<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ST.PAUL BANCORP, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
6700 West North Avenue
Chicago, Illinois 60635
(312) 622-5000
March 27, 1995
Dear Shareholder:
You are invited to attend the annual meeting of shareholders (the "Annual
Meeting") of St. Paul Bancorp, Inc. (the "Corporation") to be held on
Wednesday, May 3, 1995 at 10:00 a.m. at The Drury Lane Oakbrook, 100 Drury
Lane, Oakbrook Terrace, Illinois 60181.
The Annual Meeting has been called for the following purposes: (1) to elect
each of four directors for a three-year term; (2) to consider and vote upon a
proposal to approve the Corporation's 1995 Incentive Plan; (3) to ratify the
appointment by the Board of Directors of the firm of Ernst & Young LLP as
independent auditors of the Corporation for the year ending December 31, 1995;
and (4) to transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
THE BOARD OF DIRECTORS OF THE CORPORATION RECOMMENDS THAT YOU VOTE "FOR"
ELECTION OF THE FOUR NOMINEES OF THE BOARD OF DIRECTORS AS DIRECTORS; "FOR"
PROPOSAL 2 TO APPROVE THE CORPORATION'S 1995 INCENTIVE PLAN; AND "FOR"
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF
THE CORPORATION FOR THE YEAR ENDING DECEMBER 31, 1995. The accompanying proxy
statement provides detailed information concerning the matters to be voted on
at the Annual Meeting. Also enclosed is our 1994 annual report to shareholders
which reviews results for the 1994 fiscal year.
It is important that your shares be represented at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, you are requested to
complete, date, sign and return the enclosed proxy card in the enclosed postage
paid envelope.
On behalf of the Board of Directors, thank you for returning your proxy and
for your continued interest and support.
Sincerely yours,
LOGO
Joseph C. Scully
Chairman of the Board and
Chief Executive Officer
<PAGE>
LOGO
6700 West North Avenue
Chicago, Illinois 60635
(312) 622-5000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, MAY 3, 1995
----------------
NOTICE IS HEREBY GIVEN that the 1995 annual meeting of shareholders (the
"Annual Meeting") of St. Paul Bancorp, Inc. (the "Corporation") will be held on
Wednesday, May 3, 1995 at 10:00 a.m. at The Drury Lane Oakbrook, 100 Drury
Lane, Oakbrook Terrace, Illinois 60181 for the following purposes:
(1) To elect each of four directors for a three-year term (Proposal 1);
(2) To consider and vote upon a proposal to approve the Corporation's 1995
Incentive Plan
(Proposal 2);
(3) To ratify the appointment by the Board of Directors of the firm of
Ernst & Young LLP as independent auditors of the Corporation for the
year ending December 31, 1995 (Proposal 3); and
(4) To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
Pursuant to the Corporation's Bylaws, the Board of Directors has fixed the
close of business on March 17, 1995 as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. Only
holders of common stock of record at the close of business on that date will be
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
In the event that there are not sufficient votes to approve any one or more
of the foregoing proposals at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit further solicitation of proxies by
the Corporation.
By Order of the Board of Directors
LOGO
Joseph C. Scully
Chairman of the Board and
Chief Executive Officer
Chicago, Illinois
March 27, 1995
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE AND
COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
LOGO
6700 West North Avenue
Chicago, Illinois 60635
(312) 622-5000
----------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 3, 1995
----------------
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This proxy statement is furnished to shareholders of St. Paul Bancorp, Inc.
(the "Corporation") in connection with the solicitation by the Board of
Directors of the Corporation of proxies to be used at the 1995 annual meeting
of shareholders (the "Annual Meeting") to be held on Wednesday, May 3, 1995 at
10:00 a.m. at The Drury Lane Oakbrook, 100 Drury Lane, Oakbrook Terrace,
Illinois 60181, and at any adjournments thereof. This proxy statement and the
accompanying proxy are initially being mailed to shareholders on or about March
27, 1995.
The Annual Meeting has been called for the following purposes: (1) to elect
each of four directors for a three-year term; (2) to consider and vote upon a
proposal to approve the Corporation's 1995 Incentive Plan; (3) to ratify the
appointment by the Board of Directors of the firm of Ernst & Young LLP as
independent auditors of the Corporation for the year ending December 31, 1995;
and (4) to transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
If the enclosed form of proxy is properly executed and returned to the
Corporation in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
EXECUTED BUT UNMARKED PROXIES WILL BE VOTED (1) FOR PROPOSAL 1 TO ELECT EACH OF
THE FOUR NOMINEES TO THE BOARD OF DIRECTORS; (2) FOR PROPOSAL 2 TO APPROVE THE
CORPORATION'S 1995 INCENTIVE PLAN; AND (3) FOR PROPOSAL 3 TO RATIFY THE
APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE CORPORATION FOR
THE YEAR ENDING DECEMBER 31, 1995. Except for procedural matters incident to
the conduct of the Annual Meeting, the Corporation does not know of any matters
other than those described in the Notice of Annual Meeting that are to come
before the Annual Meeting. If any other matters are properly brought before the
Annual Meeting, the persons named in the accompanying proxy will vote the
shares represented by the proxies on such matters as determined by a majority
of the Board of Directors.
The presence of a shareholder at the Annual Meeting will not automatically
revoke such shareholder's proxy. Shareholders may, however, revoke a proxy at
any time prior to its exercise by delivering to the Corporation a duly executed
proxy bearing a later date, by attending the Annual Meeting and voting in
person, or by filing a written notice of revocation with Clifford M. Sladnick,
Senior Vice President, General Counsel and Corporate Secretary, at 6700 West
North Avenue, Chicago, Illinois 60635.
1
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The cost of soliciting proxies in the form enclosed herewith will be borne by
the Corporation. In addition to the solicitation of proxies by mail, the
Corporation and its wholly-owned subsidiary, St. Paul Federal Bank For Savings
(the "Bank"), through their directors, officers and employees, may also solicit
proxies personally or by telephone or telecommunication. The Corporation also
will request persons, firms and corporations holding shares in their names or
in the name of their nominees, which are beneficially owned by others, to send
proxy material to and obtain proxies from such beneficial owners and will
reimburse such holders for their reasonable expenses in doing so. The
Corporation also has retained Morrow & Co. to assist in the solicitation of
proxies at a fee of $7,000, plus reimbursement of certain out-of-pocket
expenses.
The securities which can be voted at the Annual Meeting consist of shares of
common stock, par value $.01 per share (the "Common Stock") of the Corporation,
with each share entitling its owner to one vote on all matters. There is no
cumulative voting of shares. The close of business on March 17, 1995 has been
fixed by the Board of Directors as the record date for determination of
shareholders entitled to vote at the Annual Meeting. The number of shares of
the Corporation's Common Stock outstanding on March 17, 1995 was 18,562,567.
There were approximately 7,464 record holders of the Corporation's Common Stock
as of that date. The presence, in person or by proxy, of at least one-third of
the total number of issued and outstanding shares of Common Stock of the
Corporation is necessary to constitute a quorum at the Annual Meeting.
Votes cast, either in person or by proxy, will be tabulated by The First
National Bank of Boston. Under Delaware corporate law and the Corporation's
Bylaws, directors are elected by plurality of votes of shares present (in
person or by proxy) and entitled to vote. The affirmative vote of holders of a
majority of the shares present (in person or by proxy) and entitled to vote is
required to approve the Corporation's proposed 1995 Incentive Plan. Unless
otherwise required by law or the Corporation's Certificate of Incorporation or
Bylaws, any other matter put to a shareholder vote will be decided by the
affirmative vote of a majority of the votes cast on the matter. Abstentions and
broker non-votes will be treated as shares that are present, or represented,
and entitled to vote for purposes of determining the presence of a quorum.
Broker non-votes will not be counted as shares present and entitled to vote nor
as a vote cast on any matter presented at the Annual Meeting. Abstentions will
have the same effect as a negative vote on Proposal 2.
A copy of the annual report to shareholders for the year ended December 31,
1994 accompanies this proxy statement. THE CORPORATION IS REQUIRED TO FILE AN
ANNUAL REPORT/FORM 10-K FOR ITS FISCAL YEAR ENDED DECEMBER 31, 1994 WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "SEC"). SHAREHOLDERS MAY OBTAIN, FREE
OF CHARGE, A COPY OF THE ANNUAL REPORT/FORM 10-K, EXCLUDING EXHIBITS, BY
WRITING TO CLIFFORD M. SLADNICK, SENIOR VICE PRESIDENT, GENERAL COUNSEL AND
CORPORATE SECRETARY, ST. PAUL BANCORP, INC., 6700 WEST NORTH AVENUE, CHICAGO,
ILLINOIS 60635. THE CORPORATION WILL PROVIDE COPIES OF THE EXHIBITS TO THE
ANNUAL REPORT/FORM 10-K UPON REQUEST DIRECTED TO THE SAME ADDRESS FOR A
REASONABLE FEE.
ELECTION OF DIRECTORS
(PROPOSAL 1)
Under the Corporation's Bylaws, the number of directors is set at ten. The
directors are divided into three classes. The term of office of only one class
of directors expires in each year, and their successors are elected for terms
of three years and until their successors are elected and qualified.
At the 1995 Annual Meeting, each of four directors will be elected for a
three-year term. Unless otherwise specified on the proxy, it is the intention
of the persons named in the proxy to vote the shares represented by each
properly executed proxy for the election as director of the persons named below
as
2
<PAGE>
nominees. The Board of Directors believes that each of the nominees will stand
for election and will serve if elected as directors. However, if any of the
persons nominated by the Board of Directors fails to stand for election or will
be unable to accept election, the proxies will be voted for the election of
such other person or persons as the Board of Directors may nominate.
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS
The following table sets forth the names of the Board of Directors' four
nominees for election as directors and those directors who will continue to
serve as such after the 1995 Annual Meeting. Also set forth is certain other
information, some of which has been obtained from the Corporation's records and
some of which has been supplied by the nominees and continuing directors, with
respect to each such person's age at March 17, 1995, the periods during which
such person has served as a director of the Bank, and positions currently held
with the Corporation. Each person has been a director of the Corporation since
its formation in 1987, except for Patrick J. Agnew, who joined the Board in
1989, and John W. Croghan and Jean C. Murray, O.P., who joined the Board in
1993.
<TABLE>
<CAPTION>
DIRECTOR OF
THE BANK POSITIONS HELD WITH EXPIRATION
AGE SINCE THE CORPORATION OF TERM
--- ----------- ------------------- ----------
<C> <C> <C> <S> <C>
NOMINEES FOR 3-YEAR TERM:
Patrick J. Agnew (a)(b)(c)(d)(e)(f). 52 1989 President, Chief 1998
Operating
Officer and Director
William A. Anderson (b)(f)(g)....... 69 1985 Director 1998
Alan J. Fredian (c)(h)(i)........... 64 1977 Director 1998
Jean C. Murray, O.P.(e)............. 67 1993 Director 1998
CONTINUING DIRECTORS:
John W. Croghan (f)................. 64 1993 Director 1996
Kenneth J. James (a)(b)............. 62 1987 Director 1996
Michael R. Notaro(c)(d)(h)(i)....... 76 1966 Director 1996
Joseph C. Scully (a)(b)(c)(d)(e)(f). 54 1980 Chairman of the Board, 1997
Chief Executive Officer
and Director
John J. Viera (e)(g)(h)(i).......... 63 1978 Director 1997
James B. Wood (a)(b)(d)(f)(g)....... 74 1982 Director 1997
</TABLE>
--------
(a) Member of the Loan Committee of the Bank.
(b) Member of the Loan Loss Reserve Committee of the Bank.
(c) Member of the Profit Sharing, Pension and ESOP Trust Committee of the Bank.
(d) Member of the Executive Committees of the Corporation and the Bank.
(e) Member of the Corporate Responsibility Committee of the Bank.
(f) Member of the Investment Committee of the Bank.
(g) Member of the Audit and Accounting Committees of the Corporation and the
Bank.
(h) Member of the Organizational Planning Committees of the Corporation and the
Bank.
(i) Member of the Stock Option Committee of the Corporation.
3
<PAGE>
The principal occupation of each nominee and continuing director of the
Corporation for the past five years is set forth below.
PATRICK J. AGNEW joined the Bank in 1979 as General Counsel. He was appointed
President, Chief Operating Officer and a Director in December 1989. Prior to
joining the Bank, he was a partner in the law firm of Righeimer, Martin and
Cinquino. Mr. Agnew holds a juris doctor degree from DePaul University College
of Law. He serves on the boards of directors of the Oak Park Development
Corporation, the Oak Park Visitors Bureau and the Oak Park YMCA. Mr. Agnew is a
trustee of West Suburban Hospital and a board member of the Chicagoland
Association of Savings Institutions and the Illinois League of Savings
Institutions. He is also a member of the President's Council of Rosary College.
WILLIAM A. ANDERSON is a Certified Public Accountant and a retired partner of
Ernst & Young LLP. While with that firm, he specialized in providing
professional accounting services to the savings and loan industry. Since his
retirement he has provided consulting services to financial institutions and
other companies. He has served on various charitable and professional boards.
He is a member of the American Institute of Certified Public Accountants and
the Illinois Society of CPAs. Mr. Anderson holds a bachelor's degree in
accounting from the University of Illinois.
ALAN J. FREDIAN is Professor of the Institute of Human Resources and
Industrial Relations at Loyola University and has been affiliated with the
University since 1967. Dr. Fredian is an organizational psychologist and
president of Alan J. Fredian and Associates, management consultants. He has
authored several books and publications. He is a member of the Academy of
Management and the American Psychological Association's Division of Industrial
and Organizational Psychology. He serves as chairman of Loyola University's
Retirement Allowance Committee. He is a life member of the Board of Directors
of Building Owners and Managers Institute International. He holds a doctorate
degree in industrial psychology from the Illinois Institute of Technology.
JEAN C. MURRAY, O.P., is the retired President of Rosary College in River
Forest, Illinois. She had been affiliated with the College since 1961, serving
as a professor and an administrator in various capacities prior to her
appointment as President in 1981. Dr. Murray has been a member of the Sinsinawa
Dominicans since 1952. She holds an undergraduate degree in French from Rosary
College and a doctorate degree in French from the University of Fribourg, in
Switzerland. She also holds a certificate from the Institute of Educational
Management at Harvard University. Dr. Murray is a member of the Board of
Directors of Fenwick High School in Oak Park, Illinois, and the Association of
Catholic Colleges. She is a member of the American Association of Teachers of
French and served as the Chairperson of the Federation of Independent Illinois
Colleges and Universities. Dr. Murray is also a member of the Board of
Governors of the American Heart Association of Metropolitan Chicago.
JOHN W. CROGHAN is Chairman of Lincoln Capital Management Company, a Chicago-
based investment counseling firm, of which he was a founder in 1967. Mr.
Croghan is a graduate of Loyola University and holds a Masters of Business
Administration degree from Harvard University. He is a director of Lindsay
Manufacturing Company, the Morgan Stanley Emerging Markets Fund and the Morgan
Stanley Asia-Pacific Fund. Mr. Croghan serves on several non-profit boards,
including Northwestern University and Evanston Hospital.
KENNETH J. JAMES is Chairman of the Board of James Investment Company, real
estate developers, and J.S. James & Co., Inc., a real estate brokerage and
management company. He is a director of Illinois Masonic Medical Center, the
Robert R. McCormick unit of the Chicago Boys' and Girls' Clubs and the
Homebuilders Association of Greater Chicago. He holds an A.B. degree in
economics from Stanford University and a juris doctor degree from Northwestern
University. He is a member of the Illinois Bar.
4
<PAGE>
MICHAEL R. NOTARO is retired from Computer Data Processing Corp., a
privately-held firm which offered computer data processing services. From 1936
through 1990, Mr. Notaro was president of Chicago-based Statistical Tabulating
Corporation, a privately-held firm founded by Mr. Notaro. Mr. Notaro is a
trustee of DePaul University and former chairman of its board. He holds an
honorary doctor of laws degree from DePaul University. He serves on the boards
of Catholic Charities of Chicago, the Chicago Boys' Club and the Hundred Club
of Cook County. He is a former trustee of the Illinois Institute of Technology
and currently serves as a member of the Citizens Board of Loyola Hospital. Mr.
Notaro is an emeritus member of the Finance Council for Cardinal Joseph
Bernardin of the Archdiocese of Chicago. He is a Knight of St. Gregory and a
Knight of Malta. He is co-trustee and co-executor of the estate of George S.
Halas, deceased owner of the Chicago Bears.
JOSEPH C. SCULLY joined the Bank in 1963 as a real estate appraiser. He was
appointed Assistant Vice President in 1965, Vice President in 1968, Corporate
Secretary in 1971 and Senior Vice President in 1974. He was elected President,
Chief Operating Officer and a Director in 1980. He was elected Chief Executive
Officer in 1982. Mr. Scully held the dual roles of President and Chief
Executive Officer from 1982 to 1989, when he relinquished the role of President
to become Chairman and Chief Executive Officer. He holds undergraduate and
graduate degrees from Loyola University. In 1981, Loyola University named him
alumnus of the year. He serves as a trustee of Loyola University and chairs its
investment committee. Mr. Scully serves on the board of the Austin Career
Education Center Corp., the advisory board of Goodwill Industries, and the
Leadership Committee of the Central Board of Neighborhood Housing Services. For
the 1994 United Way/Crusade of Mercy campaign, he was chairman of the West
Region's Major Employers Division. Mr. Scully presently serves as a member of
the Thrift Institutions Advisory Council, a panel established by the Federal
Reserve Board. He is also the past chairman of the Community Investment
Corporation of Chicago, the Institute of Financial Education of the United
States League, the Federal Savings and Loan Council and the Chicago Association
of Savings Institutions.
