NOTICE OF ANNUAL MEETING
To The Stockholders of
Premier Financial Services, Inc.
The Annual Meeting of Stockholders of Premier Financial Services,
Inc. a Delaware corporation (the "Company"), will be held at the Best
Western Stephenson Hotel, 109 South Galena Ave., Freeport, Illinois,
at 10:00 A.M., Freeport time, on Thursday, April 27, 1995 for the
following purposes:
1. To elect two Class I directors for a term of three years.
2. To consider and vote upon a proposal of the Board of Directors to
adopt the 1995 Non-qualified Stock Option Plan.
3. To ratify and approve the Senior Leadership and Directors Deferred
Compensation Plan which was adopted by the Board of Directors
effective July 1, 1994.
4. To transact and act upon such other matters or business as may
properly come before said meeting, or any adjournment or adjourn-
ments thereof. The Board of Directors of the Company does not
know of any other matters requiring action by the stockholders to
come before the Annual Meeting.
A complete list of stockholders entitled to vote at the meeting
shall be open for examination by any stockholder for any purpose
germane to the meeting, during ordinary business hours for a period of
ten days prior to the meeting at Premier Financial Services, Inc.'s
corporate office, 27 West Main Street, Suite 101, Freeport, Illinois.
The close of business on February 28, 1995 has been selected by the
Board of Directors as the record date for the determination of
stockholders entitled to notice of and to vote at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Michael J. Lester ***IMPORTANT***
Secretary WHETHER OR NOT YOU EXPECT TO
ATTEND THE MEETING IN PERSON,
PLEASE SIGN THE ACCOMPANYING
PROXY AND MAIL IT NOW IN THE
March 20, 1995 ENCLOSED ENVELOPE.
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of Premier
Financial Services, Inc. (the "Company") for use at the 1995 Annual
Meeting of Stockholders, (the "Annual Meeting"), and any adjournment
or adjournments thereof, to be held on Thursday, April 27, 1995, at
10:00 A.M., Freeport time, at the Best Western Stephenson Hotel, 109
South Galena Ave., Freeport, Illinois.
Only holders of record of shares of common stock of the Company
(the "Common Stock") at the close of business February 28, 1995 will
be entitled to notice of and to vote at the Annual Meeting, each share
being entitled to one vote. On such date there were 6,522,178 shares
of Common Stock outstanding. The presence at the Annual Meeting,
either in person or by proxy, of the holders of a majority of the
voting powers of the shares outstanding and entitled to vote is
necessary to constitute a quorum for the transaction of business. The
inspectors of election will treat abstentions (including broker non-
votes) as shares present for purposes of determining the existence of
a quorum.
Any stockholder who executes the enclosed proxy may revoke it any
time before it has been exercised by a later dated proxy or by giving
notice of such revocation to the Company in writing or in an open
meeting before such proxy is voted. Attendance at the meeting will
not in and of itself constitute the revocation of a proxy. Otherwise,
all properly executed proxies received at or before the meeting will
be voted in accordance with the instructions contained therein. If no
instructions are given, such proxies will be voted: (1) FOR the
election of directors as stated below, (2) FOR the proposal to adopt
the 1995 Non-qualified Stock Option Plan, (3) FOR the proposal to
ratify and approve the Senior Leadership and Directors Deferred
Compensation Plan, and (4) in the discretion of the named proxies,
upon such other matters as may properly come before the meeting.
The cost of solicitation will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by persons
regularly employed by the Company or its subsidiaries, by personal
interview, telephone or telegraph. Arrangements may also be made with
brokerage houses and other custodians, nominees and fiduciaries for
the forwarding of solicitation material to the beneficial owners of
the stock held of record by such persons, and the Company may
reimburse such brokerage houses, custodians, nominees and fiduciaries
for reasonable out-of-pocket expenses incurred by them in connection
therewith.
A copy of the Company's Annual Report for the year ended December
31, 1994, including audited financial statements has previously been
sent to stockholders. The approximate date on which this proxy
statement and form of proxy were first sent to stockholders was March
20, 1995.
PROPOSAL 1: ELECTION OF DIRECTORS
INFORMATION CONCERNING NOMINEES
The Company's Restated Certificate of Incorporation provides that
the Board of Directors shall consist of not fewer than five nor more
than twenty directors, with the specific number to be fixed from time
to time by a resolution adopted by at least a majority of the Board of
Directors. The number of directors is currently fixed at eight. The
Company's Restated Certificate of Incorporation further provides that
the Board of Directors is to be divided into three classes that are to
be as nearly equal in number as possible. The terms of two directors
who are presently serving on the Board, Charles M. Luecke and H. Barry
Musgrove, expire at the Annual Meeting. The Board of Directors has
renominated Messrs. Luecke and Musgrove for election as Class I
directors for a term ending at the Annual Meeting in 1998 or until
their successors are elected and qualified.
Unless otherwise indicated, proxies will be voted for the
election of the nominees below. If a nominee becomes unable or
unwilling to serve, proxies will be voted for such persons, if any, as
shall be designated by the Board. Each nominee has agreed to serve as
a director, if elected, and the Board of Directors does not presently
know of any circumstances which would render any nominee named herein
unavailable.
The Company's by-laws provide that all elections of directors
shall be decided by a plurality vote. Since two positions are to be
filled on the Board of Directors, the two nominees receiving the
highest number of votes cast at a meeting at which a quorum is present
will be elected as directors. Abstentions (including broker non-
votes) will not be counted in determining the number of votes received
by any nominee.
Class I Nominees (If elected, term will expire in 1998)
Principal Occupation and Year
Name Age First Elected a Director (1)
Charles M. Luecke 65 President, Luecke Jewelers, LTD.
(jewelry store) - 1978
H. Barry Musgrove 60 Chairman of the Board and
President, Frantz Manufacturing
Company. (manufacturer of anti-
fricton products) - 1987
- - - - - - - - - - - - Continuing Directors - - - - - - - - - - - - -
Class II (Term expires 1996)
Principal Occupation and Year
Name Age First Elected a Director (1)
R. Gerald Fox 58 President & Chief Executive
Officer, F.I.A. Publishing
Company. (publisher of financial
books and periodicals) - 1993
Richard L. Geach 53 Chairman of the Board, President &
Chief Executive Officer of the
Company - 1978
Edward G. Maris 59 Senior Vice President, Chief
Financial Officer, Secretary &
Treasurer, Northwestern Steel and
Wire Company (raw steel production
and finished steel/wire products)
- 1990
Class III (Term expires 1997)
Donald E. Bitz 66 Retired Chairman of the Board &
Chief Executive Officer, Economy
Fire and Casualty Co. (insurance
Company) - 1979
David L. Murray 52 Executive Vice President and Chief
Financial Officer of the Company
- 1981
Joseph C. Piland 61 Educational Consultant and Retired
President, Highland Community
College - 1987
(1) Each director has engaged in the principal occupation indicated
for at least five years, except as follows:
- Joseph C. Piland has been an Educational Consultant since 1992.
Prior to 1992, he was President, Highland Community College,
for more than five years.
- Donald E. Bitz retired as Chairman of the Board & Chief
Executive Officer, Economy Fire & Casualty Company in 1993, a
position he had held for more than five years.
BOARD AND COMMITTEE MEETINGS
During 1994, the Board of Directors held 8 regular meetings.
Each Director attended more than 75% of the aggregate of the total
number of meetings of the Board of Directors and the total number of
meetings held by all committees of the Board of Directors on which he
served.
The Board of Directors has established several committees to
assist in the discharge of its responsibilities.
The Executive Committee meets in situations where it is
impractical and/or unnecessary to meet as a full Board of Directors.
The Committee may consist of any five directors, one of whom must be
Richard L. Geach or David L. Murray. The Committee did not meet in
1994.
The Governance Committee evaluates and makes recommendations
regarding Board composition, qualifications of directors and other
administrative issues with respect to the Board and Boards of Directors
of Subsidiary Companies. Current members are R. Gerald Fox and Joseph
D. Piland. Among other functions, the Committee serves as a
nominating committee which selects and nominates members of the Board
of Directors. Nominees recommended by stockholders in writing to the
Secretary of the Company at 27 West Main Street, Suite 101, Freeport,
Illinois 61032, in accordance with the procedures set forth below
under "Notice Provisions for Stockholder Nominations of Directors",
will be considered by the Committee. The Committee met twice in 1994.
The current members of the Compensation Committee are Messrs.
Donald E. Bitz, Edward G. Maris and H. Barry Musgrove. Among other
functions, the Committee makes recommendations to the Board of
Directors as to the compensation of the Executive Officers and outside
Directors as well as with respect to the Company's Benefit Programs.
The Committee also interprets and administers the Company's Benefit
Plans. The Committee met three times in 1994.
The Audit Committee consists of two permanent members and one
other outside director on a rotating basis. Messrs. Charles M.
Luecke and Joseph C. Piland currently serve as permanent members. The
Committee reviews the financial audits of the Company and its
subsidiaries, both internal and independent, and examines matters
relating to the financial statements of the Company. The Committee
held seven meetings in 1994.
DIRECTORS FEES AND COMPENSATION
As of December 31, 1994, Directors who were not employees of the
Company were paid an annual retainer fee of $ 9,000 and $ 400 per
meeting attended for committee participation. Employees of the
Company are not compensated separately for their services as
directors.
EXECUTIVE OFFICERS
The following table sets forth the names and ages of the
executive officers of the Company, as well as their respective
positions with the Company and its subsidiaries: (1)
Name Age Position(s) (2)
Richard L. Geach 53 Chairman of the Board, President,
& Chief Executive Officer of the
Company, Premier Acquisition
Company, First Bank North, First
Bank South, First National Bank
of Northbrook, First Security
Bank of Cary-Grove, and a director
of all Subsidiary Companies.
David L. Murray 52 Executive Vice President/Chief
Financial Officer and a Director
of the Company and of all
Subsidiary Companies.
Kenneth A. Urban 56 Division Head, Non-Bank Products
Division of the Company,
President, Premier Trust Services,
Inc., and a Director of all
Subsidiary Companies.
Michael J. Lester 47 Division Head, Product and Sales
Support Division of the Company,
President, Premier Operating
Systems, Inc. and a Director of
all Subsidiary Companies.
Lan Pinney 55 Division Head, Community Banking
Division of the Company, and a
Director of all Subsidiary
Companies.
Scott Dixon 40 Division Head, Retail Banking
Division of the Company, and a
Director of all Subsidiary
Companies.
Steve E. Flahaven 39 Division Head, Commercial Banking
Division of the Company, and a
Director of all Subsidiary
Companies.
(1) The Company's "subsidiaries" as used herein consist of First
Bank North, First Bank South, First National Bank of Northbrook,
First Security Bank of Cary-Grove, Premier Acquisition Company,
Premier Trust Services, Inc., Premier Insurance Services, Inc.,
and Premier Operating Systems, Inc.
(2) Each executive officer has held the position or office indicated
[or other comparable responsible position(s)] for at least five
years, except that all offices and positions with Premier
Acquisition Company have been held only since 1992 when Premier
Acquisition Company was organized, and all positions with First
National Bank of Northbrook and First Security Bank of Cary-Grove
have been held only since 1993 when such banks were acquired.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Under regulations of the Securities and Exchange Commission,
persons who have power to vote or dispose of Common Stock, either
alone or with others, are deemed to be beneficial owners of such
Common Stock. Because the voting or dispositive power of certain
shares of Common Stock listed in the following table is shared, the
same shares in such cases are listed opposite more than one name in
the table. The total number of shares of Common Stock stated in the
Table as being
owned, directly or indirectly, as of the date indicated, after
elimination of such duplication is 2,814,478 shares; (37.17 %) of the
outstanding Common Stock.
