section 401(k) Plan; $105 for premiums paid by the
Company on a term life insurance policy for the benefit of Mr.
Napurano; and $2,077 paid by the Company for accrued personal
leave in 1998.
<F6> Mr. Orben has been employed by the Company since the acquisition
of Fiduciary by the Company on August 21, 1998. Prior thereto,
Mr. Orben was solely a director of the Company.
<F7> Reflects $157 for premiums paid by the Company on a term life
insurance policy for the benefit of Mr. Orben.
</TABLE>
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<PAGE>
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning stock option
grants made in 1998 to the individuals named in the Summary Compensation
Table. No SARs were granted to the named individuals in 1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS/SARS
OPTIONS/SARS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH) DATE
---- ------------ ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
Timothy L. Ashburn 500 1.4% $27.50 August 26, 2008
Thomas G. Napurano 1,500 4.1 25.00 May 20, 2008
500 1.4 27.50 August 26, 2008
Gregory W. Kasten 500 1.4 27.50 August 26, 2008
Jack R. Orben 500 1.4 27.50 August 26, 2008
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND YEAR-END
OPTION/SAR VALUES
The following table presents certain information concerning
unexercised stock option held by the individuals named in the Summary
Compensation Table at December 31, 1998. No options were exercised
during fiscal year 1998 by such individuals.
<TABLE>
<CAPTION>
SHARES FOR WHICH VALUE OF UNEXERCISED
UNEXERCISED OPTIONS HELD AT IN-THE-MONEY OPTIONS/SARS
DECEMBER 31, 1998 (#) AT FY-END ($)
--------------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Timothy L. Ashburn 500 - $ 6,250 $ -
Thomas G. Napurano 2,000 - 28,750 -
Gregory W. Kasten 500 - 6,250 -
Jack R. Orben 500 - 6,250 -
<FN>
- --------------------
<F1> Based on the fair market value of the Common Stock on December 31,
1998 of approximately $40.00 per share.
</TABLE>
EMPLOYMENT AGREEMENTS
Dr. Gregory W. Kasten has an employment agreement (the "Kasten
Agreement") with the Company. The initial term of the Kasten Agreement
is a two-year period beginning on June 1, 1997, the effective date of
the Kasten Agreement. Commencing on the first anniversary of the
effective date, and continuing at each anniversary date thereafter, the
Kasten Agreement will automatically renew for an additional year unless
prior written notice is provided to Dr. Kasten. During the initial two-
year term of the Kasten Agreement, Dr. Kasten will be paid an annual
base salary of $500,000. In addition, he is eligible to be awarded an
incentive bonus on a basis commensurate with those provided to other
peer executive officers.
If the Company terminates Dr. Kasten's Agreement during the term
of employment without "cause" (generally, willful failure to perform
duties, willful misconduct injurious to the Company or a material breach
of the Agreement), or if Dr. Kasten terminates his employment with "good
reason" (generally, the assignment of duties inconsistent with the
employee's position, a material diminution in authority or
responsibilities, a reduction in any benefit specified in the Kasten
Agreement, or any material breach of the Kasten Agreement by the
Company), the Company will be required to pay severance benefits to Dr.
Kasten in an amount equal to Dr. Kasten's then-current annual salary for
the remainder of the initial two-year period. Additionally, Dr. Kasten
would be entitled to the continuation of annual noncompete payments, and
other benefits to which he otherwise would have been entitled, as
provided for in the Kasten Agreement.
- 8 -
<PAGE>
<PAGE>
PROPOSAL II: ADOPTION OF AN AMENDMENT TO ARTICLE 4 OF
THE COMPANY'S CERTIFICATE OF INCORPORATION
On March 25, 1999, the Board of Directors adopted a resolution
amending, subject to stockholder approval at the Annual Meeting, Article
4 of the Certificate of Incorporation to increase the number of shares
of authorized Common Stock from 10 million shares to 20 million shares
(the "Amendment"). A copy of the Amendment is attached to this Proxy
Statement as Appendix A.
----------
The Board of Directors believes it is desirable to have the
additional authorized shares of Common Stock available for possible
future acquisitions, financing transactions and other general corporate
purposes.
As of April 16, 1999, (i) 2,277,500 shares of Common Stock were
issued and outstanding; (ii) an aggregate of 500,000 shares of Common
Stock were reserved for issuance pursuant to the Plan, (iii) 225,720
shares of Common Stock were reserved for issuance upon the conversion
of the Company's Series C 6.75% Cumulative Convertible Preferred Stock;
(iv) 1,743,503 shares of Common Stock were reserved for issuance pursuant
to a private placement; (v) 45,682 shares were reserved for issuance
pursuant to proposed acquisitions; and (vi) 5,207,595 shares of Common
Stock were authorized, unissued and unreserved.
If the number of authorized shares is not increased as proposed,
as of April 16, 1999, the Company could only issue, in the aggregate,
the 5,207,595 shares of Common Stock currently remaining available for
issuance. The calling of a meeting of the Company's stockholders would
be required to authorize the issuance of any additional shares of Common
Stock. Such a procedure is cumbersome, and the delay inherent therewith
could restrict the Company from taking prompt advantage of acquisition
opportunities or favorable market conditions.
It is therefore desirable to increase the number of authorized
shares of Common Stock to 20 million so that the Company will not be
restricted in its ability to make acquisitions by means of the issuance
of Common Stock or to take advantage of favorable market conditions.
The Company has no specific present plans to issue any of the additional
10 million shares of Common Stock.
It should be noted that any issuance of additional shares of
Common Stock could be disadvantageous to existing stockholders because
such issuance might serve to dilute their percentage interest in the
Company. Holders of Common Stock do not have preemptive rights to
purchase any additional shares of Common Stock which may be issued. The
Company would not be required to obtain stockholder approval to issue
authorized but unissued shares of Common Stock, unless required to do so
by applicable law or the rules of any stock exchange on which the
Company's shares may be listed.
The authorized but unissued shares of Common Stock also could be
used by incumbent management to make more difficult, and thereby
discourage, an attempt to acquire control of the Company. For example,
the shares could be privately placed with purchasers who might support
the Board of Directors in opposing a hostile takeover bid. The issuance
of the new shares also could be used to dilute the stock ownership and
voting power of a third party seeking to remove directors, replace
incumbent directors, accomplish certain business combinations or alter,
amend or repeal provisions of the Company's Certificate of
Incorporation. To the extent that it impedes any such attempts, the
issuance of shares following the Amendment may serve to perpetuate
existing management.
The additional authorized shares of Common Stock would have the
same rights and privileges as the shares of Common Stock presently
authorized and/or outstanding. The Amendment does not alter the
Company's present ability to issue up to 1,000,000 shares of Preferred
Stock with $0.01 par value per
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<PAGE>
share in such series and with such special rights (including voting
rights), preferences, restrictions, qualifications and limitations as
the Board of Directors may designate.
The affirmative vote of a majority of the outstanding shares of
Common Stock is required for approval of the Amendment. If the
Amendment is approved by the stockholders, the Company intends to effect
promptly the Amendment by filing the Amendment with the Secretary of
State of the State of Delaware.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED
INCREASE IN THE AUTHORIZED COMMON STOCK OF THE COMPANY.
PROPOSAL III: ADOPTION OF THE AMENDED AND RESTATED
UNIFIED FINANCIAL SERVICES, INC.
1998 STOCK INCENTIVE PLAN
The Unified Financial Services, Inc. 1998 Stock Incentive Plan
(the "Stock Incentive Plan"), approved by the stockholders of the
Company in May 1998, provides for the granting of stock options and
other stock-based awards. The Stock Incentive Plan, as proposed to be
amended and restated, seeks to advance the interests of the Company and
its stockholders by encouraging key employees of the Company and its
subsidiaries to acquire Common Stock or to receive monetary payments
upon the achievement of certain goals that are mutually advantageous to
the Company and its stockholders, on the one hand, and the participating
employees, on the other.
The maximum number of shares of Common Stock that currently may be
issued under the Stock Incentive Plan is 1,500,000 shares, subject to
adjustment in the event of any change in the outstanding shares of such
stock by reason of a stock dividend, stock split, recapitalization,
merger, consolidation or other similar change generally affecting
stockholders of the Company.
The Board of Directors has adopted the Amended and Restated
Unified Financial Services, Inc. 1998 Stock Incentive Plan, subject to
stockholder approval, which reduces the number of shares of Common Stock
available for issuance pursuant to the Stock Incentive Plan from
1,500,000 to 500,000.
The Board of Directors believes that the Plan will advance the
interests of the Company and its stockholders by providing additional
incentives and motivation toward superior performance and by enabling
the Company and its subsidiaries to attract and retain the services of
key employees and directors, upon whose judgment, talents and special
efforts, the successful conduct of its operations is largely dependent.