JOHN J. VIERA is a retired Corporate Vice President of Commonwealth Edison
Company. He holds an undergraduate degree in electrical engineering from
Marquette University and a graduate degree in business administration from the
Illinois Institute of Technology. Since joining Commonwealth Edison Company in
1957, he has held several engineering and administrative positions. Mr. Viera
is a member of the Economic and Serra Clubs of Chicago, a Northwestern
Associate and a member of the advisory board for Marquette University. He is a
member of the Illinois Housing Development Authority and a trustee of Roosevelt
University and the Chicago Architecture Foundation. He is on the boards of
Urban Gateways, Neighborhood Housing Services and Catholic Charities. Mr. Viera
maintains memberships in the Western Society of Engineers and the Institute of
Electronic and Electrical Engineers.
JAMES B. WOOD is President of Equity Builders of Illinois, Inc., with which
he has been affiliated since 1954. Equity Builders of Illinois, Inc. is a
construction firm engaged in the development of apartments and single-family
homes. Mr. Wood is past president of Northern Illinois Home Builders and a
former director of Standard Alliance Industries, Inc. He is past president of
the Oak Park-River Forest High School Board of Education and a life trustee of
West Suburban Hospital. Mr. Wood holds an undergraduate degree from Indiana
University and a Masters of Business Administration degree from Harvard
University.
DIRECTOR COMPENSATION
Directors of the Corporation are not paid for attending meetings of the Board
of Directors of the Corporation. Each director of the Corporation is also a
director of the Bank. Non-employee directors of the Bank are paid an annual
director's fee of $24,000, except that Mr. Notaro, as Chairman of the Executive
5
<PAGE>
Committee, receives an annual director's fee of $36,000. In addition to the
annual fee, non-employee directors receive board and committee meeting fees of
$500 per meeting ($600 for committee chairpersons), based upon attendance. Non-
employee directors also receive monthly meeting fees of $500 per month from St.
Paul Financial Development Corporation and $200 per month from Annuity Network,
Inc., which are both wholly-owned subsidiaries of the Corporation, as well as
$300 per month from St. Paul Service, Inc., a wholly-owned subsidiary of the
Bank. Directors who are employees of the Bank do not receive any such fees.
The Corporation and the Bank have adopted a nonqualified retirement plan (the
"Retirement Plan") for non-employee directors of the Corporation and the Bank.
Under the Retirement Plan, as amended, eligible directors receive annual
benefits consisting of a minimum of 60% (increasing to 70% for eleven or more
years of service and increasing by an additional 1% for each year of service in
excess of 20 years) of the regular annual compensation paid for services as a
director of the Corporation, the Bank or any of their subsidiaries during the
12-month period immediately preceding a termination of service (or, if greater,
during any 12 consecutive month period occurring during the three-year period
immediately preceding a termination of service). The Retirement Plan, as
amended, provides that benefits are paid once a director reaches age 70; after
the director's permanent and total disability; after a director nominated by
the Corporation is not reelected; or after termination following a change in
control. For the definition of "change in control", see "Executive
Compensation-Employment Agreements". Benefits are not paid if the director is
removed from the board for "cause", as defined.
Monthly payments are made under the Retirement Plan for the number of months
equal to the number of full months the eligible director has served as a
director. Directors have the right to elect to receive a lump-sum payment, as
calculated based upon an actuarial determination of the present value of the
plan's benefits. The Retirement Plan, as amended, provides for a spouse's
benefit if the director is married at the time of death. Eligible directors
must agree not to become an employee of any financial institution located
within 50 miles of the Bank's headquarters for a one-year period after
termination of service as a director in order to receive benefits. The
Retirement Plan, as amended, provides that the obligation of the Corporation
and the Bank to each eligible director will be funded as each such director
becomes entitled to receive payment of benefits. The Retirement Plan may be
amended or terminated at any time, but without affecting the vested rights of
directors to receive benefits.
CORPORATE GOVERNANCE AND OTHER MATTERS
The Board of Directors of the Corporation acts as a nominating committee for
selecting nominees for election as directors and has made its nominations for
the 1995 Annual Meeting. The Corporation's Bylaws also permit shareholders
eligible to vote at the Annual Meeting to make nominations for directors, but
only if such nominations are made pursuant to timely notice in writing to the
Secretary of the Corporation. To be timely, notice must be delivered to, or
mailed to and received at, the principal executive offices of the Corporation
not less than 30 days nor more than 90 days prior to the date of the meeting,
provided that at least 45 days' notice or prior public disclosure of the date
of the meeting is given or made to shareholders. Public disclosure of the date
of the 1995 Annual Meeting was made on March 14, 1995 by the issuance of a
press release followed by a filing of a Current Report on Form 8-K under the
Securities Exchange Act of 1934 (the "1934 Act") with the SEC. A shareholder's
notice of nomination must also set forth certain information specified in
Article III, Section 13 of the Corporation's Bylaws concerning each person the
shareholder proposes to nominate for election and the nominating shareholder.
Prior to printing this proxy statement, the Corporation had received no such
nominations.
6
<PAGE>
The Boards of Directors of the Corporation and the Bank have each appointed a
standing audit committee. During the year ended December 31, 1994, the audit
committees each conducted four meetings. The current members of the audit
committees are Messrs. Anderson, Viera and Wood. The duties of the committees
include reviewing with management and the Corporation's independent accountant
the annual financial statements, significant accounting policies, audit
conclusions regarding significant accounting estimates and the independent
accountant's letter to management concerning the effectiveness of financial and
accounting controls. In addition, the committees review the scope of the annual
independent accountant's audit and recommend to the Board of Directors the firm
to be engaged as the independent accountant. The committees also oversee the
Bank's internal audit function and review with the Director of Internal Audit
his conclusions regarding the adequacy of the organization's internal controls.
The committees may also examine and consider other matters relating to the
financial affairs of the Corporation and the Bank as they determine
appropriate.
The Boards of Directors of the Corporation and the Bank have each appointed a
standing organizational planning committee. During the year ended December 31,
1994, the organizational planning committees each conducted six meetings. The
current members of the organizational planning committees are Dr. Fredian and
Messrs. Notaro and Viera. The organizational planning committees function as
compensation committees. The duties of such committees include making
recommendations to the Boards of Directors concerning compensation of executive
officers and employee benefit plans. See "Executive Compensation-Report of the
Organizational Planning and Stock Option Committees on Executive Compensation".
The Boards of Directors of the Corporation and the Bank have each appointed a
standing executive committee. The Bylaws of the Corporation and the Bank give
the executive committees certain powers and authority in the management of the
business and affairs of the Corporation and the Bank when the Boards of
Directors are not in session. The executive committees also review and make
recommendations to the Boards of Directors concerning the Corporation's and the
Bank's annual budgets. During the year ended December 31, 1994, the executive
committees each conducted two meetings. The current members of the executive
committees are Messrs. Agnew, Notaro, Scully and Wood.
The Board of Directors of the Corporation has appointed a standing stock
option committee. The duties of the committee include making recommendations to
the Board of Directors concerning eligible persons to whom options will be
granted under the Corporation's stock option plan. During the year ended
December 31, 1994, the stock option committee conducted two meetings. The
current members of the stock option committee are Dr. Fredian and Messrs.
Notaro and Viera. See "Executive Compensation-Report of the Organizational
Planning and Stock Option Committees on Executive Compensation".
During 1994, the Corporation's Board of Directors held twelve meetings. No
incumbent director attended fewer than 75% of the aggregate of the total number
of meetings of the Corporation's Board of Directors and the total number of
meetings held by all committees of such board on which the director served.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain summary information concerning the
compensation paid by the Corporation and its subsidiaries for services rendered
during each of the fiscal years ended December 31, 1992, 1993 and 1994 to the
Corporation's chief executive officer and to each of the four other most highly
compensated executive officers of the Corporation determined as of December 31,
1994 (the "named executive officers").
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION (B) COMPENSATION
----------------- ------------
AWARDS
------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS OPTIONS/SARS COMPENSATION
POSITION YEAR ($) $ (A) # (C) ($) (D)
------------------ ---- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Joseph C. Scully.............. 1994 $366,618 $134,838 -0- $132,373
Chairman of the Board 1993 323,699 318,535 37,500 146,041
and Chief Executive Officer 1992 279,384 348,690 37,500 140,625
Patrick J. Agnew.............. 1994 259,992 131,640 -0- 82,606
President and Chief 1993 231,028 315,755 37,500 96,285
Operating Officer 1992 201,119 317,423 37,500 86,783
Robert N. Parke............... 1994 141,726 55,693 -0- 2,378
Senior Vice President, 1993 136,299 132,370 -0- 5,730
Finance 1992 129,800 145,253 18,000 8,206
and Chief Financial Officer
Thomas J. Rinella............. 1994 149,351 54,017 -0- 2,512
Senior Vice President, 1993 143,642 127,839 -0- 6,038
Community 1992 136,804 140,227 18,000 8,648
Lending
Clifford M. Sladnick.......... 1994 148,913 42,572 -0- 2,498
Senior Vice President, 1993 133,695 99,033 15,000 5,620
General 1992 117,804 108,244 18,000 7,447
Counsel and Corporate
Secretary
</TABLE>
--------
(a) Includes incentive compensation paid in July of 1992, 1993 and 1994 to the
Bank's officers based on a percentage of earnings, as well as annual
holiday bonuses (3% of base compensation) paid in December of each year.
Incentive compensation, if any, is paid in July of each year based upon the
Corporation's earnings during the preceding twelve month period, and is
included in the table based on the amount earned with respect to each year
presented. The amount of incentive compensation earned by the named
executive officers for the last six months of 1994 is not yet calculable.
(b) Certain executive officers of St. Paul Federal receive indirect
compensation in the form of personal benefits; including insurance
premiums, personal tax, financial and estate planning services, club
memberships and the use of automobiles. The amount of such indirect
compensation in 1994 did not exceed, with respect to any executive officer,
the lesser of $50,000 or 10% of the total amount of annual salary and bonus
paid to such officer.
(c) Represents stock options granted on June 22, 1992 and June 3, 1993 under
the Corporation's Stock Option Plan to purchase the stated number of shares
of the Corporation's Common Stock at exercise prices of $12.00 and $14.1667
per share, respectively. The number of shares subject to the stock options
and the per share exercise prices have been adjusted to reflect the
Corporation's three-for-two stock split on January 4, 1994. Although the
Corporation's Stock Option Plan permits the grant of stock appreciation
rights ("SARs"), no grants of SARs have been made.
(d) Consists of contributions to the Corporation's Employee Stock Ownership
Plan (the "ESOP") with respect to Mr. Parke, Mr. Rinella and Mr. Sladnick.
With respect to Messrs. Scully and Agnew, for 1994 consists of ESOP
contributions of $2,516 each, as well as deferred compensation of $129,857
and $80,090, respectively, earned under their respective employment
agreements.
8
<PAGE>
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth certain information, with respect to the named
executive officers, concerning the exercise of options during the fiscal year
ended December 31, 1994 and the value of unexercised options held as of
December 31, 1994.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS AT OPTIONS/SARS AT FISCAL
ON VALUE FISCAL YEAR-END (#) YEAR-END ($) (A)
EXERCISE REALIZED ------------------------- -------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph C. Scully........ -- -- 345,000 -- $3,256,240 --
Patrick J. Agnew........ -- -- 202,500 -- 1,712,495 --
Robert N. Parke......... 5,000 $ 76,667 73,000 -- 694,832 --
Thomas J. Rinella....... 15,000 239,375 70,500 -- 667,748 --
Clifford M. Sladnick.... -- -- 40,125 19,875 293,686 $114,312
</TABLE>
--------
(a) Market value of underlying securities at year-end, minus the exercise
price.
REPORT OF THE ORGANIZATIONAL PLANNING AND STOCK OPTION COMMITTEES ON EXECUTIVE
COMPENSATION
Overview and Philosophy
The Organizational Planning Committee (the "Planning Committee") and the
Stock Option Committee (together with the Planning Committee herein referred to
as the "Committee") of the Corporation's Board of Directors are both composed
of three outside directors, Dr. Fredian and Messrs. Notaro and Viera. The
Planning Committee is responsible for developing and making recommendations to
the Board with respect to the Corporation's executive compensation policies. In
addition, the Planning Committee determines annually the compensation that is
paid to the Chief Executive Officer and the other executive officers of the
Corporation, subject to Board approval. The Stock Option Committee selects,
subject to Board approval, the eligible persons to whom options will be granted
based on each individual's performance and responsibilities. The Stock Option
Committee prescribes the terms and provisions (which need not be identical) of
each option granted under the Option Plan.
The Committee has outside compensation consultants available and access to
independent national, regional and industry compensation survey information.
The objectives of the Corporation's executive compensation program are to:
. Directly tie individual executive pay to corporate performance;
. Support the achievements of the long- and short-term strategic goals and
performance objectives of the Corporation;
. Provide a competitive compensation program that will attract and retain
talented and qualified executives while rewarding individual achievement
and contribution; and
. Align the executives' interests with corporate success by making a
substantial portion of compensation subject to profitability.
9
<PAGE>
The Corporation's executive compensation program provides an overall level of
compensation opportunity that is competitive within the thrift and banking
industry. The Committee will use its discretion to set executive compensation
where, in its judgment, external, internal or individual circumstances warrant
it.
The 1993 Tax Act
The Omnibus Budget Reconciliation Act of 1993 added a provision to the
Internal Revenue Code of 1986, as amended (the "Code"), which generally limits
to $1.0 million the Corporation's allowable deduction for federal income tax
purposes of certain compensation paid to executive officers, except for certain
"performance-based" compensation and certain compensation related to employee
benefit plans.
The Committee has considered the implications of this new law and has
concluded that, since the cash compensation paid to the Corporation's executive
officers is significantly below the $1.0 million limitation, no general policy
with respect to this matter is necessary at this time. The Corporation,
however, could be impacted by this new law to the extent that option exercises
by executive officers cause an individual's compensation in a particular year
to exceed $1.0 million. Accordingly, the Committee has attempted to conform the
terms of the proposed 1995 Incentive Plan to the new law such that compensation
attributable to awards thereunder will not be subject to the deduction
limitation. See "Proposed 1995 Incentive Plan".
Executive Officer Compensation Program
The Corporation's executive officer compensation program consists of base
salary, annual cash incentive compensation, long-term incentive compensation in
the form of stock options, deferred compensation, personal benefits such as tax
services, club memberships, financial planning and the use of automobiles, and
various benefits including medical and retirement plans generally available to
employees of the Corporation. The executive officer compensation program is
reviewed, with the assistance of an independent compensation consultant,
relative to other well-managed large thrift institutions, regional thrifts and
local bank competitors (the "Compensation Peer Group"). The Compensation Peer
Group (which consists of 20 large national thrifts, eight regional and local
thrifts and five local banks) is used to compare the Corporation's compensation
packages to that of other companies that compete with the Bank for executives.
The Committee believes that this peer group, which differs from the published
NASDAQ indices utilized in the Comparative Performance Graph set forth below,
is appropriate for executive compensation purposes.
Base Salary. Executive officer base salaries are set relative to market data
and surveys of the Compensation Peer Group. Base salaries are reviewed position
by position and are generally set at levels lower than market due to the large
emphasis on incentive compensation determined by annual corporate and
individual performance. Overall base salaries for the named executive officers
average 22% below the combined base salaries of the Compensation Peer Group. In
determining base salaries, the Committee also takes into consideration
individual experience and contributions, as well as level of responsibility.
Annual Incentive Compensation. The officer incentive compensation program is
the Corporation's annual incentive program for corporate officers. The purpose
of the incentive compensation program is to provide a direct link between
executive officer compensation and corporate earnings. The Planning Committee
believes that compensation tied to corporate performance strengthens
management's incentive to increase the Corporation's profitability.
Accordingly, annual incentive compensation is a significant component of the
executive officers' total cash compensation. For the named executive officers,
the portion of compensation attributable to the incentive program in 1994
ranged from 34% to 49% of total compensation.
10
<PAGE>
Incentive compensation for all corporate officers has averaged 5% of the
Corporation's earnings for the preceding twelve-month period, without deducting
for net additions to general loss reserves and taxes (but reduced by specific
loan loss reserves and loan charge-offs) and has been distributed to officers
based on individual performance and corporate level. In the absence of
earnings, no bonus is paid.
In fiscal 1994, the Corporation's net earnings declined by 16.6%, or $6.9
million, over 1993. In conjunction with this decline, bonus payments to all
officers of the Corporation were reduced by approximately 20%. The Planning
Committee believes that the annual incentive program provides an excellent link
between the level of the Corporation's earnings and the incentives paid to
executive officers.
Individual incentive bonus awards to the executive officers are determined,
at the discretion of the Planning Committee, based on individual performance
and achievement. The annual incentive bonus, when combined with base salary,
resulted in average compensation payments to the named executive officers at 3%
below the average of the Compensation Peer Group. The Planning Committee
believes that the level of compensation paid to the named executive officers
during 1994 was appropriate based upon the Corporation's financial performance
and the significant portion of compensation tied to corporate performance.
Stock Options. The Board of Directors of the Corporation believes that stock
options are important to increase the incentive and to attract and encourage
the continued employment and service of executive officers and other key
officers and employees by facilitating their purchase of a stock interest in
the Corporation. The Stock Option Committee believes that the grant of stock
options aligns management with the interests of the Corporation's shareholders,
while creating another form of performance-based compensation.
The Stock Option Plan authorizes the Stock Option Committee to administer the
plan and make recommendations to award stock options to key officers, directors
and employees. Stock options are granted at the discretion of the Stock Option
Committee, with grants generally made based on individual contributions and
upon promotion. Stock options are granted at an option price equal to the fair
market value of the Corporation's Common Stock on the date of grant, have ten
year terms and have exercise restrictions based on length of service. The
amount of stock option grants increases according to salary and position within
the Corporation.
In fiscal 1994, the named executive officers did not receive any stock option
grants.