The following table sets forth the holders of more than 5% of the
voting securities of the Company, as known by the Company as of
February
28, 1995:
Amount &
Title of Name and Address of Beneficial Nature of Per
Class Owner Beneficial Cent of
Ownership Class
Common Premier Trust Services, Inc. 1,131,451 (1) 14.94%
110 West Main Street
Freeport, IL 61032
Premier Financial Services, Inc. 667,902 (2) 8.82%
Savings and Stock Plan
c/o Premier Trust Services, Inc.
110 W. Main Street
Freeport, IL 61032
NBD Bank N.A. 736,842 (3) 9.73%
Trustee of the Thomas D.
Flanagan Blind Voting Trust
dated 7/15/93
P.O. Box 77975
Detroit, MI 48277
American Midwest Bank & Trust 569,321 (4) 7.52%
Trustee of Trust Number 6486
u/t/a dated 7/15/93
1600 West Lake Street
Melrose Park, IL 60160
Richard L. Geach 438,212 (5) 6.19%
1944 Mesa Drive
Freeport, IL 61032
(1) Includes 667,902 shares listed opposite Premier Financial
Services, Inc. Savings and Stock Plan. ("Savings and Stock
Plan"). The
shares are held in various capacities with Premier Trust Services,
Inc. The trust company had full investment power with regard to
885,317 shares (11.69%), shared investment power with regard to
18,015 shares (.24%), and no investment power with regard to the
remaining 228,119 shares (3.01%). Such Trust Company had no
voting authority with regard to any shares held.
(2) Includes 251,241 shares in the Employee Stock Ownership portion of
the Plan ("ESOP"), and 416,661 shares held in the 401(K) and
profit sharing portions of the Plan. Investments in shares in
the 401(K) and profit sharing portions of the Plan are discretionary
with individual participants. The Company has no voting authority
with respect to any shares held in the Savings and Stock Plan.
(3) Represents shares of Common Stock issuable within 60 days upon the
conversion of $ 7,000,000 of the Company's Series B Convertible
(non-voting) Preferred Stock, which is convertible into Common
Stock at $ 9.50 per share. Terms of the Trust direct that shares of
Common Stock, (if any) be voted in proportion to all other shares
of Common Stock with respect to any issue requiring a vote of the
holders of the Common Stock.
(4) Includes 26,315 shares of Common Stock issuable within 60 days
upon conversion of $250,000 of the Company's Series B Convertible
(non-voting) Preferred Stock, which is convertible into Common Stock
at $ 9.50 per share, and 543,306 shares of Common Stock
currently held in the Trust. Terms of the Trust direct that
shares of Common Stock be voted in proportion to all other shares
of Common Stock with respect to any issue requiring a vote of the
holders of the Common Stock.
(5) Includes 6,143 shares held in the Senior Leadership and Directors
Deferred Compensation Plan. The Company has full voting and
investment power over such shares. Also Includes 180,432 shares
held by Janice (Mrs. Richard L.) Geach, 67,042 shares held in the
Savings and Stock Plan, and 64,203 option shares which are
exercisable within 60 days of February 28, 1995. Mr. Geach has
full voting power over all shares held in the Savings and Stock
Plan and investment power over the shares held in the 401(K) and
profit sharing portions of the Plan. Mr. Geach disclaims beneficial
ownership of the shares held by his wife
The following table sets forth the number of shares of Common
Stock owned beneficially, directly or indirectly, by directors and
nominees of the Company, certain executive officers of the Company,
and by directors, nominees and executive officers as a group as of
February 28, 1995:
Title of Name & Address of Amount & Nature of Per Cent
Class Beneficial Owner Beneficial Ownership of Class
(1) (2)
Common Richard L. Geach 438,212 (3) (4) 6.19%
Edward G. Maris 3,441 *
Donald E. Bitz 48,973 *
David L. Murray 66,783 (3) (4) *
Joseph C. Piland 8,307 *
R. Gerald Fox 32,976 *
Charles M. Luecke 18,472 *
H. Barry Musgrove 27,429 *
Kenneth A. Urban 106,675 (3) (4) 1.41%
All 13 Directors, 1,037,122 (3) (4) 13.70%
Nominees &
Executive Officers
as a group
* Indicates less than 1% of class.
(1) Includes 196,357 shares held by or for the benefit of wives and
children or by relationship. Directors and officers disclaim
beneficial ownership of such shares.
(2) Includes shares purchased on behalf of individuals and held in
the Senior Leadership and Directors Deferred Compensation Plan
Trust. The Company has full voting and investment power over
shares held in the Trust. A summary of those shares is as
follows:
Name Number of Shares
Richard L. Geach 6,143
Edward G. Maris 1,125
Donald E. Bitz 1,132
David L. Murray 4,702
Joseph C. Piland 975
R. Gerald Fox 976
Charles M. Luecke 442
H. Barry Musgrove 972
Kenneth A. Urban 4,329
All 13 Directors, Nominees and 25,212
Executive Officers as a group
(3) Includes shares held in the Savings and Stock Plan. Officers
have full voting power over all shares and investment power over
shares held in the 401(K) and profit sharing portions of the
Plan. A summary of those shares is as follows:
Name Number of Shares
Richard L. Geach 67,042
David L. Murray 5,677
Kenneth A. Urban 50,641
All 7 executive officers as a 120,940
group
(4) Includes shares issuable pursuant to stock options with respect
to which individuals have a right to acquire beneficial
ownership within 60 days of February 28, 1995. A summary of
those shares is as follows:
Name Number of Shares
Richard L. Geach 64,203
David L. Murray 50,407
Kenneth A. Urban 42,099
All 7 executive officers as a 285,980
group
EXECUTIVE COMPENSATION
The following table sets forth a three-year summary of compensation
for the Chief Executive Officer and each of the four most highly compensated
executive officers of the Company whose total salary and bonus payments
exceeded $100,000 in the year ended December 31, 1994. Total salary and
bonus payments paid to two of the four most highly compensated officers of
the Company in the year ended December 31, 1994 did not exceed $100,000.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
__________________________________________ ___________________________
Awards Payouts
___________ ___________
Other Annual Long Term All Other
Name and Compensation Stock Incentive Compensation
Principal Position Year Salary ($) Bonus ($) Options (#) Payouts ($)
(1) (2) (3)
________________ ______ ____________ ________________________ ____________ ____________
<S> <C> <C> <C> <C> <C> <C> <C>
Richard L. Geach, 1994 176,292 0 4,800 0 41,443 9,335
President & CEO 1993 173,250 0 4,800 4,550 0 10,240
1992 157,450 55,459 4,800 0 0 14,117
David L. Murray, 1994 123,495 0 4,800 0 31,459 7,551
Executive Vice 1993 113,940 0 4,800 2,385 0 7,050
President & Chief 1992 104,980 35,026 4,800 0 0 9,259
Financial Officer
of the Company
Kenneth A. Urban, 1994 107,651 0 4,800 0 30,096 6,516
Division Head, 1993 103,300 0 4,800 1,682 0 6,424
Non-Bank Services 1992 98,992 30,019 4,800 0 0 8,688
Division of the
Company
</TABLE>
(1) Taxable allowance for use of automobiles owned by the executive
officer for business purposes.
(2) The Company terminated its 1990 Performance Unit Plan in 1994.
The Plan provided that up to an aggregate of 200,000 units were
available for grant. As of the date of termination, 3,727,
2,842, and 2,715 units had been granted to Messrs. Geach, Murray
and Urban respectively.
Payments under the Plan were to be based on improvement in
weighted average earnings per share over a period of five years
from date of grant. A discounted present value (at 7.50%) for
all outstanding units (granted in 1991, 1992 and 1993) was
established by the Board of Directors as of December 31, 1994.
The value was based on actual weighted average earnings per share
for 1991 through 1994 and projected earnings per share for 1995
through 1998 assuming a 20% increase in 1995 and increases of
approximately 15% per year thereafter. The discounted amount
(including the Company matching payment for the portion which the
Named individuals elected to defer under the Senior Leadership
and Directors Deferred Compensation Plan) was accrued in 1991
through 1994 and paid in cash in January, 1995. Subsequent to
payment, all outstanding grants were canceled.
(3) Amounts accrued for the benefit of the named individuals under
the Company's Savings and Stock Plan and Senior Leadership and
Directors Deferred Compensation Plan.
The following table sets forth information regarding stock options
exercised by each of the named executive officers during the year ended
December 31, 1994, as well as the value of unexercised stock options
outstanding at fiscal year end.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND
FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Unexercised ValueofUnexercised
Options In-The-MoneyOptions
at Fiscal Year End (#) at Fiscal Year End ($)
(1)
Shares
Acquired on Value
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
__________ _______________ _________ _________ _____________ ___________ _____________
<S> <C> <C> <C> <C> <C> <C>
Richard L. Geach - - 64,203 20,649 245,743 30,459
David L. Murray - - 50,407 10,334 201,175 14,882
Kenneth A. Urban - - 42,092 6,993 171,607 9,549
</TABLE>
(1) Based on the fair market value (closing bid price) of the Common
Stock of the Company on December 31, 1994, as reported on the
National Association of Securities Dealers Automated Operations
System -National Market System ("NASDAQ-NMS).
No awards were made under the Company's 1988 Non-Qualified Stock
Option Plan during the fiscal year ended December 31, 1994.
The Plan provided that the Board of Directors could grant options
to key employees to purchase shares of Common Stock. Up to 382,014
shares of Common Stock were authorized for issuance pursuant to the
Plan. Options for all 382,014 shares had been granted prior to
January 1, 1994. All grants were made in accordance with the terms
and conditions of the Plan. Each option is evidenced by an
agreement between the Company and the Optionee.
The Company intends, subject to Shareholder approval, to replace
the Plan with the 1995 Non-Qualified Stock Option Plan (the "1995
Plan") effective January 26, 1995. (See Proposal 2 in this Proxy).
The Company terminated its 1990 Performance Unit Plan in
December, 1994. No awards were made under the Plan during the fiscal
year ended December 31, 1994.
The Company provides a defined benefit Pension Plan for its employees.
Benefits are calculated under a career average formula based upon the
highest 25 years of salary. Effective July 1, 1994, benefits
accumulating to Plan participants were frozen. Accrued benefits as of
that date were fully funded. The following table sets forth the
annual benefits payable upon retirement at age 65 to Messrs. Geach,
Murray and Urban:
Name Amount Payable
Annually upon
Retirement
Richard L. Geach 26,342
David L. Murray 24,134
Kenneth A. Urban 24,115
Change in Control Severance Agreements
The Company has entered into Change in Control and Termination
Agreements ("Agreements") with certain executive officers, including
the Named individuals. The agreements provide for certain benefits
during a severance period (12 months) following either 1) a change of
control and termination of employment for any reason other than good
cause (as defined in the Agreements) at any time during the 24 months
after a change of control occurs, or 2) termination of employment by
the executive officer for good reason (as defined in the Agreements)
at any time during the 24 months following a change of control.
