<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
AMCORE FINANCIAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
AMCORE LOGO
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 4, 1999
TO THE STOCKHOLDERS OF AMCORE FINANCIAL, INC.:
The Annual Meeting of Stockholders of AMCORE Financial, Inc., a Nevada
corporation, will be held at Cliffbreakers, 700 West Riverside Boulevard,
Rockford, Illinois on May 4, 1999, at 5:30 p.m., Rockford time, for the
following purposes:
1. To elect four directors;
2. To ratify the appointment of KPMG Peat Marwick, LLP as auditors;
3. To approve the AMCORE Stock Option Advantage Plan, as set forth in
Exhibit A of the Proxy Statement appended to this Notice; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 15, 1999 are
entitled to notice of and to vote at the meeting or any adjournment of the
meeting.
Stockholders are cordially invited to attend the Annual Meeting. However,
whether or not you expect to be present in person at the Annual Meeting, you are
requested to SIGN, DATE AND RETURN THE ENCLOSED PROXY in the enclosed addressed
envelope. The proxy may be revoked at any time before it is voted, provided that
written notice thereof has been given to the Secretary of the Company. If you
are present at the meeting, you may vote your shares in person and the proxy
will not be used.
For further information concerning individuals nominated as directors, the
appointment of KPMG Peat Marwick, LLP as auditors, approval of the Stock Option
Advantage Plan, and the use of the proxy, you are respectfully urged to read
the Proxy Statement on the following pages.
By order of the Board of Directors,
/s/ James S. Waddell
James S. Waddell
Secretary
March 25, 1999
Rockford, Illinois
<PAGE> 3
AMCORE FINANCIAL, INC.
501 SEVENTH STREET
ROCKFORD, ILLINOIS 61104
MARCH 25, 1999
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies to be voted at the Annual Meeting of Stockholders of AMCORE Financial,
Inc. (Company), a Nevada corporation, to be held on May 4, 1999 at 5:30 p.m.,
Rockford time, at Cliffbreakers, 700 West Riverside Boulevard, Rockford,
Illinois and any adjournment thereof, and further to inform the stockholders
concerning the use of the proxy and the business to be transacted at the
meeting.
The enclosed proxy is solicited by the Board of Directors of the Company.
The proxy may be revoked at any time before it is voted. Proxies may be revoked
by filing written notice of revocation with the Secretary of the Company before
the meeting or by attending the meeting and voting in person. The items
enumerated herein constitute the only business which the Board of Directors
intends to present or is informed that others will present at the meeting. The
proxy does, however, confer discretionary authority upon the persons named
therein, or their substitutes, with respect to any other business which may
properly come before the meeting. Stockholders are entitled to one vote for each
share. Only stockholders of record at the close of business on March 15, 1999
are entitled to notice of and to vote at the meeting.
Pursuant to the Bylaws of the Company, a majority of the outstanding shares
of the Company entitled to vote, represented in person or by proxy, shall
constitute a quorum at the meeting. Directors shall be elected by a plurality of
the votes cast in the election of directors. Any action to be taken by a vote of
the stockholders, other than the election of directors, must be authorized by a
majority of the votes cast at a meeting of stockholders by the holders of shares
entitled to vote thereon. Under applicable Nevada law, in tabulating the vote,
broker non-votes will be disregarded and will have no effect on the outcome of
the vote.
The expenses in connection with the solicitation of proxies will be borne
by the Company. Solicitation will be made by mail, but may in some cases also be
made by telephone or personal call by officers, directors or regular employees
of the Company who will not be specially compensated for such solicitation. This
proxy statement and the accompanying proxy are first being mailed or delivered
to stockholders on or about March 25, 1999.
ITEM 1 -- ELECTION OF DIRECTORS
In the election of the Board of Directors, stockholders are entitled to one
vote for each common share owned by them for each of the four nominees. They may
not cumulate their votes. As of March 15, 1999, the Company had outstanding
shares of common stock.
There are four Class I directors to be elected at the 1999 Annual Meeting.
Proxy votes not limited to the contrary will be cast for the election of
the nominees named below, but should any of such individuals unexpectedly become
unavailable for election, the proxies reserve the right to nominate and vote for
such other person or persons as they shall designate.
The following sets forth the names, ages, principal occupations and other
information regarding the director nominees and those directors whose terms
continue after the meeting.
Nominees for Class I directors whose terms will expire in 2002 are:
Lawrence E. Gloyd -- Director since 1987
Mr. Gloyd, age 66, has been Chairman and Chief Executive Officer of CLARCOR
(diversified manufacturer) since March 1995 and is a Director of CLARCOR. He was
previously the Chairman,
1
<PAGE> 4
President and Chief Executive Officer of CLARCOR. He is a Director of Thomas
Industries, Inc. (manufacturer of lighting, fixtures, pumps and compressors) and
a Director of Woodward Governor Company (manufacturer of controls for various
types of engines).
John A. Halbrook -- Director since 1997
Mr. Halbrook, age 53, has been Chairman and CEO of Woodward Governor
Company (manufacturer of controls for various types of engines) since January
1995. He was previously President of Woodward Governor Company. Mr. Halbrook
served as a Director of AMCORE Investment Group, N.A. until November 1997.
Frederick D. Hay -- Director since 1997
Mr. Hay, age 54, has been Senior Vice President -- Operations of Snap-On
Incorporated (manufacturer of tools) since September 1998. He was Senior Vice
President -- Transportation of Snap-On Incorporated from February 1996 to
September 1998, and previous to that was President of Interior Systems and
Components Division at United Technologies Automotive.
Robert J. Meuleman -- Director since 1995
Mr. Meuleman, age 59, has been President and Chief Executive Officer of the
Company since January 1996. He was previously Executive Vice President and Chief
Operating Officer, Banking Subsidiaries. He is a director of AMCORE Bank N.A,
Rockford and was previously a Director of AMCORE Bank N.A., Rock River Valley
until December 1996.
Those directors whose terms do not expire this year are:
CLASS II (TERMS EXPIRE 2000)
Milton R. Brown -- Director since 1989
Mr. Brown, age 67, is Chairman, President and Chief Executive Officer of
Suntec Industries Incorporated (manufacturer of fuel unit components). He is a
Director of CLARCOR (diversified manufacturer).
Carl J. Dargene -- Director since 1982
Mr. Dargene, age 68, has been Chairman of the Board of Directors of the
Company, since May 1995. He retired in December 1995 as President and Chief
Executive Officer of the Company. He is Vice Chairman and Director of AMCORE
Investment Group, N.A. He is a Director of Woodward Governor Company
(manufacturer of controls for various types of engines) and of CLARCOR
(diversified manufacturer). He was previously Chairman of the Board of Directors
for AMCORE Bank N.A., Rockford until December 1996.
Richard C. Dell -- Director since 1994
Mr. Dell, age 52, is Group President of Newell Company (diversified
manufacturer).
William R. McManaman -- Director since 1997
Mr. McManaman, age 51, has been Vice President -- Finance and Chief
Financial Officer of Dean Foods Company since October 1995. He was previously
Vice President -- Finance of Brunswick Corporation.
CLASS III (TERMS EXPIRE 2001)
Ted Ross -- Director since 1982
Mr. Ross, age 67, is President of Ross & Noerr Incorporated., previously
Ross Consulting, Inc. (financial consultants). He is a Director of Precision
Products Group, Inc. (manufacturer of tubes and springs), and has been Chief
Financial Officer and Secretary of Rockford Process Control, Inc. (manufacturer
of weldments and institutional hardware) since 1997.
2
<PAGE> 5
Paul Donovan -- Director since 1998
Mr. Donovan, age 51, is the Executive Vice President and Chief Financial
Officer of Sundstrand Corporation, (manufacturer of industrial and aerospace
products). He was previously a Director of AMCORE Bank N.A., Rockford until
August 1998.
Jack D. Ward -- Director since 1995
Mr. Ward, age 46, is an Attorney at Law and Partner with the law firm of
Reno, Zahm, Folgate, Lindberg & Powell, and was previously a Director of AMCORE
Mortgage, Inc. until May 1995.
Gary L. Watson -- Director since 1987
Mr. Watson, age 53, is President of Newspaper Division, Gannett Co., Inc.
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Company has an Executive Committee whose members are Messrs. Brown,
Dargene, Gloyd, McManaman, Meuleman and Ross. The Executive Committee exercises
those powers of the Board of Directors in the management of the Company, which
have been delegated to it by the Board of Directors. The Executive Committee met
twice during 1998.
The Company has an Audit Committee whose members are Messrs. Brown,
Halbrook, McManaman, Ward and Watson. Mr. Dargene serves as an ex-officio member
of this Committee. The duties of the Audit Committee are to review the proposed
scope of the annual audit and the results and recommendations of the independent
auditors upon completion of the annual audit; nominate a firm of independent
auditors to be submitted to the Board of Directors for approval and subsequent
ratification by stockholders at the annual meeting; recommend the compensation
of the independent auditors; review the Company's system of internal controls
and the performance of its internal auditors; and monitor compliance by
management with certain Company policies. The Audit Committee met five times
during 1998.
The Company has an Investment Committee whose members are Messrs. Donovan,
Halbrook, McManaman, Meuleman, and Ross. Messrs. Dargene, Kenneth E. Edge,
Executive Vice President and Chief Operating Officer of the Company, John R.
Hecht, Executive Vice President and Chief Financial Officer of the Company,
James F. Warsaw, President and CEO of AMCORE Bank N.A., Rockford, and Charie A.
Zanck, Group Vice President of the Company, serve as ex-officio members of the
committee. The Investment Committee establishes the investment policies of the
Company and its subsidiaries. During 1998, the Investment Committee met four
times.
The Company has a Compensation Committee whose members are Messrs. Dargene,
Dell, Donovan, Gloyd, and Hay. Mr. Meuleman serves as an ex-officio member of
this committee. The Compensation Committee advises the Company concerning its
employee compensation and benefit policies and administers the Company's
Long-Term Incentive Plan, 1992 Stock Incentive Plan and 1995 Stock Incentive
Plan. The Compensation Committee also administers the Restricted Stock Plan for
Non-Employee Directors of the Company and its Participating Subsidiaries and the
1994 Stock Option Plan for Non-Employee Directors. During 1998, the Compensation
Committee met four times. A report of the Compensation Committee is set forth on
page eleven of this Proxy Statement.
The Company has a Directors Affairs Committee whose members are Messrs.