Deferred Compensation Plan. A deferred compensation plan is provided to
Messrs. Scully and Agnew as part of their long-term incentive compensation
program. This plan, as specified in their employment agreements, requires that
a specified sum be credited annually to their account. In fiscal 1994, the
amounts credited (without earnings) for Messrs. Scully and Agnew were $129,857
and $80,090, respectively, representing 20% of Mr. Scully's and 15% of Mr.
Agnew's annual compensation.
Benefits. The Corporation provides medical, life insurance and retirement
benefits to the executive officers that are generally available on the same
terms to other employees of the Corporation. Certain executive officers receive
indirect compensation in the form of personal benefits; including insurance
premiums, personal tax services, financial planning, club memberships and the
use of automobiles. As to each executive officer, the amount of these
perquisites, as determined in accordance with the rules of the SEC relating to
executive compensation, did not exceed the lesser of either $50,000 or 10% of
annual compensation for fiscal 1994.
11
<PAGE>
Chief Executive Officer Compensation
At the beginning of fiscal 1994, Mr. Scully's base salary was $361,200.
During the year, Mr. Scully received a base salary increase of $10,836,
representing an increase of 3% effective July 1, 1994. His base salary at the
end of the fiscal year was $372,036. Mr. Scully's base salary is reviewed
annually by the Committee. The Committee consults with an independent
compensation consultant who conducts a customized survey of the Compensation
Peer Group. The survey data is used to develop trend line analysis which shows
the relationship between CEO total compensation and return on assets, as well
as CEO total compensation and institution asset size. As discussed above, the
Corporation's base salaries are set at the low end of the market data range,
allowing for an effective incentive compensation program. For 1994, Mr.
Scully's base salary was 20% below the peer group.
Mr. Scully received a bonus in fiscal 1994 of $260,000 for the period from
July 1, 1993 through June 30, 1994. The bonus was the result of corporate
performance for the above period and was paid from a pool which averaged 5% of
the Corporation's earnings for such period, without deducting for net additions
to general loss reserves and taxes (but reduced by specific loan loss reserves
and loan charge-offs).
In fiscal 1994, net earnings of the Corporation declined to $41.4 million, a
decrease of 16.6% over 1993. In addition, return on average assets (ROA)
decreased to 0.879% with return on average equity (ROE) at 9.72%, in both cases
a 24% decline. The Corporation's incentive program is designed to reward
officers according to annual earnings. In 1994, the decline in corporate
earnings and performance ratios resulted in a 20% decrease in Mr. Scully's 1994
incentive bonus payment.
The Committee believes that Mr. Scully has managed the Corporation well in a
challenging business environment for financial institutions, and has achieved
financial results generally equivalent to the Compensation Peer Group. Mr.
Scully's total cash compensation paid in 1994 was 11% below the average of the
Compensation Peer Group.
Submitted by the Members of the
Organizational Planning Committee
and the Stock Option Committee
Michael R. Notaro, Chairman Alan J. Fredian
John J. Viera
12
<PAGE>
COMPARATIVE PERFORMANCE GRAPH
The following graph sets forth comparative information regarding the
Corporation's cumulative shareholder return on its Common Stock over the last
five fiscal years. The shareholder return is measured by dividing total
dividends (assuming dividend reinvestment) plus share price change for a period
by the share price at the beginning of the measurement period. The
Corporation's cumulative shareholder return, based on an investment of $100 at
the beginning of the five-year period beginning January 1, 1990, is compared to
the cumulative total return of the NASDAQ Stock Market Index and the NASDAQ
Bank Stock Index.
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS
LOGO
[GRAPH APPEARS HERE]
<CAPTION>
Measurement Period ST. PAUL
(Fiscal Year Covered) BANC NASDAQ NASDAQ BANK
------------------- ---------- --------- -----------
<S> <C> <C> <C>
Measurement Pt-
12/29/89 $100.00 $100.00 $100.00
FYE 12/31/90 $ 50.23 $ 84.92 $ 73.23
FYE 12/31/91 $ 83.38 $136.28 $120.17
FYE 12/31/92 $148.08 $158.58 $174.87
FYE 12/31/93 $183.88 $180.93 $199.33
FYE 12/30/94 $174.19 $176.92 $198.69
</TABLE>
Employment Agreements. The Corporation and the Bank have entered into
employment agreements with Joseph C. Scully, Chairman of the Board and Chief
Executive Officer, and Patrick J. Agnew, President and Chief Operating Officer.
The salaries for Messrs. Scully and Agnew for the twelve month period ending
June 30, 1995 are $372,036 and $263,952, respectively. Each officer receives
annual salary increases as determined by the Bank's Board of Directors. Both
Mr. Scully and Mr. Agnew are entitled to participate in any discretionary
bonuses and retirement or other benefit plans applicable to the Corporation's
or the Bank's executive officers. The employment agreements for Messrs. Scully
and Agnew, as amended, are each for terms of three years, with each expiring on
December 19, 1997. The Corporation and the Bank may, upon the majority
affirmative vote of each of their respective Boards, by written notice to the
officer, renew the employment agreements for one additional year on each
anniversary date, commencing with the December 19, 1995 anniversary date,
unless the officer gives contrary written notice to the other parties prior to
such anniversary date. The employment
13
<PAGE>
agreements provide that the terms thereof are automatically terminated upon the
officer attaining the age of 65.
The employment of Messrs. Scully and Agnew may be terminated by the Boards of
Directors of the Corporation and the Bank at any time; provided, however, that
if the termination is not for cause, as defined in the agreements, each is
entitled: (a) to receive a lump sum payment in an amount equal to his then-
current compensation (including any bonuses paid during the then-current fiscal
year and deferred compensation credited for the preceding year) calculated for
a period equal to the remaining term of the agreement (provided that the
aggregate amount of such payment shall not exceed three times the officer's
then-current compensation) and (b) subject to certain limitations, to continue
to participate in retirement and other benefit plans for the remaining term of
the agreement, to be funded by an irrevocable trust established by the
Corporation and the Bank. Such lump sum payments for termination without cause
would be $2,318,622 and $1,835,526 for Messrs. Scully and Agnew, respectively,
based upon current salary and deferred compensation plus the most recent
incentive compensation paid to such officers, assuming a remaining term of
three years. However, if the termination of employment is in connection with a
"change in control", the lump sum severance payment would instead be calculated
in accordance with the provisions described below.
If any such officer terminates his employment without the consent of both
Boards, then the agreements restrict the terminating officer for one year or
the remaining term of the agreement plus six months, whichever is less, from
being employed by a competing bank, savings bank, savings and loan association
or mortgage banking company, or a holding company affiliate of any of the
foregoing, having an office in Illinois within 50 miles of the Bank's home
office, out of which the terminating officer would be primarily based.
If, during the term of the employment agreements, there is a "change in
control" of the Corporation or of the Bank, and the employment of Messrs.
Scully or Agnew is terminated, voluntarily or involuntarily, within two years
thereafter (except by reason of normal retirement, disability, death or for
cause), each will be entitled to receive, as liquidated damages for services
previously rendered, a lump sum cash payment. Such payment will be in the
amount of one year's then-current compensation, including deferred compensation
and any bonuses paid during the past twelve months, if employment is
voluntarily terminated without "good reason", defined in the agreements as,
among other things, a material reduction in the officer's salary or deferred
compensation, a material reduction in the officer's bonus below a certain
amount, the officer's relocation of more than 50 miles or a material reduction
in his position, authority, duties or responsibilities. If the officer's
employment is terminated by him voluntarily with good reason or involuntarily
by the Corporation or the Bank, such payment will be equal to the sum of (X)
the amount of the officer's then-current compensation which, but for such
termination, would be payable for the remaining term of the agreement, plus (Y)
one year's then-current compensation; provided that the aggregate amount of
such payment shall not exceed three times the officer's then-current
compensation. Based upon current salary and deferred compensation plus the most
recent incentive compensation paid to such officers, such payments would be
$772,874 and $611,842 for Messrs. Scully and Agnew, respectively, if employment
were terminated as described in the second sentence of this paragraph, and,
$2,318,622 and $1,835,526, respectively, if employment were terminated as
described in the third sentence of this paragraph. This payment will be in lieu
of the lump sum amount payable for termination without cause. The agreements
also permit Messrs. Scully and Agnew to receive a lump sum amount equal to, but
in lieu of, the above payment if they elect to terminate their employment
agreements while continuing to work for the Corporation and the Bank following
a change in control. In addition, such officers would be entitled, subject to
certain limitations, to continue to participate in retirement and other benefit
plans to be funded by an irrevocable trust created by the Corporation and the
Bank. The employment agreements provide that the officers shall not have the
right to receive any payment or benefits under the agreement to the extent that
such payment or benefit would cause any payment to be considered a "parachute
payment" under Section 280G of the Code.
14
<PAGE>
A "change in control" of the Corporation will be deemed to have occurred if
(i) any person becomes the beneficial owner of 25% or more of the Corporation's
voting shares; (ii) any person receives certain regulatory approvals to acquire
control of the Corporation; (iii) any person enters into a binding agreement to
acquire (by means of stock purchase, tender offer or merger) beneficial
ownership of 25% or more of the Corporation's voting shares, provided that a
change in control would not be deemed to occur unless the Board of Directors
makes a determination that such action constitutes a change in control, and
further provided that a change in control shall no longer be deemed to have
occurred upon any termination of such an agreement; (iv) any person becomes the
beneficial owner of 10% to 25% of the Corporation's voting shares, provided
that the OTS has made a determination that such ownership constitutes a change
in control of the Corporation; (v) any person (other than persons named as
proxies solicited on behalf of the Corporation) holds irrevocable proxies for
25% or more of the Corporation's voting shares, provided that the Board of
Directors has made a determination that such action constitutes a change in
control; and (vi) as the result of any tender offer, business combination or
contested proxy solicitation, the persons who were directors prior to such
transaction cease to constitute at least two-thirds of the Board of Directors
of the Corporation. The Board of Directors may de-trigger any transaction or
event (pursuant to which any person became the beneficial owner of up to 50% of
the Corporation's voting shares) which terminates or ceases to exist. A "change
in control" of the Bank will be deemed to have taken place if the Corporation's
beneficial ownership of the total number of outstanding voting shares of the
Bank is reduced to less than 50%.
The employment agreements with Messrs. Scully and Agnew each provide for
deferred compensation. In general, the employment agreements require St. Paul
Federal to credit a specified sum annually as deferred compensation for each of
these officers. The accrued payments will be paid to a named beneficiary if the
officer dies prior to retirement. In case of involuntary termination before the
end of the term of the agreement, the officer will receive the entire accrued
amount in annual payments over a period of ten years or a lesser period at the
option of the Bank. If the officer voluntarily terminates his employment, 75%
of the accrued amount will be payable to the officer in five annual payments.
If the officer remains in the employment of St. Paul Federal until he retires
due to age, early retirement or disability and refrains from engaging in any
competitive business, as described above, the accrued payments will be paid to
the officer in ten annual installments or a lesser period at the option of the
Bank. Each officer may elect, one year prior to the officer's retirement, to
extend the period within which he or his beneficiaries will receive
distribution of the accrued payments to a period not in excess of 15 years,
except that at the option of the Bank it may be paid over a lesser period.
Also, at the option of the Bank, distribution of the accrued payments may begin
at age 70 and such payments may be made over a 15-year period. The employment
agreements permit Messrs. Scully and Agnew to direct that deferred compensation
contributions be deemed to be invested in government securities, the Common
Stock of the Corporation or such other types of investments as directed by the
officer.
Severance Agreements. The Corporation and the Bank have entered into
severance agreements with the senior vice presidents and first vice presidents
of the Corporation and the Bank, including Robert N. Parke, Thomas J. Rinella
and Clifford M. Sladnick, Senior Vice Presidents of the Corporation and the
Bank. Under these agreements, each officer is entitled to receive a severance
payment in the event his employment with the Corporation and the Bank is
terminated, voluntarily or involuntarily (except by reason of normal
retirement, disability, death or for cause), within two years of a change in
control of the Corporation or of the Bank.
The severance agreements provide that each officer will receive one year's
then-current compensation, including any bonuses paid and any deferred
compensation credited to his account during the past twelve months, if he
voluntarily terminates his employment without "good reason" (defined in the
agreements to include, among other things, a reduction in the officer's salary,
a reduction in the officer's bonus below a
15
<PAGE>
certain amount, the officer's relocation of more than 50 miles, or a material
reduction in the position, authority, duties or responsibilities which existed
prior to the change in control). In the event the employment of any such
officer is terminated by him voluntarily with good reason or involuntarily by
the Corporation or the Bank, he will receive three times his average annual
compensation for the five-year period before termination. Based upon current
salaries and the most recent incentive compensation payments received, the
aggregate amount of such payments under the severance agreements would be
$256,084, $260,041 and $235,571 for Messrs. Parke, Rinella and Sladnick,
respectively, if employment were terminated as described in the first sentence
of this paragraph and would be $700,091, $758,916 and $586,038 for Messrs.
Parke, Rinella and Sladnick, respectively, if employment were terminated as
described in the second sentence hereof. In addition, such employees will be
entitled, subject to certain limitations, to continue to participate in
retirement and other benefit plans to be funded by an irrevocable trust created
by the Corporation and the Bank. The severance agreements provide that the
officers shall not have the right to receive any payment or benefits under the
agreement to the extent that such payment or benefit would cause any payment to
be considered a "parachute payment" under Section 280G of the Internal Revenue
Code.
The severance agreements are each for terms of three years, with each
expiring on December 20, 1997. The Corporation and the Bank may, upon the
majority affirmative vote of each of their respective Boards, by written notice
to the officer renew the severance agreements for one additional year on each
anniversary date, commencing with the December 20, 1995 anniversary date,
unless the officer gives contrary written notice to the other parties prior to
such anniversary date.
Pension Plans. The Bank maintains a qualified noncontributory pension plan
administered by trustees appointed by the Board of Directors of the Bank for
its employees and the employees of its subsidiaries. All of the current
trustees are members of the Bank's Board of Directors. The plan covers those
employees who have reached the age of 21 and who have completed at least 1,000
hours of employment in a 12-month period. Contributions are determined in
accordance with actuarial principles, subject to the approval of the Board of
Directors. Accrued benefits of eligible employees become vested after five
years of service.
The Board of Directors has adopted an excess benefit plan entitled the "St.
Paul Federal Supplemental Retirement Plan and Excess Benefit Plan". The purpose
of this plan is to provide employees who are participants in the pension plan
with benefits which are not currently available because such benefits would be
in excess of the limitations on contributions and benefits imposed by the Code.
16
<PAGE>
The following table shows estimated aggregate annual pension benefits at age
65 payable to employees under the pension plan and the supplemental benefit
plan in the form of a single life annuity for various levels of compensation
and years of credited service, without any limitations on benefits imposed by
the Code:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------
COMPENSATION (A) 15 20 25 30 35
---------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000.......................... $ 48,176 $ 65,072 $ 81,968 $ 98,864 $110,123
200,000.......................... 65,126 88,022 110,918 133,814 148,973
250,000.......................... 82,076 110,972 139,868 168,764 187,823
300,000.......................... 99,026 133,922 168,818 203,714 226,673
350,000.......................... 115,976 156,872 197,768 238,664 265,523
400,000.......................... 132,926 179,822 226,718 273,614 304,373
450,000.......................... 149,876 202,772 255,668 308,564 343,223
500,000.......................... 166,826 225,722 284,618 343,514 382,073
550,000.......................... 183,776 248,672 313,568 378,464 420,923
600,000.......................... 200,726 271,622 342,518 413,414 459,773
650,000.......................... 217,676 294,572 371,468 448,364 498,623
700,000.......................... 234,626 317,522 400,418 483,314 537,473
750,000.......................... 251,576 340,472 429,368 518,264 576,323
</TABLE>
--------
(a) Compensation is assumed to be the average of the final 60 months of
compensation, which includes base salary plus incentive compensation (as
set forth under "Annual Compensation" in the Summary Compensation Table
with respect to the named executive officers), multiplied by 12. Benefits
shown reflect the Social Security offset allowance as defined in the
pension plan.
The amount of any lump sum payment under the plans is calculated based upon
an actuarial determination of the present value, as of the date of retirement,
of the annual pension benefits.
Messrs. Scully, Agnew, Parke, Rinella and Sladnick had 31, 15, 17, 26 and 4
years of credited service, respectively, under the pension plan as of December
31, 1994.
Certain Transactions. Certain directors and executive officers of the
Corporation and the Bank, as well as certain members of their families and
certain business entities with which they or their families are affiliated, are
borrowers from the Bank. All such loans were made in the ordinary course of
business, did not involve more than the normal risk of collection or present
other unfavorable features, and were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the same time
for comparable transactions with unaffiliated persons. All loans to directors
and officers must be approved by the Board of Directors.
PROPOSED 1995 INCENTIVE PLAN
(PROPOSAL 2)
GENERAL
The Board of Directors is proposing for shareholder approval the St. Paul
Bancorp, Inc. 1995 Incentive Plan (the "1995 Plan"). The purposes of the 1995
Plan are (i) to align the interests of the Corporation's shareholders with
those of the Corporation's directors, officers and key employees by providing
such recipients with a proprietary interest in the Corporation's growth and
success and (ii) to advance the interests
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<PAGE>
of the Corporation by attracting and retaining well-qualified officers, other
key employees and directors who are not officers or other salaried employees of
the Corporation ("Non-Employee Directors").
The Corporation's current stock-based incentive plan, the St. Paul Bancorp,
Inc. Stock Option Plan (the "1987 Plan"), was established by the Board of
Directors of the Corporation in 1987 and will terminate in 1997. Moreover, as
of March 17, 1995, only 204,874 shares of Common Stock remain available for
future grants under the 1987 Plan. Accordingly, the Board believes that it is
in the best interests of the Corporation and its shareholders at this time to
adopt a new stock-based incentive plan in order to accomplish the purposes set
forth above.