The vote required to approve the Plan is a majority of the shares of
Common Stock cast on such proposal at the Annual Meeting; provided, that
the number of votes cast constitutes more than 50% of the shares
entitled to vote on the proposal.
The Plan is administered by the Administrator. The Administrator
may be the Board of Directors or, if the Board of Directors so
designates, the Compensation Committee of the Board of Directors (for
purposes of the Plan, the group administering the Plan is referred to as
the "Administrator"). The Administrator, by majority action thereof, is
authorized in its sole discretion to construe and interpret the Plan, to
make, amend and rescind rules and regulations regarding the Plan and its
administration, to determine the terms and provisions of the respective
Stock Option, Restricted Stock, Restricted Stock Unit and Performance
Award agreements (which need not be identical), and to take whatever
action is necessary to carry out the purposes of the Plan; provided,
however, that the Administrator shall take no action which will impair
any award previously granted under the Plan or
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<PAGE>
<PAGE>
cause the Plan not to meet the requirements of Rule 16b-3 of the
Securities Exchange Act of 1934, as amended (the "Act").
The complete text of the Plan is set forth in Appendix B to this
proxy statement. The following summary of certain provisions of the
Plan is qualified in its entirety by reference to the full text of the
Plan.
DESCRIPTION OF THE PLAN
Under the terms of the Plan, employees, directors, advisors and
consultants of the Company and its subsidiaries (as determined by the
Administrator in its sole discretion) will be eligible to receive (a)
Incentive Stock Options; (b) Nonqualified Stock Options; (c) Stock
Appreciation Rights ("SARs"); (d) Restricted Stock; (e) Restricted Stock
Units; and (f) Performance Awards.
INCENTIVE STOCK OPTIONS. Incentive Stock Options granted under
the Plan will entitle the holder thereof to purchase shares of Common
Stock at the base price established by the Administrator, which price
shall not be less than 100% of the "Fair Market Value" (as defined in
the Plan) of Common Stock on the date the option is granted. Such
Incentive Stock Options will be exercisable not later than ten years after
the date of the grant, and except as provided below, will terminate not
later than three months after termination of employment for any reason
other than death or disability. Incentive Stock Options outstanding and
unexercised at the time of the death or disability of the participant
generally terminate on the first to occur of either the expiration
date thereof or the expiration of twelve months after the date of such
event.
Under the Plan, no more than 250,000 shares may be issued in the
form of Incentive Stock Options.
NONQUALIFIED STOCK OPTIONS. Nonqualified Stock Options will
consist of nonqualified options to purchase shares of stock at purchase
prices determined by the Administrator; provided, however, the purchase
price shall be not less than 75% of the Fair Market Value of the Common
Stock on the date the option is granted. Nonqualified Stock Options
will be exercisable not later than ten years after the date they are
granted, and will terminate not later than three months after
termination of employment for any reason other than death, retirement or
disability. The Administrator will have the right to determine at the
time the option is granted whether shares issued upon exercise of a
Nonqualified Stock Option will be subject to restrictions and, if so,
the nature of the restrictions.
STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be
granted which, in the discretion of the Administrator, may be exercised
(1) in lieu of exercise of an option, (2) in conjunction with the
exercise of an option, (3) upon lapse of an option, (4) independent of
an option or (5) each of the above in connection with a previously
awarded option. The Administrator may establish, in its sole
discretion, a maximum amount per share that will be payable upon
exercise of a SAR, and may impose such conditions on exercise of a SAR
as may be required to satisfy the requirements of Rule 16b-3 (or any
successor rule) under the Act.
RESTRICTED STOCK AND RESTRICTED STOCK UNITS. Restricted Stock
shall consist of stock or stock units issued under the Plan at any
purchase price less than the Fair Market Value thereof on the date of
issuance, or as a bonus. In the case of any Restricted Stock or
Restricted Stock Units:
(a) The purchase price, if any, will be determined by the
Administrator.
(b) Restricted Stock or Restricted Stock Units may be subject
to: (i) restrictions on
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<PAGE>
the sale or other disposition thereof; (ii) rights of the Company to
reacquire such Restricted Stock or Restricted Stock Units at the
purchase price, if any, originally paid therefor upon the occurrence
of specified events within specified periods; (iii) representation by
the participant that he or she intends to acquire Restricted Stock or
Restricted Stock Units for investment and not for resale; and (iv)
such other restrictions, conditions and terms as the Administrator deems
appropriate.
(c) The participant or a permitted transferee, as the case may
be, shall be entitled to all dividends paid with respect to
Restricted Stock, and shall be entitled to vote Restricted Stock,
during the "Period of Restriction" (as defined in the Plan).
PERFORMANCE AWARDS. The Administrator may grant Performance
Awards which may consist of shares of Common Stock, Stock Options,
Restricted Stock, Restricted Stock Units, cash payments or a combination
thereof. In the event that performance goals are achieved over a
designated time period, the Performance Awards will be made in a
predesignated form in a single or in periodic installments as the
Administrator determines in its sole discretion. The goals established
by the Administrator shall be based on one or more financial measures of
the Company: (i) pre-tax or after-tax return on equity or average
assets; (ii) earnings per share; (iii) return on stockholders' equity;
(iv) revenue growth; (v) pre-tax or after tax net income; (vi) book
value per share; (vii) market price per share; (viii) relative
performance to peer group companies; and (ix) expense management. The
Administrator also may provide for additional opportunities based upon
the attainment of specific business objectives and other measures of
individual, business unit or company performance, and such other goals
or a combination thereof as may be established by the Administrator. In
the event the goal is not achieved at the conclusion of the designated
performance period, no payment shall be made to a participant. However,
goals may include standards for partial achievement and provide for a
partial award for partial achievement. The participant shall have no
right to vote any shares of Common Stock subject to a Performance Award,
nor shall such participant have any right to receive dividends on such
shares until the performance goals are achieved and the shares issued.
No Performance Award shall entitle any individual to receive more than
250,000 shares of Common Stock and the maximum Performance Award payable
to all Participants at a designated subsidiary for any calendar year
(excluding any additional cash payment) shall not exceed $2,000,000.
CHANGE OF CONTROL. If the terms of an agreement under which the
Administrator has granted an award under the Plan shall so provide, upon
a "Change of Control" (as defined in the Plan) outstanding awards shall
become immediately and fully exercisable or payable according to the
terms set forth in the Plan.
DURATION, AMENDMENT AND TERMINATION. No award shall be granted
more than ten years after the effective date of the Plan; provided,
however, that the terms and conditions applicable to any award granted
within such period may thereafter be amended or modified by mutual
agreement between the Company and the participant or such other person
as may then have an interest therein (notwithstanding the fact that an
amendment or modification may cause an option to no longer qualify as an
Incentive Stock Option). Also, by mutual agreement between the Company
and a participant, Stock Options or other awards may be granted to such
participant in substitution and exchange for, and in cancellation of,
any awards previously granted such participant under this Plan. The
Board of Directors may amend the Plan from time to time or terminate the
Plan at any time. However, no action shall reduce the amount of any
existing award or change the terms and conditions thereof without the
participant's consent. No amendment of the Plan shall, without approval
of the stockholders of the Company: (a) increase the total number of
shares which may be issued under the Plan or increase the amount or type
of awards that may be granted under the Plan; (b) change the minimum
purchase price, if any, of shares of stock or stock units which may be
made subject
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<PAGE>
<PAGE>
to awards under the Plan; (c) modify the requirements as to eligibility
for awards under the Plan; or (d) cause the Plan and/or awards pursuant
to the Plan not to comply with either Rule 16b-3, or any successor rule,
under the Act or Section 162(m) of the Internal Revenue Code of 1986,
as amended.
FEDERAL INCOME TAX CONSEQUENCES
No income will be realized by a participating officer or employee
on the grant of an Incentive Stock Option or a Nonqualified Stock
Option, the grant of a SAR, the award of Restricted Stock or the award
of Stock Units, and the Company will not be entitled to a deduction at
such time. If a holder exercises an Incentive Stock Option and does not
dispose of the shares acquired within two years from the date of the
grant, or within one year from the date of exercise of the option, no
income will be realized by the holder at the time of exercise; however,
the exercise may give rise to alternative minimum tax liability. The
Company will not be entitled to a deduction by reason of the exercise.
If a holder disposes of the shares acquired pursuant to an Incentive
Stock Option within two years from the date of grant of the option or
within one year from the date of exercise of the option, the holder will
realize ordinary income at the time of disposition equal to the excess,
if any, of the lesser of (a) the amount realized on the disposition or
(b) the fair market value of the shares on the date of exercise, over
the holder's basis in the shares. The Company generally will be
entitled to a deduction in an amount equal to such income in the year of
the disqualifying disposition.