Brown, Dell, Hay, and Ward. Messrs. Dargene and Meuleman serve as ex-officio
members of this Committee. The primary duties of the Directors Affairs Committee
are to provide nominations to the Board of Directors, make recommendations
regarding directors' remuneration, recommend policies for the retirement of
directors and fulfill other responsibilities as may be delegated to it by the
Board of Directors. The Directors Affairs Committee met once during 1998.
As of December 31, 1998, the Company had no other committees of the Board
of Directors.
3
<PAGE> 6
The Board of Directors met five times during 1998. All directors attended
at least 75% of the Board meetings and meetings held by all committees of the
Board on which they served during the period they were directors in 1998.
Directors of the Company, other than Messrs. Dargene and Meuleman, earned
an annual retainer of $10,000 of the Company's common stock, pursuant to the
Non-Employee Director's Stock Plan, for services rendered to the Company as a
member of its Board of Directors. All non-employee directors earned a fee of
$750 for each Board and committee meeting attended through May 5, 1998,
increasing to $1,000 for each Board and committee meeting attended during the
remainder of 1998. All non-employee committee chairmen earned a one-time fee of
$1,500. Mr. Dargene was paid $216,667 for services rendered as Chairman of the
Board of Directors of the Company in 1998. Messrs. David A. Carlson, Thomas L.
Clinton, and C. Roger Greene, as Director Emeriti, receive a lifetime retainer
of $7,000 per year. Mr. Robert A. Doyle, and Dr. Robert A. Henry, as Director
Emeriti, will receive a lifetime retainer of $10,000 per year. All non-employee
directors were granted 1,000 common stock options on May 20, 1998 at $25.50
pursuant to the 1994 Stock Option Plan for Non-Employee Directors.
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following tabulation sets forth the number of shares of common stock of
the Company beneficially owned by each of the directors and nominees for
election to the Board of Directors, by each named executive officer, and by all
directors and officers as a group as of March 1, 1999 and the percentage that
these shares bear to the total common stock outstanding on that date.
<TABLE>
<CAPTION>
PERCENT
AMOUNT OF SHARES BENEFICIALLY OF
NAME OF BENEFICIAL OWNER OWNED(1) CLASS
- ------------------------ ----------------------------- -------
<S> <C> <C> <C>
Milton R. Brown.......................................... 27,700 (2)(3) *
Carl J. Dargene.......................................... 232,146 (2)(3)(4)(5) 0.82%
Richard C. Dell.......................................... 9,711 (3) *
Paul Donovan............................................. 4,602 (3) *
Kenneth E. Edge.......................................... 57,360 (3)(4)(5) *
Lawrence E. Gloyd........................................ 28,194 (3)(6) *
John A. Halbrook......................................... 4,679 (3) *
Frederick D. Hay......................................... 2,622 *
John R. Hecht............................................ 42,478 (3)(4)(5) *
Alan W. Kennebeck........................................ 27,205 (3)(4) *
William R. McManaman..................................... 4,161 (3) *
Robert J. Meuleman....................................... 230,997 (2)(3)(4) 0.82%
Ted Ross................................................. 36,070 (3)(6) *
James S. Waddell......................................... 98,364 (3)(4)(5) *
Jack D. Ward............................................. 11,646 (3) *
Gary L. Watson........................................... 20,868 (3)(6) *
All executive officers and directors (22 persons)........ 1,190,597 (2)(3)(4)(5)(6) 4.21%
</TABLE>
- ---------------
* The amount shown is less than 1/2% of the outstanding shares of such class.
1. The information contained in this column is based upon information
furnished to the Company by the persons named above or obtained from
records of the Company. The nature of beneficial ownership for shares shown
in this column is sole voting and investment power unless otherwise
indicated herein.
2. Includes shares held individually by certain family members of the
directors and officers as follows: Milton R. Brown -- 1,369 shares, Carl J.
Dargene -- 22,870 shares, Robert J. Meuleman -- 24,961 shares, and all
executive officers and directors -- 51,836 shares.
3. Includes shares which such person has a right to acquire within sixty days
through the exercise of stock options as follows: Milton R. Brown -- 6,000
shares, Carl J. Dargene -- 110,079 shares, Richard C. Dell -- 4,500 shares,
Paul Donovan -- 2,250 shares, Kenneth E. Edge -- 31,198 shares, Lawrence E.
Gloyd -- 6,000 shares, John A. Halbrook -- 2,250 shares, John R. Hecht --
32,906 shares, Alan W.
4
<PAGE> 7
Kennebeck -- 24,431 shares, William R. McManaman -- 1,500 shares, Robert J.
Meuleman -- 148,301 shares, Ted Ross -- 6,000 shares, James S. Waddell --
55,401 shares, Jack D. Ward -- 4,500 shares, Gary L. Watson -- 6,000 shares
and all executive officers and directors -- 682,331 shares.
4. Includes shares held in trust with power to vote but without investment
authority as follows: Carl J. Dargene -- 9,894 shares, Kenneth E. Edge --
7,259 shares, John R. Hecht -- 4,215, Alan W. Kennebeck -- 716 shares,
Robert J. Meuleman -- 10,508 shares, James S. Waddell -- 1,824 shares, and
all executive officers and directors -- 54,201 shares.
5. Includes shares held in joint tenancy with the spouses of certain of the
directors and executive officers as to which voting and investment power is
shared as follows: Carl J. Dargene -- 1,732 shares, Kenneth E. Edge --
18,903 shares, John R. Hecht -- 2,622 shares, James S. Waddell -- 4,500
shares, and all executive officers and directors -- 63,875 shares.
6. Includes shares held in trusts of which such persons are trustees having
sole voting and investment power as follows: Lawrence E. Gloyd -- 5,424
shares, Ted Ross -- 4,500 shares, Gary L. Watson -- 703 shares and all
executive officers and directors -- 10,627 shares.
SECTION 16(A) BENEFICIAL OWNERSHIP
Pursuant to Section 16 of the Exchange Act, the Company's officers,
directors and holders of more than ten percent of the Company's Capital Stock
are required to file reports of their trading in equity securities of the
Company with the Commission, the Company and the NASDAQ Stock Market. Based
solely on its review of the copies of such reports received by it, or written
representations from certain reporting persons that no reports on Form 5 were
required for those persons, the Company believes that during 1998 all filing
requirements applicable to its officers, directors and more than ten percent
shareholders were complied with.
BENEFICIAL OWNERSHIP BY CERTAIN PERSONS
The following table lists the beneficial ownership of the Company's common
stock with respect to all persons, other than those listed above, known to the
Company as of March 1, 1999 to be the beneficial owner of more than five percent
of such common stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL INTEREST (1) OF CLASS
- ------------------------------------ ----------------------- --------
<S> <C> <C>
AMCORE Investment Group, N.A................................ 2,354,709(2)(3) 8.69%
501 Seventh Street, Rockford, IL 61104
</TABLE>
- ---------------
1. The information contained in this column is based upon information
furnished to the Company by the persons named above or obtained from
records of the Company.
2. Includes 2,354,709 shares held by nominees acting on behalf of AMCORE
Investment Group, N.A. Excludes 858,060 shares held as trustee of various
trusts over which AMCORE Investment Group, N.A. has neither voting nor
investment power, and as to which beneficial ownership is disclaimed on
these shares. The nature of beneficial ownership for the shares shown in
this column is as follows: sole voting power -- 2,080,876 shares, shared
voting power -- 6,450 shares, no voting power -- 339,383 shares, sole
investment power -- 1,905,705 shares, shared investment power -- 424,219
shares and no investment power -- 24,785 shares.
3. Although there is no affirmative duty or obligation to do so, it is the
general practice of AMCORE Investment Group, N.A. to solicit the direction
of trust beneficiaries or grantors with regard to the voting of shares held
in trust on all issues which are subject to vote by proxy. The shares are
then voted as directed by the trust beneficiary or grantor.
5
<PAGE> 8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
earned during each of the Company's last three fiscal years by the Company's
chief executive officer and each of the Company's four other most highly
compensated executive officers based on salary and bonus earned during the year
ended December 31, 1998:
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS OTHER
------------------------------------------------ ---------- ---------- ---------------
OTHER SECURITIES
NAME AND ANNUAL UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(1)(2) COMPENSATION(3) OPTIONS PAYOUTS(4) COMPENSATION(5)
- ------------------ ---- --------- ----------- --------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert J. Meuleman............ 1998 $360,000 $ 90,146 $116,556 18,000 $183,099 $ 56,739
President & Chief........... 1997 320,000 17,336 9,182 60,000 35,608 334,691
Executive Officer........... 1996 275,000 143,340 7,101 25,500 105,466 400,173
Kenneth E. Edge............... 1998 230,000 51,479 46,779 21,448 50,138 26,457
Executive Vice President
&......................... 1997 180,000 24,447 254 15,000 6,820 68,759
Chief Operating Officer..... 1996 135,000 39,691 653 13,500 2,938 23,810
James S. Waddell.............. 1998 215,000 46,451 22,705 22,401 84,251 28,522
Executive Vice President
&......................... 1997 200,000 22,580 785 15,000 17,986 80,706
Chief Administrative
Officer................... 1996 170,000 65,896 1,211 18,000 43,933 88,461
John R. Hecht................. 1998 170,000 44,756 2,267 15,406 41,626 17,994
Executive Vice President
&......................... 1997 135,000 12,480 2,542 9,000 7,266 18,213
Chief Financial Officer..... 1996 115,000 41,090 1,779 10,500 15,659 21,822
Alan W. Kennebeck............. 1998 160,000 50,904 479 14,431 44,894 19,973
President and Chief
Executive................. 1997 145,600 35,544 274 9,000 6,492 20,427
Officer, AMCORE Investment.. 1996 135,200 52,206 1,195 10,500 2,942 10,970
Group, N.A
</TABLE>
- ---------------
1. Compensation deferred pursuant to the Company's deferred compensation plan
is included in Salary and Bonus totals.
2. Reflects bonus earned during the year which was paid during the following
year.
3. These amounts represent reimbursements during the year for taxes. 1998
amounts also include accrued supplemental retirement benefits of $107,934
-- Meuleman, $46,385 -- Edge, $22,092 -- Waddell, and $958 -- Hecht
pursuant to the Supplemental Executive Retirement Plan.
4. Reflects long term incentive plan payouts earned during the year and
dividend equivalent payments made on all outstanding Performance Units.