Subsequent to such change of control and termination, the
executive is entitled to receive the following benefits; 1) an amount
equal to base salary multiplied by 12, 2) continuation of coverage for
the executive, his or her spouse and dependents (for 12 months) under
all Company Welfare Plans in which the executive participated prior to
termination, except that substantially identical benefits will be
provided for any Welfare Plan in which participation is no longer
possible, 3) a bonus that would have been paid under any Incentive
Plan during the year of termination, pro rated for the number of
months actually employed, plus an amount equal to the average bonus
paid for the three years preceding termination, 4) receipt of any
benefits accrued under any Retirement, Welfare or Incentive Plan in
which the executive participated at date of termination, 5) an amount
equal to the amount which the Company would have contributed to the
Senior Leadership and Directors Deferred Compensation Plan had
termination not occurred, and 6) immediate and full vesting of all
options with exercise on date of termination or for 200 days
thereafter, or, if such acceleration is not permissible under a Plan a
payment equal to the excess, if any, of the aggregate fair market
value less the aggregate exercise price of such stock on the date of
termination. If the executive officer dies during the severance
period, his or her spouse or beneficiary will receive the remainder of
all unpaid benefits provided under the Agreements.
BOARD COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is
responsible for establishing the policies and procedures which
determine the compensation of the Company's Executive Officers. The
Committee sets base cash compensation and potential bonus compensation
annually for the Chief Executive Officer (CEO) and other Executive
Officers.
In addition, the Committee has exclusive authority to grant stock
options to Executive Officers. The Committee considers both internal
and external data in determining officers' compensation, including
input from outside compensation consultants and other independent
executive compensation data.
In creating policies and making decisions concerning executive
compensation, the Compensation Committee seeks to:
1. ensure that the executive team has clear goals and
accountability with respect to expected corporate
performance;
2. establish pay opportunities that are competitive within the
Company's industry, consistent with it's position in the
marketplace and the markets within which it operates;
3. assess results fairly and regularly in light of expected
Company performance; and
4. align pay and incentives with the long-term interests of the
Company's shareholders.
The objective of the Company's salary program is to help ensure that
the organization is able to attract and retain motivated individuals
necessary to achieve its goals in the most cost-effective way
possible.
It is our policy that a salary range be established for each
position within the Company, and that these ranges be (a) internally
equitable (i.e., fair in comparison to ranges established for other
positions within the Company), and (b) competitive when compared with
the rates paid and ranges utilized by other employers for comparable
positions. Each range is divided into quartiles, with the midpoint
approximating the average salary paid for comparable positions within
the Industry. In determining Industry averages, the Committee reviews
a number of external surveys, including surveys provided by banking
industry trade groups as well as private firms specializing in
compensation. Comparisons focus primarily on Banks and/or Bank
Holding Companies of similar size and with similar geographic/market
characteristics. It is also our policy that each employee will
receive a rate of pay that falls within the range that has been
established for his or her position. Executive Officers, including
the CEO, may defer up to 20% of their salary each year. The Company
matches amounts deferred at 25%.
Performance Incentives
The Company utilizes both short term and a long term incentive
programs, in tandem with base salaries, to closely tie overall
executive compensation to the interests of the Company's shareholders.
Executive officer base salaries are set at average or below average
rates as compared to peer. The Company's Incentive Programs are then
designed to motivate the CEO and other executive officers to manage
towards improved shareholder return.
The Short Term Incentive Program (i.e. cash bonuses) rewards
executive officers for surpassing the annual financial plan with
regard to earnings. Each year, a financial plan is approved by the
Board of Directors. The executive bonus program is then approved
based upon that plan, and provides for bonuses only if the financial
plan is exceeded. The size of any bonus, which may range from
15.00% - 60.00% of salary, is dependent upon the amount by which
actual financial performance exceeds the plan. Executive officers,
including the CEO, may defer up to 50% of any bonus. The Company
matches amounts deferred at 25%.
The Long Term Incentive Program uses Stock Options to correlate
executive compensation with shareholder value. Executive officers may
be granted options as determined by the Compensation Committee.
Options are granted at the fair market value of the Company's Common
Stock at the time of the award. Executives are allowed to exercise
the options on a vesting formula of 20% per year, and all options must
be exercised within ten years or they expire. The potential value of
options is dependent upon increasing total return (i.e. stock price
appreciation plus dividends) to shareholders over time.
CEO Compensation
The compensation for the Chief Executive Officer is determined
under the same policies and programs as outlined above for all
executive officers. The maximum award under the Company's Short Term
Incentive Program for the CEO is 60.00% of salary. The CEO may be
awarded Options under the Long Term Incentive Program as determined by
the Compensation Committee.
The Compensation Committee assesses the CEO's performance with
regard to Board Policies and goals, and the Company's performance
versus peers and its financial plan. Salary is set at a level below
peer average, with overall compensation closely tied to performance
through cash bonuses (for exceeding financial plan) and stock
options.
COMPENSATION COMMITTEE:
Donald E. Bitz
Edward G. Maris
H. Barry Musgrove
Pursuant to Rule 304(d) of Regulation S-T, Premier Financial
Services, Inc. is submitting on paper under cover of Form SE the
performance graph that is to appear in registrant's proxy and
information statements relating to annual meetings of security holders
at which directors will be elected. The following table presents year
-end cumulative total returns for the Company, U.S. stocks traded
on the NASDAQ over-the-counter market and all Bank stocks traded on
the NASDAQ over-the-counter market assuming $100.00 was invested on
January 1, 1990 and all dividends were reinvested for the five
year period ended December 31, 1994.
Index 1990 1991 1992 1993 1994
Premier $ 79 $ 126 $ 176 $ 189 $ 189
NASDAQ Bank 73 120 175 199 199
Stocks
U.S. NASDAQ 85 136 158 181 177
Stocks
The Company's cumulative total return to shareholders has
exceeded the cumulative total return of the U.S. NASDAQ stock market
index for the years 1992 through 1994. In 1990 and 1991 the Company's
cumulative total return was slightly less than the U.S. NASDAQ stock
market index. The Company's cumulative total return exceeded that
of Bank stocks traded on the NASDAQ over-the-counter market for
years 1990 through 1992, and has been slightly less in 1993 and 1994.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is an officer,
employee or former employee of the Company. Members of the
Compensation Committee or their associates may have loans or loan
commitments from the Company's subsidiary banks, but all such loans or
loan commitments were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons and did not involve more
than the normal risk of collectability or present other unfavorable
features.
Compliance with Section 16(a) of the Exchange Act
Pursuant to Securities and Exchange Commission regulations, the
Company must disclose the names of persons who failed to file or filed
late a report required under Section 16(a) of the Securities Exchange
Act of 1934. Generally, the reporting regulations under Section 16(a)
require directors and executive officers to report changes in
ownership in the Company's equity securities. Based solely on a
review of Forms 3, 4 and 5, including amendments thereto, all such
Forms were filed on a timely basis by reporting persons.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors and executive officers of the Company and their
associates were customers of, and have had transactions with, the
Company and in particular its subsidiary banks from time to time in
the ordinary course of business. Additional transactions may be
expected to take place in the ordinary course of business in the
future. All loans and loan commitments included in such transactions
were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable
transactions with other persons and did not involve more than normal
risk of collectability or present other unfavorable features.
PROPOSAL 2
ADOPTION OF THE 1995 NON-QUALIFIED STOCK OPTION PLAN
The Board of Directors has approved, subject to stockholder
approval, the Company's 1995 Stock Option Plan (the "Plan"). If
approved, this Plan will replace the Company's 1988 Stock Option Plan
(the "1988 Plan").
The Plan is intended to recognize employee contributions in
achieving the Company's strategic goals, and to enhance the ability of
the Company to attract, retain and motivate individuals of the caliber
essential to the Company's future growth and success. The Plan also
provides an additional incentive to perform by giving key employees an
opportunity to acquire, or increase their proprietary investment in,
the Company's Common Stock. All options granted under the Plan will
be non-qualified stock options.
The 1988 Plan was scheduled to expire on January 27, 1998. All
382,014 shares of Common Stock reserved for issuance under the 1988
Plan have been awarded. In lieu of seeking approval for additional
shares of stock for award under the 1988 Plan, the Board of Directors
believes it is in the best interests of the Company and its
stockholders to replace the 1988 Plan.
The Board of Directors believes the use of options has enabled
the Company to attract, retain and motivate talented, experienced
individuals at salary levels below that which would otherwise have
been required if options were not part of the Company's compensation
package. Because options provide a potential economic benefit to
holders, their use effectively incents Plan participants to endeavor
to improve the Company's financial performance, and therefore the
performance of the Company's Common Stock in the public market.
SUMMARY OF THE PLAN
The following Plan summary should be read in conjunction with the
Plan, a copy of which is included in this proxy statement as Exhibit
A, and is incorporated herein by reference.
1. SHARES COVERED BY THE PLAN - The number of shares of Common Stock
for which options may be granted shall initially be 200,000 (3.07%) of
the Common Stock outstanding on February 28, 1995. The total number
of shares available for option will be adjusted on January 1 of each
calendar year to 4% of the Company's outstanding shares as of that
date, provided that no such adjustment shall reduce the number of
shares which may be issued and sold under the Plan below 200,000. The
number of shares available for option under the Plan is subject to
adjustment for any stock split, dividend, recapitalization or certain
other capital adjustments.
2. ADMINISTRATION - The Compensation Committee (the "Committee") of
the Board of Directors of the Company, which will consist of two (2)
or more members of the Board who satisfy the "disinterested"
administration requirements set forth in Rule 16b-3 of the Securities
Exchange Act of 1934, as amended, or any successor rule or regulation,
will administer and interpret the Plan and may prescribe, in its sole
discretion, rules and regulations it deemed necessary for
administration of the Plan. No person who is an officer or employee
of the Company may be a member of the Committee.
3. ELIGIBILITY - All persons who have been designated by the
Committee as key employees of the Company or any of its subsidiaries
are eligible to receive options under the Plan. Currently, the
Committee has identified 7 key employees as being eligible to
participate in the Plan.
4. TERM OF PLAN - No option may be granted under the Plan after
12/31/2004.
5. TERMS AND CONDITIONS OF OPTIONS - Each option granted under the
Plan will be evidenced by an Agreement between the Company and the
employee to whom the option is granted. The Agreement will be subject
to the following terms and conditions:
(a) The exercise price for each share granted will be determined in
each case on the date of grant by the Committee, but shall not be
less than the fair market value of shares of Common Stock at the
time the option is granted. Fair market value is defined as 1) the
average of the high and low sales prices per share of Common Stock
as reported on the National Association of Securities Dealers
Automated Quotations, National Market System ("NASDAQ-NMS") on the
date of grant, or 2) if no sales are reported for such date the
average of the bid and asked prices per share as quoted on the
NASDAQ-NMS on the date of grant, or 3) a price as otherwise
determined by the Committee in its discretion.
(b) Vesting - each option is vested in accordance with the terms of
the Agreement evidencing such Option.
(c) expiration of options - options granted under the Plan expire
not later than the first to occur of the following:
(1) Ten years from the date the option is granted ("option
period")
(2) Three months after a) the retirement of the Optionee under
any retirement plan of the Company, b) termination due to total
and permanent disability, provided that the Board of Directors
may, by resolution, determine that this subparagraph (2) of
paragraph (c) shall not apply to any option or portion thereof.
(3) Six months after an Optionee's date of death, or, at the
expiration of the option period by the person or persons
entitled to do so under the Optionee's Will, or, if the Optionee
fails to make testamentary disposition or die intestate, by the
Optionee's legal representative(s).
(4) Termination of employment for any reason other than those
expressed in subparagraphs (2) and (3) of paragraph (c).