Upon the exercise of a Nonqualified Stock Option or the surrender
of a SAR, the excess, if any, of the fair market value of the stock on
the date of exercise over the purchase price or Base Price, as the case
may be, is ordinary income to the holder as of the date of exercise.
The Company generally will be entitled to a deduction equal to such
excess amount in the year of exercise.
Subject to a voluntary election by the holder under Section 83(b)
of the Code, a holder will realize income as a result of the award of
Restricted Stock at the time the restrictions expire on such shares. An
election pursuant to Section 83(b) of the Code would have the effect of
causing the holder to realize income in the year in which such award was
granted. The amount of income realized will be the difference between
the fair market value of the shares on the date such restrictions expire
(or on the date of issuance of the shares in the event of a Section
83(b) election) over the purchase price, if any, of such shares. The
Company generally will be entitled to a deduction equal to the income
realized in the year in which the holder is required to report such
income.
An employee will realize income as a result of a Performance Award
at the time the award is issued or paid. The amount of income realized
by the participant will be equal to the fair market value of the shares
on the date of issuance, in the case of a stock award, and to the amount
of the cash paid, in the event of a cash award. The Company will be
entitled to a corresponding deduction equal to the income realized in
the year of such issuance or payment.
TAX WITHHOLDINGS
The Company shall be entitled to withhold the amount of
any tax attributable to any amounts payable or shares deliverable under
the Plan after giving the person entitled to receive such payment or
delivery notice as far in advance as practicable, and the Company may
defer making payment or delivery as to any award if any such tax is
payable until indemnified to its satisfaction. The person entitled to
any such delivery may, by notice to the Company at the time the
requirement for such delivery is first established, elect to have such
withholding satisfied by a reduction of the number of shares otherwise
so deliverable, such reduction to be calculated based on the Fair Market
Value on the date of such notice; provided, however, that with respect
to persons required to report transactions pursuant to Section 16 of
the Act, such withholding shall be satisfied by a reduction of the number
of shares otherwise so deliverable. A participant shall remain subject
to withholding taxes upon the exercise of a Nonqualified Stock Option by
a permitted transferee or upon the lapse of any forfeiture restrictions
applicable to any shares of Restricted Stock or Restricted Stock Units
transferred to a permitted transferee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE
AMENDED AND RESTATED UNIFIED FINANCIAL SERVICES, INC. 1998 STOCK
INCENTIVE PLAN.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the amount of
Common Stock beneficially owned, as of April 16, 1999, by each director
of the Company, each nominee for election as a director of the Company,
the executive officers named in the Summary Compensation Table, any
person who is known by the Company to own beneficially more than 5% of
the Common Stock and all directors and executive officers of the Company
as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF OUTSTANDING
NAME AND ADDRESS<F1> BENEFICIALLY OWNED COMMON STOCK
-------------------- ------------------ ------------
<S> <C> <C>
Timothy L. Ashburn 128,112<F2><F3> 5.6%
Jack R. Orben 91,443<F3><F4><F5> 3.9
Weaver H. Gaines 33,350<F3><F4> 1.5
Thomas G. Napurano 95,191<F2><F3><F4> 4.1
Lynn E. Wood 141,038<F2><F3><F4><F6> 6.1
Dr. Gregory W. Kasten 402,242<F2><F3><F4><F7> 17.3
John R. Owens 195,679<F3> 8.6
Kenneth D. Trumpfheller 410,000 18.0
Directors and executive officers
as a group (8 persons) 1,135,569<F2><F3><F4> 45.9
<F5><F6><F7>
<FN>
- --------------------
<F1> Except as otherwise indicated, each individual has sole voting and
investment power over the shares listed beside his name. The
percentage calculations for beneficial ownership are based upon
2,277,580 shares of Common Stock that were issued and
outstanding as of April 16, 1999. The address for each person is
431 North Pennsylvania Street, Indianapolis, Indiana 46204-1873.
<F2> Includes 4,681, 5,402, 4,563, 363 and 18,124 shares of Common
Stock beneficially owned by Messrs. Ashburn, Napurano, Wood and
Dr. Kasten, and all directors and executive officers as a group,
respectively, and held by the Company's profit sharing plan. No
person has voting power over such shares except Mr. Wood, the
voting trustee. Each of Messrs. Ashburn, Napurano, Wood and Dr.
Kasten, and all directors and executive officers as a group, may
be deemed to be the beneficial owner(s) of the shares held by the
profit sharing plan because such holder(s) retain sole investment
power over such shares.
<F3> Includes 500, 500, 500, 2,000, 500, 500, 500 and 5,400 shares of
Common Stock which may be acquired by Messrs. Ashburn, Orben,
Gaines, Napurano, Wood, Owens and Dr. Kasten, and all directors
and executive officers as a group, respectively, upon exercise of
employee stock options granted by the Company pursuant to the
Unified Financial Services, Inc. 1998 Stock Incentive Plan.
<F4> Includes 57,240, 14,850, 24,840, 26,325, 46,575 and 193,320 shares
of Common Stock which may be acquired by Messrs. Orben, Gaines,
Napurano and Wood, Dr. Kasten and all directors and executive
officers as a group, respectively, upon conversion of 424, 110,
184, 195, 345 and 1,432 shares, respectively, of Series C 6.75%
Cumulative Convertible Preferred Stock, $0.01 par value, of the
Company.
<F5> Includes 15,703 shares of Common Stock held by Associated Family
Services, Inc., of which Mr. Orben disclaims beneficial ownership.
<F6> Includes 50,000 shares of Common Stock of which Mr. Wood may be
deemed to be the beneficial owner as voting trustee of the profit
sharing plan. Mr. Wood disclaims beneficial ownership of all
shares held subject to the profit sharing plan except 4,563
shares.
<F7> Includes 869 shares of Common Stock owned by Dr. Kasten's spouse,
of which Dr. Kasten disclaims beneficial ownership.
</TABLE>
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<PAGE>
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), requires that the Company's executive officers and
directors, and persons who own more than ten percent of the Company's
outstanding stock, file reports of ownership and changes in ownership
with the Securities and Exchange Commission. To the knowledge of the
Company, based solely on its review of such reports furnished to the
Company and written representations that no other reports were required
to be filed, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners were
complied with during the year ended December 31, 1998, except that
Jack R. Orben filed one late Form 4 report.
INDEPENDENT PUBLIC ACCOUNTANTS
Larry E. Nunn & Associates, L.L.C. served as the Company's
independent accountants for the year ended December 31, 1998 and has
been selected by the Board of Directors to continue in such capacity
during 1999. Representatives of Larry E. Nunn & Associates, L.L.C. are
expected to be present at the Annual Meeting and to respond to
appropriate questions from stockholders. Such representatives will have
the opportunity to make statements if they so desire.
FUTURE STOCKHOLDER PROPOSALS
Under applicable regulations of the Securities and Exchange
Commission, all proposals of stockholders to be considered for inclusion
in the proxy statement for the 2000 Annual Meeting of Stockholders must
be received at the offices of the Company, c/o Secretary, 431 North
Pennsylvania Street, Indianapolis, Indiana, 46204-1873 by not later
than December 24, 1999. The Company's by-laws provide that stockholder
proposals, including nominations of directors, that do not appear in the
proxy statement may be considered at a meeting of stockholders only if
written notice of the proposal is received by the Company's Secretary
not less than 60 days and not more than 90 days prior to the anniversary
of the preceding year's annual meeting; provided, however, that in the
event that the date of the annual meeting is more than 30 days before or
more than 60 days after such anniversary date, notice by the stockholder
must be delivered not earlier than the 10th day prior to such annual
meeting and not later than the 60th day prior to such annual meeting or
the 10th day following the day on which public announcement of the date
of such meeting is first made by the Company. Under the by-laws of the
Company, the date by which written notice of a proposal must be received
by the Company to be considered at the 2000 Annual Meeting of
Stockholders is March 27, 2000.
Any written notice of a stockholder proposal must include the
following information: (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a director, all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (including such person's written
consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (b) as to any other business that the
stockholder proposes to bring before the meeting, a brief description of
the business desired to be brought before the meeting, the reasons for
conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on
whose behalf the proposal is made; and (c) as to the stockholder giving
the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made, (i) the name and address of such
stockholder, as they appear on the Company's books, and of such
beneficial owner, and (ii) the class and number of shares of the Company
which are owned beneficially and of record by such stockholder and such
beneficial owner.