5. Amounts shown for 1998 consist of the following:
<TABLE>
<CAPTION>
MEULEMAN EDGE WADDELL HECHT KENNEBECK
-------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Imputed income life insurance........... $ 7,117 $ 3,004 $ 2,886 $ 848 $ 1,549
Above market interest on deferred
compensation.......................... 4,801 -- 1,695 855 1,581
AMCORE Financial Security Plan.......... 11,200 11,200 11,200 11,200 11,200
Company's contributions to Top Hat
Plan.................................. 33,621 12,253 12,741 5,091 5,643
------- ------- ------- ------- -------
Total other compensation................ $56,739 $26,457 $28,522 $17,994 $19,973
======= ======= ======= ======= =======
</TABLE>
Prior year reported amounts include contributions to the security plan, top
hat plan, above market interest on deferred compensation, and life insurance
imputed income and the value of life insurance premiums. The value of life
insurance for Messrs. Meuleman, Waddell and Edge include the value of premiums
advanced by the Company under a split-dollar life insurance agreement with the
Company. For further discussion of these agreements, see "Employee Agreements"
on page eight.
6
<PAGE> 9
OPTION GRANTS
The following table provides information related to options granted to the
named executive officers during 1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------
NUMBER OF POTENTIAL NET REALIZABLE
SECURITIES PERCENT OF VALUE AT ASSUMED
UNDERLYING TOTAL OPTIONS EXERCISE ANNUAL RATES OF STOCK
OPTIONS GRANTED TO PRICE PER EXPIRATION PRICE APPRECIATION FOR
NAME GRANTED(2)(3) EMPLOYEES SHARE (2)(3)(4) DATE OPTION TERM (1)
- ---- ------------- ------------- --------------- ---------- -------------------------
5% 10%
<S> <C> <C> <C> <C> <C> <C>
Robert J. Meuleman... 18,000 6.4 % $25.50 5/20/08 $288,663 $731,528
Kenneth E. Edge...... 12,000 4.3 25.50 5/20/08 192,442 487,685
James S. Waddell..... 12,000 4.3 25.50 5/20/08 192,442 487,685
John R. Hecht........ 12,000 4.3 25.50 5/20/08 192,442 487,685
Alan W. Kennebeck.... 9,500 3.4 25.50 5/20/08 152,350 386,084
RELOAD OPTIONS GRANTED
Robert J. Meuleman... -- N/A $ -- -- $ -- $ --
Kenneth E. Edge...... 9,448 N/A 24.094 5/15/06 143,162 362,800
James S. Waddell..... 10,401 N/A 23.563 5/18/04 154,125 390,584
John R. Hecht........ 3,406 N/A 24.157 5/09/05 51,744 131,128
Alan W. Kennebeck.... 4,931 N/A 22.219 8/30/05 68,903 174,613
</TABLE>
- ---------------
1. Values are reported net of the option exercise price, but before taxes
associated with exercise. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock, overall stock
conditions and the optionholders' continued employment.
2. Reflects options granted on May 20, 1998 to acquire shares of Common Stock
pursuant to the 1995 Stock Incentive Plan.
3. Options granted pursuant to the 1995 Stock Incentive Plan have an exercise
price of not less than 100% of the fair market value of the Common Stock on
the date of the grant. Options generally become fully exercisable in four
years (25% per year) following the date of grant and remain exercisable
until ten years from the date of the grant unless the optionee ceases to be
an employee of the Company or its subsidiaries. The option exercise price
may be paid in cash, shares of Common Stock having a fair market value
equal to the exercise price, stock withholding or any combination of the
above.
4. Options reloaded pursuant to various stock incentive plans have an exercise
price of not less than 100% of the fair market value of the Common Stock on
the date of the exercise of the option that created the reload. Reload
options become exercisable immediately and remain exercisable until the
expiration date of the original grant unless the optionee ceases to be an
employee of the Company or its subsidiaries. The option exercise price may
be paid in cash, shares of Common Stock having a fair market value equal to
the exercise price, stock withholding or any combination of the above.
7
<PAGE> 10
OPTION EXERCISES AND YEAR-END HOLDINGS
The following table sets forth information with respect to the named
executives concerning the exercise of options during the last year and
unexercised options held as of December 31, 1998.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT YEAR END(1) OPTIONS AT
ACQUIRED ON VALUE ---------------------------- YEAR END(2)
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE
- ---- ----------- -------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Robert J. Meuleman........... 13,730 $239,988 148,301 18,000 $1,231,804
Kenneth E. Edge.............. 26,500 323,331 31,198 12,000 134,317
James S. Waddell............. 15,000 162,075 55,401 12,000 359,594
John R. Hecht................ 8,073 102,785 32,906 12,000 239,222
Alan W. Kennebeck............ 6,750 59,765 24,431 9,500 143,188
</TABLE>
- ---------------
1. Options granted to acquire shares of Common Stock pursuant to various stock
incentive plans.
2. The amounts shown reflect the value of unexercised options calculated by
determining the difference between the closing price of the Company's
Common Stock on the last day of the year ($22.891) and the applicable
exercise price of such options.
LONG-TERM INCENTIVE PLAN AWARDS TABLE
The following table sets forth information with respect to the named
executives concerning Performance Unit Awards granted during 1998 pursuant to
the Company's 1995 Stock Incentive Plan.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS
NUMBER OF ------------------------------------
PERFORMANCE PERFORMANCE THRESHOLD TARGET OUTSTANDING
NAME UNITS(1) PERIOD 13% 14% 15%
- ---- ----------- ----------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
Robert J. Meuleman............. 36,162 3 years $160,921 $241,201 $401,760
Kenneth E. Edge................ 17,241 3 years 76,722 114,997 191,548
James S. Waddell............... 16,117 3 years 71,721 107,500 179,060
John R. Hecht.................. 12,744 3 years 56,711 85,002 141,586
Alan W. Kennebeck.............. 8,156 3 years 36,294 54,401 90,613
</TABLE>
- ---------------
1. Performance units were granted to certain executive officers on January 2,
1998 pursuant to the 1995 Stock Incentive Plan. The holders of these
performance units will be entitled to cash or stock payments, or a
combination thereof, if certain performance targets are met during the
three-year period ending December 31, 2000. The holders are also entitled
to dividend equivalent payments on these Performance Units. The target
levels applicable to the Performance Units as shown in the table above are
achieved if the average consolidated return on stockholders' equity (ROE)
for the performance period is as shown above for each of the performance
levels. Each Performance Unit shall be of no value unless at least the
minimum level is achieved. If the Company achieves an average ROE in excess
of the minimum performance level set forth above, each Performance Unit
shall have the following values: $4.45 per unit for threshold performance,
$6.67 per unit for target performance and $11.11 per unit for outstanding
performance. It is the Company's intention to make incremental payments to
executive officers for performance levels that are between these specified
target levels.
EMPLOYEE AGREEMENTS
The Company has entered into individual Transitional Compensation
Agreements with current executive officers, including Messrs. Robert J.
Meuleman, James S. Waddell, Kenneth E. Edge, and John R. Hecht. If, during the
three-year period following a change of control of the Company (as defined in
the agreements), the executive officer's employment is ended through (1)
termination by the Company without cause (as defined
8
<PAGE> 11
in the agreements) or (2) termination by the executive officer for good reason
(as defined in the agreements) based upon a breach of the agreement by the
Company or a significant adverse change in the executive officer's
responsibilities, compensation or benefits, then a termination payment will be
made to the executive. The agreements provide that such payment will equal three
times the sum of the executive's then current annual salary and annual bonus. In
addition, the agreements provide that, if any portion of the termination payment
is subject to an excise tax as an excess parachute payment, as defined in the
Internal Revenue Code Section 4999, the Company shall pay the executive the
amount necessary to offset the excise tax and any applicable taxes on this
additional payment. Additional provisions provide for the continuation, for
three years after termination, of welfare and other benefits to the executive
and his family unless termination is for cause. Upon a change of control of the
Company, the executive is entitled to a lump sum cash payment equivalent to the
present value of the projected benefits under certain supplemental retirement
plans.
The Company also entered into Transitional Compensation Agreements with
Alan W. Kennebeck and four other executive officers. These agreements provide
that if such executive's employment is terminated within one year after a change
in control of the Company either (i) by the Company other than for "cause" or
other than as a consequence of disability or retirement (all as defined in such
agreements) or (ii) by such executive for reasons relating to a diminution of
responsibilities, compensation or benefits or relocation requiring a change in
residence or a significant increase in travel, he will receive: (a) lump sum
payment equal to his monthly salary in effect at the date of termination for a
period of time determined pursuant to each agreement based upon his salary,
years of service and age at the time of his termination, and a prorata portion
of his annual bonus; (b) life, disability, accident and health insurance as
provided in the Company's insurance programs for a period of 24 months after
termination of employment; and (c) certain perquisites and outplacement
services. The agreements provide for a commensurate reduction in the amount of
cash payments to be made to an executive under the agreement in the event that
(i) the payments fail to be deductible by the Company as a result of Section
280G of the Internal Revenue Code of 1986, as amended or (ii) such executive
procures new employment during the period he is receiving severance payments
under the agreement. If these severance agreements had become operative in
December 1998, the maximum number of monthly payments payable to the following
individual (subject to reduction as described in the previous sentence) would
have been approximately: Alan W. Kennebeck, 20 months.
On August 10, 1998, the Company entered into Endorsement Split Dollar
Insurance Agreements with Robert J. Meuleman, James Waddell, Kenneth E. Edge,
and John R. Hecht, replacing prior agreements. The Company purchased
split-dollar and/or bank-owned life insurance policies for the named executives
pursuant to each Agreement in conjunction with the Supplemental Executive
Retirement Plan. The Company may terminate any such Agreement and receive its
interest in the life insurance policy under certain conditions, including
termination of employment (other than due to death, disability or retirement,
unless such terminated employee becomes affiliated with a competitor following
any such termination due to disability or retirement), provided the Company may
not terminate any of the Agreements if such termination of employment or
affiliation occurs after a "change in control" of the Company.
The Company has also adopted a non-qualified, unfunded supplemental pension
program for Mssrs. Meuleman, Edge, Waddell, and Hecht (the "Supplemental
Executive Retirement Plan" (SERP)), which provides retirement benefits in excess
of the maximum benefit accruals for qualified plans which are permitted under
the Code. The benefits under the SERP are provided by the Company on a
non-contributory basis. The Company has not funded these supplemental retirement
benefits other than accruing a liability in the amount of the actuarially
determined present value of the retirement benefits.