(d) Transferability - options granted under the Plan shall be non-
transferable except to their trust, or by will or the laws of
descent and distribution, and are be exercisable during the
Optionee's lifetime only by the Optionee.
(e) Payment - Optionee's must pay the purchase price of the shares
of Common Stock upon exercise. Payment may be as follows:
(1) in cash,
(2) by delivering shares of Common Stock having an aggregate
fair market value on the date of exercise equal to the option
exercise price,
(3) by directing the Company to withhold such number of shares of
Common Stock otherwise issuable upon exercise of such option
having a fair market value on the date of exercise equal to the
option exercise price,
(4) by such other medium of payment that the Committee, in its
discretion, authorizes at the time of the grant, or
(5) by any combination of (1), (2), (3) and (4) above.
6. CHANGE OF CONTROL PROVISIONS - All outstanding options will become
fully exercisable and all restrictions will terminate on such options
under a change of control of the Company. The Committee, as
constituted before the change of control, may also take any one or
more of the following actions;
(a) provide for the purchase of any option for an amount of cash
equal to the difference between the exercise price and the then
Fair Market Value of the Common Stock covered by the option had the
option been currently exercisable,
(b) make such adjustment to any option outstanding as the Committee
deems appropriate to reflect the change of control, or
(c) cause any outstanding option to be assumed by the acquiring or
surviving corporation after such change of control. Change of
control is defined as:
(1) direct or indirect acquisition by a person, corporation or
group [within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934 (the "Act") -an "Acquiror"] of beneficial
ownership (within the meaning of Section 13(d)(1) of the Act) of
the Company's shares having more 20% or more of the votes
entitled to be cast at meetings of the stockholders of the
Company,
(2) continuing directors ceasing to comprise a majority of the
Board, for which purpose "continuing director" shall mean any
individual who is or was a director on January 1, 1995, or any
member who becomes a director after that date who is not an
Acquiror and whose nomination for election or election to the
Board is recommended or approved by resolution of a majority
of the continuing members who are then members of the Board or
who was included as a nominee in a proxy statement distributed
when a majority of the Board consists of continuing directors.
7. AMENDMENTS - The Plan may be terminated or amended from time-to-
time by vote of the Board of Directors without stockholder approval
provided that no Plan amendment shall be effective until approved by
the Stockholders of the Company insofar as stockholder approval is
required to satisfy the requirements of Rule 16b-3 of the 1934 Act.
8. EXEMPTION FROM LIABILITY - The members of the Committee and of the
Board of Directors, and each of them, shall be free from all
liability, joint or several, for their acts, omissions and conduct and
for all the acts, omissions and conduct of their duly constituted
agents in carrying out their responsibilities under the Plan, and the
Company shall save them and each of them harmless from the effects and
consequences of their acts, omissions and conduct in their official
capacity except to the extent that such effects and consequences shall
result from their own willful misconduct.
9. GOVERNING LAWS - The Plan shall be construed, administered and
governed under and by the Laws of the State of Illinois.
10. TAXES - At the time of exercise of any option, the Company may
require an Optionee to pay the Company an amount equal to the tax the
Company or any subsidiary may be required to withhold to obtain a
deduction for Federal and State income tax purposes as a result of the
exercise or to comply with applicable law.
The Board of Directors approved the 1995 Non-Qualified Stock Option
Plan on January 26, 1995. Subject to approval by majority vote of a
quorum of stockholders, the Plan will become effective as of that
date.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ADOPTION
of the 1995 Non-Qualified Stock Option Plan.
PROPOSAL 3
RATIFICATION AND APPROVAL OF THE
SENIOR LEADERSHIP AND DIRECTORS DEFERRED COMPENSATION PLAN
The Board of Directors established the Senior Leadership and
Directors Deferred Compensation Plan (the "Plan") effective August 1,
1994. The purpose of the Plan is to permit participants to contribute
a portion of their compensation on a pre-tax basis toward retirement
benefits, to enhance the overall effectiveness of the Company's
executive compensation program and to help attract and retain
motivated individuals.
SUMMARY OF THE PLAN
The following Plan summary should be read in conjunction with the
Plan, a copy of which is included in this Proxy statement as Exhibit
B, and is incorporated herein by reference.
1. ADMINISTRATION - The Board of Directors of the Company will
administer the Plan in accordance with its terms and conditions, and
will have all powers necessary to carry out the provisions of the
Plan, including but not limited to the right to interpret the Plan and
prescribe, amend or rescind rules and regulations relating to it.
2. ELIGIBILITY - All employees who have been designated as "Senior
Leadership Employees" by the Board of Directors (currently 7
employees), and all members of the Board of Directors who are not
employees of the Company (currently 6 Directors) are eligible to
participate in the Plan subsequent to completing an election and
enrollment form.
3. TERM OF PLAN - The Company intends the Plan to be permanent, but
reserves the right to amend or terminate the Plan upon written
resolution by the Board of Directors.
4. COMPENSATION DEFERRAL ELECTIONS - Participants may elect to defer
annually, in writing and prior to January 1st each Plan year, a
portion of compensation otherwise payable to the participant by the
Company provided that such deferral amount may not exceed a) 20% of
base salary, b) 50% of annual bonus (if any), and c) 100% of Directors
fees. Deferral elections are irrevocable with respect to compensation
covered by such election.
5. MATCHING CONTRIBUTIONS - The Company will make a monthly matching
contribution, on behalf of each participant, equal to 25% of such
participant's deferral contribution.
6. INVESTMENT OF PARTICIPANTS' ACCOUNTS - All compensation deferral
amounts and matching Company contributions will be invested in shares
of Common Stock of the Company as of the last day of the month in
which said compensation would have been paid to the participant, if
not deferred, or as soon thereafter as practicable. All compensation
deferral amounts and Company matching contributions will be held in,
and invested under a Trust Agreement entered into by the Company to
assist it in fulfilling its obligations to participants in the Plan.
Such Trust will purchase shares of Company Stock in the market,
provided that the Company may, in its discretion, contribute Company
Stock to the Trust in an amount equal to the Participant's
contributions and Company matching contributions for the month, with
the stock valued as of the date of the contribution by the Company.
Dividends on shares of Company Stock held in Participant's Accounts
will be credited to such accounts, with cash dividends reinvested in
Company Stock as soon as practicable. The Company has initially
registered 200,000 shares of Common Stock for purchase under the Plan.
7. VESTING - Participants are fully vested in their compensation
deferral account at all times. A Participant becomes fully vested in
the Company's matching contributions on the earlier of a) the last day
of the Plan year that begins 3 years after the end of the Plan year in
which each such matching contribution was made, b) the date of a
Participants' employment termination due to death or permanent
disability, or c) the Participant's retirement date.
8. FORFEITURE OF MATCHING CONTRIBUTIONS - Senior Leadership Employees
may not, without prior written consent of the Company, directly or
indirectly compete, for a period of two (2) years after termination of
employment with the Company or any of its affiliate companies within a
25 mile radius of their respective main offices or all matching
contributions will be forfeited.
9. CHANGE OF CONTROL PROVISION - A Participant will become fully
vested in all matching contributions upon a change of control of the
Company. For purposes of the Plan a change of control will have
occurred if 1) any "person" or "group of persons" (as such terms are
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Exchange Act but without regard to the
sixty day period referred to in the Rule) directly or indirectly, of
shares representing 25% or more of the combined voting power of the
Company's then outstanding shares, or 2) at any time during any period
of two consecutive years (not including any period prior to January 1,
1994) individuals who at the beginning of such period constituted the
Board of Directors (the "incumbent Board") cease to constitute at
least a majority of the Board, except that individuals who become
Directors subsequent to that period and who are approved by a vote of
the Directors than comprising the Board will be considered a member of
the incumbent Board.
10. DISTRIBUTION OF PARTICIPANT'S ACCOUNTS - Participant's accounts
will be distributed in the form of cash or Company Stock, in the
discretion of the Company, upon termination of employment.
Participant's may elect to receive distribution in 1) a lump sum, or
2) in substantially equal monthly installments over a fixed period of
5, 10, or 15 years, provided that any account less than $5,000 will be
distributed in a lump sum. Participants may also request to make a
change in their distribution election, or to make an unscheduled
withdrawal (to the extent vested). The Plan contains stipulations
such as a 10% reduction (which is forfeited) in the amount distributed
under a change of election, and a waiting period of 36 months (in the
case of an unscheduled withdrawal) before being allowed to make any
further compensation deferrals, to discourage such changes or
unscheduled withdrawals. Hardship withdrawals (to the extent vested),
when requested in writing, may be permitted in cases of unforeseeable
emergencies as determined by the Company. In the case of a hardship
withdrawal, the withdrawal will be limited to an amount necessary to
meet the emergency.
11. EXEMPTION FROM LIABILITY - Neither the Company, any of its
subsidiary Companies nor any individual acting as their employee or
agent shall be liable to any participant, former participant or any
beneficiary or other person for any claim, loss, liability or expense
incurred in connection with the Plan.
12. GOVERNING LAWS - The Plan shall be construed and administered
under the laws of the State of Illinois except to the extent preempted
by federal law.
The Board of Directors adopted the Senior Leadership and Directors
Deferred Compensation Plan effective August 1, 1994. A majority vote
by a quorum of stockholders is required to ratify and approve the
Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION
AND APPROVAL of the Senior Leadership and Directors Deferred
Compensation Plan.
AUDITORS
KPMG PEAT MARWICK, independent certified public accountants, have
served as the Company's public accountants for the fiscal year ended
December 31, 1994, and prior years, and have been selected to serve in
that capacity again for the fiscal year ending December 31, 1995.
Representatives of KPMG PEAT MARWICK, are expected to be present at
the meeting with the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate
questions.
NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS OF DIRECTORS
The Company's Restated Certificate of Incorporation establishes
an advance notice procedure with respect to the nomination of
directors, other than by or on behalf of the Board of Directors.
Under such nomination procedure, any stockholder of the Company who is
entitled to vote for the election of directors and who wishes to
nominate a candidate for election as a director must give advance
written notice to the Company of such nomination. Such notice must be
delivered or mailed by first class United States mail, postage
prepaid, to the Secretary of the Company, not fewer than 14 days nor
more than 60 days prior to any meeting of the stockholders called for
the election of directors. In the event that fewer than 21 days'
notice of the meeting is given to stockholders, such written notice
must be delivered or mailed in accordance with the preceding sentence
not later than the close of business on the 7th day following the day
on which notice of the meeting was mailed to the stockholders. Each
such notice must set forth (i) the name, age, business address and,
if known, residence address of each nominee proposed in the notice,
(ii) the principal occupation or employment of each such nominee, and
(iii) the number of shares of stock of the Company beneficially owned
by each such nominee and by the nominating stockholder. The chairman
of a meeting at which directors are to be elected may, if the facts so
warrant, determine that a nomination was not made in accordance with
the foregoing procedure, and, if he should so determine, he shall so
declare to the meeting and the defective nomination shall be
disregarded.
OTHER BUSINESS
Management does not intend to present, and does not have reason
to believe others will present, any items of business at the Annual
Meeting other than those mentioned in the Notice of the Meeting.
However, if any other matters are properly presented for a vote, the
proxies will be voted on such matters according to the judgment of the
persons named as proxies therein.
STOCKHOLDER PROPOSALS
Stockholders desiring to submit proposals to be voted upon by
stockholders at the 1996 Annual Meeting must submit their proposals to
the Company's Secretary no later than November 25, 1995.