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<PAGE>
<PAGE>
DISCRETIONARY VOTING
At the 2000 Annual Meeting of Stockholders, the individuals named
in the proxy relating to such meeting will exercise discretionary
authority to vote on any matter brought before the meeting with respect
to which the Company was provided with notice after December 24, 1999,
and before March 27, 2000. In addition, the Company will include in the
proxy statement advice on the nature of the matter and how the
individuals named in the proxy relating to such meeting intend to
exercise their discretion to vote on each mater. Notwithstanding the
above, the individuals named in the proxy relating to such meeting shall
not exercise discretionary authority over a matter if: (i) the Company
receives notice of such matter by March 27, 2000; (ii) by March 27,
2000, the proponent of such matter (the "Proponent") provides the
Company with a written statement that the Proponent intends to deliver a
proxy statement and form of proxy to holders of at least the percentage
of the Company's voting shares required under Delaware law to carry the
proposal; (iii) the Proponent includes the same statement in its proxy
materials filed under Rule 14a-6 of the Securities Exchange Act of 1934,
as amended; and (iv) immediately after soliciting the percentage of
stockholders required to carry the proposal, the Proponent provides the
Company with a statement from any solicitor or other person with
knowledge that the necessary steps have been taken to deliver a proxy
statement and form of proxy to holders of at least the percentage of the
Company's voting shares required under Delaware law to carry the
proposal.
ANNUAL REPORT
The Annual Report to Stockholders of the Company for the year
ended December 31, 1998 has been mailed simultaneously to the
stockholders of the Company. The Company's Annual Report on Form 10-KSB
for the year ended December 31, 1998, as filed with the Securities and
Exchange Commission (excluding exhibits), is included in the Company's
Annual Report to Stockholders.
OTHER BUSINESS
The Board of Directors is not aware of any business to be
presented at the Annual Meeting other than that referred to in the
Notice of Annual Meeting of Stockholders and discussed herein. No other
matters may properly come before the Annual Meeting.
TIMOTHY L. ASHBURN
Chairman of the Board, President
and Chief Executive Officer
April 30, 1999
Indianapolis, Indiana
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<PAGE>
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
UNIFIED FINANCIAL SERVICES, INC.
--------------
PURSUANT TO SECTION 242 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
Unified Financial Services, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State
of Delaware (the "Corporation"), does hereby certify as follows:
FIRST: At a meeting of the Board of Directors of the Corporation
duly called and held on March 25, 1999, resolutions were duly adopted
setting forth a proposed amendment to the Amended and Restated
Certificate of Incorporation, as amended, of the Corporation (the
"Certificate of Incorporation"), declaring such amendment to be
advisable and directing that such amendment be submitted to the
stockholders of the Corporation for approval at the Annual Meeting of
Stockholders to be held on May 27, 1999. Such resolutions recommended
that the first sentence of Article 4 of the Certificate of Incorporation
be amended by striking the existing first sentence in its entirety and
substituting in lieu thereof the following:
"The total number of shares of stock that the Corporation
shall have the authority to issue is one million (1,000,000)
shares of Preferred Stock with a par value of $0.01 per share; and
twenty million (20,000,000) shares of Common Stock with a par
value of $0.01 per share."
SECOND: At the Annual Meeting of Stockholders of the Corporation
duly called and held on May 27, 1999, the affirmative vote of a majority
of the votes permitted to be cast by the holders of the outstanding
shares of the Corporation's Common Stock, par value $0.01 per share, and
the holders of the outstanding shares of the Corporation's Series C
6.75% Cumulative Convertible Preferred Stock, par value $0.01 per share,
voting as a single class, was obtained in favor of such amendment with
respect to Article 4.
THIRD: Said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, Unified Financial Services, Inc. has cause
this Certificate of Amendment to be signed by Timothy L. Ashburn, its
Chairman of the Board, President and Chief Executive Officer, and
attested by Carol J. Highsmith, its Secretary, this 27th day of May
1999.
UNIFIED FINANCIAL SERVICES, INC.
By:
--------------------------------------------
Timothy L. Ashburn, Chairman of the Board,
President and Chief Executive Officer
Attest:
- ---------------------------------
Carol J. Highsmith, Secretary
A-1
<PAGE>
<PAGE>
APPENDIX B
----------
AMENDED AND RESTATED
UNIFIED FINANCIAL SERVICES, INC.
1998 STOCK INCENTIVE PLAN
Unified Financial Services, Inc. adopted the Unified
Financial Services, Inc. 1998 Stock Incentive Plan (the "Stock Incentive
Plan") effective as of February 25, 1998. The Company desires to amend
the Stock Incentive Plan to decrease the number of shares of Common
Stock reserved for issuance under the Stock Incentive Plan and to
provide for the award of cash payments as a component of Performance
Awards.
This Amendment shall be effective immediately upon adoption
by the Board, subject to approval by the stockholders of the Company
within twelve months after such date. Pursuant to the authority
reserved in Section 18 of the Plan, the Board of the Company hereby
amends and completely restates the Plan to read in its entirety as
follows:
SECTION 1. PURPOSE
The purpose of this Plan is to encourage certain Employees
and Directors of the Company, and of such Subsidiaries of the Company as
the Administrator designates, to acquire Stock or to receive monetary
payments based on the value of such Stock or based upon achieving
certain goals on a basis mutually advantageous to such Employees and
Directors of the Company and thus to provide an incentive for
continuation of the efforts of Employees and Directors for the success
of the Company and aid the Company and its Subsidiaries in competing
with other enterprises for the services of new Employees and Directors.
Compensation relating to Awards under the Plan is generally intended to
qualify as "performance-based compensation" under Section 162(m) of the
Code.
SECTION 2. DEFINITIONS
Whenever used herein, the following terms shall have the
respective meanings set forth below:
(a) ACT means the Securities Exchange Act of 1934, as
amended from time to time.
(b) ADMINISTRATOR means the Board or, if the Board so
designates, the Committee.
(c) AWARD means any Option, Stock Appreciation Right,
Restricted Stock, Restricted Stock Unit or Performance
Award granted under the Plan.
(d) BASE PRICE means, in the case of an Option or a Stock
Appreciation Right, a price fixed by the Administrator
at which the Option or the Stock Appreciation Right
may be exercised, which in the case of an Incentive
Stock Option or a Stock Appreciation Right shall not
be less than 100% of the Fair Market Value of a share
of Common Stock on the date of grant of such Incentive
Stock Option or Stock Appreciation Right.
(e) BOARD means the Board of Directors of the Company.
(f) CHANGE OF CONTROL is defined in Section 14.
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(g) CODE means the Internal Revenue Code of 1986, as
amended and in effect from time to time.
(h) COMMITTEE means those members of the Audit, Nominating and
Compensation Committee of the Board, or any successor thereto,
each of whom is both (1) qualified to administer this Plan as
contemplated by Rule 16b-3 and (2) considered to be an "outside
director" as contemplated by Section 162(m) of the Code.
(i) COMMON STOCK means the common stock, $.01 par value,
of the Company.
(j) COMPANY means Unified Financial Services, Inc., a
Delaware corporation.
(k) COVERED EMPLOYEE means a covered employee as that term
is defined in Section 162(m) of the Code.
(l) DIRECTOR means a member of the Board (including
members who are also Employees) of the Company or any
Subsidiary of the Company.
(m) DISABILITY means a physical and/or mental condition
that renders a Participant unable to perform the
duties of the Participant's position on a full-time
basis for a period of one hundred eighty (180)
consecutive business days. Disability shall be deemed
to exist when certified by a physician selected by the
Company or its insurers and acceptable to the
Participant or the Participant's legal representative
(such agreement as to acceptability not to be withheld
unreasonably). The Participant will submit to such
medical or psychiatric examinations and tests as such
physician deems necessary to make any such Disability
determination.
(n) EMPLOYEE means any employee, consultant or advisor
(including officers and Directors who also are
Employees) of the Company or any Subsidiary of the
Company; provided, however, that bonafide services are
rendered by any such consultant or advisor and such
services are not rendered in connection with the offer
or sale of securities in a capital-raising
transaction.
(o) FAIR MARKET VALUE means, for any particular date, (i)
for any period during which Common Stock shall be
listed for trading on a national securities exchange,
the closing price per share of Common Stock on such
exchange as of the close of such trading day, (ii) for
any period during which Common Stock shall not be
listed for trading on a national securities exchange,
but when Common Stock is authorized as a Nasdaq
National Market security, the last transaction price
per share as quoted by The Nasdaq Stock Market (the
"Nasdaq"), (iii) for any period during which Common
Stock shall not be listed for trading on a national
securities exchange or authorized as a Nasdaq National
Market security, but when Common Stock shall be
authorized as a Nasdaq SmallCap Market security, the
closing bid price as reported by the Nasdaq, or (iv)
the market price per share of Common Stock as
determined by an investment banking firm or certified
public accountant selected by the Administrator in the
event neither (i), (ii) nor (iii) above shall be
applicable. If Fair Market Value is to be determined
as of a day when the securities markets are not open,
the Fair
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Market Value on that day shall be the Fair Market
Value on the preceding day when the markets were open.