A participant's annual retirement benefits payable under the SERP are based
upon three percent of such participant's final base salary times number of years
of service and shall not exceed 70% of a participant's final base salary and
shall be no less than 45% of a participant's final base salary. The benefits
payable shall be reduced by any other AMCORE provided benefits and also reduced
by 50% of applicable Social Security benefits. The benefits shall be payable in
the form of installment payments for the remainder of the participant's life,
but in no event less than ten years, with payment continuing to the
participant's designated beneficiary for the remaining period of such ten years
in the event of the participant's death after payments have commenced but prior
to the expiration of the ten-year period.
9
<PAGE> 12
The Company provides a Top Hat plan (entitled "AMCORE Top Hat Plan") for
senior executive officers to maintain certain levels of retirement benefits and
maximize the effectiveness and flexibility of compensation arrangements for
participants in the AMCORE Financial Security Plan (Security Plan). This is
accomplished by crediting each participating executive with contributions that
would be made to the Security Plan, but for certain limitations imposed by the
Internal Revenue Code.
In August 1997, the Company adopted a Transitional Compensation policy
(Policy) to provide severance pay for substantially all of the Company's
employees whose employment is terminated within one year following a change in
control (as defined in the Policy). The Policy provides for semi-monthly
payments, depending on employment status, equal to such employee's current
weekly or monthly salary for a period of time determined pursuant to the Policy
based upon his or her salary, years of service and age.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Carl J. Dargene serves as Chairman of the Company's Compensation Committee
and is the Company's Chairman of the Board. Mr. Dargene also serves on the board
of CLARCOR and its Compensation Committee. Lawrence E. Gloyd, Chairman and Chief
Executive Officer of CLARCOR, also serves on the Company's Compensation
Committee. Mr. Dargene also serves on the board of Woodward Governor Company and
its Compensation Committee. Lawrence E. Gloyd, Director of the Company, also
serves on the board of Woodward Governor Company and its Compensation Committee.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors reviews the Company's
compensation and benefit policies, including individual salaries of the
executive officers, and submits recommendations to the Board of Directors.
The Company engages a compensation consulting firm on a regular basis to
assist the Compensation Committee and the Board of Directors in formulating
compensation policies and determining appropriate compensation levels. This firm
provides reports directly to the Compensation Committee.
Compensation received is one measure of the accomplishments and potential
of the employee, relative to peers. AMCORE believes that base compensation
should be competitive in the marketplace, but that incentive opportunities
should increase the amount of compensation available to key personnel. Incentive
opportunities should be tied to both quantitative and qualitative objectives
designed to enhance both short and long term shareholder value.
Toward that end, it is the philosophy of management, supported by the
Compensation Committee, that senior management base pay should be at or near the
median for similar positions in the industry and that incentives for meeting
objectives should provide the opportunity for total compensation to reach the
75th percentile and beyond based on performance relative to industry and peer
applicable comparisons.
AMCORE believes that incentives should not be disincentives. In the short
term, they should be achievable, but challenging, goals. When these goals are
achieved, they will increase compensation and set the basis for higher standards
as the next step.
EXECUTIVE OFFICER COMPENSATION
Consistent with this philosophy, the Compensation Committee has established
a compensation program consisting of an annual base salary and the opportunity
to earn incentive compensation tied directly to the performance of the Company,
personal performance and increases in stockholder value. The Company's executive
compensation program in 1998 consisted of the following components:
- Base Salary
- Short-Term Incentive Plan
- Intermediate-Term Incentive Plan
10
<PAGE> 13
- Long-Term Incentive Plan
The Compensation Committee, working with the compensation consulting firm,
determines a range for the executive officers' base salaries in order to be
competitive and consistent with amounts paid to executives performing similar
functions in comparable companies. The objective is to determine the salary
ranges at a level within the third quartile of trailing twelve-month activity of
the comparable companies. The amount of each executive's base salary is set
within the range based upon the performance of the Company, performance of
particular business units, the personal performance of such executive officers,
cost of living increases and such other factors as the Compensation Committee
and the Board of Directors deem appropriate.
The short-term incentive component of each executive officer's compensation
is based upon participation in the Company's cash profit sharing plan, generally
available to all of the Company's employees, and a cash bonus, based upon a
maximum target amount assigned at the beginning of each year. Amounts payable
under the Company's profit sharing plan range between 0% and 5% of the executive
officer's total eligible wages, and are based upon the profitability of the
Company. The annual cash bonus targets range from 30% to 50% of the midpoint of
the base salaries of executive officers. The amount of targeted cash bonuses
payable to such officers are contingent upon the attainment of financial targets
such as consolidated or affiliate earnings which are established at the
beginning of the year, personal performance of the executive and, where
appropriate, attainment of earnings goals of the operating unit or units for
which the executive has responsibility. The targets may be adjusted from time to
time to take into account unforeseen or extraordinary events. Generally, if
certain minimum target financial results are not achieved, no annual incentive
will be paid.
Generally, 10% of a targeted cash bonus will be paid upon the achievement
of at least 85% of such goals and will increase to 100% of such targeted cash
bonus upon the achievement of 110% or more of such goals (which include
objectives that are, in the judgment of the Compensation Committee, difficult to
attain). In 1998, the total short-term incentive payouts to executive officers
were approximately 57% of the maximum targets established under the plan.
The intermediate-term incentive component of each executive officer's
compensation is based upon the award of performance units which provide for cash
or stock payouts, or a combination thereof, based upon the achievement by the
Company of targeted average consolidated returns on stockholders' equity over a
three year performance period. The holders are also entitled to dividend
equivalent payments on these performance units. The three target levels
applicable to the performance units granted are: Threshold 13% ROE, Target 14%
ROE and Outstanding 15% ROE. Each performance unit shall be of no value unless
at least the minimum performance level is achieved. If the Company achieves an
average ROE in excess of the minimum performance level set forth above, each
performance unit shall have the following values: $4.45 per unit for Threshold
performance, $6.67 per unit for Target performance and $11.11 per unit for
Outstanding performance. Average return on equity in excess of 13% but less than
14% was attained for the 1996 performance units expiring December 1998.
Therefore, payouts of approximately $417,000 were made in January 1999 pursuant
to these units.
The long-term incentive component of each executive officer's compensation
involves the award of stock options or stock awards pursuant to the AMCORE
Long-Term Incentive Plan and 1992 and 1995 Stock Incentive Plans. Long-term
incentives are provided to reward executives for achieving long-term strategic
goals and to provide a balance against overemphasis on short-term results.
Through stock ownership, executives' long-term incentives are tied to
stockholder value. The Compensation Committee recommends grants of annual awards
of stock options to executive officers at levels determined with reference to
fixed percentages up to 35% of base compensation subject to increases and
decreases based on individual performance.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation package for Mr. Robert J. Meuleman, who was the Chief
Executive Officer of the Company during 1998, was determined in the same manner
as for all other executive officers, except that Mr. Meuleman's short-term
incentive was based 100% on the Company's total performance without reference to
any particular business unit of the Company or personal objectives. For this
purpose, Company performance
11
<PAGE> 14
was measured by comparing the consolidated earnings of the Company to earnings
goals established by the Compensation Committee.
Mr. Meuleman's base salary in 1998 was $360,000, which was in the upper
first quartile of his salary range, and his short-term bonus was $90,146, a
payout of 52% of the maximum, for a combined total of $450,146. During 1997, Mr.
Meuleman earned a base salary of $320,000 and short-term bonus of $17,336, for a
total of $337,336.
The Compensation Committee believes that the executive team of the Company
will receive appropriate rewards under this program of corporate incentives, but
only if they achieve the performance goals established for them and the Company
and if they succeed in increasing stockholder value.
<TABLE>
<S> <C>
Carl J. Dargene, Chairman Lawrence E. Gloyd
Richard C. Dell Frederick D. Hay
Paul Donovan Robert J. Meuleman, Ex-officio member
</TABLE>
12
<PAGE> 15
COMPANY PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Common Stock of the Company for the last five years with the cumulative total
returns on the NASDAQ Stock Market Index and NASDAQ Bank Stocks Peer Index.
Cumulative total returns have been measured by dividing the sum of the
cumulative amount of dividends for the measurement period, assuming dividend
reinvestment, and the difference between the share price at the end and the
beginning of the measurement period by the share price at the beginning of the
measurement period.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
(AMCORE FINANCIAL, INC., NASDAQ STOCK MARKET INDEX, NASDAQ BANK STOCK INDEX)
<TABLE>
<CAPTION>
AMCORE NASDAQ STOCK NASDAQ BANK STOCKS
------ ------------ ------------------
<S> <C> <C> <C>
Dec-93 100.000 100.000 100.000
Jan-94 103.226 103.035 101.643
Feb-94 92.281 102.073 100.365
Mar-94 84.483 95.797 98.790
Apr-94 106.579 94.553 101.984
May-94 111.228 94.785 106.634
Jun-94 111.228 91.318 106.639
Jul-94 105.994 93.193 108.119
Aug-94 116.462 99.135 110.882
Sep-94 112.013 98.881 107.821
Oct-94 102.789 100.824 104.581
Nov-94 93.048 97.479 100.216
Dec-94 99.695 97.752 99.636
Jan-95 101.024 98.310 102.982
Feb-95 108.478 103.509 108.018
Mar-95 103.121 106.578 109.084
Apr-95 103.121 109.936 112.107
May-95 94.527 112.772 115.524
Jun-95 99.929 121.911 120.435
Jul-95 108.031 130.873 126.109
Aug-95 110.732 133.526 132.878
Sep-95 123.733 136.596 135.945
Oct-95 122.374 135.807 138.159
Nov-95 121.145 138.996 145.244
Dec-95 110.879 138.256 148.383
Jan-96 114.985 138.936 148.729
Feb-96 119.092 144.224 150.772
Mar-96 115.161 144.699 154.228
Apr-96 110.334 156.700 153.443
May-96 111.024 163.896 156.019
Jun-96 109.827 156.508 156.788
Jul-96 107.046 142.551 154.835
Aug-96 111.217 150.538 165.560
Sep-96 114.904 162.052 173.490
Oct-96 116.305 160.261 181.172
Nov-96 124.713 170.168 194.714
Dec-96 151.014 170.015 195.908
Jan-97 134.783 182.098 206.805
Feb-97 141.134 172.026 218.474
Mar-97 160.492 160.793 210.605
Apr-97 151.970 165.820 215.342
May-97 161.912 184.612 228.788
Jun-97 155.680 190.266 245.068
Jul-97 165.678 210.349 263.878
Aug-97 169.963 210.028 261.731
Sep-97 196.122 222.440 289.029
Oct-97 202.588 210.924 290.198
Nov-97 204.743 211.979 301.508
Dec-97 217.649 208.580 328.018
Jan-98 212.235 215.158 313.620
Feb-98 221.980 235.360 330.930
Mar-98 235.009 244.052 346.761
Apr-98 225.217 248.196 351.227
May-98 214.337 234.573 339.439
Jun-98 210.103 251.119 340.136
Jul-98 223.234 248.467 329.863
Aug-98 188.217 199.752 268.966
Sep-98 200.346 227.341 286.870
Oct-98 210.804 236.632 307.340
Nov-98 207.501 259.943 317.206
Dec-98 202.767 293.209 324.902
</TABLE>
- ---------------
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The index level for all series was set to 100.0 as of December 31, 1993.