BY ORDER OF THE BOARD OF DIRECTORS,
Michael J. Lester
Secretary
Dated: March 20, 1995
Appendix
Pursuant to paragraph 232.304(d) of Regulation S-T, Premier Financial Services,
Inc. is submitting on paper under cover of Form SE the performance graph which
is included in the Definitive Proxy dated March 20, 1995.
APPENDIX A
PREMIER FINANCIAL SERVICES, INC.
1995 NON-QUALIFIED STOCK OPTION PLAN
SECTION 1. Establishment. PREMIER FINANCIAL SERVICES, INC.
(the "Company"), a Delaware corporation, hereby establishes the
Premier Financial Services, Inc. 1995 Non-Qualified Stock Option
Plan (the "Plan") pursuant to which key employees of the Company
and its Subsidiaries may be granted options to purchase shares of
common stock of the Company, par value $5.00 per share ("Common
Stock").
SECTION 2. Purpose. The purpose of the Plan is to provide a
means whereby key employees of the Company or any Subsidiaries may
be given the opportunity to purchase stock of the Company through
options to acquire Common Stock. The Plan is intended to advance
the interests of the Company by encouraging stock ownership or
additional stock ownership by key employees of the Company or any
Subsidiary and to advance the interests of the Company by
strengthening its ability to hire and retain highly qualified
personnel, and to give such personnel added incentive to devote
themselves to the future success of the Company. Options granted
under this Plan ("Options") are not intended to qualify as
incentive stock options within the meaning of Section 422 of the
Internal Revenue Code.
SECTION 3. Eligibility. All key employees of the Company or
any of its Subsidiaries, who have substantial management
responsibilities and are employed at the time of the adoption of
this Plan or thereafter, shall be eligible to be granted Options to
purchase shares of Common Stock under this Plan. Whether a key
employee becomes an Optionee under this Plan shall be determined in
accordance with Section 6. A "Subsidiary" is any entity of which
the Company is the direct or indirect owner of not less than eighty
percent (80%) of all issued and outstanding equity interests.
SECTION 4. Number of Shares Covered by Options. The total
number of shares of Common Stock that may be issued and sold
pursuant to Options granted under this Plan initially shall be
200,000. The total number of shares of Common Stock that may be
available for Options under the Plan shall be adjusted on January
1 of each calendar year, within the Applicable Period (as defined
below), so that the total number of shares of Common Stock that may
be issued and sold under the Plan as of January 1 of each calendar
year within the Applicable Period shall be equal to four percent
(4%) of the outstanding shares of Common Stock of the Company on
such date; provided, however, that no such adjustment shall reduce
the total number of shares of Common Stock that may be issued and
sold under the Plan below 200,000. For purposes of the preceding
sentence, Applicable Period shall be the ten-year period commencing
on January 1, 1995 and ending on December 31, 2004. The Stock to
be optioned under the Plan may be either authorized and unissued
shares or issued shares that shall have been reacquired by the
Company. Such shares are subject to adjustment in accordance with
the Provisions of Section 8 hereof. The shares involved in the
unexercised portion of any terminated or expired Options under the
Plan may again be Optioned under the Plan.
SECTION 5. Administration. The Plan shall be administered by
the Compensation Committee of the Board of Directors of the Company
(the "Committee"). The Committee shall be comprised of two (2) or
more members of the Board. All members of the Committee shall
satisfy the "disinterested" administration requirements set forth
in Rule 16b-3 promulgated under the Securities Exchange Act of
1934, as amended (the "1934 Act"), or any successor rule or
regulation. If at any time any member of the Committee does not
satisfy such disinterested administration requirements, no Options
shall be granted under this Plan to any person until such time as
all members of the Committee satisfy such requirements. No person
who is an officer or employee of the Company or Subsidiary shall be
a member of the Committee.
No person other than members of the Committee, shall have any
authority concerning decisions regarding the Plan. Subject to the
express provisions of this Plan, the Committee shall have sole
discretion concerning all matters relating to the Plan and Options
granted hereunder. The Committee, in its sole discretion, shall
determine the key employees of the Company and its Subsidiaries to
whom, and the time or times at which Options will be granted, the
number of shares to be subject to each Option, the expiration date
of each Option, the time or times within which the Option may be
exercised, the cancellation of the Option (with the consent of the
holder thereof) and the other terms and conditions of the grant of
the Option. The terms and conditions of the Option need not be the
same with respect to each Optionee or with respect to each Option.
The Committee may, subject to the provisions of the Plan,
establish such rules and regulations as it deems necessary or
advisable for the proper administration of the Plan, an may make
determinations and may take such other action in connection with or
in relation to the Plan as it deems necessary or advisable. Each
determination or other action made and conditions of the Options
granted hereunder by the Committee shall be final and conclusive
for all purposes and upon all persons including, but without
limitation, the Company, its Subsidiaries, the Committee, the
Board, officers and the affected employees of the Company and/or
its Subsidiaries and their respective successors in interest.
SECTION 6. Granting of Options. Subject to the provisions of
this Plan, the Committee may, within ten years from the date this
Plan is adopted from time to time grant Options to any key employee
("Optionee") for such number of shares of Common Stock and upon
such terms and conditions as in the judgment of the Committee shall
be desirable. Nothing contained in this Plan shall be deemed to
give any employee any right to be granted an Option to purchase
shares of Common Stock except to the extent and upon such terms and
conditions as may be determined by the Committee.
SECTION 7. Terms of Options. Each option granted under this
Plan shall be evidenced by an agreement ("Stock Option Agreement")
that shall be executed by the President of the Company and by the
key employee to whom such options is granted, and shall be subject
to the following terms and condition:
(a) The price at which each share of Common Stock covered by
each Option may be purchased shall be determined in each case
on the date of the grant by the Committee but shall not be
less than the Fair Market Value of shares of Common Stock at
the time the Option is granted. For purposes of this Section,
the "Fair Market Value" of shares of Common Stock on the date
of grant shall be: (i) the average of the high and low sales
prices per share of Common Stock as reported on the National
Association of Securities Dealers Automated Quotation,
National Market System ("NASDAQ-NMS") on the date of the
grant; or (ii) if no sales are reported for such date, the
average bid and asked prices per share of Common Stock as
quoted on the NASDAQ-NMS on the date of grant, or as otherwise
determined by the Committee in its discretion.
(b) Except as otherwise provided in the Plan or in any Option
Agreement, the Optionee shall pay the purchase price of the
shares of Common Stock upon exercise of any Option: (i) in
cash; (ii) in cash received from a broker-dealer to whom the
Optionee has submitted an exercise notice consisting of a
fully endorsed Option (however, in the case of an Optionee
subject to Section 16 of the 1934 Act, this payment Option
shall only be available to the extent such insider complies
with Regulation T issued by the Federal Reserve Board);; (iii)
by delivering shares of Common Stock having an aggregate Fair
Market Value on the date of exercise equal to the Option
exercise price; (iv) by directing the Company to withhold such
number of shares of Common Stock otherwise issuable upon
exercise of such Option having an aggregate Fair Market Value
on the date of exercise of such Option exercise price; (v) by
such other medium of payment as the Committee, in its
discretion, shall authorize at the time of grant; or (vi) by
any combination of (i), (ii), (iii), (iv) and (v). In the
case of an election pursuant to (i) or (ii) above, cash shall
mean cash or a check issued by a federally insured bank or
savings and loan, and made payable to the Company. In the
case of payment pursuant to (ii), (iii), or (iv) above, the
Optionee's election must be made on or prior to the date of
exercise and shall be irrevocable. In the case of an Optionee
who is subject to Section 16 of the 1934 Act and who elects
payment pursuant to (iv) above, the election must be made in
writing either: (A) within the ten (10) business days
beginning on the third business day following release of the
Company's quarterly or annual summary of earnings and ending
on the twelfth business day following such day; or (B) at
least six (6) months prior to the date of exercise of such
Option. In lieu of a separate election governing each
exercise of an Option, an Optionee may file a blanket election
with the Committee which shall govern all future exercises of
Options until revoked by the Optionee. The Company shall
issue, in the name of the Optionee, stock certificates
representing the total number of shares of Common Stock
issuable pursuant to the exercise of any Option as soon as
reasonably practicable after such exercise, provided that any
shares of Common stock purchased by an Optionee through a
broker-dealer pursuant to clause (ii) above shall be delivered
to such broker-dealer in accordance with C.F.R. 220.3(e)(4) or
other applicable provision of law.
(c) Each Stock Option Agreement shall provide that such
Option may be exercised by the Optionee in such parts and at
such times as may be specified in such Agreement. Any Option
granted hereunder shall not expire not later than the first to
occur of the following:
(i) The expiration of ten years from the date such
Option is granted (hereinafter called the "Option
Period").
(ii) The expiration of three months after the date of
either: (A) the retirement of the Optionee under any
retirement plan of the Company or any Subsidiary; or (B)
the termination of employment of the Optionee with the
Company or any Subsidiary due to total and permanent
disability. The Committee of the Company may provide by
resolution, however, that any terms of this subparagraph
(ii) of paragraph (c) shall not apply to any Option or
portion of an Option.
(iii) The expiration of the period of six months after
the date of the Optionee's death.
(iv) The expiration of the Option Period, by the person
or persons entitled to do so under the Optionee's will,
or, if the Optionee shall fail to make testamentary
disposition of said Option, or shall die intestate, by
the Optionee's legal representative or representatives.
(v) The termination of employment of the Optionee with
the Company or any Subsidiary for a reason other than
those expressed in subparagraphs (ii) and (iii) of this
paragraph (c).
(d) Notwithstanding anything herein to the contrary, no
Option granted under the Plan prior to approval of the Plan by
stockholders may be exercised before such approval, and in the
event this Plan is disapproved by the stockholders, then any
Option granted hereunder shall become null and void.
(e) Each Option and right granted under this Plan shall by
its terms be nontransferable by the Optionee except to their
trust, by will or by laws of descent and distribution, or
pursuant to a qualified domestic relation order ( as defined
in the Employee Retirement Income Security Act of 1974, as
amended), and each Option or right shall be exercisable during
the Optionee's lifetime only by him. Notwithstanding the
preceding sentence, an Option Agreement may permit an
Optionee, at any time prior to his death, to assign all or any
portion of an option granted to him to: (i) his spouse or
lineal descendant; (ii) the trustee of a trust for the primary
benefit of his spouse or lineal descendant; or (iii) a
partnership of which his spouse and lineal descendants are the
only partners. In such event, the spouse, lineal descendant,
trustee or partnership will be entitled to all of the rights
of the Optionee with respect to the assigned portion of such
Option, and such portion of the Option will continue to be
subject to all of the terms, conditions and restrictions
applicable to the Option, as set forth herein and in the
related Option Agreement immediately prior to the effective
date of the assignment. Any such assignment will be permitted
only if: (i) the Optionee does not receive any consideration
therefore; and (ii) the assignment is expressly permitted by
the applicable Agreement as approved by the Committee. Any
such Agreement shall be evidenced by an appropriate written
document executed by the Optionee, and a copy thereof shall be
delivered to the Company on or prior to the effective date of
the assignment.
(f) The Stock Option Agreement entered into pursuant hereto
may contain such other terms, provisions, and conditions not
inconsistent herewith as shall be determined by the Committee
including, without limitation, provisions: (i) requiring the
giving of satisfactory assurances by the Optionee that the
shares are purchased for investment and not with a view to
resale in connection with the distribution of such shares, and
will not be transferred in violation of applicable securities
laws; (ii) restricting the transferability of such shares
during a specific period; and (iii) requiring the resale of
such shares to the Company at the Option price if the
employment of the Optionee terminates prior to a specified
time.