Under the 1995 Plan, 900,000 shares of Common Stock will be reserved for
issuance. Approximately 141 officers and other key employees and eight Non-
Employee Directors are eligible to participate in the 1995 Plan.
Under the 1995 Plan, the Corporation may grant non-qualified stock options,
"incentive stock options" within the meaning of Section 422 of the Code, stock
appreciation rights ("SARs"), limited stock appreciation rights ("LSARs"),
restricted stock, performance shares and performance units. Non-qualified
options to purchase 1,200 shares of Common Stock will also be granted
automatically to Non-Employee Directors on the date of each annual meeting of
shareholders of the Corporation, and non-qualified options to purchase 7,500
shares of Common Stock will be granted to each new Non-Employee Director upon
his or her initial election to the Board of Directors.
Assuming the presence of a quorum, the affirmative vote of holders of a
majority of the shares present, in person or by proxy, and entitled to vote at
the Annual Meeting is required to approve the 1995 Plan. Unless otherwise
indicated, properly executed proxies will be voted in favor of Proposal 2 to
adopt the 1995 Plan.
The Board of Directors recommends a vote FOR approval of the 1995 Plan.
DESCRIPTION OF THE 1995 PLAN
The following summary of the 1995 Plan does not purport to be complete, and
is subject to and qualified in its entirety by reference to the complete text
of the 1995 Plan, which is annexed hereto as Exhibit A.
Administration. The 1995 Plan will be administered by the Board of Directors,
which, pursuant to the 1995 Plan, may appoint a Stock Option Committee of the
Board of Directors (the "Committee") to administer the 1995 Plan. The Board has
appointed the Board's existing Stock Option Committee as the Committee with
authority to act on behalf of the Board of Directors with respect to the
granting of awards and the administration of the 1995 Plan.
Subject to the express provisions of the 1995 Plan, and except for options
granted to Non-Employee Directors, the Board of Directors has the authority to
select eligible officers and other key employees who will receive awards and to
determine the terms and conditions of each award. Awards will be evidenced by
written agreements containing such provisions not inconsistent with the 1995
Plan as the Board of Directors shall approve. The Board of Directors will also
have authority to prescribe rules and regulations for administering the 1995
Plan and to decide questions of interpretation or application of any provision
of the 1995 Plan.
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Available Shares. Under the 1995 Plan, 900,000 shares of Common Stock are
available for awards to officers, other key employees and Non-Employee
Directors. The limitations are subject to adjustment in the event of a stock
split, stock dividend, recapitalization, reorganization, merger or other
similar event or change in capitalization. In general, shares covered by an
option, SAR, restricted stock award, performance share or performance unit that
expires or terminates unexercised or is cancelled or forfeited would again be
available for awards under the 1995 Plan. The maximum number of shares of
Common Stock with respect to which awards may be granted during any calendar
year to any individual is 90,000.
Change in Control. In the event of a "change in control" of the Corporation
or the Bank, all outstanding options, SARs, and LSARs will become exercisable
in full, and all other awards will vest. See "Executive Compensation--
Employment Agreements" for the definition of a "change in control".
Effective Date, Termination and Amendment. If approved by stockholders, the
1995 Plan will become effective as of May 3, 1995 and will terminate ten years
thereafter, unless terminated earlier by the Board of Directors. The Board of
Directors may amend the 1995 Plan at any time without further approval of the
shareholders of the Corporation, except to the extent that such shareholder
approval may be required to maintain compliance with Rule 16b-3 under the 1934
Act or the rules of the NASDAQ System.
Non-Qualified Stock Options, Stock Appreciation Rights and Limited Stock
Appreciation Rights. The period for the exercise of a non-qualified stock
option or SAR and the option exercise price and base price of an SAR will be
determined at the time of grant. The option exercise price of a non-qualified
stock option will not be less than the fair market value of the Common Stock on
the date of grant of such option. The 1995 Plan contemplates that options and
SARs granted to employees will become exercisable in installments of 50% after
one year and 12.5% in each of the next four years, except as provided in the
related option agreement. The 1995 Plan also contemplates that, except as
otherwise provided, options and SARs will become fully exercisable upon the
date on which the optionee completes five years of employment with the
Corporation or the Bank. Under the 1995 Plan, an optionee may exercise SARs
only at such times as the related option may be exercised and only at such
times as the fair market value of a share of Common Stock on the exercise date
exceeds the option price of the related option. As to SARs that would be
exercisable for shares of Common Stock, the number of shares issued pursuant to
the exercise of SARs will be determined by dividing (i) the total number of
SARs being exercised, multiplied by the excess of the fair market value of a
share of Common Stock on the exercise date over the per share exercise price,
by (ii) the fair market value of a share of Common Stock on the exercise date.
LSARs become exercisable only upon the occurrence of a change in control of
the Corporation or the Bank. LSARs may be granted under the 1995 Plan with
respect to options or SARs granted or previously granted under the 1995 Plan.
Each LSAR will be identified with a share of Common Stock subject to an option
or a SAR and the number of LSARs granted to a grantee shall equal the sum of
the number of shares of Common Stock subject to the option or the number of
SARs with which such LSARs are identified. The LSAR will terminate either upon
the expiration, termination, forfeiture or cancellation of a grantee's option
or SAR or the purchase of shares of Common Stock subject to such option. The
LSARs must be exercised within 60 days following the date of the change in
control. The benefit upon exercise of a LSAR equals the difference between the
fair market value of one share of Common Stock on the date of exercise and the
exercise price of the option.
In the event of termination of employment by reason of normal retirement (or
prior thereto with the consent of the Board of Directors), each non-qualified
stock option will not terminate until the expiration of such award in
accordance with the terms of the 1995 Plan, and each SAR and LSAR may be
exercised for a
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<PAGE>
period of three months (or such longer period as may be determined by the Board
of Directors) after the date of such termination of service or employment,
unless earlier terminated. In the event of termination of employment by reason
of death or permanent and total disability (which, for purposes of the Plan, is
total disability within the meaning of Section 22(e)(3) of the Code), each non-
qualified stock option may be exercised by the recipient or his or her executor
or administrator at any time prior to the expiration of such award in
accordance with the terms of the 1995 Plan, and each SAR and LSAR may be
exercised within one year (or such longer period as may be determined by the
Board of Directors) after the date of the holder's death or termination of
employment (and prior to the termination of the award), but only to the extent
such award was exercisable immediately prior to the recipient's death or
termination. In the event of termination of employment for any other reason,
each non-qualified stock option will terminate three months after the date of
such termination of employment, and each SAR and LSAR will terminate on the
date of termination of employment (although the Board of Directors may extend
such period for up to three months), unless earlier terminated.
Incentive Stock Options. No incentive stock option will be exercisable more
than ten years after its date of grant, unless the recipient of the incentive
stock option owns greater than ten percent of the voting power of all shares of
capital stock of the Corporation (a "ten percent holder"), in which case the
option must be exercised within five years after its date of grant. The option
exercise price of an incentive stock option will not be less than the fair
market value of the Common Stock on the date of grant of such option, unless
the recipient of the incentive stock option is a ten percent holder, in which
case the option exercise price will be the price required by the Code,
currently 110% of fair market value.
In the event of a termination of employment by reason of death, the executor
or administrator of the recipient's estate may exercise any incentive stock
option or SAR at any time within one year (or such longer period as may be
determined by the Board of Directors) of such recipient's death to the extent
such option was exercisable immediately prior to the recipient's death. In the
event of termination of employment by reason of permanent and total disability,
the recipient may exercise an incentive stock option for a period of one year
(or, although such option may no longer qualify as an incentive stock option,
such longer period as may be determined by the Board of Directors) after such
termination to the extent such award was exercisable on the date of such
termination. In the event of a termination of employment for any other reason,
incentive stock options will be exercisable to the extent exercisable on the
date of termination for a period of three months (or, although such options may
no longer qualify as incentive stock options, such longer period as may be
determined by the Board of Directors) after such termination, but in no event
after the expiration of the incentive stock option. If the holder of an
incentive stock option dies during the one-year period following termination of
employment by reason of permanent and total disability, or during the three-
month period following termination of employment for any other reason, each
incentive stock option will be exercisable to the extent such option was
exercisable on the date of the holder's death and may thereafter be exercised
for a period of one year (or such longer period as may be determined by the
Board of Directors), but in no event after the expiration of such incentive
stock option.
Non-Employee Director Options. Beginning on the date of the Corporation's
1995 Annual Meeting, each Non-Employee Director will automatically be granted,
on the date of each annual meeting of shareholders, a non-qualified option to
purchase 1,200 shares of Common Stock at an option exercise price per share
equal to the fair market value of a share of Common Stock on the date of grant.
In addition, an option to purchase 7,500 shares of Common Stock, at an option
exercise price per share equal to the fair market value of a share of Common
Stock on the date of grant, will be granted to each new Non-Employee Director
upon his or her initial election to the Board of Directors. Such options will
be fully exercisable on the date one year after the date of grant and will
expire ten years after the date of grant, provided that no
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Common Stock acquired upon the exercise of said options shall be sold or
transferred by the person exercising such option during the six-month period
following the date of grant of such option.
If a Non-Employee Director ceases to be a Director for any reason other than
death or permanent and total disability, such Director's options will not
terminate until expiration of the option in accordance with the terms of the
1995 Plan. If a Non-Employee Director ceases to be a Director by reason of
death or permanent and total disability, such options become immediately
exercisable in full and may be exercised until the expiration of the option.
Restricted Stock Awards. The 1995 Plan provides for the grant of stock awards
which are subject to a restriction period ("restricted stock") and to the
satisfaction of specified performance measures for the applicable restriction
period. Prior to the grant, the Board of Directors will determine the
restrictions applicable to such shares. Shares of restricted stock are non-
transferable until they have become nonforfeitable. An award of shares of
restricted stock, or portion thereof, is subject to forfeiture if the holder
does not remain continuously in the employment of the Corporation during the
restriction period or to the extent the performance measures are not attained
during the restriction period; provided, however, that termination of
employment by reason of normal retirement (or prior thereto with the consent of
the Board of Directors), total disability or death, will result in the
restricted stock becoming fully vested. In the event of termination of
employment for any other reason, the portion of a restricted stock award which
is then subject to a restriction period will be forfeited and cancelled by the
Corporation. Unless otherwise determined by the Board of Directors, the holder
of a restricted stock award will have rights as a stockholder of the
Corporation, including the right to vote and to receive dividends with respect
to the shares of restricted stock.
Performance Share Awards. The 1995 Plan also provides for the grant of
performance shares. Each performance share is a right, contingent upon the
attainment of specified performance measures within a specified performance
period, to receive one share of Common Stock, which may be restricted stock, or
the fair market value of such performance share in cash. Prior to the
settlement of a performance share award in shares of Common Stock, the Board of
Directors may determine to afford the holder of such award rights as a
stockholder of the Corporation with respect to the shares of Common Stock
subject to the award. Performance shares will be non-transferable. An award of
performance shares, or portion thereof, is subject to forfeiture to the extent
the specified performance measures are not attained during the applicable
performance period; provided, however, that termination of employment by reason
of normal retirement (or prior thereto with the consent of the Board of
Directors), total disability or death, will result in the performance share
award becoming fully vested. In the event of termination of employment for any
other reason, the portion of a performance share award which is then subject to
a performance period will be forfeited and cancelled by the Corporation.
Performance Unit Awards. Performance units may be granted under the 1995 Plan
to provide a benefit if specified performance measures determined by the Board
of Directors are achieved during a performance cycle. A performance cycle may
consist of a period of not less than one year nor more than three years. As
soon as practicable after each applicable performance cycle, the Board of
Directors shall determine the number of performance units which have been
earned and shall pay each participant the value of such units in cash or, at
the discretion of the Board of Directors, wholly or partly in shares of Common
Stock. The value of the amount payable to the participant equals a percentage
(which may exceed 100%) of the value of one share of Common Stock multiplied by
the number of performance units earned. The Board of Directors may, in its
discretion, permit deferment of the payment provided that the election to defer
is made prior to the applicable performance cycle.
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Prior to the grant of a performance unit, the Board of Directors will
determine the performance measures, the length of the performance cycle and the
value of a performance unit. Performance unit awards will be non-transferable.
An award of performance units, or portion thereof, is subject to forfeiture to
the extent that specified performance measures are not attained during the
applicable performance cycle. In the event of a termination of employment by
reason of normal retirement (or prior thereto with the consent of the Board of
Directors), total disability or death or under circumstances determined by the
Board of Directors to be for the Corporation's convenience, the holder will
receive the same percentage of the performance unit award which is earned by
other participants for such performance cycle. In the event of termination of
employment for any other reason before the end of a performance cycle, the
performance award will be forfeited and cancelled by the Corporation.
Performance Measures. Under the 1995 Plan, the vesting or payment of
restricted stock awards, performance share awards and performance unit awards
will be subject to the satisfaction of certain performance measures. The
performance measures applicable to a particular award will be determined by the
Board of Directors at the time of grant of such award. At present, no such
awards are outstanding and, accordingly, no performance measures have been
designated by the Board of Directors. Such performance measures may be one or
more of the following: a level specified by the Board of Directors for (a)
return on assets, (b) return on equity, (c) growth in net earnings, and (d)
growth in earnings per share. With respect to awards of restricted stock and
performance unit and performance share awards, the Board of Directors may
select any one or more of the criteria set forth in the preceding sentence or
may select some other performance measure. If the performance measure or
measures (or portion thereof) applicable to a particular award are satisfied,
the amount of compensation would be determined as follows: In the case of
restricted stock awards, the amount of compensation would equal the number of
shares of restricted stock subject to such award (or portion thereof earned)
multiplied by the value of a share of Common Stock at the time such restricted
stock vests. In the case of a performance share award, the amount of
compensation would equal the number of performance shares subject to such award
(or portion thereof earned) multiplied by (i) the closing sale price of a share
of Common Stock on NASDAQ at the time the performance shares vest or (ii) if
such performance shares are settled in shares of restricted stock, the value of
a share of Common Stock at the time such restricted stock vests. In the case of
a performance unit award, the value of the amount payable to the participant
equals a percentage (which may exceed 100%) of the value of one share of Common
Stock multiplied by the number of performance units earned. Pursuant to the
1995 Plan, the maximum number of shares with respect to which awards may be
granted during any calendar year to any individual is 90,000.
Section 162(m) of the Code. In general, Section 162(m) of the Code limits to
$1 million the amount that a publicly held corporation is allowed each year to
deduct for the compensation paid to each of the corporation's chief executive
officer and the corporation's four other most highly compensated executive
officers. Certain types of compensation paid to such executives, however, are
not subject to the deduction limit, including compensation deemed under the
Code to be "performance-based". The determination of whether compensation
related to the 1995 Plan is performance-based for purposes of the Code will be
dependent upon a number of factors, including shareholder approval of the 1995
Plan. Section 162(m) also prescribes certain procedural requirements in order
for compensation to be performance-based, including that such compensation be
related to awards granted by a committee comprised of two or more "outside"
directors within the meaning of Section 162(m) and that any performance
measures to which such compensation may be subject be based upon one or more of
the four specific performance criteria described in the 1995 Plan. Based upon
certain proposed regulations issued by the United States Department of the
Treasury, compensation under the 1995 Plan payable with respect to options,
SARs and LSARs is not expected to be subject to the $1 million deduction limit
under Section 162(m). Although the Corporation has also structured
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the 1995 Plan such that compensation payable with respect to other awards under
the 1995 Plan will satisfy the requirements of Section 162(m) of the Code with
regard to its performance-based criteria, awards under the 1995 Plan may be
made that do not satisfy such criteria, and there can be no assurance that
awards under the 1995 Plan intended to be "performance-based" will satisfy such
criteria. Accordingly, the Corporation may be limited in the deductions it may
take with respect to certain awards under the 1995 Plan.
Federal Income Tax Consequences. The following discussion of the federal
income tax consequences of the 1995 Plan is only a summary of the general rules
applicable to the grant and settlement of awards under the 1995 Plan and does
not purport to give specific details on every aspect and does not cover, among
other things, state and local tax treatment. The information is based on
present law and regulations, which are subject to being changed prospectively
or retroactively.
A participant receiving a non-qualified stock option under the 1995 Plan,
including options granted to Non-Employee Directors, will not recognize taxable
income upon the grant of the option, but will recognize taxable compensation at
the time of exercise in the amount of the difference between the exercise price
and the fair market value on the date of exercise of the shares acquired
pursuant to the exercise of the option. At that time, the Corporation will be
entitled to a deduction as compensation expense in an amount equal to the
amount taxable to the participant as income.
A participant receiving an incentive stock option will not recognize taxable
income upon the grant or exercise of the option, but will recognize income or
loss upon disposition of the shares acquired pursuant to the exercise of the
option, which may be ordinary income or capital gain (or loss), depending on
the length of time the shares have been held. The Corporation will not be
entitled to any deduction with respect to the grant or exercise of a
participant's incentive stock option. However, if the participant disposes of
the shares acquired pursuant to the exercise of the option before the later of
two years from the date of grant and one year from the date of exercise, the
Corporation will, except as limited by Section 162(m) of the Code, be entitled
to a deduction as compensation expense in an amount taxable to the participant
as ordinary income and not capital gain. Such ordinary income is the amount by
which the lesser of the fair market value of the shares on the date of exercise
or on the date of disposition exceeds the exercise price of the option.
A participant who is granted SARs or LSARs will not recognize any taxable
income upon the grant of the SARs or LSARs. Upon exercise, the participant
recognizes taxable compensation in an amount equal to the fair market value of
any shares delivered and the amount of cash paid by the Corporation. This
amount is deductible by the Corporation as compensation expense.