13
<PAGE> 16
TRANSACTIONS WITH MANAGEMENT
Directors and principal officers of the Company and their associates were
customers of, and had transactions with, the Company's subsidiaries in the
ordinary course of business during 1998. Comparable transactions may be expected
to take place in the future. All outstanding loans, commitments to loan,
transactions in repurchase agreements and certificates of deposit, and
depository relationships in the ordinary course of business, were on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for transactions with other persons, and, in the opinion
of management of the Company, did not involve more than the normal risk of
collectibility or present other unfavorable features. As of December 31, 1998,
various directors and officers of the Company were indebted to the Company's
subsidiaries in the amount of approximately $3,595,000. This amount represents
0.15 percent of the Company's subsidiaries' outstanding loans and 1.14 percent
of the Company's stockholders' equity as of that date. The maximum aggregate
amount of their indebtedness to the Company's subsidiaries during 1998 was
$4,142,000. As of December 31, 1998, associates of directors and officers of the
Company were indebted in the amount of $209,000 to the Company's subsidiaries.
Further, the Company's subsidiaries have additional committed, but unfunded,
lines of credit of $6,735,000 to associates of directors and officers of the
Company. The maximum aggregate amount of such associates' indebtedness to the
Company's subsidiaries during 1998 was $4,966,000.
The Board of Directors, on February 22, 1984, authorized the Executive
Committee to negotiate such agreements as may be necessary to accomplish stock
redemptions pursuant to Section 303 of the Internal Revenue Code to pay death
taxes of certain stockholders. Such redemptions will be conditioned upon any
requisite bank regulatory agency or debt covenant approvals. Bank holding
companies, such as the Company, are required to notify the Federal Reserve Board
prior to paying 10% or more of consolidated net worth to redeem shares over a
twelve-month period.
ITEM 2 -- APPOINTMENT OF INDEPENDENT AUDITORS
KPMG Peat Marwick, LLP have been appointed to serve as the independent
auditors for the Company and subsidiaries for the fiscal year ending December
31, 1999. This appointment is being submitted to the stockholders for
ratification. Representatives of the firm are expected to be present at the
Annual Meeting to respond to appropriate questions from stockholders and to have
the opportunity to make any statements they consider appropriate. In the event
the stockholders do not ratify the appointment of KPMG Peat Marwick, LLP, the
selection of independent auditors will be determined by the Audit Committee and
the Board of Directors after careful consideration of all information submitted
by the stockholders.
Accounting services rendered by KPMG Peat Marwick, LLP during 1998 included
the examination of the annual consolidated financial statements, review of
unaudited quarterly statements, assistance with Securities and Exchange
Commission filings, legally required special audits of subsidiaries, and
consultations in connection with various tax and accounting-related matters.
During 1998, the Board of Directors reviewed and approved in advance or
ratified the scope of all of KPMG Peat Marwick, LLP's professional services
rendered to the Company and related entities.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF
KPMG PEAT MARWICK, LLP AS AUDITORS FOR THE YEAR 1999.
14
<PAGE> 17
ITEM 3 -- ADOPTION OF AMCORE STOCK OPTION
ADVANTAGE EMPLOYEE STOCK PURCHASE PLAN
On February 16, 1999, the Board of Directors adopted, subject to
stockholder approval, the AMCORE Stock Option Advantage Employee Stock Purchase
Plan (the "Plan"). The purpose of the Plan is to provide employees of the
Company with an opportunity to purchase common stock of the Company through
accumulated payroll deductions. The Company believes that stock ownership is one
of the prime methods of attracting and retaining key personnel responsible for
the continued achievement of the financial goals of the Company's business. In
addition, an employee stock purchase plan is considered a way to enhance
teamwork and customer service through motivation of employees. The Plan will
become effective as long as it is approved by the stockholders within twelve
months after its adoption by the Board of Directors. If approved, the Plan will
continue in effect until the number of shares reserved for issuance thereunder
have been exhausted or ten years after the date of its adoption by the Board of
Directors, whichever is earlier.
VOTE REQUIRED
The affirmative vote of a majority of a quorum (which is a majority of the
votes entitled to be cast) will be required by law to approve the adoption of
the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ADOPTION OF THE PURCHASE
PLAN.
The essential terms of the Plan are summarized as follows:
SUMMARY OF THE PURCHASE PLAN
General. The purpose of the Plan is to provide employees with an
opportunity to purchase common stock of the Company through payroll deductions.
Administration. The Plan shall be administered by an individual or a
committee appointed by the Board of Directors (the "Administrator"). All
questions of interpretation or application of the Plan are determined by the
Administrator, and, to the full extent permitted by law, its decisions are
final, conclusive and binding upon all participants.
Eligibility. Each employee of the Company (including officers), whose
customary employment with the Company is more than 20 hours per week and more
than five months in any calendar year, is eligible to participate in an Exercise
Period (as defined below); provided, however, that no employee shall be granted
an option under the Plan (i) to the extent that, immediately after the grant,
such employee wold own five percent of either the voting power or value of the
stock of the Company, or (ii) to the extent that his or her rights to purchase
stock under all employee stock purchase plans of the Company accrues at a rate
which exceeds $25,000 worth of stock (determined at the Fair Market Value of the
shares at the time such option is granted) for each calendar year. Eligible
employees become participants in the Plan by filing with the Company an
enrollment and change form authorizing payroll deductions (an "Agreement") in
the manner prescribed by the Administrator.
Participation in an Offering. The Plan is implemented by consecutive
overlapping offering periods lasting twelve (12) months (each an "Exercise
Period") with a new Exercise Period commencing on January 1, April 1, July 1 and
October 1 of each year. Employees may enroll in the Plan as of one of such dates
by submitting an Agreement in the manner prescribed by the Administrator. Common
stock may be purchased under the Plan every three months (an "Exercise Date"),
unless the participant withdraws or terminates employment earlier. To
participate in the Plan, each eligible employee must authorize payroll
deductions pursuant to the Plan. Such payroll deductions may not exceed 10% of a
participant's compensation. Compensation is defined as base straight time gross
earnings, sales commissions, bonuses, incentive compensation and payments for
overtime and shift premiums. Once an employee becomes a participant in the Plan,
the employee will automatically participate in each successive Exercise Period
until such time as the
15
<PAGE> 18
employee withdraws from the Plan or the employee's employment with the Company
terminates. At the beginning of the Exercise Period, each participant is
automatically granted options to purchase shares of the Company's common stock.
The option expires at the end of the Exercise Period or upon termination of
employment, whichever is earlier, but is exercised at the end of each Exercise
Period to the extent of the payroll deductions accumulated during such Exercise
Period.
As a condition to the exercise of an option, the Company may require the
person exercising such option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by applicable
provisions of any law.
Purchase Price, Shares Purchased. Shares of common stock may be purchased
under the Plan at a price not less than 85% of the lesser of the Fair Market
Value of the common stock on (i) the first day of the Exercise Period or (ii)
such Exercise Date. The "Fair Market Value" of the common stock on any relevant
date will be the closing price per share as reported on The Nasdaq National
market (or the mean of the closing bid and asked prices, if no sales were
reported) as quoted on such exchange or reported in The Wall Street Journal. The
number of shares of common stock a participant purchases on each Exercise Date
is determined by dividing the total amount of payroll deductions withheld from
the participant's compensation since the prior Exercise Date by the purchase
price.
Restriction on Transfer of Shares. A Participant may not sell any stock
acquired under the terms of the Plan for two years after the Exercise Date upon
which such shares were purchased. Notwithstanding the above, this sales
restriction will lapse upon the earlier of the death, disability or retirement
of the Participant. For purposes of this provision, a Participant shall be
considered disabled if he has been determined to be disabled under the terms of
the Company's Long-Term Disability Plan. The Administrator may waive this
restriction in its sole discretion.
Dividends. Dividends earned on shares of Stock held in the participant's
stock account shall be credited to the participant's payroll account and used to
purchase additional shares of stock (as provided in the Company's Dividend
Reinvestment Plan).
Termination of Employment. Termination of a participant's employment for
any reason, including disability or death, or the failure of the participant to
remain in the continuous scheduled employ of the Company for at least 20 hours
per week, cancels his or her option and participation in the Plan immediately.
In such event, the payroll deductions credited to the participant's account will
be returned to him or her or, in the case of death, to the person or persons
entitled thereto as provided in the Plan.
Adjustment Upon Change in Capitalization. In the event that the stock of
the Company is changed by reason of any stock split, reverse stock split, stock
dividend, combination, reclassification or other change in the capital structure
of the Company, or any other increase or decrease in the number of shares of
common stock effected without the receipt of consideration, appropriate
proportional adjustments shall be made in the number and class of shares of
stock subject to the Plan, the number and class of shares of stock subject to
options outstanding under the Plan and the exercise price of any such
outstanding options. Any such adjustment shall be made by the Administrator, in
its sole discretion, whose determination shall be conclusive.
Dissolution, Liquidation, Merger or Asset Sale. In the event of a proposed
dissolution, liquidation, merger or sale of all or substantially all of the
assets of the Company, the Exercise Period then in progress will be shortened
and a new exercise date will be set, unless otherwise provided by the Board of
Directors. Notwithstanding the foregoing, if the Board determines, in its sole
discretion, to continue the Plan upon a merger with or into another corporation,
the Administrator may grant Options in substitution for stock awards, stock
options, stock appreciation rights or similar awards held by an individual who
becomes an employee of the Company or an Affiliate in connection with such
transaction. The terms of such substituted Options shall be determined by the
Administrator in its sole discretion, subject only to the limitations of the
Plan.