(p) FINAL AWARD means the Award earned by each Participant
at the end of the Performance Period.
(q) OPTION means the right to purchase Stock at the Base
Price for a specified period of time. For purposes of
the Plan, an Option may be an incentive stock option
("INCENTIVE STOCK OPTION") within the meaning of
Section 422 of the Code, a nonqualified stock option
("NONQUALIFIED STOCK OPTION") or any other type of
option.
(r) PARTICIPANT means any Employee or Director designated
by the Administrator to participate in the Plan.
(s) PERFORMANCE AWARD means a cash payment and/or the
right to receive a payment equal to the value of a
unit or other measure, and includes shares of Stock
(which may be granted pursuant to an Option or as
Restricted Stock) and Restricted Stock Units, as
determined by the Administrator based on performance
during a Performance Period.
(t) PERFORMANCE PERIOD means a period of not more than ten
years established by the Administrator during which
certain performance goals set by the Administrator are
to be met.
(u) PERIOD OF RESTRICTION means the period during which a
grant of shares of Restricted Stock is restricted
pursuant to Section 11 of the Plan.
(v) PERMITTED TRANSFEREE means either (i) the spouse,
children or grandchildren of the Participant
("Immediate Family Members"), (ii) a trust or trusts
for the exclusive benefit of the Participant and/or
one or more Immediate Family Members or (iii) one or
more partnerships (general or limited), corporations,
limited liability companies or other entities in which
the aggregate interests of the Participant and/or one
or more Immediate Family Members exceed 80% of all
interests in such entity.
(w) PLAN means the Amended and Restated Unified Financial
Services, Inc. 1998 Stock Incentive Plan.
(x) PLAN YEAR means the Company's fiscal year commencing
January 1 and ending December 31.
(y) PROGRAM means an Award program established by the
Administrator which designates the Participants, the
Covered Employees, a Performance Period, performance
goals and formulas or standards for determining the
amounts of Awards payable under the Plan.
(z) REPORTING PERSON means a person subject to Section 16
of the Act.
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(aa) RESTRICTED STOCK means Stock granted pursuant to
Section 11 or 12 of the Plan, but a share of such
Stock shall cease to be Restricted Stock when the
conditions to and restrictions thereon under Section
11 have been satisfied or have expired, respectively.
(bb) RESTRICTED STOCK UNIT means a unit equivalent in value
to a share of Stock granted pursuant to Section 11 or
12 of the Plan, but a Stock Unit shall cease to be a
Restricted Stock Unit when the conditions to and
restrictions thereon under Section 11 have been
satisfied or have expired, respectively.
(cc) RETIREMENT (including NORMAL, EARLY and DISABILITY
Retirement) means termination of employment with
eligibility for normal, early or disability retirement
benefits under the terms of the Company's Pension
Plan, as amended and in effect at the time of such
termination of employment.
(dd) RULE 16b-3 means Rule 16b-3 under the Act as amended
from time to time or any successor rule thereto.
(ee) STOCK means the authorized and unissued shares of
Common Stock or reacquired shares of Common Stock held
in treasury.
(ff) STOCK UNITS means units equivalent in value to shares
of Stock.
(gg) STOCK APPRECIATION RIGHT or SAR means the right to
receive a payment from the Company equal to the excess
of the Fair Market Value of a share of Stock at the
date of exercise over the Base Price. In the case of
a Stock Appreciation Right which is granted in
conjunction with an Option, the Base Price shall be
the Option exercise price.
(hh) SUBSIDIARY means a subsidiary corporation as defined
in Section 424 of the Code.
SECTION 3. ADMINISTRATION
The Plan shall be administered by the Administrator. The
determinations of the Administrator shall be made in accordance with its
judgment as to the best interests of the Company and its stockholders
and in accordance with the purpose of the Plan. In the event the Board
designates the Committee to serve as the Administrator, a majority of
members of the Committee shall constitute a quorum, and all
determinations of the Committee shall be made by a majority of its
members. In addition, any determination of the Committee under the Plan
may be made without notice or meeting of the Committee, by a writing
signed by a majority of the Committee members. Determinations,
interpretations or other actions made or taken by the Administrator
pursuant to the provisions of the Plan shall be final and binding and
conclusive for all purposes and upon all persons whomsoever. Subject to
the express provisions of the Plan, the Administrator shall have plenary
authority to construe and interpret the Plan, to make, amend and rescind
rules and regulations regarding the Plan and its administration, to
determine the terms and provisions of the respective Stock Option,
Restricted Stock, Restricted Stock Unit and Performance Award agreements
(which need not be identical), and to take whatever action is necessary
to carry out the purposes of the Plan; provided, however, that the
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Administrator shall take no action which will impair any Award
previously granted under the Plan or cause the Plan not to meet the
requirements of Rule 16b-3.
SECTION 4. SHARES RESERVED UNDER THE PLAN
Subject to Sections 10, 12 and 13 hereof, there are hereby
reserved for issuance under the Plan an aggregate of 500,000 shares of
Stock, which may be authorized but unissued shares or treasury shares.
Of these shares of Stock, 250,000 are reserved to be issued in the form
of Options, subject to adjustment as set forth in the Plan.
Except as provided in Section 13, in no event may more than
250,000 shares of Stock be issued in connection with the award of
Restricted Stock or Restricted Stock Units pursuant to Section 11 or 12,
unless such Stock or Stock Units were awarded as the payment for grants
or rights under any other employee or compensation plan of the Company.
Additionally, the maximum number of shares of Stock, which may be
awarded in the form of Options or SARs to any one individual under the
Plan shall be limited to 250,000 Shares.
Stock underlying outstanding Options or Performance Awards
will be counted against the Plan maximum while such Options or Awards
are outstanding. Shares of Stock underlying expired, canceled or
forfeited Options or Awards (except Restricted Stock or Restricted Stock
Units) may be added back to the Plan maximum. When the exercise price
of Options is paid by delivery of shares of Stock, the number of shares
available for issuance under the Plan shall continue to be reduced by
the gross (rather than the net) number of shares issued pursuant to such
exercise, regardless of the number of shares surrendered in payment.
Restricted Stock and Restricted Stock Units issued pursuant to the Plan
will be counted against the Plan maximum while outstanding even while
subject to restrictions. Shares of Restricted Stock and Restricted
Stock Units may not be added back to the Plan maximum if such Restricted
Stock or Restricted Stock Units are forfeited.
SECTION 5. PARTICIPANTS
Participants will consist of such officers, Directors and
Employees of the Company or any designated Subsidiary as the
Administrator in its sole discretion determines have a major impact on
the success and future growth and profitability of the Company.
Designation of a Participant in any Plan Year shall not require the
Administrator to designate such person to receive an Award in any other
Plan Year or to receive the same type or amount of Award as granted to
the Participant in any other Plan Year or as granted to any other
Participant in any Plan Year. The Administrator shall consider such
factors as it deems pertinent in selecting Participants and in
determining the type and amount of their respective Awards.
SECTION 6. TYPES OF AWARDS
The following Awards may be granted under the Plan: (a)
Incentive Stock Options; (b) Nonqualified Stock Options; (c) Stock
Appreciation Rights; (d) Restricted Stock; (e) Restricted Stock Units;
and (f) Performance Awards, all as described below. Except as
specifically limited herein, the Administrator shall have complete
discretion in determining the type and number of Awards to be granted to
any Participant, and the terms and conditions that attach to each Award,
which terms and conditions need not be uniform as between different
Participants. All Awards shall be in writing.
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SECTION 7. DATE OF GRANTING AWARDS
All Awards granted under the Plan shall be granted as of an
award date. Promptly after each award date, the Company shall notify
the Participant of the grant of the Award, and shall hand deliver or
mail to the Participant an Award Agreement, duly executed by and on
behalf of the Company, with the request that the Participant execute and
return such agreement within thirty days after the date of mailing or
delivery by the Company of the Award Agreement to the Participant. If
the Participant shall fail to execute and return the written Award
Agreement within the thirty-day period, the Participant's Award shall be
automatically terminated, except that if the Participant dies within the
thirty-day period such Award Agreement shall be effective
notwithstanding the fact that it has not been signed prior to death.