A participant receiving restricted stock will not recognize taxable income at
the time of the grant, and the Corporation will not be entitled to a tax
deduction at such time, unless the participant makes an election to be taxed at
the time restricted stock is granted. If such election is not made, the
participant will recognize taxable income at the time the restrictions lapse or
the stock becomes vested, in an amount equal to the excess of the fair market
value of the shares at such time over the amount, if any, paid for such shares.
The amount of ordinary income recognized by a participant by making the above-
described election or upon the lapse of the restrictions or upon vesting is
deductible by the Corporation as compensation expense, except to the extent the
deduction limits of Section 162(m) of the Code apply. In addition, a
participant receiving dividends with respect to restricted stock for which the
above-described election has not been made and prior to the time the
restrictions lapse or vesting will recognize taxable compensation, rather than
dividend income, in an amount equal to the dividends paid and the Corporation
will be entitled to a corresponding deduction, except to the extent the
deduction limits of Section 162(m) of the Code apply.
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A participant receiving performance shares and performance units will not
recognize taxable income upon the grant of such shares or units, as the case
may be, and the Corporation will not be entitled to a tax deduction at such
time. Upon the settlement of performance shares or performance units, the
participant will recognize ordinary income in an amount equal to the fair
market value of any shares delivered and any cash paid by the Corporation. This
amount is deductible by the Corporation as compensation expense, except to the
extent the deduction limits of Section 162(m) of the Code apply.
In the event of a change in control, the acceleration of the vesting or
payment of any awards under the 1995 Plan may result in the receipt by the
participant of "parachute payments" under Section 280G of the Code. As such,
the participant may be subject to an excise tax, in addition to ordinary income
tax, and the Corporation may not be entitled to a deduction with respect to
such amounts.
Accounting Consequences. Under current generally accepted accounting
principles, the value of stock options granted under the 1995 Plan are non-
compensatory and is not charged against the Corporation's earnings for
financial accounting purposes. Increases in the market value of stock following
the date of grant of SARs are currently treated as a compensation expense for
financial accounting purposes. LSARs, however, may be granted without incurring
an accounting charge until the occurrence of the event which "triggers"
exercisability of the LSAR. The Corporation would recognize compensation
expense attributable to awards of restricted stock, which expense would reflect
the aggregate market value of the shares of restricted stock on the award date,
accrued over the period during which the shares vest. With respect to
performance share and performance unit awards, a compensation expense is
recognized as measured by the market price of the related shares. A proposed
change to the accounting rules would have required corporations to recognize
for financial accounting purposes, with respect to options granted after 1996,
the value of such options as a compensation expense over the period during
which such options vest. Management's understanding is that such proposed
change will not be implemented; however, there can be no assurance that a
similar proposal will not be adopted in the future.
Grants to Non-Employee Directors. The following table sets forth the number
of shares of Common Stock underlying options which would be granted
automatically to Non-Employee Directors on the date of each annual meeting of
shareholders, beginning with the 1995 Annual Meeting.
1995 INCENTIVE PLAN
<TABLE>
<CAPTION>
NAME STOCK OPTIONS
---- -------------
<S> <C>
William A. Anderson......................................... 1,200
John W. Croghan............................................. 1,200
Alan J. Fredian............................................. 1,200
Kenneth J. James............................................ 1,200
Jean C. Murray, O.P......................................... 1,200
Michael R. Notaro........................................... 1,200
John J. Viera............................................... 1,200
James B. Wood............................................... 1,200
All Non-Employee Directors as a Group (8 persons)........... 9,600(1)
</TABLE>
--------
(1) The option exercise price per share would be the closing sale price of the
Corporation's Common Stock on NASDAQ on the date of grant. For example, on
March 17, 1995, the closing sale price of Common Stock on NASDAQ was
$21.875 per share. Each option would be fully exercisable one year after
the date of grant and would expire ten years after the date of grant.
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STOCK OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth information as of March 17, 1995 with respect
to the shares of the Corporation's Common Stock beneficially owned by each
director of the Corporation, each of the named executive officers and by all
directors and executive officers of the Corporation as a group. Such
individuals and certain of the Corporation's employee benefit plans
beneficially own a total of 2,987,247 shares of the Corporation's Common Stock,
or 16.1% of the Common Stock outstanding, including shares subject to options
that will become exercisable within 60 days.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF COMMON
BENEFICIAL STOCK
NAME AND POSITION WITH THE CORPORATION OWNERSHIP(A) OUTSTANDING
-------------------------------------- ------------ -----------
<S> <C> <C>
Joseph C. Scully
Chairman of the Board, Chief Executive Officer
and Director..................................... 434,017(b) 2.3%
Patrick J. Agnew
President, Chief Operating Officer and Director.. 291,754(b) 1.6%
William A. Anderson
Director......................................... 6,711 *
John W. Croghan
Director......................................... 60,000 *
Alan J. Fredian
Director......................................... 23,953(b)(c) *
Kenneth J. James
Director......................................... 72,747 *
Jean C. Murray, O.P.
Director......................................... 7,500 *
Michael R. Notaro
Director......................................... 18,366(b)(c) *
John J. Viera
Director......................................... 22,694 *
James B. Wood
Director......................................... 43,051 *
Robert N. Parke
Senior Vice President............................ 125,380 *
Thomas J. Rinella
Senior Vice President............................ 114,984 *
Clifford M. Sladnick
Senior Vice President............................ 63,252 *
All directors and executive officers as a group
(14 persons)..................................... 1,373,309(b)(c) 7.1%
</TABLE>
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*Less than 1%
(a) In accordance with Rule 13d-3 under the 1934 Act, a person is deemed to be
the beneficial owner, for purposes of this table, of any shares of
Corporation Common Stock if he has or shares voting power or investment
power with respect to such security, or has the right to acquire beneficial
ownership at any time within 60 days from March 17, 1995. As used herein,
"voting power" is the power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the disposition of
shares. The table includes shares owned by spouses or other immediate
family members or that are held in
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<PAGE>
trust, as to which the persons named in the table possess shared voting
and/or investment power as follows: Mr. Scully, 18,669 shares; Mr. Agnew,
37,028 shares; Dr. Fredian, 8,951 shares; Mr. James, 65,246 shares; Mr.
Notaro, 18,365 shares; Mr. Viera, 7,693 shares; Mr. Wood, 22,425 shares; Mr.
Parke, 21,536 shares; Mr. Rinella, 7,599 shares; Mr. Sladnick, 727 shares;
and all directors and executive officers as a group, 219,620 shares. The
table includes 6,910 shares and 19,423 shares as of March 17, 1995 held for
the benefit of Mr. Scully and Mr. Agnew, respectively, under the St. Paul
Federal Bank For Savings Deferred Compensation Trust. All other shares
included in the table are held by persons who have sole voting and
investment power over such shares. The table includes 870,500 shares of
Common Stock subject to outstanding options which are exercisable within 60
days from March 17, 1995. The table also includes 183,363 shares as of March
17, 1995 allocated to executive officers' accounts under the Bank's ESOP and
401(k) Profit Sharing Plan.
(b) Does not include 178,218 shares as of March 17, 1995 with respect to which
the St. Paul Federal Bank For Savings Employees Pension Plan has sole
voting and dispositive power. Also does not include 286,428 unallocated
shares with respect to which the ESOP has shared voting and dispositive
power. Dr. Fredian, and Messrs. Scully, Agnew and Notaro are the trustees
of the Employees Pension Plan and the ESOP.
(c) Except as allotted to Messrs. Scully and Agnew as indicated above, does not
include 47,885 shares as of March 17, 1995 with respect to which the St.
Paul Federal Bank For Savings Deferred Compensation Trust has shared voting
and dispositive power. Dr. Fredian and Mr. Notaro are the trustees of the
Deferred Compensation Trust.
The following table set forth information, as of March 17, 1995, with respect
to the only person known by the Corporation to have filed a beneficial
ownership report with the SEC with regard to 5% or more of the Corporation's
outstanding Common Stock:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL COMMON STOCK
OF BENEFICIAL OWNER OWNERSHIP OUTSTANDING
------------------- ----------------- ------------
<S> <C> <C>
Dalton, Greiner, Hartman,
Maher & Co., Inc. (a).... 1,155,099 6.2%
630 Fifth Avenue
Suite 3425
New York, New York 10111
</TABLE>
--------
(a) A Schedule 13G dated February 2, 1995 states that Dalton, Greiner, Hartman,
Maher & Co., Inc. is the beneficial owner of 1,155,099 shares of the
Corporation's Common Stock, with respect to which it has sole dispositive
power over all such shares and sole voting power over 667,099 of such
shares.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the 1934 Act requires the Corporation's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Corporation's equity securities, to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Corporation. Officers, directors and greater
than ten-percent shareholders are required by SEC regulation to furnish the
Corporation with copies of all Section 16(a) forms they file.
To the Corporation's knowledge, based solely upon review of the copies of
such reports furnished to the Corporation and written representations that no
other reports were required, all Section 16(a) filing requirements applicable
to its officers, directors and greater than ten-percent beneficial owners were
complied with.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 3)
The Board of Directors has appointed the firm of Ernst & Young LLP to
continue as independent auditors for the Corporation for the year ending
December 31, 1995, subject to ratification of such appointment by the
shareholders. Ernst & Young LLP was appointed as the independent auditors of
St. Paul Federal in 1981 and has performed audits for the Bank for the years
since then. Ernst & Young LLP has also served as the independent auditors of
the Corporation since its organization as the holding company of St. Paul
Federal. Unless otherwise indicated, properly executed proxies will be voted in
favor of ratifying the appointment of Ernst & Young LLP, independent certified
public accountants, to audit the books and accounts of the Corporation for the
year ending December 31, 1995. No determination has been made as to what action
the Board of Directors would take if the shareholders do not ratify the
appointment.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting. They will be given an opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions.
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
TO BE PRESENTED AT 1996 ANNUAL MEETING OF SHAREHOLDERS
Any proposal intended to be presented by any shareholder for action at the
1996 annual meeting of shareholders of the Corporation must be received by the
Secretary of the Corporation at 6700 West North Avenue, Chicago, Illinois 60635
not later than November 27, 1995 in order for the proposal to be considered for
inclusion in the proxy statement and proxy relating to the 1996 annual meeting.
In addition, the Corporation's bylaws require that notice of shareholder
proposals and nominations for director be delivered to the Secretary of the
Corporation not less than 30 days nor more than 90 days prior to the date of an
annual meeting, unless notice or public disclosure of the date of the meeting
occurs less than 45 days prior to the date of such meeting, in which event,
shareholders may deliver such notice not later than the 15th day following the
day on which notice of the date of the meeting was mailed or public disclosure
thereof was made. Nothing in this paragraph shall be deemed to require the
Corporation to include in its proxy statement and proxy relating to the 1996
annual meeting any shareholder proposal which does not meet all of the
requirements for inclusion established by the SEC in effect at the time such
proposal is received.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors of the
Corporation does not know of any other matters to be presented for action by
the shareholders at the Annual Meeting. If, however, any other matters not now
known are properly brought before the meeting, the persons named in the
accompanying proxy will vote such proxy in accordance with the determination of
a majority of the Board of Directors.
By Order of the Board of Directors
LOGO
Joseph C. Scully
Chairman of the Board and
Chief Executive Officer
Chicago, Illinois
March 27, 1995
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EXHIBIT A
ST. PAUL BANCORP, INC.
1995 INCENTIVE PLAN
St. Paul Bancorp, Inc. (the "Company") sets forth herein the terms of this
1995 Incentive Plan (the "1995 Plan") as follows:
1. PURPOSES
The 1995 Plan is intended to advance the interests of the Company and align
the interests of the Company's shareholders with those of the Company's
directors, officers and key employees by providing such recipients of awards
under the 1995 Plan with an opportunity to acquire or increase a proprietary
interest in the Company and by providing such individuals with personal
financial stakes in the growth and performance of the Company, which thereby
will create a stronger incentive to expend maximum effort for the growth and
success of the Company and its subsidiaries, and will encourage such eligible
individuals to remain in the employ or service of the Company or that of one or
more of its subsidiaries. Awards under the 1995 Plan may be granted in the form
of (i) options to purchase shares of the Company's Common Stock, par value $.01
per share (the "Stock"), (ii) shares of restricted stock, (iii) performance
shares or (iv) performance units. Options granted to officers or other key
employees of the Company or any "subsidiary corporation" thereof within the
meaning of Section 424(f) of the Code (a "Subsidiary") may be accompanied by
stock appreciation rights ("SARs") or limited stock appreciation rights
("LSARs"). An Option granted to officers or other key employees of the Company
or a Subsidiary under the Plan (an "Option") may be in the form of (i) an
"incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, or the corresponding provision of any
subsequently-enacted tax statute, as amended from time to time (the "Code")
("Incentive Stock Option"), except to the extent that any such Option would
exceed the limitations set forth in Section 6(b) below; or (ii) a non-qualified
stock option. Options granted to directors who are not officers or other
salaried employees of the Company or any of its Subsidiaries ("Non-Employee
Directors") shall be in the form of non-qualified stock options.
2. ADMINISTRATION
(a) Board. The Plan shall be administered by the Board of Directors of the
Company (the "Board"), which shall have the full power and authority to take
all actions, and to make all determinations required or provided for under the
Plan or any Option, SAR, LSAR, shares of restricted stock, performance unit or
performance share or any written agreement (an "Agreement") evidencing an award
hereunder between the Company and the recipient of such award (a "Grantee")
entered into hereunder and all such other actions and determinations not
inconsistent with the specific terms and provisions of the 1995 Plan deemed by
the Board to be necessary or appropriate to the administration of the 1995 Plan
or any award granted hereunder or any Agreement entered into hereunder. All
such actions and determinations shall be by the affirmative vote of a majority
of the members of the Board present at a meeting at which any issue relating to
the 1995 Plan is properly raised for consideration or by unanimous consent of
the Board executed in writing in accordance with the Company's Certificate of
Incorporation and By-Laws, and with applicable law. The interpretation and
construction by the Board of any provision of the 1995 Plan or of any award
granted hereunder or Agreement entered into hereunder shall be final and
conclusive.
(b) Committee. The Board may from time to time appoint a Stock Option
Committee (the "Committee") consisting of not less than three members of the
Board, none of whom shall be an officer or other salaried
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employee of the Company or any of its Subsidiaries, and each of whom shall
qualify in all respects as a "disinterested person" as defined in Rule 16b-3 of
the Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended (the "1934 Act") and as an "outside director" within the
meaning of Code Section 162(m). The Board, in its sole discretion, may provide
that the role of the Committee shall be limited to making recommendations to
the Board concerning any determinations to be made and actions to be taken by
the Board pursuant to or with respect to the 1995 Plan, or the Board may
delegate to the Committee such powers and authorities related to the
administration of the 1995 Plan, as set forth in Section 2(a) above, as the
Board shall determine, consistent with the Certificate of Incorporation and By-
Laws of the Company and applicable law. To the extent of such authority or
delegation, references herein to the "Board" shall be deemed references to the
Committee. The Board may remove members, add members, and fill vacancies on the
Committee from time to time, all in accordance with the Company's Certificate
of Incorporation and By-Laws, and with applicable law. The majority vote of the
Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee.
(c) No Liability. No member of the Board or of the Committee shall be liable
for any action or determination made in good faith with respect to the 1995
Plan or any award granted hereunder or any Agreement entered into hereunder.
(d) Delegation to the Committee. In the event that the 1995 Plan or any award
granted hereunder or Agreement entered into hereunder provides for any action
to be taken by or determination to be made by the Board, such action may be
taken by or such determination may be made by the Committee if the power and
authority to do so has been delegated to the Committee by the Board as provided
for in Section 2(b) above. Unless otherwise expressly determined by the Board,
any such action or determination by the Committee shall be final and
conclusive.
3. SCOPE OF PLAN
(a) Amount of Stock. The amount of Stock which may be made subject to awards
granted under the 1995 Plan during the term thereof shall not exceed an amount
equal to 900,000 of the Company's authorized but unissued shares of Stock.
Stock issued hereunder may be such authorized or unissued shares of Stock or
may be issued shares acquired by the Company or its Subsidiaries on the market
or otherwise, or a combination thereof.
(b) Amount of Stock Available for Grant to Single Grantee. In any calendar
year, the amount of Stock which may be made subject to awards granted under the
1995 Plan to any single Grantee shall not exceed 90,000 shares.
(c) Adjustments. The aggregate number of shares of Stock, shares of Stock
subject to Options, shares of restricted stock, SARs, LSARs, performance shares
and performance units available under the 1995 Plan shall each be subject to
adjustment upon the occurrence of any of the events and in the manner set forth
in Section 18 hereof.
(d) Reuse. If, and to the extent:
(i) Options. An Option shall expire or terminate for any reason without
having been exercised in full (including, without limitation, cancellation
and re-grant), or in the event that such Options are exercised or settled
in a manner such that some or all of the shares of Stock related to the
Option are
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not issued to the Grantee (or beneficiary) (including as the result of the
use of shares for withholding taxes), the shares of Stock subject thereto
which have not become outstanding shall (unless the 1995 Plan shall have
terminated) become available for issuance under the 1995 Plan; provided,
however, that with respect to a share-for-share exercise, only the net
shares issued shall be deemed to have become outstanding as a result
thereof.
(ii) Restricted Stock, Performance Shares and Performance Units. Shares
of Stock granted as restricted stock, performance shares or performance
units under the 1995 Plan are forfeited for any reason, or are settled in
cash in lieu of Stock or in a manner such that some or all of the shares of
Stock related to the award are not issued to the Grantee (or beneficiary),
such shares of Stock shall (unless the 1995 Plan shall have terminated)
become available for issuance under the 1995 Plan; provided, however, that
if any dividends paid with respect to shares of restricted stock were paid
to the Grantee prior to the forfeiture thereof, such shares shall not be
reused for grants or awards;
(iii) SARs. SARs expire or terminate for any reason without having been
earned in full, an equal number of SARs shall (unless the 1995 Plan shall
have terminated) become available for issuance under the Plan;
(iv) LSARs. LSARs are exercised:
(1) If the LSARs were granted with respect to an Option, the shares
of Stock subject thereto which have not become outstanding shall not
again become available for issuance under the 1995 Plan; or
(2) If the LSARs were granted with respect to SARs, such SARs shall
not again become available for issuance under the 1995 Plan.