SECTION 8. Adjustment of Number of Shares. In the event that a
dividend shall be declared upon the shares of Common Stock payable
in shares of Common Stock, the number of shares of Common Stock
then subject to any Option granted hereunder and the number of
shares reserved for issuance pursuant to this Plan but not yet
covered by an Option, shall be adjusted by adding to each of such
shares the number of shares which would be distributable thereon if
such shares had been outstanding on the date fixed for determining
the stockholders entitled to receive such stock dividend. In the
event that the outstanding shares of Common Stock shall be changed
into or exchanged for a different number or kind of shares of stock
or other securities of the Company or of another corporation,
whether through reorganization, recapitalization, stock split-up,
combination of shares, merger or consolidation then there shall be
substituted for each share of Common Stock subject to any such
Option and for each share of Common Stock reserved for issuance
pursuant to the Plan but not yet covered by an Option, the number
and kind of shares of stock or other securities into which each
outstanding share of Common Stock shall be so changed or for which
each such share shall be exchanged; provided, however, that in the
event that such change or exchange results from a merger or
consolidation, and in the judgment of the Committee such
substitution cannot be effected or would be inappropriate, or if
the Company shall sell all or substantially all of its assets, the
Company shall use reasonable efforts to effect some other
adjustment of each then outstanding Option which the Committee, in
its sole discretion, shall deem equitable. In the event that there
shall be any change, other than as specified above in this Section
8, in the number of kind of outstanding shares of Common Stock,
then if the Committee shall determine that such change equitably
requires an adjustment in the number or kind of shares theretofore
reserved for issuance pursuant to the Plan but not yet covered by
an Option and of the shares of Common Stock then subject to an
Option or Options, such adjustments shall be made by the Committee
and shall be effective and binding for all purposes of this Plan
and of each Stock Option Agreement. In the case of any such
substitution or adjustment as provided for in this Section, the
Option price in each Stock Option Agreement for each share covered
thereby prior to such substitution or adjustment will be the Option
price for all shares of stock or other securities which shall have
been substituted for such shares or to which such shares shall have
been adjusted pursuant to this Section. No adjustment or
substitution provided for in this Section 8 shall require the
Company, in any Stock Option Agreement, to sell a fractional share,
and the total substitution or adjustment with respect to each Stock
Option Agreement shall be limited accordingly.
SECTION 9. Amendments. This Plan may be terminated or amended
from time to time by vote of the Board of Directors, without the
approval of the stockholders of the Company to the extent allowed
by law; provided, however, that no Plan amendment shall be
effective until approved by the stockholders of the Company insofar
as stockholder approval thereof is required in order for the Plan
to continue to satisfy the requirements of Rule 16b-3 under the
1934 Act.
No amendment or termination of the Plan shall in any manner
affect any Option theretofore granted without the consent of the
Optionee, except that the Board of Directors may amend the Plan in
a manner that does not affect Options thereforeto granted upon a
finding by the Board of Directors that such amendment is in the
best interest of holders of outstanding Options affected thereby.
SECTION 10. Change in Control. Notwithstanding the provisions of
the Plan or any Option Agreement evidencing Options granted
hereunder upon a Change in Control of the Company (as defined
below) all outstanding Options shall become fully exercisable and
all restrictions thereon shall terminate in order that Optionees
may fully realize the benefits thereunder. Further, in addition to
the Committee's authority set forth in Section 5, the Committee, as
constituted before such Change in Control, is authorized, and has
sole discretion, as to any Option, either at the time such Option
is granted hereunder or any time thereafter, to take any one or
more of the following actions: (a) provide for the purchase of any
such Option, upon the Optionee's request, for an amount of cash
equal to the difference between the exercise price and the then
Fair Market Value of the Common Stock covered thereby had such
Option been currently exercisable; (b) make such adjustment to any
such Option then outstanding as the Committee deems appropriate to
reflect such Change in Control; and (c) cause any such Option then
outstanding to be assumed, by the acquiring or surviving
corporation, after such Change in Control.
For purposes of this Plan, a "Change in Control" of the
Company shall be deemed to have occurred if or upon:
(a) The direct or indirect acquisition by a person,
corporation or other entity or group (within the meaning of
Section 13(d)(3) of the 1934 Act, and the rules and
regulations thereunder) thereof (an "Acquirer"), of the
beneficial ownership (within the meaning of Section 13(d)(1)
of the 1934 Act and the rules and regulation thereunder) of
shares of the Company which shall result in the Acquirer
having more than 20% of the votes that are entitled to be cast
at meetings of stockholders of the Company; or
(b) Continuing Directors cease to comprise a majority of the
Board of Directors of the Company (the "Board"), for which
purpose a "Continuing Director" shall mean (i) any individual
who is (or was) a member of the Board on (or prior to) January
1, 1995, and (ii) any individual who thereafter becomes a
member of the Board (A) who is not an Acquirer described in
clause (i) above or an affiliate or associate or
representative of such Acquirer, and (B) whose nomination for
election or election, to the Board is recommended or approved
by resolution of a majority of the Continuing Directors then
members of the Board, or who was included as a nominee in a
proxy statement of the Company distributed when a majority of
the Board consists of Continuing Directors.
The Board of Directors may otherwise accelerate the Commencement
Date for the Exercise Period (as such terms are defined in the
applicable Option Agreement) of an Option or any part thereof at
such other times or upon such other occasions, including, but not
limited to, anticipation of an event described in Section 6 of the
Plan, as the Board of Directors in its sole discretion determines
is appropriate.
SECTION 11. Effective Date. The Plan was adopted by the Board of
Directors of the Company on January 26, 1995, and authorized for
submission to the stockholders of the Company. If the Plan is
approved by the affirmative vote of a majority of the shares of the
voting stock of the Company entitled to be voted by the holders of
stock represented at a duly held stockholders' meeting, it shall be
deemed to have become effective as of January 26, 1995. Options
may be granted under the Plan prior, but subject to, approval of
the Plan by stockholders of the Company and, in each case, the date
of grant shall be determined without reference to the date of
approval of the Plan by the stockholders of the Company.
SECTION 12. Termination. The Plan shall terminate as of December
31, 2004; provided, however, that the Board of Directors may
terminate the Plan at any time prior thereto. Termination of the
Plan shall not impair any of the rights or obligations under any
Option granted under the Plan without the consent of the Optionee.
SECTION 13. Employment Status. The transfer of employment from
the Company to a Subsidiary of the Company, or from a Subsidiary to
the Company, or from a Subsidiary to another Subsidiary, shall not
constitute a termination of employment for the purpose of the Plan.
Options granted under the Plan shall not be effected by any change
of status in connection with the employment of the Optionee or by
leave of absence authorized by the Company or a Subsidiary.
SECTION 14. Proceeds from Sale of Stock. Proceeds from the sale
of Common Stock issued upon the exercise of Options granted
pursuant to the Plan shall be added to the general funds of the
Company.
SECTION 15. Exemption from Liability. The members of the
Committee and of the Board of Directors of the Company and each of
them, shall be free from all liability, joint or several, for their
acts, omissions and conduct, and for the acts, omissions and
conduct of their duly constituted agents, in carrying out the
responsibilities of said Board of Directors under the Plan, and the
Company shall indemnify and save them and each of them harmless
from the effects and consequences of their acts, omissions and
conduct in their official capacity, except to the extent that such
effects and consequences shall result from their own willful
misconduct.
No member of the Committee shall, in the absence of bad faith,
be liable for any act or omission with respect to service on the
Committee. Service on the Committee shall constitute as a Director
of the Company so that members of the Committee shall be entitled
to indemnification pursuant to the Company's Certificate of
Incorporation and By-Laws.
SECTION 16. Right to Repurchase. In the event a person who has
acquired Common Stock pursuant to an Option granted under the Plan
offers to sell shares of such Stock, the Company shall have the
first right of purchase. Such person shall make a written offer to
the Company and the Company shall have first right of purchase, and
if it exercises this right, and long as its stock is traded over-
the-counter, the amount payable for each share of Common Stock
shall be the mean bid and ask prices as of the most recently
published quotation of the bid and ask prices prior to the date of
offer to sell as such published quotation is evidenced in the
Midwest Edition of The Wall Street Journal for such Stock. If the
Company wishes to exercise its right to purchase, the Company must
express its decision in a written statement signed by an official
representative of the Company and the statement must be delivered
to the person offering the Common Stock within two regular business
days from the date the person offers to sell the Stock.
SECTION 17. Governing Laws. The Plan shall be construed,
administered and governed in all respects under and by the Laws of
the State of Illinois. Each Option Agreement granted under the
Plan shall be construed, administered and governed in all respects
under and by the laws of the State of Illinois.
SECTION 18. Adoption by Subsidiaries. Any Subsidiary of the
Company may adopt the Plan by means of a resolution of such
Subsidiary's board of directors for the benefit of its key
employees; provided, however, such adoption must have prior
approval of the Board of Directors of the Company as evidenced by
a resolution of the Board.
SECTION 19. Taxes. At the time of exercise of any Option, as a
condition of the exercise of such Option, the Company may require
the Optionee to pay the Company an amount equal to the amount of
tax the Company or any Subsidiary may be required to withhold to
obtain a deduction for federal and state income tax purposes as a
result of the exercise of such Option by the Optionee or to comply
with applicable law.
APPENDIX B
PREMIER FINANCIAL SERVICES, INC.
SENIOR LEADERSHIP AND DIRECTORS DEFERRED COMPENSATION PLAN
The Premier Financial Services, Inc. Senior Leadership and
Directors Deferred Compensation Plan was established effective August 1,
1994, for the Senior Leadership Employees and members of the Board of
Directors of Premier Financial Services, Inc. The purpose of the Plan
is to permit Senior Leadership Employees and Directors to contribute a
portion of their Compensation on a pre-tax basis toward retirement
benefits, enhance the overall effectiveness of the Premier Financial
Services, Inc. executive compensation program and to attract, retain and
motivate such individuals.
Accordingly, Premier Financial Services, Inc. hereby adopts the
Plan pursuant to the terms and provisions set forth below:
Section 1. Definitions
Wherever used herein the following terms shall have the meanings
hereinafter set forth:
1.1 "Account" or "Accounts" means the account or accounts maintained
under the Plan by the Company in the Participant's name, including the
Participant's Employer Contribution Account and Compensation Deferral
Account.
1.2 "Board" means the Board of Directors of the Company.
1.3 "Bonus" means the additional cash remuneration payable to a
Participant annually pursuant to an Employer's performance compensation
program or any other plan, program or arrangement under which an
Employer pays an amount of cash remuneration to a Participant above such
Participant's Base Salary.
1.4 "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any regulations relating thereto.
1.5 "Company" means Premier Financial Services, Inc., a Delaware
corporation, or, to the extent provided in Section 6.8 below, any
successor corporation or other entity resulting from a merger or
consolidation into or with the Company or a transfer or sale of
substantially all of the assets of the Company.
1.6 "Company Stock" means the common stock of the Company.
1.7 "Compensation" means a Participant's Salary, Bonus or Directors
Fees payable in any calendar year. Compensation deferrals elected under
this Plan shall not effect the determination of compensation or earnings
for purposes of any other plan, policy or program (including, but not
limited to, the Qualified Savings Plan and any other nonqualified plan)
maintained by an Employer.