SECTION 8. INCENTIVE STOCK OPTIONS
Incentive Stock Options shall consist of Options to purchase
shares of Stock at purchase prices not less than 100% of the Fair Market
Value of the shares on the date the Option is granted. The purchase
price may be paid by check or, in the discretion of the Administrator,
by the delivery of shares of Common Stock then owned by the Participant,
which shares must have been owned for at least six months. Subject to
Section 14 hereof, Incentive Stock Options shall be exercisable not
later than ten years after the date they are granted and, except as
provided below, will terminate not later than three months after
termination of employment for any reason other than death or Disability.
In the event termination of employment occurs as a result of death or
Disability, such an Option will be exercisable for 12 months after such
termination. If the optionee dies within 12 months after termination of
employment by reason of Disability, then the period of exercise
following death shall be the remainder of the 12-month period, or three
months, whichever is longer. If the optionee dies within three months
after termination of employment for any other reason, then the period of
exercise following death shall be three months. In no event shall any
Incentive Stock Option be exercised more than ten years after its grant.
Leaves of absence granted by the Company or any Subsidiary of the
Company for military service, illness and transfers of employment
between the Company and any Subsidiary of the Company shall not
constitute termination of employment. The aggregate Fair Market Value
(determined as of the time an Option is granted) of the stock with
respect to which an Incentive Stock Option is exercisable for the first
time during any calendar year (under all option plans of the Company and
its Subsidiaries) shall not exceed $100,000, or such other amounts and
limitations as may be provided from time to time by the Code and any
regulations promulgated thereunder. The Fair Market Value of Stock
shall be determined without regard to any restriction, other than a
restriction which, by its terms, will never lapse.
SECTION 9. NONQUALIFIED STOCK OPTIONS
Nonqualified Stock Options shall consist of nonqualified
Options to purchase shares of Stock at purchase prices determined by the
Administrator; provided, however, the purchase price for Nonqualified
Stock Options shall be not less than 75% of the Fair Market Value of
Stock on the date the Option is granted. The purchase price may be paid
by check or, in the discretion of the Administrator, by the delivery of
shares of Common Stock then owned by the Participant or the Permitted
Transferee, as the case may be, which shares must have been owned for at
least six months. Subject to Section 14 hereof, Nonqualified Stock
Options shall be exercisable not later than ten years after the date
they are granted, and will terminate not later than three months after
termination of employment for any reason
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other than death, Retirement or Disability. Leaves of absence granted
by the Company or any Subsidiary of the Company for military service,
illness and transfers of employment between the Company and any
Subsidiary of the Company shall not constitute termination of
employment. The Administrator shall have the right to determine at the
time the Option is granted whether Shares issued upon exercise of a
Nonqualified Stock Option shall be subject to restrictions and, if so,
the nature of the restrictions.
SECTION 10. STOCK APPRECIATION RIGHTS
Stock Appreciation Rights may be granted which, in the
discretion of the Administrator, may be exercised (1) in lieu of
exercise of an Option, (2) in conjunction with the exercise of an
Option, (3) upon lapse of an Option, (4) independent of an Option or (5)
each of the above in connection with a previously awarded Option under
the Plan. If the Option referred to in (1), (2) or (3) above qualified
as an Incentive Stock Option pursuant to Section 422 of the Code, the
related SAR shall comply with the applicable provisions of the Code and
the regulations issued thereunder. At the time of grant, the
Administrator may establish, in its sole discretion, a maximum amount
per share which will be payable upon exercise of a SAR, and may impose
such conditions on exercise of a SAR as may be required to satisfy the
requirements of Rule 16b-3 (or any successor rule) under the Act. At
the discretion of the Administrator, payment for SARs may be made in
cash or Common Stock, or in a combination thereof. The following will
apply upon exercise of a SAR:
(a) Exercise of SARs in Lieu of Exercise of Options.
-----------------------------------------------
SARs exercisable in lieu of Options may be exercised for all
or part of the shares of Stock subject to the related Option
upon the exercise of the right to exercise an equivalent
number of Options. A SAR may be exercised only with respect
to the shares of Stock for which its related Option is then
exercisable. Upon exercise of a SAR in lieu of exercise of
an Option, shares of Stock equal to the number of SARs
exercised shall no longer be available for Awards under the
Plan, provided that if SARs are exercised for cash, shares
of stock equal to the number of SARs exercised shall be
restored to the number of shares available for issuance
under the Plan.
(b) Exercise of SARs in Conjunction with Exercise of
------------------------------------------------
Options. SARs exercisable in conjunction with the exercise
-------
of Options shall be deemed to be exercised upon the exercise
of the related Options, and shares of Stock equal to the sum
of the number of shares acquired by exercise of the Option
plus the number of SARs exercised shall no longer be
available for Awards under the Plan, provided that if SARs
are exercised for cash, shares of stock equal to the number
of SARs exercised shall be restored to the number of shares
available for issuance under the Plan.
(c) Exercise of SARs Upon Lapse of Options. SARs
--------------------------------------
exercisable upon lapse of Options shall be deemed to have
been exercised upon the lapse of the related Options as to
the number of shares of Stock subject to the Options.
Shares of Stock equal to the number of SARs deemed to have
been exercised shall not be available again for Awards under
the Plan, provided that if SARs are exercised for cash,
shares of stock equal to the number of SARs exercised shall
be restored to the number of shares available for issuance
under the Plan.
(d) Exercise of SARs Independent of Options. SARs
---------------------------------------
exercisable independent of Options may be exercised upon
whatever terms and conditions the Administrator, in its sole
discretion, imposes upon the SARs, and shares of Stock equal
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to the number of SARs exercised shall no longer be available
for Awards under the Plan, provided that if SARs are
exercised for cash, shares of stock equal to the number of
SARs exercised shall be restored to the number of shares
available for issuance under the Plan.
SECTION 11. RESTRICTED STOCK AND RESTRICTED STOCK UNITS
Restricted Stock shall consist of Stock or Stock Units
issued under the Plan at any purchase price less than the Fair Market
Value thereof on the date of issuance, or as a bonus. In the case of
any Restricted Stock or Restricted Stock Units:
(a) The purchase price, if any, will be determined
by the Administrator.
(b) Restricted Stock or Restricted Stock Units may
be subject to: (i) restrictions on the sale or other
disposition thereof; (ii) rights of the Company to reacquire
such Restricted Stock or Restricted Stock Units at the
purchase price, if any, originally paid therefor upon
termination of the employee's employment within specified
periods; (iii) representation by the Participant that he or
she intends to acquire Restricted Stock or Restricted Stock
Units for investment and not for resale; and (iv) such other
restrictions, conditions and terms as the Administrator
deems appropriate.
(c) The Participant or a Permitted Transferee, as
the case may be, shall be entitled to all dividends paid
with respect to Restricted Stock during the Period of
Restriction and shall not be required to return any such
dividends to the Company in the event of the forfeiture of
the Restricted Stock.
(d) The Participant or a Permitted Transferee, as
the case may be, shall be entitled to vote Restricted Stock
during the Period of Restriction.
(e) The Administrator shall determine whether
Restricted Stock is to be delivered to the Participant with
an appropriate legend imprinted on the certificate or if the
shares are to be deposited in escrow pending removal of the
restrictions.
SECTION 12. PERFORMANCE AWARDS
(a) Performance Period. For each Program, the
------------------
Administrator shall set forth a Performance Period over
which performance will be measured to determine whether and
in what amounts to pay Awards to Participants. Each Program
must be established in writing prior to the expiration of
any prescribed time period for the pre-establishment of
performance goals under Section 162(m) of the Code. Each
Program also shall set forth those individuals the
Administrator believes may be or may become Covered
Employees for the applicable Performance Period.
(b) Performance Criteria and Goals. All Awards
------------------------------
shall be based upon any one or more of the following
financial measures of the Company: (i) pre-tax or after-tax
return on equity or average assets; (ii) earnings per share;
(iii) return on stockholders' equity; (iv) revenue growth;
(v) pre-tax or after tax net income; (vi) book value per
share; (vii) market price per share; (viii) relative
performance per peer group companies;
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and (ix) expense management. The Administrator also may
provide for additional opportunities based upon the
attainment of specific business objectives and other
measures of individual, business unit or Company
performance, and such other goals or a combination thereof
as may be established by the Administrator. For each
Program and for each Participant, the Administrator shall
designate one or more objective performance goals based upon
one or more of the criteria listed above. No Award shall be
paid if the applicable performance goals are not satisfied;
provided, however, performance goals may include standards
for partial achievement and provide for a partial award for
partial achievement.