(e) Purchase of Stock and Issuance Under the 1995 Plan. The Board or such
committee of the Board that the Board shall specifically authorize or direct on
its behalf shall have the authority to cause the Company to purchase from time
to time, in such amounts and at such prices as the Board, in its discretion,
shall deem advisable or appropriate, shares of Stock to be held as treasury
shares and reserved and used solely for or in connection with grants under the
1995 Plan, at the discretion of the Board or the Committee.
4. ELIGIBILITY
(a) Employees. Options, SARs, LSARs, shares of restricted stock, performance
shares or performance units may be granted under the 1995 Plan to any key
employee of the Company or any Subsidiary (including any such key employee who
is an officer or director of the Company or any Subsidiary) as the Board shall
determine and designate from time to time prior to expiration or termination of
the 1995 Plan.
(b) Non-Employee Directors. An Option to purchase 7,500 shares of Stock, at a
purchase price per share equal to the Fair Market Value (as defined below) of a
share of Stock on the date of grant of such Option and upon the other terms and
conditions specified in the 1995 Plan, shall be granted under the 1995 Plan to
each Non-Employee Director of the Company elected after the Effective Date (as
defined below) upon the date of the initial election of each such Non-Employee
Director to the Company's Board. In addition, on the date of each annual
meeting of shareholders of the Company occurring on or after the Effective Date
of the 1995 Plan, each Non-Employee Director who is a Non-Employee Director
after such meeting of shareholders shall be granted an Option to purchase 1,200
shares of Stock at a purchase price per share equal to the Fair Market Value of
a share of Stock on the date of grant of such Option. Except as provided in
this Section 4(b), no Non-Employee Director shall be eligible to be granted
Options under the 1995 Plan. Non-Employee Directors
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of a Subsidiary who are not also Non-Employee Directors of the Company may be
granted Options at the discretion of the Board. No SARs, LSARs, restricted
stock, performance shares or performance units shall be granted hereunder to
any Non-Employee Director of the Company or a Subsidiary. The maximum number of
Options that may be granted to all Non-Employee Directors shall not exceed 30%
of the shares covered by the 1995 Plan.
(c) An individual may hold more than one Option, SAR, LSAR, award of
restricted stock, performance share or performance unit, subject to such
restrictions as are provided herein.
5. EFFECTIVE DATE AND TERM OF THE 1995 PLAN
(a) Effective Date. The 1995 Plan shall be effective as of May 3, 1995 (the
"Effective Date"), subject to approval of the 1995 Plan within one year of such
effective date by an affirmative vote of the shareholders of the Company
holding at least a majority of the shares of Stock present, in person or by
proxy, at a duly called meeting of the shareholders; provided, however, that
upon approval of the 1995 Plan by the shareholders of the Company as set forth
above, all awards granted under the 1995 Plan on or after the Effective Date
shall be fully effective as if the shareholders of the Company had approved the
1995 Plan on the Effective Date. If the shareholders fail to approve the 1995
Plan within one year of such Effective Date, any award granted hereunder shall
be null and void and of no effect.
(b) Term. The 1995 Plan shall terminate on the date ten years from the
Effective Date.
6. STOCK OPTIONS
(a) Grant of Options. Subject to the terms and conditions of the 1995 Plan,
the Board may, at any time and from time to time, prior to the date of
termination of the 1995 Plan, grant to such eligible individuals as the Board
may determine ("Optionees"), Options to purchase such number of shares of Stock
on such terms and conditions as the Board may determine, including any terms or
conditions which may be necessary to qualify such Options as Incentive Stock
Options. The date on which the Board approves the grant of an Option shall be
considered the date on which such Option is granted.
(b) Limitation on Incentive Stock Options. The aggregate Fair Market Value
(as defined below) (determined at the time the Option is granted) of the Stock
with respect to which Incentive Stock Options are exercisable for the first
time by any Optionee during any calendar year (under the 1995 Plan and all
other plans of the Optionee's employer corporation and its parent and
subsidiary corporations within the meaning of Section 422(d) of the Code) shall
not exceed $100,000. If an Option is granted which would exceed the limitation
of this Section 6(b), or, if as a result of other provisions of the 1995 Plan
or Option Agreement, Incentive Stock Options that become exercisable for the
first time in a calendar year exceed $100,000, the excess Options (to be
determined in the inverse order of the date of grant of such Options) shall not
be Incentive Stock Options.
(c) Option Price. The purchase price of each share of Stock subject to an
Option (the "Option Price") shall be fixed by the Board and stated in each
Agreement relating to the Option (an "Option Agreement") and shall be not less
than the greater of par value or 100% of the Fair Market Value of a share of
the Stock on the date the Option is granted; provided, however, that in the
event the Optionee would otherwise be ineligible to receive an Incentive Stock
Option by reason of the provisions of Sections 422(b)(6) and 424(d) of the Code
(relating to stock ownership of more than 10%), the Option Price of an Option
which is intended to be an Incentive Stock Option shall be not less than the
greater of par value or 110% of the Fair Market
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Value of a share of Stock at the time such Option is granted. "Fair Market
Value" shall mean the closing price of the Stock on the National Association of
Securities Dealers Automated Quotation System on the trading date immediately
before the date such value is being determined (or, if there is no such closing
price, then the Board shall use the mean between the highest bid and lowest
asked prices or between the high and low prices on such date), or, if no sale
of shares of Stock has been made on such day, on the next preceding day on
which any such sale shall have been made.
(d) Term and Exercise of Options.
(i) Term. Each Option granted under the 1995 Plan shall terminate and all
rights to purchase shares thereunder shall cease upon the expiration of 10
years (10 years and 30 days, in the case of an Option granted to an
employee of the Company or a Subsidiary which is not designated as an
Incentive Stock Option) from the date such Option is granted, or, with
respect to Options granted to persons other than Non-Employee Directors, on
such date prior thereto as may be fixed by the Board and stated in the
Option Agreement relating to such Option; provided, however, that in the
event the Optionee would otherwise be ineligible to receive an Incentive
Stock Option by reason of the provisions of Sections 422(b)(6) and 424(d)
of the Code (relating to stock ownership of more than 10%), an Option
granted to such Optionee which is intended to be an Incentive Stock Option
shall in no event be exercisable after the expiration of five years from
the date it is granted.
(ii) Option Period and Limitations on Exercise. Each Option granted to
persons other than Non-Employee Directors under the 1995 Plan shall be
exercisable, in whole or in part, at any time and from time to time, over a
period commencing on or after the date of grant and ending upon the
expiration or termination of the Option, as the Board shall determine and
set forth in the Option Agreement relating to such Option. Without limiting
the foregoing, the Board, subject to the terms and conditions of the 1995
Plan, may in its sole discretion provide that an Option may not be
exercised in whole or in part for any period or periods of time during
which such Option is outstanding; provided, however, that any such
limitation on the exercise of an Option contained in any Option Agreement
may be rescinded, modified or waived by the Board, in its sole discretion,
at any time and from time to time after the date of grant of such Option,
so as to accelerate the time at which the Option may be exercised, and
provided, further, that unless otherwise provided in the Option Agreement
relating to an Option, each Option granted under the 1995 Plan to persons
other than Non-Employee Directors shall be exercisable in respect of 50% of
the shares covered by the Option after the expiration of one year from the
date of grant and shall be exercisable in respect of an additional 12.5% of
the shares covered by the Option on each of the second, third, fourth, and
fifth anniversaries of the date of grant of the Option. Unless otherwise
provided in the Option Agreement, each Option granted under the 1995 Plan
to persons other than Non-Employee Directors shall also become exercisable
in respect of 100% of the shares covered by the Option upon the later to
occur of (i) the date on which the Optionee completes five years of
employment with the Company or any Subsidiary or (ii) the date of grant.
Except as provided in Sections 13 and 14 below, each Option granted to a
Non-Employee Director shall be exercisable, in whole or in part, at any
time and from time to time, over a period commencing on the date one year
after the date of grant and ending upon the expiration of the Option.
Notwithstanding any other provisions of the 1995 Plan, no Option granted to
an Optionee under the 1995 Plan shall be exercisable in whole or in part
prior to the date the 1995 Plan is approved by the shareholders of the
Company as provided in Section 5 above.
(iii) Method of Exercise. An Option that is exercisable hereunder may be
exercised by delivery to the Company on any business day, at its principal
office, addressed to the attention of the Committee, of written notice of
exercise, which notice shall specify the number of shares with respect to
which the Option is being exercised. The minimum number of shares of Stock
with respect to which an Option
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may be exercised, in whole or in part, at any time shall be the lesser of
100 shares or the maximum number of shares available for purchase under the
Option at the time of exercise. Except as provided in the next following
sentence, payment in full of the Option Price of the shares for which the
Option is being exercised shall accompany the written notice of exercise of
the Option and shall be made either (i) in cash or in cash equivalents;
(ii) through the tender to the Company of previously owned whole shares of
Stock (which, in the case of an Optionee subject to the reporting
requirements of Section 16 of the 1934 Act, the Optionee has held for at
least six months prior to delivery of such shares and for which the
Optionee has good title, free and clear of all liens and encumbrances),
which shares shall be valued, for purposes of determining the extent to
which the Option Price has been paid thereby, at their Fair Market Value on
the date of exercise; (iii) by authorizing the Company to withhold whole
shares of Stock which would otherwise be delivered upon exercise of the
Option having a Fair Market Value determined as of the date of exercise,
equal to the aggregate purchase price payable pursuant to such Option by
reason of such exercise; or (iv) by a combination of the methods described
in (i), (ii) and (iii), in each case to the extent determined by the Board
at the time of grant of the Option. In the case of any Option granted to an
Optionee, the Board may provide, by inclusion of appropriate language in an
Option Agreement, that payment in full of the Option Price need not
accompany the written notice of exercise provided the notice of exercise
directs that the Stock certificate or certificates for the shares for which
the Option is exercised be delivered to a licensed broker acceptable to the
Company as the agent for the individual exercising the Option and, at the
time such Stock certificate or certificates are delivered, the broker
tenders to the Company cash (or cash equivalents acceptable to the Company)
equal to the Option Price for the shares of Stock purchased pursuant to the
exercise of the Option plus the amount (if any) of federal and/or other
taxes which the Company may, in its judgment, be required to withhold with
respect to the exercise of the Option. In connection with the exercise of
an Option, the Optionee shall execute such documents as the Company may
reasonably request. An attempt to exercise any Option granted hereunder
other than as set forth above shall be invalid and of no force and effect.
Promptly after the exercise of an Option and the payment in full of the
Option Price of the shares of Stock covered thereby, the individual
exercising the Option shall be entitled to the issuance of a Stock
certificate or certificates evidencing his ownership of such shares. A
separate Stock certificate or certificates shall be issued for any shares
purchased pursuant to the exercise of an Option which is an Incentive Stock
Option, which certificate or certificates shall not include any shares
which were purchased pursuant to the exercise of an Option which is not an
Incentive Stock Option. An individual holding or exercising an Option shall
have none of the rights of a shareholder until the shares of Stock covered
thereby are fully paid and issued to him and, except as provided in Section
18 below, no adjustment shall be made for dividends or other rights for
which the record date is prior to the date of such issuance.
7. STOCK APPRECIATION RIGHTS (SARS)
(a) General. Subject to the terms and conditions of the 1995 Plan, the Board
may, in its sole and absolute discretion, grant to an eligible person rights to
surrender to the Company, in whole or in part, an Option, and to receive in
exchange therefor payment by the Company of an amount equal to the excess of
the Fair Market Value (as of the date the SARs are exercised) of the shares of
Stock subject to such Option, or portion thereof, so surrendered over the
Option Price of such shares. Such payment may be made, as determined by the
Board in accordance with Sections 7(d) and 7(e) below and set forth in the
Option Agreement, either in shares of Stock or in cash or in any combination
thereof. SARs may be granted to eligible persons only at the same time and with
respect to the same number of shares of Stock as such eligible persons are
granted Options under the 1995 Plan. All SARs shall be evidenced by provisions
in the Option Agreement pertaining to the
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related Option, which provisions shall comply with and be subject to the terms
and conditions set forth in this Section 7.
(b) Grant. Each SAR shall relate to a specific Option granted under the 1995
Plan and shall be awarded to the Optionee concurrently with the grant of such
Option pursuant to Section 6 above. The number of SARs granted to an Optionee
shall be equal to the number of shares of Stock which such Optionee is entitled
to purchase pursuant to the related Option. The number of SARs held by an
Optionee shall be reduced by (i) the number of SARs exercised for Stock or cash
under the provisions of the Option Agreement pertaining to the related Option,
and (ii) the number of shares of Stock purchased pursuant to the exercise of
the related Option.
(c) Exercise. SARs that are exercisable hereunder and under the related
Option Agreement may be exercised by delivering to the Company on any business
day, at its principal office, addressed to the attention of the Committee,
written notice of exercise, which notice shall specify the number of SARs being
exercised. The date upon which such written notice is received by the Company
shall be the exercise date of the SARs. Except to the extent that SARs are
exercised for cash as provided in Section 7(e) below, the individual exercising
SARs shall receive, without payment therefor to the Company, the number of
shares of Stock determined under Section 7(d) below. Promptly after the
exercise of SARs, the individual exercising the SARs shall be entitled to the
issuance of a Stock certificate or certificates evidencing ownership of such
shares. An individual holding or exercising SARs shall have none of the rights
of a shareholder with respect to any shares of Stock covered by the SARs until
shares of Stock are issued to him or her, and, except as provided in Section 18
below, no adjustment shall be made for dividends or other rights for which the
record date is prior to the date of such issuance.
(d) Number of Shares. The number of shares of Stock which shall be issued
pursuant to the exercise of SARs shall be determined by dividing (i) the total
number of SARs being exercised, multiplied by the amount by which the Fair
Market Value of a share of Stock on the exercise date exceeds the Option Price
of the related Option, by (ii) the Fair Market Value of a share of Stock on the
exercise date of the SARs; provided, however, that no fractional share shall be
issued on exercise of SARs, and that cash shall be paid by the Company to the
individual exercising SARs in lieu of any such fractional share.
(e) Exercise of SARs for Cash. The Board shall have sole discretion to
determine whether, and shall set forth in the Option Agreement pertaining to
the related Option the circumstances under which, payment in respect of SARs
granted to any Optionee shall be made in shares of Stock, or in cash, or in a
combination thereof. Promptly after the exercise of an SAR for cash, the
individual exercising the SAR shall receive in respect of said SAR an amount of
money equal to the difference between the Fair Market Value of a share of Stock
on the exercise date and the Option Price of the related Option.
(f) Limitations. SARs shall be exercisable at such times and under such terms
and conditions as the Board, in its sole and absolute discretion, shall
determine and set forth in the Option Agreements pertaining to the related
Options; provided, however, that an SAR may be exercised only at such times and
by such individuals as the related Option under the 1995 Plan and the Option
Agreement may be exercised; and provided, further, that an SAR may be exercised
only at such times as the Fair Market Value of a share of Stock on the exercise
date exceeds the Option Price of the related Option. Adjustments in the number,
kind, or Option Price of shares of Stock for which Options are granted pursuant
to Section 18 below shall also be made as necessary to the related SARs held by
each Optionee. Any amendment, suspension or termination of the 1995 Plan
pursuant to Section 17 below shall be deemed an amendment, suspension or
termination of SARs to the same extent.
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8. LIMITED STOCK APPRECIATION RIGHTS (LSARS)
(a) Grant of LSARs. The Board, in its discretion, may grant LSARs to a
Grantee upon the grant of any Option (other than to Non-Employee Directors) or
SAR under the 1995 Plan. Each LSAR shall be identified with a share of Stock
subject to an Option or SAR of the Grantee and the number of LSARs granted to a
Grantee shall equal the sum of the number of shares of Stock subject to the
Option or the number of SARs with which such LSARs are identified. The Board
may also grant a LSAR with respect to any share of Stock subject to an Option
or SAR previously granted hereunder. Upon (i) the expiration, termination,
forfeiture, or cancellation of an Grantee's Option or SARs, or (ii) the
purchase of shares of Stock subject to such Option, as the case may be, the
Grantee's associated LSARs shall terminate.
(b) Exercise of LSARs.
(i) Notwithstanding the provisions of Section 18(c), but subject to the
provisions of Sections 13 and 14 hereof, each LSAR held by a Grantee at the
time of a Change in Control (as defined in Section 18(f)) of the Company or
St. Paul Federal Bank For Savings (the "Bank") shall become exercisable.
LSARs that are exercisable hereunder may be exercised within 60 days
following the date of a Change in Control of the Company or the Bank by
delivering to the Company on any business day, at its principal office,
addressed to the attention of the Committee, written notice of exercise.
The date upon which such written notice is received by the Company shall be
the exercise date of the LSARs. Promptly after the exercise of the LSARs,
the individual exercising the LSARs shall be paid in cash, the amount as
determined below. The payment of LSARs which are identified with an Option
or SARs shall result in the cancellation or forfeiture of such Option or
SARs, as the case may be.
(ii) Within five (5) days after receipt of a written notice of exercise,
the Company shall pay the Grantee, in cash, an amount equal to the
difference between:
(1) the Fair Market Value of one share of Stock on the date of
exercise of the LSAR; and
(2) the Option Price of the Option.
9. RESTRICTED STOCK
(a) Grant of Shares of Restricted Stock. The Board, in its discretion, may
grant shares of restricted stock to such eligible persons as may be selected by
the Board.