1.8 "Compensation Deferral Account" means the account or accounts
maintained under the Plan by the Company in the Participant's name to
which the Participant's Deferral Contributions are credited in
accordance with the Plan. A Participant shall be fully vested in the
amount in his Compensation Deferral Account at all times.
1.9 "Compensation Deferral Contribution" means the amount of
Compensation a Participant elects to defer under Section 2.1 of the
Plan.
1.10 "Director" means an individual who is a member of the Board.
1.11 "Director's Fees" means the annual and periodic fees paid to the
Director by the Company for service on the Board.
1.12 "Disability" means a Participant is permanently and totally
disabled as determined in the sole discretion of the Company.
1.13 "Employer" means the Company and any Affiliated Company that
adopts the Plan with the Company's consent. "Affiliated Company" means
a business entity that is a member of a controlled group of corporations
(as such term is defined in the Code) that includes the Company. An
Affiliated Company may adopt the Plan on behalf of its Senior Leadership
Employees, by resolution of its Board of Directors, approved in writing
by the Company.
1.14 "Employer Contribution Account" means the account or accounts
maintained under the Plan by the Company in the Participant's name to
which Employer Matching Contributions are credited in accordance with
the Plan.
1.15 "Employer Matching Contribution" means the contribution made by
each Employer under the Plan based on a Participant's Compensation
Deferral Contributions, according to Section 2.2 of the Plan.
1.16 "Employment Termination" means the date of (i) a Senior Leadership
Employee's termination of employment with the Employer; or (ii) a
Director's termination of service on the Board, and shall include such
termination for any reason, unless expressly indicated otherwise.
1.17 "Participant" means a Senior Leadership Employee of an Employer
who is eligible for participation pursuant to Section 1.23 or a Director
who has completed the election and enrollment form provided by the
Company. A Participant who is demoted out of a covered salary tier will
continue as a Participant as to his existing Accounts, but shall not be
eligible to make further Compensation Deferral Contributions or receive
Employer Matching Contributions.
1.18 "Plan" means the Premier Financial Services, Inc. Senior
Leadership and Director's Deferred Compensation Plan, as set forth
herein and as hereinafter amended from time to time.
1.19 "Plan Year" means the calendar year, which is the Company's fiscal
year; except that, the period from the August 1, 1994 effective date of
the Plan to December 31, 1994, shall be a short Plan Year.
1.20 "Qualified Savings Plan" means the Premier Financial Services,
Inc. Employee Savings and Stock Plan and Trust, as amended from time to
time, and each successor or replacement plan.
1.21 "Retirement Date" means the first day of the calendar month
coincident with or next following the date on which a Participant has:
(i) attained age 55 years and completed at least 10 Years of Service; or
(ii) attained age 60 years.
1.22 "Salary" means a Participant's annual base salary rate for the
Plan Year, as specified by an Employer prior to each Plan Year, but
including a Participant's variable compensation.
1.23 "Senior Leadership Employee" means each executive employee of the
Company designated as a Senior Leadership Employee by the Chief
Executive Officer and approved by the Board.
1.24 "Trust" means the trust agreement entered into by the Company
under which the Employers agree to contribute to a Trust for the purpose
of accumulating assets to assist the Employers in fulfilling their
obligations to Participants hereunder. Such Trust Agreement shall be
substantially in the form of the model trust agreement set forth in
Internal Revenue Service Revenue Procedure 92-64, or any subsequent
Internal Revenue Service Revenue Procedure, and shall include provisions
required in such model trust agreement that all assets of the Trust
shall be subject to the creditors of the Employers in the event of
insolvency.
1.25 "Years of Service" means the number of consecutive 12-month
periods of the Participant's employment with an Employer (including
years of employment prior to the date on which an Employer became an
Affiliated Company). No credit shall be given for partial years of
employment or periods of employment preceding an Employment Termination
and return to work.
1.26 Words in the masculine gender shall include the feminine and the
singular shall include the plural, and vice versa, unless qualified by
the context. Any headings used herein are included for ease of
reference only and are not to be construed so as to alter the terms
hereof.
Section 2. Compensation Deferral Contributions and
Employer Matching Contributions
2.1 Compensation Deferral Elections. Any Senior Leadership Employee
or Director may elect to become a Participant under the Plan by
completing the election form provided by the Company. A Participant may
elect to defer annually the receipt of a portion of the Compensation
otherwise payable to him by an Employer in any Plan Year. The amount of
Compensation deferred by a Participant shall be a fixed amount or
percentage of such Compensation, but shall not exceed: (i) twenty
percent (20%) of such Participant's Base Salary; (ii) fifty percent
(50%) of such Participant's Annual Bonus; (iii) and one hundred percent
(100%) of such Participant's Director's Fees.
The election by which a Participant elects to defer compensation as
provided in this Plan shall be in writing, signed by the Participant,
and delivered to the Company prior to January 1 of the Plan Year in
which the Compensation to be deferred is otherwise payable to the
Participant; except that:
(a) in the year in which the Plan is initially implemented,
a Participant may make an election to defer Compensation for services to
be performed subsequent to the election and within 30 days after the
Plan is effective; and
(b) in the year in which a Participant first becomes eligible
to participate in the Plan, such Participant may make an election to
defer Compensation for services to be performed within 30 days after the
date he becomes eligible.
Any deferral election made by the Participant shall be irrevocable with
respect to the Compensation covered by such election.
2.2 Employer Matching Contributions. Each Employer shall make a
matching contribution on behalf of Participants in its employ who have
elected to make Compensation Deferral Contributions. The Company shall
make a matching contribution on behalf of Participants who are Directors
and who elect to make Compensation Deferral Contributions. The amount
of Employer Matching Contributions made on behalf of each Participant
shall equal twenty-five percent (25%) of such Participants Compensation
Deferral Contributions made under this Plan. Employer Matching
Contributions required under this Section shall be made monthly.
2.3 Investment of Participant's Accounts. Participant's
Compensation Deferral Contributions and Employer Matching Contributions
shall be contributed by the Employers to, and held and invested under,
the Trust. Participants' Compensation Deferral Accounts and Employer
Contribution Accounts and other assets of the Trust shall be invested in
shares of Company Stock, except that excess amounts that are
insufficient to purchase shares of Company Stock may be held in cash
until such amounts are sufficient to purchase Company Stock.
All Compensation Deferral and Employer Matching Contributions shall
be credited to a Participant's Accounts and invested in shares of
Company Stock as of the last day of the month during which the
Compensation amounts would have been paid to the Participant, if not
deferred. Any amount of Company Stock held in a Participant's Account
that is forfeited according to Sections 2.4, 2.5, 3.5 or 3.6 shall be
applied toward Employer Matching Contributions required for that month
under Section 2.2 and this Section.
The trustee under the Trust shall purchase shares of Company Stock
in the market on or as soon as practical after the date it receives
Participants' Compensation Deferral Contributions and Employer Matching
Contributions. The Company may, in its discretion contribute Company
Stock to the Trust in an amount equal to the Participants' Compensation
Deferral Contributions and Employer Matching Contributions for the
month, valued as of the date of such contribution by the Company.
Dividends on shares of Company Stock held in Participants' Accounts
shall be credited to such Accounts. Cash dividends shall be reinvested
in Company Stock as soon as practicable.
Participants' Compensation Deferral Accounts and Employer Matching
Contribution Accounts shall be invested in shares of Company Stock until
such amounts are distributed to the Participant after the Participant's
Employment Termination. The Company shall provide each Participant with
a written statement of his Accounts at least annually.
2.4 Vesting of Participants' Accounts. A Participant shall be
fully vested in the amount of his Compensation Deferral Account at all
times. A Participant shall be vested in the amount of Employer Matching
Contributions made on his behalf in any Plan Year on the date that is
the earlier of (i) the last day of the Plan Year that begins three years
after the end of the Plan Year in which such Employer Matching
Contributions were made (e.g., vesting on December 31, 1997 for Employer
Matching Contributions made in 1994); (ii) the date of the Participant's
Employment Termination on account of death or Disability; or (iii) the
Participant's Retirement Date.
A Participant whose Employment Termination occurs prior to his
Retirement Date and for a reason other than death or Disability, shall
forfeit the amount of Company Stock attributable to any Employer
Matching Contributions in his Employer Contribution Account that is not
vested. A Participant covered by Section 2.5 below shall forfeit all
Company Stock attributable to Employer Matching Contributions in his
Employer Contribution Account.
2.5 Forfeiture Due to Competition or Confidentiality Breach. A
Senior Leadership Employee may not, except with the express prior
written consent of the Company, for a period of two (2) years after the
Employee's Employment Termination (the "Restrictive Period"), directly
or indirectly compete with the business of the Employers, including, but
not by way of limitation, by directly or indirectly owning, managing,
operating, controlling, financing, or by directly or indirectly serving
as an employee, officer, or director of or consultant to, or by
soliciting or inducing, or attempting to solicit or induce, any employee
or agent of an Employer to terminate employment with the Employer, and
become employed by any person, firm, partnership, corporation, trust or
other entity which owns or operates, a bank, savings and loan
association, credit union or similar financial institution (a "Financial
Institution") within a twenty-five (25) mile radius of (i) an Employer's
main office or (ii) the office of any Employer's Affiliated Companies
(the "Restrictive Covenant"). The foregoing Restrictive Covenant shall
not prohibit a Senior Leadership Employee from owning directly or
indirectly capital stock or similar securities which are listed on a
securities exchange or quoted on the National Association of Securities
Dealers Automated Quotation System which do not represent more than one
percent (1%) of the outstanding capital stock of any Financial
Institution.
At all times during and after employment with an Employer or
service on the Board, a Participant shall keep secret and inviolate all
knowledge or information of a confidential nature relating to the
business and financial affairs of the Employers, including, without
limitation, all unpublished matters relating to the business,
properties, accounts, books, records, customers, trade secrets, and
contracts of the Employers (the "Confidentiality Clause").
If a Participant violates the Restrictive Covenant or the
Confidentiality Clause all amounts in the Participant's Employer
Contribution Accounts shall be forfeited; except that this Section 2.5
shall become ineffective upon a Change in Control of the Company.
2.6 Full Vesting Upon Change in Control. A Participant shall
become fully vested in all Employer Matching Contributions made on his
behalf in any Plan Year upon the occurrence of a Change in Control of
the Company. For purposes of this Plan, a "Change in Control" of the
Company shall be deemed to have occurred if:
(a) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act, except
that a person shall be deemed the "beneficial owner" of all shares
that any such person has the right to acquire pursuant to any
agreement or arrangement or upon exercise of conversion rights,
warrants, options or otherwise, without regard to the sixty day
period referred to in such Rule), directly or indirectly, of
securities representing 25% or more of the combined voting power of
the Company's then outstanding securities; provided, however, that
the following acquisitions shall not constitute a Change in
Control: (i) any acquisition directly from the Company; (ii) any
acquisition by the Company; or (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by
the Company; or
(b) at any time during any period of two consecutive years
(not including any period prior to January 1, 1994) individuals who
at the beginning of such period constituted the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to such date whose election, or
nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election
contest (as such terms are used in Rule 14a-11 or Regulation 14A
promulgated under the Exchange Act) or other actual or threatened
solicitation or proxies or consents by or on behalf of a person
other than the Board.
2.7 Cessation of Deferrals. All Compensation Deferral
Contributions and Employer Matching Contributions shall cease upon a
Participant's Employment Termination.