(c) Performance Awards. Performance Awards may
------------------
consist of cash, Options, Stock, Restricted Stock,
Restricted Stock Units or a combination thereof, to be
issued with or without any payment therefor, in the event
the performance goals established by the Administrator are
achieved during the Performance Period. For each Program,
the Administrator shall designate an objective formula or
standard for determining each Participant's Award. Except
with respect to Awards payable to Covered Employees, and
notwithstanding the failure to satisfy the applicable
performance goal(s), the Administrator shall have the
discretion to increase or reduce the amount of any
Participant's Award above or below the standard or formula
amount to reflect individual performance and/or
unanticipated factors; the Administrator may only reduce the
amount of an Award payable to Covered Employees below the
standard or formula amount to reflect individual performance
and/or unanticipated factors. Actual payment of the Award
earned shall be in cash, Stock, Restricted Stock, Restricted
Stock Units or in a combination thereof, in a single sum or
in periodic installments, all as the Administrator in its
sole discretion determines. If Stock or Restricted Stock is
used, the Participant shall not have the right to vote and
receive dividends until the goals are achieved and the
actual shares are issued. No Performance Award shall
entitle any individual to receive more than 250,000 shares
of Stock and the maximum Performance Award payable during
any Plan Year to all Participants at any one Subsidiary
(excluding any additional cash payment) shall not exceed
$2,000,000.
(d) Payment of Awards. After the close of each
-----------------
Performance Period, the Administrator shall certify in
writing the achievement of the applicable performance
goal(s) and the amounts of any Awards payable to the
Participants under the applicable formula(s) or standard(s).
All or part of the Awards payable to Participants who are
not Covered Employees may be paid prior to the end of a
Performance Period on an estimated basis, subject to
adjustment in the discretion of the Administrator. All or
part of the Awards payable to Covered Employees may be paid
prior to the end of a Performance Period only if such
earlier payment does not result in such Award failing to
constitute qualified performance-based compensation under
Section 162(m) of the Code (e.g., if achievement of the
applicable performance goal(s) can be certified prior to the
end of the Performance Period). Subject to the foregoing,
the timing of payment of all Awards to both Covered
Employees and Participants who are not Covered Employees
shall be within the discretion of the Administrator.
SECTION 13. ADJUSTMENT PROVISIONS
(a) If the Company shall at any time change the
number of issued shares of Common Stock without new
consideration to the Company (such as by stock dividends
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or stock splits), the total number of shares reserved for
issuance under this Plan, the number of shares that may be
granted in the form of Options, SARs, Restricted Stock,
Restricted Stock Units or Performance Awards, the maximum
number of shares available to a particular Participant, and
the number of shares covered by each outstanding Award,
shall be adjusted so that the aggregate consideration
payable to the Company, if any, and the value of each such
Award shall not be changed. Awards shall be deemed to
contain provisions for their continuation or for other
equitable adjustments after changes in Common Stock
resulting from reorganization, sale, merger, consolidation,
issuance of stock rights or warrants, or similar occurrence.
(b) Notwithstanding any other provision of this Plan
or in any Award, and without affecting the number of shares
reserved or available hereunder, the Board may authorize the
equitable adjustment of benefits in connection with any
merger, consolidation, acquisition of property or stock, or
reorganization upon such terms and conditions as it may deem
appropriate.
SECTION 14. CHANGE OF CONTROL
Notwithstanding any other provision of this Plan, if the
terms of an agreement under which the Administrator has granted an award
under this Plan shall provide for an acceleration of benefits upon a
Change of Control, outstanding Awards shall become immediately and fully
exercisable or payable according to the following terms:
(a) Any outstanding and unexercised Option shall
become immediately and fully exercisable, and shall remain
exercisable until it would otherwise expire by reason of
lapse of time.
(b) During the six month and seven day period from
and after a Change of Control (the "Exercise Period"),
unless the Administrator shall determine otherwise at the
time of grant, a Participant or Permitted Transferee, as the
case may be, shall have the right, in lieu of the payment of
the Base Price of the shares of Stock being purchased under
an Option and by giving notice to the Administrator, to
elect (within the Exercise Period) in lieu of exercise
thereof, provided that if such Option is held by a Reporting
Person either (i) such grant was approved by either the
Board or the Administrator or (ii) more than six months have
elapsed from the grant thereof, to surrender all or part of
the Option to the Company and to receive in cash, within 30
days of such notice, an amount equal to the amount by which
the Change in Control Price per share of Common Stock on the
date of such election shall exceed the Base Price per share
of Stock under the Option multiplied by the number of shares
of Stock granted under the Option as to which the right
granted under this subsection 14(b) shall have been
exercised. Change in Control Price shall mean the higher of
(i) (A) for any period during which Common Stock shall be
listed for trading on a national securities exchange, the
highest closing price per share of Common Stock on such
exchange as of the close of such trading day, (B) for any
period during which Common Stock shall not be listed for
trading on a national securities exchange, but when Common
Stock shall be authorized as a Nasdaq National Market
security, the highest price per share as quoted by the
Nasdaq, (C) for any period during which Common Stock shall
not be listed for trading on a national securities exchange
or authorized as a Nasdaq National Market security, but when
Common Stock shall be authorized as a Nasdaq SmallCap Market
security, the highest
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average of the high bid and low asked prices as reported by
the Nasdaq, or (D) the highest market price per share of
Common Stock as determined by an investment banking firm or
certified public accountant selected by the Administrator in
the event neither (A), (B) nor (C) above shall be
applicable, in each case during the 60-day period prior to
and ending on the date of the Change of Control, and (ii) if
the Change of Control is the result of a transaction or
series of transactions described in subsections 14(f)(i),
(iii), (iv) or (v) hereof, the highest price per share of
Common Stock paid in such transaction or series of
transactions (which in the case of paragraph (i) shall be
the highest price per share of Common Stock as reflected in
a Schedule 13D by the person having made the acquisition);
provided, however, that with respect to any Incentive Stock
Option, the Change of Control Price shall not exceed the
market price of a share of Common Stock (to the extent
required pursuant to Section 422 of the Code) on the date of
surrender thereof.
(c) Any outstanding and unexercised Stock
Appreciation Rights (other than such rights which arise
pursuant to subsection 14(b) hereof) shall become
exercisable as follows:
(i) Any SAR described in subsections 10(a) or
(b) shall continue to be treated as provided in those
subsections, except that SARs exercised by Reporting
Persons for cash shall have been either (i) approved
by the Board or the Administrator or (ii) held for six
months prior to exercise.
(ii) Any SAR described in subsection 10(c)
shall be deemed to have been exercised if and when the
Participant advises the Administrator in writing that
the Participant elects to have Options with respect to
which the SAR was granted treated as having lapsed,
except that SARs exercised by Reporting Persons for
cash shall have been either (i) approved by the Board
or the Administrator or (ii) held for six months prior
to exercise.
(iii) Any SAR described in subsection 10(d)
shall be exercisable immediately, without regard to
limitations imposed upon such exercise which are
related to the passage of time, except that SARs
exercised by Reporting Persons for cash shall have
been either (i) approved by the Board or the
Administrator or (ii) held for six months prior to
exercise.
(d) Any Restricted Stock or Restricted Stock Units
granted pursuant to Section 11 shall become immediately and
fully transferable, and the Administrator shall be deemed to
have exercised its discretion to waive any automatic
forfeitures provided with respect to such Restricted Stock
or Restricted Stock Units. Any shares held in escrow shall
be delivered to the Participant or a Permitted Transferee,
as the case may be, and any share certificates shall not
contain the legend specified by subsection 11(e). Unless
such award of Restricted Stock or Restricted Stock Units
shall have been approved by either the Board and/or the
Administrator, Reporting Persons shall not dispose of any
Restricted Stock or Restricted Stock Units until six months
following the date of award of such Restricted Stock or
Restricted Stock Units.
(e) Any Performance Award granted pursuant to
Section 12 that has not expired or been forfeited shall be
deemed to have been earned on the assumption that all
performance goals have been achieved to the fullest extent
scheduled in the Award. All
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payments shall be made promptly in a lump sum,
notwithstanding any other provision for installment or
deferred payment prescribed in the Award.
(f) For purposes of this Plan, Change of Control
shall mean a change in control of the Company 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
Act; provided that, for purposes of this Plan, a Change in
Control shall be deemed to have occurred if: (i) any Person
(other than the Company or any Subsidiary) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company that
represent 30% or more of the combined voting power of the
Company's then outstanding securities; (ii) during any
period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any
reason to constitute at least a majority thereof, unless the
election, or the nomination for election, by the Company's
stockholders, of each new director is approved by a vote of
at least two-thirds (2/3) of the directors then still in
office who were directors at the beginning of the period but
excluding any individual whose initial assumption of office
occurs as a result of either an actual or threatened
election contest (as such term is used in Rule 14a-11 of
Regulation 14A promulgated under the Act) or other actual or
threatened solicitation of proxies or consents by or on
behalf of a person other than the Board; (iii) there is
consummated any consolidation or merger of the Company in
which the Company is not the continuing or surviving
corporation or pursuant to which shares of Common Stock are
converted into cash, securities or other property, other
than a merger of the Company in which the holders of Common
Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving
corporation immediately after the merger; (iv) there is
consummated any consolidation or merger of the Company in
which the Company is the continuing or surviving corporation
in which the holders of Common Stock immediately prior to
the merger do not own at least fifty percent (50%), or such
greater percentage as shall be set in any agreement with any
Participant, or more of the stock of the surviving
corporation immediately after the merger; (v) there is
consummated any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all,
or substantially all, of the assets of the Company; or (vi)
the stockholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company.