Amendment and Termination of the Plan. The Board of Directors has the
authority to amend or terminate the Plan, except that no such action may
adversely affect any outstanding rights to purchase stock under the Plan,
provided that if the Board of Directors determines that a change in the
applicable accounting
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<PAGE> 19
rules or a change in applicable laws renders an amendment or termination
desirable then the Board of Directors may approve such amendment or termination.
The Board of Directors may not amend the Plan without approval of the
stockholders within 12 months of the adoption of such amendment if such
amendment would (i) increase the number of shares that may be issued under the
Plan or (ii) change the designation of the employees (or class of employees)
eligible for participation in the Plan.
Withdrawal. Generally, a participant may withdraw from an Exercise Period
at any time without affecting his or her eligibility to participate in future
Exercise Periods.
Federal Tax Information for Purchase Plan. The Plan, and the right of
participants to make purchases thereunder, is intended to qualify under the
provisions of Sections 421 and 423 of the Internal Revenue code of 1986, as
amended (the "Code"). Under these provisions, no income will be taxable to a
participant until the shares purchased under the Plan are sold or otherwise
disposed of. Upon sale or other disposition of the shares, the participant will
generally be subject to tax and the amount of the tax will depend upon the
holding period. If the shares are sold or otherwise disposed of more than two
years from the first day of the Exercise Period or more than one year from the
date of transfer of the stock of the participant, then the participant will
recognize ordinary income measured as the lesser of (i) the excess of the Fair
Market Value of the shares at the time of such sale or disposition over the
Purchase Price, or (ii) an amount equal to 15% of the Fair Market Value of the
shares as of the first day of the Exercise Period. Any additional gain will be
treated as long-term capital gain. If the shares are sold or otherwise disposed
of before the expiration of this holding period, the participant will recognize
ordinary income generally measured as the excess of the Fair Market Value of the
shares on the date the shares are purchased over the purchase price. Any
additional gain or loss on such sale or disposition will be long-term or
short-term capital gain or loss, depending on the holding period. The Company is
not entitled to a deduction for amounts taxed as ordinary income or capital gain
to a participant except to the extent of ordinary income is recognized by
participants upon a sale or disposition of shares prior to the expiration of the
holding period(s) described above.
The foregoing is only a summary of the effect of federal income taxation
upon the participant and the Company with respect to the shares purchased under
the Plan. Reference should be made to the applicable provisions of the Code. In
addition, the summary does not discuss the tax consequences of a participant's
death or the income tax laws of any state or foreign country in which the
participant may reside.
PARTICIPATION IN THE PLAN
Participation in the Plan is voluntary and is dependent on each eligible
employee's election to participate and his or her determination as to the level
of payroll deductions. Accordingly, future purchases under the Plan are not
determinable. Nonemployee directors are not eligible to participate in the Plan.
NEW PLAN BENEFITS
No specific determinations have been made or can be made in advance as to
the future recipients of benefits under the Plan. Known future grants of options
under the Plan, if any, are set forth in the summary compensation table. See "--
Executive Compensation."
17
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STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
NOMINATIONS FOR THE BOARD OF DIRECTORS
The Company's Bylaws provide that the notice of proposed stockholder
nominations for the election of directors must be timely and given to the
Secretary of the Company prior to the meeting at which directors are to be
elected. To be timely, notice must be received by the Company not less than 50
days nor more than 75 days prior to the meeting. The date of an annual meeting
of stockholders may be obtained from the Secretary of the Company when
determined by the Board of Directors.
Notice to the Company from a stockholder who proposes to nominate a person
at the meeting for election as a director must contain certain information about
that person, including age, business and residence addresses and principal
occupation, the class and number of shares of the Company's stock beneficially
owned and such other information as would be required to be included in a proxy
statement soliciting proxies to nominate that person. The Company may also
require any proposed nominee to furnish other information reasonably required by
the Company to determine the proposed nominee's eligibility to serve as
director. If the chairman of the meeting of stockholders determines that a
person was not nominated in accordance with the foregoing procedures, such
person shall not be eligible for election as a director.
OTHER PROPOSALS
Stockholders may submit proposals appropriate for stockholder action at the
Company's Annual Meeting consistent with the regulations of the Securities and
Exchange Commission. For proposals to be considered for inclusion in the Proxy
Statement for the 2000 Annual Meeting, they must be received by the Company no
later than November 30, 1999. Such proposals should be directed to AMCORE
Financial, Inc., Attention: Corporate Secretary, 501 Seventh Street, Rockford,
Illinois 61104.
By order of the Board of Directors,
/s/ James S. Waddell
James S. Waddell
Secretary
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EXHIBIT A
AMCORE STOCK OPTION ADVANTAGE PLAN
PREAMBLE
WHEREAS, AMCORE Financial. Inc. (the "Company") desires to establish a plan
through which certain employees of the Company and its affiliates may purchase
from the Company shares of its common stock; and
WHEREAS, the Company intends that the plan be an "employee stock purchase
plan" within the meaning of section 423 of the Internal Revenue Code of 1986,
and has designed the plan to conform to the provisions of Rule 16b-3 of the
Exchange Act;
NOW, THEREFORE, the Company hereby establishes the AMCORE Stock Option
Advantage Plan (the "Plan"), subject to the approval of stockholders of the
Company, to be effective April 1, 1999:
ARTICLE 1.
PURPOSE OF PLAN
The purpose of the Plan is to secure for the Company and its shareholders
the benefits of the incentive inherent in the ownership of the Company's common
stock by present and future eligible employees of the Company and its
Affiliates.
ARTICLE 2.
DEFINITIONS
2.1 Administrator. The individual or committee designated by the Board
to administer the Plan.
2.2 Affiliate. Each corporation that is designated as an Affiliate by
the Company pursuant to Section 5.3.
2.3 Agreement. An enrollment and authorization form submitted by an
Eligible Employee to the Administrator through which the Eligible Employee
elects to participate in the Plan and authorizes payroll deductions or other
procedures established by the Administrator for payment of the exercise price of
Options.
2.4 Board. The Board of Directors of the Company.
2.5 Code. The Internal Revenue Code of 1986, as amended.
2.6 Company. AMCORE Financial, Inc. and its successors and assigns.
2.7 Compensation. An employee's annual rate of compensation earned from
employment with the Company or one of its Affiliates, including regular
earnings, bonuses, overtime, commissions, shift premium, incentive compensation,
incentive payments, amounts elected under a salary reduction agreement pursuant
to a plan described in section 125 of the Code or a deferred compensation plan,
and amounts excluded from taxable income under section 402(g) of the Code.
2.8 Eligible Employee. An Employee of the Company or an Affiliate who is
compensated through the Company's or the Affiliate's regular payroll, except for
the following:
(a) An Employee whose customary employment by the Company or Affiliate is
20 hours or less per week.
(b) An Employee whose customary employment by the Company or Affiliate is
for five months or less in a calendar year.
(c) An employee who would own more than 5% of the total combined voting
power of all classes of stock of the Company or an Affiliate at the
time such employee would be granted an Option. For
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the purpose of determining if an employee owns more than 5% of such
stock, he shall be deemed to own (i) any stock owned (directly or
indirectly) by or for his brothers and sisters (whether by whole or half
blood), spouse, ancestors or lineal descendants, (ii) any stock owned
(directly or indirectly) by or for a corporation, partnership, estate or
trust of which such individual is a shareholder, partner or beneficiary
in proportion to his interest in such corporation, partnership, estate
or trust, and (iii) any stock the individual may purchase under an
outstanding stock option.
For purposes of the Plan and except as provided in Section 3.1(c), the
employment relationship shall be treated as continuing intact while the
individual is on sick leave or other leave of absence approved by the
Company.
2.9 Employee. A regular common law employee of the Company or an
Affiliate who is paid through the Company's regular payroll.
2.10 Exchange Act. The Securities Exchange Act of 1934, as amended.
2.11 Exercise Date. The last day of each of the months of March, June,
September and December on which the NASDAQ is open for trading.
2.12 Exercise Period. The Exercise Period for each Eligible Employee
shall be the period that begins on the Grant Date hereunder and expires twelve
(12) months thereafter.
2.13 Fair Market Value shall mean, as of any date, the value of Stock
determined as follows:
a) If the Stock is listed on any established stock exchange or a national
market system, including without limitation the Nasdaq National Market
or The Nasdaq Small Cap Market of The Nasdaq Stock Market, its Fair
Market Value shall be the closing price for such stock as quoted on
such exchange or system for the last market trading day on the date of
such determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable;
b) If the Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, its Fair Market Value shall be the
mean of the closing bid and asked prices for the Stock on the date of
such determination, as reported in The Wall Street Journal, or such
other source as the Board deems reliable;
c) In the absence of an established market for the Stock, the Fair Market
Value thereof shall be determined in good faith by the Board.
2.14 Grant Date. The Grant Date for each Eligible Employee shall be
January 1, April 1, July 1 or October 1 of the calendar year in which such
Eligible Employee enrolls in the Plan in accordance with Section 3.1.
2.15 Option. The right that is granted hereunder to a Participant to
purchase from the Company a stated number of shares of Stock at the Fair Market
Value on each Exercise Date.
2.16 Participant. An Eligible Employee who has elected to participate in
the Plan in accordance with Article 3.
2.17 Payroll Account. A bookkeeping account maintained by the Company or
its designated record-keeper to which is added the amounts withheld on behalf of
each Participant under regular payroll deductions, or otherwise, deposited into
the account as authorized by a Participant, and reduced by amounts used to
purchase shares of Stock.
2.18 Plan. The AMCORE Stock Option Advantage Plan.
2.19 Stock. The common stock of the Company, $0.22 par value.
2.20 Stock Account. The book-entry account established by the
Administrator to which all purchases of Stock pursuant to the exercise of an
Option granted under the Plan are credited.
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ARTICLE 3.
GRANT AND EXERCISE OF OPTIONS
3.1 Participation and General Conditions. An Eligible Employee may elect
to become a Participant by completing the Agreement and filing it with the
Administrator prior to the Grant Date or by responding to enrollment procedures
in the form and manner prescribed by the Administrator prior to the Grant Date.
Payroll deductions for a Participant shall commence on the first payroll
following the Grant Date and shall end on the last payroll in the Exercise
Period to which such authorization is applicable, unless sooner terminated by
the Participant as provided in Section 3.7 and 3.8 hereof.