(b) Terms of Restricted Stock Awards. Grants of restricted stock shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the 1995 Plan, as the
Board shall deem advisable.
(i) Number of Shares and Other Terms. The number of shares of Stock
subject to a grant of restricted stock and the Performance Measures (as
defined below), if any, and Restriction Period applicable to such grant
shall be determined by the Board. "Restriction Period" shall mean a period
designated by the Board, during which the Stock subject to a grant of
restricted stock may not be sold, transferred, assigned, pledged,
hypothecated or otherwise encumbered or disposed of, except as provided in
the 1995 Plan or the Agreement relating to such grant. In the sole
discretion of the Board, the Board may amend or adjust the Performance
Measures, Restriction Period or other terms and conditions of a grant of
restricted stock in recognition of unusual or nonrecurring events affecting
the Company or its financial statements or changes in law or accounting
principles.
(ii) Vesting and Forfeiture. The Agreement relating to a grant of
restricted stock shall provide, in the manner determined by the Board, in
its discretion, and subject to the provisions of the 1995 Plan,
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for the forfeiture of the shares of Stock subject to such grant, or portion
thereof, (i) to the extent specified Performance Measures (as defined below
in Section 9(d)) are not satisfied or met during the specified Restriction
Period or (ii) if the holder of such does not remain continuously in the
employment of the Company or a Subsidiary during the specified Restriction
Period. Upon the conclusion of a Restriction Period, the Board shall
certify the level of Performance Measures attained and the portion of the
award which shall become nonforfeitable as a result thereof.
(iii) Share Certificates. During the Restriction Period, a certificate or
certificates representing a grant of restricted stock shall be registered
in the holder's name and a bear a legend, in addition to any legend which
may be required pursuant to applicable securities laws or regulations,
indicating that the ownership of the shares of Stock represented by such
certificate is subject to the restrictions, terms and conditions of the
1995 Plan and the Agreement relating to the grant of restricted stock. All
such certificates shall be deposited with the Company, together with stock
powers or other instruments of assignment, each endorsed in blank, which
would permit transfer to the Company of all or a portion of the shares of
Stock subject to the grant of restricted stock in the event such award is
forfeited in whole or in part. Upon termination of any applicable
Restriction Period, subject to the Company's right to require payment of
any taxes, a certificate or certificates evidencing ownership of the
requisite number of shares of Stock shall be issued to the holder of such
grant.
(iv) Rights with Respect to Grants of Restricted Stock. Unless otherwise
determined by the Board at the time of grant, and subject to the terms and
conditions of a grant of restricted stock, the holder of such grant shall
have all rights as a stockholder of the Company, including, but not limited
to, voting rights, the right to receive dividends and the right to
participate in any capital adjustment of the Company. A distribution with
respect to shares of Stock, other than a distribution in cash, shall be
deposited with the Company and shall be subject to the same restrictions as
the shares of Stock with respect to which such distribution was made.
(c) The restrictions applicable to restricted stock granted pursuant to the
1995 Plan shall provide that, if a Grantee's restricted stock is forfeited,
then:
(i) the Grantee shall be deemed to have resold such share of restricted
stock to the Company at the lesser of (1) the purchase price paid by the
Grantee (such purchase price shall be deemed to be zero dollars ($0) if no
purchase price was paid) or (2) the Fair Market Value of a share of Stock
on the date of such forfeiture;
(ii) the Company shall pay to the Grantee the amount determined under
clause (i) of this sentence; and
(iii) such share of restricted stock shall cease to be outstanding and
shall no longer confer on the Grantee thereof any rights as a stockholder
of the Company, from and after the date of such forfeiture and resale.
(d) "Performance Measures" shall mean the criteria and objectives, determined
by the Board pursuant to the 1995 Plan, which shall be satisfied or met during
the applicable Restriction Period, Performance Period or Performance Cycle, as
the case may be, as a condition to the holder's receipt, in the case of a grant
of the restricted stock or a grant of performance shares granted pursuant to
the 1995 Plan, of the shares of Stock subject to such grant, or in the case of
a performance unit award, of payment with respect to such award. Such criteria
and objectives may include, but are not limited to, return on assets, return on
equity, growth in net earnings, growth in earnings per share, or any
combination of the foregoing or any other criteria and objectives determined by
the Board.
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10. PERFORMANCE SHARES
(a) Grant of Performance Shares. The Board, in its discretion, may grant
performance shares to such eligible persons as may be selected by the Board.
All performance share grants under the 1995 Plan shall be evidenced by
Agreements or certificates containing the term and conditions of the grant.
(b) Terms of Performance Share Grants. Performance share grants shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the 1995 Plan, as the
Board shall deem advisable.
(i) Number of Performance Shares and Performance Measures. The number of
performance shares subject to any grant and the Performance Measures and
Performance Period (as defined below) applicable to such shall be
determined by the Board. In the sole discretion of the Board, the Board may
amend or adjust the Performance Measures, the Performance Period or other
terms and conditions of a performance share grant in recognition of unusual
or nonrecurring events affecting the Company or its financial statements or
changes in law or accounting principles.
(ii) Vesting and Forfeiture. The Agreement relating to a performance
share grant shall provide, in the manner determined by the Board in its
discretion, and subject to the provisions of the 1995 Plan, for the vesting
of such grant, or portion thereof, to the extent specified Performance
Measures are satisfied or met within the specified Performance Period, and
for the forfeiture of such award, or portion thereof, to the extent
specified Performance Measures are not satisfied or met within the
specified Performance Period. Upon the conclusion of a Performance Period,
the Board shall certify the level of Performance Measures attained and the
portion of the award which shall become nonforfeitable or payable as a
result thereof. "Performance Period" shall mean a period designated by the
Board during which the Performance Measures applicable to a performance
share grant shall be measured.
(iii) Settlement of Vested Performance Share Grants. The Agreement
relating to a performance share grant (i) shall specify whether such grant
may be settled in shares of Stock (including shares of restricted stock) or
cash, or a combination thereof, and (ii) may specify whether the holder
thereof shall be entitled to receive, on a deferred basis, dividend
equivalents, and, if determined by the Board, interest on such dividend
equivalents, with respect to the number of shares of Stock subject to such
grant. If a performance share grant is settled in shares of restricted
stock, a certificate or certificates representing such restricted stock
shall be issued and the holder of such restricted stock shall have such
rights of a stockholder of the Company. Prior to the settlement of a
performance share grant in shares of Stock, including restricted stock, the
Board may determine to award the holder of such award rights as a
stockholder of the Company with respect to the shares of Stock subject to
such award.
11. PERFORMANCE UNITS
(a) Grant of Performance Units. The Board, in its discretion, may grant
performance units to such eligible persons as may be selected by the Board. All
performance units granted under the Plan shall be evidenced by certificates
containing the terms and conditions of the grant.
(b) Terms of Performance Units. At or before the grant of any performance
unit, the Board shall:
(i) determine Performance Measures applicable to such grants;
(ii) designate a Performance Cycle (herein so called), of not less than
one (1) year nor more than three (3) years, for the measurement of the
extent to which the Performance Measures are attained; and
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(iii) determine the value of a performance unit which shall be a stated
percentage (which may exceed 100%) of the Stock's Fair Market Value on the
date of such determination.
In all cases, the Performance Measures must include a minimum performance
standard below which no portion of the performance units shall become
nonforfeitable. In the sole discretion of the Board, the Board may amend or
adjust the Performance Measures, Performance Cycle or other terms and
conditions of a performance unit grant in recognition of unusual or
nonrecurring events affecting the Company or its financial statements or
changes in law or accounting principles. Upon the completion of the Performance
Cycle, the Board shall certify the level of Performance Measures attained and
the portion of award which shall become nonforfeitable or payable as a result
thereof.
(c) Payment of Performance Units. Subject to the provisions of Section 13 and
such terms and restrictions as the Board may impose, the Board shall, at the
end of each Performance Cycle, evaluate the Company's performance in light of
the Performance Measures for such Performance Cycle and shall then determine
the number of performance units which, of the total number of such performance
units granted to such Grantee, have been earned. As soon as practicable
following such determination, the Board shall deliver to the Grantee a
certificate for the shares of Stock deemed earned. Payment to the Grantee may
be made in the form of cash if in the opinion of the Board, with respect to any
particular shares, it would be in the best interests of the Company that
benefits be paid, wholly or partly, in cash. The Board may, in its discretion,
permit the deferment of the payment provided that the election to defer is made
prior to the applicable Performance Cycle.
12. NON-TRANSFERABILITY
Except to the extent expressly provided by the Board in the Agreement
evidencing an award, no Option, SAR, LSAR, restricted stock award, performance
share or performance unit shall be transferable other than by will or the laws
of descent and distribution, and each Option, SAR, LSAR, restricted stock
award, performance share or performance unit may be exercised or settled during
the Grantee's lifetime only by the holder or the holder's guardian, legal
representative or similar person. Except as permitted by the preceding
sentence, no Option, SAR, LSAR, restricted stock award, performance share or
performance unit may be sold, transferred, assigned, pledged, hypothecated,
encumbered or otherwise disposed of (whether by operation of law or otherwise)
or be subject to execution, attachment or similar process. Upon any attempt to
sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of
any Option, SAR, LSAR, restricted stock award, performance share or performance
unit in violation of this Section 12 or the terms of the award, such award and
all rights thereunder shall immediately become null and void.
13. TERMINATION OF SERVICE OR EMPLOYMENT
(a) Employees and Subsidiary Directors.
(i) Termination Other than by Reason of Retirement. Except as provided in
Section 14 below or as otherwise provided in the Agreement relating to an
award granted hereunder, upon the termination of the service or employment
with the Company or a Subsidiary of a Grantee who is not a Non-Employee
Director other than by reason of normal retirement in accordance with the
normal retirement policies of the Company or a Subsidiary, as the case may
be, or by reason of early retirement with the consent of the Board of
Directors of the Company or a Subsidiary, as the case may be, (i) any
Incentive Stock Option, granted to a Grantee pursuant to the 1995 Plan
shall terminate three months (or, although such Option may no longer
qualify as an Incentive Stock Option, such longer period as may be
determined
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by the Board) after the date of such termination of service or employment,
unless earlier terminated; (ii) any non-qualified stock option granted to a
Grantee shall terminate three months (or such longer period as may be
determined by the Board) after the date of such termination of service or
employment, unless earlier terminated; (iii) any SAR or LSAR held by a
Grantee shall terminate on the date of such termination of employment;
provided, however, that the Board may extend the period of exercise of such
SAR or LSAR to a date not later than three months after the date of such
termination of employment or until the expiration of the term of such SAR
or LSAR, whichever period is shorter; (iv) shares of restricted stock
subject to an existing Restriction Period (or portion thereof) shall be
forfeited upon the Grantee's termination of employment; (v) the portion of
any performance share award which is then subject to a Performance Period
shall be forfeited as of the date of such termination, and such portion
shall be cancelled by the Company; and (vi) a performance unit relating to
an existing Performance Cycle (or portion thereof) shall be forfeited if
the Grantee's employment with the Company terminates before the end of the
Performance Cycle.
(ii) Termination by Reason of Retirement. If the termination of service
or employment is by reason of normal retirement in accordance with the
normal retirement policies of the Company or a Subsidiary, as the case may
be, or is by reason of early retirement with the consent of the Board of
Directors of the Company or a Subsidiary, as the case may be, (i) any
Incentive Stock Option may be exercised by the Grantee for a period of
three months (or, although such Option may no longer qualify as an
Incentive Stock Option, such longer period as may be determined by the
Board) after the date of such termination of service or employment, unless
earlier terminated; (ii) a non-qualified stock option shall not terminate
until the expiration of the award in accordance with the terms of the 1995
Plan; (iii) any SAR or LSAR may be exercised by the Grantee for a period of
three months (or such longer period as may be determined by the Board)
after the date of such termination of service or employment, unless earlier
terminated; (iv) unless otherwise determined by the Board, all Performance
Measures applicable to an award of restricted stock subject to a
Restriction Period shall be deemed to have been satisfied, whereupon the
Restriction Period shall terminate; (v) unless otherwise determined by the
Board at the time of grant of a performance share award, all Performance
Measures applicable to such award shall be deemed, as of the date of such
termination, to have been satisfied, and the Performance Period applicable
to such award shall thereupon terminate; and (vi) the holder of a
performance unit relating to an existing Performance Cycle shall be awarded
the same percentage, if any, of the performance unit which is earned by
other Grantees for such Performance Cycle, and payment shall be made at the
time payment is made to such other Grantees.
(iii) Exercisability Upon Termination. Unless otherwise provided in the
1995 Plan or in the Agreement relating to an award granted hereunder, after
a termination of service or employment an award granted to a Grantee who is
not a Non-Employee Director shall be exercisable only to the extent it was
exercisable at the time of the Grantee's termination of service or
employment. In the case of any award, the Board may provide, by inclusion
of appropriate language in the related Agreement, that a Grantee may
(subject to the general limitations on exercise set forth in the 1995
Plan), in the event of termination of service or employment of the Grantee
with the Company or a Subsidiary, exercise an award, in whole or in part,
at any time subsequent to such termination of service or employment and
prior to termination of the award in accordance with the terms of the 1995
Plan, either subject to or without regard to any installment limitation on
exercise imposed pursuant to the 1995 Plan. Whether a leave of absence or
leave on military or government service shall constitute a termination of
service or employment for purposes of the 1995 Plan shall be determined by
the Board, which determination shall be final and conclusive. For purposes
of the 1995 Plan, a termination of service or employment with the
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Company or a Subsidiary shall not be deemed to occur if the Grantee is
immediately thereafter in the service or employ of the Company or any other
Subsidiary.
(b) Non-Employee Directors. Any award granted to a Non-Employee Director
shall not terminate until the expiration of the award in accordance with the
terms of the 1995 Plan, notwithstanding the Non-Employee Director's termination
of service on the Board.
14. RIGHTS IN THE EVENT OF DEATH OR DISABILITY
(a) Death of an Employee or Subsidiary Director. If a Grantee who is not a
Non-Employee Director dies while employed by or in the service of the Company
or a Subsidiary or within the period following the termination of service or
employment during which an award under the 1995 Plan is exercisable, the
executors, administrators, legatees or distributees of such Grantee's estate
shall have the right (subject to the general limitations on exercise set forth
in the 1995 Plan), (i) to exercise any Incentive Stock Option held by such
Grantee at the date of such Grantee's death at any time within one year (or
such longer period as may be determined by the Board) after the date of such
Grantee's death and prior to termination of the award; (ii) to exercise any
non-qualified stock option held by such Grantee at the date of such Grantee's
death at any time prior to termination of the award pursuant to the 1995 Plan;
(iii) to exercise any SAR or LSAR held by such Grantee at the date of such
Grantee's death at any time within one year (or such longer period as may be
determined by the Board) after the date of such Grantee's death and prior to
the termination of the award; (iv) unless otherwise determined by the Board,
with respect to an award of restricted stock subject to a Restriction Period,
to have all Performance Measures applicable to such award deemed satisfied,
whereupon the Restriction Period shall terminate; (v) unless otherwise
determined by the Board, with respect to an award of performance shares subject
to a Performance Period, to have all Performance Measures applicable to such
award deemed satisfied, whereupon the Performance Period shall terminate; and
(vi) to be awarded the same percentage of a performance unit which is earned by
other Grantees of performance units with respect to the same Performance Cycle,
and payment shall be made at the time payment is made to such other Grantees,
but only to the extent such Incentive Stock Option, non-qualified stock option,
SAR or LSAR was exercisable immediately prior to such Grantee's death. In the
case of any award granted hereunder, the Board may provide, by inclusion of
appropriate language in the related Agreement, that, in the event of the death
of the Grantee, the executors, administrators, legatees or distributees of such
Grantee's estate may exercise the award (subject to the general limitations on
exercise set forth in the 1995 Plan), in whole or in part, at any time
subsequent to such Grantee's death and prior to termination of the award,
either subject to or without regard to any installment limitation on exercise
imposed pursuant to the 1995 Plan.
(b) Disability of an Employee or Subsidiary Director. If a Grantee who is not
a Non-Employee Director terminates service or employment with the Company or a
Subsidiary by reason of the "permanent and total disability" (within the
meaning of Section 22(e)(3) of the Code) of such Grantee, then such Grantee
shall have the right (subject to the general limitations on exercise set forth
in the 1995 Plan), (i) to exercise, in whole or in part, any Incentive Stock
Option held by such Grantee at the date of such termination of service or
employment at any time within one year (or, although such Option may no longer
qualify as an Incentive Stock Option, such longer period as may be determined
by the Board) after such termination of service or employment and prior to
termination of the award; (ii) to exercise any non-qualified stock option held
by the Grantee at the date of such termination of service or employment at any
time prior to the termination of the award; (iii) to exercise any SAR or LSAR
held by such Grantee at the date of such termination at any time within one
year (or such longer period as may be determined by the Board) after the date
of such termination
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and prior to the termination of the award; (iv) unless otherwise determined by
the Board, with respect to an award of restricted stock subject to a
Restriction Period, to have all Performance Measures applicable to such award
deemed satisfied, whereupon the Restriction Period shall terminate; (v) unless
otherwise determined by the Board, with respect to an award of performance
shares subject to a Performance Period, to have all Performance Measures
applicable to such award deemed satisfied, whereupon the Performance Period
shall terminate; and (vi) to be awarded the same percentage of a performance
unit which is earned by other Grantees of performance units with respect to the
same Performance Cycle, and payment shall be made at the time payment is made
to such other Grantees. Unless otherwise provided in the Agreement relating to
an Option, SAR or LSAR granted hereunder, after a termination of service or
employment by reason of "permanent and total disability" (within the meaning of
Section 22 (e)(3) of the Code), an Option, SAR or LSAR granted to a Grantee who
is not a Non-Employee Director shall be exercisable only to the extent such
award was exercisable immediately prior to such termination of service or
employment. In the case of any award, the Board may provide, by inclusion of
appropriate language in the related Agreement, that the Grantee may (subject to
the general limitations on exercise set forth in the 1995 Plan), in the event
of the termination of service or employment of the Grantee with the Company or
a Subsidiary by reason of the "permanent and total disability" (within the
meaning of Section 22(e)(3) of the Code) of such Grantee, exercise an award, in
whole or in part, at any time subsequent to such termination of service or
employment and prior to termination of the award, either subject to or without
regard to any installment limitation on exercise imposed pursuant to the 1995
Plan. Whether a termination of service or employment is to be considered by
reason of "permanent and total disability" for purposes of the 1995 Plan shall
be determined by the Board, which determination shall be final and conclusive.