SECTION 15. NONTRANSFERABILITY
Each Award granted under the Plan to a Participant shall not
be transferable otherwise than by will or the laws of descent and
distribution; provided, however, that the Participant may, in his or her
sole discretion, transfer to a Permitted Transferee all or a portion of
(i) a Nonqualified Stock Option granted to such Participant or (ii) any
Restricted Stock or Restricted Stock Unit awarded to such Participant;
provided further, however, that, with respect to each of the foregoing,
(x) subsequent transfers of Nonqualified Stock Options, shares of
Restricted Stock or Restricted Stock Units shall be prohibited except
those (1) by will or the laws of descent and distribution or (2) to any
other Permitted Transferee of the Participant, and (y) the Participant
shall remain subject to withholding taxes upon exercise of the
Nonqualified Stock Option by a Permitted Transferee or upon the
expiration of any forfeiture restrictions applicable to such shares of
Restricted Stock or Restricted Stock Units. Following transfer, any
such Nonqualified Stock Options, shares of Restricted Stock or
Restricted Stock Units shall continue to be subject to the same terms
and conditions as were applicable immediately prior to transfer. The
Company shall have no obligation to provide a Permitted Transferee with
notice of the early
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termination of a Nonqualified Stock Option or the forfeiture of any
shares of Restricted Stock or Restricted Stock Units. Awards granted
under the Plan to a Participant shall be exercisable, during the
Participant's lifetime, only by the Participant or a Permitted
Transferee, as the case may be. In the event of the death of a
Participant, exercise or payment shall be made only:
(a) By or to the Permitted Transferee, the executor
or administrator of the estate of the deceased Participant
or the person or persons to whom the deceased Participant's
rights under the Award shall pass by will or the laws of
descent and distribution; and
(b) To the extent that the deceased Participant or
the Permitted Transferee, as the case may be, was entitled
thereto at the date of the Participant's death.
SECTION 16. TAXES
The Company shall be entitled to withhold the amount of any
tax attributable to any amounts payable or shares deliverable under the
Plan after giving the person entitled to receive such payment or
delivery notice as far in advance as practicable, and the Company may
defer making payment or delivery as to any Award if any such tax is
payable until indemnified to its satisfaction. The person entitled to
any such delivery may, by notice to the Company at the time the
requirement for such delivery is first established, elect to have such
withholding satisfied by a reduction of the number of shares otherwise
so deliverable, such reduction to be calculated based on the Fair Market
Value on the date of such notice; provided, however, that with respect
to Reporting Persons, such withholding shall be satisfied by a reduction
of the number of shares otherwise so deliverable unless the Reporting
Person elects to pay all taxes in cash. A Participant shall remain
subject to withholding taxes upon the exercise of a Nonqualified Stock
Option by a Permitted Transferee or upon the lapse of any forfeiture
restrictions applicable to any shares of Restricted Stock or Restricted
Stock Units transferred to a Permitted Transferee.
SECTION 17. NO RIGHT TO EMPLOYMENT
A Participant's right, if any, to continue to serve the
Company and its Subsidiaries as an officer, Director, Employee or
otherwise shall not be enlarged or otherwise affected by such
individual's designation as a Participant under the Plan.
SECTION 18. DURATION, AMENDMENT AND TERMINATION
No Award shall be granted more than ten years after the
effective date of this Plan; provided, however, that the terms and
conditions applicable to any Award granted within such period may
thereafter be amended or modified by mutual agreement between the
Company and the Participant or such other person as may then have an
interest therein (notwithstanding the fact that an amendment or
modification may cause an Option to no longer qualify as an Incentive
Stock Option). Also, by mutual agreement between the Company and a
Participant hereunder, Stock Options or other Awards may be granted to
such Participant in substitution and exchange for, and in cancellation
of, any Awards previously granted such Participant under this Plan. To
the extent that any Stock Options or other Awards which may be granted
within the terms of the Plan would qualify under present or future laws
for tax treatment that is beneficial to a recipient, then any such
beneficial treatment shall be considered
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<PAGE>
within the intent, purpose and operational purview of the Plan and the
discretion of the Administrator, and to the extent that any such Stock
Options or other Awards would so qualify within the terms of the Plan,
the Administrator shall have full and complete authority to grant Stock
Options or other Awards that so qualify (including the authority to
grant, simultaneously or otherwise, Stock Options or other Awards that
do not so qualify) and to prescribe the terms and conditions (which need
not be identical as among recipients) in respect to the grant or
exercise of any such Stock Option or other Awards under the Plan. The
Board of Directors may amend the Plan from time to time or terminate the
Plan at any time. However, no action authorized by this paragraph shall
reduce the amount of any existing Award or change the terms and
conditions thereof without the Participant's consent. No amendment of
the Plan shall, without approval of the stockholders of the Company:
(a) increase the total number of shares that may be issued under the
Plan or increase the amount or type of Awards that may be granted under
the Plan; (b) change the minimum purchase price, if any, of shares of
Stock or Stock Units which may be made subject to Awards under the Plan;
(c) modify the requirements as to eligibility for Awards under the Plan;
or (d) cause the Plan not to comply with either Rule 16b-3, or any
successor rule, under the Act or Section 162(m) of the Code.
SECTION 19. STOCKHOLDER APPROVAL
The Plan shall be effective on March 25, 1999, subject to
approval by the holders of a majority of the outstanding voting stock of
the Company within twelve months after adoption of the Plan by the
Board.
SECTION 20. MISCELLANEOUS
(a) Governing Law. Subject to the provisions of
-------------
applicable federal law, the Plan shall be administered, construed and
enforced according to the internal laws of the State of Delaware
excluding its conflict of law rules.
(b) Severability. The invalidity of any particular
------------
clause, provision or covenant herein shall not invalidate all or any
part of the remainder of the Plan, but such remainder shall be and
remain valid in all respects as fully as the law will permit.
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby nominates, constitutes and appoints
Michelle V. Hardesty and Jack H. Brown (or such other person as is
designated by the Board of Directors of Unified Financial Services, Inc.
(the "Company")) (the "Proxies"), or either of them (with full power to
act alone), true and lawful attorney(s), with full power of
substitution, for the undersigned and in the name, place and stead of
the undersigned to vote as designated below all of the shares of Common
Stock, $0.01 par value, and/or Series C 6.75% Cumulative Convertible
Preferred Stock, $0.01 par value, of the Company entitled to be voted by
the undersigned at the Annual Meeting of Stockholders to be held at
Champion Trace Golf Club, 20 Avenue of Champions, Nicholasville,
Kentucky, at 10:00 a.m., local time, May 27, 1999, and at any
adjournments or postponements thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING:
1. ELECTION OF DIRECTORS:
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote
(except as marked below) for all nominees listed below
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
FOR TERM EXPIRING IN 2002:
Thomas G. Napurano
John R. Owens
Lynn E. Wood
2. PROPOSAL TO APPROVE THE ADOPTION OF AN AMENDMENT TO ARTICLE 4 OF
THE COMPANY'S CERTIFICATE OF INCORPORATION:
/ / For / / Against / / Abstain
3. PROPOSAL TO APPROVE THE ADOPTION OF THE AMENDED AND RESTATED
UNIFIED FINANCIAL SERVICES, INC. 1998 STOCK INCENTIVE PLAN:
/ / For / / Against / / Abstain
4. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting and any
adjournment or postponement thereof.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is
made, this proxy will be voted "FOR" all of the named nominees for
director, for Proposal 2 and for Proposal 3.
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The undersigned acknowledges receipt of the 1999 Annual Report to
Stockholders and the Notice of the Annual Meeting and the Proxy
Statement. Please mark, sign, date and return the proxy card promptly
using the enclosed envelope.
/ / PLEASE CHECK THIS BOX IF YOU PLAN TO
ATTEND THE MEETING IN PERSON.
SIGN HERE
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(Please sign exactly as name appears at left)
SIGN HERE
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Executors, administrators, trustees, etc.
should so indicate when signing
DATED
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