On the Grant Date, each Eligible Employee who becomes a Participant, shall,
without further action of the Administrator, be granted an Option to purchase a
number of whole shares of Stock that, in the aggregate, have an exercise price
(as described below) that is not more than the amount contributed to the Plan by
the Participant, and does not exceed 10% of the Participant's Compensation on
each pay day during the Exercise Period. In addition, no Eligible Employee may
be granted an Option which permits his rights to purchase Stock under the Plan
and all other employee stock purchase plans (described in section 423(b) of the
Code) of the Company and its Affiliates to accrue at a rate that exceeds $25,000
of Fair Market Value of such Stock (determined on the date that the Option is
granted) for each calendar year in which such Option is outstanding at any time.
Each Option grant is subject to the following terms and conditions:
(a) The exercise price of each Option shall be 85% of Fair Market Value of
each share of Stock that is subject to the Option, determined on
either the Grant Date or, if less, on the Exercise Date.
(b) Each Option, or portion thereof, that is not exercised during an
Exercise Period shall expire at the end of the Exercise Period in
which the Option was granted, unless it expires sooner pursuant to
Section 3.1(c).
(c) Each Option shall expire on the date that the Eligible Employee
terminates employment with the Company and all of its Affiliates;
provided, however, that the Option shall terminate three months after
such termination of employment if termination is due to the death or
disability of the Eligible Employee. For purposes of this provision, a
Participant shall be considered disabled if he has been determined to
be disabled under the terms of the Company's Long-Term Disability
Plan.
(d) A right to purchase Stock which has accrued under one Option granted
hereunder may not be carried over to any other Option.
3.2 Right to Exercise. An Option shall be exercisable on each of the
Exercise Dates of the Exercise Period that includes the Grant Date on which the
Option was granted. An Eligible Employee must exercise an Option while he is an
employee of the Company or an Affiliate or within the periods that are specified
herein after termination of employment.
3.3 Method of Exercise. Unless a Participant withdraws from the Plan as
provided in Section 3.7 hereof, or unless the Board otherwise provides, such
Participant's Option shall be exercised automatically on the Exercise Date, and
the maximum number of shares of Stock subject to such Option will be purchased
for such Participant at the applicable option price with the accumulated payroll
deductions to the Participant's Payroll Account under the Plan pursuant to
Section 3.4 hereof.
The shares of Stock purchased upon exercise of an Option hereunder shall be
credited to the Participant's Stock Account as of the Exercise Date and shall be
deemed to be transferred to the Participant on such date. Except as otherwise
provided herein, the Participant shall have all rights of a shareholder with
respect to such shares of Stock upon their being credited to the Participant's
Stock Account.
3.4 Payment of Exercise Price. Amounts credited to a Participant's
Payroll Account shall be accumulated and reserved for payment of the exercise
price of Options granted hereunder.
(a) A Participant may modify his election to participate in the Plan at
any time by timely providing the Administrator written notice in the
form prescribed by the Administrator. Such modification shall be
effective on the first payroll date following such notice or, if
later, the date specified in the notice.
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(b) An Agreement to begin or modify participation in the Plan must be
completed by the Participant within the time prescribed by the
Administrator prior to the last payroll date in the Exercise Period
for which it is to be effective. If the Agreement is not timely, it
shall take effect upon the next following Exercise Period.
(c) Each Participant's election specified under an Agreement shall remain
in effect for successive Exercise Periods until modified or withdrawn
by the Participant in accordance with this Section 3.4 and Section
3.7.
(d) Interruptions in employment as a result, for example, of a lay-off or
the Family and Medical Leave Act, are considered temporary
interruptions in participation in the Plan and payroll deductions are
to resume when the Eligible Employee returns to work.
3.5 Issuance of Stock. Unless the Participant withdraws from the Plan
pursuant to Section 3.7, on each Exercise Date, the Company shall issue in
book-entry format whole shares of Stock to a Participant as follows:
(a) On each Exercise Date the Company shall determine the number of whole
shares of Stock to be issued to each Participant by dividing the
balance of such Participant's Payroll Account by the applicable
exercise price of the Option.
(b) The Company shall deduct from a Participant's Payroll Account the
amount necessary to purchase the greatest number of whole shares of
Stock that can be acquired under the applicable Option.
(c) If, on an Exercise Date, Participants in the aggregate have Options to
purchase more shares of Stock than are available for purchase under
the Plan, each Participant shall be eligible to purchase a reduced
number of shares on a pro rata basis and any amounts remaining in the
Payroll Account shall be returned to such Participants, all as
provided by rules and regulations adopted by the Administrator.
(d) Any amounts remaining in the Payroll Account after deducting the
exercise price for whole shares of Stock shall generally be held for
use at a subsequent Exercise Date. However, a Participant who has made
contributions to a Payroll Account and has withdrawn from the Plan
under the terms of Section 3.7 may obtain payment of the amounts held
in his Payroll Account from the Company in the manner established by
the Administrator. A Participant who has terminated employment shall
be paid any amounts remaining in his Payroll Account in the manner
established by the Administrator.
3.6 Non-transferability. Any Option granted under this Plan shall not be
transferable except by will or by the laws of descent and distribution and shall
only be transferred in accordance with applicable restrictions. Only the
Participant to whom an Option is granted may exercise such Option, unless he is
deceased. No right or interest of a Participant in any Option shall be liable
for, or subject to, any lien, obligation, garnishment or liability of such
Participant.
3.7 Withdrawal. A Participant may withdraw from the Plan at any time in
the manner prescribed by the Administrator. All of the Participant's payroll
deductions credited to his or her Payroll Account shall be paid to such
Participant in accordance with Section 3.5(d) and such Participant's Option for
the Exercise Period shall be automatically terminated, and no further payroll
deductions for the purchase of shares of Stock shall be made for such Exercise
Period. If a Participant withdraws from an Exercise Period, payroll deductions
shall not resume at the beginning of any succeeding Exercise Period unless the
Participant delivers to the Company a new Agreement.
A Participant's withdrawal from an Exercise Period shall not have any
effect upon his or her eligibility to participate in any similar plan which may
hereafter be adopted by the Company or in succeeding Exercise Periods which
commence after the termination of the Exercise Period from which the Participant
withdraws.
3.8 Termination of Employment. Upon a Participant's ceasing to be an
Employee, for any reason, he or she shall be deemed to have elected to withdraw
from the Plan and the payroll deductions credited to such
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Participant's Payroll Account during the Exercise Period but not yet used to
exercise the Option shall be returned to such Participant or, in the case of his
or her death, to the person or persons entitled thereto by will or laws of
descent and distribution or as otherwise provided in the manner prescribed by
the Administrator, in accordance with Section 3.4(d).
3.9 Shareholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to his Option prior to the time that
such Option is exercised on the Exercise Date.
3.10 Issuance of Shares. Shares of Stock issued pursuant to the exercise
of Options hereunder shall be credited to the Stock Account of the Participant
established by the Administrator as soon as administratively feasible after a
Participant exercises an Option hereunder and executes any applicable
shareholder agreement that the Company requires at the time of exercise. A
Participant may request a stock certificate, which shall be issued as soon as
administratively feasible following the lapse of the restrictions set forth in
Section 4.4.
3.11 Application of Funds. All funds of Participants received or held by
the Company under the Plan before purchase of the Stock may be held in bank
accounts of the Company and shall not accrue interest.
3.12 Dividends. Dividends earned on shares of Stock held in the
Employee's Stock Account shall be credited to the Employee's Payroll Account and
used to purchase additional shares of Stock (as provided in the Company's
Dividend Reinvestment Plan).
ARTICLE 4.
STOCK SUBJECT TO PLAN
4.1 Source of Shares. Upon the exercise of an Option, the Company may
credit to the Participant's book-entry account authorized but unissued shares of
Stock.
4.2 Maximum Number of Shares. The maximum aggregate number of shares of
Stock that may be issued pursuant to the exercise of Options is 250,000, subject
to increases and adjustments as provided in Article 6.
4.3 Forfeitures. If an Option is terminated, in whole or in part, the
number of shares of Stock allocated to such Option or portion thereof may be
reallocated to other Options to be granted under this Plan.
4.4 Restriction on Sale of Stock. A Participant shall be prohibited from
selling any stock acquired under the terms of the Plan until the expiration of
the period commencing on each Exercise Date and ending two years later.
Notwithstanding the above, this sales restriction shall lapse upon the earlier
of the death, disability or retirement of the Participant. For purposes of this
provision, a Participant shall be considered disabled if he has been determined
to be disabled under the terms of the Company's Long-Term Disability Plan. The
Administrator may waive this restriction in its sole discretion. For purposes of
this provision a Participant shall be considered retired if he has ceased
employment at 55 years of age or older with ten (10) years of service or at 65
years of age or older with five (5) years of service.
ARTICLE 5.
ADMINISTRATION OF THE PLAN
5.1 General Authority. The Plan shall be administered by the
Administrator. The express grant in the Plan of any specific power to the
Administrator shall not be construed as limiting any power or authority of the
Administrator. The Administrator shall not be liable for any act done in good
faith with respect to this Plan or any Agreement or Option. The interpretation
and construction by the Administrator of any terms or provisions of this Plan or
of any rule or regulation promulgated in connection herewith shall, to the
fullest extent permitted by law, be conclusive and binding on all persons. In
addition to all other authority vested with the Administrator under the Plan,
the Administrator shall have the discretionary authority to:
(a) Interpret all provisions of this Plan;
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<PAGE> 26
(b) Prescribe the form of any Agreement and notice and manner for
executing or giving the same;
(c) Adopt, amend, or rescind rules for Plan administration; and
(d) Make all determinations it deems advisable for the administration of
this Plan.
5.2 Persons Subject to Section 16(b). Notwithstanding anything in the
Plan to the contrary, the Board, in its absolute discretion, may bifurcate the
Plan so as to restrict, limit or condition the use of any provision of the Plan
to Participants who are members of the Committee subject to Section 16(b) of the
Exchange Act without so restricting, limiting or conditioning the Plan with
respect to other Participants.
5.3 Designation of Affiliates. The Company may from time to time
designate a "parent corporation," as defined in section 424(e) of the Code, or
"subsidiary corporation," as defined in section 424(f) of the Code, to be a
participating corporation in a manner that is consistent with Treasury
Regulation sec. 1.423-2(c)(4). Corporations that are so designated shall be
Affiliates for purposes of this Plan. Such designation shall be evidenced by the
express inclusion of the corporation as an Affiliate within Section 2.2, the
intentional act of the Company or the Administrator to communicate in writing
the grant of Options hereunder to employees of a corporation, or such other
written document that is intended to evidence such designation. The Company or
Administrator may rescind the designation of a corporation as an Affiliate by
adopting a writing that is intended to evidence such rescission.