Section 3. Distribution of Participants' Accounts
3.1 Distribution of Participants' Accounts. Upon a Participant's
Employment Termination, the Participant's Compensation Deferral Accounts
and the vested portion of the Participant's Employer Contribution
Accounts shall be distributed to the Participant, in accordance with
Section 3.2 and 3.3 below. A Participant's Accounts shall be
distributed in cash or Company Stock, at the discretion of the Company.
3.2 Form of Distribution. Each Participant shall elect the form
and timing of the distribution of his Accounts, at the time the
Participant elects Compensation Deferral Contributions under Section 2.1
above. The Participant may elect to have his Accounts distributed as
follows:
(a) in a lump sum distribution; or
(b) in substantially equal monthly installment payments over
a fixed period of 5, 10 or 15 years
Notwithstanding the foregoing, if the value of the Participant's
Accounts is less than $5,000 at any time after the Participant's
Employment Termination, such Accounts shall be distributed to the
Participant (or the Participant's beneficiary) in a single lump sum, as
soon as practicable. If the Participant fails to elect a form or period
of distribution, the Participant's Accounts will be paid in a manner
selected by the Company.
3.3 Commencement of Distribution. Each Participant shall elect,
at the time of his election to make Compensation Deferral Contributions,
the commencement date for distribution of such Contributions (and any
Employer Matching Contributions attributable thereto), as of one of the
following dates: (i) within 60 days after the Participant's Employment
Termination; (ii) on the January 1 next following the Participant's
Employment Termination; or (iii) on a date that is a specified number of
years after the Participant's Employment Termination, but no later than
the earlier of (A) ten years after the Participant's Employment
Termination, or (B) the date the Participant attains age 70 years.
3.4 Distribution Due to Death. If a Participant dies before
complete distribution of his Accounts, any remaining amount in the
Participant's Accounts shall be distributed to the beneficiary
designated by the Participant in the form and period elected by the
Participant; except that, if the amount in the Participant's Accounts as
of the date of the Participant's death is $10,000 or less, such amount
shall be paid to the designated beneficiary in a single lump sum
payment. If a Participant has not designated a beneficiary under the
Plan, or if no designated beneficiary is living on the date of
distribution hereunder, amounts distributable pursuant to this Section
shall be distributed to those persons or entities entitled to receive
distributions of the Participant's accounts under the Qualified Savings
Plan.
3.5 Change in Distribution Election. The Company may permit a
Participant to change his election as to form, period or commencement of
distribution of his Accounts. A Participant may request such a change
by writing filed with the Company. In the event a Participant changes
his election as to form, period or commencement of distribution within
18 months prior to his Retirement Date or other Employment Termination
for a reason other than death or Disability, the amount distributable
from such Participant's Accounts will be reduced by 10 percent. This
reduction will be forfeited. This reduction is intended to discourage
Participants from changing their elections as to distribution and
prevent Participants from being in constructive receipt of their
Accounts upon their Employment Termination.
3.6 Unscheduled Withdrawal Right. A participant may request an
unscheduled withdrawal of all or any portion of his Accounts (to the
extent vested) before or after his Employment Termination by written
notice to the Company; provided that, the amount distributable from such
Participant's Accounts will be reduced by 10 percent. This reduction
will be forfeited. If a Participant elects an unscheduled withdrawal
under this Section prior to Employment Termination, the Participant
would not be permitted to elect Compensation Deferral Contributions for
a period of thirty-six months following the date of such withdrawal.
This reduction and ineligibility period is intended to discourage
Participants from requesting withdrawals (other than on account of an
unforeseeable emergency) and prevent Participants from being deemed in
constructive receipt of their Accounts.
3.7 Hardship Distribution. A Participant may request, by writing
filed with the Company, that a distribution be made to him of all or
part of the amount then credited to his Accounts (to the extent vested)
on account of a severe financial hardship. The Company will approve
such a distribution to the Participant only in the event of an
unforeseeable emergency. An "unforeseeable emergency" is an
unanticipated emergency that is caused by an event beyond the control of
the Participant and that would result in severe financial hardship to
such Participant if early withdrawal were not permitted. An
unforeseeable emergency that results in severe financial hardship is an
unexpected illness or accident of the Participant or a dependent, loss
of a Participant's property due to casualty, or other similar,
extraordinary unforeseeable circumstances beyond the control of the
Participant. The severe financial hardship may not be relieved by an
early distribution under this Plan to the extent it might otherwise be
relieved through reimbursement or compensation by insurance or
otherwise, by liquidation of a Participant's assets, or by cessation of
Compensation deferrals under the Plan. Any hardship distribution under
this Section will be limited to the amount necessary to meet the
emergency.
3.8 Limitation on Distribution. Notwithstanding the foregoing
provisions of the Plan relating to distribution of Participant's
Accounts, if distribution of a Participant's Accounts in any calendar
year would not be deductible by an Employer because of the limitations
of Code Section 162(m), such distribution shall be postponed in whole or
in part, in the sole discretion of the Company, until the first calendar
year in which such distribution would not be limited as to deductibility
by Code Section 162(m).
Section 4. Administration of the Plan
4.1 Administration by the Company. The Company shall be
responsible for the general operation and administration of the Plan and
for carrying out the provisions thereof.
4.2 Power and Duties of Company. The Company shall administer the
Plan in accordance with its terms and shall have all powers necessary to
carry out the provisions of the Plan. The Company shall interpret the
Plan and shall determine all questions arising in the administration,
interpretation, and application of the Plan, including but not limited
to, questions of eligibility and the status and rights of employees,
Participants and other persons. Any such determination by the Company
shall be conclusive and binding on all persons. The regularly kept
records of the Company shall be conclusive and binding upon all persons
with respect to a Participant's date and length of employment, Years of
Service, time and amount of Compensation and the manner of payment
thereof, type and length of any absence from work and all other matters
contained therein relating to Participants. To the extent not
inconsistent with this Plan, all terms and provisions set forth in the
Qualified Savings Plan with respect to the administrative powers and
duties of the Company, expenses of administration, and procedures for
filing claims, also shall be applicable with respect to this Plan.
Section 5. Amendment or Termination
5.1 Amendment or Termination. The Company intends the Plan to be
permanent but reserves the right to amend or terminate the Plan, or
terminate the Plan as it applies to any Employer. Any such amendment or
termination shall be made pursuant to a written resolution of the Board
and shall be effective as of the date of such resolution.
5.2 Effect of Amendment or Termination. No amendment or
termination of the Plan shall divest any Participant or beneficiary of
the amount in the Participant's Accounts, or of any rights to which the
Participant would have been entitled if the Plan had been terminated
immediately prior to the effective date of such amendment or
termination. Upon termination of the Plan, all Participants shall
become fully vested in the amounts in their Accounts and distribution of
Participants' Accounts shall be made to Participants, unless the Company
determines to distribute all Accounts in lump sums. No Compensation
Deferral or Employer Matching Contributions shall be permitted after
termination of the Plan.
Section 6. General Provisions
6.1 Participant's Rights Unsecured. Except as set forth in
Section 2.3, the Plan at all times shall be entirely unfunded and no
provisions shall at any time be made with respect to segregating any
assets of an Employer for payment of any benefits hereunder. The right
of a Participant of the Participant's beneficiary to receive a
distribution of the Participant's Accounts hereunder shall be an
unsecured claim against the general assets of the Employers, and neither
the Participant nor a beneficiary shall have any rights in or against
any specific assets of the Employers.
6.2 General Conditions. Any benefit payable under the Qualified
Savings Plan shall be paid solely in accordance with the terms and
conditions of the Qualified Savings Plan, and nothing in this Plan shall
operate or be construed in any way to modify, amend or affect the terms
and provisions of the Qualified Savings Plan.
6.3 No Guaranty of Benefits. Nothing contained in the Plan shall
constitute a guaranty by the Employers or any other person or entity
that the assets of the Employers will be sufficient to pay any benefit
hereunder. No Participant or other person shall have any right to
receive a benefit or a distribution of Accounts under the Plan except in
accordance with the terms of the Plan.
6.4 No Enlargement of Employee Rights. Establishment of the Plan
shall not be construed to give any Participant the right to be retained
in the service of an Employer.
6.5 Spendthrift Provision. No interest of any person or entity
in, or right to receive a distribution under, the Plan shall be subject
in any manner to sale, transfer, assignment, pledge, attachment,
garnishment, or other alienation or encumbrance of any kind; nor may
such interest or right to receive a distribution be taken, either
voluntarily or involuntarily for the satisfaction of the debts of, or
other obligations or claims against, such person or entity, including
claims for alimony, support, separate maintenance and claims in
bankruptcy proceedings.
6.6 Applicable Law. The Plan shall be construed and administered
under the laws of the State of Illinois except to the extent preempted
by federal law.
6.7 Incapacity of Recipient. Subject to applicable law, if any
person entitled to a payment under the Plan is deemed by the Company to
be incapable of personally receiving and giving a valid receipt for such
payment, then, unless and until claim therefor shall have been made by
a duly appointed guardian or other legal representative of such person,
the Company may provide for such payment or any part thereof to be made
to any other person or institution then contributing toward or providing
for the care and maintenance of such person. Any such payment shall be
a payment for the account of such person and a complete discharge of any
liability of the Company and the Plan therefor.
6.8 Corporate Successors. The Plan shall not be automatically
terminated by a transfer or sale of assets of the Company, or by the
merger or consolidation of the Company into or with any other
corporation or other entity, but the Plan shall be continued after such
sale, merger or consolidation only if and to the extent that the
transferee, purchaser or successor entity agrees to continue the Plan.
In the event that the Plan is not continued by the transferee, purchaser
or successor entity, the Plan shall terminate subject to the provisions
of Section 5.2.
6.9 Unclaimed Benefit. Each Participant or beneficiary shall keep
the Company informed of his or her current address. The Company shall
not be obligated to search for the whereabouts of any person. If the
location of a Participant is not made known to the Company within three
years after the date on which payment of the Participant's benefits
under the Plan may first be made, payment may be made as though the
Participant had died at the end of the three-year period. If, within
one additional year after such three-year period has elapsed, or, within
three years of the actual death of a Participant, the Company is unable
to locate any beneficiary of the Participant, then the Company shall
have no further obligation to pay any benefit hereunder to such
Participant or beneficiary or any other person and such benefit shall be
irrevocably forfeited.
6.10 Limitations on Liability. Notwithstanding any of the
preceding provisions of the Plan, none of the Employers nor any
individual acting as an employee or agent of an Employer, shall be
liable to any Participant, former Participant or any beneficiary or
other person for any claim, loss, liability or expense incurred in
connection with the Plan.
6.11 Claims Procedure. In the event that a Participant's claim
for benefits under the Plan is denied in whole or in part by the
Company, the Company will notify the Participant (or beneficiary) of the
denial. Such notification will be made in writing, within 90 days of
the date the claim is received by the Company. The notification will
include: (i) the specific reasons for the denial; (ii) specific
reference to the Plan provisions upon which the denial is based; (iii)
a description of any additional information necessary for the claimant
to perfect the claim and an explanation of why such material or
information is necessary; and (iv) an explanation of the applicable
review procedures.
The Participant (or beneficiary) has 60 days from the date he
receives notice of a claim denial to file a written request for review
of the denial with the Company. The Company will review the claim
denial and inform the Participant (or beneficiary) in writing of its
decision within 60 days of the date the claim review request is received
by the Company. This decision will be final.