(c) Death or Disability of a Non-Employee Director. In the event of the death
or "permanent and total disability" (within the meaning of Section 22(e)(3) of
the Code) of a Non-Employee Director, each award held by such Non-Employee
Director shall become immediately exercisable in full (subject to the general
limitations on exercise set forth in the 1995 Plan) and may be exercised by the
holder's guardian, legal representative, executor, administrator or similar
person. Any award granted to a Non-Employee Director shall not terminate until
the expiration of the award in accordance with the terms of the 1995 Plan.
15. USE OF PROCEEDS
The proceeds received by the Company from the sale of Stock pursuant to
awards granted under the 1995 Plan shall constitute general funds of the
Company.
16. REQUIREMENTS OF LAW
(a) Violations of Law. The Company shall not be required to sell or issue any
shares of Stock under any award granted hereunder if the sale or issuance of
such shares would constitute a violation by the individual exercising the award
or the Company of any provisions of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations. Specifically in connection with the Securities Act of 1933 (as now
in effect or as hereafter amended the "1933 Act"), upon exercise of any award
granted hereunder, unless a registration statement under the 1933 Act is in
effect with respect to the shares of Stock covered by such award, the Company
shall not be required to sell or issue such shares unless the Board has
received evidence satisfactory to it that the holder of such award may acquire
such shares pursuant to an exemption from registration under the 1933 Act. Any
determination in this connection by the Board shall be final, binding, and
conclusive. The Company may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the 1933 Act. The Company shall not
be
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obligated to take any affirmative action in order to cause the exercise of an
award or the issuance of shares pursuant thereto to comply with any law or
regulation of any governmental authority. As to any jurisdiction that expressly
imposes the requirement that an award shall not be exercisable unless and until
the shares of Stock covered by such award are registered or are subject to an
available exemption from registration, the exercise of such award (under
circumstances in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.
(b) Compliance with Rule 16b-3. The 1995 Plan is intended to comply with the
applicable provisions of Rule 16b-3 under the 1934 Act. Any provision
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the 1995 Plan.
17. AMENDMENT AND TERMINATION OF THE 1995 PLAN
The Board may, at any time and from time to time, amend, suspend or terminate
the Plan as to any shares of Stock as to which awards have not been granted
without further approval of the shareholders of the Company, except to the
extent that approval of the shareholders of the Company holding at least a
majority of the shares of Stock present in person or by proxy at a duly called
meeting of shareholders may be required to maintain compliance with Rule 16b-3
under the 1934 Act or the rules of the National Association of Securities
Dealers Automated Quotation System; provided, however, that, to the extent
required to maintain compliance with the applicable provisions of Rule 16b-3,
the formula set forth in Section 4(b) shall not be amended more than once in
any six-month period, except as such amendment may be required to comport with
the Code or the Employee Retirement Income Security Act of 1974, as amended.
Except as permitted under Section 18 hereof, no amendment, suspension or
termination of the 1995 Plan shall, without the consent of the holder of the
award, alter or impair rights or obligations under any award theretofore
granted under the 1995 Plan.
18. EFFECT OF CHANGES IN CAPITALIZATION
(a) Changes in Stock. If the outstanding shares of Stock are increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of any recapitalization,
reclassification, stock split-up, combination of shares, exchange of shares,
stock dividend or other distribution payable in capital stock, or other
increase or decrease in such shares effected without receipt of consideration
by the Company, occurring after the effective date of the 1995 Plan, the number
and kinds of shares for which awards may be granted under the 1995 Plan shall
be adjusted proportionately and accordingly by the Company. In addition, the
number and kind of shares for which awards are outstanding shall be adjusted
proportionately and accordingly so that the proportionate interest of the
holder of the award immediately following such event shall, to the extent
practicable, be the same as immediately prior to such event. Any such
adjustment in outstanding awards shall not change the aggregate consideration
payable with respect to shares subject to the unexercised portion of the award
outstanding but shall include a corresponding proportionate adjustment in the
consideration per share.
(b) Reorganization in Which the Company Is the Surviving Corporation. Subject
to Subsection (c) hereof, if the Company shall be the surviving corporation in
any reorganization, merger, or consolidation of the Company with one or more
other corporations, any award theretofore granted pursuant to the 1995 Plan
shall pertain to and apply to the securities to which a holder of the number of
shares of Stock subject to such award would have been entitled immediately
following such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the consideration per share so that the aggregate
consideration
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thereafter shall be the same as the aggregate consideration of the shares
remaining subject to the award immediately prior to such reorganization,
merger, or consolidation.
(c) Reorganization in Which the Company Is Not the Surviving Corporation or
Sale of Assets or Stock. Upon the dissolution or liquidation of the Company, or
upon a merger, consolidation or reorganization of the Company with one or more
other corporations in which the Company is not the surviving corporation, or
upon a sale of substantially all of the assets of the Company to another
corporation, or upon a Change in Control of the Company or the Bank (i) all
outstanding Options, SARs and LSARs shall immediately become exercisable in
full; (ii) the Restriction Period applicable to any outstanding grant of
restricted stock shall lapse; (iii) the Performance Cycle or Performance Period
applicable to any outstanding performance unit or performance share shall lapse
and terminate; (iv) the Performance Measures applicable to any outstanding
grant of restricted stock or performance share or performance unit shall be
deemed to be satisfied at the maximum level; and (v) there shall be substituted
for each share of Stock available under the 1995 Plan, whether or not then
subject to an outstanding award, the number and class of shares into which each
outstanding share of Stock shall be converted pursuant to such Change in
Control. In the event of any such substitution, the purchase or base price of
any award hereunder shall be appropriately adjusted by the Board, such
adjustments to be made in the case of outstanding awards without a change in
the aggregate purchase price or base price.
(d) Adjustments. Adjustments under this Section 18 related to stock or
securities of the Company shall be made by the Board, whose determination in
that respect shall be final, binding, and conclusive. No fractional shares of
Stock or units of other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole share or
unit.
(e) No Limitations on Company. The grant of an award pursuant to the 1995
Plan shall not affect or limit in any way the right or power of the Company to
make adjustments, reclassification, reorganizations or changes of its capital
or business structure or to merge, consolidate, dissolve or liquidate, or to
sell or transfer all or any part of its business or assets.
(f) Change in Control. A "Change in Control" of the Company, for purposes of
the 1995 Plan, shall be deemed to have occurred if: (i) any person becomes the
beneficial owner of 25% or more of the total number of voting shares of the
Company; (ii) any person has received the approval of the Office of Thrift
Supervision ("OTS") under Section 10 of the Home Owners' Loan Act, as amended,
or regulations issued thereunder, to acquire control of the Company; (iii) any
person has received approval of the OTS under Section 7(j) of the Federal
Deposit Insurance Act, as amended, or regulations issued thereunder, to acquire
control of the Company; (iv) any person has entered into a binding agreement to
acquire (by means of stock purchase, cash tender or exchange offer, merger or
other business combination) beneficial ownership of 25% or more of the total
number of voting shares of the Company, whether or not the requisite approval
for such acquisition has been received under the Home Owners' Loan Act, as
amended, the Federal Deposit Insurance Act, as amended, or the respective
regulations issued thereunder, provided that a Change in Control will not be
deemed to have occurred under this clause (iv) unless the Board has made a
determination that such action constitutes or will constitute a Change in
Control, and further provided that a Change in Control shall no longer be
deemed to have occurred upon the termination of such agreement for any reason
whatsoever; (v) any person becomes the beneficial owner of 10% or more, but
less than 25%, of the total number of voting shares of the Company, provided
that the OTS has made a determination that such beneficial ownership
constitutes a Change in Control of the Company under the Home Owners' Loan Act,
as amended, or the
A-16
<PAGE>
regulations promulgated thereunder; (vi) any person (other than persons named
as proxies solicited on behalf of the Board) holds irrevocable proxies for 25%
or more of the total number of voting shares of the Company, provided that a
Change in Control will not be deemed to have occurred under this clause (vi)
unless the Board has made a determination that such action constitutes or will
constitute a Change in Control; or (vii) as the result of, or in connection
with, any cash tender or exchange offer, merger, or other business combination,
sale of assets or contested proxy solicitation or election, or any combination
of the foregoing transactions, the persons who were directors of the Company
before such transaction shall cease to constitute at least two-thirds of the
Board or any successor institution. For purposes of this Section 18, a "person"
includes an individual, corporation, partnership, trust or group acting in
concert. A person for these purposes shall be deemed to be a beneficial owner
as that term is used in Rule 13d-3 under the 1934 Act. For purposes of the 1995
Plan, a "Change in Control" of the Bank shall be deemed to have occurred if the
Company's beneficial ownership of the total number of voting shares of the Bank
is reduced to less than 50% of such shares.
Notwithstanding anything to the contrary contained herein, a Change in
Control shall no longer be deemed (as of the time of the determination of the
Board referred to below) to have occurred for the purposes of the 1995 Plan by
virtue of any transaction or event which terminates or ceases to exist, with
respect to which the Board by resolution adopted by the affirmative vote of at
least two-thirds ( 2/3) of the members of the Board in office immediately prior
to such transaction or event, shall specify that such transaction or event
shall no longer be deemed to constitute a Change in Control of the Company for
purposes of the 1995 Plan; provided that at the time of making a determination
under this subsection the Board may attach such terms and conditions to its
determination as it shall, in its discretion, deem appropriate; and provided
further that the provisions of this paragraph shall not be applicable to any
transaction or event pursuant to which any person becomes the beneficial owner
of 50% or more of the total number of voting shares of the Company.
19. TAX WITHHOLDING
The Company shall have the right to require, prior to the issuance or
delivery of any shares of Stock or the payment of any cash pursuant to an award
hereunder, payment by the holder of such award of any federal, state, local or
other taxes which may be required to be withheld or paid in connection with
such award. As determined by the Board at the time of grant of an award, an
Agreement may provide that (i) the Company shall withhold from the shares of
Stock or the amount of cash otherwise issuable or payable to a holder, the
number of whole shares of Stock having an aggregate Fair Market Value or the
amount of cash determined as of the date the obligation to withhold or pay
taxes arises in connection with an award (the "Tax Date") in the amount
necessary to satisfy any such obligation or (ii) the holder may satisfy any
such obligation by any of the following means: (A) a cash payment to the
Company, (B) delivery to the Company of previously owned whole shares of Stock
(which, in the case of a Grantee subject to the reporting requirements of
Section 16 of the 1934 Act, the Grantee has held for at least six months prior
to delivery of such shares and for which the holder has good title, free and
clear of all liens and encumbrances) having an aggregate Fair Market Value,
determined as of the Tax Date, equal to the amount necessary to satisfy any
such obligation, (C) authorizing the Company to withhold from the shares of
Stock or the amount of cash otherwise issuable or payable to the holder
pursuant to an award, the number of whole shares of Stock having an aggregate
Fair Market Value or the amount of cash determined as of the Tax Date, equal to
the amount necessary to satisfy any such obligation, (D) in the case of the
exercise of an Option, a cash payment by a broker-dealer acceptable to the
Company to whom the Optionee has submitted an irrevocable notice of exercise or
(E) any combination of (A), (B) and (C); provided, however, that the Board
shall have sole discretion to disapprove of an election pursuant to any of
clauses (B)-(E) and that in the case of a holder who is subject to Section 16
of the 1934
A-17
<PAGE>
Act, the Company may require that the method of satisfying any such obligation
be in compliance with Section 16 and the rules and regulations thereunder. An
Agreement may provide for shares of Stock to be delivered or withheld having an
aggregate Fair Market Value in excess of the minimum amount required to be
withheld, but not in excess of the amount determined by applying the holder's
maximum marginal tax rate. Any fraction of a share of Stock, which would be
required to satisfy such an obligation shall be disregarded and the remaining
amount due shall be paid in cash by the holder. The Company may require that
any or all obligations to satisfy or pay taxes with respect to any award shall
be satisfied or paid by the holder prior to the issuance of shares of Stock or
the payment of cash by the Company.
20. DISCLAIMER OF RIGHTS
No provision in the 1995 Plan or in any award granted or Agreement entered
into pursuant to the 1995 Plan shall be construed to confer upon any individual
the right to remain in the employ or service of the Company or any Subsidiary,
or to interfere in any way with the right and authority of the Company or any
Subsidiary either to increase or decrease the compensation of any individual at
any time, or to terminate any employment or other relationship between any
individual and the Company or any Subsidiary.
21. AGREEMENTS
Unless otherwise provided herein, each award under the 1995 Plan shall be
evidenced by an Agreement, in such form or forms as the Board may from time to
time determine, applicable to such award. Agreements covering awards granted
hereunder from time to time or at the same time need not contain similar
provisions; provided, however, that all such Agreements shall comply with all
terms of the 1995 Plan. No award shall be valid until an Agreement is executed
by the Company and the Grantee and, upon execution by each party and delivery
of the Agreement to the Company, such award shall be effective as of the
effective date set forth in the Agreement.
22. NONEXCLUSIVITY OF THE 1995 PLAN
Neither the adoption of the 1995 Plan nor the submission of the 1995 Plan to
the shareholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or individuals) as the Board in its discretion determines
desirable, including without limitation, the granting of stock options or stock
appreciation rights otherwise than under the 1995 Plan.
* * *
The 1995 Plan was duly adopted and approved by the Board of Directors of the
Company on February 27, 1995. The effective date of the 1995 Plan is May 3,
1995.
_____________________________________
Secretary of the Company
The 1995 Plan was duly approved by the shareholders of the Company at a
meeting of the shareholders held on the day of , 1995.
_____________________________________
Secretary of the Company
A-18
<PAGE>
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
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<S> <C>
Solicitation, Voting and Revocability of Proxies.......................... 1
Election of Directors..................................................... 2
Executive Compensation.................................................... 7
Proposed 1995 Incentive Plan.............................................. 17
Stock Owned by Management and Principal Shareholders...................... 25
Ratification of Appointment of Independent Auditors....................... 27
Deadline for Submission of Shareholder Proposals to be Presented at 1996
Annual Meeting of Shareholders........................................... 27
Other Matters............................................................. 27
Exhibit A: St. Paul Bancorp, Inc. 1995 Incentive Plan..................... A-1
</TABLE>
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LOGO
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PROXY STATEMENT
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MARCH 27, 1995
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<PAGE>
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE SIGN AND RETURN ALL CARDS IN THE
ACCOMPANYING ENVELOPE.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
--------------------------------------------------------------------
1. Election of each of four directors for a three-year term.
NOMINEES: Patrick J. Agnew, William A. Anderson,
Alan J. Fredian and Jean C. Murray, O.P.
FOR WITHHELD
[_] [_]
[_] ______________________________________
For, all nominees except as noted above.
FOR AGAINST ABSTAIN
2. Approval of the Corporation's 1995 Incentive Plan. [_] [_] [_]
3. To ratify the appointment by the Board of [_] [_] [_]
Directors of the firm of Ernst & Young LLP as
independent auditors of the Corporation for the
year ending December 31, 1995.
THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING, OR ANY ADJOURNMENTS THEREOF, IN ACCORDANCE WITH THE
DETERMINATION OF A MAJORITY OF THE CORPORATION'S BOARD OF DIRECTORS.
MARK HERE [_] MARK HERE [_]
FOR ADDRESS IF YOU PLAN
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING
Please date and sign exactly as name appears hereon. Each executor,
administrator, trustee, guardian, attorney-in-fact and other fiduciary should
sign and indicate his or her full title. When stock has been issued in the name
of two or more persons, all should sign.
Signature: _____________________________________________ Date _______________
Signature: _____________________________________________ Date _______________
<PAGE>
REVOCABLE PROXY ST. PAUL BANCORP, INC. REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned shareholder of St. Paul Bancorp, Inc. (the
R "Corporation") hereby appoints Joseph C. Scully and Michael R. Notaro,
O or either of them, with full power of substitution in each, as proxies
X to cast all votes which the undersigned shareholder is entitled to
Y cast at the annual meeting of shareholders to be held at 10:00 a.m. on
May 3, 1995, at the Drury Lane Oakbrook, 100 Drury Lane, Oakbrook
Terrace, Illinois 60181, and at any adjournments thereof, upon the
following matters. The undersigned shareholder hereby revokes any proxy
or proxies heretofore given.
This proxy will be voted as directed by the undersigned shareholder.
UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSAL 2 TO
APPROVE THE CORPORATION'S 1995 INCENTIVE PLAN AND FOR PROPOSAL 3 TO
RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF
THE CORPORATION FOR THE YEAR ENDING DECEMBER 31, 1995 AND IN ACCORDANCE
WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS AS TO
OTHER MATTERS. The undersigned shareholder may revoke this proxy at any
time before it is voted by delivering to the Secretary of the
Corporation either a written revocation of the proxy or a duly executed
proxy bearing a later date, or by appearing at the annual meeting and
voting in person. The undersigned shareholder hereby acknowledges
receipt of the notice of annual meeting and proxy statement.
--------------
SEE REVERSE
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE) SIDE
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