ARTICLE 6.
ADJUSTMENT UPON CORPORATE CHANGES
6.1 Adjustments to Shares upon Changes in Capitalization. Subject to any
required action by the stockholders of the Company and subject to Section 6.3,
the reserves of authorized Stock, the maximum number of shares each Participant
may purchase each Exercise Period, as well as the price per share and the number
of shares of Stock covered by each Option under the Plan which has not yet been
exercised shall, as the Administrator determines (in its sole discretion) to be
appropriate, be proportionately adjusted for any increase or decrease in the
number of issued shares of Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Company's Stock,
or any other increase or decrease in the number of shares of the Company's Stock
effected without receipt of consideration by the Company or there occurs any
other event which in the judgment of the Administrator necessitates such action.
6.2 Dissolution, Liquidation, Merger or Asset Sale. In the event of the
proposed dissolution or liquidation of the Company, a proposed merger of the
Company with or into another corporation or a proposed sale of all or
substantially all of the assets of the Company, the Exercise Period then in
progress shall be shortened by setting a new Exercise Date (the "New Exercise
Date"), and shall terminate immediately prior to the consummation of such
proposed dissolution, liquidation, merger or asset sale, unless provided
otherwise by the Board. The New Exercise Date shall be before the date of the
Company's proposed dissolution, liquidation, merger or asset sale. The
Participant's Option shall be exercised automatically on the New Exercise Date,
unless prior to such date the Participant has withdrawn from the Exercise Period
as provided in Section 3.7 hereof. Notwithstanding the foregoing, if the Board
determines, in its sole discretion, to continue the Plan upon a merger with or
into another corporation, the Administrator may grant Options in substitution
for stock awards, stock options, stock appreciation rights or similar awards
held by an individual who becomes an employee of the Company or an Affiliate in
connection with a transaction to which section 424(a) of the Code applies. The
terms of such substituted Options shall be determined by the Administrator in
its sole discretion, subject only to the limitations of Article 4.
6.2 No Preemptive Rights. The issuance by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, for
cash or property, or for labor or services rendered, either upon direct sale or
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, outstanding Options.
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<PAGE> 27
6.3 Fractional Shares. Only whole shares of Stock may be acquired
through the exercise of an Option. The Company will return to each Participant's
Payroll Account any amount tendered in the exercise of an Option remaining after
the maximum number of whole shares have been purchased.
ARTICLE 7.
LEGAL COMPLIANCE CONDITIONS
7.1 General. No Option shall be exercisable, no Stock shall be issued,
no certificates for shares of Stock shall be delivered, and no payment shall be
made under this Plan except in compliance with all federal and state laws and
regulations (including, without limitation, withholding tax requirements),
federal and state securities laws and regulations and the rules of all national
securities exchanges or self-regulatory organizations on which the Company's
shares may be listed. The Company shall have the right to rely on an opinion of
its counsel as to such compliance. No Option shall be exercisable, no Stock
shall be issued, no certificate for shares shall be delivered and no payment
shall be made under this Plan until the Company has obtained such consent or
approval as the Administrator may deem advisable from any regulatory bodies
having jurisdiction over such matters.
7.2 Stock Holding Periods. In order for tax treatment under section
421(a) of the Code to apply to Stock acquired hereunder, the Participant is
generally required to hold such shares of Stock for two years after the Grant
Date of an Option through which shares of Stock were acquired and for one year
after the transfer of Stock to the Participant. A person holding Stock acquired
hereunder who disposes of shares prior to the expiration of such holding
periods, and in accordance with Section 4.4, shall notify the Company of such
disposition in writing.
7.3 Stock Legends. Any certificate issued to evidence shares of Stock
for which an Option is exercised may bear such legends and statements as the
Company or Administrator may deem advisable to assure compliance with federal
and state laws and regulations and any other restrictions. Such legends and
statements may include, but are not limited to, restrictions on transfer.
7.4 Representations by Participants. As a condition to the exercise of
an Option, the Company may require a Participant to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares.
At the option of the Company, a stop transfer order against any shares of stock
may be placed on the official stock books and records of the Company, and a
legend indicating that the stock may not be pledged, sold or otherwise
transferred unless an opinion of counsel was provided (concurred in by counsel
for the Company) and stating that such transfer is not in violation of any
applicable law or regulation may be stamped on the stock certificate in order to
assure exemption from registration. The Administrator may also require such
other action or agreement by the Participants as may from time to time be
necessary to comply with the federal and state securities laws. This provision
shall not obligate the Company or any Affiliate to undertake registration of
options or stock hereunder.
ARTICLE 8.
GENERAL PROVISIONS
8.1 Effect on Employment. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any employee any right to continue in the employ of
the Company or an Affiliate or in any way affect any right and power of the
Company or an Affiliate to terminate the employment of any employee at any time
with or without assigning a reason therefor.
8.2 Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon contractual obligations that may be created hereunder. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
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8.3 Costs. All costs and expenses incurred in administering the Plan
shall be paid by the Company, except that any brokerage fees incurred upon the
sale of the stock or costs incurred in the issuance of a stock certificate shall
be paid by the Participant.
8.4 Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
masculine gender when used herein refers to both masculine and feminine. The
reference to any statute, regulation or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
8.5 Governing Law. The internal laws of the State of Nevada shall apply
to all matters arising under this Plan, to the extent that federal law does not
apply. This Plan is not intended to be subject to the Employee Retirement Income
Security Act of 1974, as amended, but is intended to comply with Section 423 of
the Code. Any provisions required to be set forth in this Plan by such Code
Section are hereby included as fully as if set forth in the Plan.
8.6 Compliance With Section 16 of the Exchange Act. With respect to
persons subject to Section 16 of the Exchange Act, transactions under this Plan
are intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act. To the extent any provision of this Plan or
action by the Administrator fails to so comply, it shall be deemed null and void
to the extent permitted by law and deemed advisable by the Administrator.
8.7 Amendment. The Board may amend this Plan at any time; provided,
however, that an amendment that would have an adverse effect on the rights of a
Participant under an outstanding Option is not valid with respect to such Option
without the Participant's consent, except as provided in Section 4.4(a) and
except where the Board determines that changes in applicable accounting rules or
a change in applicable laws render an amendment desirable, in which case the
Board may approve such amendment. Provided further, the shareholders of the
Company must, within 12 months before or after the adoption thereof, approve any
amendment that increases the number of shares of Stock in the aggregate which
may be issued pursuant to Options granted under the Plan or changes the
designation of the employees (or class of employees) eligible for participation
in the Plan.
8.8 Termination. The Board may terminate this Plan at a any time or for
any reason; provided, however, that no such termination can affect Options
previously granted which would adversely affect the right of any Participant.
Provided further, if the Board determines that changes in applicable accounting
rules or a change in applicable laws renders a termination desirable, then the
Board may approve such termination. The Plan shall terminate upon the earliest
to occur of (i) the termination of the Plan by the Board in accordance with this
Section 8.8, (ii) issuance of all of the shares of Stock reserved for issuance
under the Plan, or (iii) ten (10) years from the effective date. The termination
of the Plan shall be done in accordance with the procedures established by the
Administrator.
8.9 Governmental Regulations. The Company's obligation to sell and
deliver its stock pursuant to the Plan is subject to all applicable laws, rules
and regulations, including all applicable federal and state securities laws, and
the obtaining of all such approvals of any governmental or regulatory authority
as may be deemed necessary or appropriate by the Board.
8.10 Withholding. The Company reserves the right to withhold from stock or
cash distributed to a Participant any amounts which it is required by law to
withhold.
8.11 Effective Date of Plan. This Plan shall be effective and Options may
be granted under this Plan on April 1, 1999, provided that no Option will be
effective or exercisable unless and until this Plan is approved by shareholders
of the Company in a manner that satisfies Treasury Regulation sec. 1.423-2
within 12 months of the date that the Board took action to adopt the Plan. All
Options granted under the Plan will become void immediately following the
12-month anniversary of the date the Board adopted the Plan if such approval by
shareholders has not yet been obtained.
-8-
<PAGE> 29
IN WITNESS WHEREOF, the undersigned officer has executed this Plan this
day of , 1999, to be effective April 1, 1999.
AMCORE FINANCIAL, INC.
By:
Its:
-9-
<PAGE> 30
AMCORE FINANCIAL, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF AMCORE FINANCIAL, INC.
FOR THE ANNUAL MEETING ON MAY 4, 1999
The undersigned holder of Common Stock of AMCORE Financial, Inc. hereby
appoints Robert J. Meuleman and James S. Waddell or each of them, with full
power of substitution, to act as proxy for and to vote the stock of the
undersigned at the Annual Meeting of Stockholders of AMCORE Financial, Inc. to
be held at Cliffbreakers, 700 West Riverside Blvd., Rockford, Illinois, at 5:30
p.m., Rockford time, on May 4, 1999 or any adjournment thereof.
In their discretion, the proxies are authorized to vote upon other business
as may properly come before the meeting. This proxy when properly executed will
be voted in the manner directed herein by the undersigned stockholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1,2 AND 3.
DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED
AMCORE FINANCIAL, INC. 1999 ANNUAL MEETING
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS: 1- Lawrence E. Gloyd 2- John A. Halbrook [ ] FOR all nominees [ ] WITHOUT AUTHORITY
3- Frederick D. Hay 4- Robert J. Mauleman (listed to the left (except to vote for all
as specified below). nominees listed
to the left.
-------------------------------------
(Instructions: To withhold authority to vote for any indicated nominee, write ------------| | |
the number(s) of the nominee(s) in the box provided to the right.) -------------------------------------
2. Ratification of the appointment of KPMG Peat Marwick, LLP as independent auditors. [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the AMCORE Stock Option Advantage Plan. [ ] FOR [ ] AGAINST [ ] ABSTAIN
Check appropriate box Date:
Indicate changes below: -----------------------
Address Change? [ ] Name Change? [ ] -------------------------------------
| |
| |
| |
-------------------------------------
SIGNATURE(S) IN BOX
Please sign exactly as your name
appears hereon. When shares are held by
joint tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by an
authorized person.
</TABLE>
